WEBVTT - Vanguard Dipping a Toe into PE 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.880 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.759 not to mention our journalists and analysts more than a 0:00:16.800 --> 0:00:19.520 hundred and twenty countries. You can download Bloomberg Business Week 0:00:19.560 --> 0:00:22.439 on iTunes, SoundCloud, or Bloomberg dot Com. You can also 0:00:22.480 --> 0:00:24.919 listen to our radio show weekdays at two pm Eastern 0:00:25.000 --> 0:00:33.159 only on Bloomberg Radio. We're gonna roll around, all right, 0:00:33.200 --> 0:00:35.520 So let's talk a little Tesla. We do it often. 0:00:35.960 --> 0:00:37.960 We're also very fortunate that we get to do it 0:00:38.040 --> 0:00:40.920 pretty often with Dana Hall. She follows the company so closely, 0:00:41.520 --> 0:00:44.280 and the headline on the story today that she wrote 0:00:44.280 --> 0:00:47.320 with Gabby Coppola really sums it up. Tesla Capital Raise 0:00:47.640 --> 0:00:53.640 keeps fourteen billion dollar virtuous circle rolling. It certainly does. 0:00:53.880 --> 0:00:56.080 And Dana, one of the things that struck me, and 0:00:56.120 --> 0:00:58.760 you just nail it right there at the top of 0:00:58.760 --> 0:01:02.280 your story is normally, in this sort of situation, you 0:01:02.280 --> 0:01:04.080 would look at a company saying, oh, we gotta go 0:01:04.120 --> 0:01:07.000 get more money. As a little bit of a problem, 0:01:07.280 --> 0:01:09.840 we're diluting shareholders. That's a little bit of a problem. 0:01:09.920 --> 0:01:13.520 And yet, and yet this is Tesla. Tesla does not 0:01:13.640 --> 0:01:17.120 go the way that people normally expect. Help us understand 0:01:17.120 --> 0:01:19.360 the context here, Yeah, I mean, I think what you're 0:01:19.360 --> 0:01:21.760 seeing now is that, you know, it's always about the future, 0:01:21.840 --> 0:01:24.880 right Elon Musk is always selling this vision of the future. 0:01:25.080 --> 0:01:28.160 And now that they seem to have mastered you know, 0:01:28.200 --> 0:01:31.440 the past challenges of actually getting the Model three out 0:01:31.480 --> 0:01:34.120 the door, the share price is really high. You know, 0:01:34.240 --> 0:01:36.280 the idea of them going out and getting money so 0:01:36.280 --> 0:01:38.800 that they can do things like build out this plant 0:01:38.959 --> 0:01:43.560 in Berlin or perhaps another plant in Texas seems more doable. 0:01:43.600 --> 0:01:45.280 So people are more than willing to kind of fund 0:01:45.280 --> 0:01:47.560 the vision of the future, and the banks get fees, 0:01:47.600 --> 0:01:51.000 and you know, everyone sort of wins out. Dan, I'm 0:01:51.000 --> 0:01:54.000 also wondering if Gene Munster puts this correctly, as you 0:01:54.160 --> 0:01:56.920 right in your story where you say you know Elong 0:01:57.040 --> 0:02:00.720 had a shirt investors, he didn't plan to r capital. 0:02:01.480 --> 0:02:04.600 His backpeddaling is a criticism, but frankly, the state of 0:02:04.640 --> 0:02:07.920 the balance sheet is a bigger criticism. So perhaps this 0:02:08.000 --> 0:02:10.360 is scene is a good thing because it could shore 0:02:10.440 --> 0:02:13.239 up the balance sheet. Yeah, I mean, and some and 0:02:13.280 --> 0:02:15.520 some analysts like David Whiston and morning Star, they just 0:02:15.560 --> 0:02:17.359 wish that Tesla would go out and raise like five 0:02:17.400 --> 0:02:19.240 billion dollars and be done with it, like and just 0:02:19.360 --> 0:02:21.800 raise a ton of money and then and and be said, 0:02:21.800 --> 0:02:23.639 instead of having to go back to the market sort 0:02:23.639 --> 0:02:25.400 of year after year. But it is kind of funny, 0:02:25.720 --> 0:02:27.919 how you know, just on their earnings called two weeks ago, 0:02:28.720 --> 0:02:30.960 Musk was asked very specifically, do you have any plans 0:02:30.960 --> 0:02:33.200 to do a raise? And he's like no, And then 0:02:33.320 --> 0:02:34.960 you know, two weeks two weeks later, here we are. 0:02:35.000 --> 