WEBVTT - Bloomberg Businessweek Weekend - July 25th, 2025 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:08.640 --> 0:00:13.000 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.000 --> 0:00:17.599 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.520 and trends shaping today's complex economy, plus global business finance 0:00:22.560 --> 0:00:25.880 and tech news as it happens. The Bloomberg Business Week 0:00:25.960 --> 0:00:31.480 Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.080 --> 0:00:34.920 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:35.240 --> 0:00:38.000 This past week it was largely about the newsflow from 0:00:38.080 --> 0:00:40.879 Washington to Wall Street, and that included shifts on US 0:00:40.960 --> 0:00:44.320 trade policy with global allies, and renewed pressure on the 0:00:44.360 --> 0:00:48.040 FED to the White House fast tracking its AI infrastructure 0:00:48.080 --> 0:00:52.320 build out, and oh right, a busy and big earnings week. 0:00:52.680 --> 0:00:54.520 On that this first hour, what you need to know 0:00:54.560 --> 0:00:57.360 about results from two members of the mag seven, We 0:00:57.400 --> 0:01:01.000 talk Alphabet and Tesla. One traded on earnings, the other 0:01:01.040 --> 0:01:03.040 initially sold off only to Rally. 0:01:03.400 --> 0:01:06.120 And speaking of Tesla, we get into the relationship between 0:01:06.200 --> 0:01:09.760 Elon and the President, recently feuding and yet this past 0:01:09.800 --> 0:01:13.039 week President Trump perhaps offering an olive branch, as he 0:01:13.080 --> 0:01:15.800 put out on social that he wanted Elon to thrive 0:01:16.200 --> 0:01:18.920 Elon's Universe is the cover story of the upcoming new 0:01:18.959 --> 0:01:20.880 issue of Bloomberg Business Week. 0:01:20.840 --> 0:01:24.880 Plus one real estate investor finding opportunities in Solar. We'll 0:01:24.920 --> 0:01:27.080 explain all that to come. We begin with two of 0:01:27.120 --> 0:01:30.160 the big earnings this week. First up, Alphabet, which said 0:01:30.200 --> 0:01:34.080 demand for AI products boosted quarterly sales and now requires 0:01:34.120 --> 0:01:37.440 an extreme increase in capital spending, heightening pressure on the 0:01:37.440 --> 0:01:40.120 company to justify the cost of keeping up in the 0:01:40.160 --> 0:01:40.800 AI race. 0:01:40.880 --> 0:01:43.600 To help break down Alphabet's quarter reelaned on Laura Martin, 0:01:43.680 --> 0:01:46.679 senior analyst at Needeman Company, who has a buy rating 0:01:46.920 --> 0:01:48.080 on Alphabet, the. 0:01:48.040 --> 0:01:51.920 Single most important number to offset the bears is the 0:01:51.960 --> 0:01:55.840 search number. So search revenue up twelve percent, was well 0:01:55.840 --> 0:01:58.960 above the whisper A number of ten percent growth and 0:01:59.040 --> 0:02:01.880 above the Wall Street census number of nine percent growth. 0:02:02.160 --> 0:02:05.960 And they also had four percent click volume, which basically 0:02:06.200 --> 0:02:08.399 is the same as last year, and that's up from 0:02:08.480 --> 0:02:11.480 two percent you know, click through rate in the first quarter, 0:02:11.520 --> 0:02:14.520 which is positive because people of the bare case here 0:02:14.680 --> 0:02:18.639 is that generative of AI answers lower than the economics 0:02:18.760 --> 0:02:21.120 of Google Search, which is the big money engine here. 0:02:21.160 --> 0:02:24.639 So the single most important number was that search grew 0:02:24.800 --> 0:02:27.919 AD revenue twelve percent, which was three hundred basis points 0:02:27.960 --> 0:02:29.240 above consensus view. 0:02:29.760 --> 0:02:31.960 The second most important number is cloud. 0:02:32.440 --> 0:02:34.639 Right, there's still out of capacity with Cloud, but their 0:02:34.680 --> 0:02:37.920 cloud business grew thirty two percent and a twenty percent margin, 0:02:38.440 --> 0:02:41.520 So that's fantastic, So they're really pricing up now that 0:02:41.560 --> 0:02:45.200 they have capacity constraints. And the third most important numbers 0:02:45.240 --> 0:02:48.239 YouTube YouTube grew thirteen percent of revenue, and we think 0:02:48.240 --> 0:02:51.360 it's worth seventy three dollars a share here if it 0:02:51.440 --> 0:02:55.519 was separately tradable and not confined within the alphabet conglomerate. 0:02:56.000 --> 0:02:58.680 So but I would say those are the three most 0:02:58.720 --> 0:03:01.720 important segments that people are talking about. But the barecase 0:03:01.919 --> 0:03:04.600 really is highly focused on the search revenue. 0:03:04.280 --> 0:03:06.800 Ground, and that's exactly where I want to go right now. 0:03:06.960 --> 0:03:09.760 Going into this print, there was so much concern about 0:03:09.760 --> 0:03:14.600 the cannibalization of traditional Google search. Why aren't we seeing that? 0:03:15.240 --> 0:03:18.480 So what they're saying is that what happens when you 0:03:18.560 --> 0:03:20.880 have those answers, when you put in a Google search 0:03:20.919 --> 0:03:23.480 and then you get an answer, is that people are 0:03:23.520 --> 0:03:28.760 spending ten times more time, ten percent more time asking 0:03:28.800 --> 0:03:32.400 the next question, asking the next question, and that the 0:03:32.440 --> 0:03:35.440 shortfalling clicks per query is made up by the fact 0:03:35.520 --> 0:03:39.440 that people spend ten percent longer, which then lets Google 0:03:39.480 --> 0:03:43.120 serve more queries or more ads. So that's what they're saying, 0:03:43.240 --> 0:03:46.680 is that the demometization is about equal. That's their words, 0:03:46.760 --> 0:03:49.480 about equal. But I think part of it is the 0:03:49.560 --> 0:03:55.720 extra time people spend using the answer format is offsetting 0:03:55.880 --> 0:04:01.960 the actual you know, the downdraft in the economics per query. 0:04:02.600 --> 0:04:05.800 Hey, the extra spend the up again CAPEX. Initially everyone 0:04:05.920 --> 0:04:08.200 was saying, well, that's why the stock traded down in 0:04:08.240 --> 0:04:10.240 the aftermarket. It made some folks, or at least some 0:04:10.320 --> 0:04:13.720 investors it felt like initially nervous. What is your take 0:04:13.800 --> 0:04:16.320 on that. I think our own man Deep Singh was saying, well, listen, 0:04:16.360 --> 0:04:19.040 it sounds like they're getting the demand and they're spending 0:04:19.080 --> 0:04:19.919 to meet that demand. 0:04:20.240 --> 0:04:21.440 Yeah, I mean I would say that. 0:04:21.880 --> 0:04:24.120 I would say the other thing that's going on is 0:04:24.160 --> 0:04:25.920 that I think one of the reasons the stock was 0:04:25.920 --> 0:04:30.200 a little volatile is the operating income grew fourteen percent, 0:04:30.279 --> 0:04:33.839 The top line grew fourteen percent, thirteen fourteen percent, and 0:04:33.880 --> 0:04:36.160 it sort of looked like there was minimal operating leverage. 0:04:36.160 --> 0:04:38.240 But what they told us on the call that was 0:04:38.279 --> 0:04:41.560 buried in the financial statements is those costs included one 0:04:41.680 --> 0:04:47.040 four point four billion dollar fine legislative fine, regulatory fine. 0:04:47.279 --> 0:04:50.120 So if you subtract that just to look at costs, 0:04:50.400 --> 0:04:52.960 the most important point we would make that I think 0:04:53.120 --> 0:04:55.560 largely is being missed. It doesn't have to do with revenue, 0:04:55.839 --> 0:04:58.640 has to do with the fact that by integrating generative 0:04:58.640 --> 0:05:02.320 AI into every aspect of their business, they've got really 0:05:03.040 --> 0:05:07.320 accelerating revenue, which everyone's focused on. But their costs are 0:05:07.320 --> 0:05:08.120 going down. 0:05:08.440 --> 0:05:09.320 Okay, that's not fair. 0:05:09.480 --> 0:05:11.719 Their costs are just not going up as fast. There's 0:05:11.760 --> 0:05:15.080 a lot more operating leverage here if you exclude the fine. 0:05:15.400 --> 0:05:17.440 So I think that's why I think once they said 0:05:17.440 --> 0:05:20.560 there was this big fine and the costs, people realize 0:05:20.560 --> 0:05:23.400 that jenerator of AA is really lowering or increasing the 0:05:23.400 --> 0:05:27.640 productivity here, and so the operating leverage is at margin 0:05:27.720 --> 0:05:30.320 expansion is faster than people think at a time when 0:05:30.440 --> 0:05:33.320 revenue is also accelerating. Over consensus view. 0:05:33.480 --> 0:05:35.200 One thing I loved in your research, and you put 0:05:35.200 --> 0:05:37.400 this right up top, Laura, as you said, we like 0:05:37.480 --> 0:05:41.200 Google's strong strategic position as number one in search, number 0:05:41.240 --> 0:05:45.000 one in streaming YouTube number two in mobile, Android, number 0:05:45.000 --> 0:05:47.800 three in claud, number one in autonomous driving. Weimo, which 0:05:47.839 --> 0:05:49.880 Tim and I are both in love with. And you 0:05:49.920 --> 0:05:53.000 say lms make data more valuable and Google's data is 0:05:53.120 --> 0:05:57.159 best in class. Again, your view is alphabet in many 0:05:57.240 --> 0:06:00.920 ways the one to beat. And why hasn't the stock 0:06:01.040 --> 0:06:03.680 been I don't know, doing more this year? 0:06:04.200 --> 0:06:07.120 You know, I think I think Google, So I would 0:06:07.160 --> 0:06:10.960 say their execution has been very haphazard. 0:06:11.120 --> 0:06:11.520 It's not. 0:06:12.000 --> 0:06:16.240 And Wall Street really prefers leaders that lead from the front, 0:06:17.000 --> 0:06:21.560 like Meta, like Mark Zuckerberg. We like, you know, visible, clear, 0:06:21.760 --> 0:06:25.160 visionary leaders, and that's not what's going on here at Google. 0:06:25.520 --> 0:06:29.640 But you know, Google just sort of despite itself, really 0:06:29.720 --> 0:06:35.440 does have the human capital and culture and financial resources 0:06:35.839 --> 0:06:40.120 to fund what will be a retooling of American business, 0:06:40.200 --> 0:06:44.799 which is the generative AI backbone infrastructure that they're building. 0:06:45.320 --> 0:06:49.440 And they're leading by executing within their own They're showing 0:06:49.480 --> 0:06:54.880 what's possible by executing implementing generative AI and everything they do, 0:06:54.960 --> 0:06:57.479 every product they have, and every cost center they have. 0:06:58.160 --> 0:07:00.640 So this is what's about to happen to America over 0:07:00.640 --> 0:07:05.040 the next decade is companies that follow Google's lead will 0:07:05.080 --> 0:07:09.760 have increasing margins and accelerating revenue. And if you don't, 0:07:10.080 --> 0:07:12.240 which requires a cloud. By the way, you can't do 0:07:12.320 --> 0:07:15.200 this without cloud. If you don't, you will go out 0:07:15.200 --> 0:07:18.440 of business. Because, in my opinion, because the guys, the 0:07:19.040 --> 0:07:23.240 companies that use generative AI to increase productivity and margins 0:07:23.520 --> 0:07:26.760 and increase revenue will get higher multiples from Wall Street. 0:07:27.040 --> 0:07:31.200 I know you said search, search, streaming, search, cloud, and 0:07:31.280 --> 0:07:34.600 YouTube are the three most important numbers, but we'd be 0:07:34.600 --> 0:07:37.880 remiss if we didn't ask you about weimo and the 0:07:37.960 --> 0:07:41.520 expansion that the company said is coming in the quote 0:07:41.520 --> 0:07:43.880 near future. Here's what they said. Alphabet hopes to expand 0:07:43.920 --> 0:07:46.680 weimo to all cities in the near future. How do 0:07:46.720 --> 0:07:50.360 you look at this as an analyst on this company stock, 0:07:50.400 --> 0:07:54.160 as an analyst for the company and material contribution. 0:07:55.000 --> 0:07:57.760 So you guys love the service you just said, so, 0:07:57.760 --> 0:08:02.000 so I don't like it in this sense that right now, 0:08:02.160 --> 0:08:04.760 I think the most strategy is what you say no to. 0:08:05.200 --> 0:08:07.720 And what Google should be saying no to is anything 0:08:08.120 --> 0:08:10.600 that isn't generative AI related. Because this is a race 0:08:10.680 --> 0:08:14.040 and a war, and they are spending a fortune on 0:08:14.360 --> 0:08:19.080 jenerative AI. Good for them, But Weimo is another huge 0:08:20.600 --> 0:08:24.080 sunk cost or financial commitment, and I would like them 0:08:24.120 --> 0:08:26.240 figure out a way to do Wei moh. They are ahead, 0:08:26.280 --> 0:08:29.400 they are number one in autonomous driving. I would like 0:08:29.480 --> 0:08:32.200 them to keep the data because I think data in 0:08:32.240 --> 0:08:34.720 the real world plus the virtual world, is worth more 0:08:35.200 --> 0:08:39.480 than either world standalone. So I like the data aspect 0:08:39.480 --> 0:08:42.360 of WEIMO, but I do not like the capital commitments, 0:08:42.400 --> 0:08:45.959 which compete right now with the generative AI capital. 0:08:46.320 --> 0:08:48.760 What are the capital commitments? They haven't been totally clear 0:08:48.800 --> 0:08:50.320 about that. What do you to view them? 0:08:50.360 --> 0:08:50.840 Ass? 0:08:51.360 --> 0:08:53.440 Well, they sit in other bets, and I think other 0:08:53.480 --> 0:08:56.200 bets I'm forgetting, but it like it loses typically three 0:08:56.200 --> 0:08:58.800 to five billion dollars a quarter, so it's like twenty 0:08:58.800 --> 0:09:01.560 billion a year, and a lot of that is WAYMO 0:09:01.760 --> 0:09:05.120 and it's their healthcare initiatives, and so I just think 0:09:05.160 --> 0:09:07.920 that that money. You know, they just upped CAPEX by 0:09:07.960 --> 0:09:09.560 ten billion. I would like to see him take it 0:09:09.559 --> 0:09:10.320 out of other bets. 0:09:10.360 --> 0:09:11.960 But the primary other bet is WEYMO. 0:09:12.440 --> 0:09:15.600 So I think they're unwilling to relinquish their pole position 0:09:15.600 --> 0:09:16.080 because now. 0:09:16.000 --> 0:09:18.000 Tesla's coming after them. 0:09:18.240 --> 0:09:22.720 So I think I think, Look, they are number one 0:09:22.800 --> 0:09:25.800 in all of these strategic segments. Because they get there early, 0:09:26.240 --> 0:09:28.800 and so they're early to Weimo. I just wish it 0:09:28.840 --> 0:09:31.840 wasn't as capital intensive, the losses weren't as big at 0:09:31.880 --> 0:09:34.120 a time when Google should be spending all of its 0:09:34.120 --> 0:09:36.920 focus and resources on Jenerator ai Ura. 0:09:37.040 --> 0:09:40.559 We really, really, really like Weymo. I'm just gonna tell you. Really, 0:09:40.679 --> 0:09:43.040 I even close my eyes in a Weymo. That's uncomfortable. 0:09:45.559 --> 0:09:45.840 I know. 0:09:46.360 --> 0:09:49.200 Hey, listen, we've got about three minutes left. There's so 0:09:49.240 --> 0:09:51.120 many different places we would love to go with you, 0:09:51.240 --> 0:09:54.280 but you pick because you've got Apple reporting next week, 0:09:54.360 --> 0:09:58.280 Meta reporting next week, Amazon reporting next week, uh, Disney 0:09:58.320 --> 0:10:01.040 in early August, Netflix already out, and then there's the 0:10:01.120 --> 0:10:04.120 Late Night Wars. What's interesting to you right now that 0:10:04.200 --> 0:10:06.599 you think the Bloomberg audience and investors really need to 0:10:06.600 --> 0:10:09.240 be paying attention and it could be something else beyond that. 0:10:10.400 --> 0:10:12.360 Let's do Apple because it used to be the biggest 0:10:12.360 --> 0:10:14.640 company in the world now. I guess the videos, But 0:10:15.960 --> 0:10:17.959 what I would say about Apple, we have a hold 0:10:18.000 --> 0:10:20.360 here on Apple, whereas we have a buy on on 0:10:20.520 --> 0:10:25.199 Alphabet Google. You know, I think I think Apple isn't 0:10:25.400 --> 0:10:28.920 really a box because when you listen, for sure, when 0:10:28.960 --> 0:10:31.920 we hear Meta who's spending hundreds of millions of dollars 0:10:32.080 --> 0:10:35.880 per person to create a super intelligence generative AI group. 0:10:36.120 --> 0:10:39.880 And yesterday there was no sentence on the Google earnings 0:10:39.920 --> 0:10:41.600 called it didn't have AI in it. 0:10:42.120 --> 0:10:45.240 So you know, these companies are really talking. 