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For August 21, 2012, CBS

Wed, 08/22/2012 - 6:13am
Jeff Glorr, Gayle King, Elaine Quijano, Rebecca JarvisAssociated Press

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JIMMY FALLON (Late Night with Jimmy Fallon, ABC): Check this out. New research shows that Angelina Jolie and Hillary Clinton are actually ninth cousins twice removed or, as one guy put it, I think it`s time for a family reunion.

JEFF GLOR: Welcome back to CBS THIS MORNING. Facebook`s stock hit another all-time low on Monday, then bounced back to finish the day at just over twenty dollars a share. That`s about half the stock`s original price, and some Wall Street watchers are wondering if Facebook`s CEO, Mark Zuckerberg, is doing enough to help.

GAYLE KING: One man who is not surprised by any of this is Alexis Ohanian, a co-founder of reddit.com. Listen to what he said before Facebook went public back in May.

MAN (CNBC, May 18): Why would you not touch this thing with a long pole?

ALEXIS OHANIAN (Internet Entrepreneur): Well, I`ve got some reservations, and in part because, you know, the-- the Facebook business model is one that relies on display ads, sort of like Google, but doesn`t have the same purchasing attempt moment that Google does. You know, when you do a Google search and you see a relevant ad, it`s because you are seeking something out. But Facebook, you know, you`re looking at photos from your dad`s fishing trip, and I am not convinced that they can continue to grow this business in a way that still treats users well, and that`s the concern.

GAYLE KING: Was he right? Alexis Ohanian is here now along with Rebecca Jarvis. Good morning to you both.

REBECCA JARVIS (CBS THIS MORNING Business and Economics Correspondent): Good morning.

JEFF GLOR: Good morning.

ALEXIS OHANIAN: Good morning.

GAYLE KING: Let`s sta-- let`s start with you, Alexis. What did you see that others did not?

ALEXIS OHANIAN: Well, you know, the-- the price that they were hoping to get at-- at that IPO just did not seem to be justified based on the business model they had. And if they`re going to justify it, it`s going to have to be something bigger and better than just display ads, especially now that more than half of Facebook`s traffic comes from mobile, where those display ads don`t really work, and that unfortunately that-- that, you know, while they are profitable, they`re not as wildly profitable as that IPO would have led investors to believe, and it`s going to take-- it`s going to take a big change.

JEFF GLOR: But let`s assume that the IPO was priced too high, then.

ALEXIS OHANIAN: Mm-Hm.

JEFF GLOR: So is this-- is this more just IPO hangover or is this real true intrinsic business problems?

ALEXIS OHANIAN: I-- I think for the time being I would say still hangover. I`m-- I`m not yet convinced, because you know, Facebook is still a huge, huge company. It`s like something we`ve never seen before in terms of the impact it has. If they can invent their way to a new business model, one that still respects users, like I said, because they are notoriously fickle. Look at-- look at MySpace. Look at Friendster. Look at all the others before it. It`s going to take something big, and I think they`ve got the right people in the company to do it.

GAYLE KING: Mm-Hm.

ALEXIS OHANIAN: I just-- I just don`t know because expectations, obviously, have been set really, really high.

GAYLE KING: Mark Zuckerberg seems to be keeping a low profile these days. Do you think that he should be doing more things publicly, Rebecca, to reinsure-- to reassure investors?

REBECCA JARVIS: Well, I think it depends on who you`re asking about this. Within the company, what he really has to do is assure his employees that Facebook is on the right track. You don`t want to lose those minds, and that`s really what Facebook is about. It`s about the technology, it`s about the engineers that exist within Facebook that are going to come up with something, a way, ideally, to make money for the company, but also ways to make our user experience better. Those billion people who are using Facebook are very valuable, but Facebook still has to find a way to make them valuable and to make them count. And like Alexis said, selling ads isn`t the only way they`re probably going to do it in the future. They have to reinvent that.

JEFF GLOR: But we should point out that Facebook is not the only internet company--

GAYLE KING: Yes.

