>> rose: welcome to our program. we begin evening with the biggest scandal in the world. it is in china and we'll talk to evan osnos of the "new yorker" magazine. >> the reason why the bo xilai case is awkward and uncomfortable is because it has made what is abstract before, the suspicion surrounding the leadership families has made it so vivid. there are names and dates ander if rar ris and educations, is tuition attached to this case. the average chinese citizen all knows about that now. serve talking about this in beijing and that's unusual. >> rose: we continue this

evening with sebastian thrun who is the founder of google x. >> it's been a long time dream to understand the human became and intelligence systems and in bits and pieces that have exceeded human intelligence we have better chess players. but in the nda daily things we are still behind so we have no computer today that could look at the table and say, oh, that is glass and this is a cup and there's probably coffee in there. >> rose: we conclude with jack dorsey one of the founders of twitter, the chairman of twitter and also the head of a new company called square. >> it makes sense that facebook would pick it up and facebook's core competency is photos but facebook is known for the past tense, photos are in the past, they're in albums, something you have to maintain. you have to maintain your relationships. instagram represented the now and the present. >> reporter: osnos, thrun, and dorsy when we continue.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin this evening with chinese politics. the investigation continues to the ousting of bo xin fly the chinese communist party. he was a party leader and candidate for chinese politburo standing committee, the most important ruling body in china. the scandal has raised questions about the increasing level of corruption in china. this major shakeup comes as the communist party prepares to choose new leadership this fall. joining me now, evan osnos, he

had been covering this stor for th"new yorr" maze and before that for the "chicago tribune." i am pleased to have him here at this table to help us understand what is going on. welcome. >> thank you. >> rose: tell me the story first and then the players. first tell the story. >> the story begins as a murder history which was that on february 6 we had a very senior chinese political figure, a former police chief of a major city in the west show up at the u.s. consulate in chengdu, which is extraordinary. he showed up and said "i've discovered a murder and the murder was committed by the wife of my boss." this is... the family he was talking out political royalty in china, the bo chill lie family. >> rose: political royalty means the father of bo xilai was part of the revolutionary... >> he was one of the eight it mortals, as he was known. so this police chief discovered this murder, said it had been buried but he had evidence that, in fact, this person had been killed by the wife of bo xin lie and he said "this news has to

come out >> and the minute who was killed was? >> a1-year-old brit worin for as a fixer of the family of bo xilai. he shows up at the embassy and saysive evidence of a crisis in chinese leadership. this senior official is implicated an i want political asylum. >> rose: he wanted asylum. he didn't want protection from people willing to do immediate harm to him? >> there's been reports he wanted political asylum and i think probably what happened was the consulate prevented him from formal apping becau th knew they couldn't give it to him. so in the short term what he wanted was protection. he thought his life was in danger. >> rose: because he was implicating powerful people. >> as powerful as you get. >> rose: suggesting that what was involved was a financial relationship between this brit

and the wife of bo xilai? >> that was the precipitating cause that there was this... the we have of bo xilai was involved obviously, in a complicated relationship but more importantly it appeared that she had a vast economic empire at this pointhat had been asseled hindhe scenes. of course, technically bo xilai is a civil servant in china, he makes a civil servant's salary. the reports we're hearing now... >> rose: he's a princeling. >> the reports we're hearing now is the family may have been trying to move a very large sum of money. >> rose: what's a large sum of money? >> some people have said $1.2 billion. >> rose: that's a large sum of money. (laughs) >> so when you have numbers of that scale it begins to approach a political problem. and the police officer had his own purposes. he went to the consulate because he wanted protection but he began this process which has now broadened substantially. >> re: wrese no the former police chief? >> when he left the consulate he was taken into custody by central beijing authorities, which was important. >> rose: not the local people but the central beijing people. >> exactly.

that was what he wanted. he wanted the consulate to ensure he wouldn't be taken in by his boss's political and security forces. he was taken in by beijing. he's now in custody, we haven't seen him since then. he's probably going to be charged as a traitor. >> rose: a traitor? >> and the question will be whether it's mitigated by the fact that he did bring information that brought about the downfall. >> rose: the chinese don't look with favor on traitors, do they? >> no. and in thase prt of the reason for treating him so severely is that they want to send a message that even if you have information, don't take it to the americans. >> rose: so let me go back to who is who. bo xilai is the son of a princeling, whatever the term is >> there were eight immortals and he's the son of one of them. >> rose: one of the revolutionary giants. >> the founders of the nation and bo xilai grew up in that environment which was both privileged but also highly politicized and he grew up in an environment in which essentially you had to look out for yourself poticay. he thriv inthe cultural revolution. >> rose: one of the red guards.

