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Quest Means Business
Blue Apron Falls on Fears of Amazon Rivalry; U.K. Brexit Talks with EU Restart; Chines Economy Beats Expectations in Q2; Report UAE Hacked Qatar to Justify Isolation; Netflix Earnings Beat Expectations, Stock Jumps; "The Emoji Movie" Opens July 28; Sexual Harassment in Silicon Valley;
Aired July 17, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] DONALD TRUMP, PRESIDENT OF THE UNITED STATES: -- big difference, right? That's a big, big difference. The people that are
coming up to me they can't even believe it. We took the farmers land away. We took the homebuilders land away. They have their land back now and
they're building homes and they're farming their farms and it's a beautiful thing to see. And they're so thankful.
So, a lot of those regulations have been taken off. The rest are coming off. And by the way, we will have better protection than we've ever had.
But will also have something where you don't have to wait 15 years for a permit. And then when you go to the board you lose. And that's a big
portion of your life wiped out waiting for a permit. Where knocking to let that happen.
But for our nation to really prosper we must lower the tax on business. One of the highest in the world and we must repeal job killing Obamacare.
We have to do that.
RICHARD QUEST, CNN HOST: The President Donald Trump talking about "Made in America" or it's Made in America week. We'll be hearing a lot more about
it over the course of the week. The president giving his vision for less regulation. Whilst he was talking the New York market closed. A look at
the closing bell. We'll show you the Dow Jones Industrial's today just gave a small little loss at the end of the day. There we go -- just down
six points in what was otherwise a choppy session of trade. We'll talk more about that over the course of the program.
Tonight, our lead story. It's a case of "We do the prep. You be the chef." "We do the prep. You be the chef." Eight words from Amazon that
sank the shares of Blue Apron absolutely plunging. These are the way the market looked overall and this is what happened to Blue Apron in the
market, which also went down 10.4 percent. Now bear in mind Blue Apron when it IPO-ed at $10 a share. Now is trading at $6.59 and the entire fall
of Blue Apron so far, has not only been questioning on the issues of whether or not it is going to battle Amazon, but also the pricing of the
IPO and how the company is performing.
Now, Blue Apron is facing perhaps the next existential threat and it comes from Amazon. Tell me how and what's happened?
CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Well, this is the crux of it, Richard. Amazon, we learn today filed a trademark on July 6. It's
basically is for a meal kit company. We do the prep, you be the chef, is the name on the trademark. That doesn't necessarily mean that's what it's
going to be called. But look, it says prepared kit. Meals consisting of meat, poultry, everything basically to assembly meal. And this is what
Blue Apron does.
Amazon has cast a shadow over the whole process of Blue Apron's idea from the beginning when they filed their papers --
QUEST: Now just pause. Don't get yourself too excited. You're saying that this drop of 10.4 percent comes about because of this filing of
Amazon.
SEBASTIAN: Right. But don't forget there was a lot of pent up concerned about Amazon anyway. Their purchase of Whole Foods cast a shadow over the
Blue Apron IPO. They had to cut the price of their IPO to $10 and are now well below that. In fact, Richard, the price of one serving of a Blue
Apron meal starts at 8.99. The share price less than seven dollars today. So, this is as you know, discussed many times, Amazon is in everything.
They dominate everything they touch. Because of the scale of the operation.
QUEST: The thingamajig.
SEBASTIAN: Right. So, the concern, even if they don't go ahead with this, it's all about looking to the future with Amazon. The concern is that
they've dominated all of these areas. That they'll dominate meal kits to. And that's a real concern for Blue Apron. And look, we've seen this
before, Richard. Share prices across the board have suffered. This is Walmart on June 16th. The day that they announced that they were going to
buy Whole Foods. That went down 4 percent. A company the size of Walmart even getting jitters about Amazon. So, you just see that could be a
serious problem for Blue Apron going forward.
QUEST: Thank you very much.
The London Mayor is trying to keep tech firms in London as other European centers are trying to fend them off. We're going to hear from the mayor in
just a moment.
First though, we want to go to Brussels. Four days of Brexit talks kicked off today. The U.K. Finance Minister, Philip Hammond, says a transition
period is needed in terms of Brexit. The goal of round two includes, firstly, EU citizens' rights and the so-called rights.
[16:05:00] The EU has called Theresa May's offer so far, inadequate. The second part of negotiation is what's known as the Brexit bill, the
financial settlement. The sort of thing that the U.K. has signed up for any multiyear budget agreement and therefore is liable to pay. Including
its pensions for EU bureaucrats for the foreseeable future, and Northern Ireland and border issues. The EU says they must be second before any
trade talks. Listen to what Britain's Brexit minister, David Davis, and how we put it.
(BEGIN VIDEO CLIP)
DAVID DAVIS, BRITISH BREXIT SECRETARY: It's incredibly important we now made good progress. That the negotiation of this and identify the
differences so that we can deal with them and identify the similarities so that we can reinforce them. And now it's time to get down to work and make
this a successful negotiation.
