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CNN IN THE MONEY

What a CEO Could Bring to the White House; Eco Report Card; How You Can Benefit From a Slowdown in Online Shopping; Michael Bloomberg Claims He is Not Running for President

Aired June 23, 2007 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BRIANNA KEILAR, CNN CORRESPONDENT: At least seven American troops were killed today.
And in South Carolina, investigators say the furniture store fire that killed nine firefighters started in a loading dock area, but they still don't know exactly what caused Monday's blaze. One of the victims was laid to rest yesterday. Funerals for the others are planned for today.

A thousand volunteers in Ohio are searching this hour for a 26- year-old missing pregnant woman. Jesse Davis was reported missing eight days ago. Her father is pleading with officials not to give up the search.

And positive movement on the North Korean nuclear dispute, U.S. envoy Christopher Hill says the north could shut down the reactor at the heart of this dispute in about three weeks. Hill just concluded a rare visit to the communist country.

And we will update your top stories at the bottom of the hour. Now to IN THE MONEY.

ALI VELSHI, CNN CORRESPONDENT, IN THE MONEY: Welcome to IN THE MONEY. I'm Ali Velshi.

CHRISTINE ROMANS, CNN CORRESPONDENT, IN THE MONEY: And I'm Christine Romans.

Coming up on today's program, what a CEO could bring to the White House what a career politician can't, and why it matters to you.

VELSHI: Plus a new eco report card for some big name companies. Find out if your favorite burger joint is all talk and no action.

ROMANS: And later, how you can benefit from a slowdown in online shopping.

VELSHI: That's all I do, online shopping. I think I do 95 percent of my stuff, but clearly I'm not doing enough. So we'll talk a bit about that.

New York City Mayor Mike Bloomberg may have moved a step closer to his race for the White House this week because he switched from being a Republican to being an independent. Then again, the founder of Bloomberg Media says he's not running for president. As we like to say around here, go figure.

ROMANS: Here in New York that is. Bloomberg's move this week got us thinking about whether a successful CEO would make a good president and what it would mean for you. For more on that, we turn to Richard Tedlow, the class of 1949 professor of business administration at Harvard Business School. Welcome to the program.

RICHARD TEDLOW, HARVARD BUSINESS SCHOOL: Hi, it is nice to be here.

ROMANS: So you know career politicians have a very kind of singular path. They're almost always lawyers. Am I right?

TEDLOW: Yes.

ROMANS: There are a lot of lawyers out there who are career politicians, and they've been in politics an awfully long time, maybe haven't started a small business in some cases. How does a CEO maybe have what it takes to lead the country, or how would that person be different?

TEDLOW: In this particular case, this is a man of extraordinary vision who's very, very bright, and who, by the way, has not only built this company Bloomberg to extraordinarily high valuation, but who also has spent the last two terms as mayor of New York City, which isn't an easy job. He's a very -- his ratings are very high there.

VELSHI: A lot of people have drawn attention to the fact that he's very, very wealthy, and that might sort of prevent him from relating to the average American. Most presidents these days, most people who run for Senate, they're generally wealthy people. Is that a disadvantage or an advantage to somebody like Bloomberg?

TEDLOW: Bloomberg, my understanding is sometimes takes the subway to work. So he more than most, I think, is closer to the experience of the average New Yorker than most people of his great wealth. Although it is true and the point you make is valid. You know, as F. Scott Fitzgerald said, the rich are different from you and me. This is a man of enormous wealth.

ROMANS: He does have an awful lot of money. He's changed a lot of things in city hall. He took down all the big wooden doors and the separate offices and made it more like a bullpen like he has at Bloomberg when he ran that company. He says he's going to serve out his term as mayor, and he's not going to run for president right now. But it's clear a lot of political pundits say he's sort of modeling himself, or at least studying Ross Perot. Any lessons to be drawn from that mogul CEO and his run?

TEDLOW: Well, I think there's some lessons on how not to do it. You know, I mean, Bloomberg, I think, needs to follow his own instincts. I think that he needs -- this year, I think, is going to be very different from other years. First of all, the primary season is so front loaded that we're going to know who the candidates are by March 1st. This gives an extraordinary advantage to a potential third party candidate to come in to know precisely against whom he's competing and to target those people. Perot did not have that. And Perot was in and then out and then back in, as you may remember in 1992.

I have the feeling that, if Bloomberg goes in, he's going to go in, and he's going to do his best to win. There is, let me just say, one more interesting question about Bloomberg, which is -- and I have no idea what the answer is, would this man be willing to take the vice presidency? Can you imagine a Gore/Bloomberg ticket? In other words, the very fact that he's involved with all his resources and his own political and governmental experience changes the equation.

