Good morning, everyone, im scott mcgrew. I saw a billboard recently that absolutely stopped me cold because its message was so spot on. Here it is San Francisco, meet your minimum wage replacement, an ipad. Hello, may i take your order, it says. It was placed there by a think tank that opposed the citys move to raise the minimum wage to 15 an hour. Though thats exactly what the city did. And i tracked down the fella behind that billboard. Hes Michael Saltsman of the employeement Institute Based in washington, d. C. And funded by big business. Now, i suspect michael and i disagree on a whole host of opinions, but not on this because this is not opinion, its fact. The fact is technology is quickly replacing workers. Not just in factories. We knew that but especially in entrylevel, lowskilled jobs. There are no toll takers on the Golden Gate Bridge theyve been replaced by fast track. Grocery store Self Checkout nothing new, and restaurants like chiles now take orders via tablet. Mcdonalds has been testing the same concept in europe for years. And yet there is a nationwide movement to raise the pay for the very people in danger of losing their jobs to an ipad. An ipad that will work for free. Michael saltsman is the former economyist with the bureau of labor statistics recently wrote an oped, the employee of the month has a battery. And welcoming sarah frier of bloomberg. Before we get to how you and i agree on a whole lot of things i want to go over this employee policy institute thing, which is somehow associated with berman and company, a p. R. Firm. Am i fair in saying funded by big business . Yeah in fact if you read any oped i write, we acknowledge in the end we receive some of our support from the Restaurant IndustryEmployment Policies Institute is a nonprofit thats managed by berman and company, saves us on the overhead we dont need to have a fulltime Graphic Designer on staff. When i say youre funded by big business exactly, i am. My next question would be what are the problem with my facts . If there are no problem with my facts lets get to facts, and that is, i absolutely want everyone to make a living wage to have a Great Success in this great country of ours. However, i do understand that if youre earning 10 an hour and you walk off your job demanding 15 an hour and you could be replaced by an ipad thats just a bad strategy on your part. I think it is. I mean i think we can all agree broadly on the idea that reducing poverty, raising wages at the bottom end of the career ladder is a good goal but the question is what are the best means to accomplish it . The minimum wage has always come with tradeoffs, but i think what Technology Today has enabled is for those tradeoffs to be much more dramatic. Its no longer you know dennys leaving the coffee pot on the table so you can refill your own cup, its large scale changes that could lead to a restaurant no longer having to hire cashiers or wait staff. But this has been around for years. I mean i wrote a story about this i think, two or three years ago and at that time people were saying this is going to change everything once people see its economically feasible and you think the thing thats going to tip the scale is minimum wage but does that mean its not currently economically a good idea for these restaurants to get ipads . What is the Tipping Point . I think the Tipping Point becomes labor cost increases. That could be minimum wage. It could be Something Like the Affordable Care act, you know two years ago there was a front wage wall street journal story about what chilis was doing to adapt to the cost of the Affordable Care act, front of the house and back of the house, so i actually since your original story, i think if you look at chains like chilis, which has installed these tablets at all corporately owned locations, i think were getting towards that point where the economics start to make a lot more sense. I think we can all agree that technology is exerting downward pressure on wages. Exacerbating even the number of employees. But at some point, seems to me the question here is at what point do we say it is not economically optimal or socially acceptable for wages to keep going down . The minimum wage has actually been in operation for a long time in the u. S. And, you know the u. S. Has one of the strongest economies in the world and is actually going to lead the world this year out of recession. Its the u. S. Consumer thats actually been behind a lot of one of the strongest engines in the world economy, so you know, seems to me whatever we can argue about whether San Francisco should be 15 or 12 at some point, the issue here is, how are people at the bottom end of the wage scale going to be able to afford goods and services . But is it though . In the sense that i mean we want these people to afford all these things but, no its a matter of when is it that the person costs more than the device that would do the same job . The ultimate tension point here is, too, in any minimum wage debate, it always comes back to the customer. If the customer was always willing to pay higher prices wed have no debate about the minimum wage because restaurants would just increase prices and there wouldnt be an issue, but its because people are price sensitive that we run into these tensions, that if you cant raise your prices you have to find a way to provide the same service at a lower cost and i think thats where the problem you run into is you dont have jobs, the same transition entry level jobs that previous generations have. We wind up with those that dont have the same experiences that previous generation did. But in the face of Technology People always have been an argument that you cannot argue for higher wages because technology will be something different. Walter, the auto union boss one of the great kings of the labor union said he went to a ford factory, said look at all those robots. They were