tv Bloomberg Business Week Bloomberg July 8, 2017 7:00am-8:00am EDT
carol: welcome to "best of bloomberg technology." this week, a fishy way to grow new skin. oliver: activists try to protect germany's elections. all that had right here on "bloomberg businessweek." ♪ carol: we with the editor in chief, and you look at one of my favorite stories. artificial skin using fish skin.
reporter: it is rich in the type of material that is total in helping heal wounds. we sometimes forget about the number of people who are afflicted with persistent wound care, whether it is diabetes or you had a burn. they really have developed this market with fish skin. they can be used and is testing better than other products used. another product is a contestants --pig intestines. the future is here. we are adapting products, adapting things to do things we never thought possible. using fish skin. it really doesn't do something you probably never heard of but you should know and fundamentally can change the way hundreds of millions of people suffer around the world. this could be a real breakthrough. oliver: it harkens back to material science and biomaterials.
it is a very specific technological advancement within your guys' broader examination of tech in general. there is a lot of interesting developments happening. how did you choose these to be the most interesting or the most compelling in terms of showing where technology is going? megan: the issue with technology is you want to bring it down to the people. you look at global tech, we did not want to just do an issue where here is a bunch of cool new things. we wanted this so you the people in the story behind it. this story is personalized through a guy who found out about this product, traveled to finland because he had a huge issue with his jaw. this is really helping him. the more we put technology in the context of this is what is actually happening and changing everyday lives, it is much more accessible to people and it takes it a well.
that is what i love this issue so much. not just the technology, it is also the people. carol: did is also not to silicon valley. this is a small town. we think everything is happening in san francisco, but it is not. megan: we can't bring that point home to people more than enough. there is very little in silicon valley in this issue. microcosm.ley is a a lot of people have stereotypes and rightly so. i think what is really important is to get the dynamic of how technology is shifting, the centers were it is cropping up, everywhere from india to berlin. that is the unifying thing with technology. it is happening everywhere, all the time and radically reshaping the future. oliver: speaking of berlin and the computer clubs, this is such a bizarre story that has such a meaningful impact on elections. carol: he just wants to be a member. oliver: maybe in spirit.
there is a great look at the people here. tell us what exactly this story is about. a lot aboutar russian hackers and disruption. this is a group in germany that is really well-liked and has been working on safeguarding the german elect world process -- elect world process -- electoral process. -- it is such a different tale of hackers. it's about love and optimism while hacking these networks. this is a special one and of so glad we profiled it. and the heather graham cocktail. -- and they have their own cocktail. it is not rum and coke but it is something like that. whicho known as the ccc,
is been around since the early 80's. i have been following them for the last several years. it's a good meeting place to meet up with tech people in germany because among the thousands of members you have people who are information security, people just starting to hack, an older generation of people who helped run some of it biggest tech companies in germany, as well as teenagers and little kids who are learning the trade. that is part of what they are trying to do. it started in the early 1980's in hamburg as a warning about the dangers of what could happen with computer technology. now we see some of the things with hacking, etc. we are looking at them now because of the latest threat which is the threat to democracy. oliver: that is the core issue. how this group has a guerrilla
resistance against some of the things happening around the world. tell us about where this came from. you mentioned the original idea that was put together, but who were the founding people and how does the composition of the group look now? >> at the beginning there was a philosopher, one of the cofounders. he had a manifesto and they started talking about hacker ethics. by the time he got through to the 1980's and 1990's they had performed some spectacular public hacks. early paper review websites. they found -- pay per view websites. they found out how to get a bank to pay them for automated clicks as the at the equipment of roughly $50,000. they returned it to the bank. they cap fingerprints of german officials while promoting biometrics on passports and showed how easy it was to get a
minister's fingerprint off a glass at a conference. they reproduced it in their own magazine on pieces of rubber and it could be read by a thumbprint reader. these are stunts that helped them advertised to the german public that they should be wary about what they read in the newspapers and from politicians with promises made to them by banks and governments about their own personal cybersecurity. they continue to this day to do that kind of thing. one of the crucial things is democracy lies, 10 years ago they did -- democracy-wise, they did the same thing with the voting computers. they said these are vulnerable. we should teach them how to play chess. the maker said i would like to see that. within a month they had one of these very rudimentary consoles playing chess. badly, the playing chess. carol: why is a germany is seemingly years or decades ahead of the united states, the u.k.,