0:10:45.320 --> 0:10:48.320 Amazon will also because that's being run Amazon now is 0:10:48.320 --> 0:10:52.600 being run by the AWS you know founder. Essentially, he's 0:10:52.640 --> 0:10:55.960 talks a lot generative AI a lot. So the you know, 0:10:56.120 --> 0:10:59.640 the one that's not the same is Apple, and people 0:11:00.240 --> 0:11:03.280 really want to see what's happening with their generative AI 0:11:04.080 --> 0:11:10.160 strategy and how is it. How is Apple either sixteen iOS, 0:11:10.200 --> 0:11:13.480 sixteen iOS, seventeen iOS going to keep up with Android, 0:11:13.800 --> 0:11:17.000 which is Google, who last night told us they're integrating 0:11:17.280 --> 0:11:20.880 jenerave I tools into everything including androids. So I do 0:11:20.920 --> 0:11:23.839 think there's a bigger threat to Apple's only business, which 0:11:23.920 --> 0:11:26.280 is this iPhone business. We think it's a single product 0:11:26.320 --> 0:11:29.800 company with upsells to other devices. We think the anchor 0:11:29.800 --> 0:11:32.480 ten that there is the iPhone. So we really want 0:11:32.520 --> 0:11:36.440 to hear how they think they can compete when they 0:11:36.520 --> 0:11:39.560 are saying nothing about jenerative AI and they're spending twelve 0:11:39.640 --> 0:11:42.439 billion dollars on Capex, which is the same number at 0:11:42.480 --> 0:11:45.880 Apple for the last three years, when we just every 0:11:45.920 --> 0:11:48.640 single quarter we show up on the Amazon call, the 0:11:48.720 --> 0:11:51.839 meta call that Google called they're raising capex by ten 0:11:51.880 --> 0:11:52.760 billion dollars. 0:11:52.559 --> 0:11:56.040 At a time or with order thirty seconds on Apples, 0:11:56.080 --> 0:11:58.000 Tim Cook the right leader to guide them through the 0:11:58.040 --> 0:11:58.600 AI era. 0:11:59.320 --> 0:12:03.920 Ough, so harsh. I'm gonna go with no, but so harsh. No, 0:12:04.240 --> 0:12:06.600 I don't think so. I think we need a wartime CEO. 0:12:07.240 --> 0:12:09.319 And I think Tim Cook is great at a lot 0:12:09.360 --> 0:12:12.960 of things, but I don't think he's been He's not 0:12:13.000 --> 0:12:16.840 proven great at this this technological disruption called generator. 0:12:16.880 --> 0:12:18.439 They I got someone else in mind that you think 0:12:18.440 --> 0:12:19.760 she'd lead it ten seconds? 0:12:20.040 --> 0:12:22.760 It's an impossible job. So no, I have no idea 0:12:22.800 --> 0:12:24.360 in mine for who could replace him. 0:12:24.440 --> 0:12:27.360 You you rock come back soon, and I think you 0:12:27.400 --> 0:12:29.560 are coming back soon, which we're looking forward to already. 0:12:29.600 --> 0:12:30.200 Laura be well. 0:12:30.440 --> 0:12:33.199 Laura Martin, senior alys at Niedem and Company, knows this 0:12:33.320 --> 0:12:35.920 space like no other. So glad we could get some time. 0:12:36.280 --> 0:12:40.240 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:12:40.320 --> 0:12:43.760 live weekday afternoons from two to five pm Eastern Listen 0:12:43.800 --> 0:12:46.559 on Apple CarPlay and the Android Auto with the Bloomberg 0:12:46.600 --> 0:12:49.320 Business app or watch us live on YouTube. 0:12:49.960 --> 0:12:52.480 All right, let's stay with earnings and from another mag 0:12:52.640 --> 0:12:56.040 seven we're talking about Tesla, which it shares fell after 0:12:56.080 --> 0:12:58.880 Elon Musk warned of difficult times ahead for the company 0:12:59.080 --> 0:13:01.680 following one of its work stretches since it first started 0:13:01.679 --> 0:13:05.480 producing electric sedans over a dozen years ago. Tesla will 0:13:05.520 --> 0:13:08.000 be in a transition period for the next year or more, 0:13:08.400 --> 0:13:12.280 losing electric vehicle incentives in the United States and needing 0:13:12.320 --> 0:13:15.360 time to roll out autonomous vehicles. That according to the 0:13:15.440 --> 0:13:17.080 chief executive Elon Musk. 0:13:17.480 --> 0:13:20.559 Ross Gerber is a longtime investor in Tesla and owner 0:13:20.600 --> 0:13:23.640 of Tesla cars, including the cyber truck. He's the CEO 0:13:23.640 --> 0:13:26.720 of gerber Kawasaki Wealth and Well. He's been a longtime 0:13:26.760 --> 0:13:29.920 Tesla advocate. More recently, he's been a vocal critic of 0:13:29.960 --> 0:13:34.360 Elon Musk. He joined us to reflect on his cautious optimism. 0:13:34.840 --> 0:13:37.720 I think probably my biggest issue is that what I 0:13:37.800 --> 0:13:41.440 believe is best for Tesla isn't actually the strategy being 0:13:41.440 --> 0:13:45.080 employed by Elon, And what I think is best for 0:13:45.120 --> 0:13:48.040 Tesla is to be focused on selling great evs that 0:13:48.120 --> 0:13:53.480 can drive themselves versus completely pivoting into this robot and 0:13:53.600 --> 0:13:57.880 robotaxi business because they're struggling to sell cars. Because what 0:13:57.920 --> 0:14:02.240 we're seeing now, which I suspected to be true earlier, 0:14:02.679 --> 0:14:05.920 is that the deterioration of the EV business is really 0:14:05.960 --> 0:14:09.480 really bad for Tesla, and it essentially is an EV business, 0:14:09.800 --> 0:14:13.599 and so hoping that robotaxi robotics is going to be 0:14:13.640 --> 0:14:18.880 a revenue stream or let alone profitable anytime soon is 0:14:18.960 --> 0:14:22.720 really just not going to happen. And so, as Elon said, 0:14:22.760 --> 0:14:25.440 Tesla's in for some pretty tough quarters ahead, and with 0:14:25.560 --> 0:14:28.120 the ending of the tax credits and all this kind 0:14:28.160 --> 0:14:29.840 of stuff, I mean, this is all bad news. 0:14:30.000 --> 0:14:31.880 When you say it's not gonna happen anytime soon. What 0:14:32.200 --> 0:14:34.120 do you mean by that? Give us your own timeline here. 0:14:34.440 --> 0:14:37.440 Well, you know, we follow WEIMO very closely, and we 0:14:37.480 --> 0:14:40.800 think that Tesla is two years behind Weimo as far 0:14:40.840 --> 0:14:44.280 as the development of their robotaxi and now Weaimo is 0:14:44.280 --> 0:14:47.880 scaling and being quite successful at charging you know, the 0:14:47.960 --> 0:14:52.560 right amount for rides and generating enough revenue that it's meaningful. 0:14:52.800 --> 0:14:55.600 So I think it's at least two years right. 0:14:55.680 --> 0:14:59.720 So where Tesla's at for them to generate any revenue 0:14:59.760 --> 0:15:02.320 at all, all of meaningful ability will take a couple 0:15:02.320 --> 0:15:06.360 of years. And then from a profitability standpoint, we don't 0:15:06.400 --> 0:15:08.680 even know if that business is going to be profitable 0:15:08.960 --> 0:15:11.320 with all of the competition that's coming into the robo 0:15:11.400 --> 0:15:12.120 taxi business. 0:15:12.320 --> 0:15:14.520 So you said you've been selling shares of Tesla. I 0:15:14.520 --> 0:15:16.520 think there are reports to in June that you sold 0:15:16.560 --> 0:15:20.040 about sixty million dollars worth of Tesla's shares and you 0:15:20.120 --> 0:15:22.640 cited the waiting confidence as you're laying out here in 0:15:22.680 --> 0:15:25.880 the company's future. Are you selling more? What's your exposure 0:15:25.920 --> 0:15:26.640 at this point? 0:15:26.840 --> 0:15:29.640 Yeah, you know, we still have you know, on my 0:15:29.720 --> 0:15:32.120 last thirteen haf we had over two hundred thousand shares. 0:15:32.480 --> 0:15:35.240 You know, right now we're we're holding a little less 0:15:35.240 --> 0:15:37.400 than two hundred thousand shares. So we continue to sell 0:15:37.440 --> 0:15:40.760 the stock. We have a lot of diehard Tesla clients 0:15:40.800 --> 0:15:43.680 that you have huge gains because we bought the stock 0:15:43.720 --> 0:15:46.440 at you know, like two dollars and so, you know, 0:15:46.480 --> 0:15:49.840 people aren't that excited to pay taxes. And there's still 0:15:49.840 --> 0:15:54.000 this possibility that Elon could change course and really do 0:15:54.080 --> 0:15:57.520 the things necessary to fix Tesla because fundamentally, Tesla is 0:15:57.560 --> 0:16:00.960 a great company. Most if not all, of Tesla's problems 0:16:01.160 --> 0:16:04.560 are self created because of the CEO Elon Musk. It's 0:16:04.560 --> 0:16:08.840 not that Tesla's core business has some big problem. It's 0:16:08.920 --> 0:16:12.080 actually the opposite, that CEO is the problem, which is 0:16:12.520 --> 0:16:15.920 super unique. So so that's what why I'm loath to 0:16:15.960 --> 0:16:18.720 just be like completely out of Tesla. But on the 0:16:18.760 --> 0:16:21.880 other side of the coin, with the valuation where it's at, 0:16:21.920 --> 0:16:24.560 and basically we think they're not going to be profitable 0:16:24.640 --> 0:16:27.840 next year. You know, the stock needs to move meaningful 0:16:28.000 --> 0:16:30.560 the lower in my mind before I would buy it. 0:16:30.920 --> 0:16:32.280 Hello, what's meaningful? 0:16:32.640 --> 0:16:35.200 Well, you know, I don't know if any of the 0:16:35.200 --> 0:16:38.080 analyst estimates for next year are right. I think they're 0:16:38.080 --> 0:16:41.520 all vastly overstated. But even if you did three dollars 0:16:41.600 --> 0:16:44.040 of earnings next year at fifty times earnings, which is 0:16:44.280 --> 0:16:47.240 in Nvidia's multiple, you'd be at one hundred and fifty dollars. 0:16:47.280 --> 0:16:50.040 And then you put some premium on the Elon Musk 0:16:50.400 --> 0:16:53.680 robot premium, maybe you put on fifty one hundred dollars, 0:16:53.680 --> 0:16:55.800 so you're at you know, two hundred to two hundred 0:16:55.800 --> 0:16:56.680 and fifty dollars. 0:16:56.440 --> 0:16:58.080 A shares where I think Tesla should be. 0:16:58.200 --> 0:16:59.880 Hey, Ross, in the past when we've spoken to you, 0:17:00.240 --> 0:17:03.120 really critical of Tesla's board, even critical of it on 0:17:03.160 --> 0:17:07.119 social media as well. The board does include folks such 0:17:07.160 --> 0:17:11.399 as Kimball Musk, It includes James Murdoch. Most recently, it 0:17:11.440 --> 0:17:15.560 added Chipotle's Jack Hartung to the board. Are you any 0:17:15.640 --> 0:17:17.199 less critical of the board now? Do you think the 0:17:17.200 --> 0:17:18.280 board is doing its job? 0:17:18.720 --> 0:17:20.639 No? I mean I think there is no board. 0:17:20.680 --> 0:17:23.199 I think the board is Elon Musk, and so the 0:17:23.240 --> 0:17:26.120 board is just, you know, it's like a weekend at Bernie's. 0:17:26.160 --> 0:17:27.479 You know, it's like a bunch of bodies that they 0:17:27.480 --> 0:17:29.600 put at a desk and Elon tells them what to do, 0:17:29.640 --> 0:17:32.480 and they do it. This Jack guy they just put 0:17:32.520 --> 0:17:35.119 on probably had no idea what it's getting himself into. 0:17:35.560 --> 0:17:38.119 And he's in deep now, you know. 0:17:38.680 --> 0:17:41.639 So I don't actually think the board of directors cares 0:17:41.640 --> 0:17:44.840 about anybody but Elon Musk, and I think investors in 0:17:44.840 --> 0:17:47.680 Tesla know that at this point, and that's why we're 0:17:47.800 --> 0:17:52.600 ultimately sellers is nobody actually represents retail investors, which own 0:17:52.800 --> 0:17:55.760 you know, still own eighty seven percent of Tesla. So 0:17:55.840 --> 0:17:59.000 it's really a unique situation, and I expect Tesla to 0:17:59.040 --> 0:18:03.040 buy Xai at some point for probably two hundred billion 0:18:03.080 --> 0:18:07.040 dollars some outrageous price, and I think that's the next 0:18:07.200 --> 0:18:11.000 thing that will happen. So there's no question that the 0:18:11.080 --> 0:18:14.600 merging of these businesses seems to be on the horizon. 0:18:14.640 --> 0:18:16.920 Hey, before you go, definitely want you to get Have 0:18:17.040 --> 0:18:20.520 you weigh in ross on what President Trump put out 0:18:20.600 --> 0:18:24.119 on social that he denied he was seeking to ruin 0:18:24.240 --> 0:18:27.920 Elon Musk's business empire as retribution for the dispute over 0:18:27.920 --> 0:18:31.480 the President's signature tax law. What's your reading, Arnest? Might 0:18:31.600 --> 0:18:33.800 this be helpful to Elon and tell us that we 0:18:33.880 --> 0:18:35.360 just got about a minute ten? 0:18:36.040 --> 0:18:38.400 No, you know, Trump, Trump's just being the bigger man 0:18:38.480 --> 0:18:41.240 here and trying to, you know, act like he doesn't 0:18:41.400 --> 0:18:44.480 have a tiff with Elon, you know, because he's so 0:18:44.640 --> 0:18:46.840 mature or something. But the truth of the matter is 0:18:47.040 --> 0:18:49.400 he's already done what needs to be done to destroy 0:18:49.440 --> 0:18:52.840 Tesla by taking away all the subsidies and making evs 0:18:52.920 --> 0:18:56.719 much more expensive, and so you know, he doesn't have 0:18:56.760 --> 0:18:59.920 to say anything anymore. It's Elon's dug his own grave 0:19:00.080 --> 0:19:02.120 and he's going to have to figure out a way 0:19:02.160 --> 0:19:02.600 out of it. 0:19:02.680 --> 0:19:06.040 So so you know, Trump, Trump doesn't have any reason. 0:19:05.760 --> 0:19:08.040 To look bad or grind an axe, you know, and 0:19:08.080 --> 0:19:11.000 he's playing Trump's playing Elon like he has the whole time. 0:19:11.160 --> 0:19:13.920 Thirty seconds. We have talked with you about your cyber truck. 0:19:13.960 --> 0:19:18.040 We talked about others you know that you have owned. 0:19:18.040 --> 0:19:21.199 Would you buy another Tesla? Do you still like the cars? 0:19:21.280 --> 0:19:22.560 Just quickly, I do? 0:19:23.240 --> 0:19:26.080 You know, this is the whole issue, you know, I've 0:19:26.080 --> 0:19:28.520 looked at so many other cars to buy, and I 0:19:28.560 --> 0:19:31.480 want an electric car, and I want a great electric car. 0:19:31.520 --> 0:19:34.600 And I still think Tesla makes the best cars, and Rivian. 0:19:34.920 --> 0:19:37.399 I have a Rivian too, so I think they're a 0:19:37.440 --> 0:19:40.000 close second, and they make a great vehicle as well. 0:19:40.280 --> 0:19:42.200 But I just haven't been compelled by any of the 0:19:42.240 --> 0:19:47.639 other vehicles EV vehicles out there, and and so you know, 0:19:47.920 --> 0:19:50.240 I still kind of like my cyber truck, and I know. 0:19:50.320 --> 0:19:51.800 You know, I can't sell it anyways. 0:19:51.880 --> 0:19:54.240 But Tesla makes great vehicles and it's a great time 0:19:54.240 --> 0:19:56.760 to buy an EV before the discounts go away. 0:19:56.880 --> 0:20:00.639 Bus Gerbert, You're incredible of Gerbert Kawasaki. Well, we're so 0:20:00.680 --> 0:20:01.320 appreciate it. 0:20:07.920 --> 0:20:11.760 This is the Bloomberg business Week Daily Podcast. Listen live 0:20:11.880 --> 0:20:15.119 each weekday starting at two pm Eastern up on Applecarplay 0:20:15.200 --> 0:20:17.840 and the Android Auto with the Bloomberg Business App. You 0:20:17.880 --> 0:20:21.080 can also listen live on Amazon Alexa from our flagship 0:20:21.119 --> 0:20:24.719 New York station Just Say Alexa played Bloomberg eleven thirty. 0:20:26.200 --> 0:20:29.560 Safe to Say So Many called it that the romance 0:20:29.600 --> 0:20:32.960 would last between the world's richest person and the US President. 0:20:33.320 --> 0:20:36.520 The breakup happening after disruptions to the US government under 0:20:36.520 --> 0:20:39.960 what some say was the guise of efficiency and data foraging. 0:20:40.200 --> 0:20:42.880 We are talking, of course, about Elon Musk and how 0:20:42.920 --> 0:20:48.399 his companies, specifically Tesla, SpaceX, and Xai, are struggling in 0:20:48.440 --> 0:20:51.200 the wake of his feud with President Trump. This past week, 0:20:51.200 --> 0:20:54.639 Bloomberg reported that a risk factor statement was sent to 0:20:54.680 --> 0:20:59.080 SpaceX investors, including Elon's desire to get back into politics. 0:20:58.560 --> 0:21:02.280 Certainly a whirlwin for those invested in Elon's empire. Writing 0:21:02.320 --> 0:21:04.600 all about it as the cover story for the upcoming 0:21:04.600 --> 0:21:07.639 issue of Bloomberg Business Week is Bloomberg's Max Chafkin and 0:21:07.840 --> 0:21:08.400 Ed Ludlow. 0:21:08.800 --> 0:21:11.840 Max is Bloomberg BusinessWeek Senior reporter, also the co host 0:21:11.920 --> 0:21:15.639 of The Everybody's business and Elon Inc. Podcasts. He joined 0:21:15.720 --> 0:21:18.320 us to break down how Elon's empire may be creaking 0:21:18.640 --> 0:21:20.320 under the strain of his antics. 