>> rose: welcome to our program. tonight, reed hastings, the cofounder and c.e.o. of net flicks. >> we're about 24 million subscribers today, and that's up from about feen million a year ago. that's a very high rate of growth and that's what's exciting about the business and more and more people are getting smart tvs, they're watching netflix on their ipads. it's on all of the devices. it's not just netflix, it's hulu, youtube. all of the online video is experiencing an explosion in viewing because it's so convenient to click and watch. >> rose: we continue with sal khan, founder of khanacademy.org >> i used to be quiet about this dream. it seemed like a crazy thing. even last year it seemed crazy for me to say what i'm about to

say bunow there seems to be a potential-- online learning nobody takes it-- they take it seriously. online learning is here and your press tinlous universities are here. they're not in the same conversation. i hope khan academy can turn in into an institution that i won't say rivals but is taught in the same conversations -- >> jon: in the place where's you can learn. >> in the place where's you can learn at a very high level. so you can start in arithmetic, and you can go deep and it's a real learning experience. it's not something superficial. >> rose: reed hastings and sal khan next. ♪ ♪ if you've had a coke in the last 20 years, ( screams ) you've had a hand in giving college scholarships... and support to thousands of our nation's... most promising students.

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from our studios in new york city, this is charlie rose. >> rose: reed hastings is here. he is the cofounder and c.e.o. of netflix. netflix started out in 1997 as a d.v.d. by mail company. it quickly revolutionized the video rental business. it is now changing the digital landscape again by streaming movies and television programs over the internet. as a venture capitalist, netflix has changed the industry. i am pleased to have reed hastings back at this table. welcome. >> thank you, charlie. >> rose: here's what i remember most, we did an interview and i said in my naivete, how are you going to do this? how are you going to find all this content that you can deliver over the internet. and at the same time, not cannibalize your dvd business. >> you know, dvd has continued to grow for us.

it's grown every quarter. it's been phenomenal. eventually, in fact, maybe even this quarter, it will start to decline slightly for us. but it's been such a steady grower. it's been fantastic. and top of that, we've grown streaming. and when you add the two of them together that's what's helped make us so successful. >> rose: i talked recently to jeff buckus who at one point said you were luke a small country trying to conquer the world but he now sees you in a different way. take a look at this video. >> you, obviously, look at it with a certain sense of what? >> fondness. >> rose: fondness? >> yeah. because netflix-- you know, i'm now-- i'm very committed and interested to our cnn journalism and our magazines and movie studios, not just hbo, where i grew up, but i do have a fondness for subscription television. >> rose: right. >> ask netflix is subscription

television. so, welcome, brother is kund of what i say to them. and, you know, they've done some things that really as an hbo person came up in the shadow of the big giants of network tv. you've got to admire them. they've done a bold thing. they've done a good thing. >> rose: and they're very successful. >> there very successful because they're offering you a subscription service, which is very val and i had effective to that. 's now pretty cheap. you know, relative to -- >> $8 to $10 a month. >> yes, and they have a lot of interesting stuff on there. >> rose: there it is. you are a subscription player. how big is it? >> well, we're about 24 million subscribers today, and that's up from about 15 million a year ago. that's a very high rate of growth, and that's what's exciting about the business. more and more people are getting smart tvs. they're watching netflix on their ipads.

it's really on all of the devices. and it's not just netflix. it's all hulu, youtube, all of the online videos is experiencing an explosion in viewing because it's so convenient, to click ask watch. >> rose: lay out the landscape for me as you see the future and your competition. >> well, what we're doing now is really focused on how do we get a lot of prior season tv and a lot of movies and the pay television -- >> you mean the year before. >> that's right. >> rose: didn't you just buy something. >> like "mad man" and "glee." we have a prior season on those. for a vast number of shows we have the prior season and content on. and really a way for a consumer, when they're in the mood to watch something. they don't know specifically what they want to watch, to click, and using our online personalization, our web-based creation and engine, then we're able to tailor that content seats very easy for a subscriber

to click ask there's a screen full of great choices for them tailored to their particular taste. you can watch 100 episodes of "30 rock." you can watch the first couple of seasons of "dexter." it has incredible variety. >> rose: and what about the movies you can buy from the studios? >> we have 10,000 movies. it's so many movies. it's unbelievable. when i turn on my netflix, i'm always like how am i going to have time to watch all these that i want to watch? there's so much selection. >> rose: the idea used to be they were older movies. are you now getting more into the market of one of the early adapters? >> you know, we're really focused on the broad catalog, the 10,000-plus movies, covering the best movies from, you know, the 1950s up to last year. and so we have a very wide range of content. but the brand newest movies, what's happening with those, is a $30 pay per view option, not from netflix but direct tv and others, movies that are in the

