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tv   Charlie Rose  WHUT  June 28, 2012 3:00am-4:00am EDT

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>> rose: welcome to the program. tonight a conversation with mark andreessen about technology today and tomorrow. he has seen it all. he developed the first browser, he is now on the board of facebook and other companies and he is a major venture capitalist. >> to me the whole point of capitalism is to unleash human potential and money is the marketer you use and that creates resources that can be put back into society. again, for the same mission to boosting the potential. the people you're help canning create business and wealth so it's the positive feedback cycle >> rose: we conclude with ken feinberg, the author of who gets what, fair compensation after tragedy and financial upheaval. >> the only reason these programs work, i think, is because you reach a tipping
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point where from the perspective not of the victims but from the american people we want to do something to express our sense of community with the victims. you want to reach out for them and that's the justification but it's very, very difficult to justify. >> rose: andreessen and feinberg when we continue. [this is a test
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captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: mark andreessen is here. he is a founding partner of a venture capital firm andreessen
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horowitz established in 2009, the company now has $2.7 billion under management. it has stakes in facebook, four square, groupon, skype and twitter. this marks yet another phase of marc andreessen. he's a co-founder of netscape, that was sold to a.o.l. in 1998 for $4.2 billion. he created a cloud computing company called loud cloud which was sold torúuñ hewlett-packardn 2007 for $1.6 billion. as well as taking an active role at andreessen horowitz he sits on the board of facebook. "wired magazine" calls him the man who makes the future. he is in new york this week. i'm pleased to have mark andreessen back at this table. welcome. so what is the "forbes" philanthropy summit. everybody i know is there. >> it's a lot of the icons of philanthropy and new thinkers. i was on the same stage as mark
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bengehof. my lovely wife laura is speaking on social ventures. she teaches philanthropy. so it's bringing together icons and new thinkers in the field. >> rose: do what? >> to think about the ways philanthropy can be applied. you're going into a brave new world with technology connecting everything and the issues we have worldwide, the new purchases that can be applied. >> rose: what are the new ideas? >> well, the one that we work on a lot in the valley is applying the lessons of venture capital to philanthropy. so this idea of social venture programs for social venture firms is a powerful idea and there's a huge movement in silicon valley for the best and brightest. and young, by the way. >> rose: social entrepreneurship means you'll use the principles of entrepreneurship for social good? >> yes. >> rose: that's what it means? >> yes. >> rose: so you're talking about that. are you also looking for philanthropy to have business models in order to be more effective? >> yes. a lot of what's happening is trying to quantify the impact. trying to treat philanthropy
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more like a business. realizing it is different than a business in that there's not perot fit but trying to understand the metrics and take management techniques. laura teaches m.b.a.s at stamford management school on how to apply themselves to bring more of that business. >> rose: are we going to find out now because there's so much more money being made and amassed by individuals who are prepared to give back so that we will see potential. we've seen with andrew carnegie, with the rockefeller foundation, we've seen it with gates and buffett. >> i think so. we're also going to see there's a lot of... the average age is going to be quite a bit younger. in silicon valley people are getting involved in felon throepy at a much younger age. >> rose: why? >> it's probably a cultural transition. some people still have the model of they make money and 50 years from now they yt% do something but a lot of people want to have a positive impact on the world. the other thing is more and more
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companies have a philanthropy arm, a foundation associated with them, google. a lot of companies were working with the founders. >> rose: have you changed your idea about all this? >> of course. >> rose: from what to what? >> from marrying laura, of course. >> rose: she could influence anybody. >> that's right. she is an expert. she's an expert in the field so she's been teaching for 12 years. >> rose: and her father has been a factor at stanford university. >> a huge philanthropist in silicon valley so i was already involved with philanthropy at w stanford hospital but she and i have buckled down and she's helped me understand how this works. she's taken over our relationship she's much tougher on the places we donate. she grill it is hospital staff on the results of the metrics and goal for next year. >> rose: what's a metric that might will b applied to philanthropic giving? >> trying to measure outcomes and the number of people affected to see if it's medical, to understand what... so we do a
