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Fareed Zakaria GPS

Innovators Special; Interview with Linda Rottenberg; Innovation in Mattress Industry; Vinod Khosla's Vision of Future

Aired November 30, 2014 - 10:00   ET

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

FAREED ZAKARIA, CNN HOST: When the last century dawned, electricity was a novelty. Much of the world, even much of America, was still lit by gas and candles after the sun went down. A few years later, Wilber and Orville Wright flew their plane at Kitty Hawk. Then came mass production, including the Model T Ford.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You can tune in this wonderful new Westinghouse television set.

(END VIDEO CLIP)

ZAKARIA: Television, nuclear bombs, jet engines, personal computers, and the Internet. These are all just some of the innovations that rounded out the 20th century. That's an extraordinary amount of change in just four generations.

Can this century be as innovative? What makes conditions ripe for innovation? How can you or I be an innovator?

I'm Fareed Zakaria and this is "Innovators: Driving the Future," a GPS special.

I have always been fascinated by these kinds of questions so I invited some of the smartest, most innovative people I know to join me on this show and help answer them. In this hour you'll hear from Travis Kalanick, the CEO of Uber, on what failure feels like. Peter Thiel, who started PayPal and was an early investor on Facebook, on why we do not live in innovative times.

Linda Rottenberg who has worked with thousands of entrepreneurs on who the innovators of the world are. And Vinod Khosla, the founding CEO of Sun Microsystems, now a billionaire venture capitalist, on why tomorrow technology will do most of what humans do but better.

You will also see some innovation in action. We'll take you inside a brand new company that is trying to disrupt a sleepy old business. The question is, will it work?

But first, let's get right to the heart of some of those questions I just posed about innovation.

Walter Isaacson dug into them using some of the best case studies around, the founders of Intel, Apple, and Google to name just a few. He's just written a book about it called "The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution." He is of course the author of "Steve Jobs."

The most interesting part of your book given your biography of Steve Jobs is that this is not really about a single hero or even a couple of heroes.

WALTER ISAACSON, AUTHOR, "INNOVATORS": Right. You know, when I was doing Steve Jobs, I thought he was the great romantic visionary, that lone inventor who in the garage does things. And when I asked him near the end of his life, what product are you most proud of inventing, I thought he'd say the iPod or the iPhone. He said, no, creating a product is hard but creating a team, a company, is even harder.

The best thing I ever invented was Apple, the team. And we went through it all. He starts with Wozniak as his partner and gets that Macintosh team under the, you know, pirate flag banner all the way through having Tim Cook, Jony Ive, the best team in Silicon Valley. So I realized from him that creativity is a team sport, that it's a collaborative effort.

ZAKARIA: And how do you create a great team of innovators?

ISAACSON: You know, you can -- the good thing is there's no single, you know, here's the five rules, otherwise we wouldn't get to write books about different people because Bob Noyce, who is sort of the sweetest, nicest guy, creates one of the strongest possible teams of Intel because he gets a guy like Andy Grove who can, you know, be tough when Bob Noyce is sort of this wonderfully accommodating guy.

Likewise, Steve is one of the tougher bosses but he gets people like Wozniak or Tim Cook who know who to make things and manage things and, you know, keep everybody together. So I think you have to look at it like creating a good baseball team or something. You know, who's our utility, you know, player? Who is our shortstop? Who is our designated hitter? Who is our pitcher?

But the main thing is two positions. You need a visionary because, you know, without a visionary everything you do is barren, and you need somebody who can everyday execute because vision without execution is just hallucination. So that's the core of a good team, and then you have to say, OK, and we need a designer, we need an engineer. We need the right people to make it work.

ZAKARIA: What about the other factors that have aided innovation which you talk about in the book? I mean, if you think about Silicon Valley, this is -- happens for a unique set of circumstances that take place. The government is funding education in California in a big way from the public school system but also the great public universities, and then you have the big government contracts for defense which is why so many engineers end up there.

