Speaker 1: This is Bloomberg business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Masser and Tim Stenebec from Bloomberg Radio.
Speaker 1: All Right, spite feeling a little bit better when it
Speaker 1: comes to the banks today, we're still trying to be
Speaker 1: smart and look for where the other trouble spots might be.
Speaker 1: Having said that, just quickly a reminder of the headlines
Speaker 1: in the banking world. First Citizens Bank Shares agreeing to
Speaker 1: buy Silicon Valley Bank. You've got leading the rally in
Speaker 1: bank stocks today, troubled First Republic, which following report a
Speaker 1: Bloomberg report that US authorities are considering more support for banks.
Speaker 1: So this one has really in on a tear to
Speaker 1: the upside. You've got the FDIC probing management conduct and
Speaker 1: the failures of SVB and Signature Bank. So a lot
Speaker 1: continuing to be on. So with that, let's get to
Speaker 1: our daily update on banks with US. Back with us
Speaker 1: is Bloomberg Intelligence Senior Alice for US Regional Banks, Herman Chan.
Speaker 1: He's here in our Bloomberg Interactive Broker studio also with
Speaker 1: us a voice who helped guide all of us through
Speaker 1: the last banking crisis and subsequent regulation that came out
Speaker 1: as a result. He testified numerous times before US and
Speaker 1: European policymakers and regulators on the crisis and global financial sector.
Speaker 1: Josh Rosener is managing director of the independent research consultancy
Speaker 1: firm Graham Fish Share author as well. He joins us
Speaker 1: via zoom in New York City. Josh Herman, Great to
Speaker 1: have you here, both of you. Herman, I want to
Speaker 1: start with you. First Citizens bank shares soaring today. Did
Speaker 1: they really get a great deal in buying SVB and
Speaker 1: is that the interesting story or is the interesting story
Speaker 1: that that helped calm everything down? I think it's a
Speaker 1: little bit of buff It was a great sweetheart deal
Speaker 1: for First Citizens. You're gaining really strong deposits that are
Speaker 1: largely rate free, and you're getting the loans that coming
Speaker 1: on the First Citizens books that's lost share agreement. So
Speaker 1: think of it as insurance against potential losses, and it
Speaker 1: really vaults the bank to become a top fifteen, top
Speaker 1: twenty institution. And the thing that analysts are looking at
Speaker 1: is the accretion in book value. Basically book value could
Speaker 1: increase by upboards of fifty percent, maybe even one hundred percent.
Speaker 1: So we're still waiting on numbers on that, and that's
Speaker 1: why those stock has really popped atay. What is a
Speaker 1: First Citizen? Because they've been buying lots of other banks
Speaker 1: over the years. It feels like, you know, something goes wrong,
Speaker 1: the FDIC comes in and it goes to First Citizen. Yeah,
Speaker 1: it's it's a small or less known bank. It's based
Speaker 1: in Rowley, North Carolina. It's a family run, which is interesting.
Speaker 1: The founder, the CEO is the founder's grandson, so it's
Speaker 1: been family operated and a large chunk of the family
Speaker 1: owns the shares. It bought CI a couple of years ago,
Speaker 1: so that was sort of its claim the flame of
Speaker 1: coming into the New York, New Jersey area. So they've
Speaker 1: got a lot of things going on, and it has
Speaker 1: a lot of credibility with the FDIC having done numerous
Speaker 1: transactions during the Great Financial Crisis. All right, Josh Rosner,
Speaker 1: come on in. It's been a busy couple of weeks.
Speaker 1: I mean it. You are go to voice for us
Speaker 1: so often during the Great Financial Crisis. How are you
Speaker 1: looking at the headlines today and the headlines over the
Speaker 1: last couple of weeks, well, it was definitely a sweetheart deal.
Speaker 1: How am I looking at the headlines today? I think
Speaker 1: everyone is starting to finally realize that sometimes the aftershock
Speaker 1: of an earthquake is bigger than the earthquake itself. And
Speaker 1: so I think we're starting to realize that, yes, you've
Speaker 1: had problems with the longer dated assets and the securitys portfolios,
Speaker 1: but regardless of what happens to interest rates, at this point,
Speaker 1: we're well ahead of the upcoming credit cycle. We're going
Speaker 1: to see rising delinquencies, rising defaults regardless of what the
Speaker 1: what the FED does at this point, and so to
Speaker 1: some degree, the fenshands are going to be tied. So
Speaker 1: you think that there's more to come. I think there's
Speaker 1: there's absolutely more to come. Typically, you've got a lag
Speaker 1: effect of interest rate hikes by about twelve months or so,
Speaker 1: and so you're not only worrying about today the choking
Speaker 1: off of credit or the tightening of credit conditions, but
Speaker 1: obviously you're going to end up seeing that impact the
Speaker 1: loan portfolios as we see repricings. And I think that
Speaker 1: many cases that's going to be pretty dramatic. You can't
Speaker 1: add five trillion dollars to the fed's balance sheet, or
Speaker 1: you can't print five trillion dollars without leading to some
Speaker 1: misallocation of capital, significant misallocation of capital. And Josh, when
Speaker 1: it comes to First Citizen and SVB, why did it
Speaker 1: take so long to get a deal done? Well? I mean,
Speaker 1: I think that's the other interesting thing. If you look
Speaker 1: at the law sharing agreement here, which is obviously massive,
Speaker 1: the FDIC is going to end up taking you know,
Speaker 1: some hit there, but they did so really by making
Speaker 1: a systemic declaration. I think it took a long time
Speaker 1: because it seems pretty clear that they didn't want any
Speaker 1: of the g sibs to be the bidders. I think
Speaker 1: that you could have actually put together a deal more
Speaker 1: quickly and with less laws sharing, But because we don't
Speaker 1: want them to be bigger, because we don't want them
Speaker 1: to be bigger politically, I think they recognize that that's
Speaker 1: a bit of a problem. I think functionally it's a
Speaker 1: problem as well. But I think it would have actually
Speaker 1: created more problems for them politically at this point, and
Speaker 1: because they designated this as a systemic failure, they actually
Speaker 1: don't have to follow the FDIC's requirements of least cost resolution,
Speaker 1: which allowed them to actually take more laws sharing. The
Speaker 1: downside of that is, there's only about one hundred and
Speaker 1: fifty billion dollars in the FDIC Deposit Insurance Fund and
Speaker 1: how many of these can you do without ultimately depleting them?
Speaker 1: And I want to bring Herman back into the conversation
Speaker 1: because when it comes to First Republic, will there be
Speaker 1: a buyer in this scenario as well? Yeah, I think
Speaker 1: we're still waiting to see what's going on. I would
Speaker 1: point to the fact that the Bloomberg News article said
Speaker 1: that the regulators are looking to even add more liquidity
Speaker 1: opportunities for a First Republic to tap to shore up
Speaker 1: their balance sheets. You point you can point to the
Speaker 1: fact that the thirty billion dollars deposits collectively from the
Speaker 1: largest US banks gives them a short term bridge to
Speaker 1: a solution. All of the points to us that the
Speaker 1: government and the banking industry doesn't want First Republic to fail.
Speaker 1: And how bad is it if we've keep throwing this
Speaker 1: much money. They've also been tapping right right the FED,
Speaker 1: So does it tell you how bad it really is?
Speaker 1: Then we calculated that the deposits may have left to
Speaker 1: the tune of about eighty nine billion dollars, and that
Speaker 1: comparable to one hundred and seventy billion dollars at the
Speaker 1: end of the fourth quarter. So you're talking about a
Speaker 1: pretty big chunk of the balance sheet that's missing. But
Speaker 1: it sounds like things have stabilized a bit, and so
Speaker 1: they're they're hopeful that there's an opportunity for them to
Speaker 1: become a full fledged independent institution without needing any further
Speaker 1: help from the government. I get, Josh, it feels like
Speaker 1: little Boy Blue, right, and it's just like hollow water hollow.
Speaker 1: That's kind of what it feels like. Maybe the water's
Speaker 1: coming slowly, but that's what it feels like. Or somebody
Speaker 1: said to me last week, or we overheard you know,
Speaker 1: you see one cockroach, you think that's it. It's not.
Speaker 1: There's a million more behind the wall. So help me,
Speaker 1: like how you are looking at this and where the
Speaker 1: next shoe to drop might come from. Well, remember, the
Speaker 1: problem wasn't even the losses the unrealized losses in the
Speaker 1: in the health maturity portfolio in these particular banks. It
Speaker 1: was that they had the unrealized losses are the liquidity
Speaker 1: in both the health maturity and they're available for sale portfolios.
Speaker 1: But worse than that, they had large amounts of deposits
Speaker 1: that were uninsured and little cash on hand to meet withdrawals.
Speaker 1: So those are really the two other pieces to it,
Speaker 1: besides the impairments due to interest rates. There are a
Speaker 1: lot of banks that have upside down HTM portfolios, a
Speaker 1: lot we're talking, you know, well over one hundred. That
Speaker 1: is not really the concern in my mind. The concern
Speaker 1: short term was the concern about deposits, cash on hand,
Speaker 1: the uninsured portion. But again, I think that the weird
Speaker 1: look becomes You've had a very long up cycle at
Speaker 1: zero rate. I mean we've seen you know, main street
Speaker 1: commercial and industrial loans, small commercial industrial loans, see loans
Speaker 1: you know, priced when we were almost at zero rates
Speaker 1: at libor plus four to six hundred. Now as those
Speaker 1: read price, how many of those main street borrowers are
Speaker 1: going to be able to actually sustain their payments at
Speaker 1: significantly higher rates. I think that becomes really the problem.
Speaker 1: And so I think we're about to go from the
Speaker 1: liquidity questions of this cycle to the credit side of
Speaker 1: the cycle. Do you agree, Herman, Yeah, I think there's
Speaker 1: going to be some normalization and credits. The banks have
Speaker 1: had very little loan loss content over the past several years,
Speaker 1: and it's been impressive that losses haven't really formed. A
Speaker 1: lot of that had to do with stimulus measures during
Speaker 1: the pandemic and the FEDS quantitative easing measures. But at
Speaker 1: this point, it does seem like we're heading into a
Speaker 1: recession and you should see loan losses really pop up
Speaker 1: and normalize further. Industry. Yeah, if you remember, if you
Speaker 1: remember back in in the third quarter of oh five four,
Speaker 1: we had a massive hurricane and everyone said, oh, this
Speaker 1: is a temporary blip, and that was when I had said, nope,
Speaker 1: the housing prices is eighteen to twenty four months away,
Speaker 1: And it was really driven by the fact that we'd
Speaker 1: had a full rate cycle and the problems we're working
Speaker 1: their way through the system and they would ultimately create
Speaker 1: those losses. We really have the same thing going on here.
Speaker 1: It's not in residential real estate this time to some degree,
Speaker 1: the market's well aware that it's in commercial real estate.
Speaker 1: It's in sort of see credit corporate. But we haven't
Speaker 1: had a cycle now since the Great Financial Crisis. Hey,
Speaker 1: you know Josh, it's interesting. There's a lot of places
Speaker 1: we can go. Does it make sense? And I was
Speaker 1: just reading something from Bloomberg that a company like Charles
Speaker 1: Schwab is getting caught up in all of this. You
Speaker 1: know they're getting caught up because yes, they've got the
Speaker 1: health of maturity portfolio issues, and yes it looks like
Speaker 1: they've got a lot of uninsured deposits. But you have
Speaker 1: to remember it's really a securities firm where their banks
Speaker 1: are really used. Just as you know liquidity, it's really
Speaker 1: other people's money in a different way. I don't think
Speaker 1: it is sensible. Most of the assets are on the
Speaker 1: securities side, so I think if you were to net
Speaker 1: them out, they're probably fine. That's interesting because brokerages in
Speaker 1: particular have come up a number of times in my reporting.
Speaker 1: So do you think they're a bit more unscathed and
Speaker 1: if so, what would it take for them to become
Speaker 1: more vulnerable at this point? Well, so, first of all,
Speaker 1: not only they do I think, yes, they're more unscathed,
Speaker 1: but they also have a much much more wealthy clientel,
Speaker 1: and so I think the stresses are going to be
Speaker 1: a lot less. I think you have to remember the
Speaker 1: loan portfolio is not going to look like a bank
Speaker 1: loan portfolio for the most part. You were talking about
Speaker 1: the strains in specifically commercial real estate. Do you think
Speaker 1: that could potentially be the next shoe to drop? Well,
Speaker 1: I mean, I think I think there's a number of
Speaker 1: shoes to drop once we start recognizing the credit side
Speaker 1: of the cycle rather than the liquidity side of the cycle.
Speaker 1: And so, yes, I think that commercial real estate is
Speaker 1: a problem. I think there's a lot of again discrete loans,
Speaker 1: small commercial loans, not just real estate, that are going
Speaker 1: to be wildly problematic. A lot of those have moved
Speaker 1: outside of the banking system into the business development corps,
Speaker 1: into the private equity firms, but I think those are
Speaker 1: going to be, you know, somewhat problematic as well. And
Speaker 1: so that's really my point is we are going towards
Speaker 1: a hard credit cycle. I don't think that's immediate. I
Speaker 1: think that there's a lag defect due to rates. And
Speaker 1: so my question is if we are this early on
Speaker 1: having calls to guarantee deposits, we have to remember that
Speaker 1: when you're guaranteeing deposits, ultimately are also guaranteeing the assets.
Speaker 1: And is that really where we want to go as
Speaker 1: a society. Well, I think that's okay, So unpack that
Speaker 1: a little bit. I think about you know, you went
Speaker 1: before lawmakers, You've talked about the sector and the regulatory environment.
Speaker 1: So Josh, why would that be so problematic? And I'm
Speaker 1: just kind of playing devil's advocate here, Yeah, because ultimately,
Speaker 1: you are guaranteeing the assets of the banks at the
Speaker 1: end of the day, if you're guaranteeing the deposits, we
Speaker 1: should have a system of bad management equals failure. Bad
Speaker 1: management equals failure not only for the companies themselves, but
Speaker 1: at the same time, there has to be some level
Speaker 1: of diligence required. The FED cannot actually bail you out
Speaker 1: every time, and bailing you out means that the FED
Speaker 1: is going to be guaranteeing the assets. We're seeing that
Speaker 1: right now, taking of long dated treasuries and mortgage assets
Speaker 1: off of the bank's books and holding them. That's not
Speaker 1: really the way to resolve a system. Now, we could
Speaker 1: talk about better ways to do it, but that's not
Speaker 1: where the conversation has gone yet. So right now we're
Speaker 1: still in this phase of people screaming for bailouts. Guarantee
Speaker 1: my deposits, guarantee my deposits. I'm not really sure what
Speaker 1: that ultimately solves for, and I'm not sure that we
Speaker 1: have the ability to do that. You know, you're talking
Speaker 1: about at the end of the day, fourteen trillion dollars
Speaker 1: of deposits right, Well, again, multiple poles of that in assets, Josh,
Speaker 1: and we have let Silicon Valley banco under. I think
Speaker 1: we should have let it go under. I think we
Speaker 1: could have done an orderly resolution. Do I think that
Speaker 1: it was systemic. I absolutely don't think that it was systemic.