>> he was one of the young... one of the young people who really took to this movement and made a name for himself. >> rose: where is he located? where is chongqing? >> chongqing used to be chung king. it was peeled off pro the province of sichuan and became its own province 30, million people. >> rose: he became the head of the city, the mayor. >> the party secretary. >> rose: and as he did that he began to show certain characteristics that were unlike what you might expect for somebody who was of the generation that was opening china to the west. >> rose: exactly. one of the things that was confusing about him was he was one of china's most modern, sophisticated, westernized leaders. >> rose: charismatic. >> very charismatic. carried himself like an american politician. he's a back-slapper. knows how to get things done. yet the political vocabulary he was using, the rhetoric, was summoning the mawist language. the red songs, separating

enemies from friends and in a sense it was because he had be raised in theyst. mao. he knew that that was a way you could generate support and get things down in the chinese system. >> rose: and he had supporters in beijing that were kind of protective of him and were shepherding his career to a position on the standing committee. >> he had those and evidently he didn't have enough. >> rose: but one was very important. we don't know what's happened to him, the head of security for the state of china. >> exactly right. and there's some discussion about whether, in fact, he may be under investigation. >> rose: may be a casualty of this. >> that's right. >> rose: what would he have done to make him a casualty? >> this is where it gets mplicated because is possible he could be implicated for supporting or protecting and covering up things that bo xilai may have done but part of the problem is this case has exposed the fact that these families and individuals have deep and complicated relationships with businesses, with all kinds of sectors of the economy so it's possible if his faction has lost

favor then he could be implicated for all kinds of problems. >> rose: back to bo xilai. he also has a son that's well known. anat the kennedy school. >> that's right. >> rose: what's happened to him since this broke? >> a couple weeks ago bo guagua was in his apartment in cambridge and reporters saw him being led away, voluntarily, by a group of people in a dark vehicle with tinted windows. this stuff is straight out of... >> rose: of a movie. >> right out of a movie. >> rose: people have said it's a combination of ago that christie and chinglish. >> rose: so now we have the wife who is in detention? >> she is. >> rose: what does that mean, detention? >> that's probably the piece of this that looks most like what we would recognize. she's under arrest and suspected of murder. >> rose: but she was a famous lawyer. >> she wrote a book called "winning a lawsuit in the united states." because she did. she was an unusual figure. >> rose: i think she once said

she was the first woman to open a law firm this china. >> she said she was the first chinese lawyer to litigate successfully in america. these are debatable but she became a celebrity. there was a mini series made out of her book. for her to... and then sheore or less disapared fr her public role over the last few years as her husband's career continued to climb she took a backseat. what we know is in the period she was no longer a public figure she was still actively engaged in... >> rose: does anybody say this is a guy who's becoming... who had a political rival more than one who also wanted seats on the standing committee and that did him in? >> it's very possible. one of the things that we have to try to separate is what is substantive, confirmed, criminal accusation fom what is th intrig of chinese politics. and what makes this case so unusual is that these two have merged. we may never have known what was going on behind the scenes on the intrigue front had this

criminal case not happened. it only in effect became known because this police chief sought protection from the american... >> rose: it put a weapon in the hands of your opponents. >> exactly. and's that's why bo xilai had to go down in the chinese political calculation. you couldn't have somebody on the standing committee of the politburo who had been exposed to the americans. >> re: s h loses power for sure. >> he's done. (laughs) >> rose: so what happens to his head? >> well, probably... this could change. my guess is they will try to contain the damage by not being as dramatic as they could be in the punishment. my guess is he'll probably go to jail and maybe for the rest of his life but they will probably not try to uproot his entire patronage network. if you do that, if you start pulling out everybody that he knew, everybody he helped, where does it end? >> is it possible that this somehow couldeontagious and it could influence the next

leadership in china? >> beyond bo xilai? >> the party is doing everything it can to prevent this from being contagious but that ice the point. it could be. >> rose: you don't know what's there? >> each one of these families has a back story. they have people that they're associated with, they have friends, they've been involved in business and there has always been until now a sort of mutually assured sense of silence. nobody goes aftereach otr's faly becau y don't want to know where it leads. this case has upset the balance for the moment they're trying to restore the balance, get through this leadership transition in the fall and get back to business. it's going to be hard to do it. >> rose: it's interesting example. the chinese president is scheduled to be the next president. i assume that will take place. >> that's still on track. >> rose: his wife is a singer? >> that's right. she's in a sense the most famous sort of folk patriotic singer in china.