How big a role do you think -- because when you ask people in Silicon Valley, and I have, they all say government has no role. ISAACSON: Absolutely.

ZAKARIA: But as --

ISAACSON: I hope they read parts of the book. You know, Vannevar Bush, who is this wonderful guy who helped start the digital revolution, he's somebody who's a dean at MIT, helps (INAUDIBLE), he, you know, oversees America's wartime research. And one of the things is, he said you have to have a collaboration of government research, universities, and private corporation, whether it's to create a microchip, where it's a space program and the missile program. But also Fairchild and Intel and the great universities doing it.

And I think now there's more of a tension between government, private corporations, and universities. We're losing that sort of spirit that helped create the digital revolution.

ZAKARIA: And why has that changed? What do you think has changed?

ISAACSON: Well, I think we've become a much more partisan bit of society. If you look at Eisenhower, he's the great one on this. He loves the scientists. He has Dr. Killian, he has all these people, he calls them my scientists, and they start the space program. You know, we give Kennedy credit for it but it's really Eisenhower. They start the program that fund ARPANET which becomes the Internet.

And it's because he really believed that basic research was the seed core from which future innovations would grow, and he really wanted to nurture that, and whether it was the infrastructure like the interstate highways or the research infrastructure. I think now with our partisan divides, our sequester, you look at the sequester and what it did to basic research three or four years ago, people doing engineering on viruses.

Now we're hit with Ebola and we say, gee, why is it going to take until May to get a vaccine tested? Well, if you don't do the basic research on how you engineer viruses, you're not going to be able to respond to innovations you need.

ZAKARIA: When you look at a Silicon Valley today, what is -- what picture do you think historians will draw that painted what 50 --

ISAACSON: Yes. They're willing to take risks and I think that's what we're going to look at. People who are willing to fail. You have Travis Kalanick on here, I think he failed two or three times before he hit it with Uber. And yet people are still willing to bet on it. In our countries, if you fail a couple of times, you're a failure. You're not somebody who's a budding entrepreneur.

ZAKARIA: Next up, we do have Travis Kalanick on the show. He is, of course, the CEO of Uber, who plans to make getting a car and driver as easy as turning on a faucet and getting water. He'll tell us about his great innovative success but also his failures.

(BEGIN VIDEO CLIP) TRAVIS KALANICK, CEO, UBER: I find that the folks that are most successful in Silicon Valley are the ones who do not accept failure ever.

(END VIDEO CLIP)

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ZAKARIA: Before Uber started in 2009, if you wanted a car and driver to drive you across town, you had to plan ahead, make a call, even talk to somebody. Now you just press a button on your mobile phone and a few minutes later your chariot arrives.

Today Uber is Uber successful seemingly on the present and also quite controversial. All entrepreneurs agree, innovation isn't easy and it hasn't been for Uber's CEO Travis Kalanick whose first company, Scour, was sued for an astounding $250 billion before filing for bankruptcy.

I visited Uber's San Francisco headquarters in September to talk to Kalanick about innovation and his entrepreneurial successes and his failures.

So you are a grizzled veteran by Silicon Valley standards. You're not 21 years old.

(LAUGHTER)

KALANICK: I don't know what you're talking about, Fareed.

ZAKARIA: So you've seen it. You went through the dotcom.

KALANICK: Sure.

ZAKARIA: The bubble and then the crash.

KALANICK: Sure. Yes.

ZAKARIA: And you had companies. What do you think really drives innovation?

KALANICK: I mean, actually the way I look at innovation is it's really about creative problem solving. It's about on one end being very creative and almost being an idea person and seeing ideas and interesting ways of doing things everywhere, but on the other side it's about being very, very analytical and very, very dedicated to details. Like we say, God is in the details.

So if you're analytical and logical, almost like a machine, I'm a computer engineer. I went to school as a computer engineer, but bring a creative idea, an ideation piece to that, put them together, you're now a creative problem solver. And that's where I think innovation comes from.

