Speaker 1: This is Bloomberg Business Week with Carol Masser from Bloomberg Radio. Hi,
Speaker 1: I'm Carol Masser. Welcome to the weekend edition of Bloomberg
Speaker 1: Business Week. It's week thirty two, working mostly from home,
Speaker 1: COVID nineteen cases rising again in Europe and the US.
Speaker 1: The u S presidential election just a little more than
Speaker 1: a week away. Some stops and starts to the financial
Speaker 1: markets as investors awaited for another stimulus package. This week,
Speaker 1: Bloomberg's Paul Sweeney and I cut up with a group
Speaker 1: of disruptors and those trying to take disruption and make
Speaker 1: the world a better, more equitable place, and that included
Speaker 1: the new president of George Mason University, Dr Gregory Washington.
Speaker 1: We've been able to figure out different ways to basically
Speaker 1: invent a new normal. Plus you might say she's a
Speaker 1: disruptor as well. Often referred to as the woman who
Speaker 1: built Beijing. My conversation with Shenjong, co founder and CEO
Speaker 1: of Saho China and how China is back to work
Speaker 1: post pandemic. Speaking of disruptors, we begin with the cover
Speaker 1: story in the magazine this week. It's Robin Hood, the
Speaker 1: online brokerage that is one of the COVID Economy's breakout successes.
Speaker 1: The question is can it be more than an addictive
Speaker 1: trading app dominated by millennials. Bloombergs Paul Sweeney, and I
Speaker 1: talked with Bloomberg News investing reporter Annie Massa, a Blueberg
Speaker 1: Business Week editor Jill Weber. One of the stories of
Speaker 1: the pandemic is just how day trading became the thing
Speaker 1: that has been captivating people on their phones for months now,
Speaker 1: and it's made people be doing things that are sometimes
Speaker 1: a little bit crazier than what they would have probably
Speaker 1: otherwise been doing, simply because there's nothing else going on
Speaker 1: that looks like an entertainment in the same way. And
Speaker 1: so it basically almost become robin Hood especially has almost
Speaker 1: become sort of part of this like financial entertainment ecosystem
Speaker 1: during the pandemic. And so we've been watching it um
Speaker 1: along the way, and any Masa has been breaking a
Speaker 1: ton of news, and we wanted to kind of put
Speaker 1: it all together and just say, like, look, this is
Speaker 1: a robin and is now officially a pandemic path time um.
Speaker 1: But the question becomes where do they go from here?
Speaker 1: I think, what's the plane? How do you take something
Speaker 1: that you know, they popularize free training, trading, fractional shares
Speaker 1: of ownership now, but where do you go from from there?
Speaker 1: And Anny, what did you find out as you tried
Speaker 1: to ask that question. Yeah, that was a major question
Speaker 1: we were trying to figure out because robin hood has
Speaker 1: proved so amazing at just getting people onto its platform
Speaker 1: like it spread like wildfire um, signing up three million
Speaker 1: users in the first four months of the year alone,
Speaker 1: and so we were kind of asking, um, what's the
Speaker 1: next act for robin hood. And when you look at
Speaker 1: it the way that they're pitching themselves to be investors,
Speaker 1: they say, Okay, we get these first time traders in
Speaker 1: the door, and then the next step for us is
Speaker 1: to have them grow with us into all kinds of
Speaker 1: other products that robin hood doesn't offer yet, but things
Speaker 1: like one day they'll want us for mortgage lending or
Speaker 1: car and rental insurance or life insurance. Even so, they
Speaker 1: have much bigger, much bigger vision for what they want
Speaker 1: all these customers to do on their platform. That's not
Speaker 1: just trading, but the catches um. If you're going to
Speaker 1: offer things like insurance and you know, retirement accounts to people,
Speaker 1: you really need their trust and that's a place where
Speaker 1: they struggled. So and he talked to us about the
Speaker 1: typical robin Hood um trader or account user. What's the profile.
Speaker 1: I think that there is kind of a stock image
Speaker 1: in everyone's mind of typical robin Hood trader. I mean
Speaker 1: of their assets under management do come from millennial users.
Speaker 1: So it's absolutely a millennial product. But gen Z is
Speaker 1: in the mix as well. And I think, um, you know,
Speaker 1: the typical image that you might get in your head
Speaker 1: of a Robin Hoide user is maybe a coge age
Speaker 1: or um, you know, kind of twenty something uh trader,
Speaker 1: a lot of men. But it's that's not the only profile.
Speaker 1: We We spoke to all kinds of bell who used
Speaker 1: this up um, including people who don't use it just
Speaker 1: for gay trading, UM who are trying to invest a
Speaker 1: little bit more long term. And so it varies that
Speaker 1: that millennial group is core for them. And Annie, Um,
Speaker 1: you mentioned some struggles. Let's talk about sort of the
Speaker 1: the pieces of the puzzle that robin Hood users have encountered.
Speaker 1: And you know, some of them have become frustrated about
Speaker 1: what what are some of those main greats? Absolutely well,
Speaker 1: one of the more recent issues was around two thousand
Speaker 1: accounts um were compromised in UM, which they found in
Speaker 1: an internal review, and that's UM newsually broke a couple
Speaker 1: of weeks ago. And the main frustration I think around
Speaker 1: this issue and others that have come up with Robin
Speaker 1: hood over this year, they don't have a customer service
Speaker 1: phone number and a frustration. What it's like you just
Speaker 1: stopped right there. It's like, what, yeah, that's right, so
Speaker 1: and I mean it's really like it's very Silicon Valley actually,
Speaker 1: like a lot of companies that use all the time,
Speaker 1: a lot of tech companies don't have a real customer
Speaker 1: service number. But this isn't like this isn't like Uber,
Speaker 1: you know, I didn't get my car. It's like I
Speaker 1: have a question about my investments exactly. And like if
Speaker 1: you're worried that your account was hacked or if there's
Speaker 1: an outage, like they had a major day long outage
Speaker 1: way at the beginning of UM you know, right before
Speaker 1: the pandemic lockdown started on March second, that lasted all day.
Speaker 1: So if you're sitting there with your phone, like no,
Speaker 1: either the app is totally down or I'm seeing you know,
Speaker 1: funds disappear from that account because I'm worried it was hacked,
Speaker 1: like there's no one to call, and that those tweaks
Speaker 1: people out. So it's this question of, like, can we
Speaker 1: move into a world where people are okay with that
Speaker 1: one thing. Robin Hood was really an early mover into
Speaker 1: free commission trading, and at the time I think it
Speaker 1: was kind of a wacky idea and out as the
Speaker 1: industry standard. I mean, around this time last year, Charles
Speaker 1: Schwab moved to zero commissions and all of the other
Speaker 1: major brokerages did the same, and now you know, zero
Speaker 1: commission trading is the industry standard. So I mean, that's
Speaker 1: one way they offer fractional shares. That's something which is
Speaker 1: the ability to buy just a piece of a stalk
Speaker 1: instead of the right thing. That's Bloomberg News investing reporter
Speaker 1: Annie Massa and Bloomberg Business Week editor Joel Webber. Check
Speaker 1: out that full story and more stories in this week's
Speaker 1: issue that's on news stands now on the Bloomberg and
Speaker 1: online at Bloomberg dot com. And as you heard, robin
Speaker 1: Hood disrupting the online brokerage space with more customers than
Speaker 1: some of the established players. Later on We're gonna check
Speaker 1: in with one of the first disruptors in the financial world.
Speaker 1: We're talking about the financial platform Wealth Front. Coming up next, though,
Speaker 1: Robin Hood, you just heard surging amid COVID nineteen. We
Speaker 1: know cases are also on the rise again, but kids
Speaker 1: as super spreaders. Our next guest says, not so much.
Speaker 1: We'll hear from the CEO of Surgical Solutions. That's next.
Speaker 1: This is Bloomberg is Bloomberg Business Week with Gerrol Mazer
Speaker 1: from Bloomberg Radio. This week, some tough headlines on the
Speaker 1: virus as a second wave continue to make its way
Speaker 1: around the globe, with the U s, Indian, Brazil accounting
Speaker 1: for more than half of all COVID nineteen cases. Well.
