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tv   Bloomberg Best  Bloomberg  May 28, 2016 3:00pm-4:01pm EDT

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carol: welcome to "bloomberg businessweek." --id: in this week's issue come online and understand. rnc identity crisis. >> redefining insider trading. >> all of that ahead on "bloomberg businessweek." ♪ david: we are here with the editor-in-chief of bloomberg businessweek.
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>> yes. you guys talk about mr. fix-it in the auto industry. now, he has to fix mitsubishi. >> he first fixed nissan, and now mitsubishi with fixing their admission standards correctly. -- emissions standards. he has been brought in to try to help fix that. it is all because nissan has invested in mitsubishi motors. david: what makes him so good at doing this he does it time and time again? carol: the picture that you have with him, he looks like wolverine. ellen: he does. i bet you he will like the picture. in france, they called him "le cost killer." he knows how to cut costs, how to make auto industries, auto companies working together share platforms, etc. he knows how to do it for less. david: looking at venture capital, a lot of circles here. no surprise the internet is a subject of a lot of venture capital investment. what else can we take away from this graphic? ellen: my favorite part is it
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looked at the recipients of venture capital and where they went to school. the most prevalent was dropping out of school. you have a lot of entrepreneurs who are taking the advice of some of the people in silicon valley -- peter thiel among them, saying you don't need to go to college. not a big surprise, the next most popular school was stanford. carol: interesting. david in the backyard. carol: interesting, all the students go to schools, racking up all of the student debt, ultimately, you don't have to go to college. ellen: if you are very smart. that is a lesson. carol: in the global economic session, you talked about puerto rico with a lot of problems. a lot of debt. there is more to be done. they had to fix their economy. ellen: they do. the problem is they don't have an economy. they relied heavily for a while on the pharma industry. a lot of pharma companies wanted to do business there because there were tax advantages. those tax advantages no longer exist. the pharma companies over time have left. they have also attracted finance people because they have tax advantages for finance people. that has created resentment
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because people live there don't have the same advantages. it is what is puerto rico going to be able to live on? david pharma companies have : left. a lot of people have left. ellen: one of the stats we have is the rate at which doctors are leaving. it is a lot of doctors leaving. of course, they are all citizens of the u.s. all they have to do is get on a plane. david: no passport needed. the cover story, the head of the republican national committee is facing a tough task, uniting this party behind the presumptive nominee donald trump. ellen: at first, there was a lot of speculation whether the party would reunite behind trump. it is his job to figure out how to make that happen. david: you talked to the reporter who wrote that piece, josh green. josh: initially, the worry is that trump would get beaten and go awol and run a third-party bid. all of these professions of loyalty were originally meant to keep trump in the fold.
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what has happened instead as he is locked up the nomination and now is trying to consolidate the party. it has fallen to previous and -- the gop establishment costs class who had wanted a different nominee to come together and try to keep everybody on board. carol it is interesting, too. : when he came on board to help reshape the republican party after mitt romney lost, what has changed in terms of the vision, the core of the republican party since he took over until today? josh: his vision, i think it was a smart one beard after romney lost, there were all sorts of recriminations and backstabbing. he very responsibly one out and took people and did a big study of all that had gone down. the so-called republican autopsy. also looked at how the party ought to refashion itself and be able to compete in the 21st century. the conclusion they came to is that the party needs to soften its tone and moderate.
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change the primary calendar a little bit. make an effort to attract nonwhite voters, women, and minorities. i think the anguish that a lot of republican elected officials feel in having trump as the nominee is that he is a wrecking ball to that idea. he has a very different style. trump, as he told me, has a different vision of where he thinks the republican party ought to go. david: you sat down with donald trump in the trump tower. what did he say about his vision and how that jives with preibus had in mind? josh: what interested me -- trump won the nomination doing all of us the opposite of what previous -- the republican bigwigs had proposed after 2012. clearly, he is doing something right from the standpoint of winning republican voters. i asked him how does the envision the party changing? what he told me as he is going to put the trump stamp on the republican party in the same way he stamps the trump name on his buildings. what we ought to expect five years from now, he told me, the republican party will be more of a worker's party.
