Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Okay, so we are definitely a watch in AI conversations,
Speaker 2: the narrative the market moves related to such like this
Speaker 2: year's mega app performance by end video though pulling back
Speaker 2: a little bit today and keeping with that earlier on
Speaker 2: Bloomberg TV, I think overnight actually Kathy Wood talking about
Speaker 2: what will be the next to ride on the artificial
Speaker 2: intelligence frenzy driven by Nvidia.
Speaker 3: We think this is a very large market, and we
Speaker 3: believe right now the hardware side of it is probably
Speaker 3: in the thirty forty billion dollar range, So multiply that
Speaker 3: by eight we see the software side going to eight
Speaker 3: times that. But over the next between now and twenty thirty,
Speaker 3: we think artificial intelligence is going to add more value
Speaker 3: than any of our other technology platforms.
Speaker 2: Are that of course, as Kathy Wood of ARC invest
Speaker 2: really defending because she's been under a lot of criticism
Speaker 2: Matt for her selling of Nvidia back in January, which
Speaker 2: we know who has been on a tear this year.
Speaker 4: It's basically tripled since then. So yeah, she continues to
Speaker 4: say like valuations were too high and trying to kind
Speaker 4: of justify the sale. I think she should just say,
Speaker 4: we screwed up, you know, Maya Kalpa. We would have
Speaker 4: preferred to make money with that stock. We didn't win some,
Speaker 4: you lose some. Let's move on. Well, the software part
Speaker 4: of the story is really interesting, I think great. The
Speaker 4: only problem is her track record for exaggerating with her forecasts.
Speaker 4: She's like the boy who cried ten thousand wolves, you know.
Speaker 4: I mean she says Tesla's going to be worth two thousand.
Speaker 4: By the way, Tesla's trading at the same piece four
Speaker 4: p as in video. So okay.
Speaker 2: The thing I will say is she was out early
Speaker 2: when it comes to Tesla, a name that nobody wanted
Speaker 2: to back, and she wasn't wrong about that. And so
Speaker 2: maybe her numbers or her peaks, maybe you don't exactly
Speaker 2: mesh with the reality. But a lot of the.
Speaker 4: Trends that you go on, like one point three million,
Speaker 4: I think jour there's.
Speaker 2: A lot of plays that have and there are other
Speaker 2: companies that have mimicked her in terms of the innovation play.
Speaker 2: I'm just going to put that out.
Speaker 4: We'll just take a look at the other side, the
Speaker 4: performance of the fund. Okay, Okay, it's very bad.
Speaker 2: But take it back to the beginning. Okay, all right,
Speaker 2: we're going to continue this. In the meantime, we want
Speaker 2: to do want to talk about one of the most
Speaker 2: read stories on the Bloomberg Yes, folks, we're going to
Speaker 2: get to a point here because it's about Hedge Fund,
Speaker 2: specifically deploying chept to handle all of the gruntwork. So
Speaker 2: it's got this AI play, no doubt about it. So
Speaker 2: let's get into this story with Bloomberg News Managing Editor
Speaker 2: of Technology and Global Cybersecurity, Linda Wan. She's here in
Speaker 2: our Bloomberg Interactive Broker studio. I hope we didn't freak
Speaker 2: you out with her.
Speaker 4: No, I'm highly used you and I'm so.
Speaker 5: Glad that I'm not here talking about in video because
Speaker 5: I've been talking in video for the last week and
Speaker 5: I'm done with it for now. All right, she's reaching
Speaker 5: the trillion dollar mark and now now it's done for now.
Speaker 4: Well, what's the wait?
Speaker 2: What is the narrative around that is it that it's
Speaker 2: just too much too right now at this point.
Speaker 5: I think that everyone's freaked out over the past week, right,
Speaker 5: I mean, you've seen it means huge gains. You got
Speaker 5: to like take a pause and question whether it deserves that,
Speaker 5: and then Kathy would right. I mean she's got some
Speaker 5: valid points. There's going to be more competition in this space.
Speaker 5: There already is. It's only a matter of time before
Speaker 5: you see more and more people pile into this like
Speaker 5: AI market and try to stake their own claim to it.
Speaker 4: So it's absolutely true. I mean the thing about in
Speaker 4: video not to bring it up, sorry Lennon, is that
Speaker 4: for a while time, I feel like if you called
Speaker 4: up your broker and said I need an on AI
Speaker 4: right now, she probably was like, there's a stock for you.
Speaker 4: It checks every box, as Kathy Wood said, and VideA
Speaker 4: is it and that was the only stock. You know,
Speaker 4: everybody else, even in AI wasn't doing nearly as well
Speaker 4: as in Nvidia. But at least the good thing about
Speaker 4: Kathy woods interview on Bloomberg TV is that she points
Speaker 4: out there's gonna be a lot of other beneficiaries if
Speaker 4: it's really true, if this is the next wave of innovation.
Speaker 4: It's not just about the people who make chips, right,
Speaker 4: there's so much more stroader.
Speaker 5: I mean, think about the entire AI supply chain. It
Speaker 5: goes from like the foss fuels that generate the electricity
Speaker 5: that power the data centers that use the chips. There's
Speaker 5: an entire chain to make money off of, not just
Speaker 5: one company.
Speaker 2: Right, So bring in tie in Wall Street because you know,
Speaker 2: the one thing we need to talk about is AI
Speaker 2: is not a new thing, and we keep bringing in
Speaker 2: like whoa, look at this new you know, Shania object,
Speaker 2: but it's been around for a long time. Generative machine learning, though,
Speaker 2: does take this all to a different dimension. Talk to
Speaker 2: us about Wall Street and they're embracing of AI and
Speaker 2: where we are today.
Speaker 5: Yeah, so let's talk specifically about generative AI because that
Speaker 5: is where we are at right now. That is what's new, right,
Speaker 5: And when it comes to generative AI, I'm talking about
Speaker 5: like the AI tools like Chatcheep and Dolly where you
Speaker 5: can give it a prompt like, you know, show me
Speaker 5: a picture of a rooster that's pink sitting on a
Speaker 5: brown couch and it'll be able to do that. So
Speaker 5: it can like create content on the fly. They're basically
Speaker 5: using these kinds of generative AI tools for back office work.
Speaker 5: I mean you said it, well, grunt work, right, So
Speaker 5: these are the kinds of tasks that you might assign
Speaker 5: to interns or entry level workers or admins. Some examples
Speaker 5: that we gave in our story today were summarizing fun
Speaker 5: performance assessing, like vast amounts of market research to distill it,
Speaker 5: writing basic code like these are the very mundane tasks
Speaker 5: that real junior workers of Wall Street are used to doing.
Speaker 2: And they've been doing this for a while. Are now
Speaker 2: is this new?
Speaker 5: This the generitive AI part is the new part, right,
Speaker 5: So Wall Street has been using machine learning for years.
Speaker 5: I mean these hedge funds are just as much software
Speaker 5: companies as they are traders and investors at this point.
Speaker 5: They employ a ton of engineers that just do quant research,
Speaker 5: just build algorithms. I mean that's where like quant trading
Speaker 5: comes from. So really AI is not new to the space.
Speaker 5: Generative AI is new to the space. I mean it's
Speaker 5: new to everybody. It's new to the world. Chat GPT
Speaker 5: like changed everything and now suddenly everyone can program, everyone
Speaker 5: can use large language models, everyone can write essays.
Speaker 4: But Carol as you point out it's just one more
Speaker 4: tool that Microsoft is offering people in the back office.
Speaker 4: Right when I first started out as an intern at
Speaker 4: Tucker Anthony, you know, twenty five years ago, Paul Matt Miller,
Speaker 4: I had my introduction to Excel, Right, I was using
Speaker 4: other Microsoft tools. I was, you know, printing out mailers.
Speaker 2: But there are tools, and there are tools Matt that change.
Speaker 4: Yeah, but this is not a lot. But I think, Lynn,
Speaker 4: what you're saying is right now Wall Street is using
Speaker 4: this just as far as the intern sending out Christmas cards,
Speaker 4: right you Excel, right, that's right. It's not picking stocks
Speaker 4: for anybody yet, correct, But it could.
Speaker 2: Because they because and we've talked about this, Matt.
Speaker 4: Right, well they wrote about it.
Speaker 2: It gets smarter and smarter and smarter.
Speaker 4: That's right.
Speaker 5: I mean, it potentially could, and I think that that
Speaker 5: is the hope of these hedge funds. But the technology
Speaker 5: isn't perfect. You know, you might have read the stories,
Speaker 5: but chat GPT it lies like it makes stuff up, literally,
Speaker 5: and it spits out a lot of really inconsistent responses,
Speaker 5: and nobody really knows why, even the people who built
Speaker 5: these systems. So there's the issue of inconsistency and the
Speaker 5: fact that it can make up things. But there's also
Speaker 5: the issue of data leaks, which financial companies are.
Speaker 4: Very You know, this weekend, I was using chat GPT
Speaker 4: to try and determine the best strategy to get my
Speaker 4: three of a kind in Yatzi, and it told me
Speaker 4: one thing, and I questioned the model, and then it
Speaker 4: told me another. It said, oh, I'm sorry, you're right.
Speaker 2: I'll have a moment of map playing Yazi. Okay, go ahead.
Speaker 4: My part is it makes mistakes. On the other hand,
Speaker 4: in your story that that you know that we're kind
Speaker 4: of focused on right now, Lynn, which is Justina Lee
Speaker 4: and Segel Kishan wrote hedge funds are deploying chat gpt
Speaker 4: to hand all the grunt work. They point out that
Speaker 4: the FED found open AI's chat gpt does better than
Speaker 4: Google's burt and determining whether or not sentences are hawkish
Speaker 4: or dubvish. So it does have real value in terms
Speaker 4: of investiation.
Speaker 5: It could have very real value, and Justina and Sagel
Speaker 5: laid it out very well. I think that they are
Speaker 5: still trying to figure out where that value lies. I
Speaker 5: think a part of it isn't even just concerns about
Speaker 5: the factualness of these tools as much as it is
Speaker 5: how do we make it work? How do we use
Speaker 5: it so that it makes money? So there's that too.
Speaker 2: I think the quandary is, like we talk about, it
Speaker 2: gets smarter and smarter than more data that gets put
Speaker 2: into it. But at the same point, does that mean
Speaker 2: you have to open it up to everybody? And that
Speaker 2: means everybody has your information?
Speaker 5: And that is like, right, the open source nature of
Speaker 5: some of these tools really freaks out Wall Street. They're
Speaker 5: trying to like build their own in house tools. Everybody
Speaker 5: is looking at that. But that's the that's the big concern,
Speaker 5: right You just don't know where that information is being
Speaker 5: stored when you put information. I don't know where your
Speaker 5: yachtzi information is being stored in chat Gypt.
