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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P and L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. All right,

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Speaker 1: the China's Central Bank has ordered online payment groups to

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Speaker 1: operate through a centralized clearinghouse. Now, this could undercut the

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Speaker 1: dominance of companies like and Financial intencent because they didn't

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Speaker 1: have to share that data with competitors. Let's talk about

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Speaker 1: China and its effects on trade and the political events

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Speaker 1: in Asia with William Roar Rhodes. Bill Rhodes is the

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Speaker 1: author of a bank or to the World, Leadership Lessons

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Speaker 1: from the front Lines of Global Finance, and he is

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Speaker 1: the president and chief executive of William R. Rhodes Global Advisors.

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Speaker 1: Bill Bill Rhodes, you know are looking at the subtitle

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Speaker 1: of the book Leadership Lessons from the front Lines of

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Speaker 1: Global Finance. Those leadership lessons and having read the book

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Speaker 1: can be applied not just to the world of finance,

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Speaker 1: but to the world of politics, and they seem to

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Speaker 1: intersect very clearly right now when it comes to Asia

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Speaker 1: and the Korean Peninsula. Based on what you know from

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Speaker 1: the leaders of China, what and South Korea, for example,

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Speaker 1: what do you well, what kind of conversations do you

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Speaker 1: believe that they are currently having. Well, I think the

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Speaker 1: most important thing right now for Shijian paying the President

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Speaker 1: of China is the Nineteenth Party Congress, which happens every

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Speaker 1: five years, which will occur sometime at the end of October,

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Speaker 1: maybe the beginning of November, but I think October because

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Speaker 1: that's when he gets the chance to make sure he

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Speaker 1: gets all his people on the seven member Standing Committee

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Speaker 1: of the Polar Pier of the Communist Party, because they

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Speaker 1: are the ones are going to take the decisions for

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Speaker 1: where China goes for the next five years. And he is,

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Speaker 1: without a doubt, the strongest leader China has had, probably

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Speaker 1: since Don Joe Pang, and many people think he's got

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Speaker 1: elements of both Mausetong and Dong Jao peg with him,

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Speaker 1: and so he's obviously not very happy with what's going

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Speaker 1: on in Korea because this disturbs sort of the piece

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Speaker 1: and the pace of what's going on for the Party Congress.

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Speaker 1: He also has a problem with with with his financial

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Speaker 1: system in the sense of you have a very high

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Speaker 1: UH rate there of death to g g P, which

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Speaker 1: is two percent and growing up from a hundred and

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Speaker 1: fifty percent at the time of the Great Recession. Also,

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Speaker 1: you have shadow banking levels UH almost eighties seven eighty

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Speaker 1: eight percent of total GDP nine trillion dollars. And now

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Speaker 1: the asset management UH situation is now becoming a problem.

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Speaker 1: That's almost nine trillion dollars. So what he needs to

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Speaker 1: do is to clean up the financial system, but he

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Speaker 1: really can't get into that too hard until the Party Congress.

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Speaker 1: And you already seeing what's going on with Mbang, Fusan,

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Speaker 1: Dali and Wanda UH, the Highland Island Group and all

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Speaker 1: of those. Because he's the regulators under his instructions are

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Speaker 1: sorry to say, uh, you know, to the financial sector, Look,

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Speaker 1: you've got to be more prudent in your lending. But

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Speaker 1: I see a major crackdown coming. So all of what's

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Speaker 1: going on in Korea is a very bad distraction for

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Speaker 1: his plans to get through the Party Congress. You mentioned

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Speaker 1: prudent lending, and I'm wondering if it is also a

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Speaker 1: pullback from foreign investments. They want more of the money

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Speaker 1: to go two projects in China, not based on asset

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Speaker 1: purchases outside the country. That is why the four companies

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Speaker 1: I mentioned they're leaning on because in all of those

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Speaker 1: cases UH, these companies have been doing massive UH purchases

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Speaker 1: outside of China, like the Waldorf A story I could

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Speaker 1: run through all of these and what that did was

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Speaker 1: it dropped the reserves of China from four trillion to

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Speaker 1: where they are today about three trillion, and they had

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Speaker 1: to put on capital controls. So all of this is

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Speaker 1: leading up to the nineteenth Party Congress, which to me,

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Speaker 1: other than a black Swan event which could you know,

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Speaker 1: could always happen in with North Korea with Kim Jong Oon,

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Speaker 1: this is the most important event that's going to take

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Speaker 1: place in the world, and not many people are focused

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Speaker 1: on it now. When you get to Korea, I know

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Speaker 1: President Moon and new President of South Korea. I dealt

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Speaker 1: with him on the free trade Agreement when I was

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Speaker 1: leading the private sector for those negotiations because he was

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Speaker 1: chief of staff to to President No at the time.

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Speaker 1: He is very much to the left. He has been

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Speaker 1: a great one on reconcign with North Korea, and he's

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Speaker 1: been caught in a difficult situation because North Korea don't

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Speaker 1: want to reconcile, and so he's been fighting the the

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Speaker 1: establishment and usage of the fad SOL. But I think

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Speaker 1: he's going to have to back off now because I

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Speaker 1: think what you're gonna need to resolve this question is

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Speaker 1: less bombastic UH statements from the part of the United

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Speaker 1: States and action. What is action. We really need to

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Speaker 1: enforce thee sanctions which have not been done in the past.

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Speaker 1: Particularly we ought to get into oil because we caught

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Speaker 1: off his oil supplies. He's going to be in deep trouble. UH.

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Speaker 1: So we've had a lot of talk over the last

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Speaker 1: twenty years, starting with the Clinton administration, Bush Obama, and

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Speaker 1: all they've done is talked, and they've allowed Kim Jong

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Speaker 1: il first and then Kim Jong un there now to

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Speaker 1: build missiles that could strike, if not Guam, uh, somewhere

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Speaker 1: pretty close and probably the West coast of the United States.

