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Korea Air CEO Testifies In Air Rage Trial; Can Marissa Mayer Turn around YAHOO?; Kurdish Peshmerga Announce They've Retaking Strategic Hotel In Kirkuk; Silicon Valley and Psychedelics

Aired January 30, 2015 - 08:00   ET

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

KRISTIE LU STOUT, HOST: I'm Kristie Lu Stout in Hong Kong. And welcome to News Stream where news and technology meet.

Now a deadline passes for two hostages held by ISIS, but still no word about the status of a Jordanian pilot and a Japanese journalist.

The CEO of Korean Air takes a stand in his daughter's trial after she abused a flight attendant for the way she served nuts.

And we'll get an expert view on how Marissa Mayer is doing as she tries to make YAHOO! relevant again.

And we begin this hour with uncertainty over the fate of two hostages held by ISIS. Now the sunset Thursday deadline set by the militant group

has long come and gone.

Now ISIS had demanded that Jordan release convicted terrorist Sajida al-Rishawi by then or said it would kill a Jordanian pilot it is holding

captive.

Now his family is urging the Jordanian government to act to save him. And there have been rallies in Tokyo to support Japanese hostage Kenji

Goto.

Now Goto went to Syria last year to look for his friend Haruna Yukawa who had been captured by the terrorist group.

Now ISIS reportedly killed Yukawa last week.

And Goto's wife made an emotional appeal for his safe return.

(BEGIN VIDEO CLIP)

RINKO GOTO, WIFE OF KENJI GOTO: My husband and I have two very young daughters. Our baby girl was three weeks only when Kenji left. I hope our

oldest daughter, who is just two, will get to see her father again.

I want them both to grow up knowing their father.

My husband is a good and honest man who went to Syria to show the plight of those who suffer. I believe that Kenji may have also been trying

to find out about Haruna Yukawa's situation.

I was extremely saddened by the death of Haruna. And my thoughts go out to his family.

I know all too well what they are going through.

(END VIDEO CLIP)

LU STOUT: Now a friend of Goto says the Japanese journalist knew what he was doing when he made the decision to travel to Syria. And he spoke to

CNN earlier today.

(BEGIN VIDEO CILP)

MARK TCHELISTCHEFF, FRIEND OF KENJI GOTO: Kenji, he was a seasoned reporter. You know, he spent time in Afghanistan, Kosovo, you know, Sierra

Leone, Afghanistan and he knew what he was doing. He was not also someone who was just going in, you know, without the knowledge. And he made that

video, I'm sure, because he didn't want all of the major TV networks that he works with in Japan to take any responsibility for his actions.

At the same time, he felt that being Japanese and having been captured before and that go before that they -- that he would be safe, although he

knew the dangers, he had a feeling that he could actually get in there and cover the story, help his friend and speak about the humanitarian

interests.

He always was about the humanitarian interests, and especially children, you know. He was always covering the people on the street. He

was never embedded with any army. And he thought because of his work prior to that, always showing the plight of the people in war zones, that he

would be OK.

(END VIDEO CLIP0

LU STOUT: A friend of Kenji Goto speaking there.

Now meanwhile in Iraq, ISIS, the situation around the oil-rich city of Kirkuk. There are ongoing clashes there. In fact, sources tell CNN that

Peshmerga troops are fighting back with the help of reinforcement from Kurdistan.

Meanwhile, Peshmerga forces have recaptured a hotel inside Kirkuk. Now the building had been used as a police headquarters and it was stormed

by ISIS.

Now for the latest, CNN international correspondent Fred Pleitgen joins us now. He has been following developments from our bureau in

London. And Fred, heavy clashes in and around Kirkuk. What's the latest you're hearing?

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Well, you're absolutely right, Kristie. And it seems to be there are two fronts to all

this. On the one hand, there is that former hotel in Kirkuk that you just showed, which is now you being used as a police headquarters. And there

were some amazingly heavy clashes there. We saw some video from there with some very heavy gunfire going on.

Apparently what happened there is that several militants blew their way into that place using suicide bombers and a car bomb to get into the

place, laid siege to the place inside, went inside, occupied it, even put snipers on the roof of the building and then later Kurdish forces

surrounded that building, special forces moved inside and took it back. It was however an operation that lasted for several hours.