Speaker 1: I think that Frankly, one of the pieces that we're
Speaker 1: not talking about is Dodd Frank sought to prevent the
Speaker 1: bank regulators from stepping in and providing support to individual institutions,
Speaker 1: and that change is why the regulators felt that they
Speaker 1: had to probably had to use the systemic designation as
Speaker 1: the way of stepping in, thinking they were avoiding contagion.
Speaker 1: But I don't see anything that was particularly systemic, and
Speaker 1: I don't see any real reason that depositors shouldn't have
Speaker 1: been bailed in. Are there any other cracks that are
Speaker 1: forming right now that are concerning for you? Again, I
Speaker 1: think that I think there are cracks. I think, you know,
Speaker 1: they're structural their long term, they've been for a long time.
Speaker 1: I think we need to address the leverage ratio. I
Speaker 1: think that we actually have to also start thinking about
Speaker 1: when in two thousand and nine our banks held about
Speaker 1: one ninth of their security's portfolio and treasuries, and today
Speaker 1: it's almost almost a quarter. We have to ask what
Speaker 1: banks businesses because it doesn't seem that it's the old
Speaker 1: fashioned business of lending, and so it really has become
Speaker 1: more of a casino. And the question is, well, they
Speaker 1: thought they were playing in a safer casino because they
Speaker 1: were just buying treasuries. But treasuries are given as zero
Speaker 1: risk waiting under BOSEL and is that appropriate? And does
Speaker 1: that incentivize less lending and less prudent behavior? You know, yes,
Speaker 1: you know it's crazy, Josh. Is that. I feel like
Speaker 1: we had these conversations during the Great Financial Crisis about
Speaker 1: come on, if it's a bank, be a bank, right,
Speaker 1: rather than get into something. But here we are again
Speaker 1: having this conversation. I'm also going to say, where was
Speaker 1: the FED oversight when it comes to interest rates? Because
Speaker 1: one of the BERG terminal users reach out to me
Speaker 1: and he's like, here, I can show you, you know,
Speaker 1: an event that they did at the Saint Louis FED
Speaker 1: that was worried about community banks an interest rate risk.
Speaker 1: So where was that oversight? Well, it was sorely lacking.
Speaker 1: And again we're looking at, you know, a handful of
Speaker 1: banks as having been problematic. But as I said, if
Speaker 1: you go through the call report data, which was really available,
Speaker 1: you didn't have to be a central banker to see it.
Speaker 1: You didn't have to be a financial markets expert in
Speaker 1: banking to see it. It's all there in the financial
Speaker 1: in the call reports, you could have seen how badly
Speaker 1: managed the interest rate risk was in the banking system.
Speaker 1: And so where is the regulator? I think that's a
Speaker 1: good question. But now we're in a place where the FED,
Speaker 1: being both the regulator of the banks and the central
Speaker 1: bank who's supposed to meet its dual mandate of price
Speaker 1: stability and full employment, is sort of caught in a
Speaker 1: betwixt and between, because if you save the banks, then
Speaker 1: you're actually not able to effectuate your mandate of price
Speaker 1: stability full employment in your monetary policy mission, and so
Speaker 1: their hands are ultimately tied. You can choose one or
Speaker 1: the other. You can't really choose both, Josh, I have
Speaker 1: to get your thoughts on pal and yelling. What's your
Speaker 1: take as far as how they've done so far and
Speaker 1: what you think needs to change. I think they've done.
Speaker 1: I don't think they've done a very good job. I mean, frankly,
Speaker 1: I think that even from the start, the systemic designation
Speaker 1: of these institutions was silly. I think that the fear
Speaker 1: that we couldn't let these institutions be wound down in
Speaker 1: the traditional orderly way is silly. But problematic is you
Speaker 1: put in place a one year program where you're telling
Speaker 1: banks that they can pledge their long dated securities to
Speaker 1: the FED at PAR, which does nothing to clean up
Speaker 1: the gap between par and mark to market. It's an
Speaker 1: extend and pretend there's no parrot. There's all carrot, there's
Speaker 1: no there's no requirement that may figure out a way
Speaker 1: to address it, you know, at some reasonable period of
Speaker 1: time before it expires. And so we're extending and pretending
Speaker 1: into the tougher side of a credit cycle. I don't
Speaker 1: know how that actually plays well, and I do think
Speaker 1: that the mark to market problem remains the issue. Do
Speaker 1: we need to. I know we both have like a
Speaker 1: million questions for you. Do we need to be worried
Speaker 1: about money market funds, commercial credit lenders? I'm going to
Speaker 1: assume you ask fintech, insurance companies, trade credit and elsewhere.
Speaker 1: You know, we talk about shadow banking. Do we need
Speaker 1: to be worried about that stuff? You know? I don't
Speaker 1: think we really do at this point. Again, I think
Speaker 1: the credit cycle itself is where I am more concerned,
Speaker 1: assuming that we make it past this liquidity cycle and
Speaker 1: the front end of the interest rate cycle, but the
Speaker 1: interest rate cycle becomes a credit cycle, and I still
Speaker 1: think that we're a few quarters away from that. So
Speaker 1: to me, the question isn't is there a recession on
Speaker 1: the rise? And it's is the recession on the horizon
Speaker 1: because of a failure to manage the illiquidity and bank
Speaker 1: balance sheets at this point? Or is that on the
Speaker 1: horizon because interest rates are going to feed their way
Speaker 1: through the python in credit losses and Josh, we only
Speaker 1: have about thirty seconds left. But should the Fed continue
Speaker 1: to high rate or do you think they need to
Speaker 1: cut well, I think that they'll probably have to stay
Speaker 1: pat for the moment. I think they're going to have
Speaker 1: to acknowledge or accept that the target inflation rate is
Speaker 1: moving north from here probably three and a half four percent.
Speaker 1: Whether they are willing to acknowledge it or not. They've
Speaker 1: been sort of I think Pollyanna ish on it for
Speaker 1: a while, and I think that's the reality. So I
Speaker 1: don't think that they can afford to cut, and I
Speaker 1: think that their interest would be in hiking. But again
Speaker 1: bank solvency versus their dual mandate, their hands are. You're
Speaker 1: listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: weekday afternoons from three to six Eastern Listen on Bloomberg
Speaker 1: dot Com, the Ion Radio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube. Starves at nine or
Speaker 1: Big Again Bright Yeah Yeah, Teas. All right, Yes, we
Speaker 1: might be playing that song for Jazz because she is
Speaker 1: from Texas or my relatives in Texas, but now we're
Speaker 1: really playing it for her next guest, because right now
Speaker 1: we've got an opportunity to really get a check on
Speaker 1: the economy from the city level, which I always love.
Speaker 1: Back with us is fort Worth, Texas Mayor Mattie Parker.
Speaker 1: She is with us via zoom from um fort Worth Hey,
Speaker 1: how are you, Matt Matda. I'm great, good, thanks for
Speaker 1: having me on. Well, see like the lead intro there,
Speaker 1: that was good, So good to have you back. Mayor Parker.
Speaker 1: When we talk back in October, I'm curious, it's been
Speaker 1: a few months since then. How has your world changed?
Speaker 1: And I'm curious about the economic and business outlook how
Speaker 1: it looks right now. Well, I think one huge factor
Speaker 1: that's positive for fort Worth is that with growth comes
Speaker 1: a lot of prosperity. And while across the country we're
Speaker 1: all kind of on pins and needles or what this
Speaker 1: economic situation really looks like, everything from flation, inflation, housing costs, etc.
Speaker 1: But in Fort Worth we still grow at a rapid
Speaker 1: pace every single day based on our high quality of
Speaker 1: life and what that comes, jobs and opportunity. And so
Speaker 1: while we are maybe cautious at times and prepared for
Speaker 1: the future and what it may bring, right now, we're
Speaker 1: really positive and feel like we're on the right economic
Speaker 1: trajectory for our city. So job growth, home prices, all
Speaker 1: of it kind of the same. Economic growth the same
Speaker 1: from when we talked, what six five six months ago,
Speaker 1: it really has I would say the housing market has
Speaker 1: changed a bit yeah, in some ways, yes, but it's
Speaker 1: kind of odd, honestly, and anybody in the real estate
Speaker 1: industry would tell you that right now. Part of it
Speaker 1: is just because our prices have continued to rise or
Speaker 1: stabilize a bit, you haven't seen the dip. And there's
Speaker 1: actually an article in the Wall Street Journal, I think
Speaker 1: yesterday about East versus West in terms of what prices
Speaker 1: look like across the country, we've seen them to be
Speaker 1: still strong here. Housing stock is still concerned. We have
Speaker 1: seen is a slowdown and the number of new projects
Speaker 1: coming online, especially with new housing. So we're watching that
Speaker 1: really closely because in a fast growing city, you've got
Speaker 1: to have a place where people to live, right and
Speaker 1: you're talking about the stock of housing. So clearly the
Speaker 1: inventory is still an issue in North Texas right now. Absolutely,
Speaker 1: it's really an issue across any high growth state like Texas.
Speaker 1: And so what do you do to make sure you
Speaker 1: have different product in a place like for Worth that's
Speaker 1: growing rapidly, Everything from multifamily, single family housing, increasing density
Speaker 1: within the inner city, those are all considerations we're having
Speaker 1: to make. And also important is you want to attract
Speaker 1: a young workforce into a Citylight for war. So when
Speaker 1: it comes to home building, I mean, you know, we've
Speaker 1: seen booms and bust before throughout the country, and certainly
Speaker 1: anything that's connected with energy or oil, if you will.
Speaker 1: Are people holding off in terms of increasing the housing
Speaker 1: stock or is it just a case that they want
Speaker 1: to build but they just either don't have the labor,
Speaker 1: the materials, or what have you. Yes, yes, yes, it's
Speaker 1: really all of the above for a lot of these
Speaker 1: big players in this space. So in the City of
Speaker 1: Fort Worth, you have to kind of ask yourselves in
Speaker 1: any city government that's smart, is what can you do
Speaker 1: as an actual government to really encourage good development? And
Speaker 1: the number one thing we have to do is make
Speaker 1: sure we're streamlining our development services and providing optimal infrastructure
Speaker 1: for any of these potential projects. And that's a real
Speaker 1: focus for us right now. And second is really make
Speaker 1: sure we're having frequent meetings with organizations like our Real
Speaker 1: Estate Council locally to understand the needs on the private
Speaker 1: side and understand how they're kind of thinking about housing
Speaker 1: stock in the future and what these projects really look like.
Speaker 1: And then lastly, everyone's been really nervous in the last
Speaker 1: few weeks, especially after Silicon Valley Bank and then First
Speaker 1: Republic and these considerations is what does that mean for
Speaker 1: the banking industry in general. We're very proud of our
Speaker 1: banking industry here, regional banks, community banks, large players here
Speaker 1: in North Texas, and we see a real stronghold and
Speaker 1: a positive economic outlook, but we have to all recognize
Speaker 1: that could change tomorrow and being really responsible with the
Speaker 1: rhetoric whether we're using to support the banking industry here.
Speaker 1: What are some of the biggest regional banks that are
Speaker 1: in that particular area in Texas. I think probably I
Speaker 1: would say Camerica is a big one. Frost Bank is
Speaker 1: a big one as well. Umb is another great regional bank.
Speaker 1: I think everybody uses a different definition of what's regional
Speaker 1: versus community bank, but I think it's important for me
Speaker 1: to mention in North Texas and forth specifically, some of
Speaker 1: our most amazing corporate partners are actually these banks that
Speaker 1: really care about their clients differently than maybe you see
Speaker 1: across regions. They feel like their family, and because of that,
Speaker 1: even in a potential economic downturn, they have a responsibility
Speaker 1: to understand what's happening economically for families in the region
Speaker 1: and I'm really proud of everybody that's been a partner
Speaker 1: here and for ors, we're very fortunate. Hey Mayor Parker,
Speaker 1: what signs of nervousness did you see among either individuals
Speaker 1: or businesses because of the banking stress and the collapses
Speaker 1: that we saw of those three regionals over the last
Speaker 1: couple of weeks. Well, I think the main thing I
Speaker 1: heard from business leaders in Texas was just an open
Speaker 1: ended question, which was had this bank been let's say,
Speaker 1: in Houston or in Dallas and been maybe more on
Speaker 1: the energy side focus and not in Silicon Valley, would
Speaker 1: have would have the FDAC Treasury stepped up the same way,
Speaker 1: open question right, which is interesting And I'm just listening
Speaker 1: to those that are experts in this space, but importantly
Speaker 1: making sure we're telling our story of fantastic banking and
Speaker 1: financial partners in North Texas and how your your deposits
Speaker 1: are safe and that you're actually your money is working
Speaker 1: better for you in these in these smaller and regional banks,
Speaker 1: and importantly, even the big players that we have in
Speaker 1: North Texas that are you know, the JP, Morgan's Bank
Speaker 1: of America, Wells Fargo, they're excellent corporate partners. And stewards
Speaker 1: in our communities also though, and I don't know if
Speaker 1: that's similar in other in other markets, but I know
Speaker 1: that we're really lucky here and for Worth. Can I
Speaker 1: ask you, I'm just wondering because of the banking stress
Speaker 1: that we've seen, there certainly has in the market's been
Speaker 1: a reset about expectations about what the FED might ultimately do.
Speaker 1: We also just talked earlier in our broadcast that because
Speaker 1: of this situation, that we're likely to get a hard
Speaker 1: economic landing and a recession that maybe could be deeper
Speaker 1: and wider than maybe we were anticipating three weeks ago,
Speaker 1: which is pretty remarkable to turnaround in the sentiment how
Speaker 1: do you see it? Do you see her well action coming? Well?
Speaker 1: I think for us and for Worth and North Texas specifically,
Speaker 1: we have to understand what an economic recession would look
Speaker 1: like for us and how that would probably different than
Speaker 1: other region across the United States because of our high
Speaker 1: growth and economic opportunity in the projects that are already
Speaker 1: on the ground. And I would venture to tell you
Speaker 1: and those that are business leaders that are already talking
Speaker 1: about this, that even if we do go into recession
Speaker 1: in North Texas, we would weather it better and come
Speaker 1: out of it more quickly for a lot of the
Speaker 1: factors we've already talked about today, and just being really
Speaker 1: responsible in supports for that and watching the markets closely.