Speaker 1: A voice that we've reached out to several times throughout
Speaker 1: the pandemic is Alissa Wrap. She's CEO of the healthcare
Speaker 1: solutions company, Surgical Solutions. They provide equipment, people, strategies or
Speaker 1: capital to the healthcare community. She also teaches at Stanford's
Speaker 1: Graduate School of Business in Chicago's Booth Business School. Bloomberg's
Speaker 1: Paul Sweeney and I caught up with a Lissa Wrap,
Speaker 1: who reminded us about the difficulties of COVID nineteen. It
Speaker 1: continues to be a complicated COVID landscape. On the one hand,
Speaker 1: we know the diagnoses are up in fifties, six thousand,
Speaker 1: Inia day and thirty one states they're reporting more cases
Speaker 1: than the previous week. And yet there's an overwhelming amount
Speaker 1: of intelligence now that COVID nineteen transmissions from children, and
Speaker 1: maybe the children are not to blame. So I think
Speaker 1: it's it's a tough tough to navigate, So a lista
Speaker 1: on that front. You know, the children here, you know,
Speaker 1: the New York City schools or you know, obviously the
Speaker 1: largest school district in the country opening pretty well so far.
Speaker 1: Does that suggest that maybe children are not super spreaders,
Speaker 1: which was a risk as we reopened schools. Great question, Paul.
Speaker 1: So you know, there was an interesting article on this
Speaker 1: in The Atlantic just about ten days ago that schools
Speaker 1: aren't the super spreaders um from an economist at Brown University,
Speaker 1: Emily Oster. And I'm certainly not seeing that they're the
Speaker 1: super spreaders where we are in suburban Chicago, and if
Speaker 1: children are in math and socially distant between that between
Speaker 1: that economist view and the American Academy Pediatrics literally also
Speaker 1: printed an article that's at COVID nineteen the child does
Speaker 1: not to blame, and the nice Landic study talked about
Speaker 1: how children don't give it to teachers. I am not
Speaker 1: an epidemiologist, I said at once, I'll say it again,
Speaker 1: but to me, the data is compelling that children don't
Speaker 1: seem to be super spreaders. And I'm really glad the
Speaker 1: reopening has been less um vial and pun intended than
Speaker 1: than people anticipated. Right. We actually had Emily on and
Speaker 1: we did a great story in Blueberg Business Week about
Speaker 1: her and just kind of her background and her thinking.
Speaker 1: But we also had her on to talk about her
Speaker 1: work and her research. Yeah, it's interesting. I just did
Speaker 1: a big discussion with a bunch of global real estate leaders,
Speaker 1: and you know, there was a consensus, especially when it
Speaker 1: comes to colleges and universities, a feeling of we've got
Speaker 1: to get those students back. I think, you know, the
Speaker 1: concern among colleges and universities has been the older professors
Speaker 1: and their exposure. Yeah, and I teaches you you may
Speaker 1: know at Stanford University and University of Chicago, and they've
Speaker 1: been very conservative about zooming. Only for the fall out
Speaker 1: of not concern for potentially me or my age peer group,
Speaker 1: but older professors. And I think that's actually gone better
Speaker 1: than expected from a student learning perspective, at least at
Speaker 1: the graduate level. But I think we do, of course
Speaker 1: have to be most concerned about our most vulnerable population,
Speaker 1: and that includes age and other comorbidities or risk factors,
Speaker 1: and that those are the folks who will likely get
Speaker 1: the vaccine first, as they should. But the question now
Speaker 1: becomes how do we learn to live with it until
Speaker 1: the vaccine is truly widespread by the middle of next year.
Speaker 1: And I'm a little bit hopeful in spite of the numbers.
Speaker 1: I sided in the beginning that if children aren't the
Speaker 1: super spreaders, and we can at least get kids back
Speaker 1: to school with masks socially distant and safe wave, even
Speaker 1: if it's hybrid learning. Like my my two daughters who
Speaker 1: are under ten, both enjoy than at least civilization and
Speaker 1: society as we know it can start to unlock a
Speaker 1: little bit. Hey, listen, you're you know your company you
Speaker 1: have over to un employees are really on the front
Speaker 1: lines of this. In the healthcare system. One of the
Speaker 1: concerns or questions I guess people have is okay, we
Speaker 1: were we, being the U S healthcare system, was you know,
Speaker 1: fairly well blindsided by this back in March of last year.
Speaker 1: What have we learned from a healthcare facility perspective? Are
Speaker 1: we in better shape for a potential second wave? I
Speaker 1: talked to our major hospitals. We have forty across the
Speaker 1: country in nine states, and they are better prepared operationally
Speaker 1: in terms of PPE and supplies and protocols um. But
Speaker 1: a lot of hospital administrators think about COVID right now
Speaker 1: as a second job. It literally doubles their workloads. So
Speaker 1: I think the bigger risk is not operational prepperedness, but
Speaker 1: but burnout amongst frontline providers as well as the administrators,
Speaker 1: because this has taken a major toll on our on
Speaker 1: our people. Hey, I want to go back to if
Speaker 1: I may just to listen to education for a moment.
Speaker 1: I do wonder if there had been some consensus, some
Speaker 1: you know, overarching guidance from government. I'm not looking to
Speaker 1: get political here, but you know, some rules from the
Speaker 1: government about here's here's some plans and ways to to
Speaker 1: reopen education on a national scale, so that we didn't
Speaker 1: have all these hybrid approaches. Would that been better and
Speaker 1: maybe helped get education open up and running sooner and
Speaker 1: more and safely. It may have, But I heard Dr
Speaker 1: Fauci speak to the Economical to Chicago about six weeks
Speaker 1: ago in his response to that question, and was I
Speaker 1: thought the best I've heard, which is we should Our
Speaker 1: federal response should be one of localization. So it doesn't
Speaker 1: matter what states you're in. It should matter what locality
Speaker 1: you're in and what the cases are. Are they on
Speaker 1: the rise if you're in a If you're in a
Speaker 1: state where it's on the rise, but your locality is
Speaker 1: no cases of COVID like some of our hospitals in
Speaker 1: Rule Kentucky, then you should be back open. Your kids
Speaker 1: should be in school and masks the social distance thing,
Speaker 1: no matter what the state situation is. Although I don't
Speaker 1: know if Kentucky is a rising state today. But what
Speaker 1: I think his answer is the best one. If the
Speaker 1: federal policy had been its hyperlocal decision making on this,
Speaker 1: perhaps we would have had more nimble responses. Perhaps, So listen,
Speaker 1: I guess you know, as it relates to these schools
Speaker 1: and so on. I mean, it seems like the virtual
Speaker 1: is working. That's what I've a high school student with
Speaker 1: a kind of a hybrid approach that seems to be
Speaker 1: one of the more successful ones. I think hybrid with
Speaker 1: with some in person and some virtual learning does to
Speaker 1: me also, Paul, seemed like the more successful approach if,
Speaker 1: of course, you can flex to pure virtual if there's
Speaker 1: an exposure and if the world is very different comes
Speaker 1: spring and there's a vaccine that's why widely distributed, then
Speaker 1: people could be back. But I am grateful we're back
Speaker 1: hybrid as well. In elementary school. I think the biggest risk,
Speaker 1: because we know, is our college campuses or graduate schools
Speaker 1: where adult young adults are are in concentrated settings and
Speaker 1: maybe not taking as many precautions, and that where we
Speaker 1: see a spread. So we'll see you know, Listen, you
Speaker 1: did mention you are teaching. Are you teaching classes right now?
Speaker 1: I'm just curious if you are and how that's going. Yeah,
Speaker 1: thanks so much, Carol. I did teach this spring in
Speaker 1: the beginning of the pandemic, and I just finished a
Speaker 1: course at Stamford Business School via zoom, of course, and
Speaker 1: it's going well. It's just a different art form when
Speaker 1: you're when you're a professor at a graduate level with
Speaker 1: forty to sixty people in the room, you read the
Speaker 1: room and their body language, as well as probing them
Speaker 1: with the Socratic method. All that can be done via zoom.
Speaker 1: It's just slightly different and it has taken practice, but
Speaker 1: it's gone well. Thank you for asking. So what's you
Speaker 1: know you think about? I have to children in college.
Speaker 1: Thankfully it's their last year tuition wise. Um, but they
Speaker 1: both said, yeah, it's not ideal, but we're kind of
Speaker 1: getting through it. Um. The only thing, you know, labs
Speaker 1: are a little bit of an issue, but other than that,
Speaker 1: you know, they were doing a lot of other stuff
Speaker 1: kind of remotely anyway as to get through the later
Speaker 1: years of college. M I think it also depends on
Speaker 1: the nature of the student him or herself. Right, if
Speaker 1: this is a self starter, who is going to do
Speaker 1: the work? And still it gets to be in an
Speaker 1: environment with peers, hopefully in a safe environment with peers,
Speaker 1: social distancing and masks wherever possible. I think that it
Speaker 1: can be still really successful. That's a lesser Raps thee
Speaker 1: of the health care solutions company Surgical Solutions, finding ways
Speaker 1: to stay connected with her students despite the pandemic. Check
Speaker 1: out that full interview at Bloomberg dot Com or wherever
Speaker 1: you get your podcast. All right, you're listening to Bloomberg
Speaker 1: Business Week. We talk a lot about the dual crises
Speaker 1: of the pandemic and racism. Our next guest says his
Speaker 1: crisis list includes a third item. We'll check in with
Speaker 1: the new president of George Mason University. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with GARYL. Masser from Bloomberg Radio.
