60 Minutes (1968) s46e26 Episode Script
Season 46, Episode 26
This month marks the fifth anniversary of the current bull market on Wall Street, making it one of the longest and strongest in history.
Yet U.
S.
stock ownership is at a record low and less than half of Americans trust banks and financial services.
And in the last two weeks, the New York attorney general and the Commodities Futures Trading Commission in Washington have both launched investigations into high-frequency computerized stock trading that now controls more than half the market.
The probes were announced just ahead of a much anticipated book on the subject by best-selling author Michael Lewis called "Flash Boys.
" In it, Lewis argues that the stock market is now rigged to benefit a group of insiders that have made tens of billions of dollars exploiting computerized trading.
The story is told through an unlikely cast of characters who figured out what was going on and have devised a plan to correct it.
It could have a huge impact on Wall Street.
Tonight, Michael Lewis talks about it for the first time.
Steve Kroft: What's the headline here? Michael Lewis: Stock market's rigged.
The United States stock market, the most iconic market in global capitalism is rigged.
Steve Kroft: By whom? Michael Lewis: By a combination of these stock exchanges, the big Wall Street banks and high-frequency traders.
Steve Kroft: Who are the victims? Michael Lewis: Everybody who has an investment in the stock market.
Michael Lewis is not talking about the stock market that you see on television every day.
That ceased to be the center of U.
S.
financial activity years ago, and exists today mostly as a photo op.
This is the stock market that Lewis is talking about; the one where most of the trades take place now, inside hundreds of thousands of these black boxes located at more than 60 public and private exchanges, where billions of dollars in stock change hands every day with little or no public documentation.
The trades are being made by thousands of robot computers, programmed to buy and sell every stock on the market at speeds 100 times faster than you can blink an eye.
A system so complex, it's all but invisible.
Michael Lewis: If it wasn't complicated, it wouldn't be allowed to happen.
The complexity disguises what is happening.
If it's so complicated you can't understand it, then you can't question it.
Steve Kroft: And this is all being done by computers? Michael Lewis: All being done by computers.
It's too fast to be done by humans.
Humans have been completely removed from the marketplace.
"Fast" is the operative word.
Machines with secret programs are now trading stocks in tiny fractions of a second, way too fast to be seen or recorded on a stock ticker or computer screen.
Faster than the market itself.
High-frequency traders, big Wall Street firms and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone else, along with the opportunity to act on it.
Michael Lewis: The insiders are able to move faster than you.
They're able to see your order and play it against other orders in ways that you don't understand.
They're able to front run your order.
Steve Kroft: What do you mean front run? Michael Lewis: Means they're able to identify your desire to, to buy shares in Microsoft and buy 'em in front of you and sell 'em back to you at a higher price.
It all happens in infinitesimally small periods of time.
There's speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds.
But it''s enough for them to identify what you're gonna do and do it before you do it at your expense.
Steve Kroft: So it drives the price up.
Michael Lewis: So it drives the price up, and in turn you pay a higher price.
Michael Lewis is not the first person to allege the stock market is rigged or that high-frequency traders are front running the market but he was the first to find Brad Katsuyama, who is the first to figure out how it was being done.
Michael Lewis: A very unlikely character, a trader at the Royal Bank of Canada, a young Canadian man named Brad Katsuyama realized that the market that he thought he knew had changed.
The market seemed to be willing to sell a stock.
But the minute he went to buy it, someone else bought it, the stock went up.
It was as if someone knew what he was doing before he did it.
Back in 2008, Katsuyama was 30 years old and running the Royal Bank of Canada's stock desk in New York with 25 traders working for him.
Every time one of them tried to buy a large block of stock for a client their order would only be partially filled and the price of the stock would go up.
It kept happening over and over again.
Brad Katsuyama: The best analogy I think is that your family wants to go to a concert.
You go onto StubHub, there's four tickets all next to each other for 20 bucks each.
You put in an order to buy four tickets, 20 bucks each and it says, "You've bought two tickets at 20 bucks each.
" And you go back and those same two seats that are sitting there have now gone up to $25.
Steve Kroft: What'd you think the problem was? Brad Katsuyama: I had no idea.
I couldn't get answers.
At first, Katsuyama thought the technology at RBC was slow, until he went to Stamford, Conn.
, and paid a visit to one of the largest hedge funds in the world.
Brad Katsuyama: The same thing that I was experiencing as a trader, one of the most sophisticated hedge funds in the world was also having the same problem.
Then the light bulb goes off.
You say, "Holy cow, this is, this is a huge problem.
" Steve Kroft: You were determined to get to the bottom of it? Brad Katsuyama: Yeah.
Steve Kroft: Why? Brad Katsuyama: 'Cause it just didn't feel right.
It didn't feel right that people who are investing on behalf of pension funds and retirement funds are getting bait and switched every single day in the market.
Katsuyama suspected that the problem had something to do with plumbing, the way the trades were routed through fiber optic cables from his trading desk in lower Manhattan to the 13 public exchanges in northern New Jersey.
But no one would tell him exactly what happened to his orders once he hit the buy or sell button.
So he put together a team of technical experts, traders and most importantly, an Irish telecom guy named Ronan Ryan, who was an expert on high-speed fiber optic networks.
Ronan Ryan: I knew nothing about trading until my first day at RBC when I sat in that three hour meeting on algorithms.
I called my wife afterwards.
And I'm like, "Holy crap, I have no idea what they just said.
" Ryan had done work for the high-frequency traders.
He knew what they were building and he knew about the colossal amounts of money they were prepared to spend.
He told Brad about a company called Spread Networks that had laid a high-speed fiber optic cable from the futures market in Chicago to the exchanges in New Jersey.
They spent $300 million just to shave three milliseconds off the fastest route and were leasing access to high-frequency traders at $10 million a pop.
Michael Lewis: From Brad Katsuyama's point of view, when he heard they were willing to spend that kind of money for milliseconds it told him the sums involved were vast.
That was one of the first questions he said he had.
He says, "All right, I'm getting ripped off.
Everybody's getting ripped off.
But what does it add up to?" And I think when he heard the story of Spread Networks, he realized this is tens of billions of dollars we're talking about.
Ronan Ryan also knew where all the cable was buried and had detailed maps of the fastest routes from the financial district in lower Manhattan to the various stock exchanges in New Jersey, all calculated down to the millisecond.
Ronan Ryan: So I would sit there, roll out maps, and roll out this data center as a box and a line going through it.
And they had no idea what I was on about.
And then I'd be like, "Hey are you guys aware of where these data centers are located? Of course you're arriving there at different time intervals.
" For Brad, the maps turned what had been an abstract idea into something he could actually see.
The first place his orders were landing was the BATS Exchange across the river in Weehawken, N.
J.
, and high-frequency traders were lying there in wait.
Michael Lewis: Brad realizes, "Oh my God, that's how I'm being front-runned.
I'm being front-runned because my signal gets to the BATS Exchange first and they can beat me to all the, all the other exchanges.
" It only took a tiny fraction of a second for Brad's trade to reach the next exchanges on the network, but the high-speed traders were able to jump in front of him, buy the same stock and drive the price up before his order arrived, producing a small profit of just one or two pennies.
But it was happening to everyone's trades millions of times a day.
Ronan Ryan: That adds up.
Steve Kroft: You make it sound like a skim.
Ronan Ryan: What else would you call it? Michael Lewis: One hedge fund manager said, "I was running a hedge fund that was $9 billion and that we figured that the, just our inability to, to make the trades the market said we should be able to make was costing us $300 million a year.
" That was $300 million a year in someone else's pocket.
Steve Kroft: Is this illegal? Michael Lewis: No.
That's the thing that's so shocking about all this.
It should Steve Kroft: Well you used the word front running.
Front running's illegal.
Michael Lewis: This form of front running is legal.
It's legalized front running.
It's crazy that it's legal for some people to get advance news on prices and what investors are doing.
It's just nuts.
