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YOUR MONEY

Interview with Wal-Mart's U.S. CEO; Gambling with America's Future

Aired November 2, 2013 - 09:30   ET

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


CHRISTINE ROMANS, CNN HOST: Gun violence, poverty level paychecks, makers versus takers, same-sex marriage -- some of the most divisive issues tearing at American's fabric, all have one thing in common, Wal-Mart.

I'm Christine Romans. This is YOUR MONEY.

The country's largest private employer is also its largest lightning rod sometimes. It's been that way for years. A 2005 documentary by Robert Greenwald shows the high cost of the low prices.

(BEGIN VIDEO CLIP)

STAN FORTUNE, FORMER DISTRICT MANAGER, WAL-MART: They don't care about what you sacrifice. It doesn't matter how many people lose their families. It doesn't matter if the associates have good health care. It doesn't matter anything other than what the bottom-line profit is for that store of that month.

(END VIDEO CLIP)

ROMANS: That was 2005.

Now, Wal-Mart executives don't do much talking. Why should they? The company is making hundreds of billions of dollars this year.

But this week, we did talk to Wal-Mart, the CEO of the company's U.S. operations, Bill Simon. He's talking. He's talking about thousands of new promotions for Wal-Mart workers and going public with this.

Now, the timing is notable. This year's total is about the same as last year's for overall promotions. So, why the fanfare now? Why sit down with us now? Is it to blunt the criticism that its workers are paid too little?

(BEGIN VIDEOTAPE)

BILL SIMON, PRES. & CEO, WAL-MART U.S.: That is an unfair criticism. We're very proud of the jobs that we offer as a company. At the beginning of the year I made a presentation at the National Retail Federation and described our plans this year for talking about and celebrating and defending our associates and our jobs.

We hear from them often and they ask us to stand up for them because they are good jobs. There's a chance for them to start and a chance for them to progress.

The vast majority of the people who work for us full-time make well over $25,000 a year.

REP. JAN SCHAKOWSKY (D), ILLINOIS: The welfare kings in this country are the Wal-Marts of the world who can only make it and only pay those low wages because the taxpayers are willing to foot the bill.

ROMANS: Are taxpayers in some locations actually subsidizing the part-time jobs of Wal-Mart associates?

SIMON: Yes, you know, the congresswoman has her perspective and it is -- it comes from an angle that is misinformed completely -- not completely, but in part by the groups that that are feeding her the information.

ROMANS: Like what, you mean the pro-union groups?

SIMON: Uh-huh. Our business is a very typical retail business. We pay above average wages for the retail industry and we provide incredible opportunity. You can plug into our company anywhere from 16 to 60, depending on where you are in a career.

And then -- and then advance. We are no different than any other retailer in America. We provide opportunities for people to join the company and to grow. The level of subsidy that exists is an issue that the -- that the, you know, the government decides.

ROMANS: The average retail wage is something like $12 an hour. You guys pay more than that on average?

SIMON: We do.

ROMANS: And there's an argument that some are saying maybe we need a 15 minimum wage. With almost $500 billion in sales and billions in profits, why not raise the wages? Then your employees will have more money to spend.

SIMON: The discussion around the starting wage, the minimum wage, is one that the country needs to have. But that's not the issue. The issue isn't where you start, it's where you go to once you've started.

ROMANS: The mobility.

SIMON: The mobility.

So, raising the minimum wage will change the starting wage, but it won't adjust where people can go to in their career opportunities that exist in the country today. And one of things we launched this year was to help address that. At our company, you have the opportunity to enter at whatever level your capability would suggest and you have the opportunity to advance. But that opportunity doesn't exist everywhere in the country.

PAM SIMON, FORMER AIDE TO REP. GIFFORDS: It's a family friendly store where you're buying a stroller and three aisles, away you can buy a military-style assault weapon. This doesn't belong.

ROMANS: December 14th will be the one-year anniversary of the Sandy Hook shooting. At the time I was very interested in how much these gun sales are affecting your bottom line. We know that in some stores you ran out of the AR-15 style weapon.

Do you have any regrets selling that wildly popular firearm?

SIMON: Of course, like every American we're concerned about the violence that exists in the country. We've been selling firearms and supporting weapons for a long time. We are very responsible in our sales of fires. It's something that we're focused on.

And the debate in the country about whether they should be legal or not legal, that's not one that we get to participate in on a day-to- day basis. That's an issue that Congress has to deal with.

But I would tell you that if they're sold in the U.S., we want them sold through formal channels rather than through a gun show. So, you know, as we evaluated everything, the decision to exit those wasn't one we could take because without changing the demand for them, and the demand was very high, our society wants them sold through formal channels where in our business, for example, we videotape every transaction. We cooperate with the police. We signed on to the mayor's task force. We don't sell them online. We don sell handguns.

