History was of made. If thats a blue print for success, my next guest is following it to the last millimeter. Christopher heiser also showed off his prototype at pebble beach, a renovo coupe, half Million Dollar super car. Like the tesla, it is built in Silicon Valley. Like the tesla, it runs on electrons 500. Taking you from zero to 60 in less than 3. 5 second. Susquehanna river a graduate of Carnegie Mellon and like martin everhard who founded tesla, hes not spent a single day working for detroit automaker. Joined by rich, we now know him of smart news. And sprucing jenny wong of the and introducing jenny wong of the charlotte observerment. You are following teslas footprint. Is that because they did it right or because we can say they did it like tesla . If you look at tesla as a success story, they started with a vision to produce an outstanding product and worked within the confines of Silicon Valley and leveraged what we do best, integration of software and hardware together. They chose the right partners, they produced a car with an extremely small amount of money in automotive terms and in a very short amount of time. Just ten years ago, i think people were looking at tesla with a big question mark. Now with the model s outselling all of the other marks in their category, i think six quarters in a row now, its a success. We involve one of the cofounders and engineering directors and learned a lot. We learned from other e. V. Startups, success or not. You got to learn from success and failure. Thats something we spend a lot of time thinking about when we founded the company in 2010 and working in secret for the past 4. 5 years to bring our product to market. You unlike the founder of tesla, you do have a background in automotive design. People may not know, but this your college days at Carnegie Mellon you were fourtime National Champion of the society of automotive engineers for their annual off road design competition, the micro baja. Whats it like going to back to one of your first loves in your new company . Something i think youll find with any entrepreneur in the bay area is bastithat passion has ty a part in what you do. And thats what whether its wrenching cars on the weekends or traveling to races or driving cars on race tracks, the cars in our blood. We see this huge opportunity of transformation of the industry, and its something that the cars are coming to Silicon Valley. If you opened the hood of our car, youll find 80 embedded processors, almost a thousands an sensors. High Speed Networks and tylemetry systems to the cloud in real time. Looks more like a data center than a car. Thats only increasing over time. We feel that tesla of a trailblazer but that Silicon Valley is the right place to build the next generation of Car Technology companies. Its going to require a broad range of products and technologies to make it work. As impressive as the inside is, the outside is striking. Let me point out, its not really your car. A shelby, similar to what tesla did because of the lotus. They took a lotus and turned it into an electric car. Why not maybe im interrupting her question why not start with your own car completely . I think tesla showed a great model for a car in the Silicon Valley is take a partner with a lot of experience building safe, fast, reliable, High Performance cars. Designing a car is a big challenge. Te teslas done that with the model s. For us, we wanted to do something that followed that model, but it was of important to pick an American Partner for the chassis. You cant think of a more iconic bran than shelby. This company has been Building Super cars for almost six decades and is one of the most enduring brands in the united states. We couldnt be happier to be working with them. The csx 9000 chassis, on which we based our car, fantastic platform, modified shelby delivered to us. We think even hire levels than performance. It was the perform platform for what we were trying to do. You havent such how much this is going to cost. The estimates are in the stratosphere, mid six figures. Is there any social benefit whatsoever, or are you building a super play thing for the super rich . A great question. Our car is going to cost 529,000. Its in presales now. Were going to production at the start of next year. Well deliver to our lucky customers before the end of 2015. To answer your question, the super car market plays an Important Role in the Technology Market of the auto sector. Its one of the reasons why weve focused on performance. If you look at innovations like injection, overhead cams, carbon fiber, those were pioneered by people seeking performance at the highest level. Now its part of the model s, the i3, and it allows cars to be lighter, safer, and use less gas today. You cannot deliver our technology at a 50,000 or 20,000 price points. You can deliver it to the marketplace and allow people to see how it works and lay the groundwork for products that today become the mass market products of tomorrow. And you get attention. You will get more attention with a half million super car than you would with a 22,000 electric car. Yeah. Does your roadmap, pardon the use of the term, but does the roadmap call for bringing this technology down to where only the merely incredibly rich other than the vast super rich can afford, it or is this do you see yourself remaining at the very high end of the niche . Nothing would make us happier than to see things were working on go to mass market. Were trying to Push Technology as hard as we can. Three to five years ahead of where major oems are