0:02:36.880 This is the second time that he's done that. Actually, 0:02:36.960 --> 0:02:39.919 so you know, people people are a little frustrated that, 0:02:40.120 --> 0:02:41.840 you know that he says one thing is and then 0:02:41.880 --> 0:02:44.919 they do the other. But from an investor perspective, having 0:02:44.960 --> 0:02:48.960 money on hand is always a good thing. And so Dana, 0:02:49.240 --> 0:02:51.600 you know, this is also a good moment to ask 0:02:51.639 --> 0:02:54.000 you about sort of the state of Musk. You know, 0:02:54.040 --> 0:02:56.520 we have a fairly good sense of the state of Tesla. 0:02:56.800 --> 0:03:00.280 What do you sort of draw conclusion wise from looking 0:03:00.280 --> 0:03:03.200 at the company right now? Looking at the decision making 0:03:03.360 --> 0:03:07.640 and especially this amazing run where is sort of Elon's 0:03:07.680 --> 0:03:10.760 mind as much as anybody can understand it outside of 0:03:10.760 --> 0:03:14.720 his own head. Well, it's not like I'm talking to, 0:03:14.800 --> 0:03:17.639 I'm talking against from the guy every day. I don't know, 0:03:18.000 --> 0:03:20.519 I have not like interacted with him directly recently, but 0:03:21.200 --> 0:03:23.280 you know, I think that this is a guy whose 0:03:23.520 --> 0:03:26.200 entire career and much of the kind of mystique in 0:03:26.280 --> 0:03:30.560 persona around him is built around him proving doubters wrong. 0:03:30.639 --> 0:03:34.920 And so like the classic example is with SpaceX, they were, 0:03:35.040 --> 0:03:37.240 you know, for for months they tried to like land 0:03:37.320 --> 0:03:39.160 this rocket on a drone ship. No one thought they 0:03:39.160 --> 0:03:40.440 were ever going to be able to pull it off, 0:03:40.480 --> 0:03:42.800 and now they've not only have they done it several times, 0:03:42.840 --> 0:03:45.000 but it's kind of become old hat like most you know, 0:03:45.040 --> 0:03:47.960 we don't even cover the drone ship landings anymore. And 0:03:48.000 --> 0:03:52.160 with Tesla, like you know, the Model three, everyone questioned 0:03:52.200 --> 0:03:54.480 what the demand would be like. When they started building 0:03:54.480 --> 0:03:57.000 the factory in China, there were a lot of skeptics 0:03:57.000 --> 0:03:58.920 who said that this mud pit would never turn into 0:03:58.960 --> 0:04:01.600 a factory. And now like here they are like building 0:04:01.640 --> 0:04:07.880 cars in China, and so I think he feels probably emboldened. Um, certainly. Um. 0:04:07.920 --> 0:04:10.160 You know, he has a very long kind of time 0:04:10.200 --> 0:04:13.840 horizon and so people always ding him for being laid 0:04:13.880 --> 0:04:17.360 on his promises, but he ultimately does tend to deliver 0:04:17.480 --> 0:04:19.560 on them, Like, maybe not in the time frame that 0:04:19.600 --> 0:04:23.600 he originally anticipated, but you know, you look around at 0:04:23.640 --> 0:04:27.600 the at the competitive landscape. You know, no other rocket 0:04:27.600 --> 0:04:30.839 company is landing rockets quite in the way that SpaceX is. 0:04:31.240 --> 0:04:34.279 No other automaker is selling electric vehicles and the volumes 0:04:34.279 --> 0:04:38.159 that Tesla is. And it's like a new decade. They've 0:04:38.160 --> 0:04:41.960 had two quarters of back to back, back to back profits. Um, 0:04:42.000 --> 0:04:43.479 you know, they just went out to the market and 0:04:43.520 --> 0:04:45.640 raised another tree billion. I mean, I think he's feeling 0:04:45.680 --> 0:04:48.479 pretty good about things right now, Dan, I'm doing my 0:04:48.520 --> 0:04:56.440 Elon Musk dance right now for our YouTube video, all right, Dan. 0:04:56.520 --> 0:04:59.120 On a more serious note, Elon Musk and Tesla have 0:04:59.160 --> 0:05:01.840 been criticized for the lack of investment in R and 0:05:01.920 --> 0:05:04.040 D and Capex last year, and of course then they've 0:05:04.040 --> 0:05:06.880 got a big profitability number, but some of the concerns, Now, 0:05:06.920 --> 0:05:08.120 if you come out with a