tv Politics Public Policy Today CSPAN October 2, 2014 1:00pm-3:01pm EDT
>> well, there is a fee, i don't notice it. it is not a hassle. >> you are bringing up a great question. the target example, there's protection. everyone is protected from using their credit card and it is just fine. no one lost any money doing that. >> there are lots of nice things about it. >> except maybe some of the financial institutions. so bitcoin, the money is gone. what you look for is around use cases. why is it good for you? when i needed to move money to rent a vacation house and i needed to transfer the money to sterling, it's great because there's less friction and it's cheaper. >> tell me what you did again? >> so renting a house. i needed the money. i moved it to the real estate agent in the uk.
>> who accepted bitcoin. >> yes. >> is the microphone, give it to him, go ahead. >> so the best time to plant a tree is 20 years ago and the second best time is today. you need to recognize there is more at stake than revolutionizing shopping in new york city. when you think about the 2.5 billion people on planet earth that don't have access to a financial system that completely ignored them, then today there is an opportunity for them with a smart phone to put a bank if their pocket. a bank that lets them inner face, interact with each other, basically for free, and that's a really powerful thing if you think about it. so let's put aside the shopping port of this as well. because there's a lot more that we can revolutionize around the world and people have been ignored in a lot of ways. >> so one of the concerns voiced early on was that it would be
used mostly anonymous, that's another selling point, and a lot of them because they are doing something illegal. and in fact we just -- they shut down a big on-line drug site. do we have any information about what fraction of the overall transactions were through silk road? it is hard to tell from the data who is buying what. but we shut down one company. how many people were buying drugs? >> i don't know the percentage. but a very large amount of money. >> yeah, so silk road was in a marketplace where people could buy things from stocks to narcotics. it was shut down by the u.s. government this fall. >> it was a secret hard to get to website. >> yeah. >> but the interesting thing is it was shut down bit government. and a bunch of journalists said
it would die and never survive and only used for bad things. then two weeks later it started its fastest run up in value in its entire history. so it has been called a bubble and debt before. and that is just, i think, the challenge that we all face in the industry is to communicate the value that it serves. and we are still here, building and innovating. there is more money in bitcoin related projects. >> what can we tell about what people are using bitcoin for. >> you can see, there are jumps in traffic, like in china. you can exchange for bitcoin and take them out and transfer them dollars. they aren't using it to buy lunch but it is serving a need. how much do we know about what people are using bitcoin for? >> i'll try and talk a little bit. so people can tag addresses in
the bitcoin network. so basically a way to verify that transactions are going to a place you like. bitcoin brings people to the table for a lot of different reasons. if you're into donations for charity, you can make immediate international transactions happen. if you are doing payments for vacation homes, gaming is a big one for sure. and remittances will be a big story later as more systems come on line to replace the networks run by companies like western union. they have all this infrastructure in place they have to maintain. now there is innovation to take advantage of. ride the bitcoin network and cash out on the other side. people will use bitcoin and not and realize it. so people that don't have much in common. >> so you would be one of those people coming to the table, right? companies and i assume banks and regulators. i understand you can't name names, but what's the feeling
there? >> so there's a great deal of interest in this. i would say financial institutions are in the mode of just studying it right now. and i would say that this is not just something in passing. i think they are very serious about it. i have talked to some regulators around the world in central banks. that are really looking at this again. looking more less from a currency stand point but more of this again from innovation of how to design payment network and what can they learn from technology. but their view is it is a little too early to go off and adopt this and design a payment system that they are going to run a nation on. >> the idea would be that this would be a way, not just a better way to send money from one bank to another, which by the way we need, but a way for anyone to send money to anyone. >> and they are looking at not just a way to design the payment system, but also, how did they reach other areas.
what's the social good impact that you would have from getting unbanked in any market into the banking system. how do they think about making that more advantageous? and just as an example, when we see paper payments, cash and checks, go electronic in the traditional sense, we have seen countries add .3 to .4% to gdp growth to the year. so there's one in the -- one impact we see there. the other would be, can we make it even more efficient through something like this and would there be even more impact on gdp growth globally. >> can i ask you about that? maybe not in terms of gdp growth, but just in terms of everyday transaction. like if i were to go, a bit of a credit card fee attached with a credit card. would bitcoin necessarily be cheaper? how much cheaper and how much cheaper is my cup of coffee. >> i will let you answer on that.
depends on merchant fees. right now they are quite high for accepting bitcoin. but there are -- >> typical credit card fee for a transaction? >> between 1.5 to 2% for the fiscal world. >> why is it a percentage and not a flat rate? >> because if the merchant goes belly up or someone doesn't pay, that institution has to stand in -- >> so a cup of coffee is 2 bucks, then it is 4 cents for the technology they are paying for. how much is bitcoin? >> with bitcoin, the fee is basically less than a penny. like one tenth of a penny. the settlement goes through instantly to the merchant. they can spend that money right away if they choose to. huge on-line retailers are doing technical innovation. tiger direct, okay cupid, and others. you will see a lot more on-line merchants starting to receive bitcoin.
it reduces the basis points they have to deal with fraud. overstock.com hasn't had a single fraud case. >> a few percent is like a big deal. they probably spend years in rooms trying to think of how to save few percent. on the other hand, they are taking on what you call currency risk. which is if they hold on to bitcoins, they are more volatile, much more so than the dollar. yeah, transaction costs are lower. and they take on other risk. >> so merchants have a choice. they can convert transaction and get dollars in their bank account at the end of the day or choose to keep it. and what i witnessed having traveled 400,000 miles around the planet, is the story is very different outside the u.s. than it is internationally. so i met people in europe -- >> isn't it nice that you don't have to travel to talk to anyone any more? >> sometimes it is nice to have a face-to-face.
i met a woman who accepts bitcoin and it is easier for delivering coffee. it is a different way and they believe in it. >> can the government still shut it down if they don't believe that government -- >> i don't think it would be possible for the u.s. government to shut down -- from a practical perspective or legal ability? >> i think they don't have the ability, it functions outside the united states. i think they could criminalize any use of it here in the united states but there would be no way for them to stop the network due to its decentralized nation. >> can you talk about the tax part? the government came out with guidelines. by the way, if you use them, this is how to treat them with your taxes. what's that like? >> they have guidance on march 22, right before tax day, a little late to provide a substantial amount of guidance.
>> they acknowledge it exists and you should pay when you use it. >> yeah, you should be paying taxes no matter where you are. i live internationally and still pay taxes. every time a buy a cup of coffee, i have to calculate my capital gains. we're going to lobby to transition it. bitcoin is tricky like that. sometimes it looks like a commodity and sometimes like a digital currency. there is not a really easy solution for everything here. but they are acknowledging the working and they have conversations about how to move forward. so i expect likely guidance going forward. this is the most important thing to happen in this industry. we want this to be building jobs in north america and the united states and continue leadership here. but this is a totally international global thing too. so we want to build a safe home for people to experiment and succeed and fail if they do and grow and get smarter.
that's what we are looking for in the industry. >> i think you're right that there's a certain extent to which it is a vote of confidence. to issue regulation. they may be good. they may be bad. but also decrease risk for major financial players, thinking about moving to the space. if there is no regulation, they have no idea which way it'll go. if you have regulatory landscape, there is a certain value to that. one of the related developments that i think we have seen over the last year is major financial players have moved into this and they bring their background and knowledge from people from the banking industry. know your customer regulations. they bring that knowledge to companies who have incredible coders that maybe have people that can't think about compliance because it is not their background. as you bring the players in, i think you will see a lot of development that really rapidly expands the industry.
>> how would you feel about, part of the deal with bitcoin is it is kind of outside the system. how would you feel if citibank or bank of america started offering bitcoin? >> i would be thrilled. i hope they get involved. in 2013, the credit card companies were going to issue us chips in the cards. that's what they've been doing in europe for 20 years. the challenge is on everyone to build better systems. i hope they get involved in the states. they've been working in finance for years. we don't know everything. we would love to see them come compete with us. >> you see any interest in anyone doing that? >> no comment. no, so -- what i say is -- right now, i would say that they're all looking at this and trying it figure out what to do. i don't think there is any commitments at this point on
what to do with it. but i would say there is old technology in, you know, in cards. the thing is, that technology does nothing for an on-line transaction. so this is also a solution for the on-line space. >> when i think about the disruption over the last 10, 15 years, and look at the digitization, we used to send mail, now we e-mail. we used to listen to record, now we have itunes. we used to read books, now we have amazon. >> some small part of it exists as paper and coin. it is also unaccounted, banks going back and forth. >> right. one of the questions you asked earlier, circle back around to the economics, we see this money supply growth constantly. maybe that helps control the inflation of the cycle. but of course if the money supply grows every year we get to spend less and less of that
income and it funds all kind of programs and expansion of things that we may or may not have control over. it is just a choice. a marketplace. if we want something differently. i don't think that's a big problem. i think people vote with confidence. >> recently we moderated a bet between two people with bitcoin. one was that bitcoin would die and no one would remember it in any of years. the other is very bullish, betting on whether in five years' time, 1 in 10 people polled would say they bought something with bitcoin. i want to ask all of you which side of that bet you would take? do you think five years from now we do a poll of americans, 1 in 10 will have bought something with bitcoin, knowing they bought something with bitcoin. like literally had a wallet and got a cup of coffee. >> i think your caveat is
important because i think 1 in 10 will have spent some form of virtual currency. it might not have been bitcoin. it might be bitcoin and they don't it because they deal with an app on-line. so i think speculating whether they know how the guts of the transaction would work as hard -- >> he meant not the gut of the infrastructure. them thinking of it as a currency. >> i think it will just because of how widely known bitcoin is now. >> within five years, people will use bitcoin -- >> oh, not within the previous month. okay. sorry, sorry. >> whether they did it once is more common. >> the other part of that in common part is really important. we could argue, paypal which has come up, and a serious way to transact, i think about 80 million accounts now in the u.s.