At the same time, and you touched on this as well, there seems to be an assault by ISIS on the western and southwestern outskirts of Kirkuk, of

that very important place. It appears as though ISIS took some territory there. The latest that we have is that several Kurdish fighters were

killed.

And also, within all of this, one very high ranking Kurdish general was killed as well. In fact, someone who is very, very well known there.

And this is someone who has talked to CNN in the past. And so certainly that is a significant blow to the Kurds.

So what we have right now is a situation where the fighting on that southwestern front goes on. It appears as though -- this is what the Kurds

say -- they do have that building back in central Kirkuk. But this certainly is a very, very significant battle because of the significance of

the city -- Kristie.

LU STOUT: Now the clashes in and around Kirkuk, they come after ISIS was driven out of Kobani in Syria. So what is known about the overall

fighting strength of ISIS today?

PLEITGEN: It's a very good question. And there certainly are people who are saying taht perhaps ISIS is trying to open up this new front and

trying to do these very high profile attacks like the one that we just saw on that police headquarters, on that former hotel, because they are losing

in other places on the battlefield.

There is Kobani, which was of course a very heavy blow to ISIS. There are many people who are saying that it's ISIS's Stalingrad. It's a place

that didn't really have very much strategic significance to them, but where they wanted to make a stand and essentially they lost.

The other thing that really worries ISIS, many people say, is the fact that the Kurdish forces are moving closer and closer to its other main

stronghold, which is Mosul and Iraq. And apparently the Kurds have reached the outskirts of Mosul. They've launched some rockets into Mosul as well.

And so there are some who believe that perhaps the attack that we saw today, the one on Kirkuk, might be an effort to divert those Kurdish forces

and stop them from launching an all-out assault on ISIS's real stronghold in that area, which is the city of Mosul.

So, it seems as though ISIS is on the defensive at this point in time, but as we saw today. They still are very much capable of launching some

very, very strong attacks on places, Kristie.

LU STOUT: All right, CNN's Fred Pleitgen reporting. Thank you.

Now staying in the Middle East. The leader of the militant group Hezbollah is speaking out after recent violence saw two Israeli soldiers

and a UN peacekeeper killed.

Now Hassan Nasrallah will be making a statement in Beirut live this hour.

Now the Hezbollah attack on Wednesday it was in retaliation for an Israeli attack on Syrian territory that killed Hezbollah fighters. Now

Israel responded with shelling in southern Lebanon.

Now on Thursday, Israel said it learned that Hezbollah wanted to deescalate hostilities on the Israeli-Lebanese border.

Now for more on the situation, let's go straight to Nima Elbagir in Beirut. She joins us now. And Nima, will we hear a message of

deescalation from Hassan Nasrallah when he speaks?

NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: Well, at the moment, Kristie, what we're seeing is that the event where he is due to speak is

being billed as the festivities to honor those killed in that attack in the Syrian Golan. So there will, of course, be a lot of pomp around Hezbollah

being seen to have retaliated for that Grenata (ph) attack and to have taken their revenge, so to speak.

The expectation given the message that the Israeli defense minister spoke about yesterday, a message that he says they received from Hezbollah

through the UN peacekeeping force here in Lebanon was one he described as a message of restraint, a message of deescalation. So of course that is the

expectation that people are going into this with.

But there has always been very, very difficult to preview what Hassan Nasrallah can and will say. The hope is that given that it will have been

seen to have at least have retaliated that Hezbollah could see this potentially as a turning back point, Kristie.

LU STOUT: If it is indeed true that Hezbollah sent this message. It's apparently seeking a deescalation in hostilities and tension with

Israel -- why? Why is it sending this message?

ELBAGIR: Well, at this point in time the question always is whenever you see these kind of tit-for-tat spate of attacks, this -- you know, that

2006 war, the damage it wrought both in Lebanon and across the border into Israel. That still looms very large for so many people here.