0:21:20.680 --> 0:21:24.240 He's the wealthiest guy in the world, and investors to 0:21:24.400 --> 0:21:28.760 date have essentially allowed him to do whatever he wants 0:21:28.800 --> 0:21:34.120 and to do things that most CEOs, most entrepreneurs would 0:21:34.119 --> 0:21:37.280 would never be able to essentially get away. 0:21:37.320 --> 0:21:41.240 With that said, there are i'd. 0:21:41.080 --> 0:21:47.440 Say bigger challenges facing these companies today than he's experienced 0:21:47.440 --> 0:21:48.960 in a very long time. You know, of course, Elon 0:21:49.040 --> 0:21:52.359 Musk has a history of sort of flirting with disaster, 0:21:52.600 --> 0:21:56.000 and you look at the history of Tesla. There were 0:21:56.040 --> 0:21:59.080 some very dicey moments in the two thousand, same thing 0:21:59.080 --> 0:22:02.000 with SpaceX, but you haven't had this situation that we 0:22:02.040 --> 0:22:06.480 have today where you have essentially three companies SpaceX, Tesla, 0:22:06.880 --> 0:22:09.359 and Xai. I'm going to leave off this sort of 0:22:09.440 --> 0:22:13.280 small smaller ones, but those are there too. And then 0:22:13.320 --> 0:22:16.760 in the foreground you have this potential fight with Donald Trump, 0:22:17.080 --> 0:22:19.520 and so you know, everyone's focused on the fight. But 0:22:19.600 --> 0:22:22.480 those three companies, each in their own way, have very 0:22:22.520 --> 0:22:23.480 significant challenges. 0:22:23.560 --> 0:22:24.119 So let's get to it. 0:22:24.119 --> 0:22:26.600 Because you do, right, there are many more weapons President 0:22:26.640 --> 0:22:29.920 Trump could deploy against Elon Musk's business interests where he's 0:22:29.920 --> 0:22:32.080 so motivated so so much as like does he or 0:22:32.119 --> 0:22:34.879 doesn't ty, let's start. I love the way you guys 0:22:34.960 --> 0:22:37.000 do this. You do basically like these case studies of 0:22:37.000 --> 0:22:40.160 each of these three businesses. So let's talk about Tesla. 0:22:40.280 --> 0:22:43.480 He makes promises sometimes it takes longer we have all 0:22:43.480 --> 0:22:46.080 gone along from the ride that we eventually get this stuff. 0:22:46.160 --> 0:22:48.680 And to be fair, when it comes to EV, certainly 0:22:48.720 --> 0:22:50.160 in the United States, he moved the needle. 0:22:50.400 --> 0:22:54.119 Yeah, absolutely, And that's what's made I'd say the events 0:22:54.119 --> 0:22:56.200 of the last couple of years so surprising because Elon 0:22:56.280 --> 0:22:59.920 Musk is attempting this very dramatic pivot away from it 0:23:00.520 --> 0:23:04.080 and towards robotaxis, which kind of strange because the EV 0:23:04.240 --> 0:23:08.080 market is still growing very quickly. Tesla, on the other hand, 0:23:08.520 --> 0:23:11.600 is not growing. I mean, their deliveries have been falling 0:23:11.640 --> 0:23:14.600 for the last two quarters, had a down year in 0:23:14.640 --> 0:23:15.480 twenty twenty four. 0:23:15.680 --> 0:23:18.320 We'll see what this latest quarter looks like. 0:23:18.240 --> 0:23:21.440 When they report earnings. But they are selling fewer cars 0:23:22.160 --> 0:23:24.359 each quarter than they than they did a year ago, 0:23:25.000 --> 0:23:27.560 and that is kind of surprising for a company that 0:23:27.720 --> 0:23:30.920 is trading at just this insane multiple, trading at a 0:23:31.000 --> 0:23:34.879 value that is way, way, way richer than you know, 0:23:34.920 --> 0:23:37.920 a normal car company. Now, of course, the reason investors 0:23:37.920 --> 0:23:40.320 are going for this, the reason they're you know, continuing 0:23:40.320 --> 0:23:42.720 to buy the stock at a relatively high price, is 0:23:42.760 --> 0:23:46.240 because of robotaxis, this belief that Elon Musk is gonna 0:23:46.400 --> 0:23:50.239 revolutionize transportation. The issue is that's been this kind of 0:23:50.280 --> 0:23:53.359 thing that Musk was able to point ahead in the 0:23:53.359 --> 0:23:55.359 future and say, look, this is going to be great. 0:23:55.520 --> 0:23:57.639 Don't focus on the now, focus on the future. And 0:23:58.000 --> 0:23:59.840 we're now we have the now. Now, now we have 0:23:59.840 --> 0:24:03.440 some robotaxis on roads, and it's really a very small number. 0:24:03.440 --> 0:24:07.040 It's something like ten to twenty robotaxis in a very 0:24:07.040 --> 0:24:09.520 small part of Austin. Meanwhile, you got Weimo, and we've 0:24:09.560 --> 0:24:13.560 talked about this before, but there is this obvious competitor, Weimo, 0:24:13.680 --> 0:24:17.440 which has way way more robotaxis and more markets and 0:24:17.880 --> 0:24:20.560 is not getting valued the way that Elon Musk, the 0:24:20.600 --> 0:24:23.040 way that Tesla is getting valued. So you do wonder, 0:24:23.480 --> 0:24:25.879 you know, how long is it before investors start to 0:24:25.920 --> 0:24:28.879 look at that, and you know, how many quarters of 0:24:28.960 --> 0:24:32.920 sort of declining deliveries, declining car sales are they really 0:24:32.920 --> 0:24:34.000 going to tolerate. 0:24:34.040 --> 0:24:37.320 These companies have sort of always Elon Musk's companies have 0:24:37.320 --> 0:24:39.880 always kind of used one another and shared engineers at 0:24:39.880 --> 0:24:43.560 certain points. Now we're getting to appoint max where Elon 0:24:43.680 --> 0:24:47.360 wants more investment from one company to another company, specifically Tesla, 0:24:47.760 --> 0:24:51.000 to invest in Xai, which is a challenging thing to 0:24:51.040 --> 0:24:54.040 do because Tesla's a public company, Xai is not. Shareholders 0:24:54.119 --> 0:24:57.640 might not love this idea. Explain the sort of borders 0:24:57.720 --> 0:25:00.439 or lack thereof when it comes to this counting. 0:25:00.560 --> 0:25:02.639 I mean, the thing is from the point of view 0:25:02.720 --> 0:25:04.840 of Tesla investors, and I think this is true of 0:25:04.880 --> 0:25:07.280 most of the investors in most of Elon musk companies, 0:25:07.440 --> 0:25:10.080 They're not investing in a particular product. They're just investing 0:25:10.080 --> 0:25:12.720 in Elon Musk. And that's one of the reasons why, 0:25:13.040 --> 0:25:15.679 you know, even when Musk does something that seems on 0:25:15.720 --> 0:25:18.440 its face a little bit foolish or crazy, for instance, 0:25:19.160 --> 0:25:21.919 the the on again, off again purchase of x at 0:25:22.000 --> 0:25:25.560 a ridiculous you know, overvalued at the time, investors go 0:25:25.600 --> 0:25:28.399 along with because they just think, Okay, Elon Musk wants this, 0:25:28.480 --> 0:25:31.040 he's a he's a brilliant guy, and so you have 0:25:31.160 --> 0:25:35.280 this thing where the companies, although they are nominally independent, 0:25:35.560 --> 0:25:38.880 are sharing resources, sharing management of course, not just Elon Musk, 0:25:38.920 --> 0:25:41.280 but other folks, you know, sort of bouncing between them 0:25:41.359 --> 0:25:43.600 or doing work on the side. And now even you 0:25:43.680 --> 0:25:47.000 have Xai, which is desperately trying to raise money, raising 0:25:47.040 --> 0:25:50.960 money from Elon Musk's other companies, SpaceX, according to Elon Musk, 0:25:51.000 --> 0:25:55.160 putting two billion dollars into Xai. And then Musk has 0:25:55.160 --> 0:25:58.919 said he's going to ask Tesla for money for a 0:25:59.000 --> 0:26:01.280 year ago he suggests the number will be five billion, 0:26:01.400 --> 0:26:04.199 So you're talking about significant amount of money. Tesla of 0:26:04.200 --> 0:26:06.280 course has a lot of cash at the moment, so 0:26:06.359 --> 0:26:08.159 it's not like it can't afford it. But you got 0:26:08.280 --> 0:26:10.280 to ask yourself what is the rationale, Like, what's the 0:26:10.320 --> 0:26:13.919 business rationale if you're a Tesla investor to you know, 0:26:14.080 --> 0:26:17.800 move money from from Tesla to x especially when X 0:26:17.840 --> 0:26:20.320 and Tesla are sort of in competition, you know, they're 0:26:20.359 --> 0:26:24.160 both AI companies, and so so that's an issue. I mean, 0:26:24.200 --> 0:26:26.800 what I think it shows is that as much as 0:26:26.840 --> 0:26:31.200 these companies you know, add up to this big empire, 0:26:30.880 --> 0:26:35.120 they're interlocking and if one struggles, the others are going 0:26:35.160 --> 0:26:38.480 to struggle. If Tesla's value were to decline dramatically, that 0:26:38.480 --> 0:26:40.879 would hurt Elon Musk's empire in a big way because 0:26:40.920 --> 0:26:43.320 Tesla shares are a big source of his wealth, the 0:26:43.320 --> 0:26:46.480 way he finances things, and beyond that, there's this aura 0:26:46.800 --> 0:26:49.320 of success that he has used to sort of promote 0:26:49.400 --> 0:26:52.880 himself and promote these companies, and as that has i'd say, 0:26:52.920 --> 0:26:55.440 come into some question, you know, I think that hurts 0:26:55.480 --> 0:26:56.480 some of these other companies. 0:26:56.800 --> 0:27:00.840 So he did post on x that he's back to 0:27:00.880 --> 0:27:02.919 working seven days a week and sleeping in his office 0:27:02.920 --> 0:27:04.000 if my little kids are away. 0:27:04.880 --> 0:27:06.240 Yay. But I'm just. 0:27:06.280 --> 0:27:10.760 Wondering which part of his empire is the most interested. 0:27:10.840 --> 0:27:14.520 You guys talk about Xai that that's what he seems 0:27:14.600 --> 0:27:16.360 to be super interested. 0:27:15.960 --> 0:27:18.960 In, right, Yeah, And you get different answers depending on 0:27:19.000 --> 0:27:22.280 who you talk to within the empire, because, of course 0:27:22.320 --> 0:27:27.360 Tesla also feels like Tesla h employees board members also 0:27:27.440 --> 0:27:29.320 feel like they are in the middle of this really 0:27:29.400 --> 0:27:32.760 unique opportunity with Robotaxis. But yeah, I mean, Musk has 0:27:32.800 --> 0:27:35.359 spent it seems, at least over the last couple of weeks, 0:27:35.600 --> 0:27:39.239 a lot of time on with Xai and Grock. Now, 0:27:39.280 --> 0:27:42.240 of course AI chatbots, that's that's an area that a 0:27:42.280 --> 0:27:45.480 lot of investors are excited about. On the other hand, 0:27:45.520 --> 0:27:49.520 this is a very expensive company to finance. We've Bloomberg 0:27:49.520 --> 0:27:52.639 has reported that they're losing a billion dollars a month. 0:27:52.880 --> 0:27:55.399 So like that, you know, five billion dollars from Tesla, 0:27:55.440 --> 0:27:57.840 that's gonna they're gonna burn through that, you know, pretty quickly. 0:27:58.560 --> 0:28:00.600 And and you know, I think I think from the 0:28:00.720 --> 0:28:03.919 sort of bull cases, Hey, these large language models are 0:28:03.960 --> 0:28:06.439 really expensive to finance, so we need to you know, 0:28:06.600 --> 0:28:09.000 put as much into them now catch up to open AI. 0:28:09.359 --> 0:28:11.040 But of course the other side of the coin is 0:28:11.080 --> 0:28:14.680 like why, you know, why does this very successful car 0:28:14.680 --> 0:28:17.320 company that's worth a trillion dollars by market cap, you know, 0:28:17.400 --> 0:28:20.040 what does it have to do with AI chatbots? I 0:28:20.080 --> 0:28:22.120 don't think that the answer is a whole lot. 0:28:22.359 --> 0:28:23.719 Yeah. 0:28:24.040 --> 0:28:27.560 Elon Musk claimed without evidence that President Trump wasn't accomplice 0:28:27.560 --> 0:28:30.399 in the crimes of Jeffrey Epstein and alleged that the 0:28:30.440 --> 0:28:33.400 president had covered them up. This was sort of the 0:28:33.760 --> 0:28:36.840 nadir in their relationship. I think if we look back 0:28:36.960 --> 0:28:40.520 over the last six weeks, is there any recovering from that? Like, 0:28:40.560 --> 0:28:43.040 do they get back together, do they become allies again? 0:28:43.960 --> 0:28:46.440 I think it is very hard to see. 0:28:46.680 --> 0:28:50.640 I mean, obviously those are very serious charges, I mean 0:28:50.680 --> 0:28:53.480 sort of like the most serious charges in Republican politics. 0:28:54.320 --> 0:28:58.040 And it's led to a news cycle right that that 0:28:58.440 --> 0:29:01.400 happened at you know, as their feud was kicking off 0:29:01.400 --> 0:29:03.400 at the beginning of June. Now we're in you know, 0:29:03.480 --> 0:29:07.160 mid late July, and Republicans are still talking about Epstein 0:29:07.200 --> 0:29:10.080 quite a lot. So so yeah, I mean it's it's 0:29:10.160 --> 0:29:13.120 been a bad that's a thing that's going to really 0:29:13.160 --> 0:29:16.640 throw a wrench in any kind of you know, potential makeup. Now, 0:29:16.680 --> 0:29:20.080 I will say Trump and Musk are both this is 0:29:20.120 --> 0:29:22.640 going to sound weird, but they're both kind of forgiving. 0:29:22.720 --> 0:29:26.000 They both although they like to cultivate this, both of them, 0:29:26.240 --> 0:29:28.720 you know, Alpha image or whatever they have. You know, 0:29:28.760 --> 0:29:30.720 Trump has done this where people have been on the 0:29:30.760 --> 0:29:32.880 outside and then they find their way in. Steve Bannon, 0:29:32.920 --> 0:29:34.920 of course, famously was very much on the outs. Now 0:29:34.920 --> 0:29:36.440 he's no longer on the outs. 0:29:36.680 --> 0:29:37.960 Musk is the same. Musk. 0:29:38.200 --> 0:29:41.160 You know, we we'll get very mad at people and 0:29:41.160 --> 0:29:42.560 and you know, find a way to get them back in. 0:29:42.600 --> 0:29:43.640 So I wouldn't. 0:29:43.320 --> 0:29:45.880 Discount it entirely just because, and I've said this on 0:29:46.040 --> 0:29:49.120 your show before, there are reasons each of them has 0:29:49.120 --> 0:29:51.800 an interest in being on good terms with the other. 0:29:52.280 --> 0:29:56.080 That said, I mean it is it has seemed very difficult. 0:29:56.320 --> 0:29:58.440 And you're seeing now, and we get into this in 0:29:58.480 --> 0:30:00.840 the story, there are lots of sign if you're looking 0:30:00.880 --> 0:30:04.480 closely for ways in which this relationship is hurting Elon 0:30:04.560 --> 0:30:08.360 Musk today. Now I'm not just talking about Jared Isaacman, 0:30:08.760 --> 0:30:12.120 the you know, the person that Trump originally nominated to 0:30:12.200 --> 0:30:15.000 head NASA, the Space Agency, who is close to Elon Musk, 0:30:15.000 --> 0:30:18.600 who's out now. But there are lots of little regulatory moves, 0:30:18.640 --> 0:30:20.720 policy moves, and just to give you one example, the 0:30:20.760 --> 0:30:22.800 guy who's going to run NITSA, you know, at his 0:30:22.880 --> 0:30:26.320 confirmation hearing suggested that we need to have more oversight 0:30:26.360 --> 0:30:27.560 of autonomous vehicles. 0:30:27.880 --> 0:30:29.840 So if you're Elon Musk, you don't want to hear 0:30:29.840 --> 0:30:32.800 that when robotax trying to get on the roads. 0:30:32.880 --> 0:30:36.080 Yeah, you absolutely don't. And and so or you know 0:30:36.120 --> 0:30:38.360 Sean Duffy running NASA now, who's he. 0:30:38.440 --> 0:30:40.320 Was, according at least some reporting from inside the. 0:30:40.320 --> 0:30:42.640 White House, was one of the people who was really 0:30:43.080 --> 0:30:47.200 upset about Doge. So you're seeing these little things that 0:30:47.240 --> 0:30:50.760 are potentially troubling if you're Elon Musk and certainly cut 0:30:50.800 --> 0:30:54.600 against the sort of bull thesis around the time of 0:30:54.640 --> 0:30:57.840 the election, which was like, these guys are perfectly aligned. 0:30:57.880 --> 0:30:59.600 This is going to be amazing. I mean, that's what 0:30:59.720 --> 0:31:02.640 sent stock up to its you know, crazy heights in 0:31:02.680 --> 0:31:05.560 mid December, and it's fallen. I think last I looked 0:31:05.560 --> 0:31:09.440 around thirty three percent since then, as that that argument 0:31:09.480 --> 0:31:10.400 has sort of fallen apart. 0:31:11.600 --> 0:31:13.920 It's, you know, as you guys say, you know, you 0:31:13.960 --> 0:31:17.560 can't count out Elon ever, but it is curious to 0:31:17.600 --> 0:31:20.200 see how this ultimately plays out and whether or not 0:31:20.240 --> 0:31:23.800 he becomes a target of the administration potentially. Hey Max, 0:31:23.840 --> 0:31:25.960 thank you so much, really appreciate it. Bloomberg Business Week 0:31:26.440 --> 0:31:30.280 Senior reporter Max Chafkin, Max and Ed Ludlow writing this story. 0:31:30.280 --> 0:31:32.920 It's an upcoming issue of Bloomberg Business weeket is the 0:31:32.920 --> 0:31:36.040 cover story already on the Bloomberg and at Bloomberg dot com. 0:31:36.320 --> 0:31:40.320 You're listening to the Bloomberg Business Weekdaily podcast. Catch us 0:31:40.400 --> 0:31:43.840 live weekday afternoons from two to five pm Eastern Listen 0:31:43.880 --> 0:31:47.440 on Applecarplay and the Android Auto with the Bloomberg Business app, 0:31:47.600 --> 0:31:50.200 or watch us live on YouTube. 