Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news as it happened. Its
Speaker 1: Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Hi, everyone, welcome to the
Speaker 1: weekend edition of Bloomberg Business Week. Coming up, We're going
Speaker 1: to dive into a special double issue of the magazine,
Speaker 1: much of it centered around the tech Stock reckoning taking
Speaker 1: place in We begin, though, with the story that really
Speaker 1: overshadowed all others this past week, a deadly school shooting
Speaker 1: in Texas that claimed the lives of nineteen children and
Speaker 1: two teachers, now reigniting the debate over gun laws in America. Yeah,
Speaker 1: it definitely was the overarching thinking this week and just thinking, Wow,
Speaker 1: here we are again to help us understand what impact
Speaker 1: this might have on policy in our nation's capital. With
Speaker 1: primaries ongoing and midterm elections on the horizon, we bring
Speaker 1: in Bloomberg Business Week National correspondent Josh Green, who follows politics,
Speaker 1: and Josh, I gotta say when I was listening to
Speaker 1: President Biden speak this week following this mass shooting at
Speaker 1: another school, kids impacted, young kids. You know, it's not
Speaker 1: the first president calling for tougher gun laws, and I
Speaker 1: fear it's not going to be the last. What's the
Speaker 1: political will for tougher gun ownership legislation. Well, there's a
Speaker 1: lot of political will for it among Democrats. But Republicans
Speaker 1: are another story. Um. You know, going back to the
Speaker 1: child massacre in Newtown, Connecticut, Republicans have consistently opposed and
Speaker 1: sylabustered even modest background check bills. And because of the
Speaker 1: rules of the Senate, and because most Republicans don't want
Speaker 1: to pass any kind of gun control legislation even in
Speaker 1: the wake of a massacre like the one we saw
Speaker 1: this week. Uh, gun legislation just dies in the Senate,
Speaker 1: and you know, nothing President Biden does, or or Democrats
Speaker 1: in Congress do, seems to be able to change the effect.
Speaker 1: It's interesting, though, Josh, because we do see a will
Speaker 1: for it from voters. A majority of Americans do support
Speaker 1: stricter gun control laws. This according to a Morning Consule
Speaker 1: poll that was conducted last week that was after the
Speaker 1: shooting in Buffalo, but before the most recent mass shooting,
Speaker 1: said that six Americans support stricter gun control laws. So
Speaker 1: it's the politicians, the Republican politicians who don't support it.
Speaker 1: But the Americans, regardless of where they are on the
Speaker 1: political spectrum on a whole, do yeah. I mean the
Speaker 1: calculus that most Republican politicians make is that pro gun people,
Speaker 1: gun advocates n r A members are much more active
Speaker 1: on the gun issue as voters, um than the broad
Speaker 1: survey of Americans like the one that you discussed, and
Speaker 1: that for for those voters, gun control will be a
Speaker 1: motivating issue to go out and in the case of Republicans,
Speaker 1: vote against anyone who supports gun control bills or narrows
Speaker 1: the ability to own giant arsenals of automatic weapons. Um.
Speaker 1: You know, like we like we've seen in all of
Speaker 1: these recent mass shootings, so most of them, not all
Speaker 1: of them, but most Republicans have been unwilling to vote
Speaker 1: uh in favor of any gun control legislation. Now there
Speaker 1: is a slim, a very slim possibility that something could
Speaker 1: change this time around, and one of the important things
Speaker 1: that happened this week in the Senate is that the
Speaker 1: Democratic Majority Leader Chuck Schumer, instead of just putting up
Speaker 1: a bill, a messaging bill on gun control that he
Speaker 1: knew would fail. Has stepped back and allowed Connecticut Senator
Speaker 1: Chris Murphy, a Democrat who is the senate staunchest gun
Speaker 1: control advocate, to try one more time to cobble together
Speaker 1: a bipartisan coalition UH to tighten background checks so called
Speaker 1: red flag law they're trying to put together. My own
Speaker 1: reporting talking to people is that the chances for this
Speaker 1: bill are very, very slim, but you know, it is
Speaker 1: still alive, and maybe this will be the massacre that uh,
Speaker 1: you know, pushes ten Republicans um into agreeing to support
Speaker 1: some kind of legislation, and that would be a large
Speaker 1: enough number presuming all Democrats went along in order to
Speaker 1: overcome that Senate fellow booster. I mean, Josh, how how
Speaker 1: strong is the gun lobby? I feel like for years
Speaker 1: we talked about how how strong it was and how influential.
Speaker 1: I feel like this is one of those issues, just
Speaker 1: like abortion. It's so divisive within this country and you
Speaker 1: feel strongly about one way or the other. Um. But
Speaker 1: but what is the political strength of the gun lobbying,
Speaker 1: especially when it comes to politicians. Yeah, you know, a
Speaker 1: great measurement of that question is that the National Rifle
Speaker 1: Association is having its convention in Houston this this weekend. Uh.
Speaker 1: And there are a parade of Republican politicians, headlined by
Speaker 1: Texas Center Ted Cruz, who are showing up to speak
Speaker 1: to the n r A. And so I think that's
Speaker 1: a signal. The fact this is going on even in
Speaker 1: the wake of this mass here in Texas shows you
Speaker 1: how powerfully pro gun and pro gun rights um a
Speaker 1: big segment of the Republican Party almost every Republican elected officials,
Speaker 1: certainly at the federal level. UH. And so as long
Speaker 1: as that dynamic exists, as long as Republican politicians believe
Speaker 1: there is a price to be paid for supporting gun
Speaker 1: control legislation, they're simply not going to do it. And
Speaker 1: we've seen that again again and again and again. This
Speaker 1: this is the twenty seven school shooting we had this year. So,
Speaker 1: you know, I think once we got past in the
Speaker 1: massacre in new Town, Connecticut with nothing happening, you know,
Speaker 1: I think at that point Republicans are just sort of
Speaker 1: willing to accept any outcome, no matter how how horrible. Uh,
Speaker 1: you know, how how how how ghastly uh And just say,
Speaker 1: you know, This isn't something we're willing to act on,
Speaker 1: and until that dynamic changes, there really isn't gonna be
Speaker 1: any change at least coming from Washington. Just heartbreaking and
Speaker 1: just unbelievable to see this over and over again. Um, Josh,
Speaker 1: thank you so much, really appreciate your input. That was
Speaker 1: Bloomberg Business Week National correspondent at Josh Green. We should
Speaker 1: note that Michael Bloomberg, owner of Bloomberg LP, the parent
Speaker 1: company of Bloomberg News, is a founder of and helps
Speaker 1: fund every Town for Gun Safety. It's a nonprofit that
Speaker 1: advocates for gun violence prevention and other gun safety measures.
Speaker 1: All right, coming up, we're going to turn our attention
Speaker 1: to markets and the outlook for a global hospitality with
Speaker 1: the CEO of Hyatt Hotels. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio.
Speaker 1: Earlier this month, Hyatt Hotels came out with quarterly results
Speaker 1: that were better than expected thanks to strong demand for
Speaker 1: leisure travel and adjusted loss of thirty three cents a
Speaker 1: share in the first quarter. That was narrower than analyst
Speaker 1: estimates and revenue per available room, it's a key hotel
Speaker 1: industry measure known as rev par. It grew by a
Speaker 1: hundred and seven percent year over a year worldwide and
Speaker 1: a hundred and twenty six percent in the US and Canada. Meanwhile,
Speaker 1: last week's spate of week retail forecast raised questions about
Speaker 1: Americans willingness to spend big on travel, at least in
Speaker 1: the near term. Bloomberg News senior markets reporter Kitty Grayfeld
Speaker 1: and I asked high AT President and CEO marcopl Masian
Speaker 1: whether he's concerned about softening demand with the summer travel
Speaker 1: season just ahead. The connection point UH over a longer
Speaker 1: period of time to our consumer, which tends to be
Speaker 1: a higher end UH traveler at the higher end of
Speaker 1: each of the segments that we serve UM is if
Speaker 1: there's a I guess very long and persistent sell off
Speaker 1: in UH in public equities, because many of the customers
Speaker 1: that we serve are invested in the marketplace. But I
Speaker 1: don't think day day in and day out volatility actually
Speaker 1: changes M the booking behaviors on a real time basis.
