real cheese. a high-tech entrepreneur bets there's an app-etite for that. jonathan, my guest this week. and later cnn invests big in ipad, but leaves the brand behind. mark johnson in conversation with our reporter. rich and jon schwartz of usa today this week on "press:here." >> good morning. i'm scott mcgrew. my first guest invented what

became the world's most popular video camera, the flip camera. he has moved on to grilled cheese and that's not a code name for anything. it's really grilled cheese. it is truly one of the strangest of high-tech success stories. the melt. a chain of grilled cheese restaurants in san francisco is the latest effort by entrepreneur jonathan kaplan. it's his second act. in the beginning there was a flip, the wildly successful, inexpensive video camera which quickly became a best seller. in a head-scratching move, the whole product line was purchased by cisco for $590 million in stock, only to see cisco dump the product just a few months later. that brings us to the melt.

kaplan took his capital and the pinch of partnership, to open these restaurants where you can order a $5 grilled cheese sandwich using your iphone. the melt has three locations. all in the san terrific bay area. kaplan hopes to expand to seattle, boston, and as many as 500 locations. perhaps joined by john schwartz of usa today. i know people have asked this question before, but i'm going to do it jaen way, and that is video cameras to grilled cheese. what now? >> i think my real idea top ofs work on another project that was very consumer focused and that made people happy, and one of the big joys of making the flip was seeing it in action in war zones. seeing it used in action celebrating heroes. seeing it record first steps or last words. the memories and the happiness of the flip created something that i wanted reproduce again, and everyone has to eat and everybody loves a grilled cheese, and figured let's did a

grilled cheese and flip chain. >> someone wrote of you flip offered the fine art of cashing out. "new york times" said that. you did get out at the right time. we can ponder forever why cisco bought it, but it certainly -- you're probably glad not to be in the flip camera business now with the iphone shooting such video and et cetera. >> i think it's interesting. i think -- i'm so excited to be looking out at the front windshield rather than the rearview mirror when i think about flip and how successful the melt has been already, and it's only, you know, a year old. i will tell thaw the flip had many new products that were going to come out within that developed the flip from now on to doing pretty exciting things at apple and pretty exciting things at many other consumer electronics companies, and i'm not sure it was the best time to get out. cisco stopping ended up not going where i would like it to go, and i think if we had taken the flip public and brought new products to the market, people would have said how are you

going to compete with sony or panasonic? >> you hammered them. >> how are you possibly going to compete with mcdonald's and how are you going to compete with chipolte? >> exactly. i think the idea is if we can create a great customer experience and a great product, then we can compete with anyone, and americans want comfort food right now. they really want to feel good about what they eat. they want an eco friendly environment, and the melt created that. they want a brand they can trust and consistency that they can get anywhere, and this whole idea of fast casual is doing really well. we've seen it with chipolte. i think you'll see it with the grilled cheese space. >> going from one set of bow heem aths and a film camera to flipping sandwiches so to speak, what's -- restaurants are a tough industry, isn't it? the food industry? what made you decide to do something as radical and new as this? >> it's like when jeff gould said i'm going to get in the

film space. everybody said, boy, that doesn't make any sense. when i said i'm going to get into the consumer electronics space and even pop up to video camcorders, people said that doesn't make a sense. why would you invest in the consumer electronics space. it's hardware. that doesn't make any sense. restaurants are equally challenging. they are frought with all of the issues that exist for consumer electronics business or -- >> that's actually interesting when you say that. what are some of the parallels? >> if you don't sxhooz the right real estate, you'll be in big problems. we're lucky enough to have ron johnson who started as retailer of jc penney, and hiring a great team of executives to help me on the real estate side. the other thing is really making a great product and having that product be consistent and all natural and eco friendly and, you know, the idea that mcdonald's brought to all of us which is, you know, if i have a hamburger in beijing or in san francisco, it always tastes leak a hamburger. that's easier to do with a mcdobld's hamburger than a

grilled cheese sandwich or a burrito from chipolte. we've tried to create a consistent product that's good for you and also is good for the environment. >> the thing that kids started where we dine on grilled cheese, and if you go to any restaurant, that's probably the one item you can almost always order even if it's not on the menu. >> there's something about it. we were doing work with a proefgs professor at stanford to see why do people lot of grilled cheese. why when you ask them about it they don't say i like it or it sounds delicious. i don't know if it's the butter art gooy or melty. i don't know what it is. you know, coffee has something special called caffeine that people want every morning, and grilled cheese has something special, and we haven't figured it out yet. >> you have venture capital backing you. you have the guy apple stores figuring your real estate. the great chains that, of course, this goes back 50 or 60 years or 100, starting to buy into the milk shake salesman that bought -- the stuff we love