when you come down to how many people use it once a month or once a year. it is really important that 15% plus of e-commerce transactions but that's only a small part of everyone -- >> so you take the bet or no? >> five years be a little tight. >> in five years, one in every ten people will absolutely be using bitcoin. that's a no-brainer. if you look at growth, it is absolutely hockey puck. and it is growing. >> stick. >> hockey stick, sorry. >> you want to skate to where the puck is. >> thank you very much. it's been fun.jucq [ applause ] >> thank you. thank you. >> so follow the hockey puck. thank you, guys. i'm holding on to my wallet. thank you for coming.
next up, yancey strickler, founder and ceo of kickstarter. i could make a lot of jokes about what we will kick start but i think you have heard all of them. he will be interviewed by andrew ross of the new york times. and cnbc's squawk box. i have here my bribe for andrew ross and i'm going to give it to him when he completes the interview. these are your cronuts. hello, everyone. >> hi, how are you? >> good. we have not that much time together. i will go quick because we have a lot of questions. i think a lot of people here have a lot of questions or at least want to understand what this whole kickstarter thing is all about. let me start with, what was the
inflexion point? what was the thought that got this to happen? what is the story behind kickstarter? in a way to explain to everyone what this is if they don't know. >> sure. kickstarter, the website, is five years old as of a week from yesterday. thank you. as we launched april 2009, the original idea is 8 years before that by my partner, perry chin, currently our chairman. he was living in new orleans in 2001, 2002 wanted to throw a concert during jazz fest. he couldn't make it happen but wanted to do something like, to test an idea publicly and allow things to only go forward that there were people that would support them. so he had that concept and didn't really know what do with it. he worked as a recording engineer, preschool teacher and waiter. moved back in 2005.
i was a rock critic and he was a waiter at a restaurant if brooklyn. we met there. he told me about his idea. he we brought in a friend and tried to make, and failed, this website for five years. because we are a waiter, a rock critic and designer. and finally managed to get a group of tactical people to work with us in april. april 2009, the site was finally live. it was a lot of guesses and mistakes. >> who is if for, though? there are people in the audience who are probably on kickstarter. they get e-mail from friends. who is supposed to be using it on one side and what sort is a base case for me to actually hand over and fork over the dough? >> at this point, 150,000 people launched projects on kickstarter.
supported by 6 million people from 218 countries and territories around the world and all seven continents. very global. if you went to kickstarter right now, you would see people making movies. starting restaurants. making comic books. pieces of design. putting on plays. canning preserves. anything creative. anything where you are making something to share with other people. so we don't have any sort of demographic box. in fact we have zero demographic data about people who use kickstarter. it is a canvas for people who want to create something. >> it is not a big investment. oculus just sold itself to facebook for $2 billion. that is where you put them over your face. pretty soon we won't even come here, well just wear goggles. there are people here today who
gave them money who are pissed. >> great. yeah, sure, i will respond to that. yeah, i mean, a lot of really cutting edge stuff that is happening in society is starting on kickstarter. people who are funding the future. you go there, you get a glimpse of two or three years from now and crazy things that may or may not happen. just like really wild ideas. i saw yesterday, from the low line spoke here, he is trying to build an underground park in new york city. a pool in the east river that you can swim in. basically drop a brita filter in the east river. so the future is what happened here. this is a virtual reality started by this 21, 22-year-old kid named palmer lucky. could not make it up. and he basically put up this project saying he created these goggles that created the height of virtual reality was finally
real. and the internet loved it. so you can get an early prototype for about 300 bucks. it started to take off and became like the people's text. internet's favorite thing. people go to video conferences, line up for an hour and a half, wear them for 10 minutes. they would throw up, be blown away, it is incredible. it got bigger and bigger. building hardware is expensive and hard. and then, about two months ago it was announced that facebook bought them for $2 billion. >> so if i have given them money, how am i supposed to feel about this? >> well, i gave them money. >> you did. >> yeah. so i will talk about how i felt about it. i gave them 25 bucks. because i thought, this is cool. this is awesome. this should exist. and now it does. for me, i support it because i
thought the world would be better if oculus was for real. i don't want to wear one all the time but when i want to, it would be great. you know, just support the concept. now it is complicated when you have facebook involved and watch the money. i thought a lot about nirvana. i used to be a rock critic. music is my primary love. i thought about how you felt if you bought the first nirvana and you were into them with sub pop. then smells like teen spirit happens then you're on tv. and you think, that's my band. what does that mean? that is a complicated thought. there is this notion of cultural ownership. and those feelings i think have largely gone away. like wes anderson, does american express commercials, no one cares. white stripes, they are in nike
commercials, no one cares. like the grand machine of capitalism just won. you see the same thing come out about technology. it is a sign of where culture shifted. a lot of complicated things going with that but i don't know that they would have been successful if they were trying to raise money from investors. i think they weren't because they went to kickstarter to take an idea to the public. >> to some degree you don't like when people try to sell stuff on the site. people can give quote unquote rewards or things back to you. thank you stickers. or if there is a film, you know, a back stage pass to something or credit on the screen. but for something like that, it really is charity.
>> there a mantra we say a lot, that kickstarter is not a store. we try to set up expectations for backers. you support the creation of something, not buying it. it is not like oculus is sitting in amazon in some warehouse and is ready to ship to you in hours. it has to be built first. you will see videos from the factory floor and lab and you get this relationship with it. it is not about the store. however, there a return. and generally return is the copy of the thing being made or some experience with it. it is really interesting because it is not commerce. not direct commerce. not directly 1 to 1. there is a lot of fuzzy stuff in between. i don't think it is charity. this person is great, i want them to do their thing.
i just love them, here is 20 bucks. it has similarity to investment. however, something distinct to each of those. it has a common element. i think there is a fourth way of transacting. most money moves around from one of the other three ways. this way is succinct and ultimately about creating a human relationship and money serving is like a mechanism of that. and about fostering something new. but doing it out of a desire to shape the world into what we want it to be. i think there is a true spirit to it that we try honor. >> we talked about people who didn't have much and had a vision for something and people got behind them. but most people don't start with success. you see people like spike lee, zach braff, people with a tv show or movie or something and
they want funding. there is an argument that bigger names to some degree have began to crowd out smaller names. what do you make of that? >> in the last year, spike lee, neil young have launched kickstarter projects. these are three of my heros. i was shocked that they even knew what it was. when i see someone say kickstarter on their video, i feel embarrassed. it is strange. still feels like it did seven or eight years ago. this is cool. people can share with the world. even if you're spike lee. even if you've done the right thing and malcom x and these incredible movies, you still have to answer to someone. when someone writes the check,
there are demands with that check. at that moment, we are a great opportunity. if you are zach braff, you can say, let's make this movie. someone can pay 20 bucks. they see the movie first. they can stream the movie. they get all these cool things. you might visit the set for 500 bucks. that's not scorcese begging you for money. that is him with the opportunity. that's what fan-dom is. i think the cynical perspective thinks to think that audiences are sheep. but i think audiences are smart. these are things that they would like to have but the industrial complex, the movie is 120 minutes after moving image on screen and not the entire experience around the movie. i think it is really shifting that.
this is bringing tons of new audiences, creators supporting projects. there's a pay low. it benefits efrp involved. >> what is the most amount of money thus far that someone raised on kick start. what's my shot on goal? if the audience sees my brilliant idea, what's the chance if i go on kickstarter that i will succeed? >> sure. for all of you fine beautiful people, a hundred percent, of course. today a billion dollars has moved through the system. >> in total? >> in total. we passed that two months ago. about 1.5 billion a day. like $1,000 a minute. something like that. it's nuts. in a great way. largest single campaign with something called the pebble which raised $10.2 million. that is a smart watch. first smart watch.
apparently apple is about to copy it. on my walk here, i saw a few people wearing them. that is the largest project in terms of money raised. very first project raised $35 from three backers. that is called drawing for dollars. a guy said i want to draw a picture of something. if you give me $5, i will draw something for you. to me, that's an essence of kickstarter. pebble is just a version of that. money only changes hands if someone reaches the funding goal. there is a mass vetting of every single project. this incredible safety mechanism. say be this is cool, this is not cool. you are able to sift out a lot of stuff. 44% of projects reach funding goal and get their money and do things. over 90% of all of the money goes to those 44%.