Speaker 1: Right now, I think that there's a scarcity issue. People
Speaker 1: want to make sure that they've got their bookings for
Speaker 1: the holiday periods. Um, we're seeing booking levels across all
Speaker 1: of our hotels, not just for resorts now for the
Speaker 1: summer holidays up between twenty for UM Labor Day, fourth
Speaker 1: of July and Memorial Day, and so I think that's
Speaker 1: one of the drivers. The second thing is corporations and associations,
Speaker 1: which is a significant part of our business, are coming
Speaker 1: back to meetings in a meaningful way and the booking
Speaker 1: levels there are also rising. So UM we do see
Speaker 1: booking levels maintaining at this point. And you know, I
Speaker 1: would say if there's a very long and drawn out
Speaker 1: bear market or recession, then of course it's going to
Speaker 1: affect all businesses. But I think our customer base, being
Speaker 1: relative at the relatively higher end of of the you know,
Speaker 1: income scale, are more resilient and less subject to volatility
Speaker 1: in terms of their travel patterns, especially for leisure and
Speaker 1: mark I want to dig into that final point because
Speaker 1: obviously after the week of earnings that we've had, the
Speaker 1: consumer is definitely in focus how they might be shifting
Speaker 1: their spending, spending more on staples, less on sort of
Speaker 1: discretionary purposes. And you mentioned the bookings obviously for the
Speaker 1: summer months up across the board, But I'm curious, have
Speaker 1: you seen any indications that revenue spending on vacations could
Speaker 1: be slowing down or shifting. No, uh, not at all.
Speaker 1: On the contrary, I would say we've had, Um, we've
Speaker 1: had a significant increase in spend. Our rates are up
Speaker 1: significantly from twenty nine. A lot of this is really
Speaker 1: driven by penop demand and by a really really strong
Speaker 1: human desire to reconnect with people. So um, I think
Speaker 1: it's you know, people are making their decisions based on
Speaker 1: what they're going to be most fulfilled buy and what
Speaker 1: matters the most to them, and that is reconnecting with
Speaker 1: with friends and family. Mark. I know that you do
Speaker 1: serve a higher and clientele, but everybody has their limits
Speaker 1: when it comes to to spending. And I wonder about
Speaker 1: air fare prices. They are up double digits from last month,
Speaker 1: double digits from last year. Uh. I don't know if
Speaker 1: you've our listeners are familiar with this. Checking the price
Speaker 1: of flights right now, it's kind of mind boggling to
Speaker 1: see how much it is to fly a short distance
Speaker 1: thanks to you know, huge demand lack of supply, and
Speaker 1: then of course oil prices as well. How do you
Speaker 1: think about that in the context of what a consumer
Speaker 1: spends when they do visit one of your properties. Yeah.
Speaker 1: It First of all, UM, I woul just note that
Speaker 1: we UH we now own the largest tour operations tour
Speaker 1: operator platform in the UH in North America, so it's
Speaker 1: called a LG Vacations UM back in they handle over
Speaker 1: three million passengers and it's mostly doing selling packaged UM travel,
Speaker 1: so airfare included UM and so we tracked we're tracking
Speaker 1: this extremely closely, UM, and I would say that there's
Speaker 1: no question that we have seen a significant increase in
Speaker 1: airfares and I think that will persist for some period
Speaker 1: of time until supplying demand starts to balance out a bit.
Speaker 1: And the supplying demand I'm talking about right now has
Speaker 1: to do with schedules, how many planes are are in service. UM.
Speaker 1: I would note that the air the air traffic, the
Speaker 1: total lift capacity into Cancoon and Punta Kana, which are
Speaker 1: too very large markets for US UM in a l
Speaker 1: G dcations are up UM as compared to twenty levels.
Speaker 1: So it's clear that the airlines have have definitely clued
Speaker 1: in on where demand is and they've added capacity. UM.
Speaker 1: It is also true that air fares are up in
Speaker 1: that they're under some inflation reprecious. So I think that
Speaker 1: they're The dynamics for them have in part to do
Speaker 1: with energy prices, you know, get gas for their their
Speaker 1: aircraft aviation guests. And for US UM we look at
Speaker 1: how total unit value or total package prices are increasing,
Speaker 1: and they are. But again I think UM. I think
Speaker 1: as things start to stabilize in the oil and gas markets,
Speaker 1: and as we see supply being brought back with more schedules,
Speaker 1: more aircraft and more pilots UM UH back into the industry,
Speaker 1: we'll start to see a rebalancing. And that may that
Speaker 1: may take a number of months to do, but I
Speaker 1: think that that's the that's the inevitable outcome. And I
Speaker 1: want to talk about all inclusive resorts because you acquired
Speaker 1: Apple Leisure Group last year and UH seems to be
Speaker 1: very popular, especially in UH the Caribbean. Do you have
Speaker 1: any plans to bring that model to your US hotels? Yeah?
Speaker 1: Actually right now, I would say that the focus remains
Speaker 1: in Mexico, UH. In the Caribbean, UM, we've and are
Speaker 1: some of our key markets are Mexico first and foremost, UM,
Speaker 1: the Dominican Republic in Jamaica. We also have a large
Speaker 1: operation in Europe in the Balieric Islands and in the
Speaker 1: Canary Islands and in the southern coastal areas of Europe.
Speaker 1: UM we just UM, we're just now engaging with owners
Speaker 1: and developers in the Middle East and ultimately in Asia.
Speaker 1: We think that all inclusive is a great format and
Speaker 1: can be extended across the globe. UM. The the particular
Speaker 1: arena that we're playing in his luxurial Inclusive UM, which
Speaker 1: a LG, the Apple Leisure Group actually really created from
Speaker 1: about twenty years ago, and so we are now the
Speaker 1: largest player in the world in luxurial inclusive and the
Speaker 1: the guest proposition is very very compelling because Um, you
Speaker 1: take a lot of the transactional elements that you might
Speaker 1: experience in a European plan hotel where everything is all
Speaker 1: a cart Um, You're you're taking a bunch of transactional
Speaker 1: friction out of the equation and it serves its purpose
Speaker 1: when you're on holiday. That was Highatt Hotels president and
Speaker 1: CEO Mark Hoplmasian. He spoke with me and a Bloomberg's
Speaker 1: Katie Greifeld back on May eighteen, We'll still ahead on
Speaker 1: Bloomberg Business Week, we break down the business of intelligent data.
Speaker 1: We're going to do that with the CEO of Informatica.
Speaker 1: This is Bloomberg Broadcasting from the financial capital of the World,
Speaker 1: Bloomberg eleven Frio in New York to Washington, d C.
Speaker 1: Bloomberg to Boston, Bloomberg one oh six one does San Francisco,
Speaker 1: Bloomberg nine sixty to the country Sirius XM Chado one
Speaker 1: nine team and around the globe the Bloomberg Business app
Speaker 1: and Bloomberg Radio dot Com. This is Bloomberg Business Week. Well,
Speaker 1: our world today is increasingly about data, right. We talked
Speaker 1: about this tim so much on air and the technology
Speaker 1: being used to harness that data more effectively to help
Speaker 1: leaders make better business decisions, intelligent decisions. Well, Carol, you
Speaker 1: and I paid a visit to Informatical World twenty twenty
Speaker 1: two in Las Vegas this past week. We got a
Speaker 1: close up look at the publicly traded enterprise software solutions
Speaker 1: company Informatica, and we asked the company CEO on it, Wallya,
Speaker 1: what his customers want most Right now, with market conditions
Speaker 1: changing so rapidly. Whatever is happening in the current term
Speaker 1: will come and go. But the fundamental things that are
Speaker 1: changing is every enterprise is going digital. Every enterprise is
Speaker 1: trying to become intelligent using the increasingly coming off the pandemic,
Speaker 1: Coming off the pandemic and the two years of pandemic,
Speaker 1: just completely exponential growth in in in digital and in fact,
Speaker 1: the point that we made is that digital is no
Speaker 1: more a differentiator, that's a given. How do you get intelligent?
Speaker 1: And for that, how do you become data driven? And
Speaker 1: that's what we're all about, and that's what we're seeing
Speaker 1: increasing day the winds and demand for that. Everybody wants
Speaker 1: to like, hey, how do I harness the power of data.
