tv Best of Bloomberg West Bloomberg May 14, 2016 11:00am-12:01pm EDT
♪ emily: i am emily chang and this is the best of "bloomberg west," where we bring you the top interviews from the week in tech. in boston, we have been diving into the biotech and startup scene. we will kick off with comments from mayor marty walsh about ge .n boston an more than holding its own in
biotech. to the heart of the innovation cluster and conversation with foundation medicine. we talked to the director of the famed m.i.t. media lab, responsible for bringing the biggest innovations in tech from wearables to touchscreens. bringing ge to boston. this week we went to boston's annual meeting of the chamber of commerce to meet the man who made the deal happen. boston mayor, marty walsh. i want to talk about boston in general. i work in silicon valley covering technology. it is the center of the tech hub, with new york in second. where is boston? mayor walsh: right now, boston is number two in the percentage of tech workers in america. people do not understand. there is a lot of great things happening with the great ecosystem, innovative economy. people often wonder where we are right now.
actually, downtown boston, 35 percent of office space is tech companies. we have a lot of great innovation and startup companies here. we have 25 universities in the city and 75 in the greater boston area. we have a lot of brainpower. emily: now, getting g-8 was a huge coup. mayor walsh: very big. emily: $150 million in incentive packages, how will you know if it was worth it? mayor walsh: it is already worth it. when you think of ge moving their global headquarters to the city of boston, we are seeing the benefits and results. it is incredible. just the chatter in our city of the companies here and wanting to stay here when they are grounded here. we have a lot of startups, and i think a lot of companies say, wait a minute. why do we want to leave the city when we have companies like general electric coming in every day? general electric is such a big win for the city. emily: do you think ge will be a
big fire here? mayor walsh: i think so. when we have conversations about moving forward, and it was a collaborative approach with the governor and myself, working closely. he is working very closely. i do not think we put the biggest incentive factors on the table. the political atmosphere in our city is healthy and in environment is healthy for business. that's really what we want to do. we need a good healthy business environment. emily: let's talk about tax breaks. there are some questions about that -- worth up to $25 million over 20 years. to help secure this deal. you said they will generate more in property tax revenue even with the incentives. what are concrete ways that you think this deal will help combat things like income inequality? mayor walsh: the first thing off the bat, general electric made a $50 million in our education. $25 million will go into the city of boston's educational system. that was an upfront payment. when they announced it, the
official announcement two weeks ago, $25 million into the city working with us and schools like madison park high school. also dearborn high school which is a brand-new high school in the city of boston. it is actually a stem k to 12 school. they see the importance of educating the future workforce. not just ge, but companies around the globe, workforces in our city. emily: what about affordable housing? how much money will go to that? mayor walsh: there's not as big of a piece for affordable housing. we want to plan to create 53,000 units by 2030. last week we had 26,000 under construction or in the pipeline. 8000 are moderate to low income housing. we have already begun that conversation before general electric decided to come to our city. income inequality is a big problem. in boston we are the number one income inequality city, which is not a good label to have.
the way you combat that is having good jobs and affordable housing. emily: when i went to school here, cabs were king, but uber has infiltrated. how do you view uber from a regulatory perspective? mayor walsh: we are looking at regulations. i think both can exist. all different types of car services can exist. including cabs. i'm not caught up in the conversation happening in some places where you either pick uber or taxis. they can both exist. we have to make adjustments in both companies. with uber, we need more regulations to make sure people feel safe. with cabs, we have to look at medallion system and make adjustments. emily: draft kings is a controversial boston company. how do you feel about them doing business? mayor walsh: one thing that is a problem that i have been saying is the government regulates. we like to regulate. in congress, washington, other
states, we have not caught up with how do we regulate these industries that start with an app? how do we regulate them? that is something that needs to be looked at so we can make sure good business models are successful and that there could be regulations that protect you. emily: you have been referred to as the money ball mayor. how do you think data will influence your term? mayor walsh: data has made a big impact already. we are measuring everything from potholes to diversity in our offices. data is so important. the city has looked at data, but kind of on a year-to-year basis, we are looking at it on a daily basis. we keep track of everything. we have the city score. we're able to see how we are doing in certain services -- delivering services, whether it is permitting or traffic or trash pickup, whatever it might be.