you either really make your goal or get very little. >> where does the 10% go? >> you said the 90%. >> 10% is for people that don't make their goal is that is lost. that says that we as the public are sniffing things out. sniffing out people or ideas that we like and think are worthy of support. i like that. i like there's a clear difference between what is getting done and what isn't. >> you see a lot more competitors out there in the market. you just become a ceo. how many months now? >> january 1st. >> and right in the back, you just spent the afternoon with this coach. i want to know what the coach tells you. >> yeah. >> in just a moment. when you think about the competitive landscape and what this all looks like in the future, is there one platform that is kickstarter? a fragmented thing where charity
goes to one place. how do you feel about crowd source, true investments, where people actually have equity on the other end? >> we are very focused organization. very mission-orient organization. our goal is to help people make stuff. we will not support charitable fund-raising. we will not support investment. we are focused with where our hearts lie. and what we pursue with a lot of love. i think there is a pretty good chance that if we were a different people running this, we could try to be the wal-mart of crowd funding and know all of the market and certificates. but i don't want that. doesn't seem interesting to me. that not what we care about. there are plat forms focussing
on charity and investment. and that's fine. there are platforms existed before us. they have all copied us since to look exactly like kickstarter. original crowd funding campaign is alexander pope's translation from the greek to english. 700 people gave him money to transcribe 17,000 lines. their names are in the credits. we had mass media and large companies subsidizing art. i think there is a big future for this too. i think this is very early on. at this point, more money has been pledged to kickstarter than all other platforms combined. i don't think that will always be the case. but i think this market will continue to grow and interesting things will happen.
>> you said you won't sell the company. you said you won't go public. you won't sell the company. what does this look like ten years from now? >> well, andrew -- we take a hard look at what we do. we want to be a cultural institution. we think of what we do as a public trust. we exist so other people can do things. i am in service to the 84 people who work with me and the millions of people who are part of our community. you know, this is an idea that we believe in very deeply and we are trying to shepherd into the world. so if the long-term health of this mission is what's most important then we think that being owned by a giant company probably isn't the best thing for that. so instead we imagine things like profit sharing and dividend. making sure that profit we make is shared with our community. >> we're out of time. what does the ceo coach tell
you? >> his name is jerry colonna. former ceo himself. we just talk about the challenges of the job. it's a strange job. he is helpful as are some of my friends that are ceos. just talking about the pressure and weight and the thrill and excitement of responsibility. i couldn't imagine anything better do with my life than that. >> thank you for being here. really appreciate it. [ applause ] >> thanks again to yancey strickler and aaron. and aaron, i take it these are your cronuts. let me invite two awesome guys to the stage. first a quick word about willie geist. willie geist is actually cloned. he is cohost with the today show
and morning joe. if any of you noticed, they are on at the same time, basically. and the hugely successful ceo of hbo, richard plepler. >> good afternoon. how is everybody doing? richard, you sold the place out, man. >> good. you too. >> we were talking about what a cool place this is. lazy susan of ceo. kirkstarter, spin it, ceo of hbo. ceo of morgan out next. let's talk about hbo right now. as we think about the history of television and the golden age, this renaissance of television, i'm curious where you trace it back. some people say, it is oz, '97. some people say sopranos, later than that. when did that start, in your mind? >> you know, it's funny. everybody always assumed the
sopranos was the catalyst, "sex and the city" was the catalyst. all superior shows. but i think the tipping point was in the early '90s with the larry sanders show. [ applause ] >> yeah. >> because what gary did, is he said to the world, you can do something with a truly original voice. you can differentiate yourself from everything else in the medium. and excellence and quality will define success, not necessarily numbers. and i think what gary did is open the door. we saw the attention that garnered. who saw not only the acclaim he got in the media, but the attention he got in the creative community.
people were watching what he was doing on hbo and wow, i think he opened the door to what really became the modern hbo. >> and the next question, why did it take so long to get there? hbo existed. >> because the model of hbo and the model of television are very different. they are selling cpm. selling advertising. that's the way they measure success. that's just the business model that informs their decision making. our model is we're selling a brand. and what we're trying to do everyday is elevate that brand. we believe if we elevate that brand and create more attic across the wide range of demographic, we will serve our brand and grow our business and motto all over the world, which is exactly what we are doing. that's very different than trying to get the largest number of people in a certain demo to watch a particular show.
i'm coming from a lunch with the great steven soderbergh about a show that will be on cinemax starring clive owen. steven, a great artist, who did "behind candelabra", with excellence as my metric, that's an extraordinary thing. extraordinary for actors and everybody on the project. whenever you're talking to in our family, that's a very liberating creative dynamic. that's, i think, our blessing. >> you attract people who have been at this a long time who see something new. you mentioned candelabra, michael douglas comes to mind. >> michael's line to me was, i've been doing this for 40 years, what's in the water here. and everybody i encounter at
your company, marketing team, pr team, business team, and i think that's because all we're trying to do is create the best product that we can. that's very liberating dynamic inside the company. so we don't wake up the morning after a show premiers and say, what's the number. we wake up the morning after a show premiers and say, did it deliver on our expectation of excellence. we know that before it premiers. i said to barry levinson, after doing kevorkian for us, congratulations. he said to me, why are you congratulating? you don't know how this will do. i said, but i know it's brilliant. i've seen it. that's all i need to know. he said, look, i've been at this a long time. you're the first ceo of a network or studio who ever said anything like that. that's not because i'm more noble or because hbo is more noble. it is because that literally is what defines success for our
brand and for our company. and i must say, globally as well. i was in singapore two weeks ago, france last week. everywhere we go our brand is traveling. what is fascinating is that media in each country is as sophisticated about what we are trying to do as they are here. and the questions and level of sophistication of the questions about our artists, about producers, about what we are trying to do, it is as if they live in los angeles or new york and they are every bit as expert on what the brand stands for. >> your point about the numbers, is "girls". "girls" if you -- >> mic -- >> it's on. i will speak loudly until we figure it out. there we go. good hustle, thank you.
a case in richard's point about it not being in the numbers is "girls". i don't know what it is, average is like a million -- >> no, about 5. >> so in a single night a million, then the queue is 5. that's not huge if we think about network shows. that is critical to your success. >> they are high quality shows reaching a particular part. i look at it this way. 43 million constituents across hbo and cinemax. we are trying to create more and more addicts among those constituents and trying to build a new generation of viewers. for some people, silicon valley to them, is the reason they subscribe to hbo. for some people, it is "game of thrones." some people, "girls". some people watch boxing. some people watch movies or documentaries. it doesn't matter to us if a
subscriber feels emotional connect and a passion ep gaugement with our brand, that's what we are striving for. today at lunch, they said, you guys strive for good [ bleep ]. what we are trying to do -- this is the key, we are only as good as people who come to work for us. my job and my colleagues and mike who runs programming, become a magnet for the best talent to want to work. and there is competition. a lot of people doing great work. this is not just a game. it is fine for other people do good work as long as we are playing our game to our full capacity. what we think about everyday, we will have more than our fair share of attention and acclaim. that's the focus. that's the north star. and what you want is lena dunham
feeling that there is not a better place to work because she talks to her friends in the creative community and she is talking and saying, this is an incredible experience. and it becomes catalytic. >> if nothing else, we come out with a new slogan for hbo today, we do good [ bleep ]. it rolls off the tongue. lena dunham, and coming with what you are known for, having a good instinct and saying, make a good show for me. walk us through the process. >> actually it precedes me. what really happened, and this speaks to our culture i think, is a young executive in los angeles named kat mccathry, she saw "tiny furniture", lena's
first movie, that she made for $37,000, i think. and kat took the dvd for "tiny furniture", brought it back to the team. lena processed the pilot. everybody watched "tiny furniture." nobody knows that "girls" is going to be "girls." you do know that is a differentiated voice which defines us. it was kat in l.a. all of us looking at it and feeling very very comfortable this is something special. that is breaks into the like it does, nobody knows. that that's going to happen. what we knew about "true detective" is that it was excellent. 12.5 million viewers. that, you can't predict. so grant tinker used to have a
celebrated executive at nbc back in the '80s and '90s. we are looking for the two ps. proud and popular. the truth of the matter is, since you don't know whether you will be popular. whether the show will break through. you didn't even know that about "thrones." all your north star has to be, are you proud of them. and if collectively we're proud of the product, of the scripts, we feel shared vision with the people we're working for, we're very comfortable with that. and more and more if you stick to that, you're going to find that you have your fair share of things to break through. >> you were smart to trust your gut on "true detectives." but again, another lena dunham story. a guy that wrote novels. not particularly popular novels. then writes up the show. i don't think a lot of tv executives would have taken the meeting and --
>> when mike at the time, and myself, read something like 420 pages, you knew this was a remarkable piece of work. and to have matthew and woody attach to it, terry directing, everyone felt pretty comfortable this is consonant with our brand. what you don't know is that it is going to become such a huge part of the cultural conversation. that you just can't predict. i'll be honest, if you said that would do 12.5 viewers, i would have said, highly, highly unlikely. it is very -- it is complex. it is dark. you have to stay with it. you have to pay attention. people loved it. people loved it. >> and in a huge audience. speaking of which "game of thrones" has been a cultural
explosion. what has that meant in terms of your brand, it is nice to have the 17 million, right, have that show -- >> 18. >> oh, excuse me. never get your numbers wrong with richard. know that. but do you need a massive hit like that? >> no. listen, it is wonderful to have something very high quality, very much on brand and it breaks through, becomes a global phenomenon, huge back end home video attached to it. this is, you know, the other side of the coin is the most pirated show on television. but i always say in response that, that the bad news story. the good news story is 18 million people in the united states are watching it legally. but that all david benny, dan weiss and george martin.
