Bloomberg businessweek jim ellis. I want to start at the business, because there is a fascinating story. We had the auto show underway in detroit. When we think of self driving, we think of the auto manufacturers, but you also have to think about the paint manufacturers. We think this technology is all about sensors and hightech things and now some of the most ,ldschool companies around paint manufacturers are key to the new technology. It turns out that for all the sensors we are equipping newfangled cars with, Autonomous Vehicles need to be able to bounce off another oncoming vehicle or vehicles around and they judge the distance between them, they do crucial to make this work. Problem is, there is a blind spot these cars these sensors cantnd that his people read very well cars that are black or dark colored. Carol and there are a lot out there. James that is it, the bouncing needed to determine distance between things doesnt happen with black. Paint manufacturers are coming up with new ways to how to make things about back. They have taken inspiration from an unusual place. Julia eggplants. James the eggplant, which is dark but grows in the sun and stays cool when it is picked. An engineer at ppg figured out that is because the near ultraviolet rays go through the dark skin and bounce off of the white underside and come back. What they discovered is you can do paint that goes through the dark outside, goes to a white undercoat and bounces back to the sensor and therefore, it can be used for Autonomous Vehicles. Julia i wonder what the challenge would be if you have autonomous technology, electric vehicles, does that mean less vehicles on the road, the amount of paint is higher. You have autonomous and more shared vehicles, there are fewer cars and if i make paint, i will lose business. This is great because of need lots of, they paint in coatings. All of the batteries and there are lots of batteries. All of them have to be wrapped in paint and coating. Carol what is fun about this is already paint hightech. It controls temperature and so much. I didnt know that. James we have so many smart features built into the new cars now. Cars that can park themselves, cars that have the distance determination within the car, all those things require sensors and a lot of those sensors work better if they can either have special paints that are round around the electronics or around the bumpers to allow the waves to go in and out. Julia ppg is working on barcodes to allow cars to identify i want to move over and talks. Cover story about who would love to paint over the cracks. Travis kalanick. James it is quite a story. We have got a look at the yearlong fall of bloombergs ceogoing from the ubers to the one who couldnt do any wrong, to the Company Everyone hated. It is an interesting tale because it is a tale of hubris, overreach, stubbornness and it says so much about Silicon Valley and so much about american business. Carol and it is a great thing Travis Kalanick crawling on all fours. I wont give it away. This is an update to that story, we talk to brad. Was one year ago, uber flying high. It was valued at almost 70 billion. Unimaginable Success Story that transformed transportation around the world, but that was the public perception. There was a little bit of early worry that this company had gone too hard too fast for too long. Did, they things they took the first step toward hiring a professional manager, jeff jones, who came in as the president. He was a former target marketing guy. He only lasted a couple of months at uber, but he decided to do some marketing surveys to see what the perception of the company was. Carol uber had never done this. Brad of course not, that was way too conventional. Julia some voiced some concerns. Others had no concerns. Brad Travis Kalanick, the cofounder and ceo felt pretty aggressiveis approach, but jeff conducted some Polling Research and they found that the more people knew about uber, about how it was run and who was running it, the less favorable a perception they had. Where eric and i start our story in business week this week is all about the talkingwhere they were about this. The question is, did uber have a pr problem or did it have a how the company was run problem . Julia a culture problem. Brad exactly, and he for this happened they were debating that. , erically, Bloomberg News posted a video of the dashcam footage of Travis Kalanick over Super Bowl Weekend berating a driver. Talk about timing. So he looks at the video and goes back to this meeting and starts crawling around on all fours. Brad this is when he saw the video. He is on his knees and is saying, im terrible, im horrible. Because that meeting had big ramifications and report on this in our story, the unraveling of uber. Travis went and entered into a thencial arrangement with driver that really alienated some of his colleagues at uber. Another thing that happened is he didnt really address the core problem. He continued to think it was a pr problem. Julia even at that point, he was like, we need new pr strategies . Want you to explain more about that financial arrangement with this driver, because you point out this was meant to be a conversation. He was going to go apologize and it seemed to get heated again and he said he would write a check to the guy. He ever other member of uber that was there was like, hold on a second. What is going on here . And athat is one element previously unreported element of the saga, travis went to the driver. To spend a couple of minutes in the room with him, apologize and leave and said he debated him for an hour and agreed to give him uber stock. Up making a private payment when his lawyers objected. Ceo he had got removed as but was still actively involved in the company, there was some sense the media would report on this and from afar, when he asked