Future of education. Lets start with branson, founder of the virgin group. He is also a high school dropout. He is not alone. Bill gates, larry ellison, steve jobs they Left High School before graduating. I talked to branson about the challenges of educating entrepreneurs as well as the future of Virgin Galactic. Richard branson entrepreneurs it is possible that school is not necessary. I left school at 15. I learned the art of entrepreneurism by getting out there and doing it. And i also educated myself in the real world. And ive seen my life as one long education that i never had. But i think thats for entrepreneurs. Obviously, there are a lot of other professions that it can be quite useful, and university can be quite useful. For most entrepreneurs, i think the sooner they get out there and get their hands dirty, the better. Cory we see a lot of innovation around education, a lot new technologies being applied. I wonder about the role the individual has. A lot of entrepreneurs werent good students. What is it about entrepreneurs that can make them struggle in school . Branson i think an entrepreneur is somebody that wants to change things and create things does and does not want to be put in a box. And schools are there to educate the masses, i think, and entrepreneurs rebel against that. I think if you have a good idea that you feel can make a difference in other peoples lives, i suspect youll be better off not building up a big debt of student debt, but just getting out there and giving it a go. The danger of it is, if you fail, you dont have a degree to fall back on. But you will have had a pretty good education in trying to set up and run your business. Youve just got to pick yourself up and try again. Cory youve talked about your difficulties in school and dyslexia and what that meant in terms of trouble in school. Has it maybe helped your Business Career . Branson i am dyslexic. Therefore, i think i have been very good at keeping things simple, because, as a dyslexic i need things to be simple for myself. Therefore, virgin, when we launch a Financial Service company or a bank, we do not use jargon. Everything is very clear cut simple. I think people have an affinity to the virgin brand because we dont talk about them or talk down to them dont talk above them or talk down to them. What was the other thing . Cory with that, i also wonder when you talk about new ideas, do you think you do that in a different way where you use your dyslexia in some way, you have a different approach, including vetting new ideas . Branson i think the other thing i was thinking about was simply delegation. If you have a learning disability, you become a good delegator because you know what your weaknesses and strengths are. You make sure that you find great people to step in and deal with your weaknesses. And, actually, whether you are dyslexic or not, delegation is such an important thing for a good leader to be good at doing. Too many leaders want to do everything themselves and never let go. They never grow a group of Companies Like virgin. Cory another theme has been the discussion of what happens while people are in school and college, but also Career Development and launch them into a place where they can get jobs and where their resumes will put them into the right career. From your perception, youve started so many different kinds of his nurses, who do you kinds of businesses, who do you look to hire . What does a resume look like for someone you want to hire . What kind of strengths are you looking for . Branson personally i dont look at how many alevels they had, or what their academic career was. I look more at what experiences theyve had in life, what kind of person they are. If they are going into a leadership position, will they be good at people, will they be good at motivating people . Will they look for the best in people . It is more that kind of area that i am looking for rather than academic abilities. Having said that, if they are going to build a rocket, we would like a Rocket Science scientists. Cory you mentioned rockets, what is the latest with the tragedy with a test like . The test flight . What is the latest with Virgin Galactic . Branson i was there this morning in the mojave desert. They are working day and night getting the next spaceship finished. They are confident that they are back on track. It is going to be about a years delay. But i still believe Virgin Galactic has a great future. We are going to deliver. Cory do you still plan to be on that first flight . Ranson of course. Cory when we come back, well talk to mark cuban, owner of the Dallas Mavericks, an original thinker if there ever was one. Listen to what he has to say about making money in education. Cory this is the best of bloomberg west. Im cory johnson. He is one of the most prolific owners has some strong thoughts on everything including how technology can change education. We caught up with him for a wideranging interview. Mark there will be a lot of universities that go out of business. Im not talking about university of phoenix type for profit, but schools themselves. Sweet briar if you look, you are starting to see some changes. I think what people and investors fail to realize, lets just say for example, a School Charges 40,000 a year for tuition. 