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Interview with Google's Eric Schmidt; Facebook's About-Face
Aired August 3, 2013 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, HOST: Glasses that can see, cars that drive themselves, balloons that provide Internet access to the most remote corners of the earth. And, of course, the search engine so popular it's a verb, Google.
I sat down with Google's executive chairman, Eric Schmidt. Not surprisingly, he was showing off the latest foray into your digital lives -- a new phone that listens to you. We were joined by Motorola CEO Dennis Woodside. This is the first new phone to come out of Motorola since Google bought that company.
Look, we know Google is changing the world, but I wanted to know how the chairman of this massive company would change the course here at home. Of course, it has 11.5 million Americans out of work, 14 percent underemployed, and most frustrating, this comes at a time when leaders in technology like Eric Schmidt says they've got the jobs, they just can't find U.S. workers capable of filling them.
ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: The core problem in America is the educational system still not producing quite the right people. There is plenty of jobs for sophisticated manufacturing, people who have some kind of technical training, either some form of vocational training that's high-end, learning how to run numerical-controlled machines -- these sorts of things, and they are all in short supply.
The American renaissance in manufacturing, in oil and gas production and energy, and technology, it's being held back by the lack of Americans who can do this. The way you fix this is by fixing education. More competition, more choices to the Internet and so forth.
ROMANS: At what point will it ever be just not on the margin that we are making high-tech things in the United States, but there will be a manufacturing resurgence of especially in tech -- consumer tech -- of big, big numbers of jobs?
SCHMIDT: It's going to be hard for the high volume commodity stuff to get stuff in the U.S., because frankly, it's easier to be done in much, much lower wages. But those are not the high value jobs anyway.
SCHMIDT: We're losing value jobs and we're gaining high value jobs. That's the great story about American jobs. It's dependant upon education and more investment in the industries. We can do this.
ROMANS: Tell me a little bit about the immigration part of the debate, because you've also said, here we have the trend in America where we bring the best and brightest around the world, we educate them, and then we say, OK, thanks. See you later.
SCHMIDT: We don't call them aliens but customers. America is such a large native market that adding more customers, right, makes all of us better, it's more people to buy things, more people to build things, more people to invent things. It's more people to actually man the factories and bring in these skills.
It's particularly stupid -- sorry -- particularly stupid for the American government to require us to fully educate people with PhDs, ship them out of the country where they can create competitors in other countries that take American jobs away.
ROMANS: One of the things, you have to do both things. You have to keep people with great skills and great educations who can start businesses here. But you have to do a better job making sure you are raising people in this country with those skills, we're not doing both of those things.
SCHMIDT: The easiest thing to do now is to keep all of these high- tech people who have been trained in American universities, in America, so they don't create competitors in other countries, and they create jobs and corporations here. They can do that in a second. It just takes a change in law.
ROMANS: Switching gears. I want to ask you about sort of privacy and information. We have a phone that you're talking will be I guess technically always on. We have Google, which basically maybe knows what I am going to ask before I ask for it. It finishes my search request and knows everything going on in my household.
How has the privacy story changed what you're trying -- should I be concerned about how much you know about me?
SCHMIDT: We've had this question for more than a decade at Google and our answer is always the same. You have control over the information that we have for you, you can actually have it deleted. You can also search anonymously. You can choose not to give us this information. But if you give it to us, we can do a better job of getting services for you.
And I think that's the right answer. These computer systems naturally collect this data, but we've also forget it after a while and we've written down why and how. And that's true, the consumer opts into the service. They don't have to have the service, which we call touchless control. But if they want to have that hands free experience, they train the phone so it listens to them and their trigger word and then responds to what they are asking.
ROMANS: So much to the story is the negatives of too much information and the privacy of your information. But at the same time, some of the things that we do, Google, for example, the CDC, you can work with the CDC to see search results for flu symptoms. I mean, there is a broader good for being able to analyze vast amounts of information even if you don't know who that information is from?
SCHMIDT: I think good judgment matters. First, if you don't want to participate, you don't have to. But if you, do you get the benefit of taking a look at what is going on in the world, and your searches get better, we can finish some of your searches and so forth. You still know a lot about what you are doing that Google doesn't know, and it's fine. We help you, but our job is to make you more productive.
ROMANS: Let me ask you a question that I ask people that had a company that just exploded. Google now a verb, obviously. Google in every home. Google knows -- you know, Google is Google.
Will there be a business move -- what is the next act?
SCHMIDT: Well, we hope the next act of Google is Google. And Google is going from essentially search to trying to help you. Think of it, with your permission, if we can anticipate the things you might want to know or some of the questions you may have, we just make you smarter.
So, we want to go from sort of you telling us what you want to know to us suggesting things that you might want to know that might make your life better.