VELSHI: You know, there was some criticism when Bloomberg became mayor, that his style perhaps didn't respect the way politics has done, particularly in a place like New York, where politics in the way of politicking is pretty entrenched. It is pretty entrenched in Washington too. Do these CEOs who are used to efficiency and delegating work well in the political system?

TEDLOW: Nobody respects the way politics is done today. I mean there's a huge dissatisfaction rating about the direction the country is going in. And the president of the United States has something like a 20 percent or a 19 percent approval rating.

ROMANS: And, Richard, I should point out he was someone who a lot of folks said would be the first CEO president of the country, right?

TEDLOW: Well you know, that was supposed to happen. Things didn't quite work out that way. But Bloomberg you know, Bloomberg is a man who, despite the fact that he's willing to do what people don't want done at a particular moment, you folks are in New York, right? He's raised taxes there early on. Nevertheless, he has a very high approval rating. He's an impressive individual. There's no question about it.

ROMANS: Another quick CEO. We have to mention Mitt Romney. He -- I mean, being capital, he's run a very, very big wealthy firm. What about him?

TEDLOW: Well, you know, the people I know who know him have a great deal of respect for him as a business executive. Both of them are have MBAs from the Harvard Business School and a lot of business experience. Bloomberg, to me, as a business executive, is more impressive because he started his own company, he's an entrepreneur. And because, frankly, I mean, depending on who you speak to, he's worth between $4 and $5 billion.

ROMANS: Billion with a "B."

TEDLOW: I know you people are paid very well, but that's much more than I'm worth.

VELSHI: All together, we come up to about $4 billion.

TEDLOW: When was the last time you counted to a billion?

VELSHI: I think I heard somebody was doing it, and it was going to take weeks, just as an experiment.

TEDLOW: It would take weeks if you counted by twos. In other words, so that money is going to mean a lot if he decides to throw his hat in the ring.

VELSHI: We'll keep an eye on it closely, Richard. Thank you for joining us.

TEDLOW: My pleasure. Thank you for having me.

ROMANS: When we come back, the health of your local economy. See what a surge in high school dropouts means for a city's bottom line.

And find out what a thriving gay community can say about a town's prosperity. We'll be right back.

(COMMERCIAL BREAK)

ROMANS: According to a recent study by "Education Week," 30 percent of the high school class of 2007 will not graduate, 30 percent. Ten of our nation's biggest cities will graduate fewer than half of their students. Nowhere is this trend felt more profoundly than in Detroit.

(BEGIN VIDEO CLIP)

ROMANS (voice over): There is little doubt Treandous Cuthbertson will graduate from high school. But if statistics hold true, and where from a third to three-quarters of his Detroit classmates won't graduate with him.

TREANDOUS CUTHBERTSON, DETROIT HIGH SCHOOL STUDENT: Don't be a statistic, they tell us that all the time. That's one of the things I've grown to know. Do not become a statistic, grow up and be somebody.

ROMANS: Treandous lives in a place where auto jobs are disappearing, families and students are fleeing the public school system, and dropout and poverty rates are among the highest in the country. Anthony Womack has been an educator here for nearly 29 years. He says students today are distracted and parental involvement in their children's lives is declining.

ANTHONY WOMACK, PRINCIPAL, CENTRAL HIGH SCHOOL: In no uncertain terms, public schools are becoming the educator and the parent.

ROMANS: He'd like to see greater involvement from parents but also pay for performance for teachers and more funding for urban schools.

WOMACK: Money, financial, state aid that whole peace is needed to make it work.

ROMANS: According to the Census Bureau, Detroit has the highest poverty rate of the 20 largest American cities, and the state of Michigan has the highest unemployment rate in the nation, 6.9 percent. From March to May this year, 28,700 Michigan jobs gone. As the manufacturing jobs disappear, so do opportunities and resources.

CINDY BROWN, CENTER FOR AMERICAN PROGRESS: Public institutions like schools have seen their tax bases decline and their revenues decline.

ROMANS: To compete in a global economy, our workers need education and skills, but our education system is not keeping up. "Education Week" says more than 1 million American high school seniors won't graduate this year.

CUTHBERTSON: Are we going to make this planet a better planet, and then we all have to come up together, you know.

(END VIDEO CLIP)

ROMANS: The school system insists its graduation rates are much higher than the 25 percent that "Education Week" estimates, but the Mayor of Detroit says, well, we can quibble about just how low that graduation rate is, there's no dispute that too many kids aren't graduating. It's nothing less than an education crisis and a personal tragedy.

VELSHI: More than 1 million high school seniors are not graduating?

ROMANS: Seven thousand kids a day drop out of high school. How can you meet the challenge of globalization if you're not graduating half of your students? It's just remarkable.

VELSHI: Well, education woes hurt us in economic growth, as you saw from Detroit. Openness and diversity initiatives, apparently, seem to help these cities a lot as well.