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it won't be hawk to conservative right wing ideology. he will pursue a lot of the things he talked about on the campaign stage. some of those things republicans will be fine with. he has put out a list of very conservative justices he says he might appoint to the supreme court. at then there are other things like building a deporti the boarding -- ng 11 million people and ending trade deals, renegotiating trade deals that aren't going to fly very well with a lot of conservatives. i think that is why you have seen a lot of resistance to trump along the conservative intellectual class. does preibus like trump? josh: you would have to dose him
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with truth serum and even then i'm not sure he would tell the truth. what he says is they speak every day. trump was very kind toward him. two months ago, when it looked as though there were be a contested convention, trump essentially was issuing veiled threats toward republican leaders about how they were going to try to steal a nomination at eight rigged convention. his tone has changed. he has even given him a friend a -- friendly little nickname. he now calls him mr. switzerland. carol: for neutrality? josh it is to make peace between : trump and the elements of the party to find him obnoxious. clearly, you can see what he stands for if he stands for if you read this rnc autopsy. it is not what the republican party is today. it is not really what trump stands for. although he is being a good soldier and doing his best to help trump when the white house and get republicans back in power. thed: how do you illustrate job the head of the rnc has in remaking the republican party?
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on the cover, the head of the rnc, familiar to a lot of people. how do you decide to go with this photo? >> we had a fair amount of time with him which is great. we got a lot of different options. we had some options that are more traditional where you see his face and he is standing on a white wall. david: american flag? >> eagles. [laughter] carol: red, white, and blue. >> and we had pictures of his office which is kind of what you imagine it to look like. the photographer was shooting him and shooting him. he took a phone call. he had a little moment there. we thought that it was a very authentic moment of him at work. we had to talk about whether it was weird to have someone be the cover subject for not show his face. in the end, without the moment was so great and spoke to the situation right now with the republican party that it was the right way to go. carol: you do. you look at the cover and realize the frustration going on inside him internally. do ever think about when you do a cover like this how the subject is going to feel when they see it on the newsstand?
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chef but if we thought about -- >>our covers would be if we thought about that, our covers would be very, very -- [laughter] >> it wasn't -- it is by no means purposely unflattering. this is something we all experience in our daily life. carol it tells the story really : well. >> yes, it is a very natural moment, i would say. it was not pose or planned out. david: i imagine part of the calculus is some people who know him -- you can disguise the face of bill clinton and that silhouette would be known to a lot more people than this one. where you thinking about that? >> we were a little bit. as an image, there is something interesting about how mundane it is, that it is not a celebrity seen in a different way. when we have situations like that, someone not immediately recognizable we take care of it , with the language and we make sure to mention his name, the fact that he is remaking the republican party and headlined -- the headline "the hardest job
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" speaks to the photo. carol: when you did this, did you do other things like he is standing, and you just decide we are going to put him behind his desk? >> personally, when i saw the photo, i fell in love with it. we tried a bunch of cover lines, we tried when it played against it which was funny, the joy of being the rnc chair which we like for a while. we felt the photo was so great that the type needed to stand aside a bit. david: up next, trump redraw the map in terms of campaign ad spending. that has tv executives scared. carol: plus, could janet yellen be replaced by an algorithm? what central bankers are saying about ai. david: and the snapchat account that some in hollywood think could be the future of tv. carol: all of that ahead on "bloomberg businessweek." ♪
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carol: welcome back to "bloomberg businessweek."