And here at the company, you know, I try to -- we look for creative problem solvers, and we try to push people to solve things creatively because that's where innovation is. ZAKARIA: What did you learn from failure? I mean, I realize you

didn't fail completely, though there was a mixed result, your companies.

KALANICK: Sure.

ZAKARIA: But people always say in Silicon Valley, the great thing about the place is you can fail. So what's the upside of down?

KALANICK: It's so easy to talk about failure when you're not failing. It's so much easier. So a lot of the folks who talk about failure and how it's so easy to do in Silicon Valley, those are people who have succeeded.

(LAUGHTER)

KALANICK: But when they hadn't succeed yet, they were scared out of their minds of failing. And yes, I have certainly failed a couple of times, and it's scary. But I think it's, you know, really the folks who do succeed are the folks not who accept failure but the folks who do not. And so, though this is -- you know, Silicon Valley is a place where you can fail and get back up on your feet, I find that the folks that are most successful in Silicon Valley are the ones who do not accept failure ever.

And they just keep going until it works. But they don't keep going on something that's not going to work. They adjust and they move and try to find where reality and their vision meet. I like to say you can bend reality but you can't break it.

ZAKARIA: So it's a strange combination of being determined but also the awareness to say well, the market is telling me I'm wrong here.

KALANICK: Yes. It's sort of a -- you have to be incredibly perseverant, scrappy and push through all adversity, but on the other side you have to be empathetic to reality. And it's hard to know when you're wrong.

ZAKARIA: Do you see a lot of people of who fail and just despair?

KALANICK: Of course, and that's most people, and it's natural because it's very, very, very hard to be successful with something that the world hasn't seen before. The world generally doesn't -- we're enamored with change and we love change and progress but change also can be painful. And you've got to find that kind of change that, OK, maybe there's a little pain there. But the upside is there. And reality will let it happen. And it's a tough balance.

ZAKARIA: What do you think of where Silicon Valley is, where America is with regard to this whole issue of technology? Are we -- it looks like when you look around, the United States dominates the world of technology, of all the biggest companies, most of the biggest companies are here. Do you think that that will continue?

KALANICK: Yes, I think -- It think there is a lot of great -- there's a great ecosystem here in Silicon Valley, and here in San Francisco. But we are -- you know, Uber gets a really interesting perspective on things because we're in hundreds of cities around the world, and we're seeing that innovation and that sort of creativity bubbling up in a lot of different places. I think those cities have to start embracing innovation. Not just with words but with action. But I think we're starting to see -- we're starting to see this thing bubble up in other cities and cities that are taking positive action towards being a technology hub. Like that's happening.

ZAKARIA: What are the places you've been to which have impressed you in that regard?

KALANICK: Probably the most impressive is Beijing. It's a very young, but very vibrant Silicon Valley. And I'd say that they're -- you know, for a while, people thought about China as like, well, they would copy what you do and they're always behind.

What's happening is the copying is catching up. But when it catches up, there's nothing left to copy. And so what we're starting to see is innovation. It's starting to percolate up in China. And I think that's really exciting.

ZAKARIA: It doesn't scare you?

KALANICK: No, not at all. Well, mainly because we're everywhere. And why should it scare me? It doesn't matter where people are in terms of where they innovate. I think that innovation is good for the world. And the more of it that's happening, the better. So I'm actually quite excited about it.

ZAKARIA: That was Travis Kalanick, the CEO of Uber.

Now as I mentioned at the start of the segment, Uber is not only very successful, it's also controversial. We recorded the interview with Kalanick in September. Then last week another kind of story about Uber emerged as first reported in BuzzFeed an Uber executive suggested at a dinner that the company could spend $1 million to hire researchers to dig up dirt on journalists who publish stories that Uber doesn't like.

In response to his executive's remarks, Kalanick tweeted a 14-part apology. He began by saying that the executive's remarks were, quote, "terrible and do not represent the company," unquote.

