Transcripts For BLOOMBERG Bloomberg BusinessWeek 20160618

Feel about the oncoming referendum. It seems like there is some consensus. Ellen they want the uk to stay. All of them want it to stay. Germany, the biggest economy in the eu, wants them to stay. The only country where a large number of people really were not sure what they thought was poland. I cannot explain that. Lisa but it is interesting. Ellen it is interesting. In the uk the polls are looking more and more like people want to leave. It really shows that there are big differences. David the issues trade mostly . Ellen the issue is trade. Although now they have a lot of stories pointing out that the u. K. Has a lot of economic problems, but many have nothing to do with the eu. A lot of people really want out. Lisa how much of this has to do with immigration . It is a big concern that people have. When somebody comes into one country, they can go into any of them. Ellen and they are worried about jobs. Outside of the u. K. David the state camp. Ellen they want them. Lisa it will be interesting to see if more people would become double with the idea of leaving is a growing number of people in the u. K. Are voting for a brexit. Ellen it will. People dont exactly know what the new u. K. Will look like once they leave the eu. There are a lot of open questions. Lisa lets get to the special global tech edition. There was a story about glaxosmithkline. These grain sized implants to treat diseases. Nanobots. Can you talk about that . Ellen they really are investing on tiny, tiny devices. Some the size of a grain of rice , if not smaller. The idea is these devices would send electrical impulses to the right nerves. They would kind of wrap around nerves, like a doughnut, and send messages. Part of the trick is to figure out which nerves they want to send messages to and whether those messages are going to be received by the brain. But it is a whole new area. They are in pretty deep. Glaxo is big on this. This is a company that is not had success with many rounds of pharmaceuticals lately. Some drugs are becoming ready for generic treatment soon. They are betting big on this. Lisa how do they get electricity into these little nanobots . O they have little mini batteries . Ellen batteries are getting smaller and smaller. When it comes to medical devices they given implanting batteries for a long time. Pacemakers and then internal heart defibrillators. Thisll be a more advanced version of that. Of diseases can these potentially be used to treat . Ellen i think they are looking looking at a wide variety, neurological diseases. Potentially cancerous. It is sort of an open question. They are looking at lots. David you profile another company, one that is very sciencedriven. The article centers on a guy who had been offered a tenuretrack job in academia. He was lured away. He was working very closely with genes here, gene therapy. Ellen that is all about the devotion of figuring out how to manipulate dna to change and to change asthma and a whole variety of ailments by targeting the right genes. We have a photo of him with his incredible looking piece of machinery. You look at it any think and you think, genes . This looks like something that would create steel. Lisa one thing i found fascinating about this story was the rags to riches element of it. Here is somebody came from an immigrant family, who had a job, a tenured professor. He had a full scholarship to his start his own lab. Yet he chose to go to this startup. Did you find a lot of Tech Companies were sort of these ellen well, that is sort of a Silicon Valley is partly about. People taking enormous risks and then following their passions. I think you will find throughout this issue is all about passion. At the end there also happens to be a lot of money. What is also interesting about the issue is how global it is. We have a line on the cover which is 70 Silicon Valley. 70 Silicon Valleyfree. So much of this is going on all over the world. It is not just in california. Lisa we talked to the reporter on that story. Adam one thing that fascinated me was it took almost two decades for them to get a successful drug. There were failures along the way . Adam they ran on ideas for a really long time. Straight out of the gate they developed a technology that was so exciting that they got amgen involved. They kicked in 100 million, they got a partnership and went public and raised 96 million. The first drug to treat lou gehrigs disease failed. The stock plummeted from 16 to four dollars. At the same time there is more exciting science going on. Countam at the Time Technology that got them on the covers of science and nature magazine. He was cited all the time. The stock had tanked but he was becoming this famous scientist. Soon after they were able to ink another 100 millionplus deal with Johnson Johnson that also went under. When Johnson Johnson pulled out of that, they were developing one of their other proprietary technologies, this amazing, almost scifi mouse where they subbed in human genes for the immune system. And so they could test out antibodies on it. Lisa how much leeway does a company have to explore and have Research Development and really invest in that before coming up with a drug that really is incredibly profitable and could actually create some value . Adam they kept finding ways to the science