one story in the budget, we saw it went down. i made a phone call and asked why the response time was down. simply our population is growing and we have not caught up. in this year's budget, we will make adjustments, buying more ambulances and having another class of emt. we are making investments every single day. emily: that was the boston mayor marty walsh. coming up, it is home to more than 180 biotech companies and all top five hospitals in the united states. we dig into the boston biotech scene, next. and later it is the battle of , the coasts harvard versus , stanford. which ivy league turns out the best entrepreneurs? we will discuss. ♪
-- then california. biotech spiked to $2 billion last year. here, foundation medicine focuses on matching genetic cancer profiles to give doctors the best treatment resources. foundation's cofounder and third rock partner joined us this week , as well as the foundation chief commercial officer, dave daily. i want to talk with the biotech scene in boston. i'm curious how boston became the hub for biotech. did start with the universities? >> it starts with the universities. we have the concentration here of the academics, the clinicians, entrepreneurs. welcome to the hub of biotech. emily: what is ge get out of being headquarters in boston? >> we think they get access to a rich population of talent that is exclusive in the boston-cambridge area. as you indicated in the opening, m.i.t., harvard, the major medical centers. they have access to the same resources.
it is attractive to the cambridge area. emily: i want to talk about genome technology, which is one of the new frontiers of biotechnology. how does what you are working on get us closer to a cure for cancer? >> we can read the programming code of patients with cancer. being able to read that programming code, we know what the software bugs are and can suggest what types of therapies might be best matched for that specific patient. that ability to read the programming code and know what that might mean is a tremendous breakthrough. emily: a cure for cancer, how far is that, really? >> cancer is a tough disease and enemy. we have to remember there are probably 1000 different types of cancers. we are going through them one by one by one. for some, a tremendous effect has been had immediately, others we are working on. it will be a continual progress, but a lot of big improvements are happening right now.
emily: how close are you to getting more insurers to cover this? >> we know innovation outpaces reimbursement. we signed an agreement with united healthcare to cover us for lung cancer. we have regional contracts being signed. other payers are now recognizing the data that we are impacting, having a major impact on overall patient survival at a reduced cost to traditional therapy. that data is emerging. payers are coming online. emily: shares are down 65% from the peak a year ago. why is that? >> the whole sector has been down. and it is a long game that is fundamentally happening. we are incredibly enthusiastic about the future, but work needs to be done. emily: are you changing your story, your strategy? what can you do to rekindle investor interest?
>> we focus on three major -- primary areas. education, the ability to take action on the information we provide so we improve patient care, and fundamentally it is about servicing pathologist and oncologists. they are busy. they need people to be there to answer their questions and help them with patient care as quickly and seamlessly as possible. emily: the sector is still in trouble. why is that? >> the fundamentals are extraordinarily strong. as we talked before, there was a period where things got ahead of themselves. things are good, but maybe there was consolidation. this is a sector that drives on proving we are making a big difference for patients. it is the steady progress of data saying a big difference is happening for patients. i think we will continue to see that moving forward.
emily: when do you see a turnaround? >> it is happening now. we had a solid first-quarter. the forecast remains as we continue to do the same thing we have been doing. creating awareness, assistant -- driving adoption, and assisting clinicians in impacting patient care. emily: you have huge drug companies. pharma sometimes gets a bad rap over drug pricing issues. when do you see things like that getting resolved? what is it going to take? >> what do people want? people want to live long, healthy lives. afford the best technology ion medicine. >> right. the general compacts we have had in society is that if society rewards the fundamental innovation that lets people have those long healthy lives, bringing those important therapies to people that make that big difference, i think the ecosystem has worked. there is obviously strains on it.
