Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelly, I'm Carol Masser. Welcome to the weekend edition
Speaker 1: of Bloomberg Business Week. Over the next couple of hours,
Speaker 1: we've got news of the week, insights from the magazine
Speaker 1: and more, and a couple of stories that are going
Speaker 1: to freak you out right and some maybe you'll learn
Speaker 1: something about some brands that you know you won't get
Speaker 1: too freaked out, including how one private equity investor. I'm
Speaker 1: very proud of this story, one big on Lulu Lemon.
Speaker 1: It's not scary. They came back to fix the company.
Speaker 1: There were some moments of doubt though, Yeah, but they
Speaker 1: made a lot of money along the way in terms
Speaker 1: of those private equity investors. So here's the freak quotient
Speaker 1: if I may. And this is a story from Austin Carr.
Speaker 1: It's about Silicon Valley. They're listening in. They are, I mean,
Speaker 1: we all of us. You and I both have these
Speaker 1: devices in our homes. Pretty much everyone we know, I
Speaker 1: feel like, has a Google and Alexa or whatever it
Speaker 1: is that's sitting there on your kitchen counter or whatever. Well,
Speaker 1: apparently that device isn't just listening to you. There are
Speaker 1: humans who are sometimes listening to you as well. This
Speaker 1: is going to freak you out there all listening, You're
Speaker 1: gonna be worried. Plus it's holiday time and we got
Speaker 1: to visit with two rockets. They stopped by the studio
Speaker 1: and it is amazing. They're in all their regalia even
Speaker 1: and if you check out our respective Twitter feeds you
Speaker 1: can see them. They're so good at posing. Oh my god,
Speaker 1: everybody at Bloomberg was so jealous that we had them
Speaker 1: and they didn't. But first, remember the Bloomberg fifty. We
Speaker 1: were celebrating that in just the past couple of weeks. Well,
Speaker 1: we caught up with one of the members of that list,
Speaker 1: the CEO and co founder of Beyond Meat, Ethan Brown.
Speaker 1: What about this year surprised you the most? What was
Speaker 1: the most challenging? You know, it always is around continue
Speaker 1: to educate not only the consumer of the media, around
Speaker 1: just how healthy and how much our company is driven
Speaker 1: by the human health imperative. If you look at the
Speaker 1: products we're creating, take the Duncan sausage for example, that
Speaker 1: product is fifty percent less fat. It has percent less
Speaker 1: saturated fattent less sodium and has more protein and more iron.
Speaker 1: So when you're beginning with a blank canvas and you're
Speaker 1: able to build a piece of meat directly from plants,
Speaker 1: you can leave out a lot of the things that
Speaker 1: you wouldn't want to be consuming on a daily basis,
Speaker 1: such as cholesterol, and you can lower things like saturated fat,
Speaker 1: and you can provide the consumer with a very healthy
Speaker 1: product that they get to enjoy. Yet continue to move
Speaker 1: the ball forward year every year and making the products
Speaker 1: healthier and healthier. So as we get into you'll see
Speaker 1: us continue to drive toward goals that will enable the
Speaker 1: consumer to eat what they love, but do it in
Speaker 1: a way that's healthier for them. We'll talk about that
Speaker 1: because I feel like that comes up often about maybe
Speaker 1: this becoming even a healthier product because there is still
Speaker 1: a fair amount of sodium and so on in it.
Speaker 1: Do you guys think about doing some kind of reformulating
Speaker 1: to lower calories, are a lower sodium amount? Is that
Speaker 1: kind of in the future. So if you look at
Speaker 1: the DNA of the company, we are an innovation driven company.
Speaker 1: We produce all of our products here in the US,
Speaker 1: and we have our our innovation center here in Los Angeles.
Speaker 1: We call that Innovation Center of the Manhattan Beach Project.
Speaker 1: We do that because we're near Manhattan Beach, but more importantly,
Speaker 1: weren't to voke that sense of urgency and scale that
Speaker 1: occurred in the Second World War with the Manhattan Project itself.
Speaker 1: Were brought together the very best scientists, the best engineers,
Speaker 1: the best managers and gave him a clear goal, which
Speaker 1: is to build meat directly from plants. Now, when you're
Speaker 1: doing that, you're always improving, and we have these parameters
Speaker 1: we call the fat, flavor, aroma, punters, and texture. We
Speaker 1: were constantly driving towards making the products better in each area,
Speaker 1: and nutrition would of course be part of that, but
Speaker 1: it's also about marketing and helping people understand the products.
Speaker 1: So if you look at it beyond Burger, for example,
Speaker 1: that has sixteen percent daily value of sodium, not sixty
Speaker 1: but six, which is well within reason for many many
Speaker 1: meals that folks will consume, such as two flower tortillas
Speaker 1: or half a couple of mare narrow sauce, etcetera. So
Speaker 1: a lot of it is just separating the misinformation and
Speaker 1: hype from reality. This product has an extremely healthy product.
Speaker 1: It's one that I consume almost daily. It's something I
Speaker 1: feel very good about giving to my own children. And
Speaker 1: so it's really about let's educate consumers about the health
Speaker 1: of our products and about the process. We're very proud
Speaker 1: of our process. If you look at how we produce
Speaker 1: meat from from plants. Instead of running a lot of
Speaker 1: plant material through animals and the antibiotics that go without
Speaker 1: other hormones depending on the species of veterinary drugs, et cetera,
Speaker 1: what we're doing is taking that protein directly from the plant.
Speaker 1: We're running it through heating, cooling, and pressure, and that
Speaker 1: resets the bond so that they take on that fibrous
Speaker 1: texture of muscle. That's it for me. That's a much
Speaker 1: better process than one that we can be proud of.
Speaker 1: We offer complete transparency. You'd be welcome to come to
Speaker 1: our facilities, knock on the door and we'll give you
Speaker 1: a tour. People should be able to see where and
Speaker 1: how their food is made. And we believe very strong
Speaker 1: in that principle. And so Ethan, speaking of a different
Speaker 1: sort of process, walk us through the process of assessing
Speaker 1: these partnerships. You know, you name checked some of the
Speaker 1: best known when it comes to you know, fast food.
Speaker 1: You've also got some partnerships in casual dining. How does
Speaker 1: that work? Because pun intended, it feels like everybody wants
Speaker 1: a piece of this market right now, right so you
Speaker 1: always want to align yourself with the marquete players. And
Speaker 1: that's what we've done from the beginning of the company.
Speaker 1: So when we decided to go into retail way back
Speaker 1: in two thousand nine, the first company who called was
Speaker 1: Whole Foods, and then we've been able to clif right
Speaker 1: out through Kroger, etcetera. But when then you look at
Speaker 1: our venture history, the first venture firm we worked with
Speaker 1: the client of Perkins and now we have a great
Speaker 1: list including Great Point Ventures and many others. Um But
Speaker 1: if if you're now looking at the fast food space
Speaker 1: or a quick serve restaurant space, you also want to
Speaker 1: adopt the same philosophy. Who are the marquee players and
Speaker 1: how do you become uh of service to them? And
Speaker 1: that's what we're able to do. Whether it's McDonald's, whether Subway,
Speaker 1: whether it's KFC or Duncan. We're constantly looking Carl's Jr. Hearties, etcetera.
Speaker 1: We're constantly looking to serve the very best partners in
Speaker 1: the space so we can grow with them. What's the focus.
Speaker 1: Is it retail or food service or will it be
Speaker 1: a split going forward? Our focus is entirely on the consumer.
Speaker 1: It's our relationship with the consumer that makes the business
Speaker 1: so special. We listen to what they say. They told
Speaker 1: us no GMOs, they told us nothing artificial, they said,
Speaker 1: keep everything natural. So that's what we do um and
Speaker 1: that makes it harder. By the way, we would be
Speaker 1: much easier genetically modified plant material to make it, uh
Speaker 1: take on the text r and appearance and aroma of
Speaker 1: of of animal protein. But we won't do that. And
Speaker 1: so we're constantly focused on what the consumer wants. We'll
Speaker 1: need to consume where they are. So if it's if
Speaker 1: it's it's quick ser of restaurants will be there for them.
Speaker 1: If it's retailed before them. Right now, it's about and
Speaker 1: market will tell us which direction. Okay, so it could
Speaker 1: change going forward, right and that's beyond meat CEO Ethan Brown.
Speaker 1: For our full conversation, download this week's Bloomberg Extra podcast.
Speaker 1: We've covered a wide range of topics. I mean, look,
Speaker 1: this is a company that is in the middle of
Speaker 1: so many megatrons. It's essentially a lifestyle brand. Yeah, and
Speaker 1: this is why he's part of the Bloomberg fifty list.
Speaker 1: But I also think this is gonna be a big
Speaker 1: story for as well. Provocative remarks in the magazine this
Speaker 1: week with the headline the problem with female CEOs isn't
Speaker 1: that they are female, It's that they are CEOs. This
Speaker 1: is one that everybody needs to stop and read, and
Speaker 1: you're going to talk about it after you read it.