(END VIDEO CLIP)
QUEST: The problem is negotiating with the Conservative infighting that's taking place. Nina dos Santos is in London. Look, we'll get into the
internal party politics in a minute. This is the second round of negotiations. It's too soon to expect at any progress.
NINA DOS SANTOS, CNNMONEY EUROPE EDITOR: It is, about what we can say if you just take a look at some of the photographic evidence of this meeting
between David Davis and Michel Barnier, his European counterpart to the EU Commission. Well, they seem to be streets apart. Earlier on today,
although they exchange pleasantries and handshakes going into this meeting, what we saw a photo coming out. I don't know whether we can show our
viewers that here, Richard.
Michel Barnier with reams of paperwork, from his U.K. counterpart. So, plenty of papers from one side of EU negotiation table. And David Davis
basically empty-handed with his team, no notes on the table at all, broad smiles. But that meeting only lasted three hours before David Davis was
recalled back to London to deal with the very issue that he was supposed to be sorting out in Brussels. Which is of course, the issue of Brexit. This
infighting between the Tory party cabinet about what exactly Brexit should entail. Should it, as you pointed out, have this transition period that
would give business the certainty that they say they need from government. Well, there's members of the cabinet that are very hard on the issue of
Brexit. Because it should be a transition period.
QUEST: Now, this transition period, everybody accepts there is going to be a transition period. So, are they just really arguing about how long that
period should be?
DOS SANTOS: Well, remember that this is also a proxy struggle for who could be the next prime minister as well. You are seeing factions develop
on this point. And this could be a proxy battle for some kind of leadership challenge for Theresa May further down the line. What we know
is that the real substance of the negotiations are probably going to get underway more likely in October.
Because remember that in Brussels it's famous that many of these ministers will be taking holidays even though these talks are set to take place on a
month by month basis. This is only the second set of monthly talks. The reality is that if by October the negotiating starts on the behalf of the
British government isn't any clearer, Theresa May could well face some kind of leadership battle. So, there's probably a lot of personality politics
at play here. There's probably a lot of jostling for position ahead of potentially any kind of leadership contest here in the UK. But over in
Brussels that thing met with a lot of consternation, because remember that there is the fate of 320 million EU citizens that also hang on the balance
here. Not to mention as you pointed out in the introduction quite rightly, Richard, 3 million EU citizens that call the U.K. their home and more than
1 million Brits that live abroad on the continent.
QUEST: Nina dos Santos in London for us tonight. Nina, thank you.
The London Mayor Sadiq Khan, has told CNN, businesses want certainty. And to ensure they get it there has to be a two-year transitional period after
Brexit. The mayor is trying to protect London as the continents main tech hub. Now this is the Silicon Roundabout, as it's known. It's the city's
mini Silicon Valley out towards Old Street. Anyone that has been in the City of London you'll be well familiar with it.
Other European capitals would love to shove London aside. So, who's in the running? Well, obviously, we know about Berlin. The startup nature of
that particular city. Paris always had an appeal as a cosmopolitan nature. Amsterdam similarly has a huge attraction. And even Dublin is getting in
on the act. Their bidding to lure the best tech talent from the British industry. Samuel Burke asked Mayor Khan what he's doing to make sure
London doesn't lose out to all of these naysayers.
(BEGIN VIDEOTAPE)
SADIQ KHAN, LONDON MAYOR: One of the things that I'm doing is negotiating with the government the best deal for London, which by extension is the
best deal for U.K. Because we are the engine of our country. We are the financial capital of the U.K. We are the cultural capital of the U.K. we
are the political capital of the U.K.
[16:10:00] And the government recognizes that the government is going to flourish and thrive, so London needs to do well. So, we are in discussions
with the government.
SAMUEL BURKE, CNN TECH, TECHNOLOGY AND BUSINESS CORRESPONDENT: Are you talking about Prime Minister May?
KHAN: Absolutely right, with the cabinet, from Theresa May down to other members involved with the negotiations. David Davis is the Secretary of
State in charge of Brexit.
BURKE: Is that who you're talking to most?
KHAN: Yes, and I meeting him today. And so, it's really important to reassure your viewers that we're not going to stop being a great place to
come if you have talent. But also, the underlying strengths of London are still here. The ability to attract talent, really skillful Londoners.
Access to finance, access to the best universities in the world, access to Oxford and Cambridge 50 miles away, access to life-sciences, access to
other skills which help finance and tech, of course.
So, all those things are still here. Obviously, we have Brexit, you know, I campaigned against Brexit. I wanted us to stay in the European Union,
but we are who we are, and were going to make the best of where we are.
BURKE: When do you think your London tech companies and other financial companies, for that matter, need clarity? There's only 20 months left in
the negotiations. But really, it's more like 12, because it has to go through the EU parliament. So, people are holding up investments, not
investing in London. I've heard that from companies. So, when are you hearing that these businesses are saying, this is when we need to know by?