So, if firearms are going to be available, we as a society should want them sold through responsible documented channels. That's what we provide.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: This isn't some damn game.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I've read that modern day anarchist in the House have been celebrating in the shutdown.

REP. ERIC CANTOR (R-VA), MAJORITY LEADER: The Democrats are voting against the Republicans.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: It's pathetic.

ROMANS: Can you imagine anybody running a business the way we're running our business?

SIMON: I wouldn't think so. It's surprising. And it's time for them to sit down and both sides to compromise and get this thing solved. A certainty from a perspective will generate -- will generate confidence and certainty from a business perspective will generate investment. In both cases, uncertainty generates a lot of shoulder shrugging and waiting. And it's time for them to decide.

(END VIDEOTAPE)

ROMANS: It is time for them to decide. Some certainty is definitely, definitely needed here. All right. Speaking of Washington's dysfunction here, your political leaders playing a dangerous game, gambling with the future of all Americans. In the words of Kenny Rogers, does Congress know when the deal is done?

Poker champion Annie Duke holding the winning hand to end the stalemate. She's going to reveal to me her cards, right here, next.

(COMMERCIAL BREAK)

ROMANS: Washington is back at the negotiation table, working on a budget. The cards are dealt, the chips are down. So, should we be betting on a deal?

When comes to gambling, Kenny Rogers had it right.

(MUSIC)

ROMANS: So what kind of hand is Congress playing?

I want to bring in Annie Duke. Annie is a former professional poker player and author of "Annie Duke: How I Raised, Folded, Bluffed, Flirted, Cursed, and One Million".

Welcome to the program.

So, you won the world series of poker back in 2004. You know, the president -- I mean, he held the most chips during the recent negotiations. And it seems like Republicans were bluffing really. So, when you've got a great hand, a great hand, what's your strategy?

ANNIE DUKE, FORMER PROFESSIONAL POKER PLAYER: Well, when you've got a great hand, what you do is you let people come to you, because you're bargaining from a position of strength. So you can really stand your ground and allow people to make mistakes against you.

I think that what's interesting here is that the best hand really came from the fact that the polls said people were favoring the Democrats. And that's what gave him the best hand. And it forces people to move towards you when you're holding the best hand at the table.

ROMANS: You know, we watched the Tea Party holding out on raising the debt ceiling. When you're not holding the winning hand, how do you know when to fold?

DUKE: Well, that comes from reading your opponents and figuring out that if you don't fold, you're going to lose all of your chips.

You know, I think that the interesting thing here is that really you saw the compromise come from the Senate, which isn't that surprising. Because in terms of who you're trying to please, because senators are elected from whole states, they have to come to a more middle ground, so the issue is that you have this -- the Tea Party is basically what you call moving all in.

So sometimes you play against players who are just -- they just want to move all their chips in every single time. Then you have to make a choice, do you just fold because you're scared of losing all of your chips in the short run, or do you call, which would be good in the long-run but might make you lose all your chips in the short run, to stop them from moving all in on you.

So holding the debt ceiling over the negotiation is kind of like moving all your chips in. So, you know, in some sense the Democrats sort of called that and said, we're calling. At which point there was a back off on that issue and the compromise --

ROMANS: Fascinating, fascinating.

Of course, in this particular game of poker, the winners and losers are the people, not necessarily the players sometimes.

DUKE: Yes.

ROMANS: So, that starts to get so tricky.

Annie Duke, so nice to meet you. Thanks for stopping by.

DUKE: Yes.

ROMANS: For more stories that matter to your money this morning, give me 60 seconds on the clock. It's "Money Time".

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Seventeen billion dollars. That's how much the government has collected this year from banks behaving bad live. And that doesn't even include JPMorgan's $8 billion tentative settlement with the Justice Department.

Fifty-seven million Social Security recipients will get a 1.5 percent raise next year, the smallest cost of living adjustment in years. It averages about $19 a month.

Apple sold nearly 34 million iPhones last quarter. But still profit fell as iPad sales were flat and Mac sales flipped.

The fastest growing segment of the mobile device market is still in diapers. A new student finds that 38 percent of children under age two are watching shows and using apps on smartphones and tablets. That's up from just 10 percent two years ago.

In May, "Consumer Reports" called the Tesla Model S the best car it ever tested but wouldn't recommend until now. The magazine claims it has enough reliability data to finally grant its blessing.

The best selling car in American, the Toyota Camry, lost its recommendation after the car's performance in a recent crash test.

Morgan Stanley says there's a global wine shortage. Demand is rising worldwide. At the very same time, bad weather hurts production.