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lot with emergency services so the change in outcomes in terms< be treated or the average weight time are you as interested in this as she is? >> i am. i spend most of my time on the business side because of my day job. >> rose: but you're really interested in the impact of felon throepy on human beings? as is you are on understanding the future? >> to me it's flip sides of the same coin so the whole point of capitalism is to unleash human potential and money is, the t marker you use to quantify the success and that creates financial resources that can be put back into society. again, for the same mission to boosting potential and then the people you're help canning create businesses and wealth and the cycle continues. so it's the positive feedback cycle in human society. the whole thing is interesting. >> rose: have you made as much money... have you maximized your money-making potential or have i
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wanted to make certain pleasures. you know? >> probably the trade i make is i value independence and freedom of movement. for example i've never been a c.e.o. i've never had the discipline to sit down and run a company myself. if i chose to apply myself to that that i don't know if i would be good at it but if i was good at it i'd do better than i have but i optimize being able to be involved in new ideas. >> rose: because you like your life-style and the opportunity to be freer and explore ideas? >> yeah. and to learn about new fields and areas. that's one of the reasons venture capital has been... we're three years into it and it's been very interesting because the job is to define new ideas whereas where you're running a business... >> rose: you go in search of them or they in search of you? >> both. we see 1500 qualified entrepreneurs a year out of the tool of 4,000 in the u.s. >> rose: you announced it at this table. >> three years ago. >> rose: how has it grown in
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three years? >> way beyond our expectations. i think entrepreneurs were ready for a new voice in the field. >> in venture capital? >> there's a lot of great venture capitalists in the industry. so we've inserted ourselves. >> rose: google said facebook has been very good to them, hasn't it. >> that's right. >> rose: and how many google and facebooks are there? you look around it seems increasingly more whether it's all the things... whether it's groupon or the kinds of things that come out of that whether it's zynga, a part of the social media model. more opportunity than you've ever seen. >> well, i have this theory called supper eats the world. we have a slide with a globe and a fork to take a bite out of this to illustrate this. so the idea is that the internet is very widely proliferated.
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increase computers are in everybody's pocket with smart phones so there's more and more businesses of industry that have a big impact so companies go after everything from analytics and anizing dirt soil chemistry to real estate and financial services so we're seeing the model be applied to more industries than ever before which i think should... it should turn successful. >> rose: has digital education not lived up to its expectation but may get traction? up until now you had a problem where people were literally not connected so the difference between being in a world where you're still trying to get p.c.s in peep's hands and online for the first time versus a world where increasingly everybody has a smart phone or tablet and on broadband, those are two different worlds. it's like the world in which people couldn't read and then a world in which people can read.
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there's new technologies that can be used for online course delivery, textbook delivery, online tutoring. that can be done with high definition video and interactive assessment to see how students with doing. >> rose: is are you just... do you just know everything? >> there's a variety of models and he's building a bottoms up model. sy wish i had the kind of... when you don't understand something in the class you just go to saul and he explains it to you. there was always a theory that the internet is a the magic box. >> rose: true or false, google, facebook will maintain their dominance because they have a software head start >> i think it's a bit different i don't think it's the head start i think it's the... the core theory that we have is the
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fundamental output of a technology company is innovation and that's very different than a lot of businesses. the fundamental out put of a bank is loans. the fundamental output of a tech company is innovation. so the value of what you've built so far is a small percentage of the value of what you'll ship in the future so tech companies can never rest on their laurels. they have to be thinking in terms of the next five years of what comes next and if they're good at running an r&d machine that produces innovation they do well over time. it's when things go wrong internally and they stopa júñ innovating that the wheels come off. >> rose: is that what happened at microsoft? >> i think it's too early to tell. >> rose: too early to tell? you reminded me when you sat down at the table in a conversation about my great friend bill gates between the war that took place between
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netscape and microsoft that their market price hasn't changed. stock price. >> on the other hand, here's the other thing, that's true of the s&p 500. it's also true of the big tech franchises. there's a different point i would bring here less microsoft specific and more in general technology evaluations haven't budged at all. and. >> rose: and the p.e. ratios haven't changed? >> the most amazing story in the market right now is cisco, an extraordinary company, one of the bellwethers of technology. cisco's p.e. ratio if you take out cash in the bank is 4. >> rose: why is that? >> so... number one many investors have questions about these companies and it goes back to innovation. >> rose: whether they can sustain the performance? >> so for example a lot of investors have questions. microsoft, will windows phone be... will it this surface tablet work how will they do competing with google.