worth venture capital backed with data analysis. why not just open a couple of stores the way they used to, and that is sink some money into it and see where it goes? >> i think there are a couple of reasons. first is, it's me. that would be boring for me. i want to do something that will change the world. i want to print another 100,000, 150,000 jobs into the work force. what's exciting about the melt from a personal standpoint is we need comfort foods as americans, and we also need jobs, and i have over 110 hourly employees right now, and i only have ten full-time people with four stores -- well, three stores open now and one about to be opened on december 17th at the stanford shopping center. for us it's exciting to be able to put people in the work force to have a chance to understand what it's like to do a consumer business in the restaurant space, and at the same time try and give back to the world the way we did with flip. we're doing the same thing with the melt. >> i'm curious. you have the situation where can you order on-line or your iphone

and come to -- the food is cooked immediately. how many people take advantage of that, and do you actually see any benefits from your end of people doing that? >> it's a great question, and i think what we're about to give out here is this idea that you can go on the melt.com and order your meal, and you never have to tell us at the melt that you want to pick it up at 12:00 or 1:00. never have to tell us where you want to pick it up, what location. what you do is you get a qr code, and then when you walk into a melt location, there's a scan ever. you scan that qr code, and we immediately start cooking your meal right there, and that's when we charge your credit card, and that's when we start cooking. you are getting a hot fresh grilled cheese and soup at the same time you want it, which is really, really important to us. now, what's important to us about it as a business is we didn't have to take your order. we didn't have to stand there at the cash register. we didn't have to ask you nine questions and have you wait for four or five minutes because there's lots of questions. cash or credit? for here or to go? do you want tomatoes and bacon on that for flee because we offer you -- you have done thaul work for me.

you as a consumer get a better experience because you can skip the line and scan the bar code. your credit card is already saved. you don't have to worry about finding the credit card in your pocket and you can be on your cell phone. you don't have to talk to anybody if you're not in the mood to talk to anybody. the end product and internationals is the experience that i find just phenomenal. visit a macy's and look at the right dress shirt size, and i'm going down and i'm picking -- well, what you guys know if you have it oornt, why am i looking for it? i'll buy three of them and if you just give it to me right now. people are going to get more and more impatient. >> a friend of mine, i have two friends ask the same question. this is my friend laura. dessert menu to get two

specialty cookies and -- >> you have -- you launched about two week ago. >> call it the laurie. >> the laurie. i'm going to give laurie credit for it, but laurie is not the -- we just launched the sweet melt. we have the smore, which, you know, i don't know. again, we have the smore. >> i kick it in. >> it's newscast where i. >> the rasberry short cake they are $3.75. maybe we should have salad. >> you sound like my management team. my management team keeps trying to put meat in and sell potato salad. they want to do that, and the flip wanted to make it a camera. they also wanted to do this and that.

my job as the ceo -- my job as the founder is keep it simple. >> that's my idea. >> we're going to be a grilled cheese. we're going to be a melt. we're going to be great soup. >> we are running a hell of a restaurant hire. >> it's like -- >> they don't try to do anything fancy. >> my main thing was to get dr. pepper. >> let me put on my host pants and at the time board here that we need to take a break and be back in just a minute. this is an rc robotic claw. my high school science teacher made me what i am today. our science teacher helped us build it. ♪ now i'm a geologist at chevron, and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars into american education. that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪

welcome back. we're talking to jonathan kaplan about the melt. >> i want to go back to the issue where we're at the beginning of the whole thing, using your phone to pay for things and everything. i was curious about what percentage of your users are prepaying, using their mobile device to pay, and whether you're able to track any improvement in the metrics in

terms of your line length or something like that as a result of it. >> sure. so we're in about a little over 10% right now of our customers actually either with they are mobile phone or website. if they order on the website, they'll deliver -- >> what about san francisco? >> we're talking about the home of the iphone and the twitter and the -- >> i was going to -- >> in the center where we're right -- we're right at sacramento and battery, that building is filled with executives who love technology, and they have a lot of the systems and they e-mail them, qr code and it comes down to scans the qr code and brings it back upstairs. it's a little over 15% in that location. a little less on fear street. the key is over time this is going to be 20% or 30%. i don't think it's ever going to be 50%, 60%, 80%. i do think once we get some of these other technologies, once those that are 15 and 16 become