Speaker 1: I have to manage customers, childing and environment, likeness, managed
Speaker 1: supply chains, managed drug discoveries, so those become important and
Speaker 1: without data that would not have happened. And and and
Speaker 1: look at during the pandemic, the vaccine development happened in
Speaker 1: the shortest time possible. Why And we were part of
Speaker 1: that process bringing the best data, rapidly, looking at trial data,
Speaker 1: getting infidence out of it so you can say, well,
Speaker 1: this vaccine makes sense to go out, that's what is happening,
Speaker 1: and that's what we see. What specifically are you hearing
Speaker 1: from companies about the macro economic environment? And you know,
Speaker 1: we get a good view of it, not just with
Speaker 1: the analysts we talked to, but with the CEO as
Speaker 1: we talked to. What we see from earnings reports. We're
Speaker 1: in the midst of earnings right now. We're starting to
Speaker 1: see inventory levels, for example, come up at retailers. They
Speaker 1: need the data to sort through those inventory levels to
Speaker 1: help understand what consumers are gonna buy, when they're going
Speaker 1: to buy it, and control those levels. What are you
Speaker 1: hearing from customers about what's going on in the macroeconomic environment. See,
Speaker 1: there are two things behaving. Number one is everybody is
Speaker 1: definitely cautious looking at the economy. Kind of it does
Speaker 1: does give you what's going on. But at the same time,
Speaker 1: you know, we have so many great customers who spoke
Speaker 1: here and I'll give you an example, American Airlines during
Speaker 1: the middle of the pandemic, and they basically invested in
Speaker 1: our platform and I'm like, what are you doing? But
Speaker 1: the whole I mean the whole air lines But they
Speaker 1: realized that look, ultimately, pandemic will be over. This macro
Speaker 1: will be over when we come out. What do you
Speaker 1: need to do manage your customer experience better? How do
Speaker 1: you do it? Understand your data better, government better? I
Speaker 1: want to give it to every user across the enterprise.
Speaker 1: So I think that's what I'm hearing from customers. Are
Speaker 1: things that are the data related foundational things are here
Speaker 1: to stay. Now. You may stagger it, but you cannot
Speaker 1: avoid investing in it. But yes, the current macro does
Speaker 1: not get away from you. You've got to look at
Speaker 1: that every day and it gives you a little bit
Speaker 1: of caution, but these are fundamental things that you have
Speaker 1: to invest you know what I think about I always
Speaker 1: think about our investor audience, very smart audience, but they're
Speaker 1: trying to be like, Okay, I understand we talked about
Speaker 1: data all the time. We talk about the cloud all
Speaker 1: the time. What is it that you an investment audience
Speaker 1: has to understand about, you know, kind of the sophistication
Speaker 1: of data, how it's becoming more intelligent, Like what does
Speaker 1: that mean? And what is the you know, potential top
Speaker 1: and bottom one, especially for publicly health companies. So I'll
Speaker 1: give you a couple of examples and I hosted a panel.
Speaker 1: We had three customers, you know, one from g Digital,
Speaker 1: one from Freddie Mac and one from Texas Health and Hospitals.
Speaker 1: And you know, and I'll give you other examples like
Speaker 1: Kroger and all. So Kroger as an example, just start
Speaker 1: to their CEO. There you go. So Kroger is an
Speaker 1: informatic customer, and what they were using us for is
Speaker 1: egg How do I get the right product at the
Speaker 1: right shelf at the right time. It has multiple benefits.
Speaker 1: It's a lost revenue opportunity that you want to wait.
Speaker 1: Plus also, if you get the wrong product and the
Speaker 1: right shelf, you're basically waste it, which just makes means
Speaker 1: that more cost. And then you're managing a supply chain
Speaker 1: that but if I'm a customer, I want gratification, So
Speaker 1: it really goes from the revenue to cost to obviously
Speaker 1: managing customer expectations. Weren't companies doing that before like that?
Speaker 1: That to me is kind of mind blowing. You would
Speaker 1: have thought that if you look at it retailer, the
Speaker 1: margins are the thinnest, right, how do you manage your
Speaker 1: supply chains so you basically make sure that you're not
Speaker 1: losing products on the shelf at some point, right, if
Speaker 1: you get the right product, if you have you know,
Speaker 1: perishable goods and you throw it away, that's cost or
Speaker 1: if you have an empty shelf then you basically lost revenue.
Speaker 1: How do you get better at it? And how do
Speaker 1: you do more and more just in time? Look at
Speaker 1: the supply chain problem at dealing, right, you go to
Speaker 1: all the other end. Healthcare is a huge thing in there.
Speaker 1: So when when John was talking from Texas Health and hospitals, right,
Speaker 1: how do they look at patient care to make sure
Speaker 1: that when somebody is coming in they can provide the
Speaker 1: most personalized care in time for that reduces again the
Speaker 1: supply chain of healthcare cost but saves lives. So there
Speaker 1: are so many applications like that that when we talk
Speaker 1: to customers that they apply dat or too. Okay, listen, UM,
Speaker 1: got a couple of minutes left here, and I do
Speaker 1: wonder you know you're talking about supply chains and helping
Speaker 1: other companies and your clients manage that. When you look
Speaker 1: at some of the big macro issues, whether it's higher prices,
Speaker 1: supply chains, labor constraints, what's type of mind? What what
Speaker 1: of those big macro issues are affecting you guys at
Speaker 1: inform America. You know, we obviously look at customers uh
Speaker 1: to front industries end up operating differently. I look at
Speaker 1: obviously dexperin Yeah, carefully, I look at business priorities very differently.
Speaker 1: Which business priorities are getting optimized differently? That was Ahmed Waliah.
Speaker 1: He is the CEO at Informatica. You're listening to Bloomberg
Speaker 1: Business Week coming up next, tackling systemic inequity in the
Speaker 1: world of finance. This is Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovich from Bloomberg Radio. This past Wednesday mark the two
Speaker 1: year anniversary of the murder of George Floyd, a tragedy
Speaker 1: that's set off another round of soul searching and discussions
Speaker 1: around race relations and inequalities in the United States, and
Speaker 1: to be fair, really globally, we continue to struggle with
Speaker 1: taking the right actions and turning all of the discussions
Speaker 1: into action. This includes the financial sector joining us now
Speaker 1: to discuss our Bloomberg News New York Deputy Bureau Chief
Speaker 1: Shartilla Brantley and Darren Dodson, Darren's managing partner at a
Speaker 1: Lumen Capital. It's an impact fund of funds with the
Speaker 1: goal of addressing systemic in equity by reducing racial and
Speaker 1: gender bias in investing. We had an opportunity to conduct
Speaker 1: research ourselves with Stanford University and some of the leading
Speaker 1: researchers in the world on this topic. And one of
Speaker 1: the things that blew us away is not only would
Speaker 1: investors we secretly tested a hundred and eighty of them
Speaker 1: systematically choose white lead funds consistently over black lead funds,
Speaker 1: but as we increased the performance, they did it more often.
Speaker 1: In other words, they were living ready to leave money
Speaker 1: on the table before they would invest in top performing
Speaker 1: black lead funds. So this was a kind of shocking
Speaker 1: finding because many of those we tested managed the largest
Speaker 1: pools of capital in the world, including sovereign wealth funds,
Speaker 1: pension funds, university endowments, etcetera. And they weren't necessarily going
Speaker 1: out to um you know, kind of uh select one
Speaker 1: group over another because of race. But nonetheless, all of
Speaker 1: us in the industry have a fiduciary duty, and they
Speaker 1: were sort of going right past that fiduciary duty to
Speaker 1: choose the best investments in systematically choosing people because their
Speaker 1: mind was clouded with bias or overlooking the best opportunities.
Speaker 1: So Tea, I want to ask you, does that buy surprise?
Speaker 1: You know, because often when you are um a person
Speaker 1: of color, any type of investment your viewed as being
Speaker 1: more risky as someone who is not a person of
Speaker 1: color and maybe not a woman. So I'm not totally shocked,
Speaker 1: but you know, it is surprising that, you know, investors
Speaker 1: look at data and if the data shows that we're
Speaker 1: leaving a lot of money on the table lot of
Speaker 1: upside is is disheartening shock that we're allowing that bias
Speaker 1: to you know, standing between returns is just boggling. I
Speaker 1: know you have more questions for Darren jump it. Well,
Speaker 1: you know, Darren, I want to talk a little bit
Speaker 1: about your your tenure bias reduction program um that your
Speaker 1: firm has in place. Um, what are you seeing and
Speaker 1: what does success look like at the end of this Well, well,
Speaker 1: thanks so much for the question. And when we look
Speaker 1: at implicit bias reduction curriculum, it's uh scattered in terms
Speaker 1: of its overall efficacy, in terms of its ability to
Speaker 1: drive people to reduce biases. So part of the reason
Speaker 1: why we partner with some of the leading institutions in
Speaker 1: the world is to really set out to create a
Speaker 1: curriculum that we measure rigorously the impact year over year.