So the question is always are you prepared to escalate it all the way? Are both sides prepared to go back to that difficult, difficult time? And

it is always with one eye to that. And it seems at least for now with two weeks to the Israeli elections -- that you must remember, Kristie, the ball

is very much in Israel's court. They're the ones who lost those soldiers on Wednesday.

If the fact that Israel chose to go public with this message of deescalation, that in itself speaks volumes about at least a willingness to

take this down, to scale back on the tensions here.

LU STOUT: All right. CNN's Nima Elbagir, live in Beirut for us. Thank you, Nima.

Now fighting, meanwhile, in Ukraine, is escalating. Shelling is being reported there close to at the center of the city of Donetsk already in

ruins after months of battle between Ukraine government forces and separatist rebels.

And for the very latest, let's go straight to Nick Paton Walsh in Donetsk. And Nick, you have witnessed the grim aftermath of shelling.

What did you see?

NICK PATON WALSH, CNN INTERNATIONA CORRESPONDENT: Well, we've heard the booms -- you may hear them behind me while I'm talking in Donetsk for

the days that we've been here -- but today they certainly seem to have landed significantly closer to the city center proper.

Now, one particular place near the grand hotels, or the Hotel Europe here near the city center, there is a point where one of the local

billionaires, Ukrainian owners (inaudible), his staff or organization hand out food aid.

Now a shell struck very close to a queue there it seems. And I counted five dead bodies on the ground under sheets, one man in fact still

sat in the seat of his car there. And such great anger and fury obviously in the area around there.

The question, of course, now resounds, who did this? Who fired those shells? Well, of course both sides historically blame the other for

civilian casualties. It is of course hard to see from the separatist point of view why they would shell their own people. And of course the Ukrainian

army would say they don't aim to hit civilians.

But in past circumstances here, we have seen shells land and lives lost near military objectives. Not quite clear what happened, what the

motivation may have been for hitting this area.

We went to a second scene, too, where one of the trolley bus trams that travel around the city was also hit by shelling. Unclear how many

died there, although city officials here close, of course, working under the separatist rule here and the self-declared Donetsk People's Republic.

They say 12 civilians have lost their lives across the city. We can't, of course, independently confirm that. We think we've seen seven dead bodies

so far today.

But this fits a broader pattern, really, of shelling hitting civilian areas. It has in the past been towards the city outskirts. Today, it

seems to be heading perilously closer to what can only mistakenly be civilian populated areas -- Kristie.

LU STOUT: And Nick, given such heavy shelling, how many civilians have decided to flee and to leave Donetsk?

WALSH: Well, this was a city of a million. It's certainly not that now. And it's hard to tell who really does still live there.

We see some apartment blocs where there are three people living in the basement, the rest have all fled because of the shelling. Other areas seem

busier at times.

The question really is where can they go to, really? We're seeing an increased move by the Ukrainian government to make it very hard for people

to leave separatist held areas, or come back in them. We as journalists can cross those lines, but ordinary civilians have to wait over 10 days to

see if they can get a pass.

All this, though, this intensification of violence around Donetsk is happening, there's a raging battle going for a town to the northeast called

Debalziva (ph) and separatist ambitions now more open towards the southern port city of Mariupol, and as the same time today we're supposed to be

seeing in the Belarus capital of Minsk a continuation of peace talks between the two sides here.

Now their fate, of course, will be imperiled by the bloodshed we've seen here today. And that will, of course, lead to great acrimony amongst

both sides, really, from accusations surely.

But they are vital to try and return to the ceasefire other politicians thought they had agreed months ago. That was really only in

name, frankly.

But I should point out, Kristie, the violence we're seeing here is escalating remarkably. This city is militarized like I've never seen it

before. It's hollowed out of its normal population. And there is a real sense here of purpose and confidence amongst the separatists despite this

really tragic and continuing death toll amongst civilians in the city here, Kristie.

LU STOUT: And the violence certainly complicates those ceasefire talks underway in Minsk as you mentioned.

Nick Paton Walsh reporting live for us from Donetsk. Thank you.

Now you're watching News Stream. Still to come on the program, a former rap mogul is in police custody in Los Angeles after being accused in

a fatal hit and run accident.

And the CEO of Korean Air speaks out about his company's work culture and his daughter's so-called nut rage.