that is mike and i believing in david and dan, listening to their visions, seeing their passion. david and dan really are quintessential and they love the product. they know it in their bones. they breath it. and i think for george, whose whole life is built around the books, to have entrusted them with the legacy of the series speaks volumes about just how special they are. >> i was interested to read that at hbo, honest on the number here, 78% -- >> 80%. >> 80% of viewership is for theatrical film. >> yes. >> what does that mean for your business? >> it means you have to have the movies if you run a successful premium television network as we run. because while the original
programming takes a disproportionate share of the halo as it should, because it the original work of our network, the truth of the matter is that consumers still love to watch hollywood movies for a ls to watch hollywood movies for a second, a third, and a fourth time. and they are in the tens of millions of viewers. so you put fast and furious on, you're going to have 21 million viewers of "fast and furious" over the course of that run. so it's very, very important to make sure that your theatrical movie lineup is there. the halo on our brand, the driving dynamic, what gives us our pricing power i think is the combination of that theatrical sirtity with the cultural cache of our programming. you need both. >> as you know, this business moves so quickly. >> yes, it does. >> what do you do, richard, to
make sure you're not caught flat footed and celebrating irrelevance today? >> we spend about ten seconds celebrating today. we wake up, i have a little sheet of paper i keep in here. i call this to be polite what can get screwed up today list. which i keep very close. >> an optimist. >> well, you got to be very vigilant all the time because you're right, the velocity of change is extraordinary. look, our digital evolution is a big part of our thinking. hbo go is a remarkable product. it will evolve and get better and better. and what i say all the time is we will not be caught without the ability to pivot both with our parents because i think whether it's the cable partner or tell coor satellite partner, we want to grow with them. we think there's still a lot of growth left in this business and having an exciting digital product where you can watch hbo on your playstation, on your
xbox, on your kipdal, on your ipad, that's very, very important particularly for a generation of young people who more and more as you well know are getting their video in another place from the tv. >> so you feel yourself competing directly with say netflix? >> no, we feel ourselves wanting to always evolve our own brand. and what weep think about is since more and more people want the option of watching hbo on different platforms we want to make sure they have that. that's what hbo go is all about. globally as we improve on this ip platform, you think about a billion tablets and smartphones around the world and you imagine the optionnality globally where we have 85 million international subscribers and growing, that's a very exciting dynamic. we're going to make sure we continue to advance the global -- the digital possibilities of the brand,
we're going to continue to make sure that we create as many options as possible for our customer and it's all at the end of the day about the product. so yes, you want people to have the convenience of watching it on their ipad or playstation but they ain't coming there if there isn't a magnet to get them there. so first and foremost on the north star, make the content outstanding. secondly, build as much dexterity as you can so people can watch when they want, how they want and where they want. >> less than a minute left on our shot clock. the light became yellow our way to red. give us a little hint what's ahead for hbo. >> we have, well, wonderful piece by the entourage guys called balers which stars the rock about aging football players at a certain period of their life set in miami. think it will be a huge popular hit. it's poignant about kind confident end of people's
careers and how they evolve. we have a show called "the brink" starring tim robbins as secretary of state jack black as a foreign service officer. i liken it to kind you have m.a.s.h. in southwest asia, satire and parody of america's hubris in getting involved in different parts of the world. "leftovers" created by the man who brought us "lost" a kind of metaphysical, you've seen the trailer. it will be a break-through show. "west world" which j.j. abrams is producing based on the movie and this may coming "the normal heart" based on larry cramer's award winning play directed by ryan murphy starting julia roberts and mark ruffalo. so we have a is your fit of new things on their way. again the blessing for us is the line at the door of talent, of artists who want to be part of the network and you know, our job is to keep them coming in
and make sure that we continue to create an environment where they can do their best work. >> just between us girls, brad pitt on true detective? >> i cannot say since i heard this was being streamed other than to say there's an awful lot of interesting people who because of matthew's brilliant work and woody's brilliant work are in line to do next season. so stay tuned, willie. >> brad pitt's on true detective". thanks, everybody. >> so richard, i hope you'll be bringing brad pitt next year, bring him along. thank you. thank you. thanks, willie. love. >> willie, brad and me. >> i want you mostly. >> for a change of pace, we have james goreman, the ceo of morgan stanley. he will be interviewed by steven rattner who may or may not as you know from "morning joe" have
charts with him. >> i don't know. that was not very enthusiastic applause for us. okay, thank you. >> it's always dangerous to follow two guys from entertainment who weren't wearing ties. we're going to do our best. we have 16 minutes and 3 seconds which i guess is a version of speed dating. i never went on a speed date. i don't know but -- >> did not. >> okay. >> we're going to do our best to try to do about five years of financial history and the whole future in this time. so let me -- everybody knows who james is. we've known each other a long time. what a great job he's done at morgan stanley. let's just go back and try to do this pretty quickly and get ourselves caught up. so looking back at history,
there's been a lot of chatter about what could have been done differently. i'm going back to the 1990s to the time of glass/steagall being repealed to the time when a decision was made not to regulate over the counter derivatives, the whole deregulatory phase, the decisions not to impose tougher capital requirements on investment banks, things like that. so if you sort of take that time sweep that ten years or so, what should we have done differently? >> well, firstly, great to be with you again. we have known each other a long time. for those of you who stayed for the banking portion and the dead part of the day, we appreciate that. i thought for a minute they're giving prizes out outside as everybody got up to leave. but you know, i'll try and do it justice in 45 seconds or so. it's very complicated. the country went through a period of tremendous prosperity. so there was a great wealth
effect from that. we came to believe that owning a home was a right rather than necessarily something earned. and that by the way, that right was promoted by successive governments and by the banks. the banks, in turn, were complicit in frankly adopting appalling underwriting standards that allowed folks who couldn't own homes to own which if the economy ever turned would lead to disastrous results, which it did. the banks themselves through years of prosperity leveraged up their balance sheets so that at their peak, there were some banks in this world that were leveraged 60 times. that means if they're wrong 1.5% of the time, they've wiped out their capital. now, not everybody's that good particularly when things get really grim. so you had very over levered banks, very poor underwhiting
standards, a lot of people purchasing real estate that could not afford it in a down cycle and eventually you had a down cycle. the barriers in protecting against the down cycle is it's okay because the banks have enough capital and liquidity. guess what, they didn't. so when everybody's seen the film it's a would you feel life". when people want their money back, they want their money back. it's not there, it's lent out to somebody else. that understanding which creates a run on the bank is what drove the crisis. so complicated story. >> but that is a liquidity crisis, not a sol ol vency crisis for those who are not bankers. that's not the money being lent out to the house next door versus the banks simply being bankrupt. and so which was it in this case? was it all liquidity? i think some of the banks arguably were bankrupt. >> i think what happened was you had enough poor assets on bank's balance sheets which are written
off which then destroys the capital buffer. when institutions or individuals see the capital of their bank approaching zero, they say, well, you know, either this thing is going to turn around or the bank is out of business. if the bank is out of business, i want my money back. i'm going to get it back sooner. that starts a run on the bank. the customers of the next bank look at the first bank and say that happened there, we could be next. bates get my money back. you get this cascading thing. it began with poor asset quality leading to diminution in credit leading to a crisis in confidence leading to i want my money back leading to a systemic run on the financial system. and that was the single bravest challenge to our financial system that we've had since the great depression. >> so in a word, should we have repealed glass/steagall which is the law that kept commercial banking deposit taking banking away from underwriting is activities? should that have been repealed? yes or no?