Speaker 4: Right now, here's the thing to be open to everybody else.
Speaker 4: You're three of a kind new roll twos? Do you
Speaker 4: pick up the other three dice and roll them or
Speaker 4: do you pick up all five? Because your chances of
Speaker 4: rolling three of a kind are like forty two per d.
Speaker 2: No is this holiday season when you get that card?
Speaker 2: Happy Holidays. Matthew Miller from ABC Brokerage House it might
Speaker 2: have been Shatchy Sha che Te. Great stuff. We're all
Speaker 2: learning as we go in this Lynn, thanks so much.
Speaker 2: This is just fun. Linda Want She's managing editor of
Speaker 2: Technology and Global Cybersecurity at Bloomberg News. Here in our
Speaker 2: Bloomberg Interactive Broker studio, do you play Scrabble two?
Speaker 4: Well, we do play Scrabble, but was an international crew
Speaker 4: so we felt it would be unfair and we chose
Speaker 4: Yachtzi instead. Oh my gosh.
Speaker 2: To be continued.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: play Bloomberg You Love Them thirty.
Speaker 2: All right, right now, though, we want to talk about
Speaker 2: stuff going on outside of the United States, specifically what's
Speaker 2: going on between Russia and Ukraine. The US and European
Speaker 2: allies urging caution on whether Ukraine should have the right
Speaker 2: to strike inside Russia that amid concerns that a potential
Speaker 2: escalation could drag them into a broader war. Meantime, you've
Speaker 2: got President Putin demanding that Russia strength and air defenses
Speaker 2: around Moscow after the biggest drone attack on the capital
Speaker 2: since you ordered the invasion of Ukraine. So let's get
Speaker 2: the latest and some really thoughtful thinking about what's going on,
Speaker 2: at least the latest incidents. A valued voice for US
Speaker 2: on the war is Angela's stamp. She's senior fellow at
Speaker 2: the Brookings Institution, a former National intelligence officer for Russia
Speaker 2: and Eurasia at the National Intelligence Council. Also served in
Speaker 2: the Office of Policy Planning at the US Department of State,
Speaker 2: and her twenty nineteen book Putin's World, Russia Against the
Speaker 2: West and with the Rest. She joins us once again
Speaker 2: on the phone from Washington, DC. Angela, good to check
Speaker 2: in with you once again. We've been wanting to since
Speaker 2: those headlines about the drone attack in Moscow. Specifically, what
Speaker 2: do you think about what's going on right now, this
Speaker 2: war that's been going on for more than a year.
Speaker 2: What do you think is going on inside the mind
Speaker 2: of President Putin right now?
Speaker 6: So President Putin knows that the Ukrainians have said that
Speaker 6: they're going to launch a counter offensive anytime soon. They've
Speaker 6: been saying that for some time. But we believe they
Speaker 6: will do that, and so he's clearly very concerned about that.
Speaker 6: Then you had a few weeks ago a lone drone
Speaker 6: attack right inside the Crumlin walls, and then yesterday you
Speaker 6: had these drones that attacked the very posh suburb of Moscow,
Speaker 6: where all the wealthy people live and where Putin himself
Speaker 6: has one of his official residences. So he must be
Speaker 6: wondering what the Ukrainians or their supporters have up their
Speaker 6: sleeves next. I mean, the Ukrainians have said that they
Speaker 6: didn't launch the drones yesterday, we do know that they're
Speaker 6: also saboteurs inside Russia. And just a few days ago
Speaker 6: and it's going on now, we have a group of
Speaker 6: people who identify themselves as anti Putin Russians march over
Speaker 6: the border to Belgaroon, and today the Russians are evacuating
Speaker 6: children from that border town. So it's really to give
Speaker 6: the Russians a dose of their own medicine and make
Speaker 6: them uneasy and not know what's coming in the future.
Speaker 4: But it must make.
Speaker 6: Putin very angry about this. This remember was supposed to
Speaker 6: be a three day war.
Speaker 4: So before we go any further with the drawing attacks
Speaker 4: on the Kremlin. I've got to ask you, Angela about
Speaker 4: what everyone says when I talk about this, and that is, well,
Speaker 4: who did the Nordstream pipeline pipeline attack?
Speaker 7: Right?
Speaker 4: It doesn't make any sense that the Russians would have
Speaker 4: sabotaged their own pipeline. But also the US doesn't typically
Speaker 4: operate that way. It wasn't a fantastic job. So who
Speaker 4: do you think was behind that?
Speaker 6: I mean, who knows? There's so much mystery surrounding all
Speaker 6: of this. I've seen reports in the press here that
Speaker 6: some governs think that it was a group of Ukrainians
Speaker 6: or pro pro Ukrainians, not government sponsored. But if you
Speaker 6: like they were free lancing that they did that, I
Speaker 6: don't know whether we'll ever know who did it. But
Speaker 6: I don't really have any good theories. I mean, if
Speaker 6: you say, if you think the Russians did it, the
Speaker 6: only reason would be to raise you know, oil and
Speaker 6: natural gas prices, but that seems a rather roundabout way
Speaker 6: of doing it. So I think we don't know. Now.
Speaker 2: As you said, we thought this was going to be
Speaker 2: a three day war. Here we are, you know, one
Speaker 2: year in counting.
Speaker 4: So base thought it was going to be a three
Speaker 4: year war.
Speaker 2: Yeah, to be that's right exactly, And I think the
Speaker 2: world thought that this was going to come to an
Speaker 2: end much more quickly. Having said that, how do you
Speaker 2: figure out or how do you think about when this
Speaker 2: might come to an end and what might ultimately bring
Speaker 2: it to an end.
Speaker 6: Well, at the moment, there really does seem to be
Speaker 6: no end in sight. I think Putin definitely believes that
Speaker 6: he can outlast the West that eventually, you know, will
Speaker 6: have elections in the US next year, there are other
Speaker 6: European countries will have elections, and in the end people
Speaker 6: will say, you know, we can't go on supporting Ukraine
Speaker 6: like this. We're dealing with inflation and so we should
Speaker 6: really think rethink that. So that's what he's waiting for.
Speaker 6: He's waiting for the West to give up on Ukraine,
Speaker 6: if you like, and then the Ukrainians won't have all
Speaker 6: those weapons and so eventually they won't have any choice
Speaker 6: but to negotiate with Russia on Russia's trumps. Now, so
Speaker 6: far we haven't seen that happening. The West is still
Speaker 6: pretty united fifteen months into it.
Speaker 4: Yeah, I mean, Angela, we're starting to see, especially on
Speaker 4: the far right grumblings about why are we funding this
Speaker 4: war or at least why are we funding the defense
Speaker 4: of this democratic nation. Do you think that's going to
Speaker 4: go further? Does it seem like those in you know,
Speaker 4: the Freedom Caucus are going to try and take funding away?
Speaker 8: Oh, I'm sure that they will.
Speaker 6: I mean, so far, I think we have very robust
Speaker 6: congressional support for Ukraine mostly, but the people in the
Speaker 6: Freedom Caucus, the people the supporters of Donald Trump, think
Speaker 6: that we shouldn't be supporting Ukraine. Some of those people
Speaker 6: even think that Russia should be our ally, not Ukraine.
Speaker 6: And I'm sure as we get into the election season
Speaker 6: for next year, those voices are going to get louder
Speaker 6: and the people who still believe in supporting Ukraine are
Speaker 6: going to have to come up with very convincing arguments.
Speaker 2: What about the people of Russia? More broadly, are they
Speaker 2: still behind him? We know that there are factions right
Speaker 2: of folks that don't support it, but I'm just curious
Speaker 2: more broadly, especially if you now see the attack, the
Speaker 2: drone attack on Moscow, is that changing sentiment internally?
Speaker 6: Well, I think for those people who believe in the
Speaker 6: government narrative, then you know, the drones just shows that
Speaker 6: it's the aggressive West. So the majority of Russians still
Speaker 6: appear at least to support this war passively because they
Speaker 6: have been fed this diet of propaganda that the Western
Speaker 6: the US is out to get them. Then there are
Speaker 6: groups in Russia who think that Putin isn't being strict
Speaker 6: enough with this war, that the Russia should be more
Speaker 6: extreme in the way that it's treating Ukraine. So he
Speaker 6: gets criticism from the right as well. But so far
Speaker 6: there does not seem to be any kind of a
Speaker 6: ground swell movement in Russia that's anti war. Don't forget
Speaker 6: a million people have already left Russia, many of who
Speaker 6: left because they opposed the war.
Speaker 4: All right, So in terms of the war on the
Speaker 4: ground in Ukraine, what are the chances that the Ukrainians
Speaker 4: can actually make some headway and push the Russians out?
Speaker 4: Is that even in the cards or do they need
Speaker 4: jets and a lot more from the West to do it? Well.
Speaker 6: I think people believe that they may be able to
Speaker 6: push the Russians out of some of the occupied areas
Speaker 6: in this counter offensive, But this is only going to
Speaker 6: be one of what apparently will be a number of
Speaker 6: different counter offenses. I don't think anybody thinks for this
Speaker 6: particular one that will happen soon, that they going to
Speaker 6: push the Russians out of everything that they occupied, particularly
Speaker 6: the territories that they already occupied after twenty fourteen.
Speaker 2: So how do you think about this? I mean, I
Speaker 2: think I've talked with you before, you know, writing another book,
Speaker 2: and how you're thinking about you know, putin going forward
Speaker 2: in Russia. I'm not wrong, but so like, how are
Speaker 2: you thinking about this?
Speaker 6: Well, I'm still thinking looking into what I think will
Speaker 6: be a very long war. This could go on for
Speaker 6: a long time, as long again, as long as Ukraine
Speaker 6: gets weapons from the West, because the Russians will get
Speaker 6: what they need, even if the army has performed certainly
Speaker 6: below par. At some point the Russians might be persuaded
Speaker 6: that it's in their interest to have a cease fire,
Speaker 6: but so far they've said that they will only do
Speaker 6: that if Ukraine accepts all their conditions, and as long
Speaker 6: as Ukraine is fighting back and as long as it's
Speaker 6: led by Voladimir Zelenski, they're not going to do that.
Speaker 2: Hey, Angela, who watches this the most closely? China Taiwan.
Speaker 2: I'm just curious North Korea. Who you think is watching this,
Speaker 2: especially in terms of how the West reacts with Moscow.
Speaker 6: Well, clearly China is watching very carefully because it does
Speaker 6: affect its own view of maybe the timing on what
Speaker 6: it does to Taiwan. And then I think probably countries
Speaker 6: like North Korea are watching this too, just to see
Speaker 6: how this plays out. But I think China is the
Speaker 6: one for whom this probably has the most resonance.