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Speaker 1: And they're getting the technology to miniaturize an atomic warhead.

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Speaker 1: You know, most of the world players in this uh

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Speaker 1: current go round of tensions. What do you see as

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Speaker 1: some of the possible ways through this. Well. First of all,

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Speaker 1: you've got to understand that Kim Jong says that he

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Speaker 1: basically is not his father's son, he's his grandfather's son, uh,

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Speaker 1: and his grandfather, Kim Il sung, was a person who

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Speaker 1: started the Korean War because he wanted to unify Korea

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Speaker 1: under communist rule, and that many people think is the

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Speaker 1: ultimate objective of his grandson. And what he wants as

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Speaker 1: a starter is u S troops to leave. He wants

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Speaker 1: South Korea to disarm, and then that opens the way

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Speaker 1: for him. We have to be very careful that we

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Speaker 1: don't do uh what we have been doing, which is

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Speaker 1: making a lot of tough statements that we don't live

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Speaker 1: up to with North Korea threatening them, because the Koreans

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Speaker 1: basically are tough people, and you should be speaking softly

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Speaker 1: and carrying a big stick. In other words, what we

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Speaker 1: need to be doing is to make sure that we

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Speaker 1: put these sanctions on and we live up to him.

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Speaker 1: And if the Chinese don't want to follow us, and

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Speaker 1: companies in China deal with him on petroleum, coal and

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Speaker 1: other things, we should put secondary sanctions on the Chinese

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Speaker 1: companies to show the Chinese that we're serious because as

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Speaker 1: I said, uh, the president of China, U shi Jin

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Speaker 1: Pink wants no problems until this party congress in a

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Speaker 1: few months. So I think we have to really show

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Speaker 1: that we can live up to what we're saying. Uh.

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Speaker 1: And if we don't do that, uh, Kim Jong n

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Speaker 1: is not going to take us seriously. At the same time,

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Speaker 1: the president of South Korea, who, as I mentioned, I know,

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Speaker 1: president who has got to tell the North that he's

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Speaker 1: serious about installing the fat missiles, if necessary, more batteries

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Speaker 1: than we have, and that he is not going to,

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Speaker 1: you know, back down on this, and then we have

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Speaker 1: to be steady on Now. I've read three statements that

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Speaker 1: have come out from the administration in the last forty

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Speaker 1: eight hours, one by the two by the president actually,

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Speaker 1: one by our Secretary of State to listen, and one

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Speaker 1: by the Secretary of Defense matters, and the only one

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Speaker 1: that makes sense. He sense to me, that's not an

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Speaker 1: idle threat or that we don't worry, there's no problem,

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Speaker 1: which is what Tillerson said. The present made all of

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Speaker 1: these threats and stuff maddess. Basically, I think was the sanest,

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Speaker 1: uh best statement, which is saying, be careful what you

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Speaker 1: do because remember who you're up against and just left

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Speaker 1: it at that, UH, And that is the attitude we

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Speaker 1: should have. And we should make sure that UH, we're

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Speaker 1: serious about anything we say we're gonna do if we

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Speaker 1: make it tough enough for uh Kim Jong un in

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Speaker 1: the sense of butter, because remember we're talking about guns

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Speaker 1: and butter here, and so far he has not had

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Speaker 1: a problem with the sanctions on his economy, so when

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Speaker 1: we talk about putting sanctions on, they're not implemented. So

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Speaker 1: unless he takes us seriously, I think we're gonna see

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Speaker 1: more of the same. And I wouldn't be surprised if

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Speaker 1: he does try and send some missile just to demonstrate

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Speaker 1: us in the waters around Guam, unless he really thinks

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Speaker 1: we're serious. So I think this is a major problem.

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Speaker 1: We have to coordinate with our allies with Japan, South Korea,

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Speaker 1: and our major allies with NATO, UH, and then we

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Speaker 1: have to sit with the Chinese and tell the Chinese, look,

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Speaker 1: if you don't support us on these sanctions, and you

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Speaker 1: don't support us because they're they're the biggest single supporter

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Speaker 1: that that the North Koreans have on him backing down,

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Speaker 1: then we're gonna put secondary sanctions on you. And let

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Speaker 1: me tell you, the President China wants no problems before

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Speaker 1: this party Congress. So I think we would find that

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Speaker 1: if that, if the Chinese sinc we're serious, uh, they

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Speaker 1: will try and help us more than now. They basically

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Speaker 1: look at us as a paper tiger. We allowed the

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Speaker 1: South China Sea to go to them. Remember all the

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Speaker 1: threats under the Obama administration. We're not going to allow

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Speaker 1: the South China See to be dominated by China. We

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Speaker 1: allowed them to to to build all these artificial islands.

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Speaker 1: And now it's basically a done deal. And so if

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Speaker 1: we are not for in what we say, then we

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Speaker 1: shouldn't say it. And that's the only way to deal

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Speaker 1: with people like Kim Jong un and others of his

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Speaker 1: ilk As far as a president of China, Jijing Ping,

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Speaker 1: and you are a veteran banker, if you were going

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Speaker 1: to meet with the President of China and say, look,

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Speaker 1: you seem to brook no opposition when it comes for

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Speaker 1: what goes on in China. Why do you seem to

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Speaker 1: allow this to happen in North Korea? What value does

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Speaker 1: it have for you when your focus is on your

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Speaker 1: financial system and on your economy. Very good question, Pim,

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Speaker 1: And I think the reason is that you have to

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Speaker 1: go back to the to the Korean War. When McArthur

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Speaker 1: initially said he was going to you know, uh reconquer

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Speaker 1: South Korea across the thirty eighth parallel. Yeah, when he

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Speaker 1: when he decided not only across the thirty eighth parallel

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Speaker 1: of McArthur, but to go right up to the Yellow.