Speaker 1: We've been talking about that big time, So now we're
Speaker 1: gonna talk about it with the author, Rebecca Greenfield. She
Speaker 1: runs all of our diversity coverage here. Edwin Rate, the
Speaker 1: managing diversity team recently promoted to run that. Congratulations. Yeah,
Speaker 1: I'm I'm living the truth that I write about women.
Speaker 1: We have to rise through the ranks exactly. And you
Speaker 1: really put it out there in this story in a
Speaker 1: lot of ways and capture a moment that's really important.
Speaker 1: Give us the thesis. Yeah. So I noticed something that
Speaker 1: was happening, which was there are lots of companies that
Speaker 1: are run and founded by women, but they also have
Speaker 1: these missions that are you know, we are all for
Speaker 1: gender equality, and our products are going to create this
Speaker 1: gender equality, and that's great um, but then there would
Speaker 1: be these scandals where employees would say, actually, I'm a
Speaker 1: woman who works at this company, and you are not
Speaker 1: practicing what you preach um. And we saw this happen
Speaker 1: for a few years. We saw it happen at Thinks,
Speaker 1: which was a company that makes underwear for women to
Speaker 1: wear whether they're on their period. We saw this happen
Speaker 1: at Nasty Gal, which was like a retailer for women.
Speaker 1: And then more recently we've seen it or I wrote
Speaker 1: about how it's kind of happening at the wing right now,
Speaker 1: the coworking space, and there's been a huge backlash to
Speaker 1: these companies because there's this kind of irony I think happening,
Speaker 1: or like you're not practicing what you're preaching. So I'm
Speaker 1: exploring that phenomenon in this piece and saying, yeah, that's
Speaker 1: going to happen, because women when they become CEOs act
Speaker 1: a lot like men when they become CEOs. Well, there's
Speaker 1: so much there's a lot of talk to you. No,
Speaker 1: I love it. I love it, and you know, I
Speaker 1: do want to first let's start with some of these
Speaker 1: are younger company startups, and I think this is a
Speaker 1: valid point that when you're a startup, like you're costly
Speaker 1: putting out fires. I mean that's an element of it. Yeah, definitely.
Speaker 1: I think when you're a startup, no matter who you are,
Speaker 1: what you run, what your mission is, you are under
Speaker 1: a lot of constraints. Right, You get a lot of
Speaker 1: money and you have to grow really quickly. You're learning
Speaker 1: how to scale something. And I think what they're learning
Speaker 1: is when you scale you it's hard to have you know,
Speaker 1: feminism be your mission. That doesn't square with creating a big,
Speaker 1: success full company, and maybe it shouldn't have to, or like,
Speaker 1: why would we expect that. One of the things that
Speaker 1: I really took away from this that I thought was
Speaker 1: such a in many ways profound point. And you're dealing
Speaker 1: with this every day, as we said running the diversity coverages.
Speaker 1: There is a distinct difference, and keep me honest here
Speaker 1: in the in the telling of this, between the benefits
Speaker 1: of having women on a board or women in management
Speaker 1: versus diversity. That seems to be at the core of
Speaker 1: what you're arguing here, right. Yeah, So I think there's
Speaker 1: this fallacy that we want more women to lead companies
Speaker 1: because women are more compassionate than men, They're more ethical,
Speaker 1: they're more and moral, they create safer workplaces, and that's
Speaker 1: just not true. The research has found that's not true.
Speaker 1: And in fact, that's just another gender stereotype. UM. I
Speaker 1: talked to a researcher who just put it out there
Speaker 1: and said, women aren't different than men in the way
Speaker 1: that they lead. UM And that's the reality. And the
Speaker 1: benefits of diversity come not because women are different than men,
Speaker 1: because they're not that different than men, but because they're
Speaker 1: diverse and that they are different than the ten men
Speaker 1: who are in the room. And that's what we want
Speaker 1: from diversity. We want a mixture of different types of people,
Speaker 1: different point of views to kind of push back on
Speaker 1: the type of homogeneous thinking that leads to bad decisions. Well,
Speaker 1: and that's exactly it. That one of the things that
Speaker 1: we're all trying to fight as managers in many ways
Speaker 1: is group think. Right. You know that you have the
Speaker 1: same experience. You have a great line in your piece
Speaker 1: that talks about, you know, ten white dudes who all
Speaker 1: went to the same three business schools, they're going to
Speaker 1: kind of think the same way. And so what you
Speaker 1: need is this diversity of opinion and experience that doesn't
Speaker 1: necessarily just mean a different sort of group things exactly.
Speaker 1: And I mean Sally Crocheck has said, I mean that's
Speaker 1: this is one of her lines that she thinks that
Speaker 1: that kind of group things exactly what led to the
Speaker 1: financial crisis. And I should note that Wall Street still
Speaker 1: looks pretty much the same as it did before the
Speaker 1: financial crisis. And so I think, yeah, that's that's the
Speaker 1: real benefits of diversity. And that's a lot of these companies,
Speaker 1: these startups are also not diverse. They're just a lot
Speaker 1: hiring people that are like themselves, other women, their experience,
Speaker 1: their friends. They hire the people they know, they hire
Speaker 1: the people in their networks. They often talk about how
Speaker 1: they hire a lot of women, which is great because
Speaker 1: you know, most companies don't look like that. So their
Speaker 1: company is going to be diverse and a group of
Speaker 1: other companies, but it can lead to the same group thing. Rebecca,
Speaker 1: I think this is so important. You and I have
Speaker 1: had this conversation because I'm very anti like, Okay, you
Speaker 1: have the women's group, you have the LGBTQ community, like
Speaker 1: separating everybody into groups, like unless we all work together
Speaker 1: and really, you know, everything is together, and really think
Speaker 1: about diversity with all of its different layers. I mean,
Speaker 1: that's what it's all about, right, that's the goal. Yeah.
Speaker 1: I mean I think it can help when you aren't
Speaker 1: in a company where you're not part of the majority group,
Speaker 1: to talk to other people about your experiences. Um, that
Speaker 1: can help you. But I think when everyone's siloed, you're
Speaker 1: not getting the benefits of someone else having a different perspective.
Speaker 1: There was a study I talked about in here where
Speaker 1: it talk Look, you know, there's a body of research
Speaker 1: going back saying boards with women on them act more ethically.
Speaker 1: So people have kind of jumped to the conclusion that
Speaker 1: women are more ethical, But this researcher I talked to
Speaker 1: you said, that's not actually what we think is happening.
Speaker 1: What we think is happening is that somebody's in the
Speaker 1: room who again is seeing things from a different perspective
Speaker 1: and is pushing back against the group think that makes
Speaker 1: unethical decisions, or the group just by having an outside
Speaker 1: member in it isn't going to be so bold and
Speaker 1: doing things that are unethical. They kind of check themselves.
Speaker 1: And so that's the kind of benefits of diversity that
Speaker 1: I think we want to see. So one of the
Speaker 1: things that I think folks might react to when they
Speaker 1: read the story is the US and we've seen this
Speaker 1: with me too to some extent, sort of the backlash
Speaker 1: to the backlash right, and this idea that all right, well,
Speaker 1: we're just giving up on women running companies now. So
Speaker 1: that didn't work, So let's go back to where we
Speaker 1: were before. Do you worry about that sort of happening
Speaker 1: in the world. Um, I hope that's not the message
Speaker 1: of this story is getting across. Um. Men, companies run
Speaker 1: by men act like this all the time. I can
Speaker 1: name so many. I mean, there's Uber, there's we Work,
Speaker 1: There's lots of companies run by men that have similar problems.
Speaker 1: So I don't think women are any worse than men.
Speaker 1: I just think it's a setback for us to set
Speaker 1: them to this higher standard because when they don't mean
Speaker 1: it them, you know, they're penalized even more than that.
Speaker 1: That's Rebecca Greenfield, who drives our diversity coverage in the magazine,
Speaker 1: remarks provocative remarks in the magazine this week. Yeah, I
Speaker 1: really liked this because it's a nuanced argument in many ways. Obviously,
Speaker 1: gender in the workplace different genders in lee leadership is
Speaker 1: much more complicated than just like, hey, let's have more
Speaker 1: women's CEOs. And I think the message here is it's
Speaker 1: really about good, great leadership if you will not whether
Speaker 1: you're a man or woman running a company. Shares in
Speaker 1: Lulu Lemon Athletica. Man, they have been on quite a tear,
Speaker 1: almost doubling in the past year. And Jason, you know
Speaker 1: this story, so you wrote this story. It's part of
Speaker 1: a remarkable turnaround. Well, and it is. And it involves
Speaker 1: private equity. We talked about private equity a lot in
Speaker 1: the context of those big, well known names Blackstone, kr
Speaker 1: Carlisle and whatnot. This is a firm called Advent. They
Speaker 1: were in it at the beginning, they got out, made
Speaker 1: a lot of money. Then they went back in and
Speaker 1: they did even better. I sat down exclusively with advanced
Speaker 1: managing partner and chairman David Mustafer, as well as Calvin McDonald,
Speaker 1: he is the CEO of Lulu Lemon. We caught up
Speaker 1: at one of the Lulu stores in New York City. How,
Speaker 1: for lack of better term, sort of broken was it
Speaker 1: when you sort of got back in? I mean, I
Speaker 1: think the business was had its challenges, but at the
Speaker 1: core the issue was alignment and so part of the
Speaker 1: power that that private equity can bring is that alignment.