JEFF GLOR: --that`s facing stock problems right now. You`ve got Zynga, there is Groupon, which has slid dramatically. I mean is this the question has been, is this another dot-com bubble? Is it-- is it fair to call it one of those, Rebecca?

REBECCA JARVIS: I think what you`re seeing here is stocks that get priced at IPO based off of the frenzy that investors have around them as opposed to what the fundamentals of these companies are saying about their future. These are long-term stories in most cases, and the way that investors invest in public stocks is very short-term. And when you focus on that short-term element, you can price a stock way above--

GAYLE KING: Mm.

REBECCA JARVIS: --where it should actually be, and that`s what you`ve seen, and most investors would say that`s what you saw on Facebook, that`s what you saw with Groupon.

GAYLE KING: What`s the difference between now and the-- and the dot-com bubble as you see it?

ALEXIS OHANIAN: Well, so, back then, it cost a lot more money to start a company.

GAYLE KING: Mm-Hm.

ALEXIS OHANIAN: Now you literally can just have a laptop--

GAYLE KING: Yes.

ALEXIS OHANIAN: --and get going.

GAYLE KING: In a room, yeah.

ALEXIS OHANIAN: And that-- and that-- that means that you-- you can`t justify nearly taking as much of the investment as companies used to ten or fifteen years ago. Like, some of those obscene valuations were based on the obscene amounts of money they were taking to get started. And then you also have just the fact that the internet has become such a bigger part of our lives. There are start-ups, epic failures like Webvan from the last bubble that are now seen born again as things like Fresh Tracks. I don`t know-- I don`t know many New Yorkers who still go to the grocery store because they can do it all online and have it delivered.

REBECCA JARVIS: These companies are also making money. I mean at the end of the day, the-- the difference, the big difference between the dot-com bubble and right now is when these companies go public, they might not be making as much money as we`d like them to make--

GAYLE KING: Mm-Hm.

REBECCA JARVIS: --but they have a steady stream of revenue.

JEFF GLOR: (INDISTINCT) reading anything to the fact that Peter Thiel, the famed investor, an angel investor, sold his Facebook shares yesterday, twenty million of them?

REBECCA JARVIS: He got in a lot-- a-- a long time ago. He got in before this was a public company. So there is some of that in the same way that employees are selling out of some of their stake. You do see investors that invested in this company getting out because they need to show a return to their other investors. I-- I think that, you know, anybody who`s looking at this stock needs to think about it individually for themselves and they need to realize this is a highly traded stock, it is not a long-term hold right now for most investors.

GAYLE KING: All right. Rebecca Jarvis.

JEFF GLOR: Lot of thanks Rebecca Jarvis, Alexis Ohanian, thank you very much.

ALEXIS OHANIAN: Thank you.

JEFF GLOR: America is dealing with many problems right now but author and columnist Thomas Friedman says there are solutions out there, busy greenroom this morning. He`s here with us. He`s up next. You`re watching CBS THIS MORNING.

(ANNOUNCEMENTS)

(Excerpt from a Chrysler ad)

GAYLE KING: One hundred million Americans saw that Chrysler ad during this year`s Super Bowl. New York Times columnist Thomas Friedman is using it as a jumping off point for a new edition of his latest book.

JEFF GLOR: He and co-author Michael Mandelbaum focus on four major challenges facing the U.S. in That Used to be Us: How America Fell Behind in the World and How we Can Come Back. Tom Friedman is here in Studio 57. Welcome.

THOMAS FRIEDMAN (New York Times Columnist): Thank you. Good to be here.

JEFF GLOR: I read this book when it came out. It`s hard not to have a strong reaction to it. You start with that ad, which was a controversial ad at the time. Why start the book with that?

THOMAS FRIEDMAN: Well, you know, Clint Eastwood was really telling an important story about how we have fallen behind in the world. Think about what that ad focused on, Jeff? He was talking about the auto industry and what happened.

GAYLE KING: Mm-Hm.