Speaker 1: And what we expect to see if that curriculum is
Speaker 1: successful is the increase in women and people of color
Speaker 1: that are chosen through the selection processes. By reducing bias
Speaker 1: and board so i action of the companies that we
Speaker 1: invest into. We expect to see the fund managers that
Speaker 1: we invest in to higher promote, retain and attract talent
Speaker 1: at higher levels, with higher levels of placement of women
Speaker 1: and people of color within the firms. And then ultimately
Speaker 1: we expect to see the portfolios of those companies led
Speaker 1: by more women and people of color when we reduced
Speaker 1: the biases. As you might know, it's one point three
Speaker 1: percent of sixty nine trillion dollars in capital managed by
Speaker 1: women and people of color collectively, and even less managed
Speaker 1: by under represented people of color. So we've got a
Speaker 1: lot of work to do. Hey, Darren, I'm wondering the
Speaker 1: conversations that you're having with LPs about this and what
Speaker 1: they're pushing for and the type of transparency that that
Speaker 1: they want to see from firms that handle private capital. Yeah,
Speaker 1: I've been somewhat encouraged by the intentions of many LPs
Speaker 1: across the country and around the world old UM in
Speaker 1: the post George Floyd Um kind of killing contexts. A
Speaker 1: number of them have made announcements about moving forward and
Speaker 1: marching forward initiatives around racial equity. I think where so
Speaker 1: many of these falls short is that in almost every
Speaker 1: area of financial analysis, we apply the scientific method. So
Speaker 1: we look at applying things like modern portfolio theory and
Speaker 1: many of the things that I learned when I was
Speaker 1: at Stanford Business School, Like many of the listeners here
Speaker 1: are thinking about the accept in the area of looking
Speaker 1: at the returns hidden by behind women and people of color,
Speaker 1: we don't look at that scientifically, which is exactly why
Speaker 1: we applied UM that research using a team of sovereign
Speaker 1: wealth fund portfolio construction theorists, theorists and implicit bias social
Speaker 1: psychology collegey theorists, and we set out and and literally
Speaker 1: found that they were missing this massive opportunity within the
Speaker 1: investment ecosystem, and that that massive opportunity if we are
Speaker 1: able to train people like uh, like our LPs or
Speaker 1: other LPs across the system to identify that and go
Speaker 1: after it and UH invest in these overlooked and underestimated entrepreneurs.
Speaker 1: There's a massive amount of value creation there over the
Speaker 1: next decades to come. So I guess what makes you hopeful?
Speaker 1: Because you have this program and we're having the conversations,
Speaker 1: but we're still not seeing the numbers move one. It's embarrassing,
Speaker 1: It's very embarrassing. It's upsetting Darren. So how do we
Speaker 1: get people to move from acknowledging to actually acting, you know,
Speaker 1: allocating those funds to women and and and managers of color.
Speaker 1: How do we get them to that part that point? Well, well,
Speaker 1: part of what we do is UM implicit bias production
Speaker 1: is a little bit more like UM learning tennis or
Speaker 1: a martial art. A lot of people think they can
Speaker 1: sit through a day long training and then they've they're
Speaker 1: they're they're cured of it. UM when we spend our
Speaker 1: whole life developing these biases, and many leaders within the
Speaker 1: global asset management business have them in fact in economen
Speaker 1: when the Nobel Prize in Economics UM showing these biases
Speaker 1: that show up in behavioral decision making within investing UM,
Speaker 1: and what we're doing is really extending that type of
Speaker 1: research to the overlooking of women and people of color
Speaker 1: and taking this ten year approach to really training people
Speaker 1: to reduce them. Now, ten years is a long time
Speaker 1: if there is not a massive amount of uh A
Speaker 1: value accretion on the other side of doing all of
Speaker 1: that work. But we believe that uh you know, without bias,
Speaker 1: about thirty trillion hours will be managed by women and
Speaker 1: people of color, about half, because we don't see any
Speaker 1: reason to believe that women and people of color are
Speaker 1: less talented than others within the global financial markets. In fact,
Speaker 1: um if given the opportunity and chance to execute, and
Speaker 1: when given the opportunity and chance to execute, the National
Speaker 1: Association of Investment Companies has shown that for the last
Speaker 1: forty years there's at or above performance of these types
Speaker 1: of funds on average. So we've got a lot of
Speaker 1: work to do to really fine and capitalize on this
Speaker 1: important area of overlooked and latent value in our economy.
Speaker 1: All right, I have a question for you, Darren. I mean,
Speaker 1: if the numbers are there that shows the performance by
Speaker 1: being more diverse and inclusive in terms of investing, If
Speaker 1: the numbers are there, and yet we still have you know,
Speaker 1: smart institutional investors turning away. Is it just that racism
Speaker 1: is so entrenched in our society and how do we
Speaker 1: how do we write above that? Because I remember start
Speaker 1: and I like at the beginning of the pandemic and
Speaker 1: we're talking after and George Floyd like we all did
Speaker 1: feel like things were going to change, and yet kind
Speaker 1: of here we are. It's a great question. So what
Speaker 1: we find is that, um, you know, within the science,
Speaker 1: of course, there is structural racism, just to put that
Speaker 1: to sleep in case there's anybody that doesn't believe that
Speaker 1: there is. But what we see and people that uh,
Speaker 1: you know, have spent their careers on Wall Street trying
Speaker 1: to make as much money as they can and make
Speaker 1: prosperity for their investors, there's actually this legal threshold to
Speaker 1: live up to within their you know, ethical value set,
Speaker 1: and a number of people I believe are trying to
Speaker 1: live up to that and not diminish their own returns.
Speaker 1: But they kind of, um uh sort of trip themselves
Speaker 1: in a way because their mind makes these quick judgmental decisions.
Speaker 1: And we've a number researchers have proven in brain science
Speaker 1: and brain data that our minds make these jumps and leaps,
Speaker 1: so we you know, it's been documented well in various
Speaker 1: different books, and to lose returns in order to do
Speaker 1: what you're familiar with is what we see in the
Speaker 1: vast majority of these decision making processes. In fact, in
Speaker 1: many experiments where we look at education disparities or health disparities,
Speaker 1: what we find is that people that are well intentioned,
Speaker 1: that will take a test on prejudice, for example, and
Speaker 1: score they're not prejudice, will will go forward and make
Speaker 1: investments where the result is uh, you know, succumbing to
Speaker 1: systemic racism, of course, but they're actually trying to make
Speaker 1: as much money as they can. That was Darren Dotson.
Speaker 1: He is managing partner at a Lumen Capital and Bloomberg
Speaker 1: News New York Deputy Bureau Chief Shartilla Brantley Short, by
Speaker 1: the way, also a senior editor for Bloomberg Live, one
Speaker 1: of the driving forces behind our Bloomberg Equalities summits Well,
Speaker 1: that wraps up the first hour of the weekend edition
Speaker 1: of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser
Speaker 1: and I'm Tim Stenovic. Ahead in our next hour, we're
Speaker 1: talking tech from all angles, including our cover story on
Speaker 1: the crumbling big Tech monolith, and a feature on a
Speaker 1: medas plans to beat TikTok and has to do with
Speaker 1: copying TikTok. We talked about technology, big tech in particular
Speaker 1: a lot this week. There was a lot going on.
Speaker 1: Plus we've got the man who helped invent the iPod
Speaker 1: speaking of big tech, The man who helped invent the
Speaker 1: iPod breaking down the hidden dangers of so called device
Speaker 1: addiction and social media. This is Bloomberg. This is Bloomberg
Speaker 1: Business Week inside from the reporters and editors who bring
Speaker 1: you America's most trusted business magazine. Plus global business finance
Speaker 1: and tech news as it happened. Its Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stenovic on
Speaker 1: Bloomberg Radio. Plenty ahead in our second hour of the
Speaker 1: weekend edition of Bloomberg Business Week, including why Meta's planned
Speaker 1: to combat TikTok means taking a page right out of
Speaker 1: its rivals playbook, Plus a warning on the dangers of
Speaker 1: social media and device addiction from a man who knows
Speaker 1: a little thing about devices. He helped invent some of
Speaker 1: the most habit forming electronics of all time, including the
Speaker 1: iPad and the iPhone. Yeah I heard of those things right,
Speaker 1: all right, First up this hour, let's get to the
Speaker 1: cover story of our double issue of Bloomberg Business Week magazine.