ubers global head of security to see if he could look at the emails of people who might be leaking this story, and now we are six or seven months later, a precipitating event to the entirert 14member executive Leadership Team writing a member to the , but asking Board Members travis in particular, to step out of the day today. Carol turning the trouble into a cover image was the job of a design director. Chris there are no photos of him doing any of these things, so we hired this illustrator to do kind of a couple different scenes. This is definitely the most visually impactful one of him on his knees after he has watched this video arguing with the supervisor. Uber driver. Carol it feels like such a different cover for you guys. There was a lot of white space. Chris we wanted it to be arresting and we used the typography to zero in on him. Carol interesting that you say that, because is it the companys problems and ultimately, it turned out to be the ceo who was the problem. Chris exactly, he is falling and falling. Carol kentuckys experiment with medicaid next. Plus, gerrymandering gets its day in court. This is Bloomberg Businessweek. Carol welcome back to Bloomberg Businessweek. Im carol massar. Julia im julia chatterley and you can find us on bloombergbusinessweek. Com. Summer will begin requiring medicare recipients to show they are working. Julia we spoke to Matthew Philips about how the plan may unfold and what might be the outcome. Matt this is something conservatives have long wanted to do in their idea to shrink eligibility for medicaid and make it harder to qualify for a lot of the social safety net that exists for the poor and low income americans. Trump gave president states the ability to experiment with medicaid however they want. They have to apply for waivers, but that will require mean adding work requirements to that. The next day, they approved a kentucky request to do just that, which had been pending since 2016, so starting this coming summer in july, kentucky will be the union to require medicaid recipients to prove that they are working and if not, that they are disabled or pregnant or volunteering or in school. Julia very briefly, who does this actually apply to then and who would be excluded . Medicaid ise, so the 53yearold federal and state program that is aimed at foriding insurance lowincome americans. Right now, 72 million americans are enrolled in medicaid. That spending is just shy of 700 billion and accounts for about 20 of total Health Care Spending in the united states. It is a massive social safety and right now, your income threshold, depending on where you are in the country, is about 138 of the poverty line, which amounts to about 16,000. Under thexpanded Affordable Care act under president obama and about 30 states, including kentucky, chose to expand medicaid. Those numbers went up starting about 2014. What we are seeing now is, on top of the gop effort in congress to undercut and repeal obamacare, chip away at it, now the battle has moved to the state level. Kentucky is the first state to do this. There are nine other states that have similar waivers pending in front of the federal government that will probably be approved sometime in the next few months. For the next few years, we will see this social experiment conservatives have been wanting to do to raise the eligibility for medicaid to save money and get people back to work. Julia two redistricting cases are raising the odds at the Supreme Court may define some voting maps violate the constitution. We got more from peter coy. Peter gerrymandering is when you either pack all the voters from the other party into a certain district where they will be harmless, because you put them all in one place, or you will try to spread them out very thinly, but always in the minority so they cant win. Basically, it is a way of making sure your party gets more seats than the other one disproportionate to the actual support for the party in the state. Julia where were these cases and what will be heard this year . Peter they have already heard one case involving wisconsin and it was republicans that did it and the democrats objected. The case in the springs maryland, the opposite. One single congressional district, a democrat districts where the republicans are complaining. Julia when these districts are redrawn, what is the excuse given if not for political reasons . Carol and it is done every 10 years, isnt it . The state level, for congressional redistricting, it is related to the census. To reason you draw lines is make sure you have the same number of people in each district. One person, one vote role. Rule. You have to do that anyway. It comes down to where do you draw the line . There are many ways to get the same number of people in the district, and you can see some i believe it was massachusetts where the word gerrymandering came from. It was the shape of a dragon. With modern software, they are getting more creative in finding ways to pack and crack. To get maximum advantage. Carol who is in charge of drawing the lines . And ageike in this day with computers and algorithms, you could let a computer decide. Julia meeting all the requirements. It. R state legislatures do here is the case. John roberts, Supreme Court chief justice, is very strong on the idea that he does not want the court to be politicized. Or even to be perceived as political. He wants to keep his hands clean because the credibility of the Supreme Court is very important and has to be preserved. Julia bipartisan. Peter yeah, and he is afraid if they allow the redistricting, allowing that one, inevitably people will say they are being partisan. Up next, political instability is leading some bankers to seek friends in unusual places. Carol and Silicon Valley sees a brain drain to china. Julia this is Bloomberg Businessweek. Welcome back to