Next on the program, a very different perspective. Peter Thiel was a founder of PayPal and an early investor in Facebook. He's another Wunderkind of Silicon Valley. But he's not impressed. He says most of what we call innovation isn't innovation at all, and despite our future that seems to be filled with driverless cars and mission to Mars, he says in some ways we live in un-innovative times.

When we come back.

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ZAKARIA: Peter Thiel has had serial successes when it comes to innovation. He was a founder of PayPal and an early investor in Facebook, both of which helped to build his nest egg, which Forbes estimates at over $2 billion. PayPal and Facebook are his two biggest successes. But they're also examples of his style of innovation. He calls it Zero to One innovation.

He explains in his new book, also called "Zero to One," that say you want to get into the typewriter business and you decide to make 100 typewriters. That's incremental innovation. But if you take a typewriter and develop a word processor, that is the kind of innovation that makes a difference. Zero to One innovation.

PETER THIEL, FOUNDER, PAYPAL: The really great technology companies always do something that's -- that involves these sort of breakthroughs.

(BEGIN VIDEO CLIP)

STEVE JOBS, FORMER APPLE CEO: Today Apple is going to reinvent the phone.

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THIEL: Apple was the first company to develop a smartphone that worked. Google with the PageRank algorithm search, enables computers to automate search results. You know, Facebook was the first one to really crack identity on the Internet and enable social networking to actually come into its own as opposed to a lot of the very incremental kinds of things that one often sees where it's a slightly better solar panel, the -- you know, the fourth online pet food company that does things a little bit better or differently than the others.

And even though most companies are incrementalist in nature, the ones that succeed in building these breakthroughs are the ones that create the best bulk of all value.

ZAKARIA: But you have been writing for a while that you actually think we may not be living in as innovative times as everybody thinks we are.

THIEL: Well, it's been a story -- it's a two-track story on innovation in the last three or four decades where we've had enormous innovation in the world of computers, Internet, mobile Internet, the world of bits. We've had much less innovation in the world of atoms and energy and food technology, biotech, medicine, space travel, supersonic airplanes --

ZAKARIA: Even just airplane, I mean, if you think about it.

THIEL: Yes.

ZAKARIA: It takes about the same amount of time to fly from point A to point B on the globe as it did five decades ago.

THIEL: Probably even slower with the low-tech airport security systems they have in place today, and so technology, the idea of technology, has been narrowed and in many cases today the word technology means simply information technology. And I do think it would be good for our world if we broaden this again and saw accelerating technological progress across all these frontiers.

ZAKARIA: When you were writing this book, when you were living your life, what examples taught you the most? You know because a lot of this is a very rich experiential guide. What are the examples that to you were the most telling and taught you some important lesson that you want to convey.

THIEL: Well, there are -- there are all these different experiences. I mean, certainly the experiences we had at PayPal were incredibly formative. It was a crazy 3 1/2 years and we're sort of -- you had just about every single challenge you could imagine. And I think this is one of the reasons there's been this so-called PayPal mafia in Silicon Valley of all these people who started all -- all these ex- PayPal people who started these companies like Tesla, SpaceX. I was involved in Palantir, Reed Hoffman, LinkedIn, Yelp, Yammer, YouTube, were all started by ex-PayPal people.

Because I think the lesson that was learned at PayPal was that it was hard but possible to build a great company. And normally people learn a lesson that it's impossible because they're in a company that fails and they aim for something much less ambitious the next time around or if you're in a super successful company like a Microsoft or a Google, you will learn the lesson that it's easy, and the lesson that something is impossible or easy is an equally incorrect lesson because if it's impossible, there's no point in trying. If it's easy, there's no need to try. And so whether you think it's impossible or easy, either way you won't really try.