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Speaker 1: Then the Chinese said they couldn't brook you know, American

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Speaker 1: in fluence uh, you know, on the Yellow. So he

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Speaker 1: came in massively with millions of troops, uh, and there

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Speaker 1: that became the most dangerous part of the Korean War.

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Speaker 1: So they do not want to see American influence on

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Speaker 1: the Yellow. That's number one. Number two, they're concerned that

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Speaker 1: you could have massive you know, illegal immigration with immigration,

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Speaker 1: you know, with the North Korean's fleeing population. I think

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Speaker 1: about million in North Korea and about fifty million, one

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Speaker 1: million in South exactly, and these people in North Korea

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Speaker 1: would all go over there at the same time. Though,

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Speaker 1: they do not want a disturbance because of this Party Congress.

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Speaker 1: So I think we've got to let the Chinese know

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Speaker 1: that we're very serious on these sanctions, and they have

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Speaker 1: the ability, although they say they don't because it's suesome

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Speaker 1: to say they don't, they have the ability to put

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Speaker 1: a stop to this if they want it, because they

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Speaker 1: can cut off all the oil supplies, they can stop

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Speaker 1: buying things from North Korea, and then you won't have

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Speaker 1: the butter end of the guns and butter it. And

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Speaker 1: I think that uh, if our present is deliberate in

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Speaker 1: what he says and follows up, then I think the

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Speaker 1: Chinese will be more willing to help us stop this guy.

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Speaker 1: Thank you very much, Bill Rhodes. He is the author

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Speaker 1: of Banker to the World, Leadership Lessons from the front

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Speaker 1: Lines of Global Finance, and the President chief executive of

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Speaker 1: William R. Rhodes Global Advisors. Well, let's say you're attempting

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Speaker 1: to purchase a new home and you need to have

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Speaker 1: a roof inspection, such as one that my colleague Greg

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Speaker 1: Jarrett is planning for Friday. Imagine if instead of having

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Speaker 1: an expector come out, you actually just saw and met

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Speaker 1: a drone that would do all the work and send

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Speaker 1: the data back and take care of everything for less

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Speaker 1: money and in less time. How would that happen, Well,

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Speaker 1: you probably would call George Matthew. He is the chief

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Speaker 1: executive and the chairman of CASPRI. They are based in

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Speaker 1: Menlo Park, California, and Kespri is a industrial drone maker. George,

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Speaker 1: thank you very much for being with us. M thanks

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Speaker 1: so much for having me appreciate it all right, I

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Speaker 1: just want to set up the whole thing with the

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Speaker 1: topic saying that Goldman Sacks forecasts that the market for

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Speaker 1: drones is going to reach about a hundred billion dollars

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Speaker 1: by twenty twenty. Uh where would you find Kespri in

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Speaker 1: that big market? Yeah, when we look at that market,

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Speaker 1: the drones space is continuing to evolve across multiple vectors.

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Speaker 1: I think that Golden Sacks report refers to a few areas,

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Speaker 1: the commercial market, the consumer market, and of course the

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Speaker 1: military market. In that context, we're very focused at CASPRI

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Speaker 1: in the commercial market, specifically on these heavier industrial use

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Speaker 1: cases like being able to fly over a brief and

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Speaker 1: get dimensional measurement as well as understanding of what the

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Speaker 1: extent of hail damage might be on a roof. We

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Speaker 1: do work in the mining aggregate space where we enable

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Speaker 1: the drone to fly overhead to get the measurement of

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Speaker 1: what a stockpile looks like and how much material you

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Speaker 1: might have. We work in the construction arena where we

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Speaker 1: get full topic logical analysis of how much material that

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Speaker 1: you have to move on an earthworks project before a

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Speaker 1: construction effort proceeds. So it's these industrial use cases inside

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Speaker 1: of the commercial aspect of the market temp that we're

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Speaker 1: really focused on a crestwork. George, you mentioned this idea

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Speaker 1: of for example, if there is a hail storm and

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Speaker 1: there is damage to your home and claims adjuster has

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Speaker 1: to come out, tell us about a program that you

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Speaker 1: have now with Farmers Insurance because we're not going to

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Speaker 1: get necessarily a claims adjuster, we're going to get a

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Speaker 1: fleet of drones. Well, when you think about it, those

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Speaker 1: claims adjusters are still going to be coming out to

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Speaker 1: do the assessment of the extent of damage on a home.

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Speaker 1: And when you look at even the relationship with Farmers,

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Speaker 1: the adjuster is still coming to the home. But when

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Speaker 1: you think about what that adjuster is doing, the effort

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Speaker 1: for them to manually climb that roof to be able

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Speaker 1: to take a measurement of how much material you have

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Speaker 1: on the roof the extent of the damage. That's a

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Speaker 1: very laborious and dangerous process. It's actually the third most

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Speaker 1: significant occupationally hazardous job in the country roofs or anyone

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Speaker 1: who has to climb on a roof to do that

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Speaker 1: kind of work. With the assistance of the cast free drone,

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Speaker 1: that same claims adjuster can come on site and be

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Speaker 1: five to six times more productive and way more safer

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Speaker 1: because they can actually cover that roof by the drones

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Speaker 1: flying overhead, not only taking a visual image but creating

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Speaker 1: a full topological model as well as being able to

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Speaker 1: automate the hail detection of what's occurred on as far

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Speaker 1: as damage directly on that roof, and so the workload

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Speaker 1: of that individual becomes way more faster and able to

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Speaker 1: accomplish more than a single day, whereas they go from

