good evening from los angeles, i'm tavis smiley. first a conversation about ethics and politics a day after the house committee reversed disclosure that would have made trips by outside interests harder to explain. we have jack abramoff, of course, one of the most powerful lobbyist until he went to prison for conspiracy and fraud. he's a advocate for campaign finance reform. we'll turn to a conversation with david s. rose who has put it into text "angel investing." we're glad you joined us. those conversations coming up right now.

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gallup poll conducted less than a month ago has congress's approval rating at 16%, on pace to be the lowest ever for a mid-term election year, no doubt the dissatisfaction is driven in part, i expect, special interests and big money are calling the shots. joining me to talk about ethics, jack abramoff, before his fall from grace was considered perhaps the most powerful lobbyist in all of washington. jack abramoff, good to have you back on the program. >> thank you, tavis. >> most of us know the back story of what happened some years ago when the sentencing to prison and serving time and coming out. as you look back on the that period now, without calling into question too much, what do you make of your life then? >> i think my life then was basically enmeshed in the washington sort of power structure and what goes on in washington. and i have great regret that i allowed myself to get in there. but having been in there, i was able to see from at least the inside what some of the problems

are. i didn't realize there were problems, unfortunately, for me at that time. but i've been working since to turn some of them around. >> how difficult has it been to try for you to get traction on turning those issues around? >> well, i think most people, you know, i speak every week. i'm out speaking somewhere around the country, and i do as much media as i can, i think most people believe that, indeed, i'm sincere in wanting to turn things around. the problem is turning things around. it's a very difficult ship to turn around. the ship has stayed in america. and every time we come up with some ideas to do it, it seems that the entrenched establishment doesn't want that to happen, so they fight it and that's the difficulty. >> since you were last on this program after getting out and writing your book, a couple of things -- a number of things have happened. two things that come to mind immediately since i last saw you in person on this set. the obvious, citizens united so that the supreme court basically says corporations are people. and then you have this mccutchen

case which basically says you can give the maximum contribution to as many individuals, as many parties, as many pacs as you want, so there is no limit on how many people or entities you can give to. so the lid is basically off. the money is getting darker. it's coming from all around the world. there's nobody to track where it's coming from. what do you make of the changes, vis-a-vis, campaign finance, that are basically now being written into code of law which makes this ship of state even harder to turn, it seems? >> i have a couple of observations on that. first of all, i've been involved in politics since the '70s. i don't ever remember an election when big money wanted to get in, that they couldn't get in. there were always loopholes, different kinds of organizations, supreme court cases or congressional bills, so i don't ever remember in my entire existence having an example of a corporation or an

individual that wanted to put a lot of money who couldn't find some way to get that money in. i focus more on how do we limit the special interest money, because that's the problem anyway. the problem isn't somebody who's patriotic or believes in something living somewhere and doesn't want to go and influence congress for what they want. the problem is people who wants something back. these people aren't giving a lot of this kind of money unless they want something back. so, what i've tried to do is focus the efforts not on trying to go head long against the supreme court, which i don't think will work, at least now with this court. but, rather, focus where the right and left can agree, which the people shouldn't be able to bribe their legislators. they shouldn't be able to use their money to get goodies back. so, i think that keeping focused on that, obviously, it's a big fight to get them to agree to it, the legislators, but that's where -- >> something you said i want to pick apart. one, i hear people laughing when you made that comment about people don't want legislators to be bribed. i think you're right about that, but that's what people define

lobbyists as these days. lobbyists are the ultimate bribers, if i can make a word. >> that's right. >> so bribe artists in washington. are you suggesting we should do away with lobbying? >> no. lobbying is fine. we should do sgaish. >> but lobbying isn't fine. >>petitioning the government. that's part of the constitution. that's perfectly fine. people should be able to lobby, hire people to help them. like we hire people to take us to court. the problem is when a lobbyist or their clients, the special interests, give money in that process, give resources in the process, take them to dinner, take them to play golf, give them campaign contributions, that is where that process becomes polluted. that's what we need to attack. not the lobbyists, per se, by the way, the 30,000 lobbyists out there, you're probably talking about 1,000 who are the real problems here. the rest of them don't have the resources, they don't have the clients or the money. the folks who put the money into