three and a half 0:05:08.160 --> 0:05:11.599 billion dollar Capex budget, can you still be profitable on 0:05:11.680 --> 0:05:15.919 that number. What are you hearing? Well, I think I 0:05:15.960 --> 0:05:18.039 think that I think it'll be really interesting to see 0:05:18.040 --> 0:05:20.279 what the first quarter is, which they've sort of hinted 0:05:20.320 --> 0:05:22.120 at will is likely going to be soft because of 0:05:22.160 --> 0:05:25.040 seasonality and the and the fallout from the coronavirus. But 0:05:25.160 --> 0:05:27.039 you know, I mean, that's that's one of the things 0:05:27.040 --> 0:05:28.720 that Musk has gone back and forth on. They've said 0:05:28.800 --> 0:05:31.839 they'll be seasonally, they've said that they'll be sustainably profitable, 0:05:32.400 --> 0:05:34.800 and then they're like, unless we're investing in growth, but 0:05:34.839 --> 0:05:37.920 they're always investing in growth, So our investors willing to 0:05:38.000 --> 0:05:40.320 kind of take you know, I mean, I guess the 0:05:40.400 --> 0:05:43.760 question is what do investors want. Do they want profitability 0:05:43.760 --> 0:05:45.720 every quarter or do they want the company and really 0:05:45.800 --> 0:05:47.920 kind of come and dominate. And I think some investors 0:05:47.920 --> 0:05:50.560 are willing to sacrifice short term profits if it means 0:05:50.640 --> 0:05:53.920 long term you know, sort of market dominance. All right, 0:05:54.000 --> 0:05:57.080 Dana Hall, we really appreciate it. Tech reporter looking after 0:05:57.120 --> 0:06:00.240 all things Tesla, all things that Elon must that is, 0:06:00.279 --> 0:06:04.680 as we joked yesterday yesterday Taylor like eight full time jobs. 0:06:04.680 --> 0:06:06.840 All right. She joined us on the phone from San 0:06:06.920 --> 0:06:18.320 Francisco my whole patient and I know, all right, well, 0:06:18.360 --> 0:06:22.160 there are a lot of opportunities for songs leading into 0:06:22.279 --> 0:06:26.120 this segment. It also is a story in a discussion, 0:06:26.360 --> 0:06:28.239 and it helps solve a little bit of a mystery 0:06:28.320 --> 0:06:30.839 that's been going on over at Goldman, which is where 0:06:30.880 --> 0:06:34.400 all these guys going, a lot of big tech guys leaving, 0:06:34.520 --> 0:06:37.000 and at least one has landed, and he's landed in 0:06:37.000 --> 0:06:40.280 the marijuana business. Shrina Rajan here with me in New 0:06:40.360 --> 0:06:43.400 York City finance reporter looking after all things Goldman for 0:06:43.480 --> 0:06:46.960 us and much more across Wall Street. Uh so, tell 0:06:47.080 --> 0:06:52.320 us about Mike bum Well, high frequency training experted Goldman 0:06:52.480 --> 0:06:55.760 is ditching his prestigious partnership role to go and join 0:06:56.320 --> 0:06:58.240 a company that's going to open a bunch of weed 0:06:58.279 --> 0:07:03.360 dispensaries across the country. You missed an obvious opportunity to 0:07:03.440 --> 0:07:06.920 make a high frequency joke, but I'm gonna let that slide. 0:07:07.000 --> 0:07:09.279 Were you surprised by this move? Oh my god, Taylor, 0:07:09.279 --> 0:07:11.480 no offense. But I really miss Carol because if she 0:07:11.680 --> 0:07:16.480 was here, the amount of serious irols people, so many irols, 0:07:16.520 --> 0:07:19.360 so many irols. I'm I'm I roll Lane Jason just 0:07:19.400 --> 0:07:21.280 can't see me because I'm not with them in person. 0:07:21.600 --> 0:07:24.760 Luckily all of our YouTube viewers can see it. I 0:07:25.040 --> 0:07:26.960 just have to be the poor guest I can I know, 0:07:27.120 --> 0:07:29.480 I know, you're so nice. No, but do your question, Jason. 