ZAKARIA: And do you think that -- you know there is a kind of boundless optimism to the idea of entrepreneurship and everyone is telling you follow your dream, go for it even if everyone tells you you're wrong. You're a pretty level-headed guy. In fact, often I've seen in your writing a certain kind of historical pessimism.

What do you say to people? Are you somebody to cheer on a kind of boundless optimism?

THIEL: Well, I don't -- I think failure is very overrated, so I don't think -- I don't think we should be setting people up to fail, and so it's very important to think through, is this a good idea, and you don't want to categorically say that everyone is fantastic. And there are 20,000 people a year who move to Los Angeles to become movie stars, maybe 20 of them make it, and I wonder whether perhaps if some of them could have been told to do something different long before they moved there.

And so there's probably a Silicon Valley version of this. I think the percentage success ratios are higher. You know, there's a lot of different ways people do well in the Silicon Valley ecosystem but certainly I think we don't -- we never do people a favor by setting them up for failure.

ZAKARIA: Next on GPS, a rebuttal of sorts to Peter Thiel.

Does every innovation have to dramatically change the world? Does every entrepreneur have to look like Mark Zuckerberg in a hoodie and sneakers?

Of course not says by next guest whose company has looked at an astounding 40,000 business plans and advised more than 1,000 entrepreneurs worldwide. She says anybody can be a change maker as long as they're a little bit crazy.

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ZAKARIA: If you look at the pantheon of recent innovators, you have Mark, you have Steve, of course, Bill. Then there's the other Mark and, yep, another Steve. There's Jeff. And Larry and the other Larry. And Sergei, too. But where are the women? Where are Susan, Jennifer and Liza? Where is the 50-year-old who quits his job to pursue his lifelong business dream? Where are the African-Americans, where are the Brazilians, the Nepalese?

My next guest says all of those people can be innovators, and more importantly, already are. Linda Rottenberg says her firm, Endeavor, has read 40,000 business plans and partnered up with 1,000 of those entrepreneurs, mentoring them, helping them network, advising them, helping get them access to capital. Rottenberg's theory of innovation is encapsulated in the title of her new book "Crazy I a Compliment." I'll let her explain.

To you, an entrepreneur is somebody who is not always a tech genius, somebody who looks like Mark Zuckerberg. Explain.

LINDA ROTTENBERG, CO-FOUNDER, ENDEAVOR: Yes. I've been saying to people, you don't need a hoodie to be an entrepreneur. So, first of all, in this country, it turns out the two fastest growing groups starting businesses are women and baby boomers over 55.

And I have worked with a thousand entrepreneurs around the world. Every industry, every generation, every race and gender. And what I believe is that entrepreneurs are people who view the world differently. They allow themselves to be contrarian. They zig when everyone else zags. And then they do something about it. I have come to believe that entrepreneur is a fancy way of saying you're a doer. And it's not necessarily in tech. And it's not necessarily people who have radical innovations. For me entrepreneurship is about a series of minovations, mini innovations and executing well.

ZAKARIA: But you do say that the entrepreneur, at the core, has to believe in himself? You said, the most important person you have to convince is you?

ROTTENBERG: Yes. You are the person that's holding yourself back. So many entrepreneurs start when the chips are down. And one of the stories that I tell in "Crazy Is a Compliment" is the story of Walt Disney. And Walt Disney, actually is a failed cartoon artist. He comes with no money in his pocket to -- gets a little bit of success with Oswald the Rabbit and the cartoon character basically gets stolen out from under him. So, he is on a train ride home brooding. And that's when he comes up with Mickey Mouse. And he allows himself, when everyone says this is not going to work, you are crazy, to believe, and look at Disney today. ZAKARIA: If you look at Silicon Valley, it's overwhelmingly male.

ROTTENBERG: Yeah.

ZAKARIA: Do you think that a reason why women couldn't be as good entrepreneurs as men?