Speaker 1: It's a broader look at the tech sector and the
Speaker 1: mega cap stock route unfolding during the first half of
Speaker 1: this year of firms including Amazon, Tesla, and Meta have
Speaker 1: pushed the SMP five hundred to the brink of a
Speaker 1: bear market. With us now to tell us all about
Speaker 1: it is Jeff Muscus, Senior Features editor for Bloomberg Business
Speaker 1: So he's with us in the Bloomberg Interactive Broker studio
Speaker 1: along with Joel Weber, the editor of Bloomberg Business Week,
Speaker 1: who's with us as well. Joel, So, all good things
Speaker 1: must come to an end, and it certainly seemed like
Speaker 1: that's happening in Silicon Valley. Yeah, we kind of called
Speaker 1: the bottom and now it's coming out, you know, to
Speaker 1: NAZAC two days it's creeping back out since we kind
Speaker 1: of put the finishing touches. Uh, it'll regress, I'm sure, um,
Speaker 1: But basically, you know, we do a Tech issue every year,
Speaker 1: and what we really wanted to talk about here, and
Speaker 1: I think it just became impeccably unfortunate timing because every
Speaker 1: it's like the world caught up to the ideas that
Speaker 1: we had in this package. Is everything has started to change.
Speaker 1: The VC backed funny money when money was free, led
Speaker 1: to a lot of uh, you know, exorbitant ideas and
Speaker 1: investments and SPACs and crypto and we're seeing a aggression
Speaker 1: to the norm I think or and what Jeff really
Speaker 1: set out to do and as the architect of this package,
Speaker 1: and brad Stone and was thatte like you mentioned, wrote
Speaker 1: the cover story, which really sets the table, but there's
Speaker 1: a lot of other things in this package that helped
Speaker 1: kind of amplify this idea. So Jeff being the guiding
Speaker 1: hand that put all of these stories together, Like what
Speaker 1: were you what were you setting out to accomplish? Sure, well,
Speaker 1: like you said, Joel, we sort of started out from
Speaker 1: the position of okay, well you know here we are
Speaker 1: sort of um returning to varying degrees of a new
Speaker 1: version of normal as people returned to their offices and
Speaker 1: that sort of thing. And so for the first time
Speaker 1: really in in two years, we're taking a sustained and
Speaker 1: marginally less COVID inflicted. Look at where is the tech
Speaker 1: industry now? Where are all these you know, big name
Speaker 1: companies that you know, a lot many of us haven't.
Speaker 1: I haven't been looking that squarely act for the past
Speaker 1: couple of years. And what does the tech world look
Speaker 1: like now? And where is it going? And with that
Speaker 1: in mind, you know a lot of our best writers
Speaker 1: and reporters here at Bloomberg News and on the Tech
Speaker 1: team UH took a look at some of our our biggest,
Speaker 1: bold faced name targets from Instagram and TikTok uh to
Speaker 1: Google and all the way down, and then you know,
Speaker 1: sort of looking forward to where tech world going. We
Speaker 1: have a bunch of interesting looks both that things like
Speaker 1: prediction markets that are sort of on the bubble of
Speaker 1: regulation and biotech stories like this look at what they're
Speaker 1: called better Odds Babies, the science of pologenic risk scoring
Speaker 1: that might well just be the next big thing. So
Speaker 1: one of the things that I loved about the package
Speaker 1: was like, they're serious stuff, but then there's like the
Speaker 1: perfect encapsulation of everything that just talking about is remember
Speaker 1: the scooter craze. Want to start to feel a little
Speaker 1: bit like a segue now, uh it survived the pandemic mostly, Jeff.
Speaker 1: But why why why was it like such a perfect
Speaker 1: story to include in this context. Well, like you're saying
Speaker 1: a minute ago, Joel, that you know, right before the pandemic,
Speaker 1: the bottom started to drop out of this wave of
Speaker 1: basically decade long cash burning as a means of not
Speaker 1: just survival, but as the main strategy for a huge
Speaker 1: part of the venture or backed tech industry. And uh
Speaker 1: so the scooter craze was well suited for that moment
Speaker 1: where the whole deal was Okay, well you know this
Speaker 1: or that mega fund is going to give you guys
Speaker 1: nine figure checks on the regular to go out and
Speaker 1: build an explosit monopoly. Now go do it. Um and
Speaker 1: coming out of the pandemic for for a variety of reasons,
Speaker 1: or you know, as people start to to need things
Speaker 1: like scooters again, we come back to find these companies
Speaker 1: sort of clinging to life to varying degrees and without
Speaker 1: the easy access to capital that everybody got used to. Jeff.
Speaker 1: I feel like one of the things that I feel
Speaker 1: like we every guest and you often hear like pets
Speaker 1: dot Com, pets dot Com, like, are we lining exactly?
Speaker 1: Are we lining like this tech route that we're seeing,
Speaker 1: is it similar to what we saw in two thousand?
Speaker 1: I mean, are those comparisons fair or is it different?
Speaker 1: I think we're still ways off the sort of industry
Speaker 1: wide carnage that we saw at the end of the
Speaker 1: dot com bubble, But Brad and Lazette are smart to
Speaker 1: draw the comparison, at least in terms of the hype
Speaker 1: machine between you know, the sort of infamous pets dot
Speaker 1: com super Bowl ads and the Super Bowl ads we
Speaker 1: saw this year with all those crypto celebrities. Yeah, the
Speaker 1: crypt the crypto Pets comparison. My favorite was the Larry
Speaker 1: David one because I'm just a big Larry David. There's
Speaker 1: some other ones that are pretty good too, But U So,
Speaker 1: you know, what does VC actually had to say about this,
Speaker 1: because that figures into bradon was that story to bring
Speaker 1: it back to today's big take, right, like because they're
Speaker 1: undaunted really right? Yeah, for what it's worth, most of
Speaker 1: the sort of mainline VC types that you would want
Speaker 1: to talk to you and that Brandon Lizette went out
Speaker 1: to for for this kind of piece, you know, kind
Speaker 1: of said well, the next next thing is coming, like
Speaker 1: this is going to expose the businesses that aren't ready
Speaker 1: for the next moment for what they are, and the
Speaker 1: people who have done the to prepare for a storm
Speaker 1: like this, they're gonna be just fine. That was Senior
Speaker 1: Features editor Jeff Muscus and Business Week editor Joel Webber
Speaker 1: on the cover of this week's special Tech issue. You're
Speaker 1: listening to Bloomberg Business Week coming out the secrets out
Speaker 1: about a hidden gem in the Heartland, while the mayor
Speaker 1: of a fast growing Tennessee hub says his city has
Speaker 1: a chance to be America's best. This is Bloomberg. This
Speaker 1: is Bloomberg Business this Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovik from Bloomberg Radio. We are talking
Speaker 1: some big macro global issues right now. You know that
Speaker 1: we talk about it all the time on air, which
Speaker 1: is why we also need to remind ourselves that it's
Speaker 1: always important to check out things from the ground level up.
Speaker 1: For an inside look at a market that's fast becoming
Speaker 1: one of America's most desirable, we turn to Chattanooga, Tennessee,
Speaker 1: and the mayor of that city, Tim Kelly. Chattanooga is
Speaker 1: home to the kind tree is the fastest and most
Speaker 1: pervasive internet service. It's unemployment rate is hovering your three percent,
Speaker 1: and it's becoming a haven for people who have the
Speaker 1: option to work remotely. In fact, it's so popular among
Speaker 1: people looking to leave bigger cities that local sphere they
Speaker 1: could be priced out of the housing market. It's getting there,
Speaker 1: and so you know, we've jumped on it pretty quickly.
Speaker 1: UM announced a thirty three million dollar allocation of a
Speaker 1: city budget, which the city that has Chatanoo is a
Speaker 1: pretty good chunk. Uh. And then I'm gonna use my
Speaker 1: UM experience in the philanthropic world to really work with
Speaker 1: our local foundations and national foundations to try to raise
Speaker 1: a hundred million total and then also contribute a lot
Speaker 1: of city property that we have towards the effort. But
Speaker 1: but it is um, it's a form of inflation, and
Speaker 1: you know you have to get on it early and often.
Speaker 1: So we're we're where where there's a lot of buildings
Speaker 1: going up. Thank god. You know, the suplat chains issues
Speaker 1: seem to be slacking up a little bit. But UM,
Speaker 1: we we are going to have to be very intentional
Speaker 1: about increasing supply. What is typical cost of the house
Speaker 1: uh for a family or housing for family, and how
Speaker 1: much has it increased in the last two years. So
Speaker 1: the stats I've got, I want to say, the median
Speaker 1: household price five or seven years ago is like one
Speaker 1: fifty nine and it's gone to I want to say,
Speaker 1: to seventy nineties somewhere in there. So that's a pretty
Speaker 1: meteoric jump. So mayor Kelly, you know that there are
Speaker 1: people in the New York metro area saying, Okay, I'm
Speaker 1: packing up and moving to Chattanooga. I mean, that's the
Speaker 1: thing that's going on, right the perspective of exactly, I mean,
Speaker 1: that's part of the appeal. It's sure, it is right,
Speaker 1: there's no question about it. That plus plus the Internet,
Speaker 1: plus all the green space, it's not really that complicated.
