WEBVTT - Bloomberg Wall Street Week: Rattner, Koch, Tett 0:00:00.240 --> 0:00:05.000 This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices. 0:00:05.040 --> 0:00:07.400 The economy is in the process of rebounding. Will the 0:00:07.480 --> 0:00:10.479 Utter Reserve have its own digital currency? The financial stories 0:00:10.520 --> 0:00:12.879 that cheap hard work. Many people think the eels are 0:00:12.880 --> 0:00:15.080 just going to keep marching up. We have more spending 0:00:15.120 --> 0:00:17.200 coming out of Congress. One of the big questions I 0:00:17.200 --> 0:00:19.880 think on investor's minds inflation through the eyes of the 0:00:19.920 --> 0:00:23.560 most influential voices. Larry Summer is the former Treasury Secretary 0:00:23.640 --> 0:00:27.240 Bryan Wynhan a backup America, Will Smart, CEO of Charlie Sharp. 0:00:27.360 --> 0:00:31.560 Bloomberg wool Street Week with David Weston from Bloomberg Radio. 0:00:32.000 --> 0:00:35.800 Everything's coming up. Roses were back outside of the masks. 0:00:35.960 --> 0:00:38.519 People are getting back to work. The economy is growing, 0:00:38.880 --> 0:00:42.600 So should we be worried? This is Bloomberg Wall Street Week. 0:00:42.760 --> 0:00:46.440 I'm David Weston. This week we saw more of everything, 0:00:46.680 --> 0:00:49.520 more stimulus as both the Fed and the ECB say 0:00:49.560 --> 0:00:53.920 they'll keep buying those bonds at accelerated rates. More inflation 0:00:54.040 --> 0:00:56.160 is the U s CPI grew at the top of 0:00:56.200 --> 0:00:59.120 the range of expectations. It was up five per cent 0:00:59.400 --> 0:01:01.880 year over year for the month of May. And Chinese 0:01:01.880 --> 0:01:05.400 producer prices shot up, more job openings for those looking 0:01:05.400 --> 0:01:09.000 for work as the jolts numbers are running at record highs, 0:01:09.120 --> 0:01:12.520 and more mean stocks as AMC and game Stuff are 0:01:12.560 --> 0:01:16.640 so last month, replaced by stocks like Clover Health and 0:01:16.760 --> 0:01:21.640 Clean Energy Fuels and prison operator Geo Group. But the 0:01:21.680 --> 0:01:24.679 one thing there wasn't more of was fear as the 0:01:24.720 --> 0:01:28.200 ten year yield dipped back down below one and equities 0:01:28.240 --> 0:01:30.600 spent the week flirting with record highs, with the SMP 0:01:30.720 --> 0:01:32.600 five hundred up for a third week in a row. 0:01:33.000 --> 0:01:35.360 So being a trader may have been some fun this week, 0:01:35.400 --> 0:01:38.360 but won was it for investors? Then we learn anything 0:01:38.400 --> 0:01:40.640 for the longer term? And is there a downside to 0:01:40.760 --> 0:01:44.120 all this forward momentum for some answers? Welcome now Steve Rattner. 0:01:44.160 --> 0:01:47.319 He's chairman CEO of Willow Advisors, which invest the family 0:01:47.319 --> 0:01:50.640 and philanthropic assets of Michael Bloomberg, founder and majority owner 0:01:50.640 --> 0:01:54.000 of our parent company, and Katikotch Global, co head of 0:01:54.000 --> 0:01:57.280 fundamental equity funds at Golden Sex. So welcome both to 0:01:57.360 --> 0:01:59.480 both of you, Steve and Katie cam Let's start with you. 0:02:00.240 --> 0:02:02.240 The headline for me this week is we had as 0:02:02.240 --> 0:02:04.760 I say five percent inflation. You ever, you're in the 0:02:04.800 --> 0:02:07.680 month of May. That's the highest has been in thirty years. Uh, 0:02:07.720 --> 0:02:10.720 the real yield is at negative rates that we're we 0:02:10.760 --> 0:02:12.760 haven't seen since Thanking eighty when inflation was out of 0:02:12.760 --> 0:02:14.840 control and the market just shrugged it off. How can 0:02:14.880 --> 0:02:18.720 that be? Right? Yeah, very interesting inflation print. Like you said, 0:02:18.760 --> 0:02:22.079 the CPI basket clearly showing a lot of upward pressure. 0:02:22.200 --> 0:02:24.440 And to answer your question, why is the market shrugging 0:02:24.440 --> 0:02:26.799 it off? It's obviously because the Fed is telling us 0:02:26.840 --> 0:02:30.760 this is transitory, and the market also is believing its transitory. 