ROMANS: One of the things Google knows about you, the shape of your hands. Motorola's product manager say this phone's shape is based on 20 years of research about hands. Yes, 20 years of hand research, and how it feels.
And the heads up to the tech geeks out there like me, I got the inside scoop on the new Moto X as well. So, for that part of the interview, more about the phone, visit our blog, CNN.com/YourMoney.
Google is hoping to make money off this phone, of course. But what about you? Is companies like Google, Facebook, and Apple shape our future? Could you be cashing in as well?
And later, you've seen him make hardcore deals at the store in Detroit.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I will give you the whole package, everything including two chain chaws, four nail guns that golf clubs and a crowbar, 800 bucks altogether
UNIDENTIFIED MALE: Sounds good.
UNIDENTIFIED MALE: Thank you very much. I will have my guys write you up.
(END VIDEO CLIP) ROMANS: And that's the deal. Coming up, Les Gold joins me on the streets of New York for a lesson to try and get the best price on everything. If you have not asked your boss for a raise, watch this before you do it.
ROMANS: When Captain Kirk flipped over his communicator to connect with the starship Enterprise from, what, 45 years ago, nobody imagined we would be doing this today without thinking about it. That's what technology does. It disrupts our normal pattern of behavior. What was unthinkable becomes the new normal.
Facebook, Google, Apple -- these are disruptive tech giants of this generation. They had changed the way we communicate, learn, search and share. And they have built massive businesses and economic ecosystems around them.
Investors who bet on the disruptive power of technology, they have been on an interesting ride so far this year. The tech heavy NASDAQ is up 20 percent in 2013. Google's shares out paced those gains, Google up 25 percent. Apple has had a sour year, down 15 percent. And Facebook may have finally hit its stride.
Let me bring in Zain Asher.
Zain, there is a lot of buzz about Facebook, even naysayers have changed their mind.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Exactly, Christine. Yes, quite a comeback for Facebook. You know, those concerned that it doesn't know how to monetize users' shift to mobile really caught the company off guard.
And we saw last year, the stock really did sort of move like a rollercoaster. But then we got second quarter earnings. We saw revenue was up. But most importantly, revenue from mobile advertising was up and that was really key. Take a listen.
ASHER (voice-over): After slightly more than 14 months, investors who bought Facebook stock at $38 a share have broken even.
It was supposed to be a home run, a "can't miss" investment for the lucky few who were able to get in on the ground floor. Within days, the stock had sunk. But since then, Mark Zuckerberg has gotten married, dipped his toe into politics, and philanthropy, signing Bill Gates and Warren Buffett, giving pledge to one day give away more than half of his fortune, which is growing right along with Facebook's share price.
The Facebook comeback accelerated last week after its second quarter earnings report exceeded all expectations. Shares have surged about 40 percent, since the release. Since the IPO, the company has worked to move ads from the side of its page and into the news feed, making them more mobile-friendly.
DAVE KERPEN, CEO, LIKEABLE MEDIA: So, people are seeing the ads the same way that they see their friends' updates: And that's what's gotten a lot of great responses for advertisers.
ASHER: How effective the ads are depends on Facebook's 1.1 billion users, 819 million of whom now use the mobile app every month.
A year ago, Facebook was getting less than 15 percent of its ad revenue from those mobile users. Today, it's 41 percent, enough to turn one of the Facebook's biggest naysayers into a Facebook shareholder.
MATTHEW MCCALL, PRESIDENT, PENN FINANCIAL GROUP: I was probably one of the harshest critics of the IPO and of the stock. And I was telling people to stay clear of the stocks. However, as the company changed, as they move to making money off mobile ads, it then became a very attractive stock. It actually became extremely different company.
ASHER: Other new developments, including plans for a gaming platform and video ads both announced this week have kept the momentum going.
MCCALL: It's a stock I want to continue to watch. Growth is accelerating and it's one of the leaders of social networking.
ASHER: It's interesting, and it only hit $38 a share on Wednesday very, very briefly, and then it pulled back and closed the day at $36.80. So there was a feeling that some people have been waiting an entire year to break even may have, may have decided to sell.
ROMANS: This is one reason why real people shouldn't buy IPOs, right? Because look, the first year is when a company proves itself, shows its book, you don't know what is under the hood until you see the car drive a little on the freeway, right?
And that's something that Matt McCall has pointed out a long time ago. Look, there are some people who got in on the IPO, didn't get the IPO price but something much higher, and there are --
ROMANS: Yes, right. But there are some people who got in over the course of the year and those people are up. And those people are holding Facebook right now.
ASHER: September, it was $17 a share. That's when the stock really fell out of --
ROMANS: Yes, if you brought it at $38, you were crying last September. All right. Thanks, Zain.
Coming up, hardcore fan, Les Gold, hits the streets with me, the streets of New York. (BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Two dollars.