0:07:30.080 --> 0:07:33.200 It's instructive in many ways, right, of course, when people 0:07:33.280 --> 0:07:36.160 leave firms, why they choose to do it When they 0:07:36.200 --> 0:07:38.640 do it, there are a variety of different factors, family, 0:07:39.480 --> 0:07:42.640 lack of interest in the role, new opportunities. But still, 0:07:42.760 --> 0:07:45.760 when you decided to leave you a perch, as you know, 0:07:45.800 --> 0:07:48.440 a partner at Goldman Sex their highest title, one of 0:07:48.520 --> 0:07:51.120 Walt Street's foremost investment banks, and decided to take a 0:07:51.160 --> 0:07:53.600 different opportunity. In this case they start up in the 0:07:53.640 --> 0:07:57.680 marijuana space. It just it gives you a sense of 0:07:58.520 --> 0:08:01.960 where he thinks the all opportunity lies, and perhaps also 0:08:02.000 --> 0:08:06.880 indicative of the fact that it wasn't entirely fully committed 0:08:06.960 --> 0:08:09.320 to what he was doing at Goldman because he did 0:08:09.360 --> 0:08:11.840 have a weighty task. He did win approval and a 0:08:11.880 --> 0:08:14.160 lot of funds to make a bunch of highers to 0:08:14.280 --> 0:08:17.240 make a big push to overhaul the electronic trading systems, 0:08:17.800 --> 0:08:20.320 had to convince senior management a number of other people 0:08:20.440 --> 0:08:22.760 to be able to get those projects rolling, and for 0:08:22.840 --> 0:08:25.080 him to be leaving a few months after that. It 0:08:25.120 --> 0:08:26.840 was a bit of a surprise when we heard about it. 0:08:27.160 --> 0:08:29.200 And it seems that he's decided to go out there 0:08:29.240 --> 0:08:31.640 and pair up with some of his ex colleagues from 0:08:31.640 --> 0:08:36.040 a previous firm to join the startup venture three. I'm 0:08:36.040 --> 0:08:38.439 curious to get your thoughts about what's going on at 0:08:38.480 --> 0:08:42.880 Goldman more generally. You originally never really heard a lot 0:08:42.880 --> 0:08:45.240 of stories about people leaving. It's so hard to get 0:08:45.280 --> 0:08:48.160 into that. Once you're Derrick Goldman, you are really excited 0:08:48.200 --> 0:08:51.079 to be there and to work your way up. We've seen, though, 0:08:51.120 --> 0:08:54.560 a lot of departures recently, especially from the top ranks. 0:08:55.000 --> 0:08:57.720 Is there a lack of vote of confidence in Goldman 0:08:57.840 --> 0:09:01.000 or is there just a bigger vote of confidence somewhere else. 0:09:02.120 --> 0:09:05.000 That's a tough question, Taylor, because and we had this 0:09:05.040 --> 0:09:07.600 discussion yesterday when we were thinking about all the troubles 0:09:07.600 --> 0:09:10.000 at government and all the people leaving. When we go 0:09:10.080 --> 0:09:13.600 back a year ago, the January February of nine, again 0:09:13.679 --> 0:09:15.559 we saw a lot of departures. We were able to 0:09:15.600 --> 0:09:18.080 explain away a lot of that saying, hey, whenever there's 0:09:18.080 --> 0:09:20.360 a new management. In this case, David Solomon took over 0:09:20.400 --> 0:09:23.280 the role of CEO and chairman from Lloyd Blankfind you 0:09:23.400 --> 0:09:25.400 expect to change with the Guard. You expect a lot 0:09:25.440 --> 0:09:27.480 of people aligned with Lloyd or the old Guard to 0:09:27.480 --> 0:09:30.360 be leaving. And the new guy comes in and installed 0:09:30.400 --> 0:09:32.160 a lot of his people at various roles, and in 0:09:32.200 --> 0:09:35.199 an ambitious, competitive place like Goldman, you will see a 0:09:35.240 --> 0:09:38.560 lot of churn. The difficult part here, the troubling part 0:09:38.600 --> 0:09:41.480 here is a year later, fifteen months in his tenure, 0:09:41.559 --> 0:09:43.960 we're still talking about this time of the year and 0:09:44.000 --> 0:09:47.240 the kind of high profile departures we're seeing, which is 0:09:47.360 --> 0:09:49.360 which has got a lot of tongues wagging across Wall 0:09:49.400 --> 0:09:52.360 Street for sure, and the competitors are paying attention. You 0:09:52.400 --> 0:09:55.600 can be guaranteed about that. And somebody else leaving and 0:09:55.600 --> 0:09:57.920 and you the other other names that are we included 0:09:57.920 --> 0:10:00.280 in the story. Couldn't play it higher Bi because I 0:10:00.360 --> 0:10:02.440 was just so much interested in giving all the details 0:10:02.440 --> 0:10:05.080 on the marijuana startup. Otherwise Jason would have killed