machine that produces own ovation they tend to do quite well in the morning. it's when things go well internally and they stop innovating which happens a lot, that then the wheels tend to come off. >> is that what happened at microsoft. >> i think it's too early to tell. >> too early to tell, when you reminded me, when you sat down at the table in a conversation about my great friend bill gates, that since the war that took place between netscape and microsoft, that their market price hasn't changed. >> yup. >> that's true. >> stock price. >> on the other hand here is the other thing that is also true of the s&p 500 broadly. it's also true of most of the big tech franchises. there's actually a different point i would bring here, necessary microsoft specific, more in general the last 15 years, technology evaluations really haven't budged at all. >> really. >> yeah. >> and the pe ratio-- ratios haven't changed. >> they have come down. >> the most a pazsch did -- a pazing story is sysco, one

of the bellweathers of technology. sysco p-e ratio if you take out cash in the bank is four. >> that's unbelievable. >> they're trading -- >> why is that? >> so number one, many investors have many questions about these companies an that's always, goes back to the innovation part we're talking about. >> whether they can sustain the performance. >> whether they can sustain the performance. a lot of investors have questions, microsoft l windows phone be big in phones will the tablet work. how will they do in competing with google, so on and so forth. but the other thing is i think people are in a really bad mood and particularly in a bad mood about technology. and i think we're still -- >> bad mood. >> i think we're living through the psychological scarring from the dotcom crash. >> this is 2001. >> absolutely. so from the time of the great, the crash of 29 to the relighting of the stock market as something would you want to invest in was basically 25 years, basically to the mid 50s. >> right. >> and so one of the things that you learn from the great depression is equity investors without got hit by the great depression never believed in stocks ever again. they just didn't and it took

a new-- that hadn't gone through the crash to get excited about equities. warren buffett was one of those. that is when he started. these day was we see in the valley is the people who lived through the crash, in many ways they're defined by it they remember how good it was and how horrible it was it is hard to get out of this thing. basically somehow we got dheeted or we got lied to. the press suffers from this. >> you could argue that they had overcome it because of what happened to valuations, can't you, in terms of, i mean look at the facebook ipo. look at market valuations of google. look how much money google has made since its original ipo. >> google's p-e ratio --. >> how about gooeling's stock price. >> google stock price has gone up but you say their earnings have gone up faster. >> so the relationship between the two has gone down as earnings have gone up. >> that's right. disconnect, same with microsoft and sysco. apple has delivered annual

earnings growth which is 70%. unprecedented for a company that size. >> making it the largest market company in the world. >> on the other hand their pe has collapsed so their pee-cash is like 8. >> but it's got to be a bigger reason than the idea that people don't trusting it tech companies. >> since 2001 they have memories of the scars. >> i think people are bitter and skin call, up set about the crash. and here's why i say this. because now we're starting to see people enter tech, entrepreneurs, executives, press and investors who enter tech without didn't go through 290-- 2000 crash. mark zuckerberg is representative of that. now we're seeing today's 22-year-old was in junior high or elementary school. during the dotcom bubble. they just have a completely different mind-set. completely unaffected. it's striking, they don't even know what happened it is like a historical. they might as well be reading about the civil war. >> it didn't seem to affect you. >> you know, emotional ups and downsment you go through, a roller coaster. >> tell me what the downs were. >> the downs, i mean i have come to expect it.

you know, i'm a big believer there is never as-- it is always somewhere in the middle. but no, i mean look, literally onier you're being told that you are like-- the next year you're being told that you done. >> netscape, what you did at netscape was phenomenal where. is netscape today. >> it doesn't prevent the other-- it doesn't prevent the other side of the story. i just love being in the industry. so i don't have a problem with it. i plan nobody this industry for the rest of my life. >> it had no scars for you. >> i try hard to have it not. i try hard to not have lingering effects because i think compromises your ability to see clearly for what is happening now. >> rose: investor class. >> and the entrepreneur class. the people who come up with-- a lot of entrepreneurs. >> rose: but the venture capital class, did it have an impact on john doer. >> i wouldn't-- john specifically i don't think but, a lot of venture capitalists. i will give you an example amount of lot road off consumer internet, so basically dotcom so consumer

internet so, internet companies that sell something to consumers, content companies, media, social med back, whatever. a lot between 2002 and 2006 or 7 just simply would not touch those companies. and of course that's when facebook was started and twitter and linked in was started. >> do you think you're less hungry once you get famously rich. >> you could say that. but on the other hand, and some people have retired. quite a few people have retired and are literally on the beach, unavailable. >> or doing other things. >> or doing other things. >> people like nathan and. >> but look, they are hell-bent to come after, windows phone 8, they just announced. >> hardware business, building tablet, going hard, very a grifs, they bought scythe, yammer this week which su a great new enterprise web services company. >> what does it do. >> it is basically a social networking for inside companies,. >> so each company can create its own social network. >> and tie the employees and tie in the customers. >> it provides software to do that.

