WHEN: Today, Monday, May 4th
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Union Square Ventures Co-Founder Fred Wilson on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today. Following are a few links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000376543, http://video.cnbc.com/gallery/?video=3000376553 and http://video.cnbc.com/gallery/?video=3000376500.
All references must be sourced to CNBC.
SARA EISEN: NEWS FROM CISCO THIS MORNING AS THE TECH GIANT APPOINTS CHUCK ROBBINS TO SUCCEED JOHN CHAMBERS MARKING THE END OF A VERY LONG ERA, ONE OF THE LONGEST RUNS OF A CEO OF A PUBLICLY TRADED COMPANY. OUR OWN JON FORTT JOINS US NOW FROM THE AOL TECH CRUNCH DISRUPT CONFERENCE FROM NEW YORK. WITH UNION SQUARE VENTURE FOUNDER FRED WILSON. JON, JUST ONE OF THE TOPICS OF CONVERSATION THERE ON CISCO.
JON FORTT: ABSOLUTELY. FRED WILSON, THANKS SO MUCH FOR JOINING US. A RARE BROADCAST INTERVIEW WITH YOU. I WANT TO START OFF TALKING ABOUT CISCO. IT'S BEEN 20 YEARS FOR JOHN CHAMBERS STEPPING BACK TO EXECUTIVE CHAIRMAN. CHUCK ROBBINS TAKING OVER. CISCO HAD BEEN A BIG ACQUIRER IN NETWORKING AND SECURITY AND OTHER AREAS. WHAT'S YOUR OUTLOOK ON HOW SIGNIFICANT THIS IS FOR THE TECH ECOSYSTEM OR HOW LONG WILL WE HAVE TO WAIT TO SEE OU SIGNIFICANT IT IS.
FRED WILSON: IT'S NOT CLEAR THAT CHAMBERS IS LEAVING THE BUILDING. HE'S GOING TO BE EXECUTIVE CHAIRMAN. THAT TO ME SIGNALS THAT HE'S GOING TO CONTINUE TO HAVE A VERY SERIOUS INVOLVEMENT WITH THE COMPANY. BUT NEW LEADERSHIP IS ALWAYS GOOD FOR COMPANIES. A NEW LEADERSHIP OF MICROSOFT LOOKS LIKE IT'S SHAKING THINGS UP IN A VERY GOOD WAY FOR MICROSOFT. IT'S POTENTIALLY QUITE POSITIVE FOR CISCO AS WELL.
FORTT: WANT TO TALK ABOUT LIVE VIDEO. YOU'VE BEEN AN INVESTOR IN YOU NOW FOR IT IS A COMPANY ACTUALLY CALLED YOU NOW COMPETES WITH PERISCOPE AND MEERKAT FOR MORE THAN A YEAR AND A HALF. LIVE STREAMING VIDEO HAD A BIG WEEKEND WITH THE PACQUIAO-MAYWEATHER FIGHT. WHAT IS GOING TO DETERMINE THE WINNER IN LIVE VIDEO OR WINNERS? AND WHAT ARE THE CHALLENGES? BECAUSE OF COURSE WE SAW THE COPY RIGHT ISSUES AGAIN REAR THEIR HEADS.
WILSON: WELL I THINK MONETIZATION IS A KEY ISSUE WITH THESE PLATFORMS AND THAT'S WHY WE LIKE YOU NOW. BECAUSE THEY HAVE A MODEL WHERE THE FAN, THE CONSUMERS OF THE LIVE VIDEO PAY THE VARIOUS BROADCASTERS THAT THEY LIKE THE MOST. SO BROADCASTERS CAN COME ON THE YOU NOW PLATFORM AND MAKE MONEY, WHEREAS ON THINGS LIKE PERISCOPE AND MEERKAT IT'S MORE OF A FREE FOR ALL ENVIRONMENT. I'M NOT NOT SAYING THEY CAN'T ADD MONETIZATION. BUT WE'RE VERY EXCITED ABOUT YOU NOW BECAUSE THEY ARE VERY WELL AHEAD OF THEIR COMPETITORS ON MONETIZATION.