KHAN: Firstly, let me tell you about who is invested in London, Apple. Record investment since Brexit. Facebook, record investment since Brexit.
Google, Snapchat and I can go on. But you're right, there comes a period in time where you just give investors, innovators certainty.
And so, the good news is that the Chancellor of the Exchequer, Philip Hammond, said only this weekend, and he's, obviously, somebody right up
there next to the Prime Minister, but what we need is transitional arrangements. And I agree with him. We need two years from the date when
the negotiations are supposed to end for our transitional period. And you will be a aware, once the Article 50 notice is served, we're supposed to
negotiate and exit within two years. And what the government is now talking about -- I welcome this -- is a transitional period of two years to
give people certainty before we enter the new arrangement with the European Union.
Look, I think we've got a great future.
BURKE: You're optimistic. Are you worried that you can lose jobs? Have you seen any jobs been lost yet?
KHAN: I understand why if you are bank, whether it's J.P. Morgan or elsewhere, you need to plan for contingencies. I recognize that in I
understand that. But actually, if you're a banker or somebody in the tech sector or somebody in the cultural sector, my messages to you is the
underlying strengths of London aren't changing. We're going to carry-on being a place where there's talent, where there's finance, where there is
access to a number of difference's synergies you need. But also recognize that these are actually potentially tough months ahead, but I'm optimistic.
BURKE: One last question. You and President Trump got off to a famously bumpy start. He took something that you said out of context. But
President Macron got off to a bumpy start with him and they had a seemingly very successful weekend. Would you be open to a state visit by Donald
Trump here to the UK?
KHAN: Look, my views haven't changed. The USA are our closest allies. I'm welcoming Rahm Emanuel to London today. I was with the mayor of Huston
last week. I love Americans. I love America. The point I made was a very simple one, which is state visits are different from a normal visit. And
at a time when the president of the USA has policies that many people in the U.K. disagree with. I'm not sure it's appropriate for our government
to roll out the red carpet for a state visit.
(END VIDEOTAPE)
QUEST: That's the Mayor of London, Sadiq Khan, talking the Samuel Burke.
Netflix has just release new numbers on the earnings of user growth. It would appear 5.2 million new subscribers to Netflix. Earnings of $0.16 per
share. These numbers are better than the market had been expecting. Will interpret them in about 20 minutes from now. But just to put this into
context to you, Netflix, 5.2 million new subscribers, $0.16 a share on earnings, and the price in the market is up some 8 percent in afterhours
trading. So, this is obviously, Netflix was the one that everyone had been waiting for I believe so far in the earnings season. And the numbers seem
to have blasted those expectations away. What have analysis for you in 15 minutes from now.
To the markets that closed. The U.S. market closed. It was flat, it was boring, it hovered near record levels, but never quite got there. But just
look at it. Down eight points at the close of the day.
[16:15:00] The trading day on the New York Stock Exchange. Here's a film for you,
QUEST: What trading looked like at the New York Stock Exchange. Now, today was a quiet day at the exchange. But over the course of the summer
were going to take the opportunity for you to enjoy some of the history, some of the delights, some of the culture that makes New York the center of
the financial world. How did it get there? What are the cultures and traditions that they follow? For instance, today you're going to learn
about the curb traders who are key to the evolution of the New York Stock Exchange.
(BEGIN VIDEOTAPE)
QUEST (voice-over): The streets surrounding the New York Stock Exchange have always been noisy, bustling and boisterous. And never more so than in
the era of the curb traders. They were called a motley mass of humanity. And for decades they gathered to buy and sell stocks come rain or shine.
It was easy to lose your shirt.
ANNALINE DINKELMANN, CEO WALL STREET WALKS: They were trading many of them in risky stocks. Too risky to be listed on the New York Stock Exchange.
And you'll see people in the old pictures hanging out the buildings. They actually had offices in the old buildings. And they would stand out in the
street signaling the people at the office what trades they wanted to do.
JOHN STEELE GORDON, WALL STREET HISTORIAN: There's a lot of variation among the curb traders. Some of them were just no good. You know, nickel
and dime guys, some were really, quite substantial. And also, I'm still the New York Stock Exchange debated, New York Stock Exchange member, you
come out here in trade to, but use the street lamppost. They would trade particular stocks at each post. And that's how the New York Stock Exchange
and why they're called posts to this day inside where they trade a particular stock or bond.
QUEST: The curb traders were getting out of hand, and the establishment wanted see rabble gone. In the 1920s the city swept the curb traders off
the street and moved them indoors to a new exchange, the American Stock Exchange, also known as the New York Curb Exchange. The AMEX lasted years
and finally closed its doors in 2008 merging with its bigger brother the New York Stock Exchange. And that's another chapter in the stories on the
street.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
QUEST: China's economic growth figures are out and they have beaten expectations. GDP 6.9 percent in the second quarter. President Xi says
China needs a more sustainable growth quarterly. He says he's aiming for more foreign investment and wants to control risk by tightening financial
regulation. The world's second-biggest economy and the issue of sustainability is a forward question. Patrick Chovanec is a chief
strategist at Silvercrest Asset Management.