0:31:50.720 --> 0:31:53.640 Who would also unleash you just by lowering the interest rates. 0:31:54.000 --> 0:31:55.960 If the Fed would lower the rates, we wouldn't even 0:31:55.960 --> 0:31:58.040 have to do that. But we are thinking about no 0:31:58.560 --> 0:31:59.840 tax on capital games on. 0:32:00.760 --> 0:32:02.880 That was President Trump this past week with a statement 0:32:02.880 --> 0:32:05.680 that caught our attention. The President taking questions in the 0:32:05.680 --> 0:32:08.960 Oval Office during a prece event that he is considering 0:32:09.000 --> 0:32:11.880 a proposal to end capital gains taxes on home sales, 0:32:11.920 --> 0:32:14.240 and I got to say, caught my attention and sign 0:32:14.320 --> 0:32:14.600 me up. 0:32:14.680 --> 0:32:16.560 Are you planning to sell your home anytime soon? 0:32:16.680 --> 0:32:19.320 Not anytime soon, but you know, when you've been in 0:32:19.360 --> 0:32:22.040 a home for a long time and it was a 0:32:22.080 --> 0:32:26.320 market that was pretty dead, there's been a fair amount of appreciation. 0:32:26.480 --> 0:32:29.560 So yeah, but then, but can't you also have you 0:32:29.560 --> 0:32:31.480 been keeping track of all the improvements that you've made 0:32:31.480 --> 0:32:32.040 over the years. 0:32:32.120 --> 0:32:34.200 Yeah, I don't know how good the files are, but yes. 0:32:35.360 --> 0:32:36.760 I'm sure they're on your desk somewhere. 0:32:36.840 --> 0:32:37.320 Carrol I. 0:32:37.360 --> 0:32:39.000 Actually, you know it's so funny that you say, because 0:32:39.000 --> 0:32:41.280 I'm always liketed my husband or give me like the receipt, 0:32:41.320 --> 0:32:44.640 give me the like. So yeah, yeah, just some bank statements. 0:32:44.720 --> 0:32:46.280 Just keep track of that and then it becomes your 0:32:46.280 --> 0:32:47.120 accountants problem. 0:32:47.160 --> 0:32:47.840 Yeah, exactly. 0:32:47.920 --> 0:32:50.200 Hey, it's still a developing story, so nothing official yet. 0:32:50.240 --> 0:32:53.400 But under current laws, single filers are exempt from paying 0:32:53.440 --> 0:32:55.920 taxes on capital gains of two hundred and fifty thousand 0:32:55.960 --> 0:32:58.360 dollars or less for the sale of their primary residence. 0:32:58.640 --> 0:33:01.760 Well married couples filing jointly are exempt on up to 0:33:01.840 --> 0:33:05.800 five hundred thousand dollars. This new proposal would eliminate that cap. 0:33:05.600 --> 0:33:08.880 To white cut our attention, legislation that, if passed, could 0:33:08.880 --> 0:33:11.840 impact millions of homeowners. For the latest on this and 0:33:11.920 --> 0:33:14.360 the latest on housing, head to Bloomberg dot com or 0:33:14.440 --> 0:33:15.520 check out the Bloomberg terminal. 0:33:15.600 --> 0:33:17.680 You know, I've been thinking about this, and it's one 0:33:17.720 --> 0:33:20.600 of those things first you'd have to find where you'd 0:33:20.600 --> 0:33:23.040 offset that revenue loss when it comes to capital gains. 0:33:23.040 --> 0:33:24.520 But it's also one of those things, Carol, that I 0:33:24.520 --> 0:33:28.040 think would again disproportionately affect the wealthier people in this 0:33:28.080 --> 0:33:31.040 country because it's homeowners who own their homes for a 0:33:31.200 --> 0:33:34.600 very long time, so they would see the benefit, not 0:33:34.640 --> 0:33:37.640 necessarily the folks who the President has talked about wanting 0:33:37.680 --> 0:33:39.760 to be able to afford homes. Those first time home 0:33:39.800 --> 0:33:42.360 buyers that he's talked about not being able to get 0:33:42.400 --> 0:33:44.600 into those homes the way they were like their parents 0:33:44.680 --> 0:33:46.800 were able to. I mean, we even talked to a 0:33:46.840 --> 0:33:49.440 real estate agent this week who talked about first time 0:33:49.480 --> 0:33:52.719 home buyers being in their forties now as a result 0:33:52.720 --> 0:33:54.320 of high prices and high rates. 0:33:54.480 --> 0:33:59.440 Also, she talked about multi generational home buying, so older folks, 0:33:59.520 --> 0:34:02.080 you know, either passing on their homes or helping out 0:34:02.400 --> 0:34:05.880 their kids and then living with them. With the understanding, 0:34:06.040 --> 0:34:08.760 I agree, it doesn't necessarily get to the housing affordability 0:34:09.160 --> 0:34:12.040 problem that has persisted, to be fair, not just this year, 0:34:12.080 --> 0:34:14.680 not just last year, but has been around for many, 0:34:14.719 --> 0:34:17.480 many years. We have a great voice though on housing 0:34:17.480 --> 0:34:19.320 that we like to talk to plays into the multi 0:34:19.400 --> 0:34:23.000 family very much in the South of the United States. 0:34:23.000 --> 0:34:26.000 We're talking about Thomas Carroll. He's founder and chief executive 0:34:26.000 --> 0:34:29.000 officer ballast Rock Asset Management. The firm has about six 0:34:29.080 --> 0:34:31.920 hundred million dollars in assets under management, and as we said, 0:34:32.120 --> 0:34:34.960 focuses on multi family real estate and private equity. 0:34:35.560 --> 0:34:38.360 The industry as a whole has been white knuckling. I 0:34:38.400 --> 0:34:44.160 would say with an expectation of rates coming down, they've 0:34:44.200 --> 0:34:47.480 been white knuckling the sale of assets. We're primarily in 0:34:47.520 --> 0:34:51.160 the secondary market rather than developing specifically in multi family. 0:34:51.080 --> 0:34:52.239 But you still have to do a lot of work 0:34:52.280 --> 0:34:53.360 to those multi family. 0:34:53.560 --> 0:34:57.720 Absolutely, we're doing massive renovations and so inflationary costs around 0:34:57.719 --> 0:35:01.600 that material, et cetera. But yes, the rates environment has 0:35:01.680 --> 0:35:06.240 had a tremendous effect on the multifamily market, and until 0:35:06.320 --> 0:35:11.360 rates come significantly lower or sellers reprice in a material way, 0:35:11.680 --> 0:35:13.959 then it's tough for the market to get started again. 0:35:14.000 --> 0:35:15.799 That's what I want to ask you. If we just know, 0:35:16.000 --> 0:35:18.799 all right, the Fed's on hold because this is what's 0:35:18.840 --> 0:35:21.120 the policy that makes sense for the next six to 0:35:21.200 --> 0:35:23.400 twelve months, then folks are going to do deals. 0:35:23.480 --> 0:35:23.680 Right. 0:35:23.719 --> 0:35:28.120 It's like having some clarity because historically we're still at 0:35:28.120 --> 0:35:31.840 a lower rate environment. We've had much higher rates. And 0:35:31.880 --> 0:35:34.040 I guess my point is, are people just looking for 0:35:34.160 --> 0:35:37.480 clarity on what the policy is and there's just between 0:35:37.520 --> 0:35:40.560 the back and forth between the White House and pressure 0:35:40.560 --> 0:35:44.879 on Fetcher J. Powell and maybe folks thinking that that 0:35:45.080 --> 0:35:49.000 could ultimately lead to high lower rates. I mean that 0:35:49.200 --> 0:35:53.359 uncertainty essentially, and at the same time tariffs, which are 0:35:53.440 --> 0:35:56.080 putting another layer of uncertainty. So we just the FED 0:35:56.120 --> 0:35:58.520 doesn't know exactly what the environment's going to be, so 0:35:58.560 --> 0:36:00.680 they're on hold. So if at some point we have 0:36:00.760 --> 0:36:03.600 more clarity in the FED says nope, economy growing, we're 0:36:03.640 --> 0:36:07.320 doing good, Thomas that, then people say, well, this is 0:36:07.360 --> 0:36:10.120 the environment, so we'll reprice and we can do stuff 0:36:10.200 --> 0:36:13.239 one move ahead. I sorry, there's a long way of 0:36:13.239 --> 0:36:14.280 saying clarity. 0:36:14.480 --> 0:36:19.360 Yes, indeed, clarity would be extremely helpful, and perhaps you 0:36:19.360 --> 0:36:24.480 would have some owners be willing to transact again. However, 0:36:24.960 --> 0:36:27.279 a lot of owners still you know, asset holders still 0:36:27.320 --> 0:36:31.480 have twenty twenty one and peak pricing in mind, and 0:36:31.560 --> 0:36:34.080 so it's hard to let go. It's hard to reprice 0:36:34.120 --> 0:36:38.120 an asset lower, especially an income generating asset. So because 0:36:38.120 --> 0:36:40.840 they're income generating, you can hold on to them far, far, 0:36:40.920 --> 0:36:45.080 far longer than you would be able to otherwise, even 0:36:45.120 --> 0:36:49.160 if pricing theoretically should be lower if you were to sell, 0:36:49.160 --> 0:36:50.880 but you don't sell, you just hold onto it for 0:36:50.960 --> 0:36:55.360 years longer. But yes, hopefully greater clarity would be useful, 0:36:55.480 --> 0:36:57.880 But I would not say we're in a particularly clear environment. 0:36:57.960 --> 0:36:59.200 Right now. 0:37:00.280 --> 0:37:03.400 Is not there, and so volumes in terms of secondary 0:37:03.400 --> 0:37:09.000 market volume four commercial real estate in general is substantially 0:37:09.080 --> 0:37:10.680 lower than it was at the peak. 0:37:10.800 --> 0:37:12.520 So what are you doing? Are you not buying anything 0:37:12.560 --> 0:37:12.959 right now? 0:37:13.520 --> 0:37:16.920 So we are not buying a lot right now. No, 0:37:17.480 --> 0:37:19.920 the only deals that we're doing are situations where the 0:37:20.000 --> 0:37:23.960 seller is genuinely in distress. So if there's not outright distress, 0:37:24.000 --> 0:37:26.160 it's very very hard to make the numbers pencil. And 0:37:26.200 --> 0:37:29.839 what we're focusing on instead is actually where the big 0:37:29.880 --> 0:37:32.799 beautiful bill has created a short term window of opportunity, 0:37:32.960 --> 0:37:34.200 which is solar development. 0:37:34.320 --> 0:37:36.759 Interestingly enough, this is what I'm glad we were talking 0:37:36.760 --> 0:37:39.440 about this. It was in the notes and our producer 0:37:39.440 --> 0:37:40.839 already said this on the phone, and I was thinking 0:37:40.880 --> 0:37:44.600 ABOUTLF solar because the concern, and we saw this play 0:37:44.600 --> 0:37:49.960 out in the public markets, was that solar companies would 0:37:49.960 --> 0:37:52.839 get hit hard as a result of this bill, and 0:37:52.920 --> 0:37:54.400 they've been under a lot of pressure. Where are you 0:37:54.400 --> 0:37:55.239 seeing opportunity? 0:37:55.800 --> 0:37:59.120 They have been hit hard, and there is really very 0:37:59.160 --> 0:38:02.040 limited window for opportunity. So it's not great if you're 0:38:02.120 --> 0:38:05.520 full time in that business. But for us, we're a 0:38:05.520 --> 0:38:10.480 private credit lender to solar developers that might have a 0:38:10.600 --> 0:38:14.400 twenty or thirty development pipeline of projects, and it enables 0:38:14.520 --> 0:38:16.319 us as a lender to step in on a senior 0:38:16.360 --> 0:38:20.800 secured basis and identify and cherry pick really the best, 0:38:21.040 --> 0:38:24.960 most actionable, immediately actionable projects where we can get shovel 0:38:25.000 --> 0:38:27.840 in the ground right now and and bring these projects 0:38:27.840 --> 0:38:31.600 to fruition because very shortly any investment tax credits are 0:38:31.600 --> 0:38:34.399 going to disappear. So it is about a short term 0:38:34.440 --> 0:38:37.760 window and for us the opportunity is as a lender. 0:38:38.960 --> 0:38:43.760 Absolutely this bill has been extremely problematic for the development 0:38:43.800 --> 0:38:47.120 industry and for generation of solar power in the United States. 0:38:47.640 --> 0:38:49.960 How short term and what are the terms looking like? 0:38:50.480 --> 0:38:54.560 So we need shovels in the ground this year or 0:38:54.719 --> 0:38:57.000 by the middle of next year if there is no 0:38:57.160 --> 0:39:01.080 foreign content, and we need completion of the project by 0:39:01.080 --> 0:39:03.399 the end of twenty twenty seven. Some of the rules 0:39:03.400 --> 0:39:05.879 are still to be finalized. Actually, the Big Beautiful Bill 0:39:05.920 --> 0:39:10.400 obviously passed on the fourth of July, but a week later, 0:39:10.840 --> 0:39:14.880 the Trump administration issued in executive order that the IRS 0:39:14.920 --> 0:39:18.239 has forty five days to clarify the rules. So, interestingly enough, 0:39:18.280 --> 0:39:20.600 we're playing by a rule book that we don't fully 0:39:20.680 --> 0:39:21.600 have the details for. 0:39:21.880 --> 0:39:24.360 You talked about lack of clarity, correctly, it hits a 0:39:24.400 --> 0:39:25.879 lot of different areas, that's right. 0:39:25.920 --> 0:39:29.160 But there is opportunity there in the short to medium 0:39:29.280 --> 0:39:32.200 term for us to help those small to medium size 0:39:32.239 --> 0:39:35.839 developers bring those rapidly deployable projects where we can get 0:39:35.960 --> 0:39:38.560 energy to the grid before the end of twenty twenty 0:39:38.560 --> 0:39:42.040 seven online immediately. But they need capital and they're very 0:39:42.040 --> 0:39:45.200 profitable when you do it, and that's where we see 0:39:45.200 --> 0:39:47.360 the short term opportunity in development. 0:39:47.440 --> 0:39:49.400 Then do these product projects go poof? 0:39:50.080 --> 0:39:53.799 Well, no, the project will last for twenty that's it. 0:39:54.320 --> 0:39:57.880 If you have a thirty project pipeline, you might have 0:39:57.920 --> 0:39:59.520 five that you can bring to fruition. You might have 0:39:59.520 --> 0:40:00.200 twenty five go. 0:40:00.280 --> 0:40:02.440 Poof all because of tax credits. 0:40:02.840 --> 0:40:05.799 Correct Now, there will be major changes that are going 0:40:05.840 --> 0:40:11.279 to occur. The cost of construction for solar projects. The 0:40:11.360 --> 0:40:15.359 EPC construction costs are highly likely over time to come 0:40:15.360 --> 0:40:19.640 down because if there's less development going on, those construction 0:40:19.719 --> 0:40:22.120 companies will reduce their costs. So there'll be opportunities there. 0:40:22.120 --> 0:40:25.480 There will also be opportunities for states that want to 0:40:25.480 --> 0:40:29.680 continue to incentivize solar to step in and provide credits 0:40:29.840 --> 0:40:32.719 where the federal government steps out. And then finally the 0:40:32.840 --> 0:40:37.240 utilities themselves, which at the moment use the interconnection fee 0:40:37.280 --> 0:40:39.920 and other aspects of solar development to make money, they 0:40:39.960 --> 0:40:42.360 will probably compress their margins as well. So there are 0:40:42.400 --> 0:40:45.640 a number of different moving levers, and then ultimately the 0:40:45.640 --> 0:40:48.040 cost of electricity is going to go up. Well that's 0:40:48.120 --> 0:40:50.160 and that's going to be a huge driver of value. 0:40:50.239 --> 0:40:51.799 This is what I wanted to ask you. What are 0:40:51.840 --> 0:40:54.080 the projects that you are investigat. 0:40:54.239 --> 0:40:57.240 So the projects that we're lending money to are lending 0:40:57.280 --> 0:40:59.840 to forgive me exactly for clarity, we're a private credit 0:41:00.080 --> 0:41:03.840 and the lens money rather than investing equity. But those 0:41:03.880 --> 0:41:08.840 projects are below utility grade. They're what are called community solar, 0:41:08.920 --> 0:41:14.000 so they're usually in the five to fifty megawatt project size, 0:41:14.000 --> 0:41:18.240 whereas community solar really kicks excuse me, utility grade kicks 0:41:18.239 --> 0:41:22.799 in above about one hundred megawatts. Those projects, because they 0:41:22.840 --> 0:41:27.319 are much more challenging and time consuming to execute. A 0:41:27.360 --> 0:41:29.520 lot of those who have gone to use your words, 0:41:29.800 --> 0:41:33.680 who because they can't be delivered in that timeframe. So 0:41:34.440 --> 0:41:37.960 there is a massive change in the demand. As we 0:41:38.040 --> 0:41:41.440 know for solar as a result of AI for electricity 0:41:41.480 --> 0:41:44.880 in general, but now there's a material change in supply 0:41:45.400 --> 0:41:46.080 for the negative. 