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Speaker 1: covering two to three roots per day for as much

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Speaker 1: as ten to fifteen and when there's a heavy hail

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Speaker 1: stricken region. It's about speed and customer experience, and that

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Speaker 1: are Casper is really assisting that claims adjuster to just

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Speaker 1: do their work in a more expeditious fashion. I just

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Speaker 1: want to focus also on another industry group that you

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Speaker 1: have a lot of experience with. This is the mining industry,

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Speaker 1: if you wanted to start a mind or open a

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Speaker 1: mind or do a mind safety check. Uh, you've got

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Speaker 1: examples that this would take hours, if not days, and

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Speaker 1: it would take quite a number of people. Now it's

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Speaker 1: just like one person and a half hour. Well, this

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Speaker 1: is where we started in this business. When we looked

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Speaker 1: at these opportunities for industrial work, it was always about

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Speaker 1: the drone very reliably and consistently collecting data. And we

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Speaker 1: think of that as effectively a full aerial intelligence platform.

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Speaker 1: But the drones is not just working to collect that data.

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Speaker 1: Then we're providing an entire cloud infrastructure and a set

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Speaker 1: of applications to support these industrial use cases. So we

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Speaker 1: exactly right started in the mining aggregate space, where literally

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Speaker 1: now the drone flies overhead of open minds and looks

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Speaker 1: at what the topology of that landscape is, measures the

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Speaker 1: amount of material that might be stockpiled, and gives you

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Speaker 1: a full volumetric assessment of the material that you have

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Speaker 1: on that specific mind location or that aggregate stockpile. And

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Speaker 1: in that regard, In that regard, I was just going

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Speaker 1: to mention that the accuracy of what we're now delivering

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Speaker 1: them is actually now within one percent of forecast variants

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Speaker 1: because you're able to get highly accurate view basically taking

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Speaker 1: the imagery and converting that into a synthesized three dimensional model.

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Speaker 1: I was just gonna add that it's also in the

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Speaker 1: construction industry. I mean it, it would make sense that,

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Speaker 1: you know, if you're trying to figure out how much

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Speaker 1: earth you're going to have to move or do a

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Speaker 1: civil survey or something like that, that the drone, the

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Speaker 1: information and the and the ability to analyze the info

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Speaker 1: that would be useful in that industry as well. Right,

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Speaker 1: that's exactly right. And when you think about the relationship

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Speaker 1: with Kestfrey and John Deere. A few months ago we

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Speaker 1: announced at context BO the exclusive relationship with H. Deer's

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Speaker 1: Forestry and Construction division, it was exactly for this purpose

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Speaker 1: that we can actually drive the John Dear material and

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Speaker 1: excuse me, that the John Deer equipment material into a

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Speaker 1: construction work site, and supporting that equipment could be exactly

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Speaker 1: this drone that in our cases provided by Casprey that

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Speaker 1: would actually get the topological analysis, the accuracy of the

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Speaker 1: survey assessment in place, so that you know where to

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Speaker 1: move the earth, you know what the leveling and grading

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Speaker 1: on that site looks like. And of course, when you

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Speaker 1: think about these earthworks projects, getting that right is probably

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Speaker 1: some of the most important aspect of a construction project

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Speaker 1: because if you don't get it right, that's when buildings

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Speaker 1: lean and kind of fall into the ground and sync

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Speaker 1: where you have all kinds of liability issues. Clint to

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Speaker 1: a construction project coming online. All right, now, I imagine

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Speaker 1: there's no one size fits all to this. But what

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Speaker 1: about cost? What does something like this cost for a project?

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Speaker 1: And is there a subscription or a license for the

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Speaker 1: analytics that come with it. Yeah, this is exactly how

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Speaker 1: we think about it. And the solution that we're providing

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Speaker 1: is not just the drone itself, but the analytics software,

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Speaker 1: the decision making capabilities, the flight insurance that's surrounding the

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Speaker 1: drone all being packaged up. So the packaging is literally

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Speaker 1: in the tens of thousands of dollars per unit, and

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Speaker 1: so we make a very natural experience for our customers

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Speaker 1: to land with initial unit of KEST free drone and

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Speaker 1: then very quickly expands. We have customers now that are

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Speaker 1: literally in the country and the rest of North America

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Speaker 1: have twenty thirty units of KEST Free drones that are

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Speaker 1: very actively working in these industrial work sites. Georgia, last

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Speaker 1: point to you is, uh, you know, I know this

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Speaker 1: is the painful part. But if you were advising people

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Speaker 1: whose jobs were under threat and telling them, look, you

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Speaker 1: better learn about this new drone technology because what you're

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Speaker 1: doing is going to be automated in the next five years.

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Speaker 1: Do you have any estimates as to who or how many. Well,

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Speaker 1: when you think about this opportunity, at least like Casprey,

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Speaker 1: we don't wake up and think about this as a

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Speaker 1: situation where that work is replaced. In fact, in most

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Speaker 1: of the cases where we have worked in the mining

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Speaker 1: aggregate space, when we've worked in the insurance sector, when

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Speaker 1: we work in the construction sector. You notice that I

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Speaker 1: mentioned the productivity of that individual that's actually working. So

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Speaker 1: this is an opportunity that I had to go to

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Speaker 1: the White House a few months back and really spend

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Speaker 1: time with President and the rest of the administration really

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Speaker 1: helping understand what the extent of that labor potential is

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Speaker 1: and what we can actually develop. I gotta we gotta run, George.

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Speaker 1: I'm sorry, but George Matthew, he's the chief executive and

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Speaker 1: the chairman of kespre They're based in Menlo Park, California.