[16:20:00] Now, 6.9 percent. Oh, imagine my surprise, Patrick, the number that they were looking at was -- well now, what was that number? Oh, 6.9
percent.
PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: There is never any suspense when it comes to Chinese GDP numbers. But the thrust of
these numbers was probably correct. It probably was a good quarter at least in nominal terms for China. Because the Chinese have been pouring on
the stimulus, whether it's credit stimulus, fiscal stimulus, to try to boost the economy in anticipation of the big Party Congress that's going to
happen in the fall.
QUEST: There's monetary fiscal classic expenditure, but do you consider that stimulus to get to the 6.9 percent good or bad?
CHOVANEC: I think it's bad. And what's interesting here --
QUEST: Explain why to viewers who may not be as?
CHOVANEC: Well, what is interesting here the gap between people who follow in the markets China quarter by quarter, who are very enthused about recent
numbers, and the longer-term China watchers, who I think are more depressed than I've ever seen them about the direction of the Chinese economy.
QUEST: I mean, we've heard for so many years that the idea is to go to a consumer or a demand led economy rather than a state led, top-down. But
you're saying that that's not happening. And that shift isn't happening even though the amount of consumer goods being brought in China is vast.
CHOVANEC: Yes. China's consumption is growing, but it is not what's driving this kind of growth number. What's driving this growth number is
more bad debt, more expanded capacity. You know, the reforms -- all the reforms they said four years ago to make the financial system more
accountable, the things that she's talking about now, back four years ago they said it was overdue. It was urgent. Nothing's happened.
QUEST: Is nothing happening because they are negligent, because they are incompetent or because their malevolent?
CHOVANEC: I think it's because they're afraid of what would happen if they actually began to reform the Chinese economy. What might destabilize if
they pull the thread, what might come unraveled. You know, the growth that we're seeing right now, they talked about all these different industries,
steel, coal that have overcapacity in that capacity needs to be reined back. A lot of this is heading to that capacity.
QUEST: If there was to be any -- you mentioned steel -- tariffs from the United States, if there was going to be any form -- for want of a phrase --
dislocation, disruption, any form of that, that would be very damaging. You got well into global trading. We can talk about it. But also for the
Chinese economy, which would suffer a disproportionate disruption?
CHOVANEC: Although, one could argue that would move them in the right direction in terms of reining in the overcapacity. The question really is
whether the U.S. goes in with a scalpel or a blunderbuss. Because if it goes in and it tries to target Chinese overcapacity and persuade the
Chinese to engage in a kind of change that they themselves know they need, that could be positive. But if they label steel a national security issue,
have broad tariffs, I mean, that changes for instance the EU from an ally on steel, overcapacity in China, to an opponent. Because they have said
that they would see that as a trade war. So, there are good ways of going about it and bad ways of going about it.
QUEST: We're very grateful that you came to discuss both. Good to see you, thank you.
The UAE is denying accusations that it organized the hacking of Qatar state news agency and planted the seed of the Gulf's worst diplomatic crisis in
decades. Four Gulf states are leading the blockade or the embargo against Qatar, after it's emir was quoted praising Iran and in her state news.
Qatar says quotes were false, planted by hackers. Now a report in "The Washington Post "says U.S. intelligence believes the UAE was behind it.
Sources said they understand the UAE government met to plan the hack, but it's been dismissed by the UAE's top diplomat.
(BEGIN VIDEO CLIP)
ANWAR BIN MOHAMMED GARGASH, UAE MINISTER OF STATE FOR FOREIGN AFFAIRS: But the Washington story post is not true. Purely not true. That's what I
will say and I think you will see in the next few days that the Washington story will die.
(END VIDEO CLIP)
QUEST: Patrick Theros is a former U.S. ambassador to Qatar. He joins me now from Washington. This, ambassador, gets nastier, and messier, doesn't
it?
PATRICK THEROS, FORMER U.S. AMBASSADOR TO QATAR: Yes, it does unfortunately.
QUEST: And if that's the case -- and let's not worry how we got here. Let's worry how we get out of it. Do you see any easy -- well, not easy,
obviously, not easy? Do you see any potential routes to solve this?
THEROS: I think secretary Tillerson's formula is probably the only one that works.
[16:25:00] The question of terrorism financing is a question really between the United States, which is the only entity that has the capacity and the
means -- in addition some European countries -- to track financing flows. And we have now an agreement in place with Qatar and hopefully we can get
an agreement in place with the other countries in the region.
The rest of the disagreement, again, has no substance other than in my opinion, old dynastic quarrels. The ruling families in the areas have had
problems for a couple of centuries. And every time there is some loose slights, slight just add to the ledger. I think the only way out of there
is again, what secretary Tillerson suggested is that they talk to each other. That there be more mediation and undercover of this mediation
everybody slowly steps back from a situation that is destructive to our interest as well as theirs.
