Cities on Six Continents around the world are competing to become part of the network. The effects of air quality have been written about on treasurers. Charlie danny aiello, on his i only know who i am when i am somebody else. The triumph of becoming an actor, one side did and i achieved that success. I knew it was the only thing in life for me to be able to act to escape into other people. When i have pain, the greatest times i have is to fall into a character and forget about the pain in real life. Charlie ken chenault, judith rodin and danny aiello, when we continue. Rose funding for charlie rose has been provided by rose additional funding provided by and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Charlie ken chenault is here, he is chairman and c. E. O. Of American Express, the multinational financial serves company, among the worlds bestknown brand. Its iconic credit card has been swiped by shoppers and business travelers for decades. The digital revolution is changing how we engage in commerce. Eric schmidt says ken exemplifies the best leadership ive ever worked with. I am pleased to have ken chenault at the table for the first time. In interest of full disclosure, American Express has been a supporter of the program for years. I am grateful and appreciative. Thanks for being here. Great to be here, charlie. Charlie tell me about it is that informs you about the change elements and how a Company Responds to that in the ability of a c. E. O. I think whats really exciting, in the times we live in today, is this convergence of the online and the offline world. It is presenting incredible possibilities. But whats very important is that you cant look at your business in a narrow way. So let me give you one example. It would be wrong for us to simply view ourselves as a company that is facilitating payments. Because if we look at one of the major developments, platform companies, amazon, alibaba, google, facebook, and we view ourselves as not just a company facilitating payments, but as a Platform Company that is delivering services, and we have the most integrated payment platform. So what were focused on is how do we change the commerce experience and become even more meaning 1 meaningful in people. Charlie its important to define who you are in terms of what kind of company you are, and the definition in your head may change as the world changes. Yes, but i think whats very important here, charlie, and i believe this strongly is i often talk to c. E. O. S and they look at me a little bit askance, whats the soul of your company . Charlie yeah. Because what that means is whats the core . What do you stand for as a company . For American Express, weve focused on two hallmarks, as i call them reinvention and constancy. Reinvention means weve got to innovate. The slogan i use in the company, innovate or die. Weve got to do that constantly. Weve reinvented ourselves. Its in our dna over 164 years. But then you have to have a constancy of values and our company, the heart and soul of our company is service, trust, integrity, and those attributes are what we use as the compass to navigate through this fastchanging world. Charlie and can you imagine where you will be in ten years . I think ten years on a relative basis despite the fact things are moving so rapidly is still a short period of time. But heres what ill tell you, one is the form factor of payments will change and i frankly do not care if plastic goes away. Thats really not what is relevant. Whats relevant is whats the business platform that were operating on, and back to this integrated platform is American Express has relationships with merchants like retailers where we get all that information and data, and we have relationships with the enduser customer, and that information and data is very critical because what it does is it gives us insights. I know where charlie rose spends, i know what time he spends, i can predict what are different items that he will have a greater interest in, and, so, i think were going to be far more involved in both the commerce journey and the lifestyle journey. Charlie and your competition will be . I think our competition, frankly, is going to be anyone in the service business. I think our competition will clearly be other payment providers, but i think our competition is going to be anyone whos Offering Services and, so, my view is, im partnering with companies that are competitors, that are frenemies. I work with many banks around the world who issue American Expressbranded cards, and people said to me 15 years ago, ken, how could you partner with banks that are competing with you in the credit card business . And i said, you dont understand. What were doing is were expanding our brand and our cards, and if we get more volume on our network, that makes us more relevant in the marketplace. Charlie when you look at Something Like apple and the big announcement tim cook made about where theyre going, you say so him welcome . What i said to tim, absolutely, is welcome. And what i also said to tim, when we had our conversation, is, again, what does apple stand for . And what we found is there was a commonality between our companies. One is we both stand for service, but tim, whats also is very clear, im focused on product. Im focused on service. And then what was very critical is the data, because data is our lifeblood. We talk about that as the closed loop where were connecting buyers and sellers. And tim said, im not interested in the data. And that was important to me. Charlie he said that before, too. Yes. Charlie hes said that to me at this table. Absolutely. Charlie so what about alibaba . I think that they are a