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i think people are in a bad mood about technology. >> rose: bad mood? >> i think we're living through psychological scaring that took place in the dot-com crash. >> rose: that was 2001! >> absolutely. so from the crash of '29 to the relighting of the stock market to something you wanted to invest in that was 25 years. so one of the things you learned is equity investors who got hit never believed in stocks and it took a new generation of invest who hadn't gone through crash to get excited about equities. the people who lived through the crash, they're defined by it, they remember how horrible it was. it's hard for people to get out of this thing. somehow we got cheated or we got lied to. >> rose: you could argue they could overcome it because of what happens in valuations. look at the facebook i.p.o.
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look at market valuations of google. look how much money google has made since since its original i.p.o. google stock price has gone on and up. >> earnings have gone up. >> same thing with microsoft. apple is the big one. for the last five years apple has delivered annual earnings growth of 7%. unprecedented for a company that size. >> rose: the largest market cap company in the world. >> on their other hand the p.e. has collapsed. >> there has to be a bigger idea than people don't trust tech. since 2001 they have memories of the scars they suffered >> i think people are incredibly bitter and cynical and upset about the crash now we're seeing people enter tech, entrepreneurs executive, press and investors who didn't go through the 2000
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crash. so mark zuckerberg is representative of that and now we're seeing... today's 22-year-old was in junior high or elementary school during the dot-com bubble and they have a completely different mind seth. they don't know what happened. it's a historical they might be reading about the civil war. it's irrelevant. >> rose: it didn't seem to affect you. >> emotional ups and downs. >> tell me what the downs were? >> i'm a big deliver. but now the next year you're being told so i love being in the industry so i don't think we have a problem with it
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>> so no scars? >> i try hard to not have any lingering effectf> rose: we're not talking about the investor class. >> >> but also the entrepreneur class. >> rose: how about the venture capital class. did it have any impact on john dorr. >> i wouldn't say specifically but... a lot of venture capitalists road off of what was called consumer internet. so internet companies that sell something to consumers a lot of these between 2002 and 2007 would not touch those companies and that's when facebook started and twitter was started. >> rose: but twitter hasn't gone public. are you saying that, in fact, these companies are undervalued? their p.e. ratio is too low and if, in fact, they had an appropriate p.e. ratio their
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evaluation would be even more stratospheric? >> so... >> rose: sounds like it. >> you want to be careful... i want to be careful when i second guess the market. the >> well you've spent this last ten minutes telling me the reason that the p.e. ratios are so low is because of an aftermath of the 2001 bubble. >> so one of two things is true, either i'm write about that in which case there will be a recovery. >> rose: so go buy google and apple all you can get. >> in this case they're huge bargains and we'll say it's just like the mid-70s for stocks. >> rose: you're suggesting that's possible? >> that's a possible scenario and there's an easier explanation. the other possibility is the market is correct and is looking at big established tech franchisers and they're about to completely disintegrate. which by the way with my venture capital hat on that will be fine. because the companies we're fund willing try to pick up the slack
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these companies are incredibly strong. there's innovation coming out of most of these companies even companies not doing well are trying to make things happen. >> rose: i think as you've gotten older you've gotten less candid. >> we call it more polished. >> rose: i can remember you saying outrageous things when i met you. anything you said we thought you have to get andreessen take on this. having put you up on that pedestal what did microsoft lose? what have they not had as google and other companies have gained traction and phenomenal success? missing the search, missing this and that? >> i think in retrospect would
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say the government has had a big impact. >> rose:? what way? >> i was an intern in i.b.m. in 1990 and the u.s. justice department went after i.b.m. 30 years earlier? >> rose: and took them nine to ten years before they settled the suit. >> and i was there two decades after that ended and the effects were profound. there were lawyers, there were all these rules. that's a big part of why i.b.m. got in trouble because there was a pal that was cast. you can't underestimate the impact of having your government come at you like that. >> rose: so in other words when the government came at them you think they lost something? >> i think that didn't... i think that didn't help. they had a generational change happen inside the company but like i started out saying, it's too early to tell. these battles play out over a long period of time. >> rose: are you less hungry once you get famously rich? >> you could say that and some people have retired and are literally on the beach or unavailable. >> rose: or doing other things.