ROMANS: Our next guest has come up with one way to measure all that with what he calls the gay index, and he says it proves that the more gay-friendly a city is, the more economic prosperity that city will enjoy. Richard Florida is the author of the book "The Rise of the Creative Class" and the founder of Creative Class Group. Welcome to the program.

RICHARD FLORIDA, GEORGE MASON UNIVERSITY: Thanks Christine. It's good to be with you guys.

ROMANS: First, Richard, what qualifies as a gay-friendly city? How can a city have gay-friendly policies?

FLORIDA: It's not really a set of gay-friendly policies. They're a group of cities that over time have just become more open minded and open to diversity. Listening to your last segment, you were talking about places educating their kids. What's happening in places like Detroit, my wife and her family is from Detroit. I lived in Pittsburgh for 17 years, is that they're educating a lot of really smart kids, and those kids are migrating to other cities, whether it's New York or San Francisco.

VELSHI: Because the opportunities, the openness is not there for them.

FLORIDA: It's both. It's so cool, Ali. It's opportunity, on the one hand, there are good jobs, and there are vibrant labor markets. But they're also open-minded communities and the kinds of places these young people want to be. So what happens is they attract all the young talent, and then the companies have to follow.

ROMANS: Fascinating.

VELSHI: It's interesting what you're saying. You're not talking about the fact that they're attracting necessarily the smart gay kids; you're talking about the fact that open-minded kids will go to the places that are more tolerant generally.

FLORIDA: Yeah. I did this work when I was at Carnegie Mellon with a guy named Gary Gates. He's the leader among the gay population at UCLA. He had built this index of the gay population. I was studying where highly educated kids and high tech industries form. We put our two lists together. Well, the Silicon Valley, bingo, number one for gays, San Francisco, Silicon Valley. Seattle, where Microsoft is, bingo, number two for gays and lesbians, third Boston with Route 128, M.I.T. spin offs, number three for gays. We looked at the list and then we started to do a more serious study.

Places that were open to gay and lesbian people were also the kind of places that could attract not only smart young people, but also Indians and Chinese immigrants who come here and start high tech companies, they were attracting people across the board, building up a talent base and then innovating and starting up enterprises.

ROMANS: Richard is it by accident or by design, which came first, sort of the attitude or the industry, I wonder?

FLORIDA: It seems to me that what came first was the attitude. This is a big debate. A lot of people yelling and screaming about it and don't want to do it. It seems when you look back; Seattle was an open-minded place with a large gay community. Inventive musicians like Kurt Cobain and Nirvana. San Francisco and the whole 60s things was a very - and then I think places that a large gay and lesbian community gravitated to, a large group of musicians and other open minded people gravitated to when these kind of geeky entrepreneurs became important in economic growth, those were the places that accepted them too.

We've done really cool stuff looking at personality research, which seems to show the same thing. Open-minded people gravitate to the same kinds of places.

VELSHI: What can you tell us about the cities at the bottom of that list? The least gay-friendly places, Pittsburgh, Birmingham, Alabama, Detroit, Buffalo, Charlotte, North Carolina, Oklahoma City. Does your thesis hold true?

FLORIDA: Yeah, it does. I lived in Pittsburgh for 17 years. I taught at Carnegie Mellon. My wife and her family are from Detroit. I also taught at the University of buffalo a long time ago. Those are cities that I really love. The problem with those cities, even though they have a lot of technology assets, once a big auto industry in Detroit, the University of Michigan at arbor, Carnegie Mellon and the University of Pittsburgh in Pittsburgh, when people graduate, they tend to leave. It's not only an economic vibrancy question; they're just not an open minded and accepting place.

We did a survey with Galup, and we asked communities all across the country, is your city open to gay and lesbian people, poor people, ethnic minorities? The group that came in dead last when you asked if the city was open was talented young people looking for work. What happens is young people are picking up this signal. It's not an open city for me. I've got to move elsewhere.

ROMANS: Thank you, Richard Florida; "The Rise of the Creative Class" is the book. Thank you, Richard.

VELSHI: And for more stories in our series "Uncovering America, Gay in America," tune in to CNN all week or log on to CNN.com.

ROMANS: Coming up after the break, we'll tell you about some of the week's top stories from Wall Street, including all the hype around the Blackstone group IPO and what it means to you.

VELSHI: Assuming you were able to buy some of that stock.

(COMMERCIAL BREAK)

VELSHI: The big news on Wall Street this week was the Blackstone group's IPO.

ROMANS: Those guys made so much money. I mean, incredible amounts of money. Stephanie Elam joins us from the New York Stock Exchange to tell us why it does matter to the average investor like me. We're not walking away with 1.6 billion.

VELSHI: We're not involved in that IPO.