ROTTENBERG: The two fastest growing group starting businesses are women and baby boomers. We just don't hear their stories. I'm a big believer in the role model effect and that we need other stories so we understand that it's not just Mark Zuckerberg becoming an entrepreneur. We know that in terms of venture capital, that only six to eight percent of venture-backed businesses are started by women. And that's a fact. And I'm all for the efforts to increase the number of young girls in STEM, in science, technology, engineering, and math, but, again, I think that misses the point.

So many of the female entrepreneurs start by solving a problem in front of them. In the case of Pepperidge Farm, it was a woman who grew up in the Great Depression and her son had food allergies and needed gluten-free bread. Well, they didn't have it, so she ended up creating it. And what she started out, she said her first try was like the Stone Age bread because it was that hard. It becomes Pepperidge Farm. That's amazing. We never hear of those stories. And so I think by over-focusing on the tech, we're discouraging a whole host of people who have a crazy idea who could build really significant businesses that actually help create a middle class, but in more traditional industries.

ZAKARIA: When you look at the thousand entrepreneurs you've helped and you look at the ones that end up being the most successful, is there some trait that you see in them, the ones that really separates them from the rest?

ROTTENBERG: I think they're the ones that realize that if you're being called crazy, that it is a compliment. And that if you're not called crazy you're not thinking big enough. We met this woman in Saudi Arabia who created the Nespresso of Arabic coffee. Why? Because she had a problem. Her mother made terrible coffee and she went to make her grandmother's recipe and it took 40 minutes. She said I don't have 40 minutes. So, she created the packets with the spices and then actually the machine as well, created a $10 million business within less than two years. Got it down to seven minutes. Talk about changing society. You know, all the women in Saudi Arabia are clamoring for this. And she just needed to solve a problem. Everyone said she was out of her mind. So I do think that entrepreneurs don't see themselves as nuts, but everyone else does. You can't rock the boat without being told you're off your rocker.

ZAKARIA: Next on "GPS," disruption. It's a buzz word from Silicon Valley in California to Silicon Alley in New York. Apple disrupted music and film. Tesla is disrupting the automotive industry. E-mail has disrupted the U.S. postal service. What's the next industry ripe for disruption? If our next innovators are betting right, it's bedding, mattresses. Getting a good night's sleep. How? I will show you when we come back. (COMMERCIAL BREAK)

ZAKARIA: Apple disrupted how we communicate. Google disrupted how we get information. Airbnb disrupted where we sleep when we travel. Tesla is disrupting how we get around. Many of those activities might not have seemed ripe for disruption to you and me, but the innovators behind those products saw an opening, a new way, a better way of doing something we had been doing the same way for decades.

So, have you shopped for a mattress lately? It usually goes a little like this. You're presented with a myriad of mattress options, you lie down for just a few moments on something you're going to spend a third of your life on, you make a snap decision and then almost immediately you regret how much you spent on it. Enter Casper.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We set out to build the perfect mattress for anyone. And we really did believe that you could design one mattress that fits all.

(END VIDEO CLIP)

ZAKARIA: Casper is not a person or a friendly ghost but rather a sleep starter. The company which launched back in April hopes to disrupt the $13 billion mattress industry. The only thing about sleep they do not want to disrupt, your precious eight hours. With its 25 employees squeezed into a cozy 1,800 square foot space in downtown Manhattan, Casper sells mattresses directly to consumers. Remember, as Linda Rottenberg reminded us, most startups are not about fancy new technology. They're new businesses that try to give you a better product or better experience.

UNIDENTIFIED MALE: I love it.

ZAKARIA: Casper has eliminated the middleman in mattresses and they've eliminated the choice. You don't have the usual selections of firm or plush or pillow top here. There's one Casper. Take it or leave it. We sat down with several of the company's five founders.

UNIDENTIFIED MALE: When you check into a hotel, they don't ask you what kind of mattress you need. Because in general, you can build one that fits almost everybody.

ZAKARIA: It took Goldilocks only three tries to find a bed that felt just right. Well, the founders of Casper say they went through hundreds of different versions before finding the one.