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Speaker 1: Look up in the sky, it's a bird. It's a plane. No,

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Speaker 1: it's a drone. This is Bloomberg. Well, we all know

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Speaker 1: about A B and B and what it's done for

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Speaker 1: the hospitality industry and how it has disrupted the hotel business.

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Speaker 1: Here to help us understand how a similar approach might

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Speaker 1: be working on the yachting and boat industries. Jackie bound

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Speaker 1: Garden the chief executive and co founder of Boat Center. Jackie,

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Speaker 1: thank you very much for being with us. Thank you

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Speaker 1: for having me. Tell us first about what is boats

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Speaker 1: Center and how did you come to found this. Certainly so,

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Speaker 1: Boats that Are is the leading online boat rental community,

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Speaker 1: so you can think of us as an Airbnb for boats.

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Speaker 1: What Boats that Are is is an online platform where

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Speaker 1: we present privately owned vessels with US Coast Guard license

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Speaker 1: captains and incredible on the water experiences. What we're doing

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Speaker 1: is connecting people in the boating industry in a way

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Speaker 1: that's never been done before. What we have is thousands

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Speaker 1: of boats to choose from across key markets in the

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Speaker 1: United States, the Caribbean, and the med So whether you're

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Speaker 1: looking to go cruising on a power yacht, fishing with

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Speaker 1: your buddies, sailing on a Hankley, or celebrating a special

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Speaker 1: day with friends and family. We have incredible and amazing

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Speaker 1: boats and captains to choose from. Jack, Sorry, thank your

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Speaker 1: parton go Ahead. You had asked me as well, how

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Speaker 1: how how did you? Yeah, that's what I wanted to know.

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Speaker 1: How did you get into this? Certainly so there was

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Speaker 1: a very personal story. Actually, Um, some of my happiest

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Speaker 1: memories from childhood were times spent out on the water

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Speaker 1: with my father and my three brothers on the lakes

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Speaker 1: Michigan and Chicago. And I wanted to be able to

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Speaker 1: offer that opportunity to anyone. And in two thousand and twelve,

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Speaker 1: my two brothers, who are boat owners, called me about

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Speaker 1: two weeks apart from one another, complaining that they were

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Speaker 1: going to have to sell their boats because they hadn't

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Speaker 1: used them once in an entire year. And you know

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Speaker 1: their their challenge is not an exception. The average boat

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Speaker 1: owner only uses their boat fourteen days a year. So

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Speaker 1: I suggested, why don't you rent out your boats instead

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Speaker 1: of selling them? And their reaction was, I can't, my

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Speaker 1: insurance doesn't allow it. And they were correct. At the time,

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Speaker 1: recreational vote insurance policies did not allow for rentals or charters.

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Speaker 1: So I spent eight months hitting the global insurance markets

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Speaker 1: and worked with leading maritime underwriters to establish the first

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Speaker 1: of its kind peer to peer marine insurance policy. And

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Speaker 1: that's what launched the peer to peer boating industry back

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Speaker 1: in two thousand fourteen. How did that agreement and relationship

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Speaker 1: with the insurance companies change? Did add costs take away

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Speaker 1: cost What happened as a result of that, Well, it

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Speaker 1: was fundamentally a new policy and approach. The policy itself

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Speaker 1: becomes primary and exclusive only during the rental on boat

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Speaker 1: setter's platform, and it protects the boat, the boat owner,

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Speaker 1: the renter, and captain and crew. So it's the most

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Speaker 1: comprehensive policy im peer to peer in the industry. And

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Speaker 1: what that did was it fundamentally changed the relationship and

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Speaker 1: allowing private owners to be able to allow their boats

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Speaker 1: for rent on a marketplace like ours. And the way

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Speaker 1: it works is when the renter rents, there's a premium

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Speaker 1: associated for each mental to ensure and protect everyone involved

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Speaker 1: at the renter pays and that varies depending on the value,

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Speaker 1: the age and the quality of the vessel. Speak a

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Speaker 1: little bit about the state by state oversight of the

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Speaker 1: voting industry, because I know in Florida, for example, there

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Speaker 1: is an effort in the Florida Senate, I believe, to

433
00:24:19,600 --> 00:24:22,840
Speaker 1: get a new law pass that allows people to get

434
00:24:22,840 --> 00:24:28,600
Speaker 1: a discount on their registration for additional safety measures. So

435
00:24:29,119 --> 00:24:32,840
Speaker 1: you know, in the US, everything is governed by by

436
00:24:32,920 --> 00:24:36,320
Speaker 1: maritime law, so it's not technically state by state. And

437
00:24:36,600 --> 00:24:40,879
Speaker 1: unlike vehicles, there isn't a general license that one can have.

438
00:24:41,480 --> 00:24:43,480
Speaker 1: You can get a U S Coast Guard license, but

439
00:24:43,520 --> 00:24:46,080
Speaker 1: it's not required to go voting. So there are a

440
00:24:46,119 --> 00:24:51,560
Speaker 1: lot of initiatives underway through various associations. Vote US, for example,

441
00:24:51,600 --> 00:24:54,680
Speaker 1: has a non water training course. Various states are trying

442
00:24:54,680 --> 00:24:59,600
Speaker 1: to provide state safety training, voting safety courses and encouraging

443
00:24:59,640 --> 00:25:03,080
Speaker 1: it and cases requiring, depending on your age, that someone

444
00:25:03,400 --> 00:25:05,800
Speaker 1: complete a boat safety course prior to getting out on

445
00:25:05,840 --> 00:25:08,960
Speaker 1: the water. Tell us about some of the boats. Let's

446
00:25:09,000 --> 00:25:12,240
Speaker 1: maybe start with the more affordable and tell us about

447
00:25:12,240 --> 00:25:14,840
Speaker 1: some of the deals, and then give us the luxury version.