QUEST: That assumes that the GCC or the other Gulf countries, wish to step back. If you look at the level of bellicosity so far, and if you consider
the seeming unwillingness, particularly the Saudi's, to want to come to the table, or at least to have a repertoire, that doesn't bode well.
THEROS: No, it doesn't. But to be perfectly honest I don't understand what their endgame was. The demands essentially would reduce Qatar to the
level of a feudal vassal. And yet the measures they have taken in the end are not that damaging. Remember that intra-Gulf trade is minuscule. Yes,
a lot of goods came from Dubai to Qatar, a lot of goods cross the border, but they weren't Emirati good or Saudi goods. They were just trance
shipments.
QUEST: Regime change, get rid of the new younger emir.
THEROS: Yes, and find some pliable distant elderly cousin who would do with the Saudi say.
QUEST: Is that where your thinking is the endgame? Potentially in some Machiavellian view was.
THEROS: It won't work. That's what I think their attempt was. But right now, what has surprised me in a very favorable way is the solidarity of
everything I've seen in Qatar in terms of they're not going to be imposed upon.
QUEST: In a sentence, ambassador, because I've looked at this upside down, inside out, backwards and round and about, and I still don't understand it.
Is there validity to the notion that Qatar does fund terrorism?
THEROS: Does Qatar is a state fund terrorism? I do not believe that is true in any way any more than any of the neighbors as a state fund
terrorism. That there may be some bad actors in any of those countries there who need to be tracked down, it is entirely possible. But to quote
Senator Corker, what is coming out of Saudi Arabia dwarfs what comes out of Qatar.
QUEST: Great to have you ambassador. Good short, sharp, blunt answers, which is exactly what we need to try to understand this mess. Thank you,
sir.
THEROS: Thank you so much.
QUEST: Right. As we continue tonight, Netflix results are out. We're going to talk about those results. We're going to try and work out why the
market liked -- what is it about these Netflix results up 8 percent on the share price in afterhours trading. So, we need to parse the numbers after
the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:30:46] Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in just a moment. Netflix has reported blockbuster earnings. The
stock is surging and we need to understand why.
World Emoji Movie, director of the Emoji movie joins me to talk smiley faces, thumbs up and a lot of emoji's that I have not figured out what they
mean.
Before that this is CNN, and on this network the news always comes first.
The United Arab Emirates is denying a report that claims it orchestrates the damaging hack of Qatari news and social media sites. "The Washington
Post" citing U.S. intelligence officials saying UAE hackers planted false quotes supposedly by Qatar's emir. This set off the current rift between
the two countries, Qatar's neighbors. Qatar describes the alleged hackers, a shameful act of cyber terrorism.
Charlie Gard, the terminally ill British baby at the center of a legal battle has drawn international attention will be examined this week by a
U.S. doctor. The neurologist is developing an experimental therapy which has been used on at least one American patient.
Iran has sentenced Xiyue Wang, an American researcher to 10 years in prison after being convicted for spying. The Princeton University confirmed the
graduate student was arrested in Iran last summer while doing research for his dissertation. He has 20 days to file an appeal.
Netflix is up the best part of 9 percent after subscriber numbers grew quite dramatically, more than expected. Netflix added 5 million new users
and now at 104 million. Joining me to talk about it, is Lance Ulanoff. So, what on earth, tell me, talk me through these numbers.
LANCE ULANOFF, CHIEF CORRESPONDENT, MASHABLE: All right, so, the really big deal is that it is international growth. So, you have the 5.2 million,
right, 1.1 of that was domestic, the rest is international. That is exactly what Netflix needed to do to show investors, show the world that
they are still growing. Because basically in the U.S. they ran out of headroom. I mean that is what it seems like because it has been kind of
flat. They also cautioned everyone in Q2 numbers are not going to be so great, and what is really interesting when you read the report. They are
like, we didn't expect people to like our content so much. And they kind of went crazy, but again it is getting the international numbers which is a
really good sign.
QUEST: A 104 million subscribers, there are a few billion people in the world. Are these 5 million the top of the crop in terms of what they can
get internationally or are they already quite deep into a potential growth --
ULANOFF: Yes, they've done just like a top cut here. I mean if you want to look at international growth for COM activity, look at Facebook, you've
got 2 billion people on the service. That means 2 billion people with a decent enough connection to consume the kind of content that we see on
Facebook, which by the way is fine for video streaming. When you look at Netflix and you wonder how big can they get? We have to look at the
billions.
QUEST: On this question of content, that they are spending a billion or actually more.
ULANOFF: More, he said they were going to spend 6 billion this year.
QUEST: On content.
ULANOFF: Yes.
QUEST: Some have been hugely successful.
ULANOFF: And some not.
QUEST: That is the point. I mean we are tending to focus on the big ones that have been very successful.