FORTT: HOW IMPORTANT IT IS NOT TO JUST RELY ON ADVERTISING IN THIS ENVIRONMENT? LAST WEEK WE SAW TWITTER, LINKED IN YELP COME OUT WITH RESULTS LINKED IN IN PARTICULAR TALKED ABOUT THE IMPACT OF PROGRAMATIC ADVERTISING ON THEIR EARNINGS. THE IDEA THAT THIS MARKETPLACE IN ADS IN SOME CASES IS DRIVING PRICES DOWN MAKING IT MORE IMPORTANT I TGHINK FOR THE STARTUP COMPANIES TO HAVE THE UNDERLYING DATA THAT JUSTIFIES THE PREMIUM PRICES. IS THAT WIPING OUT SOME OF THE POTENTIAL TO MAKE MONEY OFF ADVERTISING UNLESS YOU HAVE THAT DATA? IS IT MORE IMPORTANT TO HAVE A SUBSCRIPTION OR PAY PER VIEW TYPE MODEL?
WILSON: I THINK IT'S ALWAYS GOOD IF YOU HAVE MULTIPLE REVENUE MODELS. IF YOU HAVE AN E COMMERCE MODEL OR A SUBSCRIPTION MODEL PLUS AN AD MODEL. BUT I ACTUALLY THINK FOR AD MODELS COMPANIES LIKE LINKED IN, FACEBOOK, TWITTER THESE COMPANIES THAT HAVE LOTS OF PROPRIETARY DAT ABOUT THEIR USERS THAT THEY DO ON THOSE PLATFORMS THEY'RE GOING TO DO BETTER A PROGRAMATIC WORLD, NOT WORSE, I THINK.
FORTT: ALRIGHT. SIMON HAS A QUESTION.
SIMON HOBBS: HEY, MR. WILSON, GOOD MORNING. YOU RECENTLY PUSHED BACK YOU ARE AN INVESTOR IN COINBASE YOU RECENTLY PUSHED BACK AGAINST NEW YORK STATE'S PROPOSED LEGISLATION OR REGULATION ON CRYPTO CURRENCIES BITCOIN AND THE LIKE AND SUGGESTED THAT WITH THIS TYPE OF REGULATION THAT THAT INDUSTRY MIGHT MOVE ABROAD SOMEWHERE ELSE. WHY WOULD PEOPLE ON MAIN STREET CARE IF CRYPTO CURRENCIES AND AN INDUSTRY MOVE SOMEWHERE ELSE?
WILSON: I'M NOT SURE THAT PEOPLE ON MAIN STREET ARE GOING TO CARE. BUT I THINK PEOPLE WHO RUN THE STATE AND FEDERAL GOVERNMENTS ARE GOING TO CARE IF AN IMPORTANT NEW INDUSTRIAL DECIDES TO HIGH-TAIL IT OUT OF THE UNITED STATES. MY REMARKS WERE AIMED AT THEM, NOT, YOU KNOW, THE AVERAGE PERSON LIVING ON, YOU KNOW, MAIN STREET.
HOBBS: HOW DO YOU DEAL WITH THE NERVOUSNESS THAT MANY PEOPLE SEE IN THE CRYPTO CURRENCIES AND THE DESIRE TO PROTECT THE POPULATION AGAIN FROM SOMETHING THAT MIGHT GO SERIOUSLY WRONG.
WILSON: I ACTUALLY THINK THAT THE AMOUNT OF INFORMATION THAT'S AVAILABLE OVER THE PUBLIC LEDGER LIKE THE BLOCK CHAIN MEANS THAT BITCOIN IS GOING TO BE EASIER TO MANAGE THINGS LIKE COMPLIANCE AND FRAUD AND SAFETY, NOT LESS. YOU'RE DEALING WITH A PUBLIC LEDGER AS OPPOSED TO A BUNCH OF PRIVATE SYSTEMS. I THINK IT'S GOING TO BE BETTER FOR ALL OF THE ISSUES THAT PEOPLE ARE CONCERNED ABOUT, NOT WORSE.
EISEN: I WANT TO ASK YOU ABOUT SOMETHING THAT YOU GOT A LOT OF HEADLINES FOR WHEN YOU MADE SOME PREDICTIONS LAST YEAR, ESPECIALLY ON WEARABLES. YOU SAID THAT THE APPLE WATCH WILL NOT BE THE HOME RUN PRODUCT, THAT THE iPOD, THE iPHONE AND THE iPAD HAVE BEEN. I KNOW THERE'S BEEN A LOT OF TALK ABOUT WHAT YOU SAID. CAN YOU CLARIFY YOUR POSITION AND SET IT STRAIGHT ON WHAT YOU THINK THE OUTLOOK IS FOR WEARABLES INCLUDING THE APPLE WATCH WHICH IS NOW OUT?