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i'm carol massar. david: you can find us on the radio on sirius xm channel 119. carol: and on boston and bay 300 area 960. david: look at the free publicity donald trump has gone from the news media and social media. carol: we asked what that means for tv executives planning on campaigning advertising dollars that have not materialized. >> you have millions of followers, and he tweets something out and it is free advertising essentially, to millions of people. often times, he says something so incendiary a gets picked up on local news or cable network tv and a goes viral and we're all talking about it in ways that paid advertising doesn't really break through. he definitely has a strategy with working with the media and he is a master at pulling the strings to generate coverage. one estimate is that he is received almost $3 billion worth of free media or earned media which is a staggering amount and far exceeds any of the other republicans in the primary and
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exceeds what the democrats are getting, as well. to break through that, we have seen his competitors have to spend a lot of money to try to even get the kind of attention he is getting. it hasn't been successful. we look at the super pac right to rise usa which backed jeb bush, spent an estimated $70 million on tv advertising, and he didn't win. that raises the question of how candidates are going to do going forward. are they going to continue spending? david: you dug into that. what are you inclined to think what the candidates are going to do going forward? >> not everybody is donald trump. you look at a candidate like hillary clinton. she gets a lot of media attention. she is not leaving anything to chance, or at least, her supporters are not. they super pac backing her has reserved $100 million worth of tv advertising between now and
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the election. that is a staggering amount and it is probably an amount that will only grow as we are closer. they would argue that -- republicans waited too long and did too little to combat trump. they want to get a good head start on it. also, if we look down ballot, we see hot senate races and gubernatorial races. tv executives think that those candidates are going to have to spend a lot to break through, get their message out in a hot political season. perhaps try to differentiate themselves from the top of the ticket on the republican side or even on the democratic side. carol: up next, the new technology determining how valuable a professional basket ball player's shoulder might be. david: and the machines that may be someday be running the world's central banks. carol: all of that ahead on bloomberg businessweek.
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carol: welcome back to "bloomberg businessweek." david: this week's global economic section, how advances in artificial intelligence could make janet yellen have to look for a new job soon. carol, maybe not soon, but -- ai is not just being applied to manufacturing anymore. >> machine learning is the dominant subfield in artificial intelligence. it refers to the technology that allows a computer to acquire knowledge or skills without being explicitly programmed for that skill. carol: we see amazon and netflix already doing this. amazon does -- has their algorithms. analyzing what we are doing in terms of purchasing. maybe they can suggest something that we are in a -- we may be likely to buy. netflix does it with movies. right? >> that's right. when you go on netflix and ask for recommendations, they are
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applying machine learning to everything it knows about you and people like you to make a prediction about what kind of movie you might want to see. carol: financial firms are doing the same thing in terms of its predictive abilities? >> there are several hedge funds that are employing machine learning to one extent or another to try to help them make picks, stock picks, or other security picks. they tend not to talk a lot about what they are doing. there is a lot of secret sauce involved. there are several hedge funds involved in the kind of work. carol >> what is tricky, it is : one thing if they are checking my buying patterns and telling me you might like this book or this product. when you are dealing with something like the fed, the whole idea that whether or not this is going to be ultimately able to go through all of this information and predict what the fed can do, that is a giant leap, correct? >> it is massively complicated. the world economy is a much more complex system then a group of customers for a company, or even
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the stock market. the number of variables that are involved in the uncertainty involved makes it a harder task. there are computer scientists -- i spoke with andrew lowe, a well-known ai specialist at m.i.t., who believes we are getting very close to the point where the technology will be good enough to match humans. and then, not too further down the road, to surpass the ability of humans. carol: the bank of england has this a littleith bit, already, right? of centralhe world banking, from what i can gather, although central banks are quite shy, i've found, to speak about this, from what i can sense, the bank of england is out in front of other central banks. their chief economist is very keen on this topic.
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they have set aside a new unit called their advanced analytics unit that is already building and testing algorithms for solving certain problems , including those within macroeconomic forecasting. they are not using it quite yet to brief their policymakers, to advise their policymakers. they are getting there. the head of that unit told me he thinks that within five years, it will be used to some extent in meaningfully helping their policymaking. carol: speaking of smart machines, in the magazine, there is a profile of a company whose visual search technology is being used by the fbi and mba. david: we spoke to the reporter. >> it is kind of like you see in a jason bourne movie. a lot of us thought this was already out there and easy to do. you cut and paste, or drag-and-drop what you want to find. it could be a person's face, a white pickup truck, a logo. you say find it and give it the source material, whatever it is. hours of surveillance video, a
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game broadcast. you say find this within that. it scans the pixels and within a matter of seconds, feedback the results. carol: so, you could do it quickly. talk about the guy behind all of this. who is he and how did he come up with all of this? >> he is a buffalo native who has been doing machine learning stuff since college. he is a deeply knowledgeable geek about this stuff. he had done a couple of -- worked at companies and started one that did -- codified facial expressions to look for -- for signs of deception. that wound up having an advertising use, too, because now, when you look at a video screen at an airport, they know who is looking at it by using this kind of technology. anyway, he had done that kind of stuff and new from network that intelligence agencies were buried in surveillance video. actually, it wasn't that sophisticated. a lot of times, it was people staring at it for hours and try
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ing to find threats, or they would have this technology that needed rooms full of servers to work. just because it is really a complicated process. he just said about trying to simplify it. he knows, for instance, when drones come back from their flight, sometimes, they have 12 hours of high residue. they put that up against the nerve system to find out what's there. >> you talk in the story, you go through a whole yankee season quickly. >> seconds. that is hundreds of hours. depending on how data rich the source is and how many queries you want to do, it is seconds. i asked him to do a brief search of three hours of cnn for hillary and trump at night. they sent me a clip of them present go, you know, and the results. it is literally just -- bang, they pop up.