0:02:31.080 --> 0:02:33.000 And that's the reason we haven't seen a lot of 0:02:33.080 --> 0:02:34.920 movement in the tenure. And so this is what people 0:02:34.919 --> 0:02:36.919 are really gonna have to get their heads around in 0:02:36.960 --> 0:02:39.799 the coming weeks as to whether or not this will unlock. 0:02:39.960 --> 0:02:42.639 Is it really a supply chain issue? Um as as 0:02:42.639 --> 0:02:44.680 an example, that's driving that. So we have to spend 0:02:44.720 --> 0:02:47.239 some time thinking through that. But I would separate the 0:02:47.720 --> 0:02:50.240 CPI basket issue from the wage issue, and I just 0:02:50.280 --> 0:02:52.639 want to comment on that quickly. Um I can make 0:02:52.680 --> 0:02:54.480 a case for a lot of things in that basket 0:02:54.480 --> 0:02:57.559 being transitory. We are worried about some of the inflationary 0:02:57.600 --> 0:03:00.640 pressures that we're seeing in wages. You mentioned her jobs 0:03:00.960 --> 0:03:04.280 available over nine million, the biggest in history. From our 0:03:04.320 --> 0:03:07.280 portfolio companies, we're seeing some people have to increase we 0:03:07.480 --> 0:03:10.920 just by to bring people back into the labor market. 0:03:11.400 --> 0:03:13.600 It may be possible, and this could be good in 0:03:13.639 --> 0:03:15.519 some ways. That we are at the precipice of a 0:03:15.639 --> 0:03:20.560 redis redistribution cycle from capital to labor and that is 0:03:20.600 --> 0:03:23.080 going to have some inflationary pressures that we're really gonna 0:03:23.160 --> 0:03:25.280 need to watch. And if that is the case, that 0:03:25.320 --> 0:03:27.880 will show up in margins of companies and that's something 0:03:27.919 --> 0:03:30.560 we have to be vigilant around. So taking that all together, 0:03:30.680 --> 0:03:33.720 people think it's transitory. The market may be too complacent 0:03:33.720 --> 0:03:36.200 about this, and we're very very focused on how it's 0:03:36.240 --> 0:03:39.160 coming through on wages. So Steve, as a major investor, 0:03:39.320 --> 0:03:41.760 are are is there a danger we are being too complacent? 0:03:41.800 --> 0:03:43.520 And go back to the FED for a second. We 0:03:43.560 --> 0:03:45.120 all like to focus on the Fed and what they're doing. 0:03:45.120 --> 0:03:47.880 They have control over things like interest rates, particularly short 0:03:47.960 --> 0:03:49.880 end of the curve. They can really affect that. They 0:03:49.880 --> 0:03:53.800 can certainly affect financial conditions. They can't really determine inflation 0:03:53.840 --> 0:03:56.040 they could only sort of predict where it's going. Do 0:03:56.120 --> 0:03:57.960 we think they have it right? The FED can not 0:03:58.120 --> 0:04:01.080 only predict inflation, they can create inflation. But that that's 0:04:01.120 --> 0:04:03.680 maybe another story. But I think what Katie said at 0:04:03.720 --> 0:04:05.600 the beginning of all of the Katie said was I 0:04:05.640 --> 0:04:08.160 think dead on, But particularly at the beginning of her answer, 0:04:08.560 --> 0:04:12.760 she pointed out this disconnect between what many professional economists 0:04:12.760 --> 0:04:14.840 like Barry Summers, who I have no agree with, as 0:04:14.880 --> 0:04:17.039 you know, but also a lot of CT goes and 0:04:17.080 --> 0:04:19.360 other people outside of the markets, I think is going 0:04:19.400 --> 0:04:21.920 on with what the markets think is going on. When 0:04:21.920 --> 0:04:26.200 you look at what's happening to inflationary expectations as measured 0:04:26.200 --> 0:04:29.400 by the markets, they remained to use the fed's famous phase, 0:04:29.480 --> 0:04:32.440 in fact favorite phrase and famous phrase, they remained well angered. 0:04:32.480 --> 0:04:35.560 Whether you look at the break evens between tips and nominals, 0:04:35.560 --> 0:04:37.599 whether you look at the forwards, whether you look at 0:04:37.640 --> 0:04:39.760 the five year five year forwards, any place you look 0:04:40.120 --> 0:04:43.560 in the market, it's it's suggesting that inflation will remain 0:04:43.760 --> 0:04:45.040 in the two and a quarter or two and a 0:04:45.080 --> 0:04:47.800 half percent range. Many of the rest of us have 0:04:47.920 --> 0:04:50.320 different views about that, but that's at least what the 0:04:50.320 --> 0:04:54.359 market thinks at the moment as and when the facts change. 