Speaker 1: Common themes through many of our interviews on our daily
Speaker 1: radio show understandably continue to be about the two crises
Speaker 1: facing our country, talking about the virus and racial injustice.
Speaker 1: For some though, that list is even longer. Take Dr
Speaker 1: Gregory Washington. He became president at George Mason University in July.
Speaker 1: Dr Washington spent some time with Bloomberg News Higher Education
Speaker 1: finance reporter Janet Lauren, Paul Sweeney, and me and shared
Speaker 1: what it was like stepping into his job at a really,
Speaker 1: really tough time. We were actually dealing with three crises
Speaker 1: and so uh pandemic in our crisis and racial inequity,
Speaker 1: but also we're dealing with a budget crisis because many
Speaker 1: states were struggling to support their state universities. And so
Speaker 1: we had a hundred and twenty four million dollar budget
Speaker 1: gap that I had to manage as well. So uh,
Speaker 1: suffice it suffice to say, to take care of the
Speaker 1: racial inequity problem required money which I didn't have, right, So, uh,
Speaker 1: you know, we tackle the problem as I tackle most
Speaker 1: problems as an engineer, right, and in a methodical kind
Speaker 1: of way. Right. You you eat an allstand one by
Speaker 1: at a time, and uh, and and you tackle it
Speaker 1: by bringing groups of people together to help you solve
Speaker 1: the problem. And so we establish a task force on
Speaker 1: Racial Inequity and begin and started that task force working
Speaker 1: towards coming up with solutions that we're going to help
Speaker 1: the campus and UH as are makes stud of pandemic.
Speaker 1: We've put together a separate Safer Return to Campus task
Speaker 1: force that's focused on that and and we've had tremendous
Speaker 1: results in both and and and that is propelling the
Speaker 1: institution for at this particular point in time. So, Janet,
Speaker 1: you know Ductor Washington talking about the precarious finances which
Speaker 1: we're hearing across so many different industries, and that includes
Speaker 1: higher education. What's your reporting been generally about what some
Speaker 1: of these big colleges, universities, how they're trying to piece
Speaker 1: it all together. From an economic perspective, Well, it's a
Speaker 1: tough time, partly because revenue isn't what schools are used
Speaker 1: to seeing about this time. Uh. Fewer enrollments means less money. Uh,
Speaker 1: Fewer students on campus means fewer students are paying for
Speaker 1: UM storms there there, fewer students are paying for dining services. UM.
Speaker 1: They've all had to many of them have had to
Speaker 1: offer refunds for housing when students left in March. UM.
Speaker 1: Now George Mason is bucking the trend a little bit
Speaker 1: in enrollment. We just had some numbers from the National
Speaker 1: Clearinghouse data source which we talked about a decline of
Speaker 1: fourteen percent for freshman enrollment and overall enrollments were down.
Speaker 1: But your enrollments were about two percents this year with
Speaker 1: record enrollment. UM. And you talk a little bit about
Speaker 1: how you accomplish that and where those numbers come from, Well,
Speaker 1: they primarily come from in state students. And uh, you know,
Speaker 1: we are the beneficiaries of a region, being at a
Speaker 1: part of the region of the country where uh, the
Speaker 1: population is still growing, and that helped us but because
Speaker 1: we actually brought students back to campus, and we did
Speaker 1: so in an aggressive way, students didn't uh you know,
Speaker 1: feel the need not to come back. Right there was
Speaker 1: if if you could, if you could take all of
Speaker 1: your classes online, or if you were gonna hit be
Speaker 1: hit with exorbitant fees and costs in terms of going
Speaker 1: to school, people started to ask the question, maybe I
Speaker 1: should take a gap year, maybe I should take some
Speaker 1: time off and not come back. Well, we made it advantageous,
Speaker 1: and we made it uh year to our students that
Speaker 1: we were going to provide an environment for them that
Speaker 1: was maybe not quite what they had uh two years ago,
Speaker 1: but something really really close. So we worked really really hard,
Speaker 1: but providing all sorts of ways for students to congregate
Speaker 1: safely and for them to enjoy fast food through our
Speaker 1: mobile robotic food delivery services from and so we put
Speaker 1: a lot of different uh you know, students can go
Speaker 1: to movies together, they go to we have this large
Speaker 1: drive in movies where students actually can do that together. Uh.
Speaker 1: And and we did lots of virtual kinds of engagements
Speaker 1: with students. We have Tiffany Haddish on campus and other
Speaker 1: kinds of things. So so we've been able to figure
Speaker 1: out different ways to basically invent a new normal, which
Speaker 1: is what I think institutions are gonna have to do
Speaker 1: because they're gonna be dealing with the virus in about
Speaker 1: forty five seconds. I mean, how much does this set
Speaker 1: you back? This the virus financially well, Love, the reality
Speaker 1: of the situation is it sets inspectremendously. Um, We're we're
Speaker 1: talking about a average student twelve thousand dollars per head
Speaker 1: for room and board. And if you and we got
Speaker 1: sixty eight hundred slots, so you just do the mask,
Speaker 1: that's seventy eight million dollars loss and we don't bring
Speaker 1: students back to campus and the numbers just go up
Speaker 1: from there. It's a reminder that for all of us,
Speaker 1: this has a deep economic cost as well. That's Dr
Speaker 1: Gregory Washington, president at George Mason University with Bloomberg News
Speaker 1: Higher Education finance reporter Janet Lauren. That full conversation, by
Speaker 1: the way, check it out on our podcast feed still
Speaker 1: to come. She has often dubbed the woman who built Beijing.
Speaker 1: How China's major cities are getting back to work with
Speaker 1: the CEO and co founder of Soho China. You're listening
Speaker 1: to Bloomberg Business Week, and this is Bloomberg. Is Bloomberg
Speaker 1: Business Week with GARYL. Masser from Bloomberg Radio. This week,
Speaker 1: the Milk and Global Conference wrapped up virtually and this
Speaker 1: year's event included a panel that I moderated and talked
Speaker 1: about on our daily radio show, is entitled real Estate
Speaker 1: in the Eye of the Storm that included commercial and
Speaker 1: residential real estate leaders from around the world. One of
Speaker 1: them was Shin Jong. She's co founder and ce of
Speaker 1: Soho China Limited. And while many of us in the
Speaker 1: US are still working from home, as we watched COVID
Speaker 1: cases creep up again, life in China, well, it looks
Speaker 1: a lot like it did pre pandemic. People are back
Speaker 1: to work, a lot of people wear a mask, but largely,
Speaker 1: you know, life has gone back to normal. Uh. In
Speaker 1: the earlier time that the first two quarters of this year,
Speaker 1: we were checking uh you know where we installed um
Speaker 1: infra camera infra thermal to just check uh temperature, body
Speaker 1: temperature every every person come into the building. We don't
Speaker 1: even do that anymore because China now has almost zero virus,
Speaker 1: so that's not required anymore. Uh. And you can just
Speaker 1: see that. Uh. You know, working life has definitely gone
Speaker 1: back to normal, and I think that's very important to
Speaker 1: you know, once people feel safe and you know, it's
Speaker 1: it's not that hard to get back to how uh
Speaker 1: you know, ordinary life is. Uh. I know outside of China,
Speaker 1: outside of Asia, people really wonder whether this is going
Speaker 1: to be a transformational change that would people ever go
Speaker 1: back to work? Uh, you know the old ways and
Speaker 1: you know people are so used to working on online
Speaker 1: and you know this is not the case in China
Speaker 1: because you can see that. You know, it's there are
Speaker 1: people just everywhere and this is a office building. Uh
Speaker 1: probably you know, just in the middle of the day,
Speaker 1: people want to go back to work. And I uh,
Speaker 1: I don't know how permanent is to change if people
Speaker 1: wanted to stay you know, in a secondary cities or
Speaker 1: moving to secondary cities, or stay outside of city. Remember
Speaker 1: that just pre COVID, there were times we're talking about
Speaker 1: how people wanted to work in the much more much
Speaker 1: more close environment, you know, more less square footage per capita,
Speaker 1: like the way worse like the share offices. And you
Speaker 1: know that was just the debate or the discussion that
Speaker 1: we had pre COVID and you know, I don't see
Speaker 1: how a virus uh slow down this process of people
Speaker 1: want to work together because that we leave that really
Speaker 1: encourages communication, encourages innovation, and young people just want to
Speaker 1: be together to work together. Uh. So I don't see
Speaker 1: how a few months or even a year staying more
Speaker 1: at home would change that fundamental human desire to be together.