Bloomberg Businessweek. Julia im julia chatterley. Carol im carol massar. Julia in the economic section, the u ks opposition party, the labour party, has been socked out by fund managers, ceos and bankers over the past six months. The prospect of labor winning power is starting to overshadow brexit as the biggest wildcard for investors. Julia here is christina with more. Mcdonnell is not your typical politician. He has been a veteran of labor and is a man who has waived the red book in debate in parliament and lists one of his interests as fermenting the overthrow of capitalism. That will sit well with everybody. Talk about that, because business people, investors are more concerned about labor winning in the next election than they are about brexit. Cristina the parties performance in the snap election was a wakeup call to britain. Carol 40 of the vote. Cristina thats right, a High Water Mark that goes up to the 2000s. Is theythe expectation have a good shot of winning the next election, whenever that happens. One is not scheduled for years, but government is very troubled mays government is very troubled so it could come sooner. Feel is a moment, lets each other out, where we stand. It is an opportunity perhaps for business to go in and say these are parts of your agenda that make us really uncomfortable. Is there any room for flexibility in these areas . But i think one of the big issues is that the party stands stance on brexit has been more flexible than mays conservatives. I think businesses and the Banking Sector are attracted to that since they overwhelmingly opposed brexit. Julia traditionally, the labour party would have been proeurope, there is the debate on exit that Jeremy Corbyn has taken a strong stance and we wouldnt be here in the first place. There is some strange irony. To what extent our business courting him, approaching him, trying to talk to him . Policies,concerning whether it is raising Corporate Taxes or reversing that Corporate Tax cuts we have seen, raising the level of personal taxes quite dramatically. It is very labor. Cristina it harkens back. People are actively seeking audiences with corbyn and mcdonnell. More people have been talking with mcdonnell. A strange situation because lobbyists and some advisor firms dont have contacts into labor. They date back into new labour, so they are having to scramble a bit. Some people have resorted to the get a seating to next to mcdonnell at events. Carol i love that. Goldman just sort of walked up to him at conference and said we would like to have a meeting, and they are working on scheduling something. Carol chinese engineers in Silicon Valley are moving back home in record numbers. They are getting tired of a bamboo ceiling, this idea there are two leadership roles available to them in the major Silicon Valley companies. Or at the least, that it is taking them too long to rise above the level of engineering and deal with the kinds of grander problems that they see friends and colleagues back in china wrestling with. Julia and now jet tech has taken over finance as the most popular reason for these guys to go back home. To a recenting survey, it accounts for one in six. Julia at a time when xi jinping is cracking down on internet privacy and the approach for these companies, why is it so easy for these guys to start up their own companies . Jeff according to the headhunters, a big piece of it is beginning with piece of that, beginning with the ipo of alibaba in 2014, there is more money than ever flowing through chinese Venture Capital funds. There was more, chinese vc money than american vc money. Getting back to the bamboo ceiling question, chinese engineers seem to have a much better time raising money if they are in china. You do talk about the vc money flowing into china. Carol three of the next five biggest startups that gives a credibility when it comes to the startup world. Absolutely, and the other piece of this opportunity question aside from the money, one engineer, according to our reporters, received 30 million in compensation for a fouryear deal. My mind. At blew 30 million for a fouryear deal for an engineer. Jeff it really is pro athlete money. Or ceo. Carol like a sports contract, yeah. Jeff but the other piece to it according to who we spoke to has to do with the looser privacy the 700is idea that million chinese Internet Users privacy and data is much more accessible and usable than those of americans. Makes total sense. When does this become a problem for Silicon Valley that they are losing all this talent to places like china and other countries too . Jeff the thing Silicon Valley has to worry about in the long run is losing ai related engineers who, at the moment, are the most in demand of anybody in the valley or elsewhere around the world. By the same token, that could 850,000 aie of the engineers or ai related workers in the u. S. Right now. But one in 12 have chinese heritage of some kind. Up next, the latest cosmetic innovation in china doesnt come in a tube or compact, it is found in a petri dish. Julia plus, intels ceo at the cef conference, but the problems persist. This is Bloomberg Businessweek. Julia welcome back to Bloomberg Businessweek. Carol still ahead in this weekss issue, fixing intels chips. Fortune from a mexican drug balance. That is still to come on Bloomberg Businessweek. Julia we are back with assistant managing editor jim ellis and the editor of the business section here. Beauty may be skin deep, but that skin matters. Matters quite a lot. It turns out that humans all epidermis, butar beneath that, there are lots of differences. Lots of ways that individual cells react differently depending on the race or nationality or locality of the the french loreal, cosmetics company, is doing interesting work with that, looking at how it can tailor make cosmetics for chinese skin, and to