0:04:54.400 --> 0:04:58.480 As King's famously uh said, Uh, we can change our 0:04:58.520 --> 0:05:00.800 minds and the market may change it mind And to 0:05:00.880 --> 0:05:03.760 a comment you made a second ago, the FED can 0:05:03.880 --> 0:05:07.440 control inflation and create it and and stop it. But 0:05:07.520 --> 0:05:09.800 the one thing that really can't do is control the 0:05:09.839 --> 0:05:12.320 long end of the treasury curve. And in a fight 0:05:12.480 --> 0:05:14.719 between the Fed and the markets of what happens so 0:05:14.800 --> 0:05:17.080 longer term interest rates, not the FED funds right, not 0:05:17.160 --> 0:05:18.880 the two year, but when you get out to ten, 0:05:19.520 --> 0:05:22.839 twenty and thirty years, I believe, and I think history 0:05:22.880 --> 0:05:25.360 would suggest that the markets are were often right than 0:05:25.400 --> 0:05:27.920 the Fed is right, and that becomes a test of wills. 0:05:28.640 --> 0:05:31.120 So O, Katy, you mentioned inflation, particularly when it comes 0:05:31.160 --> 0:05:33.479 to wages, But what does that do to you as 0:05:33.520 --> 0:05:36.200 an investment in equities? Do you have to really discern 0:05:36.360 --> 0:05:39.200 between companies, for example, with smaller margins that might get 0:05:39.200 --> 0:05:41.840 really squeezed with wage pressure, because one of the things 0:05:41.839 --> 0:05:45.000 that can happen inflation, whether it's wages or its input costs, 0:05:45.160 --> 0:05:47.840 you can really hurt the margins. Yeah. Absolutely, And so 0:05:47.880 --> 0:05:50.280 I think with wages one thing the main thing that 0:05:50.320 --> 0:05:51.920 we have to figure out here is that we know 0:05:52.000 --> 0:05:53.920 that wages are going up, as as I said, we're 0:05:53.920 --> 0:05:56.360 seeing a lot of data on that from our portfolio companies. 0:05:56.640 --> 0:05:58.920 Um we need to and it's quite an interesting thing 0:05:59.000 --> 0:06:02.279 because we've actually been able to achieve through this stimulus 0:06:02.600 --> 0:06:05.080 and increase effectively in the minimum wage that we have 0:06:05.200 --> 0:06:08.160 not been able to do through policy ever, and so 0:06:08.240 --> 0:06:11.280 that's in and of itself quite interesting. Then we need 0:06:11.320 --> 0:06:13.440 to actually see with these wages, is this a one 0:06:13.480 --> 0:06:15.680 time reset or were actually going to have growth of 0:06:16.640 --> 0:06:19.560 upward growth on wage pressure going forward, And so that's 0:06:19.560 --> 0:06:21.719 what we have to monitor. If we have that, it 0:06:21.920 --> 0:06:25.200 is going to start to erode margins more meaningfully and 0:06:25.240 --> 0:06:27.800 that could be negative for equity markets. Just taking one 0:06:27.880 --> 0:06:29.880 step back here though, I think what we're seeing in 0:06:29.920 --> 0:06:32.279 equity markets now as it relates to inflation is that 0:06:32.320 --> 0:06:35.760 markets are up so very healthy return for equity markets 0:06:35.760 --> 0:06:38.080 here to date, but the inflation is playing out what's 0:06:38.120 --> 0:06:41.960 happening under the markets obviously with value having strong leadership 0:06:42.040 --> 0:06:45.880 over growth markets, and that's directly because of inflationary pressures. 0:06:46.200 --> 0:06:49.279 Many thanks to Steve Rattner of Willow Advisors and Katie 0:06:49.320 --> 0:06:53.599 Kotch from Goldman Sachs Asset Management coming up. Jeff Bezos 0:06:53.680 --> 0:06:56.760 says he's going into space this summer, but can he 0:06:56.839 --> 0:06:59.840 make some money up there? We ask test Patch of 0:07:00.000 --> 0:07:04.040 Messember Venture Partners. That's next on Wall Street Week on Bloomberg. 