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carol: amazing. >> yeah it is out of hollywood. ,david where they wary at all : about getting into what they do? >> they develop the technology themselves. they decided to fund themselves until they had a thing they could sell. while they can't say and don't even know what the government exactly is doing, they are at liberty to talk about their technology. i was curious about whether as this becomes affordable and more widespread, do you want everybody to be able to do this? for them, and a way, they are selling it. carol: up next, the big money china is spending onto virtual reality. david: plus, the courts redefine insider trading. ♪
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carol: we are inside the magazine headquarters in new york city. david: still ahead in this weeks
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issue -- available online and on newsstands everywhere -- a new era for insider trading. carol: coal is the new hot coffee. it is all ahead on "bloomberg businessweek." ♪ carol: we are here with editor ellen pollack. there are so many must-reads in the magazine. you talk about south africa, growth slowing down in the country. there is some momentum for president zuma to step down. ellen: the story is interesting because it compares the situation in south africa where india where the reporter who wrote the story used to be stationed. it raises question about whether the african national congress can keep going and staying the dominant party and talks about how they have installed all the all thehave not solved
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problems and there is growing discontent with them. it remains possible that down the line, if possible, they will start losing some important elections. david this term, we talk about : political optics a lot in this country. laying out how a lot of candidates are speaking. you can gauge how much support they have by how crowded is the dutch the audience is behind them. ellen: is a new way of reading the tea leaves. just look at how empty or full the stadiums are. it is really cool. david in the marketing and : finance section, a look at the new banks popping up in indonesia, trash banks, as ways of encouraging people to stop littering and develop financial solvency. ellen: it is an interesting idea. you bring your trash to the bank then they pay you for your trash and they can recycle some of it. you can leave your money there and bank it. you can take money out of your bank. it means that the trash is not going into huge landfills that are littering some communities. it also creates a real banking system. it has been tried elsewhere. carol: creating a financial
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system for people who do not have an awful lot of money. ellen: exactly. interesting. in the technology section, you talk about virtual reality in chinese companies. they are not going after the hardware side of it. they are more interested in content. ellen: they are trying to figure out a way to get into virtual reality without having to commit to one kind of headset. it is a race to make the are a -- cr -- vr a real thing. here, you have lots of different headsets and merging. they realize that will be the case. whenever headset, we will create content for you. there are a lot of small companies tried to do it and some big ones, as well. david: the potential for this market is huge. ellen: it is absolutely huge. david: in the features section, you look at insider trading, how the definition of insider trading has been eroded or changed over time. ellen: it has changed a lot
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since the days of the insider trader follies of decades ago. what we look at is why it is so hard to prosecute insider trading? that is because insider trading's definition, to the extent it even has one, has changed. carol we spoke to a reporter : about the story. >> there have been a series of cases that have come out of the raj rajaratnam series of prosecutions in new york where a number of traders have appealed to higher and higher courts and ultimately, a couple of traders charged in 2012 had their convictions overturned. the appeals court kind of redefined what insider trading is and what the government has to prove in order to successfully prosecute someone. david: it has to do with it who is giving you the info, right? >> it has to do with how much you know about the original source of information, whether they got a benefit in return for leaking this information, and there is some more debate about what that benefit had to have been. parts of the reason this definition even exists is because they don't want people
