Speaker 1: This is Bloomberg Business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news as it happened. Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi, everyone, welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. This week it's a double
Speaker 1: issue of the magazine. Well, last week we brought you
Speaker 1: the cover story featuring the Gospel. According to Kathy Wood,
Speaker 1: the issue is still on news stands and available online
Speaker 1: at Bloomberg dot com and of course on the Bloomberg terminal.
Speaker 1: So this week, Tim, we're gonna take everyone inside Apple's battle,
Speaker 1: well kind of against everything. Plus we speak with Anthony Nodo,
Speaker 1: the CEO of Sophie. They just went public this week
Speaker 1: with the help of a blank check company better known
Speaker 1: as a spack. I've heard of them. They're back. They
Speaker 1: are not a new idea, but nonetheless there's quite a
Speaker 1: mania when it comes to those blank check companies. Also,
Speaker 1: we're going to hear from the beer and wine industry
Speaker 1: about how a pandemic has changed the way Americans consume alcohol.
Speaker 1: All of that to come. We begin, though, with a
Speaker 1: reminder that this week mark the anniversary of the race
Speaker 1: massacre in Tulsa, Oklahoma, the community known as Black Wall Street. Today,
Speaker 1: dozens of attorneys and activists are involved in a lawsuit
Speaker 1: against the City of Tulsa. Attorneys representing survivors and their
Speaker 1: descendants are calling for, in part, reparations, they also want
Speaker 1: justice and more accountability from government officials well tom Back
Speaker 1: in April, the U. S House of Representatives agreed to
Speaker 1: discuss the possibility of establishing a commission to study reparations,
Speaker 1: more than thirty years after the proposal was first introduced.
Speaker 1: President Biden called the plan a good idea. As for
Speaker 1: full reparations from the federal government, it probably won't come
Speaker 1: anytime soon. That said, the city of Evanston, Illinois, is
Speaker 1: already getting started. Joining us with an article in It's
Speaker 1: a feature in the current issue of Bloomberg Business Week, magazine,
Speaker 1: available on news stands and at Bloomberg dot com. Slash
Speaker 1: business Week is Joel Weber, editor at Bloomberg News, and
Speaker 1: Susan Burfield, Projects and invest Agations reporter at Bloomberg business Week.
Speaker 1: They join us from Brooklyn joel Um, I'm I'm wondering
Speaker 1: about this because reparations are, at least how Evanston is defining,
Speaker 1: reparations are a lot more complicated than just giving people money,
Speaker 1: that's right. And and I just thought this story Um,
Speaker 1: that Susan and her colleague, our colleague Jordan Holman worked
Speaker 1: on for the magazine was amazing and perfectly timed. And
Speaker 1: and I think the reparation story is one that it
Speaker 1: has been, you know, one of the most interesting to watch.
Speaker 1: Evanston is Illinois is particularly interesting because this is the
Speaker 1: first US city to really promise that that they would
Speaker 1: take this stuff on and and boy, that's not easy.
Speaker 1: It turns out, even even then, the word reparations can
Speaker 1: be controversial. So so Susan, can you can you help
Speaker 1: us understand what Evanston is going through and where it
Speaker 1: might go from here. So, you know, as you said,
Speaker 1: there's some kind of two efforts underway throughout the country.
Speaker 1: There's an effort at the national level, at least to
Speaker 1: begin talking about a federal reparations program that would probably
Speaker 1: come to trillions of dollars um for every eligible African American.
Speaker 1: And then there are cities like Evanston that are looking
Speaker 1: at what UM the local cases for reparations for you know,
Speaker 1: injustice discrimination against black residents that the cities themselves are
Speaker 1: responsible for and that they can pay within their budget.
Speaker 1: So that's usually programs of millions of dollars, in the
Speaker 1: case of Evanston ten million dollars and Susan, they're doing
Speaker 1: this through the lens of real estate. Explain why that is.
Speaker 1: You know, for a city like Evanston, UM, it's not
Speaker 1: going to attempt UM to make restitutions for something as
Speaker 1: huge as the years of slavery. But what the city
Speaker 1: why to take responsibility for and is holding itself account
Speaker 1: accountable for, is for housing discrimination UM that black residents
Speaker 1: faced in Evanston for several decades. UM that contributes, as
Speaker 1: we know everywhere to UM a racial income gap of
Speaker 1: almost seven times between black and white families. And you know,
Speaker 1: in Evanston, UM, it's pretty well documented the ways in
Speaker 1: which black residents UM at one point lived all over
Speaker 1: the city and then over the course of about two decades,
Speaker 1: we're all steered toward one neighborhood in Evanston now known
Speaker 1: as the Fifth Ward. And Susan can you know rewind
Speaker 1: the clock because this goes back actually decades and Evingston
Speaker 1: what happened? Yeah, so you know, um, Evanston can document
Speaker 1: kind of the first arrival of black residents to the
Speaker 1: late UM, eighteen fifties and sixties. Uh. And over the years,
Speaker 1: you know, there were increased none were of black residents,
Speaker 1: especially the Great Migration UM of the nineteen twenties. And
Speaker 1: as more black residents settled in Evanston, Uh, there began
Speaker 1: kind of official and unofficial codes and restrictions on where
Speaker 1: they could live. And then there came redlining, which was
Speaker 1: a national policy but also took place in Evanston. UM
Speaker 1: that further made it difficult for black residents who now
Speaker 1: we're all living in this one fairly concentrated area um
Speaker 1: to get a fair mortgage. And that policy plus under
Speaker 1: investment by the city, the results in a neighborhood where
Speaker 1: the property values are lower than elsewhere in Evanston, the
Speaker 1: homes are worth less and families were lost wealth. UM.
Speaker 1: In one of the stories that we highlight UM of
Speaker 1: Carlos Sutton, his home, his grandfather's home was actually moved
Speaker 1: from one part of Evanston to the fifth ward and
Speaker 1: the home had it been um remained where it was,
Speaker 1: I'm sorry, would today be worth maybe five dred thousand dollars.
Speaker 1: Where it is now it's worth about a hundred and
Speaker 1: fifty thousand dollars. That was Business Week Projects and Investigations
Speaker 1: reporters Susan Burfield and Business Week editor Joel Weber. The
Speaker 1: Evanson story is one will be keeping an eye on
Speaker 1: for months and years to come. Yeah, it sounds like
Speaker 1: it's been thought about for years already, but let's see
Speaker 1: if it actually moves forward. Coming up, one of our
Speaker 1: biggest interviews of the week, we're talking about so FI
Speaker 1: CEO Anthony Nodo. He joined us to talk about his
Speaker 1: company's first day of trading on the NASDAC and why
Speaker 1: a blank check company was its best option for gone public.
Speaker 1: You're listening to Bloomberg Business Week. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week with Carol Masser in Bloomberg Quick
Speaker 1: Takes Tim Spinovin from Bloomberg Radio. It went public via
Speaker 1: aspack this week, and it was a spack back by
Speaker 1: venture capital investor and what many have called the pied
Speaker 1: piper of the blank check world. We're talking about Tom Polyopatia,
Speaker 1: we're talking about the fintech firm Social Finance, better known
Speaker 1: too many people. As so far the company raised almost
Speaker 1: two and a half billion dollars to fuel growth. To
Speaker 1: find out more so far, CEO Anthony Nodo joined us,
Speaker 1: and his name is probably pretty familiar because he of
Speaker 1: course was the former CEO and CFO over at Twitter,
Speaker 1: former Goldman Sachs partner, and now his current company among
Speaker 1: the latest to capitalize on this popular investment vehicle. I
Speaker 1: think each company has to evaluate the different ways to
Speaker 1: go public based on their facts and circumstances, and for
Speaker 1: us this was a great option. We had a few
Speaker 1: things to consider. First, um, we we wanted to convert
Speaker 1: our capital structure where that was largely preferred shares to
Speaker 1: common shares. That wasn't necessity for two reasons. One, order
Speaker 1: to file with the Battle Reserve for a bank charter,
Speaker 1: we needed a comment act that could become a public company.
Speaker 1: We also needed to make that conversion. We also had
Speaker 1: two capital needs. First, um, we had bought Galileo in
Speaker 1: March of two thousand and twenty UM and with that
Speaker 1: came a seller note, and that note was going to
Speaker 1: be doing March at two thousand one, So that was
Speaker 1: one capital need. A second capital need was to finance
Speaker 1: the bank if and when we were able to achieve
Speaker 1: a charter UM And so we were raising private money
Speaker 1: at the time, and we got approached by a number
Speaker 1: investors that wanted to put even more capital into the
Speaker 1: company and also considered UM supporting us in and going public.