(COMMERCIAL BREAK)

LU STOUT: Now to the U.S. now where the former Rap mogul Marion "Suge" Knight has been arrested on suspicion of murder in connection with

the fatal hit and run.

Now L.A. police say a man matching Knight's description drove his pick-up truck over two men. They say the suspect then drove over the

victims a second time before speeding away. One of the victims died. And the condition of the other man is not known.

Knight founded Death Row records back in 1991 signing major talent including Tupac Shakur and Snoop Dogg.

Now the label went bankrupt after Knight ran into a series of legal troubles which included jail time.

Now what's come to be known as the nut rage trial is turning out to be an examination of corporate culture.

Now the CEO of Korean Air took the stand to testify about his company. His daughter, a former executive, has been charged with violating aviation

safety law and hindering a government investigation.

Now she made headlines after flying in to an onboard rage for being served macadamia nuts in a bag instead of on a plate.

Now prosecutors say that this case is about more than just bad behavior. And they're calling into question the dynamics of power.

Now CNN's Paula Hancocks joins us now live from Seoul. And Paula, before we get into that angle, Heather Cho's father, the CEO of Korean Air,

he testified today. What did he say?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Kristie, first of all he said that he had scolded his daughter for her behavior, said that

she should have been able to control her emotions, should not have disciplined this employee. Remember, she did order the plane back to the

gate as it was taxiing and ordered the chief steward off the flight.

And also he said that he wanted to try and change the corporate culture within Korean Air. HE apologized once again for what had happened.

Interestingly, we also heard earlier in the day from the flight attendant, the female flight attendant that actually served the nuts to

Heather Cho. Now she was saying that once Ms. Cho became very angry, she started shouting at her. She alleges that she pushed her and ordered her

off the plane as well, although she didn't get off the plane.

And she also said that once she was back in Seoul, Korean Air manager actually came to see her and suggested to her quite strongly that she

should not talk about the verbal or the physical abuse when giving her official statement.

So this is something that prosecutors really want to get to the bottom of. They believe that there may well have been an attempt at a coverup.

This is what they were asking about on -- today at court.

Now the Korean Air chairman himself did not actually address this with his testimony, but certainly it's something prosecutors want to nail down -

- Kristie.

LU STOUT: And Paula, how has the trial sparked a wider debate there in South Korea about corporate power, about nepotism and privilege?

HANCOCKS: Yes, there were very few companies, very large companies, very rich companies, that are family run. Here they're called Chebals

(ph), the likes of Samsung, Hyundai, Korean Air. And certainly there has been some resentment towards these companies among the general public in

recent years.

These are companies which have really fueled the growth and the economic miracle in South Korea. So they have grown in stature and in

power, but of course this particular case has caused a lot of resentment and a lot of anger among the general public.

Some people on the streets I spoke to questioned why this woman believed it was her own personal jet, others saying they believe that there

should be legal punishment for this kind of behavior.

And certainly there was a lot of anger, and also ridicule when you look online about what she has done the fact that Heather Cho lost her

temper so badly over a bag of nuts -- Kristie.

LU STOUT: Paula Hancocks reporting live from Seoul. I know we'll speak again soon on the trial. Thank you.

Now you're watching News Stream. Still to come on the program, Hong Kong's Occupy Movement, it lives on in a most unusual way. Keep it here.

(COMMERCIAL BREAK)

LU STOUT: Coming to you live from Hong Kong, you're back watching News Stream.

Now the barricades have come down and the tents are long gone, but Hong Kong's Occupy movement lives on. An enterprising activist has opened

the Occupy Hotel, it's a living shrine to the protests that shook Hong Kong last year. Andrew Stevens takes a look.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: It was just a few short weeks ago that the road behind me here in Causeway Bay, one of Hong

Kong's busiest shopping districts, was a mass of tents of the Occupy Movement.

You'll remember the scene, tens of thousands of mainly students demonstrating for their right for more democracy in this city.

Well, the Occupy movement is now over, but it lives on at least in spirit on the 13th floor of this building. It's an Occupy hotel. And for

a few bucks you can experience at least a little bit of what it was like.