448
00:25:15,800 --> 00:25:18,280
Speaker 1: You've got it. Well, the beauty is, with thousands of

449
00:25:18,280 --> 00:25:20,960
Speaker 1: boats on the site, we can offer pretty much anything

450
00:25:21,000 --> 00:25:24,359
Speaker 1: to anyone depending on what they're looking for. Anything from

451
00:25:24,400 --> 00:25:27,520
Speaker 1: going um, you know, touring the inner coastal and taking

452
00:25:27,520 --> 00:25:30,960
Speaker 1: out a center console for two hundred and fifty to

453
00:25:31,040 --> 00:25:34,880
Speaker 1: three hundred for half a day, up to beautiful luxury

454
00:25:34,960 --> 00:25:37,880
Speaker 1: hundred and thirty foot yachts for five thousand a day.

455
00:25:38,320 --> 00:25:41,520
Speaker 1: Now you can customize the duration that you want to

456
00:25:41,520 --> 00:25:43,080
Speaker 1: go out on a boat. So if you want to

457
00:25:43,119 --> 00:25:44,840
Speaker 1: take it out for half a day or a month,

458
00:25:45,280 --> 00:25:48,240
Speaker 1: that could be accommodated. And you know, for those of

459
00:25:48,280 --> 00:25:50,400
Speaker 1: you in New York who are interested, you could take

460
00:25:50,440 --> 00:25:53,880
Speaker 1: out in ninety seven foot beautiful power yacht for a day,

461
00:25:54,040 --> 00:25:55,760
Speaker 1: or if you want to sail, we have you know,

462
00:25:55,760 --> 00:25:57,760
Speaker 1: thirty five ft in gleaves that you can take out.

463
00:25:58,119 --> 00:26:02,040
Speaker 1: There's a wide variety of inventory, boat size, boat type,

464
00:26:02,600 --> 00:26:05,520
Speaker 1: and the plus side to our platform is that we

465
00:26:05,640 --> 00:26:08,639
Speaker 1: also have the largest database of US Coast Guard license

466
00:26:08,720 --> 00:26:11,639
Speaker 1: captains and making me assigned to any boat, so you

467
00:26:11,680 --> 00:26:13,760
Speaker 1: don't even have to be an experienced voter to enjoy

468
00:26:13,800 --> 00:26:17,040
Speaker 1: boats Center. Well, thank you very much, Jackie boun Garten,

469
00:26:17,400 --> 00:26:20,359
Speaker 1: and I noticed for about for a half day you

470
00:26:20,359 --> 00:26:24,000
Speaker 1: can take out a nice Hinckley UH thirty five on

471
00:26:24,080 --> 00:26:26,399
Speaker 1: the on the Hudson River. Thank you very much for

472
00:26:26,480 --> 00:26:40,920
Speaker 1: being with us. Very interesting. Yes, well, we're gonna talk

473
00:26:40,920 --> 00:26:43,880
Speaker 1: about Blue Apron, a recent initial public offering, and here

474
00:26:43,880 --> 00:26:46,760
Speaker 1: to help us is Alex Brinka, our initial public offering

475
00:26:46,800 --> 00:26:50,199
Speaker 1: reporter for Bloomberg. Alex, see, you get to cover the

476
00:26:50,240 --> 00:26:52,040
Speaker 1: I p O and then you get to cover the

477
00:26:52,160 --> 00:26:54,440
Speaker 1: earnings call of let's say, Blue Apron. We'll get to

478
00:26:54,480 --> 00:26:56,760
Speaker 1: snap in a second. What did we learn from Blue

479
00:26:56,760 --> 00:26:58,639
Speaker 1: Apron other than the fact that people seem to be

480
00:26:58,720 --> 00:27:01,800
Speaker 1: on a diet, people are not eating as much. Blue

481
00:27:01,840 --> 00:27:04,159
Speaker 1: Apron is what it seems. But the main thing that

482
00:27:04,240 --> 00:27:06,840
Speaker 1: I'm looking at here, it's something that did come up

483
00:27:07,119 --> 00:27:09,840
Speaker 1: when this company went public a couple of months ago,

484
00:27:10,320 --> 00:27:14,919
Speaker 1: is looking at customers and looking at how much customers

485
00:27:14,960 --> 00:27:20,280
Speaker 1: are spending. Revenue per customer, and customers did decline quarter

486
00:27:20,359 --> 00:27:24,679
Speaker 1: over quarter nine percent, not great and average revenue per

487
00:27:24,720 --> 00:27:27,639
Speaker 1: customer was two fifty one bucks in the second quarter,

488
00:27:28,000 --> 00:27:30,720
Speaker 1: and it was two d sixty four dollars in the

489
00:27:30,720 --> 00:27:34,960
Speaker 1: second quarter, So that's gone down to so not great things.

490
00:27:35,040 --> 00:27:38,600
Speaker 1: But put in context of Blue Apron, this company went

491
00:27:38,680 --> 00:27:42,360
Speaker 1: public as losing a lot of money, spending a lot

492
00:27:42,400 --> 00:27:46,960
Speaker 1: of money on marketing and right now it's not showing

493
00:27:47,160 --> 00:27:50,399
Speaker 1: that path to profitability. UM. And that's something that was

494
00:27:50,520 --> 00:27:53,480
Speaker 1: concerning when this company listed and will continue to be

495
00:27:53,600 --> 00:27:58,240
Speaker 1: concerning and marketing spending to frankly, UH came down, which

496
00:27:58,240 --> 00:28:00,760
Speaker 1: could be perceived as a good sign, but when you

497
00:28:00,800 --> 00:28:03,600
Speaker 1: when it coincides with that decline and customers as well,

498
00:28:03,840 --> 00:28:07,359
Speaker 1: there's this fear then if they if this trend of