1000 students, that is 40 million a year. There are not a lot of companies, particularly education companies, that can adjust to that loss. What is happening is i am looking for a investment perspective for companies that can puts kids through school. Can put kids through school. College or postgrad. If a school keeps a kid and graduates in four years, that is a much more costeffective graduation for the school. They would make it more cost effective. Retention system would keep kids in school. Those help schools reduce their cost so they can deal with the ups and downs in demographic changes. Cory the companies monitor using the data. Mark i never get the latin name right. The retention systems help schools put together monitoring systems. When kids have to turn in things, particularly online students, you want to monitor them. If something is not coming in not happening on time, you want to be able to send an alert to not just the student, but the school as well, so they can proactively get involved. Cory schools have advisors. Mark they had them, we never used them. Cory for those schools, when they look at this, they have a whole different interaction with the student, because it is happening digitally. Mark it is not traditional like what we were used to. Now it is different. A portion is online or all of it is online. It is not just about taking a test at the end of semester. We used to just show up and do that. You want to know if the kid is tracking to make sure they are reaching their milestones in order to be successful. It is harder to self monitor when youre taking online courses. Just generally the way classes are today in college. Cory one thing that is changing the way books work. I know you have looked at that for investment. Mark one of my Shark Tank Companies is pack back books. Cory its not backpack. It is packback. That is my dyslexia. Mark what they are trying to do is reengineer the whole ebook approach to college textbooks. They are working with publishers now to try to come up with, analytically, the best approach to selling textbooks. Not just the physical textbooks, but ebooks replenishing ebooks, and in some cases a payperview for books as well. You may be like me. I didnt buy the books because i could not afford them. I would borrow books. Now you can rent them for a limited period of time. Trying to create a system almost like the movie business so you can get the books when you need them at the price you need them. Cory are the publishes open to this . Mark they are learning they do not have a choice. School gets more and more expensive. It was one thing when your books were a set amount. Now as College Tuition has expanded and grown rapidly three times the rate of inflation, what is happening now is the marginal cost of those books appears to be enormous. Kids are not always making the choice to buy them. They are renting them or they are buying them used. They are not getting the renewable Revenue Sources they used to. Packback comes in and says we will analyze for you and come up with the best solution. Cory and you got that on shark tank. Are you making money off of those . Mark i have had one go out of business. Two are not doing so well. Cory have you looked at those investments . Mark yes, i looked at them. Cory how do you do that . Mark im fortunate because i do not have to limit my capital. On shark tank it is one thing because i am trying to support entrepreneurs. Outside of shark tank, im looking for home runs. I invest in companies that go out and find new students and find the best outcomebased values for students. That is a different type of investment than what i do on shark tank. Cory we have snapchat pinterest, and other companies that have been out there for a long time. Even that is changing. Mark thats changing rapidly. You are that unicorn. Once you raise 500 million, you see them accelerate revenue. In order to do an ipo, you have to outperform. You cannot just increase 30 per quarter. You have to blow up your numbers. Thats why you see snapchat go to what they are doing. Whats up get spot because they do not have that revenue outlet. Revenue has become more important. It has gone. Oh. Back in the day with broadcast. Com, you could do a 30 million ipo. I read there were more 100 million private finances from vcs than there were from ipos. Now over the last 10 years, more i. T. Companies have grown through private investment than ipos. There were only 231 that have grown through ipos the last 10 years. Thats crazy, so because there is no ipo market, because the sec will screw things up. Cory are we going to see a unicorn like that, a billiondollar company in education . Mark yes. There is no outlet for ipos. Outside of them, you are not seeing the traditional growth path from the 1990s, where again, you show dramatic growth and profitability, then you go to the Public Market to get capital to grow. Now you have to keep raising money privately or get bought out. Until that ipo market reappears, you will see a lot more unicorns. They dont have the outlet go public. You will see a billiondollar education unicorn, the question is what happens next . You will also start to see billiondollar unicorns go out of business. Cory Dallas Mavericks owner and broadcast. Com cofounder mark cuban. Up next, Dan Rosenweig. Cory this is the best of bloomberg west. I am cory johnson. It began as an online textbook rental company. Now, it is much more. With learning platforms, recruitment, tutoring, things are a lot bigger than textbooks. I spoke to ceo Dan Rosenweig about the expansion of Career Development and internships at the summit. Dan 70 of college kids go to college to get a job. But the ratio of career counselors to College Students is one to 1000. 