Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg business Week inside from the reporters and
Speaker 2: editors who bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 3: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 3: Quite a week that included Super Tuesday's voting in fifteen
Speaker 3: states at as expected, prompted Republican presidential hopeful Nikki Haley
Speaker 3: to drop out and deliver definitive wins for both former
Speaker 3: President Donald Trump and President Joe Biden in an almost
Speaker 3: guaranteed rematch come November. As for President Biden, he also
Speaker 3: addressed the nation in his State of the Union speech
Speaker 3: this past week, announcing, among other initiatives, plans to raise
Speaker 3: taxes and corporations.
Speaker 4: On top of all that, we continue to digest us
Speaker 4: economic data on every from the services sector, factory activity,
Speaker 4: job openings, and on the overall health of the job market.
Speaker 4: This is Fedchair J. Powell spent two days up on
Speaker 4: Capitol Hill answering questions, as he does twice a year
Speaker 4: in his semi annual Monetary Policy testimony before the House
Speaker 4: Financial Services and Senate Banking Committees, the FED chair reiterated
Speaker 4: to lawmakers that the US Central Bank is in no
Speaker 4: rush to cut interest rates until policymakers are convinced that
Speaker 4: they have won their battle over inflation.
Speaker 3: A lot going on this week, and all the details
Speaker 3: on all of what Tim just talked about you can
Speaker 3: find at Bloomberg dot com or on the Bloomberg but
Speaker 3: that is our backdrop. We're going to spend a lot
Speaker 3: on the macro market and political backdrop. This hour with
Speaker 3: Kathy would have of ARC invest and what impact any of
Speaker 3: it might have on the market outlook. We'll also get
Speaker 3: Kathy Wood's take on everything from getting out of Nvidia
Speaker 3: before the stratospheric run up and what AI stock she
Speaker 3: might be buying instead.
Speaker 4: Also what she makes of the overall run up in
Speaker 4: stocks and whether she sees any signs of bubble, plus
Speaker 4: how things are going with her new spot Bitcoin etf Oh, Carol, hmmm,
Speaker 4: what about Elon too, of course, yeah, and what she's
Speaker 4: been adding to we're selling out of and.
Speaker 3: Why always lots to talk about when she joins us.
Speaker 3: Kathy Wood, by the way, part of an all star
Speaker 3: lineup of women over the next couple of hours, in
Speaker 3: light of March being Women's History Month and International Women's
Speaker 3: Day just this past Friday, and so also this hour,
Speaker 3: Capitol Group's head of Global Asset class Services, Matti Desner,
Speaker 3: she'll join us on the capital market assumptions for the
Speaker 3: next twenty years.
Speaker 4: We all should probably listen closely considering what the author
Speaker 4: of a new book has to say. Teresa Gilarducci is
Speaker 4: professor of economics at the New School, also the author
Speaker 4: of the new book Work Retire Repeat The Uncertainty of
Speaker 4: Retirement in the New Economy. It's a damning portrait of
Speaker 4: the dire realities of retirement here in the US.
Speaker 3: Which is done investing enough for our futures or our retirement.
Speaker 3: All right, all of that to come. We begin with
Speaker 3: a voice and perspective that gets a lot of attention
Speaker 3: on Wall Street and certainly in our Bloomberg world. Kathy
Speaker 3: Wood is the founder, CEO and CIO of ARC invest.
Speaker 3: Kathy joined us Friday to talk the macro environment and
Speaker 3: her micro investment.
Speaker 5: It looks like that corporations are losing pricing power, and
Speaker 5: we are now beginning to see the unemployment rate move up.
Speaker 5: It went up to three point nine percent in this
Speaker 5: latest report from a low of three point four percent,
Speaker 5: So undeniably it's on its way up now. And we
Speaker 5: do think it's because corporations are losing pricing power, their
Speaker 5: margins are getting hit. It's going to it's going to
Speaker 5: cause a couple of things. One, the labor hoarding that
Speaker 5: we've seen since COVID is going to diminish, and that
Speaker 5: will increase the unemployment rate. But then the second thing
Speaker 5: is it will accelerate the adoption of technologies. Innovation solves problems,
Speaker 5: and one of the things that it does is increase productivity,
Speaker 5: increase efficiency, and create new products and services. So we're
Speaker 5: pretty optimistic about our strategy in this environment because interest
Speaker 5: rates should come down. I think I think that the Fed,
Speaker 5: even the FED is going to be surprised at how
Speaker 5: low inflation goes.
Speaker 1: We think it could be negative this year.
Speaker 3: Well, so, Kathy, let me ask you, that's interesting. I mean,
Speaker 3: if the expectations, at least according to traders right now,
Speaker 3: is that the first rate comes in June, is that
Speaker 3: too late in your view for the Fed to start
Speaker 3: cutting rates?
Speaker 5: Well, I think the twenty fourfold increase in interest rates
Speaker 5: in little more than a year have shocked the system.
Speaker 5: We're beginning to see a reverberation of the regional bank issues.
Speaker 5: We don't think they are going away. Deposits are still
Speaker 5: outflowing broadly from the banking system. And there are increasing
Speaker 5: problems with commercial real estate. Most people know about the
Speaker 5: office problems, but multifamily units, multifamily apartments, We're beginning to
Speaker 5: see some distressed sales there as well. I think that
Speaker 5: that problem isn't as well understood I think, and it's
Speaker 5: going to cause the regional banks even more problems.
Speaker 4: Kathy, how quickly do you think unemployment can go up
Speaker 4: this year? What are you forecasting over at ARC?
Speaker 5: Well, I wouldn't be surprised to see the unemployed employment
Speaker 5: rate go above five percent. Now, I'm saying that knowing
Speaker 5: that this is an election year and that this administration
Speaker 5: probably will try and spend more than is currently in
Speaker 5: the budgets through executive order or what have you, But
Speaker 5: above five percent would not surprise us.
Speaker 3: All right, So above five percent, well, that's interesting, all right,
Speaker 3: So we have a good idea of your economic and
Speaker 3: kind of macro backdrop. Having said that, so here we
Speaker 3: are sitting at a day where we're seeing a little
Speaker 3: bit of a pullback in stocks, but you're to date
Speaker 3: the S and P still lot more than seven percent.
Speaker 3: We're looking at a Nasdaq one hundred that's also got
Speaker 3: more than seven percent. You look at something like the
Speaker 3: socks is up around twenty percent year today, picking an
Speaker 3: individual name like an Nvidia more than eighty percent, and
Speaker 3: I could go on and on and on. There are
Speaker 3: many who talk about a bubble, some like in it
Speaker 3: back to ninety nine, two thousand, anything in today's equity
Speaker 3: trade that says bubble to you.
Speaker 5: We do not believe we're in a bubble anything like
Speaker 5: we were in the late nineties. I was there, and
Speaker 5: the technologies weren't ready, The costs were too high, too
Speaker 5: much capital chase, too few opportunities, too soon.
Speaker 1: The seeds for.
Speaker 5: What is happening now were planted during the twenty years
Speaker 5: that ended in the tech and telecom bubble, and they've
Speaker 5: been germinating for twenty five or thirty years. So we
Speaker 5: believe we're ready for primetime. The one place where we
Speaker 5: could see a correction, and it's just a correction. We're
Speaker 5: not calling at the end of this at all is
Speaker 5: in the chip space.