us. 0:10:05.760 --> 0:10:09.920 But yes, Jeff Winner joined Goldman two years ago after 0:10:10.000 --> 0:10:14.120 having senior engineering roles in places like Stripe and Uber Silicon, 0:10:14.240 --> 0:10:16.640 Valley name. He was supposed to build out this big 0:10:16.679 --> 0:10:19.880 San Francisco office for Goldman uh and he's gone in 0:10:19.880 --> 0:10:22.480 onto two years and it's it's funny when when when 0:10:22.520 --> 0:10:24.640 we sort of look back at the old clips and 0:10:24.840 --> 0:10:26.480 the interviews we did with him at the time of 0:10:26.520 --> 0:10:29.600 his joining. He talked about how there's still a lot 0:10:29.640 --> 0:10:31.520 of stuff in us in this place, but the bank 0:10:31.600 --> 0:10:34.080 is working to get rid of it. He talked about 0:10:34.200 --> 0:10:37.960 free flowing kombucha. Unfortunately, before he could get a free 0:10:37.960 --> 0:10:42.400 full of kombucha, he's decided he's had enough. All right, Well, 0:10:42.760 --> 0:10:44.720 it's a good story. Thank you for being a good sport. 0:10:44.760 --> 0:10:47.800 As I make all my terrible, terrible marijuana punts here, 0:10:48.040 --> 0:10:50.560 it's a Friday afternoon, it's been a long week, and 0:10:50.800 --> 0:10:52.720 you know, it's just too good. It's just too easy. 0:10:52.720 --> 0:10:55.800 It's sitting right there, Shri Nadaraja and always doing such 0:10:55.840 --> 0:10:58.600 a great job with the comings and goings at Goldman, 0:10:58.640 --> 0:11:03.480 Sachs and Codman Arture Partner. Ditching a pursuit of Quantz 0:11:03.480 --> 0:11:06.200 for a marijuana start up is a really nice story 0:11:06.240 --> 0:11:09.720 in one of the most read on the Bluebird. And 0:11:09.800 --> 0:11:16.440 what is it that hasn't done as a puzzle in song. Alright, 0:11:16.559 --> 0:11:19.760 so when it comes to Valentine's Day gifts, maybe this 0:11:20.040 --> 0:11:24.240 isn't the one you want, unless you what you're Valentine 0:11:24.280 --> 0:11:28.360 to be both ignoring you and maybe really really mad 0:11:28.400 --> 0:11:31.160 at you. It's such a great story. We're talking about 0:11:31.440 --> 0:11:36.960 stave puzzles, where the torture is the point. Devin Leonard 0:11:37.240 --> 0:11:40.360 wrote this story quite an assignment he got for Bluebird 0:11:40.440 --> 0:11:43.080 Business Week. As I joked earlier, Devon, you know, usually 0:11:43.120 --> 0:11:46.800 you're doing these deep dive investigations you're telling us about 0:11:46.800 --> 0:11:51.040 like McK mulvaney and Steve mcnuchin and folks like that. 0:11:51.080 --> 0:11:54.560 But here we are talking to you about puzzles. So 0:11:54.960 --> 0:11:57.319 why what's going on here? I don't know. This is 0:11:57.360 --> 0:11:59.920 a really weird one. And I mean, this is a 0:12:00.000 --> 0:12:02.160 company basically until recently was run by a guy who 0:12:02.200 --> 0:12:07.000 described himself as its chief tormentor. It's customers they all 0:12:07.040 --> 0:12:10.559 basically say their addicts, and I mean to these weird games, 0:12:10.559 --> 0:12:12.760 some of which the company says are are created by 0:12:12.920 --> 0:12:15.640 you know, a sadist. So I mean, this is not 0:12:15.679 --> 0:12:17.080 the type of story I do all the time. And 0:12:17.120 --> 0:12:18.760 I had no idea what I was getting into when 0:12:18.920 --> 0:12:22.400 Joel Webber, the magazine that are asked me to do it. Yeah, Devin, 0:12:22.480 --> 0:12:26.679 how did you find this story? I've never even heard. 0:12:26.679 --> 0:12:28.480 I've never heard of this company. I never I'm not 0:12:28.520 --> 0:12:32.280 a puzzle guy. Uh and and uh, but Joel kind 0:12:32.280 --> 0:12:34.320 of is. I mean, I think he that part of 0:12:34.360 --> 0:12:37.040 it is he knew about this from maybe being Tork 0:12:37.400 --> 0:12:41.880 cousin or or something. But no, I don't. I just 0:12:42.280 --> 0:12:43.920 said I just had no idea. It really wasn't. I 0:12:44.480 --> 0:12:46.480 went up there and I stayed at that place. It's 0:12:46.480 --> 0:12:49.959 really swanky, uh, you know, Resort Twin Farms, and they 0:12:49.960 --> 0:12:52.240 had them in all the rooms. I couldn't do mine. 0:12:52.280 --> 0:12:55.640 My daughter later did in ten minutes. But but but 0:12:55.679 --> 0:12:57.360 that's when I started to see like, hey, wait a minute. 