a member of the military. >> rose: she's a general as well? >> she's a general as well d shs beernown in some sense... i mean, the characters are from a writer's perspective... >> rose: you should have seven books in you. >> from a writer's perspective this is a gift. these things are great. >> rose: but it does say something in what they fear that there's corruption within the walls of the most honored figures of the chinese hierarchy? >> one of the things we hear about the incoming president whose wife we were just talking about is people say he's relatively clean. up until now, people have tried to prevent that becoming the issue. the reason why the bo xilai case is especially awkward and uncomfortable is because it's made what was abstract before, the sense of suspicion surrounding the leadership

families has made it so vivid. there are names and dates and ferraris and educations, tuition attached to this case that the average chinese citizen all knows about now. everybody is talking abt this in beijing and that's unusual. >> rose: in a broader way, it is often said that the reason that the chinese are the way they are on human rights and crackdowns and censorship is because they fear most of all instability. >> i think that's right. and i think in order to understand why china does the things it does and why it can be so harsh and defensive, its belief in what is best for china is simply because it was so poor and so chaotic so rectly. thinur lifetime, even within the last 30, 40 years, people were dirt poor. and the idea that they could engager what they have accrued so far is a very powerful and very uniting impulse. it keeps people in support of a party that otherwise has lost its ideological mission and the

fear is that it if this case of case can undermine what's left of the support and credibility of the party then it starts to get volatile. >> rose: party above all because party means power and control. >> party means growth, control, and stility and thefear thatn the efforts to protect the party that it may in fact be promoting instability >> are they paranoid beyond necessity? >> yes, i think so. i mean, i think this has been a debate for the last several years. did they know more than we know or, in fact, are they just paranoid? i think they're paranoid for good reason in the sense that the internet has turned out to be more explosive and transformative than even they imagined. the dynamics are very different than the middle east. but the truth is that some of the things that took place in the arab spring made a deep impreson on the chinese leadership. even though they believe they're different they know there are enough ingredients. >> rose: tell me the... having been there six years? >> seven years. >> rose: and you come back here

and someone says "tell me some of china." >> in the end the thing that comes through most clearly for me, the thing that unites so many strands that i follow there is the sense of ambition on an individual level, on a national level. i meet people in the wooliest corners of the chinese mainland. i mean, you go out toartst provinces and you meet people who are trying to transform themselves which is a very in some ways unchinese instinct. traditionally people were born into a confucian system that says you were born into this place, you will stay in this place and you will die in this place. and they've set out to subvert that on an individual level and nationally the same thing. china believes it will become a great nation again, it will become a superpower and it is the combined ambitions of 1.3 billion people that drives that. >> rose: but what are they ambitious for is the ultimate question? >> tt's the mtery this ithe problem for them. they don't know what they're

going for. what are the values china stands for today? >> rose: they've never been imperialistic, have they? within adjacent properties. >> beyond tibet and what they consider to be chinese territory exactly. the south china sea, they don't ultimately have the interest that, for instance, the soviet union had if projecting its values but the problem is china these days doesn't know what it stands for internally. what it stands for at the moment is a condition, a state of being which is growth, prosperity, but that's thin and thategins to founder, if we get a slowdown, you're know no longer getting 7.5%, 8% growth, what gets people out of bed? what ties them together as a country? they can't answer that question. >> rose: it's a fascinating country. how do they see the united states? >> combination of envy and inspiration. frankly, they want to be us in a lot of ways. they admire our education system. >> rose: except democracy. >> democracy, they don't have a feel for it yet.

but the truth is when the incoming president ofchi has his daughter at harvard as he does. >> rose: and bo xilai has his son at the kennedy school. >> and i run into chinese low level officials all the time whose kids are applying to prep school in america. >> rose: and they have a different impression of the united states than their parents did. >> absolutely. in some sense in the long term that has an effect. they come back with ideas that are different. >> rose: you should write a book about ambition in china. >> not a bad idea, actually. >> rose: evan osnos for the "new yorker", that's a famous publisher and former "washington post" reporter and editor named peter osnos who's now known not as peter osnos but as the father of evan osnos. back in a moment. stay with us. >> rose: sebastian thrun is here he is the former director of the stanford artificial intelligence laboratory. he's also the founder and head of google x.