Speaker 1: Whenever I hear.
Speaker 5: The word shortage, and we started hearing about GPU shortages
Speaker 5: about this time last year as chat GPT was capturing
Speaker 5: the imagination of both businesses and consumers.
Speaker 1: So for about a year we've heard.
Speaker 5: That word and now we're seeing lead times we believe
Speaker 5: come down for GPUs for nvidians in particular from the
Speaker 5: eight to eleven month range to the three to four
Speaker 5: month range. So that is suggesting that there was probably
Speaker 5: a lot of double and triple ordering as the word
Speaker 5: shortage was making the rounds, and that those inventories will
Speaker 5: have to be digestivele Is that.
Speaker 3: Also because of an increase in supply in terms of
Speaker 3: output or is it because you think demand is going down?
Speaker 3: Which one is it?
Speaker 2: Oh?
Speaker 5: I don't think no, No, demand is not going down,
Speaker 5: though there is something we expect that I don't hear
Speaker 5: discussion very much. And it harkens back to the early
Speaker 5: days of the Internet. There was a moment when the
Speaker 5: Internet was taking off, when Cisco was all the rage,
Speaker 5: and then enterprises started thinking seriously about the need to
Speaker 5: spend aggressively on this new thing called the Internet, and
Speaker 5: the backbone and they paused as a lot of competitions
Speaker 5: started to make the rounds, and Cisco went down fifty
Speaker 5: percent plus as enterprises were pausing. Now, why are enterprises
Speaker 5: likely to pause or at least go through an assessment.
Speaker 5: They have to integrate all of their data first, proprietary
Speaker 5: data is the secret to AI's success. And they have
Speaker 5: to map out in excruciating detail their workflows internally and
Speaker 5: with suppliers and customers and so forth. And this is
Speaker 5: going to take time. So we think this is this
Speaker 5: movement is real, is going to be massive, but we
Speaker 5: think there's been a little bit too much too soon.
Speaker 4: Well, it's interesting to hear you say that, Kathy, because
Speaker 4: you and at ARC were very early to acknowledge the
Speaker 4: impact of AI. Yet your flagship Ark Innovation ETF has
Speaker 4: not held shares of Nvidia in about a year. You
Speaker 4: do own some of it in your other ETFs. Do
Speaker 4: you have any regrets about not having held onto the
Speaker 4: stock or actually increasing your exposure in the last couple
Speaker 4: of years after more than five hundred and thirty percent
Speaker 4: gains since twenty twenty two since the end of twenty
Speaker 4: twenty two.
Speaker 5: Yes, so you're right, we were very early into Nvidia
Speaker 5: ten years ago when it was five dollars. Now it's
Speaker 5: roughly eight hundred dollars, and we wrote it most of
Speaker 5: the way up. But I'll tell you what we did,
Speaker 5: and this is as a portfolio manager. It's not one
Speaker 5: action but what it causes in terms of another action.
Speaker 5: Last year we sold in the flagship in Vidia and
Speaker 5: put it into Coinbase. Coinbase, I believe is up as
Speaker 5: at least as much as in VideA, and it is
Speaker 5: much less well understood. The whole crypto movement, the crypto
Speaker 5: asset movement, Bitcoin as a new asset class and so
Speaker 5: forth is not well understood or completely accepted out there.
Speaker 5: So we prefer to go where others are not traveling
Speaker 5: as much. And you know, as we were moving out
Speaker 5: of in Video, we were saying, okay, regulators are trying
Speaker 5: to crush coinbase here, and we were buying it on
Speaker 5: every dip. In Vidia happen to be one of the
Speaker 5: sources for that purchase. So it's not just what we
Speaker 5: do on the cell side, it is what we do
Speaker 5: on the buy side that you have to look at.
Speaker 5: And yes, we do hold it in the more specialized funds,
Speaker 5: but we've been taking profits there as well for reasons
Speaker 5: I just described.
Speaker 3: Yeah, And to be fair, you're right, Coinbase is up
Speaker 3: about six hundred and twenty percent since the end of
Speaker 3: twenty twenty two, so that compares with about five hundred
Speaker 3: and thirty percent gain in nvideo. Is there anything, though,
Speaker 3: Kathy in the n video story that would make you
Speaker 3: we think the name and want to become more aggressive
Speaker 3: on it.
Speaker 5: Yeah, if the price came down a lot, we would
Speaker 5: you know, the rate of return expectations or split?
Speaker 3: Would a split do it? Because I know we've been
Speaker 3: never No, no.
Speaker 1: No, that wouldn't change. That wouldn't change anything.
Speaker 5: No, no, split adjusted than the price. So you know,
Speaker 5: if you look at our portfolio is what we're trying
Speaker 5: to capitalize on with a Palenteer for example. Are the
Speaker 5: next stages of this AI revolution? What we're seeing in
Speaker 5: the GPU side of things is Nvidia All praise to
Speaker 5: Jensen one. I mean, just unbelievable company execution, vision and
Speaker 5: so forth.
Speaker 1: And it's not over.
Speaker 5: It's going to last a long time, but there are
Speaker 5: going to be many other companies benefiting from AI. The
Speaker 5: productivity lift alone is going to be massive. The most
Speaker 5: massive productivity lift in history, we believe, and so this
Speaker 5: AI revolution is going to be broad based and is
Speaker 5: going to benefit a lot of companies. On the GPU side,
Speaker 5: of course, we have AMD as competition, but many people
Speaker 5: do not understand that there's a lot of other surreptitious
Speaker 5: competition evolving out there. Each of the hyperscalers is evolving its.
Speaker 1: Own chip strategy.
Speaker 5: You have a Tesla that has designed its own chip
Speaker 5: for AI, chip for the specialized, more specialized autonomous driving opportunity,
Speaker 5: and I think you're going to see a lot of
Speaker 5: companies developing more specialized chips. We know that Nvidia, of
Speaker 5: course will segment the market as well. So we just
Speaker 5: think that a lot of the assumptions for Nvidia, you
Speaker 5: know that this is in Nvidia's market, and it's alone
Speaker 5: that those are changing.
Speaker 4: Well, we're speaking with Kathy Wood if you're just joining us.
Speaker 4: She's the founder and CEO and chief investment officer of
Speaker 4: ARC invest. She joins us from Saint Petersburg, Florida.
Speaker 3: So it's interesting, Kathy two to you know, right, everybody
Speaker 3: seems to be out there making chips, and it's funny.
Speaker 3: We had a conversation yesterday with Chris Miller, who wrote
Speaker 3: the book Chip Wars, and we talked about TSMC that
Speaker 3: everybody can kind of design what they want, but ultimately,
Speaker 3: right now they've got to come back to TSMC as
Speaker 3: the fabricator to make them. So as you say that,
Speaker 3: I mean you guys, and one of your funds I
Speaker 3: think late last month was selling shares of TSMC. I
Speaker 3: am curious about then you're thinking around TSM. See there's
Speaker 3: a story today too about TSMC winning more than five
Speaker 3: billion in grants for their US chip plant, so money,
Speaker 3: you know, certainly being devoted to them. Why maybe pull
Speaker 3: back a little bit on TSMC or what is your
Speaker 3: case for TSMC in the long run.
Speaker 5: Well, the case for TSMC is, yes, it is the
Speaker 5: manufacturer of these merchant chips, so a very big story there.