Speaker 1: And so what we ended up doing was choosing a
Speaker 1: private round with zero price who invested three in seventy
Speaker 1: five million dollars. Then we closed that UM on or
Speaker 1: about December. We launched the pipe confidential pipe process on
Speaker 1: the UH and we're able to complete that by the
Speaker 1: thirty one and then announced the combination of those two
Speaker 1: and the third leg of the store, which was a
Speaker 1: spact merger with Social Capital Head of Sophia five UM
Speaker 1: on January four. And the combination of those three pieces
Speaker 1: made it a unique approach trust to raise capital and
Speaker 1: go public at the same time, and it was the
Speaker 1: right outcome for us versus a regular way I p
Speaker 1: O or well, no shortage of spacts out there, So
Speaker 1: why Social Capital Head of Sophia founded by we're approached
Speaker 1: by a number of different um UM spacts and UM
Speaker 1: we were confident that we're ready to become a public company.
Speaker 1: We knew we would have to go through a pretty detailed,
Speaker 1: more detailed process from a diligence standpoint than going public
Speaker 1: as it's a merger UM, and we thought that Chamath's
Speaker 1: team brought one first and foremost a strategic UM perspective
Speaker 1: to the table for us and that we could partner
Speaker 1: on different strategic opportunities over time. Number Two, UM they
Speaker 1: had great experience in conducting the type of diligence of
Speaker 1: a company like US, as they've done with other companies,
Speaker 1: to make sure they brought the credibility to Pipe investors
Speaker 1: when they made when they made the announcement and brought
Speaker 1: us to Pipe investors. Uh. Three, they had great experience
Speaker 1: and executing spects and so the combination of strategic value
Speaker 1: UM the diligence process that we knew would bring incremental
Speaker 1: credibility to the Pipe investors. And then three UM expertise
Speaker 1: and having done this before were the three factors and
Speaker 1: why we chose Social It was a tough decision. We
Speaker 1: brought three options to the board that came down to
Speaker 1: the wire, and the board chose Social Capital. So you
Speaker 1: guys are all in their student loans. There's personal loans,
Speaker 1: there's home loans or insurance, small bies financing, UM investing.
Speaker 1: There's a lot on your platform. Will crypto be part
Speaker 1: of it at some point? We do offer within invest
Speaker 1: the ability to buy single stocks without commissions, fractional shares
Speaker 1: which we pioneered, robe advisory accounts which we've created ourselves. UM.
Speaker 1: We also have UM five so far ETFs UM, and
Speaker 1: we do offer cryptocurrency. We offer eighteen different coins UM.
Speaker 1: We do it in a very appropriate it way and
Speaker 1: that we disclosed to the volatility of that asset class
Speaker 1: and the risk that you could lose all your money
Speaker 1: every time you put in a bye order. That is
Speaker 1: disclosed before you hit the hit the buy button. UM.
Speaker 1: It is an asset class that our members one, and
Speaker 1: you want to provide cercified selection for them. Because you
Speaker 1: have an array of services that you can offer folks
Speaker 1: on the platform. What do you think is going to
Speaker 1: be the best growth opportunity, provide the best margins for you?
Speaker 1: Where is going to be the big business in your view?
Speaker 1: You know, we design each one of the businesses to
Speaker 1: be best in class from a consumer value proposition, but
Speaker 1: also best in class unit economics, and so we design
Speaker 1: them all to be attractive on their own. Um. We
Speaker 1: do get incremental benefits when people take the second, third,
Speaker 1: or fourth product with us, but they have to stand
Speaker 1: on their own, both from a value probably to the
Speaker 1: consumer and the unit economic standpoint for us financially. Uh.
Speaker 1: And the reason why we do that is we want
Speaker 1: to meet the member where they are with what they want,
Speaker 1: what we make money. So you so you're saying all
Speaker 1: of it's going to be lucrative. There isn't one of
Speaker 1: the things that you said, Okay, this is going to
Speaker 1: be our bread and butter. Yeah, they're all. They're all
Speaker 1: architecturally the long term to be standalone, viable, attractive businesses
Speaker 1: by themselves. And many companies are in just one of
Speaker 1: the product categories. Many are just in mortgage, justin student loans,
Speaker 1: are justin brokerage, or justin checking or savings. I want
Speaker 1: to talk a little bit about profitability and so Fi's
Speaker 1: path to profitability. You currently lose money more than two
Speaker 1: million dollars in nineteen twenty each year. What is the
Speaker 1: path to profitability and when do you get there? Well,
Speaker 1: we achieved positive ebada um in the fourth quarter of
Speaker 1: two thousand twenty is our first quarter of positive EBADA
Speaker 1: since we embarked on such an ambitious strategy to become
Speaker 1: a one stop shop and comprehensive suite financial services products
Speaker 1: on on one app UM SO we made a smith
Speaker 1: amount of investment in two thousand nine, eighteen and nineteen
Speaker 1: and started to bear fruit of that investment two thousand
Speaker 1: and twenty, hitting positive EBADA in the fourth quarter of
Speaker 1: twenty UM and again in UH the first quarter of
Speaker 1: two thousand and twenty one UM and on a trailing
Speaker 1: told month basis UM we as you'll see in our
Speaker 1: financial disclosures, we've we've also achieved positive BADA so from
Speaker 1: a profitability standpoint, as it relates to non gap metric
Speaker 1: of IBADAD, which we think is the best measure for
Speaker 1: cash flow, we've gotten to that point now. Each one
Speaker 1: of our businesses is not profitable or our learning business
Speaker 1: is very profitable. It's a it's a you know, very
Speaker 1: very well growing business UM. You can see the growth
Speaker 1: rates for the business in our filings, but it's a
Speaker 1: it's a high grower but also very profitable. Our technology
Speaker 1: platform is a high even higher grower business UM with
Speaker 1: great profitability. As well with about thirty margins. And then
Speaker 1: our financial services business which consists of so FI Invest,
Speaker 1: so Fi Money and so By credit card um. That's
Speaker 1: an acquisition business where we recoup the customer opposition costs
Speaker 1: we make in year one over the you know, year
Speaker 1: and a half the two years after we acquire them.
Speaker 1: So on a per account basis, we may be hitting profitability,
Speaker 1: but because we're acquiring more customers than we cur we
Speaker 1: have that are profitable, it shows a loss in that
Speaker 1: in that business, which has also seen in our financials.
Speaker 1: But we focus on unit economics, return of our business
Speaker 1: and prolo and economics to make sure that overall these
Speaker 1: businesses can be great unit economic businesses individually and in total.
Speaker 1: And so we're balancing both growth at a high rate
Speaker 1: with profitability in the overall mix. That's so FI CEO
Speaker 1: and former CEO and CFO at Twitter Anthony no No
Speaker 1: to explain to us why the company chose to go
Speaker 1: this spack round versus a traditional I p O, though
Speaker 1: I think it is part of a broader conversation Carol
Speaker 1: about why some companies choose to forego the traditional I
Speaker 1: p O process. The road show what's referred to as
Speaker 1: that s one filing and do this back instead. All
Speaker 1: rights still ahead on Bloomberg Business Week, finding that work
Speaker 1: life balance in the wake of zoom meetings and online learning.
Speaker 1: I don't know about you, Tim, but I'm still trying
Speaker 1: to figure it out. Yeah, I think we all are.
Speaker 1: This is Bloomberg broadcasting from the financial capital of the world,
Speaker 1: Bloomberg Live the Free in New York to Washington, d C.
Speaker 1: Bloomberg to Boston, Bloomberg one oh six one does San Francisco,
Speaker 1: Bloomberg nine sixty to the country Sirius XM Chado one
Speaker 1: nineteen and around the globe the Bloomberg Business app and
Speaker 1: Bloomberg Radio dot Com. This is Bloomberg Business Week having
Speaker 1: it all, doing it all well. Not easy being a
Speaker 1: working parent. We know that, especially hard during the pandemic
Speaker 1: when so many were working or worried about keeping their
Speaker 1: jobs while at the same time taking care of and
Speaker 1: often schooling their kids at home because of the pandemic,
Speaker 1: or even taking care of elderly family members. Yeah. Someone
Speaker 1: who knows a lot about that is Daisy Dowling, founder
Speaker 1: and CEO of Work Parents. It's an executive coaching and
Speaker 1: training firm She's out with a new book. It's called
Speaker 1: A Work Parent, The Complete Guide to Succeeding on the job,
Speaker 1: staying true to yourself and raising happy kids. And Tim
Speaker 1: we started by asking about how and why she created
Speaker 1: this resource for working mothers and fathers. So when I
Speaker 1: started writing this book, I wanted it to be the
Speaker 1: book that I myself needed to read, both as an
Speaker 1: executive coach and as a mom. So for years I
Speaker 1: worked with hard working men and women who are trying
Speaker 1: to get ahead on the job and fulfill their ambitions
Speaker 1: and earn a living, build their careers, all while at
Speaker 1: the same time being the present loving parents they wanted
Speaker 1: to beat. And I could advise them professionally, but I
Speaker 1: didn't have such great advice or tips or a single
Speaker 1: resource I could point them to they would help them
Speaker 1: do both of those things at the same time. And
Speaker 1: then when I became a mom nine years ago, I
Speaker 1: got you know, the problem came home with me and
Speaker 1: I saw it for you know firsthand myself. I couldn't
Speaker 1: figure out how to find care, how to talk to
Speaker 1: my boss's boss about still wanting to get that promotion
Speaker 1: even after I had just had a baby, and every
Speaker 1: you know, practical and and ambition related question in between.