Speaker 4: North Korea they're watching it on like an old black
Speaker 4: and white set with ars.
Speaker 2: It's all right, they're watching, and they're watching. Angela always
Speaker 2: appreciate you weighing in on this. Be well, good to
Speaker 2: check in with Angela Stent, Senior Fellow at the Brookings Institution.
Speaker 2: Check out Our World and her book that's on Putin's World,
Speaker 2: Russia against the West and with the Rest. As we said,
Speaker 2: you know, has served within the US Department of State
Speaker 2: and the National Intelligence Councils there really has some great
Speaker 2: vantage point on Putin himself, but just more broadly when
Speaker 2: it comes to global policy.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live weekdays from two to five pm. Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and you too. You can also
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Speaker 1: Play Bloomberg e Love and thirty.
Speaker 2: Well, if you check out the Bloomberg original series The
Speaker 2: Future with Hannah Fry, you may have come across an
Speaker 2: episode that looked into how a scientific revolution has begun,
Speaker 2: one that may bring the fantasy of immortality a little
Speaker 2: closer to reality, at least by a few decades. Anyway,
Speaker 2: researchers the world over are closing in on discoveries that
Speaker 2: may help humans live longer, perhaps well into their one hundreds.
Speaker 2: So we have lots of conversations and lots of questions
Speaker 2: about wellness and living longer and lifespans in general. In
Speaker 2: the meantime, investors, including Primetime Partners, are finding ways to
Speaker 2: bet on the world's aging population. So with us in
Speaker 2: our studio is Abby Miller Levey. She's co founder marging
Speaker 2: partner of the early stage venture capital firm focused on
Speaker 2: the trillion dollar global aging sector. There's a lot going on,
Speaker 2: is Primetime Partners, co founded, by the way, with longtime
Speaker 2: venture capitalist Alan Patrick ofv Welcome, Thank you so much
Speaker 2: coming a little bit so we can hear you because
Speaker 2: we want to make sure it's absolutely. Talk to us
Speaker 2: a little bit about the aging space and how you
Speaker 2: guys think about it as investors, because there is a
Speaker 2: lot going on. But it could be you know, housing
Speaker 2: for people aging, it could be healthcare, So how do
Speaker 2: you think about it?
Speaker 9: Absolutely, there are so many parts of how we think
Speaker 9: about the longevity sector. And if you think about it
Speaker 9: this way, if you ask ARP for example, they do
Speaker 9: surveys all the time of older adults and they say,
Speaker 9: what do you care about? And they care about their health,
Speaker 9: they care about financial independence, and they care about having
Speaker 9: meaningful experiences, and so that means basically, in my mind,
Speaker 9: gravity means all of healthcare, all of retirement and wealth management,
Speaker 9: all of consumer and media, and as well as housing
Speaker 9: and real estate, and so it's quite a broad industry.
Speaker 9: As investors, we're focused on the early stage and we
Speaker 9: age tech as it's now called, had about two point
Speaker 9: three trillion dollars of investments, sorry, billion dollars of investments
Speaker 9: just in twenty one and twenty two. It's really an
Speaker 9: emerging space. I liken it to where climate tech was
Speaker 9: twenty years ago. Everybody understood that climate change was not
Speaker 9: everyone there was a widespread there was a lot of data. Yes,
Speaker 9: there was a lot of data that said climate change
Speaker 9: is happening and we need to address it as a society.
Speaker 9: This seismic shift in our age demographic that this is
Speaker 9: not new information. The fact that twenty five percent of
Speaker 9: the US population will be over the age of sixty
Speaker 9: five by twenty fifty thirty percent in Japan, this is
Speaker 9: not new information. The question is how do we adapt
Speaker 9: to it, the same way that the climate tech industry
Speaker 9: has had to adapt to this new reality. So that's
Speaker 9: how we really think about it. There's a lot of opportunity,
Speaker 9: but we have to in some ways prompt and nudge
Speaker 9: and push on the urgency of the top.
Speaker 4: Well, there are a lot of problems then to be solved,
Speaker 4: right because especially if people are retiring at sixty five
Speaker 4: seventy and they've on the financial side of it, they're
Speaker 4: ready for maybe another twenty years, possibly thirty, But what
Speaker 4: the data is showing is that they could go for
Speaker 4: another fifty years, right, So absolutely, I guess there are
Speaker 4: problems that need to be solved in terms of how
Speaker 4: they finance it. The healthcare bill is going to be
Speaker 4: off the charts, right, and then for meaningful experiences where
Speaker 4: they going to do absolutely well.
Speaker 9: You know, one of the most pressing problems is that
Speaker 9: fifty percent of Americans don't have retirement savings.
Speaker 2: That's what I think about. How if you're living longer, yay, yes,
Speaker 2: If you don't have the money to support yourself, not
Speaker 2: so great.
Speaker 10: Well.
Speaker 9: I think there's a few things. One is, you know,
Speaker 9: our individual choices. You know, average retirement age right now
Speaker 9: is sixty two. That hasn't changed much in the.
Speaker 4: Past few years.
Speaker 9: We are going to need to work longer, but that's
Speaker 9: incredibly young exactly. Then you have forty more years of
Speaker 9: basically acid DQ emulation versus a cumulation, and so that
Speaker 9: is a major choice we have to make. And are
Speaker 9: also given ageism in the workplace and things like that.
Speaker 9: We need to really work on workforce longevity, but also
Speaker 9: real changes in forcing retirement savings and so really excited
Speaker 9: that the government do that.
Speaker 4: Well. A couple of things.
Speaker 9: The Secure Act two point zero was the first time
Speaker 9: that by twenty twenty five, employers who offer four oh
Speaker 9: one ks are going to have auto enrollment. In other words,
Speaker 9: instead of saying to someone at twenty, hey, would you
Speaker 9: like to save now?
Speaker 4: Just do it?
Speaker 9: And there have been studies done by Bank of America
Speaker 9: that show basically that increases participation by five x. And
Speaker 9: so what Oftentimes in my role as an investor in
Speaker 9: the space, friends and family always ask me, you know, Abby,
Speaker 9: what's the secret to longevity? As if I know some
Speaker 9: secret pill. And by the way, there's a huge biotech
Speaker 9: industry focus on this. I always say, and they're very
Speaker 9: kind of it's not as sexy an answer, but I say,
Speaker 9: max out your four o one k that's the secret
Speaker 9: to longevity, because if you don't have financial longevity, you
Speaker 9: will not have a lesser chance of having a decent
Speaker 9: health span. And we are starting to see that people
Speaker 9: in their twenty and thirties right now are investing at
Speaker 9: higher rates in their four to one k's than before.
Speaker 9: And in fact, one of our portfolio companies is called Penelope.
Speaker 9: What they do is they allow solopreneurs and micro business
Speaker 9: owners to offer four oh one k's at reasonable prices,
Speaker 9: because as a small business owner or even a gig
Speaker 9: economy worker, you should be able to have your own
Speaker 9: four to oh one k and as a self employed person.
Speaker 9: So we really see that as an opportunity in terms
Speaker 9: of retirement savings to think about that. The other interesting
Speaker 9: part of the industry is really going to be around
Speaker 9: acid dcumulation. Most of our financial services sector is focused
Speaker 9: on accumulation. If you think about decumulation, this is everything
Speaker 9: from now that you have these four to one k's most
Speaker 9: people they're sitting in. First of all, most people have
Speaker 9: an average of seven retirement accounts. If you have retirement accounts,
Speaker 9: because every time you move employers or out of work
Speaker 9: and do a roth IRA or an IRA, then you
Speaker 9: have all these accounts and they are these small sums
Speaker 9: of money sitting typically in passive investment accounts. So another
Speaker 9: business we really like is a business call retireable that
Speaker 9: basically allows you to put them all together and then
Speaker 9: look at, actually, how do we invest or think about
Speaker 9: even drawing a paycheck from our retirement saving so you're
Speaker 9: really thinking about it differently. And also home, of course,
Speaker 9: home equity. You know, the majority of older adults eighty
Speaker 9: seven percent own they have home equity, and so how
Speaker 9: do you think about that as a bank account and
Speaker 9: really without the punitive products that may have existed or this,
Speaker 9: you know, sense of it is it has only emergency funding.
Speaker 9: How do you really think about it actively as funding?
Speaker 9: You do say early stage that you guys go into.
Speaker 9: Where are you seeing the most kind of company creation?
Speaker 9: Is it in the financial products? Is it in how
Speaker 9: we live? Is it how we experience? Is it healthcare?
Speaker 9: It's absolutely in healthcare.
Speaker 4: Yah.
Speaker 9: So two thirds of our investing is in healthcare, and healthcare,
Speaker 9: you know, is still the largest, you know, one of
Speaker 9: the largest contributors of our society. And older adults consume
Speaker 9: two thirds of all health care spent. So there's really
Speaker 9: incentives on everybody side. The government that pays for sixty
Speaker 9: five percent older Americans healthcare, the health plans, insures and
Speaker 9: pharmac everybody is incentive to figure out how we take
Speaker 9: better care of older adults.
Speaker 2: So what do you invest in? I'm curious the kind
Speaker 2: of companies that are come up on your radar and
Speaker 2: you say, okay, this is something of interest.
Speaker 9: Absolutely Honestly, you follow the money and where the money
Speaker 9: is is basically in figuring out how to reduce the
Speaker 9: cost of care and how to make care more accessible.
Speaker 9: If I had to bucket it into two buckets, again,
Speaker 9: we don't do pharm our biotech, So that's something that's
Speaker 9: not in our purview, but within our purview, it's reducing
Speaker 9: cost of care. So, for example, anything that would prevent
Speaker 9: an older adult from hospitalization. A hospitalization can cost a
Speaker 9: health plan anywhere from fifteen to twenty thousand dollars. So
Speaker 9: reducing hospitalizations might be nutrition, might be, medication adherents might
Speaker 9: be fall prevention might be even things such as updating
Speaker 9: your home to make sure that there's safety within the home.
Speaker 9: So we've invested in several solutions that set into health
Speaker 9: plans to say, hey, let's prevent these hospitalizations that have
Speaker 9: clinical results and data to show we can prevent hospitalizations.
Speaker 9: So that's one example on the accessibility front. I mean,
Speaker 9: I'm sure most of the listeners here recognize that COVID
Speaker 9: changed everything in terms of telemedicine.
Speaker 2: Right.
