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tv   Bloomberg Business Week  Bloomberg  June 11, 2016 7:00am-8:01am EDT

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>> welcome back to bloomberg as newsweek. you can find us on the radio on sirius xm channel 119 and a.m. 1130 in new york and a.m. 1200 and boston, sm 99.1 in washington, d c and a.m. 960 in the bay area. a look at the century old rivalry between mercedes-benz and bmw. here's reporter sam grove art. >> we have a century old rivalry.
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the two competitors are mercedes-benz and bmw. this is the year where the mwa is celebrating its 100th anniversary so that's 100 years of two of the top german automakers going to tell and always trying to outdo each other in the luxury car market. they have been tracking one another in terms of their developments. what aspect have the companies had on one another? has it been motivating? a competition that has benefited all of us because luxury carmakers are the ones that pioneer a lot of the technologies that ultimately filter down to the mainstream. that is important when it comes to safety systems. the first antilock brakes were on a mercedes. bmw pushed on four-wheel-drive. start, you have to go with your highest margin of profits but eventually, we all
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benefit from that so the competition has pushed both companies to come up with new ways to improve the automobile which in turn benefits all of us. bmw, i thinkthat it was, started to introduce an electric car a few years ago? can you tell us how that worked out? in 1976 at the munich olympics, bm w which is headquartered in munich. a standard bmw sedan but the engine had been removed and it was large and heavy batteries, almost no range whatsoever it was not considered a viable car for many decades. beginning of a tradition at bmw that led to some vehicles coming out not too i-8 whichike i-3 and were groundbreaking and is given bmw a good footing when it comes the future of electric
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transportation. >> how has tesla built on what bmw introduced? in 1976, elon musk was one year old. >> a wee boy barely standing up. at that point, engineers realize that electric propulsion could be a reality sometime in the future. would say his work is based on all of the work before hand including those engineers at bmw and other companies. i am intrigued by the fact that both of these companies grew up around the same time and in the same place. what do you think about that? is there something about german culture that contributed to this? is this surprising that this happened? it makes some sense to me. germany has had a long-standing scientific and engineering tradition that goes back centuries.
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they also have an enormous number of universities. you don't hear a lot about them. they are everywhere. the opportunity for people to learn about physics and chemistry and those other sciences is very prevalent. for these two companies to come up in germany makes a fair bit of sense. otherslikedaimler and were the original people who invented the automobile so it would stand to reason that the surrounding area, there would be a cottage in -- industry of new companies to exploit that. >> up next, the high-tech that makes month sent to a takeover target and the game of thrones-style battle at the united states postal service. ♪
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sheila: welcome back. $62 billion bid for monsanto is a play for the companies technology. we spoke with this reporter. >> anyone driving past the field and seas of farmer on their tractor has iconic images and the simple life. if you go into a tractor these days in places like the u.s. corn belt and other places, that tractor has an area that looks more like the, head of an airplane. big rate ted is doing a lot to transform farming in the last they use precision guided agriculture that helps him decide where to plant their crops and how much seed to use and what fertilizers to apply and the tractor itself can steer itself, in some ways turning the
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farmer into an autopilot. : can you describe who the leaders are in this area? >> this is becoming one of the big agricultural areas. you take a look behind the scenes at how chemical and and monsanto and you see this battle for big data. it makes sense of farmers are using more integrated data to make their farming decisions. for them to go to one company that can be one stop and get you your planting data, whether data. you saw this in 2013 when monsanto took over climate corp. which was doing interesting work in aggregating weather but pioneer from dupont stepped up their game.