Speaker 1: And because I couldn't find that single source resource, that
Speaker 1: one complete cookbook, I decided to write it. Well, I
Speaker 1: gotta say it reminds me of when I was pregnant
Speaker 1: and what to expect when you're expecting, because I just
Speaker 1: like it kind of takes you through different parts of
Speaker 1: that book, your pregnancy, but this takes you part, you know,
Speaker 1: through different points of being a working parent. Um. You know,
Speaker 1: there's one thing that jumped out at me about communication,
Speaker 1: and I like this communicating with the village. We do
Speaker 1: talk about it takes a village, you know, to raise
Speaker 1: kids to kind of do anything in this society. Um,
Speaker 1: but how you communicate with that village is a really
Speaker 1: important thing. It is. And listen, throughout the course of
Speaker 1: the pandemic, working parents have been so stretched and pressured
Speaker 1: that we're not doing a lot of communication. When we
Speaker 1: don't need to write our boss calls, we answer, our
Speaker 1: kids need that, you know, help getting into distance learning.
Speaker 1: We're on it. But in terms of that kind of
Speaker 1: back and forth, the proactive communication with your child caregivers,
Speaker 1: with maybe relatives, with extended members of your community, with
Speaker 1: all the people you're looking to and want to look
Speaker 1: to now in the new normal to help you not
Speaker 1: just raise your child, but build your career. You really
Speaker 1: want to think about how much you're in front of
Speaker 1: those people, what kind of connections and touch points you're
Speaker 1: having with them, and have them not be on a
Speaker 1: need to or must basis, but really be ones where
Speaker 1: you're building that relationship and making sure that village is
Speaker 1: a strong one. So what's different about I'm one of
Speaker 1: seven kids. My mom was a stay at home mom
Speaker 1: until we got a little bit older. Uh, and we
Speaker 1: were all or some of my older siblings were heading
Speaker 1: off to college. Um, is it tougher being a working
Speaker 1: parent today than it was a few years ago, or
Speaker 1: twenty years ago or thirty years ago? And I'm trying
Speaker 1: to think twenty years ago and so long ago. It's
Speaker 1: you know, the year two thousand. Yeah. Yeah, it's such
Speaker 1: a great question. And so many of my coaching clients
Speaker 1: grapple with this. You know, I saw my parents do it.
Speaker 1: I see you know some of the very senior people
Speaker 1: at work. You know they've done this. Why is it
Speaker 1: so hard for me? And we beat ourselves up about that.
Speaker 1: But here's the thing. Working parents doesn't just feel harder
Speaker 1: or seem harder, It actually is harder for a couple
Speaker 1: of different reasons. First of all, the way you're working
Speaker 1: parent now, whether you're part of a dual career couple
Speaker 1: or if you're a single or solo parent, you are
Speaker 1: operating in a frame that your parents maybe didn't have to,
Speaker 1: and your grandparents almost certainly didn't have to. There was
Speaker 1: much more likely that one partner, one person at home
Speaker 1: was going to be more available to look after the
Speaker 1: great big task of raising the family. And then, think
Speaker 1: about it from a technology perspective. So even if you're
Speaker 1: a working parent back in oh five, oh six, that's
Speaker 1: not really that long ago, but you weren't doing it
Speaker 1: with that kind of seven pressure and constant communication and
Speaker 1: that feeling of always being on that we now have
Speaker 1: because of the smartphone. Now. Don't get me wrong, I
Speaker 1: love my iPhone as much as the next person, and
Speaker 1: it's a great tool it allows for I know, I'm
Speaker 1: kidding a little bit, but i'm but I'm also it's
Speaker 1: something that really kind of keeps us going. It does.
Speaker 1: It does, and that's not something that you know twenty
Speaker 1: years ago that you're or that your mentors had to do.
Speaker 1: So there's a constant pressure. I keep telling people, we're
Speaker 1: in a new game here, and we've got to get
Speaker 1: a whole new set of tools and ways of thinking
Speaker 1: about working parenthood that will keep us on our front foot.
Speaker 1: That's Daisy Dowling, founded CEO of Work Parent and Executive
Speaker 1: coaching and training firm. You're listening to Bloomberg Business Week.
Speaker 1: Coming up next, it's the CEO of lands End on
Speaker 1: his company's growth and the possibility of becoming a meme stock.
Speaker 1: I gotta say it was a fun conversation. I really
Speaker 1: enjoyed it. I really also found it interesting kind of
Speaker 1: how they're evolving the company. It's a brand that's been
Speaker 1: around for a long time, but they're figuring out how
Speaker 1: to kind of keep it going. Yeah, who did you
Speaker 1: have one of those backpacks with their initials on when
Speaker 1: they're a kid? Right? Exactly. I bought a few uniforms
Speaker 1: from the company. This is Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stenovik from Bloomberg Radio. I'm not sure if you've noticed
Speaker 1: probably shod cheers of lands and they're on a tear
Speaker 1: up kind of around this year. The retail are also
Speaker 1: raising its full year guidance for sales and earnings after
Speaker 1: it posted first quarter results that exceeded an earlier company forecast.
Speaker 1: One big reason why e commerce sales that have brought
Speaker 1: in a lot of new customers. Land and CEO Jerome
Speaker 1: Griffith joined us with a look back and look forward
Speaker 1: to and about the possibility of being a Meme stock.
Speaker 1: The conversation started with a look back at those fraud
Speaker 1: early days of the pandemic just about fourteen months ago,
Speaker 1: well obviously about a year ago when we went into lockdown.
Speaker 1: It was real shock for everyone, and you know, we
Speaker 1: shut doors and and furlough folks and took salary reductions
Speaker 1: very quickly, and we're able to try and adapt to
Speaker 1: whatever the new normal was going to be. Our demand
Speaker 1: went down in March last year, but very quickly rebounded
Speaker 1: in April and then went on a tear for the
Speaker 1: rest of the year. You've seen a lot more consumers
Speaker 1: shopping online, and uh, most of those consumers have been
Speaker 1: coming from Gen xers and baby boomers who have not
Speaker 1: been comfortable shopping online before and since our business is
Speaker 1: an e commerce business. We've been the recipients of a
Speaker 1: big increase in demand and a big increase in new customers.
Speaker 1: We're just this past quarter report increase in new customer
Speaker 1: acquisition and retaining them over into actively. So yeah, we've
Speaker 1: we've been seeing some some really good numbers and I've
Speaker 1: got to say our troops have been extremely resilient. The
Speaker 1: folks that work in our facilities in Wisconsin have been
Speaker 1: just just great to work with, and we've seen some
Speaker 1: really great performance there. Everybody's been working from home. We've
Speaker 1: been designing lines from home. We've been using three D design,
Speaker 1: we've been using architectural boards so our designers can share
Speaker 1: ideas back and forth while working remotely. And what we've
Speaker 1: actually found is we've done a really good job. We've
Speaker 1: been extremely efficient um our folks are very happy working remotely,
Speaker 1: and as we get ready to return to the office
Speaker 1: in September, we're going to see a pretty liberal hybrid
Speaker 1: work environment where people are being just as creative, if
Speaker 1: not more creative, and coming up with great new ideas
Speaker 1: for us to continue to move the business forward. That
Speaker 1: is really fascinating because it's in contrast to really what
Speaker 1: we're seeing the financial community where there is. It feels
Speaker 1: like a real big push to get everybody back to
Speaker 1: the office. Does it mean, though, to them that you
Speaker 1: guys might give up some real estate space because you
Speaker 1: just won't need it. No, we own all of our
Speaker 1: real estate in Wisconsin, so there's no sense to give
Speaker 1: anything up. What we might do is repurpose some of it. Uh,
Speaker 1: And we're thinking about that, but no, generally, Uh, we'll
Speaker 1: have people coming back into the office on on a
Speaker 1: hybrid schedule, and we may move people from one building
Speaker 1: to another to make it more efficient, but that will
Speaker 1: be about it. So when you talk about repurpose, does
Speaker 1: that mean you might rent it out to other folks? Um,
Speaker 1: we could. We haven't made it that far yet. We're
Speaker 1: still in the thinking stages right now. All right, So
Speaker 1: talk to me about retail trends. You said that you
Speaker 1: guys had a lot of new customers actually come on.
Speaker 1: What were people by during the pandemic and what about
Speaker 1: those trends if they were different from pre pandemic levels.
Speaker 1: Do you think stays with us going into the pandemic.