0:41:47.160 --> 0:41:50.279 Before we let you go back to your focus on 0:41:50.520 --> 0:41:52.680 multifamily in the past, you've been on with us and 0:41:52.680 --> 0:41:58.640 you've spoken excitedly about the Sun Belt. Where geographically are 0:41:58.640 --> 0:41:59.960 you thinking for opportunity now? 0:42:00.200 --> 0:42:02.680 We continue to see a lot of opportunity in small 0:42:02.719 --> 0:42:05.920 to medium sized cities across the southeast, the Carolinas, Georgia, 0:42:06.040 --> 0:42:09.799 where these right to work states where we're seeing a 0:42:09.800 --> 0:42:15.480 lot of new battery factories and and other new factories 0:42:15.520 --> 0:42:18.959 being built. It's those small to medium sized markets where 0:42:19.000 --> 0:42:22.800 we continue to see a growth in demand, an increase 0:42:22.800 --> 0:42:26.640 in wages, an increase in job opportunities, and we're there 0:42:27.080 --> 0:42:29.280 to do our best to support that with housing. 0:42:29.640 --> 0:42:32.600 How would you describe the economy just real quickly, kind. 0:42:32.440 --> 0:42:35.279 Of strong jobs market, but a lot of lack of 0:42:35.280 --> 0:42:39.719 clarity around issues such as tariffs and rates that have 0:42:40.239 --> 0:42:42.520 that make it challenging for long term deployment of capital. 0:42:42.880 --> 0:42:45.319 All right, interesting, So it sounds like potentially a lot 0:42:45.320 --> 0:42:48.800 of stuff sitting on the sidelines just waiting we see clarity. Certainly, 0:42:49.160 --> 0:42:52.040 all right, good to check in with you. Thank you 0:42:52.080 --> 0:42:54.720 for coming in. Thank you, Yeah, appreciate it. Thomas Carrol, 0:42:54.880 --> 0:42:57.680 He's founder and chief executive officer of ballast Rock Asset Management, 0:42:57.760 --> 0:43:02.080 joining us right here in our Bloomberg Interactive Broke Studio. 0:43:05.680 --> 0:43:09.560 This is the Bloomberg Business Week Daily Podcast. Listen live 0:43:09.640 --> 0:43:13.040 each weekday starting at two pm Eastern on Applecarplay and 0:43:13.120 --> 0:43:15.799 the Android Auto with the Bloomberg Business App. You can 0:43:15.800 --> 0:43:18.960 also listen live on Amazon Alexa from our flagship New 0:43:19.040 --> 0:43:22.359 York station, Just Say Alexa. Played Bloomberg eleven. 0:43:22.160 --> 0:43:25.000 Thirty plenty ahead in our second hour of the weekend 0:43:25.120 --> 0:43:28.320 edition at Bloomberg Business Week, including the luxury brand facing 0:43:28.400 --> 0:43:31.399 questions about how far is too far when it comes 0:43:31.480 --> 0:43:32.480 to exclusivity. 0:43:32.760 --> 0:43:35.840 Plus really excited for this one because we get to 0:43:35.880 --> 0:43:39.239 speak to our Bloomberg Food editor, Kate Crator. She's stopping by. 0:43:39.880 --> 0:43:43.359 She's talking about the boom in YouTube chefs. New York 0:43:43.400 --> 0:43:46.240 influence also pervades the food and drink scene in London. 0:43:46.280 --> 0:43:48.680 Apparently you can get a pretty good burger there these 0:43:48.760 --> 0:43:52.320 days if you want it. Pizza too, pizza yeah. Kate's 0:43:52.320 --> 0:43:55.080 also going to share how CEOs optimize their sleep routine. 0:43:55.120 --> 0:43:57.239 I was surprised to see some of these CEOs are 0:43:57.239 --> 0:43:59.200 not doing a very good job. And I was too. 0:43:59.239 --> 0:44:01.480 I was amazed how many I expected, like all these 0:44:01.520 --> 0:44:03.759 great like lie about it. 0:44:03.760 --> 0:44:05.839 If you're not doing a good job, CEOs, come on 0:44:06.080 --> 0:44:06.800 you a good example. 0:44:06.920 --> 0:44:10.320 This part of your brand, all right. And while on 0:44:10.440 --> 0:44:12.840 the subject of food in chefs in nineteen sixties, diner 0:44:12.960 --> 0:44:14.480 is one of the scenes in a new high tech 0:44:14.600 --> 0:44:19.280 immersive show on Elvis Presley that unfortunately failed to impress. 0:44:19.680 --> 0:44:21.640 Elvis has left the building, and it sounds like maybe 0:44:21.680 --> 0:44:24.520 our reviewer wanted to do so as well. We'll explain 0:44:24.600 --> 0:44:26.120 it's all in Bloomberg Pursuits. 0:44:26.400 --> 0:44:29.520 First up this hour, the Starbucks Pumpkins spice latte is 0:44:29.560 --> 0:44:31.840 set to return to stores in just about a month. Nuts, 0:44:32.200 --> 0:44:34.680 that's nuts. Come on, Togs twenty. 0:44:34.560 --> 0:44:35.160 Six, get over. 0:44:35.239 --> 0:44:37.040 I think it's a little cheating to think about you. 0:44:37.400 --> 0:44:39.520 I'll have listen a pumpkin spice latte. 0:44:39.600 --> 0:44:42.319 I stay away from it. Okay, I do too, no 0:44:42.320 --> 0:44:44.400 matter what time of year it is. Speaking of the 0:44:44.400 --> 0:44:47.759 Pumpkins spice lattes, one of the most read stories over 0:44:47.760 --> 0:44:49.839 the last week is about the CEO who turned around 0:44:49.880 --> 0:44:52.560 Taco Bell and then turned around Chipotle, can he now 0:44:52.600 --> 0:44:56.920 do the same for Starbucks? For Bloomberg Business Week, Danielle 0:44:57.040 --> 0:45:00.760 Story interviewed investors, baristas, and Brian Nicol Well, the Newish 0:45:00.840 --> 0:45:02.920 CEO who has lured to Starbucks with the pay package 0:45:03.000 --> 0:45:05.560 valued at about one hundred million dollars. He's been on 0:45:05.600 --> 0:45:07.920 the job for a few months since September, so it's 0:45:07.920 --> 0:45:10.880 almost been a year. Actually. The ceramic cups, a handful 0:45:10.920 --> 0:45:14.360 of madeover stores, and condiment bars are some of the 0:45:14.440 --> 0:45:19.680 changes he's betting on. Oh, and protein too. Doniella sr. 0:45:19.719 --> 0:45:22.520 Torri is Bloomberg News restaurant reporter. She joins us from 0:45:22.520 --> 0:45:24.719 our Chicago bureau. She spent a lot of time with 0:45:24.800 --> 0:45:27.640 Brian Nichol. She did a lot of traveling for this story. 0:45:28.040 --> 0:45:30.960 Doniella tell us a little bit about how Brian Nichol 0:45:31.040 --> 0:45:32.640 is doing and turning this company around. 0:45:33.000 --> 0:45:36.040 So there's definitely been some progress, you know. The Starbucks 0:45:36.120 --> 0:45:38.720 has already made some changes, like bringing back the Continent 0:45:38.760 --> 0:45:40.719 bar so people don't have to, you know, complain to 0:45:40.760 --> 0:45:42.240 baristas about their drink being. 0:45:42.040 --> 0:45:43.959 Too sweet or too dark or too light. 0:45:44.960 --> 0:45:48.040 They've also started renovating some stores, you know, they started 0:45:48.040 --> 0:45:50.640 redesigning the menu, So definitely things that are going to 0:45:50.719 --> 0:45:52.840 make a difference. And you know, they do say that 0:45:52.880 --> 0:45:54.960 people are hanging out in stores more because they want 0:45:55.000 --> 0:45:57.359 to bring back that feeling of you know, it being 0:45:57.400 --> 0:45:59.120 like a coffee house and that they're ording a more 0:45:59.120 --> 0:46:02.759 coffee centric drain. But some of the big things, you know, 0:46:02.920 --> 0:46:05.359 in terms of operations, which is such a boring word 0:46:05.440 --> 0:46:08.120 but it matters so much when it comes to getting 0:46:08.120 --> 0:46:12.000 your drink quickly, are still being developed. Like, for example, 0:46:12.160 --> 0:46:14.360 the company is in the process of putting more workers 0:46:14.360 --> 0:46:17.279 in stores, which they are hoping will you know, speed 0:46:17.360 --> 0:46:19.200 up service. And then also you know, give Braces a 0:46:19.200 --> 0:46:20.920 little time to you know, have a chat with you. 0:46:21.520 --> 0:46:24.080 But some of these big changes are still are still 0:46:24.200 --> 0:46:27.720 in the works and so you know, it's definitely working progress. 0:46:27.760 --> 0:46:29.240 And Brian himself has said. 0:46:29.080 --> 0:46:31.479 That, well, let's we'll get to Brian. More on Brian 0:46:31.520 --> 0:46:33.160 in a second. But one thing that I really liked 0:46:33.200 --> 0:46:34.799 about your piece was it did a good job of 0:46:34.880 --> 0:46:38.320 laying out the challenges that Starbucks has faced in recent years. 0:46:38.920 --> 0:46:40.759 Can you talk a little bit about how it lost 0:46:40.800 --> 0:46:41.960 its way? 0:46:42.600 --> 0:46:45.360 Absolutely, so you know, we can look back at a 0:46:45.440 --> 0:46:47.560 sort of the pandemic, one of the things that happened 0:46:47.640 --> 0:46:50.279 was the company moved a lot to sort of that convenienced, 0:46:50.800 --> 0:46:53.279 convenience focused model, right, a lot of us wearing go 0:46:53.320 --> 0:46:55.840 into the store stores weren't even open, and so Starbucks 0:46:55.880 --> 0:46:59.680 actually started removing seats from stores. At the same time, 0:47:00.200 --> 0:47:03.920 you know, there was this unionization movement ignited by several things, 0:47:03.960 --> 0:47:07.000 you know, like very says, feeling that there was understaffing. 0:47:08.000 --> 0:47:11.640 All of that led to slower service at the company. 0:47:11.760 --> 0:47:14.759 Lines just have gone very long. At the same time, 0:47:14.760 --> 0:47:17.200 people are like, well, this doesn't feel like a cafe anymore. 0:47:17.760 --> 0:47:19.960 And then you know, we also have some issues outside 0:47:19.960 --> 0:47:22.759 of the US, right, So, for example, China has been 0:47:22.920 --> 0:47:26.319 very slow to recover because of the companies sorry, because 0:47:26.360 --> 0:47:29.920 of the country's economic situation, and also just competitors that 0:47:29.960 --> 0:47:34.440 have undercut Starbucks. And so there are challenges on multiple 0:47:34.480 --> 0:47:36.480 fronts that the company has to confront right now. 0:47:37.239 --> 0:47:40.120 You know, it's interesting I try to think about what 0:47:40.280 --> 0:47:43.080 it is that Starbucks has to deal with. They really 0:47:43.200 --> 0:47:47.040 kicked off, right kind of the coffee craze, right, and 0:47:47.680 --> 0:47:50.719 you know, not just getting a cup of coffee from 0:47:50.760 --> 0:47:53.520 a deli, but made it so much more. But the 0:47:53.560 --> 0:47:58.120 market that they really created is now a really crowded market, 0:47:58.280 --> 0:48:01.600 So is it just that? But it can't be just 0:48:01.680 --> 0:48:05.880 about coffee anymore, and that Starbucks has to mean something 0:48:05.960 --> 0:48:09.759 beyond that, like food, a cafe you hang around and 0:48:09.800 --> 0:48:11.840 you bring the family, Like what is it that it 0:48:11.880 --> 0:48:14.920 may be? What do industry folks say it needs to be? 0:48:15.400 --> 0:48:17.520 Is it or is it just painting the cafes and 0:48:17.560 --> 0:48:18.520 making them cozier? 0:48:18.560 --> 0:48:19.080 What is it? 0:48:19.320 --> 0:48:22.160 No, that's absolutely right. I mean in Starbucks created this 0:48:22.239 --> 0:48:24.880 idea of sort of the third place right beyond you know, 0:48:24.960 --> 0:48:26.839 your work and your home, where you could hang out, 0:48:26.880 --> 0:48:30.440 and also making coffee a little bit premium here in 0:48:30.760 --> 0:48:33.680 the US, but there's been a lot of competition that 0:48:33.760 --> 0:48:36.480 has undercut the company in terms of price, in terms 0:48:36.520 --> 0:48:38.839 of speed, and also in terms of new products. You know, 0:48:38.880 --> 0:48:41.440 if you look at places like Dutch Bros. 0:48:41.480 --> 0:48:42.279 They just have these. 0:48:42.239 --> 0:48:46.680 Drinks like protein coffee, drinks that really appeal to demographics 0:48:46.719 --> 0:48:49.440 like gen Z and at the same time, you know, 0:48:49.520 --> 0:48:53.440 they've kind of pioneered a model of convenience. So it 0:48:53.520 --> 0:48:55.640 is almost like all of the above, right, Like one 0:48:55.640 --> 0:48:57.480 of the things that when you talk to Brian Nicol, 0:48:57.560 --> 0:49:00.719 he wants to make sure Starbucks stands out is by 0:49:00.760 --> 0:49:03.399 having the space, you know, having the coffee shop where 0:49:03.440 --> 0:49:05.880 you can hang out. That is something that you know, 0:49:05.920 --> 0:49:09.279 those drive through concepts like Dutch Bros. Don't really have 0:49:09.360 --> 0:49:11.759 because by definition they are drive through. But at the 0:49:11.760 --> 0:49:13.600 same time, they also need to make sure that they 0:49:13.600 --> 0:49:16.319 have stuff that actually gets people in the door. And 0:49:16.360 --> 0:49:19.600 so that's why they've been also redesigning the menu. They 0:49:19.600 --> 0:49:22.360 are trying to focus on coffee because that's their heritage, 0:49:22.400 --> 0:49:25.120 and so they think that they can sort of distinguish 0:49:25.200 --> 0:49:27.959 themselves that way. But at the same time they are 0:49:28.000 --> 0:49:31.320 adding those twists like that vanilla latte with the protein 0:49:31.360 --> 0:49:31.960 cult foam. 0:49:32.280 --> 0:49:35.359 I actually got to try it in Vegas. It's quite 0:49:35.360 --> 0:49:36.280 it's quite interesting. 0:49:37.040 --> 0:49:38.759 But you know, it's like they can't they can't go 0:49:39.640 --> 0:49:43.640 super focused on like purest coffee. They also recognize they 0:49:43.680 --> 0:49:46.919 need to have stuff that actually like catches people's eye, 0:49:46.960 --> 0:49:47.680 if that makes. 0:49:47.520 --> 0:49:50.480 Sense, Daniella. I'm curious too about Brian Nicol. He has 0:49:50.520 --> 0:49:53.279 been so quiet. I mean, Tim and I have talked 0:49:53.320 --> 0:49:58.640 to him a lot. When he was at Chipotle, he 0:49:59.520 --> 0:50:02.719 was very accessible. I've done some deep dives too with 0:50:02.840 --> 0:50:08.080 him for BusinessWeek magazine and for Bloomberg. I'm just curious, 0:50:09.160 --> 0:50:10.439 why is he kind of laying low. 0:50:12.040 --> 0:50:14.799 It's interesting the perception that he's laying low. I mean, 0:50:14.800 --> 0:50:17.480 I guess from my perspective. You know, since Brian joined, 0:50:17.560 --> 0:50:20.080 he's been pretty clear about his vision and his plan. 0:50:20.239 --> 0:50:23.600 So I remember he joined September nine, September ten, he 0:50:23.680 --> 0:50:26.440 actually came out with like the broad outlines of his plan, 0:50:27.440 --> 0:50:29.680 and by October, you know, they were putting him on 0:50:29.719 --> 0:50:33.120 the phone, you know, to talk to reporters about what 0:50:33.160 --> 0:50:36.920 was happening at the company. I do think that part 0:50:37.080 --> 0:50:40.520 of what's happening is that while his vision is clear 0:50:40.719 --> 0:50:42.480 in terms of what he wants to accomplish, I mean, 0:50:42.480 --> 0:50:44.000 he knows he wants to bring back the coffee house, 0:50:44.040 --> 0:50:45.799 he wants to focus on coffee, he wants to speed 0:50:45.880 --> 0:50:50.839 up service, sometimes the underlying tactics are changing a little bit, 0:50:51.920 --> 0:50:53.000 and so you know, the. 0:50:53.440 --> 0:50:55.200 Sort of direction of travel is clear. 0:50:55.280 --> 0:50:57.680 But just to give you an example, earlier this year, 0:50:57.719 --> 0:51:01.160 Starbucks said that they were going to bring more staffing 0:51:01.200 --> 0:51:04.480 to about a third of US company operated stores. So 0:51:04.520 --> 0:51:10.040 that excludes stuff like airports, it excludes targets. Then later 0:51:10.120 --> 0:51:12.280 they were like, no, actually it's coming to all stores. 0:51:13.120 --> 0:51:15.160 Probably part of it was a little bit of pressure from 0:51:15.200 --> 0:51:17.640 investors being like, all right, man, when are we going 0:51:17.719 --> 0:51:21.040 to start seeing your results? But the tactics and sort 0:51:21.040 --> 0:51:24.239 of like the speed are changing a little bit, even 0:51:24.320 --> 0:51:27.280 though everyone knows like the direction of travel. 0:51:27.320 --> 0:51:30.680 If that makes sense, yeah, it does. You mentioned the 0:51:30.760 --> 0:51:33.960 changing menu and to get people into the door. What 0:51:34.000 --> 0:51:36.399 I learned from your story is that's a big part 0:51:36.400 --> 0:51:39.440 of Tressie Lieberman's job. Tell us about her. 0:51:40.040 --> 0:51:46.040 So Tresie worked with Brian at Chipotle and a Tacko Bill. Actually, 0:51:46.360 --> 0:51:48.440 she told us that she's been working with Brianston. She 0:51:48.480 --> 0:51:52.719 was in like her twenties, so she knows Brian quite 0:51:52.760 --> 0:51:55.920 a bit, and so she came over right before Starbucks. 0:51:55.920 --> 0:51:58.480 She was actually a chief marketing officer at Yahoo, so 0:51:58.560 --> 0:52:02.560 she has brought experience and so her rema is marketing. 