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who are, say, whistleblowers trying to report fraud to a reporter, to the outside world, who aren't doing it for personal gain. they don't want to silence those people. there are times when you can legitimately disclose confidential corporate information and you should not be accused of insider trading if someone even overhears you and goes and trades on it. carol: what do legal experts think about this? it feels like a shift in terms of figuring out insider trading. >> they are divided here a lot -- well, they are divided. there are a lot of defense points who raise a good and say this campaign in new york led by all these hedge funds ultimately overreached. they point to this one case that led to this redefinition, these two traders, todd newman and anthony, to hedge funds in new york, one in connecticut. they were at the end of a long chain of people who were sharing information about dell. there was a guy who worked in investor relations who told his friend at an asset management
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firm who used to work with them adele, and then that friend told a guy who worked at a hedge fund. david a lucrative game of : telephone. >> exactly. eventually, these guys at the end here this -- at the end hear s and they trade and they say, we did not know where this came from. we didn't know this was illegal. this came from investor relations. is that even possible that that was inside information? the government said you clearly have knowledge of this with market moving information. you made all of this money. there were things that were a little disturbing, in some cases, they had been paying some of the sources. ultimately, they were successfully arguing made and not know if that original leaker, the original tipper got anything. was he just gossiping or did he actually get something of value which would mean he had betrayed the trust of the company? they succeeded. now, we are waiting for the supreme court to look at another case and perhaps clarify some of
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the questions around it. is the attitude toward this within the sec? they must be greatly frustrated. >> they are very frustrated. they are often frustrated, that is their natural state. of course, as soon as this happened, the phone started to ring. defense lawyers, i want to undo my settlement, i want my money back. i paid you all of these fines. i don't have an exact count. i think there have been many, many cases where people have gone back and tried to undo things and said i didn't know. the benefit was too weak. it wasn't a strong benefit. it wasn't money. there is a lot of that going on. on the criminal side, prosecutors had to vacate a number of convictions and guilty pleas. of traders and analysts because of this. carol: at this point, will this make it tough to prosecute or go after insider trading going forward? >> it will make it harder. certain types of cases, i will
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quote my colleague here again -- they will go unpunished, basically. of course, there are some people who argue that maybe some of those cases where ones that shouldn't. there is a lot of gossiping in -- and information sharing going on in the market every day. where do you draw the line as to what is criminal? people do need to know really clearly is this going to get me in jail or is this just a typical day trading at a hedge fund that i'm just listening to what everyone else is listening to? there is that argument, but there are certain groups of people who are getting the information secondhand and you could see a scenario where a firm adopted officially or unofficially a don't ask don't tell policy. that would insulate all of the hier-ups. david: up next, self-publishing goes from the french to mainstream. carol: what a snapchat account may tell us about the future of tv. david: can kelly slater sell his new wave machine to the world? that is ahead on "bloomberg businessweek." ♪
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david: welcome back to "bloomberg businessweek." carol: you can find us on radio, on sirius xm channel 119. david: also in new york boston , 1200, washington, dc 991, and bay area 960. a look at the wave machine designed by surfing legend kelly slater. carol: could it make the sport mainstream? >> there has been a quest for an artificial wave that was more or less like what the pros experience in the ocean. there have been a lot of tries and there are wave pools around the world, but nothing that fell to professionals. carol: in december, he posts the video on youtube, kelly slater. what was that video? >> he posted a teaser on his instagram feet first, which was him, a shot of this perfect
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wave, and then it cuts to him looking extremely happy, jumping up and down. you see him on this wave and it is revealed this is an artificial wave. his voiceover says this is the greatest man-made wave ever made. turns out it is his wave. for the last 10 years, he has been working with a company and a team of scientists on a wave that looks like an ocean wave. the surf world immediately celebrated this thing and said , oh, my god, kelly slater has done it. carol: has racked up millions of using comments. where is this wave, where did he do it? he did it under secrecy. >> it is exactly were you wouldn't expect. carroll: is it landlocked? >> it is in california, but it is in the san joaquin valley. fresno would be the nearest thing you would've heard of. it is in farm country. there are a couple reasons for that. a lot of people said this is for secrecy reasons. they wanted to do it where no one was looking for it. that was true, but it is a 20 acre lot with seven hundred acre -- 700 yard long pool, an