the united kingdom in terms of thinking about cyberattacks and hacking? how can they are so much ahead of everybody else? >> what was interesting was it started looking at the data gathered around the world from interference in fake news and elections. one thing we saw was an internet intere -- institute at oxford that is been tracking twitter activities. there is much higher levels of professionally may news than other content on german twitter been the u.s. or the u.k. in the run-up to elections. the answers we got were the terrible history in germany, m to the secret police and the with a used surveillance on people. to this grassroots resistance of the chaos computer club, and away you don't see
in any other countries. digital human rights organizations. it is a hacker group but also a lobby group. carol: inside the magazine and online you will find interesting out of the chaos your club. here's clinton cargo. cargill. how did you approach the pectoral element of it? >> we thought it would be incredibly photogenic and you wanted to capture this wild and woolly energy of this group of 800 people. carol: this certainly captures the chaos. it is just nuts. ights is agramming n public event they do to bring it to a wider audience of the german public. they do it with -- that p -- panache. poy set up temporary kiddie
ols and floating chairs and all kinds of wacky energy. carol: show us some of the other pictures. my guess that you guys describing it for the story, there are probably so many different things you can shoot. there was a lot of activity going on. you did show the goulash. >> and this, this is a great moment. this uniform -- unicorn mask. as a photo and there i am sick of looking at this mask, put it signifies a certain kind of useful -- youthful energy. shoes off. they set of these large banks of servers in what was an old german factory in southwestern germany. -- likewas the kind of rave. of coding there was an energy. carol: it is not like it is
the market, beating up motorola and folks like that before falling pretty precipitously off the cliff. oliver: vessel country is finland? >> right. oliver: what are they doing right now? they used to be so ubiquitous. when i saw the story i thought nokia, title that was a perfect title. >> they are pretty much out of the consumer market. their clients basically are verizon, going to telecom -- deutsche telekom. towers andell software that runs them. carol: they sold her handset business to microsoft. >> a couple of years the handset is this was doing terribly. they got out of it by selling the microsoft. carol: what happened from being ubiquitous, owning the mobile phone market, then all of a sudden not? >> the iphone happened.
it happened to a lot of people but nokia was one of the biggest victims. they basically made a lot of money on these phones. they made them fairly cheaply. they were reluctant to start putting in these touchscreens, which were expensive. they either opted for a cheaper model touchscreen or not at all. people just did not want the phones anymore. even in finland. oliver: that is not good when he connected a home base. now they are basically partnering with big technology companies. is it about data services, communication services? where are they providing an essential service? >> it is basically all the stuff that happens between my phone in your phone. nokia provides that. it is the actual transmitter, the radio transmitters, the antenna. increasingly is the software that runs all this stuff. it is more and more software-based. it is figuring out ways to
use the limited bandwidth to satisfy people's hunger. oliver: we are not to talking about the operating system. or turnssically routes your voice into a digital signal in the back into it the sound of a voice at the other end. it basically routes all the stuff that keeps track of are you a verizon customer. it is all this stuff making this complex choreography happen. carol: they are also making a big bet on future choreography in the form of 5g. periods whereong people are slowly upgrading or maintaining the networks. then every several years there is a jump to a new generation of wireless standard. 5g is the next one. it is due to start coming online in a couple of years. carol: but not here yet? >> there are a few limited,
city-based trials going on. south korea is hoping to have a system in place for the olympics. it is still a couple of years off. carol: doesn't work so well -- does it work so well? it is not so easy. >> it is definitely complicated. the consensus is the problems are solvable, but there are tricky problems to be solved. the other question is whether we will need this. a lot of this stuff, for you and me, 4g works pretty well for the uses we need. the argument nokia makes is that wholeholding new generation of stuff we will do with this increased capability. carol: such as? >> the internet of things. it is machines talking to each other, wireless cars, automated factories where all these robots can basically be much more fluid because they are not tied to a cable. oliver: smart homes.