working, this allows us to build in which companies would reach the broader market. Going to higher volume is all about cost containment. Its what giga factory is about, what all of these initiatives is about. Those take immense amounts of capital and time. You need people pushing the envelope of whats possible. We think the performance market where renova motors is positioned allows it do thing that as operational. We like to see we want e. V. S that kids will be proud to put posters of on the walls of their room to encourage them and inspire them to be automotive engineers, to get involved in the challenges of transportation in the 21st century. If you look at the Automotive Market today, its incredibly diverse. Theres everything from people movers to giant earth movers. And that Technology Base needs all type of technologies and companies. Were part of that technology. Last question, where do you see yourself in, say, ten years . Youve gone through model one. Youve learned some things. Where would you like to be . A super car manufacturer or, like tesla, were going to come out with a sedan . I think that the opportunities for us are huge. We think of ourselves as a very diversified company. Building super cars is an important part of our dna and how we demonstrate whats possible and engage customers in the Technology Available to. We also believe platforms have applications far beyond the super car movement. Were going to pursue those and will be making announcements this year of Big TechnologyCompanies Inside and outside of the Automotive Industry working with us to deliver the technology to those contacts in the future. Why dont you make that announcement here . Im serious. You come here, you make that announcement when that comes, all right . That sound great. All right, chris heiser, thanks for being with us. Next, disrupting the loan industry by ignoring Credit History in favor of credit future. The city found themselves returning many times investing in other barracuda products. What keeps me up at night is the need to have secure, accessible and managed data. And richmond has the tools in place to do that. Welcome back to press here. Would you lend a chunk of money, say 10,000, to someone out of college . No income, little assets and Credit History. The bank would not. If i told you that person graduated in Harvard Business school is, about to start her job on wall street next week, that changes things, doesnt it . I would tloepd that person because she has a len to that person because she has a future. Thats the difference. Banks loan based on what youve done in the past. Common sense says you should loan based on what the person will do in the future. Certainly the general idea behind the loan company earnest which says it looks beyond Credit History and fico scores and looks carefully at potential when it decides to whom to loan. Louis barrel is founder of earnest loans, himself a harvard grad who had a tough time getting a loan. Thanks for being with us this morning. So it would seem obvious, but obviously banks have been doing this for a long time. They must know what theyre doing. Why is your system better . Yeah, thanks, scott. I think what we do is, we do the most thorough underwriting in the country. We do that by digging into everything about a persons full profile. Wire looking at education and history. Metrics of financial responsibility. We look at bank accounts, late fees or lack thereof of what sort of banks . Not really. Most bank what theyre looking at, they try to make the process as quick as possible. What were trying to do is go back to 150 years ago where your banker sat across the table and got to know your full story. Thats what were doing. Were incorporating the full picture. You look at peeps linkedins. Thats one of the ways we connect through their education employment history. But let me take it to the next level. So thing like your 401 k retirement account, banks dont do that. Not for a credit card, not for small loans. Were able to metric of saving for the future and financial responsibility that big bank dont look at. Someone who takes a big chunk you out of their paycheck and puts it toward retirement is a responsible person theyre planning for the future. Thats what were looking at. I know one of the things youre looking at is education and earning potential. If i majored in french literature, will you judge me to be less creditworthy than if i had majored in Electrical Engineering . I think we dont have anything thats prescriptive. What we try to do is take every applicant and look at them as an individual. French literature and youre a teacher, youre financially responsible, saving every month, thats what were were trying to look at you as a person. On the other side, youre a computer scientist, software engineer, your income is growing quickly, maybe your expenses are hire. But nothings prescriptive. Our model and Software Look at every person as an individual. Thats a big breakthrough in lending. Thats not the beltways done today. So youre using technology a great deal. But youre also because youre looking at things that arent necessarily always looked at, what are the privacy implications . Are you picking through my entire life . I think our philosophy here is theres a couple of things. So first is our typical client is really digital native. They you know, a bank is going to look through your Bank Statements for a home loan. Theyre going to create a profile. We make it very quick, very easy, very cheap. Thats why were able to deliver very low prices for our clients. On the other