ULANOFF: They have definitely had a few shows that they basically killed after a season. A season with Netflix is 13 episodes. And for a while
they were basically letting everything go, it just seemed like it didn't matter. There were the really big hits like "Orange is the New Black" and
there are other things that people didn't pay attention to. But now, and recently, I know they cut at least a couple of shows, and everyone went,
oh, signs of trouble. Netflix is cutting shows. But actually, that is just smart content management. You have to look at the things. Netflix
does not give us a lot of information about viewership numbers. We don't have the Nielsen insight there, but we know that when they shut down the
show, it doesn't have the same kind of viewership is something like "Stranger Things" or "Orange is the New Black" and these are shows that are
driving subscribers.
[16:35:00] QUEST: But we also know that they need content. They absolutely need content and therefore even if they shut down shows, they're
going to have to create something else.
ULANOFF: It is funny you talk about it like that, they don't have a so- called schedule, right, they just dump content through the entire season on there. But this is a competitive playing field, that is only going to get
worse, you have companies like Hulu, companies like Amazon, companies like Apple that are all looking at making original content. Netflix has a huge
leg up but they have to stay I had, they will continue to invest in more content so they can win.
QUEST: Good to see you, Lance.
ULANOFF: Good to see you.
QUEST: Unfortunately, we didn't have time to get to Amazon, but next time.
ULANOFF: Next time.
QUEST: There is a world giving a big thumbs up to emojis today, all the rest of us are happy to use emojis to communicate in a whimsical way, Sony
is seeing dollar signs. And they have just finished reading the closing bell at the New York Stock Exchange. They are celebrating their upcoming
Emoji Movie.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Welcome to the world inside your phone, where everyone is expected to act one way their whole life.
GENE, EMOJI CHARACTER: My name is Gene, I was supposed to be a "meh" like who cares. My problem is I have more than one emotion.
ELEPHANT EMOJI CHARACTER: Check this out.
GENE: Son, please tell me that you were just laughing just now.
(END VIDEO CLIP)
QUEST: Joining me now Tony Leondis is the director of the Emoji Movie from the floor of the stock exchange. First of all, why a movie about emojis,
what -- I am not being disrespectful here, sir. But what do you add to the emoji world by making a movie about them?
TONY LEONDIS, DIRECTOR, THE EMOJI MOVIE: Emojis, millions of people said emojis, billions of times a day. And what I love about emojis is that and
it's very technological time where we are all on our phones, emojis are a way for us to express what is in our hearts to each other. Insert is
really an expression -- the human heart has found a way through technology to express itself. And that is what is so exciting about emoji today.
QUEST: OK, if that is exciting about and emoji itself, the reviews I've read are very good about the movie, and it is certainly exceptionally well
executed, but, OK, in a movie how do you quintessentially give and emoji a purpose, other than say a rabbit or any other form of being, animal or
animation? What makes it special for the emoji?
LEONDIS: In the emoji world, everyone is expected to act there one way, their whole life. So, Smiler always has to smile, and the Devil is always
devilish. And in our movie, there is an emoji that was born different. He has every expression, and so he thinks that there is something wrong with
him, so he and his friends go on this adventure through the apps of the phone. And each app is a different world trying to find a way for him to
fix himself. His name is Gene and it is played by TJ Miller, and so it is a journey through all the apps, and we bring to life Spotify and all those
apps.
QUEST: Now, look, I am just looking at my emojis on my phone at the moment, all right, I know the Smile I know the Frown, and I know the Devil,
and I know the confused, and I know the Sleep. But there is some of them when people send me them, I start to think what on earth. You must have
the same thing, you start to think what is he or she trying to say with that emoji?
LEONDIS: Yes, it is becoming a very specific language, emojis are becoming a new font but there are a lot of places that you can go to, and they will
help you decipher those emojis. We have some emojis in our movie that you never see like the fish cake would swirl, but whoever wants to send him, so
we actually deal with that in the movie. They feel really bad because no one really ever sends them around.
QUEST: Finally, as I say goodbye and thank you to you, sir, give me your favorite emoji face. Imagine you are -- you've got five seconds, I will
count you down, you got five seconds to give me an emoji face. 5, 4, 3, 2, 1.
[16:40:00] Thank you very much, sir.
LEONDIS: Thank you.
QUEST: We will interpret that as we will. Good luck with the movie. Great to have you on the program.
It is QUEST MEANS BUSINESS tonight. As we turn our attention, this is a fascinating story. More women -- you will be well aware, we talk about
this on a program frequently -- they are speaking publicly about sexual harassment in Silicon Valley. Now, we will hear from six tech
entrepreneurs about their experiences, and we will talk to of course our correspondent who has done such groundbreaking work to bring these stories
through. It is QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
QUEST: We have heard the charge for years. Silicon Valley has a sexism problem. But relatively little has been done about it until as you know
recently. In the past three weeks to Silicon Valley investors, Justin Caldbeck and David McClure stepped down after women made serious
allegations of sexual harassment. Now more women are speaking up shedding light on the extent of the problem.