we need to make sure whatever changes we make to it, we keep the part that works intact. emily: i want to talk about regulation. there are questions about whether the technology stands up . regulators are looking at it even more closely than they were. who is right? >> i think the feds are on that one. i will leave that one to the feds. the bedrock of making this important breakthrough therapy available for patients is about data. can you really show that things make a fundamental difference in the clinic? that is what foundation medicine is fundamentally about. >> yes, we are fundamentally different and spend an inordinate amount of time making sure our data is demonstrating our quality. we're working closely with the agency to certify parts of our laboratory for continued diagnostic processes. we are close to the agency and feel comfortable with their entrance into our space. emily: we have been talking
about technology and how a lot of internet and software talent has moved to silicon valley. what do you think about biotech talent? how do you keep that talent here, and do you think they are here to stay because this is the epicenter of biotech? >> this is the epicenter of biotech and you mentioned that density. if you were walking down the street in kendall square, you have the academics and the clinicians, the entrepreneurs, big companies, small companies, investors. literally, i walk one block and bump into multiple people. you have a conversation. sometimes it is about scientific ideas, investment opportunities, partnership. that density that critical mass , does not exist anywhere else. that is the liquidity of the labor market and ideas. it is something very special. emily: our interview with and alexis of third rock ventures. coming up, m.i.t. they have given rise to
emily: in boston, we spent time in the hotbed of groundbreaking research, m.i.t. we turned to the president's office for a look at entrepreneurship and innovation. the university teaches 63 courses in entrepreneurship. 162 faculty members are entrepreneurs. over 30,000 active companies have been launched by m.i.t. alums. withis our interview m.i.t. president l. rafael reif. see m.i.t.'s role in the startup community in boston
and the world? mr. reif: m.i.t. is a unique place. students with a great deal of talent come here because, not only do they want to get a degree, they want to use their skills to do something important for the world. to make the world better. they come here to learn and try to work on projects addressing the most important challenges the world faces. emily: you have a theory that we leave a lot of innovation on the table, like ketchup in a bottle. what do you mean? mr. reif: at m.i.t. alone, you see a tremendous amount of innovation. you see innovation you want to go out into society to address the world's biggest challenges. right now, we have an extremely strong -- the u.s. is the most innovative country in the world. the system works well. you have ideas from universities that are picked up by risk capital, then different companies. that is the way innovation moves to the market, to society.
what is happening today and for the last five to 10 years is that risk capital is only going to ideas that are a success rate very quickly or fail very quickly. the most important challenges the world faces, climate change, clean water, food, and hiv vaccine -- you name it -- all of those important challenges take long development times. risk capital is very limited. in that way, we are leaving a lot of innovation in the bottle. emily: we are based in san francisco in the heart of silicon valley. stanford being behind companies. is m.i.t.
is at a disadvantage because they are not at the heart of the venture capital business. mr. reif: they're not at a disadvantage, they are on different things. you mentioned 50,000 plus companies by m.i.t. alumni. 50% are in massachusetts. 20% are in california. they go where they can make their company successful. i will not say m.i.t. is at a disadvantage. i will say the nation at a whole is at a disadvantage. the innovation we have in this country is huge, but not all of it is reaching the marketplace to benefit society. i'm trying to find to the system -- fine tune the system we have. i'm not saying it is bad. it is actually perfect. we do need the googles, yahoo!s, and facebook. we need different types of companies. i just want to fix the system -- emily: how do you fine-tune that process when a lot of the ideas you are working on, which are incredibly potentially revolutionary but might take 5, 10, or 20 years before they are real?
mr. reif: that is what we are doing. the most important thing we need is patient capital. there are modern-day investors that are more in favor of philanthropic investors. they want to invest in companies that make a big difference in the world. they already make their money doing it the way americans do, to they wantwant to invest in companies that make a difference. the most important thing we need is patient capital, and we are building that. we also need the proper amount of space, a connection with a mother institution -- in this case m.i.t. -- emily: one last question are great talk about the future of education. i wonder what is your view on the future of higher education. we were speaking with saul khan of the khan academy. online videos taking the world by storm. he believes the more students can learn online, the more they can free themselves to do projects and other things off-line. what is the future of higher
education? mr. reif: there is no question in my mind that the model of education -- the residential model of education, m.i.t., stanford, harvard -- that model is the best education there is. it is also the most expensive. we need these places because they provide the best quality of education, but for many people it is unaffordable or inaccessible that is we cannot accommodate all the talent the world has. we can only accept a small percentage. many of those we reject would do very well here. we need to find a way for them to also get a quality education. the online additional tools help. we need to combine those two. we have programming that can not apply to m.i.t., but take online courses. if you do well you can be invited to come to m.i.t.. emily: that was m.i.t. president l. rafael reif. coming up, we will sit down with
emily: welcome back to the best of "bloomberg west." i am emily chang. we cannot leave without speaking to one of the greatest visionaries in the area, director of the m.i.t. media lab. he is a two time college dropout. he is a three-time entrepreneur. he was tapped to become the director of the media lab in 2011 and believes a biological revolution is next. here is our interview with the m.i.t. media lab director joey tell. the biological revolution is next?