UNIDENTIFIED MALE: We did focus groups, we sent them out to different places. You know, we even had people measuring with their jawbones or their fit bit, you know, sleep sensors, whether they're getting better sleep on it or not. Until we got to a point where we knew like this is it, this is going to be a better product.

ZAKARIA: The final secret recipe is a combination of latex, memory foam and poly foam and it's made almost entirely in the United States. They have applied for a patent but they say that innovation is happening not just in the product design but in their overall approach to the business of sleep.

UNIDENTIFIED MALE: We went back to the very beginning and rethought every element of the customer journey. So, from the actual product that arrives in your hands and the way that we engineered it, that we designed it, where we - you know, where the factories are, what the individual raw components are all the way through to (INAUDIBLE) in your home, right? How we put it into a box that's small enough so that we can deliver it via cargo does it get into your home? How do we put it in a box small enough that we can deliver it via cargo bike and make it easy so you can get it in our long window?

ZAKARIA: You heard correctly. The Casper folds up in a box the size of a mini fridge. And if you live in New York City, your mattress could arrive by bicycle. We followed a mattress' five miles journey through busy streets to the Upper West Side of Manhattan.

Customer (INAUDIBLE) was able to move into a new apartment, purchase a mattress, have it delivered by bike, unwrap it and sleep on it all in one day. His queen mattress was relatively cheap, just $850. To put that in perspective, we found mattresses ranged from $159 to more than $20,000. You can order while speaking to a human.

UNIDENTIFIED FEMALE: A queen we can make happen today.

ZAKARIA: Or without ever speaking to anyone.

UNIDENTIFIED MALE: We have a huge amount of customer feedback. And they'll tell us what they love, they'll tell us what they hate, sometimes with vast exuberance for both.

ZAKARIA: The loving side of the exuberance is what the company is counting on. Overall Casper says it has raised close to $15 million in investments. They will not disclose their total sales, but we'll say the number is in the millions. Their initial success actually caught them off-guard.

UNIDENTIFIED MALE: Growing fast has been really hard. You know, when we started, we bought enough inventory for what we thought was going to be three months, which was just, you know, a couple of dozen beds. And on the first day we sold out of everything within the first two or three hours. And so we were totally unprepared. You know, our factories had been preparing on making a couple dozen units for us. They had no idea how to think about how do I go from making ten to making a thousand in the course of a matter of months.

UNIDENTIFIED MALE: I would guess that the mattress industry is one of probably the worst perceived industries that are out there. And the fact that we're so radically different in terms of how we interact with people and how we talk to people. I really think it's that fundamental core of why what we're doing is innovative.

ZAKARIA: There you have it. The life of a startup. Cramped quarters, late nights, passionate people with interesting ideas.

UNIDENTIFIED FEMALE: Surprise, worked really well!

ZAKARIA: Casper isn't the only company trying to disrupt the mattress world. But they're doing so with a unique style. They're expanding in square footage and in staff and they're going global. They've recently launched sales to Canada. But this does not mean they can rest easy. If they succeed, they'll be in the minority. Most startups fail. And their biggest challenge may be the simple fact that people are in the habit of going to the store to buy their mattresses. Of course, that was probably said about many industries right before a new company came along with a new way of doing things.

So, what will be the cumulative effect of all of the innovation happening around the world today? My next guest says in coming decades, we will all have to work much less. The brave new world of leisure, when we come back.

(COMMERCIAL BREAK)

ZAKARIA: So what kind of world will be ushered into being by the innovators you met today and many others like them? For that I wanted to talk to Vinod Khosla. He's been on the cutting edge in Silicon Valley for decades. He was the founding CEO of Sun Microsystems. He since entered the world of Venture Capital. He now runs his own firm, Khosla Ventures.

Listen in, his view of the future of work is fascinating. Since he says we'll all be doing much less of it?