Shouldn't happen.
Ronan knew the only way to beat the high-frequency traders was to take away their milliseconds advantage that allowed them to sniff out slower trades and beat them to the exchange.
He had an idea how to do it.
Brad Katsuyama: And he said, "You're probably better off trying to go slower," which means send the order to the exchange located the farthest away first and send the order to the one that's located to you last.
So stagger when you send them out with the goal of arriving at all places, as close to the same time as possible.
Katsuyama and his team developed software that did just that, allowing the orders of Royal Bank of Canada's customers to reach all of the exchanges at the same time, cutting the high-frequency traders out of the equation.
Brad Katsuyama: And essentially our fill rates went to 100 percent.
We couldn't believe it when, when we actually figured it out.
Steve Kroft: So you beat speed by slowing it down.
Brad Katsuyama: Yeah, as crazy as that sounds.
Katsuyama and his team went out and began selling and explaining what they had discovered to the big mutual funds, pension funds and institutional investors, people who had suspicions that they were being front-run but didn't know how.
Steve Kroft: And nobody had really bothered or tried to figure this out until Brad Katsuyama came along Michael Lewis: It was in nobody's interest to, correct.
I spoke to dozens of investors, big investors, famous investors who, who said that, "When Brad Katsuyama came into my office and laid out to me how the market was rigged, my jaw hit the floor.
I mean, I knew something was wrong.
I just didn't know what it was and no one had told us.
" Brad Katsuyama: Part of those meetings led us to believe, "Holy cow, this is, this is really something.
" 'Cause some of the most sophisticated, largest asset managers in the world, this is the first time they were hearing this story.
And some of the most famous names in the American stock market heard the pitch Michael Lewis: The Capital Group, T.
Rowe Price, Fidelity, Vanguard, I mean, it, one after another.
He was in their offices.
They said, "This man walked in.
Why is he gonna know how the stock market operates?" And, and at the end of the hour they said, "Oh, my God, he understands.
" Hedge fund titan David Einhorn of Greenlight Capital is one of the believers.
Steve Kroft: Was he able to show you how your orders were being front run? David Einhorn: Oh yeah.
They had, they, they got the marker and the white board and started drawing maps and boxes, and wires and locations.
And yeah, we went through it in some detail.
Steve Kroft: Did you find it interesting? David Einhorn: It was.
It was.
Clients like Einhorn encouraged Brad and his team to do something bigger.
That's when Katsuyama, a conformist even by Canadian standards, decided to do something radical.
In 2012, he quit his high-paying job as head trader at RBC and went off with some of his team to start their own exchange.
Steve Kroft: You were making good money at Royal Bank of Canada? Brad Katsuyama: Yeah, right.
Steve Kroft: Millions of dollars? Brad Katsuyama:: Right.
I guess, I guess everybody know that now? Right, yeah.
Steve Kroft: Why did you wanna go off and walk away from that job and start a stock exchange? Brad Katsuyama: Yeah, wasn't an easy conversation to have with my wife, that's for sure.
It almost felt like a sense of obligation to say, "We found a problem.
It's, it's affecting millions and millions of people.
People are blindly losing money they didn't even know they're entitled to.
It's a hole in the bottom of the bucket.
They set out to build an exchange funded exclusively by large traditional investors.
They called it IEX, the investor's exchange, and quietly launched it in October with the support of some of the biggest players on Wall Street.
And it comes with built in speed bumps to eliminate the advantage of high-speed predators.
Michael Lewis: And the way they did it was they coiled 60 kilometers of fiber optic cable between themselves and the high-frequency traders computers.
They call it the magic shoe box and it looks like it's got fishing line in it.
But essentially, a high-frequency trader, if he tries to react on the IEX exchange, his trade goes (makes noise) for 60 kilometers until, so he's, he's in east Jesus.
Steve Kroft: So it gets there the same time as everybody else.
Michael Lewis: It gets there same time as everybody else's.
Steve Kroft: Do you think they can game you? Ronan Ryan: I think that they'll try to game us.
I think the fact, though, that we've gone and met with the majority of the biggest high-frequency firms to explain what the magic shoebox is doing and that people haven't said, "Oh that's rubbish.
That won't work.
" We've had many ask us for a backdoor, to be honest.
So that says something that it'll work.
The exchange is off to a strong start, although it is still very small with lots of powerful enemies that like the status quo and are trying to starve IEX by discouraging customers from using them.
Greenlight Capital's David Einhorn is one of the investors.
Steve Kroft: Do you think IEX will survive? David Einhorn: I think it's gonna succeed.
I think it's gonna succeed in a very big way.
Just last week, IEX received a strong endorsement from Goldman Sachs, whose top executives cited it as a model for a more stable and less complicated stock market.
Brad Katsuyama: We're selling trust.
We're selling transparency.
And, and, and to think that trust is actually a differentiator in a service business, it's kind of a crazy thought, right? Michael Lewis: Why is this kid, why is he able to all of a sudden sit at the center of the American stock market? And the answer is, when someone walks in the door who is actually trustworthy, he has enormous power.
And this is the story, story of trying to restore trust to the financial markets.
Comparing the Tesla Model S to other cars is like comparing an iPhone to a desk phone.
It is a technological marvel that scorches the pavement -- zero to 60 in four seconds.
Tesla is another revolutionary idea from the mind of Elon Musk -- a 42-year-old Silicon Valley entrepreneur who built an industrial empire from the stuff of little boy dreams: fast cars and rocket ships.
Musk is an idealist who told us he had to start his companies so that man could colonize Mars and save the Earth.
His sister says it's like her brother traveled into the future and came back to tell us all about it.
So what is the future like? Apparently it's fast and smoke-free.
The Tesla Model S is powered by 7,000 battery cells linked to an electric motor.
No engine, no transmission, no tailpipe.
As this company video shows, the dash is dominated by a computer that's constantly connected to the Internet.
It has a fanatical following.
There's a waiting list that Elon Musk is trying to shorten building in Northern California.
Scott Pelley: I have heard a lot of people describe you.
Elon Musk: Okay, good, I mean, hopefully-- on-- on balance, hopefully, mostly good.
Scott Pelley: How do you describe yourself? Elon Musk: I usually describe myself as an engineer that's basically what I've been doing since I was a kid.
I'm interested in things that change the world or that affect the future and wondrous, new technology where you see it and you're like, "Wow, how did that even happen? How is that possible?" How is it possible that Elon Musk could launch two impossible businesses -- SpaceX, a builder of rocket ships and Tesla which could be the first successful car company startup in America in 90 years.
Scott Pelley: How did you figure you were going to start a car company and be successful at it? Elon Musk: Well, I didn't really think Tesla would be successful.
I thought we would most likely fail.
But I thought that we at least could address the false perception that people have that an electric car had to be ugly and slow and boring like a golf cart.
Scott Pelley: But you say you didn't expect the company to be successful? Then why try? Elon Musk: If something's important enough you should try.
Even if you -- the probable outcome is failure.
What's important to Musk is reducing greenhouse gases which he believes threaten the world.
The Tesla will go about 250 miles on a charge.
And Musk is building a network of charging stations where the driver pays nothing for a fill up.
He hopes to make the stations largely solar powered one day.
Elon Musk: You can drive for free, forever, on pure sunlight.
That's the, you know, message we're trying to convey.
So even if, like, there's a zombie apocalypse and the grid breaks down, you'll still be able to charge your car.
Scott Pelley: So there's a zombie apocalypse warranty? Elon Musk: Yes, exactly.
And, if you're running from zombies, it's good to know the Model S won the highest quality rating in the history of consumer reports and has the government's highest safety rating.
Musk may be changing the car the way Steve Jobs changed the phone.
Like Jobs he's a perfectionist in the art of engineering.
His goal wasn't to show a profit but to reveal the possibilities.
It is a desire to discover that's also behind Musk's other line of vehicles.
Only four entities have launched a space capsule into orbit and successfully brought it back: the United States, Russia, China and Elon Musk.