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>> or doing other things. but they are hell bent to come after= they just announced windows phone 8, they're building tablets, going hard... doing very aggressive. they bought skype and yammer which is a great new enterprise web services company. >> rose: what does yammer do? >> it's a social networking for inside companies. >> rose: so each company with create its own social network. >> and tie together employees and tie in customers. >> yammer allows you tow do that? >> it's one of the top guys from papal, part of the papal mafia. >> rose: the papal mafia is something, isn't... paypal mafia is something, isn't it? >> it is. >> rose: what was in the water at pais wall? >> testifies peter and elan musk >> rose: they were going to the moon. >> very successfully. and so they had to ship it. >> rose: do you have one of those? >> not yet.
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>> rose: maybe soon? >> i'm holding out. >> rose: why? >> i'll see what comes to market. there was a big net effect where they brought in a tremendous group of talented people people like reed ofman and chad hurley so they're all over the valley and doing all kinds of things. so it's i.q. test 101. you say yes like it's not a... >> rose: is it really. >> in other words to make a lot of brain... smfs somebody who used to be part of the mafia and alumni. >> here's the blank check. you don't quite do that but there's a strong bias. the google mafia over time there will be a facebook mafia. >> rose: whatever happened to cheryl sandberg? >> i understand she's doing well. >> quite well explain to me the
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genius of mark zuckerberg. >> he's a genius who's comprehensive. >> rose: he knows everything? >> he has taught himself to be good at everything. he applied himself to learning how to be a c.e.o. he's one of the best c.e.o.s in the world at age 28. >> rose: wait a minute, one of the best c.e.o.s in the world? >> yeah. you're saying far guy who runs a company with a huge market cap he's at the top? what is it he does and knows that makes it so? >> he's built an amazing team and by the way he built that the hard way. there was a fair amount of turn in the ranks until he stabilized on his team and now he's got one of the top two or three teams in the valley. just kind of across the board
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engineering market. >> rose: and the right c.o.o.. >> he's a tremendous visionary. >> rose: what does he want to do? >> connect the world. >> rose: he'll have a billion soon. >> that's right. >> rose: but that's not enough. what is he going to do with the world in that's the question. >> that's one of the questions. he's going to do a lot but other people will do a lot so facebook is an enabling engine for a lot of businesses and nonprofits and political movements. on and on and on >> is he going to have the field to himself or will bing be a player? >> >> there are lots and lots of people who would love to be facebooked and then big
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companies, there's a number of big companies that are... would like to have a more important position in that market so google is competing hard. >> rose: what who else? >> twitter is doing well. microsoft hasn't yet. we'll see what they do. apple now has a partnership but has their own efforts. >> rose: twitter will remain private? >> that i don't know. >> rose: you're not on that board. because there's a question as to who might want to buy them. it's been rumored everybody. >> if they were to be for sale they would be attractive it's totally in their hands whether or not they want to sell. >> rose: what's its potential? >> twitter's potential is to be basically... think of it as... i call it the global messaging background so anybody can put out a message. >> rose: i know people think it has more future impact than facebook. >> i would never support that view. >> rose: oh, stop it!
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>> it's a big deal. it's a broadcast medium. it's more of a medium in which anybody can become a broadcaster. it and facebook are tied into the smart phone revolution which is a big deal. all these companies that today are useful you know in five to ten years the address will market, it will be five billion people worldwide with smart phones so >> i would suggest a topic that you and i discussed on your part when steve jobs died characterize him for us. what made him steve jobs? >> >> a whole bunch of things. vision, product genius. and we talk a lot in the valley about founder c.e.o.s and the role of founder c.e.o.s and apple is one of the few companies where we've run the experiment through the few life cycle. and we kind of see how it went so he's the great example of the founder c.e.o. of the visionary
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able to run the company. one of the underappreciated parts is as apple. he said the thing he was proudest of building... >> walter isaac son. >> exactly. >> rose: i wasn't iphone or ipad it was creating a great company. >> which goes back to what we started talking about which is apple delivers innovation. today it's an iphone, tomorrow an ipad but it's innovation. >> rose: has apple been one of the best countries in the history of the world. >> because it because this was a guy who understood that if you create the best product and do everything with a a maniacal ma nigh cool look at detail and you have some sense of taste and style and demanding that the engineering be as good as it can