0:52:02.600 --> 0:52:05.920 So how the company presents itself to customers, including the 0:52:06.160 --> 0:52:10.880 sort of rebranding as Starbucks Coffee Company, but also the 0:52:11.000 --> 0:52:14.720 menu because I think they recognize that. Yes, the company 0:52:14.719 --> 0:52:17.000 has had some hits like for example, cold foam, things 0:52:17.000 --> 0:52:19.440 like shake and espresso. One of the thing ways to 0:52:19.520 --> 0:52:22.160 know if something's been ahead is if competitors have copied 0:52:22.160 --> 0:52:24.040 it and if you go to any coffee shop, any 0:52:24.040 --> 0:52:26.279 coffee shop has those things. But at the same time, 0:52:26.280 --> 0:52:28.600 there were things they launched, like for example, energy drinks 0:52:28.680 --> 0:52:31.239 last year that they've discontinued because they just didn't think 0:52:31.239 --> 0:52:33.600 we're apt to par and so that's kind of what 0:52:33.640 --> 0:52:37.760 Tressie's doing, and she's described wanting to make the menus 0:52:37.880 --> 0:52:42.400 sort of modern and premium, and so one of some 0:52:42.440 --> 0:52:43.920 of the things they're looking at is like the protein 0:52:44.000 --> 0:52:48.719 latte and also bringing fresh baking to Starbucks because I 0:52:48.760 --> 0:52:51.880 don't know if this is common knowledge, but pastries of 0:52:51.920 --> 0:52:55.040 Starbucks coming up plastic bag that then gets reheated in 0:52:55.120 --> 0:52:58.480 an oven. So that doesn't really fit a definition of premium, 0:52:59.040 --> 0:53:01.560 which is, you know, they're trying to justify the prices 0:53:01.600 --> 0:53:03.399 that they are that they are charging, and they're trying 0:53:03.400 --> 0:53:04.560 to justify the experience. 0:53:04.800 --> 0:53:06.439 So that's sort of the direction that they're moving. 0:53:06.480 --> 0:53:08.320 We'll say, their littlegg bites I think are something my 0:53:08.400 --> 0:53:09.120 daughter really like. 0:53:09.760 --> 0:53:14.160 People love these popular I know, right, yeah, they're kind 0:53:14.160 --> 0:53:14.720 of nice. 0:53:15.440 --> 0:53:17.880 And if you see that, it's another example of Starbucks 0:53:17.880 --> 0:53:20.160 setting a trends that has caught on, like even Costco 0:53:20.239 --> 0:53:21.279 seales X bite egg bites. 0:53:21.600 --> 0:53:23.120 So can I ask you something? 0:53:23.160 --> 0:53:25.360 Wait, because I would say that we're a couple of different, 0:53:25.480 --> 0:53:28.040 three different generations. Do you go to Starbucks? 0:53:28.160 --> 0:53:30.920 I do, but I also cover it, so sometimes I 0:53:31.040 --> 0:53:33.240 just go to see how things are okay? 0:53:33.400 --> 0:53:35.960 So okay, Tim, Tim doesn't go. 0:53:36.160 --> 0:53:38.360 I will not go unless I don't falling asleep at 0:53:38.360 --> 0:53:40.520 the wheel. And it's the only place, right. 0:53:40.760 --> 0:53:42.160 So I think, why you do go? 0:53:42.239 --> 0:53:42.520 You do? 0:53:42.680 --> 0:53:43.200 No, I don't go. 0:53:43.360 --> 0:53:44.360 I don't like the coffee. 0:53:44.400 --> 0:53:46.520 And would you go if you didn't? I mean, this 0:53:46.640 --> 0:53:48.680 might be uncomfortable, but would you go just between the 0:53:48.680 --> 0:53:50.359 three of us if you didn't cover it? 0:53:50.880 --> 0:53:52.880 Just between the three of us in front of everyone. 0:53:52.880 --> 0:53:54.760 I think I'm gonna refrain from answering that question. 0:53:55.400 --> 0:53:58.440 You're the smartest one getting yourself in trouble. 0:53:58.560 --> 0:53:59.840 There's lots of choices. 0:54:00.640 --> 0:54:03.200 But I will say I I it's why I only 0:54:03.239 --> 0:54:05.440 have one cup of coffee a day. I know, and 0:54:05.480 --> 0:54:07.200 I have to have it at home because I can't 0:54:07.239 --> 0:54:07.600 do anything. 0:54:07.680 --> 0:54:09.120 It's a little bit of a prima. 0:54:09.400 --> 0:54:11.400 Well, the thing is, I don't know. I mean I 0:54:11.480 --> 0:54:13.880 used to drink. I used to drink the coffee, but 0:54:13.920 --> 0:54:16.000 then you move to New York, and you're like the 0:54:16.080 --> 0:54:19.319 options for coffee here it's nuts or unbelievable. 0:54:18.800 --> 0:54:21.280 So many Yeah, I like to press at home. 0:54:22.400 --> 0:54:25.319 But don't you know people go Charlie Pelleck goes every day. 0:54:25.640 --> 0:54:27.600 I know Katie Greifeld goes every day. 0:54:27.640 --> 0:54:28.480 I think you now like that. 0:54:28.560 --> 0:54:29.800 I think that's that's a question. 0:54:29.920 --> 0:54:30.080 Right. 0:54:30.280 --> 0:54:33.640 There is a loyal base of customers and some of 0:54:33.680 --> 0:54:36.920 the moves that Starbucks has made, you know in recent months, 0:54:36.920 --> 0:54:38.719 you know they changed their rewards program, they've did they 0:54:38.920 --> 0:54:41.440 just changed a lot about the experience. Does that keep 0:54:41.480 --> 0:54:43.480 the loyal customers or not? And then at the same time, 0:54:43.520 --> 0:54:44.680 does it bring new people? 0:54:44.840 --> 0:54:47.279 Like you know, maybe Brian will do something that will 0:54:47.280 --> 0:54:50.759 actually get Tim to come in the door. He's just 0:54:51.239 --> 0:54:51.839 not going to happen. 0:54:52.360 --> 0:54:54.960 If it's like a Chipotle or if it's like a 0:54:55.120 --> 0:54:58.760 Chipotle Bowl or Dorito's Locos talker, then maybe. 0:54:58.320 --> 0:55:01.040 Maybe, I don't know, what, what if he improves the food, 0:55:01.080 --> 0:55:02.080 that is also part of life. 0:55:02.080 --> 0:55:03.920 I know I was trying to do in Zac right, 0:55:04.000 --> 0:55:06.160 like you go in and right you increase that like 0:55:06.239 --> 0:55:09.239 individual purchase. Hey, twenty five seconds China. 0:55:09.280 --> 0:55:11.160 They are looking at us selling a stake there. That 0:55:11.239 --> 0:55:13.960 is the latest information that we have because recovery has 0:55:14.000 --> 0:55:15.800 been tough and they want a local partner there to 0:55:15.920 --> 0:55:17.319 help them figure out what to do. 0:55:17.239 --> 0:55:19.359 Because that's an important part of growth, right for. 0:55:19.360 --> 0:55:24.120 Them, second largest market after North America, and they say 0:55:24.120 --> 0:55:24.799 they believe in it. 0:55:24.840 --> 0:55:29.680 So see final question Pumpkin spice latte too early. August 0:55:29.680 --> 0:55:31.080 twenty six, too early, right. 0:55:31.200 --> 0:55:33.000 I don't know if it's earlier than other years, but 0:55:33.080 --> 0:55:35.000 it's not fall. It's definitely not fall. But I think 0:55:35.040 --> 0:55:36.759 it's earlier and earlier because it does give them a 0:55:36.760 --> 0:55:37.440 big sales pump. 0:55:37.440 --> 0:55:38.960 So maybe that's why definitely not fall. 0:55:39.280 --> 0:55:43.319 Danielle Sitory joining us Bloomberg News Restaurant Reporter. A great 0:55:43.320 --> 0:55:46.040 story on the Starbucks CEO. It's a BusinessWeek story. Check 0:55:46.040 --> 0:55:46.359 it out. 0:55:46.719 --> 0:55:50.719 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:55:50.800 --> 0:55:54.240 live weekday afternoons from two to five pm Eastern. Listen 0:55:54.280 --> 0:55:57.840 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:55:58.000 --> 0:56:00.160 or watch us live on YouTube. 0:56:00.760 --> 0:56:04.200 Tiffany's salespeople call them the watch monsters. Oh my god. 0:56:04.239 --> 0:56:08.400 Salespeople always have words for the customers, the obsessives of 0:56:08.560 --> 0:56:11.000 the ultra wealthy shoppers who were sure they would be 0:56:11.040 --> 0:56:13.600 among the chosen few to get their hands on the rare, 0:56:13.680 --> 0:56:16.480 limited edition Protect Philippe timepiece. 0:56:16.760 --> 0:56:20.160 But what began is a celebration of the iconic jeweler 0:56:20.200 --> 0:56:24.680 and watchmaker has evolved into a cautionary tale, a lesson 0:56:24.800 --> 0:56:29.239 in how exclusivity, if mishandled, can dim the glow of luxury. 0:56:29.320 --> 0:56:32.400 Jeanette Newman is Bloomberg News consumer reporter. She wrote all 0:56:32.440 --> 0:56:36.080 about how Tiffany turned their best customers into their loudest critics. 0:56:36.400 --> 0:56:39.760 She joined Tim and Bloomberg News equities reporter Noura Melnda. 0:56:40.040 --> 0:56:44.560 This watch was particularly coveted and particularly special, So if 0:56:44.719 --> 0:56:46.719 let's say you wanted to just go in and buy 0:56:46.719 --> 0:56:48.800 the watch, you couldn't just walk in off the street 0:56:48.840 --> 0:56:52.000 and say, you know, I love Protect philip I want 0:56:52.040 --> 0:56:55.000 this very special watch. There were only one hundred and 0:56:55.000 --> 0:57:00.160 seventy of them made. You would express interest in the watch, 0:57:00.880 --> 0:57:04.000 and then you would be told, okay, we'll, we'll Tiffany. 0:57:04.120 --> 0:57:06.600 Tiffany salespeople would tell you we'll, we'll get back to you. 0:57:07.440 --> 0:57:12.560 And that's because this watch was very highly, very highly desired, 0:57:12.880 --> 0:57:15.040 and so there were many people who were who were 0:57:15.040 --> 0:57:18.240 trying to get it and it was ultimately, as we report, 0:57:18.240 --> 0:57:21.400 at the discretion of Tiffany executives who ended up getting 0:57:21.560 --> 0:57:23.320 the one hundred and seventy watches. 0:57:23.680 --> 0:57:27.360 And that discretion is really where things got complicated for 0:57:27.560 --> 0:57:30.960 some of the folks who were argue, at least in lawsuits, 0:57:30.960 --> 0:57:33.919 that they were longtime customers of Tiffany and spent quite 0:57:33.920 --> 0:57:36.520 a bit of money at Tiffany. What did you find 0:57:36.560 --> 0:57:37.200 in your reporting? 0:57:38.640 --> 0:57:41.440 So in the reporting, what I found is that and 0:57:41.680 --> 0:57:43.680 I think it would it would also be helpful of 0:57:43.720 --> 0:57:45.440 you if you find it helpful to just to kind 0:57:45.440 --> 0:57:48.200 of situate, you know, this moment. So we have to 0:57:48.200 --> 0:57:51.080 go back in time a little bit just to understand 0:57:51.160 --> 0:57:55.200 why this watch was the watch at the time and 0:57:55.240 --> 0:57:58.920 why now even a couple of years later, we're talking 0:57:58.960 --> 0:58:01.800 about it. I'm I'm reporting on it because it's the 0:58:01.840 --> 0:58:04.960 sale of the watch is still having repercussions today. So 0:58:05.160 --> 0:58:08.800 this this watch that was made by Ptec Philip was started, 0:58:09.000 --> 0:58:12.280 was went on sale in December twenty twenty one. And 0:58:12.480 --> 0:58:16.080 if you'll remember that at that time, we many people 0:58:16.120 --> 0:58:19.520 were feeling, you know flush, we had you know, extra 0:58:19.560 --> 0:58:22.040 pandemic savings. Some people still had some money left over 0:58:22.080 --> 0:58:24.680 from the stimulus checks, a lot of people were buying 0:58:25.000 --> 0:58:27.680 luxury goods. Demand for luxury goods was going through the roof. 0:58:27.920 --> 0:58:31.280 That included luxury watches. Some said at the time there 0:58:31.320 --> 0:58:34.640 was actually a bit of a watch bubble. People who 0:58:34.960 --> 0:58:37.240 you know, maybe hadn't been interested in watches before, all 0:58:37.280 --> 0:58:39.800 of a sudden got very interested in spending their pandemic 0:58:39.800 --> 0:58:43.800 savings on these luxury watches, like Pateech philip So at 0:58:43.800 --> 0:58:47.800 this time, Pateech Philippe says, okay, actually we're going to 0:58:47.880 --> 0:58:51.200 discontinue one of the most beloved watches in the world, 0:58:51.240 --> 0:58:54.479 their fifty seven eleven model, which is the Nautilus fifty 0:58:54.480 --> 0:58:56.600 seven eleven model. They said, we're going to discontinue it. 0:58:56.880 --> 0:59:00.640 At that time, the watch world freaked out. It was 0:59:00.720 --> 0:59:02.680 it was a huge deal that amid this kind of 0:59:02.760 --> 0:59:05.320 watch bubble, one of the biggest, one of the most 0:59:05.320 --> 0:59:07.600 important watchmakers in the world says we're no longer going 0:59:07.680 --> 0:59:10.240 to sell the watch that everybody, that everybody loves. And 0:59:10.280 --> 0:59:13.800 then they said, okay, So that caught everybody off guard. 0:59:13.880 --> 0:59:17.120 And then they caught people off guard again by saying, actually, 0:59:17.360 --> 0:59:20.360 there's going to be one final swan Swan song for 0:59:20.480 --> 0:59:22.880 the fifty seven eleven line. We're going to make one 0:59:22.920 --> 0:59:27.120 hundred and seventy of these very special edition watches to 0:59:27.320 --> 0:59:30.040 honor the one hundred and seventy years that patech Philly 0:59:30.160 --> 0:59:33.800 and Tiffany had been working together, So an incredibly long 0:59:33.880 --> 0:59:37.920 standing relationship in the luxury world. So Patek made one 0:59:38.000 --> 0:59:40.840 hundred and seventy of these watches. And what was different was, 0:59:41.200 --> 0:59:43.880 as you said, the dial was in that kind of 0:59:44.360 --> 0:59:46.880 in that signature Tiffany Tiffany Blue, which is actually a 0:59:46.880 --> 0:59:49.400 patented color. If you go to the stores, everyone knows 0:59:49.400 --> 0:59:52.720 that the Tiffany boxes are in are in that color. Now, 0:59:53.040 --> 0:59:56.440 PTech doesn't have that many retail stores, so it relies 0:59:56.480 --> 0:59:59.640 on Tiffany and other jewelers to sell its watches. So 0:59:59.680 --> 1:00:02.160 in the case of this blue dial watch, it was 1:00:02.200 --> 1:00:06.760 Tiffany that was tasked with with selling with selling the watches, 1:00:07.040 --> 1:00:09.840 and as you said, that's where that's where things got 1:00:09.880 --> 1:00:14.800 a little bit complicated. So there was basically Tiffany. Tiffany 1:00:14.840 --> 1:00:19.080 executives realized that there was so much demand for these 1:00:19.160 --> 1:00:25.200 watches that they could encourage clients to spend between two 1:00:25.240 --> 1:00:28.360 to three million dollars on jewelry in order to even 1:00:28.360 --> 1:00:30.600 get a shot at buying watch. 1:00:31.160 --> 1:00:33.280 And this is called as you as I learned reading 1:00:33.320 --> 1:00:35.200 your piece, this is called bundling, and it's something that 1:00:35.280 --> 1:00:39.520 is typically done, but there are no it's they're not 1:00:39.600 --> 1:00:43.320 real rules around it. It's kind of like understood, but 1:00:43.840 --> 1:00:47.280 not always in writing. It's typically done in high end 1:00:47.320 --> 1:00:49.680 stores with with luxury items. Explain that. 1:00:51.160 --> 1:00:54.120 Exactly, it's not, it's all. It's all very informal. I think, 1:00:54.240 --> 1:00:56.200 you know, talk talking to some people for this story, 1:00:56.240 --> 1:00:59.840 people would often mention, oh, right, that's kind of what 1:00:59.880 --> 1:01:01.880 you have to do if you want to get simply, 1:01:01.960 --> 1:01:03.560 you can't walk off the street and just buy a 1:01:03.560 --> 1:01:07.080 burken bag. Often what customers will say is you have 1:01:07.160 --> 1:01:11.000 to You're encouraged to buy other other goods in order 1:01:11.040 --> 1:01:14.000 to then get access to that, to that, to that 1:01:14.080 --> 1:01:16.520 burken bag. And that's again what some people in the 1:01:16.520 --> 1:01:20.120 industry called bundling, other people other people call it call 1:01:20.160 --> 1:01:22.960 it tying. I would say one one potential difference with 1:01:23.000 --> 1:01:24.560 that is, you know, if you walk into an air 1:01:24.560 --> 1:01:28.080 med store and they're telling you to you know, potentially 1:01:28.240 --> 1:01:31.720 telling you to consider buying some other goods in order 1:01:31.760 --> 1:01:35.680 to be considered be considered for a burke, And that's 1:01:35.720 --> 1:01:38.320 kind of all within the confines of one store, right 1:01:39.200 --> 1:01:43.320 one and one brand. I think the difference here is 1:01:43.440 --> 1:01:48.400 that you had Tiffany, which was selling Protect Protect watches, 1:01:48.880 --> 1:01:52.560 encouraging its clients to buy Tiffany jewelry in order to 1:01:52.560 --> 1:01:55.080 get access to the to the Protect watch. 1:01:55.320 --> 1:01:59.600 So explain the alienation of some customers, these wealthy customers 1:01:59.600 --> 1:02:02.720 who expected to be able to buy this watch after 1:02:02.800 --> 1:02:06.120 spending money at Tiffany, but according to your reporting, ultimately 1:02:06.120 --> 1:02:07.040 weren't able to do that. 1:02:08.440 --> 1:02:08.640 Right. 