what do you mean? >> 30 years ago when the media lab was created, computers were about big companies working on very special projects that most companies did not have to think about. eventually with the internet and other things, you couldn't not have an internet strategy. similarly, medicine and health has been about big pharma companies. if you look at all of the tools involved, the technologies involved, and the fact that health care is 24 hours a day from when you are born to when you die, it is becoming this convergence a lot like the internet has done for information. emily: biotech research is more expensive to fund. will it scale as quickly as the digital revolution? joi ito: it is harder. you have to do fda trials. there are more safety concerns.
it is super important. it is a huge market that requires real science. one of the reasons i decided to come to m.i.t., kendall square and cambridge is the center of biotech. just like the computer companies dragged all of the people to silicon valley as it emerged, we are seeing ge bringing headquarters here. you are seeing the emergence of a new field. this ecosystem has to be built in a different way than we did for computers. emily: you think that because the bio revolution is next that boston will surpass silicon valley. do you believe that? is boston the next silicon valley? mr. ito: shen zhen is the hardware. i think we will be the bio silicon valley. silicon valley will be good at internet software. more software and artificial intelligence is required for bio.
bio is not really easy to do online. you can do some of it, but it is about walking over and looking at samples. it is very physical. you need to be near m.i.t. and harvard. emily: you are working with a company called pure tech on some of these models. mr. ito: i had to go to capital market and got back a couple of hours ago. it is an example. a lot of companies still require basic science. you need to bring the academics, do fda trials. a lot of the times the technology is not ready to be companies so sometimes the model does not work. tech is a new model for connecting academic research to companies. it is experimenting with and testing new ways to translate academic research into companies and is really important. that is what i am really interested in. emily: one thing in the spoken out about is bitcoin. what do you think the future is? mr. ito: it reminds me a lot of the internet.
one of my first companies that i was the ceo of was an internet service provider in japan. i worked in a lot of the early internet circles. the thing about the internet is we had a lot of time to work out the technology before people started pouring in money. the problem with bitcoin is, we have $1 billion in venture money before we figured out the protocols. the upside of bitcoin is that it will be to banking, law, contracts, and accounting what the internet was to media and advertising. the tricky part is we are ahead. i'm worried that the investments we are making to make the apps are happening before we figured out the core. in you have been here for a while, you know the web guys here, richard clarke, we do a lot of the open protocols here. silicon valley makes them into money here and we have not finished yet. one thing we do at the media lab
is we retain a lot of the core developers. we are probably the largest non-financially interested group working on bitcoin and financial cryptography. going toknow this is be a very difficult question for you to answer, but what do you think is the single most transformative idea you are working on right now at the media lab? you can only pick one. mr. ito: i can only pick one? i would say, let's just say importance. the reason i have been going to silicon valley every couple of weeks is that i think the artificial intelligence, singularatarians in silicon valley believe that computers will get so smart you can ignore policy and law. the lawyers and philosophers are lawyerizingng and
without understanding the technology. bring human beings and policy together with ai is important. we are extended intelligence. we do not think it will be about terminator or not here and we think the future will be about human beings and machines working together. whether it is individual interfaces to networks across society where we have computers and machines working together how they work together is , important. the media lab is about the relationship between humans and machines. i think the relationship between ai and society is extremely important. we are calling it extended intelligence instead of artificial intelligence. emily: that was the m.i.t. media director joi ito. we are looking at big solutions to big issues. we want to show you the lab where some of the most advanced bionics have been designed. a vision for a world without disability. this is a man who has engineered
some of the biggest recent breakthroughs in the technology of artificial limbs. after a mountaineering accident, he went to a double amputation dedicate hiso life's work of finding a better solution for people who need prosthetics. he believes the answer is in bionics. bionics as design structures, synthetics or bionic materials, that instantly connect or are implanted inside the body that normalize human physiological function. from time to time, they extend human capability. emily: these limbs can do something that no other commercially available prosthetic can. herb: this is the first ankle -- the foot ankle that i am wearing is the first that emulates lost muscle function. all other foot ankle devices are human powered, like a bicycle,