Speaker 5: But this is simply a cyclical call and it has
Speaker 5: to do with that word shortage and TSMC. For example,
Speaker 5: Broadcamcom reported last night I listened to that call. In
Speaker 5: the semiconductor solutions part of their business, they were up
Speaker 5: only four percent, AI up thirty five percent, but everything
Speaker 5: else down. So there there are some cyclical phenomenon out there,
Speaker 5: phenomena out there that we think are not they're not
Speaker 5: being integrated into the short term expectations for a number
Speaker 5: of stocks.
Speaker 3: Hey in counting including Yeah.
Speaker 4: So, Kathy, I want to move on to Tesla because
Speaker 4: you brought it up a moment ago. You've been a
Speaker 4: long time bull on Tesla. You have been buying shares
Speaker 4: recently after selling them for most of twenty twenty three.
Speaker 4: The stock down about thirty percent so far this year.
Speaker 4: We covered the news this week that shipments from tesla
Speaker 4: shang High factory sank to the lowest in over a
Speaker 4: year in February. The challenges facing the EV industry have
Speaker 4: been well documented. We've talked about those a lot. Why
Speaker 4: do you still like Tesla considering all of the challenges
Speaker 4: in the EV space and also what many critics would
Speaker 4: say are disappointing fundamentals.
Speaker 1: So, yes, you're right.
Speaker 5: We were selling last year as it was in the
Speaker 5: three hundred to four hundred dollars range. It's back to
Speaker 5: one seventy five. And this is what portfolio managers do.
Speaker 5: We have a five year investment time horizon for Tesla
Speaker 5: and our price expectations from here, I mean we see
Speaker 5: roughly a seven to tenfold increase. I know we're in
Speaker 5: the process of revising our model. So I'm not at
Speaker 5: liberty to give you the new number.
Speaker 4: But would that new number be higher or lower than two.
Speaker 1: Thousand, Well, we're pushing it out a year, and.
Speaker 5: Therefore it will be higher because the autonomous taxi platform
Speaker 5: opportunity will be in full force. We think and we
Speaker 5: believe that Tesla will get the lion's share of that
Speaker 5: market here in the US, if not elsewhere. Autonomous taxi
Speaker 5: platforms are sas models. Tesla's current gross margin is well,
Speaker 5: it's in the teens right now because it's been cutting prices,
Speaker 5: but we think normalized the ev margin is in the
Speaker 5: thirty percent range. Sas margins are in the eighty percent range.
Speaker 5: Most analysts focusing on the stock have nothing in their models,
Speaker 5: are very little for autonomous. Our confidence that autonomous is
Speaker 5: going to happen has increased because it has happened. We
Speaker 5: see way most successful. We see a lot of success
Speaker 5: and commercial success. That is in China. It can be done.
Speaker 5: We think Tesla will launch a national service and Tesla
Speaker 5: this is where AI comes in. Tesla has orders of
Speaker 5: magnitude more data than all of the other auto and
Speaker 5: tech company companies going after this market combined and what's
Speaker 5: important about that is that it has corner cases that
Speaker 5: nobody else has, rare, rare occurrences on the roads that
Speaker 5: it has recorded, and it is prepared for it, but
Speaker 5: others aren't.
Speaker 1: You just don't.
Speaker 4: I just want to jump in. It's kind of like
Speaker 4: a running joke with the Tesla community because Elon Musk
Speaker 4: says every year we're going to have this autonomous drive technology,
Speaker 4: and every year since he started saying it, what twenty seventeen,
Speaker 4: twenty eighteen, it has failed to materialize. Why are you
Speaker 4: so confident it's going to happen in the near future.
Speaker 5: Well, because it has happened, as I just said, and
Speaker 5: so it's not. It's not if it is when. That's
Speaker 5: the most important reason. Interestingly, in his last conference call,
Speaker 5: Tesla's last conference call, Elon said, yeah, I know I've
Speaker 5: been wrong about it, so I'm not.
Speaker 1: Even going to make a projection.
Speaker 5: I actually thought that was good and maybe I had
Speaker 5: has a better shot now and we're looking at some
Speaker 5: of their hiring and their job postings and seeing rumblings
Speaker 5: in different cities that they're starting to get ready.
Speaker 3: Hey, Kathy, something I know I've brought up this with
Speaker 3: you before. But I think back to are you and
Speaker 3: my first interview back in May of twenty fourteen, so
Speaker 3: almost ten years ago. But you brought up Elon Musk
Speaker 3: when he wasn't a household name or what his company
Speaker 3: was doing, and you likened him to Thomas Edison, And
Speaker 3: I guess what I want to ask you. You know this,
Speaker 3: you talk with him, you followed him obviously for a
Speaker 3: long time. Do you ever feel you know, do you
Speaker 3: feel that way still about him in terms of likening
Speaker 3: to someone like Thomas Edison? And how do you find
Speaker 3: clarity and feel comfort in some of the questionable and
Speaker 3: controversial things that that Elon comments on or that he says.
Speaker 5: Yes, well, we we're focused on the technology and we're
Speaker 5: as is he.
Speaker 1: He is the inventor of our age.
Speaker 5: And this age is a very special age because the
Speaker 5: five major innovation platforms around which we have centered our
Speaker 5: research are converging, and three of them he is helping
Speaker 5: to converge. This autonomous taxi platform opportunity is the convergence
Speaker 5: of robotics. Autonomous vehicles are robots, energy storage they will
Speaker 5: be electric right, and artificial intelligence. We're the at three
Speaker 5: separate s curves feeding each other and should lead to
Speaker 5: super exponential growth. He has understood this idea that technologies
Speaker 5: are going to converge with one another, and that is
Speaker 5: the way he's been thinking his first principles research. Just
Speaker 5: because something's been done one way for a very long time,
Speaker 5: think autos, doesn't mean it is going to remain that way.
Speaker 1: And that's why he's going to win.
Speaker 3: Do you ever feel though that he gets distracted or
Speaker 3: or candidate to it.
Speaker 5: Yeah, he is so laser focused on technology. And in
Speaker 5: the case of Tessela, the electric vehicle side that is
Speaker 5: on automatic pilot, they are just scaling and what he
Speaker 5: is doing is becoming, you know, the manufacturer of factories.
Speaker 5: He's trying to figure out how to automate and continue
Speaker 5: to drive down the costs there. His focus is on
Speaker 5: autonomous now certainly, and of course you can say on
Speaker 5: x's distracted, but he's really more focused on the innovation.
Speaker 5: How can I go back to the future where I started,
Speaker 5: which was in the payments app Space sold to PayPal.
Speaker 5: How can I turn this into not only a payments app,
Speaker 5: but an everything app? And I think he's hard at
Speaker 5: work doing that in ways that we don't know yet.
Speaker 3: We are, of course talking with Kathy Woods. She's the CEO,
Speaker 3: CIO and of course founder of ARC invest joining us
Speaker 3: from Florida.
Speaker 4: Hey, Kathy, you're talking about the future of transportation. We
Speaker 4: got to talk about Archer Aviation. One of the most
Speaker 4: read stories today is about the company that you've been
Speaker 4: buying up. It's a developer of air taxis, Archer Aviation.
Speaker 4: Your stake around ten percent across several of your ETFs.
Speaker 4: You're the third largest investor in the name. We should
Speaker 4: note shares down roughly thirty percent so far this year.