Speaker 1: We had already had a tagline for marketing purposes that said,
Speaker 1: let's get comfy. The most important thing to our consumer
Speaker 1: is comfort and fit and fabric, and while that was
Speaker 1: performing extremely well going into the pandemic, as we went
Speaker 1: through the pandemic, the the requests for Knitwear, Lounge where Sleepware,
Speaker 1: Home Bedding, Bathhouse really went through the roof. I would
Speaker 1: say the only thing that was more of an anomaly
Speaker 1: for us was the quick increase in home. But generally
Speaker 1: people come to us for comfortable clothing. We are known
Speaker 1: as a very casual brand, and we've seen the demand
Speaker 1: not only continue to increase through the pandemic, but as
Speaker 1: we're coming out of it, it continues to stay very strong.
Speaker 1: We think that as people return to the office, you know,
Speaker 1: the newfound comfort world, they're not gonna want to give
Speaker 1: it up. We found that our employees don't want to
Speaker 1: give up the freedom that they have and they don't
Speaker 1: want to give up the comfort, and this is what
Speaker 1: we're hearing from from our customers as well. Yeah, that's
Speaker 1: kind of interesting, um, but I agree. I see it
Speaker 1: even in colleagues who come back. I mean, I walk
Speaker 1: into para genes. I don't know that I used to
Speaker 1: do that, even if I change at work into kind
Speaker 1: of on air clothes. It's just our mindset has changed
Speaker 1: and I think about what I really need. Uh. What
Speaker 1: about the supply chain, how did that work throughout the pandemic,
Speaker 1: or how has what happened during the pandemic maybe changed
Speaker 1: how you want to do it going forward. Well, I
Speaker 1: think from our manufacturer standpoint, they've done an amazingly good job.
Speaker 1: People have have pivoted very quickly with either gearing up
Speaker 1: or gearing down production. And some of them had a
Speaker 1: hard time with with COVID. Some people had to close
Speaker 1: their plants because of heavy COVID cases. But generally they've
Speaker 1: been able to manage it relatively well. Where we've seen
Speaker 1: problems as really getting goods into the country. The pork
Speaker 1: congestion has just been really terrible on the West coast
Speaker 1: and that tends to add literally weeks to the supply chain.
Speaker 1: In addition to that, you've seen increases in pricing uh
Speaker 1: coming into the US and then from your hubs getting
Speaker 1: deliveries to consumers, that's also been been increasing in price.
Speaker 1: And probably the scariest thing that's that's been happening is
Speaker 1: a lack of labor market um. People are happy to
Speaker 1: stay home and collect unemployment versus going out and getting
Speaker 1: a job and a pretty hot economy. I was reading
Speaker 1: some things that some are speculating that Land's end stock
Speaker 1: is getting caught up in the meme stock trading. What
Speaker 1: do you say to that? What are your thoughts on this?
Speaker 1: And I'm curious if you're getting questions about this. We
Speaker 1: have a smaller float, so you'll see when it comes
Speaker 1: to announcement times around the quarters, you'll see some pretty
Speaker 1: volatile swings in and out of the announcement date. But generally, no,
Speaker 1: I wouldn't think that we're a meme stock at this
Speaker 1: point in time. Okay, So not where about getting caught
Speaker 1: up in the craziness of it. I'm not worried about
Speaker 1: it now. Okay, So let's talk a little bit more
Speaker 1: about the business because there's a lot of stuff that's
Speaker 1: interesting going on. First of all, one thing I want
Speaker 1: to ask you. You You mentioned uniforms before. That's a big business.
Speaker 1: I bought uniforms for you for my daughter, uh for school. Um.
Speaker 1: I'm assuming that business did it stop completely or fall
Speaker 1: off a lot in the past year, and it fell
Speaker 1: off pretty pretty far. A couple of parts of the
Speaker 1: business were tough Obviously, the school part of the business
Speaker 1: was very difficult, and then in our national accounts, we
Speaker 1: have an inordinately large relationship with the travel industry, so
Speaker 1: we do Davis rented Cars, Hampton Ins, Delta Airlines, American Airlines,
Speaker 1: and and that was challenge. But what we've seen coming
Speaker 1: into the back part of is a much faster than
Speaker 1: expected recovery. Uh. The area that's still challenged in the
Speaker 1: uniform business is really the small medium sized businesses and
Speaker 1: that's going to be dependent upon the economy as we
Speaker 1: run through to come back. But is it getting back
Speaker 1: to or close to pre pandemic levels from what you're seeing, Yeah, yeah,
Speaker 1: it is. We think that this school business will be
Speaker 1: back to pretty much normal by by this year, and
Speaker 1: then the national account business depending on the back part
Speaker 1: of the year. But we see that going much faster
Speaker 1: than what we had anticipated. So talk to me about
Speaker 1: this third party marketplace for sellers um interesting. We brought
Speaker 1: the technology in last year and formally launched the marketplace
Speaker 1: in the fourth quarter of It performed very well for
Speaker 1: us over the holiday season, and what we've done has
Speaker 1: gone out to many other brands in areas that produced
Speaker 1: product that we really don't make, so we're looking at
Speaker 1: additional home products like furniture and home whears, things like that,
Speaker 1: additional shoes and then accessories, jewelry, sent beauty and bring margin.
Speaker 1: That's higher margin business. Right. Well, it's a good margin
Speaker 1: business for us. And what's great it's it's low risk
Speaker 1: because we take the information put it all up on
Speaker 1: our website, but the manufacturers are dropping drop shipping for us,
Speaker 1: going directly to the consumers. So it gives the consumer
Speaker 1: when they come onto our website a much broader range
Speaker 1: of products the shop that they're looking for, and it's
Speaker 1: really de risking it for us. Jerome, how big a
Speaker 1: business could that be for you, guys, especially if you
Speaker 1: don't have the overhead of the distribution like Amazon does.
Speaker 1: How big of a business could it ultimately be for you?
Speaker 1: It could be tens to hundreds of millions. But we're
Speaker 1: still in the in the point right now where we're
Speaker 1: sizing it. We're bringing on many more brands as we speak.
Speaker 1: We expect to be well over sixty brands by the
Speaker 1: time that we get to holiday this year, and continuing
Speaker 1: to grow that and scale it over the course of
Speaker 1: the next few years. Hey, one last thing partnerships Draper,
Speaker 1: James Reads Witherspoon. How important is that to um kind
Speaker 1: of you know, keeping the brand relevant, if you will,
Speaker 1: just great for the buzz, And what's better than that
Speaker 1: is it's been great for the bottom line. We've been
Speaker 1: really pleased with the aults that we saw last year
Speaker 1: and then again this spring. In fact, we're expanding our
Speaker 1: partnership with them in the back part of the year
Speaker 1: with the home furnishings and sleepwear. Yeah, and we've got
Speaker 1: some other exciting news coming down the pike, which we'll
Speaker 1: be able to talk about in the quarter or two.
Speaker 1: So we're working on some other fun stuff. Looking forward
Speaker 1: to catching up at another day to on that exciting news.
Speaker 1: That was Land's End CEO Jerome Griffith leading a company,
Speaker 1: Tim that's diversifying the types of products and services it's offering.
Speaker 1: End investors certainly taken notice. Yeah, Stock on a tear
Speaker 1: really over the last couple of weeks. Yeah, exactly. All right,
Speaker 1: that wraps up the first hour of the weekend edition
Speaker 1: of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser
Speaker 1: and I'm Timstantive. Coming up in our next hour, we
Speaker 1: go inside the c suite at b n Y Melon's
Speaker 1: pershing with CEO Jim Crowley and CEO Emily Schlausser. That's
Speaker 1: ahead of the annual Insight Conference on investment strategy. Yeah,
Speaker 1: we find out what's on the mind of investment professionals,
Speaker 1: what their clients want to know about. You know, some
Speaker 1: of the things that clients are looking for really around
Speaker 1: the digital capabilities, which not surprising and has certainly been
Speaker 1: accelerated by what we've seen through the course of the pandemic.
Speaker 1: I think the clients are really looking for enhanced usability.
Speaker 1: I mean, really, their expectations are being set by the
Speaker 1: ease with which they can do anything else in the
Speaker 1: digital world, from personal banking to ordering a new bird,
Speaker 1: to getting food and groceries delivered. Right, So we're seeing
Speaker 1: an elevated expectation around the ultimate usability and experience. Plus,
Speaker 1: the CEO of an Appa Valley Winery and the head
Speaker 1: of the Beer Institute talk alcohol making in the wig
Speaker 1: of the pandemic. Spoiler alert, we're still drinking which one beer?