theater. there are really two segments. there are the more expensive movies up front, pay per view, either $30 or $5. and a liz expensive, very convenient subscriptions like netflix or hbo. >> rose: are we going to see more and more, the premium you pay $30. and what is that anything to do to the theater presentation? >> it's unclear. that's why the studios are moving slowly with what will happen. i'm sure they'll watch what happens with the theaters, and i'm sure they very much want the theaters to stay highly relevant. >> rose: they do. it's not in their interest for theaters to go away. >> correct. >> rose: why is that? >> because so much of the downstream revenue is linked to that initial excitement to how much revenue is produced at the domestic box office. for example, what we pay fair film three years later is highly correlated to how well it did in the box office. there's a big incentive to

continue to have that happen. >> rose: you're also going into original content. >> not exactly. when hbo does original content, they're real creative. >> rose: soprawn ois and that. >> they cast people, they own it on a global basis. what we did do is license the premiere from another studio, media rights capital, that is creating a show called "house of cards." david finch is directing it. kevin spacey is starring in it. like "the office" it's a remake of a british success. it looks very exciting. we did agree to license that. it's their content, which we licensed, and that's what characterized it as original content because it's going to be exclusive on netflix. it's coming out next fall. >> rose: should hbo be worried that you're coming at them and you want to provide original content to be competitive with them? >> in ways. i mean, we're like baseball and they're like football. that is, we have no overlap in

content. but we sell to the same persons. we have the same aficionadoes who are passionate about our product. but i don't think the nfl worries about, you know, baseball encroaching on their territory. >> rose: so how would you define your audience and, say, hbo's audience or showtime? >> hbo is a content creator. they make amazing content like "sopranos" and what we'd like to do is license content. so we'd like to license content interest them, maybe discontinued shows like "in treatment" or the older shows and that helps build the -- >> if you get this platform aren't you going to be inclined to create content, not just license it? >> we're inclined to do things that are profitable for us. and, you know, if we thought it was highly profitable--. >> rose:. >> rose: that's why we're here? you're inclined to do things that are profitable. >> that's right. and they have an incredible competence that we don't have in creative and in casting and in figuring out -- >> you can get that. come on, you know you could get

that. >> not-- the competence that any company has is always somewhat limited if it's a strong competence. we don't need to. so we can be a licenser of the prior systems of showtime, of hbo, and others and be very successful. so that's our current ambition is to focus on that. >> rose: it is said the driving passion for you is to make sure that you offer such attractive content on next flix that you'll get more and more subscribers, and more and more subscribers will enable you to go out and buy more and more attractive content. that's the cycle. >> that's very well said. that's exactly what we're doing. more content gets us more subscribers, and then with more subscribers we have more revenue and can afford to buy more content. that's the cycle we're on. >> rose: how many subscribers do you think have the content gave

you? >> none specifically because we don't market-- now we have starz content. what it does is increases consumer satisfaction with our service. >> rose: and that gives you more subscribers? >> that gives us more subscribers. our subscribers are watching both starz, and other content so there's no direct way to attribute it to starz. starz was a breakthrough deal for us three, four years ago whenee did it -- >> 25 million? >> we haven't disclosed. but at the time it was so expensive we almost didn't do the deal at the last minute. >> rose: everybody looks at it now and says what a deal for netflix? >> that's four years later. we were all dvd then, to a lot more streaming. that builds up in the first quarter of next year, and we'll try to renew with them. and of course that renewal, if it happens, will be for a lot more money. >> rose: people said you paid $25, $30 million and now you will have to pay $200 million.

is that in the ballpark? >> that's in the ballpark, a lot hear money. >> rose: so the business model is simplyue went into a gym one day, and you said, "my god, this is a business model here. you pay a month feel and come as often as you want of. so you koreaed netflix where you pay a monthly fee and watch as much as you want, correct? >> that's right. that was the original on dvd. and then for last five or six years we've been mostly focused on streaming. really, youtube showed the way. when we first used youtube in 2005, it was shock because you could click ask watch. it was like television, except it was-- you could decide. it was instant. and although the early youtubes were quite low quality and the video quality and the content, we realized streaming is finally here. the internet is ready. >> rose: so youtube taught you that streaming was here. >> that's right. youtube was a clarion call and then we-- it took us a year and a half, to the beginning of '07,