0:07:09.600 --> 0:07:13.560 This is Bloomberg Wall Street Week with David Weston from 0:07:13.720 --> 0:07:17.840 Bloomberg Radio. Space is now open not just to astronauts, 0:07:17.960 --> 0:07:21.360 but to billionaires. Jeff Bezos announced this week that he's 0:07:21.400 --> 0:07:23.600 going to take on an eleven minute trip to space 0:07:23.640 --> 0:07:26.400 on a Blue Origin rocket next month. And he's not 0:07:26.520 --> 0:07:29.680 the only one. Virgin Galactics Richard Branson plans to take 0:07:29.680 --> 0:07:32.520 a similar trip as early as this summer. We're asking 0:07:32.520 --> 0:07:35.880 our founder Richard Branson to come on and really test 0:07:35.920 --> 0:07:38.680 the private astronaut experience for us. We think who better 0:07:38.760 --> 0:07:42.640 to do that? That's Virgin Galactic CEO Michael Cole Glacier. 0:07:42.920 --> 0:07:46.960 For investors, space is a growth market. Morgan Stanley estimates 0:07:47.000 --> 0:07:50.000 that the global space industry could grow to one trillion 0:07:50.040 --> 0:07:54.800 dollars in competition among the space barons started when Jeff 0:07:54.800 --> 0:07:58.360 Bezos founded Blue Origin back in two thousand. My vision 0:07:58.400 --> 0:08:02.480 for Blue Origin, the long term vision is millions of 0:08:02.560 --> 0:08:05.600 people living and working in space. We need a space 0:08:05.640 --> 0:08:09.160 staring civilization for a whole bunch of reasons, and that's 0:08:09.200 --> 0:08:12.720 the vision. The company operated quietly for fifteen years until 0:08:12.760 --> 0:08:16.760 it started testing its new Shepherd rocket. SpaceX was second 0:08:16.800 --> 0:08:19.400 into the private space race, joining in two thousand two. 0:08:19.840 --> 0:08:22.360 In just a few years, it launched its Falcon one 0:08:22.480 --> 0:08:25.280 rocket and pulled ahead of its competitors in a series 0:08:25.360 --> 0:08:28.760 of first SpaceX led the first private mission to the 0:08:28.800 --> 0:08:32.760 International Space Station, filling a role left vacant after NASA 0:08:32.800 --> 0:08:36.680 retired its space Shuttle fleet in two thousand eleven. Here's 0:08:36.800 --> 0:08:42.040 Morgan Stanley's Adam Jonas. SpaceX is the apex predator in 0:08:42.160 --> 0:08:46.199 the space market. Some would argue they're sucking the air 0:08:46.240 --> 0:08:48.240 out of the universe right now in terms of talent 0:08:48.280 --> 0:08:51.680 and capital. While SpaceX and Blue Origin compete over NASA 0:08:51.760 --> 0:08:55.480 contracts to launch satellites and service the space station, Virgin 0:08:55.520 --> 0:08:59.920 Galactic focuses on space tourism. It celebrated its first manned 0:09:00.120 --> 0:09:02.800 space flight in May and is planning to conduct more 0:09:02.840 --> 0:09:06.240 test flights with the goal of taking commercial passengers to 0:09:06.320 --> 0:09:10.800 the edge of space again. Here's Virgin Galactic CEO Michael 0:09:10.880 --> 0:09:13.600 cold Glazier. We believe this is going to be a 0:09:13.600 --> 0:09:17.360 supply constrained business for quite some time. The demand of 0:09:17.400 --> 0:09:19.760 this is going to be well out in front of 0:09:19.800 --> 0:09:21.839 our ability to build and scale the fleet up for 0:09:21.880 --> 0:09:25.920 a while, and as such it will be reasonably expensive 0:09:25.960 --> 0:09:28.680 as it goes forward. There is so much excitement and yes, 0:09:28.920 --> 0:09:32.160 romance in space, but the question is is it investival? 0:09:32.160 --> 0:09:34.920 Can we make money out there in space? Welcome now 0:09:34.960 --> 0:09:37.320 test Hatch, who is devoting her career to answering that 0:09:37.480 --> 0:09:40.800 key question. She started out as an aeronautical engineer hoping 0:09:40.840 --> 0:09:43.440 to be an astronaut, worked at SpaceX and at Boing, 0:09:43.679 --> 0:09:46.200 but now she's become a venture capitalist. She has a 0:09:46.240 --> 0:09:49.440 partner at Bessemer Venture Partners, and we welcome right now 0:09:49.520 --> 0:09:51.880 to Wall Street Week. So give us a sense of 0:09:51.960 --> 0:09:54.480 how we might make money out there beyond just getting 0:09:54.480 --> 0:09:57.760 excited about it. Of course, when investing in any company, 0:09:57.800 --> 0:09:59.360 there's a handful of things you want to look at. 0:09:59.600 --> 0:10:01.679 You want to look at the top line revenue, how 0:10:01.760 --> 0:10:04.160 quickly and efficiently it's growing. You want to look at 0:10:04.800 --> 0:10:08.400 the competitors in the space and the quality of the team. 0:10:08.440 --> 0:10:12.680 When it comes to space companies specifically, there's additional nuances 0:10:12.720 --> 0:10:15.440 you want to factor into your consideration. Let's use three 0:10:15.480 --> 0:10:20.400 of the most common examples, launch vehicles, satellites, and space tourism. 