Speaker 1: So do you have any thoughts on that in terms
Speaker 1: of industry and variation is when it comes to the
Speaker 1: commercial property market, I don't see difference. You know, I
Speaker 1: think it's human nature. And you know, do we want
Speaker 1: to work with other people together or do we want
Speaker 1: to work alone? That's really the question I think we
Speaker 1: all feel. You know, this is a great thing about humans.
Speaker 1: If we want to be with others, we want to
Speaker 1: be with our coworkers. And ideas you know, would come
Speaker 1: out from these interactions only were when we're in a
Speaker 1: team and in the group of people with the group people.
Speaker 1: So see, and I want to bring you in because
Speaker 1: what are you seeing in terms of the tertiary or
Speaker 1: secondary you know, cities when it comes to Asia specifically,
Speaker 1: but it hasn't really showed that much of a difference. Uh,
Speaker 1: you know, like it's secondary. Tier two cities in China
Speaker 1: are have never been able to catch up with the
Speaker 1: Tier one cities, and even with a massive population in
Speaker 1: China and with the incredible new infrastructure in these tier
Speaker 1: two cities, but still I think talents and companies are
Speaker 1: large really attracted to Tier one cities. UH. In America
Speaker 1: that might be different, but in China that has been
Speaker 1: the case. UH. And I also wanted to add one
Speaker 1: point is um what we have seen in China over
Speaker 1: this October Golden Week, a one week national holiday, is
Speaker 1: that there was so much pent up demand in travel.
Speaker 1: Hotels are fully booked, and you know, restaurants are fully booked,
Speaker 1: and you know, resorts are fully booked, and you know,
Speaker 1: you could not move on the bund in Shamghai without
Speaker 1: pushing people around. So there was such a pent up
Speaker 1: demand because people were so frustrated lockdown for a few months,
Speaker 1: and they were desperate to get out. And I expect
Speaker 1: that's going to be the case for London and New York.
Speaker 1: You know, as soon as the vaccine comes out, people
Speaker 1: feel free to travel, feel free to interact with people. Hey, Shane,
Speaker 1: what about your properties because it's mixed use? What are
Speaker 1: you're seeing on the residential side of things. We don't
Speaker 1: do that much residential in China now. We only do
Speaker 1: office now. And I wanted to mention just uh, you know,
Speaker 1: as you said that, you know, central banks have printed
Speaker 1: so much money and with all these rescue packages around
Speaker 1: the world, we are we are, you know, living in
Speaker 1: a prolonged low interests re environment. And I think that
Speaker 1: would have a positive impact on real estate because you know,
Speaker 1: capital would be you know, chasing after you know, assets
Speaker 1: with steady cash flow. So I think that that would
Speaker 1: you know, as as fixed income allocation would be reduced,
Speaker 1: I think, and then you know, some of that would
Speaker 1: be shifted to real estate. Uh, as we continue to
Speaker 1: live in this prolonged interest rate, low interest environment, I
Speaker 1: wanted to share One thing is logistics different from the
Speaker 1: other traditional real estates like commercial hotels or residential is
Speaker 1: the east warehouses are but one is very quick to
Speaker 1: build and two is there they're not as location sensitive,
Speaker 1: so they literally can build anywhere outside of the city.
Speaker 1: Um So in many ways, I think it's a there's
Speaker 1: a greater danger of over supply of logistics, logistics and
Speaker 1: the warehouse than any other properties because of this nature.
Speaker 1: Here's an interesting question um college and university campuses foster
Speaker 1: a very important community and has an incredibly large amount
Speaker 1: of students, faculty, etcetera. Any thoughts or strategies and how
Speaker 1: real estate will evolve around campus. We've done a lot
Speaker 1: of stories here at Bloomberg just as colleges universities have
Speaker 1: either shut down or everybody's at home. You know how
Speaker 1: it's affected certainly the local economy. It's not just the
Speaker 1: university and colleges being impacted. Anybody have any thoughts on that.
Speaker 1: Students are dying to go back to colleges and uh,
Speaker 1: you know, I have to college sons, and they're dying
Speaker 1: to go back and to be with their friends. And
Speaker 1: they're really they see many of their friends already contract
Speaker 1: of COVID and then recovered. But I think the issues
Speaker 1: and not the students, are the professors, right, and the
Speaker 1: faculties they are the older ones. They need to be protected.
Speaker 1: And if the students get contracted them, what happened to
Speaker 1: the professors and faculties. Well, and I know some schools
Speaker 1: are doing where they're keeping the teacher sequestered, but the
Speaker 1: kids are together in a classroom, so that at least
Speaker 1: there's a social aspect. And there's a question I want
Speaker 1: to ask UM for you. It's actually from Michelle or
Speaker 1: any of the panels exploring investments in AI technology in
Speaker 1: regards to health and safety. Will there there'd be a
Speaker 1: great relationship there, Shan, Well, we we went through stars,
Speaker 1: you know. I remember at the time people were so
Speaker 1: afraid of being indoor, and then we change our building windows,
Speaker 1: you know, to from curtain walls to at least one
Speaker 1: you know, every floor has a certain stage of openable windows.
Speaker 1: That was then the technology of the building, and now
Speaker 1: I think it's about futuring the people entering the buildings.
Speaker 1: So we have all these in proa thermal you know,
Speaker 1: everywhere and then and and you know you but you
Speaker 1: need more than just a technology. You also need the
Speaker 1: you know, the environment where you're allowed to use the technology.
Speaker 1: And my understanding in the US is that you have
Speaker 1: the technologies, but you're not allowed to use them for
Speaker 1: tracing for future and that in chime and we don't
Speaker 1: have that problem. The one thing another question that came
Speaker 1: in UM had to do with climate change. How will
Speaker 1: changing climate, extreme weather events, rising ocean levels, wildfires affect
Speaker 1: real estate demand along the coasts or other vulnerable areas.
Speaker 1: If ensuring a home from flooding or wildfires becomes unaffordable, well,
Speaker 1: governments need to intervene. And I know we've had some
Speaker 1: programs in the US where local municipalities are actually buying
Speaker 1: up homes that are in just terrible areas only because
Speaker 1: it costs those cities to have to rescue people when
Speaker 1: their storms and so on, so they're just trying to
Speaker 1: take those homes off the market. Um. Climate change in
Speaker 1: real estate? Um, is that something that's kind of on
Speaker 1: your watch list? Or I'll share one story that we
Speaker 1: had because this is to do with the climate. Uh So,
Speaker 1: two things is, you know, for a while, you probably
Speaker 1: all knew that China was filled with the air pollution,
Speaker 1: especially in cities like Reiginia and Shanghai. And then so
Speaker 1: it was so bad that we were thinking, as a developer,
Speaker 1: what do we need to do to fil through the air.
Speaker 1: So what we did is we installed a filtering air
Speaker 1: filtering system to all of our buildings. And knowing that
Speaker 1: you know, humans, at least the Chinese in China and
Speaker 1: in the cities are you know, eighty percent of a
Speaker 1: time are indoor. So we can filter the air indoor.
Speaker 1: We're probably doing some help and so that's one thing
Speaker 1: to do with, you know air. That's John co founder
Speaker 1: and CEO Soho China Limited, talking about really so many
Speaker 1: different factors impacting the real estate market right now because
Speaker 1: of the virus, but also you know, getting into some
Speaker 1: of those longer term trends, whether it's climate change and
Speaker 1: the things that are really going to be the real
Speaker 1: estate stories for years to come. Check out by the way,
Speaker 1: that entire panely you can search on Milken Institute dot org,
Speaker 1: Slash Global Conference. I talked with several global leaders, including
Speaker 1: of course Shen Jong. Among them Richard Mac, co founder
Speaker 1: and CEO of Mac real Estate Group, David Warren, CEO
Speaker 1: and founding partner of DW Partners, and also Jonathan Goldstein,
Speaker 1: who's the CEO of k and International. Really a great
Speaker 1: global perspective on what's happening in our real estate market. Well,
Speaker 1: that wraps up the first hour of the weekend edition
Speaker 1: of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser.
Speaker 1: Still to come more on real estate people saw it.