Speaker 1: Wine about a little bit about It's good to know
Speaker 1: you're listening to Bloomberg. This is Bloomberg Business Week inside
Speaker 1: from the reporters and editors who bring you America's most
Speaker 1: trusted business magazine, plus global business, finance and tech news
Speaker 1: as it happened. Bloomberg Business Week with Carol Messier and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hi, I'm
Speaker 1: Carol Masser and I'm Tim stock. Plenty ahead in our
Speaker 1: second hour of the weekend edition of Bloomberg Business Week,
Speaker 1: including our conversation with both the CEO and CEO of
Speaker 1: B and Y Melon's pershing. We're talking about Jim Crowley
Speaker 1: and Emily Schlausser. Emily, by the way, actually entered the
Speaker 1: C suite at the height of the pandemic. Yeah, taking
Speaker 1: on that job remotely back in over the summer wild
Speaker 1: Plus the CEO of a Napa Valley vineyard talks about
Speaker 1: how a pandemic and climate change are impacting wine sales.
Speaker 1: First up this hour, though a story online at Bloomberg
Speaker 1: Business Week that we want to draw your attention to
Speaker 1: about the shine coming off the golden child of tech,
Speaker 1: and by that we mean Apple. For more, we talked
Speaker 1: to Bloomberg Business wee gdit Her, Joel Webber and Bloomberg
Speaker 1: News reporter Joe light as the Coopertino based firm is
Speaker 1: now getting the same type of scrutiny as its fellow
Speaker 1: tech giants in the midst of a crucial legal battle.
Speaker 1: Apple is kind of getting hit on four fronts, you know.
Speaker 1: The first, as you mentioned, is this epic lawsuit. Um.
Speaker 1: The second, they were hauled in front of Congress in
Speaker 1: April to answer questions from lawmakers around its app store
Speaker 1: and kind of accusations that it's you know, anti competitive,
Speaker 1: that they're not allowing enough competition to put programs onto iPhones.
Speaker 1: Then they've in May they faced you know, kind of
Speaker 1: two issues they face. Um uh. As he said, Tim Cook,
Speaker 1: he actually took the stand in the epic trial and
Speaker 1: facing those antitrust accusations. And then the New York Times
Speaker 1: came out with an investigation about some of Apple's activities
Speaker 1: in China, which just brought a new way of scorn
Speaker 1: from lawmakers who you know, say that Apple was kind
Speaker 1: of sacrificing some of the privacy of its users in
Speaker 1: China in order to gain access to that to that market. So,
Speaker 1: as he said, it was kind of nothing at all.
Speaker 1: For a few years, you know, during the Trump administration,
Speaker 1: Tim Cook had a very good relationship with Donald Trump.
Speaker 1: And now now all of a sudden, you have all
Speaker 1: these things kind of hitting the company at once. So
Speaker 1: what go ahead to say? I always thought that was unusual,
Speaker 1: like Tim Cook and Donald Trump, like I tried to
Speaker 1: get my head around, I'll never forget him any next
Speaker 1: to the President and not correcting him when he was
Speaker 1: making statements about the factory in Texas a few years ago. Um, Joe,
Speaker 1: I'm I'm wondering about potential worst case scenarios here for Apple.
Speaker 1: Among the many challenges that you you spoke about, what's
Speaker 1: the worst case scenario for for Apple? Here? Is it?
Speaker 1: Is it Epic prevailing in this fight? Um so yeah,
Speaker 1: so so the Epic lawsuit. I mean, Apple could potentially,
Speaker 1: you know, lose some of its power over the App
Speaker 1: Store if Epic wins. I mean, the worst case scenario
Speaker 1: for Apple is if it starts getting hit with antitrust
Speaker 1: lawsuits from governments, you know, whether it's the whether it's
Speaker 1: the federal government. The Bloombergs reported that as as uh
Speaker 1: as late as January, um d OJ investigators were interviewing
Speaker 1: a developer on the App Store, So clearly they're doing
Speaker 1: some sort of investigation around that. Um, some seat governments
Speaker 1: have also brought lawsuits against those other companies, against Amazon,
Speaker 1: against Facebook, against Google, and if it starts getting hit
Speaker 1: with those sorts of antitrust lawsuits, I mean that's where
Speaker 1: the real real pressure comes. I mean, all this lawmaker stuff.
Speaker 1: You know, they say mean things, but very rarely does
Speaker 1: it actually result in some sort of legislation. But um,
Speaker 1: you know, these federal enforcers are a completely different story.
Speaker 1: I think I think you're right there, Like, you know,
Speaker 1: it sounds good to talk mean and you know, but
Speaker 1: it's another thing to actually like a wheeled to stick Joe.
Speaker 1: But you know, one of the things that I wonder
Speaker 1: here is do you feel that, you know, is it
Speaker 1: worse for Apple that you know, face something you know,
Speaker 1: on a one on one basis, or to be sort
Speaker 1: of part of like a zone defense where you've got
Speaker 1: you know, they get wrapped up in things that might
Speaker 1: also affect the Amazon's and another and facebooks of the world,
Speaker 1: you know, other tech companies. Well, I mean, I guess
Speaker 1: I guess you'd much rather be you know, kind of
Speaker 1: one in a crowd of people who are are facing iro.
Speaker 1: I mean, you know, in the same way like you know,
Speaker 1: you want to be like if you're a zebra, you know,
Speaker 1: you kinda want to be in the middle of the
Speaker 1: herd and kind of and in and hope that you're
Speaker 1: not the one the line takes down or whatever. But
Speaker 1: the you know, once they start facing this one on
Speaker 1: one scrutiny, you know from these enforcers. I mean, one
Speaker 1: of the lessons we had from Microsoft, which faces zony
Speaker 1: I trust scrutiny. Um. You know, like twenty years ago,
Speaker 1: is Microsoft ultimately one that case. But because of the pressure,
Speaker 1: because they didn't want to be seen as to um,
Speaker 1: you know, growing into other businesses that could face even
Speaker 1: more anti competitive scrutiny, they missed out on some business.
Speaker 1: You know, people say that that's what gave Google the
Speaker 1: opening to become the giant that it became. So that
Speaker 1: that's the sort of you know thing that Apple is
Speaker 1: gonna want to avoid, you know, fight this scrutiny while
Speaker 1: also being aggressive in innovating in business expansion. But you know,
Speaker 1: you also make a good point that you know, ultimately,
Speaker 1: even the pressure, the political pressure that Apple and some
Speaker 1: other tech companies have faced, you know, it's uncomfortable. It
Speaker 1: gives great fodder for us to talk about on radio
Speaker 1: and on TV and in Business Week magazine and online,
Speaker 1: but ultimately didn't really hurt them too much financially, right, Yeah,
Speaker 1: so so so ultimately the thing, the thing that you know,
Speaker 1: I'm sure Apple executives are gonna want to avoid is
Speaker 1: where they decide, you know, not not to do something.
Speaker 1: You know some you know what, one of their one
Speaker 1: of their attorneys or even executive in his own mind
Speaker 1: says no, we're not gonna we're not going to expand
Speaker 1: into that business line because we know that you know,
Speaker 1: such and such an investigator, that will be just another
Speaker 1: thing for this investigator or for this lawmaker um to
Speaker 1: uh yell at this about um so that that's the
Speaker 1: sort of kind of you know, self editing of their
Speaker 1: business business that that could ultimately be the effect of,
Speaker 1: you know, all the scrutiny. Bloomberg News reporter Joe Light
Speaker 1: and Business Week editor Joel Webber, you're listening to Bloomberg
Speaker 1: business Week coming up, how investment advisors are handling the
Speaker 1: spack I p O trend meme stocks and everything in between.
Speaker 1: There's a lot going on in the financial world. B
Speaker 1: n Y Melon's pershing CEO Jim Crowley and the company's CEO,
Speaker 1: Emily Schlausser. They join us next. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovik from Bloomberg Radio. A favorite event where
Speaker 1: we get to check in with what's on the minds
Speaker 1: of investment professionals. From advisors and asset managers to broker
Speaker 1: dealers and family offices, they all collect together in an event.
Speaker 1: This week, it's the annual b and Y Melon Pershing
Speaker 1: Insight Gathering, held in a virtual format. This year, we
Speaker 1: caught up with bn Y Melon's Pershing CEO, Jim Crowley
Speaker 1: and the company's CEO Emily Schlauser to talk all about
Speaker 1: the trends investment advisors say their clients want to know
Speaker 1: about and Tim how the last year has really changed
Speaker 1: how advisors advise. It has been. You know, obviously the
Speaker 1: last fifteen months fifteen months have been quite a challenge,
Speaker 1: and you know, two priorities really. First was obviously the safeguarding,
Speaker 1: you know, the health and the well being of all
Speaker 1: of our people. That was priority one. And then you
Speaker 1: know the second thing, Carol, that really became clear to
Speaker 1: us is that there really is no substitute for business
Speaker 1: continuity planning and testing of your business continuity processing, because
Speaker 1: it became clear in March when we left the office
Speaker 1: on March thirteenth, literally overnight, we were virtual working from home,
Speaker 1: and thankfully we didn't miss a b through what was
Speaker 1: really tremendous volume and volatility. Emily, come on in here
Speaker 1: and and talk a little bit about what it's been
Speaker 1: like for you as as chief operating officer. UM. What
Speaker 1: are the changes that you've made and how are you
Speaker 1: thinking that some of those changes are going to be
Speaker 1: permanent on the other side of this. Thanks Jim, Yeah,
Speaker 1: and thanks thanks to both of you for having us.