19 and 20 and 30, they're going to expect to use their mobile phones to do all of their payments, and we wanted to have a system that made it easy for them and convenient for them, but also wasn't just cool. it actually played a role. it really does play a role for the consumer. your favorite order is saved. you can e-mail that qr code to a friend and they can pick it up for you. you can go to any restaurant and pick up those products. it's very different than just using the web in order to prepay something versus a mobile phone -- real mobile phone payment. >> i know that starbucks, for example, monitors lean length. that's one of their key metrics, and somebody once told me that that was one of the things that they looked at when they were deciding whether to open another starbucks nearby was, you know, a certain point the line lengths people will start walking out the door. >> that is true. >> are you able to track sort of what the affect of -- that's 10% which does seem to be the substantial number, does that have an appreciatable affect on how long people are in the store

and how long those lines are? >> not just line length, but also the number of customers that we can search in an hour period. the lunch rush being the most important for us. if you show up at the melt between 11:30 and 1:30, there's likely to be a line. as you mentioned with starbucks, our goal is to have the line be long enough that you think it's a cool place to go, but short enough you get out of there in ten minutes. if have you to wait more than five or ten minutes for lunch, you're not going to do it. people have a lunch hour in america, and, unfortunately, ten minutes of the lunch hour waiting in line is not really what you want to do. we try to make waiting in line interesting by having, you know, some interesting things that we do on-line, like sampling and we provide what we call the order status board that lets you while you wait learn about our products and watch where you are in the line. can you actually watch your sandwich being made, kind of like the airline board where you look to see if you are going to be upgraded or not. >> pizza does that too. it's cool. >> so we try to do things that we know that when we don't have on-line ordering, we can do between 90 and 100 customers in an hour and when we do have onlane ordering, weave seen san

francisco do over 150 customers an hour. it can be a big difference. >> you've mentioned fairly ambitious plans and 500 lobbyings in five years. i'm wondering in addition to that might you cater and tech companies like google, apple -- >> you don't mean to depart, you mean -- >> -- an actual location in. >> they have a wide variety of things so maybe you might be one of the -- >> our goal right now and, you know, we really don't know what we're doing. i know it sounds like we do, but -- >> that's refreshing. >> we really don't,, and we're learning. what would we be like in an airport? what would we be like in a ballpark or on google's camp where yous? >> at&t park, you would do well. >> we're learning now. we know we're going to sell parts and lunch at lunch and explore whether we should sell breakfast at breakfast and whether we should sell dinner at dinner, which, you know, of course, what does late night look like? we're doing this. our location helps to determine that. stanford is going to be a

different dinner crowd than san francisco, which is a different lunch crowd. not much happening for dinner around there. as we learn, and maybe we'll come back and sit on the show again and talk and decide is google the right place for us to be? should we be on a campus? franchise, i don't think we want to do. we want to be company-owned. capital is the reason why traditionally companies franchise. they want to grow faster than their capital allows or faster than the management team will allow. i'm a pretty ambitious guy. i think he i can raise the capital necessary to open up and have 25 restaurants next year, have 15 to 75 the year after, get to my 500 restaurants in five years, and so hopefully i won't have to franchise. >> jonathan kaplan, we will have you back to hear more about it. that's all the time we have. thank you for being here. >> thank you. >> up next, the ipad change the way we consume news. the world tailored just for you when "press here" continues. this is an rc robotic claw. my high school science teacher made me what i am today. our science teacher helped us build it. ♪ now i'm a geologist at chevron,

and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars into american education. that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪

welcome back to "press here." if you do not have an ipad, you can't understand what's happening. the intimate personal relationship people have with their ipads, i mean, content producers, have to change the way they operate information. it's beyond the web on a tablet. it is a entry into the whole experience. >> tech entrepreneur mike mccue compares the ipad to a hurricane destroying the internet as we know it. forced to rebuild, he asks what would a new internet look like? for many app developers, that new internet looks an awful lot like a digital magazine. something like this called zite. an easy to read collection of pictures and articles automatically updated and tailored to your interests. there is a presentation for the news impressed cnn which bought zte for a rumored $25 million

last summer. the first purchase of a tech company is in cnn's history. zite is run by an independent company. it comes from microsoft, but it is his first time at the helm as ceo. thanks for being with us this morning. >> thanks for having me. >> i was enjoying my zite this morning, and i noticed that your top story section, a story that was brought to me from abc news. >> yeah. >> now, if i'm the head of cnn, i'm thinking what are we doing there? why are we promoting -- in fact, it was hard to find cnn content. you are really an independent company? >> we are. cnn bought us because they saw something really special. they realized that people want content from all over. they're looking for lots of different sources. they have lots of different interests. we satisfy sort of a different need then than people coming to cnn. people come to cnn pour breaking news.

people come to zite when they're kicking back on their couch or in the morning reading about their varied interests. for different purposes. >> i happen to agree that that's the better approach, but as -- aol does this with edition. they have a similar sort of magazine thing, and there's not a lot of aol content. >> slice of life, especially on ipad. >> this is mcdonald's searching burger king, and the head of manage donnell's says why are we serving burger king whereby we're mcdonald's. i think there's going to be tension coming ahead, or no attention at all? >> i think cnn is really supportive of our mission, and they realize there's lots of great content being produced out there, and, i mean, certainly cnn produces excellent content also, but they produce on the order of hundreds of pieces of content a day. zite looks at millions of pieces of content a day. that's why we have sections like astrophysics and astrology. >> you have a section that's -- >> you're probably not going to find that on cnn. >> probably.

