captioning funded by cbs and ford-- built for the road ahead. >> kroft: one of the most encouraging signs of the u.s. economy over the past year has been the striking turnaround of chrysler. in 2009, the company was headed towards the junkyard, but last year chrysler made $183 million and paid back its $6 billion federal bailout six years ahead of schedule. and none of it would have happened without its italian- born, canadian-raised boss, sergio marchionne. >> from "60 minutes." >> oh, yeah. >> kroft: sorry to barge in on you like this. >> no problem. >> kroft: does he walk in all the time? >> occasionally, yeah.

>> definitely an aroma, the mandarin dancy tangerine. >> safer: meet the flavorists, whose mission for the food industry is to create an irresistible craving for everything from chicken soup to soda pop. >> we want, you know, a burst in the beginning, and maybe a finish that doesn't linger too much so that you want more of it. >> safer: ah! so a quick fix, and then... >> and have more. >> safer: that suggests something else, which is called addiction. >> exactly. >> safer: you're trying to create an addictive taste. >> that's a good word. >> gupta: it all started in 2004 when sal khan was working as a hedge fund analyst in boston, and his cousin nadia, a seventh grader in new orleans, was struggling with algebra. he agreed to tutor her remotely and wound up posting lessons on youtube. but then, an odd thing happened- - total strangers started using them, too. >> just like we talked about consumer surplus, this is a producer surplus. innovation never comes from the

established institutions. it's always a graduate student or a crazy person or somebody with a great vision. sal is that person in education, in my view. he built a platform that cld completely change education in america. >> i'm steve kroft. >> i'm leslie stahl. >> i'm morley safer. >> i'm lara logan. >> i'm sanjay gupta. >> i'm scott pelley. those stories tonight on "60 minutes." [ diana ] power was very important to me. we test-drove the camry, took it on the freeway, and it was just like -- this was the car for me. [ ryan ] it has stuff that guys like, like the rims and the sleekness to the body. and, then, had the bluetooth and the navigation that diana really wanted. [ diana ] and it was a sport edition, so it felt really grounded to the ground. [ man ] grounded to the ground? yes, yes! grounded to the ground. [ male announcer ] see their story and more at the camry effect. camry. from toyota.

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hey, bro. or engaging. conversations help us learn and grow. at wells fargo, we believe you can never underestimate the power of a conversation. it's this exchange of ideas that helps you move ahead with confidence. so when the conversation turns to your financial goals... turn to us. if you need anything else, let me know. wells fargo. together we'll go far. >> kroft: one of the most encouraging signs in the u.s. economy over the past year has been the resuscitation of the american automobile industry

from a near-death experience. and in many ways, the most dramatic recovery has been chrysler's. three years ago, the company was headed for the junkyard crusher, leaking cash and about to be scrapped, unloved and unwanted. but last year, chrysler turned a $183 million profit, and would have made a lot more if it hadn't decided to repay its $6 billion federal bailout six years ahead of schedule. as we first reported in march, much of the credit goes to u.s. taxpayers, and to chrysler workers, who accepted wage and benefit cuts. but none of it would have happened without the efforts of a 60-year-old italian-born and canadian-raised auto executive named sergio marchionne, who engineered a last-minute partnership with fiat, and an american-style success story. with his gray stubble, longish hair, relaxed demeanor, and trademark black sweaters, sergio

marchionne looks more like a film director than an auto executive, but he is now the industry's biggest star. >> sergio marchionne... ( cheers and applause ) >> kroft: the c.e.o. of fiat had already rescued that company from financial ruin, and in chrysler, marchionne saw at least one similarity-- both companies had been through hell. >> sergio marchionne: i remember, when i came here in 2009, there's nothing worse for a leader than to see fear in people's faces. it's been a long, rocky road, but the fear has gone. >> kroft: what were they afraid of? >> marchionne: of not being here, all right? it's that simple-- this was really a question of existence. there's nothing worse in life than to sit there and be the victim of a process that's outside your control. >> kroft: and that was exactly the situation at chrysler in early 2009 when marchionne began negotiating with the federal government over a controlled bankruptcy of chrysler that would allow fiat to take over

the failing auto company. it was the last hope for chrysler and its 54,000 employees. >> marchionne: there wasn't a c.e.o. in the world, from the car side, that would have touched this with a ten-foot pole. >> kroft: gave you a little leverage? >> marchionne: it gave me some leverage and a whole pile of downside risk. you can't... you know, for you to be the only guy at the bar, thers got to be a reason, right? >> kroft: did you think was a long shot? >> marchionne: all these things are long shots, all. if it was that easy, then everybody would do it. >> steve rattner: if sergio had not appeared, i think it's very likely chrysler would have been allowed to liquidate. >> kroft: steve rattner, who was head of the presidential task force on the auto industry, sat across from marchionne at the bargaining table during the height of the economic crisis. rattner believes that chrysler's demise could have cost 300,000 american jobs up and down the industrial supply chain. was he a tough negotiator?