This Buck Rogers dream started years ago when he had a nutty idea to fly an experimental greenhouse to Mars.
But he couldn't.
He discovered that the price of rockets was astronomical.
So now he builds his own.
Elon Musk: I had so many people try to talk me out of starting a rocket company, it was crazy.
Scott Pelley: What did they tell you? Elon Musk: One good friend of mine collected a whole series of videos of rockets blowing up and made me watch those.
He just didn't want me to lose all my money.
He never did launch that greenhouse but now Musk is lofting commercial satellites and flying cargo to the space station for NASA at a fraction of the former cost.
Musk's fascination with technology dates to his childhood in South Africa.
Maye Musk: He just found everything interesting.
He wanted to explore everything.
He knocked his teeth out 'cause he was just falling off stuff.
Kimbal too, actually.
Yeah.
We spoke with his mother Maye, sister Tosca and brother Kimbal.
Kimbal Musk: He's a guy with unlimited ambition.
Scott Pelley: Ambition to do what? Kimbal Musk: Not a typical type of ambition.
It's more he just needs to be constantly-- his mind just needs to be constantly fulfilled.
And the problems that he takes on therefore need to become more and more complex over time in order to keep him interested.
He was interested in computers early.
At the age of 12 he wrote the software for a video game and sold it.
Against his parent's wishes he set his sights on the software capitol of the world.
Elon Musk: It seemed like the vast majority of such things came from the United States.
I also, like, read a lot of comic books-- and they all seemed to be set in the United States.
So it's like, "Well, this is a good place-- this is where-- I gotta go to this place.
" He earned degrees in business and physics at the University of Pennsylvania and asked his brother to join him in California.
Kimbal Musk: When we moved to Silicon Valley we had nothing.
So we actually lived in the office.
And we would sleep on the floor in the evening and go shower at the YMCA the next morning.
And then we would be ready to go before some of our employees would arrive, so they wouldn't think we were actually sleeping in the office.
In that office, Musk invented a program that gave step by step directions between addresses.
That's common today in cars and phones but in 1995 it was magic.
In four years he made $22 million.
Scott Pelley: Only in America.
Elon Musk: Right, only in America.
Absolutely.
Next, he started an online banking firm that he grew into PayPal, a system for making purchases on the Internet.
Scott Pelley: And you sold PayPal to eBay for what? Elon Musk: It was about $1.
5 billion.
So that-- that was-- it was a good outcome.
Scott Pelley: A good outcome? Elon Musk: Yes.
His share was $180 million and he bet it all on Tesla and SpaceX.
But at the age of 37, he hit rock bottom.
His first rockets failed to reach orbit, and an early model Tesla roadster had quality problems.
Scott Pelley: In 2008, the rocket company is not going well, you've had three failures.
Elon Musk: Right.
Scott Pelley: The car company is hemorrhaging money-- Elon Musk: Yeah.
Scott Pelley: and the American economy has tanked in the worst recession since the Great Depression.
Elon Musk: Right.
Scott Pelley: What was that year like for you? Elon Musk: And I'm getting divorced, by the way, add to that.
That was definitely the worst year of my life.
That terrible year was captured in a documentary called "Revenge of the Electric Car.
" His plant was filled with flawed cars that couldn't be delivered.
["Revenge of the Electric Car:" Holy mackerel.
Jesus! We have like an army of cars here.
Like, Jesus! This is frightening.
It's really pedal to the metal here.
I mean, each month that passes is literally costs us tens of million of dollars we need to appreciate that.
.]
To save Tesla, Musk needed millions more from investors.
His fortune was gone.
Elon Musk: When we'd call people and say, "Hey, would you like to invest?," they'd be angry that we just called.
That it's like-- it's not like no-- no and-- no and-- you know, various expletives.
Scott Pelley: He was essentially broke.
Kimbal Musk: Oh yeah.
In debt.
More than broke.
Scott Pelley: More than broke.
Kimbal Musk: Yeah.
Elon Musk: I remember waking up the Sunday before Christmas in 2008, and thinking to myself, "Man, I never thought I was someone who could ever be capable of a nervous breakdown," but I felt, "This is the closest I've ever come.
" 'Cause it-- it seemed pretty-- pretty dark.
Toward the end of 2008, SpaceX prepared its fourth attempt.
Elon Musk: We were running on fumes at that point we had virtually no money.
Scott Pelley: So a fourth failure? Elon Musk: A fourth failure would have been absolutely game over.
Scott Pelley: Done.
Elon Musk: Done.
Scott Pelley: SpaceX bankrupt Elon Musk: Yeah.
It's bad enough to have three strikes, having four strikes is really kaput.
But flight four was flawless and in Musk's world, it lit the darkness.
Then, as often, the week of Christmas became a time when little boy dreams are answered.
Elon Musk: NASA called and told us that we'd won a $1.
5 billion contract.
And I couldn't even hold the phone, I just blurted out, "I love you guys.
" Scott Pelley: They saved you.
Elon Musk: Yeah, they did.
Scott Pelley: Financially and maybe even emotionally.
Elon Musk: Well, I'll tell you that was, that was definitely helpful, yeah.
Two days later, on Christmas Eve, Tesla's investors decided to pour in more money.
Scott Pelley: So you were saved in the period of three days by two completely unexpected events.
Elon Musk: Yeah.
Scott Pelley: Merry Christmas.
Elon Musk: Yeah, absolutely.
That's for sure.
The rockets haven't failed since.
His cargo capsule has docked three times with the space station.
And in the California plant they're fitting seats for what they hope will be eventual manned missions.
SpaceX is also testing a rocket that can be reused, softly landing on a column of flame.
Another step on a longer journey.
Elon Musk: I'd love to have SpaceX be the company that brings humanity to Mars and I hope I see it while I'm still alive.
He's at SpaceX three days a week, two days at Tesla and weekends are at home with his five sons from his first marriage and his second wife Talulah whom he met in london.
Talulah Riley: It all happened very fast.
We were-- we were engaged after, I think, sorta two-- two weeks of knowing each other.
And I was 22 and it was-- there were all these boys.
And it was-- which was the best part.
And-- it was-- it was fast.
And then we were in it.
Scott Pelley: You knew each other two weeks before you got engaged? Talulah Riley: Something like that-- Scott Pelley: What was so attractive? Talulah Riley: Well, he was very charming and definitely the most interesting and eccentric person I have ever met.
Tesla stock has rocketed up nearly 500 percent but that's not based on the cars he's selling -- that price is counting on the hope that Tesla will create an electric car at one-third the cost of the Model S which runs about $100,000.
This is what stands in the way.
This slab covered in plastic is the battery.
Scott Pelley: So this is essentially the bottom of the car.
The front wheels would be there, the rear wheels would be right here.
It fills up the entire bottom of the car.
Elon Musk: That's right.
This is how it fits into the bottom of the chassis.
Trouble is the battery's so expensive musk can't build a $35,000 car with acceptable range.
To make Tesla successful, he must reinvent battery manufacturing.
Musk has just announced a $5 billion factory to be built in the U.
S.
which, he says, will make more lithium ion batteries than all the other plants on earth combined.
Gambles like that have led a lot of people on Wall Street to bet against him--taking investment positions that count on Tesla stock to fail.
But so far, those pessimistic investors have lost a lot of money.
Scott Pelley: What is it about you that seems to invite skepticism? Elon Musk: Well, I think it's because we're doing these things that seem unlikely to succeed.
And we've been fortunate, and at least thus far, they have succeeded.
Who's the greatest American musician most people have never heard of? To me, it's Marcus Roberts.
I'm biased because Marcus worked in my band when he was just starting out.
But anybody who's heard him at the piano usually agrees: he's a fearsome and fearless player, and a homegrown example of overcoming adversity with excellence.
Marcus went blind when he was 5 years old.
And soon began trying to make sense of life in the darkness.
He was unusually curious, and even tore his toys apart just to find out how they worked.