WILSON: WELL MY NEGATIVITY ABOUT THE WATCH IS REALLY MORE ABOUT THE WATCH PER SE. I THINK THAT THE IDEA THAT PEOPLE ARE GOING TO WEAR DEVICES THAT ARE NOT PHONES IS ABSOLUTELY GOING TO HAPPEN. BUT NOT EVERYBODY IS GOING TO WANT TO WEAR A WATCH IN THE SAME WAY THAT EVERYBODY NEEDS TO CARRY A PHONE. I DON'T THINK YOU'RE GOING TO SEE 100% OF THE POPULATION WEARING A WATCH THE WAY THAT YOU SEE 100% OF THE POPULATION TRENDING ANYWAY TO CARRYING A PHONE.
EISEN: THE OTHER THING I WANTED TO ASK YOU IS, ON THIS IDEA OF THE ELECTION CAMPAIGN CYCLE STARTING TO HAPPEN HERE, YOU SAID THAT IT'S GOING TO BE AN OPEN QUESTION AS TO WHERE SILICON VALLEY LENDS ITS SUPPORT. GIVEN THE ANNOUNCEMENT TODAY OF CARLY FIORINA. DO YOU THINK SILICON VALLEY WILL SUPPORT HER? WHO DO YOU THINK THEY'RE GOING TO GRAVITATE TOWARD?
WILSON: I THINK IT'S A LITTLE EARLY TO MAKE ANY PREDICTIONS. IT DOES SEEM THAT THE DEMOCRAT FIELD HAS BEEN CLEARED AND THERE'S ONLY ONE CANDIDATE THERE. THAT'S AN EASIER FIELD TO PREDICT.
I THINK TECH POLICY IS REALLY IMPORTANT AND I THINK THAT SILICON VALLEY CARES ABOUT A BUNCH OF ISSUES. AND I THINK THAT CANDIDATES WHO WANT TO APPEAL TO SILLICON VALLEY ARE GOING TO NEED TO DO THEIR HOME WORK AND MAKE SURE THEY'RE GOOD ON THOSE ISSUES.
FORTT: FRED, SO YOU'RE AN INVESTOR – LET'S TAKE YOU BACK TO THE MARKETS FOR A MOMENT – YOU ARE AN INVESTOR IN ETSY, NEW YORK TECH FINALLY GOT ITS MULTI-BILLION DOLLAR EXIT. I THINK THE IPO PRICE WAS AROUND 16 BUCKS, WENT UP AS HIGH AS 30, NOW IT IS DOWN IN THE LOW 20s. HOW DO YOU VIEW THE MARKET RIGHT NOW FOR IPOs? GIVEN SOME OF THE VOLATILITY FOR THOSE ISSUES THAT HAVE GONE PUBLIC AND GIVEN WHAT WE'RE SEEING IN THE PUBLIC MARKETS IN GENERAL, ARE YOU FEELING GOOD ABOUT, YOU KNOW, MID-YEAR AND THE REST OF THE YEAR OR IS IT MORE CAUTIOUS?
WILSON: I THINK THE PUBLIC MARKETS ARE DOING A VERY GOOD JOB OF VALUING COMPANIES. I THINK THE PRIVATE MARKETS ARE NOT DOING SUCH A GOOD JOB OF VALUING COMPANIES. AND THE BIG PROBLEM IS THAT COMPANIES CAN GET MUCH BETTER VALUATIONS IN THE PRIVATE MARKETS THAN THEY CAN IN THE PUBLIC MARKETS. AND COMPANIES WILL COME OUT AND GO PUBLIC AND THE STOCK WILL TRADE BELOW WHERE THEY DID THEIR LAST ROUND OF FINANCING IN THE PRIVATE MARKET. SO THE PRIVATE MARKETS NEED TO BE RATCHETED BACK.
FORTT: WHAT'S GOING TO CAUSE THAT TO HAPPEN?
WILSON: I DON'T KNOW.
FORTT: I BET YOU WISH YOU DID KNOW.
WILSON: WELL I DON'T KNOW. THERE'S SO MUCH MONEY IN THE PRIVATE MARKETS CHASING THESE DEALS THAT THE PRICES KEEP GETTING BIDDED UP. BUT I THINK THE PRICES IN THE PUBLIC MARKETS ARE QUITE RATIONAL. THE PRICES IN THE PRIVATE MARKETS ARE NOT.