1 to 10,000. It is a completely underinvested area. Less than 40 of college kids even go to their Career Counseling Office because they dont have anything for them. This gives College Students an internships site. 62,000 companies, 2 million users. This gives them Career Coaching and counseling to help them figure out the right job. Cory what is intriguing me is it seems like it extends customer life. You take your customer past the fourth year or fifth year of college, in my case, past that fifth year into a longerterm relationship that lets you analyze your marketing dollar longer. Is that part of the plan . Chegg isnt just a college thing, its a career website. Dan there are two things. There is the right thing to do what do students need . We had to figure out what college to go to, matching them with scholarships. We extended it three years ago for the same business reasons. Now we have them, in high school, we have 75 of High School Kids who plan to go to college in our network. We help them pick the right college, pick the right class, pick the right major, get their learning materials. Now we have tutors, internships, and careers. We have extended long beyond the original idea. Cory what is the customer like now . Dan when we started, it was four days a year. Rent it, return it. Cory that is a fouryear customer . Dan it was more like a threeyear. Freshman didnt rent. Now i think our lifetime of the customer can extend as much as eight years. Cory interesting. Does that mean you will spend more on marketing Going Forward . Dan no. Once we get you into the system, we have you. The data matching of Relevant Services is used. We can bring in your learning materials, we can bring in your tutors, the right internship opportunities. It is a learning graph. Facebook has the social graph. We are that graph. Our actual marketing dollars have not only gone down as a percentage of revenue, it has stayed flat or three years as our business has grown. Cory you are getting involved in the College Selection process. Do you find, because you are putting students to work, that the diversity of schools is much greater that you are reaching into the far as the business . You are sending people to schools they might not heard of . Dan yes, it absolutely works in other ways. My daughters are at colgate, we know new york well. They were recruiting back in the day where it was upstate new york, new jersey, connecticut, and massachusetts. Today, colgates number two state is california. Not only are we introducing students to schools they have never heard of, that are relevant to them, but we are helping schools recruit diverse students from all over the country because we have the information. Cory my daughter is six. She said, hey, dad, i have been thinking about something. I think i decided where i want to go to college. At six. She says, dad, we like cal right . We like cal, but youve got to work hard on your math and science. She says, ok, im going to cal because we dont like stanford. Do you think that notion of where you are going to go and what you will do will change in bigger ways because of the work you do . Dan it already is. We have 4000 colleges, we work with a thousand of them to recruit students. We see the diversity of gender race, income. That is what they are looking for. Thats from all over the country. We are helping upstate new york schools, like syracuse, reach to los angeles, into zip codes they have never heard of. It is the way america is working. We are both from new york, here we are, and we live in california. The population is moving. Why not move when youre in college . Cory we are in arizona, just to be clear. You guys have made a big change in your business. To really get the physical textbook business to get out of that. Dan well, we got out of owning them. The sooner we go digital, the happier we will be. The deal with ingram simplifies the business. It clears things up in our tutoring business, our digital services, our college to High School Recruitment business. Those are growing at extraordinary rates. Higher margins, less cash. The print textbook business, rental business, we invented it. It is still the number one pain point for College Students. We do 6 million textbooks. The ingram deal means we do not have to run a warehouse, we do not have to buy the books. There is a company that had Slower Growth and now has faster growth. It had 12 Gross Margins and now 55 in that part of the business cory there was cash on the table for the investors, because the market today did not want it. Dan heres is the good news the most important thing to us is the student. We never lost focus of the ability to offer the business. We can now expand our catalog and offer more because of someone elses capital. We already do over 6 million textbooks a year. Its a very big business for us. The opportunity to use that