0:10:20.480 --> 0:10:22.679 When it comes to launch vehicles, you want to look 0:10:22.679 --> 0:10:25.040 at the number of successful launches and the number of 0:10:25.080 --> 0:10:28.240 assets that rocket is launched into space. When it comes 0:10:28.240 --> 0:10:30.080 to satellites, you want to look at the number of 0:10:30.120 --> 0:10:33.840 satellites and specifically what sensors they have in space. And 0:10:33.840 --> 0:10:36.679 then space tourist companies eventually you want to look at 0:10:36.679 --> 0:10:39.360 people that they've launched into space. That's not reality at 0:10:39.360 --> 0:10:43.160 the moment. So an early indicator is successful test flights, 0:10:43.200 --> 0:10:46.000 and all of these things are an early proxy in 0:10:46.040 --> 0:10:48.959 space tourists case and an actual in launch vehicle in 0:10:49.000 --> 0:10:52.520 satellitees case to revenue, again, a very important thing for 0:10:52.840 --> 0:10:55.960 all companies, even space companies test right now for many 0:10:56.000 --> 0:10:58.400 of us who aren't as initiating in this as you are. 0:10:58.600 --> 0:11:01.000 When we think about private at space race, we think 0:11:01.040 --> 0:11:03.199 about three big companies, right, We think about SpaceX, We 0:11:03.240 --> 0:11:05.960 think Abou Blue Origin, we think of Virgin Galactic, two 0:11:05.960 --> 0:11:08.480 of which are private actually, but essentially that there are 0:11:08.480 --> 0:11:10.120 other companies out there as well that may not be 0:11:10.160 --> 0:11:12.920 as well known or as big. It's amazing all that 0:11:13.320 --> 0:11:15.720 space X, Blue Origin and Virgin Galactic are doing for 0:11:15.760 --> 0:11:19.960 the space industry. They're really paving a path for hundreds. 0:11:20.440 --> 0:11:25.720 There are over four hundreds space startups following in in 0:11:25.720 --> 0:11:29.439 in those three footsteps and hope to be those next three. Uh. 0:11:29.440 --> 0:11:32.199 There's about a dozen space startup companies that are going 0:11:32.280 --> 0:11:35.600 public this year via s back a special purpose acquisition company, 0:11:35.720 --> 0:11:37.760 and will be available to the public by the end 0:11:37.760 --> 0:11:40.840 of the year. It's a really large market, and it's 0:11:40.840 --> 0:11:44.120 an overall three hundred and fifty billion dollar economy that 0:11:44.520 --> 0:11:46.960 we use in our everyday lives, whether it's to watch TV, 0:11:47.160 --> 0:11:50.320 listen to the radio, navigate us to our destination, and 0:11:50.320 --> 0:11:54.319 and and these startups are really lowering the barrier of 0:11:54.440 --> 0:11:57.440 entry to space and continuing to open space for business. 0:11:57.640 --> 0:11:59.480 So pick up on that specifically, how much of this 0:11:59.520 --> 0:12:03.000 is telecom muncations is putting satellites up? I mean, you've 0:12:03.000 --> 0:12:05.360 taught me actually about something called cube SATs. I didn't 0:12:05.360 --> 0:12:07.240 know they existed. I just think about the big ones. 0:12:07.320 --> 0:12:09.680 Tell Star back to the old days, right, But we 0:12:09.720 --> 0:12:11.880 have a whole new range of satellites that some of 0:12:11.920 --> 0:12:14.880 these private companies are putting up there. Decades of Moore's 0:12:14.960 --> 0:12:18.520 law has exponentially decreased the size and increased the power 0:12:18.559 --> 0:12:21.520 of commercial off the shelf electronics to allow for the 0:12:21.520 --> 0:12:24.559 invention of the cubes at, which reversed the model that 0:12:24.600 --> 0:12:27.880 you were just sharing of massive school best sized satellites 0:12:28.080 --> 0:12:30.679 that would take years of not decades, and tens, if 0:12:30.679 --> 0:12:33.160 not hundreds of millions of dollars to design, build, test, 0:12:33.200 --> 0:12:37.560 and launch into geostationary orbit thirty six thousand kilometers away 0:12:37.559 --> 0:12:41.240 from the world. The invention of the cubes at flipped 0:12:41.240 --> 0:12:44.920 that model so that you can launch your camera onto 0:12:44.960 --> 0:12:48.000 a tissue boxed size satellite whizzn't around the Earth every 0:12:48.080 --> 0:12:50.800 ninety minutes. If you saw the movie Gravity, it's where 0:12:50.800 --> 0:12:53.760 Sandra Bolock and George clooneyware on our International Space Station. 