to launch our first streaming. >> rose: and how much better is streaming going to be? >> oh, over the next 10 years dramatically. ult rahigh-def, 4-d, it's going to be everything. >> rose: so anything you can do in any way now you will be able to do by streaming in five years. >> here's the key. in plastic media, you've got to standardize it. dvd lasts for 10 years, bluray-- one every 10 years you get a chance to make change. in broadcast, you have the same thing, settop. if you want to change the format you have to do it very rarelily because everyone has to get a sue newsettop box. in the internet you ket getcontinuous innovation. every year it's better, now you have 3-d, and it will be 4-k, in a couple of years, which is ultra-ultrahigh def. the decoders are very flexible so you can keep making it better and better and better. so we'll get on a cycle of video innovation which is much faster

than anything the industry has seen before. and that that helps gets sony and panasonic and toshiba excited because it gives them more things to sell. a lot of times they'll come up with an idea-- we'll take 3-d for an example-- and it's very hard to sell because there's not a lot of content in 3-d, but once it's on internet, it's easier to update. >> rose: are we going to see 3-d without glasses? >> yes, 3-d without glasses and the way it works is you have to sit in particular places around the room. it's a little tricky. >> rose: you mean throughout the movie? >> no, no, each place in the room-- if you move a foot to the right or the left, you get a blurry picture but if you move a foot to the left of you get a clear 3-d picture. it's very interesting technology. but it's getting better and better and better without glasses. >> rose: in the world you live in, who is shaping the future?

>> oh, i would say in silicon valley, it's so broad. facebook is doing amazing work, twitter is, google, microsoft. >> rose: do you think all of those people will be delivering content? >> oh, i would say when you say "my world" i think of that as the internet, as opposed to content delivery, you know, specifically. but there's-- with improvement in bandwidth, and c.p.u. power and memory and disk, it's just phenomenal what's happening. smart phones, you know, over the next two years will be as fast as the fastest laptops and there's just so much changing. >> rose: in a couple of years smart phones will be as fast as the fastest laptop. >> that's right. >> rose: so what's going to be the impact of smart phones in terms of product distribution and usability? >> well, for example, when you walk into your room, your tv will sense your phone, and it will know who's in the room and it will know what you like.

so a lot of those personalization snaur yorkz you'll be able to control nex flix or other applications right from the smart phone so the smart phone over the time will become the remote control. >> rose: for everything. >> not only for your tv but your oven. >> rose: start your car, change the temperature, you can do everything, start cook your meal whatever you want to do. >> that's right. think of it as a handheld interface to the electronic world, and, of course, there will be pad versions which are larger format and, you know, in another five or 10 years we'll have roll-up screens and great reflectibility. you'll be able to tuck it in. >> rose: does everybody in silicon valley know the same thing? >> i think so. >> rose: i mean, you and john dorr, and all the people who are out there, steve jobs. >> let me give you a very specific example. 10 years ago aol was the king of the world, dial-up. everyone had their modem.

you remember all that, right? just a decade ago. if you talk a spreadsheet and say 56k, was the typical speed people connected in the year 2000. you double it and it would predict this year the average speed would be 14 megabit in the u.s. which is just about right. with a cable modem you're typically 20. in the year 2000, with just dial-up, you could predict there would be 14 megabit this year, and drag that out and say in 2021, the typical american home will have one gigga bit connectist. that sounds shock, and then you realize wait, that's what google is rolling out this year in kansas with their amazing google access project. >> rose: qhoogs the google access probability? >> they're running fiber to the home all through kansas city and offering 1 gigga bit internet service -- >> if they can make it work in kansas city, that's their

prototype? >> that's right. and then either they can roll it out or their competitors in cable will role it out. you asked about predictability. my point is that even from the year 2000, you could predict-- you couldn't predict a particular technology, dial-up, dsl, capable, fiber. but it turns out these exponential curves of technology improvement are not linged to a single physical phenomena,. it spans multiple technologies. so in 2000, all you had to do was extrapolate and you knew what you were targeting. today we 9910 years it will be mostly a gigga bit world, and you'll be able to do ultrahigh-def. it sounds like science fiction, even to me. it's hard to believe that will happen in 10 years. >> rose: what could turn this into a nightmare for you? >> a nightmare. uhm, not a lot.

i mean, there's-- it's very, you know, tough growing a business fast. there's always something broken. there's something broken in the company. there's something broke nen a supplier relationship. there's always-- because you're moving fast. but but we continue to work on all of those elements, and business is a great joy. i mean it's just-- even when we had-- we had three, four years a huge battle with bloc buster and right in the middle of it in one of my earnings calls i said they've done everything they can to us. they've thrown the kitchen sink at us. and the next day in feddix comes a big kitchen sink and the c.e.o. of blockbuster, our main competitor, has a great sense of humor. and jeff buickus, refers to us as the albanian army, and, you know -- >> what is it about you that generates that kind of sentence? in addition to that, analysts have underestimated you from the get-go. >> well, some have, but others