CNN has been speaking to them about their experiences. They describe sexual harassment in Silicon Valley as the norm. But this is the important
part in many ways, the hope of these women is that by going public they could help things to change.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: You don't want to tell people that you are in a business meeting and somebody shamed you, and less than. Who wants to say
that?
UNIDENTIFIED FEMALE: It was a moment that I felt my leg being grabbed under the table that I thought, holy moly, this is real.
UNIDENTIFIED FEMALE: We are sitting at a Starbucks and he grabs my face, and tries to make out with me.
CECILIA PAGKALINAWAN, FOUNDER, APPLOUD, STYLETREK: I hate to say this, it is the norm. I hope that we can change that. This is my story in 2001,
the environment was a lot different because of the dot-com crash. So, I was faced with raising more money or letting go of employees. One time I
had a meeting with a potential VC one of the more powerful ones out there. And he ordered a $5000 bottle of wine and I couldn't even remember how many
times the glass got filled, all of a sudden, he was conveying to me how attractive he was to me. He tried to lean over and kiss me and I pulled
away. I never forget when he touched me under the table and looked into my eyes, and grab my leg, and squeezed it, and said, I am going to help you.
I am going to do this for you. As if he was my savior or something. And at the same time, he is violating me.
UNIDENTIFIED FEMALE: I was lucky enough to have an advisor or mentor who had never expressed any romantic or sexual interest in me, and we were
literally working on spreadsheets, the least sexy thing in the world. I remember it, we were sitting side by side or front of the computer.
[16:45:00] And at the end of that he stood up and he pulled out his erect penis, genitalia. He pulled out his erect penis and it was right in
eyesight, it was awkward, it was uncomfortable, it was unfair. But it happened, and it wasn't the last time something like that would happen.
UNIDENTIFIED FEMALE: When he did that it made me feel disgusted.
PAGKALINAWAN: Demoralized and disrespected.
GESCHE HAAS, FOUNDER, DREAMERS/DOERS: Like I did not have any worth as a woman in business.
PAGKALINAWAN: Like all of my accomplishments, that I already raised $5 million in venture funding, like none of that mattered.
LISA WANG, COFOUNDER, SHE WORX: If I was sitting across from the investor who harassed me, I would say to him, I am here to talk business and nothing
else.
UNIDENTIFIED FEMALE: It is strange to me, when you look at your pipeline and deal flow as opportunities for your romantic life. Do not date your
deal flow, it is not that hard.
PAGKALINAWAN: What else do you need to prove? You already have the money, you have the power, you have the decision-making ability, you have it all.
Why do you do this?
WANG: You preyed on a group of women that you thought were too afraid or not in a position to speak up and clearly you were very, very wrong.
(END VIDEOTAPE)
QUEST: Laurie Segall is with me. She is wrong, that last woman, she is wrong isn't she because it has been going on for years, it is only now that
it is coming out.
LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT: Absolutely, I mean I have been covering tech for something like eight years, and this is the
first time that I can say, seen these stories happened behind the scenes --
QUEST: Did you know about these things? Were you aware? Were you aware that this culture existed?
SEGALL: Absolutely, and we have covered stories here and there, but this is the first time that I have seen women who really want to come out and
talk. Because there has always been this fear of retaliation. All of these women right here, a lot of them had the stories for years but they
weren't willing to put them out there yet.
QUEST: Let's go 1940s, 1950s, 1960s, 1970s. And you have got traditional Mr. Smith in the workplace, Miss Jones in the typing pool. We all know how
that ended. And then you get to the 70s, 80s and 90s but companies in the last 25 years, the big companies have clearly known that sexual harassment
exists but it is not acceptable. What is it about these industries that the HRs within them did not deal with it?
SEGALL: I think what happened in technology especially over the last decade, you look at these venture-capital firms, there is no HR when it
comes to investor, employer, investor startup relationship. If I am trying to go raise money from you, and you say something inappropriate, there is
no place for me to go. And I don't have the same employee protection, and then you add on, Richard, that this is an industry that is male-dominated.
A lot of younger men too, there is a certain very specific power dynamic, and is grown so fast and this is also where the power and the money is.
And you have a big problem. And I think the problem has been under the surface for a long time. And it has taken one or two things for to
actually come and for people to very much feel comfortable talking about it.
QUEST: How much of this is putting a crudely, raw money, in the sense that I have got so much of this stuff that you want, I can do whatever I like
and what are you going to do about it?
SEGALL: I would say 95 percent. So much of it, you look at Cecilia's story where she talked about having an investor say, I'm going to take care
of you. There is a certain arrogance that comes with the fact that they have been able to get away with it. They protect each other. A lot of
these VC firms by the way, they knew this behavior was going on, the LPs knew this behavior was going on and it had been flagged, but had not been
taken care of.