Speaker 1: And so in this case, we had a situation where
Speaker 1: the founder wasn't aligned with the board and the management team,
Speaker 1: and so you've seen some turnover of the senior management.
Speaker 1: You also didn't have the company uh in sync with
Speaker 1: the ability to make investments. They were following Wall Street
Speaker 1: and thinking about what they needed to do that quarter.
Speaker 1: And so I feel like what we saw as this
Speaker 1: fundamental opportunity was to help regain that alignment and put
Speaker 1: the platform in place so that the company could establish
Speaker 1: a really strategic proposition, not just here and now, but
Speaker 1: part of the real opportunity is to help them get
Speaker 1: out of the penny a share game and make some
Speaker 1: of these investments that had been deferred. Right, I want
Speaker 1: to get to the moment where Calvin, you come into
Speaker 1: the company, you do have a series of of C
Speaker 1: e O s um so leadership becomes something at the
Speaker 1: at the top level that you also have to deal
Speaker 1: with in terms of the the various issues you have
Speaker 1: to address. Firstly, we had a situation where the board
Speaker 1: really was interested, loves this company and wanted to see
Speaker 1: its succeed and so in that regard when we came back,
Speaker 1: we were able to create some of that alignment pretty
Speaker 1: easily and help create the UM, the ability to put
Speaker 1: some of these ideas in place, the idea of a
Speaker 1: longer term plan. But you're right, I think some of
Speaker 1: those challenges with the founder made it hard and so
Speaker 1: UM at the point that UM that the founder exited
Speaker 1: the company into was in fifteen, we were really able
Speaker 1: to begin assembling a world class management team and so
Speaker 1: UH with a CFO who is initially with Stewart now CEO,
Speaker 1: and then talent along the way, leading to people like
Speaker 1: Glenn and Calvin and Son and a host of really
Speaker 1: world class business leaders. And the exciting part is that
Speaker 1: this business had that potential, it just needed the opportunity
Speaker 1: and the the framework. From this point and beyond, it
Speaker 1: really feels like the business is just getting started. At
Speaker 1: that moment where you where you do start to dig in, Calvin,
Speaker 1: I mean, what's what's the opportunity do you see to
Speaker 1: sort of take it to the next level. So for me,
Speaker 1: the first assessment was as an opportunity here to be
Speaker 1: even more than what Lulu Lemon is, not just with
Speaker 1: the North American internationally UH. And I think the clear
Speaker 1: resounding answers absolutely. I mean, the vision we have today
Speaker 1: is to nite a community of people to live the
Speaker 1: sweat life UH. And we're going to express that not
Speaker 1: just through incredible product that will keep developing because there's
Speaker 1: so much opportunity in white space for us to develop into,
Speaker 1: but also through our strategy of events on what we
Speaker 1: do with our grow initiatives and seeing what Calvin and
Speaker 1: the team have already done with the manifestation of this
Speaker 1: some of this next step vision in Chicago and with
Speaker 1: the membership and loyalty program, you already are beginning to
Speaker 1: see some of the seeds of thinking about what the
Speaker 1: broader vision might look like. And so what does that
Speaker 1: look like going forward? Because it does feel like we're
Speaker 1: at a very interesting moment in the world of retail.
Speaker 1: We have a huge runway of growth. UM. Not only
Speaker 1: is our women's business continuing to grow at double digit
Speaker 1: with a lot of growth opportunity being entering into new
Speaker 1: categories or we mentioned to and from OTC that doesn't
Speaker 1: even really in our women's uh category exist uh, and
Speaker 1: into our omniguest experience with our digital platform and as
Speaker 1: good as we are, there's a ton of opportunity to
Speaker 1: even more. This is an emotional brand, and our online
Speaker 1: continues to be more transactional and then finally, you know,
Speaker 1: expanding into markets. We still have a lot of opportunity
Speaker 1: in North America, not to mention what's happening internationally and
Speaker 1: in Europe as well as in China. We feel we're
Speaker 1: early innings and everything we're trying to create, and that's
Speaker 1: advent Managing partner and chairman David Mussafer and Kelvin McDonald,
Speaker 1: Lulu Lemon's CEO, we caught up at a store here
Speaker 1: in New York City. Listen. It's a remarkable tale, candidly
Speaker 1: that had not been told before. The stock obviously, anybody
Speaker 1: who's watching it has seen it rise. But the money
Speaker 1: behind it, what it took to fix it, that's a
Speaker 1: whole different story. I think this is a great business
Speaker 1: school case study, right of a company that was had
Speaker 1: done so well, had some problems and really came back,
Speaker 1: and you can look at it at so many different
Speaker 1: levels well, and it's a well known brand and one
Speaker 1: that people really keep an eye on for trend setting,
Speaker 1: but also for investors. Obviously, issues a big Tech. It
Speaker 1: is definitely one of the big themes of a future
Speaker 1: story this week about how Silicon Valley's biggest companies Jason
Speaker 1: fold millions of people into letting temp workers listen in
Speaker 1: on their most intimate moments. I'm creeped out. It is
Speaker 1: a must read for sure. It's the cover story this week.
Speaker 1: And actually you've got to just look at the cover
Speaker 1: and you're gonna be really You're gonna be really creeped out.
Speaker 1: But you're gonna want to know more. Austin Carr is
Speaker 1: here to do just that, to tell us more about it,
Speaker 1: all right, take us back, because this is really about
Speaker 1: a device or a series of devices that so many
Speaker 1: of us have in our homes, and they're listening totally.
Speaker 1: I mean, this is really a big story about how
Speaker 1: these devices like Amazon Echo and their virtual assistant Alexo,
Speaker 1: or if you use Apple Syrie or Google Assistant, what
Speaker 1: have you. If you have these devices in your home
Speaker 1: or on your phone, this is a story about how
Speaker 1: these whole all these things work. And I think they
Speaker 1: these companies, these tech companies and Silicon Value presented these
Speaker 1: products and sort of automated they were sort of using
Speaker 1: machine learning and computers to answer our every voice command,
Speaker 1: And it turns out there's actually a vast apparatus of
Speaker 1: human listeners who are helping to improve these services. When
Speaker 1: voice commands are submitted to their servers, in some cases,
Speaker 1: they're actually rerouted to data centers where humans are actually
Speaker 1: transcribing your every word in order to improve the speech
Speaker 1: recognition on these services. Yeah, I think there definitely was
Speaker 1: an assumption that there's just some little robot that's like
Speaker 1: listening and then spitting things back at me. So tell
Speaker 1: me about these humans. I mean, what kind of conversations
Speaker 1: are they listening to? What are they hearing? Um? Because
Speaker 1: you guys, you guys talked to a lot of people.
Speaker 1: We talked to dozens and dozens of contractors and and
Speaker 1: these are people who are placed everywhere from Ireland to India. UM.
Speaker 1: In the case of Apple, they relied on a A
Speaker 1: I T firm in Cork, Ireland, were just you know,
Speaker 1: dozens and dozens of contractors will be listening in on
Speaker 1: people's recordings and they told us that they felt deeply
Speaker 1: uncomfortable listening to this material. Often it was very very
Speaker 1: personal information. They were called children in many instances sharing
Speaker 1: personal information like phone numbers or street addresses, which you
Speaker 1: can imagine parents concern over that they overheard couples having
Speaker 1: sexual engaging in sexual activity very private conversations in your
Speaker 1: kitchen and bedroom. So really the most sort of alarming
Speaker 1: thing is just how invasive this is and the fact
Speaker 1: that the people on the front lines of this behavior,
Speaker 1: doing this work, who are often the most low paid
Speaker 1: workers in this supply chain, they found it very alarming
Speaker 1: and emotionally unethical. So what do the companies say, Because
Speaker 1: this has been a story that you guys have been
Speaker 1: following really through the course of the year, and as
Speaker 1: Carol said, it probably is one of the defining stories
Speaker 1: in many ways of twenty nineteen, broadly speaking, the discomfort
Speaker 1: that we're starting to have with the relationship with technology.
Speaker 1: What did the companies say, Yeah, I'm glad you asked
Speaker 1: about that, because one of the most profound things for
Speaker 1: us was the disparity between what the contractors were telling
Speaker 1: us in terms of them feeling very uh that this
Speaker 1: was very morally dubious, versus what the the tech engineers
Speaker 1: and executives were telling us when we started reporting this.
Speaker 1: It was almost like they didn't think this was a
Speaker 1: big deal. They just didn't anticipate it. They would argue,
Speaker 1: this was very par for the course in the industry.