ROMANS: Twenty dollars.
UNIDENTIFIED MALE: Wow, $20? How much would you take for three of them?
UNIDENTIFIED MALE: Sixty.
UNIDENTIFIED MALE: No deal? No deal?
UNIDENTIFIED MALE: No deals on the t-shirts.
(END VIDEO CLIP)
ROMANS: No deals on the t-shirts. I have three of them right here, and we did not pay $60 for them. We didn't pay $40. And that wasn't even our best deal.
Up next, the secret to getting the best price on everything.
ROMANS: Are you a good negotiator? Aside from buying a car or bargaining at a flea market, negotiating is something many don't have much experience with, but it's something everybody can use to save money. Les Gold of "Hardcore Pawn" on TruTV, he showed me his skills, and pay attention, strong negotiating chaps can get you deals everywhere and can help you get a raise at work.
ROMANS: All right. I'm here in New York, and I am here with Les Gold, the man that knows how to make a deal and get a deal, and he will teach me street economics.
LES GOLD, HARDCORE PAWN: I'll show you.
ROMANS: All right. We've got some money -- I have real money from CNN, and thank you CNN for this real money, and we are going to go and learn how to spend it.
GOLD: Let's go.
ROMANS: Hi, how are you? How are you? I am Christine. Nice to meet you.
GOLD: We don't mean to bother you while you are on the phone. How much would you take for the bracelet, cash?
UNIDENTIFIED FEMALE: Twenty.
GOLD: That's it? You won't take $10?
UNIDENTIFIED FEMALE: No.
GOLD: Fourteen bucks, $14.50.
UNIDENTIFIED FEMALE: OK.
GOLD: There you go. Gracias.
And the value of everything is how much are you going to reach into your pocket and pay. If I was going to give you a gift today, what present would you like?
ROMANS: Let's say, OK, let's say this necklace.
GOLD: How much are those?
UNIDENTIFIED MALE: Forty dollars.
GOLD: Why? What are they made of?
UNIDENTIFIED MALE: That's a metal, gold plated.
GOLD: Twenty is the best deal? You wouldn't take 10?
UNIDENTIFIED MALE: You give me 15 and you take it.
GOLD: I will give you 10 bucks and I will take it right now.
UNIDENTIFIED MALE: Fifteen.
GOLD: It's not worth it. Ten bucks? Twelve? You are making a mistake.
Thirteen bucks right now.
UNIDENTIFIED MALE: OK.
ROMANS: Thank you. Nice to see you. Thanks a lot.
GOLD: Thank you very much.
Know when to walk away from a deal.
ROMANS: What I saw you in there was confidence, though. That you are confident, you asked a few questions and you were ready to walk away. Sometimes in negotiating, it's hard to be confident.
GOLD: That's the key, and that's what I stress in my book. Be confident. Make sure you understand, that emotion, I was not in love with it, it was a nice piece, but be able to walk away.
ROMANS: You have it in your blood.
For somebody who doesn't have it in their blood, you know, how do you become a better negotiator when you go to your boss, for example, and you are asking for a raise?
GOLD: Don't be afraid.
ROMANS: Do you give the first number or does the boss give the first number?
ROMANS: You do?
GOLD: You need to get the first number, because how can a boss judge?
You have to have the understanding. Nobody is going to give you anything unless you ask for it.
What I don't have is a waffle. How much for the waffle?
UNIDENTIFIED MALE: Eight dollars.
GOLD: Eight dollars for a waffle, why?
UNIDENTIFIED MALE: (INAUDIBLE)
GOLD: What's the best deal we can get?
UNIDENTIFIED MALE: Six of them? I can go to $35.
GOLD: How about $25?
UNIDENTIFIED MALE: Thirty.
UNIDENTIFIED MALE: Twenty-eight-fifty.
GOLD: I'm not that hungry.
UNIDENTIFIED MALE: Twenty-six.
ROMANS: All right. Here it is.
All right. We've got a little bit of money left.
ROMANS: Got a little bit of money left. Starting to rain.
GOLD: Show me what you like.
ROMANS: Well, t-shirt.
GOLD: T-shirts, how much are your t-shirts?
UNIDENTIFIED MALE: They're American apparel. Made here in America. They're silk screened by a friend of ours in Brooklyn so it's all American made so they're $20. GOLD: Wow, $20. How much would you take for three of them?
UNIDENTIFIED MALE: Sixty.
GOLD: No deal? No deal. Even if we pay cash?
UNIDENTIFIED MALE: No deal on the t-shirts.
UNNIDENTIFIED MALE: They're made by a friend of his.
GOLD: Can your friend make more?
UNIDENTIFIED MALE: He can, yes.
UNIDENTIFIED MALE: If you want three --
GOLD: I'll take three.