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the big players are trying to harness this data. how does this play out for companies like deere and caterpillar? >> this is a case were they can get a farmer to invest something to a tough economic time. when you look at profits and u.s. agriculture, we are seeing them it a 14 year low. farmers are looking at ways to be more efficient. -- precisionure guided technology can save them money by cutting down on the mount of seed and fertilizer and pesticides they need to buy. can make the equipment the farmer can put onto their tractor that allows them to boost their yield and cut their cost in other areas. it makes farmers spend money but they are spending money to save money and approve -- and improve their performance which is a good selling point during eight
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economic time. typically doers work at night with this new technology? >> farmers have often been people who have been prisoners to the weather and time of day. you have seen tractors with headlights for many years. again, you are right, if you steer it in the dark but you have the technology that knows giveto do and the monitors you the readings of what's going on in your field, yeah, that helps you a lot during planting and harvesting. those are very tight time windows especially when you get to areas with more extreme climates. that seems to be everywhere in recent years. you want to be able to harvest at just the right time. this gives you the precision as well is the ability in terms of steering your equipment to be able to make those decisions and be proactive to get the best crops. fighth: the congressional over the u.s. postal service, we
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spoke with devon leonard. sheerah: this sounds like a sleepy day but it's a huge influential body that is overseeing an enormous budget. can you describe what they do and the amount of money is at stake? >> even though the mail is down and they have problems and deficits, the postal service still sent 154 billion pieces of mail on the budget was $69 billion. the postal service is supposed to sign off on that and oversee that. it's a nondescript bore with people you've never heard of. the board itself is going the way of the mail now. pimm: why is the board not being populated as has been previously stipulated? what is the role of bernie sanders? >> the president of the united
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states appoints the members of the board of heaven or at least the nine members of the board of governors the other two are the postmaster general and her deputy. -- hasate has a proved not approved a president since 2010. in the last couple of years, bernie sanders has locked and never of -- a number of appointees. why is he blocking the appointees? one guy served under ronald reagan was a supporter privatization and another guy is tied to the payday loans does notand sanders like him and another guy wants to cut mail delivery and have people receive their mail scanned and the unions don't like them either.
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sheelah: is there any talk of the block being lifted? >> there has been talk of postal reform for the last couple of years. the presidential election will probably take up everybody's bandwidth to there is only one presidential appointee left, three members of the board of governors now. e surf for a decade and his term will be up at the end of the year. then there will be two members wod he says there has to be t appointees. they say they can keep function but the chairman of the board says maybe they can't. i think things will get worse.
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the growing debt crisis in corporate america next and one of the costliest things that intel does. ♪
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sheelah: welcome to bloomberg businessweek. still ahead in our double technology issue, inside the intel chip machine, creating a long-term stock exchange, and d creating steph curry's free throw. ♪ i am here with the editor of bloomberg businessweek, ellen pollock.
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there are more must reads in this issue. we will next turn to an interesting story about the next debt crisis. i thought the story was bananas. i had no idea that so many companies were on the brink of financial disaster because of their reckless borrowing. can you tell us about that? crisis,r last financial consumer debt and mortgages were the problem that created the crisis. now people are worried there is a lot of corporate debt and that's because interest rates are low so companies get a lot of darling. now they are loaded with debt. .here is sort of this worry with all the uncertainty of the economy the question is, are there going to be more defaults? will it spark another crisis? what does it mean when companies are borrowing money? instead of expanding, they are doing buybacks.
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what is the long-term effect? >> economists are worried because instead of investing in equipment which would boost the economy or research and develop an investing which would create more value, they are doing share buybacks and acquisitions. we have written about how some companies are sitting on piles and piles of cash like apple and some other companies. in fact, if you separate the big mountains of cash, a lot of companies don't have much cash. how will they pay back the debt. : there is another interesting story about how scientists and innovators are crisis ofaddress the caffeine in outer space. i understand the company has developed coffee that will work for nasa? this is an issue that was
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very important to me even though i don't personally intend to go to the space station. this is for astronauts at the space station and when they want a cup of coffee, that is up problem because there is no gravity and the coffee floats around. i imagine a nightmare. for me, it would be a nightmare if i had no cup of coffee. the scientists at nasa believe you want to keep astronauts happy and you want something that makes them happier to be in space. they have created this elaborate system. all thesehad engineers working on this so they can make a cup of coffee. sheelah: there is another delicious story about intel and how it has developed a newer and faster chip. >> that is something we wanted to do for a long time. chip makers do not want you hanging around their labs
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because they have clean rooms and you have to put on garb and there are trade secrets. you have to have your whole body covered. these rooms or even cleaner than operating rooms. they have to be completely sterile. we have the opportunity and convince them to let us in and see how you put the chip together. don't think about chips in your daily life, it's a fascinating story. fox and iimm talked to the reporter who did the story. >> to get into the clean room, there is in a for level of verification. get to look at a through a window which is the closest anyone from the outside has gotten since president obama visited in 2011. back in the 90's, intel was more open about their manufacturing process but things have gotten more competitive.