Speaker 1: Essentially everyone's doing it. Um. They said that this is
Speaker 1: just really a way of fixing what they called quality
Speaker 1: assurance issues. They described it as similar to you know,
Speaker 1: when your app crashes on your Mac, you get the
Speaker 1: option type you want to report this bug. They just
Speaker 1: described it as a quote voice bug. Um. At a
Speaker 1: broader level, they also say that hey, just f y,
Speaker 1: these systems are only recording when you activate them, and
Speaker 1: the vast majority of voice commands are actually handled by computers,
Speaker 1: with just a small uh number of them needing human input. Input. Now,
Speaker 1: whether or not that makes you feel more comfortab about
Speaker 1: using the services, there's no doubt that millions and millions
Speaker 1: of recordings are still being transcribed by humans. All right,
Speaker 1: And I'm not going to excuse the companies, But what's
Speaker 1: the transparency, like when you sign up for things, is
Speaker 1: it in there in the fine print somewhere that this
Speaker 1: might happen originally? Not? I mean, they very broadly um
Speaker 1: sort of said, you know, this could be used to
Speaker 1: improve these services. Apple might use it to improve or
Speaker 1: enhance SIRIE for example, but it didn't explicitly say that
Speaker 1: humans might be listening. And I think that was a
Speaker 1: major oversight, if not an intentional one. A lot of
Speaker 1: the companies that we talked to said that that there
Speaker 1: sort of stance on this for the past years, especially
Speaker 1: in the case of Apple or Amazon, was sort of
Speaker 1: to um inform, not alarm. In other words, if they
Speaker 1: did disclose that in their terms and conditions, they might
Speaker 1: have turned off users from using these products in the
Speaker 1: first place. Because and I'm glad you you put it
Speaker 1: in that way, because in a lot of cases, you know,
Speaker 1: we all call people, you know, and we get that,
Speaker 1: you know, when we call for customer services something to say,
Speaker 1: this call may be recorded for quality assurance. It feels
Speaker 1: like they were just sort of putting it into that bucket.
Speaker 1: But that feels when that happens pretty voluntary. And and
Speaker 1: by the way, you know, you're having a business conversation
Speaker 1: of some sort, even if you're talking about your bank
Speaker 1: account or whatever, you're kind of okay with it. And
Speaker 1: it's very clear, uh, to Carroll's point, this seems not
Speaker 1: quite on but not not clear um. And also the
Speaker 1: other issue is that these devices often are triggered accidentally. Um,
Speaker 1: you know my my fiance, for example, her name is Alexis.
Speaker 1: You can imagine that the Amazon Echo we have in
Speaker 1: our home is triggered quite frequently inadvertently. Now for everyone
Speaker 1: listening to this or watching it on TV, there Amazon
Speaker 1: Echo just went on exactly, I apologize that one of us, well, yeah,
Speaker 1: not the Echo, but but or okay, Google, or if
Speaker 1: you say hey Siri. There's many ways that these can
Speaker 1: be accidentally triggered. And one of the things that the
Speaker 1: contractors kept saying to us was, hey, you know what,
Speaker 1: we heard so many instances where the recordings coming through
Speaker 1: It was so clear that the users had no idea
Speaker 1: um and what they found most alarming wasn't the more
Speaker 1: provocative ones, but it was actually the most mundane just
Speaker 1: you know, one contract contractor described an instance of just
Speaker 1: a father and son having a conversation after school and
Speaker 1: how that it can feel so invasive. You know, they
Speaker 1: have no business recording this material and let alone transcribing it.
Speaker 1: Did these workers know what they were going to be
Speaker 1: do when they were hired exactly? It was unclear at
Speaker 1: the early days. Some toy not I think it became
Speaker 1: clear what they were doing is they were going along.
Speaker 1: But I will just say, these are, you know, not
Speaker 1: the highest paid workers. And as I said before, this
Speaker 1: is emotionally taxing labor um. So when they're doing this firsthand,
Speaker 1: I think they're realizing as they're going along, Wait a minute,
Speaker 1: do I feel comfortable with this? Some people compared it
Speaker 1: to sort of Another person said, this has felt like
Speaker 1: the Tower of Babel in a way. Um, but at
Speaker 1: the same time, you know, these aren't the folks that
Speaker 1: are necessarily on the highest part of the food chain
Speaker 1: here that they can't just sort of rebel and push back.
Speaker 1: They did express concerns to managers and they they some
Speaker 1: of them just said that they were unreceptive. They said,
Speaker 1: transcribe everything that comes through. So let me ask you this.
Speaker 1: I mean again, you guys have been following this so closely,
Speaker 1: and I know, Austin, you look across the text sphere,
Speaker 1: often sent to the furthest corners of the world to
Speaker 1: uh explore this. Where do you think we are sort
Speaker 1: of in the in this moment of questioning almost existentially
Speaker 1: our relationship with tech companies. This feels right at the
Speaker 1: heart of that. What do you think happens next? You know,
Speaker 1: I think this is one of the biggest tests that
Speaker 1: we've seen in the Silicon Valley in the last couple
Speaker 1: of years. They just went through years and years of
Speaker 1: the most severe scrutiny from Washington, um all these concerns
Speaker 1: about everything from Cambridge Analytic to the elections to you know,
Speaker 1: how much data their minding from our every clique and
Speaker 1: Internet browsing habits. And even after all that, they still
Speaker 1: seem oblivious to the fact that there was something wrong.
Speaker 1: Was setting up a vast apparatus of human listeners that
Speaker 1: could legitimately hear the things that we were saying inside
Speaker 1: of our homes. The government does this, we'd be appalled.
Speaker 1: We have government, and I think that that's a very
Speaker 1: especially when you consider that Shoo Me bay Do Ali
Speaker 1: Baba are turning out roughly three million smart speakers per quarter.
Speaker 1: One could imagine China not being so scrupulous about what
Speaker 1: they could listen into. And we haven't uncovered evidence of that,
Speaker 1: but there's no doubt that these these devices can be hacked,
Speaker 1: you know, and I think that's a major concern, and
Speaker 1: that one that was just a bit naive for tech
Speaker 1: company not to think we're was there and yet I've
Speaker 1: got one. You've got them, You've got them, right, I
Speaker 1: mean the American public. I mean there's a statin here.
Speaker 1: By three, they'll be eight billion voice controlled devices out there,
Speaker 1: one for every person on Earth. I mean, so people
Speaker 1: are buying up. We love the convenience we do. Are
Speaker 1: we willing to give up? Are we getting to that
Speaker 1: point where we're, okay, I'll give up my privacy for this.
Speaker 1: You know, there's actually a term for that, which is
Speaker 1: the sort of uh, it's sort of like analysis proalysis.
Speaker 1: Are just so much privacy concerns, and these things are
Speaker 1: so integrated with our lives it's hard to give them up.
Speaker 1: A few research study actually found that about six of
Speaker 1: cost Americans are very concerned with data privacy when it
Speaker 1: comes to smart speakers. At the same time, one fourth
Speaker 1: of all the U S public owns them. So there's
Speaker 1: this this this really harsh disparity between our concerns for
Speaker 1: privacy and the fact that we just, you know what,
Speaker 1: We're just gonna give up and own a smartphone, own
Speaker 1: an Amazon Echo and so forth. And it's, uh, it's
Speaker 1: a sign that customers don't know how to protect themselves.
Speaker 1: Are the companies changing anything in terms of with this
Speaker 1: pushback and the more that you guys and others report
Speaker 1: on all of this, they have indeed, Um, you know
Speaker 1: a lot of these companies that they didn't do good
Speaker 1: enough disclosing these terms to their cost commers. Uh. They've
Speaker 1: introduced new disclaimers and their privacy policies more often features
Speaker 1: for certain services. UH. And Google has said that for
Speaker 1: Google Assistant, they're actually pausing human transcription, although they did
Speaker 1: declined to comment on whether they were collecting voice data
Speaker 1: in other ways, which is interesting. But I think, you know,
Speaker 1: it's very clear at this juncture that they did not
Speaker 1: do enough for the past seven or eight years, and
Speaker 1: especially for a company like Apple. Tim Cook has been
Speaker 1: out there saying privacy is a human right. How do
Speaker 1: they get this wrong? How did they just obliviously build
Speaker 1: this this this large sort of group of people who
Speaker 1: are listening in on people's conversations. I feel like that
Speaker 1: just goes against their their core values absolutely, and you
Speaker 1: do wonder how oblivious they actually were in many ways.
Speaker 1: That's Austin Carr great story. We all have these home devices,
Speaker 1: we think that nobody's listening. But this story shows you
Speaker 1: that folks are actual humans are well, and this is
Speaker 1: really the latest installment in a series of stories that
Speaker 1: the tech team has been doing that has really sort
Speaker 1: of brought this to light. And one of the things
Speaker 1: that I find most interesting and kiddly troubling is most
Speaker 1: people read this and say, WHOA, I didn't know that
Speaker 1: was going on. And the tech companies, when confronted with
Speaker 1: this essentially like, yeah, cool. I mean, we're just trying
Speaker 1: to like make the product better. What's the deal. Yeah,
Speaker 1: we'll see if this changes in specially with Washington watching
Speaker 1: very closely, with these tech companies are up to. This
Speaker 1: holiday season will be the first for the Apple Car,
Speaker 1: the highest profile new credit card in years, and it's
Speaker 1: pretty exciting for Apple Jason absolutely, and for people who
Speaker 1: are using it, they seem to be big fans. It's
Speaker 1: like the sexy new card to have, but retailers maybe
Speaker 1: not so excited because it's in that category where they
Speaker 1: have to pay more. Jenny Seraine here with this New
Speaker 1: York City to explain the twist and turns of this
Speaker 1: story are fascinating. Tell us about the heat on the
Speaker 1: retail side of this. Basically, Visa and MasterCard have several
Speaker 1: different tiers, and so they have their kind of basic
Speaker 1: credit cards that maybe don't have a ton of rewards.