STEPHANIE ELAM, CNN CORRESPONDENT: It is not us, Christina and Ali that are for sure. If you talk about what this does mean, though. With stakes in 40 different companies, Blackstone is a huge private equity firm, which, besides the funds it owns, buys undervalued companies, gets those companies back in shape, and then sells those companies for a profit. While you may not recognize its name, you probably know some of its name brands, from Universal Studios Florida to Mrs. Buttersworth, to Duncan Heinz. Blackstone owns many of the brands that populate our homes. Blackstone is one of the largest real estate owners in the U.S.

VELSHI: How does this -- this is a company we call these private equity companies. How does it compare to the big public companies that we know?

ELAM: Well, if you take a look at just size alone, Blackstone would be a top 20 Fortune 500 Company, or I should say it is now, now that it's open, with annual sales of $83 billion. That would move it ahead of Morgan Stanley, Proctor & Gamble, and Boeing. It's a really large company we're talking about here. Through the companies that it owns, Blackstone employs 375,000 people, and it did earn $2.3 billion last year.

ROMANS: Wow.

VELSHI: This IPO -- IPOs get people excited because it seems like a way to make money on a new stock. How did this one rank compared to some other big ones?

ELAM: As for this IPO, it actually got $4.1 billion with the share's pricing at about $31. So the stock, which is now listed at the New York Stock Exchange under the ticker symbol BX, the Blackstone IPO ranks among the top six largest. In fact it is the sixth largest public offering in the U.S., behind the likes of AT&T, Kraft, and U.P.S. and the last time we had a blockbuster IPO was last year when MasterCard went public in a $2.4 billion.

You may be wondering about Google, and that got a lot of hype when it went public three years ago. But it's not one of the largest offerings. That's surprising. That IPO pulled in $1.7 billion, and that's not even enough to crack the list of the top 25 IPOs in U.S. history.

ROMANS: What kind of payout did this IPO mean for the Blackstone founders? There's a lot of money for those guys.

ELAM: When you hear this, you think, wow, kind of wish I was back there in 1985. The founding fathers of Blackstone raked in a huge payload when this company went public. The Steven Schwartman, he is the co-founder and CEO, he collected about $930 million from the IPO. And he'll hold on to a 23 percent stack here in Blackstone, and that is valued at $7.8 billion. I mean that is an amazing amount of money.

Peter Peterson, he walked away, also one of the co-founders, with about $2 billion from the offering, and he holds on to a 4 percent stake and that is worth about $1.35 billion. Considering the private equity firm was launched in 1985 worth about $400,000. That's a mere little drop in the bucket. It's a rock solid return for both of these gentlemen.

ROMANS: God bless America, right?

ELAM: You got to love it.

VELSHI: Now people can have their part of it if they so wish. Stephanie good to see you, thank you.

ELAM: Thanks a lot.

ROMANS: Coming up on IN THE MONEY, find out if the companies you think would be easy on the planet really deliver.

VELSHI: And later, the reported drop in online shopping. What it tells you about the future of retail and how you can save money.

(COMMERCIAL BREAK)

KEILAR: I'm Brianna Keilar in the CNN "NEWSROOM" in Atlanta. Now in the news, U.S. troops tightening the accordion around al Qaeda fighters in Baquba in Iraq's Diyala Province. The city is an al Qaeda stronghold rigged with roadside bombs and booby-trapped homes. U.S. commanders say scores of al Qaeda militants have been killed in Diyala Province over the past few days.

And a U.S. envoy is hoping North Korea will stop producing plutonium in the next few weeks. Christopher Hill has just completed a visit to the North Korean capital, the first by a high-ranking U.S. official since 2002. U.N. nuclear inspectors are due in North Korea on Tuesday.

And the Pentagon says its latest midrange missile test was a success. This missile was launched from Hawaii. Four minutes later, an interceptor missile was fired from a U.S. ship in the Pacific. Officials say the interceptor hit its target 100 miles above earth. Cost of the test, about $50 million.

Police say a man killed his two young daughters and himself in his Montclair, New Jersey, home. Forty-six -year-old Thomas Reilly was estranged from his wife. Police say they found his daughters, ages 5 and 6, drowned in the bathtub and Reilly hanging in the attic.

Coming up at the top of the hour, the latest on the U.S. offensive in Iraq, but now back to IN THE MONEY.

ROMANS: Looking to spend your hard-earned green on companies that are going green.

VELSHI: Miles O'Brien has a look at a new report card rating the carbon footprint of major companies.

(BEGIN VIDEO CLIP)

MILES O'BRIEN, CNN CORRESPONDENT (voice over): It's a long way from health food, we all know that. But chew on this. Your choice between a whoppers and a big Mac may have an impact on the health of the planet. It's true. It's just one small McNugget. In a hot off the griddle global warming report card on 56 companies you know well.

GARY HIRSHBERG, CEO STONYFIELD FARM: If Corporate America doesn't take responsibility for the climate crisis, and then we're not going to get anywhere.