THOMAS FRIEDMAN: Now, basically, back in the eighties, you know, people said Japan is the big threat. When you think about it, Japan really threatened two American industries, consumer electronics and autos, and challenged one American town, Detroit, which that ad focused on.

GAYLE KING: Mm-Hm.

THOMAS FRIEDMAN: Where we are today, thirty years later, which is the merger of globalization and the information technology revolution, that merger challenges every American town and every American industry. That is what is new.

JEFF GLOR: So the challenges come from where then?

THOMAS FRIEDMAN: Well, the challenges come from the fact that, you know, when I sat down to write this book with Michael, I actually went back to the first edition of the book I wrote in 2004-2005, called The World Is Flat, which is about the world getting connected.

GAYLE KING: Yeah.

THOMAS FRIEDMAN: You know, and I opened that book up to the index. Facebook wasn`t in it. You were just talking about Facebook.

GAYLE KING: Oh, yeah.

THOMAS FRIEDMAN: So when I wrote that-- when I was saying The World Is Flat, I mean Facebook wasn`t around, Twitter wasn`t around, The Cloud wasn`t around,--

JEFF GLOR: Yeah.

THOMAS FRIEDMAN: --LinkedIn wasn`t around. So what`s happened basically is we`ve actually gone from a connected world to a hyper connected world.

JEFF GLOR: Mm.

THOMAS FRIEDMAN: And what that means is, if the world were a single classroom--

GAYLE KING: Mm-Hm.

THOMAS FRIEDMAN: --the whole global curve just rose. Why did it rise? Because every boss now, including yours and mine--

GAYLE KING: Mm-Hm.

THOMAS FRIEDMAN: --has access to cheaper software, automation,--

GAYLE KING: Yep.

THOMAS FRIEDMAN: --robotics, cheap labor and cheap genius than ever before. And hence, I-- I think, you know, Michael and I would agree, the most important chapter in this book is so much about education, it`s called Average Is Over.

JEFF GLOR: Mm.

GAYLE KING: Yes.

THOMAS FRIEDMAN: To average is over now. All right?

GAYLE KING: Yeah. Yeah.

THOMAS FRIEDMAN: If-- if, you know, there is an old saying in Texas, if all you ever do is all you`ve ever done, all you ever get is all you`ve ever got.

GAYLE KING: Yes.

THOMAS FRIEDMAN: That is no longer applicable. Okay. If all you ever do is all you`ve ever done, all you`ll ever getting now is not all you`ll ever got. We all have to find our extra.

GAYLE KING: But you also say it`s not that the lack of jobs is holding us back. That`s not really what it is. It is in your opinion?

THOMAS FRIEDMAN: Well, You know, Gayle, there`s so many other things. It`s infrastructure, it`s immigration, it`s right rules to incent risk-taking and prevent recklessness, all of these. Everyone wants kind of once a one, you know, stop solution to all our problems.

GAYLE KING: Yeah.

THOMAS FRIEDMAN: We got here because we did a lot of things right. We had a formula for success, which was educate our people to use the best technology in the world, have the best infrastructure, have the most immigration of talented, energetic people, have the right rules, have the most government-funded research. If you go down that list today, you`ll see we`re falling behind in all five categories.

GAYLE KING: Do you think people realize, Tom, how crucial education is? You know, when people start talking about education, a lot of times their eyes glaze over, but it is so important that we get this right.

THOMAS FRIEDMAN: Well, it-- it`s so important, because today, Gayle, even with the merger of globalization and the IT revolution, there is no decent job that doesn`t require more education. You know, I-- I was at San Francisco Airport last week.

GAYLE KING: Mm.

THOMAS FRIEDMAN: And at the premiere counter I`m a hundred-thousand-mile flyer--

GAYLE KING: Yeah.

THOMAS FRIEDMAN: --so I`m into premier counter. And-- this is the premier counter now. I had to check myself in using the machine there. I noticed there were just two United employees behind this long counter, okay?

GAYLE KING: Yeah.

THOMAS FRIEDMAN: Everyone else was checking themselves in--

GAYLE KING: Yes.

