Headquarters thanks as always good morning, welcome to squawk alley. It is 11 00 a. M. At the United Nations headquarters in new york 11 00 a. M. On wall street, and squawk alley is live good Tuesday Morning welcome to squawk alley. I am Carl Quintanilla with Morgan Brennan and jon fortt at post nine of the New York Stock Exchange were going to begin with wework founder adam newman has started talks with Board Directors and investors on his future with the company. This comes after vanity fair says he met with jamie dimon how to get the ipo back on track joining us to discuss the latest in that saga, good morning to you both stephanie, ill start with you what do you think . Is adam neumann poised to leave the company, does the board have the ability to make it happen . Theres a lot of stuff in play now i think adam neumann needs to think of whats best for him and the company and other shareholders i suspect that in addition to talking to board members, he probably needs to be doing some consultation with his family, with his closest advisers. The challenge adam faces now i suspect is like a lot of fallen founders, he is finding himself with not a lot of friends to turn to. It is clear from News Coverage coming out that former employees are starting to reveal things about whats happening inside the company, big supporters are falling by the wayside i think theres a real lesson for founders about the way to comfort themselves as they build their companies. When things get rough, you need friends. It seems like adams friends are falling by the wayside. We talk a lot about what it means from an investor standpoint, i cant help but think this is probably weighing on blou east aemployees and folr within the company as well absolutely. I think there are parallels to the uber situation and down fall of Travis Kalanick clearly it had a big impact on employees at the time that was going on at uber this is one of the kinds of messy byproducts of having these visionary founders yes, theyre able to, you know, harness all of this energy and momentum for their companies, including among their blemployee base, but when they fall and they pile up and you see through the cracks, i think theres also a lot of fallout with the employee base. Were definitely starting to see that one of the interesting things is figuring out how much is an adam neumann and how much is a wework problem. I may argue this is softbank chickens coming home to roost. They encourage crazy founders with outlandish ideas, trying to grow like gang busters at all costs in this era. We see it at wework, saw it at uber theres a sense that this concept is hitting a wall of some sort. I dont see how it plays out in a way thats great for the likes of softbank either way if you replace neumann, dont you stick a shiv in the growth story, if you dont, you have to mark down the investment, right . I think all these things are happening. Certainly every Portfolio Company in Vision Fund Portfolio that follows this pattern of the visionary founder, these are all going to get scrutinized heavily. There are companies in the softbank vision portfolio that dont follow this pattern. I think of an arm, for example thats not a company, it is tied to the vision, but thats a very Different Company than an use or wework and already public. And already public. Nvidia is another. Softbank has made investments that feel more run of the mill, but youre right, jon. There will be assessment of the founder visionary investment that softbank has made, and i think everyone, including people at that company will be going through the portfolios. Im looking at the list uber is the visions largest, followed by arm and nvidia, doordash, sofi, slack, theyre not all founder stories, thats for sure. No. And Stewart Butterfield is the corollary, opposite to adam neumann or Travis Kalanick story. You know, i dont want to get too far ahead of myself, but i think that someone like Stewart Butterfield comported himself in a way thats visionary and business like, and theres proof you can be both. Turning to netflix i was going to say he hasnt hit pot in the cereal box at least. Okay. Turning to netflix, thats going negative for the year, more competitors rush into that space. The cover story on netherlands that covers the bet on original content, women that are leading the charge tell us about it it is interesting obviously we have seen netflix go through pivots in the past, they have been technological pivots, move to streaming is the biggest one probably now netflix is finding itself in a very different place where content is king. You have all of the other streaming services coming out. A lot of them priced at lower price points than netflix is offering it finds itself having to compete on content and part of its strategy is it hired on Diverse Group of people to create content for everyone on a global level. Stephanie, netflix has gone negative for the year, gave up a 46 gain folks come on, talk about competitors, the fact that they are going into the biggest battle, the race for eyeballs, keeping subscribers. Is it overdone when you see 46 reversal i think 46 reversal feels like a big drop. But ill point to something from the cover story, ted sarandos says we started as a tech company but have become a media, Entertainment Company. If you put it out there that youre a media, Entertainment Company, be prepared to be valued like a media, Entertainment Company as opposed to being valued as a tech company. The way theyre operating, spending, putting their energies feels more like a content company than tech company. Seems to me something fundamental about netflix is about to be tested and thats how much value can they extract from the data. I feel they sold this idea that got so much data on consumer taste, what they want to see, they can develop content for