>> no, but if you step back from it and look at the broader consequences for the financial system, it was of many of the sort of monoline institutions, bear stearns got into the trouble, lehman brothers, norman rock and the uk got into trouble, wachovia bank which was for all intents and purposes got in trouble and so on. >> what about regulating the derivatives? should that have been done sooner? >> listen, you can always second-guess whether things could have been done sooner. >> right. that's what i'm asking you to do. >> and i'm avoiding your question. >> okay. >> where do we go from here? >> let's move on from there. >> that was pretty swift. we just covered the whole financial in five minutes. >> no, i'm going to give you another question to avoid. let's get into the fall of 2008 when the crisis really hit the fan. lehman brothers, bear stearns had been saved as we know. lehman brothers wa the next one
up. decision was made not to save it. we can talk about whether they could have and the legalities and all the stuff but in your mind, was that the right decision as we know when lehman fell, the aig crisis came immediately after, t.a.r.p., a lot of the other things. so lehman brothers handled right, handled wrochk? >> you know, i think it was handled right. i think they made the call with the facts at the time which was essentially that this government should not be the full symptom for every financial institution out there, which would encourage the kind of reckless behavior that we were trying to to avoid. i think the government was making a statement, a courageous statement that has been second-guessed many times. i lived through the financial crisis as you did. i was sleeping on the couch in my office many nights. we were working you know continuously for six weeks. you were making hundreds of decisions every day. and for the way the government stepped in at that point, listen, you can second-guess a bunch of them but in aggregate, i think they did a phenomenal
job. >> but they didn't save lehman which meant aig went down and they ended up putting more money in aig than what it would have taken to save lehman. >> and unfortunately they didn't have a book on the shelf that said here's what happens if you don't save lehman. in life you're presented with the facts in front of you. you have to act based on the facts in front of you. ultimately, look where we are five years later. compare it to the great depression. the great depression started in 1929. unemployment peeked at 30, 32, 33%. it took 12 years for unemployment to get -- 12 years for unemployment to get below 10%. here we are five years after the great recession, and this economy may be the strongest economy in the world right now. unemployment is down around 6%. not where we want it but improving. i think they did a lot of things right. were they perfect? but it was like listen, you had geithner, paulson, bernanke you
know, this was sort of jeter, jose rivera and i don't know, i'm australian. i don't know. i only know two baseball players. >> throw out a few australian cricket players. >> the yankees at their best on plate in the biggest financial crisis in history and the chairman of the team was the guy who spent his life studying the great depression. i think them did a phenomenal job. >> nonetheless, the country is not in love with bankers. except for you and me of course. the country is not in love with bankers. there's a lot of acrimonious. >> i did not know that. >> well, i'm here to speak truth to power. so the question is, was there a way to avoid that? should, for example, when the t.a.r.p. money went in, i don't want to get too technical, should it have gone in on tougher tougher terms and the shareholders have had to give up more? should bonuses have been
curtailed for a longer period of time. lastly a question that is often asked, why did nobody go to jail? >> can we hold that one for a minute? >> i want to give you time to think about it. >> work down the descending order here. you know, t.a.r.p. was kind of inspirational. here you've got a couple of financial institutions fail. and you have a bunch of other financial institutions lined up like the planes landing at newark airport all a coup counsel miles part but all descending and all with an absolutely certain outcome if something didn't happen. so the government steps in and say okay, if you go back to sort of my root analysis which was credit quality, writes off capital, crisis in confidencecy. so bank run. the first point the government can intervene is give you more capital. so the government intervenes by saying not just the weak bank gets capital which i thought was very clever. there you're identifying the
weak bank or banks, but everybody who's big gets capital. you all get it on the same terms. so in the u.s., what we did in that month we gave out and our institution received $10 billion from the u.s. government and taxpayers. we got the capital and with it came certain obligations. basically interest rates and we paid i think 21% effective interest on the capital which was a good return to taxpayers. they deserved it. but then immediately because we didn't like paying so much money we went out to the market and raised the money, strengthened the institution. contrast that with europe. they didn't require people to take capital. they said if you think you don't have the enough capital, then go and raise some. nobody thinks they're going to have to go and raise it. as a result, the european banks five years later is still working through the issues our government solved in 2008. why nobody went to jail? i used to be a securities lawyer in australia a long time ago.
and i know that countries are similar and there are some differences but as far as i know to go to jail, you've got to commit a crime. and you know, fact of the matter is and i'm not talking about the ponzi schemes, the madoffs of this world. bad judgment, incompetent, negligence, greed, these might all be socially unacceptable. lead to a lot of personal embarrassment and potential financial ruin but they're not criminal offenses. and you know, the fact of the matter is we have laws on the books for a reason and when you go to court, you have to demonstrate that the law has been broken and the criminal code has been broken. where that has happened in the rare instances most people have gone to jail but simply taking people to jail for messing up in their jobs, you'd be locking a lot of people up in corporations and outside. >> let's move on from that. let's talk about the present and the future. we had dodd-frank pass this
2,000 page bill that is complicated. one of the seminal questions about dodd-frank, does it take too big to fail off the table? does it provide for a way to wiped down a failing institution without excessively rewarding shareholders without having to to go through everything we went through in 2008? is there an orderly way to deal with that institution that is not just il liquid but insolvent. >> i think just to broaden it a little bit, i think of it as three pieces. number one up front. banks are required to raise their capital, raise their liquidity and cut their leverage. the analogy if you're going to see your doctor, you've got your genes to deal with, diet and exercise. put the preventive measures up front. on the back end, if things go really bad, there is now an orderly liquidation authority so we don't have this lehman-type
failure where nobody knows who owns what. >> you think it will work without there being a market panel? >> it has been tested. in our case, it's thousands of pages long. but the barriers are up front. we have a process at the back end. along the way we go and see our doctor, go to the federal reserve and say dear doctor, here are our numbers and they say i'm sorry you pass or don't pass. that's the test. >> that's been happening with banks sense the federal reserve was created. the fed was supposed to be doing this for the last 60 years. >> it's fair to say i don't think they were testing bank's viability in what's called a severely adverse scenario. the parameters of which are much worse than 2008. listen, i said once in an interview and was roundly criticized for it that i thought the risk of another financial crisis like the up with we've just had in my life, the risk of that happening in my lifetime was near zero. of course, some wags said obviously, he's got some big
illness because he's not going to be around very long. so not true, by the way. i'm perfectly healthy. but i think in the last 200 years, there's been a financial crisis of sorts every 14 years on average. and you know and have lived and worked through many of them as have i. or not that many. we're not that old. >> this was an extraordinary one. >> let me move on because you described the new regulatory apparatus, the checks, this, the that. the question gets raised can a bank like morgan stanley compete under these kinds of regulatory restrictions whez you have a whole bunch of other firms running around outside of the system, hedge funds and private equity funds and other pools of capital not subject to those restrictions. so can you compete? do you stay as a bank holding company? do you give that up and go back to being an investment bank? how do you nav gave the through this whole world.
>> the investment banking industry for all intents and purposes have disappeared. balance sheets greater than $500 billion will not exist in the future. they're all bank regulated and they should be. they should be one governance process which we have in the fed. can we compete? absolutely. you choose the businesses you can get the most efficient return on capital. we purchased smith barney from citigroup. this month we will break $2 trillion of financial assets in that business. it will be one of the largest businesses in the world. low capital usage, great returns. that balances out our institutional securities business where we bring companies to markets and swriz on mergers and acquisitions and so on. every institution has to look where they can get the returns for the capital the shareholders have given them and adjust accordingly which we've done.
>> so you're moving away from the highly eg hated investment banking types of businesses? >> i wouldn't say we're moving away from it. we've added half of the firm which is now what i call the ballast. it gives us stability in the storms and the other half is the engine room that really when things are moving and the economies are charging you need to raise capital. you need to bring companies public. that's the other half of our firm. we happen to think we've got a business model which meets the best of both worlds. time will prove whether that's the case. >> the lending club and prosper which are they what call peer to peer lending where there's no bank in the middle. it's all done on the internet. there are some credit qualifications on both sides. but the bank that provided the credit evaluation and so forth is out of the mix. is that a good thing or a bad thing for society? >> listen, society started off with a barter system before the first bank which i think is the name of the bench in in venice.
bank cofrom the bench was formed. i think it's great. it's innovation. payment system and the whole credit card systems are a form of innovation replacing cash. ámarket, they can do it efficiently and manage the credit risk, god bless them. it's not the end of banking. >> i'm not saying it as much as a worry for you. is it going to end in tears with some set of problems emerging that people hadn't focused on or hadn't been appreciative of? >> nothing is risk free and particularly around money where there are a lot of things at stake in high volume. again, it's people properly understanding the credit risks that they're taking. it's one thing to give somebody money because you're getting a sport aught return on it. what really matters is getting your capital back first. >> i have a lot more questions but no more time. james, thanks so much for doing this. >> thank you, steve.