the system because they want something back, the lobbyists and the special interests, those are the people we have to target and end. >> to your earlier point you don't want to waste your time, at least, going after a supreme court, particularly a court right now that seems impenetrable when it comes to these issues, sadly, for some of us, unpersuadable, to use another word, but give me your assessment specific skaally on e two pieces, seminole supreme court cases, one citizens united and mccutchen, whether you want to fight the court on them. >> i have mixed views. one, i'm in favor of free speech. i believe speech is not just words that come out of our mouths but maybe where our bodies go, signs we hold up, and continuing how we use our money. i continue to believe that. i also believe an individual has rights, groups of individuals,

churches, organizations, whatever they're called, have rights. components i agree with. my problem is i don't believe the justices, because none of them are politicians, none of them are elected officials, none of them have been in the process, don't think they understand what money does in this system. i think they're looking at it in a rarefied ivory tower way to say, it's not really corrupting the system, not sufficiently corrupting the system, and i think they're wrong. they don't see what's happening on the ground. as a consequence, the decision which has components, i agree with, as a whole, creates a bigger problem. again, not a problem that i personally believe we're going to solve by going right at that problem, but, rather, a problem that is creating a real difficulty for america. >> i think you're being somewhat charitable and generous. some of these justices are some of the brightest, they may be wrong half of the time, some of the brightest but they wouldn't be serving on the u.s. supreme court. i don't think they're so stuck on stupid they don't get that and they have cases argued

before them to give them answers they don't know. i think there are politics involved here. that's a conversation for another time. for sake of aargument, if i concede they don't get it because they're not elected officials, people in congress get it. they get it and still don't want to do anything about it. >> that's exactly right. >> what do you do about that? >> it's bold-face opposite. they people who benefit from money and power, people raising contributions, people who want something from them, people who wined and dined -- i used to do it myself. i owned restaurants where they came and ate. i owned an airplane where i took them to play golf. they don't want to end that o oligarch life skil. they don't want to leave that lifestyle. they want to go from that lifestyle to be a lobbyists. 90% of the people i knew want to be a lobbyists, raise money and power. >> this is a continuing problem.

barack obama with iran said he would stop this. not just him, every president before him said -- not every, but some said they would do something and they haven't. but he's in the office. he failed miserably. he said he would stop that revolving door. people go into the administration, come out and go right into lobbying. how do we stop that revolving door. >> the president could make a job, anybody who signs up, takes a government paycheck, could ever be a lobbyists again. the congress could do the same thing. they don't want to do that. i think the president probably wanted to do something about this. i, by the way, have an argument between half of the revolving door and the reform committee. i don't have a problem someone coming from lobbying world to administration, they don't get a big payoff like jacob lew and others got to work in government, we all know what

coming from being a lobbyists and has expertise into administration, i'm okay with that. but they can't go back into the lobbying world. they can't cash in. that's a big problem and where most of the corruption lies. >> we should be clear, both democrats and republicans -- >> yes, everybody is in on this. >> speaking of barack obama, what about this other issue, people voted for him the first time around because, let's be frank about it, he had the best track record of anybody i've seen in a long time on real meaningful campaign finance reform. the only issue he had been consistent about in the illinois state senate was on the issue of campaign finance reform. then the supreme court gives citizens united issue, he berates them on the floor of congress in the state of union and then a year later starts taking the money and says i can't compete with romney if i don't do what romney does even though i criticize supreme court for doing this. the one we thought would finally reform this does a 180. if you can't depend on the guy in the white house to depend on,

i'm going to do this, if you can't depend on congress, the supreme court, all three now, has made its case clear, what agency do the people have to ultimately get real meaningful campaign finance reform? >> the only power people have ultimately is vote people out of office. they can't necessarily vote a president out once he's there. he's there for four years. every two years they can vote their congressmen out. i've been working with groups to formulate an approach to go after congress mern who are against these kind of reforms. the truth is, until some of them lose their seats, until a lot of them lose their seats, they won't take it seriously. >> that approach is what? >> to basically create a perfect bill, as perfect can be, in washington contacts that eliminates or limits the ability of washington special lobbyists to give money, to have the revolving door from government into lobbying sector. the other is who is a lobbyists?

ne newt gingrich said he was a history professor. not just gingrich. it's those on the right and left. real serious change, going out in our view, taking six districts in the first election, targeting them, let the whole country target these districts, get six folks defeated. next time, 25 defeated. and then and only then will they start paying attention. they don't care about, i'm not going to get enough money from these companies or this. there's plenty of money to give them. what they care about is their seat. losing their election is the end of their political life. they don't want to see that. we have to deliver the end of their political life or we won't get them to treat this seriously. >> is this political cesspool so contaminated it can't be clean? have we reached the point of no return that money has corrupted the system, that big business owns and controls everything in washington, i wonder if the train has left the station and there's no way to get it back?