>> rattner: brutally tough, yeah. he... but that's part of why he's successful. >> kroft: in the end, marchionne and fiat got a 20% stake in the brand-new, slimmed-down, debt- free chrysler, plus a $6 billion high-interest loan from the u.s. treasury, just for taking the auto company off the government's hands and running it. he used the $6 billion to modernize chrysler plants with state-of-the-art equipment to improve quality, upgraded 16 existing models in just 18 months, and began integrating chrysler and fiat's operations. obviously, you saw something in chrysler that you thought would fit well with fiat. >> marchionne: yeah, from a product standpoint, they were the other half of the coin. when you put the two together, we were going to come out with a product portfolio that was absolutely complete. >> kroft: chrysler's best assets were its jeeps, minivans, and light trucks. fiat's expertise was in small-

car technology and fuel efficient engines, the very thing that chrysler lacked. and next month, the first product of that collaboration will begin rolling off the assembly line in belvidere, illinois. >> marchionne: this car didn't even exist on paper in june of 2009. >> kroft: it's the dodge dart, the first new compact sedan that chrysler has produced in more than a decade. it's a slightly longer and wider version of the alfa romeo guiletta, re-engineered and built in the u.s.a.-- base price, just under $16,000, with 40 miles to the gallon. how important is this car to chrysler? >> marchionne: if you are a serious car maker and you can't make it into a segment, it... you're doomed. >> kroft: it's got a little italian flair? >> marchionne: yeah. just enough to make it interesting, and it avoids all the pitfalls of being italian, yeah? ( laughs ) >> kroft: mechanically, it's good? >> marchionne: mechanically, it's outstanding. >> kroft: under marchionne, the quality of both fiat and chrysler products both have

improved dramatically, according to "consumer reports." now, marchionne needs to convince the public. >> marchionne: we got it. we fixed it. this car has nothing to apologize to.... for an... i mean, for anything. >> kroft: the darts produced at the belvidere plant are not just for u.s. consumption; marchionne plans to begin exporting them to more than 60 countries. when he took over chrysler in 2009, this plant had 200 workers; by the end of the summer, there will be 4,500. what do you think of american workers? >> marchionne: i think the world of american workers. what happened here at chrysler would have been impossible without the commitment that they've shown, absolutely impossible. when i was looking at this deal back in 2009, i snuck into jefferson, our plant that now makes the grand cherokee. and i thought, if i had any reservations about doing this deal, it was after i saw the state of that plant. and the people that fixed that plant are the guys on the shop

floor. >> kroft: like most of detroit's auto makers, chrysler was saddled with a stifling bureaucracy, which marchionne quickly culled. to change the management structure, he combed through the company and found 26 young leaders who would report directly to him. were they on the management fast track? >> marchionne: no. some of these people were buried inside an incredibly hierarchical organization that, you know, all pointed to the top. this place was run by a chairman's office. that's the tower, right? >> kroft: uh-huh. >> marchionne: and the chairman's office is the top floor. it's empty now. we use it as a tourist trap. we bring people up there. >> kroft: why did you leave? >> marchionne: because nothing happens there. i'm on the floor here with all the engineers. >> kroft: with the engineers? >> marchionne: yeah. i can build a car with all the guys on this floor. that's all i care about. >> kroft: how do they feel about you having... >> marchionne: they love it. >> kroft: ...on the floor? >> marchionne: ( laughs ) the

official view is that they love it. >> doug betts: he looks familiar to me. >> marchionne: for "60 minutes." >> betts: oh, yeah. >> marchionne: doug betts. >> betts: how are you doing? >> marchionne: he's a... >> kroft: hey, doug. how are you? whether they like it or not, everyone on the floor seems to have gotten used to his presence. sorry to barge in on you like this. >> betts: no problem. >> kroft: but, does he walk in all the time? >> betts: occasionally, yeah. >> ralph gilles: the 300, in many ways, is the, i would say, the flagship with the chrysler brand. >> kroft: mm-hmm. 42-year-old ralph gilles is in charge of product design at chrysler and one of the rare holdovers from the old regime. the chrysler 300 and the dodge dart are his babies. he says the company has always had good talent, but a lack of resources and execution produced cheap interiors, and poor fit and finish. >> ralph gilles: everyone knew what was wrong with the cars. you asked any employee in the company, they could list ten things that they would do better. and when you're given the chance to do those kind of things better, you end up with a product that exceeds the sum of its parts. >> kroft: the company has also made strides in reshaping its image. chrysler's dramatic "imported from detroit" campaign with