Speaker 1: But let's be honest, anybody that's trying to gamble here
Speaker 1: and guests is really difficult and we just have to
Speaker 1: be patient and watch it closely. The one number one
Speaker 1: topic I have heard from constituencs here locally or interest race,
Speaker 1: especially in mortgages, and back to these prices, an impact
Speaker 1: of those high increases. You know, just a few months
Speaker 1: ago you could get a mortgage rate for in the
Speaker 1: high twos or threes. That's unheard of right now. And
Speaker 1: so what does that mean for home prices in a
Speaker 1: place like Texas where you're seeing rising prices across the state.
Speaker 1: And I was going to ask you what the biggest
Speaker 1: concern was among your constituents. But interesting enough about how
Speaker 1: you're talking about what is happening clearly with the correlation
Speaker 1: with mortgage rates. Are you seeing any sort of easing there?
Speaker 1: Because we were talking about housing earlier, but when it
Speaker 1: comes to those applications to try to get a mortgage,
Speaker 1: are you seeing any sort of easing there or is
Speaker 1: it still tough for a lot of your constituents at
Speaker 1: this point because of even though housing prices have cooled,
Speaker 1: still relatively high just given historical standards. And I haven't
Speaker 1: seen any data, but I know anecdotally. At first, I
Speaker 1: think there was a shock to the system when you
Speaker 1: saw the jump in rates. But I think at this point,
Speaker 1: families that need to be in a home and they
Speaker 1: find their spot, they just shop mortgage rates as best
Speaker 1: they can and decide to go ahead and move forward,
Speaker 1: recognizing that even a five or six percent seems high
Speaker 1: from what we've seen in the last several years. It's
Speaker 1: still something that they're willing to embark on as a
Speaker 1: family because it's a high quality of life that they
Speaker 1: want to be in this area. And it's it's just
Speaker 1: a competitive sport to find a house anywhere in a
Speaker 1: big metro area, but certainly in a great place to live,
Speaker 1: like fort Word. So I mean, bottom line, even though
Speaker 1: the housing stock may be not there. I mean the
Speaker 1: great relocation that we talked about, you you know, back
Speaker 1: in October, that is still happening. It really is, And
Speaker 1: there's a variety of companies we could brag on and
Speaker 1: talk about what's happening. I think one industry and specifically
Speaker 1: that I know Bloomberg is really watching closely, is this
Speaker 1: concept of entering of magnet manufacturing, especially for evs. We're
Speaker 1: really proud to be the first home for empty materials
Speaker 1: to manufacture their magnets here for batteries in the United States,
Speaker 1: and this is an effort across the US, but I
Speaker 1: think fort Worth, for a variety of reasons, will lead
Speaker 1: the way. A special connection with Alliance Airport now Paro
Speaker 1: Field and Hill would in the work they're doing a
Speaker 1: mobility innovation zone, and companies are noticing fort Worth for
Speaker 1: different reasons. Easier to do business. We're incredibly scrappy here.
Speaker 1: We want you here, and we're really focused on emerging
Speaker 1: industries that we know. Will you have an impact economically
Speaker 1: not just for our state but the entire country moving forward.
Speaker 1: Mayor Parker, I do you want to talk to you
Speaker 1: about manufacturing in crypto and all these good things, But
Speaker 1: can I ask you what is it like to be
Speaker 1: one of the youngest mayors of a major American city
Speaker 1: in US history? Well, some days it's awesome and other
Speaker 1: days I really question my sanity. I'm being honest. Why
Speaker 1: why Yeah, Well, it's just a weird time to be
Speaker 1: in politics. You can imagine, you know everything. First of all,
Speaker 1: we're just divisive as a country right now, and that
Speaker 1: really rings true in a city. Also, I sometimes I
Speaker 1: love social media and other times I kind of question
Speaker 1: why I'm on it, just because it becomes this platform
Speaker 1: that sometimes it's toxic rather than does things for good.
Speaker 1: But at the end of the day, it's a huge
Speaker 1: honor to be mayor of this city. My family lives here,
Speaker 1: we care about it deeply, and it is unique to
Speaker 1: be a part of a new age demographic and that's
Speaker 1: kind of emerging, not just in politics, but in business also.
Speaker 1: I'm really proud to carry on that tradition for my
Speaker 1: city and didn't know that i'd be one of the
Speaker 1: youngest mayors when I was elected. But I've got some
Speaker 1: great colleagues across the country now and we can kind
Speaker 1: of commiserate in the job. But no two days are
Speaker 1: the same, as you can imagine in a fast growing city,
Speaker 1: and for the most part, it's been a ton of
Speaker 1: fun and then occasional blips when you have days when
Speaker 1: they're pretty tough, you just have to remember how fortunate
Speaker 1: in my case, how fortunate I am to get to
Speaker 1: do this job. Do you feel the front and center?
Speaker 1: And this is something Jess and I talked. She said that,
Speaker 1: you know before we got started that there are people
Speaker 1: you know that question your age. Do you feel like
Speaker 1: you see it sometimes in a conversation with someone. I
Speaker 1: don't think age matters ever, to be not honest, but
Speaker 1: do you ever are having either business dealings or political
Speaker 1: dealings where you know they're either talking down or looking
Speaker 1: down because of your age? You know? Yes, maybe, but
Speaker 1: mostly since I've been mayor, I would tell you once
Speaker 1: you can get in a room with me and talk
Speaker 1: about the issues. Any concern someone may have had about
Speaker 1: age or experience dissipates pretty quickly. You just have to
Speaker 1: be on your game. And frankly, I've experienced that as
Speaker 1: a woman in business in general, you have to be
Speaker 1: kind of the smartest in the room and most prepared,
Speaker 1: and surround yourself with really bright people. Also. So is
Speaker 1: it easier to be younger or is it easier to
Speaker 1: be a woman or harder to be a woman? A harder? Oh,
Speaker 1: good question, you know, I think in some ways age
Speaker 1: has been a bigger factor or talked about more. Okay,
Speaker 1: my gender in this role, but I have seen sometimes frankly,
Speaker 1: it's not just that I'm a woman, but I'm a
Speaker 1: mom of young children and kind of the looming question
Speaker 1: of how do you do it? And I'm like every
Speaker 1: working parent, every working mom. Some days it's awesome and
Speaker 1: I'm killing it, like I'm keeping the balls in the air,
Speaker 1: and other days it's a little messy and just kind
Speaker 1: of being vulnerable and owning that. And for some people
Speaker 1: it just depends on your setting. They don't really understand
Speaker 1: that necessarily because it's so foreign to their day to day.
Speaker 1: And that's okay with me. I like to be a
Speaker 1: trail boser in that way because I know some really
Speaker 1: amazing women out there doing the same thing in their
Speaker 1: respective industries. Walk us through what your day to day
Speaker 1: is like, Is it kind of similar day to day
Speaker 1: or their variety of changes, obviously depending on what your
Speaker 1: constituents are looking for. Yeah, I think that's true about
Speaker 1: any mayor's role across the city. You never know what
Speaker 1: can happen. I mean, you could be in crisis one day,
Speaker 1: something happens in your community, or you could kind of
Speaker 1: really stick to your schedule. I really try to spend
Speaker 1: a predominant amount of my time focus on Fort Worth,
Speaker 1: even though there is a need to pull me across
Speaker 1: that country for different opportunities, to make sure we're highlighting
Speaker 1: our city for the right reasons. So just kind of
Speaker 1: creating a balance of time and commitment. And we have
Speaker 1: council meetings every Tuesday between work sessions and a council meeting,
Speaker 1: and so that can add up really quickly. Make sure
Speaker 1: you're reaching with constituents and then working alongside my colleagues
Speaker 1: on council. There are eight other people on the diets
Speaker 1: with me, soon to be ten when we redistrict this May,
Speaker 1: and making sure they have enough time from me and
Speaker 1: understand what their priorities are that we can kind of
Speaker 1: carry forward for the city. If I'm being honest. Right now,
Speaker 1: I was texting with a twelve year old who has
Speaker 1: lost his basketball somewhere at school warns practice. So sometimes
Speaker 1: that's a little bit distracting, but you know, we're making
Speaker 1: it happen and really proud where we are in the city. Yeah, exactly. Listen,
Speaker 1: and I know last time around we talked with you.
Speaker 1: You are a Republican, but you are not shy about
Speaker 1: taking stands that maybe are taking a position that is
Speaker 1: against the GOP or feeling very differently and coming out
Speaker 1: and saying it or criticizing the current state of the GOOP.
Speaker 1: Do you still feel comfortable doing that and what gives
Speaker 1: you kind of the strength to do that? Well, I
Speaker 1: think for me in particular, Aget I remember I did.
Speaker 1: I've kind of been behind the scenes in policy for
Speaker 1: over seventeen years. I really enjoy that. And to me,
Speaker 1: when I make a decision or take a certain stand
Speaker 1: publicly on any particular issue, it's really about the policies
Speaker 1: that we have, whether they're locally or across Texas or
Speaker 1: the United States, that I think need to change or evolve,
Speaker 1: regardless of party. Kind of agnostic about those things. Let's
Speaker 1: really dig and understand why we have a policy in
Speaker 1: place and what may need to change. And to your
Speaker 1: question about why or how I do that, my perspective
Speaker 1: right now is this job is hard enough as it is,
Speaker 1: and if I felt like I was ever compromising my
Speaker 1: own integrity or my belief on what should happen or
Speaker 1: what is right, why would I be doing the job anyway?
Speaker 1: And I just find it to be exhausting if you're
Speaker 1: constantly hedging out of fear of what a party may
Speaker 1: or may not do. And that doesn't mean I don't
Speaker 1: have a lot of respect for certain platforms, but I
Speaker 1: also disagree with many. Also, I've tried to stay out
Speaker 1: of the headlines when I can, or when it really
Speaker 1: doesn't necessarily help my role as may or help my city.
Speaker 1: But occasionally I've had to push that aside and say, hey,
Speaker 1: this is important enough for fort Worth. I'm willing to
Speaker 1: make a headline, not because I want to be front
Speaker 1: and center, but because I want to bring attention to
Speaker 1: a particular cause that I think warrants that in that situation,
Speaker 1: I wanted to follow up on as far as pushing
Speaker 1: for new gun laws. Can you tell us more specifically
Speaker 1: what it is that you're looking to do and change?
Speaker 1: Well this session, honestly, you know, they did a lot
Speaker 1: of inner and studies on what may need to happen.
Speaker 1: Of course, understandably after the tragedy in Uvaldi, and the
Speaker 1: one public stance I've taken in Texas, and this is
Speaker 1: out there already, is that I wish we would consider
Speaker 1: raising the age limit from eighteen to twenty one for
Speaker 1: those semi automatic rifles. I think there's a way to
Speaker 1: reconcile some of the concerns I've had in Texas. Right now,
Speaker 1: you have to be twenty one to purchase alcohol, to
Speaker 1: pursis tobacco, and I just think there's some inconsistency in
Speaker 1: our policies, and particularly in Uvaldi, I felt, based on
Speaker 1: those circumstances and what I know in that case, the
Speaker 1: individual that perpetrated those horrific tragedies in killing these young
Speaker 1: children and two teachers could have been prevented had there
Speaker 1: been a different age limit by no means, So I
Speaker 1: think that's going to solve things overnight. We just experienced
Speaker 1: what happened in Nashville yesterday. We can talk about gun
Speaker 1: laws across the country, but I do think it needs
Speaker 1: a balance. I think what Senator Cornyn and his bipartisan
Speaker 1: group tried to do in the Senate was just that
Speaker 1: sort of marrying different policies that need to happen across
Speaker 1: the country. And then lastly, I would just say listening
Speaker 1: closely to local law enforcement and what they're seeing, and
Speaker 1: it's really important detail that we're not talking about always
Speaker 1: nationally in the met it is the bulk of the
Speaker 1: gun violence you're seeing in this country among the youth
Speaker 1: or actually black market weapons. So we talk a lot
Speaker 1: about legal gun purchasing ability, but black market weapons are
Speaker 1: still a consideration that we have in a large city
Speaker 1: like Fort Worth and across the country, and what are
Speaker 1: we doing to kind of curb gun violence. We had
Speaker 1: a young man killed in a water Burger parking lot
Speaker 1: right just a few months ago. He was a young
Speaker 1: high school student, and honestly, that would have been the
Speaker 1: kind of thing that was just a brawl right in
Speaker 1: the parking lot a few years ago. But in this situation,
Speaker 1: a child died because there was a gun involved. We
Speaker 1: have to run. Appreciate covering so much ground with you.
Speaker 1: Be well, Mattie. Mattie Parker, of course, the mayor of
Speaker 1: Fort Worth, Texas, joining us from the city of Fort Worth.
Speaker 1: This is Bloomberg. You're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Eastern
Speaker 1: on Bloomberg Radio, the Bloomberg Business app Band YouTube. You
Speaker 1: can also listen well. I've on Amazon Alexa from our
Speaker 1: flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
Speaker 1: We talked earlier with the team over Doohn Hopkins Bloomberg
Speaker 1: School of Public Health. They talked about pharmaceutical advertisement and
Speaker 1: treatment efficacy. Well, right now we have a guest in
Speaker 1: the healthcare space using AI, the human genoman more to
Speaker 1: improve health outcomes. So great to have back with us.
Speaker 1: Katherine Stoulin, she's the CEO of Gendx, a small cap
Speaker 1: publicly held company. They're roughly about two hundred and seventy
Speaker 1: million in market cap stocks up twenty five percent a
Speaker 1: year to date, and she is in her Bloomberg Interact,
Speaker 1: a broker's studio. Nice to have you back. I feel
Speaker 1: like there's a lot of places I want to start.
Speaker 1: Let me start really big, broad if we may, because
Speaker 1: we're in a funny, interesting, confusing at times macro environment.
Speaker 1: You play in a very specific space, but you've got
Speaker 1: to be watching market volatility, the headlines about the banking sector.
Speaker 1: How do you see the environment today? So we've taken
Speaker 1: a very i would say responsible approach to how we're
Speaker 1: managing the company moving forward. So when I started, we
Speaker 1: combined two companies, so Semaphore and GenX actually came together
Speaker 1: last year. I took the helm of the combined companies
Speaker 1: May second, and we had already started to see the
Speaker 1: pressures of the economy and the company had been burning
Speaker 1: about ninety million dollars in Q one last year. So
Speaker 1: Job one was really figuring out a plan to ensure
Speaker 1: that we could become self sustaining as soon as possible.