Speaker 1: The next step up for Visa, it's called Visa Signature.
Speaker 1: For MasterCard is MasterCard World. Um, and they have that
Speaker 1: kind of premium premium tier. It's most instantly being ranked
Speaker 1: in society. Yes we are, yes, c this is no different, um.
Speaker 1: And and so for Visa it's called Visa Infinite. For
Speaker 1: MasterCard it's called MasterCard World Elite. And every time you
Speaker 1: swipe a Visa Infinite or a MasterCard World Elite card,
Speaker 1: it costs the retailer a little bit more in swipe fees. Um.
Speaker 1: And basically it's been years and years of kind of
Speaker 1: this huge rewards war that's gone on between banks, and
Speaker 1: so more and more consumers are showing up at the
Speaker 1: point of sale with these cards, and retailers are like,
Speaker 1: we've had enough, um, and they're just ready to kind
Speaker 1: of you know, take this to Visa and MasterCard and say,
Speaker 1: and here comes Apple joining the part. Here comes Apple.
Speaker 1: It's a very elite card. Um, it's the MasterCard World
Speaker 1: Elite and um, yeah, it's it's expensive for retailers. It's
Speaker 1: you know, had this huge high profile launch we saw
Speaker 1: I think it was ten billion in lines extended to
Speaker 1: consumers and that kind of first month that it was
Speaker 1: out so very popular. Card um and retailers are just like,
Speaker 1: this is you know, just another time, another thing that
Speaker 1: we have to kind of spend money on and and
Speaker 1: you know, yeah, to you guys this point, it's holiday season. Um,
Speaker 1: they're trying their best to compete against the Amazons of
Speaker 1: the world and this is kind of one more thing
Speaker 1: in the negative bucket. Well, when we talked about this
Speaker 1: story on our radio show, our Daily Radio showed during
Speaker 1: the week, like I think both of us were like,
Speaker 1: oh yeah, I didn't realize that there was this incredible
Speaker 1: tears in terms of designations for credit cards, right, Um,
Speaker 1: and they come with them different fees in terms of
Speaker 1: what the merchants paid, but the elite cards, the assumption
Speaker 1: is all right, this is somebody who probably makes more
Speaker 1: money and they're going to spend more. So sorry, merchant,
Speaker 1: you're gonna pay a little bit more. Yeah, so you'll
Speaker 1: win in the end. Kind of is a thinking and
Speaker 1: that I think has historically been what VI said, master
Speaker 1: Card and the big banks say to the merchants when
Speaker 1: they complain about this. They say, look, these people come in,
Speaker 1: they have way more buying power. They're usually um, their
Speaker 1: average ticket sizes are much bigger than the ticket sizes
Speaker 1: for those more basic credit cards. UM. And so that's
Speaker 1: been kind of the justification over the years. Now retailers
Speaker 1: have started to come back and say, well, look, if
Speaker 1: I'm a gas station or if I'm a grocer, people
Speaker 1: with these high rewards credit cards, they're not actually spending
Speaker 1: more on groceries. They're not spending more on gas because
Speaker 1: they have these rewards. And so those kinds of retailers
Speaker 1: are just like, look, we've reached our breaking point. Our
Speaker 1: margins are thin already. We need a break here, right,
Speaker 1: because this can really essentially eliminate or really dramatically shrink
Speaker 1: the margin, especially when you're talking about grocery or other
Speaker 1: places where that margin is already so thin. Yeah, for sure,
Speaker 1: and so it's um. I mean, grocery is kind of
Speaker 1: the biggest example. And we actually saw the country's largest grocery, Kroger,
Speaker 1: take a really harsh stance on this earlier this year
Speaker 1: UM or last year. They actually banned certain visa card
Speaker 1: they banned all visa credit cards from certain stores. Um.
Speaker 1: And so you're seeing more and more take that stance. Now,
Speaker 1: Visa and Kroger they've reached an agreement. Kroger is now
Speaker 1: accepting Visa and all of its stores. But I think
Speaker 1: this is something we're going to see more and more
Speaker 1: of grocers and retailers in general just really feeling this pinch.
Speaker 1: The other tricky side to this is that, Okay, so
Speaker 1: these credit cards they have different levels, different designations, right,
Speaker 1: and as a merchant, you can say, okay, I'm just
Speaker 1: gonna take the lower tier. You either take it all
Speaker 1: or you take none. Right. Yeah, So that's the big
Speaker 1: sticking point right now. Out Um, the rule is actually
Speaker 1: called honor all cards, so if you take one Visa
Speaker 1: credit card, you have to take them all. And merchants
Speaker 1: hate that rule. They say, you know, we should be
Speaker 1: able to say we're okay with taking these basic credit cards,
Speaker 1: but we're not really willing to take these more premium,
Speaker 1: high end cards. Um. But Visa makes that a rule
Speaker 1: of kind of accepting any of the cards MasterCard as well. Um.
Speaker 1: And in two thousand five, the merchants actually it's been
Speaker 1: it's been fourteen years. Merchants actually took this to court. Um.
Speaker 1: And it's been kind of rumbling around in the courts
Speaker 1: ever since. UM and it kind of remains a sticking
Speaker 1: point in negotiations for settling that case. Well, and I
Speaker 1: think we were talking about this as well. I mean,
Speaker 1: historically this has been an issue with American Express too,
Speaker 1: because their rates have tended to be higher than Visa MasterCard, right. Yeah. Well,
Speaker 1: so it's interesting actually, as we've seen this kind of
Speaker 1: profusion of these elite cards on the Visa and MasterCard networks,
Speaker 1: those rates have actually come much more in line. So
Speaker 1: it's no longer and you know Master am X has
Speaker 1: actually come down a lot too, so it's actually no
Speaker 1: longer that much more for merchants, because back in the
Speaker 1: day that was the thing. I mean, I remember there
Speaker 1: were a lot of places but at work in an
Speaker 1: American Express for many years, and I remember it was
Speaker 1: such a thing because we would go to places and
Speaker 1: they wouldn't take the card as they called it, and
Speaker 1: it would and the merchant or the restaurant or whoever
Speaker 1: it was would say, listen, the fees are higher for me.
Speaker 1: This is why I'm not doing it. Yeah, And so
Speaker 1: that's um, it's actually it's It's strange, how you know,
Speaker 1: between amex coming down and Visa MasterCard coming up, it's
Speaker 1: a lot, a lot closer in terms of the rates
Speaker 1: that merchants are paying. And so you've seen that in
Speaker 1: the acceptance. You know, AMX is accepted accepted at almost
Speaker 1: as place as a Visa and master Card these days.
Speaker 1: So where's all of this going? Because what's interesting is
Speaker 1: we have a ton of guests on our show, our
Speaker 1: daily radio show, where I think they say, we like Visa,
Speaker 1: we like MasterCard because they're processing so many transactions and
Speaker 1: you know, they get a little piece of all of them,
Speaker 1: but there's so many going on. But I am curious,
Speaker 1: you know, so they're doing okay, So where's all of
Speaker 1: this going. It's hard to bet against Visa and MasterCard.
Speaker 1: I mean, they are just they're so ubiquitous. They are
Speaker 1: part of every transaction. Um, so it's hard to bet
Speaker 1: against them. I mean, I do think that merchants, um,
Speaker 1: you know, they're starting to kind of really coalesced around
Speaker 1: this on our all cards thing, So we could it's
Speaker 1: so hard to guess how it could turn out, but
Speaker 1: we could see a future where maybe if they went
Speaker 1: out on this on our all cards role going away
Speaker 1: where you show up and at the checkout they say,
Speaker 1: we'll take your basic visa card, but we're not going
Speaker 1: to take that Chance card. And that's Jenny's serene. We're
Speaker 1: pretty sure she never sleeps because she's so incredibly prolific.
Speaker 1: And this story, I feel like it's gonna be We
Speaker 1: say this about a lot of things, a very twenty
Speaker 1: nineteen story, Goldman Apple getting together, and it's a little
Speaker 1: trickier than maybe the anticipated. Well this holiday season the
Speaker 1: first for the Apple card, and I've got to say
Speaker 1: when this story came out on the Bloomberg terminal, it
Speaker 1: was among the most read, so everybody was checking it out.
Speaker 1: The Department of Events had stepped up its scrutiny of
Speaker 1: Chinese Americans and made growing distress between the two nations
Speaker 1: and Jason as a result and snaring undeserving individuals. This
Speaker 1: story is a troubling one. It is very troubling, and
Speaker 1: the details, as you get into them, really take you
Speaker 1: places you don't expect to go. Peter Waldman one of
Speaker 1: our Projects and Instigations reporters. He wrote the piece. It's
Speaker 1: in this week's Business Week. Peter joins us from San Francisco.