eminem was hugely successful. and this year's two-minute, $8 million super bowl ad with clint eastwood, extolling the resiliency of america and its automobile industry, caused a major stir and briefly became part of the presidential campaign. republicans said that this was... was a campaign commercial for president obama, a payback. did you anticipate that criticism? >> marchionne: just to rectify the record here, i paid back the loans and 19.7% interest. i don't think that i committed to do a commercial on top of that. i thought that the republicans' reactions to this was unnecessary and out of place. >> kroft: that's very restrained from you for you. >> marchionne: it is. i'm on camera. ( laughter ) you put me here. you turn these things off, i'll give you my own assessment. >> kroft: marchionne splits his

time between the fiat headquarters in turin, italy, and chrysler headquarters in auburn hills, michigan, but he is fully engaged on both continents at all times. when you're here, do you get calls... do you have to deal with fiat? >> marchionne: yeah. that's why i get up at 3:30 in the morning, so i can deal with the european side and be fine here by the time i get in. i mean, the other things that helps is the... our time zones. >> kroft: when do you go to sleep? >> marchionne: 10:00. i'm not really a late-night guy. i used to be when i was younger. >> kroft: besides being c.e.o. of chrysler group and fiat automotive, which has nearly 200,000 employees at 166 plants worldwide, marchionne is also chairman of the fiat industrial group, which makes heavy equipment, and sgs, the world's largest standards and instruments company, based in geneva. he manages all this with five different cell phones he totes around in his knapsack. you've got a lot of jobs.

>> marchionne: hmm. i have some, yes. >> kroft: do you remember them all? >> marchionne: yeah. but i... yeah, i don't get confused, since i do them all, yes? >> rattner: you and i have lived among workaholics in our day. i have never seen anything like sergio. when it was a holiday in italy, he'd come to america to work. when it's a holiday in america, he goes to italy to work. saturdays and sundays were just workdays to him and for his whole team, and anybody who signed up with sergio signed up for the program. >> kroft: marchionne does have passions besides work. he loves opera and jazz and very fast cars. in turin, he showed us the high end of the fiat automotive line which includes maserati and ferrari. these are great looking cars. is anything here for less than half a million dollars? >> marchionne: all of them. >> kroft: sergio owns a couple of these, but he has no opportunity to drive them. as the head of italy's largest industrial empire, his life is much different here. he's required by the government to travel in bulletproof cars with police escorts, and is always surrounded by state security.

sergio seemed more than happy to take us to the old test track that still sits atop an old factory for a short spin in this limited edition alfa romeo, a legendary brand that he will reintroduce to the u.s. market in 2014. but even here, he was unable to escape his security detail. >> marchionne: it has a severe impact on your private life, because you're always with them when you're there. it's part of life. it's part of what i do. >> kroft: do you have a private life? >> marchionne: sure, i do. and it's private. it's private. >> kroft: what he likes to discuss is business, which is worse right now in europe than in the u.s. what promises to be a serious recession is beginning to affect the economy there, and fiat and other european car makers are

struggling. but it should not affect the future of chrysler. do you think they're out of the woods? >> rattner: i think the question of whether chrysler will survive or not is largely behind us. i think the question at this point is how big a market share can they have? how good can their products be? >> kroft: there are plenty of new products in the pipeline. a brand new viper debuted this spring. a high-end maserati s.u.v. built in detroit debuts next year, along with a whole range of new models. sales are up, and chrysler's net income the first half of this year was more than $900 million, after losing money the first half of last year. but marchionne, who is obsessed with quality, is taking nothing for granted. what's the biggest challenge facing chrysler right now? >> marchionne: that we're going to slip on execution, we're going to get something wrong, big. >> kroft: like what? >> marchionne: we're going to screw up on a car. it won't sell. it's possible.

>> kroft: can you afford that? >> marchionne: one car, yes. ( laughs ) now, i can afford a car. 12 months ago, it would have been a... it would have been a disaster, but now i can take the pain-- one... one car. >> cbs money watch update sponsored by: >> glor: good evening. oil and gas production in the gulf is firing up again after being shuttered by isaac. that could help at the pumps. gas was up 8 cents last week. and the midwest drought is causing a snack dry sis. popcorn companies say the cost of kernels is up as much as 50%. i'm jeff glor, cbs news. ♪