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be... >> rose: yes. but it also runs deeper than that i think the press focuses sometimes too much on the design part. >> that's why i didn't do that. >> rose: behind apple is technology. they're very good at building sophisticated technology. both hardware and software. >> rose: i asked this question to bill gates yesterday. why is it that... you were into all these technologies at the same time steve was or earlier, tablet, touch. come on! >> the difference is bill stepped down from microsoft in the same era when steve stepped up at apple. this is my point. it's very hard... the problem with history is you can't run the experiment over again. so you can't run the experiment over again where bill gates stayed at microsoft and would have been there for the last 12 years. we don't know how much things would have been different. it could have been better or worse. we do know apple without steve was not the same as ale with steve. >> rose: wait, we know it's not
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the same? >> apple without steve...? the interim period when steve got fired and when he came back... >> rose: right, we know. that >> we know it's not the same. so now apple today there's a tremendous challenge which is to keep going but what they have is the ben fit of this amazing organization and that's what steve did, attracted incredible people. >> >> and they stayed there, too. something ought to be said about that. >> well, the bench is incredibly deep. there will be some turnover but the bench is very deep if you're at apple you're doing the best work of your career. he's underappreciated as a c.e.o. same way as mark zuckerberg. they'll do the best work they'll ever do in their lives. >> rose: is larry paige a good c.e.o.? >> i think so. >> rose: as good a c.e.o. as... >> early indications have r very positive. >> rose: founder, c.e.o., the kind of guy you like. founder, c.e.o.. >> he put a sharp focus in that
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company on product. he's actually i think if anything consciously modeling his management approach after steve so he took... he's taken a laser shop product focus on the different product lines. as far as i can tell it's been 100 october( >> rose: why do you think he wanted to be c.e.o. again? >> i think because he saw a bigger opportunity for google. the same with steve... he thought he could do the job in a way that he wanted to see it done. >> yeah and have it much bigger long-term impact the great founder c.e.o.s they know that if they just have enough time there's no constraint on how big or important of a company they can build and how big of an i believe pact. >> rose: it begins with tom watson and hewlett-packard? >> exactly. >> rose: explain that to me.
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is innovation a culture? a mind seth? what? >> it's a bunch of things. a lot is talent. getting the best and brightest to work with you and a lot is psychologically being able to eat your own young. to be able to compete with yourself. this is the idea when a technology company gets outinnovated it's not because it built the thing that uninnovated it, it's because it didn't want to kill what it already had in the market. >> rose: it didn't want to be cannibalistic? >> it didn't want to be cannibalistic and sometimes they become big businesses and they've got shareholders and they end up with high caliber profession alcee east coast who... >> rose: is that what happened to microsoft? >> that i don't know. >> rose: why do you play it so careful when it comes to microsoft? >> they're a fantastic company. >> rose: you don't want to offend anybody. what happened to you when you get to middle age? >> i have too many conflicts. way too many conflicts.
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like i said too early to tell. >> rose: too early to tell? what will time tell us? >> microsoft has a whole bunch of products entering the market right now. >> rose: that may be able to... but don't you see it early on in a product you enter the market and ten years later you say oh, it's going to be good. >> the iphone got... pardon my french you got criticized heavily. >> rose: by you or... >> by all kinds of people in the industry. i mean, the idea of building... it was crazy. a lot of people thought it was crazy. the first ipod got terrible reviews, people said this is ridiculous. >> rose: by serious them? >> to technologists. by people inside the technology industry people saying an overpriced underpowered m.p. 3 players. why would i buy this? apple is in the process of going out of business. so there's a lot of heat and energy. >> rose: how long did it take before you realized that was a stupid judgment? a year? >> i think... i always like
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mid-ipod. >> rose: but it's not ten years later. >> two, three, four years. but windows phone 7 has gotten great reviews. the reviewers like it a lot. the users who use it like it a lot. the challenge is that android and iphone are ahead but microsoft is a company with staying power. >> rose: android is ahead of the iphone. >> that depends on how you look at it. android is i think selling more in units but iphone is more profitable. >> rose: mobile devices, smart phones what will they become? >> the key thing is they're not phones. we've given them the wrong name. >> rose: exactly. >> phone is 1% of what they do. when i think about it it's a supercomputer in your pocket. in "jurassic park" it was $25 million computer. those companies have shrunk that thing to the size of... literally that thing, it's that powerful. so it's a magic box in your
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pocket. it can do anything. it can run any game, any application, it can give you anything you want. stream video. let you broadcast to the world. everything so that is number one. number two everybody will have one. that's the big thing that we are still... >> rose: seven million on the planet? >> so there's five and a half billion mobile phones on the planet right now. >> rose: but because many people have two or three... >> there's some of that but there's a very large... i don't know, china mobile alone has 600 million subscribers. one company has 600 mill subscribers so these are large numbers ofvdwj a lot of people have mobile phones who don't necessarily have running water so it's a big... it's a big deal. my theory is that those... all of those phones will be upgraded to smart phones in the next five to ten years. in a couple years you won't be able to buy a phone that's not a smart phone. then you put a computer in everybody's pocket. then you have five, ten, 20 times the number of people