Speaker 1: We'll hear from Don Peebles, he's the CEO of one
Speaker 1: of the country's few privately held national real estate investment
Speaker 1: and development companies that prioritize inclusivity in all phases of
Speaker 1: each of their projects. Also the economists that found sixteen
Speaker 1: trillion dollars when she tallied up the cost of racial bias.
Speaker 1: Will also check in with the co founder of wealth
Speaker 1: Front on Robin Hood and his company's next gen automated platform,
Speaker 1: and then Luxury amid the virus. We'll hear from the
Speaker 1: CEO of Watches of Switzerland. This is Bloomberg. This is
Speaker 1: Bloomberg Business Week with Garrol Mazer from Bloomberg Radio. Hi
Speaker 1: m Carol Masser joining me this week Bloomberg's Paul Sweeney
Speaker 1: and coming up in this hour of the weekend edition
Speaker 1: of Bloomberg Business Week, We're gonna hear from wealth Front
Speaker 1: co founder and CEO Andy rack Left on fintech disruptors,
Speaker 1: plus Luxury weathering the impact of the virus, Watches of
Speaker 1: Switzerland CEO Brian Duffy on that brand's retail expansion plans.
Speaker 1: We begin, though with what was one of the most
Speaker 1: read stories on the day it hit the Bloomberg about
Speaker 1: the economists who found sixteen trillion dollars when she tallied
Speaker 1: the cost of race bias. We do like to do
Speaker 1: the math on things here at Bloomberg, and this story
Speaker 1: definitely delivered. Bloomberg's Paul Sweeney and I got more from
Speaker 1: Bloomberg News e s G reporter Sagel Kishen and Bloomberg
Speaker 1: Business Week editor Joe Weber. Sagel UM found a story
Speaker 1: that is this one of these stories that it's sort
Speaker 1: of like, how do you how do you find that story?
Speaker 1: I think UM, And it's about Dana Peterson, who is
Speaker 1: a City Group global economist. She tried to put a
Speaker 1: price tag on race bias in terms of what it
Speaker 1: actually means to the economy. UM, Sagel. How did she
Speaker 1: come up with sixteen trillion dollars UM? Well, it took
Speaker 1: her something like three months to do UM, and she
Speaker 1: poured over I mean, she's a macro economist, so she's
Speaker 1: normally looking at sort of like big macro economic data,
Speaker 1: but instead she turned to micro economic data everything from
Speaker 1: wage levels by race too, debt levels UM by county
Speaker 1: for instance, UM and basically tied the cost um you know,
Speaker 1: saying that over the last two decades. UH, the the
Speaker 1: U s economy lost out um on sixteen trillion dollars
Speaker 1: because of racism. So say, jee's this kind of I mean,
Speaker 1: we're what's the source of the lost economic growth? It's
Speaker 1: it taxes? Is it GDP output? Where is where do
Speaker 1: we see it in the economy? Where sure it's it's
Speaker 1: it's a g d P. That's that. That was her calculation.
Speaker 1: She looked at the overall economy, um, and did it
Speaker 1: that way and in sidral talk to us about where
Speaker 1: where should it's landed her? And this was a project
Speaker 1: that took months, um, not something that anybody had ever
Speaker 1: tried to do. And what was the outcome? Yeah, I mean,
Speaker 1: you know obviously through her reports at a law of
Speaker 1: wide spread, widespread readership when it came out last month. Um.
Speaker 1: But you know, since doing her report, she's taken up
Speaker 1: a role um at the conference board where she's now
Speaker 1: the chief global chief economist. It's what's great about a
Speaker 1: story like this is and I feel like, you know, Joel,
Speaker 1: I feel like this is a this is a number
Speaker 1: we're gonna be quoting in a a lot of Bloomberg events,
Speaker 1: you know, over the next year or so, virtually or
Speaker 1: other because it's just you know, when you put a
Speaker 1: number on something, money talks, and money gets people to
Speaker 1: do things. I mean, there's another one in your story, Sagel,
Speaker 1: that talks about her calculations and that an additional six
Speaker 1: point one million jobs a year, thirteen trillion in business
Speaker 1: revenue could have been generated over the last two decades
Speaker 1: if black entrepreneurs had fair and equitable access to credit.
Speaker 1: This is a story. I mean, VC, the venture capital world.
Speaker 1: I mean there's just no money going there. Yeah, now absolutely.
Speaker 1: I mean that number also struck me, that thirteen trillion
Speaker 1: dollars in business revenue. That that's a huge amount. Um.
Speaker 1: But you know, she she did the work, she did
Speaker 1: the calculations, and we've also you know, our tech colleagues
Speaker 1: on the West Coast have done some story is about, um,
Speaker 1: sort of the struggles of black entrepreneurs trying to secure
Speaker 1: VC capital. So you know, this is the number. You
Speaker 1: know that that she puts on that which is is
Speaker 1: is the huge number. And I think, you know, putting
Speaker 1: or quantifying this, I mean, this goes beyond the sort
Speaker 1: of the social and moral imperative of sort of ending racism.
Speaker 1: You know, putting a number on these things, and you know,
Speaker 1: to take her word. She says, this is a way
Speaker 1: that you know, people in the world of finance and
Speaker 1: economy and the economy, which is our wheelhouse at Bloomberg,
Speaker 1: this is something that they can actually relate to. So
Speaker 1: entering stage going forward, I was looking in your piece,
Speaker 1: You've got some numbers about even going forward, the cost
Speaker 1: could be just outstanding eight trillion dollar gain and gross
Speaker 1: domestic product by if we can close the racial equity gaps.
Speaker 1: That that's according to alter Um, a nonprofit in in Aurbora, Michigan.
Speaker 1: So that numbers, I mean going forward could also be
Speaker 1: just compelling. Yeah. Absolutely, And we've done a lot of
Speaker 1: coverage about how black and Latin X and other minority
Speaker 1: communities in the US have been disproportionately affected by by
Speaker 1: COVID and economically as one much as health wise. And
Speaker 1: so you know, given where the economy is now at
Speaker 1: the moment, is not an significant number. I mean, Um,
Speaker 1: what Dana mentioned is like it's a growth opportunity, and
Speaker 1: moneymakers always always looking for growth opportunities. So maybe UM
Speaker 1: investing in black run businesses, for instance, is a way
Speaker 1: to to not only help that community, but to get
Speaker 1: the overall economy back on its feet. Another thing um
Speaker 1: uh stood out to me in the story, and it's
Speaker 1: just sort of one of those daggers in the heart
Speaker 1: was sort of, this is a person that worked a
Speaker 1: city for a really long time and never put her
Speaker 1: face into the system because she didn't want, you know,
Speaker 1: her colleagues bias to impact um or of her ability
Speaker 1: to do her job. Talk to him, talk to us
Speaker 1: more about that side of the story. Yeah. Absolutely, that
Speaker 1: was one of the most point in parts of the
Speaker 1: conversation that I had with her. UM. I mean she's
Speaker 1: she's been on um you know, UM financial news networks,
Speaker 1: including US. UM, so it's good to see. But um, yeah,
Speaker 1: it was a really sad reality um that you know,
Speaker 1: she wanted to be judged on her work first rather
Speaker 1: than people judging her on her race and so UM yeah,
Speaker 1: not putting her photograph on the email system felt that
Speaker 1: she would have a better shake um or fairly fair
Speaker 1: shake um at being um you know, chosen to do
Speaker 1: presentations or or write reports. UM. But yeah, it was
Speaker 1: a really pointing part of the interview. There are so
Speaker 1: many professionals out there who unfortunately, you know, do endure
Speaker 1: the same sort of racism. UM that everybody else does,
Speaker 1: and I think we don't pay so much attention to that,
Speaker 1: and her bringing and talking about her story brought that
Speaker 1: to life. It was a real reality check. Well, nothing
Speaker 1: like research and data and hard numbers to give us
Speaker 1: the facts in really a reality check. That's Bloomberg News
Speaker 1: e s G reporter Sagel Kishen and Bloomberg Business Week
Speaker 1: editor Joel Weber. You're listening to Bloomberg Business Week. Coming up,
Speaker 1: our next guest in his company dubbed the term affirmative development,
Speaker 1: where inclusivity is a priority in all phases of each
Speaker 1: real estate project that they do. We'll catch up with
Speaker 1: Don Peebles. That's next. This is Bloomberg. This is Bloomberg
Speaker 1: Business Week with GARYL. Masser from Bloomberg Radio. We're bringing
Speaker 1: you some of the highlights of our daily radio broadcast
Speaker 1: and podcast, and that included a guest who understands real
Speaker 1: estate politics, understands making a difference and creating a more
Speaker 1: equal and just world. We're talking about Don Peebles, founder,
Speaker 1: chairman and CEO of the People's Corporation. He also served
Speaker 1: on the National Finance Committee of President Barack Obama. Bloomberg's
Speaker 1: Paul Sweeney and I began by asking about the state
Speaker 1: of US residential real estate s seeing a lot of
Speaker 1: tail winds for a single family real estate. I think
Speaker 1: single family homes are very strong interest rate stories at
Speaker 1: historical lows, and so it's propelling a lot of buyers
Speaker 1: who are able to do that and take advantage of
Speaker 1: it or out of the market buy So that continues
Speaker 1: to be a bright spot. I think we're seeing UM
Speaker 1: in some places. What was very interesting is in Los Angeles,
Speaker 1: the condo sales markets is actually doing well and UH
Speaker 1: as a surprising bright spot in the marketplace. And UH
Speaker 1: and that's again because people want to get out of
Speaker 1: their cars, they want to lift closer to where they work,
Speaker 1: and UH in their economies to getting open back up.
