WEBVTT - A Closer Look At Impact Investing 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.960 at Bloomberg dot com slash podcast. I want to bring 0:00:21.960 --> 0:00:27.120 in Mayo Engelstein right now, CEO of Open Road Alliance. 0:00:27.160 --> 0:00:31.320 It's a philanthropic organization in an area that we've been 0:00:31.360 --> 0:00:33.880 covering a little bit more lately, and I just find 0:00:33.880 --> 0:00:38.319 absolutely fastening impact investing. Maya, thanks so much for joining us. 0:00:38.800 --> 0:00:41.839 UM talk to us first about the difference between impact 0:00:42.040 --> 0:00:48.280 investing and e s G investing, Right, UM, so E 0:00:48.479 --> 0:00:52.400 s G Environmental Social Governance criteria is really it's a 0:00:52.400 --> 0:00:56.320 set of standards, right, It's a criteria impact investing. I 0:00:56.360 --> 0:00:59.360 think of it is really more about an investment thesis 0:00:59.400 --> 0:01:02.400 for investment strategy, and a good way to think about 0:01:02.440 --> 0:01:05.080 it is to kind of bring it into the conceptual 0:01:05.120 --> 0:01:08.360 and just realize that every investment that ever has been 0:01:08.400 --> 0:01:12.120 made in the history of investing has actually had an 0:01:12.160 --> 0:01:16.120 impact on the world that could be environmental, could be social, 0:01:16.400 --> 0:01:22.800 and that impact could be negative, positive, or neutral. Until recently, though, 0:01:22.840 --> 0:01:26.280 we just never bothered to notice or take into account 0:01:26.360 --> 0:01:30.800 in our investment decision making whether that impact was positive, negative, 0:01:30.840 --> 0:01:32.720 for neutral, and what we as an investor wanted to 0:01:32.760 --> 0:01:35.720 get out of it. So E s G. I think 0:01:35.720 --> 0:01:37.560 of it if you think about it on that continuum 0:01:37.560 --> 0:01:40.240 of negative to positive impact. E s G is really 0:01:40.319 --> 0:01:43.560 a set of criteria that helps us avoid doing harm, 0:01:44.000 --> 0:01:46.759 that make sure that the impacts of our investment are 0:01:46.800 --> 0:01:50.720 not on the negative side. Impact investing, however, is really 0:01:50.720 --> 0:01:53.680 a strategy that says, I don't just want to avoid harm, 0:01:53.720 --> 0:01:56.120 I really want to pursue an investment strategy that is 0:01:56.160 --> 0:02:00.360 proactively and intentionally prioritizing being on the path to end 0:02:00.400 --> 0:02:03.200 of that spectrum. My, can you give us an example 0:02:03.240 --> 0:02:06.440 of maybe a type or an actual investment that you 0:02:06.440 --> 0:02:11.960 guys made that has been successful for you. Yes, UM, 0:02:12.000 --> 0:02:15.680 So Open Road Alliance. The primary area of impact investing 0:02:15.680 --> 0:02:18.280 that we're engaged in is in debt. So we want 0:02:18.320 --> 0:02:22.799 a force short term bridge lung fund primarily supporting businesses 0:02:22.840 --> 0:02:26.359 in the emerging in emerging markets. UM, that's really designed 0:02:26.400 --> 0:02:31.440 to help businesses that are at an inflection point of 0:02:31.480 --> 0:02:35.760 growth and scale and for us that we support a 0:02:35.919 --> 0:02:39.680 variety of impact areas UM, so everything from climate change 0:02:39.720 --> 0:02:44.520 to healthcare UM to gender, gender equity and human rights UM. 0:02:44.560 --> 0:02:47.560 And an example of somebody that we help with our 0:02:47.600 --> 0:02:51.720 investment thesis around this UM would be in the renewable 0:02:51.840 --> 0:02:56.000 energy space, where the renewable energy, particularly in emergency markets 0:02:56.160 --> 0:02:59.079 is of course growing and growing and growing, but they're 0:02:59.080 --> 0:03:02.400 still subject to the same market inefficiencies UM as the 0:03:02.440 --> 0:03:05.640 rest of the market. So, for example, we supported Hubco 0:03:05.720 --> 0:03:09.240 Power UM when they were entering their series raise and 0:03:09.400 --> 0:03:12.320 it was a m at the time, the largest series 0:03:12.400 --> 0:03:17.200 raised for a renewable energy company in East Africa as 0:03:17.320 --> 0:03:20.720 twenty million dollar raise UM, but they needed five hundred 0:03:20.800 --> 0:03:24.040 thousand dollars in order to get to close UM and 0:03:24.040 --> 0:03:27.079 we provided that five thousand dollar loan. They got to close, 0:03:27.240 --> 0:03:30.480 they were able to see the massive expansion UM and 0:03:30.560 --> 0:03:33.080 of course the impact in a company like that is 0:03:33.120 --> 0:03:36.080 baked in UM just given the nature of what they're doing. 