0:12:57.360 --> 0:13:00.680 You know, you know, you know the rooms, the sweets 0:13:00.679 --> 0:13:02.800 I go for, you know, a thousand, two thousand dollars 0:13:02.800 --> 0:13:05.960 a night, and you know, you know there's something that 0:13:06.200 --> 0:13:09.280 you know there, there's some there's something going going on here. 0:13:09.400 --> 0:13:10.760 And then then I went over to the company and 0:13:11.000 --> 0:13:13.040 basically they took me all around and show me with 0:13:13.080 --> 0:13:14.760 crazy puzzles. And then they showed me a whole wall 0:13:14.760 --> 0:13:18.560 and there's Jeff Bezos and Bill Gates and Queen Elizabeth 0:13:18.679 --> 0:13:22.719 and the Bush family and you know, so basically all 0:13:22.800 --> 0:13:25.760 these people. Um, I mean, well you have to have 0:13:25.800 --> 0:13:28.240 money because because the puzzles cost as much as you know, 0:13:28.280 --> 0:13:31.520 ten ten ten grants. Right. I have to say, like, 0:13:31.920 --> 0:13:34.520 in reading your story, it feels like, and you just 0:13:34.840 --> 0:13:37.400 illustrated it pretty well. It's almost like you go down 0:13:37.440 --> 0:13:40.800 this rabbit hole, right, you know, into into this place 0:13:40.880 --> 0:13:45.439 where people are sort of obsessive about it. Clearly they 0:13:45.880 --> 0:13:49.200 appeal to a certain type of person. Tell us about 0:13:49.200 --> 0:13:55.520 the puzzles themselves. Well, they mean, they're they're they're sort 0:13:55.520 --> 0:13:58.720 of I guess they're very they're very I guess they're beautiful, 0:13:58.760 --> 0:14:01.720 I mean a person. But they're designed and ways to 0:14:01.720 --> 0:14:04.160 to just be be very difficult. They come in boxes 0:14:04.200 --> 0:14:06.280 and blue boxes, so you don't have a picture of 0:14:06.280 --> 0:14:07.840 the puzzle in the box and you put it together. 0:14:08.080 --> 0:14:11.240 They throw in pieces that purposely don't fit. Then they 0:14:11.280 --> 0:14:13.440 have all these other tricks that that they used to 0:14:13.480 --> 0:14:15.880 drive people crazy. But then but then you you know, 0:14:15.920 --> 0:14:17.679 you wind up talking to the people who spend all 0:14:17.679 --> 0:14:19.520 this money, you know, these things, So that's what they want. 0:14:19.800 --> 0:14:22.080 They want to kind of be tortured and and you know, 0:14:22.120 --> 0:14:23.600 they want things to be really hard and they want 0:14:23.640 --> 0:14:25.600 to be a challenge, and sometimes it drives them crazy. 0:14:25.600 --> 0:14:28.040 And one guy said he's he curses at his puzzles, 0:14:28.080 --> 0:14:30.920 but he buys ten a year, sorry, not ten a year, 0:14:31.080 --> 0:14:34.840 ten at a time. Oh wow, you know, Devin, I'm 0:14:34.880 --> 0:14:37.040 going on the website right now and there's a puzzle 0:14:37.080 --> 0:14:39.760 for Valentine's Day that Jason's gonna get me. It's nine 0:14:39.880 --> 0:14:44.000 hundred and seven dollars. It has this sweetheart little street. 0:14:44.040 --> 0:14:47.400 It's called sweet Streets, just in time for Valentine's Day. 0:14:47.440 --> 0:14:49.920 But in your story you talk about a lot of 0:14:49.960 --> 0:14:54.360 other cool ones, um like these boxes and locks and 0:14:55.360 --> 0:14:58.560 very non traditional, right, talk to us about some of 0:14:58.680 --> 0:15:03.120 these crazy puzzles that you mentioned in your story. Well, 0:15:03.200 --> 0:15:05.440 maybe the best example is, you know, this custom made 0:15:05.480 --> 0:15:07.640 one that they made for this guy in in Dallas. 0:15:08.160 --> 0:15:11.000 His name's Hal Brierley. He's a relaters and guy ended 0:15:11.080 --> 0:15:13.000 up himself. I mean, he's sort of one of the 0:15:13.080 --> 0:15:17.240 fathers of customer Customer loyally programs. He either designed them 0:15:17.360 --> 0:15:21.280 or random for the major airlines, for Hurts, for Hilton. 