"new york times" has called it google's lab of wildest dreams. he has designed products such as street view, the self-driving car, and the recently announced google glass. his latest project is an online university called udacity. i'm pleased to have him here at this table for the first time. welcome. >> thank you so much. >> rose: did i they right? >> absolutely. udacity. >> rose: and you have to famous glass on now. >> i have them on my head. >> rose: tell me about project glass. >> they're really an aspiring hopefully project to change the way we interact with mobile devices and they help us to get things out of your life not into your life. so we carry our phone in our hand, we don't look up really. this is a display that's with you all the time, it sits above your normal feed of view, you can see things ifyou wish to but normally it doesn't impede your normal vision. >> rose: what can you do with it? everything you do with a smart phone? >> we're doing all kinds of studies right now. the thing i like is picture taking so i can have a camera here and i'm taking a picture of you. >> rose: i'm taking one of you. >> and now magically all my

friends show up, and here's my entire team called "glass team" and that means that the entire picture is now visible right now... >> rose: so they can see us right now. >> yes. >> rose: this conversation is being... on g+? all right. so how else do you use it? >> there's a whole bunch of things. people talk about augmented reality with objects and faces and finding information. we haven't found this to be the compelling use case. so far the compelling use case is the sharing experience. other people can now see through my eyes, the camera is exactly where it should be, where my eye is and it's available all the time. we've done experiments with things like making phone calls, notifying when an event comes up and so on, i can send e-mail, spoken e-mail so i can see e-mail to her peopl when i'm on the run or on the go i can have my e-mail read to me so i don't have to use my hands or my eyes. so it's a very liberating

experience to me. >> rose:s that demo of project glass. here it is. >> yeah, meet me in front of strand books at 2:00. oh, man, really? hey, little guy. hey there, little guy.

sweet. remind know buy tickets tonight. >> rose: okay. so i'm the first person, journalist, to see this? >> you're the first journalist to see it. >> rose: let me talk about you for a moment. i mentioned the artificial intelligence at stanford. how far did you get on that? where are we in artificial intelligence? >> i wish i had better news. it's been a long time dream to understand the human brain and intelligence systems. and in bits and pieces they've exceed hum intlince. have better chess players than the strongest human chess player. but in the mundane daily things we are still behind. so we have no computer today that could look at this table and say "this is the glass and this is the cup and this is probably coffee in there." >> rose: and this is how you reach out to get it. >> this is how you reach out to get it and so on. >> rose: are you frustrated or did you become disillusiond? >> i'm immensely frustrated. i haven't given up. i want to fix it. i want to make machines really smart. my computer doesn't know about

my intention th computers don't know about others. there's so many amazing things we can do. if i look at my work day i would say some good fraction of my time would be replaced easily by a working artificial intelligence. >> rose: let's talk about the car, too. driverless car. larry page, who i've interviewed a number of time and known for a while, has been talking about this for a while. did he get you interested in this or did you have a separate interest? >> i had my separate interest. i used to be arobotics professor and around 2003-- almost a decade ago... the defense research agency of the department of defense launched a challenge, as they call it, to give a million bucks to someone who could build a car that drives itself. just to be precise, this wasn't a remote controlled car where you sit in the back of a building. this was the car where you have one button, the start button and

the car goes off by itself from all the artificial intelligence projects, this is one of the easy ones. so i got interested. i felt this is an opportunityo fix a cossal big problem for society. death in traffic accidents is the number one killer for young people. i lost a friend in a car accident, it was really sad. so it's a real thing and a lot of viewers experience this. and we tolerate the fact that we have so many traffic accidents. so i felt there could be technology i could bring to bear as an artificial intelligence researcher to make the cars smarter so they don't crash anymore. >> rose: where are we today? >> today we have a car thacan ive highways and for several thousand miles you never encounter a situation that is... >> rose: driving in traffic? >> yes, normal traffic. it's not at the stage where it

rivals or surpasses human performance of an awake human driver. it's certainly... drives better than most drunk people i know of. but it's quite amazing. if you get into it, it really drives you and within minutes you kind of feel you want to stop paying attention even though our drivers have to pay attention because it drives like a person. it can drive thousands of miles before you run into an incident where you think i have to take over now. >> rose: take a look at this. this is a demo of the self-driving car featuring the blind driver steve mahan. >> auto driving. >> where do we go? (laughs) look, ma, no hands! >> no hands anywhere. >> no hands, no feet. no nothing. (laughter) >> we're here at the stop sign. using radars and lasers, second

nature to make sure nothing's coming. >> anybody up for a taco? >> yeah, yeah. what do you want to do today? >> i'm all for tacos. >> all right. :. >> and we're turning into the parking lot now. >> we'll keep along here. does anybody have money? >> i've got money. >> i've got my wallet right here. >> roll down your window and order a burrito. >> i'm doing very well, how are you today? >> good, thank you. >> this is some of the best driving i've ever done. >> this excites you, does it? >> absolutely. this is steve was a seeing person for most of his life. he was a graphics designer. eve mahan. he turned blind and he spent a

good amount of time with him just listening to stories. he was able to drive his car to work and now it takes him two and a half hours because he's relying on public transportation and so on. he's often unsafe when he navigates in new environments. it's hard to orient yourself. and this little piece of technology can transform steve's life. so for many weeks we have him drive to work everyday and pick him up after work, bring him back. it was a transformational experience. >> rose: tell me more about google x. >> i'm at the point where i have to punt. >> very secretive. >> google x has been a little bit overhyped. in the media obviously every company does research. i came from stanford university and other research labs and i'm a very unhappy person and i get