a better price, targeting a specific demographic that will keep them on the platform. Disney doesnt have that data, apple doesnt have that data if they steal netflix customers, does that disprove a big part of netflixs tech thesis . I think this is definitely going to be tested in coming years. One point to keep in mind, even though netflix has this advantage, other players dont have the data, both because they havent had the time to invest in it and build it out, maybe dont have the audience that would help to populate that data, but they will catch up not only is this going to be tested now, how valuable, is this really netflix, how valuable to other players and is it a competitive advantage i dont think it will be for long this goes back to the conversation we have been having a couple years what would you rather be, content player with the brand and needs data or the data company, phone company in some cases who wants to be a content player and needs a brand, right . Whos got the biggest ask . The classic content versus distribution question. You know, it is very hard to use data to create the marvel cinematic universe i will always bet on a great content creator over Artificial Intelligence and data any day of the week. Finally to another faang name, facebook, acquiring startup control labs wi i have an interesting theory. I think facebook should embrace this acquisition, position it as tech for good. It would be an incredible pr move there are already scientists that are developing neuro technologies that enable people that arent able to speak to use their brain waves to communicate, tell people what theyre thinking, to use this technology for good. I think some examples from the company are that theyre using an arm band to help with muscle control and things like that i think if facebook wants to push into the acquisition, they could use a pr win this is a real opportunity to go out and use it as tech for good platform. Even though they get larger trust us, were going to be good now, but were larger. They are larger, but if they lead with something, instead of saying this is mind control, if they position this as heres how we can give voice to the voiceless, heres how we give movement to people who cant move, i think it could be a win for them in a way, it links indirectly to Artificial Intelligence and what you need to control an ai environment, but does this also show that facebook is plowing ahead with smaller acquisitions, despite the antitrust scrutiny theyre under . They have to keep innovating, just because theyre under scrutiny and getting fined and hit from different sides, they have to keep innovating. How have they innovated the last few years . They made acquisitions i think this is not that surprising what do you think it signals about the future of facebook and direction Mark Zuckerberg is looking to go . I mean, i would expect them to do a lot more on the payment side, private messaging, in that area they still havent exactly shown us how theyre going to monetize the new direction theyre going in the neural interface stuff is something that a lot of different people are doing, elon musk is invested in this they have to show that theyre making some progress theyve been at it a few years, it is not an entirely new area i think they have to innovate a cross across a lot of areas, but this isnt it yet. Thanks for joining us today thank you when we come back, california cracking down on vaping, launching a probe into juul as the nationwide death toll and vaping related deaths reaches nine dow has come well off the gh up 32 points when did you see the sign . When i needed to jumpstart sales. Build attendance for an event. Help people find their way. Fastsigns designed new directional signage. And got them back on track. Get started at fastsigns. Com. Micron produces memory chips used in countless electronics. To advance the chinese governments five Year Economic plan, a Company Owned by the Chinese State allegedly stole microns designs valued at up to 8. 7 billion soon, the Chinese Company obtains patents for nearly an identical product, and micron was banned from selling its own goods in china that is President Trump last hour saying china got a patent on stolen micron technology. Shares of micron falling nearly 2 this morning, on pace for its worst day since august micron ceo is going to be joining squawk on the street friday morning, guys part of the carrot and stick approach that the president seemed to have talking about china, what has happened since china was admitted into the wto, and what hasnt happened, kind of personally complimentary towards president xi, calling him a good leader, but outlining what hasnt changed and what needs to the u. S. Did indict chinese and taiwan firms for targeting micron and these practices november last year this has been a case, and micron specifically has been out in the news because of these investigations, so its certainly moving the stock today. But weve known this type of probe was under way. Yeah. Worst day for micron in almost a month or so. Federal prosecutors in california conducting a criminal probe into juul this morning rahel solomon has more. This news the latest in regulatory head winds for the company as teen vaping use surges this month alone, a Bipartisan Group of lawmakers urged the fda to immediately pull juul and similar products from store shelves, the fda warned juul over marketing products as safer than traditional cigarettes, and requested documents within 30 days of the letter, and the white house announced plans to remove all e cigarettes from the market until the fda reviews them walmart announced friday it would stop selling e cigarettes in u. S. Stores but juul is sold in stores like 7eleven, chevron, exxon, quick trip at one point, the company was worth more than 35 billion, but