Roberts developed a powerful, analytical intelligence, capable of producing music that will move your mind as well as your body.
The story of his genius begins with a precious gift from his parents: a piano.
Marcus Roberts: I remember coming home from school one day.
I walked in the house, I had no idea they had the piano.
And I actually ran into it.
I said, "What is this?" And then I figured it was a piano.
I swear, that's like one of the most, like, gratifying, exciting days of my life.
[MC: Please help me welcome to the stage, Marcus Roberts!.]
The good Lord giveth, he taketh away.
Marcus Roberts lost his sight, but gained a rare insight into the soul of American music.
He's a virtuoso, a monster musician.
He's an icon to a whole generation of jazz players.
Not just a thrilling performer, but a composer, too, of innovative modern music who remembers, as a kid, picking out songs he heard on the radio.
Marcus Roberts: Like, for example, Stevie Wonder's tune "I Wish"? [Marcus Roberts plays bass line.]
Wynton Marsalis: Well, lemme hear the right hand with the left hand.
[Marcus Roberts plays it.]
Wynton Marsalis: So did you ever feel some type of kinship or relationship to Stevie because he also was blind? Marcus Roberts: I think so.
In childhood, he taught himself the basics, playing with four fingers on each hand because no one told him you could use the thumb.
Some dedicated music teachers straightened him out along the way.
And after years of practice and sheer determination, Marcus today is a walking encyclopedia of America's jazz heritage, with the DNA of pianists long gone in his fingertips.
We gave him a musical test: play a familiar tune in different styles.
Marcus Roberts: Let's take America the Beautiful, for example.
First, as it might have been played by Erroll Garner, a legend from half a century ago.
Wynton Marsalis: What about James P.
Johnson? In the early twentieth century, Johnson took ragtime and made it swing.
Wynton Marsalis: What about Thelonious Monk? Monk was the modernist, the Picasso of the piano.
Wynton Marsalis: What about Duke? Marcus Roberts: Duke would be kind of-- He heard Duke Ellington - one of the pillars of American music - on the radio in 1975.
And it changed his life.
Marcus Roberts: They were playing - [plays A Train main theme.]
Marcus Roberts: Catch the A Train.
Wynton Marsalis: Catch the A Train? Marcus Roberts: Yeah.
I mean, that's what I used to call it.
Wynton Marsalis: Take the A Train, you called it Catch The A Train? Marcus Roberts: That's what I called it back then, yeah.
Take the A Train.
Hearing Ellington's band, Louis Armstrong and other jazz greats, 12-year-old Marcus Roberts was hooked, compelled to figure out the sounds he heard: taking them apart as he'd done with his toys.
Marcus Roberts: It was just swingin'.
There was a quality to it that made me feel good.
Like, figuring it out, something about that made me feel better about myself.
Nearly 40 years later, he's at the top of his game.
Improvising here on the music of jazz legend Chick Corea.
The way Marcus gets around the keyboard even amazes other pianists, including Corea himself.
Chick Corea: Marcus embodies a perfect kind of art in my mind.
Marcus absorbed a lot of the history of music.
But then comes with a rendition that is completely Marcus Roberts.
For instance: this performance a few years back that Marcus calls one of the greatest experiences of his life.
Playing his take on George Gershwin's "Rhapsody In Blue" with the Berlin Philharmonic and conductor Seiji Ozawa before 18,000 people.
A lot of it's improvised.
Spur of the moment.
Gershwin - not a bad pianist himself - would have been knocked out.
Marcus grew up in Jacksonville, Fla.
, across the tracks from downtown and deep in the hood, where his mother still lives.
As a little kid, wherever there was a piano, he'd try to unlock the mystery of the keys.
So his mother and his father - a longshoreman down on the Jacksonville docks - scrimped and saved for that piano Marcus could call his own.
Coretta Roberts: He went right to it.
And went to playing "Mary Had A Little Lamb.
" His mother Coretta is sightless too, blinded by glaucoma.
She remembers the pain of having to leave school in the seventh grade because she couldn't see the blackboard.
Coretta Roberts: It was just like I had lost a loved one or something.
And by the time he was five, severe cataracts blinded Marcus as well.
Wynton Marsalis: How did your parents explain your blindness to you? Marcus Roberts: They really didn't explain it.
They just taught you how to do stuff for yourself.
Wynton Marsalis: Marcus told me that you were never about self-pity or feeling bad about yourself.
Coretta Roberts: Oh, no, no.
I got adjusted to it and accepted it as it was God's will.
Marcus Roberts: She showed you by example.
I mean, she could do a lot of stuff that to this day I can't really do.
Like she can iron clothes.
She can cook.
She knows how to like, run a household.
He taught himself enough to get his first gig at the Silas Missionary Baptist Church, on this very piano.
It's out of tune but still quite soulful.
Sister Murray: I remember him.
Sister Murray used to lift Marcus up on the piano bench.
Wynton Marsalis: His mama said when he first started playing he didn't sound good.
Sister Murray: Oooh.
He got better.
He could really play and he could sing.
Wynton Marsalis: Oh, he could sing at the same time? Sister Murray: Oh yeah.
Marcus Roberts: And then where you hold chords out is real important in gospel music.
So they'll be playin' - He learned the gospel style.
Music for praise, for consolation, for teasing a few more coins into the collection plate.
Wynton Marsalis: When you really wanted the church to get more intensity, give me an example of something you would do to have some intensity to it.
Marcus Roberts: Maybe something like that.
When Marcus was 10, his parents sent him to the Florida School for the Deaf and Blind, down the road in Saint Augustine, where a music teacher - also blind - changed his life.
Hubert Foster introduced Marcus to Bach and Beethoven.
That's Marcus on the sax.
Foster taught him more about jazz, and how to read musical scores in braille.
Marcus Roberts: He was an amazing man.
His biggest point was that, he just said, "You don't want to be ignorant.
Because if you add ignorance with not bein' able to see, you're gonna have a rough life.
That's not gonna work out for you.
" Wynton Marsalis: So you embraced education? Marcus Roberts: Yeah.
Absolutely.
I didn't want to be participating in this noble savage notion of being an artist who doesn't really know what he's doing.
We took Marcus back to the school.
For a homecoming with some of the people who knew him as a kid, like Vicky Palmer.
Vicky Palmer: He was just a good, genuine young man.
And every time I hear his name, I say "Oh, that was one of my students.
" For the current crop of blind music students, we put in a good word for jazz.
Marcus remembers being inspired here by a visiting musician long ago.
We figured we might just do the same.
Student: I was wonderin' One young man wanted some pointers.
And played us a tune he liked.
He soon found himself in a duet with the master.
Marcus Roberts: The same way that this young man came up and had the courage to come down and play, that's the same courage that you all have to have when you go out into the world.
You gotta go out with confidence, but you want as much information as you can get your hands on.
Information - learning - is at the heart of Marcus's world.
He travels with various devices that let him email, surf the web, even write music in braille.
And he has a devoted band of young musicians who record and perform with him.
Ricardo Pascal decided to give up computer science and study instead with Marcus.
Ricardo Pascal: He's one of the patriarchs right now of this music.
Back in Jacksonville, we celebrated his 50th birthday, making him an official elder statesman of jazz.
The mother who told him to find success in adversity was there.
And so was the spirit of the father who did without so Marcus could have that piano.
And for the man who can play just about anything, we had one more challenge.
Wynton Marsalis: One final test for you.
Art Tatum.
Marcus Roberts: Oh, no.
Good Lord.
OK.
Wynton Marsalis: What you got? Art Tatum was probably the greatest jazz piano virtuoso ever.
In the Tatum style, Marcus plays the Gershwin tune "Someone to Watch Over Me.
" Remembering the parents, teachers and fellow musicians who watched over him and set him on his way.
Can anyone top Tatum? Never, says Marcus.
Marcus Roberts: But you know what? It's about the search for it.
The search for that higher level of virtuosity, that higher level of intimacy with music.