0:12:54.400 --> 0:12:59.200 And these cube SATs have really allowed entrepreneurs, students, people's 0:12:59.200 --> 0:13:03.040 imagination to launch unique sensors to take photos of the Earth, 0:13:03.280 --> 0:13:06.960 to communicate with the Earth. And I especially am interested 0:13:07.200 --> 0:13:10.960 in novel or unique sensors that are in space on 0:13:10.960 --> 0:13:13.880 this CubeSat that help life on Earth. What sorts of 0:13:13.920 --> 0:13:17.640 profit margins can you make on things like launching CubeSats 0:13:17.720 --> 0:13:20.640 is that a profitable business. Hey, every business, even if 0:13:20.679 --> 0:13:23.120 it's space, needs to be profitable at least from a 0:13:23.360 --> 0:13:29.439 venture capital investment perspective. And once you make your constellation, 0:13:29.520 --> 0:13:31.640 once you get to a carrying capacity where you have 0:13:31.679 --> 0:13:34.960 the number of assets you need in space, the margins 0:13:35.120 --> 0:13:39.320 can be can be quite good north of if not 0:13:39.400 --> 0:13:42.200 more or less depending on how often you need to 0:13:42.240 --> 0:13:46.480 replenish your satellites. So I can use a specific example, 0:13:47.160 --> 0:13:50.439 um Bestumber venture partners firm, I'm a partner at has 0:13:50.440 --> 0:13:54.040 invested in a company called spire Global, the largest general 0:13:54.040 --> 0:13:58.400 purpose cubes at constellation. We have three very specific sensors 0:13:58.400 --> 0:14:02.240 for aviation, maritime and weather monitoring and protecting. It is 0:14:02.280 --> 0:14:04.720 one of the companies that has announced its back merger 0:14:04.800 --> 0:14:08.480 with Knapsite and embarking down that path to go public. 0:14:09.400 --> 0:14:12.240 We have about eight lemurs, which we call our cub 0:14:12.280 --> 0:14:15.160 SATs in space and that's all we need. We've hit 0:14:15.240 --> 0:14:20.000 that capacity and it will dramatically increase the margins for 0:14:20.040 --> 0:14:22.440 the business now that we only need to replenish every 0:14:22.480 --> 0:14:25.320 three to five years rather than launch to get to 0:14:25.320 --> 0:14:27.440 the A D in first place test. We think of 0:14:27.520 --> 0:14:30.320 this as a massively capital intensive business. I mean, it 0:14:30.480 --> 0:14:32.680 was at one point only the government, and now when 0:14:32.680 --> 0:14:34.040 you have some of these big companies, there's a lot 0:14:34.080 --> 0:14:36.760 of capital involved. Is that true? Even with things like 0:14:36.840 --> 0:14:40.000 cubes at companies, it's more capital intensive and it takes 0:14:40.040 --> 0:14:43.240 longer than let's stay software software companies, you change a 0:14:43.240 --> 0:14:45.360 lot of code, you push it into the ether, and 0:14:45.400 --> 0:14:49.320 you get your result. Versus satellites and launch vehicles, you 0:14:49.400 --> 0:14:52.600 have to launch your asset into space before you start 0:14:52.640 --> 0:14:55.240 generating your product and therefore revenue. Thank you so much 0:14:55.280 --> 0:14:59.280 to Tess Hatch, partner at Bessemer Venture Partners. Coming up 0:14:59.280 --> 0:15:02.160 on Wall Street, we contributor Jillian Tett of The Financial 0:15:02.200 --> 0:15:05.920 Times explains why being an anthropologist, or at least knowing one, 0:15:06.240 --> 0:15:09.560 could make us better investors. That's next on Wall Street 0:15:09.600 --> 0:15:18.480 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:15:18.640 --> 0:15:22.200 David Weston from Bloomberg Radio. To those of us coming 0:15:22.280 --> 0:15:25.160 from the outside global, Wall Street might just remind us 0:15:25.200 --> 0:15:27.920 those exotic tribes from Papua New Guinea or Borneo that 0:15:27.960 --> 0:15:31.080 we read about in our undergraduate anthropology classes. But it 0:15:31.120 --> 0:15:34.160 turns out that the similars are more than just superficial something. 