Speaker 1: So we went through a series of changes in the company.
Speaker 1: We actually shut down a few of the business lines
Speaker 1: that were materially negative gross margins and we're in their
Speaker 1: nascency or just we're not performing. And where we landed
Speaker 1: was in a place where we have a distinct competitive advantage.
Speaker 1: We can really help people in a unique way in
Speaker 1: the marketplace that also happens to deliver on very healthy
Speaker 1: growth margins and as well reinverse moving forward. So we've
Speaker 1: really been taking the era of growth at all costs
Speaker 1: is behind us, and we have been really focused on
Speaker 1: revenue driving growth moving forward. Well, Catherine, I'd love to
Speaker 1: talk just about the your main business because it's pretty
Speaker 1: fascinating and correct me if I misinterpret what you're doing.
Speaker 1: But you basically take the full genome sequence of a
Speaker 1: person and try to look for genetic diseases and that
Speaker 1: type of thing is that is that basically it So
Speaker 1: you're right on. What we do is essentially take a
Speaker 1: genome's worth of information and we distill it into actionable insights,
Speaker 1: which is an incredibly daunting task if you think about
Speaker 1: the fact that it's only been about twenty years since
Speaker 1: the Human Genome Project delivered its first its first draft. Really,
Speaker 1: so we've been really working to develop the technology that
Speaker 1: can take a genome's worth of information and deliver it.
Speaker 1: Deliver the information in a way that provides a definitive diagnosis,
Speaker 1: looking more comprehensively than a single gene like Bracca. We
Speaker 1: want to look at the entire scope of the genome.
Speaker 1: So what's the holy grail? Like? When we think about this,
Speaker 1: like in an ideal world, you would say, okay, we've
Speaker 1: said we've mission accomplished. What would it mean for a
Speaker 1: patient and or a medical professional. Ultimately, we want to
Speaker 1: diagnose disease as quickly as possible, get them on the
Speaker 1: treatment that's best for them, so truly personalized medicine, and
Speaker 1: get them on a healthier path. Now, ideally, what that
Speaker 1: means is we're all walking around today with DNA that
Speaker 1: can help inform our health and it can either help
Speaker 1: diagnosed disease immediately or even get to the point where
Speaker 1: we can prevent disease. But there's one piece that would
Speaker 1: make that information even richer, and it's the information that
Speaker 1: we find in each of our own mrs. So being
Speaker 1: able to have an MR, an electronic medical record, so
Speaker 1: being able to take a look historically, having a longitudinal
Speaker 1: look at each of us, and being able to say,
Speaker 1: what are the different lab tests that we're taken, what
Speaker 1: did an MRI say, what different treatments have I been on?
Speaker 1: And be able to take the genomic information from within
Speaker 1: you and have that additional context from your own medical
Speaker 1: history that can then give us an even more precise
Speaker 1: diagnos So it's not like just the case of out
Speaker 1: of the out of the womb that we're we do
Speaker 1: this mapping and we know kind of what's to come.
Speaker 1: Is it even that that is a fantastic starting point?
Speaker 1: So okay, we are starting to do newborn screening. So
Speaker 1: we are we're working on a study right now called
Speaker 1: the Guardian and Steady, and that really is taking a
Speaker 1: look at healthy babies, sequencing their genomes and screening for
Speaker 1: two hundred and fifty conditions so that is a fantastic
Speaker 1: starting point, and we do want to get to that
Speaker 1: point where we can make this available and accessible to
Speaker 1: absolutely everyone, so your customers are more of the scientific
Speaker 1: community rather than me bringing my newborn to you and say,
Speaker 1: can you sequence its correct. What we're doing is we're
Speaker 1: working with providers. Because I've been in the genomics industry
Speaker 1: for ten years, I've been in the healthcare industry for thirty.
Speaker 1: It gets more and more before I know it. But really,
Speaker 1: what we want to be able to do is continue
Speaker 1: to work with providers and ensure that the information can
Speaker 1: be delivered responsively, because when you have a healthy newborn,
Speaker 1: the last thing that you want is a whole bunch
Speaker 1: of worrisome information. What we want to be able to
Speaker 1: do is hold onto the information and when there is
Speaker 1: a emptom be able to provide on demand whether or
Speaker 1: not there's an underlying genetic condition. And I think what's
Speaker 1: really important about the study that we're doing right now,
Speaker 1: it is Wendy Chung, a fantastic pediatrician and geneticis out
Speaker 1: of Columbia, who is driving the entire thing. A thousand
Speaker 1: patients or a thousand families have really enrolled in this
Speaker 1: since it launched in October. What we did was a
Speaker 1: retrospective analysis, So we took a look at our own
Speaker 1: database at GENDX, and we predominantly test children. And what
Speaker 1: we did was we said, if we took the Guardian
Speaker 1: screening criteria and applied it to our database to our patients,
Speaker 1: we actually would have been able to diagnose twenty percent
Speaker 1: of the children that we tested at birth. Instead, they
Speaker 1: went on for eight, nine, ten, eleven years without a diagnosis.
Speaker 1: So in other words, okay, so that's interesting because I
Speaker 1: keep thinking about we talk about disruption innovation. We've seen
Speaker 1: it in a lot of different spaces. We certainly saw
Speaker 1: it as a result of the pandemic, just in terms
Speaker 1: of buying online. You know, I never carried cash anymore
Speaker 1: as a result of it. But I do think about
Speaker 1: healthcare disruption and I have been thinking the genome, like
Speaker 1: this has got to be where it all comes from. Ultimately,
Speaker 1: how tricky is what you're doing is it is highly complicated.
Speaker 1: I mean, if you think about it, why is it complicated?
Speaker 1: If you think about the twenty three thousand genes, there
Speaker 1: is a very big gap that we call variants of
Speaker 1: unknown significance. So there's just an uncertainty about the characterization
Speaker 1: of those variants. Are they disease causing or are they not.
Speaker 1: So we're still in the early days of learning so
Speaker 1: much about individual genes and variants within each gene that
Speaker 1: it creates in inequity in and of the genome itself.
Speaker 1: There are certain variants that are very clearly pathogenic or
Speaker 1: not pathogenic, but then there's all of these variants where
Speaker 1: we just don't have enough information yet. The more patients
Speaker 1: that we test, our underlying interpretation platform actually gets smarter,
Speaker 1: so data we need more patients, we need more data,
Speaker 1: and then we learn more about those variants. And it
Speaker 1: strikes me as I don't want to sell like a
Speaker 1: sales rep for your company here, but it strikes me
Speaker 1: as a type of thing that if I were an
Speaker 1: insurance company, I'd probably be on board with this, you know,
Speaker 1: you'd want to identify these type of conditions early. I mean,
Speaker 1: is that kind of the selling point for you guys.
Speaker 1: It is fascinating to see seventy percent of commercial payers,
Speaker 1: so insurance companies are paying for XOMERGINO not at birth,
Speaker 1: so that's something we need to figure out in the future.
Speaker 1: But they're paying for it in the pediatric setting. What's
Speaker 1: even more interesting, so Signa and United health Care earlier
Speaker 1: this year both put out new medical policy supporting utilization
Speaker 1: of our xome or genome as a first line treatment
Speaker 1: for exactly that it helps produce their costs because right
Speaker 1: now it's just a big trial and error of different
Speaker 1: tests which are inefficient and creates a lot of waste
Speaker 1: in the system. So they're actually very much on board
Speaker 1: with ensuring that people are getting this technology because it
Speaker 1: helps them too. I want to get back to our conversation.
Speaker 1: Catherine Stouland, the CEO of Gendx, is with us here
Speaker 1: in studio. I want to get back to what you
Speaker 1: guys are doing, because we were just talking in our
Speaker 1: break Mike and I with you, and there's a lot
Speaker 1: of more interesting things that we want to get to.
Speaker 1: I want to ask you, though, you said in the
Speaker 1: break that this is your first time as a CEO
Speaker 1: of a company. It's publicly held, it's a small cap
Speaker 1: which can move around a lot. It's a week that
Speaker 1: I'm looking at your share price. It's down a lot,
Speaker 1: it's still up twenty five percent year to date. How
Speaker 1: do you think about those things as you run your company,
Speaker 1: and it sounds like it's going to be a long,
Speaker 1: you know, runway if you will, in terms of what
Speaker 1: you're trying to do. Absolutely well, we happen to be,
Speaker 1: I think, in a very rare position, just having raised
Speaker 1: one hundred and fifty million dollars in January, which was
Speaker 1: a very difficult market to be raising money in. Although
Speaker 1: glad you did it now so then so glad that
Speaker 1: we did it, and that enables us to get to
Speaker 1: profitability in twenty twenty five and to be in that position,
Speaker 1: I think is a very rare place to be. And
Speaker 1: what we've said to the team, the stock is going
Speaker 1: to be noisy. It just will be, and the best
Speaker 1: thing that we can do is stay focused on executing
Speaker 1: on our plan. We have a clear plan that gets
Speaker 1: us right to that twenty twenty five profitability place. We
Speaker 1: have a lot of operating ricor for the team, so
Speaker 1: we're really LEAs staying focused on driving revenue, driving volume,
Speaker 1: bringing down our cogs. So we try to keep the
Speaker 1: stock price noise as much out of the discussion as
Speaker 1: possible and really keep it focused. We have a lot
Speaker 1: of work to do. We have a lot of patients
Speaker 1: that we're serving. We have a lot of customers. We
Speaker 1: work with hundreds and hundreds of hospitals across the United States,
Speaker 1: and so there is plenty to keep us busy. And
Speaker 1: what I say is, so long as we can deliver
Speaker 1: on the goals that we've put forth as a team
Speaker 1: internally report that out to the street, the stock price
Speaker 1: is going to follow. So I very much believe that
Speaker 1: our board has been nothing but supportive of our kind
Speaker 1: of maniacal focus on execution this year and for the
Speaker 1: following year. So that's the best message that I think
Speaker 1: we can be delivering to the team. And fortunately we
Speaker 1: have a very mission based company. Employees come to the
Speaker 1: company sometimes because they've used our exom er genome to
Speaker 1: diagnose one of their own children. Wow. And so people
Speaker 1: really really care the samples that come into our lab.
Speaker 1: It is usually of a child who is a rare disease.
Speaker 1: It sometimes is a sample from a baby who's in
Speaker 1: the neck and the parents are waiting to get an answer.
Speaker 1: So there is very much a connection of exactly how
Speaker 1: important the work that we're doing day in and day
Speaker 1: out is in terms of being able to bring an
Speaker 1: answer which brings peace of mind to parents and it
Speaker 1: helps get their child on a healthier path sooner. You know, Catherine.
Speaker 1: When I think about what your company does and what
Speaker 1: its ambitions are, some of the real trendy market buzzwords
Speaker 1: come to mind innovation, disruption. The problem with disruption is,
Speaker 1: you know, not everyone likes that right that there's often pushback, existance,
Speaker 1: And I'm picturing you know, my kids seventy five year
Speaker 1: old pediatrician talking to you and really not being on
Speaker 1: the same page, not being trained in genetics. So I'm curious, like, how,
Speaker 1: you know, what are the roadblocks to further adoption of
Speaker 1: this type of technology and using it in diagnosis and treatment.
Speaker 1: I assume there's probably some pushback from the medical community
Speaker 1: that is at risk of being disrupted from this. Is
Speaker 1: that Is that fair to say? So, it's interesting we
Speaker 1: have a groundswell of support from medical geneticists who are
Speaker 1: well equipped to be able to interpret the information, know
Speaker 1: which patients to use the information on, and they have
Speaker 1: put out very clear guidelines that other providers listen to.
Speaker 1: And what's interesting now is if you look at the
Speaker 1: medical societies outside of medical genetics, so the American Epilepsy Society,
Speaker 1: they've come out to tell their practitioners a neurologists and
Speaker 1: pediatric neurologist that if you think that a child has
Speaker 1: may have epilepsy, you're witnessing a seizure, you should use
Speaker 1: an exome or a genome as a frontline. So we
Speaker 1: are starting to see providers from other groups outside of
Speaker 1: the medical geneticists receive the message that this is something
Speaker 1: that can help them. It's our job to make it
Speaker 1: as easy as possible for them to identify which patients
Speaker 1: are eligible for it, and then in turn, this is
Speaker 1: something we have not solved yet. In turn, we have
Speaker 1: to be able to deliver the information in a way
Speaker 1: that is easily understandable to a non genetics expert. So
Speaker 1: that is a probably interpretation the interpretative test itself exactly.
Speaker 1: So do you guys do that we do that you do?
Speaker 1: That is part of what we do exquisitely well is
Speaker 1: being able to take all of that information and say
Speaker 1: this is a positive test result, this is what it
Speaker 1: means for your patients. But because is historically it really
Speaker 1: has been geared towards a genetics expert, part of my
Speaker 1: challenge to the team is to say make it understandable
Speaker 1: for the seventy five year pediatrician, because then it becomes
Speaker 1: much less of a barrier for them to utilize it.
Speaker 1: So how what does the test cost? So we are
Speaker 1: in a very fortunate position after a lot of work
Speaker 1: and publishing a lot of data. Seventy percent of commercial
Speaker 1: payers pay for our services. We're continuing to get more
Speaker 1: and more coverage and in fact, United Insigna just issued
Speaker 1: coverage earlier this year saying you utilize this testing. So
Speaker 1: what so usually four out of five patients have zero
Speaker 1: out of pocket, which is great. Our goal is to
Speaker 1: make sure that, from an equitability standpoint, everyone has access.
Speaker 1: We work with state medicaids and in fact there's six
Speaker 1: states right now that cover XOME and genome for baby
Speaker 1: as well as parents. So we're starting to see even
Speaker 1: more and more coverage across the board. But if not,
Speaker 1: what would it cost? You all? Think about thirty seconds
Speaker 1: leapt If not, then it's about thirty five hundred dollars.
Speaker 1: I feel like I have a million more questions. You
Speaker 1: wrap it up real quick. Well, I was to say that,
Speaker 1: you know, is it a matter of a doctor suspecting
Speaker 1: a patient has something in sending them to you, or
Speaker 1: would it be more prophylactic. Say, ideally you'd want to
Speaker 1: do it to everyone. I imagine ideally you want to
Speaker 1: do it to everyone. But if there is a potential
Speaker 1: that there is an underlying genetic condition, we want the
Speaker 1: clinician to order from us. We'll get them an answer
Speaker 1: and hopefully get that and that's when it's covered by insurance.