Speaker 1: So Peter, tell us what you found. So basically, this
Speaker 1: is a continuation of work I've been doing all year
Speaker 1: long on the whole question of whether or not we
Speaker 1: are overreacting in this country to the threat of Chinese
Speaker 1: espionage and specifically the threat of UM theft of intellectual property. UH.
Speaker 1: This week's Business Week story is about an Army engineer
Speaker 1: who was harassed essentially by the FBI and military intelligence
Speaker 1: from the Army. This is a civilian engineer, by the way,
Speaker 1: UM and ultimately his security clearance was taken away. After
Speaker 1: over twenty years of stellar performance, including developing UM software
Speaker 1: system that the n s A uses for communications and
Speaker 1: eavesdropping and things like that. And this stellar in science,
Speaker 1: thist Um lost in security cliance, which essentially forced him
Speaker 1: to retire now he was of retirement age. It wasn't
Speaker 1: the biggest body blow, but he was humiliated and he
Speaker 1: was accused of disloyalty, and he had lots of ties, friends,
Speaker 1: neighbors who were asked many times if he was a
Speaker 1: spy for China. He is a Chinese American individual, and
Speaker 1: he suffered a great deal as a result of this.
Speaker 1: I can tell you the end of the story, which
Speaker 1: essentially is that ultimately the Pentagon decided he was not
Speaker 1: a spy and was innocent of their suspicions. So it's
Speaker 1: kind of a sad story. Well, and so this individual
Speaker 1: Waist sue, I guess the question is, and this goes
Speaker 1: to how you kicked it off, Peter? You know, are
Speaker 1: we overreacting? Is this an isolated incident, you know, where
Speaker 1: folks like Waists are being targeted um in a wrong way,
Speaker 1: or are we seeing a lot of that happening? So
Speaker 1: perhaps both. It's hard to say whether the thousands of
Speaker 1: Chinese American individuals who have come under suspicion for espionage
Speaker 1: in some form or another. Maybe it's exporting materials to
Speaker 1: China that are on some uh list of of stuff
Speaker 1: that's not supposed to go to certain entities the so
Speaker 1: called entities list, or outright theft of intellectual property aren't
Speaker 1: even worse espionage on government secrets. So there are legitimate cases.
Speaker 1: There's no question that China is overreaching, that that China,
Speaker 1: on their part has come to make demands and expectations
Speaker 1: of overseas Chinese um to work for the motherland when
Speaker 1: called upon, And that's kind of put a target on
Speaker 1: people's backs. But in terms of what's happened on this
Speaker 1: side of the Pacific, the distrust level, and that's the
Speaker 1: real key word. I think in this story. The level
Speaker 1: of distrust of Chinese Americans has just sword in recent years.
Speaker 1: And colleague in the Bloomberg Data Analytics department, Andrea our Tar,
Speaker 1: did an enormous job of filtering, analyzing some twenty six
Speaker 1: thousand cases in the government database of security clearance decisions
Speaker 1: who gets it, who doesn't, and he found that in
Speaker 1: the past decade, the rate of rejections of Chinese Americans
Speaker 1: essentially um for security clearances has gone from something like
Speaker 1: forty four percent, which was the average of all countries
Speaker 1: including other non Chinese countries UH, to over six for Chinese.
Speaker 1: So uh, it's a real growth in the rate of
Speaker 1: rejection for that which is a kind of barometer of suspicion, distrust,
Speaker 1: and essentially difficulty for these American citizens. And I love
Speaker 1: the perspective that you include your story, Peter, because you say,
Speaker 1: even people with ties to nations like Iran or Russia,
Speaker 1: they fear better than those with ties to China. Yeah,
Speaker 1: the data showed that they went from rates of fifty
Speaker 1: to cent or so in the prior decade from two
Speaker 1: thousand to two thousand nine, they dropped both below fifty
Speaker 1: in terms of the rejection rate and the rate of
Speaker 1: rejection for people with ties to China went from that
Speaker 1: forty four percent average for everyone all the way up
Speaker 1: to well and Peter, you provide some really nice details
Speaker 1: in this story, and I have to say much of
Speaker 1: it is cinematic in a lot of ways, these interrogations,
Speaker 1: but also the rulings that have come down, one ruling
Speaker 1: specifically that repeatedly uses the term coercion tell us how
Speaker 1: that plays into the suspicion and sort of the overall narrative.
Speaker 1: So what we are talking about there are the guidelines,
Speaker 1: the federal guidelines for trustworthiness essentially who should get at
Speaker 1: a security clearance, and two of the guidelines include categories
Speaker 1: called foreign preference and foreign influence. And under those guidelines,
Speaker 1: um you essentially if you have ties of one sort
Speaker 1: or another family members, parents, financial ties, you may own
Speaker 1: property in another country, which many Chinese immigrants to this
Speaker 1: country do, particularly relatives. Um it can disqualify you just
Speaker 1: on its face for security clearance. And the basis of
Speaker 1: that concern on the part of the in this case
Speaker 1: the Pentagon, is that you would then be subject to
Speaker 1: coercion by Chinese agents, Chinese intelligence, who could perhaps go
Speaker 1: to your family members and say, well, you wanna your pension,
Speaker 1: you want your salary this month, while you're gonna have
Speaker 1: to get your relative Joe living in New York or
Speaker 1: Texas to spy for us. Otherwise, you know, forget your
Speaker 1: pension for the next year. So that's what's meant by
Speaker 1: coercion um. There was another Pentagon study two thousand seventeen
Speaker 1: study by a branch of the Pentagon that does nothing
Speaker 1: but study espionage and questions of trustworthiness, and they reviewed
Speaker 1: all two hundred and nine cases since nineteen forty seven
Speaker 1: of espionage and espionage related convictions, including economic espionage, and
Speaker 1: they found that since nineteen eighty there have been something
Speaker 1: like a hundred and forty convictions for espionage, not a
Speaker 1: single one has had coercion as a main motivator of espionage.
Speaker 1: So it's perhaps a myth that that could happen. Now
Speaker 1: it's logical, but it just hasn't happened. That's Peter Waldman,
Speaker 1: Bloomberg News Projects, an investigation reporter joining us to talk
Speaker 1: about that story. And I think about the implications because
Speaker 1: house of these heightened trained tensions and really just heightened
Speaker 1: tensions overall between the US and China and Chinese Americans.
Speaker 1: They're getting caught in it. They absolutely are. And again
Speaker 1: sort of like the story we were talking about as
Speaker 1: it related to the listening devices, this is essentially the
Speaker 1: latest in a series of stories that Peter Waldman has
Speaker 1: been working on. It's about how this tense relationship between
Speaker 1: the US and China is playing out in maybe some
Speaker 1: unexpected ways. Al Right, you know that music. You know
Speaker 1: what it's all about, because for almost a century you've
Speaker 1: been hearing songs like that, the Radio City Rockets, they've
Speaker 1: been part of the American landscape and of course of
Speaker 1: holiday traditions. A new holiday season underway, helping to kick
Speaker 1: it off to Rockets joining us in studio Alyssa Lemons
Speaker 1: and Johanna Richardson there in our Bloomberg Interactor Broker Studio.
Speaker 1: I have to be quite honest, Jason knows too. I'm
Speaker 1: like yuess who's copingodat So Joanna tell us a little
Speaker 1: bit about what's new and different this year. Remember when
Speaker 1: some of your colleagues were here. Last year there was
Speaker 1: a new finale. What are what can people expect this year? Well,
Speaker 1: we are so excited for this uh this season of
Speaker 1: the Christmas Spectacular. Each year, our creative team tries to
Speaker 1: re re event the show in some way to make
Speaker 1: it more exciting for audiences that come back year after year.
Speaker 1: This year, if it's possible, we've made the finale even
Speaker 1: more impressive. Um. The finale number was introduced last year,
Speaker 1: and then this year we've really focused on the choreography,
Speaker 1: the dazzling costumes that the Rockets perform in, and then
Speaker 1: also the Rockets have a really impressive entrance to the number.
Speaker 1: I won't ruin it if you haven't seen the show yet,
Speaker 1: you'll just have to come and see it. But it
Speaker 1: is so exciting and I feel like the Christmas Spectacular
Speaker 1: is one of those traditions that families can come to
Speaker 1: year after year. It's a different experience every time you come.
Speaker 1: If you're sitting um, even in the same seats in
Speaker 1: the house, we have such high energy dance numbers and choreography.
Speaker 1: There's happening that's done on on the ceiling. Well, this
Speaker 1: there's something new to experience every time you see the show, Joann,
Speaker 1: listen what I wanted to bring in. I went a
Speaker 1: few times, certainly when my daughter was younger and stuff,
Speaker 1: and it really is quite an experience and there are
Speaker 1: what's really great about it is that there's certain traditions
Speaker 1: that come back every year, but you guys have increasingly
Speaker 1: embraced technology over the years. So talk to us a
Speaker 1: little bit about what we can see and on that fright,
Speaker 1: because I do feel like right the world, everybody's embracing technology. Yeah,
Speaker 1: but yeah, I think that's what's great about the Christmas
Speaker 1: Spectacular is it is that perfect balance of that holiday
Speaker 1: tradition with still all this new technology that we get
Speaker 1: in every year. Um, as Joe was mentioning, we have
Speaker 1: projections over all the walls and race and music hall.