>> i thank you. i understood almost every word of it. so i thank you, mr. goreman. as always. and now we're going to move from making money, hold on to your seats to giving it away. charles best, ceo of donors choose.org and darren walker of the ford foundation. welcom welcome. >> so charles best, cover boy, donors choose is among the most celebrated and innovative ngos anywhere in the world. >> that's kind of you. i'm going to interrupt. when i was a public high school teacher in the bronx, i taught for five years and donors choose.org was just an experiment that my students and i would work on during our after school hours. there was one person in the world of philanthropy who saw our potential and that was darren who brought me in with my
students to let people see what we were up to. >> because you were doing this amazing innovation. now you've become very much associated with a new sense of philanthropy. i want to -- i want you to reflect on a quote that i am inspired by and challenged by when i think about our work at the ford foundation. it's a quote by dr. martin luther king about philanthropy and nil lan throw pivots. what he said is philanthropy is commendable but it must not cause the philanthropist to overlook the circumstances of injustice in america which make philanthropy necessary. and so i want to have you to reflect on that in your own work. you have created a platform that is one of the most popular platforms for microphilanthropy
in the world. are the people who are on your platform, are they thinking about the injustice in american education when they click to buy that playground or that trip to the met for a student in the bronx? >> that quote which weighs on me and inspires me i think evokes an understandable criticism of donors choose.org which is that you are letting private citizens let government off the hook when citizen donors step in where the system is falling short. and you are not inviting state legislatures and governments across the united states to stand down now that donors choose.org is here. of course, if that were true, i think we'd all quit. and what we see happening is that when someone gives to a classroom project on our site, very often, a 70% chance in fact
that this is their first real encounter with what's going on in public schools on the other side of the tracks. and they emerge from their giving experience fired up, politically angry because they've just had a much more vivid encounter with the unmet needs of students in low income communities than if they had read statistics in a newspaper article. so ray large proportion of donors say they are more likely to vote in an education budget referendum or take some other form of systemic protest as a result of being on our website because it was energizing rather than reassuring when they encountered these classroom needs. there are several more things that we're doing to change the system itself. >> are you building a movement of angry people about public schools? is -- are you raising the consciousness of these people who -- and i'm one of them who
sit in their comfortable homes and go online and look at your pictures of these terrible places that we can't believe are american schools and try to -- are you moved building a movement? are you about a movement or are you a nice platform that allows people to go and buy classroom products for kids? >> yeah, yeah, well, you as the audience will be the judges. you each have a $25 donor's choose.org gift coward or board of directors has underwritten so you can choose a project to support. this is the gift of giving that stephen colbert, our board member gives to every guest on his show. when find a classroom project that makes your eye twinkle and spend your $25 gift card on it, let me know if that was an experience which makes you feel like everything is now okay or whether you've been awakened to needs and challenges that you didn't know existed beforehand.
but we do think that we can show the world that crowd funding, donors choose.org specifically but crowd funding generally is not just a thousand points of light of sort of feel good, one to one connections, let people ask for stuff, let people be and he gels, everybody can feel warm and fuzzy. there are three ways we think we can help to change the system itself and i'll give you headlines. one is by piloting a third way on teacher performance pay where teachers get donors choose.org classroom funding credits commensurate to student educational outcomes. think of it as a performance bonus but one where the currency is not cash money. it's classroom funding credits which has made this flavor of merit pay much more amenable to the teachers union and the teachers themselves. second way by letting inventors and entrepreneurs circumvent the
complex and introduce new tools to teachers without having to hire a force of salespeople and lobbyists. the third way is opening up our data so that polesmakers and budgetmakers can see what resources is teachers most need in bed-stuy, brooklyn or what louisiana high school teachers are thinking about as expressed by the projects they're creating op our site. we think we can give voice to teachers at the budget and policy making table by opening up the data generated by the 600,000 classroom projects that a quarter million teachers have created on our site. >> what's been the biggest prize for you? when i first met you, you were really naive, charles. you were really naive. and i was so inspired by your naivete and your determination to make a difference in the lives of these kids. and so over these years, what's been, if i were to say, tell me
your biggest surprise. >> there are still district leaders who want to shut down donors choose.org because they don't like the idea of teachers getting funding for books that they might not have approved of or going on field trips that deebate from the mandated curriculum or just getting any resource that they're not personally authorizing and controlling. and this began in our first year when we were operating out of my classroom in the bronx and another teacher got funding for a field trip to go up the hudson river on a clear water vessel. she had gotten oceanography if i training the summer before and was going to take her students fishing testing -- taking water samples, learning about the hudson river ecology. students had signed. parents signed off. principal signed off. when the district administrator heard that this field trip had been funded through our site, he told the bus driver to turn around right as they got to the
hudson river and $86 the field trip which was the similar reaction to a school principal in chicago who teld a teacher she would be fired if she used our site again because her first project which requested dictionaries was respectful of the school but it revealed that the school didn't have dictionaries by virtue you have requesting them. >> we shouldn't be just angry about the inequality but about the system and the bureaucracy? and i think. >> that's right. >> the question is, how do you navigate that politically? because what you're doing is politically very combustible. and very disruptive. >> i think we're still taking some comfort in that naivete. you know, initially we will just kind of circumvented the powers that be and the bureaucracy by going directly to teachers. we doll keep school principals in the loop every time a project is funded and tell them what tiers are en route to the school
but the teacher does not need to have first paid their dues or gotten higherups to sign off. they are a social entrepreneur when it comes to donors choose.org who does not need the signoff of anybody. they can create that project. if doaners think it's worthy, it's coming to life. where we are kind of ignorant is how the to get the power that be to pay attention to what our teachers are trying to tell them in the projects that they're creating on our site. we know we can create killer info graphics when we open our data that show what books high school teachers think are most effective at getting kids hooked on reading as expressed by the top ten mostflectly requested books. we don't no p know how to get policymakers to pay attention to those info graphics. >> you're also not just an innovation platform? you are innovating in actually what the demand is by what you see? i mean, you seals a lot of things that i would imagine come
in trends and that could certainly be aggregated with policy implications and yet, you don't have a foot in the policy making? >> that's exactly right. going to need to partner. we think we can be the best at creating an amazingly vivid giving experience and liberating teachers to tell the world about their best ideas for helping students learn. we'll never be that great at lobbying. we're going to need a partner for that. speaking of trends we see, i'll give you one example. it shows policymakers should be paying attention to what teachers are trying to tell them but so too schools that train teachers. we noticed not long ago there were a lot of special education teachers who would request books on our site for students to read to therapy dogs. because they had concluded that special needs students are often very reluctant to read outloud in front of the classroom because they're afraid they'll
be taunted. but if that same tuned is given a book to read to a dog, they've got a 100% attentive nonjudgmental rapt audience and this student can absolutely blossom as an orator and schools of education are not hip to this discovery. this is the kind of thing that strictly teachers, classroom teachers on the frontlines using their kind of primary street expertise that only those folks come up with these insights. yet, i think it would enrich the training of any special education teacher to know that this is a neat little trick for getting a special needs student to come out of their shell. >> so let's switch gears from the bronx to notting hill gate and your friend gwyneth. so you i understand have recently -- are she's joined the charles best bandwagon. what is this goop thing that i
keep hearing about? >> she doesn't knee from adam. she knows donors.org. i was noting that this newsletter that she creates has an incredible following. it's always been interesting to to us to see which media outlets generate the most activity and inspire the most people to support classroom projects our on our site. the media outlets are not the usual suspects which drive the most giving. goop would be a good example of that. a lot of people supported our site because of the newsletter from gwyneth than were inspired by national news stories. >> most education advocate sill organizations don't have access to gwyneth and your friend oprah. how would you think about counseling them for effectiveness? they don't have all of the charles best charisma and story
telling capacity but they are doing important work. that's the message those organizations who are the 99.9% of the education advocacy establishment? >> i'll tell you how oprah came to learn about our site. after 9/11, a lot of the teachers at the schools beside ground zero were creating projects on our site to recover from the attacks on the world trade center. there was a first grade id teacher whose students had been saved by a group of firemen. they wanted to do a musical performance in front of the fire ladder company for which they needed musical instruments. there were hundreds of these projects. i called 100 reporters. they all hung up on me. my 100th call was to jonathan alter at news week at the time, called him during my lunch hour. he was the first reporter not to hang up on me. he wrote a piece arguing that this little experiment growing out of a bronx classroom might one day change philanthropy. and oprah's producers read that
story. so i think our example is i'd like to think one of kind of hustle and humility that years later pays off. >> well, charles, when i met you over a decade ago, you were naive in x ways but what i saw was a determination and a commitment to justice and righteousness in this country. and are you doing that with donors choose and making us all very proud. >> thank you very much. you au it first, darren. >> thanks again to charles and darren walker. that was a fascinating session. thank you so much and now we have two very fun folks. your services are no longer needed meet the robot. andrew mcafee co-founder of m.i.t.'s institute on the digital economy and co-author of the second machine age with
david brooks, author and op-ed columnist of "the new york times." at our opening dinner last night, david gave a riveting sobering talk about the subject happiness. in the back of my mind, i had the pharrel williams song going on. david did away with that very quickly and looking at the contending moral and economic tracks to happiness. i hope you'll get into some of that in terms of the moral versus the economic as we look at the machine age that's coming. david brooks. >> i don't know how we're going to do that with computers. but we'll try. >> i ask short questions. first question is, machines think, it humans think. what's the difference? >>en at first thing that i want to say is i think we both wish that i were thomas pickheady these days. you think you've written a book about economics and somebody shows you what that actually means. so hopefully we'll get a chance
to talk about what he thinks is going on versus what we see is going on. but machines don't think. in the same way, there's a great me near of artificial intelligence who said airplanes don't flap their wings. we humans see cool stuff going on. nature and we build machines that get there via a very different path. when i talk to uber geeks building watson and making cars that drive themselves and i said are you building artificial brains and minds, they generally say i have no idea how the brain works. i'm solving an engineering problem. if we happen to back into an artificial brain, that would be a coincidence. >> there are guys trying to reverse engineer the brain and put that in silicon. if they're successful, it's a horribly difficult problem. so the terminator, the matrix nightmare is not the one that i find myself wake aging up screaming from. >> let me rephrase the question.