have not. >> rose: yeah, but many have. many didn't think you could deliver on the promise that you were selling, didn't they? >> you know, that certainly-- there are some that did. again, we never focused that much on the analysts. we focused on what is technology doing? the bandwidth throughout the country and the world is growing tremendously. and we always had confidence that we just had to keep on-- we had to figure out the streaming thing and youtube was a great vision in that and we executed on that. we built the content. that helped to get us devices, built the content, built a subscriber base. we're just beginning now. we're soñi small compared to wht we think is possible around the world -- >> what do you think is possible? >> well, we think about it as what's the market for people-- who watch videos? geez, that's like the world population. who has the internet? well, today -- >> everybody who has the capability to watch video watches video. >> that's right thoorkts. billions and billions of people. who who who has internet? today there's only 500 million

wired households and there are a lot more than that, that are mobile internet but that's growing. over 10 or 20 years you have to believe there's fiber optic everywhere. i was in rural costa rica about three weeks ago. so you driveway up north on the west coast, way counsel a dirt road, and i was stunned in this little hut we were staying in had really good dsl, and i was like how is this possible? it turns out the government of costa rica is laying fiber optic down dirt roads and they were prioritizing internet connectist over paving road. that's how important internet is becoming. and it's true in brazil. it's true in argentina. that's true in turkey. that's true in india. that's true in china. it's all around the world, the internet fiber revolution is happening. >> rose: is it in most placeaise government policy? >> absolutely. >> rose: and do we have same kind of government policy? the president mentioned it in the state of the union as you

know. he talked about broadband, a necessity to invest in broadband. that was one of the principal areas he talked about. >> our brod band policy is much more limbed. in nations like australia, what they're doing is laying fiber everywhere -- >> private or public? >> a hi brit brid but mostly public in australia. >> rose: do you think that would have been a good idea for us? >> no, our culture is very different that way. un, it's-- it might have been efficient narrowly-- we'll watch australia. borough zal is doing a lot of that. at least the backbone, maybe not the last mile. but think of the internet-- think of mobile. the expuz europe took different approaches in terms of imposing a standard in europe and not in the u.s. and both have great mobile today. so i'm not sure that's going to be the big difference. of it as importance and power of the internet as growing so fast.

in every nation by various set of methods the internet is going to grow and grow and grow, like electricity how it spread around the world. in the early days, electricity, very few people had it and then everyone had it. >> rose: the internet will be like electricity? >> the internet will be like electricity. today there are over five billion active mobile phones in the world. so that's what i mean by a very large market. >> rose: and the entrepreneurial possibility are stunning. >> always true in-- when the technology is changing so rapidly. again, whether that's wireless networks and mobile phones, semiconductors. >> rose: if you wanted to go to another country, other than the united states, and see the future, where would you go? >> you know, that really-- the u.s. is far ahead in many ways. if you think about where much of the innovation is am canning from, whether that's facebook or twitter.

you might go to silicon valley, that country. >> rose: that country. but there's nowhere like south korea or japan where they have more broadband, and, therefore, they've done more entrepreneurial things. >> there are aspects of it. japan has had incredible mobile for a long time. so there's particular systems and particular places that are very advanced. >> rose: what about amazon? >> amazon is an amazing company in many dimensions, and amazon, in particular, they have a great retail where they do physical good. they have a great book vertical where they're doing the online with kindle. and they've qepd an amazing cloud offering that jeff says may end up being the most valuable part of the company eventually. >> rose: they're having a problem with with it right now, aren't they? >> they had a hiccup a couple of weeks ago but it's so small-- it shows the power of cloud computing. the entire data center went down

and netflix which runs on their data center, kept rung because traffic got switched over. only one of the data centers went down. the whole episode was a solidification of the cloud story of why the cloud is useful. so they're just amazing at this work. >> rose: who else? who else is a player in this? obviously, hbo. >> apexpel google do, obviously, a lot of video work, amazon does video -- >> like everybody who offers video, you're one more person, one more company offering video to be streamed into your smart phone, into your tablet. >> in a way. for all the other firms that's one project or one product area in a very big form. >> rose: and for you? >> we're pure play. this is all we do. >> rose: that's a word you like, "pure." didn't you name a company "pure one?" >> we did. we focus on great video service. it's only eight bucks a month, very low price, large scale, and we're just making it better and

better and better sfwl and it's going to cost more and more and more? i mean, with all this competition, why wouldn't the price just go sky high almost making it-- you know, cutting your profit margins way down? >> when i last came and saw you in 2005, we were 20 bucks a month. then we were 16. then we were 13. then we were 10, and then we were nine, and now it's eight bucks a month because we have much bigger scale, way more subscribers. >> rose: how many subscribe jeerz 23.6 million. >> rose: what do you think that number will be in two years. >> we haven't made specific prediction -- >> you made them internally. >> we have. the growth rate-- right now we're on about a 70% growth rate. >> rose: so if you look at that trend. if you look at that trend, where will you be in two years? you don't have that in your head. >> whether it's a little bit bigger or a lot bigger, there's