>> one of the top guys from paypal mafia. >> they are something. >> they are amazing. >> so there was just a magnetic affect where they brought in a tremendous group of talented people like reid 406man and chad hurley who started youtube. >> amazing alumni. >> exactly so just very smart people and they are all over the valley and doing all kinds of things. it is basically, iq test 101 for venture capitalist is pap pay mafia member comes in, you say yes like -- >> really. >> it doesn't take a lot of brains. >> somebody from pay pal who usd to be part of that mafia is an alumni they come and say here is my ychlted you say how much dow need. >> here's the blank check. >> explain to me what you think the genius of mark zuckerberg is. >> so i would say he is a genius is comprehensive. aes's enpsyche pedestrian weekly of what you want for founder and c.e.o.. >> meaning he knows everything. >> he has taught himself to be good at everything. he didn't start out that way but he has become that way. he applied himself to

learning how to be a c.e.o.. he put far more work into being a great c.e.o. than people realize and i much better c.e.o. than people realize. one of the best ceos in the world at age 28, by the way. >> rate wait a minute, one of the best c.e.o.s in the world. >> yeah. and so. >> you're not just comparing with other 28 years old but are you saying basically for a guy who runs a company with a huge market cap. >> yeah. >> he's at the top. >> 4,000 employees, $4 billion revenue last year. >> what is it edition or knows that makes it that so. >> its across-the-board. he built an amazing team. by the way he built the hard way because there was a fair amount of churn in the ranks at facebook until he stibl lyzed and now he has maybe the top, one of the top 2 or 3 teams in the valley, across-the-board, engineering, marketing, legal. >> and the right coo in cheryl. >> exactly. >> from google. >> exactly. he's done that tremendous visionary. he completely understand was he wants to do with facebook. >> what does he want to do. >> he wants to connect the world. he wants to make the world more open and connected.

>> he will have a billion soon. >> yes, that's right. >> but that's not enough. i mean just so he connects the world. what will he do with the world connected, that is the question. >> that is one of the questions. he's going to do a lot and lots of other people will do a lot on top of that. >> facebook is an enabling engine for a lot of other businesses, nonprofits, political movements, on and on and on. >> is he going to essentially have the field to himself or will binge be a player. >> there are lots of people who would love to be facebook and so there is going to be, you know, thousands of start-ups that will come at him in the next ten years. >> i would suggest a topic you and i have discussed about when steve jobs died. characterize him again for us what made him steve jobs. >> well, it was so a whole bunch of things. obviously vision, obviously product genius. we talk a lot in the valley about founder c.e.o.s and the role of it, app sell one of the few companies where

we have run the experiment through the full lifecycle, the experiment of the company with the founder, without founder and again with the founder and we see, how it went. so he is the great example of the founder c.e.o. of the visionary who is able to run the company. i think one of the really underappreciated parts and i think he thought he was underappreciated on this is apple, he said the thing he was proudest of building in his career-- not a particular device. >> it was kroting a great company. >> a great company which goes back to what we started talking about which is app sell in-- apple delivers innovation. today it's an iphone, tomorrow an ipad but it is innovation and it will keep changing and they will keep coming out with new products. >> what would it be without steve at the helm. >> apple has been under steve one of the best companies in the history of the world about being an innovation machine. >> why do you think that was? because it because this was a guy who understood that if you -- create the best product, and do everything with a maniacal look at

detail. >> uh-huh. >> and you have some sense of taste and style and demanding that the engineering be as good tas can be -- >> yes, but it also runs deeper than that. it was also very deep technology. i actually think the press sometime focuses too much on the design part which is important. underneath that -- >> that's why i -- do that i said design and engineering. >> behind app sell very deep technology. these are very sophisticated. very good at building sophisticated technology, hardware and software including chips. >> i never have known the question, i asked this yesterday, why is it that steve, you were into all these technologies at the same time steve was or earlier, tablet, touch, come on, he was. >> yeah, the difference bill stepped down from microsoft right in the same era when steve stepped back up at apple. this is my point. like it's very hard, the problem with history, you can't run the experiment over again in the alternate scenario, where bill gates