0:03:36.240 --> 0:03:38.880 And so how do you actually define success for you? 0:03:38.960 --> 0:03:43.960 Is it returns or is it uh, you know, change, 0:03:45.880 --> 0:03:49.600 It's both, it's both. So we actually think about certainly 0:03:49.600 --> 0:03:53.760 the financial terms. We're a lender, and we are, you know, 0:03:53.800 --> 0:03:56.960 a lender that wants to have the same financial baseline 0:03:56.960 --> 0:03:59.080 as other lenders. We want to need to break even, 0:03:59.480 --> 0:04:01.120 we need to meet it. Are in I r R 0:04:01.800 --> 0:04:05.480 are open MOAD Impact Fund. We do service third party assets, 0:04:05.520 --> 0:04:07.880 we have assets of her management, So we certainly have 0:04:08.000 --> 0:04:11.920 to meet all of those fiduciary responsibilities. But what's different 0:04:11.920 --> 0:04:14.080 about our investors is, of course they want to go 0:04:14.160 --> 0:04:17.240 above and beyond that. They're not looking for maximum profits, 0:04:17.560 --> 0:04:20.400 they are looking for maximum impact in the areas that 0:04:20.440 --> 0:04:23.119 where they're investing. So that really is where we're gonna 0:04:23.880 --> 0:04:27.000 where we go to to look for in terms of 0:04:27.120 --> 0:04:31.799 you know, what is what is happening because of this investment. 0:04:31.839 --> 0:04:34.760 How many kilowatts of clean energy are coming online? How 0:04:34.760 --> 0:04:38.360 many more customers who didn't have access to electricity previously 0:04:38.640 --> 0:04:42.080 now have access to electricity because of this investment. So 0:04:42.200 --> 0:04:44.080 my kind of going forward give us a sense of 0:04:44.080 --> 0:04:46.320 where you think the opportunities are going to be for 0:04:46.880 --> 0:04:49.120 impact investing. Where what areas are you guys are going 0:04:49.160 --> 0:04:52.960 to be looking at. We're gonna be looking in a 0:04:52.960 --> 0:04:54.800 lot of areas. I do think, you know a game 0:04:54.880 --> 0:04:57.920 climate is just a really obvious one and a really 0:04:58.040 --> 0:05:01.599 big one. Um And but I have to say, you know, 0:05:01.760 --> 0:05:04.359 my sense is really the future. When people asked about 0:05:04.360 --> 0:05:07.280 the future of impact investing, my first sense is the 0:05:07.279 --> 0:05:10.760 future of impact investing isn't impact investing, It's just investing. 0:05:11.360 --> 0:05:14.440 Because we have learned over the years, and especially in 0:05:14.480 --> 0:05:17.680 these past couple of years between COVID and inequity and 0:05:17.760 --> 0:05:20.200 everything that has been happening in our country and around 0:05:20.200 --> 0:05:23.880 the world, that you know, this traditional system of making 0:05:23.960 --> 0:05:27.559 investments without being aware of the impact that they're having 0:05:28.160 --> 0:05:30.919 hasn't really worked out for us. And you know, you 0:05:31.000 --> 0:05:33.279 only have to look to of course Business round Table 0:05:33.720 --> 0:05:37.240 and Black Rock and you know, other actors in the 0:05:37.279 --> 0:05:42.599 main field. The convergence of impact and investing it's on 0:05:42.680 --> 0:05:45.120 a collision course. And I don't think that in ten 0:05:45.200 --> 0:05:47.680 years time there's actually going to be any distinction between 0:05:47.720 --> 0:05:52.080 what today we're calling impact investing and what is called investing. 