cash, the 100 million plus, to buy our textbooks, we get all the benefits in the front end. We have to give up some of the margin to our partner, but they are better at logistics than we are. We use their eight warehouses rather than our one. It works out. It is an interesting thing to see what investors think is important. We saw the same benefits, and we went ahead and pulled the trigger years earlier. Cory up next, Khosla Ventures founder vinod khosla. Cory youre watching bloomberg west. I am cory johnson bringing you this weeks best of bloomberg west. His Venture Capital work is some of the best ever in the valley. And his own vc firm, Khosla Ventures. I talked to him about his investments in educationrelated startups. Vinod i think previously it was this lower faction view of Technology Applied to education. You always heard about speeches and classrooms, but there wasnt this notion of, let me create something for the student or the teacher for interaction. Now with cloud and mobile, we have gotten the basic infrastructure to do all kinds of interesting things. If you look at Something Like twitter or facebook, what they are about is taking a person and addicting them to the application. I think that ecosystem has been enabled for entrepreneurs to come in and start addicting students to learning. I think it will happen. Cory where do you see that happening . Have you made investments in this kind of arena yet . Vinod we have made some investments. I will give you an example. Piazza, a little ecosystem that professors use in colleges to essentially have a class forum a place for students to ask questions, get help from peers from teachers, teachers assistants. Before investing, i looked at my sons enrollment in three classes. He had 3000 interactions on piazza. Cory your son is at school where . Vinod my son is at stanford in computer science. He had taken three courses where the professors were using it. There were 3000 individual interactions across those courses in the forums. That is way more engaged than any classroom you can imagine. Cory do you make these investments saying, here is the big problem some company will need to fix . Therefore, i will find that company . Vinod there are lots of big problems. Starting with big problems is a good idea. What i find entrepreneurs do is the opposite. Start with something small, then make it explode. Going back to the facebook analogy, facebook was a forum for classmates at harvard. It really wasnt this vague idea that a billion or multibillion people would use. Cory it was a way to pick up girls, was the original focus. Vinod what the founder of piazza started with was the idea that people need to interact in a forum, this lots of questions, lots of peer help, that then becomes a way to expand. In normal classes, professors give tests. If you know every interaction a student had in class, you could get much better assessment of how much the student understands. Cory and not just the score on one test. Vinod what kind of questions do they ask . What kind of comments do they make . All of this can change it is mostly College Education at piazza. K12 teachers and other peoples who are passionate have created over 100,000 pieces of content. In high school, there are only about 2000 concepts you have to learn. For each of those, there are 100,000 concepts that have been created, elaborations that have been created, we call them modalities. These modalities are literally you describe photosynthesis, but can i see a simulation or a video, or can i play with what happens if the sunlight is late evening versus morning . Being able to run those experiments right on your ipad or android tablet, those kinds of things are getting students engaged. Imagine that much content. We were talking about mcgrawhill earlier. They dont have people who can offer that much content. But the community has authored it. Because ck12 started with a complete set of stem textbooks for middle school through 12 six through 12 education. Because they have that platform, people are now adding to it. There are great simulations you can play with and say, why is summer and winter different in the northern and Southern Hemisphere . You can run a model and see how the earth is going around the sun and actually see it. Cory Khosla Ventures founder vinod khosla. Up next, groupon founder andrew mason. Cory i am cory johnson. This is the best of bloomberg west, where we focus on innovation, technology, and the future of business. Andrew mason has a new startup two years after leaving as the ceo of groupon. He is becoming an audio tour guide. He has launched an iphone app called detour. He joined me to talk about this new business. Andrew we have 90 tours launched just in the San Francisco bay area. Each one takes you through a different part of the city. These are immersive, highquality walks where a tour guide is telling you where to go. Your phone is in your pocket the whole time. And you have great tour guides, too. Andrew we tried to find people who are not just great tour guides, but people who are real members of the community. We found a fisherman who has been fishing there for the last 40 years. He takes you behind the touristy facade and shows you what the wharf is really like. Are you just in San Francisco right now . Andrew we did one