UNIDENTIFIED MALE: We could do $45.
UNIDENTIFIED MALE: Still a lot of money. How about $35, $35 for three? I'm not talking to you.
UNIDENTIFIED MALE: He's the negotiator.
UNIDENTIFEID MALE: How about $40?
GOLD: How about 35 bucks, I'll take three of them.
UNIDENTIFIED MALE: We can do $40.
GOLD: Split it with you $37.50.
UNIDENTIFIED MALE: All right, $37.50.
GOLD: You got a deal. We got three of them.
ROMANS: Perfect. Sold.
GOLD: Thank you, guys.
ROMANS: Thanks, guys.
ROMANS: If we had paid the starting prices for everything we bought, it would have cost us $128, but we paid only 68 bucks.
"Hardcore Pawn" airs Tuesday at 9:00 p.m. on TruTV. It's part of Time Warner, just like CNN.
If you want more advice from Les, his new book is called "For What It's Worth: Business Wisdom from a Pawnbroker." Solid tips on building a business, facing your fears and, of course, negotiating. OK, it's a hot summer, but I'm not going to talk about temperature. I'm going to show you where the hottest housing markets in the country are. That's next.
ROMANS: A hundred sixty-two thousand jobs added in July. Economists had predicted a higher number, and revisions show 26,000 fewer jobs created in May and June. The unemployment rate dropped to 7.4 percent. That sounds good but it's because 37,000 people dropped out of the labor force.
The U.S. economy lost about 9 million jobs during the recession and has gained back now about 7 million. But we know the jobs that are coming back aren't the same as the ones we lost.
Look at the sectors with the greatest growth. It's so interesting. You can see retail jobs, leisure and hospitality.
Some of these jobs are jobs that do not create the kinds of wages and give the kinds of hours that we're used to.
The labor force participation rate now the lowest since 1978. What does that mean? It means that people who are actually engaged in the labor market, the people who are working or looking for work is the lowest share since 1978. That's something we have to fix.
The jobs report was the big headline this week, but there were some other important story that is matter to your money. Let's put 60 seconds on the clock. It's money time.
ROMANS (voice-over): Americans today are working less than their parents, though not necessarily by choice. The big reason: the rise of part-time jobs. Americans work 34 hours a week, four hours less than their parents. Back in the 1860s, a manufacturing worker logged 62 hours a week.
Today in China, that's almost exactly what an Apple worker puts in to make your iPhones and iPads. A labor watchdog says Apple's subcontractors don't always pay the workers for their overtime. Apple is sending a team to China to look into labor conditions and those overtime claims.
China labor watch says workers report all that unpaid overtime to make a budget-friendly iPhone. Apple blogs buzzing over this iPhone 5C case.
New York's soda ban has gone flat. A court upheld an earlier ruling preventing Mayor Michael Bloomberg's ban on huge sugary drinks from going into effect, but Americans might be breaking that soda habit anyway. New sales numbers from Coca-Cola, Pepsi, and Dr. Pepper show soda sales down last quarter.
(END VIDEOTAPE) ROMANS: One area of the economy that's definitely not flat, housing. Take a look at this. It is a good time to sell because home prices are rising. Over the past year, the 20-city Case-Shiller index is up a whopping 12 percent, the biggest gain in seven years going back to March 2006.
Here are the hottest markets where we're seeing the biggest increases. Prices are up 20 percent to 25 percent in some of these towns, and you can see. Look at Las Vegas, up 23 percent. Phoenix, up 20 percent. Atlanta, up 20 percent.
Now, these are some of the cities with the biggest real estate bubble pops. Remember, all real estate is local. When you look at New York, prices there up more like 3 percent, so some big variations throughout the country. Definitely depends on where you live.
Let's take a look at this. This is another really interesting point because you are not back where you started. A lot of people saying, wait, this housing recovery is not really benefiting me.
Well, you're right. If you bought a house between 2004 or '05, '06, '07, '08, you are still 20 percent to 30 percent below the peak.
Mortgage rates have been climbing recently, 4.39 percent on the 30- year fixed rate. But what's really interesting here, the average since World War II is 6.5 percent. So, rates are still historically low. They should continue to climb the next year or two years. This is still a good time to refinance, if you can, and still a good time to buy.
Coming up on a brand new YOUR MONEY at 2:00 p.m., which one of these people is the most important person in the world when it comes to your money? President Obama, Warren Buffett, Donald Trump? Guess what? None of the above. Find out the answer on a new YOUR MONEY. That's today at 2:00.
But, first, the backlash against Russia and the new anti-gay laws. Could gay athletes who want to participate in the 2014 Olympics, be prosecuted there. Olympics speed skater Blake Skjellerup says he's not deterred. Hear about one athletes plans to participate out and proud in those games. That's coming right up CNN in "THE NEWSROOM."