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and the chances are you are-- it's probably because you eat too much, too much of the wrong stuff. most of the wrong stuff we eat comes in a bottle, a can, or a box-- food that's been processed. as we reported in november, much of that food has been flavored. the flavoring industry is the enabler of the food processing business, which depends on it to create a craving for everything from soda pop to chicken soup. it is willy wonka and his chocolate factory as a multi- billion-dollar industry, an industry cloaked in secrecy. but recently, givaudan, the largest flavoring company in the world, allowed us in to see them work their magic. >> jim hassel: so, definitely an aroma, the mandarin dancy tangerine. real mild, though. not in your face. >> safer: these are "super sniffers," "super tasters"... >> andy daniher: and more bitter. >> safer: ...on the prowl; the special forces, first responders

to the call for the next best taste. >> daniher: the mandarin notes are fantastic. >> safer: they are braving the wilds of a citrus grove in riverside, california, where jim hassle, whose nose and palette are legendary, leads a givaudan team on a taste safari, big game hunters in search of the next great taste in soft drinks. their inspiration-- the greatest flavorist of them all, mother nature. >> hassel: seeing everything that's available really just drives the whole creative process. >> safer: like an artist going to rome or something? >> hassel: correct. correct. >> safer: but the ultimate purpose is to sell more soft drinks or whatever. >> hassel: that's what... we're in the business of selling flavors. >> safer: let's go sniffing. our perception of taste is largely located in the nose, but described in the language of music. >> dawn streich: do you get, like, a tropical note? a little bit of papaya

potentially? >> daniher: cotton candy note? >> streich: cotton candy, a little bit. >> safer: they are plotting how to move the flavors they find in this grove to your supermarket shelf, and then on to your stomach. >> hassel: i could see it in a sports drink, i could see it in a... water, flavored water. and i also could see it in... in a twist on an orange carbonated beverage. >> safer: when they find something they like, they extract its flavor molecules from the fruit on the tree. then back in the lab, they mimic mother nature's molecules with chemicals. essentially, what you do is you take whatever this smells like... >> right. >> safer: ...and copy it? >> right, exactly. >> safer: and then i suppose you could... if you chose to, you could, quote unquote, "improve on it." >> yes. >> hassel: exactly. >> we... all the time. >> safer: the holy grail, a flavor so good you can't resist it. >> streich: in our fruit flavors, we're talking about we want, you know, a burst in the beginning, and maybe a finish that doesn't linger too much, so that you want more of it. >> hassel: and you don't want a long linger, because you're not going to eat more of it if it

lingers. >> safer: ah. ( laughter ) so i see, it's going to be a quick fix and then... >> hassel: have more. >> safer: ...and then have more. ( laughs ) but that suggests something else? >> hassel: exactly. >> safer: which is called addiction. >> hassel: exactly. >> safer: you're trying to create an addictive taste. >> hassel: that's a good word. >> streich: or something that they want to go back for again and again. >> safer: food companies know that flavor is what makes repeat customers. so they commission givaudan to create what they hope will be a mouthwatering taste. givaudan may be the biggest multinational you've never heard of. the swiss company employs almost 9,000 people in 45 countries, providing tastiness to just about every cuisine imaginable. there's a lot of secrecy involved in your profession, correct? >> hassel: our intellectual property are our formulas. so without that, we have nothing. so there's a lot of secrecy. you really don't want anyone to know. >> michelle hagen: my world is making things taste good. ( laughs ) >> safer: soda pop and chewing gum flavorist michelle hagen has

helped givaudan and the food companies make billions with her secret formulas. >> hagen: i create thousands of flavors, so i need somewhere to put them. and i have a lot of flavors in here. >> safer: what are these? >> hagen: here are some oranges and tangerines. >> safer: 750 flavors-- orange, tangerine, mandarins. >> hagen: raspberry's one of my favorite. i can't even fit all my raspberries on here. >> safer: how different can raspberries be? >> hagen: oh, very different, very different. oh, yeah. you can make them jammy. you can make them sweet. you can make them floral. you can make them seedy. it's endless, really. >> safer: and the flavor ingredients might not have ever met a raspberry. >> hagen: i have butyric acid artificial and then i have butyric acid natural. >> safer: all flavors are combinations of chemicals. artificial flavors are largely manmade. natural flavors come from nature, but not necessarily from what the label implies.