O'BRIEN: That's Gary Hirschberg, founder of Famously Deep Green Yogurt Maker Stonyfield Farm. He's spear heading a new non-profit called Climate Counts that scores companies on global warming. Are they working to measure and reduce their carbon footprint? Or do they oppose laws to address the problem? And do they let the world know what they are doing?

Overall, it's not a pretty picture. The average 30 out of 100, a big fat "f." And 16 of the companies scored miserably, below ten points. Among them, Levi Strauss, Amazon, and Apple. Apple? Who would have thunk it?

HIRSHBERG: Mr. Jobs and many of the companies who are under ten points have clearly not made climate a priority.

O'BRIEN: Maybe now he will if his iPhone starts filling up with e-mail from angry customers who assumed his Apple was green. If you want a greener computer company, look of all places to "big blue," IBM got a 70. And on top of the list overall, Canon with a 77, a "C". Stoneyfield Farm only got a 63.

HIRSHBERG: If my children came home with those scores, they'd be grounded for a week.

O'BRIEN: But will a report card like this change the way companies do business?

MARK BROWNSTEIN, ENVIRONMENTAL DEFENSE: Report cards can be a very effective tool. There's no question that, when you affect consumer behavior, you ultimately affect corporate behavior.

O'BRIEN: And the consumers we spoke with want to know more.

UNIDENTIFIED MALE: If I have the opportunity to be informed, I certainly will take the environmentally friendly avenue.

UNIDENTIFIED FEMALE: It's hard to find out those products because a lot of companies won't advertise or tell you how they dispose of their products or what they do to test their products.

O'BRIEN: So that still leaves the question, which burger should you buy? Well, as it turns out, Burger King got a zero, a goose egg on the subject of global warming. McDonald's got a 22. Not exactly honor roll status, but relatively speaking, something to relish.

Miles O'Brien, CNN, New York.

(END VIDEO CLIP)

VELSHI: That was just an excuse.

ROMANS: It was. To expense two hamburgers. We contacted some companies that did not fare so well. Burger King told us, "We are striving to reduce our usage of electrical energy by installing newer, more efficient equipment in our restaurants."

VELSHI: And a Levi Strauss spokesman told CNN "We need to do more and make it easier for our consumers to find." We didn't get a response from Apple or Amazon, but I did see Amazon responding to somebody else saying that the information, one of the reasons Amazon got a low ranking was that the group said it was hard to find information on their Web site. Amazon's response is they didn't look hard enough. So interesting.

ROMANS: Up next on IN THE MONEY, see whether online shopping is on its way out or just hitting a peak.

(COMMERCIAL BREAK)

ROMANS: Shopping online is no longer a novelty for millions of Americans. I was absolutely thought I'd never be an online shopper, and I am.

VELSHI: I don't buy anything that's not online these days. If I'm by chance in a store, I get very excited.

ROMANS: It's still not the same as getting into a store and really shopping, but I do it a lot.

VELSHI: Those of us that are doing it are doing it. That means the wild growth of online sales is kind of cooling off. Marketing expert Pamela Danziger joins us to talk about this. She's the president of Unity Marketing. Pam I didn't believe this when -- I can't see how it slows down. Is it slowing down?

PAMELA DANZIGER, PRESIDENT, UNITY MARKETING: Well, growth is slowing down. But that's because it went from 0 to $300 billion now. So it's plateauing. So we can expect growth to moderate, but it's certainly not slowing. And I think the story is overplaying and obscuring the reality of online shopping, which is the influence of Internet is really growing as a tool for shoppers today.

ROMANS: Is it the city thing, Pam? Ali and I were just discussing we don't have a car -- well, you do have a car, but we don't drive a car to work. It's not like you can pop off someplace and get something and throw it in my trunk. I do online shopping because it's more convenient. Is it a city? Is there some kind of pattern?

DANZIGER: Not at all. I live in the country. For me to go to Neiman Marcus, I have to drive an hour. I shop with Neiman Marcus and Nordstrom's all the time as my preferred alternative.

VELSHI: Does this trend mean anything to the consumer that growth is slowing, does that mean that I'm going to see better offers, more free shipping, better policies? I'm going to take this opportunity to rant for a second. A lot of my online shopping, the only problem I have is I bought something from Lucky Jeans the other day, a pair of jeans.

ROMANS: Aren't you cool?

VELSHI: Something was wrong. I went to return it to the store. Much more complicated than you would have expected.

ROMANS: Right.

DANZIGER: That's really -- the way online developed it was very much vertical. It was perceived by companies as a different way of selling to the shopper. But today the really good marketers are doing it just as another alternative, and they're having a very horizontal view of the Internet and incorporating that into using the Internet to support in store, store to support the Internet, and catalogs to support the Internet and so on.

VELSHI: It's amazing not everybody has that complete integration.