0:05:52.200 --> 0:05:54.760 It's just all gonna be the same thing. Well, you know, 0:05:55.040 --> 0:05:57.919 I was talking with a Leam Ramtula from Developing World 0:05:57.920 --> 0:06:01.920 Market recently and I was thinking the distinction I would 0:06:01.920 --> 0:06:03.880 make isn't between impact investing in E s G. But 0:06:03.920 --> 0:06:06.640 really between impact investing and charity, I would rather do 0:06:06.839 --> 0:06:09.520 impact investing. If I can make a difference in someone's 0:06:09.560 --> 0:06:14.400 live LIFs and UM, then just donate money. It makes 0:06:14.440 --> 0:06:18.600 more sense absolutely, And if you're looking at it from 0:06:18.640 --> 0:06:21.680 the charity and of the perspective, there is a very 0:06:21.680 --> 0:06:25.800 clear economic argument to be made. Write a grand charity. 0:06:26.080 --> 0:06:30.160 It's a guaranteed loss, guaranteed zero percent return. Impact investing 0:06:30.760 --> 0:06:34.719 from an impact traditional charity perspective has huge leverage building 0:06:35.720 --> 0:06:40.680 because you automatically have that opportunity to capital for more impact. Hey, Maya, 0:06:40.720 --> 0:06:43.400 thank you so much for joining us. Maya Winkelstein, CEO 0:06:43.640 --> 0:06:47.240 of Open Road Alliance, will have more coming up. This 0:06:47.480 --> 0:06:53.800 is Bloomberg. Now let's bring in Jason Pride. He is 0:06:53.880 --> 0:06:57.960 chief investment officer of Private Wealth over Glen me They 0:06:57.960 --> 0:07:00.160 have forty billion dollars a little more than four any 0:07:00.200 --> 0:07:03.560 billion dollars of assets under management out of Philadelphia. Jason, 0:07:03.600 --> 0:07:06.320 thanks so much for joining us. Well to be on 0:07:06.480 --> 0:07:12.240 with you guys. Let's talk about UM, the peak growth narrative, 0:07:12.680 --> 0:07:17.440 and it's one that it seems like market participants are 0:07:17.520 --> 0:07:22.200 convinced about and nonetheless UM they continue for the most 0:07:22.200 --> 0:07:24.920 part to bid up stocks. Okay, right now we're down 0:07:24.960 --> 0:07:27.360 a little bit, but we um continue to bump up 0:07:27.360 --> 0:07:30.760 against new record highs. What's your view, So we might 0:07:30.800 --> 0:07:32.560 have a little bit of an opinion here. We think 0:07:32.560 --> 0:07:35.920 that the peak growth narrative is Look, it's it's in 0:07:36.000 --> 0:07:39.040 one way it's a fact, and the other way it 0:07:39.080 --> 0:07:42.200 actually doesn't matter that much to investors. And here's the 0:07:42.240 --> 0:07:46.520 reason why. Peak growth comes about from from a realization 0:07:46.560 --> 0:07:48.880 or a reality that when you're growing up of a 0:07:48.920 --> 0:07:53.000 low base that that occurred during the previous recession, your 0:07:53.040 --> 0:07:55.040 growth rate is going to hit levels that you just 0:07:55.080 --> 0:07:57.600 don't see during the regular portion of the cycle. You 0:07:57.680 --> 0:08:00.960 hit those peak growth levels, and then one you annualize 0:08:01.000 --> 0:08:04.600 past that low base, you actually back off from those levels. 0:08:04.680 --> 0:08:08.320 This happens every single time we are coming out of 0:08:08.320 --> 0:08:12.240 a recession. It is a very regular occurring thing and 0:08:12.400 --> 0:08:16.560 something that actually historically doesn't matter to markets once you 0:08:16.600 --> 0:08:18.920 get past. And the reason for that is once you 0:08:19.000 --> 0:08:22.080 settle back down from these these high growth rates coming 0:08:22.120 --> 0:08:25.160 off the low base, you settle into a sustainable growth 0:08:25.320 --> 0:08:28.960 rate that ends up being acceptable for investors. All of 0:08:29.000 --> 0:08:33.040 the past recovery cycles we've been through have seen peak growth. 0:08:33.080 --> 0:08:35.600 We've seen the market through move right past peak growth 0:08:35.840 --> 0:08:39.480 and realize that behind peak growth is an underlying base 0:08:39.559 --> 0:08:41.840 of growth that ends up being acceptable to them because 0:08:41.840 --> 0:08:44.080 it ends up being in the middle of an ongoing 0:08:44.080 --> 0:08:47.440 economic expansion. We don't expect this period to be any 0:08:47.520 --> 0:08:51.840 different than that, all right, given that background, Jason, where 0:08:51.840 --> 0:08:54.920 are you, folks at Glenn Meat, Are you positioning your 0:08:54.920 --> 0:08:58.440 equity portfolio is more for kind of a reopening cyclical 0:08:58.559 --> 0:09:01.680 trade or are you, like a lot of folks sticking 0:09:01.720 --> 0:09:04.360 with those big top line stories, whether it's an Apple 0:09:04.440 --> 0:09:07.679 or an Amazon or something along those lines. Look, I 0:09:07.760 --> 0:09:10.280 see it's actually a mix of those those two things. 