FORTT: I WANT TO TALK TO YOU FOR A MOMENT ABOUT ONE-DAY DELIVERY. YOU WERE IN COSMO.COM. WAY BACK IN THE DAY.
WILSON: YES. EXACTLY.
FORTT: 2000, 1999. THAT FLAMED OUT. BUT NOW BIG PLAYERS ARE GETTING INTO THIS. AMAZON IS IN, UBER IS GEARING UP TO BE MORE OF A PLAYER THERE. DO YOU THINK THERE'S AN OPPORTUNITY FOR MORE COMPANIES TO GET INVOLVED IN THAT OR ARE THE BIGGER WELL-FUNDED COMPANIES THAT ARE ALREADY IN THE COMMERCE AND TRANSPORTATION SPACE GOING TO CROWD EVERYBODY ELSE OUT?
WILSON: NO. I ACTUALLY THINK THERE'S A BIG CHANGE COMING AND THE CHANGE IS COMING BECAUSE COMPANIES LIKE UBER HAVE SHOWN THAT YOU DON'T NECESSARILY NEED TO BUILD A LOGISTIC SYSTEM. YOU DON'T NEED TO BUILD A UPS OR A FEDEX. ALL YOU NEED TO DO IS PUT TOGETHER A NETWORK OF DRIVERS THAT ARE ESSENTIALLY MANAGED LIKE A MARKETPLACE. AND THEN YOU CAN OFFER SAME DAY DELIVERY. I THINK THAT'S A BIG CHANGE AND A POSITIVE CHANGE FOR THE ECONOMICS OF THE BUSINESS.
FORTT: DAVID FABER'S GOT A QUESTION BACK AT THE EXCHANGE.
FABER: YEAH, THANKS JON. I WOULD JUST LOVE TO FOLLOW UP ON YOUR EXCHANGE ABOUT PRIVATE MARKET VALUES, FRED. YOU DO SEEM TO BE IMPLYING THEN – OR LET ME ASK THE QUESTION. DO YOU THINK THAT THERE IS A BUBBLE IN THE PRIVATE MARKET RIGHT NOW THE WAY SOME ARGUE THERE IS IN VENTURE CAPITAL?
WILSON: WELL, YOU KNOW, LOOK. I THINK WHAT'S GOING TO HAPPEN IS PEOPLE ARE GOING TO PAY PRICES IN THE PRIVATE MARKETS THAT THEY'RE NOT GOING TO MAKE MUCH OF A RETURN IN THE PUBLIC MARKETS, AT LEAST RIGHT AWAY. THAT WAS TRUE WITH FACEBOOK, TOO, WHEN FACEBOOK WENT PUBLIC. THERE WERE PEOPLE WHO HAD BOUGHT STOCK PRIVATELY IN FACEBOOK AT HIGHER PRICES THAN FACEBOOK TRADED AT IN THE FIRST THREE TO SIX MONTHS AFTER THEY WENT PUBLIC. NOW, FACEBOOK HAS BEEN A GREAT PUBLIC STOCK AND SO, AT THIS POINT, EVERYBODY HAS MADE LOTS OF MONEY IN FACEBOOK. BUT THE IDEA THAT YOU CAN BUY STOCK PRIVATELY IN A COMPANY AND THEN IT GOES PUBLIC SIX OR NINE MONTHS LATER AND YOU'RE GOING TO MAKE 3 OR 5 X. THAT'S JUST NOT GOING TO BE THE CASE FOR A LOT OF PEOPLE.
FABER: RIGHT, BUT MANY ARGUE THAT'S SIMPLY A RESULT OF THE FACT THAT THESE COMPANIES STAY PRIVATE SO MUCH LONGER, BECAUSE OF THE VARIOUS LEVERS THAT HAVE BEEN CREATED THAT ALLOW THEM TO DO SO. WHETHER IT IS PROVIDING LIQUIDITY FOR THEIR EMPLOYEES AND THE LIKE. IS THAT IN FACT THE CASE AND CAN WE EXPECT TO SEE IT? OR SHOULD THESE COMPANIES BE GOING PUBLIC EARLIER IN THEIR LIFE CYCLE?