THOMAS FRIEDMAN: --and even the guy moving the bags was a contractor. He didn`t work for-- for United. So in other words, all those, you know, those jobs that were at that skill level, they`re gone now. You know you have two people there. And someone maybe is running those machines out there. That`s a good job--a higher level of skill, though, it`s going to take.

JEFF GLOR: Tom, I want to ask you quickly about Syria before--

THOMAS FRIEDMAN: Yeah. Please.

JEFF GLOR: --before you leave here, because the President mentioned chemical or biological weapons is a trip wire, are there other trip wires in your estimation,--

THOMAS FRIEDMAN: Yeah.

JEFF GLOR: --that would get the U.S. involved?

THOMAS FRIEDMAN: You know, I think that`s the big one, Jeff, because Syria has somewhere between thirty and forty sites where they were storing chemical weapons, and you see that country collapsing, you see order in that country collapsing. The people are asking most of all about that are the Israelis. They`re saying who`s got the chemical weapons? Who`s in charge, al Qaeda or one of their affiliates goes in there--what happens? We`re right next door.

JEFF GLOR: Does Israel strike Iran?

THOMAS FRIEDMAN: I-- I think it`s now a fifty-fifty proposition. I think we`re-- we`re really getting close, when reading the Israeli press to a big decision there.

GAYLE KING: All right. Thomas Friedman, thank you.

THOMAS FRIEDMAN: Pleasure. Thanks to you, guys.

GAYLE KING: May I mention your book?

THOMAS FRIEDMAN: You bet.

JEFF GLOR: It`s a fantastic read. Check it out if you get a chance.

GAYLE KING: The expanded paperback edition of That Used to Be Us is on sale now.

Now at seven forty-five it`s time for your local weather.

(LOCAL WEATHER BREAK)

GAYLE KING: Diana Nyad has been having more trouble this morning on her swim from Cuba to Florida. She`s been battling stormy weather, jellyfish, and hypothermia. We`ll show you how she`s doing when CBS THIS MORNING continues.

(ANNOUNCEMENTS)

GAYLE KING: Endurance swimmer Diana Nyad faced more difficult conditions on the fourth day of her marathon trip from Cuba to Florida, another storm slowed her down overnight, and there are conflicting reports at this hour on whether she just ended her attempt.

JEFF GLOR: She had hoped to celebrate her birthday tomorrow as the first person to complete that swim without a shark cage. Elaine Quijano is in Key Largo, Florida, this morning. Elaine, good morning to you. What are we hearing?

ELAINE QUIJANO (CBS News Correspondent; Key Largo, Florida): Good morning to you, Jeff and Gayle. Well, there are reports that Diana Nyad has been pulled from the water, but we`ve been unable to confirm that. Now, what I can tell you is that not too long ago, in fact, about fifteen minutes ago, CBS THIS MORNING did talk to members of Diana Nyad`s support team. And what they told us is that overnight, Diana Nyad did suffer some serious jellyfish stings. Now, this is on top of injuries that she received earlier in her swim when she also was what stung by jellyfish. What they said to us just a short time ago is that they are concerned certainly about her health, that that, in fact, was their top priority, and they were working to assess her health at that time. They also said that Diana Nyad made very clear she did not want to get out of the water. In fact, one person, a team member, said "she`s a tough, old bird," but Diana Nyad clearly wanted to continue this attempt. Now, Diana Nyad had tried this three times before. This, in fact, was her fourth attempt, and she had been on track to head to Key West. However, she suffered a series of setbacks, including a couple of storm squalls. Unclear right now what her status is. We`re working to gather more details. Gayle and Jeff.

GAYLE KING: All right. Elaine, thank you so much for the update.

Phyllis Diller said that she became a stand-up comic because she had a sit- down husband. We`ll remember the woman behind those snappy lines and those very crazy clothes on CBS THIS MORNING. We`re talking to Phyllis`s good friend, Joan Rivers, in the next hour.

(ANNOUNCEMENTS)

END

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