side of that, what our focus is, it should be about what you deserve to pay. And if youre very low risk, by us digging in deeper, that actually gets you a much better rate. Thats why you should want our type of service. Would that include things like looking at my twitter feed . No. We try to only focus on things that are causal to your ability to repay in the future. The funding when you give me money, you arent reselling this loan, right . This is purely funded by you. That money presumably is coming from the Venture Capitalists who are backing you up. Is that a Fair Assessment . Yes. Okay, you are trying to get loan as low as human low possible. As i, the borrower, i really appreciate that. I as the Venture Capitalist dont like this at all. Im taking money and youre saying, look, were getting 3 return from scott on this. Thats a terrible investment. I mean, in many ways you cant make up for it with volume. Right . I disagree with part of that. I think what the Venture Capitalists love about our business is unlike a Traditional Financial Institution that always focuses on a single transaction, we are much more, our Business Model is much more like the best technology and consumer brands. Theyre focused on lifetime value. Its about building a really longterm relationship are so that you have more loans from the same . My point is, if i give you 1, i want 12 back. I dont want 3 back. And no matter how many dollars you len out, youre just lend out, youre just giving me to 3 back. Or are you developing technology that you can license to bank themselves the way that fair isaac does so that your lending becomes your loss leader . Right. Were not doing that. I cant do that as that would be like amazon creating their infrastructure and selling it to barnes and noble. But what we do is our software and data, theres a bunch of things. One, it dramatically lowers our infrastructure. Think about all of the buildings that all the banks have. Were able to do this a lot more efficiently. And its its actually based on our underwriting procedures theyre much better. We can make better decisioning. Our costs are much lower. And then, were able to keep those clients for much longer because were delivering so much more value to that. And getting fewer bad loans, that helps the bottom line, as well . We have 100 ontime repayment. Thats not bad. Youve never loaned below a fico score of 600. Is that correct . Thats not 100 correct. We have one 597. Do you ever see yourself going below a significantly below a 600 score, potentially disrupting the payday loans industry . Well, so i dont think well go to payday loans. But a totally different market. Totally different demographic. What i would say, we really ignore fico in our underwriting process because thats thats really not what were looking at. Were looking at the full picture. That said, you know, fico is not the best model. But you know, the model on certain levels all the way down, all the way at the highest end, does work to a certain extent. If someone has a very, very low fico, theres probably other extenuating is, thats cause them to be there. Do you see that wells fargo or somebody might adopt this idea . Is this a big that big businesses might get into this . This disruption . Amazon does make its infrastructure available to others through Amazon Web Services and other things. Sure. In that regard, why isnt that a better Business Model . Our mission at earnest is better access to credit to millions of americans at earlier ages and at cheaper prices. I would love it if wells fargo, jpmorgan chase, started doing better underwriting and offering cheaper prices to millions of americans. Louis, the website is meetearnest, correct . Thank you for being with us. Well be back in a moment. Welcome back. I assume youre familiar with ted talks. Theyre free, even though a tick to the actual talk, to be in the audience is 6,000, and you have to be invited. Ted is at the same time both the mostish he iselitisist of its k. You have to be at the top of your field, one in a million. Then at the intented ted x, where anyone can talk about whatever they wish. My guest loves that idea of giving it away. Carl ron has a theory called reciprocity advantage which says counterintuitively by sharing your most closely guarded secrets. You can grow your own business. The hes authored a book by the name with his coauthor. Hes the man behind are you ready swiffer and febreeze. Thats kind of cool. Thank you for being with us this morning. How is this different, this idea that i am going to put my technology out there and let other people adapt it and use it . How is it different than open source which has been around for quite some time . Open source and open innovation is a very important piece of trying to optimize your Current Business and cost structure and growth. One of the things happening is were now in a social world. And partnership are extremely valuable to creating additional growth. The partnerships where you can reduce costs, make your Current Business better, are very, very common. What theres an opportunity to do now and ted x is an example of partnering with the world to create something new while maintaining that Current Business. So ted is just as strong or stronger. And ted x is completely incremental growth. Its almost as if you know youre on to something if your boards, no, dont do that. That would give away the secret. Then you know you have something valuable. Yes. What i think is even a better thing that happens is quite often somebody knocks on your door and says, can i have this . And