0:15:21.800 --> 0:15:25.320 But basically he's he's he's a guy. He's he's he's 0:15:25.320 --> 0:15:27.680 a workaholic and he needs these puzzles sort to get 0:15:27.720 --> 0:15:30.680 his mind off of an off of work. He's still 0:15:30.720 --> 0:15:32.960 like seventy four and he's still doing this. So so basically, 0:15:33.480 --> 0:15:36.080 his uh, his wife and his sister in law been 0:15:36.200 --> 0:15:39.360 ordering him these custom made puzzles and uh, you know 0:15:39.560 --> 0:15:41.480 the one he the one he's he's working on he 0:15:41.520 --> 0:15:43.520 can't finish, just driving him nuts. It's more than a 0:15:43.640 --> 0:15:48.200 thousand pieces and it's designed you know, it's inspired by 0:15:48.280 --> 0:15:52.440 these African safari trips. They've all taken two thirds of 0:15:52.480 --> 0:15:55.360 the pieces are all blue, and basically basically when he 0:15:55.600 --> 0:15:57.960 doesn't understand, I mean maybe he's figured out. No, I 0:15:57.960 --> 0:16:00.280 don't think he has. But there's a whole other level 0:16:00.760 --> 0:16:02.440 to to the puzzle that fits on top of the 0:16:02.480 --> 0:16:05.080 continent of Africa. It's all water but the but the 0:16:05.120 --> 0:16:07.440 pieces are almost all the same size. There's no guide. 0:16:07.880 --> 0:16:09.600 And this is a really smart guy. There's tons and 0:16:09.640 --> 0:16:12.200 tons of puzzles, but he can't figure it out. And 0:16:12.360 --> 0:16:15.280 he's I mean, I he basically said, I'm a guy 0:16:15.280 --> 0:16:16.960 of bills by the hour. I'm sort of calculated how 0:16:17.040 --> 0:16:18.800 much time they I don't know it's worth it. But 0:16:19.240 --> 0:16:21.000 I love these things. So, you know, one of the 0:16:21.080 --> 0:16:23.200 things that occurs to me Devon, and I wonder if 0:16:23.240 --> 0:16:24.640 this occurred to you as you were working on it. 0:16:25.360 --> 0:16:29.840 This feels like kind of an analog antidote to a 0:16:29.960 --> 0:16:33.120 very digital world, right, you know, it's very tactile, and 0:16:33.280 --> 0:16:35.560 even some of the other things you talk about are 0:16:35.760 --> 0:16:39.160 experiential and more and more, it does feel like, and 0:16:39.400 --> 0:16:42.280 you've alluded to this already, this is an escape from 0:16:42.400 --> 0:16:44.680 being in front of these screens or holding our phones 0:16:44.720 --> 0:16:47.120 and things like that. People draw a lot of satisfaction 0:16:47.160 --> 0:16:49.320 out of this. Yeah, and and and and it is 0:16:49.360 --> 0:16:51.400 sort of amazing that that in this day and age, 0:16:51.480 --> 0:16:54.760 some little company could you know, prosper by making something 0:16:54.840 --> 0:16:56.400 that's sort of like I guess now you can buy 0:16:56.440 --> 0:16:58.560 them online. But they used to Everything used to be 0:16:58.920 --> 0:17:00.960 you know, done through the male, and so they think 0:17:00.960 --> 0:17:03.400 they still do something, you know, thank you notes, handwritten 0:17:03.440 --> 0:17:05.480 thank you notes, and I mean the whole thing is 0:17:05.560 --> 0:17:07.800 so sort of retro but I think that's for the point. 0:17:08.040 --> 0:17:09.760 I mean, the one thing for them is the customers 0:17:09.800 --> 0:17:11.399 are are pretty old. Just about everybody I talked to 0:17:11.520 --> 0:17:14.159 was their seventies, so I mean, I did see them, 0:17:14.600 --> 0:17:17.720 among other things. Well, it's Valentine's. They designed these puzzles 0:17:17.760 --> 0:17:21.200 for people that you know, some person puts it together 0:17:21.240 --> 0:17:23.480 with their significant another and then as they're finishing it, 0:17:24.040 --> 0:17:26.200 you know that, you know, they put these pieces and 0:17:26.280 --> 0:17:28.200 I guess, I guess the person I bought the puzzle 0:17:28.520 --> 0:17:30.119 gives oh, by the way, I got these pieces, and 