it seems there are two sorts of problems. one i would prefer a machine to do it or at least a set of rule based checklists maybe and one i don't want that. so i'm thinking i walk into a hospital with some kidney problem. i probably want the checklist. i'm going out on a date, i'm not sure i'm going to fall in love, i don't want the checklist. >> you do want the checklist in that case. >> social life at m.i.t. >> exactly. >> take dating advice from m.i.t. people. terrible. >> skeptical. >> we should probably be skeptical about the dating example. but most of us have lousy intuition about a lot of things and a very lous u internal compass and weak ability to look at ourselves and be objective about what we see. i'm not saying we should turn over all of our personal decisions to algorithms. we should probably be using them more than we are now for fairly
personal things like how should i conduct my dating life if i'm single or what kinds of choices should i make there. don't outsource everything to the computer but the market share of the algorithms should probably go in a lot of domains. >> some people say that intuition is unconscious pattern recognition. >> i am one of those people, yes. >> to believe otherwise, you'd have to believe there's something kind of magical or ineffableable about the human intuitive ability. i just don't believe that. i don't think it comes from any kind of soul we have. it comes from this weird computer between our ear. it's better at really high end pattern matching than anything we've been able to do with digital stuff these days. but not better in every domain and the digital stuff is getting better all the time. >> okay. now we're interacting with machines and the chess example i've always bridled against that because why don't you describe why humans working with machines
are better at chess than machines only? why is that. >> chess is a wonderful thing to look at it because it encapsulates this seesaw between human and digital intelligence. before we had chess playing computers we used to think that chess was one of the highest expressions of human intelligence. there are great quotes from nab ba coven an others talking about mystical chess grand masters out there. once computers got better we looked and said this is just pattern matching. of course, computers would be better. we didn't think that in advance. i had the chance to talk to garry kasparov. he was the world chess champion during an interesting period. when i first became world champion, played 32 simultaneous matches against the best chess playing matches of that time. he won 32-0. ten years later, ibm finally deep blue finally beat him in a pretty close match. now it's not even close. they asked a grand master a little while back how he would
prepare for a match against a computer. he said, i'd bring a hammer. so that head to head is completely boring. machines have raced ahead except when we're able to combine human ability and digital ability and play these freestyle tournaments where any kind of team comes together. i get optimistic as a person again because it turns out the right team will beat a grand master or a supercomputer or a grand master with a supercomputer. the right team is fairly geeky people who are both chess geeks and computer search and algorithm geeks and they combine what they can do versus what their machines can do and you just beat everybody. >> what is the grand master bringing to the table? >> kasparov talks about it as the ability to jep rate a new idea, which seems weird to me because the computers can just iterate through so many more ideas than we can these days. there is still something, especially in that portion of a chess game, and i don't play nearly well enough to know this
in detail, in the middle of a chess game when things are completely wide open, our weird computers can do a better job at seeing a for real opportunity still than the digital stuff can through some pretty i won't say manual cal but pretty wild process. >> will computers ever write columns? >> and i should say that thinking of some of my fellow columnists. maybe they already do. >> they clearly already do. >> not "the new york times." >> but the earnings announcements for corporations that appear on the forbes website are written entirely by an algorithm. that's just pretty run of the middle journalism. here's a body of facts write propose narrative on top of that. we can automate that and none of us can tell the difference if the by line didn't say the narrative science instead of a person's name on it. it's always a good idea to platter your enterer, what you and your colleagues do, i don't think it's close to being
automated. i've never seen a piece of technology that could awaken nel kind of deeper response in me or another human. one thing i've learned that the mantra i keep repeating as i try to figure out what technology can and can't do, the mantra is never say never. >> you're around a lot of young people at m.i.t. preparing for the workplace with a much heavier technological footprint. >> yeah. >> how do you tell them to prepare for that, given they won't know exactly what the technology is but they know it will be pretty big? >> i don't worry too much about the kids at m.i.t. mark andressohn says in the future there are going to be two kinds of jobs. the the jobs that tell computers what to doen at jobs that were told by computers what to do. only one of those categories is a well paid good job to have. the m.i.t. stinds will be in the first category. i worry about the people currently in the middle that is populated by human beings right now if andressohn's vision is right and i kind of think it is, that middle is going to be
hollowed out even more than now. that is what keeps me up at night. >> i just want to tell you how journalism works. if i want to write a piece ripping you, i would take the sentence i don't worry about kids at m.i.t. says m.i.t. professor. that would be the only quote you get out of this. >> if that's the worst thing i say, i would be really happy with that. i don't know how many of us shed tears for the poor students at m.i.t. and their job prospects. >> let's talk about this core issue that you hear from everybody else but not so much in your book. and that is that the technology is just going to hollow out employment. even at the high end when facebook -- i forget what they paid but it was something on the order of $300 million or $400 million per employee. so that suggests you can generate a whole lot of value or at least perspective value with
very few people. >> we talk about the two main economic consequences of this astonishing tech progress that we're seeing. the first is the good news. it's abundance and bounty and more stuff. the second is what you point out. we call it spread is our label for it. the fact that the what's app team is way up at the top of any income or wealth distribution now. there are a lot of people at the bottom. exactly as you say, that traditional large stable of prosperous american middle class, it's pretty clear that since about 1980, that middle class has been getting hollowed out. i don't think it's a coincidence that 19 0 kind of started the pc era and this great democratization of technology. it's kind after irony as we have put -- i believe the most powerful tools for personal expression and individuality and entrepreneurship in the hands of people since about 19 0, what we're seeing instead is an increase in spread and inequality in some things na we
care about. >> is that just baked into the cake of tool? >> yes and no. i think that technology does have that super strong tendency but the reason i'm trying to hedge a little bit is i don't want to to be any kind i have reason or excuse to throw up our hands and say, oh, well, that's how it's going to go. good luck to everybody. that's a terrible idea for all kinds of reasons. the last sentence in our book is that technology is not destiny. we get to shape our destiny. i think there are these strong forces but to me that argues more strongly for policy intervention and hard thinking and all the things we as a society can doing to change the equation a little bit. >> what's possibly big enough that you're talking about some reasonably fundamental forces that seem on the driving end just a lot bigger than raising the minimum wage on the policy scale? >> i don't know how prominently that particular intervention should be featured. my, the mantra i repeat about what the right playbook is going
forward is innovation, more innovation and more inclusiveness in our economy. the thing we have to do, there's a great exchange i forget exactly who said it, but the quote was the gentlemen, we've run out of money. it's time to start thinking. i think the equivalent for this era is it's time to start innovating even more than we are. the only thing that's going to get us out of our problems, we can't tax or spend our way out of it. all we can do is grow and innovate our way out of it. some of our current path of innovation is leaving people behind. the other half of my mantra is inclusiveness. the research is pretty we would. social mobility in this country is a lot lower than we think. and it's been a lot lower for quite a long time. this american dream you and i probably still believe in it and carry it around, it's been a tougher sell these days. so finding ways to actually restore that is really
important. the first winner of the nobel prize in economics had a beautiful way to frame it. he said, inequality is a race between technology and education. technology tends to exacerbate it it, education is the great moderating force. let's not forget that. >> let's talk about some of the technological peekts within industries or the places where a lot of us work. in my work area, the internet has had this weird effect that was unpredicted. used to be a reporter, you'd going to press conference and write 00 words summarizing what happened. that's basically gone. and i call those people the middle distance runners. >> yeah. >> and the people who are really good with the sprinters who are tweeting out a zillion things a day. >> yep. >> or what i hope i am is the conceptual people. >> yep. >> it's harder to find conceptual people, strizingly hard to find people. basically it's distance people and sprinters but no middle distance in my field. what are other fields where you see weird effects from
technological -- >> that pattern you identified is to my eyes a flavor of the hollowing out we're seeing happen over and over. the profession of law is in some trouble these dpapz there are several reasons for that. we're probably turning out for law school graduates than we need. but also that middle distance of law is this work of reading a whole box full of documents and looking for patterns as part of a discovery process or something you. hit a button, you get that right now. a very, very good lawyer the equivalent of a "new york times" columnist for a lawyer is somebody who can prevent the problem up front or negotiate through a complex deal. i don't see the that getting automated anytime. but there are some pretty low level people in those middle distance runners are going away. i wouldn't be surprised to see the same thing happen in medicine. ibm did not build watson just to win the game of jeopardy. they didn't unplug it after it won on jeopardy. they sent watson to medical school.
i'm convinced if watson is not already the world's best medical die nostician, it will be very quickly. there's a lot of doctors in the middle there. >> did you happy to read michael lewis's of most recent book, flash boyses? >> not yet. >> what's interesting is that people use technological skill to sort of rig the game. most people they hit had the bye button and assume it automatically leads to a sale. of course, there's a lot of steps in there they don't think about. so are there other examples of that of i mean, possibilities for corruption from people who are just understand the technology better? >> yeah, there are tons of them. entrepreneurship and innovation are kind of unguided processes in gem, i think they take us in the right direction and into a better place. but some of it clearly goes into if not outright criminal activities then counterproductive ones or exploiting little holes that don't make us overall better off. they just make the innovator a lot better off.