♪ oliver: welcome back. carol: you can listen to us on 106.1 fm,irius xm, a.m. 1330 in boston. and in asia on the bloomberg radio plus app. record dealrs have making in the chip industry. >> unprecedented. nothing like this has happened in the 40 or 50 years of the chip industry. getting together at a rapid pace and consolidating into a few concentrated companies that are responsible for the majority of production. >> the cost of production is helping fuel the m&a pace we see in the semiconductor space.
when it comes to chinese companies that want to be in that consolidation wave they are being left out. how come? >> there is a geopolitical aspect to this. the semiconductor industry is primarily a u.s. industry. china is the biggest market for chips. 59% i believe of the overall market is actually sold into china. it is really a u.s. industry. the fastest way to get expertise, the fastest way to get market share is to go out and buy it. companies,. -- buy and the u.s. government does not want that to happen oliver: let's talk about one specific person in the story. it's an interesting anecdote. tells about darren biller back -- billerbeck's story. ian: he is representative of the things we talked about. lattice semiconductor.
they specialize in one sort of niche. they got to that point of going to billions of dollars of revenue. it is really too much for them. they were looking around for a buyer. china is out there. it has a national policy of saying we will build our own industry. that is something that is attractive if you are darren and lattice. there was a partner found in every thing screeched to a halt when it's ready information from the u.s. government to allow the technology to go to china. carol: there is an interesting stat in your story that jumped out at me. the 10 largest semiconductor makers control about 56% of the global market. that share is rising. none are based in china, which is ironic considering china is such a huge buyer of chips. they buy the most. ian: just to put that into
perspective, bernstein did a report with a said imports of chips to china outweigh imports of oil in terms of total value. from the chinese perspective that is a huge strategic outflow of money. not to mention defense and other elements to the semiconductor industry that having those industries in-house gives you. carol: president xi just made his first visit to hong kong since taking office. oliver: he was greeted by pro-democracy protests. here is matt phillips. what we know about the current standing between xi jinping and hong kong? matt: it is a little chilled i would say. xi jinping, for the first time since becoming president in 2012 is visiting hong kong to mark the 20th anniversary of its handover from the british to the chinese. in that handover, the terms
stated china would basically give hong kong is freedom and authority for 50 years. there is concern increasingly over the past couple of years that beijing is encroaching on those terms. there have been a lot of protest in hong kong recently, particularly among young people who want democracy and making free speech. they want to maintain the auspicies office -- of the freedoms they have had. carol: i remember they handover, reporting on it. it was a big deal at the time. 20 years later, those freedoms in place and the people of hong kong and joining the freedom. what will be xi's message? matt: this message is going to be twofold. careful whatbe be
you wish for in terms of protests. on the other hand, he wants to be positive with his message and say there is a lot to be gained to strengthen the economic ties between hong kong, which is a huge financial of, and -- hub, and mainland china. oliver: i think there was a stronger bargaining power between hong kong and china at the onset of this relation to because hong kong was at a time where it's economic growth and its economic strength was a much bigger boom to china's overall economy. as the growth of china eroded the negotiating power hong kong has? matt: in 1997, hong kong was almost 20% of china's overall gdp. they had a lot of room to stand on and negotiate from. now, it is like 3%. china has grown tremendously over the past 20 years.
they have a lot more leverage and they are not going to necessarily stand for some of the anti-chinese rhetoric we have been seeing recently. we have seen some crackdowns where booksellers selling anti-communist paraphernalia and works get abducted and disappear and wind up apologizing in the mainland a few weeks later. there are questions about whether hong kong has diminished in terms of his leverage. let's remember it remains under british common law. free speech as an independent judiciary. it has free market capitalist economy which is tricky the kind of fit into the one party policy of china. this has been a relationship that has been fraught for years. three years ago in 2014, massive protests. they want their recollections. they did not get -- they wanted
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oliver: welcome back to bloomberg businessweek, i am oliver renick. additional payments are not being taken out of india . how satellites are transforming space and earth. oliver: all of that ahead on "bloomberg businessweek." ♪ oliver: we are back with editor in chief megan murphy. india for a while now trying to find a way to wean its people
off of currency, paper currency. how is that going? megan: this was a shock move in november to try and take down the bank notes in circulation, which he said was a method to corruption and cut down on that by taking some of those out of circulation. where 98% ofntry consumer transactions were done with paper so the scramble to moving to digital payments, withdrawing moneys from atm's, whether they can scale up, whether the digital infrastructure is there to allow them to make this change when that amount of cash is withdrawn from the system, is a problem. changeis there a way to it, i feel like it is cultural? there's a lot of pushback. megan: we see this not only in india but other areas of africa in particular.