Speaker 9: Telemedicine wasn't a was very infrequently a reimbursable experience before COVID,
Speaker 9: but it was basically built into our healthcare system now
Speaker 9: as a way to deliver care. So we've invested in
Speaker 9: many businesses that frankly make telemedicine more accessible from an
Speaker 9: infrastructure layer company called open Loop, and then about a
Speaker 9: third of our investments use telemedicine as a delivery and
Speaker 9: accessibility mechanism.
Speaker 4: And we're looking at.
Speaker 9: Other businesses, you know, and I know everyone's very focused
Speaker 9: on AI, you know, within healthcare. What's really interesting is
Speaker 9: you think about the word care. Healthcare, particularly for older adults,
Speaker 9: has always been a service business. There's a human involved,
Speaker 9: and where does AI do a wonderful job? It does
Speaker 9: a wonderful job of making human interactions faster, easier, and
Speaker 9: more personalized.
Speaker 2: We talk about this. I don't know if this is
Speaker 2: where you're going. And forgive me if I'm like off
Speaker 2: off in a crazy way, but just this whole idea
Speaker 2: of older people who are who are lonely, this idea
Speaker 2: of creating a robot or something that can I know, Matt,
Speaker 2: you're looking at me like I'm crazy, but I've seen
Speaker 2: it firsthand and it's devastating. And whether there can be
Speaker 2: in interactions. I know you think.
Speaker 4: I don't think that's crazy. I did a story on
Speaker 4: that like twenty years ago. My thing is, I wonder
Speaker 4: how high valuations are right now, because I'm sure a
Speaker 4: lot of people want to get into this space. It's
Speaker 4: an incredible demographic right.
Speaker 2: Sure, Well, I just got about twenty seconds important.
Speaker 9: So robots we're less excited about.
Speaker 4: We're excited about.
Speaker 9: Technology enabling meetups, live, you know, experiences. It's really human
Speaker 9: to human. But on valuations, just like everybody else, valuations
Speaker 9: have come down back to i'd say, you know, twenty
Speaker 9: nineteen levels on many companies. But because we invest early stage,
Speaker 9: early stage has largely been protected from the valuation perspective.
Speaker 9: I think the one thing that has changed is people
Speaker 9: are focused on profitability and making their money last.
Speaker 2: We have to run, come back soon. We'll do all right,
Speaker 2: Abby Miller Levey. She's co founder managing partner at Primetime Partners.
Speaker 2: Here in studio, you're.
Speaker 1: Listening to the Bloomberg Business Week Podcast. Catch us live
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Speaker 1: the Bloomberg Business App, and you too. You can also
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Speaker 1: Play Bloomberg, e Love and thirty.
Speaker 4: Well.
Speaker 2: In our last segment, we talked about the one trillion
Speaker 2: dollar global aging sector and how investors are tapping into it.
Speaker 2: One new eldercare benefit company in that group, though, is
Speaker 2: called Papa It's essentially a gig economy version of home assistance,
Speaker 2: a family on demand task rabbit for seniors that's being
Speaker 2: offered by some well known health plans and is embroiled
Speaker 2: in assault allegations. Bloomberg News Technology and venture capital reporter
Speaker 2: Priya Annan and the editor of Bloomberg BusinessWeek, Joel Webber,
Speaker 2: joined me and Matt Miller with more.
Speaker 11: The company is venture backed, it's a handful of years old.
Speaker 11: It's been valued by investors including soft Bank and Tiger
Speaker 11: Global at one point four billion dollars. Their model is
Speaker 11: essentially bring the gig economy to eldercare. So they have
Speaker 11: a network of independent contractors who can sign up within minutes,
Speaker 11: go through a background check process, and get onboarded, and
Speaker 11: then those folks are sent to the homes of elderly
Speaker 11: clients who are members of health plans that the company
Speaker 11: contracts with. The company does a lot of business with
Speaker 11: Medicare advantage plans. Some of the country's biggest insurers are
Speaker 11: customers and clients of PAPA, and working with Medicare Advantage,
Speaker 11: they're essentially taxpayer subsidized.
Speaker 4: Well, the thing is, even before I read your story,
Speaker 4: Eldercare and childcare is the last place I want the
Speaker 4: gig economy to be. Is everybody for this, it's such
Speaker 4: a bad idea.
Speaker 11: Well, what we found in our investigation where I reviewed
Speaker 11: more than one thousand incident records of complaints that have
Speaker 11: been filed with the company by members, by its own workforce,
Speaker 11: the independent contractors who who are the pals that they send.
Speaker 11: That's the term they've given their workers. You send a
Speaker 11: pal to the home of an elderly member. The company's
Speaker 11: whole thing is they remove the nursing element from homemade
Speaker 11: and so you know, they send independent contractors with very
Speaker 11: little training a short video that they watch for training
Speaker 11: into homes and the way they were able to sell
Speaker 11: us to insurers is there's a huge shortage of caregivers
Speaker 11: in this country. But at the same time, in reviewing
Speaker 11: the more than thousand records of complaints that have been filed,
Speaker 11: it's clear that their contractors are sent into situations that
Speaker 11: they're unprepared for, and it does lead to some questions
Speaker 11: around is the gig economy the right model for a
Speaker 11: company of this sort right?
Speaker 4: And part of the reason why.
Speaker 11: This has been something that insurance companies have signed on
Speaker 11: board for is there is this severe shortage of caregivers
Speaker 11: in the US. The Surgeon General has talked about this.
Speaker 11: You know, people have written extensively about just the lack
Speaker 11: of caregiver services in America. In this case, the population
Speaker 11: that this company is serving Medicare advantage plans. Oftentimes folks
Speaker 11: are very vulnerable in that population, and cost is also
Speaker 11: an issue. So when this company pop up partners with
Speaker 11: a health insurance plan, oftentimes the insurance plan will make
Speaker 11: it available as a service to its members for you know,
Speaker 11: X amount of hours a week that they can use
Speaker 11: this thing for free. Right, they don't have any other
Speaker 11: form of help. They don't have family members who can
Speaker 11: be caregivers for them, and family members who can help
Speaker 11: them get to the store, to the bank, to do laundry,
Speaker 11: things like that. The idea is that they would then
Speaker 11: turn to these contractors through this app right exactly on demand.
Speaker 11: They call it.
Speaker 2: We want to bring in the editor of Bloomberg Business Week, magazine,
Speaker 2: jail Web or he's here in our studio as well.
Speaker 2: I do feel like this is the kind of story
Speaker 2: you guys do so well. It's like very specific and
Speaker 2: really gets into the details, and it sounds like there's
Speaker 2: still a lot to figure out about kind of either
Speaker 2: how to make it work better or where it all
Speaker 2: went from.
Speaker 10: Yeah, all Priya and her excellent reporting on this one,
Speaker 10: you know, to Madge to your point there of like
Speaker 10: who thinks this is a good idea?
Speaker 4: Well, you know the company, and you know the company
Speaker 4: also put the name Papa. It is a terrible idea.
Speaker 4: It's solved.
Speaker 10: You talk about marketing and that the CEO and founder
Speaker 10: actually had some personal experience with and so scaling. That
Speaker 10: is totally where this came from. Of course, we are
Speaker 10: in this massive shortage of workers everywhere, and.
Speaker 4: Who needs to spend time with people?
Speaker 10: Like literally people need to spend time with people. In theory,
Speaker 10: this sounds great. It's just sort of one of those
Speaker 10: realities where the gig economy meets up with something that
Speaker 10: hasn't totally been kind of proofed in the real world.
Speaker 2: Read pre an Nouns full story online er on the
Speaker 2: Bloomberg Terminal for more details on some of the allegations
Speaker 2: facing pop Up.
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Speaker 1: The Bloomberg Business App and YouTube. You can also listen
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Speaker 1: play bloom Bird. You love him dirty.
Speaker 2: I can't believe you can hear this, Stree.
Speaker 4: No, are you not wearing an earpiece? He's not wearing
Speaker 4: headphones or an earpiece, so you can't hear but Stree.
Speaker 4: Stree has always hated Alice Cooper?
Speaker 2: Do you hate Alice Cooper? School's out forever? Okay? Anyway,
Speaker 2: Moyle Today, Now in the rear view mirror, many parents
Speaker 2: are getting ready to send their kids off to summer camp,
Speaker 2: and our BusinessWeek team out this week with a special
Speaker 2: digital series on the what is it like three to
Speaker 2: four billion dollar market for such programs that served twenty
Speaker 2: six million Americans each year and many years ago. Matt Miller.
Speaker 2: So let's get into it because occupying a small but
Speaker 2: pricey corner in that space is a name very familiar
Speaker 2: to our audience. We're talking about the head of Goldman Sachs.
Speaker 2: So let's get into it. Bloomberg News Senior Finance reporter
Speaker 2: Street Atarajen is here in our interactive broker studio along
Speaker 2: with the editor of Bloomberg Business Week, jol Weber. As
Speaker 2: we said both in studio, the story is as we
Speaker 2: mentioned digital online at Bloomberg dot com, slash BUSINESSWEEKND on
Speaker 2: the Bloomberg terminal, till can we start the big picture?
Speaker 2: Because it is one of several stories that you guys
Speaker 2: have online.
Speaker 10: Yeah, I would look at summer and a thing that
Speaker 10: you know, it's got some nostalgia vibes to it, but
Speaker 10: it turns out to be this massive industry that you know,
Speaker 10: it's sort of quiet and nobody really knows about it
Speaker 10: is summer camp. And when we started to think about
Speaker 10: what the summer camp machine looks like, we started to
Speaker 10: kind of like spool up some stories and then it
Speaker 10: just got really fun and we kept kind of digging around,
Speaker 10: and then Sri and Max Abelson were like, did you
Speaker 10: know that the Goldman Saxio owns a summer camp And
Speaker 10: we're like, no, uh.
Speaker 4: No, I did not know that.
Speaker 10: Actually, Like thanks for sharing that and like tell me more,
Speaker 10: and they're like, well, actually, we think he might have
Speaker 10: maybe bought into more than one. And then it turns
Speaker 10: out that Matt Miller grew up going to summer Camp
Speaker 10: and he had recommendations which did not inform the package,
Speaker 10: but we find out things about our colleagues after the
Speaker 10: fact that you know, I'm hoping to learn more.
Speaker 4: Wait, did you not go to summer camp?
Speaker 10: No, it's not a I grew up an Oregon. Oregon's
Speaker 10: not known for you know, sleep away camps. Oregon is summer.
Speaker 10: It is summer camp.
Speaker 12: Yeah, that's right, Monday, It's just summer all year long.
Speaker 10: So we were just mesmerized by how many cool ideas
Speaker 10: there were. And Rayhan Harmanci on our team led this effort.
Speaker 10: It turned out to just be really fun. And but
Speaker 10: we couldn't have done it without David Solomon, I think right.