(END VIDEOTAPE) ROMANS: All right. Coming up, when Twitter goes public, the cofounder and billionaire Jack Dorsey will get nearly $500 million richer. You won't.

I'm going to give you three reasons you feel good about getting shut out of this year's most hyped IPO.

(COMMERCIAL BREAK)

ROMANS: President Obama could certainly use some tech support. Administration officials spent another week apologizing for the botched rollout of Healthcare.gov. Then a hack attack directed at President Obama's Twitter feed. Users who clicked on links from the president's account were redirected to a pro-Syrian government video, the hacker group Syrian electronic army claiming credit.

And from the politics to the personal, you maybe headed for a breakup and not even know it. Facebook would know it, though, right? Researchers say Facebook can map a user's social network and that algorithm can identify a relationship in trouble.

As for Facebook's relationship status with investors, it's complicated. The company stock surged after it announced nearly half of its ad revenue came from mobile users but it fell again after Facebook's financial officer revealed young teens are not using the site as much as they used to. That admission comes just a few months came after Facebook CEO Mark Zuckerberg defended the company against accusation teens just don't find it cool anymore.

Well, you're parents are on it. That'd be cool, right?

OK. What's cool? A billion dollars. That's how much twitter co- founder Ed Williams could make when Twitter goes public. A fellow co- founder Jack Dorsey, $469 million. Modest sum. Current CEO, Dick Costolo, $154 million. That's a lot of money.

You, not so much. You've heard me say it before. Sometimes it feels like the deck is stacked against ordinary investors, and usually it is.

Twitter says it's shares will debut between $17 and $27 a share. But you probably will not be able to buy them at that price. Why can't you get them at that price? Because most tech IPOs only about 20 percent of the shares go to ordinary investors, the rest go to the employees and institutions backing the company, the investment banks.

And sometimes, it pays to wait. Let's look at three recent social offerings.

I want to start first at Facebook. The biggest IPO ever quickly became one of the biggest flops. The stock debuted at $38 a share. But three months later, you could get it for half that price. They're all the way down to $17.

It trades for three times the low now. It's all the way back here in the $50 zone now. LinkedIn had a smoother first day. The company priced at $45 a share right here. Take a look at this. It opened at $83, popped up there nicely, but fell to below $60 several months later. Today, it's trading above the $200 share. It paid to wait on that one, too.

And early investors and coupon site Groupon got a discount they didn't want. The stock debut at $20 a share and promptly fell to the single digits, $2.60 by November.

That's why American's most famous investor says he never buys the IPO hype.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, CEO, BERKSHIRE-HATHAWAY: The idea that something coming out on a Monday that's being offered with significant commissions, all kinds of publicity and everything, the seller electing the time to sell is going to be the best single investment that I can make in the world among thousands of sources, that's mathematically impossible. So, we are not a buyer o issue.

(END VIDEO CLIP)

ROMANS: So, you might not make any money off the IPO, but Jack Dorsey certainly will.

Here's a look at the business of being the creator of the tweet.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): He is the man behind the tweet, changing the world 140 characters at a time.

But there is a lot more to the business of being billionaire Jack Dorsey. Born in St. Louis, Dorsey taught himself to program when he was a teenager, and like many great tech moguls, he dropped out of college and headed to San Francisco to join the start-up world. Dorsey teamed up with Evan Williams and Biz Stone, and Twitter was born.

In March 2006, Dorsey wrote the first tweet.

JACK DORSEY, FOUNDER: We loved it, and we kept building it, because we wanted to see other people use it.

ROMANS: A self-described loner, he mate the world a lot more connected.

DORSEY: It's definitely humbling.

ROMANS: He's been compared to Steve Jobs.

STEVE JOBS, APPLE CO-FOUNDER: We are calling it iPhone.

ROMANS: And like Jobs, he was booted from the company he helped found back in 2008. But don't feel too bad for Dorsey. He launched another successful start-up, Square.

DORSEY: Twitter is focused around communication. This is around commerce. I think they're both fundamental to humanity.

ROMANS: Square lets any business accept credit cards through a square card reader that attached to smartphones. Revolutionary for small businesses.

DORSEY: We have positive impact to the whole economy. It will go into the international economy (ph).

ROMANS: Today, he juggles two blooming brands. He returned to Twitter in 2011. He stands to make $469 million from his 5 percent stake in Twitter when it goes public.

As for Square, it processes $15 billion a transaction each year from your local coffee shops, all the way to Starbucks. Valued at more than $5 billion, Dorsey owns about a third of it.

He's also got has his hands in video streaming service, UStream and Fancy, a social media based online store. And he invested early in the start-up, like Instagram, Kickstarter and Foursquare. All together, Dorsey is worth an estimated $1.3 billion.