stayed at microsoft and has been there for the last 12 years. we don't know how much things would have been different. could have been better, worse, we'll never do. we do know with apple, it was not the same without steve. so steve has-- . >> rose: we know it is not the same. >> apple without steve, in the interim period between when steve got fired and when he came back we know it was not the same. so now apple today, there is a tremendous challenge which is to keep going. but what they have the benefit of this amazing organization which is the other part he did was attracting all these incredible people. >> all these guys, scott, and all these guys. >> and they stayed there too. something ought to be said about that. >> the bench, its bench is incredibly deep there will be some turnover but the bench is very deep. look, if are you at apple you doing the best work, you will probably ever going to do. there is something to be said, you know, these-- this is the greatest thinging underappreciated as a c.e.o.. same as mark zuckerberg, magnet for brilliant people because they will do the best work they will ever do in their lives in this environment. >> larry page a good c.e.o..

>> i think so. >> as good as -- >> newer in the job, early indications are very positive. >> founder. >> c.e.o.. >> yeah, exactly. >> founder c.e.o.. >> he's put a very sharp focus in that company on product, it was -- >> he is actually i think if anything consciously modelling his management approach after steve which was generally very good thing to do in our industry. so yeah, he's organized the company. he took, he's taken a very laser sharp product focus and the product lines, as far as we can tell 100% of the time in the company working with the engineers on the products and he's got talented. >> why do you think he wanted to be c.e.o. again. >> i think he's-- my read is that he saw a bigger opportunity for google and thought he was the right person to make that happen. i mean i think it's the same with steve. i think he sees -- >> he thought codo the job in a way that he wanted to see it done. >> yeah. >> and have a much bigger long-term impact. the really great founder c.e.o.s view that if they just have enough time there is no constraint on how big

or important of a company they can build and impact they have. >> begins with tom watson and hewlett-packard. >> exactly. and innovation being the output as o toes-- opposed to any particular product. >> explain that to me. is innovation a culture, a mind-set, it's what? >> it's a whole bunch of things. a lot of it is talent being able to bet the best and bright toast work with you to build new products and a lot is psychologically being able to eat your own young, to be able to compete with yourself. this is this is the idea. when a technology company gets outinnovated it's not usually because it couldn't built the thing t is because it didn't want to because it didn't want to kill what it already had in the market. >> it didn't want to be can ballistic. it didn't want to be can ballistic towards itself. these companies become big businesses and they are public and they have shareholders and end up with very high calibre professional ceos who have to deliver big -- >> is that what happened to microsoft. >> that i don't know. >> why do you play it so

careful when it comes to microsoft. >> they're an important company, fantastic. >> you don't want to offend them. >> they're doing a lot of things. >> what happens to you when you get to middle age. >> i have way too many complexes. >> that's true. >> so like i said, too early to tell. >> too early to tell. >> too early to tell. >> rose: what will time tell us. >> these play out. microsoft has a bunch of products entering the market. and they're doing a -- >> don't you see it will early on in a product. does a product simply you enter in the market and ten years later you say it's going to be good. don't you know. >> the iphone got, pardon my french t cot criticized heavily, i was going to use a more colourful term. >> by you. >> no all kinds of people in the industry. all signeds-- kinds say-- it is just crazy. a lot of people thought it was crazy. the first ipod got terrible reviews. they said this is ridiculous. >> by serious people. >> by people inside the technology industry saying look, an overpriced, under powered mp 3 product.