Speaker 4: As our own Sam Potter writes today, you are once
Speaker 4: again on the other side of a short call made
Speaker 4: by Grizzly Research. Last time you were in a similar
Speaker 4: spot regarding differ name Too Simple. You lost a lot
Speaker 4: and eventually sold most of your position. So talk to
Speaker 4: us about why you believe in Archer and does it
Speaker 4: ever worry you to go against the short sellers.
Speaker 5: So our investment process is centered around research and original research.
Speaker 5: I'll start with Too Simple. We sold Too Simple after
Speaker 5: the CEO, who was the technology visionary, left and so
Speaker 5: Grizzly got that right. I don't think for the right reasons.
Speaker 5: Although we were in the teeth of a massive bear
Speaker 5: market as well. If that CEO had not left, I
Speaker 5: don't think we would have sold that stock. In the
Speaker 5: case of Archer, we have a high degree of confidence
Speaker 5: in Archer. One thing to understand about ARC is we
Speaker 5: are the closest ARC is the closest you'll find to
Speaker 5: a venture capital company in the public ech markets, and
Speaker 5: we tread where others in the traditional asset management world
Speaker 5: will not go, at least on the public side.
Speaker 1: When we see a real opportunity.
Speaker 5: As we're doing our work on autonomous vehicles, we concluded
Speaker 5: that the cost is going to drop so much that
Speaker 5: roads are going to become very congested in the future,
Speaker 5: much more congested if you can imagine New York City,
Speaker 5: and so we then started doing work about transportation in
Speaker 5: the skies. Is it possible, Yes, it is possible. The
Speaker 5: FAA is the gating factor from a regulatory point of view.
Speaker 5: There are two companies the FAA is working very closely with,
Speaker 5: and I think because of successes elsewhere in the world,
Speaker 5: other companies are having success where regulators have not been
Speaker 5: as strict, I think there's been a little more pressure
Speaker 5: on the FAA to pay close attention here, and the.
Speaker 1: Two are Archer and Jobi.
Speaker 5: Our confidence went up when Boeing, which was suing it
Speaker 5: for patent infringement, settled the case and actually took an
Speaker 5: ownership position in Archers, as has Stilantis and United Airlines,
Speaker 5: So three very deep pocketed partners who are also trying
Speaker 5: to figure out the future of transportation, and we know
Speaker 5: that they're on their way. Both Jobi and Archer two
Speaker 5: FAA certification. Seems like the process is in motion and
Speaker 5: we haven't.
Speaker 1: Had a hiccup.
Speaker 5: And it has an MoU with Abu Dhabi to launch
Speaker 5: an air taxi service in twenty six and pending regulation,
Speaker 5: it has an MoU with inter Globe to launch an
Speaker 5: air taxi service in India. Both of those have been
Speaker 5: much better from a regulatory point of view.
Speaker 4: But how big of a concern is it to you
Speaker 4: that regulators here in the US could drag their feet.
Speaker 4: We did speak with an airline executive recently who is
Speaker 4: concerned that the FA is moving slower than other regulatory
Speaker 4: bodies when it comes to this type of technology.
Speaker 5: Yes, and that is why we paid a lot of
Speaker 5: attention to regulatory arbitrage. We've seen innovation move abroad to
Speaker 5: other countries, even Amazon. The FAA wouldn't let Amazon fly
Speaker 5: its drones ninth generation nearly ten years ago on its
Speaker 5: own property outside, so it went to India and elsewhere.
Speaker 5: I think the pressures on the FAA now. And I
Speaker 5: also think that the bear market of twenty one and
Speaker 5: twenty two eliminated a lot of other competition that was
Speaker 5: brewing just the funding markets were closed, and so I
Speaker 5: think this market is much more is that both Jobie
Speaker 5: and Archer are going to have much more share than
Speaker 5: otherwise would have been the case. So we're pretty excited
Speaker 5: about the possibilities here.
Speaker 3: Hey, Kathy, as you said, you know, one of the
Speaker 3: things about ARC it certainly and it's the DNA, is
Speaker 3: that you go places and take positions that other people
Speaker 3: maybe don't do. And one of the things though that
Speaker 3: increasingly I feel like the financial establishment again is interested
Speaker 3: very much so is in crypto. And I want to
Speaker 3: talk about your spot bag Cooin ETF if I may
Speaker 3: the RC twenty one shares Bitcoin ETF. What can you
Speaker 3: tell us about institutional interest in it? Is there or
Speaker 3: is it mostly the funds that are going into it
Speaker 3: are mostly from the retail side. Well we are.
Speaker 5: We know there's institutional interest because we're talking to a
Speaker 5: lot of institutions including state treasurers and public pension funds.
Speaker 5: And why why is this? Because they're trying to figure
Speaker 5: out if this truly is a new asset class, and
Speaker 5: if it is, they must have a point of view
Speaker 5: as a fiduciary if there's a new asset class which
Speaker 5: is uncorrelated or shows very low correlation in terms of
Speaker 5: returns relative to other asset classes, than what an asset
Speaker 5: allocator does is it will take a position to increase
Speaker 5: returns per unit of risk. That's what happens with low
Speaker 5: correlation of returns. So definitely, now are they moving whole hog.
Speaker 5: Not yet. Nor are the big wirehouses like the Morgan,
Speaker 5: Stanleys and Ubs as wells Fargo, marri Lynch b of A.
Speaker 5: They are all waiting to see who are the winners
Speaker 5: in terms of the ETFs because they do not want
Speaker 5: to commit to an ETF that will close down and
Speaker 5: make sense and right, so and they're going to give
Speaker 5: it from what we're hearing three to six nine months.
Speaker 5: So everything the net inflows that we've seen and are
Speaker 5: away from those two spaces. Really it's part of it
Speaker 5: is our client base switching from GPTC into and other
Speaker 5: client bases into the ETFs, which are.
Speaker 1: Much lower fee.
Speaker 3: All right, but I do want to also then go
Speaker 3: to the next level, and that is an ether ETF
Speaker 3: being approved maybe in May. Are you optimistic that it's
Speaker 3: going to happen by that made deadline or what obstacles
Speaker 3: might be still out there that it won't make that deadline?
Speaker 5: Yeah, So the biggest obstacle is staking, and I don't
Speaker 5: think the regulators will allow staking in this first round
Speaker 5: if they allow the first round at all. Now, we
Speaker 5: and one other firm will see our final deadline in
Speaker 5: May if they reject. If they reject our filings, then
Speaker 5: will have to refile. But my guess is my guess
Speaker 5: is they will move more now to a first come,
Speaker 5: first serve when this next round goes through.
Speaker 1: So if it's May, it'll be without staking.
Speaker 5: If it's later, there's a better chance for staking. If
Speaker 5: it's in I would say twenty twenty five, because I
Speaker 5: think legislators and legislation is starting to get involved here
Speaker 5: and taking it away from simply the regulators.
Speaker 3: Hey, Kathy, I don't want to leave without asking you.
Speaker 3: It is International Women's Day, and I think about your path.
Speaker 3: We Tim and I have been talking a lot to
Speaker 3: many women who have made their way in male dominated fields,
Speaker 3: and I'm just curious how you think about your trajectory
Speaker 3: from where you started and what you've achieved. You started
Speaker 3: two firms or have co found one and started your
Speaker 3: own firm, how you think about that path and what
Speaker 3: is top top of mind in terms of those other
Speaker 3: individuals and other women that are out there that are
Speaker 3: maybe trying to do the same.