where only your energy causes it to move. emily: this technology has been spun out from m.i.t. into a startup called bionics. it has fitted 1300 patients with these limbs, 15% wounded veterans. a new partnership with the largest prosthetics maker means that patients across western europe can access this technology. biomechatronics lab is developing exoskeletons, equipment that could augment human performance. enhancing performance for athletes, soldiers, and making extreme sports even more thrilling. herb: in the future, it will be common to see people wearing bionics. bionics is about self-improvement and is a journey of what humanity can be. when humanity blends and integrates with good technology and design. emily: that was m.i.t. media
lab professor herb herr. the work he is leading with the bio mechatronics. a battle of the coasts, harvard versus stanford. which nurtures the best entrepreneurs? and check out our podcast with our best longform interviews. are ivy league schools behaving like the medieval catholic church? hear the full interview out on monday. ♪
emily: harvard has been around for centuries and was one of the first to offer advanced education in engineering. the official engineering school is relatively new, founded in 2007. this week we caught up with , frank doyle, the dean of the harvard school of engineering and applied sciences to talk about the ambitious goal of becoming a top five engineering school in the next five years. also with us the general partner , of a
boston-based venture capital firm. you moved out here from santa barbara, where you had a long tenure at the university of california system to run the engineering school. what attracted you to this position? >> i think it was the legacy of harvard, the power of the institution, the creativity of the students. i was really drawn from the beginning of the interview process to the innate talent, the raw creativity of the students, combined with the power of the harvard professional schools at large. the medical school, the business school, the law school. it also struck me that harvard was an interesting and historic moment in regards with engineering. we are tripling enrollment at the engineering school. we are growing the faculty. we are moving to a new building. all at the same time the marvelous gifts are coming in. it is an unusual confluence. emily: some say that harvard engineering school has lagged stanford, m.i.t., carnegie mellon.
you have pledged to be a top-five school within five years, which is fairly ambitious. how do you intend to do that? professor doyle: most of these metrics that you look at that pug -- put big players like stanford on top are based on the size of the program. looking at the metrics, the scale, the size of the faculty, the publications, the funding, we compete with everybody. we are at the top. we are a small program. we don't want to change that. one want to keep the small community collegial feel, which is part of the innovative way that harvard does engineering. that will enable us to be at the top of the field on a scale basis. >> it is really impressive what is going on over there. how are things going with diversity, getting more women to be engineers? are you happy with that trend? do you feel like you have more work to do? how is that going?
prof. doyle: both. we happy with the trend, but we have more work to do. we are at roughly one third women in the bachelors program, the undergraduate program, what we call a concentration. that compares favorably to the national average of 20% of engineering bachelor's degree going to women. it is no reason to rest on our laurels. if we make the top 10 rankings in that regard, but we have to keep improving. we have to push the number until we get closer to demographic in the population. emily: how do you push that number, how do you attract more women and retain them? prof. doyle: we have to push the pipeline, recruit high school students into the undergrad program. undergraduate students from the undergraduate cohorts. and women into the faculty ranks. if we did not address the pipeline at all stages, we will fall short. in the absence of a small presence in the faculty, we will not have a draw of undergraduate students coming to harvard. emily: you say that your programs are very different. some would point to stamford as
being the father of google, whereas mark zuckerberg dropped out of harvard and went to silicon valley with facebook. how do you keep that from happening again? prof. doyle: as educators, our mission is to educate the students. to bring them through to fruition to the degree they are training for. that is our mission, that is our primary objective. along the way, things happen. kids get ideas. they take them and run with them. we are not trying to create lots of short-circuits and ways to drop out early, but rather focus on the complete package. what it means to get the harvard degree, complete the training, and use that to springboard into successful endeavors. >> the dropouts, i think those are exceptional people so i tend not to get obsessed with them. that is not the mass of students that we are educating. do you think that there is room for online to supplement these things?
do you have a view on the online schools? do you think that is a way to widen the aperture of the harvard experience? prof. doyle: i think it is. certainly with harvard x we have been doing a lot in that space as an institution and in the engineering realm. in computer science, i think we can do more. a bigger piece is bringing innovation more broadly into the curriculum. this is something that i would say has been slow to change at harvard, but there is a mindset that harvard pushes fundamental boundaries. i think we do that brilliantly. but i think over the last decade i have watched where a number of the harvard faculty have been successful entrepreneurs. i had a meeting this morning with ryan adams whose company was acquired by twitter. he is one of our cs faculty. we have a lot of faculty getting into the entrepreneurial space. their excitement is infectious, and that affects their graduate and undergraduate students.