When you look at the future, you are seeing more of the new technologies than almost anybody. What excites you the most? I've heard you say things like 80 percent of what doctors do is going to be done by computers. Is that really true?

VINOD KHOSLA, SUN MICROSYSTEMS: Absolutely. I have zero doubt. Now that's not tomorrow. That's not in five years. But in 20 years, absolutely true. You won't want a doctor to do your diagnosis or monitoring or pick your therapy. It's a bad idea. That's why IBM Watson is trying to pick cancer therapists because it's too complex for humans to do. There is 15,000 diseases, 15,000 devices, drugs, therapies, prescriptions. You think a doctor who graduated 25, 30 years ago remembers what he learned? Do you think if you're a cardiac patient your cardiologist has read even 100 of the last 5,000 articles published last year on cardiac disease? Not a chance.

ZAKARIA: But the computer can go through it all?

KHOSLA: Absolutely. I think 10, 20 years from now, there will be very few areas, maybe none, where human judgment is better than machine judgment. That means almost universally human judgment will be surpassed by machine judgment, whether that's doctors or what to do in a car while you're driving it. Humans have accidents. Google's driverless car has driven 700,000 miles without an accident. Humans cannot drive 700,000 miles, even the best humans have accidents before they get to 700,000 miles. Legal research, law researchers. We have machine learning systems for attempting to replace all legal research. So, that - because it was judgment. And these new systems are very good at judgment.

ZAKARIA: So what do humans do?

KHOSLA: Tricky topic. The good news is all the jobs we'll eliminate are the ones people think of as work and drudgery. So, that's the good news. The other good news is if, in fact, this happens, we will have an era of abundance, extremely high productivity. That means there will be enough goods and services to go around.

ZAKARIA: And there will have mass leisure time, in effect?

KHOSLA: Yeah, or time to pursue their passions. This will happen over 50 years so it's not -- it may happen over 20 or 30 if you're optimistic, this era of abundance. But I do believe we will free up humans to do more of what they want.

ZAKARIA: In trying to understand innovation, let's come back to where we started. Teamwork. We think of the lone creative genius. But as Walter Isaacson pointed out, most innovation happens because of teamwork. If we broaden out the idea of teamwork to mean communication and collaboration, we would see that throughout history, human beings have advanced when they've been able to work together. Look at periods of great ferment in the advance of human history, and you will see how people worked off each other's ideas and how those collaborative efforts snowballed, because of the interplay of thought and practice.

In his book "The Rational Optimist," Matt Ridley asks the question, when did human progress really take off? And his answer is, when human beings began exchanging things, ideas, skills, goods, services. Once we began to benefit from the combined and collaborative efforts of groups of people, we found that two plus two started to equal 5, and 6, and 20 and 100. I once asked Jeff Bewkes, the CEO of Time Warner, our parent company, what skill was the most useful in business that wasn't taught in college or graduate schools much? He replied immediately, teamwork. You have to know how to work with people and get others to want to work with you. It's probably the crucial skill and yet education is mostly about solo performances.

One reason why America has been so innovative is because its many sectors, the federal government, universities, venture capitalists, entrepreneurs, all compete and collaborate to push forward. Finally, innovation is also about collaboration in the sense that it is a collaboration between two kinds of temperament. At one of Steve Jobs' last product launches, he famously explained how Apple worked.

(BEGIN VIDEO CLIP)

STEVE JOBS: It's in Apple's DNA that technology alone is not enough, that it's technology married with liberal arts, married with the humanities, that yields us the result that makes our hearts sing.

(END VIDEO CLIP)

ZAKARIA: But Isaacson couples that quote with a cautionary caveat. It is also true, he says, that people who love the arts and humanities should endeavor to appreciate the beauties of math and physics. Otherwise, they will be left as bystanders at the intersection of arts and science when most digital age creativity will occur. They will surrender control of that territory to the engineers. So my conclusion is, if you want to innovate, think crazily, work with others, think big, be creative, and keep up with your math.