Speaker 5: Yes, well, I think the most important thing in early
Speaker 5: years is to make your own bosses look brilliant because
Speaker 5: younger people, younger people coming into the business know so
Speaker 5: much more about technology and where the world is going
Speaker 5: almost innately then shall I say, more seasoned investors. So
Speaker 5: just make your bosses look brilliant and educate them and
Speaker 5: you know, generate enthusiasm, enthusiasm, excitement, energy around around ideas
Speaker 5: and make sure you have good mentors. If they're not
Speaker 5: giving you a good shot, after you've made them look brilliant,
Speaker 5: you know, time to move on. So that's one thing.
Speaker 5: As far as starting a business, I would say, make
Speaker 5: sure there's an unmet need. In our case, in the
Speaker 5: case of ARC, what we saw was the traditional world
Speaker 5: going more passive or benchmark sensitive, when we saw an
Speaker 5: explosion of innovation thanks to the five major innovation platforms
Speaker 5: around which we have centered our research and investing. And
Speaker 5: so I said to myself, you know, someone has to
Speaker 5: do this, and so we went off, and honestly, I
Speaker 5: think most people thought we would fail for a couple
Speaker 5: of reasons. One, we put a truly active, fully transparent
Speaker 5: equity portfolio inside an ETF wrapper, and that had not
Speaker 5: been done at scale at all, and no one it
Speaker 5: was a passive world that we had entered. And then
Speaker 5: the second was we're benchmark agnostic. You can put us
Speaker 5: against any benchmark, and you're going to have to give
Speaker 5: us some time after the massive interest rate shock that
Speaker 5: we went through and now we're on the other side
Speaker 5: and you know, performing better as a result over the
Speaker 5: last year. But over time, these innovations are going to
Speaker 5: transform the world and create massive wealth with AI as
Speaker 5: back to that topic as the main catalyst. So we
Speaker 5: coulst be more optimistic about innovation.
Speaker 3: All right, kind to leave it there, Kathy, as we
Speaker 3: so appreciate all the time that you do give us.
Speaker 3: Have a great weekend. Kathy would of course, the founder, CEO,
Speaker 3: and CIO of our co invest joining us from Florida. Kathy,
Speaker 3: thank you.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Apple car Play and ed brot Auto with a
Speaker 2: Bloomberg Business app, or watch us live on YouTube. Well.
Speaker 3: One of our most read stories on the Bloomberg today
Speaker 3: is about a Fidelity international money manager that dumped nearly
Speaker 3: all of his positions in US treasuries from friends. His
Speaker 3: expectations are that the world's biggest economy, the US economy,
Speaker 3: still has room to expand. Check it out. It's a
Speaker 3: great read on the Bloomberg terminal at Bloomberg dot Com.
Speaker 3: It's just kind of one of the resets we continue
Speaker 3: to see.
Speaker 6: Tim.
Speaker 4: Yeah, on that reset, I want to bring in Maddi Destner,
Speaker 4: head of Global Asset Class Services at Capital Group. It's
Speaker 4: global investment and management organization manages more than two point
Speaker 4: five trillion dollars. Maddie joining us from Los Angeles right now. Maddie,
Speaker 4: good to have you with us. The reason you're on
Speaker 4: is because Capital Group is out with its twenty year
Speaker 4: Capital Markets Assumptions Report, it sets out some pretty clear
Speaker 4: expectations about where you all at Capital Group think the
Speaker 4: market is going. And when we say market, we're talking macroeconomics, equities,
Speaker 4: fixed income, and FX market performance over the next twenty years.
Speaker 4: Carol and I were talking about this.
Speaker 6: How do you do this?
Speaker 4: Yeah, I mean, how clear is your crystal ball to
Speaker 4: be able to help us understand what US equity markets
Speaker 4: are going to do over the next twenty years and
Speaker 4: what emerging market equities are going to do over the
Speaker 4: next twenty years.
Speaker 7: Well, it's a great question, Tim and Carroll, and thanks
Speaker 7: so much for having me on. When we think about
Speaker 7: the long term, you have to consider what is directional,
Speaker 7: what you know is about to occur, and then what
Speaker 7: you can assume for the long term. So, really, what
Speaker 7: our expectations are our inputs to ensure that our clients
Speaker 7: are set up for success for the long term, and
Speaker 7: our expectation as we look forward is that they are.
Speaker 7: Actually Our broad expectation for a sixty to forty portfolio
Speaker 7: is about six percent annualized over twenty years. And when
Speaker 7: we look through the asset classes, we've changed things a
Speaker 7: bit as we've seen action in the markets over the
Speaker 7: last couple of years. We've actually brought down our equity
Speaker 7: assumptions just by a bit about six point nine percent
Speaker 7: for US equities given the evaluation change that we saw
Speaker 7: over the last year, not extreme, but our expectations or
Speaker 7: that valuations are a little less attractive. And then for
Speaker 7: a fixed income we've actually brought up our expectations. You're
Speaker 7: seeing some equity like returns out of fixed income sectors,
Speaker 7: particularly some of those extended sectors. So we really feel
Speaker 7: good about the puts in takes of the long term
Speaker 7: expectations and the fact that investors will be set up
Speaker 7: for success as long as they stay invested.
Speaker 3: All right, what's how do you figure it out? Like
Speaker 3: we said, your crystal ball, But what are these assumptions
Speaker 3: based on. I'm always interesting in how do you make
Speaker 3: the sausage here in terms of investing? So what is
Speaker 3: it that these are based on in terms of kind
Speaker 3: of reducing your equity assumptions of the next twenty years,
Speaker 3: but maybe raising your fixed income assumptions.
Speaker 7: Yeah, so we actually decompose the returns into building blocks.
Speaker 7: So as you start to pick apart the pieces, you
Speaker 7: can think about what will change in those building blocks.
Speaker 7: So we think about economic growth, what does that look
Speaker 7: like over the next twenty years, Productivity, what happens to
Speaker 7: the labor force, inputs into demographics, how that picture will
Speaker 7: change over the next twenty years.
Speaker 8: These are knowable things.
Speaker 7: Our expectation of changing technology and the productivity of the workforce.
Speaker 7: We think that has a big impact on the expectations.
Speaker 7: And then of course currency, certainly for US based investors
Speaker 7: of international assets, both developed as well as emerging. Our
Speaker 7: expectations for the dollar and other currencies, how that impact
Speaker 7: the supply demand dynamics and the balance of trade. And
Speaker 7: then of course the expectation of the change in share count.
Speaker 7: There's been quite a lot of buybacks and that has
Speaker 7: changed the expectation for earnings for companies for individual shareholders.
Speaker 7: And then the last thing is yield, both on the
Speaker 7: fixed income and the equity side.
Speaker 8: Our expectation is that you're.
Speaker 7: Going to start to see healthier dividend yields, particularly in
Speaker 7: the international space, less so in the US. And then,
Speaker 7: as I said before, starting yield than fixed income are
Speaker 7: much higher. So as we look at each of these
Speaker 7: building blocks, we sort of build up the elements from
Speaker 7: the bottoms up perspective and then look top down and
Speaker 7: ask ourselves how westic are these numbers.