bugged by things that are wrong so i got bued by the fact tha most research labs don't help their companies that much so i wanted a lab that is not research but it takes me out there like google glass at the time was really kind of a new area and turn them into products that really help people and close the entire loop. so and in the google glass case, for example, we started with a wonderful, wonderful fellow who was professor at the university of washington and we got him over in google x and said, look, let's build something interestg based on wat u know and we'll give you the resources you need to do this. and all the time you want and so on. and he hired around him a team of great engineers and mostly former students and that team basically in two year's time cranked out this prototype over here. i really want spaces so people can be innovative but not for the sake of writing research papers, for the sake of impacting society.

>> rose: let's go to udacity. tell me about that and how you got started and why you finally left stanford. >> so udacity is our attempt to really democratize higher education. i grew in germany. even though germany is a first world country, my education, my access to high quality contemporary education was not that great. most were professors who aren't informed of what's going on in the world. for many years, for more than a decade i've been dreaming with taking the university to the world rather than locking it up and charging $40,000 a year for access. i got my wakeup call when i heard a wonderful, wonderful fellow, solomon kahn. >> rose: at at this table. >> he just recorded himself for his nieces and all of a sudden he had, like, hundreds of thousands of people being enlightened by what he recorded. hi wasn't even a professor.

he was a former financial guy. so the most unlikely person you'd think of to think about education starts with what i consider possibly the most important revolution in education today. >> rose: somebody put it on youtube and it became enormously... >> yeah, it's an unlievle story. it's an amazing innovation story. we should really embrace it. so i felt embarrassed. i was at stanford teaching my typical 200 students. but by... it's like five minutes of (inaudible) so i made this announcement together with my co-teacher peter novak with a single e-mail. i said we're going to open up our stanford class to the world and you can take the same exams. and we were suspecting how many students wilwe get, 200, maybe 500. i was actually person way out there saying 5,000. and the next morning we woke up, we had 5,000 students and then the next morning we had

10,000 students. >> rose: and then 30,000. >> come monday morning stanford wakes up and we had 14,000 students. and that number just... >> rose: what did they say? what was the reaction at stanford, 14,000? >> it's been an interesting thought process. stanford has been supportive of the idea to do this. but it raises a number of... for example, if you give someone a certificate for this class and the certificate counts, how do you make sure that it's the person who you think it is. how do you establish that entity and 160,,000 students were the final count. in every country except for north korea. >> rose: every country? >> we had... >> rose: >> so then we scrambled. we ordered... two of my gr studts srted coany. we put together a system that was able to put video lectures

out. we wanted to reinvent the teaching itself so rather than making videos of long lectures that you could find... like there was a program for ten years before us. we wanted to make much more interaction. we wanted to work as a student so we made short lectures like a minute or two and we would put a quiz in between and home work assignment and the video would stop, uncomfortably and you'd sit there and you had to think and we put th togetr basically week by week we would call it at night. my day job was google and at night i was recording these videos frantically. my students could tell how tired i am and we made it through the quarter. the interesting thing is we graduated at stanford level quality 23,000 students. >> rose: how do you know it's stanford level quality? because of their achievement of tests? >> yes. >> there was a midterm exam that was the same, a final exam that

was the same attanfd. there were home work assignments. they were graded so we made choice questions. but at the end of the day we could say, like, if a student performed at this level would we give the student a passing grade at stanford and the answer was yes. for 23,000 students which means in this quarter my colleague and i taught more students in the world artificial intelligence than all professors together. >> rose: you have said you can probably get the same quality of education you in each class with 1% to 2% of the cost. sohen i taught this class i taught it online and of my 200 stanford students, about 170 chose to view me online. >> rose: and didn't come to the classroom. >> and i was surprised so i asked them what's going on? you paid a lot of money to see me in person, the famous professor and you're not even bothering coming to class? >> and they would say "we prefer you on video."