DANZIGER: Exactly, that's because we've only been at it ten years, and it's taken a while. If you look at people like Nordstrom's and Neiman Marcus.

VELSHI: Excellent examples.

DANZIGER: They really understand how to use their catalog and dream books to feed the Internet, to feed their stores. That's how shoppers look at the Internet. It's just another alternative. It complements and doesn't compete with different ways they're shopping.

ROMANS: Let me get selfish here. If it's going to be slowing down or the growth is slowing down, might I be able to get better shipping deals? Some folks still have, oh; we'll get that to you in two to three weeks. Will there be improvements for me if they have to fight to keep the growth up?

DANZIGER: Well you know the shipping and handling is just going to be something you have to deal with. A lot of times they will negate it. In special instances, they will take away the shipping and handling charges. Those are just sort of facts of life. I don't see any big change is going to happen there. What I see the change as being is when the younger generation comes along. They're going to be much more attuned to the Internet and utilizing it. So I kind of see the future of the Internet shopping as being a combination between MySpace and YouTube and television shopping. So all together.

ROMANS: The next big boost will be those tweens who finally start to get some real -- they do have real money now, as it is. Fascinating. That's fascinating, Pam.

VELSHI: Good to see you. Thank you for talking to us about this.

DANZIGER: Thank you.

VELSHI: It's kind of novel to me to actually, you know, have that retail store experience. I get excited when I go to other places. So recently, I had a chance to sit down with the CEO of Urban Outfitters.

ROMANS: That's right.

VELSHI: Which is the parent of Urban Outfitters, the store, Anthropology, and free people.

ROMANS: Yes I have been there before.

VELSHI: Anthropology.

ROMANS: Anthropology, right. There's one in Soho.

VELSHI: It's an interesting store. It appeals to 30 and 40- something professionals, mainly women, and I sat down with Glen Senk, the CEO, and sort of got a sense of how he does what he does and what's the most important part of his job.

(BEGIN VIDEO CLIP)

GLEN SENK, CEO URBAN OUTFITTERS: I probably 20 percent of my time in our stores speaking to our customers. It's where I learn. I say, if you want to know what's right about your business or wrong about your business, spend time in the dressing rooms or the cash rack, and talk to the customers.

VELSHI (voice over): Let's walk around your store. It doesn't feel like a store. It looks like what you would design if you wanted to do an interview in a place that looked like a store. Tell me about the environment and what this is in urban outfitters.

SENK: We're actually standing. This is Anthropology. Our company has three brands, Urban Outfitters, which is the namesake of the company started in 1970. Free People, and then Anthropology. We actually just announced a fourth concept, which doesn't have a name yet. All of our businesses are experience-based businesses. So we believe that, when people come to shop us, they're coming to the store for more than just to buy a product. They're coming to feel a certain way. I like to think, when people come into this building, that fits a mini-vacation.

VELSHI: What is anthropology?

SENK: It's an apparel business. What we like to say is that we're a customer business, that we are customer experts. The lion's share of our business in all three of our brands is apparel based. But we might carry bicycles one season. We just carried a radio that you that you could connect your iPod into. We have a huge apron business. We have a huge bedding business. It's kind of whatever strikes the fancy of the buying group. The fact that every one of our stores is different is very unusual because we want to feel local for every one of our -- in every one of our locations. So we spend a lot of time on site selection, a lot of time on store designs, and a lot of time in visual merchandising. Every store in all of our brands has a visual team that does nothing but place the product and make it look fantastic.

VELSHI: Is this meant to be impulse buying, or is this meant to be planned buying? In other words, the person who buys this might buy this. What's supposed to happen? I'm supposed to come in here and think you're going to give me good ideas for what I want in my life?

SENK: First of all, at the risk of saying sexist, particularly in Anthropology, this is a women's store. Women shop differently than men. Men are hunters. If you're like me, I know what size pant I wear, what it I like.

VELSHI: And you go right to it.

SENK: I go right to it, and I'm interested in efficiency. Women are more explorers. It's the social interaction of coming and experiencing the store. And they kind of explore. And what the merchandising does is it really encourages that sense of exploration. We tend to place the less intimate product in the front of the store. We kind of say, the closer it is to the outside of the house, like garden ware and so on, might be at the front of the store. And the closer it gets to the bedroom or bathroom, the further back near the dressing rooms it would be. VELSHI: I want to explore the idea of people, your relationship with your staff, your staff's relationship with your client, and your relationship with your customers directly.

SENK: There's very little more that I enjoy than being in a store selling. I could regale you with stories about me selling and people having no idea who I am because I love to make people feel good. I love to cook and feed people. I love to make women feel beautiful. In a way, that's really one of our missions. It's just to make people feel great. And we try to hire people who have the same values that I have.