Speaker 1: I think the challenge in the industry in real estate
Speaker 1: overall will be the obvious, which is retail. Brick and mortar,
Speaker 1: retail and hospitality sectors are very challenge right now, and
Speaker 1: the office is kind of a wait and see right now. Hey,
Speaker 1: don As you're well aware, there's this existential discussion going on,
Speaker 1: argument going on about the future of New York City.
Speaker 1: Does it have a future? Help? Right? Is it? UH?
Speaker 1: What are your thoughts. Of course, I think New York
Speaker 1: City definitely has a future and it will always be
Speaker 1: a bright future at the city of eight and a
Speaker 1: half million people. That being said, about a hundred thousand
Speaker 1: residents have left Manhattan, which is a significant number out
Speaker 1: of two million residents. UM. I think what we're seeing
Speaker 1: in New York though, is a a perpetuation and continuation
Speaker 1: of a trend that was beginning to happen before, and
Speaker 1: it started with the salt. Once the state and local
Speaker 1: income tax deductions were taken away, it started encouraging more
Speaker 1: high net worth individuals to relocate to more tax friendly
Speaker 1: environment and then there was a diminishment of quality of life.
Speaker 1: The city got a bit dirtier, crime was creeping up
Speaker 1: a little bit, and then with this pandemic it is
Speaker 1: exceled rate at that so I think on the high
Speaker 1: end ultra luxury side, the residential market is going to struggle.
Speaker 1: Their sales volume for residential condos is down significantly and
Speaker 1: vacancy rates are at you know, um, all time highs
Speaker 1: um Right now, vacancy rates for apartments in Manhattan or
Speaker 1: New York City as a whole over five percent, which
Speaker 1: is a very big number and uh and then and
Speaker 1: then there is about almost twenty million square fee of
Speaker 1: sublet office space. And we're seeing a shift. And what
Speaker 1: we're also seeing now is millennials coming of age of
Speaker 1: having being married, having kids and seeking out places that
Speaker 1: are more conducive to that where the public school systems
Speaker 1: are more predictable and uh, a little better quality of
Speaker 1: life and lower costs. So I think we're going to
Speaker 1: see a shift of what New York City looks like. Um,
Speaker 1: we're gonna see that. That shift is happening now. And
Speaker 1: and I think New York is going to become real
Speaker 1: become much more affordable for younger people. And I think
Speaker 1: it will, you know, among of the silver linings of
Speaker 1: New York, and it will attract younger and more creative people,
Speaker 1: uh there because it will be more cost effective. Well,
Speaker 1: so what does it also the mean for You've got
Speaker 1: the gateway cities and then you've got secondary and tertiary cities.
Speaker 1: I mean, is that where you want to be investing
Speaker 1: at this point? Maybe not the gateway cities so much,
Speaker 1: or I don't know, how do you see it done? Yeah,
Speaker 1: I think it's very challenging right now to make any
Speaker 1: kind of strategic long term investment in New York City.
Speaker 1: I think if you look at the emerging markets, the
Speaker 1: ones that are the what would be the tertiary cities
Speaker 1: that are emerging, and they're going to become much more
Speaker 1: dominant players. I would say Charlotte, North Carolina, has significant
Speaker 1: good news recently. Uh they just got a new corporate
Speaker 1: relocation that's going to spend about two billion dollars on
Speaker 1: the headquarters. UM. You have uh, Tennessee, especially Nashville continuing
Speaker 1: to do well. South Florida is on a great run,
Speaker 1: both of them single family side and attracting more entrepreneurial
Speaker 1: financial services firms down there, and some of the bigger
Speaker 1: banks are beginning to look at backup house down there
Speaker 1: as well. So I think that those types of markets, uh,
Speaker 1: and then some of the other I think the VATA
Speaker 1: is gonna begin to pick up in Texas is you know,
Speaker 1: Austen doing very well, will continue to do very well.
Speaker 1: I think it's the New York that's in the Chicago's
Speaker 1: um that are in the city. The major gateway cities
Speaker 1: are going to struggle. Boston being an exception to that
Speaker 1: because life sciences and the strong intellectual capital in that marketplace,
Speaker 1: are saving it from what would be catastrophic results like
Speaker 1: what New York is beginning to see right now. So
Speaker 1: don't just quickly tax You mentioned the tax policy. What
Speaker 1: can states like New York and New Jersey and some
Speaker 1: others do. I mean, they just simply try to get
Speaker 1: more efficient a combination of things. I mean I think that,
Speaker 1: I mean, were they New York has to recognize the
Speaker 1: New Jerse. He has to recognize that they are losing
Speaker 1: residents by the moment. I mean, we just launched a
Speaker 1: new private club in Miami Beach called the Bath Club,
Speaker 1: which is a private beach club, and we are getting,
Speaker 1: you know, flooded by applications of people coming from New
Speaker 1: York relocating down you know, just kind of almost sur
Speaker 1: the moment. So they've got to so New York, New York,
Speaker 1: New Jersey have to recognize they've got to compete for residents.
Speaker 1: So they've got to be much more efficient and take
Speaker 1: a fresh look at what role the government has, especially
Speaker 1: in New York City. What is the role of the
Speaker 1: municipal government. It can't be everything to everybody. It's got
Speaker 1: a right size its workforce quickly, um and it's and
Speaker 1: this administration has been reluctant to do that, and then
Speaker 1: I think it has to think about longer term tax policy.
Speaker 1: New York should be in the business of reducing taxes
Speaker 1: and spent advising a job generation and productivity ton. One
Speaker 1: thing I wanted to ask you is, and I just
Speaker 1: got done earlier today doing a real estate for milk
Speaker 1: in and it was with global real estate leaders. And
Speaker 1: one of the participants was Jean Jin who is the
Speaker 1: founder and CEO of Saho China, and she made a
Speaker 1: point of you know, there's very few women when it
Speaker 1: comes to global real estate. And I know we've talked
Speaker 1: with you before. And there were other participants in the
Speaker 1: panel and all white men who said, you know what,
Speaker 1: there is no diversity when it comes to real estate.
Speaker 1: Are we making any progress, especially with what we have
Speaker 1: seen over the last and the conversations over the last
Speaker 1: six to seven months in terms of racism and inequalities?
Speaker 1: Have we Are we making any progress on any of this? UM?
Speaker 1: I think you know, yes, slowly but surely. UM. If
Speaker 1: you look at it, think about this. The global head
Speaker 1: of real estate for a black Stone is a woman,
Speaker 1: and and I mentally qualified women woman, and I believe that.
Speaker 1: I mean women continue to confront call out um the
Speaker 1: you know, discriminatory practice. It's a glass feeling that they
Speaker 1: can find. They those glass feelings get shattered. Systemic problems
Speaker 1: require systemic solutions. We hear that a lot. That of
Speaker 1: course was Don Peebles, founder, chairman and CEO of The
Speaker 1: People's Corporation. Check out that full conversation wherever you get
Speaker 1: your podcasts coming up. We talked about the cover story earlier,
Speaker 1: robin Hood disrupting the online trading world. Well, one of
Speaker 1: the early disruptors of the investing in financial world was
Speaker 1: wealth Front co founder and CEO Andy Rackliffe. Weighs in
Speaker 1: on the up starts and more. This is Bloomberg is
Speaker 1: Bloomberg Business Week with Carol Mazer from Bloomberg Radio. This
Speaker 1: mixed cover story we talked about it earlier. It's all
Speaker 1: about robin Hood, which is exploded in popularity this year
Speaker 1: as millions of American stuck at home, including throngs of millennials,
Speaker 1: have been looking to make some money during a pandemic
Speaker 1: that has sent stock prices swinging. Well, robin Hood is
Speaker 1: disrupting the financial industry and certainly disrupting trade eating, but
Speaker 1: one of the first firms to do that years ago
Speaker 1: is wealth Front, founded back in two thousand eight. Andy
Speaker 1: rack Left is co founder and CEO at wealth Front,
Speaker 1: and he gave Bloombergs, Paul Sweeney and me an update
Speaker 1: on the company. Where our next gen banking service that
Speaker 1: helps young professionals manage their money. So we provide high
Speaker 1: interest checking and low cost investment management services all through
Speaker 1: a five star rated app, and our vision is to
Speaker 1: automate all of your finances. We call this self driving
Speaker 1: money and buy that. What I mean is you can
Speaker 1: direct deposit your paycheck with us. We automatically pay your
Speaker 1: bills and then route the remaining money to the most
Speaker 1: appropriate investment or savings account depending on your situation and goals.