for example... >> hagen: our strawberry creations. safer: ...strawberry and vanilla flavor can come from the gland in a beaver's backside. >> hagen: so what we do is just manipulate them and create with them and give the impression of the papaya or the strawberry. >> safer: hagen is an illusionist. she has even created a flavor that mimics the taste and smell of an old oak tree. >> hagen: to give whiskey a little bit more depth, sometimes-- a young whiskey. >> safer: oh, to give the taste of the barrel it was supposed to have been aged in. >> hagen: yeah, yeah, you can add some cask notes, some oak notes. okay, here we go. >> safer: hassel and hagen let us in on the alchemy of inventing a new flavor, this one inspired by a hong kong kumquat that the team found, not in hong kong, but back in riverside. it's a process using hundreds of different "notes" until they've created a symphony of taste. >> hagen: i mean, with a name

like "hong kong kumquat," you need to really have something going on, i think. >> hassel: i'm curious to see the carrot on top of the kumquat. >> hagen: that is interesting. that is very interesting. >> hassel: you get the citrus, but yet the... the carrot poking it's head out. >> hagen: yeah, it's very complex. >> hassel: but not overpowering. >> hagen: that's really exciting. this is a home run. >> safer: there's no shortage of metaphors in the flavoring business. givaudan goes to the ends of the earth scouting for new flavors. in hong kong, givaudan convened their annual conclave of top chefs from restaurants around the world to demonstrate their latest creations. the goal-- to turn those creations into new commercial flavors. the chefs mixed, chopped, mashed, steamed, sautéed, and smoked for a week to create irresistible cutting edge cuisine. hong kong chef alvin leung didn't disappoint. >> alvin leung: it makes you

want to eat this again, and again, again, okay? it's like sex, okay? you know, you want to do it over and over again until you get a headache. >> safer: the givaudan team didn't just taste the food; they sniffed, photographed, analyzed and debated it. then, they distilled the best into flavor powders, applied them to beef and noodles, and voila, a frozen dinner. >> this is a translation into a frozen ready meal that you can buy in the supermarket to really deliver a different eating experience. >> safer: givaudan chef stefan strehler demonstrated how convincing these translations can be compared to the real thing. >> stefan strehler: we have here the whole lineup of some of the chicken flavors. so that's a roasted chicken flavor. >> safer: it sure is. the... it absolutely matches it. givaudan makes flavors that match almost every kind of chicken imaginable. this is crusty, fatty chicken.

>> strehler: we just take a little skin here, and then you smell like that now, you get much more of those fatty, crusty notes. and when you smell that flavor... >> safer: yes, it sure is. now, what is this? is this actually chicken? >> strehler: it can be, yes. a lot of what you have in front of you is the chicken that has been translated into a flavor. >> safer: translated on a grand scale in the givaudan plant in kentucky... >> this is a chicken flavor as a liquid in the tanks. >> safer: ...an endless stream of brown liquid-- part chicken, part chemical, all flavor. >> this is the chicken we looked at in the tank right here. this is the chicken in the hose. >> safer: chicken in the hose? >> chicken in the hose. we'll stretch this hose out, and we'll actually load the liquid

into these individual trays. it gets vacuum dried in the oven, and it comes out in a dried cake form. we'll grind that into a fine powder. >> safer: chicken, just like grandma used to make. it's used in soups, stews, sausage, noodle and rice dishes- - chicken by the ton, chicken for every taste. our old friend, crusty, fatty. chicken for vegetarians. yes, chickens without chicken. ground zero for the food and flavor industry is the supermarket. givaudan won't reveal which brands contain their flavors, but in this aisle, almost every product on the shelves has been enhanced artificially or with so-called natural flavors. and not only that, virtually everything edible in a package, in a jar, in a can is

intensified with either fat, sugar or salt, or all three of those little devils. >> david kessler: we're eating fat on fat on sugar on fat with flavor. and much of what we're eating with these flavors, you have to ask yourself, "is it really food?" >> safer: dr. david kessler is the former head of the f.d.a. he is "dr. no." he's bent on getting america to kick its bad habits. >> kessler: we're living in a food carnival. these flavors are so stimulating, they hijack our brains. >> safer: kessler believes flavorists are accomplices, the hired guns of the food industry. >> kessler: they make food super palatable. >> safer: what's wrong with that? don't we want the richness of good taste? >> kessler: of course, food has to be pleasurable. it has to be desirable. but look around, morley. look around this country, and what do you see? ask the rest of the world how

they view americans, and they will say, "we don't want to look like them." >> safer: are you saying that the food industry and the flavoring industry together are trying to make, and succeeding in making us, addicted? >> kessler: did the industry do this deliberately? no. it learned what stimulates. it learned what people want. >> bob pelligrino: there's no question we're trying to create an irresistibility and a memorability. i think, though, that there's then a leap to get to that leads to over-consumption. >> safer: bob pelligrino is givaudan's flavor czar, as vice president of global strategy and business development. your critics say that you provide the means to seduce people into eating too much salt, too much fat, too much sugar, and responsible, partly, for the obesity in this country. >> pelligrino: our business is to make taste experiences pleasurable ones. so, i... i don't think that the

flavors create an overeating problem. i think that's a different issue. >> safer: but is it a different issue? because, surely, what you clients want... the food industry wants is to provide the kind of flavor that will make people want more. >> pelligrino: i don't think it's creating a desire for more- ness, as well as it's a desire for memorability so that people will repeat the purchases of the product and enjoy them. >> safer: but given the obesity epidemic, the food industry is beginning to respond to pressure for "less-ness"-- if there is such a word-- of fat, salt and sugar. and that's opening up a whole new business opportunity and another challenge for these alchemists of flavor. >> hassel: everyone, everyone, everyone is working on health and wellness. how can you get a consumable, acceptable product that's better for you?