Speaker 1: I guess yeah. But the more data that comes in,
Speaker 1: the more tests that are done, it gets even better
Speaker 1: and better it does. And the more testing we do,
Speaker 1: the more we learn that more people actually are impacted
Speaker 1: by this. Hopefully you come back in a few months
Speaker 1: and talk more about the progress you guys are doing.
Speaker 1: Katherine Stoulan, chief executive officer of gendx US. Here in
Speaker 1: our interactive Brokers studio. You're listening to Bloomberg Radio. You're
Speaker 1: listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: weekday afternoons from three to six Eastern Listen on Bloomberg
Speaker 1: dot com, the Ion Radio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube. Jess, here's some startling
Speaker 1: statistics about one profession. For those in it, some forty
Speaker 1: six percent would not recommend it as a career. Only
Speaker 1: thirty three percent feel fairly compensated. Ninety three percent think
Speaker 1: the shortage in their field will only get worse. So
Speaker 1: those are pretty rough numbers. They are. And when I
Speaker 1: know what profession you're about to talk about, and this
Speaker 1: is something that was pivotal, especial, it always is pivotal,
Speaker 1: but especially in the week of the pandemic. Absolutely, we're
Speaker 1: talking about nursing, which, as you said, we were reminded
Speaker 1: was so crucial to get us through the COVID pandemic.
Speaker 1: So let's get more on the state of nursing. Great
Speaker 1: to have back with us, doctor Aman Abuzaid. She's CEO
Speaker 1: and co founder at Incredible Health. Her company connects hospitals
Speaker 1: with nurses and other healthcare workers. She joins us via
Speaker 1: zoom from Austin, Texas, Doctor Abuse, Nice to be checking
Speaker 1: in with you again. How are you. I'm good, Thank
Speaker 1: you so much for having me. Hey, so listen. I
Speaker 1: shared with our audience and viewers some of the statistics
Speaker 1: tell us about your State of the Nursing report, which
Speaker 1: I believe was just released today. Yeah, I was released
Speaker 1: to date. It's our fourth annual report and we use
Speaker 1: hiring data from over seven hundred thousand nurses in our
Speaker 1: network on the Incredible Health platform, and then we surveyed
Speaker 1: an additional three thousand two So as far as just
Speaker 1: the main findings, I'd love to start off with some
Speaker 1: good news. Actually, there's been some improvements since last year.
Speaker 1: So eighty percent of nurses plan to stay in their
Speaker 1: field until retirement, which is a big increase. It was
Speaker 1: only at fifty five percent last year. And then there's
Speaker 1: also been a ten percent degrease in the number of
Speaker 1: nurses who are planning to leave their current roles this year.
Speaker 1: So that's that means that turnover will hopefully be improving
Speaker 1: in the next twelve months too. Can we can we
Speaker 1: ask you why that good news? Why do you think
Speaker 1: those numbers have improved, because I know they were pretty
Speaker 1: dismal when we were talking to you before they were
Speaker 1: I think I think the main reason is that the
Speaker 1: pandemic and the intensity of it has subsided a bit.
Speaker 1: And then we're also through the triedemic. You know, there
Speaker 1: was this r RSB flu time period too, so you
Speaker 1: know they're looking their nurses are a little more optimistic
Speaker 1: about the long term in the future, their future careers.
Speaker 1: There was a nurse in my neighborhood, A neighbor who
Speaker 1: she was like, I'm done, I'm done, wouldn't go like
Speaker 1: just because it was just too much UM coming at her.
Speaker 1: So I can totally relate UM walk us through some
Speaker 1: of the numbers though that weren't so great. Yeah, I know.
Speaker 1: So now having said that, even with that some of
Speaker 1: that good news, that's a little bit more longer term
Speaker 1: looking that they want to stay in their careers. In
Speaker 1: the long term, there there's still a lot of frustration
Speaker 1: about what's going on currently with understaffing, would burnout and
Speaker 1: with pay. So, you know, more than sixty two percent
Speaker 1: of the nurse say they're not hopeful for the next
Speaker 1: generation of nurses, and forty six percent would actually not
Speaker 1: recommend a career in nursing. When asked about, you know,
Speaker 1: staffing shortages, ninety three percent of the respondent said that
Speaker 1: they expect they are experiencing the nursing shortage getting even
Speaker 1: worse and so and they have all a set over
Speaker 1: seventy percent have pointed to inadequate staffing being one of
Speaker 1: their top concerns. What I'm wondering about, Oh, I was
Speaker 1: curious about as far as what could be done to
Speaker 1: help healthcare workers feel more supported. Yeah, there's there's quite
Speaker 1: a bit that all of us can that all of
Speaker 1: us can do for for for the hospital executives in particular,
Speaker 1: they can definitely invest more in career advancement, that more
Speaker 1: training opportunities for nurses so they're encouraged to stay in
Speaker 1: their health system. There's also quite a bit more work
Speaker 1: that needs to happen with providing more flexible scheduling, so
Speaker 1: allowing nurses to pick pick not just full time roles
Speaker 1: but also part time roles, and not only twelve hour
Speaker 1: shifts but also four hour and eight hour shifts and
Speaker 1: weekend shift options, just so they can fit work into
Speaker 1: their into their into their lives a little easier. And
Speaker 1: then you know there of course, like the other big
Speaker 1: trend that we're seeing is with wages. You know, wages
Speaker 1: has increased overall. We're seeing a fourteen percent increase in
Speaker 1: sign on bonuses, in the use of sign on bonuses overall,
Speaker 1: and the actual amount of sign on bonuses has also
Speaker 1: was that ever a thing years ago. I had a
Speaker 1: sister who was a nurse. I don't remember her. I
Speaker 1: we're talking about a sign on bonus. It wasn't a
Speaker 1: thing at all. We've also seen the actual hourly rate increase.
Speaker 1: I think the reason it's become a thing is because
Speaker 1: you know, there's a huge supply shortage here, right, There's
Speaker 1: a huge demands supply demand and balance, and as a result,
Speaker 1: because we don't have enough workers, wages will go up.
Speaker 1: So as far as kind of piecing all of this together,
Speaker 1: are there are more nurses that are planning now to
Speaker 1: actually stay in this rule a year from now versus
Speaker 1: obviously before because you were explaining all those statistics now,
Speaker 1: So if they are planning to stay, does that potentially
Speaker 1: bode well, Yeah, it bodes well, but they're more likely
Speaker 1: to stay now. Keep in mind the turnover still high, right,
Speaker 1: The turnover annually is at twenty two percent, but thankfully
Speaker 1: a much smaller percentage of nurses are looking to leave
Speaker 1: the field altogether. You know, one of the things that
Speaker 1: I remember, Doctor Obvious from I think we talked last time,
Speaker 1: what's the average I hate that word, what's the average
Speaker 1: nurse make? But what's the average salary in nursing? It's
Speaker 1: about ninety three thousand naturally okay, natural average obviously varies
Speaker 1: dramatically by state. Yeah, no, right, lots of variations. And
Speaker 1: I know we've talked about as you said, there's not
Speaker 1: necessarily a lot of people coming into this profession. Once again,
Speaker 1: is it, you know, opening up immigration and I know
Speaker 1: we've talked about this in the past. Is that the fix?
Speaker 1: What's the fix in terms of encouraging people to enter
Speaker 1: And I often find that's a lot of people from
Speaker 1: other countries that are, yeah, those nursing So there's two
Speaker 1: keyball necks that are happening in the US. Number one
Speaker 1: is at nursing school. So there's there's tens of thousands
Speaker 1: of Americans on wait lists to get into nursing schools,
Speaker 1: but the nursing schools cannot handle more capacity, and so
Speaker 1: we need to expand nursing school capacity in this country
Speaker 1: and train more nurses. And then there's another ball in
Speaker 1: that happening right after nursing school. And then there's not
Speaker 1: enough programs at hospitals and other other employers that train
Speaker 1: nurses to become more specialized. So both of those are
Speaker 1: the two huge ball in next that we have just
Speaker 1: got about thirty seconds. We've talked with you about this before.
Speaker 1: Any progress that we're making on this are you seeing
Speaker 1: it not honestly, not yet not it's not showing up
Speaker 1: in the data yet. But I know, I know that
Speaker 1: many nursing leaders and HR leaders and nursing education leaders
Speaker 1: are actively working on it. They have to be stressed
Speaker 1: out because if you think about an aging population, we're
Speaker 1: all going to just need more of certainly healthcare services overall,
Speaker 1: but definitely nursing in particular. Um M, I'm good to
Speaker 1: check in with you again. Doctor Monabu's age. She's co
Speaker 1: founder and chief executive officer at Incredible Health. Joining us
Speaker 1: via zoom from Austin, Texas. Yeah, I mean, I think
Speaker 1: about it right. We just know that an aging population
Speaker 1: is just going to need a lot of healthcare going fore,
Speaker 1: and you do wonder whether the doctors will be there,
Speaker 1: the nurses will be there, absolutely, But then hearing about
Speaker 1: the wage gains signing bonuses, will that be enough to
Speaker 1: continue to get workers in that field as long as
Speaker 1: the pool of workers are right there? All right, you're
Speaker 1: listening and watching Bloomberg Business Week. This is Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty. Welcome to the
Speaker 1: weekend edition of Bloomberg Business Week. I'm just written in
Speaker 1: for Harold Masser. Plenty ahead in our second hour of
Speaker 1: the weekend edition of Bloomberg Business Week, including Ali Baba's
Speaker 1: announcement to split into six distinct units, plus Pinky Cole,
Speaker 1: founder and owner of Slutty Vegan Restaurants, on growth and
Speaker 1: makin Vegan food accessible to all. First up, this week's
Speaker 1: cover story, Dungeons and Dragons has never been more popular,
Speaker 1: thanks in part to Stranger Things D and D themed
Speaker 1: podcast and influencers on YouTube and TikTok. But after fifty
Speaker 1: years of business missteps, the giant toymaker Hasbro, which owns
Speaker 1: the game through its Wizards of the Coast division, is
Speaker 1: looking to finally turn the fantasy franchise into its next
Speaker 1: billion dollar brand. For more, Bloomberg's Paul Sweeney and Mike
Speaker 1: Reagan spoke with Bloomberg News Entertainment editor Felix Gillette and
Speaker 1: the editor of the magazine Joel Weber. I have to
Speaker 1: admit it, Michael Reagan. I am not. I never was,
Speaker 1: have not been, nor am I expected to be a
Speaker 1: player a fan of the Dungeons and Dragons thing, but
Speaker 1: I know it is a huge thing. You're not a
Speaker 1: dungeon master, Paul. I'm not a dungeon master. But it
Speaker 1: is important, and I'm gonna tell you how important is it
Speaker 1: it gets the domestic cover business Bloomberg business Week magazine.
Speaker 1: That's some pretty good stuff. Dungeons and Dragons epic quest
Speaker 1: to Finally make money is the title of the story.
Speaker 1: Joel Webert joins us here. He's the editor of Bloomberg
Speaker 1: business Week. He joins us here in a Bloomberg Interactive
Speaker 1: Broker studio along with Philix Gillette, Media Entertainment and Telecom
Speaker 1: editor for Bloomberg BusinessWeek. It's also the author of a book,
Speaker 1: It's Not TV to Spectacular Rise Revolution in Future of HBO.
Speaker 1: That's right down my alley. He's also here in a
Speaker 1: Bloomberg Interactive Broker studio. Joel, Dungeons and Dragons kind of
Speaker 1: guy boy. You put me on the spot. I'm gonna
Speaker 1: say I've never rolled the dice. Oh okay, but I
Speaker 1: am looking for a Dungeon Master, which I promised to
Speaker 1: myself I wouldn't say, and then I said it. And
Speaker 1: I am looking for games. I know that there are
Speaker 1: some hardcore D and D people at Bloomberg and in
Speaker 1: the newsroom. I consulted with them at length about this story.
Speaker 1: And and Felix happens to maybe be able to bridge
Speaker 1: the normal world and the D and D world and
Speaker 1: tell us why this game, which has been around for
Speaker 1: fifty years, is beloved by legions of fans, has become
Speaker 1: popular yet again because of you know, cameos in places
Speaker 1: like Netflix, is about to be in a movie that drops,
Speaker 1: you know, Hollywood blockbuster, and yet the franchise is the
Speaker 1: word used in the story, undermonetized. Yes, why what happened?
Speaker 1: Why is Dungeons and Dragons not Lord of the Rings?
Speaker 1: It's cursed now, I mean in some ways it is.
Speaker 1: You look back at the history. It's been going for
Speaker 1: fifty years now, incredibly popular, very active fan base, and
Speaker 1: yet always hard to make money from Dungeons and Dragons.
Speaker 1: And Hasbro, which is coming off a rough holiday season,
Speaker 1: toy sales are down. They've pointed to Dungeons and Dragons
Speaker 1: as potentially having a very big year. So this movie,
Speaker 1: this Hollywood movie that drops tomorrow with Paramount, is the
Speaker 1: start of a big D and D blitz. Wait they're
Speaker 1: doing a movie. Yes, yes, Chris Pine, Michelle Rodriguez, one
Speaker 1: hundred and fifty million dollar budget and yeah, it's coming down.
Speaker 1: People are pretty excited about. They really need it to
Speaker 1: be franchise material. Yeah, so first of many here. Yes,
Speaker 1: they tried this back in two thousand, they had a
Speaker 1: Dungeons and Dragons movie. That was what happened then, just terrible,
Speaker 1: like one of the worst sci fi fantasy movies ever made.
Speaker 1: It generated less than thirty five million dollars in the
Speaker 1: global box office, yet still spawned two follow up D
Speaker 1: and D movies, both of which went direct to cable
Speaker 1: TV on sci fi. But it was kind of a
Speaker 1: disaster for Hasbro. They had just acquired Wizards of the Coast,
Speaker 1: which also owns Magic the Gathering. Magic the Gathering has
Speaker 1: turned into this incredibly good business. One of my favorite
Speaker 1: takeaways here is maybe we should be doing a Magic
Speaker 1: the Gathering cover story. That's so easy because it's a
Speaker 1: collectible card game Dungeons and Dragons. The problem with Dungeons
Speaker 1: Dragons is it's a game played in people's imaginations with dice.
Speaker 1: Those are like the two cool thing and rules kind
Speaker 1: of hard to make money there, Yes, I love that,
Speaker 1: straight to the Sci Fi Network. That's the Homer Shark Nado.
Speaker 1: I'm not mistaken and you know cool favorite right there.