0:09:10.520 --> 0:09:13.320 One thing is is we are not in the full 0:09:13.440 --> 0:09:16.280 force recovery at this point in time. We are when 0:09:16.360 --> 0:09:18.960 year past it, we are entering into the kind of 0:09:19.000 --> 0:09:22.520 like the ongoing expansion period. Having said that, there's a 0:09:22.559 --> 0:09:24.840 little bit more gas in the tank on on the 0:09:24.880 --> 0:09:27.920 recovery um. There are portions of their market that are 0:09:27.960 --> 0:09:31.760 not fully back to previous lowest, portions of the economy 0:09:31.800 --> 0:09:34.040 that are not fully back to the previous levels. We 0:09:34.160 --> 0:09:37.840 continue to face the COVID pandemical a little bit, and 0:09:37.840 --> 0:09:40.319 that's holding back certain parts of the economy. So we 0:09:40.360 --> 0:09:43.040 think there's actually a little bit left in the reopening trade. 0:09:43.280 --> 0:09:45.440 So I would say on the whole we're pretty balanced 0:09:45.440 --> 0:09:48.320 between the two aspects. Would maybe a little bit of 0:09:48.320 --> 0:09:52.320 a tilt, a very marginal tilt towards the reopening trade 0:09:52.320 --> 0:09:54.960 because there's a little bit more left in the in 0:09:55.000 --> 0:09:57.200 the tank there for us as we go through the 0:09:57.240 --> 0:10:00.680 next I would say six to twelve months aread. I 0:10:00.720 --> 0:10:04.080 think I would also underline that that what seems to 0:10:04.080 --> 0:10:07.000 be coming out of Washington right now with the the 0:10:07.080 --> 0:10:13.640 upcoming um UH Infrastructure and Reconciliation Bill, is likely going 0:10:13.679 --> 0:10:19.439 to be helpful for those more reopen oriented traded industrial cyclicals, 0:10:19.440 --> 0:10:23.680 domestically oriented companies than the large global multinationals. It seems 0:10:23.720 --> 0:10:25.760 to be a little bit more punitive to the large 0:10:25.800 --> 0:10:30.360 global multinationals. On the tech side. How much help do 0:10:30.400 --> 0:10:35.000 you expect the industrials, How much fiscal help do you expect? Well, 0:10:35.000 --> 0:10:37.520 it's a it's a pretty big bill. I think we're 0:10:37.559 --> 0:10:41.839 looking at mainly from the tech side. Um they peered 0:10:41.880 --> 0:10:44.000 back some of their expectations on how they're going to 0:10:44.080 --> 0:10:48.240 be applying the global intangeable income taxes and lifted the 0:10:48.280 --> 0:10:53.199 expectation for base statutory corporate tax rates, but still the 0:10:53.280 --> 0:10:56.880 bigger multinational tech players are gonna get harder, hit harder 0:10:56.920 --> 0:11:01.559 than the more domestically oriented industrial play. And look, it's 0:11:01.559 --> 0:11:03.719 an infrastructure spend. At least a good portion of it, 0:11:03.800 --> 0:11:09.280 seven billion dollars in infrastructure oriented spending is going to 0:11:09.360 --> 0:11:12.920 be going through and that should benefit UM cyclical industrials 0:11:12.920 --> 0:11:16.640 more than it does the big tech place. How do 0:11:16.679 --> 0:11:19.520 you guys think about valuation here in this market, Jason? 0:11:19.559 --> 0:11:21.480 A lot of folks are saying, you know, even with 0:11:21.600 --> 0:11:24.320 the ten yield tent tenure yielding in at one point 0:11:24.400 --> 0:11:27.720 three roughly, boy, this is an expensive market. How concerned 0:11:27.720 --> 0:11:30.840 are you about that? And we we tend to agree 0:11:30.840 --> 0:11:34.600 with that. Even when you adjust for interst rate short 0:11:34.720 --> 0:11:38.600 term and long term interest rates, equities on a global 0:11:38.640 --> 0:11:42.360 basis are sitting in like in the eightieth percentile range 0:11:42.400 --> 0:11:46.160 of valuation. So on the high side, domestic stocks are 0:11:46.160 --> 0:11:49.400 actually sitting above the nine percentile, with the growth oriented 0:11:49.400 --> 0:11:54.800 place UM sitting actually closer like seven PERCENTIUL so kind 0:11:54.800 --> 0:11:59.920 of nosably territoryile and above tends the result in red 0:12:00.080 --> 0:12:03.680 used for returns over the next one three and five years. 