and the challenges now is, how do you make them taste good? >> hagen: not enough. >> hassel: so, when you lower the salt, what can we put in that will make it taste like it did without salt? when you lower sugar, how can you make it taste sweeter without adding calories? so it's a whole new world that didn't even exist ten years ago, but the consumers are interesting. as much as they want to be healthy, right, if it's not as sweet, then i don't want it. >> safer: people are still going for the tried and true-- heavy on sugar, heavy on salt, heavy on fat? >> hassel: yeah, so i guess the real question-- is obesity going down? and i guess the answer would be no. so, what's the problem? these are hot. we're shipping 'em everywhere. but we can't predict our shipping costs. dallas. detroit. different rates. well with us, it's the same flat rate. same flat rate. boston. boise? same flat rate. alabama. alaska? with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate.

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so this holiday, you'll have lots of things to celebrate. prcandidate is more likely toion return us to full employment. this is a clear choice. the republican plan is to cut more taxes on upper-income... people and go back to deregulation. that's what got us in trouble in the first place. president obama has a plan to rebuild america from... the ground up, investing in innovation, education... and job training. it only works if there is a strong middle class. that's what happened when i was president. we need to keep going with his plan. president obama: i'm barack obama and... i approve this message. >> kroft: now, cnn's sanjay gupta on assignment for "60

minutes." >> gupta: take a moment and remember your favorite teacher. now, imagine that teacher could reach not 30 kids in a classroom, but millions of students all over the world. as we first reported last spring, that's exactly what sal khan is doing on his web site, khan academy. with digital lessons and simple exercises, he is determined to transform how we learn at every level. one of his most famous pupils, bill gates, says khan-- this "teacher to the world"-- is giving us all a glimpse of the future of education. 35-year-old sal khan may look like a bicycle messenger, but with three degrees from m.i.t. and an m.b.a. from harvard, his errand is intensely intellectual. in his tiny office above a tea shop in silicon valley, he settles in to do what he's done thousands of times before. >> sal khan: we've talked a lot now about the demand curve and consumer surplus. now, let's think about the supply curve. >> gupta: he's recording a ten- minute economics lesson.

it's so simple-- all you hear is his voice, and all you see is his colorful sketches on a digital blackboard. >> khan: in this video, we are going to talk about the "law of demand." >> gupta: when khan finishes the lecture, he uploads it to his web site, where it joins the more than 3,000 other lessons he's done. in just a couple of years, he's gone from having a few hundred pupils to more than four million every month. has it sunk in to you that you are probably the most watched teacher in the world now? >> khan: i... you know, i try not to say things like that to myself. you don't want to think about it too much because it can, i think, paralyze you a little bit. so, if we get rid of the percent sign, we move the decimal over... >> gupta: he's amassed a library of math lectures... >> khan: 12 + 4 is 16... >> gupta: ...starting with basic addition, and building all the way through advanced calculus. >> khan: we are taking limited delta x approach to zero. it's the exact same thing. >> gupta: but he's not just a math wiz-- he has this uncanny ability to break down even the most complicated subjects,

including physics, biology, astronomy, history, medicine. how much reading do you do ahead of time? >> khan: it depends what i'm doing. if i'm doing something that i haven't visited for a long time, you know, since high school, i'll go buy five textbooks in it, and i'll try to read every textbook. i'll read whatever i can find on the internet. let's talk about one of the most important biological processes... >> gupta: sal khan has tackled so many subjects that, if you watched just one of his lectures a day, it would take over eight years to cover it all. >> khan: these are huge time scales... magnetic north is kind of the geographical... and let's say this is point "x" is equal to... basic introduction... light... if this does not blow your mind, you have no emotion. >> gupta: did you ever think about putting yourself visually in the video? >> khan: look, if there's a human face there, especially a funny-looking human face, then it's actually hard to focus on the math. 4,000 is 2,000 x 3 is 6,000. i don't have to shave, i don't have to comb my hair. i just press "record," make a video. there might be spinach in my teeth.