Speaker 1: It's been it's been quite a ride. As Jim pointed out,
Speaker 1: So I joined the company as chief operating officer last
Speaker 1: July in a fully virtual environment, which is interesting. UM.
Speaker 1: I did have the privilege of meetings him briefly before
Speaker 1: I started, but otherwise I've worked largely for the last
Speaker 1: year virtually with all of my new colleagues. UM. But
Speaker 1: it's been great. Like we we have adopted very quickly
Speaker 1: to the virtual environment, UH, and we are thinking very
Speaker 1: carefully about what does this mean for the future. And
Speaker 1: I think we're you know, we're seeing employees that are
Speaker 1: really getting accustomed to working from home and having that flexibility,
Speaker 1: and then also people who are changed to get back
Speaker 1: in and and interact with people in person. So we're
Speaker 1: looking at options for how we continue with the hybrid
Speaker 1: work environment to achieve both of those needs while you
Speaker 1: building the best environment to serve our clients. I just
Speaker 1: want to dive right into that because man, Tim and
Speaker 1: I every day there are stories on the Bloomberg, especially
Speaker 1: within the financial community that you are seeing a lot of.
Speaker 1: It feels like we got to be back in the office. Uh,
Speaker 1: And it feels like the tone of the conversation Jim
Speaker 1: has changed a little bit from maybe a year ago.
Speaker 1: We're well, maybe this hybrid stuff makes sense. Remember James
Speaker 1: Gorman thinking about maybe we give up some real estate space,
Speaker 1: um to where everybody now, this is what we've got
Speaker 1: to be back in the in the environment your financial community.
Speaker 1: You guys are working with folks that are dealing with
Speaker 1: you know, millions and millions of investors accounts globally on
Speaker 1: a daily basis. What are they saying? Are they hybrid?
Speaker 1: Are they back in the office, what what do they anticipate? Well,
Speaker 1: many of our clients, Carol, are back in the office.
Speaker 1: I can't say though, that there is any one client
Speaker 1: that is back in the office full time um with
Speaker 1: their full staff. I think most people are still sort
Speaker 1: of working through this environment and trying to figure out
Speaker 1: how to be hybrid. Who really is essential in office
Speaker 1: and who really isn't necessary to be an office And
Speaker 1: in fact, you know, for our clients, the most important
Speaker 1: thing for them is being in front of investors, being
Speaker 1: in front of their clients. And that's a lot more
Speaker 1: virtual going on with that, and people are clients comfortable
Speaker 1: with that, Jim, much more virtual though. I have to
Speaker 1: say though, clients, you know, particularly when you're talking about
Speaker 1: their investments and their life planning, they really do want
Speaker 1: to have a personal relationship. And having a personal relationship
Speaker 1: through a WebEx serve any other sort of form of
Speaker 1: video conferencing isn't the same as sitting across the table
Speaker 1: or meeting in the restaurant. And you know, I've actually
Speaker 1: myself and Emily, we've been on a couple of business
Speaker 1: trips now where we've actually met with clients in offices
Speaker 1: and it's it's the energy is so much better and
Speaker 1: the opportunity to communicate clearly and sort of get a
Speaker 1: sense for what the other person is feeling and thinking.
Speaker 1: It's much more valuable, Jim. Something we talk about on
Speaker 1: a daily basis here at Bloomberg, these meme stocks and
Speaker 1: the rise of alternative investing platforms, whether it's read It,
Speaker 1: whether it's Robin Hood. Uh, we are really kind of
Speaker 1: watching this and how it's up ending what's seems to
Speaker 1: be kind of the mainstay financial community. What are your members,
Speaker 1: what are your you know, the groups that the folks
Speaker 1: that come to insight, what do they want to know
Speaker 1: about this? Yeah, so it's been quite quite interesting, Carol.
Speaker 1: You know, thankfully, Um, you know, our platform has through
Speaker 1: all the Reddit and and beamestock. You know, volume volatility
Speaker 1: has performed quite well our clients. Interestingly enough, while we
Speaker 1: see elevated transaction volumes in these names, the overall dollar
Speaker 1: value notional value of the of the transactions and things
Speaker 1: that we're doing for our clients, it's relatively small because
Speaker 1: our clients are much more what I would call financial
Speaker 1: planning based, wealth based, and so while there may be
Speaker 1: some transaction activity in these names on a relative basis
Speaker 1: is really it's a fraction of their overall what they're
Speaker 1: dealing with when they talk about the wealth of their clients. Hey, Emily,
Speaker 1: come on back in on our converse station. You know
Speaker 1: you worked at Goldman you were in charge of their
Speaker 1: Global Markets division. You operationally have had to look at
Speaker 1: b and Y, MAL and Pershing and you know, look
Speaker 1: at what the needs are for clients and your team
Speaker 1: around the globe. How do things look in terms of
Speaker 1: us getting on the other side of the pandemic. Yeah,
Speaker 1: you know, I think, um for thought I could come
Speaker 1: from Goldman. I was in charge of change management there
Speaker 1: at their Global Markets division, and so I'm excited to
Speaker 1: bring much of my transformation expertise to Pershing. You know,
Speaker 1: some of the things that clients are looking for really
Speaker 1: around the digital capabilities, which not surprising and has certainly
Speaker 1: been accelerated by what we've seen through the course of pandemic.
Speaker 1: I think that the clients are really looking for enhanced usability.
Speaker 1: I mean, really, their expectations are being set by the
Speaker 1: ease with which they can do anything else in the
Speaker 1: digital world, from personal banking to ordering a new word
Speaker 1: and getting food and groceries the heard right. So we're
Speaker 1: seeing an elevated expectation around the ultimate usability and experience,
Speaker 1: and as such, we are uplifting our advisory and investment
Speaker 1: platforms to improve the way that our advisors can help
Speaker 1: their clients move money so they can onboard new accounts.
Speaker 1: Um we're providing new modern look and field streamlined navigation.
Speaker 1: So we're really excited about what we can bring to
Speaker 1: bear in terms of our our digital platforms. That was
Speaker 1: b n y Melon's perishing CEO, Jim Crowley in the
Speaker 1: company's CEO, Emilish Lausser, has some great insight there well
Speaker 1: still to come. On Bloomberg Business Week. We finished off
Speaker 1: the week with a half hour on Booze thirty minutes. Okay,
Speaker 1: that's enough, first from a CEO of a Napa Valley
Speaker 1: winery and then from the president of the Beer Institute,
Speaker 1: all in an effort to find out how a pandemic
Speaker 1: has changed America's drinking habits. You're listening to Bloomberg broadcasting
Speaker 1: from the financial capital of the World, Bomberg Eleve in
Speaker 1: Frio in New York to Washington, d C. Bloomberg to Boston,
Speaker 1: Bloomberg one oh six one to San Francisco, Bloomberg nine
Speaker 1: sixty to the country, Sirius XM Chado one nine team,
Speaker 1: and around the globe, the Bloomberg Business app and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Business Week. So this
Speaker 1: last half hour we're gonna relax, kick back, enjoy a
Speaker 1: few conversations about wine and beer. We certainly are. Later
Speaker 1: we're gonna hear from the president of the Beer Institute.
Speaker 1: First up, though, a look at the wine industry in California.
Speaker 1: I love this. You caught up with David Duncan, the
Speaker 1: CEO at Silver Oak Winery, and spoke about how the
Speaker 1: pandemic has impacted the overall wine industry and specifically how
Speaker 1: things have been in my home state of California with
Speaker 1: the droughts, the fires, and just the way the climate
Speaker 1: has been changing. Yeah, it's been really a fascinating, uh,
Speaker 1: you know exercise, if you will, from a from a
Speaker 1: production standpoint, and you know, being a being a ventnor
Speaker 1: and baking wine, it's all been pretty much you know normal. Um,
Speaker 1: we've been growing grapes and making wine and and our teams,
Speaker 1: you know, we've keeping all of our employees safe and
Speaker 1: and doing everything that we can to deal with the pandemic.
Speaker 1: From a consumer standpoint, it's been just an amazing change.
Speaker 1: You know, we focused on selling our wines and restaurants,
Speaker 1: and as our restaurant partners across the country and really
Speaker 1: around the world, we're close we're forced to close. Um.