1:02:08.680 --> 1:02:11.960 And there was definitely some frustration based on our reporting, 1:02:12.000 --> 1:02:16.200 based on sources that we talked to with the sale, 1:02:16.240 --> 1:02:18.120 with the sale of this watch, and I think I 1:02:18.120 --> 1:02:22.320 mean one kind of specific element that might be interesting 1:02:22.400 --> 1:02:26.400 to listeners is so there was a charity auction of 1:02:26.880 --> 1:02:29.480 the watch in December twenty twenty one, and the watch 1:02:29.560 --> 1:02:32.959 went for a staggering six point five million dollars, which 1:02:33.000 --> 1:02:35.520 is about one hundred times its retail value. The watch 1:02:35.560 --> 1:02:39.160 itself will need obviously a lot for so many of us, 1:02:39.240 --> 1:02:42.560 but the watch itself only cost around fifty three thousand 1:02:42.560 --> 1:02:45.080 dollars and it sold for six point five million dollars. 1:02:45.360 --> 1:02:49.040 That initial sale fell through. The watch ultimately exchange hands 1:02:49.040 --> 1:02:51.680 for six point two million dollars, still a lot of money. 1:02:52.080 --> 1:02:55.560 People who were interested in the watch saw that sale 1:02:55.760 --> 1:02:58.600 and said, well, this is a no brainer investment. If 1:02:58.640 --> 1:03:01.720 I can get access to something that costs fifty three 1:03:01.720 --> 1:03:06.680 thousand dollars and then potentially sell it for the market 1:03:06.720 --> 1:03:09.680 is showing that there's demand of up to six million dollars, well, 1:03:09.680 --> 1:03:12.840 that seems like a no brainer investment. So what some 1:03:12.880 --> 1:03:16.120 of our sources said is that some people again saw 1:03:16.120 --> 1:03:20.640 that as a no brainer investment and said, okay, well, 1:03:20.680 --> 1:03:24.040 if I'm being encouraged to spend two to three million 1:03:24.080 --> 1:03:27.240 dollars on jewelry, that might be worth it, because I 1:03:27.280 --> 1:03:30.720 think that I can resell I can resell watch. Now, 1:03:30.760 --> 1:03:37.040 the thing about that auction is, in general charity auctions, 1:03:37.080 --> 1:03:39.880 longtime collectors will look at charity auctions with a bit 1:03:39.880 --> 1:03:42.880 of a skeptical eye because sometimes, for example, the watchmakers 1:03:42.920 --> 1:03:46.320 themselves are involved in the bidding. So seeing that six 1:03:46.360 --> 1:03:49.080 point five million dollar price as kind of a market 1:03:49.120 --> 1:03:55.400 price versus a price that's you know, maybe more marketing oriented, 1:03:56.160 --> 1:03:59.400 I think was part of the issue. According to our 1:03:59.560 --> 1:04:03.440 According to our sources and according to our reporting, and 1:04:03.480 --> 1:04:06.760 then what happened to answer to answer your question, is 1:04:06.800 --> 1:04:10.040 people thinking the watch was worth this much, some of 1:04:10.080 --> 1:04:13.919 them did get the watch, and then over time, over 1:04:14.000 --> 1:04:16.959 the over twenty twenty twenty twenty two and into twenty 1:04:17.000 --> 1:04:20.040 twenty three, the value of the watch really fell. And 1:04:20.080 --> 1:04:23.360 now the watch sells in the secondary market for around 1:04:23.760 --> 1:04:28.000 one point two million dollars. So obviously a very a 1:04:28.120 --> 1:04:31.080 very big drop. Still a very expensive, a very expensive, 1:04:31.160 --> 1:04:36.120 very valuable watch, but not what people who were encouraged 1:04:36.240 --> 1:04:39.200 to you know, spend spend money on jewelry, were expecting 1:04:39.280 --> 1:04:42.040 for this, for this investment, and also to be to 1:04:42.080 --> 1:04:43.440 be fair. And I'm sure if you have, you know, 1:04:43.520 --> 1:04:47.360 friends who buy watches, there's there's all kinds, right, I mean, 1:04:47.400 --> 1:04:50.440 some people buy watches, you know, it's it's buy and 1:04:50.480 --> 1:04:52.240 hold or and there's some people who want to buy 1:04:52.280 --> 1:04:55.200 and sell. Other people bought the watch and never even 1:04:55.240 --> 1:04:57.880 intend didn't see it as a no brainer investment or 1:04:58.120 --> 1:05:00.400 or otherwise because they didn't see it as an investment, right, 1:05:00.440 --> 1:05:01.959 They saw it as I want to buy and hold 1:05:01.960 --> 1:05:03.680 this because I love this watch and I want to 1:05:03.680 --> 1:05:06.480 have it. Others, the ones who were disappointed by the 1:05:06.520 --> 1:05:09.720 decline in the price. We're seeing it as more of 1:05:09.760 --> 1:05:12.280 an investment that they could potentially flip at least have 1:05:12.320 --> 1:05:15.360 the option to flip Janette. Based on your experience covering 1:05:15.360 --> 1:05:19.520 the luxury space, is this normal? Are mishaps, mishandlings like 1:05:19.560 --> 1:05:24.360 this common? I think you know in in this story. 1:05:24.440 --> 1:05:26.920 At the end of this story, we mentioned I spoke 1:05:26.920 --> 1:05:31.280 to an anesthesiologist who what he what he told us. 1:05:31.360 --> 1:05:35.400 He told a story of how he was trying to 1:05:35.400 --> 1:05:38.600 buy some Ferraris. He had one Ferrari that he really wanted, 1:05:39.400 --> 1:05:41.880 and he bought several Ferraris in order to try to 1:05:41.920 --> 1:05:45.640 get that Ferrari and he never he never got that Ferrari. 1:05:45.680 --> 1:05:47.880 To kind of decline to comment on his kind of specific, 1:05:48.120 --> 1:05:54.200 specific experience and said, you know it, it doesn't encourage 1:05:54.200 --> 1:05:58.520 that kind of behavior. This anesthesiologist said that he's come 1:05:58.560 --> 1:06:03.120 across that game in the luxury world, and honestly, he's 1:06:03.400 --> 1:06:05.240 the way he said it is, he's kind of he's 1:06:05.320 --> 1:06:06.760 kind of sick of it. So I think that is 1:06:06.800 --> 1:06:09.520 a potential risk in the in the luxury world that 1:06:10.600 --> 1:06:14.080 some people, some people like to engage in this game, 1:06:14.120 --> 1:06:17.040 and I think others find it tiring. I would say, 1:06:17.400 --> 1:06:20.600 speaking to some people who sell watches on the on 1:06:20.640 --> 1:06:23.640 the secondary market, one of the things that they say 1:06:23.800 --> 1:06:26.440 is they find that some of their clients come to 1:06:26.480 --> 1:06:29.240 them because they just want to be able to like, 1:06:29.360 --> 1:06:31.080 what's tell me the price and then I'll buy it, 1:06:31.160 --> 1:06:33.080 or I won't. I don't want to get involved in 1:06:33.360 --> 1:06:35.640 trying to spend money on X, Y and Z that 1:06:35.680 --> 1:06:37.360 I might not even want in order to get what 1:06:37.400 --> 1:06:40.760 I actually what I actually do want. So I do 1:06:40.800 --> 1:06:44.080 think it definitely happens in the luxury world, and you know, 1:06:44.160 --> 1:06:47.160 people can choose to continue to engage with it or 1:06:47.640 --> 1:06:49.400 or say, you know, that's that's not for me. 1:06:50.280 --> 1:06:53.320 Janett a great story. I learned a ton including maybe 1:06:53.320 --> 1:06:56.080 I should have considered a career in anesthesiology. Sounds like 1:06:56.120 --> 1:07:01.200 it considering that this anesthesiologist has bought what five ferraris 1:07:01.280 --> 1:07:05.200 or something hie er really really good stuff. Check out 1:07:05.200 --> 1:07:07.480 this story. It is the most read story on the 1:07:07.480 --> 1:07:11.640 Bloomberg terminal. The headline you really can't beat it Tiffany 1:07:11.680 --> 1:07:14.400 Anger's rich clients who wanted to buy a rare the 1:07:14.520 --> 1:07:15.520 tech watch. 1:07:23.680 --> 1:07:27.520 This is the Bloomberg Business Week Daily podcast. Listen live 1:07:27.600 --> 1:07:31.040 each weekday starting at two pm Eastern on Applecarplay and 1:07:31.080 --> 1:07:33.720 the Android Auto with the Bloomberg Business app. You can 1:07:33.760 --> 1:07:36.920 also listen live on Amazon Alexa from our flagship New 1:07:37.000 --> 1:07:40.760 York station, Just Say Alexa played Bloomberg eleven thirty. 1:07:41.520 --> 1:07:45.800 Julia Child, Gordon Ramsay, and Rolla Gassi, Rachel Ray. These 1:07:46.120 --> 1:07:48.960 are just some of the many celebrity chefs that make 1:07:49.040 --> 1:07:52.360 a living cooking on television. Well now, the next generation 1:07:52.400 --> 1:07:55.919 of chefs are turning to YouTube even TikTok to learn 1:07:55.920 --> 1:07:58.800 new skills and establish their culinary reputations. 1:07:59.000 --> 1:08:02.760 Plus New York vibes and London restaurants. That and a 1:08:02.800 --> 1:08:06.320 lot more from the Bloomberg Pursuits team with us right now. 1:08:06.360 --> 1:08:09.400 The editor of Bloomberg Pursuits, Chris Rouds, are also Bloomberg 1:08:09.440 --> 1:08:13.240 Pursuits Food editor Kate Crater. She is not in London. 1:08:13.640 --> 1:08:16.320 She's here in New York City in the studio with us. 1:08:16.400 --> 1:08:18.000 Carol, I can't even tell you how much we've been 1:08:18.000 --> 1:08:18.840 talking about this all week. 1:08:18.840 --> 1:08:21.439 We're like, we've all done, We've all donegy we group 1:08:21.520 --> 1:08:24.200 hugs already, like we spent a bunch of time catching 1:08:24.280 --> 1:08:25.160 up and supposed to. 1:08:27.160 --> 1:08:27.320 Work. 1:08:27.800 --> 1:08:29.240 We do all right, We're going to talk a lot 1:08:29.320 --> 1:08:31.960 of food in a moment because there's so many stories 1:08:32.320 --> 1:08:33.720 that we want to get to. But first of Chris, 1:08:33.720 --> 1:08:37.120 we just want to talk a little bit about green watches. 1:08:36.920 --> 1:08:41.000 The most important news. There's a new color on watches. 1:08:41.120 --> 1:08:44.160 You guys, how does this happen? How does like the 1:08:44.280 --> 1:08:45.719 watch industry levels then go green? 1:08:46.040 --> 1:08:49.800 That's you know, it's funny watches. There are not that 1:08:49.840 --> 1:08:52.240 many trends that can take over watches. There's like different 1:08:52.240 --> 1:08:55.040 styles of watches, different metals, sometimes different colors. And then 1:08:55.800 --> 1:08:57.320 every once in a while there's like a big blue 1:08:57.439 --> 1:08:59.719 year or big green year, and there's lots of stories 1:08:59.720 --> 1:09:02.599 and and sort of collects these certain things. And this 1:09:02.720 --> 1:09:07.800 year there is a wave of pistachio colored watches. And 1:09:08.080 --> 1:09:11.040 this is interesting only because or it's interesting because there's 1:09:11.439 --> 1:09:13.120 it's not that bold of a color. It's kind of 1:09:13.120 --> 1:09:14.920 a subtle color. It doesn't pop off your wrists, and 1:09:14.960 --> 1:09:17.839 it's not traditionally a color that people like in watches. 1:09:17.880 --> 1:09:20.840 But we've seen everything from Rolex to Hugh Blow to 1:09:20.920 --> 1:09:24.719 Parmesiani to Oris all have watches this year in this color. 1:09:24.760 --> 1:09:27.080 And it's like they talk to each other, but they didn't. 1:09:28.080 --> 1:09:29.719 That's what That's what I find crazy. 1:09:29.800 --> 1:09:29.920 Kate. 1:09:29.960 --> 1:09:31.080 Would you hear a green watch? 1:09:31.479 --> 1:09:33.840 I absolutely would, especially if Chris told me which one 1:09:33.880 --> 1:09:35.439 to wear. And I want to know which of those 1:09:35.479 --> 1:09:36.600 Pistasia watches you have. 1:09:36.760 --> 1:09:37.559 Christ Well, I have. 1:09:37.520 --> 1:09:39.840 Good news for you, Kate. They is a price range 1:09:39.840 --> 1:09:42.240 and it ranges from about six thousand dollars per watch 1:09:42.240 --> 1:09:44.200 all the way up to two point three million dollars 1:09:44.200 --> 1:09:44.599 per watch. 1:09:45.000 --> 1:09:47.519 Just help me make night, You help me make night decision? 1:09:48.040 --> 1:09:50.080 Could you have a twenty four thousand dollars watch with 1:09:50.120 --> 1:09:54.000 a rubber strap? I'm just asking, Yeah, that's a good question. 1:09:54.200 --> 1:09:56.360 Some people we hold on rub What about a two 1:09:56.400 --> 1:09:58.799 point three million dollar watch with a rubber strap? 1:09:58.960 --> 1:09:59.439 Exactly? 1:10:00.200 --> 1:10:00.960 There is one of those. 1:10:01.120 --> 1:10:03.479 Yeah, So that's a Reshard Meal watch, and that's kind 1:10:03.479 --> 1:10:05.519 of a that's sort of what these things caught that. 1:10:05.560 --> 1:10:09.960 These resharp Meal watches are the billionaire's handshake, they call them. 1:10:10.240 --> 1:10:12.479 And this one is a flying Turbion Sapphire. It's a 1:10:12.479 --> 1:10:14.759 big chunky thing. It's a kind of watch that Kendall 1:10:14.800 --> 1:10:19.320 Roy watches on succession wears on succession. The most popular 1:10:19.320 --> 1:10:22.760 one will be the Rolex Oyster Perpetual, which everyone's killing 1:10:22.760 --> 1:10:26.479 themselves to get this pistachio green color. My favorite is 1:10:26.680 --> 1:10:31.160 a Parmegiani watch, which is a skeleton and a beautiful 1:10:31.200 --> 1:10:34.120 slate green color. It is not affordable. I will not 1:10:34.200 --> 1:10:35.520 derying it. 1:10:35.520 --> 1:10:36.759 It's affordable to some people. 1:10:36.760 --> 1:10:39.800 It's seventy thousand dollars, but it's extremely beautiful and you 1:10:39.800 --> 1:10:41.559 should look at the story online to check it out. 1:10:41.560 --> 1:10:43.800 But there's there's more inexpensive ones like Orris has a 1:10:43.800 --> 1:10:46.599 cool one for four thousand dollars, and nor Caine, which 1:10:46.640 --> 1:10:48.880 is a very cool, sporty new company that we've covered, 1:10:49.000 --> 1:10:50.080 has one for six thousand. 1:10:50.280 --> 1:10:51.840 All right, all right, when I think of green and 1:10:51.840 --> 1:10:53.800 when you said pistacio, I thought of ice cream and 1:10:53.880 --> 1:10:57.519 other things. So let's go to food now YouTube. Yay, 1:10:58.800 --> 1:11:00.479 I have to say there are I can't tell you 1:11:00.520 --> 1:11:02.679 how many times we are when we're looking to cook something, 1:11:02.680 --> 1:11:04.880 we go to YouTuber or social to figure out. Sounds 1:11:04.920 --> 1:11:06.679 like there's a whole new generation of chefs. 1:11:06.720 --> 1:11:08.280 I was going to say, you could be a professional 1:11:08.360 --> 1:11:12.080 chef right now, Carol, the way you're talking, I could not. Well, 1:11:12.200 --> 1:11:14.040 let's see you know what you never know? Just watch 1:11:14.080 --> 1:11:16.920 a couple more videos. No, it's kind of. It's like 1:11:16.960 --> 1:11:21.400 this seismic shift. A couple decades ago. You know, people 1:11:21.720 --> 1:11:25.479 would would professional chefs or want to be professional chefs, 1:11:25.479 --> 1:11:27.840 would want to train in a kitchen like a Thomas 1:11:27.880 --> 1:11:31.760 Keller kitchen or a Bobby Flay kitchen, And now they 1:11:31.800 --> 1:11:35.000 don't even need to do that. They just turn on 1:11:35.040 --> 1:11:38.400 their computer and watch some videos and sooner or later 1:11:38.439 --> 1:11:41.559 they can actually open up their own place. It's been 1:11:41.840 --> 1:11:43.120 to me it's a seismic shift. 1:11:43.160 --> 1:11:43.799 It's amazing. 1:11:44.120 --> 1:11:46.840 You have this great anecdote about James Low and wanting 1:11:46.920 --> 1:11:48.960 to I don't even know what the right term is, 1:11:49.040 --> 1:11:51.519 but like filet a tuna, is. 1:11:51.479 --> 1:11:52.120 That what it is? 1:11:52.360 --> 1:11:57.360 Butcher, I think you would say Butcher sit home, Tim. Yeah, Butcher, 1:11:57.400 --> 1:11:58.439 I think I think he would be. 1:11:58.360 --> 1:11:59.880 Butcher Easier said than done. 1:12:01.080 --> 1:12:02.360 Truth, total truth. 1:12:02.560 --> 1:12:05.040 Yeah, No, he's a He's a very British chef and 1:12:05.080 --> 1:12:08.080 there hadn't been tuna in his neck of the woods 1:12:08.120 --> 1:12:10.639 since he'd started cooking, had like a thirty year career, 1:12:11.160 --> 1:12:14.920 and then all of a sudden or whatever, because of 1:12:16.200 --> 1:12:18.479 because of the way that the government was able to 1:12:18.560 --> 1:12:22.320 manage the waters, tune it became available in Cornwall, and 1:12:22.320 --> 1:12:23.800 all of a sudden, it became a sort of local 1:12:23.960 --> 1:12:28.040 ingredient for him, and so he bought one and then realized, 1:12:28.200 --> 1:12:31.720 now what, because he'd never ever butchered one before. And 1:12:31.800 --> 1:12:34.679 so he and his team sat there and watched YouTube 1:12:34.680 --> 1:12:38.799 and then carried a four hundred pound piece of fish 1:12:38.880 --> 1:12:41.040 or a whole fish into their kitchen. Like it took 1:12:41.080 --> 1:12:44.160 over their dining room. They'd watched hours and hours, and 1:12:44.200 --> 1:12:46.639 he said it was a process that took He said, 1:12:46.640 --> 1:12:51.760 it was a process that took hours. But there is 1:12:51.800 --> 1:12:53.519 a picture if you look at this story, there's this 1:12:53.640 --> 1:12:56.680 crazy like that literally took over five tables of their 1:12:56.680 --> 1:12:58.559 dining room. Like that's how big the fish is. They 1:12:58.560 --> 1:13:01.680 didn't have the knives to do it. You know, it's 1:13:01.680 --> 1:13:02.880 an amazing story. 