when people start with mobile payments or digital payments, either it becomes intrinsic to the community and they accepted and it moves forward and becomes when youparcel, or but are trying to overhaul and change a culture into doing something different, that is much harder. in africa a you have seen huge transactions of mobile payments because people have never done those things. i think the success rate will be geometric. they have so much invested in doing it. but it is challenging. with allunwieldy place its chaos and craziness to begin with, was his -- which is the best part. there is a economy where 90% of commerce is done in cash transactions, that is not the best starting place to try and digitize everything. are they set on this? has the government decided, this is what we are going to work you
-- worked to? megan: i think they will get there. there is these huge queues at atm's. there are stockpiles of worthless banknotes that are just no longer valuable. by the way, there is other countries that are not india -- the u.k. has made a shift to take certain pound coins out of circulation. this is not something totally new, just doing it on this scale is surprising people. carol: the majority of indians do not have access to the internet. that is problematic. will seee thing you across all economies it is not so much the broadband access, it is the mobile access. even in countries with a are still using two g, in world parts of the world they do not have start -- smartphones and are using the phones people used a decade ago. it is adapting that technology
to work across your mobile versus where we visualize the inter-web. oliver: let's bring it back to global tech and talk about the exciting cover story about space . there is a lot to talk about with space. what did you choose to analyze? megan: i use this word randomly, but this is truly majestic and this is one that i am really passionate about because i corrupt as a kid wanting to be an astronaut. -- grew up as a kid wanting to be an astronaut. what actually really goes into is just how cheap the race for space is, how accessible it has become, how important it has become to our everyday lives in cataloging, surveilling, giving us a picture of what is going on in the world in real time every moment. it is not just google earth and google maps. it is making this technology so
accessible to a broader spectrum of people and a new fascinating tale of the new space race. carol: and a reminder that satellites are everywhere. we have more on this story from ashlee vance. >> there's this really interesting moment that is happening where the cost of satellites has come down a lot, much better consumer electronics and all of these trends we see throughout the technology world. the size of the satellites has come down so you have these companies rushing to kind of reinvent a lot of the communications that take place in space, the imaging that takes place in space, and the types of science that you can do there as well. there is kind of this blue mode of satellite startups. >> i wondered if this tied into more of a private sector look at space. is it more of a reflection of -- for example in the u.s. when we think about those making the
biggest strides i think about spacex and elon musk. i do not really think about nasa so much. obviously, that is still happening but not quite to the extent that a previous generation would expect. ashlee: that is absolutely right. spacex started in about 2002 and that was kind of this proving point, that a private individual could start a space company. he did his rockets and generated a lot of interest in space, and in the last two years we have seen venture capital flooding into private space companies. i think in 20 16 the amount of venture capital that went into space was double what we had seen in the last 15 years. you could do this stuff, made investors more comfortable, and now we are seeing people experiment. >> let's talk about some of the in -- other players in this space.
you talk about a company called planet lab. what are they and what are they doing? ashlee: they are based near san francisco. it was three guys that used to work at nasa and they saw that electronics are getting so much better and cheaper, and specifically smartphones were packing so much horsepower into this tiny package that about seven or eight years ago they decided to rethink the satellite. they thought, what if we can take all the electronics industry phone -- in the smartphone and base a satellite offices? your satellite would cost about $1 million versus about $300 million for a digital imaging satellite. you could put up dozens if not hundreds of these things and surround the earth. they have put up about 160 tiny satellites and the first company in history, the first organization in history that can take a picture of every spot on the earth every day.