a lot of room to grow in this market. facebook gets into this market in what way? >> well, facebook is working with a number of video providers including us, to figure out social video. >> rose: to figure out how they can offer video to the-- whatever, 500 million subscribers they have? >> no, to have applications, potentially video applications. that's what we're looking with them on is, to have netflix be more social. to see what your friends are doing if you've given permission. you can ask your friends, "what should i watch?" >> rose: it's not delivering video to-- >> that's right. we're focused on delivering video and most of that video is to the television, not to the laptop. >> rose: right. >> okay, so it's a set of dwigss like the game consoles or the smart tvs, where you don't normally interact with facebook. >> rose: do you still use a pc? >> yeah. >> rose: do you use a tablet? >> not really -- >> what? hello! >> i'm a phone and laptop, and i

haven't found a good-- i carry my phone because that's very portable and easy. and then my laptop. >> rose: what kind of laptop? >>. >> ibm laptop, lenovo, running windows. >> rose: why haven't you gone to mac? >> i'm on the board of microsoft so i'm a little bit biased but i would say it's other way. i've always been a huge microsoft fan and that's part of why i was willing to go on the board of microsoft. but windows 7 is an incredible product. it's amazing. it's the top-selling o.s. in history. it's growing very rapidly, very successful. so they seem to have righted the ship on the o.s. front. i have a windows phone. it's not as successful as windows 7 but it's a very good product. >> rose: great to you have here. >> thanks, charlie. >> rose: reed hastings, the c.e.o. and chairman of netflix.

>> rose: sal khan is here founder of khanacademy.org. he provides 10-minute tutorials on the web on everything from math to science to finance. he has become an online teaching sensation. his videos have been viewed more than 50 million times worldwide. they have been translated to more than seven different languages. here is a look. >> the hypotenuse is now going to be five. these animal fossils are only found in this area of south america. a nice clean band here. and this part of africa. we could integrate over the surface and the notation usually is a capital sigma. national assembly. they create the committee of public safety-- which sounds like a very nice committee. some cells have a membrane around the d.n.a. this is a called a nucleus. notice, this is an aldyhyde, and an alcohol. a galaxy, hey, there's another

galaxy. 30 million plus 20 million from the american manufacturer. if these things end up being worth 30 cents on the dollar. let's say we go to some future state and these are worth 30 cents, the most a private investor loses in this situation is his $7. if this does not blow your mind, then you have no emotion. >> rose: i am pleased to have sal khan at this table for the first time. welcome. >> thanks for having me. >> rose: what am i just looking at? i'm looking at someone who is interested in everything and has a passion to tell others. >> i think so. yeah, that's what i've turned into. >> what have you turned into? >> yeah, i've turned into someone-- i guess from my point of view-- who gets to-- i started off with the math and the physics and the science and the economics, stuff they knew payroll well from my background. but now i've turned into someone who gets to learn pretty much anything, and distill it down

and teach it? >> you're learning new things, assimilating them, distilling them and teaching them. >> yeah. >> rose: give me background you have. >> as you mentioned, five, six years ago i was an analyst at the hedge fund. before that, my background was in soft wear. and i started in boston and while i was in boston i had family visiting me in new orleans-- this was right after my wedding in 2004. my cousin nadia-- i remember we were waiting for the fireworks over the charles river and we were just killing time and i started giving her brain teasers like you give to a software interview like a 25-year-old engineer. most people disengage. i don't want to deal with that. nadia, she was twelve and said don't give meet answer, i want to figure it out. and i was pretty impressed and, you know, started telling her and her mother, hey, you should think about becoming an engineer or whatever. the next morning, her mom told me, thanks for believing in naud

yark but she's actually being tracked into a slower math class like the nonadvanceed track. and i said that's impossible. the stuff she was doing yesterday was way beyond her. she's clearly a bright girl. and she said i think she did bad on the placement exam. when naud yeah woke up, i said what is going on? apparently she bombed units, converting gallons to quarts. i said i can understand how that could be confusing but the stuff you were doing last night was way deeper and harder than units and if you're willing to work with me when you go back to new orleans and i'll stay here in boston i think we can get you past whatever hurdles you have. and she agreed and they went back to new orleans, and every day after work, i would come home, and we'd get on the speaker phone for half an hour, an hour and i started working with her. and it worked out. in two or three months she got up to speed, went hate h.d. doppler of the curve. and then i started tutoring her brother, other family members and fast forward to 206 about 18 months have gone by and i was venting to a buddy.