If you are one of the lucky ones to be able to do what you want to do, then you are blessed.
Yet U.
S.
stock ownership is at a record low and less than half of Americans trust banks and financial services.
And in the last two weeks, the New York attorney general and the Commodities Futures Trading Commission in Washington have both launched investigations into high-frequency computerized stock trading that now controls more than half the market.
The probes were announced just ahead of a much anticipated book on the subject by best-selling author Michael Lewis called "Flash Boys.
" In it, Lewis argues that the stock market is now rigged to benefit a group of insiders that have made tens of billions of dollars exploiting computerized trading.
The story is told through an unlikely cast of characters who figured out what was going on and have devised a plan to correct it.
It could have a huge impact on Wall Street.
Tonight, Michael Lewis talks about it for the first time.
Steve Kroft: What's the headline here? Michael Lewis: Stock market's rigged.
The United States stock market, the most iconic market in global capitalism is rigged.
Steve Kroft: By whom? Michael Lewis: By a combination of these stock exchanges, the big Wall Street banks and high-frequency traders.
Steve Kroft: Who are the victims? Michael Lewis: Everybody who has an investment in the stock market.
Michael Lewis is not talking about the stock market that you see on television every day.
That ceased to be the center of U.
S.
financial activity years ago, and exists today mostly as a photo op.
This is the stock market that Lewis is talking about; the one where most of the trades take place now, inside hundreds of thousands of these black boxes located at more than 60 public and private exchanges, where billions of dollars in stock change hands every day with little or no public documentation.
The trades are being made by thousands of robot computers, programmed to buy and sell every stock on the market at speeds 100 times faster than you can blink an eye.
A system so complex, it's all but invisible.
Michael Lewis: If it wasn't complicated, it wouldn't be allowed to happen.
The complexity disguises what is happening.
If it's so complicated you can't understand it, then you can't question it.
Steve Kroft: And this is all being done by computers? Michael Lewis: All being done by computers.
It's too fast to be done by humans.
Humans have been completely removed from the marketplace.
"Fast" is the operative word.
Machines with secret programs are now trading stocks in tiny fractions of a second, way too fast to be seen or recorded on a stock ticker or computer screen.
Faster than the market itself.
High-frequency traders, big Wall Street firms and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone else, along with the opportunity to act on it.
Michael Lewis: The insiders are able to move faster than you.
They're able to see your order and play it against other orders in ways that you don't understand.
They're able to front run your order.
Steve Kroft: What do you mean front run? Michael Lewis: Means they're able to identify your desire to, to buy shares in Microsoft and buy 'em in front of you and sell 'em back to you at a higher price.
It all happens in infinitesimally small periods of time.
There's speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds.
But it''s enough for them to identify what you're gonna do and do it before you do it at your expense.
Steve Kroft: So it drives the price up.
Michael Lewis: So it drives the price up, and in turn you pay a higher price.
Michael Lewis is not the first person to allege the stock market is rigged or that high-frequency traders are front running the market but he was the first to find Brad Katsuyama, who is the first to figure out how it was being done.
Michael Lewis: A very unlikely character, a trader at the Royal Bank of Canada, a young Canadian man named Brad Katsuyama realized that the market that he thought he knew had changed.
The market seemed to be willing to sell a stock.
But the minute he went to buy it, someone else bought it, the stock went up.
It was as if someone knew what he was doing before he did it.
Back in 2008, Katsuyama was 30 years old and running the Royal Bank of Canada's stock desk in New York with 25 traders working for him.
Every time one of them tried to buy a large block of stock for a client their order would only be partially filled and the price of the stock would go up.
It kept happening over and over again.
Brad Katsuyama: The best analogy I think is that your family wants to go to a concert.
You go onto StubHub, there's four tickets all next to each other for 20 bucks each.
You put in an order to buy four tickets, 20 bucks each and it says, "You've bought two tickets at 20 bucks each.
" And you go back and those same two seats that are sitting there have now gone up to $25.
Steve Kroft: What'd you think the problem was? Brad Katsuyama: I had no idea.
I couldn't get answers.
At first, Katsuyama thought the technology at RBC was slow, until he went to Stamford, Conn.
, and paid a visit to one of the largest hedge funds in the world.
Brad Katsuyama: The same thing that I was experiencing as a trader, one of the most sophisticated hedge funds in the world was also having the same problem.
Then the light bulb goes off.
You say, "Holy cow, this is, this is a huge problem.
" Steve Kroft: You were determined to get to the bottom of it? Brad Katsuyama: Yeah.
Steve Kroft: Why? Brad Katsuyama: 'Cause it just didn't feel right.
It didn't feel right that people who are investing on behalf of pension funds and retirement funds are getting bait and switched every single day in the market.
Katsuyama suspected that the problem had something to do with plumbing, the way the trades were routed through fiber optic cables from his trading desk in lower Manhattan to the 13 public exchanges in northern New Jersey.
But no one would tell him exactly what happened to his orders once he hit the buy or sell button.
So he put together a team of technical experts, traders and most importantly, an Irish telecom guy named Ronan Ryan, who was an expert on high-speed fiber optic networks.
Ronan Ryan: I knew nothing about trading until my first day at RBC when I sat in that three hour meeting on algorithms.
I called my wife afterwards.
And I'm like, "Holy crap, I have no idea what they just said.
" Ryan had done work for the high-frequency traders.
He knew what they were building and he knew about the colossal amounts of money they were prepared to spend.
He told Brad about a company called Spread Networks that had laid a high-speed fiber optic cable from the futures market in Chicago to the exchanges in New Jersey.
They spent $300 million just to shave three milliseconds off the fastest route and were leasing access to high-frequency traders at $10 million a pop.
Michael Lewis: From Brad Katsuyama's point of view, when he heard they were willing to spend that kind of money for milliseconds it told him the sums involved were vast.
That was one of the first questions he said he had.
He says, "All right, I'm getting ripped off.
Everybody's getting ripped off.
But what does it add up to?" And I think when he heard the story of Spread Networks, he realized this is tens of billions of dollars we're talking about.
Ronan Ryan also knew where all the cable was buried and had detailed maps of the fastest routes from the financial district in lower Manhattan to the various stock exchanges in New Jersey, all calculated down to the millisecond.
Ronan Ryan: So I would sit there, roll out maps, and roll out this data center as a box and a line going through it.
And they had no idea what I was on about.
And then I'd be like, "Hey are you guys aware of where these data centers are located? Of course you're arriving there at different time intervals.
" For Brad, the maps turned what had been an abstract idea into something he could actually see.
The first place his orders were landing was the BATS Exchange across the river in Weehawken, N.
J.
, and high-frequency traders were lying there in wait.
Michael Lewis: Brad realizes, "Oh my God, that's how I'm being front-runned.
I'm being front-runned because my signal gets to the BATS Exchange first and they can beat me to all the, all the other exchanges.
" It only took a tiny fraction of a second for Brad's trade to reach the next exchanges on the network, but the high-speed traders were able to jump in front of him, buy the same stock and drive the price up before his order arrived, producing a small profit of just one or two pennies.
But it was happening to everyone's trades millions of times a day.
Ronan Ryan: That adds up.
Steve Kroft: You make it sound like a skim.
Ronan Ryan: What else would you call it? Michael Lewis: One hedge fund manager said, "I was running a hedge fund that was $9 billion and that we figured that the, just our inability to, to make the trades the market said we should be able to make was costing us $300 million a year.
" That was $300 million a year in someone else's pocket.
Steve Kroft: Is this illegal? Michael Lewis: No.
That's the thing that's so shocking about all this.
It should Steve Kroft: Well you used the word front running.
Front running's illegal.
Michael Lewis: This form of front running is legal.
It's legalized front running.
It's crazy that it's legal for some people to get advance news on prices and what investors are doing.
It's just nuts.
Shouldn't happen.
Ronan knew the only way to beat the high-frequency traders was to take away their milliseconds advantage that allowed them to sniff out slower trades and beat them to the exchange.