fascinating company, and the reality is, as you know, theyre in payments, theyre in commerce, and what were increasingly doing is were bringing buyers and sellers together. Youve got to look, as i said, more broadly at payments. We had the largest rewardsbased program in the world. And the reality is, you can access our membership reward points in a new york city taxi, in uber, in airbnb, to pay your bill on amazon. So you cant just look at our business as simply facilitating a payment. Charlie tom freedman says hes thinking about a new book. You remember the book the world is flat. Now the world is flat. And he talks about uber and things like that, and the genius they bring is speed. Right. Charlie did that resonate with you . It absolutely resonates. I think, at the end of the day, speed is absolutely critical. But ill tell you another thing that uber brings, i think we are brig, i think there are a range of Successful Companies that are doing this speed, simplicity, convenience and being seamless. So if you look at the Uber Payments experience, youre not even going through the act of really paying. And what weve done is, with uber, is maybe it a seamless experience to earn points and redeem points. So the ability to, in fact, operate with speed is an essential requirement of success. Charlie do you believe that the consumer understands what American Express is today and how its changing . I think its evolving. Charlie or that part of an education that you as c. E. O. Have to do . Yeah, i think, when you think about the consumer, a consumer is not going to analyze the business like a business case. What a consumer is going to say is is this a company that understands me and is meeting my needs . Is this a company that is forming a connection . And what im absolutely convinced is that consumers believe that, with American Express, they form both a rational and emotional connection. But what were also doing is we are making the American Express brand a more welcoming, inclusive brand, and the way i characterize this for our organization is were going back to the future. 164 years ago, charlie, we were a Freight Forwarding company. Whats glam warehouse about that . The travelers check business had no income requirement. But one of the things that the Digital Transformation has changed is scale has been redefined, and we have to be meaningful in all peoples lives, the affluent and nonaffluent. So we have a higher purpose of service, but i also want us to have a higher purpose of meeting all segment needs. Charlie you have said one of the points i make consistently to our people is that we want to become the company that will put us out of business. Absolutely. Charlie so you want to become the person that disrupts American Express. Absolutely, because, at the end of the day, if youre the one on of fence, if youre the one bringing about change, youre going to be a winner, and the Creative Process is moving things forward. Challenging the status quo. Not standing still. Because if you stand still in this world, you fall back. So what i want the people in our organization to be focused on, we need to be disrupters. We need to change, we need to be willing to challenge the status quo. Ill give you one example that goes to the history of the company. For years the company debated should we get in the card business. We didnt come out with our card till 1958. The fear was if we entered the card business, it would cannibalize the travelers check business. Fortunately, the c. E. O. At the time, howard clark, decided were going to enter the card business. Charlie too much upside not to do it. Too much upside, and we should take the risk that well cannibalize. And i always think that if im going to be cannibalized, i want to make that choice. Charlie do you regret any choices that youve made as you have led American Express in which you said, well, if i could do it over, i might have gone the other way . Anything clearly that looks at you or is it more ambiguous . Its more subtle. The reality is, as far as the big strategic moves, i feel very good about the moves that weve made. I think, if there were mistakes, its not moving quick enough on people and ideas. Charlie not moving quick enough. Not moving quick enough. It goes back to the speed. And you can overcome that, and we have. But if anything, id like to move even faster. Charlie tell me about partnerships. Walmart, you have this thing, what do you call it, bluebird service. Yes. Charlie how does that work . Whats terrific about this partnership with walmart, and it also points to the importance of partnerships in general because no single company, i dont care how large you are, can operate with the speed and scale thats necessary in this marketplace alone. So what walmart provides us is that they have millions of customers who, in fact, need a product like bluebird. There are 70 million americans who are unbanked or underbanked, who, in fact, dont qualify for a credit card and, frankly, what were providing to them is a lowcost product that is on a digital platform. They can use it as a plastic card, but they can also use their mobile phone. And what it provides them are a set of capabilities for their financial affairs. It allows them to make payments. It allows them to deposit. And what is opened up is an opportunity that many of these customers who could not qualify for a credit card now can shop online. And the other thing walmart has done, theyve come up with a very innovative product called savings catcher where you can look on your mobile phone, you look at the bar code of a product youre purchasing in walmart, and in a 12mile radius, if, in fact, you could have purchased