why would i buy this, by the way. witness so there is a lot of in the moment, heat, energy. >> so what is the mission where is this thing going? >> so the stated mission of the company is to make the world more open and connected, right. and the idea is that when you give people the able to stay connected with all the people they care about and you make it so they can express new things about themselves or in communication with other people who they care about, then you just open up all these new possibilities. you make it so people can stay connected in ways they couldn't before. they can learn about new things whether it's events happening in the world or ability to organize new things or learn about new products or new movies or music they want to listen to. it opens up a lot of new possibility when you can keep all of these connections open to the people you care about. >> what is it about that people want to be on facebook? they want to talk about themselves, what is the sort of essence of that? >> i think that people just

have this core desire to express who they are. and i think -- >> it has always existed. one of the things that i think makes us human. but yeah, obviously to knows what's going on with your friend's lives not just your friends but people you care about, right. people who you are interested and who aren't your friends or maybe on the periphery of your social circle. yeah, i think that those are all just core human needs. and until facebook there wasn't a great tool for doing that. but i think that a lot of that, building that up was the last five years. i think the next five year is going to be now are you connected to all these people. now you can have better music listening, better movie watching experience. you can see what your friends are reading and learn what news you should read first. all of these things i think are going to get better. that's the thing i'm most excited about for the next five years. if we do well i think five years from now people are really going look back and say wow over the last five years all these products have gotten better because i'm not doing the stuff alone, i'm doing with my

friends. >> and it's personal. it's not just bringing your friends with it, then it becomes personal to you. how you look at how people use most of the webs, most products even if are you logged in, if i looked over your two shoulders, you see the same stuff because it's basically produced for the masses. >> is the key to the monday etization of the future the fact that advertisers will believe this is the best way to reach people who are likely to buy their products? >> so marketers have always wanted personal relationships with consumers or relationships with where consumer does two things. consumers buy their products and consumers tell their friends that they buy their products. marketers have always been looking for that person who is to the just going to buy but spread the word to their friends. what we do on facebook is we enable marketers to find that and then if i do it on facebook i'm sharing with an average of 130 people. so it becomes word of mouth marketing at scale. so people can tell each other what they like which is for marketers the thing they have been looking for i think for a long time.

>> let me talk about what you know about all of us. it is this notion that constantly comes up. is there anything you do not want to know about -- >> i done even think we think about it that way. >> help me think about it in the right way how you think about it. because like button, you know. >> is powerful tool. >> it's not for us, though. >> rose: it's for advertisers. >> people relate to each other. >> i think this is a core part of what makes facebook facebook is that we really are focused on users first. and for the long-term, right. we believe that if we build a product where people can connect and can express the things they want about themselves that over the very long-term we'll have a lot of people doing that. because that's a core human thing where people want to do that and they will be very active. we will have opportunities to sell advertising and do all these things and build a great business. but none of that is the leading thing that we're pushing for. what we're pushing for is the mission. we think if we succeed on

that we will build a great business. now if, i just think there is this core part of people, where they want to express things about themselves. so the question isn't what do we want to know about people, it is what do people want to tell about themselves. and we try to answer that question continuously, what do people want to tell about themselves that they can't tell now. we think this year that one of the big things that people want to express that they haven't had a way to, you know what are my favorite songs and different media that i consume. there is been a way for to you type in okay my favorite band is green day or the beatles or whatever. but there hadn't been a way to say okay out of all the songs that i have listened to in the last month, here are the top ones. but in 9 month or so since we've launched that functionality on top of platform, people have already chosen to publish more than a billion songs that they listen to into facebook through partners. it's amazing. it's because they want to do that. >> it's really important to understand that we don't want people to express anything. we want them to have an

opportunity to express what they want to express to the people they want to express it. so privacy has been very core to this service. i think it's one of the big innovations facebook had. if you think about on-line services before facebook they're basically open or closed. you know, something you publish on a blog is open. facebook was the first place that one of the core own vacations mark had was actually around privacy. i can take this photo of the three of us here. i can share it just my parents, just with my little group of high school girlfriends or i can share it with all of facebook and the wol world. every time you share something on facebook you have an opportunity to choose who you're sharing it with. >> yes. >> and that commitment to our users, that their trust is sacred, that privacy is the most important thing we do. >> how is your culture say different from the culture that you saw at google? what is the facebook culture. >> you know when i think about this, if you compare facebook and google to most of the world, right to other

companies and industries, they're actually in some ways incredibly similar. they are founder-led, silicon valley-based technology companies that have -- >> driven by engineering. >> that's right, very similar. in the little silicon valley bubble if which we leave they are totally different. totally different. >> how so. >> couple things. >> one is that you know google is fundamentally interest-- about. >> you're interested. >> google is fundamentally about you know, algorithms and machine learning. and that has been very important, continues to be very important. they're doing a great job. we start from a totally different place. we start from an individual. who are you. what do you want to do. what do you want to share. you know, for us the vision of the world is that we are like a hacking culture and we mean that in the best of ways. we do not mean scary people breaking into your homes or espionage. what we mean is we build things quickly and ship them. we are not aiming for, you know, perfection that comes