That means sleeping indoors in a tent, surrounded by some of the umbrellas that defined this movement, plus Occupy paraphernalia collected

by Stephen Thompson before the protest sites were demolished in December.

STEPHEN THOMPSON, MANAGER, OCCUPY HOTEL: I would just like to keep alive the spirit of the Hong Kong democracy movement going a bit longer and

some inform people and in particular young travelers from around the world about our fight for democracy here in Hong Kong.

STEVENS: That fight lasted more than two months. And these tents became a symbol of the demonstrator's commitment to their cause.

Now they take up most of Stephen's small two bedroom, 600 square foot, that's 55 square meter flat. He says people come from all over the world -

- the U.S., the UK, even Mainland China, to stay, drawn by a feeling of solidarity with Hong Kong protesters, not to mention a very attractive

price in a very expensive city.

$13 dollars a night will get you, well, some of the basic creature comforts you'd expect from a hotel. And there's no shortage of political

statements. Hong Kong chief executive CY Leung featuring in the toilet.

NICHOLAS WATMOUGH, GUEST: It was definitely something worth seeing. And I know that it's also beyond just being a hotel, it's an exhibition

space. I would have been king to meet with Stephen and just explore this stuff even if it wasn't a place to stay.

STEVENS: With Hong Kong's sky-high rent, Stephen says he's just about breaking even. But he'll still turn guests away if he thinks they're not

interested enough in Occupy. It's high way of keeping interest in the movement alive even as its future becomes less clear.

Andrew Stevens, CNN, Hong Kong.

(END VIDEOTAPE)

LU STOUT: Coming up right here on News Stream, YAHOO! in transition. We look at the company's plans to spin off Ali Baba and what it could mean

for its CEO.

And Silicon Valley, the place where technology and innovation are part of daily life. And ahead, how some of its innovators are turning to

psychedelic drugs to come up with that next great idea.

(COMMERCIAL BREAK)

LU STOUT: I'm Kristie Lu Stout in Hong Kong. You're watching News Stream. And these are your world headlines.

Now fighting in Ukraine is escalating. Shelling is reported close to the center of the city of Donetsk already in ruins after months of battle

between Ukrainian government forces and separatist rebels.

Now Kurdish Peshmerga forces in Iraq have recaptured a hotel from ISIS in the city of Kirkuk. Now the building had been use as police

headquarters. Meanwhile, ISIS is still holding onto an area southwest of the city. Now the highest ranking operational commander of the Kurdish

brigade has been killed.

Jordan says it is still holding a female prisoner despite an ISIS ultimatum to release her by sunset on Thursday. Now the fate of two

hostages held by the terror group is unknown. ISIS have threatened to kill a Jordanian pilot if the prisoner was not released by the deadline. ISIS

has also threatened the life of Japanese journalist Kenji Goto.

Now the chairman of Korean Air has testified in what's known as the nut rage trial. Now his daughter made headlines when she forced one of the

company's planes to return to the gate after being served nuts in a bag instead of on the plate. Now she has been charged with violating aviation

safety law and hindering a government investigation.

Now buried under the flurry of tech earnings announcements this week YAHOO's results. And they weren't anything to really brag about.

Quarterly revenue and profits are both lower than in the same quarter the year before. But still there are many who are looking to see if CEO

Marissa Mayer can turn things around.

Now since taking the helm in 2012, Mayer has pushed forward a number of media related initiatives, that includes creating original news content.

But investors, they seem more excited about another of Mayer's initiatives, spinning of YAHOO's stake in Ali Baba, the Chinese online retail giant.

Now for an indepth discussion on the future of YAHOO, Nicholas Carlson joins me now.

Now he is the chief correspondent of Business Insider. He's also the author of the book "Marissa Mayer and the Fight to Save YAHOO." And he

joins us now live from New York.

Thank you so much for joining us.

You know, once the spinoff of Ali Baba is complete, which really captured all the headlines this week, Marissa Mayer is going to be in

charge of a much, much smaller company. Could that actually be a good thing?

NICHOLAS CARLSON, BUSINESS INSIDER: It definitely could be. I mean, what it'll mean is that the bar for growth for YAHOO will be much lower.