and i would say why? and they would say, professor, for one we can remind you so you can check the same thing again. the second thing is you might think your class is intertive bu you're actually just interacting with a small number of students. >> rose: once you ask a question everybody gets a question not just one person. >> so right now it's very personalized. the people taking classes on udacity tend to get addicted. they end to like the idea that rather than just watching a stupid boring lecture and i submit that most lectures are relatively boring in my opinion. i won't say stupid but certainly boring. they can now go and really interact... not quite like video games but you can ask questions. ght w we have a program interface so we go from videos to writing code... >> rose: so when you think large when you, as they say "blue sky" do you see what is happening with udacity and other... saul kahn and others as a giant wave

that will change the way people around the world learn? >> i see this fundamentally changing the entire learning experience. i'll give you an example and the example is from and then you move on to the next class where you don't the prerequisites to succeed. there's a one size fits all model that leaves kids behind. what a digital medium can afford us is a personalization where you go by your own speed, you can rewind the professor. the medium can find lectures that suit you. so that your fundamental token of experience is a positive one. you did something, you achieve sothing and i t thousands of e-mails of students who tell me i come to you udacity classes and i feel good about myself because i achieved something and that's that's not an experience

most kids being educated share. >> rose: here's what you said. you said "having done this i can't teach at stanford again, i feel like there's a red pill and blue pill and you can take the blue pill and go back to your classroom and lecture to your 20 students but i've taken the red pill and i've seen wond wonderland." >> that comment didn't exactly make me popular. but i stand behind it. it's been like a red pill. i haven't imagined how much hunger exists around the world, including in america, for a good education. how many people are writing me passionate e-mails and sending me passionate e-mails. this simple class changed my life. and it's funnily enough much stronger outside the walls of stanford than inside. stanford gets the world's best students who are incredibly skilled and talented and i don't think my impact on a teachon th isnywhre a b as my impact on a high school student

in minnesota or a dying man... >> rose: they do argue that there's something about the physical place, that's the argument as to why it costs more. >> >> that argument is well taken. the approach is not to take away the physical university. the approach is to make it access to believe all the other people. if you look at the world, i estimate we only educate 1%. so we talk about the wall street 1%, i love to talk about the education 1% that is leave 99% behind. it's not just ople on countries, it's people on mid-career. if you're an automotive in detroit, what are the odds that it can learn today's engineering skill which would be computer engineering or tomorrow's engineering skill which will be bioengineering? so i think these days edge station a life long thing and just the fact it's free, you can do it at home, in the bus, on the toilet wherever you want: you're educated throughout your life. >> rose: what a great joy to learn things. thank you.

thank you so much. pleasure to have you on the broadcast. >> great to be here. >> rose: jack dorsy is here. he is the co-founder and chairman of twitter. the social network has transformed communication and civic engagement across the world. twitter was act one for jack dorsey. act two is to make square his latest startup the payment network of the future. the march issue of "fast company magazine" includes both twitter and square in its cover story on the world's 50 most innovative companies. i'm pleased to have jack dorsy back at this table. welcome. >> thank you, charlie. >> rose: here is this "businessweek, "twter, the company that couldn't kill itself is finally turning the corner." i mentioned "fast company." the world's 50 most innovative companies and there you are. the $10 billion man. jack dorsy leads both square, number five, and twitter number six. square is ahead of twiter? >> square is ahead of twiter in this particular issue. >> rose: because? >> we've moved the company very fast. the company is three years old.

the product has been out for 18 months. today we announced we're processing $5 billion annualized through the system. >> rose: people using square to buy $5 billion worth of products? >> that's how much money is flowing through everyday. and just a month ago it was $4 billion. so it's everyone from people wanting to sell something at their garage sale to golf instructors to major retail to even the obama campaign is on and the romney campaign is on accepting donations for the campaign. >> you want to make a donation you can use square. sgluk >> you can use your credit card. >> rose: tell us what square does? >> square is the simplest way to accept credit cards. you download an application, put in your na d mailing address, we send you a free little square reader and you plug it in and you can start accepting credit cards. it goes right to your bank account that day. so it's super fast and easy and we charge 2.75% per transaction. typically merchants to accept

credit cards... >> rose: $2.75% of the amount of the transaction? >> of the amount of the transaction. typically they get charged 3% to 5%. and 30 cent transaction fee on top of it so it's significantly faster and cheaper tha a credit rd. and you just use the device you already have, which is your mobile phone or, you ipad. works on iphones and android devices. >> rose: so if it's gone that fast where will it be by the end of 2013. >> well, we here in the u.s. right now, we want to bring it around the world. our aspirations are to carry every transaction in the world. we want to be the point of sale for every merchant and we want to be the way that people initiate a payment and start to pay their local shop but also the larger shops. >> rose: houngs did it take you to get the money you needed to turn this on? >> well, it was vy shor. we started the company three years ago and within six months we had financing. but it was a great company to demo because i could go around to investors and say "do you

want to see my new product?" and they would say "yes." and i would say "i need your credit card." >> rose: plus you had a track record, too. >> i have some wind at my back, which has been nice. >> rose: where do you put this? if it... what is its potential upside? >>, we i mean, i think what we really care about is transforming people's relationships with their money. money as a conpt haseen wth us for over 5,000 years. it touches every single person on this planet and at the same time every single person who runs into the concept of money feels bad about it. it feels like a burden. it feels like something they have to deal with. and we can take all that away. i think the best technology is... and twitter is included in this. they disappear. they fade into the background and are relevant when you want to use them and get out of the way when you don't. so one of the things we're most excited about square is that we've built this system called pay with square, an application that aonsur can download and i can link my credit card and