Speaker 1: But but the trajectory has headed on. I mean, that's great.
Speaker 1: That's what we're here to do, or I'm here to do,
Speaker 1: is to try to sell Chattanooga and push economic growth.
Speaker 1: But but again, my job is a Goldilocks problem, so
Speaker 1: I have to have to have to push hard. You know,
Speaker 1: I wanted to talk to you about Roe V. Wade
Speaker 1: because it's a business store and Tennessee is one of
Speaker 1: about a dozen states I believe they're thirteen that have
Speaker 1: a so called trigger law, so abortion would be illegal
Speaker 1: if the Supreme Court overturns Roe v. Wade. We see
Speaker 1: companies speaking out about this, especially that companies that have
Speaker 1: employees and states were so called trigger laws could take effect.
Speaker 1: What would you say to somebody who's concerned about moving
Speaker 1: to a state where abortion could become illegal? Well, I
Speaker 1: am concerned about it, right, I mean, the break on
Speaker 1: economic growth could be significant the flip side as a
Speaker 1: as a city mayor, right, I kind of try to
Speaker 1: live by the old serenity prayer and worry about what
Speaker 1: I can control and not worry about what I can't control.
Speaker 1: And that one is is well above my pay grade.
Speaker 1: But but I am concerned as I think the most
Speaker 1: most business minded people in the state of Tennessee are
Speaker 1: um and I'll leave it at that, Okay, but I
Speaker 1: am going to follow because you said you're concerned about
Speaker 1: it being a break on economic growth. You could see
Speaker 1: something like that slowing either companies coming to this, coming
Speaker 1: to the city, or expanding within the city. Yeah, yes,
Speaker 1: of course, right, I mean, I think history has shown
Speaker 1: that companies and workers, particularly the knowledge economy, want to
Speaker 1: be in diverse progressive cities. That right, and and that
Speaker 1: is sort of antithetical, uh to running the opposite current
Speaker 1: from from from overturning Roy wade Um that said, you know,
Speaker 1: Tennessee has always been a very pro business state and
Speaker 1: has has pro business leadership. I will will see how
Speaker 1: it all plays out, but it is it is of
Speaker 1: concern for us, you know. I do want to point out,
Speaker 1: as full disclosure, Chattanooga among the first AID cities selected
Speaker 1: for a nationwide initiative to improve government performance and transparency
Speaker 1: through civic data. We're talking about Bloomberg Philanthropies, What Works
Speaker 1: Cities and which is providing support and training for midsize cities,
Speaker 1: including your city. I mean, what does it mean to
Speaker 1: be a modern city today? Well, again, I guess I'm
Speaker 1: if I came at it from business and philanthropy, not
Speaker 1: from politics, And is that an advantage. I think it's
Speaker 1: a huge advantage. I mean again, Mike Bloomberg of candidly
Speaker 1: is my hero, right, I mean like I come at
Speaker 1: it from the same direction that he did. You know,
Speaker 1: executive politics is a very very different, non ideological exercise
Speaker 1: than legislative politics. My job is to run the city
Speaker 1: like a Swiss watch right to to to really have
Speaker 1: the machinery of government work. And I don't think that's
Speaker 1: a trivial undertaking because we ran in my whole campaign
Speaker 1: based on filling potholes, which seemed really probably a bad
Speaker 1: analogy but pedestrian. But what occurred to me through the
Speaker 1: course of the campaign was people want to know that
Speaker 1: government can solve their problems. And if you can't solve
Speaker 1: their simplest problems, they're not gonna trust you to solve
Speaker 1: more abstract problems. I mean democracy. I think it's fair
Speaker 1: to say as an institution is under is under threat.
Speaker 1: And I think cities are where we can prove that
Speaker 1: democracy works and that government can still solve people's problems,
Speaker 1: but all people, all people's problems. How do we make
Speaker 1: sure of that? Because that's that's the world we are in. Here.
Speaker 1: We come off as two year pandemic, right uh, and
Speaker 1: we see the gaps have just widened absolutely. And so
Speaker 1: the thesis of my campaign not to get too political, was,
Speaker 1: you know, one Chattanooga, I published a forty page strategic
Speaker 1: plan that's basically relies on two tenants. One is, you know,
Speaker 1: creating government that works better for all Chattanoogan's. But the
Speaker 1: other one, very frankly, is getting the difficult topics on
Speaker 1: the table and talking about them until we fix them.
Speaker 1: And that's racial equity, right, And it's not. As Raphael
Speaker 1: Bostick eloquently said to the Atlanta Federal Reserve, racism is
Speaker 1: is expensive. It doesn't work. And so you know, the
Speaker 1: gaps between the black and the white community and Chattanooga
Speaker 1: are are worse than they are nationally and it has
Speaker 1: to change. Right. So that's that is a very explicit
Speaker 1: goal for us, is to close the gaps in average
Speaker 1: income and network between our black and white communities. And again, look,
Speaker 1: I'm a startup guy, I'm an entrepreneur. A lot of
Speaker 1: it will be focused there, a lot of it's focused
Speaker 1: on workforce development, adult learners, and and of course good
Speaker 1: old fashioned education. We need to fund from early childhood
Speaker 1: to post secondary. We need to fund our educational institutions better.
Speaker 1: All Right. So I'm gonna say, I feel like we've
Speaker 1: been having these conversations and I'm not I'm I'm targeting
Speaker 1: you because you're here, but I mean it more broadly,
Speaker 1: and the same thing, you know, after George Floyd, like
Speaker 1: these were not new conversations. So what is it? So
Speaker 1: many people say, well, the people who are most impacted
Speaker 1: don't have a seat at the table, right, So so
Speaker 1: what would you say if you could pick one or
Speaker 1: two things that you think would change some of the
Speaker 1: inequities that are out there, whether it's black, white, whether
Speaker 1: it's you know, well, look, I mean it's to some
Speaker 1: extent it's an attitudinal thing. A good friend of mine
Speaker 1: ran against me, is mayor, a black man, and I won,
Speaker 1: you know, and um and I if there was a consolation,
Speaker 1: we're you know, we're still quite close. You know. Racism
Speaker 1: is a problem for the black community, but it's a
Speaker 1: problem with white people. Right. So I think as a
Speaker 1: white candidate can can do some things to help close
Speaker 1: those gaps that that a black candidate might not be
Speaker 1: able to do. And that's what I try to do
Speaker 1: on a daily basis, right, just to keep having those
Speaker 1: conversations in a very very intentional way, and again not
Speaker 1: in a political or polemical way, but in almost a
Speaker 1: utilitarian way. Right, this this doesn't work, it's it's not working.
Speaker 1: That was Tim Kelly, mayor of Chattanooga, Tennessee. We should
Speaker 1: note that Chattanooga was among the city's elected for a
Speaker 1: nationwide initiative to improve government performance and transparency through civic data.
Speaker 1: That initiative by Bloomberg Philanthropies. It is founded and supported
Speaker 1: by Michael R. Bloomberg, the founder and majority owner of
Speaker 1: Bloomberg LP. Still to come on Bloomberg Business Week. Mark
Speaker 1: Zuckerberg is so worried about TikTok that is blowing up Instagram,
Speaker 1: which of course he owns. Right Yeah, Facebook bought it
Speaker 1: about a decade ago for a billion dollars. It looks
Speaker 1: like probably the best investment Facebook ever made. This is
Speaker 1: Bloomberg Broadcasting from the financial capital of the world Bloomberg
Speaker 1: eleven Frio in New York to Washington, d C. Bloomberg
Speaker 1: to Boston, Bloomberg one O six one to San Francisco,
Speaker 1: Bloomberg nine sixty to the country Sirius XM Chado one
Speaker 1: nineteen and around the globe the Bloomberg Business app and
Speaker 1: Bloomberg Radio dot com. This is Bloomberg Business Week. At
Speaker 1: Middle Platforms annual shareholder meeting this week, CEO Mark Zuckerber
Speaker 1: and founder, of course of the company said that the
Speaker 1: company will lose a significant that was Zuck's word amount
Speaker 1: of money in the next three to five years as
Speaker 1: it builds out the metaverse Meta. The company formerly known
Speaker 1: as Facebook also wants more people using its short form
Speaker 1: Instagram video feature. It's called reels. You've probably seen it
Speaker 1: if you've been scrolling through your feed lately, and it's
Speaker 1: copying its biggest social media competitor, TikTok, that appears at
Speaker 1: least to be the game plan. Bloomberg News Big Tech
Speaker 1: team leader Sarah Fryer and Business Week editor Joe Weber explain,
Speaker 1: it's not like that that strategy that has kind of
Speaker 1: helped um, you know, Facebook reached three billion people around
Speaker 1: the world, always works. But they have ran up against
Speaker 1: a competitor the likes of which they have not really
Speaker 1: had this much of an existential dread about. And that
Speaker 1: competitor is TikTok. And part of what makes TikTok go
Speaker 1: so well and has taken off during the pandemic is
Speaker 1: that and its ability to capture this youth culture. Is
Speaker 1: this algorithm that really surfaces people who who maybe you
Speaker 1: have never even used the platform before, and it harnesses
Speaker 1: it is this drug, and there's a sense of discovery
Speaker 1: and when you tap into what Facebook has it maybe
Speaker 1: doesn't feel the same and the you know, as Facebook
Speaker 1: here tries to pivot into the metaverse. Reels is the
Speaker 1: Instagram product that Sarah Fryer has written about here. Facebook
Speaker 1: is putting meta, is putting a ton of weight on reels,
Speaker 1: this feature within Instagram to be the thing that takes
Speaker 1: on TikTok. How is that going so far? Sarah, Well,
Speaker 1: it's really a big gamble. I mean, what they're doing here,
Speaker 1: it's hard to oversee how much is changing Instagram. Instagram
Speaker 1: teams to prominence based on its aspirational lifestyle photography. You know,
Speaker 1: the stuff you would go and you'd scroll and you
Speaker 1: see people on their vacations, they're having their nice meals. Um.