who cares? >> gupta: the format is so simple. why does it appeal to so many people? >> khan: i've gotten a lot of feedback that it really does feel like i... i'm sitting next to the person and we're looking at the paper together. let me take out my trusty calculator out. i'm 95% of the time working through that problem real-time, or i'm thinking it through myself if i'm explaining something. and to see that it is actually sometimes a messy process-- that, you know, it isn't always this clean process where you just know the answer. i think that's what people like, the kind of humanity there. >> gupta: it all started in 2004 when sal khan was working as a hedge fund analyst in boston, and his cousin nadia, a seventh grader in new orleans, was struggling with algebra. he agreed to tutor her remotely, and wound up posting lessons on youtube. they helped nadia, but then an odd thing happened-- total strangers started using them, too. >> khan: i started getting feedback like, you know, "my child has dyslexia, and this is the only thing that's getting into him." i got letters from people saying, you know, "we're... we're praying for you and your family." that's pretty heady stuff.

people don't say that type of stuff to a hedge fund analyst, normally. ( laughs ) >> gupta: so, in 2009, khan quit his job and, working from a desk set up in his closet, devoted himself full-time to khan academy. it's a non-profit with a simple but audacious mission-- "to provide a free, world-class education for anyone anywhere." if that goal sounds far-fetched for a guy working in his closet, consider what happened next. >> bill gates: there's a web site that i've just been using with my kids recently called khan academy-- k-h-a-n. just one guy doing some unbelievable 15-minute tutorials. >> khan: i was like, "those are just for nadia, not bill gates. i have to... i have to look... i have to take a second look at some of this stuff." >> gupta: that's right-- bill gates, one of the smartest and richest men in the world, was using sal khan's free videos to teach his own kids. >> khan: two weeks later, i got a call from... from larry cohen, who is bill gates' chief of staff. and he says, you know, "you might have heard bill's a fan." and i'm, like, shaking. i'm like, "yeah, i heard," you know.

and he... and he was like, "if you have time, you know, love to fly you up to seattle." and then, i was looking at my calendar right then for the month-- completely blank. and i was like, "yeah, you know, i think i could, you know, fly in, you know, between, like, laundry and a bath." ( laughs ) "and meet with bill." >> gupta: that was just two years ago. today, with the help of more than $15 million in funding, much of it from the gates foundation and google, khan has been able to hire, with competitive salaries, some of the most talented engineers and designers in the country. the khan academy office has the intense vibe of a silicon valley start-up. the team is working to create software they hope will transform how math is taught in american classrooms. >> and once they've done all of these, they really understand proper fractions. >> khan: right, right. >> gupta: last winter, we visited a class in the los altos school district outside san francisco, where the new khan academy software is being piloted. >> courtney cadwell: grab your computer, log in, and then open "khan academy." >> gupta: right away, you notice something different.

there are no textbooks and no teacher lecturing at the blackboard. instead, students watch khan videos at home the night before to learn a concept. then, they come to class the next day and do problem sets called modules to make sure they understand. if they get stuck, they can get one-on-one help from the teacher-- less lecturing, more interaction. what you think of as homework you do at school, and school work you do at home. it's called "flipping the classroom," and seventh grader laurine forget says using khan academy at home has given her math a big boost. >> laurine forget: i'm not a big fan of textbooks. i thought that khan academy was a lot easier, because it's on a screen, it's easy to find the concept you want to do. >> gupta: and now, with the videos, do you find yourself rewinding it, playing it again if you need to? >> forget: a lot, yeah. >> gupta: do that at home? >> forget: yeah. usually when i watch the videos, it's because i'm having trouble on the practices. so if i don't understand the video, i can always rewind it or pause it so that i can go back to the module and do what i

learned. >> gupta: but what's the hardest part about learning this way? >> forget: i don't really think there is a hard part. >> gupta: even kids who don't have a computer at home can "flip the classroom." eastside prep in east palo alto keeps its computer labs open until 10:00 p.m. so kids like sixth grader alex hernandez can take as much time as they need to learn a concept. >> alex hernandez: my mom, she went to school in mexico. some things she can explain to me, but some, like, she can't. so, like, i take long to, like, try to finish my homework. >> gupta: how did you used to do in math? >> hernandez: pretty bad. like, at a third-grade level math. so, you know, khan academy has helped me. it's like... it's, like, opened doors that i couldn't open. it's helped me a lot. >> gupta: a lot of people have talked about the idea that flipping the classroom is... is sort of what's happening here. you take a little bit of issue with that. >> khan: i kind of view that as... as a step in the direction. the ideal direction is using something like khan academy for every student to work at their own pace, to master concepts before moving on.