Speaker 1: So I used to just be like the first three
Speaker 1: percent I ums the archways in the theater, but now
Speaker 1: it goes all the way back to the back of
Speaker 1: the house, so every seat is getting that full experience
Speaker 1: and really sucks the audience into each number. They're in
Speaker 1: Central Park with us there in Times Square with us
Speaker 1: for numbers. You really get really immersive right in this way,
Speaker 1: and you know, Joanna Carroll mentioned at the top of
Speaker 1: the conversation. I mean, this is a quintessentially sort of
Speaker 1: New York thing total, And you guys appear not only
Speaker 1: in Radio City Music Hall obviously for this show, but
Speaker 1: you're at the parade. You guys, I believe, participated in
Speaker 1: the World Pride events, uh this year. So, I mean
Speaker 1: this is something that is is very New York. What
Speaker 1: is it that sort of connects you to New York
Speaker 1: other than a hundred years of history of course, Yeah, absolutely.
Speaker 1: I mean the Rockets first started performing at Radio City
Speaker 1: Music Hall in nineteen thirty three. We perform in one
Speaker 1: of the most iconic theaters in Radio City. It's truly
Speaker 1: an experience from the moment you walk in the door,
Speaker 1: especially at Christmas, the decorations are drenching the theater and
Speaker 1: just from the moment you walk in the door, just
Speaker 1: the vibe of the theater. You can meet Santa, you
Speaker 1: can meet a Rocket. We have two live Organs that
Speaker 1: are playing pre show, And I feel like the Rockets
Speaker 1: especially are such an iconic staple in New York City.
Speaker 1: They represent um, poise, grace, and an athleticism. Um for
Speaker 1: an all female dance company, and I definitely grew up
Speaker 1: watching the Rockets before and it was so inspired by
Speaker 1: these women coming together from all different walks of life.
Speaker 1: But it's the true epitome of teamwork. What we do
Speaker 1: on stage is not about one particular dancer. It's about
Speaker 1: all all thirty six of us on stage, and I
Speaker 1: just think that's so incredible to be a part of.
Speaker 1: We'll talk to us a little bit about your trick there.
Speaker 1: I mean, Joanna, where are you from? Originally I from Atlanta.
Speaker 1: I live in Colorado right now, from Dallas, Texas. But
Speaker 1: I love here and now, so tell us how long?
Speaker 1: How long have you been dancing with the Rockets? Six year?
Speaker 1: Your six year? And Joanna, this is my four season,
Speaker 1: so okay, so let me start with you. I mean,
Speaker 1: that's a long time to be There's a lot that's
Speaker 1: changed also the role of women and women in our society,
Speaker 1: how we're looked at. But I'm just curious about your
Speaker 1: road to coming to here. What was it like, Hotely?
Speaker 1: Was it? Yeah? So I grew up in Atlanta. I
Speaker 1: trained at my mom's dance studio, and um, it was
Speaker 1: really important growing up in dance that we had a
Speaker 1: well rounded training and ballet tap jazz just so you're
Speaker 1: a versatile performer. And um, that's one thing that I
Speaker 1: loved about the Rackets so much is it's not just
Speaker 1: about one style. It is about the technique of ballet
Speaker 1: tap jazz, the flexibility and strength to be able to
Speaker 1: do those I high kicks, which we do over three
Speaker 1: d per show, up to four shows a day. So
Speaker 1: the athleticism also was so inspiring. And um, I remember
Speaker 1: watching the Rackets perform in the mec Sinksgiving Day parade.
Speaker 1: I finally saw them perform live and he had tears
Speaker 1: in my eyes and I knew I needed to be
Speaker 1: up on that stage. And actually took me four auditions
Speaker 1: before I was actually cast. So I went back, you know,
Speaker 1: each time learned something new learned there was something that
Speaker 1: I needed to work back. Yeah, and my perseverance paid
Speaker 1: off in fourteen years later and still performing in my
Speaker 1: dream job. And that's a LISTA Lemons and Joanna Richardson too.
Speaker 1: Radio City Rockets. They stopped by your studio. It's really
Speaker 1: fun to catch up with the nice tradition. Oh, it's
Speaker 1: always the start of the holiday season when the Rockets
Speaker 1: stopped by in pursuits this week. We love catching up
Speaker 1: with Chris Rouser and you know, we've had our gift
Speaker 1: guide and we know what to buy. I think you
Speaker 1: have a lot of ideas about what to buy for me,
Speaker 1: which is fantastic, very high end, very high end, all
Speaker 1: right good. But also this is the season about giving
Speaker 1: back exactly, and we've got a guide and some insights
Speaker 1: into how some very wealthy folks are doing that maybe
Speaker 1: some tips for the rest of us. Chris is here
Speaker 1: with us in New York City. How's it going good?
Speaker 1: Very well? Um. This is one of our favorite sections
Speaker 1: of the year, our annual Philanthropy special section, because it
Speaker 1: makes us feel better about all of the really expensive
Speaker 1: things that we tell you to do for the rest
Speaker 1: of what else you could have done with you Yeah,
Speaker 1: because I think you know, philanthropy for our audiences is
Speaker 1: a very big part of how of their pursuits of
Speaker 1: what they do outside of work, and so we all
Speaker 1: we always want to take a look at it, and
Speaker 1: this year we wanted to look at it from the
Speaker 1: perspective of just like a lot of data and like
Speaker 1: looking at uh, you know, facts, numbers, and people who
Speaker 1: look at philanthropy from like a really sort of technical lens.
Speaker 1: We'll tell us about the Arnold I had never heard
Speaker 1: of this couple. They're billionaires, but they're showing you maybe
Speaker 1: how to be a better billity in. Yeah. So they're
Speaker 1: the Arnolds were very very private until I think this year.
Speaker 1: Basically they they made their money first through Enron and
Speaker 1: then true Centauris and m John Arnold was a legendary
Speaker 1: energy trader and then his wife is also like a
Speaker 1: super high powered mergers and exisition's lawyer. Uh. And they
Speaker 1: you know, they're on the Bloomber Billionaire's Index. They've got
Speaker 1: a couple of billion dollars of their own and then
Speaker 1: they have a couple of billion with their foundation and
Speaker 1: basically they have they've sort of set out to reform
Speaker 1: criminal justice, UM also the pharmaceutical industry, and they do
Speaker 1: it by doing a ton of research. And they're not
Speaker 1: liberal and they're not conservative or they try not to be, uh,
Speaker 1: And they just do studies until they find the inequalities
Speaker 1: that are out in the system. Hence the data, right,
Speaker 1: their data driven in terms of what they're going after.
Speaker 1: And there maybe their approach. Yeah, so they hire experts
Speaker 1: UM and they really don't go after something you know,
Speaker 1: it's really important if you have that kind of money
Speaker 1: that you can't just try to address everything that someone
Speaker 1: asks you to address. Um. So they've picked the things
Speaker 1: that they focus on and through studies, they're like really
Speaker 1: obsessed with data. So they did this thing one time
Speaker 1: where they did they redid a hundred different studies from
Speaker 1: psychological journals to see if they could be reproduced, and
Speaker 1: only them could, right, So they're like really testing theces
Speaker 1: all throughout this and and and one of the things
Speaker 1: that they're focused on is criminal justice reform and bail
Speaker 1: and parole and they and they think that the criminal
Speaker 1: justice system is one of the organisms, one of the
Speaker 1: systems that knows the least about itself, and so they're
Speaker 1: trying to get some visibility into that well. And there
Speaker 1: are some lessons for us mere mortals when it comes
Speaker 1: to our own giving, and part of it is really
Speaker 1: know what you're giving to and also focus up a
Speaker 1: little bit. And you don't have to give to everyone
Speaker 1: who asked you for money. You need to sort of
Speaker 1: put a theme in some parameters around it. Yeah, So
Speaker 1: the critic this week is about all these these books
Speaker 1: that came out this year on philanthropy, and ad minute, like,
Speaker 1: you don't really probably want to read a bunch of
Speaker 1: books on philanthropy, so we did it for you. And yeah,
Speaker 1: and you know, one of the main takeaways is like,
Speaker 1: really look at why you're giving. And so there's this
Speaker 1: one book that we looked at called The Ethics of Giving,
Speaker 1: which basically he says like, Okay, you want to do good,
Speaker 1: but why and then if you if you explore the
Speaker 1: philosophical reasons for why you want to do things, that
Speaker 1: actually can help you get to what you should be
Speaker 1: doing with your money. Um. And then you know, there's
Speaker 1: so much technology now out there that can help you
Speaker 1: measure the impact of your gift that you can really
Speaker 1: see how like how much good you're doing, and you
Speaker 1: can also coordinate with other people. You know, you can
Speaker 1: see how you're the good that you're doing, or your
Speaker 1: your money interfaces with other people's money and really make
Speaker 1: the most of it. Well, you talked about data before,
Speaker 1: but there's also a book that is looking at kind
Speaker 1: of what the technology titans are doing right in many
Speaker 1: ways in Silicon Valley and how they're disrupting the world
Speaker 1: but again using data in many ways. Yeah, exactly, Um,
Speaker 1: and you know there's even some tips in there to
Speaker 1: like how how to get your kids interested in philanthropy,
Speaker 1: like that you know, um, every year on the holidays,
Speaker 1: make sure they give away three toys or split up
Speaker 1: the money into you know, if you if they get
Speaker 1: an allowance to split it up to like for themselves,
Speaker 1: for saving for the future, and then to give to
Speaker 1: a nonprofit so they get it in their minds. Early.