was exciting enough that they kept finding ways to raise more money. They did go through some lean years around the early 2000s where they had to have layoffs and things like that. It does not seem like they ever had a dry period in terms of scientific discovery. They were always moving forward on that front. Since they were scientists, they were not panicking. They were looking for the long game. It is surprising. It took a long time. In fact, the breakout drug they developed in the 1990s. Lisa what does that treat . Adam macular degeneration, one of the leading causes of vision loss. Mainly on the strength of the drug that their stock has risen almost 2000 , which is what makes him a paper millionaire. David what is this company like today, and what are the aspirations Going Forward here . You mentioned they had some failures along the way. This ocular drug was a success. What is it looking forward to doing . Adam it on the frontier of the genetics revolution. What they are doing is interesting. It is sort of why i wanted to write about them. They have inked partnerships with a whole bunch of different researchers around the world. There is a researcher who studies mennonite populations. There was a researcher who studies families down in texas. There is a Large Health Care system which is collecting dna samples from about 250,000 of their patients. What they are looking for is people with rare mutations. A lot of this started when they found a bunch of people down in texas that had abnormally low cholesterol. They isolated this through genetic mutation and that to that has led to some exciting new drugs to treat cholesterol. Lisa up next, we hear from the company developing a breathalyzer to measure thc, otherwise known as pot. David and the epiphany that led to a booming ocean turbine business. Lisa the garage is where some of the worlds most prolific inventors are burning the midnight oil. David all that ahead on Bloomberg Businessweek. Lisa welcome back to Bloomberg Businessweek. I am Lisa Abramowicz come in for carol massar. David i am david gora. You can also listen to us on the radio on sirius xm channel 119, am 1130 in new york, fm 99. 1 and washington, d. C. Lisa in this weeks global tech edition the British Defense , contractor who is developing a weed breathalyzer . David we spoke to the cto. Jeff states Like Washington and colorado and perhaps in d. C. Where marijuana has been legalized, we were looking down the road and deciding that at some point Law Enforcement officials will have the need to decide whether a driver is driving under the influence of thc, marijuana. We knew in our company we had technology that we could leverage and bring to bear on the problem of how do you detect when someone has consumed it without an invasive test . If you could develop a breathalyzer to do this, that would be the ideal approach. We have had a relationship with Washington State university for almost 15 years. Right about the time that we saw the opportunity to develop a product to do this we found out our good friends at Washington State, professor hale and his graduate students, were looking at the same problem. Professor hill understands the science of measurement of these kinds of materials. He also knew we had technology that he be brought to bear on the problem. We decided to develop this partnership. David there is a standard metric when you breathalyze someone for alcohol, you know they have violated the law. We dont have the same metrics here for driving under the influence of marijuana. Is that standard going to be coming . What is going to bring that about . Jeff i know in the state of washington there is a level of thc you are allowed to have in your blood. If you exceed that level, you are considered impaired. We dont know about the policy. We are not lawyers. David it doesnt matter to you guys . You are out to detect it. Doesnt matter what the level is. Lisa that raises an interesting point. In other words, the threshold have to be very low. It has to be incredibly sensitive tests . Jeff the instrument is able to detect very minute quantities. The level of thc we have been able to detect is 10 picograms, a particle of thc can be detected by our instrument now. David sounds small. That is small. Lisa so small you have never heard of it. Jeff many of your viewers may not know what a few program is. As a reference, an e. Coli bacteria is about 10 picograms in mass. You are talking about detecting particles that are not visible to the eye. David aspiring inventors never know when or where they would get the next idea. Herbert williams got his idea in prison. Idea, and undersea turbine, made him rich. Reporter once in a while i get to cover outside inventors. What that means is people with no real engineering background who obtain patents and are able to get their idea out to the world and be successful. Herbert williams made millions on this invention. He had Little College background. He was a dropout. He built boats. He was a handson guy. He was a crab fisherman in alaska. A lot of different jobs. Fished for turtles in florida which im not even sure what that means. It runs the gamut. Certainly no official schooling. Lisa and no turbines. David hes made a lot of money off of this. He has had investors in his newest project as well. Describe where he works. It is a pretty big compound. Reporter thats right. The ocean turbines started generating revenue for his small company. He put that into a wind turbine company that is a whole different take on the typical threebladed turbines you see out in wind farms. These are very much like an ocean turbine. 