Speaker 1: I put those D D movies the shame. Let's not
Speaker 1: put those in the same category. But Felix, I wonder
Speaker 1: if there's a sort of a bigger picture issue here
Speaker 1: in that. You know, I'm a I'm a father, Joel's
Speaker 1: a father. I don't know if you have kids, but
Speaker 1: Paul's a father. Kids just don't play with toys anymore.
Speaker 1: It's everything's on the phone, or if it's not on
Speaker 1: the phone, it's a computer. D and D just not
Speaker 1: make that leap, you know, was Hasbroo kind of a
Speaker 1: sleep at the wheel there and didn't sort of push
Speaker 1: it into the digital world. I mean, is it a
Speaker 1: game that that can may I tried and they started
Speaker 1: two thousand and seven. They had this big presentation that
Speaker 1: they were going to make this D and D digital
Speaker 1: gaming table. It never came out. It was a big flop,
Speaker 1: And now they're trying again. But I think it's an
Speaker 1: interesting challenge because I think part of D and D's
Speaker 1: appeal is that it is an analog game. It's something
Speaker 1: that you can play around a table with a bunch
Speaker 1: of friends. I think parents have now embraced it because
Speaker 1: they want to get their kids off the screens and
Speaker 1: they're like, hey, this is amazing, actually something you'll do
Speaker 1: that's not a video game. And yet again hard to
Speaker 1: make money selling people dice and rule set. So yeah,
Speaker 1: Hasbro wants to make it more digital. This next edition,
Speaker 1: which is called One D and D is going to
Speaker 1: premiere next year. It's got all these new digital tricks
Speaker 1: that are going to be attached to the game. That
Speaker 1: Hasbro's promising and they think it'll be great because they think, oh,
Speaker 1: once we get players in a virtual tabletop environment, will
Speaker 1: start you know, it's the same model as all these
Speaker 1: other video games, all these micro trans transactions. So you
Speaker 1: start with the big Blockbuster movie and you start rolling
Speaker 1: things out. It sounds great, sounds like it could work.
Speaker 1: But they had a big folly. Yes, they headed into this.
Speaker 1: What happened earlier in the year that enraged and I'm
Speaker 1: talking enraged the D and D. Yeah, that's an easily
Speaker 1: triggered group. I would imagine, Yeah it is. And you
Speaker 1: know it's the exact opposite playbook. I mean usually when
Speaker 1: you get one of these big blockbuster movies coming down
Speaker 1: based on an adaptation, you want to get the geeks
Speaker 1: like really fired up in a good way. And they
Speaker 1: got them very fired up in the bad. Let's let's
Speaker 1: do the exact. The long story short is, they changed
Speaker 1: the licensing rules around how you could incorporate D and
Speaker 1: D playing conventions and ideas into other RPG's, other role
Speaker 1: playing games, and other supplementary materials for the D and
Speaker 1: D community. For the past twenty three years, it's been
Speaker 1: this open source model, and Hasbro decided, you know what,
Speaker 1: like maybe we should gain more control over this. If
Speaker 1: we're going to start building out this big Hollywood franchise
Speaker 1: and making streaming programs, video games and all this stuff, like,
Speaker 1: we need more control over it. But they handled it
Speaker 1: in a very you know, not a very smooth manner,
Speaker 1: and uh, you know, pissed everybody off in the role
Speaker 1: playing role playing community and uh, you know, angered everybody.
Speaker 1: They basically had to apologize, they had to retreat this.
Speaker 1: Oh you know what, we're not going to change those rules.
Speaker 1: But hey, here's our blockbuster movie too. Yeah, why don't
Speaker 1: you come out and see the movie? Uh, you know,
Speaker 1: so it's and they it's a big question mark going
Speaker 1: forward as Dungeons and Dragons gets more digital and there's
Speaker 1: more digital properties around it. Everyone, I think was hoping
Speaker 1: that Hasbro would maintain this less a fair environments and
Speaker 1: if they are not doing that, then a lot of
Speaker 1: people are going to be cut out. And well it's
Speaker 1: an interesting I mean, these guys that has we are
Speaker 1: just following a playbook that you know, Lego did very
Speaker 1: well a movie, and nobody's done it better than Bob
Speaker 1: Iger when he with all the Marvel characters and you
Speaker 1: know Warner Brothers with a DC comics. I mean, those
Speaker 1: in Holly would call that intellectual property IP, which is
Speaker 1: the term creators hate. But it's true. If you've got
Speaker 1: intellectual property, there are so many ways to monetize it.
Speaker 1: And I guess what that's what these guys are hoping
Speaker 1: to do with this Dungeons and Dragons. They are the
Speaker 1: challenge again with Dungeons and Dragons is at the start
Speaker 1: of every D and D campaign. Every time people get
Speaker 1: together and play. You play with your own character. You
Speaker 1: make a character and then you play with it, and
Speaker 1: then you have like, you know, a unique setting for
Speaker 1: each one of those groups. And you know, all those
Speaker 1: great IP adaptations are based on universally loved characters and settings.
Speaker 1: And without that, it's like what do you have? You
Speaker 1: have dice and you have kind of a vibe. You know,
Speaker 1: that's like what we when talked enough to Pawtucket, Rhode Island,
Speaker 1: talk to Chris Cox's the CEO of Hasbro and he
Speaker 1: himself is is a dungeon master. Dungeon loves Dungeon. He's
Speaker 1: been playing since he was a kid. He's so into
Speaker 1: it and he pass a test. Is there like a
Speaker 1: certification process like a serious and there are books? Yes,
Speaker 1: but it is kind of the ven diagram of like
Speaker 1: corporate CEO and dungeon master, like you kind of have
Speaker 1: to be a very like managerial person. Well, I'm looking
Speaker 1: at your story here and the photograph they were south
Speaker 1: by Southwest? Is that where like the cool kids are
Speaker 1: I mean yes, Paul Nerds run the world totally. So
Speaker 1: they had they had the premier there and weet any feedback, Paul,
Speaker 1: you're suggesting that D and D players aren't the cool
Speaker 1: I'm not sure. Maybe I'm making a pause resumption there.
Speaker 1: The initial reviews of the movie were good. Of coming
Speaker 1: out of the south By Southwest, people liked it a
Speaker 1: lot um. I went and saw a preview. I did
Speaker 1: not love it that much. Um as a more casual player,
Speaker 1: and I think, uh, you know, it's got Chris Pine
Speaker 1: is amazing. It's fun seeing those classic D and D monsters,
Speaker 1: the intellectual devour, which is like a brain on legs
Speaker 1: that goes around, steals your brain. That stuff is really
Speaker 1: fun to see on the big screen. Again, I thought
Speaker 1: it kind of suffered from the characters, the script. I
Speaker 1: didn't think it was great. But you know, but fans,
Speaker 1: fans are who this is fully exactly not the target
Speaker 1: demographic base. I think it's pretty big. It's how big
Speaker 1: how big Felix? You know? I asked them that. I
Speaker 1: was like, how many people play? And they're like, well,
Speaker 1: it's a bunch of rules and people with dice entirely
Speaker 1: certain millions, they say, fifty million people have interacted with
Speaker 1: the brand, but you know, at what level That's a
Speaker 1: little hard to say. But it's not a huge business.
Speaker 1: I mean it's a one hundred and fifty million dollars
Speaker 1: a year business for Hasbro somewhere in that ballpark to
Speaker 1: give you, I mean magic. The Gathering does over a
Speaker 1: billion dollars of animal sales at this point. So, um,
Speaker 1: you know, there's there's room for growth for sure. One
Speaker 1: thing that surprised me reading the stories. You know, I'm
Speaker 1: gonna date myself a little bit here, but I grew
Speaker 1: up in the seventies, I guess, in the golden era
Speaker 1: of D and D and you know, everyone in the
Speaker 1: elementary school was playing it. But it kind of felt
Speaker 1: like to me like that game had been there forever.
Speaker 1: I'm surprised to read it was it was invented in
Speaker 1: nineteen seventy four, so it's only fifty years old. Pyramidwestern guys,
Speaker 1: Gary Geigax, I don't know what I'm saying his name wrong.
Speaker 1: And David Arnison, any idea whatever happened to them or
Speaker 1: they still getting royalties on this thing, or you know,
Speaker 1: you think they'd have like islands somewhere and like the Caribbean,
Speaker 1: but they don't. They you know, they had immediately a
Speaker 1: big falling out the two founders. They were battling each
Speaker 1: other in court forever. The business the Gary Geygax started TSRU,
Speaker 1: you know, just got crushed under debt and all these
Speaker 1: expansions that didn't pay out. They ended up selling it
Speaker 1: in nineteen ninety seven for twenty five million dollars to
Speaker 1: Wizards of the Coast. So yeah, it's it's been a
Speaker 1: struggle for everybody who has ever tried to make money
Speaker 1: out of this. And here's Hasbro right, and and you
Speaker 1: know Hasbro and toy companies in the middle of all this,
Speaker 1: and you're right, like maybe the toy business isn't what
Speaker 1: it once was, but they see Hollywood and they see
Speaker 1: that ip potential and like, if you can roll this
Speaker 1: into a franchise that's sustainable, like you you could be
Speaker 1: able to organically do it. And and then you know
Speaker 1: thing Worth mentioned that Felix and Tom Buckley write about
Speaker 1: in the story a little bit is you know that
Speaker 1: last time they tried to drop this movie in in
Speaker 1: the early two thousands, right, it was right when Lord
Speaker 1: of the Rings in Harry Potter. And it shows you
Speaker 1: if you do this right, how big of a business
Speaker 1: it can become. What I'm thinking, with Thrones being so
Speaker 1: popular toa that's got to add a little Yea and dragons, right,
Speaker 1: And you know, they have in the last couple of years,
Speaker 1: like you know, especially when the pandemic hit. The fifth
Speaker 1: edition of D and D, which is the current one,
Speaker 1: is the most popular in the game's history. And I
Speaker 1: think one thing that they do have going for them
Speaker 1: is there is this whole new world of D and
Speaker 1: D influencers, and the game has translated very well into
Speaker 1: the live streaming world. It plays very well on YouTube, twitch,
Speaker 1: TikTok podcasts because people it's performative. Naturally, you get a
Speaker 1: bunch of people that are charismatic playing a little D
Speaker 1: and D together and they're funny, and it plays out
Speaker 1: live and it's great. The spontan ad works really well
Speaker 1: with those mediums. I think that actually works better in
Speaker 1: the live streaming world than it does in the scripted world.
Speaker 1: And the other thing here, though, is you actually, Mike
Speaker 1: Reagan might be the target audience for this, right, like
Speaker 1: you know your kids, kids you brought up your kids,
Speaker 1: you know, for for brands like Hasbro, kids are no
Speaker 1: longer the demo that they're really going for it. And
Speaker 1: Business WEEKI has written about this before, like that adults
Speaker 1: are actually the ones who still buy toys and still
Speaker 1: buy games. Yeah, so adults have become a huge driver business.
Speaker 1: So you know, Mike Reagan, what's it gonna take for
Speaker 1: you to get into Dungeons and Dragons this weekend after
Speaker 1: you watch the movie? Someone? Uh? Will there be women there? No,
Speaker 1: just your buddies from the Seven Guys from Yeah, now,
Speaker 1: I got a lot of guys buddies that still play it.
Speaker 1: I Uh. So this is gonna the premiere tomorrow, Yes, okay,
Speaker 1: so we'll pay attention. Yeah, well times, well, yeah, perfectly excellent.
Speaker 1: So I'm just looking at the stock here. I mean,
Speaker 1: it's a seven point two billion dollars stock has Bro.
Speaker 1: It's down thirty five percent and trailing twelve months. Not great.
Speaker 1: Mattel down twenty three percent to trailing. Roll the dice
Speaker 1: on this, all right, I'm just looking at the stock.
Speaker 1: You know, you have an old stock jockey, but it'll
Speaker 1: be interesting to see. So it's important for the company.
Speaker 1: It's important for the stock. I'm guessing U, Felix, great stuff.
Speaker 1: Really appreciate taking the time to come in here. Felix Gillette,
Speaker 1: Media Entertainment and Telecom editor for Bloomberg BusinessWeek, is also
Speaker 1: the author It's Not TV, The Spectacular, Rise, Revolution and
Speaker 1: Future of HBO. He joins us here in a Bloomberg
Speaker 1: Interactive Broker Studio and Joelobergh, of course, editor of Bloomberg
Speaker 1: Business Week Bloomberg he joins us also on the Bloomberg
Speaker 1: Interactive Broker Studio, and of course Phillis story Guess What
Speaker 1: Isn't Domestic cover of the issue of BusinessWeek magazine, available
Speaker 1: now on newsstands, on the Bloomberg and at Bloomberg dot Com.
Speaker 1: Slash BusinessWeek Dungeons and Dragons the movie Who Would Have
Speaker 1: Guessed It? Matt Miller plays that I know it. I'm
Speaker 1: sure he does this this Bloomberg. You're listening to the
Speaker 1: Bloomberg Business Week Podcast. Catch us live weekday afternoons from
Speaker 1: three to six Eastern Listen on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or watch us
Speaker 1: live on YouTube. Hello, Hello, We're gonna talk at about
Speaker 1: Teddy Bears. Listen back for a moment. I'm it all
Speaker 1: our focus on banking, and rightfully so, but let's get
Speaker 1: a feel of how this change and sentiment over the
Speaker 1: past couple of weeks or at least this new narrative,
Speaker 1: if you will, might be impacting consumers and retail with
Speaker 1: us right now is Sharon Price John. She's president and
Speaker 1: CEO of the publicly held small cap Build a Bear
Speaker 1: Workshop back with us via zoom in New York City. Sharon,
Speaker 1: nice to have you here with justin myself. Last and
Speaker 1: we talked, it was more than a year ago, December
Speaker 1: twenty twenty one. What's changed for you in your business
Speaker 1: and what's on your purview if you will, in the
Speaker 1: last twelve to fifteen months. What's changed? Yeah, well, we've
Speaker 1: continued to post record results. I mean, we just announced
Speaker 1: our year in on March ninth, and we're happy to
Speaker 1: be able to share double digit improvement in both the
Speaker 1: top line and the pretext profit line, with our top
Speaker 1: line up about fourteen percent and our bottom line up
Speaker 1: about twenty two percent. And that it's we had seen
Speaker 1: at that point continued momentum in the business at first
Speaker 1: quarter a year to date and but so that's not
Speaker 1: what's changed. That's what's remained the same, and that last year,
Speaker 1: twenty twenty one was a record profitability year for us,
Speaker 1: and we eclipse that in twenty twenty two with another
Speaker 1: record profitability year. What's changed is that we've evolved so
Speaker 1: much as a company and that we have a much
Speaker 1: broader addressable market. We appealed to consumers for different reasons
Speaker 1: for shopping, not just which would be a typical type
Speaker 1: of event for us, which would be a birthday for
Speaker 1: a child, but now from the adult consumer what's called adulting.