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we had to work to get the ax as we got. pimm: you did not take it personally? >> no, i felt grateful. pimm: what did you see? what is the basis of the story because this is -- how do you create a new computer chip? it's like the risk is better. it's more expensive than making a plane. it takes about three times as long as making a plane. from start to finish takes nearly eight decade depending on where the technology is. layout forreate a the liens of tiny transistors chip aboutose on a the size of a postage stamp. that has to happen with incredible accuracy. any little speck of dust will mess it up and cost intel money.
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of these great modern marvels that no one appreciates or thinks about. if you are happy about facebook it's the chips making those possible. there are microprocessors and everything we use now. how integrated are these into our world? they are everywhere? , youry are everywhere phones, your computers, a smart watch. people don'tt think about is that they are in data centers. when you user -- your phone to hail an uber most of the action is taking place in these giant server farms. there is a lot of rocket science going on at intel and some of these companies that create these data centers to make sure it happens as quickly and efficiently as possible.
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ip takes 60%n ch more energy to run than a large refrigerator. search, it a google can do thousands of those. they have to be as efficient as possible and that's why intel has been as successful as it is. is the world's largest chipmaker and it's selling 15 billion dollars per year worth of these chips and half of that is profit. it's about extreme efficiency. the rush is to build the past is .hip sdheelah: what can affect the speed? --every year, this group of at intel, some are in
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washington, they where the big white outfits, there is a fighting a war with the laws of physics. everyonete 90's, thought that soon we will might be able to make chips smaller because of quantum effects. the size get so small that electrons don't behave the we ate the -- the way we expect them to. years, intel comes up with solutions that violates the laws of physics or what we under -- understood them to be. this has been going on like clockwork. you have this giant company and the giant research mechanism that has pulled this off. intel has struggled lately. they just laid off 11% of their workforce. that is in part because people have begun to question how long they can keep this up. with feelseo i spoke this will go on for another decade.
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every year it's very hard. : it can be exciting to talk about the next thing in tech but next it's exciting to talk about images. we will talk to a photo editor in the issue. >> the most exciting piece was the photo spread we did on innovative materials that are being created. there was a range of them. there is a polymer that goes on glass to repel liquid and stains. there is something called second skin. the item that started the project was a thing called danta black which was designed to be the blackest of lack and absorbs almost all the light because near it. , weting with that concept set out to find a number of different inventions that are new materials in development and photograph them as abstracts and
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present them with the potential they have to change the way you jump in shoes are water comes or toe side of a plane make fabric that can conduct electricity and record data. that was pretty exciting. nasa and m.i.t. and places in london so it was an exciting project. : the reporter described black -- banta bla ck, was this a special challenge to the photographer? >> we wanted to photograph it against a black. orally you use paper sometimes velvet or something. ae photographer had painted
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backdrop and when the pictures came in, you can't even tell that the background itself is black. it is so starkly different from the material. sheelah: up next, the silicon modify the wall street cycle. ♪
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sheelah: welcome back to "bloomberg businessweek." week's double technology issue, a profile of eric ries in his crusade to get wall street to have more ipos in a long-term stock exchange. pimm fox and i spoke with the
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reporter. who was aes is a guy household name in silicon valley. they look most to as someone who has developed a methodology called the lean startup. he wrote a book in 2010 that talks about how you should best build your start up in a lean way, putting your product in front of people as much as possible. startups are really taken it to heart. at the end of his book, he floats this provocative idea about reviewing the public such asin some way making a new stock exchange. can you describe this idea of a long-term exchange? traders are focused on quarterly earnings so what would a long-term exchange do exactly? >> the way he put this together is one in which she would change the dynamic of the public market