see all the merchants around me that accept square, i can go to one of them and i can simply open a tab and i can go up to the counter and say "i'd like a cappuccino, you can put it on jack. my name is on the register, my face is on the register. they click on, that i get my cappuccino and walk out. i don't have to bring my wallet or phone out. the technology disappears complete lift for the merchants i go to all the time i can just turn it on automatically. so wherever i'm within ten feet of that regter it automatically opens the tab and i can just say "i'm jack, i'd love a cappuccino." walk out, no technology. >> rose: what has the biggest upside potential? twitter or square? >> both. >> rose: oh, come on. >> communications and the exchange of value. they're two foundational central things to our civilization and when you simplify those, when you get down to the essence, you fix so many things. with twitter it's been the public conversation. it's been transparency, it's

been health. people aretalng about mo proactive measurements instead of... and preventative instead of just solving a solution. the... with square you have things like health as well. like doctors, one of the major issues with health care industry today is getting doctors paid and getting nurses paid and we have doctors on square who are doing house calls or are at their offices just accepting credit cards directly from their patient which is turns out to be much cheaper. so these foundational utility cans solve so many other issues in the world. >> rose: then let me move to twitter. who founded twiter? >> (laug) we have three founders. >> rose: you, biz stone and evan williams? >> and evan williams. >> rose: today neither biz nor evan nor you are the c.e.o.. >> we're not the c.e.o. we have a great c.e.o. >> rose: i agree with you. but why was that necessary? because you guys are entrepreneurs but not managers? >> well, i'm c.e.o. of square.

so... >> rose: (laughs) that's a good reason not to be the c.e.o. of twitter. >> i think, you know, companies of all... cmpans evolve, organizations evolve and twitter has been through a lot of evolution and we've always been attached to the company, always been a part of the company. evan and i simply switched roles. back in the day i was the first c.e.o. he was chairman, i became chairman, he became c.e.o. because he really wanted to be c.e.o. and then we moved to another switch with dick who was brought in as our c.o.o. dick is an amazing leader. he's very cognizant of what we need to do and he doesn't get enough credit for a lot of the revenue products that twitter has. we're really driven very quickly by dick. so the promoted products, the permanent treat tweets, permanent accounts he created a small team and drove them very,

very quickly we beat all of our revenue goals and it's doing fantastic. >> rose: is it where you wanted it to be or more? >> much more. we built it as a utility to stay in touch with each other. to just simply update where we were and what we were doing and what was meaning to tos and the world has made it their own. that's why i say you know, you look at any founders in the company and you can have a very shallow view and say there's three founders and only at the beginning but truly great companies have multiple founding moments throughout their history and the truly great companies are reinventing themselves all the time with the people they bring in and with twitter with our users a lot of what you see in twitter today was invented by our users. the at symbol before the user name. the hashtag,the retet. the word tweet to talk about the 140 characters. none of that came from the

company. that came from our users and we made it easier. so twitter has been great at listening to what people want to do with the technology in making it simple. >> rose: in terms of politics and revolutionary events like the arab spring, which has the most impact? facebook or twitter? >> i think they bothdo to a rt b twier is naturally public so it's a public conversation, it's a distribution channel and anyone the world if you're in the middle of egypt you can pick up a $5 cell phone, you can send a text and it doesn't just go to your social network that you've built, that you've maintained, that you have to create it goes out to the whole world so anyone can see it at the whole point and anyone can listen in. we think that's powerful.

so you are having these conversations in the open. it create mrs. transparency and understanding of how everyone lives. like iran for me, before that event was... before the election protest was a black box. i didn't know anyone from iran. i didn't see a lot happening on the ground and suddenly people were tweeting videos of what they took and i could see and it opened the doors for how people live in a country that i didn't really understand and i believe strongly if you have more of that, you have more understanding which create mrs. empathy for how people live their day and go to sleep and if you have more empathy you have less contention. you have less conflict. >> and k you easily monetize this? >> twiter? absolutely. it's happening today. our promoted products are, again like they blew through all of our goals for last year, the advertisers love it, we're seeing 3% to 5% engagement on these promoted products which is not typical for the industry,

the industry usually sees .10 to 1% engagement. so it's interesting because a new ad unit, a new way of advertising is invented every decade. every decade you have to learn how to really make an engagement. newspapers. you need to how to make an engaging message that people act on. radio, television, 140 characters is just the next one. so the content becomes more and more compelling so people click on them more. and if you remember, google for five years, four or five years, didn't have any revenue, did not have an ad product. when they added ad words it made search better. it made search more relevant. it was organic to the product and we think the same thing is happening with twitter. the tweets that our advertisers are produceing is making the experience better. >> rose: how will twitter change over the next five years? >> it will be focused on a lot more of discovery.