Speaker 1: A big trend with gifting and adult to adult gifts.
Speaker 1: A lot going on with build a Bear, a lot
Speaker 1: of collectibles. We have a lot of fun licenses, like
Speaker 1: most recently announced ted Lasso Bear, but things like a
Speaker 1: Deadpool Bear or Matrix Bears Friends Bear. How well did
Speaker 1: those kind of bears do really fun? Like? How well?
Speaker 1: I mean is it? Are they profit drivers? Or give
Speaker 1: me an idea? Well, I'm as a publicly traded company, clearly,
Speaker 1: you know one of our objectives is that we choose
Speaker 1: to do things that hopefully are profit drivers. But the
Speaker 1: kid that the business now has, as I noted, when
Speaker 1: I speak about it having a broader addressable market, I
Speaker 1: don't mean that that's not meaningful for us. About forty
Speaker 1: percent of our sales are now to teens and adults,
Speaker 1: and yes, those licenses often have clearly they're going to
Speaker 1: have a royalty associated with them, if that's the impetus
Speaker 1: for the question, but they also generate generally a little
Speaker 1: a little higher price point as well, because that consumer
Speaker 1: has more latitude and the way they think about it.
Speaker 1: At the same time, we balanced the portfolio with a
Speaker 1: very accessible prices, with very accessible prices for kids, particularly
Speaker 1: with our Birthday Treat Bear where you can come in
Speaker 1: at the month of your birthday and pay your age
Speaker 1: to get the Birthday Treat Bear. So if you're turning
Speaker 1: two years old, you can get an entire bill of
Speaker 1: Bear Special one one Mooney stopping experience for two bucks.
Speaker 1: That's pretty cool. Your products have definitely evolved with the
Speaker 1: tastes of children today, So when you think of Super
Speaker 1: Mario Brothers or Paw Patrol, Harry Potter and I know
Speaker 1: a lot of the accessories can definitely add up quick.
Speaker 1: So with the straws earning out look ahead, what do
Speaker 1: you think this really tells us about the direction of
Speaker 1: the economy If consumers are still willing to spend on
Speaker 1: discretionary items at specialty retailers like yours, Well, first of all,
Speaker 1: we don't think of ourselves. Is just a specialty retailer.
Speaker 1: We think of ourselves as an experiential brand, an opportunity
Speaker 1: for families to come together to share memories. We're multigenerational,
Speaker 1: like twenty five years old. And yes we do evolve
Speaker 1: our licenses with the times, as you mentioned, but things
Speaker 1: that are evergreen, like a Harry Potter that appeals to
Speaker 1: a broad broad range consumers. To your question, though, our
Speaker 1: accessories business is, you know, to be able to address
Speaker 1: your bear and make it very much your own. That's
Speaker 1: just a part of our creative process. That's how kids
Speaker 1: and adults feel empowered by making it incredibly unique. And
Speaker 1: you can even put the sound in the bear, so
Speaker 1: it's a one of a kind in many cases. And
Speaker 1: that's you know, and where when you think about that
Speaker 1: as the experience and the takeaway and the importance that
Speaker 1: Teddy Bears play in the lives of children, particularly its
Speaker 1: comfort animals, a lot of psychological background on the need
Speaker 1: for that type of special, kind of special relationship with
Speaker 1: a stuffed animal. I don't know if you can consider
Speaker 1: us completely discretionary. I gotta say for my daughter it
Speaker 1: was a discretionary which was a little kid. Hey I
Speaker 1: say that, I say that from a vantage point of
Speaker 1: a mom of three, so you know, some of it
Speaker 1: could be tongue in cheek, you know, as a CEO,
Speaker 1: but there's some reality to that. I remember, go on
Speaker 1: a trip we forgot we forgot our stuffy and man
Speaker 1: we had to get a new one in front of
Speaker 1: replacement one really quickly. Hey, UM, one thing I want
Speaker 1: to ask you, Sharon is UM and I want to
Speaker 1: step back just to some of the bigger, broader macro
Speaker 1: that's going on. UM. As a CEO of a company,
Speaker 1: you have to think about recession, consumer retail in general,
Speaker 1: but the recent market volatility and concerns about our banking system. UM,
Speaker 1: how has that impacted you at all? Yeah, of course
Speaker 1: that's very concerning. I mean, we want to see a
Speaker 1: strong economy, We want to see people in you know,
Speaker 1: good financial situations. I can also say, though, on looking
Speaker 1: back on the last few years, there's certainly been a
Speaker 1: lot of volatility. UM. I think some of the most
Speaker 1: multiple as economic times you know, in our modern history,
Speaker 1: clearly inclusive of the COVID outbreak and even prior to
Speaker 1: that in retail, UM, the retail apocalypse, so constant feels
Speaker 1: like a lot of constant changes and uncertainty, and I
Speaker 1: think that, um, you know, families and businesses have to
Speaker 1: be here for that. You know, we're in a strong
Speaker 1: financial situation. We have very prudent financial control. We finished
Speaker 1: this year with forty million dollars in cash and return
Speaker 1: seventy million over the last two years to our shareholders,
Speaker 1: announced a special dividend, and have no borrowings on our
Speaker 1: credit facility. So with all of that in mind, and
Speaker 1: that we did mention that we expect are in the
Speaker 1: guidance that we provided from a range perspective, another five
Speaker 1: to seven percent on the top line, another ten to
Speaker 1: fifteen percent profit expansion through twenty twenty three. But the
Speaker 1: reason that we feel and shared that and feel like
Speaker 1: that there's some confidence. Clearly that's excluding anything entirely appeaving.
Speaker 1: But we've been able to manage as a team and
Speaker 1: as a company, that brand relationship that we have with guests,
Speaker 1: and be able to pull the proper levers when needed
Speaker 1: to manage through some of these uncertainty economic times. Clearly
Speaker 1: you've probably heard as well, I've we already been in
Speaker 1: a recession. Are we under said a recession? Now? Are
Speaker 1: we going into a recession, right, it's you know, I
Speaker 1: don't know that we You know, there's a lot of
Speaker 1: different I would say earmarks that are pointing in different directions,
Speaker 1: and I think that the key is to be diversified
Speaker 1: and flexible, and that's what we've been attempting to do
Speaker 1: by pivoting the company to have revenue streams and traditional
Speaker 1: retail as well as eCOM entertainment, looking for different ways
Speaker 1: to meet the needs of guests for different reasons. Hey,
Speaker 1: hang on ver second, just quickly, did you shift around
Speaker 1: your banking at all because of the nervousness within the
Speaker 1: banking system. We have a very strong relationship with our
Speaker 1: banking partners. Okay, that's what I wanted to know. You
Speaker 1: talk about expanding your revenue stream and these strategies. You've
Speaker 1: got the metaverse that you guys are certainly embracing. You're
Speaker 1: also thinking about content and linking up three Witherspoon and
Speaker 1: her media company just got about forty five fifty seconds.
Speaker 1: Just talk to us a little bit about these strategies
Speaker 1: if you could. Yeah, in a brand that has sold
Speaker 1: two hundred and twenty five million furry friends over the
Speaker 1: last twenty five years, and when you understand that each
Speaker 1: one of those furry friends represents a story. We're really
Speaker 1: a storytelling company. So when you think about the extension
Speaker 1: and expansion of our brand and our business into the
Speaker 1: entertainment arm and the content driven arm, it's not really
Speaker 1: that much of a stretch from that perspective. So yes, Hello,
Speaker 1: Sunshine's three Witherspoon's Company. We did announce a feature film deal.
Speaker 1: We also have Mary Mission our Christmas holiday and holiday.
Speaker 1: This is a particular property that we launched years ago
Speaker 1: starring Glisten. We'll be out this holiday as well in
Speaker 1: an animated feature, and we're we'll be in launching the
Speaker 1: build of their feature documentary with award winning documentary and
Speaker 1: Taylor more than later this year. So we have a
Speaker 1: lot of different ways to connect again with a broad
Speaker 1: base of consumers yep, and to monetize the value and
Speaker 1: enormous saluity of the builder bay Ram. Sharon's so good
Speaker 1: to check in with you. Sharon Price, John CEO of
Speaker 1: Build a Bear Workshop, joining us right here on Bloomberg
Speaker 1: business Week. You're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Eastern
Speaker 1: on Bloomberg Radio, the Bloomberg Business app, and YouTube. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 1: We've been talking about Ali Baba, certainly a name that
Speaker 1: is front and center today. It's up about fourteen percent
Speaker 1: as we speak, jumping. I think it's the biggest intra
Speaker 1: day climb since January. It all has to do with
Speaker 1: plans to split into six units. So we want to
Speaker 1: get to the news and the impact it's having on
Speaker 1: the overall Chinese names at trade here in the United States.
Speaker 1: With more on the news, Thatt's bring Blueberg News Equities
Speaker 1: reporter that follows the Chinese ADRs. The trade in the
Speaker 1: US is Chen's here in our Blueberg Interactor Broker studio.
Speaker 1: Ishan tell us about the news. First of all, I
Speaker 1: feel like it's interesting that Jack Mark comes back after
Speaker 1: missing for a year. That was yesterday and then we
Speaker 1: get this news today. So walk us through the news
Speaker 1: and maybe the significance of it. Yeah, great, great, First,
Speaker 1: thanks for having me today, and you know, it's definitely
Speaker 1: a very interesting week for Ali Baba today. The news
Speaker 1: is showing it's like a radical restructure and clan for
Speaker 1: Ali bah Bah because and now it's going to split
Speaker 1: the whole business unit Empire into six Indi video units
Speaker 1: including e commerce, cloud and also media, and it potentially
Speaker 1: pays the road for them to raise funds and eventually
Speaker 1: explore the IPOSO in the video units. So unlock's value,
Speaker 1: I bet investors seas potentially right, And I think it's
Speaker 1: more than a lock value because you know what analysts
Speaker 1: and investors are telling me. They see it as a
Speaker 1: wing wing situation for Ali Babba and Beijing. So first
Speaker 1: of all, it's for sure like a lock value for investors.
Speaker 1: If you look at the like a mass on the
Speaker 1: you know, some of parts of each innovating units is
Speaker 1: treating like it should be way higher than currently where
Speaker 1: it is treating now. But also thinking about from the
Speaker 1: regulatory perspectives, we all know that Beijing over the past
Speaker 1: two years have been having this sweeping crackdown on the
Speaker 1: tag industry and the main concern was that, you know,
Speaker 1: the concentrated power of Ali Baba and many tach firms,
Speaker 1: it's not helpful or healthy in terms of competition or
Speaker 1: innovation in the industry. So now that Ali Baba. What
Speaker 1: it is doing is to break the big empire into pieces,
Speaker 1: so in a way that should potentially is the concern
Speaker 1: from Beijing from the regulators, and this is a move
Speaker 1: or should you know, get the blessing from them. And
Speaker 1: it's great to have you hear each and because obviously
Speaker 1: you're one of our star reporters on the Egrist team,
Speaker 1: but I also know this is a rare move right
Speaker 1: when you're thinking about technology companies specifically based in China.
Speaker 1: So what do you think this means for the industry
Speaker 1: and could potentially be template for other companies to follow. Yeah,
Speaker 1: that's a great question. Actually, I have seen analysts and
Speaker 1: investors saying this is a game changer for the industry
Speaker 1: going forward, and it could serve as a blueprint for
Speaker 1: other firms such as like JD dot Com, Tensent or
Speaker 1: bai Do to explore a similar paths. And Tenson could
Speaker 1: be a most real, the most reasonable candidate here for
Speaker 1: a breakup because it has huge influence just as bah Bah,
Speaker 1: and it has different business lines and actually I already
Speaker 1: started to divestis some of the units, but still there
Speaker 1: are romantic entities could become standard long segments would Jack
Speaker 1: Mark have done this without the Chinese government kind of
Speaker 1: putting pressure on the internet sector. And I'm wondering if
Speaker 1: this if Ali Baba was in the United States, would
Speaker 1: US regulators you think, similarly been saying we've got to
Speaker 1: push for a breakup. I'm curious with analysts how they're
Speaker 1: weighing in on that, if they are. I mean, I
Speaker 1: haven't seen enough reporting there. But it's a very good quastion.
Speaker 1: And I was say, since you brought up Jack Mar,
Speaker 1: I think it's interesting because this news today, also called incidized,
Speaker 1: was the news we saw yesterday that Jack Mar was
Speaker 1: spotted back in China again after a year more than
Speaker 1: a year of like traveling or staying abroad. Right the
Speaker 1: market of course took that also as a very positive
Speaker 1: sign because Beijing right now is pushing and saying that
Speaker 1: it wanted to support private enterprise to revive as economy,
Speaker 1: but it really needs to gain the confidence from the
Speaker 1: companies and investors after you know, a series of crackdowns
Speaker 1: of different industries. So now that Jack Malla is coming back,
Speaker 1: and then was this split plant appeared to you know
Speaker 1: pay Road for you know, the company's future. These are
Speaker 1: all like a turning the sentiment of ali blah blah,
Speaker 1: but also Chinese ados in general. Yeah, they were all
Speaker 1: up today, right, or a lot of them are. And
Speaker 1: I know you've also covered different calls, say like with
Speaker 1: Marco Kolonovic over at JP Mortgage, he was talking about
Speaker 1: buying the dip on Chinese equities in this particular back
Speaker 1: even during right in early October, during that whole reopening
Speaker 1: type trade, and some of that had paid off. But
Speaker 1: are you seeing any other analysts kind of still calling
Speaker 1: for maybe still continuing to buy this or do you
Speaker 1: think it's run its course? Because it's interesting if you're
Speaker 1: looking at the right as far as how they've performed
Speaker 1: so far this year more probably kind of flat, not
Speaker 1: not really obviously so the big rally in the full quarter, right,
Speaker 1: because on the JPM call, we walked together on a
Speaker 1: story jazz and at that time I think the call
Speaker 1: the man sciss is about the reopening. But remember that
Speaker 1: reopened Raley we have seen from November last year. I
Speaker 1: have fizzle outs a bit, especially after a quarter of
Speaker 1: you know, like earnings praying there's quite a bounce off
Speaker 1: of that low right, casino stocks in hotels, Yeah, also
Speaker 1: like a travel relating names, but it has already played out,
Speaker 1: so investors now at the point of they wanted to see, ah,
Speaker 1: what is the fundamental value of these companies. They are
Speaker 1: focused on the regulatory certainty and certainty, but this news
Speaker 1: definitely help in terms of, you know, the regulatory perspect
Speaker 1: that's what I wantation because I do feel like depending
Speaker 1: on I felt like we went through a period of
Speaker 1: even we start with the pandemic, you know, shut down,
Speaker 1: open up, like it was just kind of startling. And
Speaker 1: even with the tech sector, China has been very clear
Speaker 1: about wanting to be performing in the global economy at
Speaker 1: a higher tech level, like this is important to the
Speaker 1: global growth and the growth in China specifically, but there's
Speaker 1: a lot of oversight about privacy and data gathering, and
Speaker 1: I do wonder does a move like this come tech
Speaker 1: entrepreneurs in China and investors when it comes to investing
Speaker 1: in these names, or is it a reminder that China
Speaker 1: and Chinese officials could at any moment be like you
Speaker 1: know what, I still don't like how big this company
Speaker 1: is or the impact it is and that they can
Speaker 1: move in I'm just wondering if things are settling down
Speaker 1: in terms of that, right, I think that's a very
Speaker 1: good question. And back to the news here. I think
Speaker 1: one question investors are asking on today's news is where
Speaker 1: are like these potential in the video units or spending
Speaker 1: of Ali Baba into a list in Hong Kong or
Speaker 1: in China the Domesta market because ever since you know
Speaker 1: dds IPO debacle in New York, right, but Agian has
Speaker 1: been calling for the so called homecoming listening of Chinese companies.