automating look at all those robots whos going to pay your union dues in the future . Yeah but whos going to buy your fords . Thats always been the tradeoff here, without a decent wage you know these companies cant thrive and survive, and so its just too easy to kind of seems to me back into a corner and say we cant fight the computers, we give up take a lower wage or give up our jobs. I dont think its fighting the computers so much. The question is at what point are we accelerating decisions, 2045 would it be possible to have widespread automation everywhere . I think thats possible but i think what were doing now and a number of banking analysts have written about this, were accelerateing transitions at a time when a state like california Unemployment Rate for teens is near 28 still, so i think were accelerating these things in a way thats actually harmful for the people in this case that were trying to help. I mean you have to think about it in a broader way because while this works in airports and it works at fast food places you know i was a hostess once and sometimes somebody will ask you, do you mind can i get some turkey for my kid who doesnt want to eat a full meal . People always want specific Little Things that arent on the menu or maybe need to ask what ingredients are in something, and, yes, i see that tablets can provide Better Service in many cases, but, you know isnt waitressing, being a hostess isnt it always going to be a service job . Its a good question, and i think well go back to the chilis example. A colleague of mine was traveling recently and was in a chilises chilis, in a 16section you had two servers where you use to have four or five to cover. Its true, theres still someone you can ask a question to but also three jobs that no longer exist because most of the work is done via the tablet at the table. Let me ask you this question why do you care in the sense lets create this strawman named sam, works at mcdonalds, literally walked off his job so he could go protest for 15 wages to which the restaurant could say well well just replace you with an ipad. What difference does it make to you or your organization . In other words let the wage rise and the market will do what the market will do. I think the concern should be and theres a robust body of research on what happens when people miss out on entry level opportunities. Basically shows youre at a higher risk of being unemployed again, earning lower wages later in life and on the flip side those who work in high school six to nine years after graduation are more likely to be in a job that pays better and has more benefits. When people miss out on that our concern should be do we become a situation where we have 40 youth unemployment and vast swaths of people who cant find work because weve rendered them unemployable because they never had the same Job Opportunities and chance to start their way up the career ladder. Michael saltsman, thank you for being with us. I think this is a subject near and dear to so many of us so many facets of it but technology, i swear, is going to come in and make its own decisions. Up next the thing you absolutely should not say to a venture capitalist when press here continues. Welcome back to press here, the numbers are in and it turns out it was a really good year for venture capital. It raised more than 44 billion in 2014. Uber raised the most money according to data from pitch book while 500 startups did the most deals. If you want money for your startup, youre going to have to talk to someone like him. You say there are some things you never, ever ever want to hear from somebody pitching you. Give me a big one. Absolutely. You dont want to pitch the flavor of the day to a v. C. Like uber like uber for this data for this clouds for that social for them. People do that to journalists all the time. Thats because were dumb and we can only understand it. Absolutely absolutely. Misconception that people see the flavor of the day. But what they dont understand is People Like Us are looking for unique perspective about a market problem other people have not figured out. But excuse me it does seem looking at what people invest in the valley, there are trends so Artificial Intelligence is a current trend where everybody has to have a couple of a. I. Companies in the portfolio, so you can understand why companies would come to someone like you and say i have a great a. I. Company, why dont you invest. That is true v. C. S have this fear of missing out and they try to invest in that trend, but Good Companies and bad companies, good investment and bad investment whether its a bunch of technology or a solution to a problem. If you look at a. I. Machine learning Artificial Intelligence, bunch of technologies. You have a problem that you can solve for your customers. If you have, youre a great business. We journalists tend to call that the hook. Whats the thing thats going to do something other than you have a large data company . What else do you not want to hear from the young people coming up to your door and knocking on it . Other thing i dont like to hear is that people think if they have big advisers that will help get funding or credibility. I thought that too. We see it the other way around. I see it the other way around because if you have the big name adviser whos taken three shares from you and doesnt work in the company or she doesnt work in the company, no value. That person is not going to spend a single minute with you. The other thing, you tend to know that person better than they do. They are going to throw down a Scott Mcneilly or Something Like that had drinks with that guy the other day sort of thing. You are not impressed. Did you read his recent book . He said you have a problem with the clean tech bubble, all these investors turned up in suits and ties and that was the warning, salesmen. Everybodys throwing away their suits and