over, you know, years and we ship a product. we don't work on things for years and ship it we work on things, ship them, we get feedback from the people who use it, from the world. we iterate, iterate, iterate. we have these great signs around. done is better than perfect. what would you do if you weren't afraid. we're very much a culture. >> i want to talk about the future and competition. there are many people who look to silicon valley and they say there are four platforms. it is amazon, apple, google, facebook. what we're going to witness over the next ten years is a plat out war between the four of you for the future. how do you see that? >> i mean people like to talk about war. you know -- >> and conflict. >> there are a lot of ways in which the companies actually work together there are real competitions in there. but i done think that this is going to be the type of situation where there's one company that wince all the stuff. >> but you're already getting in each other's

businesses. >> yes and no. >> there is something called google plus. >> google i think in some ways is more competitive and certainly is trying to build their own little version of facebook. but you know, when i look at amazon and apple, when i see companies who are extremely aligned with us. and we have a lot of conversations with people at both companies just trying to figure out ways that we can do more together. and there's just a lot of reception there. i can't think of an apple product or amazon product that i look at and it's oh, that's really impressive. >> amazon just announced a new kindle fire to compete with the ipad. >> that's cool. we don't have a tablet so we could care less about it. >> rose: there are no borders out here in terms of what you might want to do, come on. >> there are no borders for us, certainly. >> rose: exactly. >> we want everything to be social and we want, prefer everything to be social with facebook. >> and so for us you know our goal is really to work

across. we want to work on every tablet. >> this is the important part. >> and el and-- apple and amazon, god bless them they can compete and build-- you found a device, you want to be seen ton. >> that's right. if you are's amazon, one of the big strategies is sell kindle so you can sell more things. if you are's apple a big part of your strategy is sell devices because that's how you make money. if you are's google they want to get android is widely adopted as possible. our goal. >> rose: therefore they go out and buy motorola. >> and there are rumors microsoft is made by nokia. >> our goal is not to build a platform but to be across all of them. because our mission is to help people conduct and stay connected with people no matter what devices they're on. >> this is really important. it gets back to the differences before-- there is one thing that i think is most important that is true of facebook which is that we are focused on doing one thing incredibly well. we only really want to do

one thing. >> social media. >> connect the world.

>> funding for charlie rose has been provided by the coca-cola company supporting this program since 2002. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org "the electric company" is brought to you by...

find your voice and share it, american greetings, proud sponsor of "the electric company." agreement from the u.s. department of education's ready to learn grant, and viewers like you, thank you. you 5 words. to inspire people is to encourage them to make or do things. your signature is your name written down in your own special way. a petition is a letter that people sign to get what they want. verify means to prove something's true. preserve means to keep something the way it is and protect it. all right, so now we have... watch out for them in today's show.

- and the next room of tour is the famous little green room from j.t. bookbinder's story "good night robot," about-- - the night saverstock's bedroom turned into a spaceship. - that's right. maybe you should be the tour guide. - we know all about "good night robot." my sister here used to make me read it to her every night before she went to sleep. it's weird that i've lived in this neighborhood my entire life and i've never been here before. - i know. this is the house that made j.t. bookbinder want to write "goodnight robot." this is the little green room that inspired him. - oh, is this his signature? - that's right. he wrote his name right there. - it's so cool to see how he turned all the things in here into characters in his book. - yes, you're right. these are all the things that inspired mr. bookbinder to write the book. - check it out, jess.

that old radiator is what inspired him to make the robot. - huh. oh! and that's the radio that turns the controls for the space ship. - yes. mr. bookbinder had an amazing imagination for the--[sniffs]--future. - um, are you ok? - i'm fine. where were we? ah, yes, mr. bookbinder kept all of these rooms as they were when he was a child so that people could be inspired for many years to come. [blows nose] - maybe we should come back another time. - no, no! i'm happy that you're here. see? happy steve. - steve, you don't look so happy. - i'm sorry. i just found out that they're going to tear down the bookbinder house. - why would they tear down such an inspiring place? - because somebody wants to build a hotel. - who? - the antigone carruthers' corporation. - antigone carruthers? - antigone carruthers? - that's francine's mom. - yeah. steve, put your hanky away. we're not gonna let them tear this place down. huh.