the product at a lower cost at another store, they will refund the difference to you on a gift card. Now, if you use a bluebird card, you could double the savings. So this is meeting a need and an unmet need at a lower cost, and its opening up a tremendous opportunity. Charlie Small Businesses are an area of great concern for you. I think whats very importance, charlie, with Small Businesses, because this is not an issue of Small Businesses against big businesses, the reality is Big Companies generate substantial opportunities for Small Businesses. But i think as we all know, the reality is that 23 million Small Businesses in the United States, they employ half the private workforce, generate twothirds of the net new jobs, and what we did 25 years ago is we were one of the First Financial services companies, payment companies, in fact any company, that put together a Business Unit that was 100 dedicated to meeting the needs of Small Businesses. Now, what do most Small Businesses want . They want more business. They want help with marketing. We have created an Online Community for Small Businesses where we bring experts in to work with them. Charlie you give them expertise beyond their own budget . Absolutely. Because were trying to take the resources and capabilities of a Large Company and bring them to Small Businesses. Small businesses are essential for our community, but i think what people sometimes miss is the level of cooperation and collaboration between big business and Small Businesses. But the success of Small Businesses and the growth is essential for our economy. Charlie we wen went througha terrible experience in 2007 and 2008. Doddfrank came out of that, and a lot of people were hurt, as you well know. Right. Absolutely. Charlie have we taken the measurers as a country to minimize the possibility of that happening again, or is it inevitable almost part of the business psychle . I think a few points i would make, charlie. First, i think the fact that we have been able to come out of the financial crisis as a country, as we did, speaks to the resilience of this country. For all the criticism of our political system and frustration that we all have had, it speaks to the strength of that political system. It speaks to the culture in this country. Very frankly, if you had said to me, in 2009, ken, here is where we would be in the economy in 2014 charlie you would have said . I would have said, charlie, i think you are way optimistic. Charlie really . Because there is the fear that we were falling off the cliff. What i do think is that, with the regulation that has been put in place, with the changes in business practices, it does not mean we wouldnt fall back, but i think the progress that weve made is substantial. The issue, at the end of the day in our society, is still income inequality and the fact that the benefits of the recovery have not trickled down. Charlie what else do we do . Because its going to be a central issue. Weve got to have an absolutely relentless focus on job creation in this country. It needs to be a combination of the private and Public Sector. We obviously need, as we look at our educational system, our training and development programs, i think the United States has to look at this as the primary issue, because, as we know, job creation is not just critical to our economy. Its critical to an individuals selfworth. Charlie what kind of grades do you give the president . Whats he done right and whats he done wrong . I think at the end of the day the focus has to be on outcomes. And i think on a relative basis of where the economy was, in 2008 and 2009 and where it is today, i think weve come a long way. If we hadnt come a long way, i think people would clearly say, real problem with the president. Charlie right. So i think weve made progress on the economy. I would like to have seen even more of an effort on job creation, because i think thats so essential to our economy and the well being of our society. Charlie hacking. Do you worry about it . I absolutely worry about it. The reality is cybersecurity and hacking is a major modernday threat that were dealing with because it impacts national security, it impacts the economy, and it impacts the safety and security of our individual citizens. Charlie not to speak of privacy. And the privacy is incredible. But whats very concerning, and you know some of these factoids charlie right. 400,000 new malicious programs launched every day, four new cyberthreats every second. We talk about breaches, of the companies that have been breached, 75 didnt know they were breached. They found out through a third party. So what is absolutely essential is not Just Companies and institutions have to be focused on it, but there has to be a far greater level of cooperation between the private and the Public Sector because this is a fundamental threat to the safety and security of the world. Charlie and in some cases may be statesponsored. The reality is we nee that. Charlie you seem to be speaking out more than when i first met you when i came to new york. Is it because you felt like there were issues and ideas important to discuss . You felt responsibility toward your own company to make sure that the Global Community understood it . Or is it a combination and Something Else . I think its a combination. One of the things that i believe in strongly, and i guess it was a maxim that i got from my father, that he said the one thing you can control is your performance, and thats what you need to focus on. So in first taking over as c. E. O. , i wanted to make sure that i performed. I also believe very strongly that companies, depending on how you run them, can make