10 blades. Looks like the spokes of a bicycle wheel. The u. S. Department of energy has been very interested in this technology. They say it ports well to rural areas and gets small gusts and low altitude and can be used to pump water, run tools, generate electricity. And so his vision for that is to one day have these in the ocean on a Floating Wind farm to help generate electricity. Lisa you talked about how we as how he came out of you talked about his time in prison and how he came out of prison with these drawings. How did his time in prison in for his design of these turbines . When i talked to herbert, he was reluctant to talk about prison. It was an awful time. The first couple of years, understandably, are just very hard. Apparently they got a little easier as conditions got better. Towards the end he met a fellow prisoner who taught him technical drawings. He started making blueprints, dozens of them, of marine contraptions. He started learning a trade. When he left jail he left for a tiny rural town where nobody would know him. He received 27 from the federal officials. He had his blueprints with him. So that is how he started. David up next, why democrats hope the way hillary handled Bernie Sanders puts her in a better position to handle donald trump. Lisa and our investors expecting too much from brazils acting president . David welcome back to Bloomberg Businessweek. I am david gura. Lisa i am Lisa Abramowicz, in for carol massar. In the politics and policies section, why political ads may be about to get ugly. David we talked to reporter josh green. Josh there is a new premium on personal attacks. You didnt want your candidate saying mean things because it will poison their image with the public. You outsource it to a tv ad. Now trump, as he has in so many ways, set a new standard by showing that if you make a personal attack in front of the camera, that will travel very quickly throughout the media ecosphere. Lisa josh, taking a step back, can you talk about why the democratic primaries have been so free of negative advertisements . In contrast with Donald Trumps standards . Josh i think there are a couple of reasons. One of the reasons is despite the vitriolic way in which the campaign has been covered, especially on cable news, both Hillary Clinton and Bernie Sanders are very popular with democratic voters. You run a risk of offending those voters if you run negative ads against an opponent that is also very wellliked. I think really what it came down to was a pair of idiosyncrasies. In sanders case, he doesnt believe in running negative ads and explicitly told his senior advisers dont you dare run negative ads. Clinton, for her part, believes very much in negative ads. We remember the 3 00 a. M. Ad in 2008. She has no problem with those kinds of ads in theory. In this case you realize early on that Bernie Sanders has a lot of supporters, a lot of energy. If i attack him for being a socialist or whatever, im really going to potentially hurt myself and my ability to win the voters over. As we can see from the tightness of the trumpclinton matchup, she will need those voters. Lisa is donald trump in a worseoff position because how Much Negative campaigning heated that he did he did . Josh donald trump is his own walking, talking negative ad for himself. He does a lot of the work that his opponents would ordinarily have to outsource to tv ads. I think the implication here, and i think clintons people to a large extent believe this, that it is trumps own mouth that will hurt him. It is not necessarily 100 million in negative ads. Josh, hold on right there. Some could argue this is the reason why he is in the position he is in today, because hes gotten so much free advertising from some of the outrageous things he has said. Josh well, sure, and that helped him in the republican primary where a lot of the people agree with a lot of the outrageous things he said. But he is running for the president now in a general election with a much broader electorate who does not automatically share a lot of those views. David this weeks Global Economic section, why investors may be expecting too much from brazils acting president. Reporter they believe in the government. They are very handson in terms of handling economic policies. They are scared about the economic slowdown. So they inject a lot of credit into the markets using state banks. It worked for a while until it didnt work. David yeah. Lisa sounds familiar. [laughter] lisa given the new budget proposal, where have the biggest cuts been proposed . Ye some of the cuts they are mostly focused on the spending part of it. In brazil situation, there is less room to maneuver. Most of the spending is mandatory, like 80 is mandatory. It is protected by the congress. To make some room, they have to amend the congress. Some of the cuts in social spending and health care. These are the two biggest areas. David what does this situation portend for other countries in latin america . I think of venezuela to the northwest where things are probably not much better. Maybe a bit worse. Are other countries watching