499
00:28:07,359 --> 00:28:11,359
Speaker 1: them having to basically buy customers UH doesn't work if

500
00:28:11,359 --> 00:28:13,719
Speaker 1: there's no UM you know, if if they if they

501
00:28:13,800 --> 00:28:16,800
Speaker 1: raign in that spending and customers acquisition doesn't go up,

502
00:28:17,200 --> 00:28:21,199
Speaker 1: that's another profitability question. They also mentioned, I believe, on

503
00:28:21,240 --> 00:28:24,679
Speaker 1: the call talking about their Linden, New Jersey facility and

504
00:28:24,760 --> 00:28:30,120
Speaker 1: also a facility in California and their ongoing challenges. That's right,

505
00:28:30,240 --> 00:28:32,240
Speaker 1: And so Blie brands business model. Remember they send out

506
00:28:32,240 --> 00:28:34,800
Speaker 1: these meal kids to customers. Um, you you cook and

507
00:28:34,880 --> 00:28:38,080
Speaker 1: chop and kind of cook the food yourself, but they

508
00:28:38,120 --> 00:28:41,840
Speaker 1: preportion everything in these boxes and these boxes are made

509
00:28:41,840 --> 00:28:44,560
Speaker 1: at what they call these fulfillment centers. This Linden, New

510
00:28:44,640 --> 00:28:49,000
Speaker 1: Jersey location. UM, they did talk about that location does

511
00:28:49,040 --> 00:28:50,680
Speaker 1: look like it's going to be a little bit delayed,

512
00:28:50,680 --> 00:28:53,520
Speaker 1: which is not helpful for the second quarter, but it

513
00:28:53,640 --> 00:28:57,720
Speaker 1: does also drag down on margins, is what it looked like.

514
00:28:57,960 --> 00:29:02,040
Speaker 1: The chief executive officer said, and um, this delayed New

515
00:29:02,120 --> 00:29:06,320
Speaker 1: Jersey ramp up. Their cost of goods sold also increased

516
00:29:06,360 --> 00:29:10,880
Speaker 1: twenty year every year, and they attributed that as well

517
00:29:10,960 --> 00:29:14,760
Speaker 1: to kind of getting settled in this New Jersey location.

518
00:29:14,840 --> 00:29:17,760
Speaker 1: So these fulfillment centers are very important for Blabran. It

519
00:29:17,840 --> 00:29:20,520
Speaker 1: is the hub that all of the food comes into

520
00:29:20,800 --> 00:29:24,080
Speaker 1: that they prepackaged. So any kind of you know, delay

521
00:29:24,280 --> 00:29:27,880
Speaker 1: or trouble or increase in kind of the cost of

522
00:29:28,000 --> 00:29:31,000
Speaker 1: running one of these locations could be an issue. They

523
00:29:31,040 --> 00:29:34,000
Speaker 1: did say that down the road, this New Jersey fulfillment

524
00:29:34,040 --> 00:29:37,760
Speaker 1: center is larger, it will help in terms of facilitating

525
00:29:37,880 --> 00:29:41,000
Speaker 1: kind of their operations. But for now it's not a

526
00:29:41,000 --> 00:29:43,480
Speaker 1: great sign. And if you look at the shares, they

527
00:29:43,520 --> 00:29:49,400
Speaker 1: are down about pent right now, bringing the company down

528
00:29:49,640 --> 00:29:53,880
Speaker 1: since it's listing in June. Well, that's just my flush

529
00:29:53,960 --> 00:29:56,280
Speaker 1: out anybody who was a bull on the on the

530
00:29:56,280 --> 00:29:58,600
Speaker 1: I p O. But you know that the future remains

531
00:29:58,640 --> 00:30:00,240
Speaker 1: to be seen. But I think it's just the played

532
00:30:00,240 --> 00:30:03,200
Speaker 1: devil's advocate. For a second, I got it's impressive that

533
00:30:03,240 --> 00:30:05,719
Speaker 1: they are at a billion dollar run rate already. They

534
00:30:05,760 --> 00:30:08,160
Speaker 1: are at a billion dollar run rate and annually, right,

535
00:30:08,200 --> 00:30:10,320
Speaker 1: I mean, so this is I mean, you gotta hand

536
00:30:10,320 --> 00:30:12,400
Speaker 1: it to I mean, in an industry which, you know,

537
00:30:12,440 --> 00:30:14,840
Speaker 1: a couple of years ago, this did not really exist

538
00:30:14,920 --> 00:30:16,760
Speaker 1: other than you know, in the memory of people who

539
00:30:16,880 --> 00:30:20,720
Speaker 1: ate Swanson's TV dinners. Um, this is kind of impressive,

540
00:30:20,920 --> 00:30:23,200
Speaker 1: it is, And that's that's what the kind of buying

541
00:30:23,240 --> 00:30:25,680
Speaker 1: into the I p O was all about. This company

542
00:30:25,720 --> 00:30:30,480
Speaker 1: is relatively young. Their revenue increased to almost a billion dollars,

543
00:30:30,520 --> 00:30:32,800
Speaker 1: basically a billion dollar run rate in just a few years.

544
00:30:32,960 --> 00:30:35,040
Speaker 1: They were the first mover in this male kid space.

545
00:30:35,120 --> 00:30:38,760
Speaker 1: But just since literally three days before this company uh

546
00:30:39,360 --> 00:30:41,560
Speaker 1: launched it road show for this I p O, you

547
00:30:41,600 --> 00:30:45,280
Speaker 1: have Amazon buying cold foods. Now you have Amazon looking

548
00:30:45,320 --> 00:30:48,800
Speaker 1: to patent its own meal kits. So the competitive dynamics

549
00:30:48,840 --> 00:30:51,440
Speaker 1: have changed quite a bit just in the last two months.