Really, what she'll need to do is prove that YAHOO is as sustainable a company as old brands like Microsoft or AOL. Right now, Wall Street is

valuing YAHOO at negative $7 billion approximately. And that's just such a low number that it's not that hard to improve it.

LU STOUT: You know, Marrisa Mayer has so much to prove, but can she do it? Can she get the core growing again at YAHOO whether it's search or

mobile ads. Does she have the vision, does she have the leadership to do it?

CARLSON: Well, the final third of my book is about this unprecedented opportunity Mayer had where people who were investing in YAHOO weren't

really looking at YAHOO's core business for her first two years, it was a rare opportunity for a turnaround CEO.

And what she hoped to be able to do is prove that her plan for the future was so great that when YAHOO finally did need to spinoff its Ali

Baba shares, or actually sell you know some of its Ali Baba stock, what it would be able to do is take that money and invest it in her plan.

But what happens in the book is that she proves that to shareholders that she -- her plan isn't that great. And they say to her you know what

just give us the money back. And that's what we're seeing happen now.

So, Mayer is having to take this brilliant investment, the proceeds from this brilliant investment in 2005 that YAHOO made and just give them

back to shareholders instead of getting to invest it in her plans for the future.

LU STOUT: But what is her plan? What is she going to do next? I mean, we've seen the last couple of years that Marissa Mayer has been a

serial acquirer. She's acquired some 40 companies in just a couple of years. Will she continue to buy and look for new assets, or is that phase

over?

CARLSON: Right. So, during -- you know, when they thought they were going to have this money from Ali Baba to spend, they thought OK we're

going to have billions of dollars and we're going to out and do some big things. All right, we're going to buy you know all the YouTube stars and

pay them to come to Tumblr. Are we going to go out and buy a cable network. And that -- all those ambitions have been really scaled back.

And so now, you know, what YAHOO needs to do is -- it's -- you know, she talked about it. She wants to go out and buy apps. But you know it's

very difficult to go out and buy apps these days when companies like WhatsApp sell to Facebook for $15 billion. YAHOO just doesn't have that

kind of cash on hand.

LU STOUT: Now YAHOO was once considered the pioneer of Silicon Valley. And now it's become kind of uncool. I mean, some people are

saying it's on its way to becoming today's Ask.com. I mean, what's your thoughts about YAHOO? Is YAHOO cooler than that, or YAHOO really needs to

stand out, especially among the tech giants of today?

CARLSON: Right. So, in reporting for this book what I learned was that back in the late 90s, early 2000s, YAHOO was the internet in many

ways. The internet was a wild and scary place and YAHOO solved a problem. It made it all very consumer friendly. And it solved this problem for

about two to three years. And then all of a sudden consumers realized that they could trust other brands. They could go out and they could go use you

know thousands of other websites. And then they could use thousands of other apps.

And now YAHOO doesn't uniquely solve any problem better than anybody else does. And it's this situation where if YAHOO went away tomorrow, you

know, some people would be annoyed, because they'd have to switch their webmail, but the world wouldn't really miss it in the way they would miss

Facebook or Google or even Ali Baba if they went away tomorrow.

LU STOUT: Now, a turnaround plan for YAHOO. Marissa Mayer, she was hired with much fanfare back in the day to do just that. Do you think

there will be a YAHOO turnaround? And will it happen under Marissa Mayer?

CARLSON: So, it's going to be very difficult. I think that Marissa Mayer herself is on a long trajectory upward. She's a brilliant person,

very creative, and you know, I wrote the book because she's so fascinating.

But I think YAHOO is in a much more troubled situation.

Listen, it still throws off nearly a billion dollars in profit every year. So from a capitalistic standpoint, someone is going to find it to be

a valuable asset to hold for the very long term. But do big companies really ever come up with the new app that everyone wants to use? It

doesn't happen very often. And that's what long-term YAHOO is going to have to do if they're going to meet Mayer's ambitions for the company.

LU STOUT: Yeah, it seems like there's two parallel stories here, the story of YAHOO and the story of Marissa Mayer, both very compelling.

We'll leave it at that. Nicholas Carlson, author and journalist joining us live from New York. Thank you. Take care.