brazil . Ye it is interesting. I think its probably a global phenomenon. People are fed up with the establishment. In the u. S. You have the rise of donald trump. In latin america, because people are so upset with the economic slowdown over the last couple of years, they are shifting to the right from the left. Brazil is one example. Dilma rousseff is on her way out. Argentina is another one. People are moving to a more marketfriendly regime, which is a good thing. But in other places like chile, people are also upset with the current administration, the new president is proposing to be more handson or stateoriented. So, yeah, its a global phenomenon. David up next building the , First American factory in cuba. Lisa we will grade some tech predictions from 1996. Dont be scared to dream big. Lisa welcome to Bloomberg Businessweek. I am Lisa Abramowicz come in for carol massar. David and i am david gura. Lisa we are here inside the new york headquarters of Bloomberg Businessweek. David why Tech Companies are on a hiring spree for economists. Lisa we will look at materials of the future. David in the First Manufacturing factory in cuba. Lisa all that ahead on Bloomberg Businessweek. We are here with the editor of bloomberg. Usinessweek, Ellen Pollock there are so many must reads in this issue. In technology you asked a question whether the pentagon can really learn to be more flexible. Can you talk to us a little bit about what that means . Ellen they opened an Innovation Office in Silicon Valley to help with the hope that they can learn about Silicon Valley and otherr with startups and companies on a variety of projects. The idea was they would develop the contracts and work together. And it would move things along. David sounds so easy. Ellen it sounds so easy, but whenever you work with government, not everything is easy. Lisa really . Ellen it turned out getting these contracts going often took too much time in Silicon Valley is used to moving fast. You are dealing with entrepreneurs who have built companies fast and then they would deal with the pentagon and things would move like, not fast. David glacially. Lisa like a government agency. David this is a Big Initiative of ashton carter, a trained physicist himself, phd physicist. He has made a number of trips to Silicon Valley. Are they impressed . Ellen i mean, they were interested that he was coming out and it demonstrated his commitment to it but also would demonstrate commitment of whether they get the funding they need. They are asking for 30 million, which does not seem like that much when you look at the valuation of some of these Tech Companies but i suppose it could go a long way. And it is a start. David in the Global Technology double issue you have done, reevaluating some predictions from 1996 and seeing what came true. Any favorites that stood out to you, successes, misses . Ellen we looked at about 12 of them from a book that came out in 1996 when the predictions were made. Some of them sadly were overly optimistic. They predicted that by 2002 there would be an aids vaccine and there is not. So that is sort of is sad. Sometimes they got it wrong the other way. They thought there would be a space station by 2004 and in fact there was one by 1998. And i think it varied like that. They talked about the idea of an automated highway, because the idea was that you would automate the infrastructure. They suggested that would happen in 2017 and that is not because no one is paying attention to the idea of automated highways. They are talking about driverless cars, so they got the direction wrong. It is almost like a time capsule on a page. Lisa what did they get right . Ellen they got right a variety of things. They talked about the advent of ecash around 1998 when paypal opened its wallet. David skype, video calls. Ellen they predicted video calls and skype came into being. Although people moved on from skype in some cases, they were right on that, too. Lisa another story in the global tech section that i found so fascinating was the idea of bringing an American Business to cuba to create attractors. Can you talk to us a little bit about this . Ellen this is sort of another passion story about these two guys who worked together at ibm. Once it looked like cuba was going to open, and they realized agriculture is so important in there and yet they do not have the equipment to do it productively, they are designing a tractor that by u. S. Standards is sort of oldfashioned but by cuban standards will be ahead. The idea is they are going to make some in alabama and hopefully open a factory in cuba eventually. David we talked to the reporter on that story. Reporter the two characters in this story david they are characters. [laughter] reporter they are kind of old friends. They had worked at ibm together back in the 1970s. Saul was going back to cuba because he still holds citizenship there. Any other american couldnt do that the time. He is going backandforth and seeing firsthand, their entire farming system is crumbling. And he is a smart guy who is doing the research and said that 80 of the food is being brought in. 2 billion is being spent the spent from the government every year to feed their citizens, which is a daunting thing to run into as a businessman. As an entrepreneur the number one thing you think about is the solution and their idea was to