Speaker 10: And three, this guy went to summer camp, not unlike Matt.
Speaker 10: And which summer camp.
Speaker 1: Did he go to?
Speaker 12: Well, he went to Camp robin Hood in the lovely
Speaker 12: town of Freedom, New Hampshire, and it certainly helped grow
Speaker 12: into the human being that he's today, made him very successful.
Speaker 12: He's now the Sea of Goldman Sax but was also
Speaker 12: the place where he was frequently known as Saul. And
Speaker 12: when David Solomon became a DJ the first time around,
Speaker 12: he went with the moniker DJ D Saul. Unfortunately that
Speaker 12: was too kitchie for who he is now, so he rebranded.
Speaker 12: He's now DJ David Solomon, way more boring, but DJ
Speaker 12: Desol does trace its roots back to Freedom, New Hampshire.
Speaker 8: Ah, so he.
Speaker 4: Got that name at summer Camp. That's pretty cool till.
Speaker 12: The sole part of it, the DJ came much later.
Speaker 4: I mean, it's pretty clear from Solomon. How you get that?
Speaker 2: Yeah, I know.
Speaker 10: Any Yeah, he wasn't the first person in his family
Speaker 10: to go to that camp either, right.
Speaker 12: Right, His father, his uncle were there before him, then
Speaker 12: he went there, then his daughters went there. So clearly
Speaker 12: there is a lot of sentimental value to Camp Robin Hood.
Speaker 12: And this was back in two thousand and four when
Speaker 12: he became a co owner of that camp. This was
Speaker 12: well known when he became the CEO of Goldman Sacks
Speaker 12: in twenty eighteen. But what was not well known hopefully
Speaker 12: much more well known now the story is out, is
Speaker 12: last year he expanded his portfolio of summer camp ownership.
Speaker 12: He bought into another camp which has one for boys
Speaker 12: one for girls in Kent, Connecticut with a as part
Speaker 12: of a consortium of investors. So technically he kind of
Speaker 12: has a stake in three different camps.
Speaker 2: Now, what's up with that? What's his interest. I mean,
Speaker 2: I get it. The first one, nostalgia, sentimental value investment.
Speaker 10: We spoke to the.
Speaker 12: Managing partner at the latest Summer Camp and he says
Speaker 12: it has been incredibly successful in the last year that
Speaker 12: they've owned it. Remember, this business has had its challenges,
Speaker 12: had some struggles through COVID, but perhaps in the post
Speaker 12: COVID era, where the outdoors are far more cherished, you
Speaker 12: can see why potential investors would be interested in something
Speaker 12: like this. And as they liked to tout, it's a very,
Speaker 12: very very big industry.
Speaker 10: One of the reasons that I thought it was a
Speaker 10: great idea you do this package of stories was post COVID.
Speaker 10: It's like, you know what, you you don't want your
Speaker 10: kids to look at screens anymore. You know where you
Speaker 10: can go get outside, and you know who's ready to
Speaker 10: capitalize on that.
Speaker 4: Titans of Wall Street.
Speaker 2: It's great, it's naughty. It's crazy. Are there other like
Speaker 2: folks on Wall Street that are really into it?
Speaker 4: You know, not that we've heard of all. By the way, guys,
Speaker 4: I don't think it's as crazy as the fact that
Speaker 4: the three of you didn't go to summer camp is
Speaker 4: a lot weirder and the fact that look, as the
Speaker 4: story says, twenty six million Americans go to summer camp
Speaker 4: and it is typically like a legacy thing. The camp.
Speaker 4: I want to camp kwani in well made. My dad
Speaker 4: went there, my uncles went there, my nephews go there.
Speaker 4: Like it's a normal thing for generations of family members
Speaker 4: to go to. And it's also normal for it to
Speaker 4: be a boys camp or a girls camp. I went
Speaker 4: to a boys camp. There was a girls camp on
Speaker 4: the other side of the lake. We would sneak over there.
Speaker 4: Sometimes that was like a funk. You never know. I
Speaker 4: just think it's a pretty normal That's why you have
Speaker 4: these American like comedies that are about.
Speaker 10: What's the one on American summer? American Summer, and then
Speaker 10: ten years later they have the reunion.
Speaker 4: Yeah, so what was your nickname? I didn't have a nickname.
Speaker 4: I don't think for the air. I remember that we
Speaker 4: had the lodges. I stayed in Deer Lodge the first year,
Speaker 4: and the second year I stayed at Beaver Lodge, and
Speaker 4: we would do like this was our insignia, you know.
Speaker 4: And when I went back and when my nephew went there,
Speaker 4: the kids were doing the same thing. I went and
Speaker 4: saw where I had written my name on the wall
Speaker 4: in the lodge, you know, thirty years earlier. Like it
Speaker 4: was a really cool traditional experience.
Speaker 12: Wait, you go there for a few weeks and then
Speaker 12: week you go back twenty thirty years later for reunion event.
Speaker 4: Yes, we had our centennial reunion last year, which was
Speaker 4: really cool.
Speaker 7: That's actually normal.
Speaker 10: I think like the people who go to Camp chairshit,
Speaker 10: did you notice? You know what they're willing to do.
Speaker 10: So if you had a chance to buy into that camp,
Speaker 10: would you do it?
Speaker 4: One hundred percent? I would definitely. I would even donate money.
Speaker 4: I was looking at the website today and they have
Speaker 4: a place where you can do that. I thought about it.
Speaker 10: Sponsor a camper, maybe sponsor a camper for sure.
Speaker 2: To try has been around for one hundred years.
Speaker 4: Yeah, and so has the one that David Solomon invests. Nope,
Speaker 4: ninety nine years, nine years okay, okay, so we got
Speaker 4: them beat Camp Kawane.
Speaker 2: So does he ever talk about it? Solomon?
Speaker 12: He suddenly talked a lot about Camp Robinhood, and he did.
Speaker 12: He has spoken publicly about what impact it had while
Speaker 12: he was growing up. He cuttainly is very attached to that.
Speaker 12: I certainly don't know of him talking about his little
Speaker 12: expansion of his portfolio.
Speaker 10: Yeah, the expansion part was what was really interesting, because
Speaker 10: if you've done it once, you're just like you know,
Speaker 10: you know, and then you you know what you want
Speaker 10: to know? How many more summer camps can I come out?
Speaker 4: I will say the prices have gone up, I think
Speaker 4: pretty substantially. So that about what does it cost for
Speaker 4: a year. About five years ago or six years ago,
Speaker 4: I wrote a check to sponsor a camper at my
Speaker 4: camp at Camp Kwani, and back then it was I
Speaker 4: think five one hundred dollars. And so today because of.
Speaker 10: This story pre inflation.
Speaker 4: Yeah, so today, because of this story, I looked at
Speaker 4: the website again and now it's nine six hundred dollars
Speaker 4: only five or six years later to make the price
Speaker 4: is almost doubled.
Speaker 12: David Solomon's Robin Hood fourteen nine hundred dollars for the summer,
Speaker 12: the one in Connecticut about fifty two hundred for three weeks.
Speaker 10: What do you get within your camper?
Speaker 1: Though?
Speaker 4: For that waffles, go karting and in DJ go karting
Speaker 4: seems luxurious, that's extreme.
Speaker 10: What did you get?
Speaker 4: We had water skiing, which was awesome, full range we did.
Speaker 4: I was a junior main guide, so I went out
Speaker 4: in the woods for three days without any help and
Speaker 4: survived at junior giant games of Capture the Flag that
Speaker 4: could last days. It was really really fun. But what
Speaker 4: days days? I mean it was a huge camp and
Speaker 4: you were either on one side or that you were
Speaker 4: either in the maroon or the grays, and so you
Speaker 4: would compete with the others all summer.
Speaker 10: And then you would like hide it for multiple days
Speaker 10: and they wouldn't be able to find it.
Speaker 1: Kind of thing.
Speaker 4: Wow, all right.
Speaker 2: I didn't go, but my daughter did a little bit
Speaker 2: of camp, but it was like a farm and she
Speaker 2: was like out in the woods. It was kind of rough.
Speaker 2: I mean, are these camps posh or how are they?
Speaker 8: Look?
Speaker 12: I've been in this country for ten years and I
Speaker 12: still have to say I find America endlessly fascinating.
Speaker 2: Well, Matt was your place posh?
Speaker 4: No? No, it wasn't at all. You brought You brought
Speaker 4: sleeping a locker and all of your stuff was in
Speaker 4: the locker. Before camp. Every year, my mom would take
Speaker 4: me to the Army Navy surplus store where we would
Speaker 4: get like a canteen and a compass and a pocket
Speaker 4: knife and yeah you uh yeah, no more crappy clothes
Speaker 4: because you're going on mountain hikes. It wasn't because fourteen
Speaker 4: sounds expensive expensive.
Speaker 12: But to be clear, if you were in a camp
Speaker 12: in Maine, which is a camp in New England, and
Speaker 12: any camp in New England will be called an idyllic
Speaker 12: summer camp, and anything that's called ilic summer camp is
Speaker 12: automatically put.
Speaker 4: I'm sorry. Well, we did have the king. Well when
Speaker 4: I went there, Prince Philip was with me in camp,
Speaker 4: and so were Julio and Enrique Iglesias. And now Prince
Speaker 4: Philip is the King of Spain.
Speaker 2: But we're more fun.
Speaker 4: They were not in my age group, so I didn't
Speaker 4: hang out with them directly, but we had for some reason,
Speaker 4: kids from Ohio, New Jersey and Spain.
Speaker 12: For a second, wasn't Prince Philip Queen Elizabeth's husband.
Speaker 4: As well, No, the King of Spain, King King Philippe.
Speaker 4: He was at the time, he was just a prince obviously.
Speaker 10: So one of the things that we tried to do
Speaker 10: in this package that is, like, Matt, what you're talking
Speaker 10: about is this nostalgic American pastime sleep away camp, and
Speaker 10: that had been a very popular thing, especially in New England.
Speaker 10: But there's another thing that sort of happened, and we
Speaker 10: tried to talk about this in the package, which is
Speaker 10: that style of camp has largely writ large been kind
Speaker 10: of displaced by more like day camps or thematic camps
Speaker 10: like coding.
Speaker 4: We talked about the space.
Speaker 10: Camp, camp whatever. So there has been this shift and
Speaker 10: along with that has become this nightmare for parents because
Speaker 10: if you're going to put your kid in camp, all
Speaker 10: these little thematic camps that are out there, you know
Speaker 10: when they start filling up like January December. So for
Speaker 10: you to be planning for your July and August, which
Speaker 10: is basically when you know you don't have school, which
Speaker 10: maybe don't have childcare, you got to be putting down
Speaker 10: thousands of dollars and reserving those spots months in advance.