0:17:30.280 --> 0:17:33.359 and it says, will you marry me? And and I 0:17:33.400 --> 0:17:36.119 guess the one example, the one or two examples they 0:17:36.160 --> 0:17:41.440 showed me, the answer was no. But no, so so 0:17:41.680 --> 0:17:47.440 you know, buyer beware. But but but I mean, it's 0:17:47.840 --> 0:17:50.320 it's uh, it's it's it's like nothing I've I've ever 0:17:50.359 --> 0:17:53.560 seen before. Absolutely need I need to meet that girl 0:17:53.600 --> 0:17:55.600 who said no. I think I'm a fan of hers, 0:17:57.119 --> 0:17:59.640 you know. But on a more serious note, I think, 0:17:59.680 --> 0:18:02.600 like you, we're alluding to Jason. In this digital world, 0:18:03.200 --> 0:18:06.800 I remember during Superstorm Sandy, when all of our lights 0:18:06.840 --> 0:18:10.000 went out, we're all doing puzzles by candle light, right 0:18:10.000 --> 0:18:13.000 because our mobile devices stopped working. And around Christmas time, 0:18:13.040 --> 0:18:15.280 when we're all on our phones, it's kind of a 0:18:15.359 --> 0:18:17.960 nice break to maybe just sit down and do a puzzle. 0:18:18.040 --> 0:18:20.080 And so I'm really wondering if this is the beginning 0:18:20.119 --> 0:18:22.520 of a bigger trend where we put some of these 0:18:22.600 --> 0:18:25.280 mobile devices down and use this as a really way 0:18:25.320 --> 0:18:27.680 to connect with people again, if you're gonna afford it, 0:18:28.000 --> 0:18:31.000 If you can afford it, that's absolutely true. Well, uh, 0:18:31.200 --> 0:18:33.960 this is a really terrific story. It is being consumed 0:18:34.040 --> 0:18:37.880 pretty madly on the Bloomberg terminal and online. This one's 0:18:37.880 --> 0:18:39.720 gonna have a long tail. I can guarantee you that 0:18:39.840 --> 0:18:42.959 Devin Leonard wrote it. He is projects an investigations reporter, 0:18:43.280 --> 0:18:46.399 a different sort of project, in this case looking into 0:18:46.600 --> 0:18:54.960 some very tough to solve puzzles. All right, it's one 0:18:55.000 --> 0:18:57.600 of my favorite stories of the week. Not surprisingly, any 0:18:57.680 --> 0:19:00.480 Massa wrote it. It's about big mone me on big 0:19:00.560 --> 0:19:05.280 money Vanguard. We're talking about the mutual fund manager looking 0:19:05.280 --> 0:19:08.399 after mutual funds, looking after index funds, getting into the 0:19:08.440 --> 0:19:12.280 business of private equity, sort of dipping its toe a bit, 0:19:12.560 --> 0:19:15.080 but we think probably we're going to put a leg 0:19:15.119 --> 0:19:17.119 in it before too long. An easier with me in 0:19:17.200 --> 0:19:19.679 New York City, tailor raigs in San Francisco. All right, 0:19:19.720 --> 0:19:22.320 so Annie, tell us what Vanguard's up to. So Vanguard 0:19:22.359 --> 0:19:25.440 has announced plans for a new private equity fund that 0:19:25.520 --> 0:19:29.800 at first will only be available to institutions, smaller institutions 0:19:29.880 --> 0:19:33.520 like endowments and nonprofit foundations, but that it hopes to 0:19:33.640 --> 0:19:37.160 open up to a broader range of investors as it can, 0:19:37.320 --> 0:19:40.600 and it's doing this with Harbor Vest Partners managing the 0:19:40.680 --> 0:19:44.960 fund out of Boston, so Annie. The interesting thing is 0:19:45.040 --> 0:19:49.200 that Vanguard is known for low cost passive indexing. This 0:19:49.400 --> 0:19:51.879 is now PE, which you think of as high fees, 0:19:52.440 --> 0:19:56.960 certainly nowhere near passive investing. How does this fit into 0:19:57.080 --> 0:20:01.359 Vanguard strategy. It's a great question. As you know, Vanguard 0:20:01.600 --> 0:20:05.360 is synonymous with this kind of retail facing, ultra low 0:20:05.520 --> 0:20:09.680 cost index fund ethos that it was really built on. 0:20:10.400 --> 0:20:13.520 But I mean, it does have an active management arm. 0:20:13.640 --> 0:20:17.879 It's got over a trillion dollars in active strategies and 0:20:18.520 --> 0:20:22.320 it sees this PE vehicle as a continuation of that. 0:20:22.800 --> 0:20:24.680