and then, the teacher, using khan academy as a tool, so that you can have a room of 20 or 30 kids all working on different things, but you can still kind of administrate that chaos. >> gupta: khan academy has created a dashboard so teachers like courtney cadwell can monitor each student's progress. so, right now, they're all working on things, and you can see that real-time? >> cadwell: yes. >> gupta: so, as you sit here and look at the dashboard, you see how the students are doing individually, you can see how they're doing as a whole class, and you can figure out who you need to help? >> cadwell: exactly. and here, i can track their progress over time. i can see who's rushing ahead, who's lagging behind. i can see if they begin to stagnate. >> gupta: a blue bar indicates a student knows a concept; orange, they're still working on it. but if a red bar pops up... >> cadwell: it's kind of the red flag to tell me, "hey, it's time to step in and intervene." and i can see... >> gupta: oh, so you can see not only it's red, but specifically what the problem is. >> cadwell: what they missed. and you can see the number of seconds they spent on each problem. i feel like i'm using my time more effectively with my

students because, instead of making the assumption that the entire class is weak in this area and i need to spend time reviewing this, i can really pull those three, four, five kids, do a mini-workshop, address those needs, and allow those other students to move on to problem-solving activities, or project-based learning with their peers. >> gupta: so far, the national education association has supported non-profit technology like khan academy in the classroom, as long as teachers are trained properly. but as with any new innovation, khan says there are always some skeptics. >> khan: i've seen some subset of teachers who say, "oh, what is this video thing?" you know, "live human interaction is important." and the reason why that... that bothers me a little bit is that i know that's exactly what we're saying. in fact, we exactly agree with you, that what we're trying to do is take the passivity out of the classroom so that you, as a teacher, will have more flexibility. >> gupta: does it minimize the role of the teacher? does it make it less impactful? >> khan: no, i think it's the exact opposite. we kind of view teachers playing the role of more like a coach or a mentor, which, once again, i personally believe is a much

higher valued thing than a lecturer. >> gupta: khan academy's math program is being piloted in 23 schools, mostly in california. preliminary test scores from a handful of classrooms have shown improvements, especially for students who were struggling. official state assessments will be available soon. in the meantime, chief operating officer shantanu sinha says they're gathering massive amounts of data-- not just from american classrooms, but from every khan academy user around the world. so, you can see how many problems were done over the last 24 hours? how many was it? >> shantanu sinha: right now, in the last 24 hours, we had close to 1.8 million. >> gupta: wow. not total, but just one day? >> sinha: yeah. yeah, just in... in a 24-hour period. >> gupta: and when you take a look at total users over the last 18 months... >> sinha: 41 million visits from the united states. we can look in-- from india, 1.7 million; australia, 1.4 million. >> gupta: right. it is pretty amazing to think that millions of people all over the world are using khan academy right now. >> sinha: yeah. it's a gold mine on how to understand, you know, what...

what paths through learning are most effective. >> gupta: khan says they look at all that data and constantly make changes to their software platform. >> khan: we can start fine- tuning things the way that amazon might fine-tune the button to help you buy that book or find the book that you want, or netflix says, "what's the right movie for you?" we now get to do with education. >> gupta: eric schmidt, the pioneering chairman of google, says he's seen a lot of failed attempts to integrate technology into education, but says what sal khan is doing is different. >> eric schmidt: many, many people think they're doing something new, but they're not really changing the approach, which, with sal, he said, "what we're going to do is not only we're going to make these interesting ten-minute videos, but we're going to measure whether it works or not." >> gupta: he was the guy to sort of make this happen? what... why do you think it was him and not some person who was an educator or who had a background in this area? >> schmidt: innovation never comes from the established institutions. it's always a graduate student or a crazy person or somebody with a great vision. sal is that person in education, in my view. he built a platform. if that platform works, that

platform could completely ange education in america. >>n: 17 over 9 is equal to 1.88. >> gupta: inside classrooms, it's just khan academy math for now, but sal khan believes his strategy can be used to teach subjects like history and science. and not just in elementary schools, but high schools and even colleges. but no matter how big or how successful khan academy gets, sal khan promises he'll never put a price tag on it. >> khan: the for-profits have to mold themselves much more to the education establishment than we do. as a not-for-profit, we're just like, "what's our mission?" to educate children as well as possible. i've said it enough times, and it's in our mission statement-- a free, world-class education for anyone anywhere. >> gupta: and that's what sixth grader alex hernandez says he needs. has anyone in your family ever gone to college? >> hernandez: no. >> gupta: so it's a pretty big deal for you? do you think you're going to be able to do it? >> hernandez: with help or, like, with more, like, studying or, like, khan academy, i think i can get there.

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