There it there is a behind the scenes thing that people talk about in Silicon Valley where a lot of powerful women, even, who I would love to
come and speak on camera, they still will not speak with me on camera because they say I can do more help trying to buy these people out, and
trying to make a difference behind the scenes without having a blacklist. This has been a secretive Silicon Valley for a very long time. It is
incredible to watch these women come forward, but for those women there are dozens more.
QUEST: Thank you. Your reporting always brings us such important and original, thank you.
SEGALL: Thank you.
QUEST: Now, robots are taking over the job market. Most of us recognize it could be higher unemployment. For Elon Musk, the worry is robots will
spell the end of civilization. For the director general of the International Labor Organization, and means an entire global workforce,
that is going to have to rethink the way. QUEST MEANS BUSINESS
[16:50:00] (COMMERCIAL BREAK)
QUEST: QUEST MEANS BUSINESS for the United States as part of a negotiation or renegotiation of NAFTA has just released its priorities of what it says
will be its priorities in the talks. The talks will start by the end of August. The first priority is better access to markets in Canada and
Mexico, which is considered to be a priority. Related to that, and this is the crux of it, the core goal will be deficit reductions, this is bilateral
and trilateral deficits on the trade deficit between the different countries. But Donald Trump is basically said, there has to be a reduction
in the deficit. Which takes us to the third one which is truly fair trade.
Now fair trade depends on where you sit and how you look at it. But those are the three guiding principles just released by the USTR, the United
States Trade Representative who will be leading the negotiations. And those negotiations now that the consultation period is over expected to
start by August, the middle of August 2017. We will follow it very closely indeed.
Elon Musk is sounding the alarm about artificial intelligence. He is calling it a threat to human civilization. He wants authorities to
regulated before it regulates or do something nasty to us. Elon Musk claims if nothing is done, we will find out too late.
(BEGIN VIDEO CLIP)
ELON MUSK, FOUNDER, TESLA: I have exposure to the most cutting-edge AI, and I think people should be really concerned about it. I keep sounding
the alarm bell but until people see robots going down the street killing people, they don't know how to react. Because it seems so ethereal.
(END VIDEO CLIP)
QUEST: Now the ILO, International Labor Organization, part of the U.N. says automation in the workplace is advancing rapidly. The conclusion of
the broad report on the future of the workforce, Guy Ryder is the DG of the ILO. Lots of happenings there.
QUEST: Director general, good to see you, sir.
GUY RYDER, DIRECTOR GENERAL, INTERNATIONAL LABOR ORGANIZATION: Nice to see you.
QUEST: How worried are you by the AI, the encroachment of AI, and where do you see those jobs that will be lost?
RYDER: I think you ought to make a distinction between two things, one thing Mr. Musk was talking about is AI fundamentally changing the
relationship between machines, robots and human beings. The other is and it is much more territory, what is a going to do to jobs in terms of
creating jobs, destroying jobs? And I think even more important than that, changing the way that work is done?
QUEST: But how big -- the difference with AI is going to affect people, middle-management, even white-collar in a way that they had not been
affected, say Industrial Revolution, 80s revolution, digital revolution 2.0?
[16:55:00] RYDER: You're hitting sort of the big question here, is this fourth Industrial Revolution different from the previous ones? Because how
for painful those last ones were, we came out ahead. In the end we had more jobs, we came out more prosperous. This time is a $64 million
question is, is it different?
QUEST: Is it going to be so incrementally slow that we won't notice it until we look back and say, where did those 20 million jobs go?
RYDER: No, I think it is going to be quick. It is going to hit us like that with a blow. And so, the thing, and I agree with Mr. Musk, starts
thinking about it now. Start anticipating, not whether it is the end of civilization, I don't know but what it is going to do to employment in the
way work is organized?
QUEST: Do you see any willingness by governments to address this because there are no easy answers to it, Guy.
RYDER: There are no easy answers but I think this coming on quickly. Look at the G20, look at the United Nations. I was down there today, this is
what they are talking about. This is a frontier issue of today. And it is also what the electorate is worried about. Politicians are getting into
this stuff now.
QUEST: But there is no obvious policy to introduce on this.
RYDER: Well, obviousness may not be there, but it doesn't mean you haven't got to do it. You do these things because they are difficult. And the
point here is we got in the habit of saying more regulation get in the way of progress. You got to start regulating small for this stuff. Look at
Uber, look at all the tangles we have had around Uber, which is a fairly incremental, fairly we understand that sort of application of technology to
work. But look at all the regulatory issues which have arisen from that.
QUEST: in a sentence, how big is this on your agenda? The ILO?
RYDER: Top. Top of our agenda. We are just going to celebrate our 100th birthday, and we are going to do a big deal on the future work and where we
are going.
QUEST: Good to see you, sir. Thank you very much indeed.
RYDER: Thank you.
QUEST: And that is QUEST MEANS BUSINESS. Whatever you are up to in the hours ahead, I hope it's profitable.
END