Speaker 1: So with that in mind, the thing I think that's
Speaker 1: effected us for most are I think there's been a
Speaker 1: bunch of people rather than wanting a diversified and managed portfolio.
Speaker 1: I think that day trading has really taken off this year.
Speaker 1: And the other big thing that we've noticed is that
Speaker 1: with the dropping interest rates, people are more inclined to
Speaker 1: day trade or try to pick securities in order to
Speaker 1: make up for the fact that they're not earning that
Speaker 1: interest on their seats. So Andy, during this pandemic, I've
Speaker 1: upped my digital banking game pretty substantially, I must say, um,
Speaker 1: and I find it with a number of financial institutions.
Speaker 1: So it seems like these big players, they're investing money
Speaker 1: in fintech, they're investing money in their front end platforms
Speaker 1: as they integrate with their consumers. How what's your competitive
Speaker 1: advantage going against maybe some of the big commercial banks
Speaker 1: or brokerage firms and things like that. Well, I would
Speaker 1: say that it's business model and technology. So first, let
Speaker 1: me talk about business model. Traditional banks use branches, and
Speaker 1: what most people don't realize is that the average branch
Speaker 1: costs the average consumer two hundred dollars per year. So
Speaker 1: if you take the cost to operate a branch and
Speaker 1: divided by the number of people that it serves, it
Speaker 1: costs you about two hundred dollars a year. A cost
Speaker 1: the bank two hundred dollars a year to offer that branch. Well,
Speaker 1: they've got to pay for that, and the way that
Speaker 1: they pay for that is through a number of fees
Speaker 1: that most people don't like. Next generation banking services like
Speaker 1: wealth front don't charge those nickel and dying fees. So
Speaker 1: you're gonna be far better off, first of all, just
Speaker 1: not from not having the fees. Second of all, we
Speaker 1: pay interest on our balances. We pay point to be five.
Speaker 1: I use Wells Fargo. They pay me zero percent on
Speaker 1: my checking balance. So the fact that they have to
Speaker 1: support branches is a real negative for young people who
Speaker 1: don't want to go to a branch. It's probably a
Speaker 1: positive for a baby boomer who likes that personally a action.
Speaker 1: So it's a very generational thing. On technology, thanks are
Speaker 1: terrible at developing software. You know, uh JP Morgan Chase
Speaker 1: got quite a bit of attention a few months ago
Speaker 1: because they rode off your personal finance app called Skin.
Speaker 1: In contrast, Wealth Fund is the highest rated financial app
Speaker 1: in the app store. Just because both companies offer software
Speaker 1: doesn't mean that they're of comfortable quality. You know, and
Speaker 1: you have seen a lot of cycles in the financial industry.
Speaker 1: You co founded where general partner at Benchmark Capital, You've
Speaker 1: been an investor in the likes of juniper Um Equinox.
Speaker 1: I mean, you see the world from a lot of
Speaker 1: different angles when it comes to specifically though the financial industry.
Speaker 1: What do you make of something like a Robin Hood. Well,
Speaker 1: every once in a while something comes along that really
Speaker 1: just captures the industry's imagination, and Free Trading really did that,
Speaker 1: and they've done a superb job of growing the business
Speaker 1: as a result of offering something that people really wanted.
Speaker 1: It's interesting and I think, you know, we're all in
Speaker 1: the old enough. Sadly, I guess to remember the dot
Speaker 1: com boom day trading that kind of thing. It turned
Speaker 1: didn't turn out very well for some of those folks,
Speaker 1: and it kind of signaled in hindsight that was clearly
Speaker 1: up peak in the market. Any concerns about that here
Speaker 1: or do you just feel it's different this time? No.
Speaker 1: One of the funny things is that every fifteen years
Speaker 1: or so there is a day trading boom, and it
Speaker 1: usually coincides with a market that's gone up by fort
Speaker 1: in less than six months. Because when the market trades
Speaker 1: up very, very significantly, it's like shooting fish in a barrel.
Speaker 1: Any stock pick is going to go up. The mistake
Speaker 1: that individual industris make is they confuse absolute performance with
Speaker 1: relative performance. You know, if the markets up in Europe,
Speaker 1: you think you're a genius in actually terrible that's Andy
Speaker 1: rack Left, co founder and CEO at the Automated Investment Service.
Speaker 1: Weal front making a pretty good point when it comes
Speaker 1: to trading, something to think about amid the pandemic and
Speaker 1: the volatility that we're seeing in the market. And you
Speaker 1: can check out that full conversation by going to our
Speaker 1: podcast feed at Bloomberg dot com, Apple Podcasts or wherever
Speaker 1: you get your podcasts. Still to come, we may be
Speaker 1: doing more online financially, we are also apparently increasingly going
Speaker 1: online when it comes to shopping in the luxury space.
Speaker 1: We check in with the CEO of Watches of Switzerland,
Speaker 1: Brian Duffy. You're listening to Bloomberg Business Week, and this
Speaker 1: is Bloomberg. Is Bloomberg Business Week with Garrol Masser from
Speaker 1: Bloomberg Radio. We're gonna wrap up this week with a
Speaker 1: check on the luxury space. Recently, our Bloomberg Pursuits team
Speaker 1: posted a story they talked with Hilton's head of luxury Brands,
Speaker 1: who said that year end will be the start of
Speaker 1: travels turnaround. He is betting on pent up demand. But
Speaker 1: in general, we know the luxury space has definitely seen
Speaker 1: its share of ups and sounds because of COVID nineteen.
Speaker 1: Plumberg's Paul Sweeney and I checked in with Brian Duffy.
Speaker 1: He's the CEO of Watches of Switzerland Group who was
Speaker 1: based in London, and we talked with him from there.
Speaker 1: That's a city, of course that we know that was
Speaker 1: once again in the midst of the coronavirus. We've taken
Speaker 1: it very seriously. We've been very careful. London has really
Speaker 1: been impacted, um, you know continually throughout this uh that's
Speaker 1: period and has actually moved a bit backwards in terms
Speaker 1: of a traffic and behavior, so we'll see. UM. So, Brian,
Speaker 1: this has really been, you know, a disruptive time, not
Speaker 1: only to people's lives, but obviously two businesses as well.
Speaker 1: How has this pandemic uh impacted your business really over
Speaker 1: the last seven or eight months? UM A lot, uh
Speaker 1: you know, bets of results and we have a could
Speaker 1: have predicted I'm sure you've seen a results for the
Speaker 1: um ten weeks of the quarter that we're currently in
Speaker 1: then what we're actually three getting a plus twenty in
Speaker 1: constant currency, which I never honestly am an optimistic guy
Speaker 1: at the best of times, but I would never have
Speaker 1: predicted that um, and it just seems that, you know,
Speaker 1: we're very fortunate with the products that we sell. We
Speaker 1: have a very big partnership with Rolex. Uh we're hugely
Speaker 1: popular brand also protecularly, but with more PGA brands in
Speaker 1: which you know, we have waiting lists, we have supply
Speaker 1: not making the demand overall, so we are a very
Speaker 1: fortunate situation. Um. It seems that our clients, particularly in
Speaker 1: the US or a business in the US, has been
Speaker 1: very very strong, and it seems that you know, people
Speaker 1: have money, Um, they have accumulated money. The traditional things
Speaker 1: that they might have spent it on a travel and
Speaker 1: hospitality and fashion really hasn't been available to them. So
Speaker 1: our category has been popular and within that category we've
Speaker 1: clearly done a good job. So surprisingly we're trading, we're
Speaker 1: trading very Um. Well, what I'm wondering though, Brian, I mean,
Speaker 1: go take us back to March and April. What was
Speaker 1: that time like, um, And I know you just gave
Speaker 1: us the numbers. I believe it was for the second quarter,
Speaker 1: and you did see growth, and that does sound really
Speaker 1: good considering this environment. You're right, you have a certain
Speaker 1: kind of customer base, But what was it like in
Speaker 1: March and April. I mean you sell through stores, you
Speaker 1: do sell online, but I do wonder yeah, I mean
Speaker 1: leading into the lockdown, and it pretty much happened. So
Speaker 1: our business is all Yuki in the US, and the
Speaker 1: lockdowns happened initially and started in the US Vegas and
Speaker 1: New York and Florida, and then the following week in
Speaker 1: the UK. So but the middle of March all of
Speaker 1: our shops that had been closed around the world, and
Speaker 1: obviously then then that that took of an impact and
Speaker 1: it was almost a year end. The year end was
Speaker 1: the end the vehicle, so that really impacted the last
Speaker 1: quarter under and the results. Over all. We had great
Speaker 1: momentum leading into that period over trading in the US
Speaker 1: plus very five UK plus ten, so we were trading
Speaker 1: very very well. But obviously when the shop shut as well,
Speaker 1: there's not there's you know, a lot you can do.