CARLSON: Thank you.

LU STOUT: Now, so it turns out the next big thing in tech apparently might have its genesis in the underbelly of society thanks to the kind of

epiphany that some scientists say can only come from a psychedelic trip. Not the image of Marissa Mayer there, I'm referring to something else

altogether. We've got that story ahead. Stay with us.

(COMMERCIAL BREAK)

LU STOUT: Welcome back.

Now the this week we've been looking at the highs and lows of Silicon Valley. And now some say the kind of creative solutions and breakthroughs

that the tech world is looking for requires more than just book smarts. I'm talking about LSD.

Now CNN's Laurie Segall shows us where geekdom and psychedelics connect.

(BEGIN VIDEOTAPE)

LAURIE SEGALL, CNN MONEY: Part of success in Silicon Valley is dependent on flexing one of the biggest muscles you have: your brain. How

well can you focus? Can you stay up all night and code?

But the other part of success is creativity, the ability to think outside the box, to have the breakthrough moment, a moment that could turn

your millions into billions.

TIM FERRIS: The billionaires that I know almost without exception use hallucinogens on a regular basis.

SEGALL: Tim Ferris is a valley insider. He's an entrepreneur and he wrote the book about optimizing your time.

His lifestyle insights have developed a cult-like following.

The creativity comes from drugs?

FERRIS: The people I know who are trying to be very disruptive and look at the problems in the world that exist and ask completely new

questions. So they might look at something that's existed for hundreds of years and see something completely different.

KEVIN HERBERT, ENGINEER: I was actually at a science fiction convention with a bunch of friends. And the Grateful Dead "Truckin" came

on the radio. And my girlfriend and I at the time sort of had this revelation, oh, oh that's why people listen to the Grateful Dead on LSD.

SEGALL: It was the Fourth of July in 1980 when Kevin Herbert first tried psychedelics. He's been using LSD for decades. Kevin currently

works as an engineer for Cisco.

How high would you say is the premium on creativity in Silicon Valley?

HERBERT: I mean, everything we do is entirely creative. Everything requires creative solutions. And LSD kind of fits into that because you

get the sort of magical breakthrough.

I would be at a Grateful Dead show high on LSD during drums and then something about my work would just come to me. I had been working on a

problem for over a month when all this hardcore debugging. And I took LSD. I just realized, wait, the problem is in hardware it's not a software

problem at all. I come back to work the next day, tell my manager I had an epiphany. He laughed and said oh, great show.

SEGALL: And there's actually scientific proof that LSD could do just that.

One study funded by the U.S. government in the 60s took a group of scientists and sent them out to solve 48 different physics, math and

architectural problems, problems that the scientists themselves had been unable to solve.

Each scientists was guided through a psychedelic trip at the end of which 44 of the 48 problems had found solutions.

UNIDENTIFIED MALE: I moved here to work in the Apple garage building Apple Is. That was 1976.

SEGALL: That's Daniel Kotkey (ph), one of Apple's first employees. And before we all knew Steve Jobs as the creator of one of the most

successful companies in the world, Daniel knew him as the guy he used to trip with in college.

You said that Steve said that LSD was one of the best things he ever did. Why was that?

UNIDNETIFIED MALE: It expands your consciousness. It could have been mushrooms. It could have peyote. It could have been any number of other

things.

Conversely, Steve was never really interested in smoking pot. That did not expand consciousness.

SEGALL: Today, psychedelic research is having a renaissance. People in the industry say there are more studies now than there have been in

decades.

FERRIS: We don't know as much about the human brain or body as we think we do. I mean, we're absolutely Medieval. I think we're going to

look back in 10 years at our behavior now and it's going to look like bloodletting in the dark ages.

(END VIDEOTAPE)

LU STOUT: Now as Laurie said, Steve Jobs said taking LSD was one of the most important things he'd ever done in his life. Now Jobs elaborated

on why in his biography. He called it a, quote, "profound experience" saying that "it reinforced my sense of what was important -- creating great

things instead of making money."

And that is News Stream. I'm Kristie Lu Stout. But don't go anywhere. World Sport is up next with Alex Thomas.

END