not even the nsa or cia can do this so planet is this daily picture of the earth that they sell companies and giveaway to nonprofits. ande knew this was coming we got to dive into the how, as i'm sure it is a tough one to walk through, right give us sort of the lehman's breakdown of how ymen'san happen -- la breakdown of how this can happen. how do youlites, control that small item in the vastness of space? these: that is something guys have to solve. a typical imaging satellite is about the size of a bus. it has a huge lens and you get very high resolution images. the problem has been they are not looking at the earth all the time, you have to task them to look at a specific spot. approachok this other
where they create almost like a shell around the earth that is constantly imaging. the satellites are smaller so the revolution -- resolution is not quite as good, but they place them closer to the earth to improve the picture and it is really crazy software and algorithms that manage this fleet of satellites. every days tasked with taking a picture of an area about the size of mexico, and then they bring all this data to these ground stations on the earth, and then software assembles this imaging and cleans it up and you can search it just like you do google earth. >> it is like a pixelation of a picture, you fill in the dots and you get a complete picture. it is pretty amazing. we are getting to a point, i do not know if we are already there , to mapping every section of the earth's surface? planet, as of february, i went to india for their most recent rocket launch and they
have been at this for about five years but in february they sent up 88 new satellites. those joined about 60 satellites already flying so it takes them a while to spread out. right now as we are talking, they are able to get this daily image of every square inch of the earth. oliver: up next, chibani rethinks its restaurant -- it's just it's ingredients. oliver: this is bbt week.
york,nded in 2005 in new at the time 10 years ago americans basically did not eat greek yogurt. they come in and say -- >> that is the founder. >> turkish immigrant, basically showed up with nothing and introduced americans to greek yogurt. sales the1 billion in first year, a company taking on giants were there had not been much innovation. you had dan and an yoplait -- dannon and yoplait. a lot of people eating yogurt, shifting to greek. chobani has explosive growth for the first five years. they run into some trouble. they built a massive new plants, there was a recall, they had trouble filling orders. that all settle down and they
have rebounded in a big way. a past year play as the top-selling yogurt in the country last year and they are going to take on conventional yogurt, which is interesting because they have built their company around the idea that greek is better. their argument is traditional yogurt is artificial, overly sweet, it is boring. they are saying eat greek, now we have our greek problems -- products but we will come in with traditional yogurt. oliver: you mentioned yoplait and you mentioned chobani zoomed to the beginning of the pack. who are its competitors? , right?ou have dannon dannon is the biggest, they have tons of brands. if you go to wait dairy case in any supermarket a lot of that stuff is dannon.
as 25% controls as much of the market around 2011. in the middle of the country, big areas, people still buying a lot of your play and there has been other greek companies coming into the market. there is australian style, icelandic, so a lot of sort of have takennds that it into a competitive category. >> how does chobani think they will be able to do something different in the conventional market? >> the yogurt category is declining. greek yogurt down 5%, regular yogurt down 3%. that has basically been yoplait, a disaster for general mills. they have really struggled with , theit and the feeling is argument chobani is making is that is weighing down the category. the numbers they are saying are not as bad as they look. >> is he right?
>> he is right that your is weighing down the numbers, but greek has slowed down. ,t has been around for 10 years it rocketed up and it is plateauing. we have to do something to drive the next 10 years of growth. chobani wants to take over. they passed yoplait and they want to pass danon. carol: 84 lumber is trying to teach kids to skip college. oliver: and work and construction. >> there is a shortage of skilled workers so they are trying to fill manager trainee jobs, they have factories where they build roof trusses and wall panels, and they are struggling to find the right talent. just because there are not that many people out there who are, with the skills to do the job. >> what kind of jobs are they
looking for? what do they typically pay? >> manager trainees, this could be someone out of high school or who did a little college, they start out at about $40,000 and then they can make a million dollars. they have a lot of people who make about $200,000. these are store managers. everywhere in between. i would say most of them are making about $100,000. oliver: i wonder if you can sort 84, place where 84 lumber and this project and this sort of effort by them fits into this larger problem which forrying to get employees these more sort of sophisticated type jobs that are not the old school, traditional industrial roles, how does it fit into the overall effort in the u.s. for companies to bring these types