>> can i ask a quick question? we mention like mccuen's clipboard, what's the difference between what you do and they do? i have used both. i know the answer, but can you maybe tell people who are unfamiliar with both companies. >> sure. flip board bills themselves as a social magazine. you care ate the magazine through the people you follow on twitter. the different secs that you look at and flip board, but they're limited to a number of cure ated secs. at zite we get smarter as you use it, and we try to learn the things you like and deliver you more of it. we look at your twitter feed and the things you might have stored on social bookmarking sites. we only use that as an input and try to take those steps and say, hey, because you follow these people, because you have read this stuff, maybe you should read this other stuff. the number one comment that we get from customers who love zite is that, wow, i read stuff on zite i could not have found elsewhere yoosh. >> your background is this search. there's alga rhythming going on well.

it's not like if you like dogs, you must like cats. it's very complex. >> right. zite is six years old. it came out as a research project, and there was another product before this. i came on as an advisor about two years ago, and we did a pivot from the old product wario to the new product zite. what's great about the years of research, we were able to create this really interesting technology that has lots and lots of applications, and in this case the ipad came out. we've had this great personalization technology. you marry the two together, and you get an incredible product. >> i have a question on that why cnn scene as well. cnn happens to be owned by a company which publishes a lot of magazines. time warner. cnn is not necessarily known as a place you go to read. it's a place you go to view video because to see news rather than to read news. why is cnn a berd home for zite

than, for example, time inc. would be? >> cnn is an extremely innovative company. think about the history of cnn. they really changed the way that news was delivered on cable, and they realized that in order to be relevant in the new millennium, they need to continue to change, and i think that they see zite as something that is rel usary and innovative and wants to continue to see us move along. another thing to remember is that cnn has 13.5 million mobile am kegs out there. they're one of the top web sites in the world, so even though it sounded like a cable news network, it really has moved far beyond that now. >> i think also there is that -- i mean, for -- i know you're not saying how much, but let's say it was $20 million. for $20 million a lot of laboratory and in the grand scheme of things, that's not very much. >> you know, i'm wondering, so

how do you guys prosper. cnn -- there's propeller, pulse. >> coming from google or yahoo? propeller? >> i'm not sure you would want to read all day from the smartphone. how do you kind of differentiate yourself from that? absolutely. >> there's a lot of proliferation right now. big companies are -- there's lots of small companies in it. we came out of nowhere. i think that when we launched, people certainly didn't expect to see zite. that being said, i think that when someone downloads zite, when they start use it or start personalizing it, we want to keep them. so far we found retention rates for zite are really, really high, and that's because we give people such great personalized experience. i think continuing to evolve that technology, continuing to make the experience really great is really what's going to keep us.

>> it keeps it fairly simple, the sdpin, the way the news is delivered it's not a circus layout. it's more of kind of simple, elegant. >> i think certainly the ipad helps, but, you know, years of bad design at the former entity warrio helped us to get really good design, and force us into really simple design rather than getting really flashy and getting really complicated. we left lots and lots of features out of this product that we could have put in, and why did we do that? because one of these is to have a great simple experience. we wanted someone to come in and be able to set up their account almost immediately, and within a few minutes be able to repersonalize news. that's a tough thing to do. >> i'm wondering how you look at the landscape of other platforms. is there anything else out there besides ipads that looks like it might be worth your while to really seriously develop? >> certainly phones. really interested. people don't always have an ipad with them. the web is something we're

looking at. >> do you mean iphone or android, everything else? >> all phones. i think that everybody has a smartphone. not know has a tablet. everyone has a web browser that they go to. not everyone has a tablet. the kindle fire is one of the most exciting things that's happened in the tablet space in quite some time. certainly since the ipad launch. we're watching that very carefully. >> mark johnson, we'll have to leave it there. thank you for being with us this morning. zite available on the apple app store. be back in just a minute. this is an rc robotic claw. my high school science teacher made me what i am today. our science teacher helped us build it. ♪ now i'm a geologist at chevron, and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars into american education. that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪

that's our show for this week. my thanks to jonathan kaplan and mark johnson. we are preempted next week by nbc sports. we'll be back here in two weeks, but we're always on-line. press:heretv.com, and on itunes where we are the seventh most watched business podcast just behind maria bartiromo. we are number seven. i'm scott mcgrew. thank you for making us part of your sunday.