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online as has been connected before. we've never lived in a world that's connected like that. >> is there a great theory of everything? >> in physics everybody's trying to find out how everything fits together. is there a great fear of everything in terms of how... where the digital revolution is going? >> my theory is it's unlocking human potential. it's... digital technology does a whole bunch of things. it strips away inefficiencies, makes it hard for businesses that aren't built in value to exist buying a car is radically different from not having internet to having the internet. >> rose: what is price transparency. >> you can find out what the wholesale price for a car is. you give me this plus 5% or i'm going buy this down the street. whip i was a kid that didn't exist. >> rose: is that how you buy cars? >> yeah. you just... you want to take
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advantage of... almost all the cars that are purchaseed are purchaseed with people having researched them online. >> rose: and they go into all kinds of stores and walk in and say... >> right. you can literally scan the bar code on the product and pull up here are all the competitive prices and if he's charging you too much you can buy it online. so retail pushes the challenge. so retailers used to have a perfectly good business because that's where you got stuff now there that there's this other place to get stuff with transparency of pricing you have to justify the fact... >> rose: it will be interesting to see how... what the digital revolution does to wal-mart, for example. itis a very successful business model. it's growing and that was a problem area for it in north america and how they handle it and what they do with it >> they've been a beneficiary of hit in the last 30 years. wal-mart... when i think about
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wal-mart, the same way i think about fedex is wal-mart is basically a computer network that happens to have stars and products at the end of the network. but the thing that makes them so good is logistics and pricing and they run sophisticated technology operations. >> that's what makes them great in the beginning. in other words when you bought a product and inventory made a calculation to what happened in that store and that other stuff instantly. >> and that let them beat retailers at the time. wal-mart has been making a whole series of silicon valley acquisitions. they added... i have friends on the board. and so they're making a huge invest some there's this wal-mart versus amazon thing playing out. >> rose: let me talk about something that's happening at rockefeller. one of the things they're asking themselves is how can the digital revolution be used to change the life of the poorest among us in the world. any ideas?
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>> this is what i mean about the evolution of human potential. you have to use specifics very fast but the real fundamentals of education, the real fundamentals... you talk about price transparency. one of the great unwritten stories is the number of subsistence farmers in third world countries that have never known the price of their product so you grow the grain and take it to market and whatever the guy offers you is what you get. now what happens is they go online on the phone and find out what the price of the product is. so basic economic improvements. i think the wave of the developing world in the developed world the number of parents that will realize their kids will get a leg up on education that wave will hit hard in the next five or ten years. >> rose: this has been a very interesting conversation. i think this kind of conversation has to take place and people understand you're on the cusp of something truly and
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profound that can change the life of so many people that were untouched by the prosper any the world. >> and that's why i keep coming back to... >> rose: farmers can find out about climate and seeds and getting access and credit >> we've never lived in a world where people are connected where everybody is connected the way they are. we'll never live in that world. >> rose: great to have you here. >> thank you. (laughter) >> rose: the man who makes the future. mark andreessen, thank you. back in a moment. stay with us. >> rose: ken feinberg is here. he's been at the center of some of the most complex legal fights of our time. his specialty is unique. for 28 years he's been called upon to dispense justice by compensating victims of nationally recognized tragedies. he became known for his role as
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special master of the 9/11 victim compensation fund. six years later he's contributed money to those affected by the virginia tech massacre. in the aftermath of the financial crisis the obama administration appointed him to set limits on pay of the companies that receive the most bailout funds. he oversaw payouts to the victims of the oil spill in the gulf of mexico. he "chronicle"s these cases in a new book called qhot gets what: fair company compensation after tragedy and financial upheaval." i'm pleased to have ken feinberg back at this table. welcome. >> thank you. >> rose: does anybody on the planet... you know where i'm going, do what you do? are you it? >> no, i don't think i'm it. i'm probably it when it comes to very public nationally recognized visible program bus everyday people settle their claims. >> rose: but it seems like you get all the big deal highly publicized.