0:12:04.280 --> 0:12:07.199 Eightieth percentile does it though, which is pretty interesting. The 0:12:07.360 --> 0:12:10.480 note and what that what that conveys is actually there's 0:12:10.520 --> 0:12:13.959 not really everything in the market is overvalued. It's actually 0:12:14.040 --> 0:12:17.679 more most concentrated those large growth names. When you look 0:12:17.679 --> 0:12:19.960 at large value, it's more reasonable. When you get down 0:12:20.000 --> 0:12:23.240 the small it's more reasonable when you look abroad, International, APTA. 0:12:23.880 --> 0:12:25.520 It was some of the better areas that we think 0:12:25.840 --> 0:12:28.720 set out there actually set on in Asia where look 0:12:29.000 --> 0:12:31.439 they've they've been hit for reasons, but they are the 0:12:31.480 --> 0:12:34.760 most attractive areas out there in the global marketplace. All right, Jason, 0:12:34.760 --> 0:12:37.280 thank you so much for your perspective in your comments. 0:12:37.320 --> 0:12:41.040 Jason pride ce io of Private Wealth for Glenn Mead. 0:12:41.520 --> 0:12:47.719 They are based in the town of Brotherly Love. That's Philadelphia, Pa. Well, 0:12:47.760 --> 0:12:49.960 we always love to talk M and A deals, and 0:12:50.000 --> 0:12:52.480 there's a big one in the text base and it 0:12:52.520 --> 0:12:55.760 involves a company that has got a product called mail 0:12:56.200 --> 0:12:59.559 Chimp into it. It's going to acquire email market and 0:12:59.640 --> 0:13:03.280 mail Chimp for twelve billion dollars. I don't know where 0:13:03.280 --> 0:13:05.480 to go with this, but let's start with our leader 0:13:05.720 --> 0:13:08.520 in all things tech that's on a rag running. He's 0:13:08.520 --> 0:13:11.040 a Senior Software and I T services animals for Bloomberg 0:13:11.080 --> 0:13:16.360 Intelligence on I know into it. Okay, application software company 0:13:16.400 --> 0:13:19.520 buying some more software. What is a mail Chimp and 0:13:19.520 --> 0:13:24.160 why is it worth twelve billion dollars? It's a good one, Paul, 0:13:24.440 --> 0:13:26.800 if you look at it. Everybody in the software space 0:13:26.840 --> 0:13:29.160 wants to be like Salesforce. They want to go by, 0:13:29.320 --> 0:13:31.880 go out and buy other software assets so that they 0:13:31.880 --> 0:13:34.960 can sell in then got installed base. And that's exactly 0:13:35.000 --> 0:13:38.160 what in chet is doing. Mail Chimp is an email 0:13:38.200 --> 0:13:42.520 marketing software company. So you know, if you want to um, 0:13:42.559 --> 0:13:45.360 you know, send me spam every day about you know, 0:13:45.440 --> 0:13:47.640 some kind of product that you have. You know, you 0:13:47.800 --> 0:13:51.800 use one of these software products. I wonder what the 0:13:51.920 --> 0:13:56.920 name comes from, is it uh? Is there a history 0:13:57.160 --> 0:14:02.800 of monkeys delivering mail? Or I have no idea, but 0:14:02.800 --> 0:14:05.120 but hands down, if you think about it right now, 0:14:05.360 --> 0:14:08.640 how are people reaching out you. Nobody's mailing you pamphlets 0:14:08.640 --> 0:14:10.840 and trying to get you to buy some stuff. If 0:14:10.880 --> 0:14:13.600 you have a large installed base of customers that already 0:14:13.679 --> 0:14:16.480 use your product, this is the best way for you 0:14:16.520 --> 0:14:20.000 to you know, sell into another thing that they will 0:14:20.040 --> 0:14:23.000 buy from you and keep on increasing your recurring revenue 0:14:23.160 --> 0:14:26.200 from that customer piece, and everybody wants to target the 0:14:26.320 --> 0:14:28.480 SNB market right now. So, Matt, I don't know if 0:14:28.480 --> 0:14:29.760 you know this, but whenever I see an M and 0:14:29.840 --> 0:14:32.040 A trade go across the Bloomberg terminal, the first thing 0:14:32.120 --> 0:14:34.840 I do is hit M A go Well, then I 0:14:34.960 --> 0:14:37.560 go to look at the advisors, what investment banks are 0:14:37.560 --> 0:14:39.760 working on this deal and for the seller here for 0:14:39.920 --> 0:14:45.320 mail Chimp, Frank Quatrone and Catalyst still doing big, big 0:14:45.360 --> 0:14:48.440 deals in tech. Just one of the all time grades 0:14:48.640 --> 0:14:52.480 in technology investment banking on a rug. So what's really 0:14:52.880 --> 0:14:54.640 you know, talk to us about into it? Here, here's 0:14:54.640 --> 0:14:56.720 the company. I got a hundred and fifty billion dollar 0:14:56.800 --> 0:15:00.360 market cap. Most people, including me, don't really know much 0:15:00.480 --> 0:15:03.040 about it. Talk us about this company and kind of 0:15:03.160 --> 0:15:07.960 where they're growing. Uh, what's behind this company? Since you 0:15:08.080 --> 0:15:09.640 look at it, I mean, they are the the you 0:15:09.680 --> 0:15:12.640 know everything tax, turbo tax and then they that's really 0:15:12.680 --> 0:15:15.600 their bread and potter. But just like it is for 0:15:15.640 --> 0:15:19.120 any other even large installed based software company. You know, 0:15:19.120 --> 0:15:22.360 whether that's a derby, whether that's salesforce, whether that's into it. 0:15:22.440 --> 0:15:24.480 Right now you have to figure out how can I 0:15:24.480 --> 0:15:28.120 sell another product? To my customer base. And that really 0:15:28.200 --> 0:15:30.560 is the game here. You know, a value investor would 0:15:30.560 --> 0:15:32.440 have said, why don't you just go out and buy 0:15:32.440 --> 0:15:35.440 your stock every you know, every every year and use 0:15:35.520 --> 0:15:39.120 the free cast for that. But Salesforce has shown that 0:15:39.160 --> 0:15:41.720 buying a lot more products it does help in the 0:15:41.760 --> 0:15:46.040 long run. It helps in customer retention, your turn rate 0:15:46.080 --> 0:15:48.520 goes down, and then you can, you know, increase prices 0:15:48.520 --> 0:15:51.400 when you bundle these things, and that's what the CEO 0:15:51.560 --> 0:15:54.560 is doing. They bought a company called credit Karma a 0:15:54.640 --> 0:15:57.280 little while ago for seven billion dollars and this is 0:15:57.440 --> 0:15:59.720 you know, in the same string of acquisitions. This is 0:15:59.760 --> 0:16:04.080 a can pick one alright, So what's what's next? Then? 0:16:04.480 --> 0:16:07.200 I guess is there are they looking for pretty much 0:16:07.240 --> 0:16:11.040 anything that they can fit into And is finance just 0:16:11.120 --> 0:16:14.840 super easy right now? I think finance is super easy 0:16:15.160 --> 0:16:17.320 right now. And for all of these software companies, what 0:16:17.400 --> 0:16:20.120 they're looking at is what is their niche and market 0:16:20.520 --> 0:16:23.280 And for introit it is the SMB market. So whenever 0:16:23.360 --> 0:16:26.560 you see an economy, uh, you know, rebound, you see 0:16:26.600 --> 0:16:29.360 the number of small businesses go up, and this is 0:16:29.400 --> 0:16:32.320 where the sweet spot is for Inteuit. They want to 0:16:32.360 --> 0:16:34.760 be able to not just do the tax software for 0:16:34.800 --> 0:16:37.440 these companies. They want to sell additional products. And now 0:16:37.440 --> 0:16:39.600 whether this is you know, let's say right now they're 0:16:39.680 --> 0:16:43.000 using email marketing software. You know, potentially they could think 0:16:43.000 --> 0:16:47.040 about something in advertising, something in the front office customer service, 0:16:47.360 --> 0:16:49.960 something in the back office such as finance. So they 0:16:49.960 --> 0:16:52.720 can they can figure out many areas where a small 0:16:52.760 --> 0:16:56.440 and medium business would need more software products. You know, Matt, 0:16:56.480 --> 0:16:59.720 I just pump put up the camp chart, which is 0:16:59.760 --> 0:17:01.440 something you like to do