build the one thing that cuba really needs, and that is a lowtech tractor. David what does it look like . What do they have in mind here . Ian they named it after a deity in the santeria religion, the god of metalwork. It has this symbolic value to it in regards to protection and looking out for the future. They put that moniker on this machine, which is basically like a barebones preworld war ii single row tractor. David you invoke the gokart. [laughter] ian exactly. The front of it is wide open so you can dig your head in and poke around with. It is not something necessarily where you need to bring it into a garage and dismantle it. It is very accessible. Especially from a layman standpoint. Lisa why is this tractor necessary . Why not import some from another country . Ian if you look at the psychology of any nation, they want to be selfsufficient or have a say in the process in which they rely on, especially for something as crucial as agriculture. If you are a large tractor or Farming Corporation and you are like, now we can sell our stuff to cuba and make a quick buck, the cuban government has to be ok with the trade agreement as well as the u. S. Government, they are going to be like, why would you want to buy something . That just puts us in the role of being reliant. Whereas we could have this company come in, build their own factory on cuban soil, employee and educate cuban workers, and keep the process entirely within the country. At first, the guys are sourcing parts that are being manufactured in the u. S. To bring them to be assembled but over time, once they can round up welders and people with manufacturing experience in cuba , probably after a year or two, they will be able to do everything from scratch on the island. David , why algorithms are not just for coders. Lisa all that i had on Bloomberg Businessweek. Lisa welcome back to Bloomberg Businessweek. I am Lisa Abramowicz in for carol massar. David i am david gura. You can also find us on the radio. Fm 99. 1 inboston, washington, d. C. In the technology section, why Tech Companies are on a hiring spree for economists. Lisa we spoke to patrick clark. Patrick if you are an economist and want to learn about the world, a tech company is a great place to go. David what is the demand like among these companies for economists . It is often not just one guy on board. You see Companies Hiring a lot now. Patrick amazon did not tell me how many they have on staff but i heard anywhere from 60 to 80 now from friends who have worked there or have been interviewed, and they have another 30 some jobs posted. To put that into perspective, a givent the bank i was to believe they might have a big bank like wells fargo. Take that for what it is worth. According to the National Association for business economists, 20 to 25 is a big number for private team, so amazon is triple or quadruple. David bigger than an Academic Department for sure. Lisa but you have to wonder i understand from the economist point of view, they get more money, a trove of behavioral Economic Data they can derive theories from. From the company standpoint, what are they looking for . Better ad placement . A better way to target potential customers . Patrick it could be any of the above and these companies all have big science teams. Big data science teams. If you talk to the people who were to this company, how many economists do you have, who is an economist . Lisa who isnt an economist . David play one on tv. Patrick so some of the problems Tech Companies want to solve, we will take the example of a marketplace, that is a problem in economics of how to match buyers and sellers. Companies are hiring economists to serve almost as brand spokesmen or to build brand recognition, and they are publishing research. It is not exactly the same kind as if they were working at stanford or princeton, but they are communicating to the public and hopefully, or they hope, they are building a reputation for their companies as a resource for consumers or a name that people can trust. Lisa in the markets and finance system, how barclays is managing its dwindling branches. David we spoke to gabrielle coppola. Gabrielle now they have video bankers, which means that basically you can tap an app in your mobile phone and have a conversation with a live human being. David how is this going to work . Gabrielle they are real human beings, not robots. They are based in what barclays calls contact centers. You have your call Center People just doing telephone calls, live web chats. The have people who monitor twitter 24 7. David hundreds of people, thousands of people . Gabrielle i know they have 60 video bank tellers and they plan to expand it to 120 by the end of the year. Theres one in liverpool and they are in northern england. Lisa wait, you said they respond to complaints on twitter so they will troll through twitter trying to figure out what peoples issues are and try to contact them . We will talk to you live about that. Gabrielle i do not know if there is the seamless integration with the video bankers. It is more like a personal service if you have an account with barclays and want to open up a new account or are having a problem and you want to talk to a human. Lisa up next, where investors come up with their revolutionary ideas. David materials of the future, super materials. David welcome back to Bloomberg