that's part of the process going forward, as well. i do still think that on balance, technology based innovation takes us into a better place. >> what struck me about that book and your book is the people who they were pushing a button to buy and then when it hit the screen, the shares or whatever they were trying to buy were no longer there. what they were seeing on the screen was not reflecting the real market. they couldn't figure it out. most people just said that's a mystery, i can't figure it out. a very few people were obsessed with the problem and they behaved in market irrational ways because they had this fanatical desire to understand what was going on. you have some of that, as well, that this obsessive ability does have -- it's a unique human trait and character that you can bringing to this technological work. >> the positive label we give to that is a geek. in my world of the tech industry, geek is a term of high, high high praise. nerd is more ambiguous but geek is just the highest thing you can be called.
they've got that character they're just tenacious about a problem. they don't ever let it go. when they have something like an answer to it, what's amazing is technology gives you such leverage if your answer is a type i bit better, you can propagate that answer and capture a great big huge market. so technology, it's not just that geeks like to play with technology. it's that technology amplifies geekerry in a way i've never seen before. >> does it defeat social skills? does it minimize -- what other skills become amplified? >> i know you're a fan of st. augustine. you teach him in the course. to me he's got the best insight about what's going on with our screens which are unbelievably addictive, our friends are there. there are these bright july colored things. they fit into our pockets. they're accessible in in two seconds. when the person we're talking to is boring we've got this whole world right here. it's a dire temptation and i give into it way too often. i'm going to get the augustine
quote wrong. he says look what the world does is put these temptations in front of us all the time. our job as to use your words from last night as more mature more reflective or deeper people is to be aware of that and then to fight that battle against ourselves to try to become a better or more reflective person in part by not reaching for the darn phone every five seconds. i still like the phone. i still want it. but we need to be able to have a real conversation. >> you think it cuts our attention span? >> yeah, probably. but i have trouble believing that we could design any technology better at rotting our brains than network television. and we survive that. >> hp bo guy left. >> no, he's cable. it's cool. but my generation survived that just that passive completely nonengaging experience. at least what we're doing now is so much more interactive.
i do have faith that even with these problem areas they're going to make our brains better instead of worse. >> my last question, i tend to say that we tend to underestimate the pace of technological change and overestimate the pace of behavioral change. we have these unique gizmos but still sitting here in this room. will this go away? >> i mean, let's hope not. i interact on technology a ton. i come across interesting ideas and interesting people on twitter, on my blogs. in the online world. there is no sub tute and as a natural entro vert, i would kind of much rather not have to go to conferences and talk with other human beings but part of the struggle that where i've learned is that's actually where you get a spark, a new idea, something real and kind of cool in your life is not just by staring at the screen but getting out there in into the real world. i think it would be dire, dire if that went away. >> we are out of time.
i will say to wrap up, you are a well disguised introvert. >> thank you very much. >> our campaign and 2014 coverage tonight features two governors debates on c-span2 live at 8:00 eastern, a debate from the nebraska governor's race, democrat and republican face off in lincoln, nebraska. and on c-span tonight at 8:00, oklahoma governor mary fallon debates her democratic challenger joe dorman in still water. that's live on c-span at 8:00 eastern. right now a look at some of the campaign ads in that oklahoma race. >> i'm so doorman. in my hometown with, my mom lives close by. we talk every day. here i learned to stretch every dollar, to support the second amendment and to value my public education. >> joe doorman. >> as governor, i'll improve schools by taking franchise tax revenue out of the hands of legislate tors and using all
those funds for classroom instruction. no exception. i'm joe doorman. i'll be a fiscally, pro gun, pro education governor. >> the last four years have challenged us in ways we never imagined. but we've come through stronger, tougher. better. under the leadership of governor mary fallon, oklahoma has changed for the better. she made the economy her top priority and today, we're a leader in job growth and attracting new business and opportunity. she promised to make government smaller. smarter, more efficient. and she has. closing a half a billion dollar budget shortfall and balancinging the budget while cutting taxes. she stood up against an intrusive federal government fighting obamacare and an out of control epa and when we faced our greatest challenges, she was there. to lend a hand. lead a prayer. share a hug. it's what makes her who she is.
a leader. a friend. our governor, mary fallon. because no one cares more about oklahoma. no one. >> i'm joe doorman. as governor, i will always put put oklahoma first. mary fallon is out of touch. she sided with washington bureaucrats on common core and i worked with leaders in both parties to override her veto. >> a plus and a champion for our schools. joe dorman for governor. >> we need a governor who doesn't care what washington thinks. >> a lot tonight on c-span on 8:00 p.m. eastern. >> we continue with the new york inside festival. then former arizona congresswoman gabrielle
giffords. this is 40 minutes. # #. >> we now have a real wind up today. we have bill brat on and james bennett. i will introduce them a moment. >> for those of you who want a second set, i want to thank you for your support. for those of you in the lobby, the man who is keeping us in town, bill brat on. >> thanks, steve. thank you. thank you, commissioner for being with us today. i thought i would open with a familiar sta stiftic that i thought i should repeat again. you will correct me if i have it
wrong, but in 1990, there were 2,245 i think homicides in the city of new york. last year there were 333 homicides in the city. though the population had grown by a million people in the meantime and however many millions more in the city every year. i can remember the social implications were for those across the city. # in the early 90s, and the transformation is nothing short of astonishing. you arrived to lead the transit police in 1990. while no doubt there many factors that explain the decrease, the source of strategies and tactics you put in place with aggressively managing the broken windows with
data driven policing are widely credited with the transformation. you are the guy to ask about what's next. i heard you talk a lot in the last couple of years about predictive policing. i thought we might start there. what does that mean sn. >> the policing is the evolution we are now going through. in policing. we have learned the importance of gathering as much information as possible and as quickly as possible. in policing, that was the comp stat system that we put into place in 1994. the engine that really drove the crime declines that allowed us to move from the all time high in the city and last year the all time low. the good news is so far this year, we have 18 fewer murders than at the same time last year.
the good news is that crime can continue to go down. the k458 enj to do that is to find ways to do it. the ability to get huge amounts of information we can gather without rhythms that have been developed and continually improved upon, we have the ability within the area that a crime will likely be committed unless you put that to the police officer. >> you are identifying the likely hood of a crime. can you give an example sn. >> you are identifying the criminal. the person is living in that area and who has been arrested.
just got out of jail. the trends of crime that are matching up against who does that type of crime. the minority on the tom cruise movie that looks so futuristic with the audience and the iphone and the samsung phone can do what tom cruise was doing that seemed so futuristic as recently as years ago. this is not far-fetched. this is the reality of policing. as we go forward into the 21st century, it's going to be become more common place. the idea of using technology and using big data. using all of the ways of collaborating to effectively keep crime low and most importantly prevent it from occurring in the first place. >> in the future, they feel like 6,000 or 7,000 cameras in the
streets of new york. we had more public spaces and use of drones and so forth. it has been speculative a lot. >> what we can expect is 7.5 million people in 1990. we have we believe 8.5 million, probably more with the 56 million tourists. that number is growing. we live in a very densely crowded city. they will be more crowded. one of the things we attempted to do to police the public spaces. post 9/11 implemented a program called the awareness for the wall street area and growing up to around 59th street and moving north. that effectual legal will be throughout the city. that's the camera system, 7,000 cameras in the private sector and police cameras that are all
interconnected so we have the ability to closely monitor, particular6) ç low in manhattan public space. we also have license plates and scanning capability that is in the future will be impossible. to not have the license plate scanned with an easy pass or other type of location where that number is being recorded. all of this is constitutionally protected. they give up some degree of privacy. they prevent crime in solving it after the fact. # it wants to be the victim of a crime. every morning at my 9:00 technology and big data is an essential part of just about
every crime i look at in that briefing in the morning. >> you disbanded. the conversations ask so forth. do you think that we either in the city or nationally, i guess did lose our balance a little bit. they lose in the struggle of terrorist threats in recent years. when i arrived in january, the unit was down to i think about three officers. it effectively had been disbanded prior to my arrival. and that the remaining three
offices out of 1,000 we spent all of our time on counter terrorism activities. remove of the last three office over the last three years have ceased to occur. it was not going to diminish in any significant way. it was also to try to learn more about the muslim communities. any community in the department did not have a sense of the idea that we are an incredibly mixed society in new york city. different population groups here. from a policing standpoint, the more you know about the various communities, they will be able to police them and develop collaborations with them.
there is an issue happening in the native country that they need to be aware of and generate concerns here. we need to be aware of those communities. i don't think we need to have this particular unit to do anything. we are doing census tracking and many others. they still part of the practice of the rest of the force sn. >> certainly. we have community service offices and each of us have all there is to intimately understand what communities exist. all it is to go out pro actively and introduce themselves and the issues in those communities. ways that we can understand them and interact and protect them better. that's what i'm talking about. i have hundreds of community service officers that are doing a lot of the same work. they are doing it in a much more collaborative ma