Speaker 1: Um we did, we think, we you know, money the
Speaker 1: situation very well. During the lockdown. We kept all of
Speaker 1: our people employed, we kept them all paid, we kept
Speaker 1: them all training. You can never train enough in this category,
Speaker 1: so all over people were doing tons of training and
Speaker 1: we held it together. And you know, I can't wait
Speaker 1: for the stores to start opening it again, which we
Speaker 1: did in the US and in the months of May
Speaker 1: UK was June the UK. We have a very very
Speaker 1: strong online business that doubled during the lockdown period and
Speaker 1: we've been trading about plus fifty five since. UM, so well,
Speaker 1: and we're you know, we're better equipped. I think the
Speaker 1: most were very very active on digital. We we've we're
Speaker 1: very good on CRM. We've got a great database. We
Speaker 1: gave all of our store guy Zoom licenses and training
Speaker 1: so they could sell remotely with Zoom. Very active in digital.
Speaker 1: We did lots of you know, lots of social media.
Speaker 1: You know, what is the way forward? I mean, what
Speaker 1: changes in terms of how you sell. Like you were
Speaker 1: talking about how you guys quickly pivoted and set up
Speaker 1: some of your sales folks to be able to sell
Speaker 1: on zoom. Does something like that stay, Brian? Does it
Speaker 1: make sense? Sure it does, Carol. I think, you know,
Speaker 1: we've all really learned Zoom and teams and the Webbex
Speaker 1: or whatever. I think we've all really learned how to
Speaker 1: communicate that way affect of it can be um. So
Speaker 1: for sure, I think that's days. I think everything digital
Speaker 1: has hugely been accelerated the importance of social media, the
Speaker 1: importance that wed be put a big emphasis on CRM
Speaker 1: so we can keep in touch with all of our
Speaker 1: all of our past clients. UM. So everything digital has
Speaker 1: become very very important, I think for everybody, and I
Speaker 1: think we've accelerated a number of years and what otherwise
Speaker 1: would have been a slow development. So Frank as it
Speaker 1: relates to the digital in your in your digital sales
Speaker 1: and as part of your total sales, what was that
Speaker 1: percentage before the pandemic and kind of work boarding that's
Speaker 1: going to be on the other side. Well, but the
Speaker 1: unusual thing that you might be surprised to hear is
Speaker 1: that the market online in the US is is pretty
Speaker 1: underdeveloped actually for a for new products. So there's a
Speaker 1: very active pre owned market in the US, but not
Speaker 1: so much for new whereas in the UK the market
Speaker 1: for UM for new products from as as strong and
Speaker 1: overall m share of our total groups around where was
Speaker 1: around seven during obviously during lockdown, it's uh, it's it's
Speaker 1: shoes like accelerated in terms of that percentage. We don't
Speaker 1: the biggest brand that we sell as roat Legs, and
Speaker 1: they don't authorize us to sell online, so that will
Speaker 1: always suppress the potential it's there. But for the brands
Speaker 1: that we sell online, we do up to the business.
Speaker 1: So brands like like Carti, Omega, Brightling, Tagure, for those
Speaker 1: brands in the UK we sell a bit of the
Speaker 1: business online and it's a increasing proportion and we have
Speaker 1: big ambitions to do the same in the US. So
Speaker 1: what does Brian. I'm always curious when we you know,
Speaker 1: we're hitting into earning seasons, certainly here in the US,
Speaker 1: and what we want to hear from is, you know,
Speaker 1: leaders about what looks like. Um, I think, you know,
Speaker 1: we're just kind of scrambling and reaching for some kind
Speaker 1: of ideas of what visibility looks like. What what do
Speaker 1: you think one looks like for you? But I think
Speaker 1: for us and for the whole luxury market, the critical
Speaker 1: you know thing is particularly luxury market, actually less so
Speaker 1: for for us directly as the amount of luxury tourism
Speaker 1: that's going to go on, amount of travel that's going
Speaker 1: to going around the world, and I'm getting it and
Speaker 1: less optimistic about that. Actually, I think the earliest so
Speaker 1: that we will see travel get back to normal. Hill
Speaker 1: As twenty two and beyond UM, so I think that
Speaker 1: that will impact the luxury market in total. UM. Everybody
Speaker 1: in luxury has included are very much focused on the
Speaker 1: domestic consumer, which I think the longer term a good
Speaker 1: thing UM and I think both in the UK and
Speaker 1: the US for luxury watches. For US specifically the domestic businesses,
Speaker 1: you know, as we're proving very healthy. In the year
Speaker 1: before a lockdown, it was seventeen our of our total
Speaker 1: business overall, so it's by no means of dependency our
Speaker 1: focus both UK and US is on domestic but it
Speaker 1: was seventeen seven of the seventeen was a Chinese and
Speaker 1: ten was there's other tourists and it was predominantly around London.
Speaker 1: But since then it's been it's been nixt to nothing
Speaker 1: for the summer and we've obviously had to overcome that,
Speaker 1: which we've done and still still growing our business. So, Brian,
Speaker 1: in this environment we founder in what is your primary
Speaker 1: growth strategy and have you had to change strategies here? Really? No,
Speaker 1: we are. We obviously are doing well. We've confirmed all
Speaker 1: of our UM, all of our investments, both capital, we've
Speaker 1: actually stepped up our marketing investment all on digital UM
Speaker 1: so we stay front foot. We relieve we think the
Speaker 1: US markets usually underdeveloped for for what we do, so
Speaker 1: we see great growth prospects in the US. We're opening stores.
Speaker 1: We're opening Monol brand stores that are big partners, will
Speaker 1: open eight of them before before December. UM, So we
Speaker 1: are we are front foot, We're believing in what we're doing,
Speaker 1: what we are working our way through this positively. And
Speaker 1: I think we're going to come out even more positively
Speaker 1: when the when the world gets back to normal. So
Speaker 1: what up up at night? UM, I think we've Obviously
Speaker 1: you do worry that things could go you know, very
Speaker 1: negatively wrong. If there could be a an impact on
Speaker 1: production of all of our product comes from Switzerland, and
Speaker 1: if there was and obviously there was a lockdown in
Speaker 1: Switzerland earlier this year impacting production. If that happened again,
Speaker 1: obviously would it would be a worry. We don't anticipate
Speaker 1: it happening, but obviously could. UM when we look ahead.
Speaker 1: Actually a biggest concern is the next quarter we're going into, UM,
Speaker 1: the threat of the impact of local lockdowns picking up
Speaker 1: the momentum. Concerned about the election in the US. You know,
Speaker 1: I think it's creating instability and kind of look forward
Speaker 1: to that being behind us, but it could impact in
Speaker 1: this quarter. Um, but generally a sleep okay at night.
Speaker 1: That's good to hear from Brian duffy, Ce of Watches
Speaker 1: of Switzerland Group, especially since there are so many stresses
Speaker 1: on today's leaders amid the uncertainty because of COVID nineteen.
Speaker 1: Pretty remarkable that they were able to hold onto their workers,
Speaker 1: amp up their digital strategies. But definitely still concerned about
Speaker 1: the luxury market, especially as that luxury tourist stays away.
Speaker 1: That wraps up the weekend edition of Bloomberg Business Week
Speaker 1: from Bloomberg Radio. Thanks so much for joining us. I'm
Speaker 1: Carol Masser. Be sure to tune into our daily radio
Speaker 1: show Monday through Friday on Bloomberg Radio starting at two
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