for these names. Look at 0:17:01.440 --> 0:17:04.240 the last five years, boy into it's had a compoundent 0:17:04.320 --> 0:17:06.720 and your return about forty a year versus the SMP 0:17:06.840 --> 0:17:09.880 of eight. So it's up another fifty percent this year. 0:17:09.920 --> 0:17:14.040 So another great software story. That's all I has. All 0:17:14.040 --> 0:17:16.160 the companies he follows all are up like fifty percent 0:17:16.240 --> 0:17:20.000 a year every year. Well, it's uh, just a fascinating 0:17:20.200 --> 0:17:23.280 time for these companies. And um, it kind of reminds 0:17:23.280 --> 0:17:26.640 me a little bit of those days when Frank Quatrone 0:17:27.040 --> 0:17:29.800 was the prince of Silicon Valance. You know, I mean 0:17:30.359 --> 0:17:32.240 for a lot of our a lot of bankers today 0:17:32.280 --> 0:17:35.600 probably are too young to remember Frank Quatrone. Um he 0:17:35.720 --> 0:17:38.879 got embroiled in some real issues just as he was 0:17:38.920 --> 0:17:43.960 all vindicated. Well yeah, yeah everything, uh huh okay. So 0:17:44.119 --> 0:17:47.439 definitely a fascinating, a fascinating story of Frank and of 0:17:47.880 --> 0:17:50.600 into It and Male Champa Rona. Thanks so much for 0:17:50.760 --> 0:17:57.800 joining us from Bloomberg Intelligence. Apples holding a product event 0:17:58.000 --> 0:18:02.920 today one pm. Lost ree time, maybe iPhone thirteen upgrade, 0:18:02.960 --> 0:18:06.000 maybe a watch upgrade. So my question is do I 0:18:06.040 --> 0:18:07.680 need to run over to the Apple store on Fifth 0:18:07.720 --> 0:18:10.960 Avenue and upgrade all my Apple stuff? Joining us is 0:18:11.000 --> 0:18:14.520 on on Shriny Boston, Senior Semiconductor on Hardware Analysts. He 0:18:14.600 --> 0:18:17.720 covers Apple for Bloomberg Intelligence, joining us here in the 0:18:17.720 --> 0:18:21.080 Bloomberg Interactive Broker studio. So Anna, what's is there a 0:18:21.119 --> 0:18:24.240 big deal today or is this just kind of, you know, 0:18:24.280 --> 0:18:28.399 some upgrades on the edges. Look, it's going to be evolutionary, right, 0:18:28.440 --> 0:18:32.840 So we've said this. There are a billion iPhone users 0:18:32.840 --> 0:18:35.920 in the install base and the fact that we upgrade 0:18:35.960 --> 0:18:40.200 about twenty of them every single year is phenomenal. So 0:18:40.280 --> 0:18:43.720 what you want to do is produce a product that 0:18:43.880 --> 0:18:48.480 is revolutionary, that drives that refresher great up what we 0:18:48.560 --> 0:18:52.199 saw with the revolution last with the iPhone twelve was 0:18:52.280 --> 0:18:56.040 the five G move, and we expect the momentum to continue. 0:18:56.240 --> 0:18:59.320 We think we're not We're nowhere near done yet with 0:18:59.359 --> 0:19:02.320 the super Psyche. So this is a this is an 0:19:02.320 --> 0:19:05.240 evolutionary story. So the answer to your question is, it 0:19:05.240 --> 0:19:07.400 would be nice if you went out and upgraded everything 0:19:07.720 --> 0:19:11.159 as quickly as possible. But we're expecting, you know, fifty 0:19:11.160 --> 0:19:13.840 one million units in counter quarter three and about eighty 0:19:13.920 --> 0:19:16.439 nine millions to be sold in counter quarter four. But 0:19:16.920 --> 0:19:19.720 in the grand scheme of things, this is an evolutionary upgrade, 0:19:20.080 --> 0:19:25.520 more five G, more momentum, continuation of teams. But the 0:19:25.560 --> 0:19:28.960 Watch is going to be revolutionary, isn't it? Or at 0:19:29.040 --> 0:19:33.119 least the shape is going to be different. It's bigger, um, 0:19:33.119 --> 0:19:37.760 it should be capable of more? Does it tell time? Look? 0:19:38.560 --> 0:19:40.960 You know you you bring up a good point, Matt Miller. 0:19:41.160 --> 0:19:44.520 Is that you brought up the connectivity portion, the halo effect. 