Speaker 1: You know, we were worried, frankly, and we found that
Speaker 1: the consumers uh, you know, found other ways to purchase
Speaker 1: wine and so UM working with uh you know, find
Speaker 1: wine shops and all the way the states opened up
Speaker 1: to allow wine shipping really allowed us to to you know,
Speaker 1: shift our focus and and provide you know, the wines
Speaker 1: into people's glasses where they were and uh, I think
Speaker 1: as the restaurants come back, we're gonna we're gonna we're
Speaker 1: really gonna see the demand shift again. So can you
Speaker 1: talk about develops, talk about the regulatory changes here, because
Speaker 1: I have this memory of I grew up the Central
Speaker 1: Coast of California wine country, on the Central Coast wine country,
Speaker 1: and I had this memory of of of going to
Speaker 1: ups with a case of wine and trying to ship
Speaker 1: it to a friend of mine in Maine. And this
Speaker 1: was you know, fifteen seventeen years ago, and that they
Speaker 1: told me I couldn't do that, and I didn't understand
Speaker 1: why at the time. Take me into the regulatory changes
Speaker 1: over the last year that has allowed you to ship wine. Well,
Speaker 1: you know, uh ten ten, twelve years ago, we were
Speaker 1: only allowed to ship wine into thirteen states directly, and
Speaker 1: that really has to do with the repeal of prohibition
Speaker 1: you know, back in the thirties, and how um it
Speaker 1: was given the state control. So each state has its
Speaker 1: own uh you know distribution model. Uh some states or
Speaker 1: state controlled some states are most states are you know,
Speaker 1: you have to sell through a distributor. They called a
Speaker 1: three tier system, so it's producer to distributor to either
Speaker 1: retailer or restaurant and um, and so uh there was
Speaker 1: a perception really that that um, you know, if if
Speaker 1: you cut out the distributor, they wouldn't make money and
Speaker 1: so the distribution would be fighting for their their share
Speaker 1: and and but I think what really happens is what
Speaker 1: I call the buying occasion. So you know, I mean
Speaker 1: you're probably familiar with different wines that you enjoy and
Speaker 1: if you can find them at your fine wine shop,
Speaker 1: you know for fifty dollars a bottle, but at a
Speaker 1: restaurant that same bottle seventy you're willing to pay that
Speaker 1: because it's like buying a steak at you know, at
Speaker 1: the grocery store and grilling it yourself versus UM having
Speaker 1: the same steak you know, on the menu and prepared
Speaker 1: and brought out on a clean white plate. You know.
Speaker 1: So I think there's UM uh so that that's basically
Speaker 1: and and you know, the producers and UM really helped
Speaker 1: to promote the idea, and the states responded that the
Speaker 1: custom you know, the consumers were there, and with restaurants closed,
Speaker 1: we needed to be able to sell our product UM
Speaker 1: and so many many states. I think we can shift
Speaker 1: to forty five states now. So UM, you know it is,
Speaker 1: it's changed pretty dramatically. It will be interesting to see
Speaker 1: how that model continues to evolve as we come back
Speaker 1: out of the pandemic. Is that a permanent shift? Yeah,
Speaker 1: I don't think we know that yet. I think, UM,
Speaker 1: there's definitely a call for that, and I think the
Speaker 1: consumer enjoys it. I think we've proved that we're not
Speaker 1: shipping wine to minors, you know, especially especially ultra premium wines,
Speaker 1: and which has always been an argument UM and so yeah,
Speaker 1: I think I think the landscape has permanently changed. Um.
Speaker 1: You know, I think some of it will regress, but
Speaker 1: I think for the most part, we're going to remain
Speaker 1: in this in this type of model going forward. Do
Speaker 1: you think the industry faces though an existential threat from
Speaker 1: climate change? Well, I have. My answer to that question
Speaker 1: is is generally that if we can't grow Cabalty and
Speaker 1: Napa Valley, we're gonna have a lot bigger problems on
Speaker 1: our hands than than than that, you know. So I
Speaker 1: think that, um, uh, there's certainly is uh um, you
Speaker 1: know it is. It seems warmer, although I tell you
Speaker 1: I just got the data from our ven your team
Speaker 1: that the average temperature in Napa Valley and this spring
Speaker 1: was ten degrees below the thirty three year average. I
Speaker 1: mean that is a remarkable thing. It was a cold spring, um,
Speaker 1: and we're seeing the vine growth kind of starting off slow.
Speaker 1: So I don't like to call it global warming. I
Speaker 1: call a climate change, you know. And it may be
Speaker 1: actually too cool here, you know. So, um, I think
Speaker 1: it's a it's a difficult problem. That's David Duncan, the
Speaker 1: CEO at Silver Oak Winery. You're listening to Bloomberg Business
Speaker 1: Week coming up, Tim, we switched from wine to beer.
Speaker 1: We check in with the CEO of the Beer Institute,
Speaker 1: Jim McGreevy. You kind of like specialty beers. Yeah, I
Speaker 1: like the low alcohol beers these days. Every few years,
Speaker 1: I kind of switch it off, go from low to high. Well,
Speaker 1: I think that. I mean it speaks to the trends
Speaker 1: that are are shaping the beer industry. Yeah, there's so
Speaker 1: many different choices when it comes to beer. All right,
Speaker 1: So we'll get the low down from Jim in just
Speaker 1: a moment. This is Bloomberg. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovik
Speaker 1: from Bloomberg Radio. We're gonna wrap up with more on
Speaker 1: the alcoholic beverage industry, this time with a twenty five
Speaker 1: year veteran a policy and political work who now heads
Speaker 1: the Beer Institute, which is the national trade association that
Speaker 1: represents America's brewers, beer importers, and supply chain partners. He
Speaker 1: sees it all, he does, and adds up, according to
Speaker 1: their website, to a three hundred and twenty eight billion
Speaker 1: dollar industry that supports more than two point one million
Speaker 1: American jobs. For more on the pandemic and post pandemic
Speaker 1: worlds of the industry, we checked in with Jim McGreevy,
Speaker 1: President and chief executive officer of the Beer Institute. Where
Speaker 1: we were a year ago was probably where so many
Speaker 1: other Americans were a year ago personally and in their jobs,
Speaker 1: really trying to figure out as of March thirteenth and
Speaker 1: around there where where our industry would be going. Thankfully,
Speaker 1: the federal government made the production and distribution of beer
Speaker 1: essential as part of the grocery system UM, so we
Speaker 1: were able to keep our breweries and and many of
Speaker 1: our folks employed UH in the making and distribution of beer. Obviously,
Speaker 1: with the bars and restaurants closed for months on end,
Speaker 1: particularly at the beginning of the pandemic, we saw so
Speaker 1: many of those jobs lost, nearly seventy thousand as a
Speaker 1: matter of fact, throughout the US jobs supported by the
Speaker 1: beer industry. But their Beer Serves America report really UM.
Speaker 1: It tells the story of a very resilient industry and
Speaker 1: one that's coming back, we hope as America comes back.
Speaker 1: So we're very pleased with with some of these some
Speaker 1: of this data from our biennial report. Well, it's interesting,
Speaker 1: you know local beverage center where we pick up like
Speaker 1: our cases of water and you know whatever else juices
Speaker 1: and stuff. But I said to them, how you know,
Speaker 1: I haven't hadn't seen them in about a year, and
Speaker 1: I said, how are you guys? And they said it
Speaker 1: was really hard because of their business was supplying all
Speaker 1: of the local restaurants, uh in the community, and that
Speaker 1: was just shut down. Tell us about your members, because
Speaker 1: we think about you know, those of us who go
Speaker 1: to the supermarket right or um, you know, to pick
Speaker 1: up something. But it's the restaurants and the hospitality industry
Speaker 1: that your members play such a big role on. How
Speaker 1: How hard hit were they? Oh they were, they were
Speaker 1: very hard hit. Uh, not just from the the hundreds
Speaker 1: of thousands of employees that either lost their jobs on
Speaker 1: a permanent or temporary basis, but we saw nearly twenty
Speaker 1: billion dollars in decline in retail beer sales. You know, uh,
Speaker 1: you think back to that mid March period of the
Speaker 1: March madness was just get rolling, getting rolling with the
Speaker 1: conference tournaments leading to the n c A Tournament St.
Speaker 1: Patrick's Day. We've loaded in a lot of beer in
Speaker 1: the beer in the bars and restaurants throughout the country
Speaker 1: for St. Patrick's Day, so many of these holidays, then
Speaker 1: moving into the somewhere with Memorial Day, fourth of July. UM,
Speaker 1: the bars and restaurants in this country were just so
Speaker 1: hard hit. We're getting near the end of this COVID period, thankfully,
Speaker 1: and I think we're starting to see these bars and
Speaker 1: restaurants crowded. I can tell you down here at the
Speaker 1: Jersey Shore UM we saw lines out the door and
Speaker 1: down the block to get into some of the some
Speaker 1: of the bars and restaurants at the Jersey Shore, a
Speaker 1: lot of that gathering is done around a beer um.
Speaker 1: So we're very hopeful for the recovery of the bars
Speaker 1: and restaurants. Is so important to our country, so important
Speaker 1: to beer um uh. During the COVID period, we saw
Speaker 1: significant spoilage of food and beverage and beer is perishable.