WILSON: I THINK COMPANIES SHOULD BE GOING PUBLIC EARLIER IN THEIR LIFE CYCLE SO THE BROADER PUBLIC CAN BE SHAREHOLDERS. I THINK IT'S NOT GOOD FOR SOCIETY FOR ALL OF THE GAINS IN THESE, YOU KNOW, GAME-CHANGING COMPANIES TO BE HELD BETWEEN A VERY, VERY SMALL GROUP OF SHAREHOLDERS. AND THIS IS ACTUALLY I THINK A FUNCTION OF BAD PUBLIC POLICY. STARBUCKS AND ALL THAT KIND OF STUFF, THAT MAKES IT MUCH, MUCH MORE DIFFICULT AND MUCH, MUCH MORE DANGEROUS AS AN EXECUTIVE OR A DIRECTOR OF A COMPANY TO GO PUBLIC MEANS THAT THESE THINGS STAY PRIVATE LONGER AND ALL OF THE GAINS ARE CAPTURED AMONG A VERY SMALL COHORT OF PEOPLE. IT'S JUST NOT GOOD PUBLIC POLICY. WE GOT TO CHANGE IT.
FORTT: AND FINALLY, FRED, I WANT TO ASK YOU ABOUT CSNYC.
WILSON: RIGHT.
FORTT: THIS INITIATIVE FOR COMPUTER SCIENCE IN NEW YORK PUBLIC SCHOOLS. 1.1 MILLION STUDENTS IN NEW YORK SCHOOLS YOU WANT TO HAVE ACCESS TO COMPUTER SCIENCE EDUCATION. YOU EVEN HELPED START A SCHOOL ALONG THOSE LINES. WHAT DO YOU THINK YOU CAN ACCOMPLISH WITH THIS? HOW BROAD BASED IS THE LEARNING GOING TO BE? BECAUSE YOU NEED A CERTAIN KNOWLEDGE BACKGROUND TO REALLY TAKE ADVANTAGE OF COMPUTER SCIENCE EDUCATION. SOME WOULD ARGUE JUST THAT BASIC STEM IS AN ISSUE TO BEGIN WITH.
WILSON: I DON'T BELIEVE THAT'S TRUE. I THINK ANYBODY CAN LEARN TO CODE. I DO NOT BELIEVE YOU NEED TO KNOW CALCULOUS OR DIFFERENTIAL EQUATIONS OR ADVANCED MATHEMATICS TO BE A GOOD CODER. I THINK PEOPLE CAN LEARN JAVA SCRIPT, PEOPLE CAN LEARN BASIC SOFTWARE ENGINEERING SKILLS JUST AS EASILY AS THEY CAN LEARN ALMOST ANYTHING ELSE WE TEACH KIDS IN MIDDLE SCHOOL AND HIGH SCHOOL. AND THE IDEA THAT YOU NEED TO BE A ROCKET SCIENTIST TO BE A SOFTWARE ENGINEER IS JUST WRONG. IN MANY COUNTRIES LIKE INDIA HAVE ACKNOWLEDGED THAT. THEY ACKNOWLEDGED THAT 30 YEARS AGO – AND THEY EDUCATE THEIR POPULATION AND THAT'S WHY OUR SOFTWARE ENGINEERING JOBS HAVE MOVED TO INDIA. WE'VE GOT TO GET THEM BACK BY TEACHING OUR KIDS HOW TO DO THIS WORK. AND THE IDEA THAT WE CAN'T TEACH OUR KIDS BECAUSE THEY'RE NOT SMART ENOUGH IS NONSENSE. IT IS COMPLETE NONSENSE. AND WE GOT TO START TEACHING OUR KIDS HOW TO DO THIS STUFF.
FORTT: SO IT SHOULD BE LIKE HUMANITIES OR SHOP CLASS, OR A BASIC CORE –
WILSON: YEAH, IT SHOULD BE PART OF THE COMMON CORE. COMPUTER SCIENCE AND SOFTWARE ENGINEERING. AND WE'RE GOING TO MAKE THAT HAPPEN AT LEAST HERE IN NEW YORK CITY WITH CSNYC. BUT THERE ARE PEOPLE WHO ARE WORKING ON THIS PROBLEM AROUND THE COUNTRY, COLLEAGUES OF MINE AND FRIENDS OF MINE AND I THINK WE'RE GOING TO CHANGE. WE HAVE TO CHANGE.
FORTT: ALRIGHT. WELL, FRED WILSON OF UNION SQUARE, THANKS SO MUCH FOR JOINING US ON "SQUAWK ON THE STREET."
WILSON: GREAT, THANKS.
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