0:19:44.560 --> 0:19:48.720 You know, iPhone drives, Watch, iPhone, drives, Macmac drives, iPhone, everything, 0:19:48.800 --> 0:19:53.959 drive services. Right, So the connectivity um or the connectivity 0:19:54.000 --> 0:19:58.040 between all of these products within the closed the walled garden, 0:19:58.080 --> 0:20:01.520 if you may, is the wholly grade for Apple to 0:20:01.640 --> 0:20:05.080 the extent that I can get you upgraded on the watch, 0:20:05.119 --> 0:20:07.440 which hasn't seen that much of an upgrade UM in 0:20:07.920 --> 0:20:11.600 recent times. Is a is a great advancement. The fact 0:20:11.680 --> 0:20:15.480 that services, despite the epic drama, we can make that stickier. 0:20:15.480 --> 0:20:18.879 It's a high margin business. We can expand that. That's 0:20:19.119 --> 0:20:22.600 if I can do that consistently, If I'm Apple every 0:20:22.640 --> 0:20:26.520 single time, a single product every year or every other 0:20:26.600 --> 0:20:30.320 year in some cases, and increase the attached rate, that's 0:20:30.400 --> 0:20:34.199 what drives iPhone tripments and services grow. You made a 0:20:34.240 --> 0:20:37.159 second point which was interesting, which not many people are 0:20:37.160 --> 0:20:43.080 talking about, is the gating factor is supply constraints right UM, 0:20:43.320 --> 0:20:46.760 and the chip shortage is here to stay, unfortunately, and 0:20:46.960 --> 0:20:49.720 the visibility of that through be maybe through first half 0:20:49.760 --> 0:20:53.359 twenty two. So depending on how strong demand is and 0:20:53.400 --> 0:20:57.119 where demand comes from and what other products are have 0:20:57.320 --> 0:21:01.200 high demand, there could be a re percussions even two 0:21:01.240 --> 0:21:04.440 companies like Apple UM which saw some spill over into 0:21:04.960 --> 0:21:07.360 iPhone and three Q. Alright, so I'm trying to get 0:21:07.400 --> 0:21:09.879 Tom Kane to upgrade the five G. I'm trying to 0:21:09.920 --> 0:21:13.280 ma can download his movies and his music much faster. 0:21:14.160 --> 0:21:18.959 Is five G really a super cycle driver? I'm just 0:21:19.040 --> 0:21:22.160 not feeling it. Yeah, you know, it's interesting because one 0:21:22.200 --> 0:21:25.639 of the things that unlike remember the two G two 0:21:25.640 --> 0:21:28.639 three G conversion was voice to data. Right, three G 0:21:28.720 --> 0:21:32.800 two four G was huge upgrades from a speed perspective 0:21:33.000 --> 0:21:36.240 from in the four G in the in the data landscape, 0:21:36.480 --> 0:21:40.960 four G two five G is yes, about more speed, 0:21:41.240 --> 0:21:44.879 but also about a variety of more connections. It's just 0:21:44.960 --> 0:21:49.120 not about the handset anymore. It's about handset, it's about autos, 0:21:49.119 --> 0:21:54.000 it's about industrial IoT, but the services associated with all 0:21:54.080 --> 0:21:58.760 of those new expansive products and product categories. We're not 0:21:58.840 --> 0:22:00.959 there yet, okay, So this is going to be a 0:22:01.000 --> 0:22:05.200 long journey, and it's come first to the consumer. And 0:22:05.440 --> 0:22:07.600 at the margin we're going to be able to see 0:22:07.960 --> 0:22:11.640 faster speech. We are not there with the true millimeter 0:22:11.760 --> 0:22:14.760 wave implementation of five G either, so all of this 0:22:14.880 --> 0:22:18.240 is going to take time. Um, we're not seeing any 0:22:18.560 --> 0:22:22.359 dramatic art poo increases. So you're going to download your 0:22:22.359 --> 0:22:24.640 movies faster. You're going to be able to stream when 0:22:24.640 --> 0:22:27.480 you're on the train in New Jersey transit. That's the answer. Paul. 0:22:28.040 --> 0:22:30.240 By the way, I remember hearing all this about three 0:22:30.280 --> 0:22:33.440 G as well. And and now when I see three 0:22:33.440 --> 0:22:36.240 G on my phone, It's like a nightmare scenario. It 0:22:36.280 --> 0:22:39.119 doesn't doesn't work anymore. We're we're spoiled, Punch. I can 0:22:39.160 --> 0:22:41.159 tell you that, you know, the even four G might 0:22:41.200 --> 0:22:43.720 seem slow compared to a year from now with five. 0:22:44.400 --> 0:22:47.280 So bottom line on on, I want to go out 0:22:47.359 --> 0:22:49.879 and get myself a new iPhone. Have been waiting and 0:22:49.920 --> 0:22:52.600 waiting and waiting. I want to go and get the 0:22:52.600 --> 0:22:56.840