He had an idea how to do it.
Brad Katsuyama: And he said, "You're probably better off trying to go slower," which means send the order to the exchange located the farthest away first and send the order to the one that's located to you last.
So stagger when you send them out with the goal of arriving at all places, as close to the same time as possible.
Katsuyama and his team developed software that did just that, allowing the orders of Royal Bank of Canada's customers to reach all of the exchanges at the same time, cutting the high-frequency traders out of the equation.
Brad Katsuyama: And essentially our fill rates went to 100 percent.
We couldn't believe it when, when we actually figured it out.
Steve Kroft: So you beat speed by slowing it down.
Brad Katsuyama: Yeah, as crazy as that sounds.
Katsuyama and his team went out and began selling and explaining what they had discovered to the big mutual funds, pension funds and institutional investors, people who had suspicions that they were being front-run but didn't know how.
Steve Kroft: And nobody had really bothered or tried to figure this out until Brad Katsuyama came along Michael Lewis: It was in nobody's interest to, correct.
I spoke to dozens of investors, big investors, famous investors who, who said that, "When Brad Katsuyama came into my office and laid out to me how the market was rigged, my jaw hit the floor.
I mean, I knew something was wrong.
I just didn't know what it was and no one had told us.
" Brad Katsuyama: Part of those meetings led us to believe, "Holy cow, this is, this is really something.
" 'Cause some of the most sophisticated, largest asset managers in the world, this is the first time they were hearing this story.
And some of the most famous names in the American stock market heard the pitch Michael Lewis: The Capital Group, T.
Rowe Price, Fidelity, Vanguard, I mean, it, one after another.
He was in their offices.
They said, "This man walked in.
Why is he gonna know how the stock market operates?" And, and at the end of the hour they said, "Oh, my God, he understands.
" Hedge fund titan David Einhorn of Greenlight Capital is one of the believers.
Steve Kroft: Was he able to show you how your orders were being front run? David Einhorn: Oh yeah.
They had, they, they got the marker and the white board and started drawing maps and boxes, and wires and locations.
And yeah, we went through it in some detail.
Steve Kroft: Did you find it interesting? David Einhorn: It was.
It was.
Clients like Einhorn encouraged Brad and his team to do something bigger.
That's when Katsuyama, a conformist even by Canadian standards, decided to do something radical.
In 2012, he quit his high-paying job as head trader at RBC and went off with some of his team to start their own exchange.
Steve Kroft: You were making good money at Royal Bank of Canada? Brad Katsuyama: Yeah, right.
Steve Kroft: Millions of dollars? Brad Katsuyama:: Right.
I guess, I guess everybody know that now? Right, yeah.
Steve Kroft: Why did you wanna go off and walk away from that job and start a stock exchange? Brad Katsuyama: Yeah, wasn't an easy conversation to have with my wife, that's for sure.
It almost felt like a sense of obligation to say, "We found a problem.
It's, it's affecting millions and millions of people.
People are blindly losing money they didn't even know they're entitled to.
It's a hole in the bottom of the bucket.
They set out to build an exchange funded exclusively by large traditional investors.
They called it IEX, the investor's exchange, and quietly launched it in October with the support of some of the biggest players on Wall Street.
And it comes with built in speed bumps to eliminate the advantage of high-speed predators.
Michael Lewis: And the way they did it was they coiled 60 kilometers of fiber optic cable between themselves and the high-frequency traders computers.
They call it the magic shoe box and it looks like it's got fishing line in it.
But essentially, a high-frequency trader, if he tries to react on the IEX exchange, his trade goes (makes noise) for 60 kilometers until, so he's, he's in east Jesus.
Steve Kroft: So it gets there the same time as everybody else.
Michael Lewis: It gets there same time as everybody else's.
Steve Kroft: Do you think they can game you? Ronan Ryan: I think that they'll try to game us.
I think the fact, though, that we've gone and met with the majority of the biggest high-frequency firms to explain what the magic shoebox is doing and that people haven't said, "Oh that's rubbish.
That won't work.
" We've had many ask us for a backdoor, to be honest.
So that says something that it'll work.
The exchange is off to a strong start, although it is still very small with lots of powerful enemies that like the status quo and are trying to starve IEX by discouraging customers from using them.
Greenlight Capital's David Einhorn is one of the investors.
Steve Kroft: Do you think IEX will survive? David Einhorn: I think it's gonna succeed.
I think it's gonna succeed in a very big way.
Just last week, IEX received a strong endorsement from Goldman Sachs, whose top executives cited it as a model for a more stable and less complicated stock market.
Brad Katsuyama: We're selling trust.
We're selling transparency.
And, and, and to think that trust is actually a differentiator in a service business, it's kind of a crazy thought, right? Michael Lewis: Why is this kid, why is he able to all of a sudden sit at the center of the American stock market? And the answer is, when someone walks in the door who is actually trustworthy, he has enormous power.
And this is the story, story of trying to restore trust to the financial markets.
Comparing the Tesla Model S to other cars is like comparing an iPhone to a desk phone.
It is a technological marvel that scorches the pavement -- zero to 60 in four seconds.
Tesla is another revolutionary idea from the mind of Elon Musk -- a 42-year-old Silicon Valley entrepreneur who built an industrial empire from the stuff of little boy dreams: fast cars and rocket ships.
Musk is an idealist who told us he had to start his companies so that man could colonize Mars and save the Earth.
His sister says it's like her brother traveled into the future and came back to tell us all about it.
So what is the future like? Apparently it's fast and smoke-free.
The Tesla Model S is powered by 7,000 battery cells linked to an electric motor.
No engine, no transmission, no tailpipe.
As this company video shows, the dash is dominated by a computer that's constantly connected to the Internet.
It has a fanatical following.
There's a waiting list that Elon Musk is trying to shorten building in Northern California.
Scott Pelley: I have heard a lot of people describe you.
Elon Musk: Okay, good, I mean, hopefully-- on-- on balance, hopefully, mostly good.
Scott Pelley: How do you describe yourself? Elon Musk: I usually describe myself as an engineer that's basically what I've been doing since I was a kid.
I'm interested in things that change the world or that affect the future and wondrous, new technology where you see it and you're like, "Wow, how did that even happen? How is that possible?" How is it possible that Elon Musk could launch two impossible businesses -- SpaceX, a builder of rocket ships and Tesla which could be the first successful car company startup in America in 90 years.
Scott Pelley: How did you figure you were going to start a car company and be successful at it? Elon Musk: Well, I didn't really think Tesla would be successful.
I thought we would most likely fail.
But I thought that we at least could address the false perception that people have that an electric car had to be ugly and slow and boring like a golf cart.
Scott Pelley: But you say you didn't expect the company to be successful? Then why try? Elon Musk: If something's important enough you should try.
Even if you -- the probable outcome is failure.
What's important to Musk is reducing greenhouse gases which he believes threaten the world.
The Tesla will go about 250 miles on a charge.
And Musk is building a network of charging stations where the driver pays nothing for a fill up.
He hopes to make the stations largely solar powered one day.
Elon Musk: You can drive for free, forever, on pure sunlight.
That's the, you know, message we're trying to convey.
So even if, like, there's a zombie apocalypse and the grid breaks down, you'll still be able to charge your car.
Scott Pelley: So there's a zombie apocalypse warranty? Elon Musk: Yes, exactly.
And, if you're running from zombies, it's good to know the Model S won the highest quality rating in the history of consumer reports and has the government's highest safety rating.
Musk may be changing the car the way Steve Jobs changed the phone.
Like Jobs he's a perfectionist in the art of engineering.
His goal wasn't to show a profit but to reveal the possibilities.
It is a desire to discover that's also behind Musk's other line of vehicles.
Only four entities have launched a space capsule into orbit and successfully brought it back: the United States, Russia, China and Elon Musk.
This Buck Rogers dream started years ago when he had a nutty idea to fly an experimental greenhouse to Mars.