>> i don't believe that. i think there are ways to get it back but it's going to require everybody who is hearing this broadcast, and frankly, everybody who believes this, and i believe most of 300 million americans believe what we're talking about. only those inside the beltway don't. it will take them getting active, focussed and defeating these guys to get the message. once they get the message, we can turn it around. >> i'm glad to have you back on this program. >> thank you, jack. coming up, a conversation with angel investor david s. rose. stay with us. jooishg jooishgsz. there's a very appealing scenario, perfect investor with deep pockets meets a brilliant entrepreneur and the result, thriving new company, turn on investment, it happens enough to keep investors interested. something david s. rose knows about. his new book "angel investing: having fun investing in

startups," he's the ceo of gust, global platform for online startups used by 30,000 accredited angel investors. david s. rose, good to have you on this program. >> my pleasure. >> this is not new, obviously, but when did this become the domain of everyday people? >> surprisingly, it's relatively recent. people think of finance as having been around forever, angel investing in the way we think of it today is only 20 or so years old. >> even they it didn't start out as domain or purview of everyday people. >> no. because according to rules of s.e.c. you have to be an accredited investor to invest in stock of privately held companies. you have to have an income over $200,000 or assets of over $1 million a year. that's today. there's something called equity crowd funding which will be legal maybe later this year. it's been passed by congress and

signed by the president and it's taking a while to get through the works. that will allow on a limited basis regular people who aren't accredited investors to actually purchase shares of stock in companies. >> that's what i was getting at, everyday people. what's your sense of what will happen? how will the flood gates open up once that is the order of the day? >> i'm not sure it's going to be flood gates. it's going to be more than a trickle but less than a flood. the bottom line is, you really don't want -- nobody really wants people -- everybody addition everybody just investing in anything that sounds good or looks good. there's a reason we have the securities and exchange commission. there's a reason we have public stock markets because those are all very transparent. very regulated. have you to say exactly what you're doing. with privately-held companies it's all futures and all -- nothing that's real now. so, it can be very risky to invest in it, very risky. most start-up companies fail. >> i don't want to insult anybody. let's just start with a definition of what we mean when we talk about angel investing. >> sure.

so, an angel investor is an individual person who takes money out of his or her pocket and invests in buying shares of stock, part ownership in a privately held company. that's different from venture capitalists who are professional money managers, who raise a big pot of money from institutions and very rich people, hundreds of millions of dollars, and invest that in start-up companies. it's different from people who buy stock on the stock market where you can buy your broker or go online and buy shares in apple apple or doing. >> how does one know the opportunities in angel? >> that's the difficulty. i used to equate it to an entrepreneur and angel investor returning around on a football field in the dark saying, i have money, i want money. companies have accelerator programs, a lot of them, where they're helping companies get off the ground. they have demo days, have you

online platforms like gust which has hundreds of thousands of companies listing themselves. you have in the newspapers, there are blogs that are covering them, there are all kinds of meet-ups. so, now for the first time in decades, it's really possible to find a lot of interesting companies. >> when you go looking for or opportunities presented to you to invest in company xyz, who are you looking for in the entrepreneur who must be the most important quality in a company? >> we call it bet the jockey, not the horse. things happen and they change. so, we look for a whole host -- have you to be almost perfect to be able to get an investment because there are so many entrepreneurs out there. we look, first of all, for integrity. is this someone we can trust? unlike a public company, you

don't have revenue, sales, maybe not a product, we have to trust you can do it. we want passion to drive this through because it can be challenging to get a company off the ground. you you want to see experience, experience in starting up a company, experience in the area you're investing in, experience in the area it takes to run a company. we want to see things like leadership ability so you can get other people to follow you. we want commitment to sticking around during the bad times. we want to see vision of a bigger thing, a better thing, a glorious future that will be the lone star you follow. we want to see realism to understand it's very tough and not be too wildly optimistic. we to want see someone who is flexible, listen to advice and pivot as required. all those things have to line up for it to make sense. >> how does one gain all of that if one is a young kid with a great idea, and it is, by definition, a startup? i'm 19, i'm 22, i'm 25, i haven't had all the years that you or tavis have had to gain