This sweater is designed by a woman who started with us as an intern. Her name is Carrie, and she's now a sweater designer. To get the DNA into the garment that we have, takes years of development with someone like Carrie. She's outstanding.

VELSHI: You've got Urban Outfitters and you have Anthropology. The newest retail concept you have is Free People; tell me a little about that.

SENK: Free People is kind of positioned between Urban Outfitters and Anthropology. It's a 20-something-year-old, very artistic, bohemian trendy girl. We refer to it as the upscale homeless, 18 to 26-year-old kid, either just starting out in school, maybe just finished school and in his first job or her first job, largely female, but we do sell a fair amount of men's clothing as well.

If Urban is the upscale homeless than the Anthropology customer is the upscale homeowner. In all three of our brands, it's the customer who does not want to shop in a chain environment. She's someone who sees herself as an individual. She's someone who wants to define herself her way. She doesn't want to be dictated to by a store or retailer.

(END VIDEO CLIP)

ROMANS: He's talking about me.

VELSHI: I got to tell you, people who know this brand and use it have a real devotion to it. Glen Senk was saying the company's announced a fourth concept that revolves around a greenhouse thing, and it's going to target baby boomers. They've really figured out who the segments of their population that target are and cater to.

ROMANS: Ever been to Anthropology, you'll see the men sitting on couches and the women going through the racks. You're right it's targeted to women.

VELSHI: Wasn't a whole lot I was looking to buy. It was a pleasant environment, and I was quite happy on that couch.

ROMANS: Coming up next time IN THE MONEY the hype versus the hope as Apple gets set to debut the iPhone.

(COMMERCIAL BREAK) VELSHI: The long-awaited launch of the iPhone is almost here. Honestly, can we talk enough about this? Less than a week away, it's going to change the world, as we know it.

ROMANS: That's what our Apple lover Jennifer Westhoven says. She's here to join us. Clearly, you're seeing disdain from the Apple hater of the family here. Jennifer loves Apple.

VELSHI: In fairness, I've got a Mac and an iPod.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: He just can't get one.

VELSHI: I can't get an iPhone ahead of time. That's why.

ROMANS: This is just frustration.

VELSHI: I'm sore.

ROMANS: This is frustration.

WESTHOVEN: A lot of people might share that frustration. But frankly, the best advice for any of these gadgets is wait for the second generation anyway. I think what's really interesting about the iPhone, it hasn't come out yet, and already Apple is showing improvements. They improved the battery life. Not only did they fix the battery problem, it seems like, it's got a longer battery life than my trio. It's eight hours compared to four hours for most of the phones and Blackberries out there. It's scratch resistant. They changed the cover already. I think what you can expect here, they're going to follow this model with the iPod where it keeps getting --

VELSHI: Sorry to interrupt you. That's the problem. See that keyboard. It's a screen keyboard. You have no response. You don't know you press the "d" or the "f." that would freak me out.

WESTHOVEN: I agree that touch screen could be the make or break for this thing.

ROMANS: Some people love the touch screen because you can get rid of it and you're on to the next.

WESTHOVEN: When you can't touch -- I've got one of these new black berries where you can't touch easily, and it is true that I am now getting so frustrated that I'm not using it to communicate anymore.

VELSHI: It's kind of fancy, but interestingly enough, Apple has said they want to get some corporate customers, the kind of people who use blackberries.

WESTHOVEN: And what if that touch screen works? It might work. We haven't used it yet. We don't know. Ali's right, though, about the business market right now. Apple's always left it alone. You know the ads, right? The guy's too cool for school; he is very artsy, thinks outside the box, different. Now there are hints from the Wall Street Journal that Apple is going after the corporate market. That's big money.

VELSHI: At $500 or $600 a pop plus the contract, the corporate world can afford it. Are kids going to buy it? Apple did change the world. I'm not kidding. I've got an iPod. I've got a cell phone. Doesn't take pictures or anything, just a cell phone. I've got a blackberry. I'm fine with my three devices. I'll grow old with it.

WESTHOVEN: I'm not I want one.

ROMANS: You're cool. We already knew that. AT&T this week came out with something called video share. I want to show it to you. I've got the phone here on the desk. I'm not moving it because I'm frightened of it. On the other side of this video screen is Todd Bonin, our fabulous producer. He's out on the street right outside. Todd, good afternoon. You're on the other side of this phone. You know all about this video share. Tell us about it.

TODD BONIN, PRODUCER: This thing, you talk about a phone that doesn't have real buttons. This phone actually has buttons, and it actually does something. I can shoot live video here and feed it back to you onset. Here's our handsome cameraman Ricky Shine. That's nice for voyeur purposes. I'm going shopping. Ali, I'm going shopping. I'm at the Rolex for you. Would this work for you?

VELSHI: Let me see.

BONIN: Or not manly enough?