the common thing people think of is they see twitter and they immediately think it's not useful to me because i don't want to tweet. i have nothing to say. i don't want to tweet about my breakfast, and that's what they hear. but the true value is opening up the app, opening up the web site and instantly seeing what's happening on the world right now and it brings you closer to these events and think about when you're watching t.v. on your couch or at a sporting event. you're no longer just watching it, you're watching with a device in your hand, you're watching it with your phone or ipad or laptop. and enough sideline conversation on twitter. you don't have to participate in. you don't just consume and you get closer to nascar events because u caseehe drivers in the cars taking pictures before they go out from the pit stop. you can see the actors walking on stage taking a video and tweeting it to the world. you don't get this access anywhere else. so it's amazing. >> rose: it's interesting to me,

too, when you look at twitter and the impact is that in politics also it's having... companies are understanding how to use it to introduce products. >> it's an amazing feedback tool an amazing market research tool. so when a company releases a new products they will instantly get feedback from the market and they can see by the tweets what people think of it. and you see this all the time with movies. that was movie with adam sandler that was kind of billed to be a comedy and people went to the movie and that was drama. this is not funny at all, i thought it was going to be funny. then the studio immediately saw that and they could turn it around by making another trailer that focused on the dramatic part. so it's a good movie but it was framed incorrectly and they got that feedback instantly so they could immediately turn it around and ep the ticket sales u >> rose: you were an early investor in instagram. >> uh-huh. >> rose: what did you see? >> i was one of the first. so... >> rose: you have my admiration.

>> (laughs) i... kevin sis tram was an intern at ode owe and he sat right next to me working onodio, which is the company that twitter came out of. i was a propl at odio and i taught him java script and we were working side by side, then he went back to stanford and what impressed me about kevin is he did love photography and kevin is someone who when he loves something, when he wants to build something like say he wants to build a photo filter he go into the chemistry of it and try to understand the chemical principles and recreate that in software. and just that passion and amount of craft that... the pride you take in your work to do it the right way that creates great things. that's what sold me. before i even sold a product i'm like kevin is just an amazing craftsman and he ll build a company of crafts people and that's what we try to do with

square and twitter as well. we love our work. >> rose: kevin just sold to facebook. >> he just sold to facebook. it makes sense facebook would pick it up. facebook's core competency photos. but facebook is known for the past tense. photos are in the past. they're in albums. they're something that you have to maintain. instagram represented the now. it represented the present. it represents a lot of the ideas that twitter brought to the world. in the consaint. we have a constraint of 140 characters. instagram has a constraint of a square. >> so what excites you about where we are in terms of the digital revolution? >> i am superexcited about technologies that disappear completely you don't have to keep an app open. you don't have to keep a web site open to get value out of it. and i think a lot of this has to do with... >> rose: explain that. >> the concept of push notifications. this was what was so exciting

about twilter. i could be sitting on the grass reading any newspaper and suddenly i would get a tweet about an earthquake happening in san francisco and then i would feel it. and it was amazing because it brought everyone closer together. and it made everyone feel like we're one planet: but i didn't have to have the app open. i didn't know what to look for. it was pushed to me because it was relevant. because it was interesting and we're doing this with twitter and we're doing with this square and that's what pay with square is. you don't need the technology to interact with it i believe the best technology always reminds us of our humanness. we have everything we need. you see that with the history of computing, we started with big computers in massive rooms then they took over the room and then they could fit on a desk then we had the abstractions of the mouse and keyboard and you moved the mouse. now we're just using our fingers.

we're using what we already have and we're using it to interact with data and i think the next move of that is the technology disappears from our sight completely and it's pushed when 's relevant and it gets out of the way when it's not. >> rose: is security going to be a bigger problem than it is now? >> security is always evolving. you build a block and someone breaks it then you a build block and someone breaks it and tt cycle will never disperse. something something edgar allen poe in the day said. any... any crypto gram that a man can invent i can break. so when they made one and he couldn't break it andsomee else eventually did but, you know, with security it's not a question of, like, the strongest barriers but the policies and the expectations you've set around the data. around the interaction. and the interaction that it's

always evolving. >> great to see you here. >> great seeing you. >> rose: jack dorsy from square and twitter. thank you for joining us. see you next time. captioning sponsored by se communications captioned by media access group at wgbh access.wgbh.org