of employees in? >> one of the issues is vocational education has kind of gone out of fashion. had arica, we kind of track system until the early 1980's where if you are sort of not as academically inclined you could learn how to be a plumber or how to fix cars, and you would be ready for a job out of high school. we do not really have that anymore, or in a very limited way we haven't. so a lot of -- we have it. so a lot of people are pushed toward four-year college. most try a little college and half of those people drop out. the ones who dropped out have the debt and they are not really prepared for the kinds of jobs that these companies are trying to fill. oliver: one iphone designer sees a future without screens. carol: the digital activist fighting human prejudices in machines. oliver: this is "bloomberg
carol: and in asia on the bloomberg radio plus app. online at businessweek.com, tony fidel is famous for creating the iphone and ipod prototype. oliver: we set down with him to see what he sees for the future. >> one of the most important hardware designers today worked at apple and was a key engineer on the ipod and then the iphone. he built early prototypes of both devices and then he went and started nest, which is this, made this smart thermostat. best pioneered the idea of these smart home ideas that we are seeing, sold it to google for $2.3 billion, left last year and is taking a bit of a rest. he is working on something but will not say what it is. oliver: this is a guy we should
listen to when we try to assess where technological devices are going and where technology is going. >> we had a nice conversation about the iphone, it is celebrating its 10 year anniversary. 2007 and i june 29, asked him, what is the next iphone going to look like? ?ill it be a phone his response was basically, no, he thinks these connected devices going to be the future of the way we get information so he told me that in his house on sundays they do not use screens. his vision of the future, no one will look at a screen while they are in their house. you will be talking to alexa or the equivalent in the future. carol: phones in general or iphones are not as important? tough to get my head around this. bute is a big fan of phones
his point was that the phone has sort of become, as he called it a game of inches. companies are trying to tweak on it, improve it. apple will have a big launch we think in september, and that new phone that will have a screen that supposedly goes up to the edges will blow people's minds and make everyone excited about phones again. a lot of the most interesting innovation is happening in other areas of the venture capital system. carol: kind of freeing, you walk in and talk to something. >> that is the idea, that the internet is still at your fingertips -- or not at your fingertips, your voice tip. carol: it is a buddy. >> you do not necessarily need to be glancing at your screen all the time, you can move around. section,n the pursuit a profile of a digital activist. carol: she is on a mission to
get prejudice out of algorithms. >> they are people who are changing the field they are working in and this woman is running an initiative at m.i.t. media lab where she is identifying subtle bias in machines. it is something that you were not necessarily think about, where either computers that use facial recognition or are using data like zip codes, stuff like that, that has bias implicit in it. she is trying to fix it. there are algorithms that these computers need to be taught so if it is facial recognition, they are shown hundreds of thousands of faces and most of them will be white. people of color will have trouble using these algorithms and computers because they will not recognize their faces. carol: hence the machine bias. emma: she is doing this initiative to change that, trying to lobby different
companies to use different algorithms so that people of color are more included. it is really interesting. oliver: i like the name of the group which is the algorithmic justice league. what they are actually doing is basically trying to incorporate more data sets into the ones that exist. emma: exactly, and she has a group working on this. she has given a 10 talk that has been viewed almost 10,000 times. it is an issue that people do care about when they know about it but it is one of these things when she got into the industry, she thought, no one is talking about this. that we use so wild technology and are starting to use facial analysis a lot more, it is important that we are inclusive. emma: the example i found even more interesting was the zip code. as she said, zip codes sometimes are used just in the outset of when people are getting approved for mortgages or credit cards, and it is something you would
not necessarily know they are using and they do. that plays into different racial biases of where people live so she is trying to fix that as a. carol: bloomberg businessweek is available on stands now. oliver: it is available online and of course on the app. carol: loved the cover story by ashlee vance, satellite companies making smaller, this expensive satellites, putting tons of them in space and taking pictures of everything on earth. it is creating a more transparent earth and space. how about you? related,lso technology i like the material science behind the fish skin and how we are using it to expedite the human healing process but i also , ae the people involved really cool stilly -- story about these activists that are doing good things for democracy around the world. carol: they have their own
♪ david: coming up, the stories that shaped the week and business around the world. the g-20 summit begins in a climate of uncertainty for the world costs most power -- world's most powerful nations. a missile launch from north korea throwing another wrench into the gears of diplomacy. >> they are going to try to continue to pressure china to put more economic pressure on north korea. >> a new trading link provides access to china's markets and , investors wonder what to make of the june job report. >> take note the bad news is it , does not do a lot for wages.
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