Speaker 1: I do love what you said about you know that
Speaker 1: these guys are saying, whether it's the books or whether
Speaker 1: it's the Arnold's like, don't just give because you've been asked, Right,
Speaker 1: You've got to kind of do some homework here, because
Speaker 1: then you're not smart imaged. Also, like, the more you
Speaker 1: know about what you're doing, the more you're engaged in,
Speaker 1: the more you care about outcomes, and the more you're
Speaker 1: likely to keep coming back. Sometimes people think you should
Speaker 1: just spread around your giving because, especially if you have
Speaker 1: a lot of money, people might think like, oh, we
Speaker 1: don't want this nonprofit to become dependent on us. But
Speaker 1: you wouldn't stop going to a restaurant that you liked
Speaker 1: because you didn't want it to become dependent on you, Right, So, like,
Speaker 1: you really do want to be engaged well, and this
Speaker 1: whole notion of philanthropy is R and D that the
Speaker 1: Arnolds have put out really does, as you say, sort
Speaker 1: of engage you on a deeper level, and if you
Speaker 1: know the numbers, you're more likely to go along, all right,
Speaker 1: So it's all about giving back. Tell us about the
Speaker 1: founder of birds Bees, because sounds like this individual is
Speaker 1: giving back. Yes, So this is to my heart because
Speaker 1: I'm from Maine. Um So Roxane Quimby is a woman
Speaker 1: who co founded birds Bees and that company over the
Speaker 1: years has been sold. So she had a lot of
Speaker 1: money that like sort of she came into and she
Speaker 1: started buying up land in Maine and in other states,
Speaker 1: and she eventually accumulated eighty seven thousand acres in Maine
Speaker 1: around Mount ca Tod and was sort of in the
Speaker 1: center of the state. There's a lot of national parks
Speaker 1: there and she wanted it to turn into a national park,
Speaker 1: but the governor of Maine, um it was like a
Speaker 1: very conservative Republican who didn't want her to. So it
Speaker 1: was this long paddle um where she actually sort of
Speaker 1: started off being like the locals in the area where
Speaker 1: against her because the paper companies had sold her the
Speaker 1: land and that was sort of the lifestyle up there,
Speaker 1: I mean, and sort of still is a big part
Speaker 1: of the main lifestyle. And she didn't want people to
Speaker 1: go um hunting or snow machining in the woods and
Speaker 1: like that. I forget it. If you're in Maine, like
Speaker 1: you have people have to be. So eventually she handed it,
Speaker 1: like the project over her son, who was like a
Speaker 1: little more charming and who went around and had coffee
Speaker 1: with people, and they waited out the governor until he
Speaker 1: left um. And so they actually got Obama to make
Speaker 1: it into a National monument, which is not the same
Speaker 1: as a National park, but they're functionally very similar. UM.
Speaker 1: And so now there's this amazing, huge amount of wilderness
Speaker 1: in the center of main and uh they they the
Speaker 1: old governor wouldn't let them put signs up to it,
Speaker 1: so you couldn't find it, and now they can. And
Speaker 1: so now people are just beginning to use it. It's
Speaker 1: really cool, and it does feel a little bit like
Speaker 1: a potential model elsewhere because people really are starting to invest,
Speaker 1: as it were, or to try and give money around
Speaker 1: nature in some ways. Yeah, exactly. Well, let's talk about
Speaker 1: another thing that I think is doing good if you will,
Speaker 1: and that is the kind of rise in wildlife tourism.
Speaker 1: But it's not like maybe it used to be, right,
Speaker 1: it's really changing. Is one company in particular that's playing
Speaker 1: a big role in this. Yeah, So Airbnb actually recently
Speaker 1: announced their Animal Experiences, which is which is actually something
Speaker 1: they've been doing for a while, but they're they're now
Speaker 1: making it a big focus. And what it is is
Speaker 1: like a thousand experiences where you can go and either
Speaker 1: interact directly with animals, domesticated animals, or you can look
Speaker 1: at and watch wild animals and they um Airbnb started
Speaker 1: working with an organization called World Animal Protection to make
Speaker 1: to make sure they're being really ethical about these experiences
Speaker 1: and also using them to teach people about conservation and
Speaker 1: the ethical treatment of animals. This is so important and
Speaker 1: it's hard. I mean, it's hard to do, and I
Speaker 1: mean it was interesting too in reading Nikki Exstein's story
Speaker 1: about how difficult it is a to identify and be
Speaker 1: to sort of keep people honest about it because they
Speaker 1: can easily sort of slip, especially as you go into
Speaker 1: more and more remote places. You really have to be
Speaker 1: able to vet and it's not easy. Yeah, and you know,
Speaker 1: I think a lot of people, a lot of people
Speaker 1: don't know that the that the experience that they're having
Speaker 1: is maybe damaging to wildlife. So you know, Airbnb now
Speaker 1: won't do anything where marine animals are kept in captivity.
Speaker 1: So that's no dolphin experiences, you know, And you might
Speaker 1: not even think that, you know, when you're I don't
Speaker 1: know in Mexico playing with dolphens that that's a negative experience,
Speaker 1: but it could potentially be, and the Airbnb has to
Speaker 1: be very vigilant about it. And it's a big commitment
Speaker 1: of them, and that's meaningful. I think it's really important.
Speaker 1: It's really educating people um and letting animals be in
Speaker 1: kind of their natural environment. But I just have to say,
Speaker 1: I love one of the pictures. I want to have
Speaker 1: cakes with a sheep. I know. Yes, there's one experience
Speaker 1: where you are allowed to interact with the animals is
Speaker 1: in Scotland. You can have tea and very rude sheep
Speaker 1: will him named Hamish, will come up and have tea
Speaker 1: with you. That when I saw that picture, I was
Speaker 1: reminded that there's a fine line between like cute and
Speaker 1: slightly creepy. It's so cute. It's very much divided people.
Speaker 1: That's I love it. I love it. I love it. Hey,
Speaker 1: one last thing I'm speaking of, you know, kind of
Speaker 1: taking care of things and preserving them. There's a little
Speaker 1: section in Pursuits this week about Venice. Yes, yeah, so
Speaker 1: you know, different ways to put your money to work there. Right,
Speaker 1: Venice had its highest aqua alta since nineteen sixty six
Speaker 1: this year last month actually, and um it really did
Speaker 1: some serious damage, not only because water places were flooded,
Speaker 1: but the force of the waters actually moved some stonework.
Speaker 1: Um and so Save Venice, which is a great organization
Speaker 1: which has been working to save the try psures of
Speaker 1: Venice since after that first nineteen sixty six flood um
Speaker 1: worked with us to sort of explain what they spend
Speaker 1: money on if you give money to them, so you can, uh,
Speaker 1: five dollars will get you a day's work from a
Speaker 1: conservator who like an expert, not just like a cleaning
Speaker 1: person who goes in and figures out the issues. And
Speaker 1: then for one point one million you can renovate a
Speaker 1: whole basilica and just sort of like everything in between.
Speaker 1: And there's you know, obviously Titian paintings. Um, there's you know,
Speaker 1: old mansions that have been damaged, so there's a lot
Speaker 1: you can do and the money is is like ready
Speaker 1: to be spent, right. Yeah, it's interesting too. You know,
Speaker 1: this has been an area of philanthropy where a lot
Speaker 1: of interesting people have sort of gotten behind it, just
Speaker 1: given how important in that city is in in the
Speaker 1: history of the world. I remember the late Alex Navab,
Speaker 1: a longtime private equity guy, and he was very committed
Speaker 1: to that as well. It's important our own Kathleen Hayes
Speaker 1: just came back from Venice and she was talking about
Speaker 1: just the absolute grandeur of the place and you do
Speaker 1: worry about some of that going away. Yeah. The architects
Speaker 1: Peter Marino has also been really big on That's the
Speaker 1: editor of the Pursuit section, Chris Rouser. And that wraps
Speaker 1: up the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 1: Thanks so much for joining us. I'm Jason Kelly and
Speaker 1: I'm Carol Masser. Be sure to tune into Bloomberg Business
Speaker 1: Week Radio Live Monday through Friday starting at two pm
Speaker 1: Well Street time, and if you can't catch us live,
Speaker 1: get our daily podcast for the Ride home. Check that
Speaker 1: out at Bloomberg dot com or wherever you get your podcast,
Speaker 1: and of course you can get this week's edition of
Speaker 1: the magazine. It is on newsstands now. Plenty of great
Speaker 1: holiday reading there for the upcoming week. We'll be back
Speaker 1: next week right here at the same time. Merry Christmas
Speaker 1: and happy holiday. This is Bloomberg.