if we can capture that and bring it to the curriculum, the classroom curriculum as well as the online curriculum, i think we could be even more effective. emily: frank doyle, the dean of the harvard school of engineering and applied sciences with spark capital. up next, our focus on the boston startup scene continues. we will talk supersonic jet technology. you're watching the best of "bloomberg west." ?
supersonic flight that carried civilians was the concorde that crashed in 2000. now nasa is working on supersonic flight along with boston-based spike aerospace. we sat down with the ceo and spark capital. explain boston's role in the aerospace scene. we think of texas and we think of the west coast but we don't , think of boston. >> florida, california, and texas get a lot of attention. a lot of rockets are built in those areas. there is a credible amount of technology that is developed in boston. we have m.i.t., harvard, northeastern, boston university have tremendous aerospace programs. there is a company based that does flying cars. our companies are developing supersonic aircraft. it has the academic resources.
access to the european market. one thing silicon valley has is a great ecosphere. for boston it is easy access to washington and new york. we have everything right here within a quick hop. it is a great place to be, but we have a lot going on here, too. emily: the concorde situation is also isolated, but unfortunately it looms large in this field. why try again? how can you prove this is safe? >> the concorde exploded not because of its mechanical aerodynamics design. there was a scrap of metal on the runway that punctured the tire on the aircraft and hit the bottom. the market has changed. the global market has changed significantly since then, 15 years later. the european market has exploded. the middle eastern market was oil-rich but not as ambitious in its global expectations of growth. the asian market has exploded.
asia, china, india, taiwan, singapore, those have exploded. those are tremendous opportunities. people need to get to those destinations, middle east to europe. emily: you are excited about getting on one? >> i am. i will do it. i travel a lot to the west coast, which is not your initial priority, but we do business in europe and china. getting there would make my family quite happy. >> i fly to dubai quite frequently but it is a 12 hour flight from boston. if i can bring that flight down to six hours i would probably go there once a month. building face-to-face relationships is critical. you need to be there, shake hands, looking someone in the eye, having casual conversations. you cannot do that by e-mail. emily: the problem is that it is so loud you can only do oceanic flights. could you get from new york to san francisco? >> the concorde was very loud. our aircraft is specifically
designed because we are taking advantage of computer technology and material sciences and aerodynamic configurations to reduce the sonic boom to a background noise, something like an airplane -- an air conditioner with sound like. you'll be able to fly overpopulated areas and someone would bailey notice. >> when you think you will come to the u.s.? >> we're going to start with europe and the middle east and asian markets. our first deliveries will be in the early 2020's. the u.s. is going to restrict delivery into the market probably 15 plus years. it is federal regulation that prohibits supersonic flights. as u.s. policymakers see supersonic flights succeeding, they will probably look at amending those regulations. emily: we hear so much about elon musk, jeff bezos, these billionaires getting into space -- you need $100 million in investment to account for anything. how do you raise that kind of money? how difficult is that?
>> it is not easy. you can certainly raise $100,000 for an iphone easier. our vision is so compelling that travelers and business users are also the investors in the aircraft. if they could see saving that much time and be able to do better business they are the , ones either purchasing the aircrafts investing, and some of the airlines we are talking to. >> how much will it cost a passenger to fly from here to london, london to hong kong? >> the commercial airlines are looking at offering it as a premium service to top clients. pricing would be first-class pricing. not super exuberant. emily: you are in. spike aerospace ceo and spark capital. that does it for this edition of the best of "bloomberg west." you can join us for more tech
scarlet: coming up on "bloomberg best," the stories that shaped the week in business around the world. from saudi arabia's new oil minister to impeachment battles in brazil to the bank of england's latest rate decision. mark interesting. : >> there are no big deals left here. they have to just continue as they are. scarlet: earnings season continues. we will look back at who delivers and who disappointed. >> the tide on media is flowing out. there is a limit to how big you can get through deals at a certain point. >> sprint remains a thorn in his side. scarlet: and we replay the