Speaker 10: And so summer camp, as it's gone away from this
Speaker 10: model that you talk about, as that price tag gets higher,
Speaker 10: it's also just added to this anxiety for parents about
Speaker 10: like where am I putting my kid? What am I
Speaker 10: supposed to do? And so we have some really great
Speaker 10: stories in here about just this hot mess that summer
Speaker 10: camp has become for parents.
Speaker 2: You hear it big time in New York. Right, It's
Speaker 2: like what am I doing with my kid? And like
Speaker 2: people are talking about it, You're right months ago because
Speaker 2: it's so competitive.
Speaker 12: That's interesting because most of the reaction I expected was
Speaker 12: panic about enrolling their kids into some a camp. Instead,
Speaker 12: I got a lot of the reaction was regret, clearly
Speaker 12: over the amount that they had to pay to enroll
Speaker 12: their kids into summer campaign.
Speaker 10: Right, and with on the other side of COVID now,
Speaker 10: I think it's like you want you want to add
Speaker 10: a thousand dollars to that fee.
Speaker 7: It's like, you know, we.
Speaker 10: Know that this is a thing that I think parents
Speaker 10: are craving for their kids and get them away from
Speaker 10: thost screens.
Speaker 12: So you're saying Goldman Sachs made the right investment call.
Speaker 10: I mean, well made the right This is his own
Speaker 10: Perhaps I am not surprised that he would double down
Speaker 10: on a space that he knew.
Speaker 2: Do you think on the next earnings call you're sure
Speaker 2: you could just slide it in a little question?
Speaker 12: Nope, thank you.
Speaker 10: Bo Okay, there's some other ones that I just want
Speaker 10: to mention here. There's a ketamine camp where you can go.
Speaker 4: That's not for the kids though, that's for that's for you.
Speaker 1: You know, you can go.
Speaker 10: Camp better little micro doves to focus on, you know,
Speaker 10: empowering your and becoming a better you.
Speaker 1: Uh.
Speaker 10: And there's some other adult only summer camp. So if
Speaker 10: you want to go live the youth that you you miss,
Speaker 10: we have all of that carved out, and.
Speaker 4: I think that would be too awesome. I dig that
Speaker 4: if I were single, look at this.
Speaker 2: For the nostalgia camper that might be you.
Speaker 4: Yeah, Matt Miller doesn't need a better U version.
Speaker 12: He already know he is.
Speaker 10: Amazing, you know, the big surprise here, big number three
Speaker 10: point five billion dollar industry, and it's cabin's, canoes and
Speaker 10: counselors and everything else. So have fun with it and enjoy.
Speaker 2: All right, really good stuff and great story. In terms
Speaker 2: of Davaoball, who would have thought Meetball Camp.
Speaker 4: No, that was the movie with like Bill Murray at
Speaker 4: summer Camp the Balls.
Speaker 2: Yeah, Oh, Matt, you never know where you're going to go.
Speaker 2: Jill Webber, thank you so much. Editor oft Bloomberg Business
Speaker 2: Week has not been to camp yet. Shrinata Rajen, Senior
Speaker 2: Finance reporter, at Bloomberg News has not been to camp.
Speaker 2: Matt Miller, of course has been, and we'll probably go back.
Speaker 10: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Got us
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Speaker 1: play Bloomberg.
Speaker 4: You Love Them thirty.
Speaker 2: A lot of businesses making changes. In the aftermath of
Speaker 2: the murder of George Floyd. We all had a lot
Speaker 2: of conversations with business leaders about what needed to be
Speaker 2: done more broadly in recognizing and really leveling the playing
Speaker 2: field when it comes to the black community overall and specifically,
Speaker 2: I know certainly on Bloomberg we talked a lot about
Speaker 2: black owned businesses, which brings us to our next guest,
Speaker 2: LaToya Williams. Belford is executive director at fifteen Percent Pledge,
Speaker 2: joining us on zoom in New York City. LaToya, great
Speaker 2: to have you here with Matt and myself, your founder
Speaker 2: a Roora James. After George Floyd took to Instagram and said,
Speaker 2: and I take this from your website. Okay, here's one
Speaker 2: thing you can do for us tagging the world's largest
Speaker 2: retail brands and asking them for fair Black representation on
Speaker 2: their shelves and talking about the Black community fifteen percent
Speaker 2: of the population and that as a result that we
Speaker 2: need to represent fifteen percent of the shelf space the
Speaker 2: black community. Tell us a little bit more about the
Speaker 2: organization and the inroads post pandemic and post as Lloyd.
Speaker 13: Yeah, thanks for having me, Matt and Carrol. We've been
Speaker 13: doing a lot of work over the last three years.
Speaker 13: You know, as we approach the three year anniversary of
Speaker 13: mister Floyd's unfortunate death. At the pledge, at the fifteen
Speaker 13: percent pledge, we work with the coalition of retailers. We
Speaker 13: have twenty nine major retailers who sign multi year contractual
Speaker 13: agreements to diversify their shelves and their assortments to the
Speaker 13: tune of fifteen percent and support of black entrepreneurs. We
Speaker 13: have moved over fourteen billion dollars and opportunity for black
Speaker 13: businesses as we work to close the racial wealth gap,
Speaker 13: and we've placed over six hundred and twenty five black
Speaker 13: businesses onto the shelves of the retailers like Macy's and
Speaker 13: Sophora all to Beauty Norstrum and the work that we've
Speaker 13: been doing so really working to create a more equitable
Speaker 13: landscape for black entrepreneurs as we kind of look to
Speaker 13: write many of the societal wrongs that we all were
Speaker 13: talking about in twenty twenty and thinking about how we
Speaker 13: use corporate partnerships in support of black businesses, you know,
Speaker 13: overall thinking about the most equitable economy for us all
Speaker 13: because we know that that is beneficial to our society
Speaker 13: in general. So equitable access.
Speaker 4: LaToya, I mean Macy's and Nordstrums. These are big nationwide stores.
Speaker 4: Fifteen percent of that shelf space is huge. Are they
Speaker 4: meeting their commitments?
Speaker 13: Well, Listen, it's a multi year proposition, right, and that's
Speaker 13: why we signed. No contracts with partners are less than
Speaker 13: four years. And when you look at a Norstrum, because
Speaker 13: of the size and the breath and the depth of
Speaker 13: their business, they have a ten year contract with the
Speaker 13: fifteen percent pledge to get to fifteen percent in the
Speaker 13: most sustainable way. So it's really a marathon and not
Speaker 13: a sprint. And it's really about a long term systems
Speaker 13: change towards a more equitable and inclusive you know business marketplace.
Speaker 2: Part of this process post George Floyd has been an
Speaker 2: education for all of us. I know, I've had a
Speaker 2: lot of conversations with black colleagues and their experience in
Speaker 2: this world, and we all thought we were just so
Speaker 2: much more advanced, and we found out we got a
Speaker 2: lot of problems out there. Having said that, I am
Speaker 2: curious as you tap into black owned businesses specifically, how
Speaker 2: big is the pool? And I asked that because we
Speaker 2: at Bloomberg have done a ton of stories about the
Speaker 2: lack of funding an investment that goes into you know,
Speaker 2: businesses started by black entrepreneurs, or they don't have the
Speaker 2: access to the financial system and the financial infrastructure that
Speaker 2: so many other white entrepreneurs have. So give me a
Speaker 2: little education, if you will, or what you have experienced
Speaker 2: when it comes to that.
Speaker 13: So the pool of black businesses is vast. So in
Speaker 13: twenty nineteen, black businesses represented three percent of the entrepreneurial landscape,
Speaker 13: and in twenty twenty two we now represent nine percent
Speaker 13: of the entrepreneurial landscape. At the Pledge, we work with
Speaker 13: over five thousand businesses very closely to help them to
Speaker 13: have equitable access program development, access to capital and ultimately
Speaker 13: to be business ready to scale into the ecosystems of
Speaker 13: those twenty nine corporate partners and retailers that take the pledge.
Speaker 13: So five thousand businesses are you know, working directly with
Speaker 13: the Pledge, but a nine percent overall representation, and that
Speaker 13: number continues to grow.
Speaker 4: So you mentioned a few of the companies that are involved.
Speaker 4: What about the biggest retailers in the nation. What about
Speaker 4: getting like a Walmart on board. Well, that's where we're heading.
Speaker 4: We're hopeful to be heading that way, Matt.
Speaker 13: When we think about closing the racial wealth gap, and
Speaker 13: we think about our goal organizationally is one point for
Speaker 13: trillion dollars generated through our work by twenty thirty. We
Speaker 13: need the partnerships of a Walmart of a target, you know,
Speaker 13: to really kind of maximize opportunity and always for black
Speaker 13: business owners.
Speaker 4: And what I also will add is that you.
Speaker 13: Know, at the Pledge, in addition to the twenty nine
Speaker 13: partners that sign the multi year contracts as Pledge takers,
Speaker 13: we have some very robust strategic partnerships with Google, with
Speaker 13: City Bank. When we think about all the ways and
Speaker 13: all the collaboration that it's going to take to really
Speaker 13: see a long term system change to drive a more economic,
Speaker 13: a more inclusive economic landscape.
Speaker 4: There's all. There's also, LaToya, you know, in a capitalism sense,
Speaker 4: a real purpose to this because if everyone works together
Speaker 4: in the way that you've laid out, we increase the
Speaker 4: for all of us.
Speaker 13: Absolutely, And Matt, that is a fantastic point because at
Speaker 13: the core of our business and the DNA of what
Speaker 13: our founders started three years ago is definitely economic justice.
Speaker 13: It's definitely diversity, equity and inclusion. But what we know
Speaker 13: is that when we support black entrepreneurs who have been
Speaker 13: historically excluded and systemically excluded, and we really look at
Speaker 13: their product innovation and their universal appeal. Right, products made
Speaker 13: by black founders are not just for black consumers. There's
Speaker 13: a whole universal marketplace there for retailers to be able
Speaker 13: to drive revenue. And ultimately, when we invest in black businesses,
Speaker 13: when they have equal and equitable access to partnership, it
Speaker 13: is a good business strategy. Equity is good business, is
Speaker 13: what we know after doing this work for three years.
Speaker 2: And I just want to say, LaToya, I mean no offense,
Speaker 2: I agree with you, but that research has been out
Speaker 2: there for at least a decade, right, Mackenzie others have
Speaker 2: said the importance of diversity on boards and in corporations.
Speaker 4: Well, but it's just like Marcus Shaw says, you need
Speaker 4: to let greed overcome your bias.