Businessweek. I am david gura. Lisa and i am Lisa Abramowicz, in for carol massar. There is a photo essay of five substances of the future. David our reporter spoke with carolyn winters. The one that i find most fascinating is the blackest black in the world. When you look at it, it just looks like a void, a bottomless pit. For example, here in the magazine we show a piece of tinfoil that is crinkled and covered with it but it just looks like a hole. It is fascinating because it is being used in aerospace. They can put it into star trackers or telescopes, things where you have to get rid of ambient light. It is also being used in luxury products. They are making a wild new watch where the face will be this material and it will look like a hole on your wrist. Reporter well, pretty cool. Are Companies Investing a lot in developing this . There is a small startup that has made this technology. It is carbon nano tubes. They have to apply it. You could not get a little black dress made of it. It is made in a clean room and it is a complex process. Until recently, it was not possible. Reporter very hightech . Very hightech. Reporter i was intrigued by the skin one. This is another material under development, and basically, what you put on a few different gels on your face and they react and form a second skin. They have done test that show this can completely eliminate bags under the eyes and it makes youthful it mimics youthful skin. You can wear it when you are swimming and exercising. To take it off you can just peel it off. They are also looking at it as a way to develop medications to the skin or protect our natural skin from environmental damage. Lisa another cool photo essay in this weeks edition was a look inside the garages where some of these inventions really take place. A lot of what they have in common is this kind of mess that they work in. That is what we like to see. Some of them are working with a garage with their kids toys or fishing rods and that is what we are looking out, where they are carving out a space to work. David are these people who aspire to bring products to the commercial market place . Are they just content with the act of tinkering . Reporter they are a mix of people. Some have brought them to the marketplace. This boy, he is 16 and he has a kickstarter. He is actually creating these parkinson rings. David he lives in a hotbed of technological creativity. Cupertino, california. Reporter he is quite charming and has a small space, essentially a table in his parents garage. All of these can i turn this . David please. Reporter they all have that, and this woman is interesting. She works on a pingpong table in her brothers garage. She wanted to style it but this is what she works on with her two laptops and is able to spread it all out. She commutes between texas i loved that space. Some people did not like it. David i love that she prefers it. Something about the table speaks to her. I think she found the color calming. We have the wider shots were you can see the toys, their belongings. Lisa i think about my grandfather, who worked extensively in his garage and it was because of the spare parts and the metal and the different pieces that he could be creative with. Did you find that most of the inventors were more industrial in nature and it was partly, in order to be able to use those tools, that they would choose a garage . David even the boy in cupertino is soldering. Reporter you need to be able to make a mess. All of these people are building things with the exception of mona, who is using laptops to build apps, but i think you have all the material and you can make a mess because it is a garage. You can maybe shove it away later. This man in south africa had a plaster of einstein that we liked. These photos are all online. Certainly i think the garage has all these elements. David you mentioned how you were not interested in the we work spaces, the incubators. I wonder if you found that there was a Movement Toward those. Yes, there is people working in their garage but there is the lure to move out of the garage. Hard to find people, i guess. Reporter i think it was tricky in some countries and places like japan where people do not have garages. There were places where people werent able to work in their homes so they choose that kind of space. That is harder. There were a few people who did not make it into the magazine. They had some interesting setups. David Bloomberg Businessweek is available on newsstands now. Lisa and online. David what is your favorite story . Lisa so many good ones. I love the idea of the video tellers. David room in liverpool. Lisa exactly. What about you . David i like the story of the guide drawing up plans to build these turbine on a plot of land. He is a fascinating character, went to prison and learned technical drawing. See you back next week. Announcer this program is a paid advertisement from the u. S. Money reserve, a company not affiliated with the u. S. Government or the u. S. Mint. The markets for coins and bullion are unregulated. Prices can rise or fall, so buying these items carries some risks. Past performance of a coin or the market cannot predict future performance. Offers are void where prohibited. The views and opinions expressed on this program do not reflect those of this station, network, its management, or their ownership