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>> thank goodness there aren't that many. >> rose: so what skills do you have that qualifies you to do this other than experience? well thatf)gg parenthetical is y important. i'm only as popular as my last success and one of these days there will be a compensation program that doesn't work whether i do it or... >> rose: what might cause it not to work? >> there won't be enough funds, there will be too much clamor and above all there won't be public support for the program. as i say in the book there's a tipple point where the public decides after 9/11 or after the b.p. oil spill we want to do something out of the box. something creative. to respond to our unprecedented disaster or a paying financial meltdown and that leads to my getting the call. >> are you setting the rules and precedence for this? >> no, these are one off
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programs. they're a precedent for not nothing. once they're finished they'll put them the library a history department. but i don't think they're a precedent for anything. >> rose: like in so many conflicts that end up in a legal arena there are emotional human factors. there are human beings who are asking you to define, measure, quantify. tragedy. loss. human loss. how do you deal with that? >> you try try and explain to people-- quite unsuccessfully, i must say-- i'm doing what judges and juries and lawyers do everyday in every courtroom every n every city, village, hamlet in this country. what would that victim have earned over a lifetime? how much pain and suffering? but when you have these
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collective programs very viz flbl the public eye and you are judge and jury it becomes even more emotional. everybody counts other people's money. i've learned this. >> rose: everybody counts other people's money? >> that's right. it's not just what i am going to receive from mr. feinberg as a result of this program. what did my neighbor get? what did the person who worked next to me at the corporation make? why are you demeaning me or the memory of a lost loveed one. >> rose: do you think most people are not being greedy? they're trying to fair in making sure they're being treated fairly. >> absolutely. human nature. the number of claims that i receive from fishermen or ship captains in the gulf after the oil spill every ill they confront, the fault of the spill even if their boat at the time of the spill was in dry dock
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with a tax lien on it. we would have got that boat ride out of hawk, we would have caught the greatest fish catch ever and now the oil spill. pay me. we received over one million claims from 50 states, about 400 from new york and 35 foreign countries. once b.p. announced to the worl, everybody came. build it and they will come, i learned that. >> rose: what so what was the dividing line? >> the dividing line was an objective table or formula that said basically how direct was the impact, how close physical proximity of the gulf how much can you prove, how much can you demonstrate with dollars and documentation. >> rose: so they had to come with a lot of documentation? >> some came with a lot; some came with a little. we tried to deal with it as best we could. >> rose: and you think you left
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them mostly, what? happy? satisfied? >> no. >> rose: unhappy, dissatisfied? angry? disappointed? >> i think disappointed. i've never done a program where anybody is happy. money is a poor substitute for joy and happiness. >> rose: how do you get compensated? >> in many of the programs, 9/11 for sure, the pay czar for sure pro bow flow. i don't feel... >> rose: you do pro bono as pay czar... >> 9/11. for those two programs i didn't think it appropriate politic, smart, the honorable thing to do to get paid. the idea that i would get paid after 9/11 when millions of americans were offering charity and help to the victims i just thought that would be a terrible thing to do and wouldn't be the right thing to do. with b.p. i got paid. b.p. paid the full cost of the entire program the infrastructure, 3,500 people working in the gulf. claims adjusters, b.p. and
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international oil company that put up the money. i thought it was appropriate. >> rose: did you think that b.p. behaved appropriately and honorably after the... after what happened? >> absolutely. b.p. cleaned up the oil as much as it could be cleaned up. it's still somewhat questionable but it seems they did a very good job. >> rose: all they could do? >> i think they did. and b.p. unlike other oil company has are still litigating over other disasters, exxon "valdez" they're still late gaiting over 20 years later. b.p. stepped up, the president may have had something to do with it and said we want to get all this behind us. we don't want to be in the courtroom. if here's $20 20-billion up front. we'll worry later who should contribute other countries. right now let's just deal wrpl this. >> rose: if you look back in hindsight would you have done anything different? >> oh, i made some blunders!