Speaker 2: But so if you do, then you would see a
Speaker 2: lot more going on. What is it when you go
Speaker 2: to a Walmart or perhaps an Amazon, if you really
Speaker 2: want to start moving the needle, right, why haven't they joined.
Speaker 13: On because there just hasn't been understanding leadership investment. The
Speaker 13: data is there, but the proof of concept has been
Speaker 13: lacking for many reasons. Right, Black businesses need support and
Speaker 13: development and cultivation to be able to show up business ready.
Speaker 13: So it's not enough to just say we're going to
Speaker 13: move forward, we're going to flood our shelves, we're going
Speaker 13: to find black businesses because they won't be successful. Right,
Speaker 13: So there's a whole kind of ecosystem that needs to
Speaker 13: be in play for this proof of concept that we
Speaker 13: are proving at the Pledge. The data shows it fourteen
Speaker 13: billion dollars in three years that when black businesses are
Speaker 13: supported in the right ways and when retailers and corporations
Speaker 13: really understand the journey, the need, the trajectory of black
Speaker 13: businesses because they have been historically and systemically excluded, so
Speaker 13: they show up needing additional support. And when those two
Speaker 13: things come together and partnership is when you're able to
Speaker 13: see the magic and the proof of concept for the
Speaker 13: data that we all know to be true, but the
Speaker 13: actual proof of concept is proven.
Speaker 2: All right, well, certainly great to check in with you,
Speaker 2: and it's great to hear the progress that you guys
Speaker 2: are making. LaToya Williams Belforti's executive director of fifteen Percent Pledge.
Speaker 2: Joining us via zoom in New York.
Speaker 1: City, you're listening to the Bloomberg Business Week podcast. Catch
Speaker 1: us live weekdays from two to five pm Eastern on
Speaker 1: Bloomberg Radio, the Bloomberg Business app, and you too. You
Speaker 1: can also listen live to our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Hey listen. We want to get little bit more on
Speaker 2: the property mark it and especially when it comes to
Speaker 2: working from home. We're trying to figure this out the
Speaker 2: demise of the office. John Saxon is chief of staff
Speaker 2: at the real estate development and management firm, and they
Speaker 2: really specialize in mixed use properties. We're talking about Howard
Speaker 2: Hughes and he joins us on Zoom from New Orleans. John,
Speaker 2: good to have you here with us broadly. You know,
Speaker 2: there's been so much nervousness about office and office properties
Speaker 2: coming off the pandemic. Do you think that nervousness is
Speaker 2: well founded?
Speaker 8: I mean, I think that it depends where you're looking at.
Speaker 14: So what we're seeing today is the performance of office
Speaker 14: is really bifurcated. You have the doom and gloom and
Speaker 14: everything that you're seeing in the news headlines about office,
Speaker 14: as you just pointed out, but a lot of that's
Speaker 14: concentrated into some of these coastal states like California. But
Speaker 14: what we're seeing in our portfolio at the Howard Hughes Corporation,
Speaker 14: where we have communities concentrated in Houston and Las Vegas,
Speaker 14: as we're seeing incredible lease in activity, especially for those
Speaker 14: high quality Class A assets. You know, we've seen this
Speaker 14: out of state migration of residents and people leaving those
Speaker 14: coastal states and they're coming around the Sunbelt, and again
Speaker 14: that's where we have our communities, and so as we
Speaker 14: see people moving into our communities, tenants are following these
Speaker 14: these corporate relocations of offices are heading into our communities
Speaker 14: because they need to.
Speaker 8: Follow that talent pool.
Speaker 14: And you know, even in summer land outside of Las Vegas,
Speaker 14: where you know, we're we're building more office just to
Speaker 14: meet that demand.
Speaker 4: Tell us about your community's John, because you've got a
Speaker 4: fascinating business. The name Howard Hughes, I think often throws
Speaker 4: people off a little bit because they think of the
Speaker 4: you know, billionaire recluse in Las Vegas exactly. But you
Speaker 4: have some really cool communities. Explain them to our listeners.
Speaker 8: Yeah, it's it's a really unique company. And so so
Speaker 8: Howard Hughes.
Speaker 14: We're a developer of master planned communities, and so we
Speaker 14: fit in this bucket of a real estate developer. But
Speaker 14: really the way we think of ourselves as community builders.
Speaker 14: And so we take these large loss of land, think,
Speaker 14: you know, ten twenty thousand acres, twice the size of Manhattan,
Speaker 14: and we break it out between residential land and commercial
Speaker 14: and so we sell land to homebuilders, and those homebuilders
Speaker 14: sell homes and that brings residence into the community. And
Speaker 14: we use the proceeds from the land that we sell
Speaker 14: to homebuilders as the equity contribution for our commercial development,
Speaker 14: So I think office and retail, multifamily, you name it.
Speaker 14: And as we build that, it attracts more residents to
Speaker 14: come into our community and raises the value of our land,
Speaker 14: and it creates what we call this virtuous cycle of
Speaker 14: value creation. And our communities span you know, one hundred thousand,
Speaker 14: two hundred thousand residents. And in order to build something
Speaker 14: out on this size and the scale at ten decades,
Speaker 14: and so we lay out this mastered plan where we
Speaker 14: decide where the roads and where the roads go, and
Speaker 14: where the residential and where the commercial goes to really
Speaker 14: create this cohesive environment.
Speaker 2: So when it comes to working from home or working
Speaker 2: in the office, if you had to make a bet,
Speaker 2: where would you put your money?
Speaker 8: Again, I think it depends where you're looking at.
Speaker 14: If you're in California, work from home probably more likely
Speaker 14: where we're at in Houston. Let's take the Woodlands for example,
Speaker 14: which is our community just north of the Woodland, just
Speaker 14: north of Houston. We're seeing a lot of people coming
Speaker 14: back into the office and we're headquarters here in the Woodlands.
Speaker 14: We have a six hundred thousand square foot office building
Speaker 14: and I can tell you just by looking in the
Speaker 14: parking garage. Every day there's more cars heading in, and
Speaker 14: I think part of that is to commute time. So
Speaker 14: the average community and across the US is right under
Speaker 14: an hour, and the Woodlands it's seven minutes. So people
Speaker 14: want to get out and they want to go to
Speaker 14: the office. At least that's what we're seeing because you're
Speaker 14: having that collaboration, and you know, when you leave a
Speaker 14: meeting in that in office, you have those one off
Speaker 14: conversations on a zoom call, you don't really get that.
Speaker 14: So I think where you're positioned, if you're positioned in
Speaker 14: a high quality area with with those assets and where
Speaker 14: people want to be, I think, you know, over the
Speaker 14: long term, you'll start seeing more and more people head
Speaker 14: back into the office.
Speaker 2: You know, always think about the leftreck family, right who
Speaker 2: their history of building these these developments where you live, work,
Speaker 2: play schools, you name it. What do you think is
Speaker 2: kind of the special source of making them really really
Speaker 2: work because some of them can can feel a little
Speaker 2: bit either overproduced, if you will, and some of them
Speaker 2: just feel like a normal natural development and a natural progression.
Speaker 2: What do you think is key to making them work well?
Speaker 14: So at the end of the day, what you will
Speaker 14: be doing in order to be successful as a master
Speaker 14: plan developer is creating a place where people can have
Speaker 14: that better quality of life and feel like they have
Speaker 14: the walkability to go from the restaurant to the office
Speaker 14: to their home all.
Speaker 8: In one very quick place.
Speaker 14: And you can do it in a you know, in
Speaker 14: a relatively short amount of time, and that creates that
Speaker 14: that quality of life. So the way we think about
Speaker 14: it is it's a little bit science, right, so you know,
Speaker 14: thinking about developing the office and selling the land, but
Speaker 14: there's also an art piece of it.
Speaker 8: So it's a balancing act.
Speaker 14: So you're thinking about where that next park is going
Speaker 14: to go, where that next trail system is going to go,
Speaker 14: and reserving enough open green space and even thinking about
Speaker 14: incorporating education, health care facilities so that people can live this, live, work,
Speaker 14: play in one master playing community and they don't ever
Speaker 14: have to leave. So if you can do that and
Speaker 14: prove that you can do it over a long period
Speaker 14: of time, we think that, you know, you'll be successful
Speaker 14: in doing that. And that's what we've done here, you know,
Speaker 14: for for decades and decades, and we still have communities
Speaker 14: that are in their infancy and we'll incorporate those best
Speaker 14: practices to get the same result.
Speaker 4: Speaking of decades and decades or being in your infancy, John,
Speaker 4: I want to ask about you and in your career
Speaker 4: as well as the chief of staff role there. You're
Speaker 4: only twenty nine years old, but you already are extremely
Speaker 4: successful after a stint at Goldman Sachs and now chief
Speaker 4: of staff at the Howard Hughes Corporation. What would you
Speaker 4: say to people starting out in their career who want
Speaker 4: to get a foothold in finance or in real estate.
Speaker 4: And as I understand that real estate wasn't you know,
Speaker 4: your your first job, so this is something something of
Speaker 4: an evolution for you.
Speaker 14: Yeah, So I would say the advice, or at least
Speaker 14: it's worked for me, is to just have this this
Speaker 14: unrelenting work ethic and having focus and having.
Speaker 8: That drive of what you want to do long term.
Speaker 14: And so when I, you know, I get asked a
Speaker 14: question if I'm talking to one of the students and
Speaker 14: my alma mater, who you know, is nearing graduation and
Speaker 14: looking for advice, I mean.
Speaker 8: It's it's the secret sauce that's really not so secret.
Speaker 14: But I think to give a little bit more context,
Speaker 14: it's it's also going outside of just the job description,
Speaker 14: going above and beyond and doing things like creating a
Speaker 14: tool or a dashboard or improving a process at a
Speaker 14: company that makes your boss's life easier. That's been pretty successful.
Speaker 14: I've been able to do that at every company.
Speaker 2: That's what Matt does all the time. He makes his
Speaker 2: bosses lives easier.
Speaker 4: Not really, well, I heard it, you know, David Strim
Speaker 4: said you're one of the best hires he's ever made.
Speaker 4: So I get that. What about the chief of staff role?
Speaker 4: That's the kind of thing that we typically hear, you know,
Speaker 4: in Washington. So what does the chief of staff do
Speaker 4: at a real estate development company?
Speaker 8: Yeah? I get it a lot. Are you political focus?
Speaker 1: Is it hr?
Speaker 8: Is it legal?
Speaker 7: You know?
Speaker 8: What do you do?