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artificial lake. if you were to buy that around san diego, that would cost $30 million. really financial reasons had as much to do with it as secrecy. they found a plot they could afford. carol: how complicated was it? there is science technology , involved in making this happen. >> extremely complicated. engineers and scientists have an working on this for 3, 4 decades. not all of the time and the world's best minds, the professional surfers have always tried to find people who could crack the code. it turned out to be complicated. they spent 10 years on it. they started with scale models and computer models and eventually, in 2014, started building it. it is a proprietary design. they use a hydrofoil which is the best way to think of it is like an airplane wing under the water that pushes it and creates a swell. the contours of the bottom of the pool, just like before the
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dutch just like the floor of the ocean is what causes the way to -- the wave to break. this is how the ocean works. swells come in, then the coral reef, shallower water causes that wave to break. that is the right. carol: you want to see it. -- you went to see it. >> i did. carol what did it look like? : >> it looks amazing in video but in person, it is even more impressive. it is hard to say -- it is hard to appreciate the power of it. it is big. it is not huge because he didn't want it to be huge. it's not supposed to be pipeline. carol: it has to be manageable. >> it sounds like a wave. when it comes by you, and ask -- it acts like a wave and you hear the roar. if you close your eyes, you would have no idea you were in fresno, california. there is a goat ranch next door. david: speaking of going mainstream, the focus on section is about small businesses. carol: it is a look at how the self-publishing industry is coming of age. we talked to the editor. >> we're seeing the start of something. people have options.
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they are actually really becoming aggressive about targeting people, often made -- mid-list authors who are frustrated by the neglect they feel they are experiencing. they are giving them a check to -- attractive deals, sharing revenue. one of the things they're letting them do is keep the copyrights. that is important for a lot of people. in some cases, what we seeing is authors whose novels who have gone out of print and they are turning to these platforms to republish. carol: are all the platforms the same or do they vary? >> they all have different revenue models. some of them are marketplaces where people can find talent and contract with these people in the marketplace takes a cut of those deals. some of them have more sophisticated tools where people can do collaborative work, not e-mailing files back and forth, but there is a technology platform there that you can access. others, soup to nuts. they will put you in touch with
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the matter, designer. pr arms. david: how much of this is about the advent of the e-reader? that it is fairly cheap to disseminate a book that way? there are companies here printing books, as well. >> it definitely is. i think what it is is an evolution. right now, something like half of all books on kindle direct our self published books. david: half of them? >> yeah. the five publishing houses account for one quarter of books on that platform. there is one note of caution. we talked to a consultant who said digital books may have peaked in 2014. they fell back as a share of the overall books out there. he thinks there is a bit of fatigue and people perhaps at the end of the day, sitting in front of a computer all day, want to go back to print.
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carol: up next how cold coffee , is overtaking hot coffee and the companies looking to cash in in the trend. david: why anyone who wants to work in tv should get to know snapchat account arsenic. -- arsenic tv. ♪
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david: welcome back to "bloomberg businessweek." carol: in the companies and industries section, a report on how the cold coffee business is booming and how everyone wants in on the action. we talked to reporter jenny kaplan. >> more and more people are drinking their coffee cold year-round. it seems like according to some of the experts we spoke to, there are a lot of coffee houses these days where they are actually serving more cold drinks than hot, even in the winter months. carol: like starbucks?