But he couldn't.
He discovered that the price of rockets was astronomical.
So now he builds his own.
Elon Musk: I had so many people try to talk me out of starting a rocket company, it was crazy.
Scott Pelley: What did they tell you? Elon Musk: One good friend of mine collected a whole series of videos of rockets blowing up and made me watch those.
He just didn't want me to lose all my money.
He never did launch that greenhouse but now Musk is lofting commercial satellites and flying cargo to the space station for NASA at a fraction of the former cost.
Musk's fascination with technology dates to his childhood in South Africa.
Maye Musk: He just found everything interesting.
He wanted to explore everything.
He knocked his teeth out 'cause he was just falling off stuff.
Kimbal too, actually.
Yeah.
We spoke with his mother Maye, sister Tosca and brother Kimbal.
Kimbal Musk: He's a guy with unlimited ambition.
Scott Pelley: Ambition to do what? Kimbal Musk: Not a typical type of ambition.
It's more he just needs to be constantly-- his mind just needs to be constantly fulfilled.
And the problems that he takes on therefore need to become more and more complex over time in order to keep him interested.
He was interested in computers early.
At the age of 12 he wrote the software for a video game and sold it.
Against his parent's wishes he set his sights on the software capitol of the world.
Elon Musk: It seemed like the vast majority of such things came from the United States.
I also, like, read a lot of comic books-- and they all seemed to be set in the United States.
So it's like, "Well, this is a good place-- this is where-- I gotta go to this place.
" He earned degrees in business and physics at the University of Pennsylvania and asked his brother to join him in California.
Kimbal Musk: When we moved to Silicon Valley we had nothing.
So we actually lived in the office.
And we would sleep on the floor in the evening and go shower at the YMCA the next morning.
And then we would be ready to go before some of our employees would arrive, so they wouldn't think we were actually sleeping in the office.
In that office, Musk invented a program that gave step by step directions between addresses.
That's common today in cars and phones but in 1995 it was magic.
In four years he made $22 million.
Scott Pelley: Only in America.
Elon Musk: Right, only in America.
Absolutely.
Next, he started an online banking firm that he grew into PayPal, a system for making purchases on the Internet.
Scott Pelley: And you sold PayPal to eBay for what? Elon Musk: It was about $1.
5 billion.
So that-- that was-- it was a good outcome.
Scott Pelley: A good outcome? Elon Musk: Yes.
His share was $180 million and he bet it all on Tesla and SpaceX.
But at the age of 37, he hit rock bottom.
His first rockets failed to reach orbit, and an early model Tesla roadster had quality problems.
Scott Pelley: In 2008, the rocket company is not going well, you've had three failures.
Elon Musk: Right.
Scott Pelley: The car company is hemorrhaging money-- Elon Musk: Yeah.
Scott Pelley: and the American economy has tanked in the worst recession since the Great Depression.
Elon Musk: Right.
Scott Pelley: What was that year like for you? Elon Musk: And I'm getting divorced, by the way, add to that.
That was definitely the worst year of my life.
That terrible year was captured in a documentary called "Revenge of the Electric Car.
" His plant was filled with flawed cars that couldn't be delivered.
["Revenge of the Electric Car:" Holy mackerel.
Jesus! We have like an army of cars here.
Like, Jesus! This is frightening.
It's really pedal to the metal here.
I mean, each month that passes is literally costs us tens of million of dollars we need to appreciate that.
.]
To save Tesla, Musk needed millions more from investors.
His fortune was gone.
Elon Musk: When we'd call people and say, "Hey, would you like to invest?," they'd be angry that we just called.
That it's like-- it's not like no-- no and-- no and-- you know, various expletives.
Scott Pelley: He was essentially broke.
Kimbal Musk: Oh yeah.
In debt.
More than broke.
Scott Pelley: More than broke.
Kimbal Musk: Yeah.
Elon Musk: I remember waking up the Sunday before Christmas in 2008, and thinking to myself, "Man, I never thought I was someone who could ever be capable of a nervous breakdown," but I felt, "This is the closest I've ever come.
" 'Cause it-- it seemed pretty-- pretty dark.
Toward the end of 2008, SpaceX prepared its fourth attempt.
Elon Musk: We were running on fumes at that point we had virtually no money.
Scott Pelley: So a fourth failure? Elon Musk: A fourth failure would have been absolutely game over.
Scott Pelley: Done.
Elon Musk: Done.
Scott Pelley: SpaceX bankrupt Elon Musk: Yeah.
It's bad enough to have three strikes, having four strikes is really kaput.
But flight four was flawless and in Musk's world, it lit the darkness.
Then, as often, the week of Christmas became a time when little boy dreams are answered.
Elon Musk: NASA called and told us that we'd won a $1.
5 billion contract.
And I couldn't even hold the phone, I just blurted out, "I love you guys.
" Scott Pelley: They saved you.
Elon Musk: Yeah, they did.
Scott Pelley: Financially and maybe even emotionally.
Elon Musk: Well, I'll tell you that was, that was definitely helpful, yeah.
Two days later, on Christmas Eve, Tesla's investors decided to pour in more money.
Scott Pelley: So you were saved in the period of three days by two completely unexpected events.
Elon Musk: Yeah.
Scott Pelley: Merry Christmas.
Elon Musk: Yeah, absolutely.
That's for sure.
The rockets haven't failed since.
His cargo capsule has docked three times with the space station.
And in the California plant they're fitting seats for what they hope will be eventual manned missions.
SpaceX is also testing a rocket that can be reused, softly landing on a column of flame.
Another step on a longer journey.
Elon Musk: I'd love to have SpaceX be the company that brings humanity to Mars and I hope I see it while I'm still alive.
He's at SpaceX three days a week, two days at Tesla and weekends are at home with his five sons from his first marriage and his second wife Talulah whom he met in london.
Talulah Riley: It all happened very fast.
We were-- we were engaged after, I think, sorta two-- two weeks of knowing each other.
And I was 22 and it was-- there were all these boys.
And it was-- which was the best part.
And-- it was-- it was fast.
And then we were in it.
Scott Pelley: You knew each other two weeks before you got engaged? Talulah Riley: Something like that-- Scott Pelley: What was so attractive? Talulah Riley: Well, he was very charming and definitely the most interesting and eccentric person I have ever met.
Tesla stock has rocketed up nearly 500 percent but that's not based on the cars he's selling -- that price is counting on the hope that Tesla will create an electric car at one-third the cost of the Model S which runs about $100,000.
This is what stands in the way.
This slab covered in plastic is the battery.
Scott Pelley: So this is essentially the bottom of the car.
The front wheels would be there, the rear wheels would be right here.
It fills up the entire bottom of the car.
Elon Musk: That's right.
This is how it fits into the bottom of the chassis.
Trouble is the battery's so expensive musk can't build a $35,000 car with acceptable range.
To make Tesla successful, he must reinvent battery manufacturing.
Musk has just announced a $5 billion factory to be built in the U.
S.
which, he says, will make more lithium ion batteries than all the other plants on earth combined.
Gambles like that have led a lot of people on Wall Street to bet against him--taking investment positions that count on Tesla stock to fail.
But so far, those pessimistic investors have lost a lot of money.
Scott Pelley: What is it about you that seems to invite skepticism? Elon Musk: Well, I think it's because we're doing these things that seem unlikely to succeed.
And we've been fortunate, and at least thus far, they have succeeded.
Who's the greatest American musician most people have never heard of? To me, it's Marcus Roberts.
I'm biased because Marcus worked in my band when he was just starting out.
But anybody who's heard him at the piano usually agrees: he's a fearsome and fearless player, and a homegrown example of overcoming adversity with excellence.
Marcus went blind when he was 5 years old.
And soon began trying to make sense of life in the darkness.
He was unusually curious, and even tore his toys apart just to find out how they worked.
Roberts developed a powerful, analytical intelligence, capable of producing music that will move your mind as well as your body.