Speaker 4: Hey, Maddie, I want to dig into the equities research
Speaker 4: that you and the team over a Capitol Group have done,
Speaker 4: because I was pretty surprised to see that over the
Speaker 4: next twenty years you expect emerging market equities to outperform
Speaker 4: US equities pretty significantly, given and that surprised me given
Speaker 4: the outperformance we've seen from US equities over the last
Speaker 4: ten to fifteen years. At this point.
Speaker 7: Yeah, our expectation is that there are both cyclical and
Speaker 7: secular changes going on in emerging markets. So if we
Speaker 7: just frankly look at the inflation picture within emerging markets,
Speaker 7: inflation accelerated early on. Central banks started to ease or
Speaker 7: titan pretty quickly, and now they're in the path of
Speaker 7: easing policy, so they're a bit ahead of us in
Speaker 7: that cycle.
Speaker 8: We expect to see an upturn.
Speaker 7: From that perspective, there's certainly a benefit from a continued
Speaker 7: weakness of the dollar, which.
Speaker 8: We expect to see over the long term.
Speaker 7: And then one of the most important things about emerging
Speaker 7: markets is the change in supply chains that we expect
Speaker 7: to see over the long term. So we know that
Speaker 7: Chinese growth is slowing due to demographic impacts as well
Speaker 7: as less than friendly market reforms. But what's happening is
Speaker 7: companies are starting to remove their supply chain exposure to
Speaker 7: China and going to places like India, like Mexico, like
Speaker 7: Southeast Asia. So we really do expect a resumption of
Speaker 7: manufacturing centers in those areas.
Speaker 8: And then the last thing I'll.
Speaker 7: Point to is that from an emerging markets perspective, the
Speaker 7: demographic picture, the age of the workforce looks a lot
Speaker 7: healthier than in some other areas of the world.
Speaker 3: Yeah, that makes a lot of sense. I'm also curious,
Speaker 3: you know, here we are coming off a week where
Speaker 3: we were all agog over Nvidia, right, its result, its outlook,
Speaker 3: its impact on the trade continues to play out today.
Speaker 3: You guys did look at as one of your key
Speaker 3: criteria the changing technology on workforce. Talk to us a
Speaker 3: little bit about what's the changing technology that you focused
Speaker 3: on and its impact.
Speaker 7: Yeah, it's a number of things, Carol, It's not just one.
Speaker 7: If we think about the impact of how productive is
Speaker 7: every single worker if everybody was doing the same jobs
Speaker 7: that they did in nineteen fifty versus today, How much
Speaker 7: more can they build, how many more patients can they see,
Speaker 7: How long is the expectations for life expectancy, and how
Speaker 7: that's changing. So things like artificial intelligence and how that's
Speaker 7: helping us do our jobs, cloud computing and how that's
Speaker 7: helping us be more efficient, and even some of the
Speaker 7: innovations in healthcare, whether it's gene therapies or immunizations, these
Speaker 7: will impact our longevity and frankly, our health as a
Speaker 7: nation and as.
Speaker 8: A world society.
Speaker 7: So all of these things are incorporated together, from our perspective,
Speaker 7: significantly increase the productivity of each hour work from individuals.
Speaker 7: So it's a bit of a give back to the
Speaker 7: giveaway that we have from demographics, because we know that
Speaker 7: this is an aging nation, for aging all over the world,
Speaker 7: and that will impact We.
Speaker 4: Talk about that a lot here on the program, Mattie.
Speaker 4: We only have thirty seconds left, but we got to
Speaker 4: talk politics and how you factor politics into your analysis here,
Speaker 4: not just here in the US, but around the world.
Speaker 4: Just thirty seconds left.
Speaker 7: Yeah, Exogynous factors hard to incorporate into the actual analysis.
Speaker 8: So we really do try to look through that and
Speaker 8: think long term.
Speaker 7: From our perspective, though, as we look at the last
Speaker 7: twenty three election cycles, what we notice is that markets
Speaker 7: trend up on average every single time. There's lots of
Speaker 7: volatility around the primary environment, but once we have regardless
Speaker 7: of who sits in the administrative chairs, we tend to
Speaker 7: see up markets in that election cycle more so than
Speaker 7: a non election year.
Speaker 8: So we're pretty constructive.
Speaker 3: All right, really appreciate this and look forward. Hopefully we
Speaker 3: can get you back real soon. Mattie Destner, she's head
Speaker 3: of Global Asset Class Services over at Capital Group, a
Speaker 3: global investment management group managing more than two and a
Speaker 3: half trillly in Mattie, of course, joining us from Los Angeles.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm. Easter listen
Speaker 2: on Apple card Play and then brought auto with a
Speaker 2: Bloomberg Business act or want us live on YouTube.
Speaker 3: All Right, everybody, here's how it's supposed to go. You
Speaker 3: work hard, you save if you pay your Social Security
Speaker 3: and your Medicare taxes, and yes, you retire hopefully enjoying
Speaker 3: some great time during those golden years.
Speaker 4: Tim Yeah, maybe you travel spend time with family, relaxed,
Speaker 4: not worry about whether or not you're going to outlive
Speaker 4: your savings. But Carol, we know that's actually not the
Speaker 4: reality for many Americans. In fact, as you and I
Speaker 4: talked about back in January, younger generations are having a
Speaker 4: hard time even imagining retiring. A recent TIA Institute's survey
Speaker 4: said that roughly twenty one percent of Americans ages twenty
Speaker 4: two to thirty four said retirement is out of reach
Speaker 4: or not even part of their plan.
Speaker 3: Which is pretty remarkable. Probably not all that surprising to
Speaker 3: our next guest, who writes that our society has largely
Speaker 3: given up on the idea that a dignified retire hirement
Speaker 3: should be the right of every worker in our affluent nation.
Speaker 4: Teresa Gillarducci is a professor of economics at the New School.
Speaker 4: She's also the author of the new book work Retire Repeat,
Speaker 4: The Uncertainty of Retirement in the New Economy. She joins
Speaker 4: us from New York, Professor, good to have you with us,
Speaker 4: Congratulations on the new book. Lay it out for us
Speaker 4: in this day and age. Just how bad is it
Speaker 4: out there for retirees and people who are working their
Speaker 4: way toward retirement.
Speaker 9: Yeah, I'm glad to talk about it as a big
Speaker 9: societal problem because I think right now almost everybody thinks
Speaker 9: it's bad for them, but doesn't realize how bad it
Speaker 9: is for their friends. Because not being prepared for retirement
Speaker 9: is often the source of shame. And you can't you
Speaker 9: don't wear it on your sleeve. You know, you don't
Speaker 9: have your number on your chest. And so people are
Speaker 9: really swallowing their fear. And that's because most people should have,
Speaker 9: you know, about a million dollars in their retirement accounts
Speaker 9: when they're approaching retirement, and most people don't have anywhere
Speaker 9: near that. And if I give you averages, it won't
Speaker 9: even tell the picture. Because Elon Musk is among our
Speaker 9: midst and if you know, he walked into my house,
Speaker 9: so it'd be the richest person you know ever on average.
Speaker 9: But the typical person really can be described by medians.
Speaker 9: And so people in the bottom half of the of
Speaker 9: the earnings distribution in households are about ready to retire.