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>> yes, but even more so, some of the craftier coffee places. the cool hipster place in brooklyn. carol: and you are getting prepackaged cold coffee in demand. >> right, that is the boom i'm talking about. that is where starbucks and pepsico have a partnership for their grocery store products, coca-cola, dr pepper recently announced a partnership, they are all getting in on this ready to drink bottled and canned coffee that is served cold. carol: how big is the market size compared to conventional coffee? the warm coffee we all kind of like? >> it has been growing double digits since 2011. according to euromonitor, it is supposed to hit 3.6 billion by 2020. it is growing rapidly, but it is still not a huge market compared to coffee overall. >> what is the demand globally? >> globally, it was at 18 billion in 2015. >> is there any market in particular where you are really seeing growth? >> japan is huge. carroll: japan? >> yeah. they love their bottled coffee there. they have vending machines there
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that serve all different kinds of bottled coffee beverages. actually, coca-cola's presence in the market is so large that they are actually the number one player globally, even though in the u.s., starbucks and pepsi are really dominant. carol: what surprised you when you started working on the story and looking into it? >> i personally drank iced coffee more than hot coffee. i drink it in the winter. i was fascinated by the fact that i'm not the only one. this is something that -- not only are there tons of startups getting into this, but it is a -- it is really big players. david: this week's etc. section, a look at what some say is the future of television. >> for now, a snapchat account called arsenic tv. >> it is a snapchat account which sounds weird because it isn't exactly a business, it isn't a media company, it only exists inside of the snapchat app. it is a lab mag where scantily clad models -- provocatively dressed.
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they do provocative things on camera. it sounds crazy, but it is -- in a lot of ways, the hottest thing in media right now. " tried to buy them. i had a conversation with the playboy ceo the other day. he candidly admitted they were rebuffed and continue to say i would really -- i'm very interested. everyone is very excited about this thing although it is very weird. carol: it is only women who go on the tv and jump in the hot tub? >> it is all women for now, but the founders and they have ambitions that go beyond this. they see this as the beginning of an mtv or vice. you look back on a device which -- you look back on vice, which is by valuation, the biggest digital media company. it was pretty sleazy back in the day. they just widened their content focus and arsenic, i think, could do the same thing although it is a long shot. david: who are the founders? >> billy hawkins who is minorly famous as being spike lee's
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agent and amanda, who is a movie producer. they were starting it -- a different company, a rent the runway kind of thing. this grew as a side project and took on a life of its own. carol: how are they making money off of this? >> in some ways, nobody is making money. arsenic has no revenue. the unpaid models are making money because they are getting paid by smaller companies, protein shakes and clothing or whatever, to basically record little ads on instagram. the main model in the story, caitlin o'connor, is making between something like $6,000 and $10,000 a month. carol: because she has followers. >> followers are worth money. there is some question about whether this is going to be a sustainable business. some people think once real celebrities get in the game doing product placements and that sort of thing on social media, this economy will
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collapse. for now, you have these b, c list celebrities who are able to make a decent living inside of instagram. >> their goal cannot be just to make a decent living. this is -- speaking of where our culture is right now -- this is the platform or moment to elevate yourself kardashian style to fame and fortune. >> there is some question as to -- david: put it all out there. >> as to what fame is. one of the sources i talked to says everyone thinks i will do this snapchat thing and then i will become famous for real. in a lot of ways, the snapchat stars are the stars. if you ask a 16-year-old like who are the most famous people, half of them, some percentage of them would be people you have heard of, and some percentage would be these influencers. and so i think we are in a , moment of flux. it is hard to tell how it will all shake out. carol: why are they making money off of snapchat but they are off -- they are not off instagram?
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>> that has to do with the fact that snapchat is so new. it is hard to tell what is happening inside of the app. if you are an advertiser, you don't know how many people are looking at a snap. as a result, there is no money yet. there could be very soon if snapchat releases what is known as an api which would be a way for advertisers to get information about what is going on. "arol: "bloomberg businessweek is available on newsstands now. david and online. : what was your favorite issue out this week? carol: i found it fascinating what is going on in indonesia and the banks that allow people to bring in trash and get money and create account at the bank. it gives the money to buy something, things they need at home. it is creating a financial system. i find that fascinating. david: i like the cover story by josh green, something i had heard about, new a bit about, had a sense of the job he has to undertake to unify the republican party. josh brings into crystalline focus. it was a really great piece. carol: i feel like the cover tells the story.
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david: absolutely. we will see you next week. ♪
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announcer 1: imagine wiping away the appearance of crepey skin. on your arms. announcer 2: on your legs. announcer 1: and even your neck. announcer 2: what would your reaction be? >> can i look now? >> yes. >> are you serious? oh, my goodness. announcer 2: and now, a paid presentation for crepe erase. announcer 1: a breakthrough

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