VELSHI: No, I like. So you could be doing this. So you could be doing this. Todd, you're not buying me a watch, but you might be buying your wife a watch or you might be looking at the person you talk to from AT&T gave the example of maybe her 14-year-old kid saying, I'm at a sleepover party. And she says, let see. Show me a picture.

BONIN: I could just ask you if I look good today. That's my other question if we're not around each other.

ROMANS: Todd, you wouldn't have to ask. We already know the answer. You look terrific.

BONIN: Hair looks pretty good. I've seen a lot of stuff. We're looking at retail. I can also call you and say, hey, Ali, I'm seeing all this other stuff around town. What do you think of this? And I've seen a lot of this, these around town. And it's kind of -- well, it's a little jarring.

ROMANS: Oh, I see. I see.

VELSHI: I'm wanted.

BONIN: Now, it's funny because we've been posting these all day, and the looks we've gotten from people around the street, you'd better watch yourself when you walk home today.

ROMANS: OK, I want to know. Do you guys think we really need this? I already can't even drive in the car without being distracted by -- I can't even work the radio. Do we need to see video when we use our telephones?

WESTHOVEN: Do I want my boss to see me at home? This looks like a strictly a personal phone.

VELSHI: You call in sick, and they want you to prove it. It's got great applications. I don't think this is the corporate application, but I actually think it would make me think about changing over to this cool phone because I can see applications for this.

ROMANS: I don't need this kind of gadget.

BONIN: Not that expensive. Only $5 or $10 a month to pay on the plan you use with them, how many minutes. Not too expensive. We're not talking text message. We're talking live video of Ricky Shine. That's priceless.

VELSHI: You do have to have a third generation phone, 3g phone, and the iPhone isn't going to be one of those. I like the little gadget.

WESTHOVEN: I still think one gadget.

ROMANS: Me too.

WESTHOVEN: Not three.

VELSHI: Get your iPhone when you get it. We'll do battle.

ROMANS: Too many gadgets. Let's do smoke signals from now on between us. Thanks, Jennifer.

VELSHI: Jennifer thank you. Coming up next, the story of a former FBI agent who's betting on a new career path. We'll be right back with that story.

(COMMERCIAL BREAK)

VELSHI: The life of an FBI agent is often a dangerous game of cat and mouse.

ROMANS: We recently caught up with a retired agent who's helping others play a very different game.

(BEGIN VIDEO CLIP)

JOE NAVARRO, RETIRED FBI AGENT: What we do in this room is two things observe and communicate.

VELSHI (voice over): Joe Navarro's life seems right out of a Tom Clancy novel.

NAVARRO: For 25 years, most of my work was in the National Security Division of the FBI. I was a spy catcher, and that's what I did.

VELSHI: When he retired from the bureau in 2003, Navarro had fairly pedestrian goals.

NAVARRO: Honestly, I thought I would be writing part time because I enjoy writing, and I would be teaching maybe one school a month. But if you want to learn about reading nonverbal behavior.

VELSHI: Navarro is teaching, but the subject matter of the class is less Tom Clancy and more oceans eleven. See, his students here are poker players.

NAVARRO: I teach them the significance of tells that affect us the most. Things that tell us what is this person going to do? Is this person going to fold? Is this person going to quit? Or are they going to continue?

VELSHI: Navarro started sharing his knowledge with the poker set after appearing on a television show about deception with a poker pro.

NAVARRO: At first, I mean, I told him, I said, I don't play poker. I don't know what I can offer you. And they said, we want you to come teach even though you don't know how to play poker because we think you have something to offer. And that's how I got started.

VELSHI: Navarro does spend most of his time teaching law enforcement groups and business clients, like JP Morgan Chase.

NAVARRO: Do they show discomfort when I mention a product?

VELSHI: Yet he says the poker school delivers the biggest payoff, 40 percent of his earnings, despite being only 7 percent of his work. And Navarro's picks things up from the poker world as well.

NAVARRO: I wish more agents played poker because there's tells that you pick up in the poker room, and you pick up so many of them in one day or in one hour that it would take you maybe 40, 50, 60 interviews to see these. And you can see it in one or two tables in the span of 30 minutes.

(END VIDEO CLIP)

VELSHI: I'm not so much of a poker player.

ROMANS: Me either.

VELSHI: I can't imagine you. We're too --

ROMANS: I made some money playing poker one time, and I'm never going to do it again.

VELSHI: This is a story how you gambled once and won. So you're never going back.

ROMANS: I'm up for the rest of my life. VELSHI: Thank you for joining us on this edition of IN THE MONEY. Catch Christine later today at 6:00 p.m. Eastern on "Lou Dobbs This Week."

ROMANS: And you can catch Ali every week day morning on "American Morning." We'll see you back here next week, Saturday at 1:00, Sunday at 3:00. See you then.

(COMMERCIAL BREAK)

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