Speaker 1: This this reels experience. It's all videos, short form video,
Speaker 1: and they're forcing it into every users speed. So when
Speaker 1: you scroll through those nice photos, you're going to get
Speaker 1: these videos of sound, right, and if you quick on them,
Speaker 1: you're in in real you can't. It's like hard to
Speaker 1: get out of it. I I've you know, watch people
Speaker 1: try this um and and just get really confused and like, okay,
Speaker 1: what's happening to Instagram? And it might even get more
Speaker 1: redesigned in that direction, you might eventually open Instagram and
Speaker 1: it's all the short form videos basically essentially TikTok. So
Speaker 1: it's not just that they're trying to copy TikTok, it's
Speaker 1: that they are basically completely reinventing Instagram in the process
Speaker 1: because they're so desperate to bring back that teen demographic,
Speaker 1: which the Zuckerberg sees as the future. I mean, these people,
Speaker 1: they develop their habits, and they have their habits, they
Speaker 1: have their communities, they've established it, and he wants them
Speaker 1: to be establishing it on his platforms. And Instagram is
Speaker 1: his It's become like his Swiss army knife to the
Speaker 1: team demographic, which has made Instagram incredibly confusing and packed
Speaker 1: the features. And um, you know it's a risk. It's
Speaker 1: a big risk because it's such an important property. It's
Speaker 1: it's the main revenue driver for Facebook on the main
Speaker 1: revenue growth driver, I say, and you know they're they're
Speaker 1: risking it to tibet the farm on becoming TikTok. Walk
Speaker 1: us through that confusion that that users are are confronted
Speaker 1: with when they now launch Instagram, which used to be
Speaker 1: this well curated, square boxed uh platform. Right, Um, and
Speaker 1: you could curate it and it was awesome and very simple.
Speaker 1: What what does it look like now and what could
Speaker 1: it become? Because you have some interesting reporting on that well,
Speaker 1: and in the way I described it in the story,
Speaker 1: it's just like it's like you're you're cruising to required
Speaker 1: art gallery, neutral in the corner, and you're in a
Speaker 1: dance party. It can be very jarring if you're in
Speaker 1: the mode of silence images and then you go into sound. Um,
Speaker 1: your brain is just working differently. And so I think
Speaker 1: that what people come to Instagram for um. You know,
Speaker 1: people have spent years, spent more than a decade curating
Speaker 1: who they follow on Instagram. Now when you go to Instagram,
Speaker 1: the top thing you are going to get it suggestions.
Speaker 1: Your feet is going to become full of stuff that
Speaker 1: you didn't say you wanted, and a lot of it
Speaker 1: is going to be experimental and not based on what
Speaker 1: you've been following before. And that's that's a huge bet
Speaker 1: for Facebook at large. They want to become more about discovery.
Speaker 1: For the last fourteen years, since the invention of the
Speaker 1: New Seeds, they've been really good at showing you what
Speaker 1: they already know you want to see. Now it's about
Speaker 1: showing you stuff that you never even knew you wanted
Speaker 1: to see, which TikTok is really good at and Facebook
Speaker 1: is really not yet. That was Bloomberg News Big Tech
Speaker 1: team leader Sarah Fryer along with Business Week editor Joe Webber.
Speaker 1: You're listening to Bloomberg business Week. Coming up, lessons from
Speaker 1: a life in Silicon Valley from one of the inventors
Speaker 1: of the iPod, and the warning from him about the
Speaker 1: device addiction that comes with many of the popular social
Speaker 1: media platforms that we have been talking about. Former Steve
Speaker 1: Jobs advisor and the creator of Nest joins us. Next,
Speaker 1: that's Tony Fidel. This is Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovik from Bloomberg Radio. Our next guest is credited with
Speaker 1: creating the iPod. He's actually created a few companies, also
Speaker 1: with building out the iPhone and founding the smart home
Speaker 1: company Nest. He spent more than nine years at Apple,
Speaker 1: including being advisor to Steve Jobs, of course, then the
Speaker 1: CEO and co founder of Apple. He's also warned us
Speaker 1: about the dangers of device addiction and Silicon Valley's responsibility
Speaker 1: to fix it. Tony Fidel is now principal at Future Shape.
Speaker 1: It funds early stage companies and invest in what he
Speaker 1: calls quote deep technology. This was an interesting conversation. Tony's out,
Speaker 1: by the way, with a new book. It is entitled
Speaker 1: Build an Unorthodox God to Making Things Worth Making. We
Speaker 1: began our conversation by asking him about Apple's recent announcement
Speaker 1: that it's discontinuing the iPod. It's bitter sweet, obviously if
Speaker 1: you see your baby go. But you know, at the
Speaker 1: end of the day, the march of technology, the drumbeat
Speaker 1: of technology never stops, right, And I've been in this
Speaker 1: business long enough to know that you can't get to
Speaker 1: you know, too wedd into any one thing because you know,
Speaker 1: you might have to eat your own And that's exactly
Speaker 1: what the iPhone did. You know, the iPod um created
Speaker 1: the conditions at Apple to be able to make the iPhone.
Speaker 1: So without the iPod, there would have been no iPhone.
Speaker 1: So it feels really good to know that what we
Speaker 1: did in the iPod and brought Apple into where it
Speaker 1: is today. You know, it's yeah, it was last week.
Speaker 1: I guess the most valuable company on the planet, and
Speaker 1: that was because of the iPods. Wells really really wonderful
Speaker 1: to know. Well. And I talked to us about your
Speaker 1: journey because that's so much a part of this book,
Speaker 1: um build and and who you wanted to read this
Speaker 1: book and what lessons you hope are what you hope
Speaker 1: people would take away from reading it? Well, I think
Speaker 1: you know. I stepped back and I thought about the
Speaker 1: mentors that I've had over the years. And that's the
Speaker 1: reason why I'm able to talk to you today is
Speaker 1: those people helped me. And if I didn't get that
Speaker 1: help back in the day, maybe I would not be here.
Speaker 1: And so when I thought about those mentors, most of
Speaker 1: them had died, and I thought, oh, it's now my
Speaker 1: turn to be mentor, And so how can I do
Speaker 1: that at scale and take the journeys through companies like
Speaker 1: General Magic and Phillips and Apple and Nest and all
Speaker 1: the lessons learned on building transformative technology and really the
Speaker 1: books about human nature, so which so I'm trying to
Speaker 1: really go for you know, what were you if you
Speaker 1: were in high school or if you're in college or
Speaker 1: a new grad. What do you need to know? What
Speaker 1: you look behind the scenes of the product that you
Speaker 1: probably grew up with and and how those were developed.