i said this is a lot of fun i'm having. by this time i moved out to california. i said this is a lot of fun. it's really satisfying. but the first time you give a lecture it's fun. the second time it's still fun and the third time it starts to get a little tiring. and he said -- >> do it one time. >> he said do it one time and why don't you put it on youtube? and i said, no, youtube is for dogs on skateboards. it's not for serious learning. once i got over the fact it wasn't my idea i decided to give it a shot and fut up there. >> rose: which one did you put up there? >> it was either least common multiple or greatest common divider. the cool thing about youtube sucan sort by upload time. the first video was one of the earliest videos. i started to cringe, and thought that's when i wasn't using the fancy hd stuff. >> rose: and reaction? >> once i had 20 or 30 up there, my cousin's initial reaction-- i

joke about this, but it's true, they preferred me on youtube than in person. i-- i'll take that for what it's worth, and-- but, it made sense. >> rose: you need not come to the next family gathering. >> yeah. i can be annoying sometimes. >> rose: when did it become khan academy? >> you fast forward. it's t soon became clear, like maybe six months, random people started watching it. fast forward six months and i probably had 50, 100 videos and started getting random letters from people. if you look on youtube, people aren't always that civil on youtube in tirmz of what they write. for the motor part people wrote, thanks, this helped me. and some wrote i was going to flunk calculator. and i was going to become an engineer because i couldn't handle the course load until i saw the video on vector. it started to dawn on me it

could be more than a hobby although it stayed a hobby. the first time khan academy because-- i think it was 2007 i decided to set up my own domain name and have another way of viewing the videos and i also started working on the software for my cousin, giving problems and exercises, and i played it all on the site. and i was working for a hedge fund, lowell capital, and i told my boss, i'm sal khan, khan academy. >> rose: what are your dreams? what count it to be? >> you know, if i-- and i used to be kind of quiet about this dream because it seemed kind of like a degrees kraez thing. even last year it seemed crazy kraez interest me to say what i'm about to say. but now, i think there's a potential for-- online learning known takes it seriously-- they take it seriously. online learning is here and your prestigious universities are over here. they're not in the same conversation. i'm hoping khan academy can turn into an institution, i don't

want to say rivals but talked in the same conversation--. >> rose: in place where's you can learn. >> place where's you can learn at a very high level. you can start in arithmetic but you can go deep and it's a real learning experience. it's not something superficial. >> rose: how many people work for you? >> we have eight people. we'd have six if you asked last week. >> rose: eventually you'll give diplomas? that's an open question. if you focus on k-12, and our video content goes well beyond k-12, but just on k-12, right now what really matters, some of the standardized tests, s.a.t.s, you know, high school diplomasa-- kids are getting into harvard based on being home schooled. we see our real niche on the lside. standardized education is learning and credentialing. we'll tackle the learning and in the future see what we can do in the credential. >> rose: you have a remarkable number of people who unbelievable what you're doing, google and bill gates and others

have cited you for what you have done and what are you doing. is there any push-back from what you have accomplished? does anybody say, yes, but? >> there are-- my-- my sense of the push-back is sometimes these articles get written-- the article itself is fairly bbsed and reasonable but they'll title it like, "will khan academy demolish traditional education?" >> rose: where was there th. >> i don't know. there was one that recently came out, will it flip the classroom or turn education upside down. there are these headlines that are very attention grabbing and i think when someone resident that they become cynical about the panacea solutions to a big problem and they might say, "there's no way something like this could solve all of our problems." for the most part, when people understand what we're doing, we haven't gotten a lot of resistance. >> rose: who are the people who are watching? >> that's the surprising thing, who is watching. when i started off, it was for my cousins and i kind of just

made them for-- my cousins want to learn. i was there as their big brother type figure and was motivating them. i was like if i wanted to learn the subject, mawhatwould i want? how would i want it to be explained? i thought it would appeal to a certain subset of people, people who like to watch, you know, the discovery channel and charlie rose, and all the rest. but i'm really focused on the intuition and going deep and showing how it connects and all of these things that sometimes get lost in textbooks in some classes. the surprising thing siget letters from that group of people, but i do get letters from parents of students with learning disabilities, kids who are-- were otherwise disengaged from math class or from school generally, and over here they all of a sudden discover a love. >> rose: that is the most important question to come out of this conversation between the two of us-- what is it you know? what is it you do that somehow makes learning more attractive,

more interesting, more satisfying and more productive? >> you know, i don't know that i definitely have the answer. i have guesses. >> rose: guess for me. >> yeah, i think it's-- you know i started off making it for my cousin. so i kind of didn't care. and i was kind of like this liberated person. if someone had told me in 2004, "i'm going to give you a couple of million dollars to produce something that's going to reach millions of people and bill gates is going to watch it and all are thest, i probably would have produced something different. i probably would have got fancy lighting and put makeup on and produced the educational material that's already out there. but i think the reality is that, that's what we all assume is good content. but when someone watches that, it's so dehumanizing. you kind of check out like "that's not talking to me." when i made it, it was literally me in a room. people could tell. it's some dude, not getting paid he's making it for his cousin.