ties. Sorry, scott. Its an nbc requirement. You met me halfway. What about the Later Stage Companies, the ones that ask for certain preferences or options or equity at a certain level. Say, like travis comes up to you and says you can be part of uber, but youll have absolutely no power in Decision Making part of our board, but silent. The difference is Later Stage Companies are set in its way. And as a new investor you cannot influence the companys direction. Only time that will help influence the company is the first 12 months of the company. Thats what i invest in. First 12 months you help set the foundation of the company. After that the train is moving you are just a passenger. Are there any personal things you look out for when you meet entrepreneurs . What are the little signs you personally think, you know thats what tells me this person really gets it or they are going to be a Great Company founder . Two things quiet confidence not bombastic, quiet confidence. This determination to succeed, because building a business is not a fun thing. It looks very sexy from outside, but its a lot of struggle so this guy or this gal has this stamina that im going to get into it and stick with it through ups and downs, thats number one. Number two is really a unique perspective of the market something that you know that they dont. Doesnt mean its a big huge secret, just perfecter, can you look at this problem differently, provide a value to your customers which nobody else has been thinking about. You mention in the first 12 months, the only time you can truly influence that company, have you ever yet thought to yourself maybe i shouldnt influence . Maybe i would mess this up theyve got something going, ill invest but im going to let them figure it out on their own. I think about it all the time because nobody knows how to run a business. Its your perspective and anybodys opinion. Typically, my opinion has been look, im going to be a doting father, ill tell you all this good and bad, you pick your own battle and go fight it out. For example, when i met one of the companies that i was the founding investor in they had a very simple proposition. They said we are going to separate storage performance from capacity and you buy performance through software and this vision when they started the company, today still have the same vision and its still running on it. So as a venture capitalist, all you can do is help them enable and introduce employees, businesspeople salespeople, but you cant influence the path. You talk about unique perspectives how do you account, then for the lack of diversity in founders . Do you think about that at all when you interview people . Absolutely. I mean personally as much as i like to invest in women and minorities, when you see people walking in most of the time typical white male american male and it also depends on what Life Experience or professional experiences you have because thats what you carry to your v. C. Office or idea that you carry. So as venture capitalists we want to see more diversity, just the volume is very low on the other side. A partner at life speed partners, and i look forward to the first person that comes up to you, hey, i saw you on press here, as they often do and im going to pitch you just the way you want to be pitched. Thanks for being with us. The appetite for ipos in 2015 may be in uber. Well take a look when press here continues. Jim cramer is critical of him, whos been ceo since 2010. Here you see him on the floor of the New York Stock Exchange the day that twitter became a publicly traded company. So whats wrong with him . Lets ask that allaround smart guy, all right, well whether you agree or not, whats the market about him . First of all, im not nearly as critical as others are. This guy game into a mess and turned it into a 25 billion company. Im not sure the four of us can do that so its an incredible accomplishment. Having said that hes been a structurally tough position. Hes needed a founder ceo like Mark Zuckerberg who controls the entire company, nor is he the higher gun. Hes not even the ceo the board brought in hes an accidental ceo. The board was divided and he became the ceo. You combine that with stock that has fallen 50 in the last 12 months when its peer group is exploding. Facebook up 50 , snapchat the markets on fire. You know hes in a tough position, and every quarterly Board Meeting they are talking about whether hes the right guy going forward, fair or not. Absolutely. I think he has an expectation problem. As you say, he came in with a massive evaluation great business, just not that big of business, so the problem for him is how do you reset that. Thats more our fault than his. Everybodys buying twitter, is excited. Thats one side of it but you have to consider that hes been through five product managers in five years, he switched out his cfo, his coo got rid of his coo. Does that concern you . Yeah great teams dont have that level of turnover. Its just a fact. It shows theres structural problems in the company and that a ceo you dont want to see that level of turnover. Great teams have a turnover at the beginning to build the great team or just too much turnover . There are folks who are good at taking the ball certain ways down the field, folks great getting something off the ground getting to 100 million to 1 billion, but we shouldnt see the types of turnover weve seen in the last 24 to 36 months. Is there a name you would put forward for next ceo of twitter . Or needed to be a next ceo of twitter . I wish i had the perfect name. I think what well see is a true professional, a marissa myer type candidate someone who has come out and is ready to go even bigger. Twitter might have been a better fit for marissa than yahoo . Yahoo is very mature. Its not about the products. Twitter is the most baffling product i use every day, i love twitter, i tweet 20 30 times a day, its still wor