then you get to say yes or no. You say no if what theyre going to do is basically just eat you. Its not incremental. You should continue to say no. However, sometimes crazy people that come your way, they saw value. What we want is to take those assets, that right of way that you have to grow a new complementary business. Now its a little like youre finding a new packard to start the new business. Thats a great comparison. Looking back to your p g experience, how would you apply this idea to the Business World . So i really this book has a target, small entrepreneurs to help them be better entrepreneurs. But also the power of a big company like procter and gamble or any of the Large Companies is they have the ability to scale. For those of us taking venture financing, they have a cost of capital that is extremely admirable. Right. Or desirable. Or desirable. So what happens is they often define their businesses too narrowly. I talk about everybody is actually in three industries in order to try to open up your view of the world. And just to take a historic version of it, you have your core business, thats the product you sell. And so look at the railroad business, you know, which was, of course, important to Silicon Valley here. But the railroad industry, we talked about they miss ed the move to transportation. They forgot what industry theyre in. They moved things from place to place even if it doesnt take rails. The problem is that every company love their trains too much. So everything has to look like a train. The real miss and where the reciprocity advantage was is in communication. Understanding that right of way, the literal land underneath their tracks. People could string wires above it, and then instead of sally having to go from new york to chicago twice a year to visit her sister, if you Pay Attention to the experience, shes communicating while shes there, that is the new business that you can build with your right of way. You know, reciprocity is a really ancient concept. And the problem of los angeles, Mature Companies finding ways to grow like fast, Small Companies, is also quite a problem of longstanding. Why reciprocity now . What is it about the next ten years that makes reciprocity a more powerful concept than the last ten years . So, the social and technological changes have put us into a connected world where partners are going to be far more enabled than you ever imagined them. So super computing, available to, if we all wanted to start a Company Using watson, super computing is going to become ubiquitous. That means all kinds of people have immense capability to do things you never thought they would do. Thats the other thing that i wondered about when i of re w was reading your book. You talk about concepts like looking out for each others interests. That happens between individuals. Chow organizations bake reciprocity into their structures in a way that would serve key players leaving like a ceo . The most important thing to a partnership if its going to be challenging because its nice to like your partners, but sometimes i joke we also have lawyers is to define what t that ive always wanted to do, and i, only do it if we do it together. And if both of us answer that question, theres a very narrow piece that is the core that we hold on to in spite of everything else. And so if we go back to the communications example, okay, a new Communications Startup and a Railroad Company are going to fight a lot. This is not going to be a natural match. However, if they can recall the thing that they came to do, i have something you need, were together in communications. I have these skills, i bring them to the game. Youre bringing the technology, and youre going to wanted this thing that goes 1,000 going to understand this thing that goes 1,000 times more frequent than my business, were going to build a Business Model together. If we can stay focused on this very narrow definition of why we came together, we can pretty much ignore everything else. If lawyers is part of the answer, then one of the questions i have is around the asymmetric partnership that your book discusses which is partnerships between very Large Companies like fortune 500 entities or apple yes, and either very Small Companies or answer quickly or individual. What does the little go to look for in an asymmetric partnership . When you form the partnership, its no different than the Venture Capital world. You really want to define the reason for that partnership, and youre going to want to get the right paperwork together so that we dont have to worry about that. But the real thing is, you want to learn small together and then you only worry about scaling. Where you get the loss is if what you try to do is move so fast that before youve proven where the win is, you try to get too big before you have developed the partnership. Well be back in a minute. Thats our show. Thanks to my guests. Im scott mcgrew. Thanks for making us parts of your is not morning. Hello and welcome to comunidad del valle, im damian trujillo. And in todays show [ speaking spanish ] nbc bay area presents comunidad del valle with damian trujillo. We begin today with cets culinary school, located here in san jose. With me on comunidad del valle are richelle seigler, cet head chef. And also alissa santiago is a student there at the cet culinary school. Welcome to the show. Thank you. You brought a wonderful pastry. Before we tease anybody, tell us what you brought for us. The students made a delicious cheesecake, vanilla cheesecake with White Chocolate saving and whipped cream