all that to convince you to invest in my business. it's a start-up, after all. >> exactly. like every single book was issued in the first edition, by definition, every single entrepreneur was at one point a first-time entrepreneur. although we would love to invest in serial entrepreneurs all day long, but you look for something, wzintegrity. that doesn't have to be experience, that's integrity. passion can you see, commitment, vision. those are all things people can at-v at any age. in terms of experience, have you led anything before? do you have a track record as a kid, a paper route, a captain at school, something to show you can start and lead a project. >> how does one as high as david s. rose, at least, got comfortable making investment in people or companies about which you are not an expert? so, obviously the reason why they're doing it is because they're the expert. how do you find a comfort level

putting yourself in something that might feel like but you don't know the particular -- am i making snens. >> yes. the answer is, it's a very fine line. on the one hand we often say you should invest in what you know. that's why i don't invest in fashion deals. for me, that would be the kiss of death. never, ever want to do that. >> you never walked a runway, are you kidding? >> you know, by the same token, i don't invest? biotech deals. i've got a good college education but i don't know enough about the biotech industry to make a decision. on thicks like financial technology, internet, consumer products, i'm pretty good on that. you want to invest in an area you know something and then you want to learn. what i might do occasionally if i'm going into a new area, invest a little money with other very smart angels in an yir i don't know much about and i learn that way. in general, you want to invest in an area you know and then trust and do your due diligence. due diligence is talk -- not just seeing what the entrepreneur gives you but actually calling references and reading about the industry and

making a reasonable decision. >> you have a wonderful chapter, and i'm glad you did, about impact investing. so many people, myself included, if they're going to invest in something, they want to invest in something that's making a difference. i believe you can do good and well at the same time. >> absolutely. >> so, those persons interested in what we call impact investing, say a word about that. >> impact investing is known as double bottom line investing where you want to make money and do well. that's great and wonderful. the problem is there is no ee indication that can take money on the one hand and good on the other and put them into the same mathematical equation. so double bottom line doesn't really work. what you have to do, and i devote a whole chapter in the book is so take, i want to make an impact, that's great, and i want to make money, too. which do i want to do first? you have to be -- one or the other, financially oriented or impact oriented. impact first or financial first. and then if you're an impact -- if you're an impact first investor, you can say, i'm going to judge all opportunities by

how big a potential societal impact they can have provided i can get a return of "x ". if you're financial first, you say i want to opt myself my financial return but i need a certain amount of societal return to make this to work. if you're talking about angel investing into a commercial business, the money on some level has to come first. if it doesn't, the company will go out of business. no good will happen and your money will be lost. >> trust factor. some institutions these days no longer have the trust of the american people. the supreme court isn't trusted. the president isn't trusted. congress certainly is not trusted. wall street. how do you -- how do you get comfortable trusting in the process of angel investing? >> well, you trust in the process by understanding the process. and by understanding the metrics. the metrics are that most start-up businesses fail. a majority. maybe even a large majority of start-ups fail. so, you invest in only one start-up company, the odds are

you will lose 100% of your money. therefore, if you invest in many companies, the odds are that one of those 20, 30, 40 are actually going to be a very big success. and the size of that success will ultimately outweigh all the failures. you have to understand that if you do it right with discipline and you understand what you're doing and you negotiate appropriate valuations and do your due diligence and all the things the professional angels do we talk about in the book, over time the returns from a successfully managed portfolio can be over 25% annually, which is really pretty significant. >> just between two of us, nobody's watching, what did you miss out on? you can't win them all. there had to be something you missed out on. >> every angel investor has their anti-portfolio. in my case i passed on a company called tote, where we had a chance to be around on first round of financing that turned into pinterest.

i passed on sling investor, sold for $300 million. very interesting companies. you can't win them all. >> i'm not going to feel sorry for you, you've done already. david s. rose, ceo of gust, founder of angel investor. his new book is "angel investor: the gust guide to making money and having fun." investing in startups s it really fun? >> the most fun you can have with your clothes on. >> i should try that. that's our show for tonight. thanks for watching. as always, keep the faith. for more information on our show visit tavis smile smiley @pbs.org. >> join me for emmy-winning actor beau bridges. that's next time. we'll see you then.

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