reporting from our david faber now indicates a lower value today. Nine deaths are linked to vaping, u. S. Public Health Officials are investigating hundreds of vaping related lung illness, and none of the deaths are linked to juul products. But carl, as you know, when you spoke to the ceo of juul, kevin burns, about teenagers using vape products, apologized to parents, said it is not intended for teens. We reached out to the company again today, they said no comment. Meantime, shares of the tobacco giant altria with 35 stake in juul not reacting, it is up. 2 . There you have it, carl. Back to you. Thank you for that. All of this is while a house hearing on vaping is under way in washington, investigating what they call the youth vaping epidemic with us, former ceo fred hasan welcome back good to see you. Good to be here. I wonder what you think of how we regulated these products as a country since the beginning and allowed them to grow so quickly. Yeah. I think in this case the science has moved forward very quickly weve seen very fast advances in the devices, powerful devices that can deliver this nicotine very efficiently, very powerfully, and the Regulatory Framework has simply not kept up were looking at a Public Health crisis 5 million teenagers who vaped this year is just too high and the number has doubled in the last two years this is a Public Health crisis nobody could have seen it five years ago, but it is happening now. Yeah, the science moved quickly. Of course, advocates of the industry would say look, were trying to help people quit smoking. We know thats the biggest killer of the american population, next to heart disease, perhaps what happens are you worried about the category going away . Well, so on the subject of quitting smoking, my former company was the innovator in the nicotine gum and patch, the brand name was nicorette but we came through the front door applied through the fda, got it approved, and nicotine was delivered gradually into the bloodstream, it was not a hit. So i would just recommend that if this truly is helpful to quit smoking, that they should be invited to do the research and then to file their application with the fda and to get a lawful approval to be a help to quit smoking. I think the problem were seeing now is that these devices are allowing a large amount of nicotine to be hit very hard, very quickly, and as we know, nicotine is a very powerful and addictive substance. Some people say more powerful than cocaine yeah. You know, fred, you mention the Regulatory Framework didnt keep up with the market i wonder what you think of government reaction so far have the right steps been taken . Enough steps been taken . I think some reactions are occurring, but what we need is the congress to come together bipartisan manner, deal with this directly. This is not a partisan issue, give the fda the support to do it the fda already recognizes that nicotine is an addictive substance. All the e cigarettes have a flavor, theyre invitation to recreation, they should be banned also, why not try to encourage more counseling for the mothers and fathers of the children. Have them talk to the nineyearolds and tell them, dont take on the peer pressure from school. This is not going to be good for you. I was hoping we would be seeing this be free of nicotine, and it is disappointing were seeing a problem these days fred, this has me worried about what else regulators maybe havent checked or spent enough time on. Theres the whole warm tobacco or whatever you call it that the industry is saying surely it has got to be safer than cigarette smoking. Is it really have enough tests been done on this stuff before its been released to the public under whatever marketing scheme the companies have there is no question that smoking is very dangerous. 35 of cancers are linked to smoking. Smoking is bad this thing requires more experience, a lot more data, and a lot more people willing to invest in the r d required to understand these things. What i am concerned about is the very fast move through very powerful marketing tools, virtual viral marketing to get to younger people in this manner, to get them onto the product. Lets learn more if it does good things like nicorette gum, lets do it all it does now is gives you a powerful nicotine hit. Finally, fred, the company probably expected Regulatory Risk in the states i wonder what you make of india and china and the idea that maybe those International Gold mines are lost well, theyre also clamping down obviously this is a global problem nicotine nicotine addiction is a problem around the world people are seeing the data the u. S. And uk are more free for products of this type than many other countries i really think it has to be stopped before it becomes a real problem. Getting young people onto nicotine is a real issue nicotine is such a powerful addictive substance. Certainly reminded of that every day. Always good to get insight on an important topic. Thanks again after the break, can you tell the difference between the two pairs of shoes you have a pair of allbirds and amazons onset. On set. A look at that in a moment woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. All right. Lets get back to a controversy that came to light last week, having to do with allbirds, popular hipster shoe, and amazon, which is arguably copying allbirds one box, brown cardboard box, black lettering. This is allbirds the company is worth 1. 4 billion, a startup. Theyve got a shoe that has a distinctive look you see here, bowool, this whit the laces. You see allbirds, you generally know it is allbirds. Here is 206 collective thats amazon, seattle this company is obviously worth quite a bit more the shoe is 50 bucks cheaper than this shoe you can see wool upper, very light color if not white bottom. Wool laces some say t