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as we know it today by making these incentive structures within the listing standards. if you have a company that wanted to advertise in the onket that they will focus these long-term and innovative project, we will list them as long-term stock exchange and within the listing standards, you have these reforms that allow for both company management and investors to work together to achieve long-term goals. he has several different reforms he has put forth. one of them is the idea of tenure voting were investors who have helped stocks longer continue to accrue more voting power. if you want to buy this talk right away you could but you would not have as much of a say in corporate governance as those who had committed long-term. there are various examples like that he hoped would make the exchange dynamic different than the ones today. the do everything
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happens all the rage in china and our reporter took it for a test drive. >> this looks a lot like whatsapp. scream -- screen is messaging and then they have a moment screen which is like facebook area then there are all these other services. wanted to transfer money to your landlord, you could do that through wechat. if you wanted to buy train or plane tickets, it's a couple of clicks. if you wanted to pay traffic tickets or report a harassing phone call, you could do that through city services that are offered. there are something like 350 cities that -- in china that offer services for the wehcat. it's primarily in china. tech companies
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are banned from china like facebook or youtube. wechatted a garden for to go into. rolls out --say it it rolls up a lot of different applications into one. wherehink that's messaging platforms are moving. they are trying to get you to stay inside the app to shop and interact with your hotel customer service line, you never have to be on the phone again. lot easierke ends a if you could go to it through one app as opposed to getting out of that happen going to another and another every time you wanted to do something area
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that's the wave of the future, i would say. sheelah: up next, using an algorithm to use the basketball genius that is steph curry. ♪
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sheelah: welcome back to " bloomberg businessweek." in this week's double technology issue, the startup that could be helping nba star steph curry hit those three-pointers. pimm fox and i spoke with the reporter. vanguardbasically the of an explosion in three-point shooting. leftpeople may have been behind, the three-point role came in for 1979.
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he made 402 of them this year which is more than 100 more than the most in a season before that. the previous record was his and the previous record before that was is. this keeps with the nba in general that the amount of offense that comes from the three-point shot has gone from 2% to1/4 of all scoring so shooting is everything. i look at new technology that yoursolated the arc of shot, the angle of entry is a key factor in scoring success. they say the warriors now use this. sheelah: what have they learned about his tech need? they have been looking at >> shooters for 15 years. it started in silicon valley. this guy was trying to teach his daughter to shoot with better
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arc. he wanted to try to do it better. and he went marty to two of his pals. out that the ideal angle of entry for a shot would be 45 degrees and they tested that and it turned out to be true with millions of shots. kerry happened he is one of these machines a couple of years ago in a practice jim and his angle was 46 degrees which was above ideal but if you are an elite athlete, you can afford -- the window was whiter for you. you can make the case that he shoots higher to get it over tall or players.
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they now have a shot tracker you can use to get instant feedback in the gym while you are shooting. i tried when out at the university of virginia. you shoot that shot and you hear right away whatever the computer voice tells you what your angle was. a version of this product it is out there where the nba teams started testing it that gives you feedback on all of that, very precise data. over thousands of practice shots, you can see what your average arc and where was from different spots and how'd deep it fell to the rim and where was the center of the all? -- of the ball. this is granular specific shooting feedback technology. at the elite level cometh fixes small problems and for high schools and even lower, it can help get people on the right track to shooting with proper technique. bloomberg businessweek
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is on newsstands now and is available online. thank you for being here and we will see you next week.
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>> coming up, the stories that shape the week in business around the world. aleant shareholders get more bad news. the race is set for the white and transformation nation, saudi arabia steps up its economic makeover. >> it's a grand bargain. ramy: there are impassioned arguments over the briggs it value.


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