they can tell there's a human element to it it. a lot of times when people are trying to get people engaged in math, they try to distract them, play a rap song. i think people find it patronizing. >> rose: that's exactly what i believe about the show. it's a black room. just a conversation between interesting people. >> yeah. >> rose: and that's all it is. that's what people want. they don't want a loss of bells and whistles. >> bells and whistles mean it's not interesting to watch. >> rose: sal khan is an interesting person and this kind of conversation will penetrate that veil of complexity. >> yeah -- >> and give you a channel to access complexit. >> i wholeheartedly agree. maybe i was subconsciously -- >> no, it isn't, but it's the same idea. when i hear you said it, that's our approach. that's our mindset as well. so what's the hardest thing about this? 24 hours in a day. >> 24 hours in a day.

i think now the hardest thing is i really want me to be all about continuing to make videos. i want most of my day kind of-- the learning and the producing. >> rose: but? but-- and this is another interesting thing about khan academy. because i put these videos out there and people watch them and i'm kind of associated with them and i can use that as a platform to engage in the discussion, however you want to view it. but i still think my biggest role and probably the highest lermg of my time are the videos. and even though the video online, in the first week might only be watched by a few hundred people, i think over the next 100 years, that will be a-- that will be a big impact. >> rose: do people come to you all the time and say, "we can monetize this?" >> they, they-- they used to. about two, three years ago when khan academy started to get to-- people started to know about it, but i still had my day job at

the hedge fund. i used to do a double bottom line hybrid model, a premium-- all these things. and actually i got to meeting two with one of them. meeting one was a lot of fun. it was like, "hey, you can make a salary to do this and if it all works out you'll be rich." but meeting two was like, "let's focus on this market because we can monetize this." so meeting two-- yeah, so i said no-- it was too much fun to give up the fun part of it, regardless of the up side. so when you-- so that actually became clear, even though i didn't know what a nonprofit would entail to start and how do you raise money for it, that's when it became clear-- what are all these universities? they're not for profit. i want to become a nonfor profit too. >> sean: that's what you've become. so you get money from gates or dorr, who believe in what you do? >> yeah. i quit my job in 2009, and the

savings started to go. and it was anne in particular who really stepped up and, you know, allowed me to get the first salary and then google and bill gates and everyone else started to get involved. >> rose: take a tangent from you for a second. what's wrong with the way we teach? >> uhm, i think more than the way we teach, i think it's a systemic thing of how the school is structured. right now, you have-- you and i were sitting in algebra class, prealgebra class, and they're going over negative numbers. and, you know, maybe you get a 95% on the exam. you feel good about yourself. you get an "a" stamped on your forehead, whatever. let's say i get a 70%, a "c" or "d." so an assessment so it does identify i have big weaknesses. you had some weaknesses. and negative numbers are core thing. you need to know that really well but despite that, the whole class moves to the next cob

tent. they're marchingen down that path and people keep having gaps this their knowledge. and we've all seen this with ourselves, family members. everyone hits a certain math class or certain science class and they hit a wall where all of a sudden the "a" student or "b" student is flunking. it's because they have all of these gaps. once you're in agbra class there's no way to identify the gap in fourth grade or prealgebra or once you're in calculus, there's no way to identify the algebra gap. i thinks that's the problem. no matter how good a teacher you have, you have a weak foundation. >> his low-tech conversational tutorials, his face never appears, and there are doodles and diagrams on the blackboard:

is that a point? >> it's a point. >> rose: nothing more. >> yeah, it is a point. >> rose: everybody is entitled to a opinion. >> or more. >> rose: maybe two or three. >> maybe two or three. you know, to rebut that last point, that's exactly why. we have the videos and i keep making videos but as soon as we got funding the simple software i started building for my cousin to measure what they knew and didn't know, that's why we started building it into this exercise platform. so i think over time, the videos will always be a big part of khan academy but the exercise piece, where it keep generating problems until they master a