Speaker 1: Nearly nine million UM dollars worth of beer that was
Speaker 1: just perishable, and that just that just really hurts the
Speaker 1: industry and hurts the bars and restaurants. Your industry. Are
Speaker 1: they having any troubles attracting workers, especially as the economy
Speaker 1: opens up, a demand ramps up don't see uh trouble
Speaker 1: attracting workers in our breweries and distribution business. Um again, Carol,
Speaker 1: it goes back to the bars and restaurants. Right there's
Speaker 1: nearly seventy jobs lost on a temporary or permanent basis,
Speaker 1: and you hear lots of discussion around the difficulties of
Speaker 1: getting people back into those places. And you know, I
Speaker 1: think we really need to support the recovery by by
Speaker 1: getting those folks back to work. Um uh. And I
Speaker 1: think we're seeing that. I mean, you know, our senses
Speaker 1: from some of the data, we're seeing that the food
Speaker 1: service uh, in what we call the on premise, the bars, restaurants,
Speaker 1: taverns are starting to come back to pre pandemic levels.
Speaker 1: I think we're going to get there, but certainly you
Speaker 1: do hear from a lot of different corners this the
Speaker 1: discussion around the difficulty in getting some workers. And I
Speaker 1: think we're certainly seeing that in the bars and restaurants
Speaker 1: right now. But we're not at pre pandemic levels for
Speaker 1: the industry yet. No. But you know, I think we're
Speaker 1: going to have a big summer, uh for all Americans,
Speaker 1: and I think for the hospitality industry, and I think
Speaker 1: for the beer industry. Um uh, so I'm very hopeful. Uh.
Speaker 1: You know, you just see the economic impact of beer
Speaker 1: through our Beer Serves America report. One point six percent
Speaker 1: of of U s GDP comes from our our industry.
Speaker 1: Two million Americans of their livelihoods in one way or
Speaker 1: another to the production, distribution, and sale of beer. We're
Speaker 1: coming out of a period where folks were cooped up. Um,
Speaker 1: they want out, and I think they're going to um uh,
Speaker 1: We're already seeing them sort of hitting the bars and
Speaker 1: restaurants in this country in a big way, and I
Speaker 1: think that's only gonna grow. I have to say, some
Speaker 1: of our listeners and followers on YouTube, I think hearing
Speaker 1: that you said we're gonna have a strong summer saying
Speaker 1: we'll drink to that. So responding as the world reopens, hey, listen.
Speaker 1: One thing I'm curious about present. Binds said to be
Speaker 1: offering up to create a tax floor down from his
Speaker 1: earlier proposal to let a corporate tax rate from twenty one,
Speaker 1: so essentially unwinding the tax cuts um that the GOP
Speaker 1: adopted back in seventeen. That's what he initially was looking
Speaker 1: to do. Now it looks like he's backing off of
Speaker 1: that potentially, I'm assuming your members are in favor of
Speaker 1: lower rather than higher corporate taxes. You know, we saw
Speaker 1: the power of tax relief in our own industry. Um.
Speaker 1: We are one of the most taxed industries and regulated
Speaker 1: industries in the country, but we did receive relief from
Speaker 1: the excise tax that you're paid in two thousand UH
Speaker 1: twenty and two thousand nineteen, excuse me, UM, And we
Speaker 1: saw the power of that UH for our industry. So
Speaker 1: I think it's I think it's great to see seemingly
Speaker 1: Republicans and Democrats coming together inching closer towards one another
Speaker 1: on on some kind of deal here on infrastructure, which
Speaker 1: I think will only help support the recovery. You know,
Speaker 1: excise taxes is a tax that we pay that others
Speaker 1: do not. But the total taxes paid we see in
Speaker 1: our Beer Serves America report from UH from Beer is
Speaker 1: fifty five billion dollars. So we certainly want to see
Speaker 1: low taxes. But we know in our industry the power
Speaker 1: of tax relief just in recent years it's been very
Speaker 1: helpful to us. So what specifically, what what happens when
Speaker 1: there's low taxes? What happens to that money, because we
Speaker 1: often talking about it with you know, publicly held companies
Speaker 1: that you get a tax break, it's not necessarily higher
Speaker 1: wages or investment in the business. It's often buy backs.
Speaker 1: So I'm just curious what happens when there's lower taxes
Speaker 1: in your industry, What specifically do you see happen. Yeah, Carol,
Speaker 1: in nineteen seventy six, there are fifty one breweries left
Speaker 1: in this country. Today there are over eight thousand. And
Speaker 1: I can tell you when we received the XCISE tax relief.
Speaker 1: Over the last few years that we've received UM, I
Speaker 1: talked to brewers across the country, large brewers, small brewers,
Speaker 1: all sort of talking about the same thing, using that
Speaker 1: tax relief to hire more workers, to improve their physical plants,
Speaker 1: their breweries, their their tap rooms, uh, you know, their
Speaker 1: their facilities. UM, finding more ways to distribute their beer,
Speaker 1: innovating more and more so to me, uh and I
Speaker 1: we see this. We are an industry that has experienced
Speaker 1: this over the last few years. Low taxes drives innovation,
Speaker 1: it drives jobs. Uh, and it drives an industry. Okay,
Speaker 1: So in terms of innovation, what are some of the
Speaker 1: kind of interesting innovative trends that are happening within the
Speaker 1: beer industry. You know, we were talking on our planning
Speaker 1: call and I was thinking about cannabis and beer, and
Speaker 1: the political environment seems to be opening up in a
Speaker 1: big way, certainly when it comes to cannabis. More generally speaking,
Speaker 1: What are the interesting trends Jim, that are happening right now?
Speaker 1: There's always innovating, Carol. You know, a few decades ago,
Speaker 1: light beer was an innovation of its time, and then
Speaker 1: we saw the rise of the craft movement and bringing
Speaker 1: back some of the styles that had fallen off the
Speaker 1: radar screen for a while, particularly I P. A. S. Today,
Speaker 1: you see ready to drink beverages in so many different ways.
Speaker 1: The hard cellser phenomenon of the last four years preceded
Speaker 1: by the hard soda uh movement of a few summers ago. Um,
Speaker 1: that's the great thing about beer. We are always innovating.
Speaker 1: We want to be where the consumer is, and the
Speaker 1: consumer right now is looking for more flavor, but also
Speaker 1: very mindful of health and wellness, calories and other things.
Speaker 1: So these these hard selsers are ready to drink beverages
Speaker 1: are are really becoming a bigger and bigger part of
Speaker 1: our industry. There. Many of them are malt based, they're
Speaker 1: made in a brewery, they're made by brewers. Um. That's
Speaker 1: the kind of innovation you see. And you hear so
Speaker 1: much about these different hard Selzer brands now, um, but
Speaker 1: there's always something new in beer. Beer is the incredibly
Speaker 1: dynamic industry. I just got about twenty five seconds here.
Speaker 1: When you talk to your members, the outlook, the economic
Speaker 1: market outlook, how does it look for the next six
Speaker 1: months to twelve months. Well, as I said, I think
Speaker 1: we're hoping for a big summer for every American and
Speaker 1: for beer in particular. We want to grow those uh
Speaker 1: two million jobs supported by the beer industry. We want
Speaker 1: to grow that three thirty two billion dollar economic input
Speaker 1: that we have. So um. You know, I think that
Speaker 1: there's always things that can be improved upon, but I
Speaker 1: think the opportunities for beer are grade. I think the
Speaker 1: opportunities for our country are very coming out of this,
Speaker 1: uh this pandemic period. So I'm very hopeful. That was
Speaker 1: Jim and Greevy, President and chief executive Officer of the
Speaker 1: Beer Institute, and that reps up the weekend edition of
Speaker 1: Bloomberg Business Week for Bloomberg Radio. Thanks so much for
Speaker 1: joining us. I'm Carol Masser and I'm Tim Stock. Be
Speaker 1: sure to tune into our Bloomberg Business Week daily show.
Speaker 1: It happens Monday through Friday and starts at two pm
Speaker 1: Wall Street Time on Bloomberg Radio. You can also watch
Speaker 1: our daily broadcast on YouTube. Just search Bloomberg Global News
Speaker 1: and check out our Bloomberg Business Week podcast. You can
Speaker 1: find it at Bloomberg dot com, Apple, or wherever you
Speaker 1: get your podcast. That's right because a lot of the
Speaker 1: conversations from this week. If you want the full conversation,
Speaker 1: just check them out because you will find them there.
Speaker 1: Bloomberg Business Week to available on newsstands now, at Bloomberg
Speaker 1: dot com and on the Bloomberg Terminal. You can also
Speaker 1: see me at Bloomberg quick Take available on Bloomberg dot com,
Speaker 1: slash Qt, and streaming platforms like Roku, Apple TV, Samsung TV,
Speaker 1: and more. Have a great weekend. This is Bloomberg.