But his dream job: following in the footsteps of another billionaire turned mayor of New York City.

DORSEY: Desire to be mayor is more aspirational, kind of raising the bar.

ROMANS: Clearly, @jack is not done yet.

(END VIDEOTAPE)

ROMANS: All right. Coming up, the NBA's biggest star is becoming a big global brand.

(BEGIN VIDEO CLIP)

LEBRON JAMES, NBA PLAYER: I became a professional athlete, I became a businessman, as well. So I couldn't just worry about the game of basketball 24/7 without understanding the business side of it.

(END VIDEO CLIP)

ROMANS: CNN's Rachel Nichols one-on-ne with LeBron James, talking business, China, and chopsticks. You do not want to miss this. It's next.

(COMMERCIAL BREAK)

ROMANS: They call him King James for a reason. Here's the score, Miami Heat forward LeBron James is one of the most dominating athletes of all time. He's now won back-to-back basketball championship, four league MVP trophies, he's just, what, 28?

What he's doing off the court is also impressive. This year, LeBron jumped ahead of Kobe Bryant as the highest earner in professional basketball, at more than $56 million. Wow! That's according to "Sports Illustrated's" rankings.

CNN's Rachel Nichols is the host of "UNGUARDED" every Friday night at 10:30 p.m.

Nice to see you.

RACHEL NICHOLS, HOST, CNN'S "UNGUARDED": Thank you so much. I like being here. It's great stuff here. I'm into the desk.

ROMANS: Money and sports, sports and money, we love it.

NICHOLS: They go together, my friend.

ROMANS: Tell me about LeBron.

NICHOLS: Well, on your show, you report all the time is imports from China, but I spoke to LeBron James about brands he's exporting, sponsorship deals with Nike and Coca-Cola and Samsung. He's also building the global brand he calls LBJ. And as all things LeBron, this one is scoring big.

(BEGIN VIDEOTAPE)

(CHANTS)

CROWD: LBJ! LBJ! LBJ!

NICHOLS (voice-over): For one week a year, every year, for nearly a decade, this is LeBron James.

UNIDENTIFIED MALE: All of the fans over here, what do you think about --

JAMES: Oh, this is crazy.

When I first came here nine years ago, I was, like, wow.

RACHELS (on camera): If I told 10-year-old LeBron James you'd end up going to China more often than a place closer to Ohio, like Nebraska or Kansas, what would you have thought?

JAMES: He'd probably told you, I'm not leaving Akron, Ohio. I remember first time when I was known outside of my hometown, when I was 14.

I was a freshman. We went to Columbus for a state tournament. Oh, that's LeBron. That's the freshman everyone is talking about. I'm 120 miles away from home, I was, like, wow, this is pretty cool.

A thousand miles away from home, you know, and for people to love me and passion about seeing me is -- it's very surreal. UNIDENTIFIED MALE: LeBron James!

(CHEERS AND APPLAUSE)

NICHOLS (voice-over): James is one of the richest and most famous athletes on the planet. But being a global phenomenon doesn't just happen by itself.

JAMES: When I became a professional athlete, I became a businessman, as well. You know, so I couldn't just worry about the game of basketball 24/7 without understanding the business side of it.

NICHOLS (on camera): How adventuress are you when you travel? In terms of trying weird food --

JAMES: I'm not adventurous at all. I'm not. I'm not. I've never been. I do use chopsticks, though.

UNIDENTIFIED MALE: Any more fried rice over there?

JAMES: I use chopsticks.

(END VIDEOTAPE)

NICHOLS: What I loved about this is we got those crazy public moments with all of those scene, tens of thousands of people in the street. And then we had all access exclusive with him, so we had private moment, too.

And a lot of times he was just a dad away on a business trip, like a lot of your viewers, I'm sure. Anyone who has carted over to China, and there he is, calling his house at the wrong time, because he forgets the time difference. He annoys his wife because the phone rings at 2:00 in the morning. So that juxtaposition was so much fun to see.

And I will tell you, a victory after that trip, the whole point is to sell the brand LBJ. Not long after he got back, NBA announced for the first time ever, he is number one in global jersey sales.

ROMANS: Unbelievable, just another dad on a business trip with $54 million a year and leader in global jersey sales. Thanks.

You can see more of Rachel's interviews with the biggest name in sports every Friday night. It's called "UNGUARDED", 10:30 p.m. Eastern, right here on CNN, on Fridays.

All right. Coming up next on "CNN NEWSROOM," live coverage of the Boston Red Sox victory parade, celebrating not just the comeback of this team, but the resilience of a city, just six months after the devastating Boston bombings. Don't miss that. That's next hour on "CNN NEWSROOM".

(MUSIC)