0:15:34.160 --> 0:15:37.600 It takes a true anthropologist to explain. Before she became 0:15:37.600 --> 0:15:40.640 an acclaimed financial journalist and author, Jillian Tett of The 0:15:40.640 --> 0:15:43.800 Financial Times trained as an anthropologist at Cambridge and she 0:15:43.880 --> 0:15:45.800 brings us a different way to look at many of 0:15:45.840 --> 0:15:48.320 the stories recovery every day in her new book and 0:15:48.440 --> 0:15:51.240 through vision, a new way to see in business and life. 0:15:51.280 --> 0:15:53.000 And we welcome her now to give us someone of 0:15:53.080 --> 0:15:55.360 the taste of the lessons this book has to teach 0:15:55.400 --> 0:15:58.280 us all. So welcome Jillian. Congratulations on this book. It's 0:15:58.280 --> 0:16:00.800 a fascinting book because you go through quite a few 0:16:00.800 --> 0:16:02.960 stories actually that we know about it, and then you've 0:16:03.000 --> 0:16:05.200 covered through the years and we think of a sort 0:16:05.200 --> 0:16:08.440 of Wall Street stories and apply and anthro vision as 0:16:08.480 --> 0:16:10.480 it were, to them. We can't go through them all. 0:16:10.520 --> 0:16:12.520 I recommend somebody get the book. Area, But let's take 0:16:12.600 --> 0:16:15.080 one that's very timely right now. Let's work from home 0:16:15.560 --> 0:16:17.760 and what happened when we were forced to separate from 0:16:17.800 --> 0:16:20.560 one another? And now as we re enter, explain what 0:16:20.640 --> 0:16:25.080 anthropology might teach us about that phenomenon. Well, one of 0:16:25.080 --> 0:16:29.240 the things anthropology argues is that culture matters. In a 0:16:29.320 --> 0:16:32.920 world of artificial intelligence. We need to use some anthropology 0:16:32.960 --> 0:16:35.400 intelligence to really look at all the things that big 0:16:35.480 --> 0:16:38.240 data contract, which is these cultural patterns which are often 0:16:38.280 --> 0:16:43.320 contradictory and lookdown. Has made many of us in amateur 0:16:43.320 --> 0:16:46.920 anthropologists almost by default, because we've just had a big 0:16:47.000 --> 0:16:49.600 culture shock where all the things that we used to 0:16:49.640 --> 0:16:52.240 take for granted about our work lives and home lives 0:16:52.520 --> 0:16:55.560 have been turned upside down, and suddenly we've had to 0:16:55.560 --> 0:16:58.880 think about things like social boundaries whose are in our 0:16:59.000 --> 0:17:01.400 cod or our trial life, and we've had to think 0:17:01.400 --> 0:17:03.960 about the rituals that shape our lives. We've had to 0:17:04.000 --> 0:17:08.040 think about all the daily routines that we rely on. 0:17:08.800 --> 0:17:12.040 And what's fascinating is that many people have learned that 0:17:12.680 --> 0:17:15.160 being at home you can do some things incredibly well. 0:17:15.800 --> 0:17:19.080 Many people have realized actually value having that boundary between 0:17:19.119 --> 0:17:23.080 home life and work life in space and in time UM. 0:17:23.119 --> 0:17:25.800 And they've also realized that one of the benefits of 0:17:25.840 --> 0:17:29.000 being in an office is not what people think. It's 0:17:29.040 --> 0:17:32.000 not the processes and the formal tools that we use 0:17:32.080 --> 0:17:35.440 to get work done. It's often the sent through experience 0:17:35.440 --> 0:17:39.520 of interacting with colleagues and bumping into people and having 0:17:39.520 --> 0:17:43.480 so indipudous encounters that really matters. UM. There's a process 0:17:43.520 --> 0:17:47.040 of what anthropologists call sense making going on in offices, 0:17:47.640 --> 0:17:50.240 and many people have found that pretty hard to replicate 0:17:50.280 --> 0:17:54.040 in zoom. So the question that's fascinating now is as 0:17:54.080 --> 0:17:56.040 we go back to the office, or some of us do, 0:17:56.920 --> 0:17:58.600 what are we going to keep How are we going 0:17:58.640 --> 0:18:02.520 to redefine our rich alls and our social groups, and 0:18:02.560 --> 0:18:05.200 now that we have an opportunity to reset them with 0:18:05.480 --> 0:18:08.359 much more awareness in the past, how are we going 0:18:08.400 --> 