Speaker 9: This is like, you know, from fifty four to sixty four,
Speaker 9: the bottom half have nothing. The next forty percent, you know,
Speaker 9: our middle class have about two hundred thousand dollars and
Speaker 9: they should have over a million. And people even in
Speaker 9: the top ten percent, they should have maybe three four
Speaker 9: million dollars to supplement social security and keep their lifetime
Speaker 9: lifestyle in retirement. I'm not going to cry out, you know,
Speaker 9: alligator tiers for them, but even their worried, you know,
Speaker 9: they have about a million. So like everybody across the board,
Speaker 9: you know, doesn't have enough, but the bottom ninety percent
Speaker 9: are headed towards really retirement just depending upon socials sect.
Speaker 4: Here's the thing, this is something this is something that
Speaker 4: everybody should care I think people would argue this is
Speaker 4: something that everybody should care about because who pays for
Speaker 4: the folks who don't have enough to retire? What's the
Speaker 4: societal impact.
Speaker 1: Of something that the governments you care?
Speaker 4: What's the stress on our system when that happens.
Speaker 9: Yeah, so let me just talk to the adult children,
Speaker 9: you know, who are listening. Of the adult children who
Speaker 9: are forty and fifty, we're minute. Research is showing that
Speaker 9: a third of those adult children are straining in some
Speaker 9: way to take care of their elders. Even if their elders,
Speaker 9: you know, have a pension, there's no long term care insurance.
Speaker 9: So what happened is that we're we're reproducing this retirement crisis.
Speaker 9: I mean it is reproducing itself because those of daughters
Speaker 9: and a daughter in law, sons and sons in laws
Speaker 9: are either reducing their own their work effort, reducing their savings,
Speaker 9: and we're seeing people actually take money out of their
Speaker 9: retirement to help their their aging boomer parents.
Speaker 3: Teresa, how did we get there? I'm thinking about you know,
Speaker 3: my dad who fought in World War Two, there was
Speaker 3: VA benefits. There was a company that he worked for
Speaker 3: for fifty years or close to it that there was
Speaker 3: a pension. There were investments because of Forrow and K's
Speaker 3: and so on and so forth. You know, starting there
Speaker 3: were social security benefits. Where where did the system start
Speaker 3: to come undone in that we are kind of now
Speaker 3: talking about this problem that this is where we are today.
Speaker 9: Yeah, I mean there was kind of a golden age
Speaker 9: of pensions for a group of society.
Speaker 10: You know, men who.
Speaker 9: Kept their jobs for a while, that's for sure, they
Speaker 9: had to find benefit plans and mainly their wages kept
Speaker 9: up with with the productivity, you know, with the rest
Speaker 9: of the economy. And then women who were working, you know,
Speaker 9: starting around the nineteen forties, fifties, sixties, they earned wages
Speaker 9: that kept up with their productivity. They got more educated,
Speaker 9: non white workers really became an enfranchised in the labor market.
Speaker 9: And even though not everybody was in a union, not
Speaker 9: not even by you know, by any stretch of the imagination,
Speaker 9: the pensions that they negotiated were defined benefit pensions. I
Speaker 9: mean you saw them in the private sector and the
Speaker 9: public sector, and even the companies that weren't unionized, I
Speaker 9: kind of kept up with the leaders in their industries.
Speaker 9: So we had a layered system social security, defined benefit plans,
Speaker 9: and wages you know, that kept savings up. It all
Speaker 9: fell apart around the eighties, you know, when Ronald Reagan
Speaker 9: attacked the labor movement, you know by firing all the
Speaker 9: air traffic controllers that had the structural problem of kind
Speaker 9: of slowing down wage growth and wages really fell behind.
Speaker 9: Productivity fell fell behind that, you know, the growth of
Speaker 9: the economy, so that really hurt savings. We had a
Speaker 9: lot of debt creating institutions kind of overwhelmed our wealth
Speaker 9: creating institutions, you know, with very little down for our houses,
Speaker 9: and if we had any home equity, we would take
Speaker 9: we would take you know, home equity loads. But in
Speaker 9: the retirement space, we had the decline of these traditional
Speaker 9: pensions and a pretend to replacement of those pensions with
Speaker 9: four oh one ks.
Speaker 6: And the reason why I.
Speaker 10: Said, is it, Yeah, it's not even to even.
Speaker 9: And the four oh one K was supposed to be
Speaker 9: easy and really attractive to employers, and it was supposed
Speaker 9: to spread across the whole economy. But you know, fifty
Speaker 9: percent of the population had a defined benefit plan. Those
Speaker 9: got replaced by the inferior four oh one K system,
Speaker 9: inferior and like three dimensions. And the people who had
Speaker 9: nothing still have nothing. And so we've had a forty
Speaker 9: year experiment with these kind of do it yourself retirement plans.
Speaker 9: They're voluntary from the employer, voluntary for the worker.
Speaker 3: The worker has.
Speaker 9: To take all the risk of choosing the right investments,
Speaker 9: and then when they retire, it's really up to.
Speaker 1: The stock market.
Speaker 9: It depends whether or not they can make it last.
Speaker 4: So we haven't even talked about much about social security.
Speaker 4: I don't necessarily want to get to that right now.
Speaker 4: We don't have time, professor, but I want to know
Speaker 4: about the answer here. What's a solution to the problem
Speaker 4: that you outlined.
Speaker 9: Well, you know, the book spends a lot of time
Speaker 9: on the fake solution, which is to work longer. It's
Speaker 9: just obvious that most people don't have jobs where their
Speaker 9: employers want them to work longer, or they have jobs
Speaker 9: that will actually keep up their health, you know, and
Speaker 9: their ability to do the work productively. And also most
Speaker 9: people are pushed out of their jobs, you know, either
Speaker 9: their health or they're just pushed out or they're laid off,
Speaker 9: you know, before they want to retire. So working longer
Speaker 9: as a fake solution, the real solution is bold. It's
Speaker 9: a lot different than tweaking the tax breaks here and
Speaker 9: there and then senting small employers to have a pension
Speaker 9: since they can't really afford much of anything that, especially
Speaker 9: if it's voluntary, they're not going to take on that liability.
Speaker 9: We really need to have a layer of retirement accounts
Speaker 9: on top of Social Security, and everybody who works, whether
Speaker 9: it's for grub hub or uber or Delta Airlines, you know,
Speaker 9: just for five years when they leave that good employer
Speaker 9: or they're working contingent and platform work, they should be
Speaker 9: saving alongside of the other Social security. So I advocate
Speaker 9: a universal tension system. There's a villain Congress called the
Speaker 9: Retirement Security Savings Act for All Americans. And the best
Speaker 9: thing about this is that it's bipartisan. A conservative Republican
Speaker 9: and a modern liberal Democrat supported in the Senate and
Speaker 9: the same thing in the House.
Speaker 11: And I think.
Speaker 9: Lawmakers are just hearing from their constituents everywhere they go
Speaker 9: about this palpable fear of what happen to them or
Speaker 9: their parents, you know, or their future selves, that this
Speaker 9: may be the year when nothing else passes, this kind
Speaker 9: of sensible universal pension system may pass.
Speaker 3: Fingers crossed, you know, excited, we'day you know, Tim and
Speaker 3: I are going to change our names to uh gloom, Yeah,
Speaker 3: because we've just kind of had a bunch of stories
Speaker 3: today that are along that front. But listen, really constructive
Speaker 3: conversation about what is going on and maybe our way
Speaker 3: forward to a better outcome. Teresa, Thank you so much.