Speaker 1: These are reasonable speculations that even they you know, break
Speaker 1: up and eventually list some of the units, maybe they
Speaker 1: offer the shares or issue the shares closer to home.
Speaker 1: So if they do that, what the regulation, I say,
Speaker 1: what kind of message does that sense? Right? I think
Speaker 1: it's in line with where Biging is pushing for more
Speaker 1: regulations in terms of the listing share offering, and they
Speaker 1: also wanted to give access to domestic investors to all
Speaker 1: them trade all these you know national bit like bit
Speaker 1: tech firms. So maybe no listings in the US potential
Speaker 1: yeah that yeah. No, I just think it's really interesting
Speaker 1: in terms of the sector and how it's been playing out. Ryeah, No, definitely,
Speaker 1: So really we don't have a ton of details yet
Speaker 1: right as far as the timetable, could be moving forward
Speaker 1: on this because I'm sure investors are eaching to know. Yeah, yeah,
Speaker 1: I like today's I think the first step in terms
Speaker 1: of splitting up and could potentially pave the road for
Speaker 1: a wave of pol spud. We haven't seen any details
Speaker 1: in terms of timeline or you know what is the
Speaker 1: IPOL plans Florida individual units and still doing cost cutting
Speaker 1: to shore up the bottom line. So that's business as usual.
Speaker 1: Thank you so much. It's an important sector and I
Speaker 1: love talking about those Chinese names that trade here in
Speaker 1: the United States. Ishanshin, thank you so much. She's Bloomberg
Speaker 1: News Equities reporter. She follows the Chinese ADRs that trade
Speaker 1: in the US. Joining us here in our Bloomberg Interactive
Speaker 1: broke or studio. You're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Eastern
Speaker 1: Listen on Bloomberg dot com, the I Heart Radio app,
Speaker 1: and the Bloomberg Business App, or watch us live on YouTube. Well,
Speaker 1: earlier this month, our next guest opened her latest outpost
Speaker 1: right here in New York City, up in Harlem, and
Speaker 1: in doing so, it was a bit of a homecoming
Speaker 1: of sorts for her. Her Slutty Vegan Restaurants are said
Speaker 1: to be valued at one hundred million dollars as she
Speaker 1: continues to expand and include restaurant Tour, Danny Meyer's Enlightened Hospital,
Speaker 1: Pality Investments, and Essence Ventures CEO Rich Dennis's New Voice
Speaker 1: Fund among its investors. So let's head to Atlanta, where
Speaker 1: her company is based. Pinky Cole is the founder and
Speaker 1: owner of Slutty Vegan Restaurants. She joins us via Zoom. Pinky,
Speaker 1: so nice to have you here with us. I was
Speaker 1: looking forward to this conversation. Tell us about your company. Well, good,
Speaker 1: great to have you here. Tell us about your company,
Speaker 1: the food that's on your menu, and what demand from
Speaker 1: your customers and from the growth of your business tells
Speaker 1: you about the vegan food world. I started with crazy.
Speaker 1: We get a little bit of frozen in terms of Zoom,
Speaker 1: so we're hoping we can work that out technically and
Speaker 1: get back to her. But the vegan business, the food business,
Speaker 1: the protein plant based food business, is something we talk
Speaker 1: about a lot here and so curious to get her
Speaker 1: perspective on it, because we certainly have seen a lot
Speaker 1: of investment all to go into it, and certainly seen
Speaker 1: the public side. They are a publicly held companies. There
Speaker 1: are private brandies. They've struggled a bit though, since you
Speaker 1: know the industry, which is about a decade old. They
Speaker 1: have definitely and especially being us being here in New York,
Speaker 1: I feel like there's so many different options on the
Speaker 1: vegan side of things. But me being from Texas, I've
Speaker 1: definitely seen it expand in that state, especially in Austin
Speaker 1: and other areas, which has been interesting to see over
Speaker 1: the past decade. As far as these different restaurants and
Speaker 1: just looking at their menu right now, as far as
Speaker 1: the different burghers, seeing some of the names Dancehall Queen
Speaker 1: and some of these other ones, and it's really fun.
Speaker 1: And we'll ask her about it. I did a little
Speaker 1: bit of googling before we do. We have her yet,
Speaker 1: not quite yet, but did some googling into terms of
Speaker 1: her name and how it came to be. And yeah,
Speaker 1: hopefully we can get to her in just a moment
Speaker 1: to have her explain it. In the meantime, let's just
Speaker 1: remind you how we closed on this Monday. We did
Speaker 1: see stacks bouncing around a little bit volatility. But what
Speaker 1: was really key is that it felt like some commonness
Speaker 1: came back to the financial markets, and certainly with the
Speaker 1: bank sector, which rallied. Whether it was regionals, whether it
Speaker 1: was the big banks. They finished off their highs, but
Speaker 1: nonetheless that provided support for the overall market. That two
Speaker 1: year note yield popping above four percent. Right now, we're
Speaker 1: looking at a two year that finished or trading at
Speaker 1: about three ninety nine, so just below it, but move
Speaker 1: up from what we saw last week, right and especially
Speaker 1: coming into today, getting some promising news with First Citizens SVB,
Speaker 1: looking at what's happening as far as it purchasing all
Speaker 1: of those the loans that are there. I know a
Speaker 1: lot of people were concerned as far as trying to
Speaker 1: figure out what parts of SVB or certain banks potentially
Speaker 1: going to try to buy. But then you came into
Speaker 1: this week and then obviously the good news with First Citizens.
Speaker 1: If you're thinking more broadly, though, the SMP five hundred
Speaker 1: energy was the biggest gainer to day, up more than
Speaker 1: two percent of Fortunately, if you're thinking more of the
Speaker 1: technology and growth side tacked down close to one percent.
Speaker 1: Communication services on that side too, down about one percent,
Speaker 1: but obviously that having to tanty yields. All right, we
Speaker 1: do have our guests back with us. Let's get back
Speaker 1: to Pinky Call, founder and owner of Study Vegan Restaurants. Pinky. Sorry,
Speaker 1: we're living in this technology world that most of the
Speaker 1: time works but doesn't always. So tell us about your
Speaker 1: company and the demand that you're seeing from your customer
Speaker 1: and your growth what it tells you about the vegan
Speaker 1: food world. So I started this company in twenty nineteen,
Speaker 1: and I had no idea that I was building a
Speaker 1: hundred million dollar brand and went from a ghost kitchen
Speaker 1: to a food truck to now having almost ten locations
Speaker 1: in Atlanta, Birmingham, and now New York City. And what
Speaker 1: I realized is there was a market to help people
Speaker 1: to reimagine food in a way that they haven't seen
Speaker 1: it before. So of course we've had beyond me, you know,
Speaker 1: disrupt the industry and possible food and to disrupt the industry.
Speaker 1: But now Floody Vegan entered the conversation and started to
Speaker 1: disrupt because there were so many people that were looking
Speaker 1: for plant based alternatives and wanted it in a way
Speaker 1: where it tasted good and you didn't have to compromise
Speaker 1: the things that you like. So I am in the
Speaker 1: business of helping people to reimagine food and it's allowed
Speaker 1: us to grow exponentially. And now here we are with
Speaker 1: one hundred million dollar brand and we have no, no, no,
Speaker 1: no time in slowing down, Like this is a growing
Speaker 1: business and I'm excited about it and you're talking about
Speaker 1: reimagining food. How exactly did the pandemic help potentially fuel growth?
Speaker 1: The pandemic literally was the best thing that could have
Speaker 1: happened to me. Unfortunately, I know that people were compromised
Speaker 1: by everything that happened in the pandemic. Hell, almost the
Speaker 1: last couple of years people were still trying to figure
Speaker 1: out what it was. But in that time, we got
Speaker 1: super creative as a business and focus more on our
Speaker 1: marketing to drive traffic to the business. And what we
Speaker 1: realized is more than ever more people wanted to support
Speaker 1: startup companies. So we came in at a right time
Speaker 1: where larger corporations wanted to be in solidarity with us.
Speaker 1: They wanted to support us in our elevation and our growth.
Speaker 1: So it gave us a competitive advantage to be able
Speaker 1: to be in the marketplace and do really well and
Speaker 1: now here we are. We've literally been able to open
Speaker 1: up four additional locations in a pandemic. Would the business
Speaker 1: have been the same had we not had a pandemic,
Speaker 1: I'm not sure. But what I do know is it
Speaker 1: taught me a lot. It taught us how to be
Speaker 1: chameleons in and the pandemic, and it also gave us
Speaker 1: an opportunity to really really be able to grow in
Speaker 1: a space where people were so confused about what was
Speaker 1: happening in the restaurant our industry. So how do you
Speaker 1: think about vegan Because I'm looking at your burgers and
Speaker 1: they do have great names, and you have a lot
Speaker 1: of fun. You think about food and kind of sex
Speaker 1: and the fun like it's it's really it's kind of
Speaker 1: a fun menu to go through. But having said that,
Speaker 1: I'm seeing cheese, I think I'm seeing I'm seeing a
Speaker 1: lot of stuff. Vegan isn't always locale correct, So you know,
Speaker 1: I like to say that floody Vegan is like the
Speaker 1: tree all. You know, when you go to the hospital
Speaker 1: and you got to check in and you go to
Speaker 1: the triage first. I like to meet people where they are.
Speaker 1: So when you look at slutty vegan. This is not
Speaker 1: the salad joint that you go to in your local community.
Speaker 1: This is not that. My audience is not just the vegan.
Speaker 1: My audience is the person who likes me, who probably
Speaker 1: would never otherwise try vegan options unless they met a
Speaker 1: sweaty vegan like me. But this is literally a place
Speaker 1: where wherever part of the journey you want, you can
Speaker 1: literally come and learn how to eat plant based living,
Speaker 1: even if it means vegan comfort food. You know what
Speaker 1: I want to do is I want to change the
Speaker 1: narrative of what people think about veganism. When they think
Speaker 1: about veganism, it always sounded rich and inaccessible, right. I
Speaker 1: wanted to make it accessible for all people and give
Speaker 1: it an opportunity for people who have never tried me
Speaker 1: vegan options to say, you know what, let me try
Speaker 1: to go vegan, and then I say it's slutty vegan
Speaker 1: and I like it. Now I can go to other
Speaker 1: restaurants to do the same thing. So it's literally an
Speaker 1: opportunity to meet people where they are, even if it
Speaker 1: means vegan burgers and fries. I'm curious as far as
Speaker 1: how you were able to mitigate the challenges of inflation
Speaker 1: and supply chain issues over the past year. It's hard.
Speaker 1: I would be lying if I sat in this interview
Speaker 1: and told you that we don't have those problems. We
Speaker 1: face every problem that every single restaurant tool quite frankly,
Speaker 1: has to deal with. That's inflation, that's labor shortages, that's
Speaker 1: our food cost going up, like everything, supply chain issues
Speaker 1: that those are the others and flows in the restaurant industry.
Speaker 1: What I will say is it gives us an opportunity
Speaker 1: to really unlock those challenges and get better. Like whoever
Speaker 1: said that the restaurant industry was easy was a lie.
Speaker 1: It is not easy. It's very difficult, but it's so
Speaker 1: worth it because we really get to tap into our
Speaker 1: consumer in another way, the last couple of years, we
Speaker 1: have not increased our prices, and we may lose a
Speaker 1: little bit on the back end, but we are so
Speaker 1: consumer driven and it's more important for us to our
Speaker 1: consumer to have a really good experience first, and then
Speaker 1: we could deal with everything on the back end. And
Speaker 1: that is what will make us a disruptive business and
Speaker 1: it will keep us in a conversation as sustainable for
Speaker 1: as long as everybody can remember Pinky can you access
Speaker 1: all the funding that you need and want, especially in
Speaker 1: an environment where you know we're talking a lot about banks.
Speaker 1: We talked about Silicon Valley Bank and its role for startups.
Speaker 1: Are you do you have the money you need and
Speaker 1: or can you access it if you need it? And
Speaker 1: just got about fifty seconds left. We got a really
Speaker 1: great problem. Everybody loves Slutty Vegan. I literally say no
Speaker 1: to so many people who want to invest in slutty Va.
Speaker 1: We are oversubscribe, but we are always at the dating pool.
Speaker 1: We're just about to go into our series being Around,
Speaker 1: which is super, super exciting, and I'm just excited about
Speaker 1: what's out there, and I'm excited about the conversations that
Speaker 1: we already started to entertain. You want we will be successful?
Speaker 1: Do you want to go public? Is that the end
Speaker 1: as a couple of months? In a couple of months? Wow? Okay,
Speaker 1: I really like that. And you're going to continue to expand, right,
Speaker 1: You're gonna open up twenty more? Is that this year?
Speaker 1: Just quickly? It is Operation World Domination? So yes, yes,
Speaker 1: and yes, okay, we'll come back in a couple of months.
Speaker 1: Tell us what's going on. We'd love to kind of
Speaker 1: continue to follow your story. Peeky Coles, she's founder an
Speaker 1: owner of Sletty Vegan Restaurants, joining us via zoom from Atlanta.
Speaker 1: George I thought was interesting in terms of access to capital.
Speaker 1: She's on it. This is the Bloomberg Business Week Podcast,
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