The story of his genius begins with a precious gift from his parents: a piano.
Marcus Roberts: I remember coming home from school one day.
I walked in the house, I had no idea they had the piano.
And I actually ran into it.
I said, "What is this?" And then I figured it was a piano.
I swear, that's like one of the most, like, gratifying, exciting days of my life.
[MC: Please help me welcome to the stage, Marcus Roberts!.]
The good Lord giveth, he taketh away.
Marcus Roberts lost his sight, but gained a rare insight into the soul of American music.
He's a virtuoso, a monster musician.
He's an icon to a whole generation of jazz players.
Not just a thrilling performer, but a composer, too, of innovative modern music who remembers, as a kid, picking out songs he heard on the radio.
Marcus Roberts: Like, for example, Stevie Wonder's tune "I Wish"? [Marcus Roberts plays bass line.]
Wynton Marsalis: Well, lemme hear the right hand with the left hand.
[Marcus Roberts plays it.]
Wynton Marsalis: So did you ever feel some type of kinship or relationship to Stevie because he also was blind? Marcus Roberts: I think so.
In childhood, he taught himself the basics, playing with four fingers on each hand because no one told him you could use the thumb.
Some dedicated music teachers straightened him out along the way.
And after years of practice and sheer determination, Marcus today is a walking encyclopedia of America's jazz heritage, with the DNA of pianists long gone in his fingertips.
We gave him a musical test: play a familiar tune in different styles.
Marcus Roberts: Let's take America the Beautiful, for example.
First, as it might have been played by Erroll Garner, a legend from half a century ago.
Wynton Marsalis: What about James P.
Johnson? In the early twentieth century, Johnson took ragtime and made it swing.
Wynton Marsalis: What about Thelonious Monk? Monk was the modernist, the Picasso of the piano.
Wynton Marsalis: What about Duke? Marcus Roberts: Duke would be kind of-- He heard Duke Ellington - one of the pillars of American music - on the radio in 1975.
And it changed his life.
Marcus Roberts: They were playing - [plays A Train main theme.]
Marcus Roberts: Catch the A Train.
Wynton Marsalis: Catch the A Train? Marcus Roberts: Yeah.
I mean, that's what I used to call it.
Wynton Marsalis: Take the A Train, you called it Catch The A Train? Marcus Roberts: That's what I called it back then, yeah.
Take the A Train.
Hearing Ellington's band, Louis Armstrong and other jazz greats, 12-year-old Marcus Roberts was hooked, compelled to figure out the sounds he heard: taking them apart as he'd done with his toys.
Marcus Roberts: It was just swingin'.
There was a quality to it that made me feel good.
Like, figuring it out, something about that made me feel better about myself.
Nearly 40 years later, he's at the top of his game.
Improvising here on the music of jazz legend Chick Corea.
The way Marcus gets around the keyboard even amazes other pianists, including Corea himself.
Chick Corea: Marcus embodies a perfect kind of art in my mind.
Marcus absorbed a lot of the history of music.
But then comes with a rendition that is completely Marcus Roberts.
For instance: this performance a few years back that Marcus calls one of the greatest experiences of his life.
Playing his take on George Gershwin's "Rhapsody In Blue" with the Berlin Philharmonic and conductor Seiji Ozawa before 18,000 people.
A lot of it's improvised.
Spur of the moment.
Gershwin - not a bad pianist himself - would have been knocked out.
Marcus grew up in Jacksonville, Fla.
, across the tracks from downtown and deep in the hood, where his mother still lives.
As a little kid, wherever there was a piano, he'd try to unlock the mystery of the keys.
So his mother and his father - a longshoreman down on the Jacksonville docks - scrimped and saved for that piano Marcus could call his own.
Coretta Roberts: He went right to it.
And went to playing "Mary Had A Little Lamb.
" His mother Coretta is sightless too, blinded by glaucoma.
She remembers the pain of having to leave school in the seventh grade because she couldn't see the blackboard.
Coretta Roberts: It was just like I had lost a loved one or something.
And by the time he was five, severe cataracts blinded Marcus as well.
Wynton Marsalis: How did your parents explain your blindness to you? Marcus Roberts: They really didn't explain it.
They just taught you how to do stuff for yourself.
Wynton Marsalis: Marcus told me that you were never about self-pity or feeling bad about yourself.
Coretta Roberts: Oh, no, no.
I got adjusted to it and accepted it as it was God's will.
Marcus Roberts: She showed you by example.
I mean, she could do a lot of stuff that to this day I can't really do.
Like she can iron clothes.
She can cook.
She knows how to like, run a household.
He taught himself enough to get his first gig at the Silas Missionary Baptist Church, on this very piano.
It's out of tune but still quite soulful.
Sister Murray: I remember him.
Sister Murray used to lift Marcus up on the piano bench.
Wynton Marsalis: His mama said when he first started playing he didn't sound good.
Sister Murray: Oooh.
He got better.
He could really play and he could sing.
Wynton Marsalis: Oh, he could sing at the same time? Sister Murray: Oh yeah.
Marcus Roberts: And then where you hold chords out is real important in gospel music.
So they'll be playin' - He learned the gospel style.
Music for praise, for consolation, for teasing a few more coins into the collection plate.
Wynton Marsalis: When you really wanted the church to get more intensity, give me an example of something you would do to have some intensity to it.
Marcus Roberts: Maybe something like that.
When Marcus was 10, his parents sent him to the Florida School for the Deaf and Blind, down the road in Saint Augustine, where a music teacher - also blind - changed his life.
Hubert Foster introduced Marcus to Bach and Beethoven.
That's Marcus on the sax.
Foster taught him more about jazz, and how to read musical scores in braille.
Marcus Roberts: He was an amazing man.
His biggest point was that, he just said, "You don't want to be ignorant.
Because if you add ignorance with not bein' able to see, you're gonna have a rough life.
That's not gonna work out for you.
" Wynton Marsalis: So you embraced education? Marcus Roberts: Yeah.
Absolutely.
I didn't want to be participating in this noble savage notion of being an artist who doesn't really know what he's doing.
We took Marcus back to the school.
For a homecoming with some of the people who knew him as a kid, like Vicky Palmer.
Vicky Palmer: He was just a good, genuine young man.
And every time I hear his name, I say "Oh, that was one of my students.
" For the current crop of blind music students, we put in a good word for jazz.
Marcus remembers being inspired here by a visiting musician long ago.
We figured we might just do the same.
Student: I was wonderin' One young man wanted some pointers.
And played us a tune he liked.
He soon found himself in a duet with the master.
Marcus Roberts: The same way that this young man came up and had the courage to come down and play, that's the same courage that you all have to have when you go out into the world.
You gotta go out with confidence, but you want as much information as you can get your hands on.
Information - learning - is at the heart of Marcus's world.
He travels with various devices that let him email, surf the web, even write music in braille.
And he has a devoted band of young musicians who record and perform with him.
Ricardo Pascal decided to give up computer science and study instead with Marcus.
Ricardo Pascal: He's one of the patriarchs right now of this music.
Back in Jacksonville, we celebrated his 50th birthday, making him an official elder statesman of jazz.
The mother who told him to find success in adversity was there.
And so was the spirit of the father who did without so Marcus could have that piano.
And for the man who can play just about anything, we had one more challenge.
Wynton Marsalis: One final test for you.
Art Tatum.
Marcus Roberts: Oh, no.
Good Lord.
OK.
Wynton Marsalis: What you got? Art Tatum was probably the greatest jazz piano virtuoso ever.
In the Tatum style, Marcus plays the Gershwin tune "Someone to Watch Over Me.
" Remembering the parents, teachers and fellow musicians who watched over him and set him on his way.
Can anyone top Tatum? Never, says Marcus.
Marcus Roberts: But you know what? It's about the search for it.
The search for that higher level of virtuosity, that higher level of intimacy with music.
If you are one of the lucky ones to be able to do what you want to do, then you are blessed.