Speaker 14: And my response is yes, it's none of that, none
Speaker 14: of the above, you know. But I like to think
Speaker 14: of my role as is kind of being a Swiss
Speaker 14: army knife and being that that versatile player to work
Speaker 14: with our CEO and our entire leadership team to go
Speaker 14: out and help ways and really push the strategic initiative
Speaker 14: of the company forward. And so at Howard Hughes, we
Speaker 14: have eight different regions We're involved in a lot of
Speaker 14: different segments and industries, and so at the end of
Speaker 14: the day, we have one mission driven purpose right to
Speaker 14: maybe people's lives better and to you know, enhance community life.
Speaker 14: And so working strategically and looking at large data sets
Speaker 14: and creating a compell narrative that I can go to
Speaker 14: our CEO and have a message on you know, that
Speaker 14: that's what drives the value.
Speaker 2: We have to jump in because you're run out of
Speaker 2: time ten seconds. Anything that you're seeing on the horizon
Speaker 2: that says recession to you very quickly, I have to
Speaker 2: go back to business.
Speaker 7: No.
Speaker 14: Surprisingly, I think we're yeah, we're seeing we're seeing a
Speaker 14: lot of improvement across the board, and we're pretty positive
Speaker 14: heading out to the rest of twenty twenty three.
Speaker 2: All right, cool stuff.
Speaker 4: Seck in with you.
Speaker 2: John Sackson, chief of Staff at Howard Hughes Corporation. Joining
Speaker 2: us via zoom from New Orleans.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekdays from two to five pm Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and you too. You can also
Speaker 1: listen live to our flagship New York station Just say
Speaker 1: Alexa Play Bloomberg eleven thirty, Bloomberg News.
Speaker 2: Reporting earlier this year how the fitness sector has roared
Speaker 2: back after being devastated by the pandemic. Cost pressures though,
Speaker 2: and a possible recession could possibly pose a threat. So
Speaker 2: we thought we'd take a look man at the industry,
Speaker 2: and we've got someone who's actually spent more than twenty
Speaker 2: years managing, owning, and franchising health clubs. Chuck Runyon, his
Speaker 2: co founder and CEO at Anytime Fitness, a franchiser of Gym's,
Speaker 2: joining us on Zoom from Woodbury, Minnesota. Check also the
Speaker 2: CEO and co founder of Self Esteem Brands, which is
Speaker 2: the owner of Anytime Fitness and also the Bar Method
Speaker 2: and more so, he's certainly well versed in this space. Hey, Chuck,
Speaker 2: nice to have you here with Matt and myself. Talk
Speaker 2: to a little bit more about Anytime Fitness, how it
Speaker 2: all works, and the type of growth you've seen, particularly
Speaker 2: post pandemic.
Speaker 15: Yes, Carol, Matt, thank you for having me from this
Speaker 15: beautiful day in Minnesota.
Speaker 7: Excited to be here.
Speaker 15: My partner and I started Anytime Fitness just over twenty
Speaker 15: years ago.
Speaker 7: We started in Minnesota, but.
Speaker 15: Today we serve over fifty five hundred communities in forty
Speaker 15: countries around the world. And our goal has always been
Speaker 15: to make fitness more affordable, more accessible, and more effective,
Speaker 15: and we utilize technology to do that so members could
Speaker 15: work out on their schedule, not the gym schedule. That
Speaker 15: technology is still in place today and when you buy
Speaker 15: membership at your local club, say in Minnesota, you get
Speaker 15: to use every club.
Speaker 7: In the network.
Speaker 15: So we are still infused with technology. And now recently
Speaker 15: we've just launched our coaching suite, which is providing people
Speaker 15: with education motivation anytime anywhere. So whether they're in one
Speaker 15: of our gyms or studios or wherever in the world
Speaker 15: they live, we can now reach them, help them be healthier,
Speaker 15: help them eat better, coach them to a better lifestyle.
Speaker 15: And so we're very excited and you know, tremendous growth ahead.
Speaker 15: We are on a pathway to have ten thousand units
Speaker 15: by twenty thirty.
Speaker 4: So do you have you know a lot of people,
Speaker 4: myself included, have joined gyms and then like they'll go
Speaker 4: a few times and then never go again, and every
Speaker 4: you know, a couple of years, I'll join another one
Speaker 4: and do it again, do it all over again, but
Speaker 4: I wish I could stick with it. How do you
Speaker 4: motivate someone like that?
Speaker 15: It's a great question and something that has been going
Speaker 15: on in our industry since day one, and you know,
Speaker 15: it comes down to a handful of things.
Speaker 7: First of all, personalization.
Speaker 15: You know, it really helps with understanding our members where
Speaker 15: they're at in their life journey and where they want
Speaker 15: to get to. And once we do that, we can
Speaker 15: now not only give them the workout necessary, but give
Speaker 15: them the coaching, give them the motivation, give them the
Speaker 15: education that matters to them, and serve them up the
Speaker 15: type of content that they want to see. And so
Speaker 15: we're just in this for a series of small wins.
Speaker 15: If we can help our members just achieve some small wins,
Speaker 15: some progress along the way. Right, When members see progress
Speaker 15: and experience it, they stick with their membership longer and
Speaker 15: they reach their fitness goals. When, like you said before,
Speaker 15: if they don't get that extra help but they don't
Speaker 15: feel that level of personalization, they start to drift away.
Speaker 15: They leave the industry, maybe to come back a few
Speaker 15: years later. So everything we do is about how do
Speaker 15: we help our members achieve progress? Right, our members' health
Speaker 15: is at the center of everything we build here.
Speaker 2: You guys though, believe that basically the government right should
Speaker 2: be what mandating fitness giveness.
Speaker 4: Yeah, let's get to that. That would be good.
Speaker 2: Let's get a little bit into how you're thinking about this.
Speaker 7: Yeah, well, well let's zoom out again from our industry.
Speaker 15: And you know, right now, globally we spend a trillion
Speaker 15: dollars a year on healthcare, and seventy percent of that
Speaker 15: spend is preventable based on something we call lifestyle medicine.
Speaker 7: Lifestyle medicine is.
Speaker 15: Proper eating, regular exercise, and better sleep and recovery. And
Speaker 15: so who better to deliver that than gym's or studios
Speaker 15: located in communities around the country. And so we were
Speaker 15: so disappointed that during COVID, health experts and policymakers around
Speaker 15: the world forced studios and gyms to shut down, which
Speaker 15: is the exact opposite message we should have, especially as
Speaker 15: as we saw that COVID attacked people with underlying health conditions,
Speaker 15: they had it the worst.
Speaker 7: And so now, to be.
Speaker 2: Fair, to be fair, we didn't quite know how COVID
Speaker 2: was transmitted or how infectious it was. Right, so as
Speaker 2: we found our way, like it just made sense to
Speaker 2: shut it down initially.
Speaker 15: Well, well, I would argue there that there is empirical evidence.
Speaker 15: There is empirical evidence linking physical activity towards mental health
Speaker 15: and social well being.
Speaker 7: And guess what.
Speaker 15: Our industry was working with lawmakers to say, we can
Speaker 15: social distance people inside of our clubs and studios, we
Speaker 15: can only allow a certain amount of people in at
Speaker 15: certain times. We were trying to work with them to say, look,
Speaker 15: fitness is essential, and if it's outside the club or
Speaker 15: inside a club studio, the message should be let's keep
Speaker 15: people moving, let's keep them healthy during COVID Because now
Speaker 15: what's accelerated is we have issues of mental health, we
Speaker 15: have issues where people been inactive, we have we have
Speaker 15: issues of loneliness, right we have issues of weight gain
Speaker 15: and right now cardiovascer disease and type two diabetes and
Speaker 15: obesity are the number one killing globally.
Speaker 4: We have a big message with them, so hold on.
Speaker 2: None of us are disputing these numbers, and no doubt
Speaker 2: about it. But this whole idea of government mandating fitness
Speaker 2: and wellness, I'm not saying.
Speaker 4: I just it's not that they're mandate. He's not saying
Speaker 4: they should mandate fitness wellness. He's saying they should consider
Speaker 4: it essential so that they wouldn't close it down in
Speaker 4: case of a pandemic.
Speaker 15: And I would not use the word mandating, but think
Speaker 15: about this, what health health expert to be heard like
Speaker 15: really say get behind, move more, eat better, sleep better.
Speaker 15: It was all about like avoiding a virus, but our
Speaker 15: real virus is inactivity. Right at the end of the day,
Speaker 15: we have we lose hundreds of thousands of people a
Speaker 15: year to preventable diseases that if they were just live
Speaker 15: healthier lifestyles, right, we could not only save money, but
Speaker 15: save lives. And so that should be the message coming
Speaker 15: out of how do we get people healthier? And there's
Speaker 15: no better industry to deliver that than our gyms and studios,
Speaker 15: And so we're trying to educate policymakers and lawmakers to
Speaker 15: help with that.
Speaker 4: I mean, hopefully we'll never get back to a pandemic
Speaker 4: where we shut down. I think I hope the government
Speaker 4: has learned lessons about these draconian procedures. But one thing
Speaker 4: we can do, Chuck, is encourage kids to be more active.
Speaker 4: When I was a child, and I'm Carol, I'm sure
Speaker 4: as well, we have a president exactly President Eisenhower Climate
Speaker 4: and it was like a big deal when I was
Speaker 4: a kid, and I think the kids today for some
Speaker 4: reason in this like snowflake generation, they're allowed to skip
Speaker 4: gym class because it hurts their feelings. Like don't we
Speaker 4: have to change that?
Speaker 7: We do?
Speaker 15: In fact, if you look at most school budgets around
Speaker 15: the country, fy, it is being cut and so there's
Speaker 15: less and less activity in our kids' lives. And technology
Speaker 15: is also playing a role to have our kids be
Speaker 15: more sedentary. So we absolutely, with both adults and children,
Speaker 15: need to create awareness and infectives and policies to shape
Speaker 15: the health of this country and shape the health of
Speaker 15: global don't.
Speaker 2: You think technology though, ultimately with our with an Apple
Speaker 2: Watch and different things that are kind of getting us
Speaker 2: to a point where we're more aware of our fitness
Speaker 2: or lack thereof, And just cut about twenty five seconds
Speaker 2: real quick.
Speaker 7: I think that the opportunity is there.
Speaker 15: We absolutely can enable technology for more activity, but it's
Speaker 15: also like having us be sedentary right where we're sitting
Speaker 15: and having too much screen time.
Speaker 7: So it's both a strength.
Speaker 2: No what I'm saying, like I've I got to watch
Speaker 2: Matt's gonna watch like you count your steps. These things
Speaker 2: are potentially good. We'll continue this conversation at another day.
Speaker 2: Tell with you, Chuck No, I'm all for wellness and fitness.
Speaker 2: You know that co found or CEO of Anytime Fitness.
Speaker 2: Joining us from Minnesota. This is Bloomberg.
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