550
00:30:51,440 --> 00:30:55,760
Speaker 1: So yes, great kind of onboarding of initial customers, great

551
00:30:55,800 --> 00:30:59,480
Speaker 1: initial kind of trajectory for revenue, but now they have

552
00:30:59,640 --> 00:31:01,840
Speaker 1: to really get to scale, figure out a way to

553
00:31:01,880 --> 00:31:04,440
Speaker 1: make money and block and tackle with a girl I

554
00:31:04,560 --> 00:31:06,800
Speaker 1: like Amazon, Well, it's just gonna also mention just to

555
00:31:06,920 --> 00:31:11,240
Speaker 1: sort of, uh offer a coda to Blue Apron. Right now,

556
00:31:11,680 --> 00:31:14,080
Speaker 1: the I p O price was ten dollars a share,

557
00:31:14,200 --> 00:31:17,080
Speaker 1: right and we're trading right now at five dollars and cents.

558
00:31:17,120 --> 00:31:19,680
Speaker 1: So if you thought it was great at ten, maybe

559
00:31:19,680 --> 00:31:21,840
Speaker 1: you think it's even greater at about five and a

560
00:31:21,880 --> 00:31:24,760
Speaker 1: half bucks to share. Right. Potentially, we will keep an

561
00:31:24,760 --> 00:31:27,560
Speaker 1: eye on those analyst ratings as well. There aren't that

562
00:31:27,600 --> 00:31:31,120
Speaker 1: many on this stock, but they right now a lot

563
00:31:31,160 --> 00:31:33,520
Speaker 1: of a lot more buys than you have holds and cells,

564
00:31:33,520 --> 00:31:35,400
Speaker 1: and some of that might be due to that share price.

565
00:31:35,520 --> 00:31:38,680
Speaker 1: All right, Now, let's turn to something that disappears after

566
00:31:38,720 --> 00:31:42,959
Speaker 1: you created a Snap shares a snap down. Today, they

567
00:31:43,000 --> 00:31:45,080
Speaker 1: were trading at about thirteen and a half bucks to share.

568
00:31:45,120 --> 00:31:46,760
Speaker 1: What's up with Snap? We're going to get their results

569
00:31:46,960 --> 00:31:49,040
Speaker 1: later on, that's right, we will get their results later on.

570
00:31:49,120 --> 00:31:51,880
Speaker 1: This is the second earnings report since the I p O.

571
00:31:52,240 --> 00:31:55,440
Speaker 1: You remember, on that first earnings report, Snap disappointed on

572
00:31:56,280 --> 00:32:00,000
Speaker 1: user growth, they disappointed on revenue. And so these are

573
00:32:00,080 --> 00:32:01,760
Speaker 1: or those are kind of the two metrics that I

574
00:32:01,800 --> 00:32:04,360
Speaker 1: expect people will be paying a lot of attention to

575
00:32:04,960 --> 00:32:08,280
Speaker 1: last earnings, Uh, they're a fiscal first quarter earnings that

576
00:32:08,320 --> 00:32:12,560
Speaker 1: they reported. Uh, the stock fell about that day. Folks

577
00:32:12,560 --> 00:32:14,760
Speaker 1: were not happy. It's recovered a little bit since then,

578
00:32:15,560 --> 00:32:17,920
Speaker 1: but you know, people will be looking at those two

579
00:32:18,000 --> 00:32:21,480
Speaker 1: numbers and also they will be looking for more clarity

580
00:32:21,520 --> 00:32:25,040
Speaker 1: on how they continue to want to fight against their

581
00:32:25,080 --> 00:32:28,520
Speaker 1: adversary in this fight, which is Facebook and Facebook's Instagram

582
00:32:28,560 --> 00:32:32,640
Speaker 1: property um, which is basically copied snaps, disappearing photo features,

583
00:32:32,680 --> 00:32:35,720
Speaker 1: their story features every step of the way. So this

584
00:32:35,800 --> 00:32:39,040
Speaker 1: company is very secretive. Management doesn't like to give much

585
00:32:39,120 --> 00:32:41,560
Speaker 1: when it comes to the product roadmap or how they

586
00:32:41,600 --> 00:32:45,760
Speaker 1: prove to advertisers that advertisers are getting the eyeballs and

587
00:32:45,800 --> 00:32:47,840
Speaker 1: making money off the ads they're putting on their app.

588
00:32:47,880 --> 00:32:51,040
Speaker 1: But that's what investors will be looking for from chief

589
00:32:51,080 --> 00:32:54,800
Speaker 1: executive Officer Evan Spiegel and potentially chief strategy officer in

590
00:32:54,920 --> 00:32:57,560
Speaker 1: Ron Con as well. A pleasure always, and I'm if

591
00:32:57,640 --> 00:33:00,080
Speaker 1: Evan Spiegel's listening or someone knows him, I think it

592
00:33:00,160 --> 00:33:01,600
Speaker 1: he ought to talk to you. That way, you won't

593
00:33:01,640 --> 00:33:04,480
Speaker 1: be so reclusive. Thanks very much for joining us. Alex

594
00:33:04,520 --> 00:33:10,760
Speaker 1: Brinka our i p O reporter for Bloomberg News, Thanks

595
00:33:10,760 --> 00:33:13,400
Speaker 1: for listening to the Bloomberg P and L podcast. You

596
00:33:13,400 --> 00:33:17,200
Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

597
00:33:17,320 --> 00:33:20,800
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

598
00:33:20,840 --> 00:33:24,840
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.

599
00:33:24,960 --> 00:33:27,560
Speaker 1: It's one before the podcast. You can always catch us

600
00:33:27,600 --> 00:33:29,160
Speaker 1: worldwide on Bloomberg Radio