concept and only then move on to the next concept. that will become a bigger and bigger piece. we are doing the assessment and feedbacking. >> rose: do you see it as supplementary to the process of education or a main line in the process of education? >> our goal-- we view ourselves as in the beginning of this process. i've been at it four, five years but as an organization we've only been at it six or seven months. our glol is with khan academy alone, if there's a student in calcutta-- they need an internet connection. but if they're there, they can get a pretty solid grounding in a lot of different subject areas especially ones that where meaningful to them that they can use tow progress. but we think it can also be the operating system of what happens in the classroom to really liberate what happens inside of a classroom. >> rose: how many of them do you do yourself? >> i produce all the videos. >> rose: that's what i thought. >> i'm the faculty. you are the faculty of one. >> our meetings are very

nonbureaucratic. >> rose: let's suppose you're interested in napoleon and the french revolution? what do do you? how do you prepare? what's the process of going from, "i'm curious about napoleon," to, two, "this is what i have to teach you. this is your access to understand this moment in history in? >> once again, i approach it from what my brain would like to see. for me, with history, in particular-- and i don't foal like i got this in the history books. and even now when i prepare i'm not getting it from the history books on my shelves. i like to see a scaffold. i like to see a map. what is the holy roman empire. what is it now? what are these things? people keep referring to them but if i can't-- for history i immerse myself in it as much as possible. i usually read a wikipedia entry first just to get the scaffold. >> rose: it's a learning experience. i want to see where it fits. i want to see the geography of the place. what does it look like? >> the beauty of wikipedia if i

find cool maps along the way, i copy and paste-- i make sure it's in the public domain, copy and paste and stick it on my blackboard art program and sometimes i draw a timeline to make sure i get the years right. but the main thing i do whether history or chemistry or anything is get the scaffold and really immerse myself for however long it takes and make sure they can make intuitive connections between everything that happens. and -- >> what is that, intuitive connections? >> understand why something-- if i'm doing it on the neuron, why-- you know, a biological book will tell you the signal goes across because there's a myelin sheathe. but how does putting tissue tornado the neuron, how does it make it go faster? and i'd ponder it, it's kind of like a fiber optics system and then i'd call up a few buddies

who are biologists or communications engineers-- whatever. i say does this make sense? and they'd say, no, i think you're right. it's a big deal for me, if i'm doing biology, why does the myelin sheathe make the signal go faster. these obvious questions are important for me to answer. and what's really cool is sometimes you call a buddy, and you're like, i know you're going to think i'm stupid when i ask you this and you probably think i have no business making a video on this considering i'm asking the question. and i ask them a question and they're like, we don't know. and i'm like why doesn't the book tell me that? >> rose: what do your former colleagues at the hedge fund say? >> they're super happy about it. i mean, you know, my last boss told me, if i knew you were going to do this i wouldn't have hired you. >> rose: it's great to find something that you have great

passion for, and it involves learning yourself. >> i think i'm subconsciously been inspired by you. years ago i said charlie rose has the best job. he gets to learn everything and i am doing it in my own way. >> rose: it's great to meet you. >> oh, thank you. >> rose: sal khan of khanacademy.org. >> turk turkey has become a very important country in its region. i'm off to istanbul to talk to the prime minister about his ambition for himself and his country. we'll show that you conversation next week. >> there is no other country in the islamic world when is democratic secular. turkey is the only country having these characteristics. and i think everybody should be well aware of how valuable this is. and turkey is predominantly

muslim. 99% of the people are muslim. on the other hand, the population in turkey have well understood these democratic values and turkey is a member of nato. in afghanistan, for example, turkey has been fulfilling most important responsibility. and we are not-- we don't aim to play for any sort of leadership role in the islamic world. what we are truth to do as turkey is how we can move towards a more contemporary civilization. our goal is to be one of the top 10 economies of the world in the coming years. this is our goal. this is what we're trying to achieve. but, of course, not at the expense of fundamental rights and freedoms. we would like to see our people enjoy even better democratic standards, even better living standards.

and we will not be diverted from that course. and we will have relations with the u.s., russia, the u.k., france, all the other countries. and we will continue to work in the most influential, better way that we can work in the region. our goal, of course, is to see peace reign in our region. that's our goal. >> rose: will you win reelection? >> it certainly looks that way at the moment. >> rose: do you believe the united states and its leadership understand turkey and its role and its potential? >> i believe they understand. i'd like to believe that they understand. because even before the... it

was a country that had fulfilled its role in solidarity very well. and we're still in the same position. and given our strategic location i think we're a country that is important, that should be taken into consideration, and everyone should pay attention to its national unity. and that's why, western countries, including the united states, must act with us. just like we fulfilled our responsibilities with regard to what happened after 9/11. every nato member country must stand by us because one of the main goals of nato is also to fight against terrorism, and we are fighting against terrorism. and nato countries must support us in our effort.

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