collaboration with radio lab in austin for sxsw. Youve got to tell us what your favorite tour is. Andrew they are all different. There is one we did recently, it is all about trash. It takes you down to the bayview area of San Francisco, where a lot of the trash processing happens, and it talks about the citys goal to be landfill free by the end of the decade. It is not what you typically think of when you go on a tour but it is an amazing experience. You learn a lot. You are really entertained. I think it is an example of types of ways were pushing the medium. How big of a market is this . Andrew i have never thought about things that way. If someone asked about how big the market was for groupon at the beginning, i dont think they would predict we would have a 5 billion company today. I just think about, is this something that people want . Is this something i want . This is an idea i had when i would travel. Even before groupon, just feeling like there has to be a better way than being in a tour group with a bunch of people you dont really know, trapped in this threehour experience that is kind of hit or miss. There had to be a better way to learn about these places that would allow people to explore. I think technology has finally reached the Tipping Point where this phone in your pocket can provide that kind of experience. What have you learned from your groupon experience that you are bringing to bear with detour . Andrew i have learned how to dress better. It is all mundane stuff. Let me think of something pithy and awesome to say. The value of building a pristine Consumer Experience and not compromising on that at all is something that we saw proven out again and again at groupon. It is something were trying to stay true to. We believe this is a space where a lot of people have tried to build something. None of it has been good. We said, we are going to not do that. We are going to make sure it is good, no matter how hard it is. It has been hard. We are building the consumer app so it is almost like we are building two startups at once. And we have the Team Building content, so it is almost like three startups. Were proud of the experience that we have created. We think people will be surprised. To follow up, you had a very public experience in your final years at groupon. Has building something more intimate that you control with detour has it been healthier experience to help recover from the battle scars you got at groupon . Andrew you may be surprised to hear i feel pretty good and happy about the whole groupon experience and grateful to have been part of it. We had some enormous ups and downs, but that is just part of the territory. I would say everything about that experience that was one thing, this is the next. I have i feel grateful for the opportunity to work on it. Its a lot of fun. Cory groupon cofounder andrew mason. Up next, the Creative Team behind hbos Silicon Valley talks about the new season. Cory this is the best of bloomberg west. Im cory johnson. Hbos Silicon Valley returns this week. It is produced by two people who are no strangers to making it big in comedy. Mike judge from office space, king of the hill, and, of course, beavis butthead. Mike the Second Season is the story about what happens to a company. Techcrunch just finished. They are a hit. Its them going to the next level. Series a financing and all the bad things and good things that can happen. Emily the winklevoss twins make a cameo. Evan spiegel, the ceo of snapchat, we will see him at some point. Mike this is true. Emily is there a good joke in this series . Mike at least one. I think it is a good one. Emily it is a joke worthy of season one . Mike they are all our babies. [laughter] who can choose to say which is better than which other . Emily it might be the most talked about moment from season one and i think its indicative of how you guys put the show together, because it is technically correct. I know you spend a lot of research on the technical part of things. Tell me how that came to be. When mike and i first started talking about working on the show, we bonded over the fact that we said, i hate technically incorrect jokes. We decided we vowed, if we do jokes, they will be technically correct. They may not be funny but they will be correct. So far, we have stayed true to that. Emily mike, you are an engineer. You worked in Silicon Valley once upon a time yourself. So, you know about this world. Mike i had fun on that one. Believe it or not, this guy whos got his phd just after we finished season one was sort of the compression consultant. We asked him for that joke. We said, can you give a stuff to give us stuff to put on the board . We had a lot of the technical stuff about the various angles. He went to town on it in a way that i couldnt believe. That came about, we were early on, when we started, at some point, i thought it would be cool to have a Beautiful Mind moment, like he did with the men and women in a bar leading to this mathematical epiphany. I thought maybe we should have Something Like that with compression. We were looking for something maybe dumb. Silly. It came from one of the writers, who was just completely separately talking about a discussion with his roommates about how you could i dont know how to say it on this show. Alec