0:18:10.680 to choose to do that? And just to be clear 0:18:10.760 --> 0:18:12.480 from your book, I learned we're not just talking about 0:18:12.520 --> 0:18:14.880 soft science here, we're talking about making money. Some people 0:18:14.960 --> 0:18:17.919 anticipated this. You talk about some trading rooms before the 0:18:17.920 --> 0:18:21.880 pandemic where some people will understood the importance of that 0:18:22.080 --> 0:18:25.320 lateral vision, as it were, even by having lower computers, 0:18:25.359 --> 0:18:28.240 they can see one another absolutely. I mean, one of 0:18:28.240 --> 0:18:31.200 the key messages in anthropology is that if you live 0:18:31.200 --> 0:18:33.920 your life with tunnel vision, just looking at things that 0:18:33.960 --> 0:18:37.160 are directly under your nose, and you don't take time 0:18:37.200 --> 0:18:39.880 to have lateral vision to look around you, then you're 0:18:39.920 --> 0:18:43.720 losing out. And ironically, financial trader has known that for 0:18:43.760 --> 0:18:46.800 a long time because actually there's an anthropologist who went 0:18:46.880 --> 0:18:49.760 to study Wall Street traders around the turn of the century. 0:18:50.200 --> 0:18:53.040 And notice that even though Wall Street traders technically have 0:18:53.160 --> 0:18:55.440 the ability to work from home, way back in the 0:18:55.560 --> 0:18:58.840 year two thousands with a Bloomberg terminal or other tools 0:18:58.880 --> 0:19:02.679 like that, banks were building bigger and bigger trading flaws. 0:19:03.440 --> 0:19:06.000 And when he asked why, he realized it was because 0:19:06.000 --> 0:19:09.720 of this issue of sense making, awareness of others of 0:19:10.040 --> 0:19:14.600 lateral perspective, and also something called incidental information exchange, which 0:19:14.640 --> 0:19:18.680 is really what happens when you have small teams who 0:19:18.680 --> 0:19:21.800 may have very good levels of social capital inside the team, 0:19:21.920 --> 0:19:24.479 needing to bump into each other and collide and swap 0:19:24.560 --> 0:19:28.439 ideas and the keepon is this with zoom calls, small 0:19:28.520 --> 0:19:32.320 teams doing specific tasks can usually replicate that quite well 0:19:32.359 --> 0:19:36.399 in cyberspace, but we all know that having that incidental 0:19:36.480 --> 0:19:41.119 information exchange, that serendipitous encounter, basically running into someone in 0:19:41.119 --> 0:19:44.639 the corridor, that's what you can't replicate with zoom. So 0:19:44.720 --> 0:19:46.840 one of the other very interesting questions that companies are 0:19:46.840 --> 0:19:49.320 going to have to think think about culturally when they 0:19:49.359 --> 0:19:51.520 go back to the office is what do you do 0:19:51.640 --> 0:19:54.560 if part of your workforce is at home and part 0:19:54.600 --> 0:19:56.679 of it is actually in the office. And that's going 0:19:56.760 --> 0:20:00.880 to require a lot of reflection. An we have left here, 0:20:00.920 --> 0:20:02.480 I want to come up to this week in your 0:20:02.560 --> 0:20:04.840 calm on the Cornwall Consensus, and I wonder whether the 0:20:05.000 --> 0:20:08.800 G seven there's a little lateral vision going on. Absolutely, 0:20:08.840 --> 0:20:10.840 there's so much I'd love to say that where anviropology 0:20:10.840 --> 0:20:13.280 you can share light today. One thing that it really 0:20:13.280 --> 0:20:15.280 can make people think about is the importance of symbols 0:20:15.320 --> 0:20:18.080 and rituals. We often think they're empty and meaning it's 0:20:18.440 --> 0:20:21.240 but they present a vision on an idealized future people 0:20:21.280 --> 0:20:23.159 would like to have. And if you look at the 0:20:23.200 --> 0:20:25.080 G seven this week and look at the memos that 0:20:25.119 --> 0:20:28.280 have come out, yes they may not correspond to reality, 0:20:28.640 --> 0:20:31.640 but what's fascinating is a vision they give in terms 0:20:31.680 --> 0:20:33.680 of how they want the world to work. It's very 0:20:33.720 --> 0:20:37.000 different from where we were thirty years ago when you 0:20:37.080 --> 0:20:40.040 had things like the Washington Consensus come out, which is 0:20:40.080 --> 0:20:44.040