Speaker 1: But not just like from a technical point of view,
Speaker 1: but from a human nature point of view, building your career,
Speaker 1: building products, building teams, companies, businesses. So it's all about
Speaker 1: trying to give back to help those those those people
Speaker 1: with their careers um and and hopefully one day they'll
Speaker 1: change the world as well well. So how did Steve
Speaker 1: Jobs help you? One by giving us an environment to
Speaker 1: actually thrive to be able to create the iPod That
Speaker 1: was the first thing. But the other one is really
Speaker 1: to learn about storytelling in detail. And what happens is
Speaker 1: is you really need to not just create technology for
Speaker 1: technology's sake. That's what happened to General Magic, and that's
Speaker 1: what I learned so painfully up the disaster that was
Speaker 1: that company. And so watching him masterfully tell a story,
Speaker 1: a non fictional story, through marketing and through the products
Speaker 1: that we created and all the customer touch points, you know,
Speaker 1: you get to see a master at work. And then
Speaker 1: we were able to then take those lessons and create
Speaker 1: a company like nest and and change the world there
Speaker 1: with a small, tiny team because we learned how to
Speaker 1: do it right. Tell you. What I wanted to ask
Speaker 1: you is what's worth making in today's environment? Yeah, how
Speaker 1: do you? How do you make things worth making? So
Speaker 1: I always start with the pain. I'd much rather go
Speaker 1: where customers have pain. I don't want to give them
Speaker 1: vitamins customers who some people like vitamins, not everyone needs them.
Speaker 1: When you have pain, you need to, you need to,
Speaker 1: you know, just squash that pain down. And it's even
Speaker 1: better if you if you give them a pain killer
Speaker 1: and a superpower at the same time, so they can
Speaker 1: do things with the product or service that they never
Speaker 1: thought possible before, and they feel like there's they have
Speaker 1: new new superpowers. And so you really have to focus
Speaker 1: on the pain and do it in a way that
Speaker 1: people feel really amazing about it. Okay, so it's clear
Speaker 1: how you did that at Nest with the Nest Learning thermostat,
Speaker 1: a product that continues, I think to solve a pain
Speaker 1: point in many consumers lives. We both had them, Yeah,
Speaker 1: we both have them, and um, Tony, but but where's
Speaker 1: the pain? Where's the pain today? Because I look around
Speaker 1: and I see the innovation at a company like Meta Platforms,
Speaker 1: for example, and that's the metaverse. Or do we feel
Speaker 1: pain in the real world and need to be in
Speaker 1: the metaverse. I feel real pain from the climate crisis
Speaker 1: we have, in the health crisis we have, and our
Speaker 1: social crisis is we have that we're generated out of
Speaker 1: disintermediation between humans. It first started with text and video
Speaker 1: and photos. And now we're gonna say we're going to
Speaker 1: go in the metaverse and we're going to get connected
Speaker 1: and dance and have meetings. To me, that's toxic. We've
Speaker 1: seen what it's done in the past. You're not going
Speaker 1: to get into the metaverse. People are not going to
Speaker 1: want to go and live in there and dance in
Speaker 1: there and and connect. We need to have controls on
Speaker 1: that stuff before we ever. You know, we've been talking
Speaker 1: about controls on text and Twitter, all these other things,
Speaker 1: these social platforms. Why we want a new environment where
Speaker 1: disconnects us even more and allows more toxicity to grow.
Speaker 1: Let's fix the social problems we have on the with
Speaker 1: the technology we have, Let's not create even more of them.
Speaker 1: So let's go and also let's fix the problems in
Speaker 1: the real world, the climate crisis that we have. There
Speaker 1: are so many things that we need to address right now,
Speaker 1: and this these these goals that we have are coming
Speaker 1: so quickly. If not, we could lose it all. It's it's,
Speaker 1: it's it's it's absolutely astonishing to me that we are
Speaker 1: diverting incredible, smart, brilliant brains and resources to things that
Speaker 1: are not solving the real problems that we have today. So,
Speaker 1: you know, you talk about social um and the social universe,
Speaker 1: do you think Elon Musk is someone who can fix
Speaker 1: Twitter to some extent um and some of the downside
Speaker 1: of that social media platform. And I don't think I'm
Speaker 1: saying any thing subjective. I think many would argue that
Speaker 1: it can do a lot of good, but it can
Speaker 1: also do a lot of harm like other social media. Absolutely,
Speaker 1: it's not just Twitter, there's so many things. But could
Speaker 1: he could he fix it? He could fix it if
Speaker 1: he wants to fix it in the right way. I
Speaker 1: think what we have to understand here is we can't
Speaker 1: just go putting people back onto the Twitter platform if
Speaker 1: we don't change the environment at which they come back
Speaker 1: onto it with. If we continue to drive revenue based
Speaker 1: on amplifying um, misinformation and and and these kinds of things,
Speaker 1: then we have not done anything to fix Twitter or
Speaker 1: fix these social networks. We have to divorce the amplification
Speaker 1: mechanism from the revenue mechanism. If we don't do that,
Speaker 1: the toxicity will only grow. And we can't just let
Speaker 1: anyone on to say free speech, free speech in the
Speaker 1: in the town square was never amplified. He should not
Speaker 1: amplify that for revenue purposes. Do you think some of
Speaker 1: these big tech companies have just become too big and
Speaker 1: kind of too controlling in terms of the narrative? Uh?
Speaker 1: And the trend of where technology is going. I think
Speaker 1: with great power comes great responsibility, and if they can't
Speaker 1: rain themselves in, then they're going to need to be
Speaker 1: reined in by the government or what have you. The
Speaker 1: inequity is growing so dramatically and the concentration of powers
Speaker 1: growing so dramatically, not just then the people who use
Speaker 1: the products or are used by the products, but who
Speaker 1: also the ecosystems they create, and they continue to extract
Speaker 1: so much revenue from apps or what have you. It
Speaker 1: needs to be rebalanced. If not, we saw this in government.
Speaker 1: When there's an equity, there's revolution. They're going to have
Speaker 1: a revolution against them if they do not ring themselves in.
Speaker 1: So I do see the power growing too strong and
Speaker 1: they're going to have to modulate down otherwise they will
Speaker 1: be they will be forced to do so. Tony, last
Speaker 1: time you and I spoke was I believe back in
Speaker 1: and you were at that time pushing for controls on
Speaker 1: Apple products, specifically monitors monitoring how much we were using
Speaker 1: those products to give Apple customers an idea of just
Speaker 1: how much time they were spending on their phones. Apple
Speaker 1: has since done that. In each week I get a
Speaker 1: really depressing report that shows how much time I'm spending
Speaker 1: on Apple devices. Are you satisfied with with that type
Speaker 1: of disclosure that you're seeing from Apple right now? And
Speaker 1: and what have you learned after taking on that project? Well,
Speaker 1: you know that was that was something that they implemented
Speaker 1: based on public reaction to you know, this this social
Speaker 1: or this screen time addiction. Um, I think we're only
Speaker 1: of the way there. It was a good start, but
Speaker 1: there has been really no innovation and continuing to take
Speaker 1: it to the next steps. So I think still need
Speaker 1: not just Apple, but Google, all the different platforms, you know,
Speaker 1: PlayStation even, They need to go after and and start
Speaker 1: looking at this the what they can do for the
Speaker 1: screen time limitations and the information. So not just the
Speaker 1: tools and the control tools. That also the information by
Speaker 1: which we disclose what these apps can do, not just
Speaker 1: to kids, but also to adults. And if you look
Speaker 1: at it, you know we now they now added over
Speaker 1: since that they added privacy labels to tell you what
Speaker 1: are the privacy things that these apps do and don't do.
Speaker 1: Why don't we have um a digital nutritional information about
Speaker 1: what these apps can do to kids or what have
Speaker 1: you when you do consume them? You know, do they
Speaker 1: have toxic ads inside these free to play games? You know,
Speaker 1: sure they might be might be get games that kids
Speaker 1: can play. The ads that pop up. I've seen it
Speaker 1: with my daughter. They can be very toxic and my
Speaker 1: daughter comes to me, you know, screaming, going what is this, Daddy?
Speaker 1: So I think we need to be much more on
Speaker 1: what's going on and what we're consuming. Just like nutrition
Speaker 1: labels on the side of a on the side of
Speaker 1: a food product, we need to have that for our apps.
Speaker 1: Dad's Tony Fidel. He's principal at Future Shape. His new
Speaker 1: book Build, an Unorthodox Guide to Making Things worth Making
Speaker 1: is out now. You can catch the entire conversation. Just
Speaker 1: check out our podcast feed that wraps up the weekend
Speaker 1: edition of Bloomberg Business Week from Bloomberg Radio. Thanks so
Speaker 1: much for joining us. I'm Carol Masser and I'm Tim Stanak.
Speaker 1: Be sure to tune into Bloomberg Business Week Monday through Friday.
Speaker 1: It starts at two pm Wall Street Time on Bloomberg Radio.
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Speaker 1: We are all right, everybody, Stay safe. This is Bloomberg