manipulate . Mike manipulate four men at the same time. Alec overheard this. He said, i think weve got it. Alec that was like my own personal Beautiful Mind moment. Emily i just got spit on. Im good. Very meta. What just happened . Ok. [laughter] really, you guys do a lot of research for this show. You have come up here often. Tell me about that. Mike a lot of the stories come from real stories up here. When alec started on it, i think we both had this desire to dig in and find out more about the real world and what these people really do. We were sitting after the pilot when it went to series. It just kept occurring to us i dont know what these people are doing. I used to program a little bit but i wasnt building apps and platforms. I was doing a different kind of test engineering thing. The more we dug into it, the more great stuff we found. Emily the hot shows used to be about doctors and lawyers. Why write about computer geeks . Alec we ask that on a daily basis. Why do we do a show about people that sit and type all day . What they do literally 16 hours a day is inherently unfilmable. Its a challenge. Emily unsexy. Unglamorous. Unfunny. Alec but it couldnt be more relevant. You look at the speed at which tech is moving and the role it plays in our lives. Everybody has at least one mobile device on at all times. It is super relevant to peoples lives. You do not see that much about that stuff comes to be. Cory mike judge and alec berg. Up next, hiphop group, de la soul. They are back thanks to the power of technology. Cory this is the best of bloomberg west. Im cory johnson. It has been 25 years since the hiphop group de la soul changed the world of music with hits like this cory the blend of conscious lyrics and sampled beats won the group a cult following, a big one, but it has been 11 years since they put out an album. Technology has changed the music industry. That is especially true for hiphop artists. They are back in the studio. They have raised 400,000 on kickstarter to fund their new album. I asked them about sampling. Making music was based off of how an early hiphop you just rhymed over beats. As you said, we were experimenting with james brown and any other record that normally we would rhyme over from a hiphop perspective. We did not think about the fact of who you have to pay for writing or publishing. We learned. We learned quickly. Cory what was it like at tommy boy . Where was the notion of lets make the music first . We will figure out who we have to pay later . Yes. That was it. The creative aspect was more important. Getting into the studio, creating a song out of your favorite stuff, a good sound was first and foremost. Business time came, we all sat down and looked at the list of individuals that we sampled from and figured out, is it going to be difficult to clear this one is it going to be difficult to find this publisher, get clearance on each song . The creative aspect definitely came first. Cory these are names i havent said out loud in 20 years. Now we look at the business, you want to get your music played on beats audio, pandora, spotify. What has happened to the licensing of that music since the origins of some of those tracks are unknown . Unfortunately, a lot of the earlier stuff we did on tommy boy, from what we are to understand, a lot of the legal language that needed to be part of the contracts between ourselves, the owner of the master, and the publisher, it did not include the world of digital. So it was almost specifically to vinyl, cassette, cd. So, a lot of the contracts needed to be reworked. Dealing with that is taking a lot of time to reach out to those different people. Rework those contracts to make the language exist for the benefit of the individuals involved its a process. It is a long process to make that happen. That is why our stuff is not available in the digital world. Cory so, as a result, you are getting around this by giving it away . Giving it away is fun. It is frustrating. Of course we dont want to break any rules but the fans are screaming and they want the music. They enjoy the music and at the end of the day, you want the fans to be able to enjoy the music. Or you do what we are doing now through the kickstarter campaign. Cory a last question about that, do you see yourself getting paid for that music or ultimately supporting touring and live events where some artists say they make more money there . That is one of the options for us. We have been able to tour for the last 20 years without having new music out. The idea of stacking profit or anything, rewarding what you have done via publishing or anything like that. Thats not available to us, really. Cory that is it for this edition of best of bloomberg west. You can catch us monday through friday. You can see more best of bloomberg west next week. David tweed its Building Blocks are known worldwide. Its brand is among the globes most admired. Its the fastestgrowing toymaker on the planet. We are at a company that less than a decade ago was losing a Million Dollars a day and has been transformed. It is going to be, i think, in the coming years a case study in how you turn around a company. David we are going inside lego. Awesome everything is awesome david the theme music to the lego movie could well be the theme for the company itself