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>> rose: really. the biggest was. >> the biggest blunder i made-- and i point it out in the book-- i went down there and made the ridiculous,÷fápromise file your claims, we'll pay you within 48 hours or if you're a big company we'll pay you)8sgñ in one week. it became apparent very quickly that the documentation needed to document these claims and calculate the damage it wasn't going to be done in two days or a week and yet i fueled false expectation about when the money would be flowing and that set me back on my heels because the credibility and the credibility of the program was called into question for a number of months before the money really start flowing to rectify the situation which we did. in 18 months before the first trial was even scheduled almost six and a half billion dollars
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was paid out to 220,000 people. >> rose: so the b.p. settlement in march was what? it >> it remains to be seen how many of those claims are real but b.p. announced that they would set aside an additional $7 billion plus to deal with all potential claims. i'm not party to that settlement so i don't know the terms and conditions. >> rose: let me talk aboutfagv has it changed after 2008 after dodd frank? >> i learned every company has a different pay culture. every company has a different approach to this and i've learned even in dealing with just the seven companies that have i held jurisdiction over be careful about painting with two broad a brush. i don't think what i did had any long-term appreciable impact on pay at least beyond those seven companies >> did you form new ideas about
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pay? >> yes. >> rose: which were? >> i reached conclusion that let's stop these guaranteed pay contracts let's tie pay to longer term performance and make sure that an individual executive's total compensation is directly related to the long-term growth of the company for which she or he works and i think those basic principle which is may sound obvious to you but weren't obvious in those seven companies is what i learned about the program. >> rose: i realize a lot of people get paid money and don't do very much but i also understand that a lot of people find themselves at a place and point in which they can create wealth for an institution in
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which they are responsible for that and the company says admit this much to us it might be considered failure. >> you have history on the side of that argument. it wasn't so long ago that hamilton and jefferson fought it out. j.p. morgan testimony mall factors of wealth, the progressive era, f.d.r. and the banks. isn't that part of the... of our history? >> rose: do you read history? >> absolutely. most of the problems i confront i learn something from americant history even the 9/11 fund. >> really. what had that? >> i learned after the war of 1812 the american government set up a compensation system for victims of the british destruction on the way to washington destroying farms and villages and laying waste home
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of american citizens and the got had a compensation program that was a miserable flop and the administrator of that program got ridden out of town and you learn a lot about making the program very open, making the program understandable and simple, inviting claimants to come in be heard, bent about life's unfairness, tell me their tales of woe and it is just heart wrenching. >> rose: some people think we ought to be compensating native americans and african americans because of slavery. >> that is the great dilemma. as is i say in the book when you talk about the story in 9/11 you set up a program for 9/11 victims or special b.p. environmental program during 9/11 look at the e-mails i received. dear mr. feinberg my wife died in oklahoma city, where's my check? dear mr. feinberg, i don't get
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it my husband died in the basement of the world trade center from in the original 1993 attacks committed by the very same people. how come i'm not eligible? katrina. no katrina 9/11 fund. oklahoma city, no oklahoma city fund. >> rose: where is the fairness here? >> where is the fairness? and the only reason these programs work i think is because you reach a tipping point where from the perspective not of the victim but from the american people we want to do something to express our sense of community with the victims. we want to reach out to them and that's the justification but it's very difficult to justify. >> rose: do you love being a judge rather than an advocate? >> um... no, i don't think so i'm a trained lawyer. >> rose: you like argument
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rather than decision? >> i don't know, these programs i'm sort of judge and jury. and i. and i do the job. >> rose: but you're not... but it's not adversarial. >> what is it then? it's judgment? what is it here? what are you doing? >> what i'm trying to do i think is as simple as providing victims or corporate officials with one less aspect of their lives that they're going to worry about that in light of tragedy a government-- good government, by the way, one thing you learn from these programs is government can be very, very helpful in reaching out and assuaging horror. >> rose: tell me about the friendship with judge jack weinstein. >> it is... like a father to me.
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judge weinstein, one of those... 91 years olt. one of the most distinguished federal judges in the country still sits in brooklyn federal court. is still sitting and we knew each other 35, 40 years ago because we clerked for a different time so we got to know each other and he got me into this. agent orange. the vietnam veterans. and ever since then... he's a very wise man. he's been my mentor and somebody i really look to for judgment my entire career. what do you need to know about the idea of negotiation? >> know facts and circumstances which lead to the negotiation, there's no substitute for competence, knowledge of the facts. two, be prepared to be creative
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in finding a way to get to yes and three be as flexible and as dogged as you can be in pushing in that direction and more often than not i find if you implement those variables and characteristics you'll find a way to get to yes. >> rose: ken feinberg, who gets what. thank you. >> thank you, charlie. >> rose: good to have you back. >> thank you. >> rose: thank you for joining us. see you next time.
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