1:13:02.720 --> 1:13:05.600 Maybe because it's the fiftieth anniversary of Jaws. But I 1:13:05.640 --> 1:13:07.680 saw this and it looked like a shark. Like all 1:13:07.680 --> 1:13:10.559 I could think about was the shark and Jaws. It's massive. 1:13:10.680 --> 1:13:13.040 So thirty years ago, he would have had to fly 1:13:13.200 --> 1:13:18.400 to Japan or buy cookbooks or make a lot of mistakes. 1:13:18.680 --> 1:13:21.920 Yeah no, exactly, expensive mistakes. Precisely. Yeah no, I think 1:13:21.960 --> 1:13:24.000 you or he would have just brought somebody in who 1:13:24.120 --> 1:13:26.439 knew how to do it. But yeah, no, just think 1:13:26.479 --> 1:13:29.040 about like, even if you're looking at the most detailed 1:13:29.080 --> 1:13:32.360 manual of a cookbook, it only takes you so far 1:13:32.439 --> 1:13:34.320 when you're presented with his fish. 1:13:34.439 --> 1:13:34.840 I don't know. 1:13:35.240 --> 1:13:37.439 I do this all the time, not for cooking, for 1:13:37.560 --> 1:13:39.400 anything that I have to build that comes with an 1:13:39.400 --> 1:13:42.960 instruction booklet. I'm not good with the diagrams the instruction booklets. 1:13:42.960 --> 1:13:45.759 I gotta watch YouTube video. Unfortunately those exist for everything. 1:13:46.320 --> 1:13:48.120 Tim you can open up a restaurant with Carol. 1:13:48.560 --> 1:13:50.880 I was more thinking about assembling children's toys, which is 1:13:50.920 --> 1:13:52.479 why I was looking at Chris because I know he 1:13:52.479 --> 1:13:53.160 does the same thing. 1:13:53.280 --> 1:13:55.200 You know what's crazy. I don't cook. I'm not a 1:13:55.200 --> 1:13:57.320 great cook. It's a joke in my complete family. But 1:13:57.360 --> 1:13:59.800 I'll be on Instagram and like people making things and 1:13:59.800 --> 1:14:01.720 I just find it really relaxing. 1:14:01.320 --> 1:14:02.240 And transfix thing. 1:14:02.439 --> 1:14:03.799 Yeah, it's pretty amazing. 1:14:04.520 --> 1:14:05.040 Yeah, I was just. 1:14:05.040 --> 1:14:07.080 Gonna say it's actually cool because in London, where I'm 1:14:07.080 --> 1:14:10.840 based right now, these pizza chefs, there was this whole 1:14:10.880 --> 1:14:14.240 thing during the pandemic. A couple people who weren't so 1:14:14.280 --> 1:14:17.479 happy with their jobs started watching pizza videos because there 1:14:17.520 --> 1:14:20.680 were all those US style pizza all of a sudden available, 1:14:20.840 --> 1:14:23.360 or like it became there were all these videos from 1:14:23.400 --> 1:14:26.599 like Dave Portnoy barstool and stuff like that. And now 1:14:26.640 --> 1:14:30.360 there's a couple newly minted pizza makers in London thanks to. 1:14:30.320 --> 1:14:32.879 YouTube, and they're very hot, very popular people. 1:14:33.040 --> 1:14:33.639 Very popular. 1:14:33.880 --> 1:14:36.160 Pizza perfect against pizza. 1:14:35.800 --> 1:14:38.840 Perfect segway to talk about pizza in London, Usually we 1:14:38.880 --> 1:14:41.920 talk about pizza in New York City, But Kate, You've 1:14:41.920 --> 1:14:44.280 got a story out that's talking about a kind of 1:14:44.600 --> 1:14:47.640 vibe of New York City taking over London restaurants. When 1:14:47.640 --> 1:14:49.320 I think of food in London, I think of really 1:14:49.360 --> 1:14:51.760 good Indian food, and then of course the classics fish 1:14:51.760 --> 1:14:53.760 and chips and the like. But apparently you can get 1:14:53.760 --> 1:14:54.599 a good pizza there now. 1:14:54.880 --> 1:14:58.200 Yeah, no, you are, You're absolutely right, And it's it's 1:14:58.479 --> 1:15:01.800 it feels a bit ironic because you know, the US 1:15:01.840 --> 1:15:05.120 brand isn't so so hot over over in the UK 1:15:05.240 --> 1:15:08.800 and Europe, and tourism is way down here. I think 1:15:08.800 --> 1:15:10.080 it's down, and it's going to be down by two 1:15:10.120 --> 1:15:12.880 point five million people they estimate in New York City 1:15:13.120 --> 1:15:14.840 by the end of the year. And yet New York 1:15:14.920 --> 1:15:18.160 vibes are super hot in London, and it's got to 1:15:18.160 --> 1:15:20.519 do with state. Like you, if you go somewhere now 1:15:20.560 --> 1:15:23.360 you'll see a cheeseberg on an ambitious menu which you 1:15:23.400 --> 1:15:26.000 never would have seen before, and steaks and oysters. 1:15:26.200 --> 1:15:27.960 But it's also an energy. 1:15:27.680 --> 1:15:30.280 Which is the part that I think is really fascinating. 1:15:30.479 --> 1:15:32.960 The Brits aren't used to being spontaneous. If you know 1:15:33.000 --> 1:15:35.080 any Brits like you will probably co. 1:15:35.160 --> 1:15:37.080 Sign on that we love all of you who watch it. 1:15:37.360 --> 1:15:40.840 We love yes, yay you, yeah, you guys. But now 1:15:40.880 --> 1:15:44.160 so they traditionally haven't had walkins at restaurants, and now 1:15:45.080 --> 1:15:47.880 now a lot of these cool, super cool London restaurants 1:15:48.439 --> 1:15:49.800 have places for walkins. 1:15:50.080 --> 1:15:51.360 But it's also an energy. 1:15:51.400 --> 1:15:53.479 It's the way they arrange their tables, so instead of 1:15:53.520 --> 1:15:56.439 there being like rows and rows of tables and chairs, 1:15:56.680 --> 1:15:59.759 they turn the chairs in different directions and that literally 1:15:59.800 --> 1:16:01.320 changes the energy in the room. 1:16:01.479 --> 1:16:06.840 Okay, many people, multiple two people forwarded me this story 1:16:06.920 --> 1:16:09.519 and asked me, does that mean that the martinis are 1:16:09.560 --> 1:16:13.000 bigger or are they still? Are they still thimble sized? 1:16:13.040 --> 1:16:15.320 You know, they're they're pretty modest. I think if your 1:16:15.360 --> 1:16:17.800 friends who are like doing a measurement, they will they 1:16:17.840 --> 1:16:20.360 will say that, but there's a big I think the 1:16:20.479 --> 1:16:23.000 most The thing that this story inspired the most debate 1:16:23.080 --> 1:16:26.840 on is where the martinis from because technically and historically 1:16:27.520 --> 1:16:30.400 or not technically, but the history is a bit fuzzy. 1:16:30.600 --> 1:16:33.280 But it's supposedly from the Nickerbocker Hotel in New York 1:16:33.320 --> 1:16:35.559 City and that makes Brits very very mad. 1:16:35.640 --> 1:16:38.639 You can get a Cosmo in London now, yes you can. Wow, 1:16:39.040 --> 1:16:41.360 I'm just saying true story. Hu to thunk? Who to thunk? 1:16:42.320 --> 1:16:42.400 Just? 1:16:42.720 --> 1:16:44.080 Uh, where do we want to go? 1:16:44.120 --> 1:16:45.080 Where do we want to go? 1:16:47.000 --> 1:16:47.479 This story? 1:16:47.520 --> 1:16:49.160 Both Tim and I talked about this were like, okay, 1:16:49.240 --> 1:16:51.280 there were some good strategies, but there are a lot 1:16:51.280 --> 1:16:53.879 of CEOs who don't seem like they've got this under control. 1:16:54.280 --> 1:16:57.240 So we do this feature every month in Business Week 1:16:57.240 --> 1:16:59.080 where we call it the Ceo Diet. We talked to 1:16:59.120 --> 1:17:01.040 a bunch of CEOs. Hate is in charge of it, 1:17:01.360 --> 1:17:04.960 thankless task, and she talks a bunch of CEOs about 1:17:05.280 --> 1:17:06.800 their habits and what they do, what they eat, what 1:17:06.840 --> 1:17:08.439 they drink, what they do in the morning. And so 1:17:08.560 --> 1:17:11.519 this month we did how to optimize your Sleep, which 1:17:11.680 --> 1:17:14.040 CEOs are everyone wants to know and they have a 1:17:14.040 --> 1:17:14.759 lot of thoughts. 1:17:14.560 --> 1:17:18.400 About Yeah, they do know, it's it is. It's kind 1:17:18.400 --> 1:17:22.960 of amazing. The CEO of Dogfish says he takes a 1:17:23.000 --> 1:17:25.640 bath underneath a picture of Andre. 1:17:25.439 --> 1:17:28.519 Three thousand playing a flute, playing a flute. 1:17:28.520 --> 1:17:29.320 Sorry, yeah, thanks for that. 1:17:30.080 --> 1:17:32.679 Wi Fi scree breaks is white out and that's why 1:17:32.680 --> 1:17:36.439 they have separate bathrooms. The CEO of Uber, which is 1:17:36.640 --> 1:17:41.120 a very famously data oriented company, says he used to 1:17:41.200 --> 1:17:45.360 be obsessed with data and like compete against himself every night, 1:17:45.400 --> 1:17:47.400 and now he just puts away all of his screens 1:17:47.600 --> 1:17:51.040 and goes to sleep. And that to me is super ironic. 1:17:51.160 --> 1:17:53.479 That is so telling. My husband is obsessed with data too, 1:17:53.479 --> 1:17:55.519 and he'd be like, I got a sixty seven, had 1:17:55.560 --> 1:17:57.040 a seventy five. I'm like, well, how do you feel? 1:17:57.080 --> 1:17:58.720 It's like, I don't know, I got a seventy five. 1:18:00.200 --> 1:18:02.439 But what was amazing? There were so many folks that 1:18:02.640 --> 1:18:03.800 I thought, who was it? 1:18:04.200 --> 1:18:07.960 Peter McGinnis, No, Shabonni Well formerly of Tabonni Carol and 1:18:07.960 --> 1:18:09.360 I have spoken to him quite a bit. Now he's 1:18:09.360 --> 1:18:14.000 that impossible foods. Yeah, he's basically says, maybe I should 1:18:14.000 --> 1:18:15.880 get more sleep. He's not good at it. 1:18:16.479 --> 1:18:19.320 Yeah, that doesn't surprise you though, right like CEOs you 1:18:19.360 --> 1:18:21.519 think of like never sleeping and not maybe just. 1:18:21.520 --> 1:18:24.960 Like but that was like ten or fifteen years ago. 1:18:25.240 --> 1:18:28.960 Now now sleeping is cool, like like now sleeping is cool. 1:18:29.000 --> 1:18:31.200 Being healthy is like in right now, that's what it 1:18:31.240 --> 1:18:31.600 feels like. 1:18:31.640 --> 1:18:33.880 That's exactly right. I think you used to brag about 1:18:33.920 --> 1:18:36.720 the minimal amount of sleep you needed, and now you're like, 1:18:36.800 --> 1:18:39.559 look at me sixty seven, seventy five or now. If 1:18:39.560 --> 1:18:41.439 you don't get a good night's sleep, if you're changing 1:18:41.479 --> 1:18:44.840 time zones too many times, it's something you know that 1:18:44.880 --> 1:18:47.080 you sort of agonize over and say, like, I need 1:18:47.120 --> 1:18:47.960 to get better at it. 1:18:48.400 --> 1:18:50.160 Yeah, I love the guy was at the head of 1:18:50.200 --> 1:18:52.639 Vito Coco. I think he talked about napping a lot. 1:18:52.960 --> 1:18:55.720 Yeah, yeah, forty minutes nap, a forty minute nap every 1:18:55.720 --> 1:18:56.200 single day. 1:18:56.240 --> 1:18:58.240 Hey, Tim, before we start our show, we'll just tell everybody, Hey, 1:18:58.240 --> 1:18:58.840 we're going to take a. 1:18:58.880 --> 1:19:01.639 Nap that I don't know, Chris, when was the last 1:19:01.640 --> 1:19:04.200 time you got to take a bath for thirty minutes? 1:19:04.320 --> 1:19:08.240 No, I haven't taken a bath in years. I mean, 1:19:08.439 --> 1:19:11.280 I think about it makes me want to cry thinking 1:19:11.280 --> 1:19:14.479 about it. The Rainy Williams from Beverly Hills estates of 1:19:14.560 --> 1:19:17.240 the CEO. I thought had good advice. It was like, 1:19:17.439 --> 1:19:20.719 usable a lot of it. Yeah, I take magnesium, zinc 1:19:20.760 --> 1:19:24.840 and ATP along with a cortisol bouncer to help regulate 1:19:24.880 --> 1:19:26.680 stress levels, which I would really like. 1:19:26.680 --> 1:19:27.080 I don't know. 1:19:27.240 --> 1:19:28.840 I have to find out what that is. And that's 1:19:28.880 --> 1:19:30.760 just the start, she says, And. 1:19:30.720 --> 1:19:34.160 Then she takes a relaxing shower, full skin care and 1:19:34.200 --> 1:19:35.240 self care regimen. 1:19:35.560 --> 1:19:37.760 She's doing it right, and a red light mask. 1:19:37.960 --> 1:19:38.840 Right to be. 1:19:38.960 --> 1:19:40.880 Kind's like her answer was twice as long as this. 1:19:40.960 --> 1:19:43.640 This is an edited version of what she does, Like, 1:19:43.720 --> 1:19:44.599 she's doing it right. 1:19:45.240 --> 1:19:46.519 Can I just tell you I went down a rabbit 1:19:46.560 --> 1:19:47.439 hole on those red lights. 1:19:49.120 --> 1:19:51.760 Here's my return before I go to bed, clean up 1:19:51.880 --> 1:19:55.040 everything that my kids have taken out that day. Yeah, 1:19:55.080 --> 1:19:58.519 clean up all, do all the dishes, start making lunches 1:19:58.520 --> 1:19:59.479 for them for the next day. 1:20:00.240 --> 1:20:00.439 Uh. 1:20:00.479 --> 1:20:01.519 And then look at my phone. 1:20:02.120 --> 1:20:03.240 Yeah that's about what mine is. 1:20:03.360 --> 1:20:08.920 Yeah, all right? Or maybe no sound bath, you know, 1:20:13.640 --> 1:20:15.000 Or maybe what you should do is go see this 1:20:15.080 --> 1:20:19.760 new Elvis show in London and only got about a 1:20:19.800 --> 1:20:23.880 minute or so. Here Sarah Rapperport, she did a review, 1:20:23.880 --> 1:20:24.800 didn't seem like she liked it. 1:20:24.880 --> 1:20:27.639 Chris, there's a show called Elvis Evolution in London right 1:20:27.640 --> 1:20:33.080 now which everybody is loving to hate. Only fools rush in. 1:20:35.280 --> 1:20:39.880 Audiences are not all show up. Sorry, So Sarah went, 1:20:39.960 --> 1:20:42.439 and we have been excited about this show because it 1:20:42.479 --> 1:20:43.920 was supposed to be AI. It was supposed to be 1:20:43.960 --> 1:20:45.680 like the abb of Voyage, so like there you were 1:20:45.680 --> 1:20:48.240 going to see Elvis, you know, like a new incarnation 1:20:48.280 --> 1:20:50.840 of Elvis interacting with the audience. And that's not what 1:20:50.880 --> 1:20:54.040 it is. It's like you walk in. It's an immersive experience. 1:20:54.080 --> 1:20:55.840 It's a tour. So you start in a diner and 1:20:55.840 --> 1:20:57.559 then there's actors and then you go to a like 1:20:57.640 --> 1:20:59.960 a bar, and then at the end you see a 1:21:00.040 --> 1:21:03.840 video of Elves on stage and people are Sarah says, 1:21:03.840 --> 1:21:06.760 it's quite disappointing. People are asking for their money back. 1:21:06.800 --> 1:21:10.439 It's three hundred pounds for VIP tickets. One old older 1:21:10.479 --> 1:21:14.080 guy got really mad during the show and started complaining loudly, 1:21:14.120 --> 1:21:16.120 and then security tackled him and took him out and 1:21:16.160 --> 1:21:18.240 he canceled the rest of the shows from the evening. 1:21:18.840 --> 1:21:21.920 It is, yeah, it's. 1:21:21.760 --> 1:21:23.760 Not how can you make Elvis bad? 1:21:24.479 --> 1:21:24.719 Well? 1:21:24.920 --> 1:21:26.320 I guess there's probably the reason they started. 1:21:27.240 --> 1:21:31.280 Carol, and I know you can, Kate, you got it. 1:21:31.320 --> 1:21:32.160 You're gonna have to go see it. 1:21:32.800 --> 1:21:37.280 Really just for work. 1:21:38.080 --> 1:21:38.559 We'll take that. 1:21:38.920 --> 1:21:41.040 We'll take that as a Now, this has been such 1:21:41.080 --> 1:21:43.320 a treat. You guys made our week. Thank you so much, 1:21:43.439 --> 1:21:44.120 so appreciate it. 1:21:44.160 --> 1:21:45.240 Thank you, guys, thank you. 1:21:45.760 --> 1:21:48.400 Oh thanks to Chris Rouser, the editor of Bloomberg Pursuits, 1:21:48.439 --> 1:21:51.000 and to Bloomberg Pursuits Food editor Kate Creator. 1:21:51.040 --> 1:21:52.960 And that wraps up the weekend edition of Bloomberg Business 1:21:52.960 --> 1:21:55.240 Week from Bloomberg Radio. Thank you so much for joining us. 1:21:55.320 --> 1:21:57.639 I'm Tim Stunbeck and I'm Carol Mass. Have a good 1:21:57.640 --> 1:21:59.840 and safe weekend. Be sure to check out Pursuits. Just 1:21:59.840 --> 1:22:01.400 to see the big VI was it is tuna? It 1:22:01.520 --> 1:22:03.400 was it tuner, It was a tuna. Just to see 1:22:03.439 --> 1:22:05.000 that picture a little pretty wild. 1:22:06.000 --> 1:22:11.360 This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, 1:22:11.479 --> 1:22:15.200 and anywhere else you get your podcasts. Listen live weekday 1:22:15.240 --> 1:22:19.240 afternoons from two to five pm Eastern on Bloomberg dot com, 1:22:19.280 --> 1:22:23.200 the iHeartRadio app, tune In, and the Bloomberg Business app. 1:22:23.439 --> 1:22:26.240 You can also watch us live every weekday on YouTube 1:22:26.439 --> 1:22:28.599 and always on the Bloomberg Terminal