Speaker 3: Hopefully we can check back with you down the road.
Speaker 12: Uh.
Speaker 3: Teresa Jilarducci. She's professor of economics at the New School,
Speaker 3: author of a new book work Retire Repeat the Uncertainty
Speaker 3: of retirement in the New Economy. Joining us here in
Speaker 3: New York.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 2: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 3: Plenty ahead in our second hour of the weekend edition
Speaker 3: of Blueberg Business Week, including what the highest ranked woman
Speaker 3: in luxury Swiss watches is doing to ease the pain
Speaker 3: of purchasing Yes, say a one hundred thousand dollars watch.
Speaker 4: I don't know how you ease that.
Speaker 3: Non my household. Our Bloomberg Pursuits team on what the
Speaker 3: newest CEO at Odamar p Gay has in store to
Speaker 3: bring interest back for these so called hype watches.
Speaker 4: Also ahead, from selling cruises door to door to becoming
Speaker 4: the first woman to take the helm of one of
Speaker 4: Royal Caribbean Group's most popular brands. What it takes to
Speaker 4: make waves and rise to the top any male dominated
Speaker 4: industry with the former CEO of celebrity Cruises, Lisa lutof Prolo.
Speaker 3: Are you sensing a theme here? Anybody?
Speaker 4: I am all right?
Speaker 3: Well, first up this hour. As we've been mentioning March's
Speaker 3: Women's History Month, no shortage of inspiring business women worth
Speaker 3: talking to, including our next pair. Between them, they've got
Speaker 3: dec of experience in senior positions at United Airlines, Craft Foods,
Speaker 3: to Lette, Motorola, McKenzie and more.
Speaker 4: Grace Puma is the former chief operations officer at PepsiCo,
Speaker 4: and Christianna Smith she is the former president of the
Speaker 4: Consumer Direct division at Nike. They also share their tips
Speaker 4: for career success in a new book it's called Career
Speaker 4: Forward Strategies from Women Who Made It, in which they
Speaker 4: reveal some well surprising work advice.
Speaker 12: Yeah, this book kind of got birked on the fact
Speaker 12: that we had Matt and we were both on a
Speaker 12: corporate board and one day we went out after the
Speaker 12: meeting and really connected, and it connected around identifying that
Speaker 12: although we took very different paths to achieve what we
Speaker 12: achieved some of the top levels and different corporations, we
Speaker 12: had some of the same learnings and some of the
Speaker 12: same truths.
Speaker 6: And then you add to that.
Speaker 12: We both have it's hard to call them millennial children,
Speaker 12: but children that are now in their thirties and having
Speaker 12: their own career paths, and we really wanted to transfer
Speaker 12: the knowledge and the learning that we felt really could
Speaker 12: be helpful as they set their own path.
Speaker 4: I should note that you guys are still on some
Speaker 4: pretty pretty interesting boards. Grace is on the board of Target,
Speaker 4: among others, Christiana on Columbia Sports where ups West Marine,
Speaker 4: to name a couple others. So yeah, I mean, definitely
Speaker 4: still in the consumer space right now, no question.
Speaker 3: Yeah, exactly, Christiana, So come on in too. Like, as
Speaker 3: you guys were putting together the book, did what did
Speaker 3: you want to make sure was kind of in the
Speaker 3: messaging here from your own experience?
Speaker 13: Yeah, I think we had a really strong goal to
Speaker 13: address this moment in time as well as just share,
Speaker 13: you know, decades of career experience learning that Grace and
Speaker 13: I had. And as Grace said, even though her path
Speaker 13: was very much through some of the top corporate company
Speaker 13: corporate brands and companies and mine was consulting for over
Speaker 13: twenty years and then a c Threek job at Nike,
Speaker 13: we had similar takeaways about how to build a career
Speaker 13: that you love and how to make it worth it.
Speaker 13: And when we first started writing the book, we were
Speaker 13: still in the pandemic, and there was of course all
Speaker 13: this talk about women falling out of the workforce because
Speaker 13: they couldn't, you know, make the childcare life work balance work.
Speaker 13: And then there was quiet quitting, and there was just
Speaker 13: act your wage. There's so many things right now that
Speaker 13: show in this moment a need to talk about how
Speaker 13: you can still invest in yourself and still have a
Speaker 13: great career while meeting this moment and balancing all the
Speaker 13: other forces that are at work in your life.
Speaker 3: Well, we want to give to some of the specifics,
Speaker 3: but I wondered, Grace, if I said, luck, skill, timing,
Speaker 3: what was the most important thing in your career path?
Speaker 6: That's a great question. I would probably say.
Speaker 3: To be all of it too. Skill.
Speaker 12: Well, no, I think it's skill, and I think it's
Speaker 12: about not just you're not boring with the skill, Okay,
Speaker 12: it's cultivating skill reevaluating what the next skill or capability
Speaker 12: is needed or will be needed.
Speaker 6: So it's an ongoing and commitment to learning.
Speaker 12: And we talk a lot about that in our book,
Speaker 12: and to read the tea leaves on what is necessary
Speaker 12: and valuable in those skill sets.
Speaker 14: Same thing to you, Christine, if I could, yeah, please
Speaker 14: do you mind if I was going to say, do
Speaker 14: you mind if I jump in on that going even
Speaker 14: a step further with grace and I believe is you
Speaker 14: can do a lot more than you think to create
Speaker 14: your own luck.
Speaker 13: What do you mean when we talk about when we
Speaker 13: talk about people we see at work and we say, oh,
Speaker 13: she's so lucky she got that project, he's so lucky
Speaker 13: that story hit right at the right time, whatever it is.
Speaker 13: But you roll the tape back, you realize they invested
Speaker 13: in building their network inside and outside the company. They
Speaker 13: invested in knowing things that are important at that moment
Speaker 13: in time. They demonstrated performance. That's when opportunities tend to
Speaker 13: come to you. And then we say the key is
Speaker 13: do you hear the knock on the door when opportunity
Speaker 13: is knocking and do you answer it right?
Speaker 10: That's timing.
Speaker 13: So there's clearly serendipity in your career, there's no question.
Speaker 13: But you can do an awful lot to be in
Speaker 13: the right place at the right time through the steps
Speaker 13: that you take to invest in yourself.
Speaker 15: Well.
Speaker 3: And some would say I'm trying to think whether I
Speaker 3: want to think our leader or book or other books
Speaker 3: about this whole idea of being the first one at
Speaker 3: the office, being the last one to leave. And sometimes
Speaker 3: you can't do that, but it's certainly early on in your
Speaker 3: career things will people will move around and be like,
Speaker 3: who's here, who can do this? You're here because you're here.
Speaker 6: Early and you're here late.
Speaker 3: And it's as simple sometimes as something like that. It is.
Speaker 4: But I'm wondering, and I want to go to you
Speaker 4: grace first on this one. If in an era of
Speaker 4: hybrid and remote work that that is more of an
Speaker 4: issue because you're not going to run into the boss
Speaker 4: on the zoom. You're only going to run into the boss,
Speaker 4: you know, at the water cooler, if you're physically around
Speaker 4: the boss. And there's an entire generation really brought you know,
Speaker 4: who graduated in last four years that don't have the
Speaker 4: same idea of going to the office that I think
Speaker 4: a lot of us grew up with.
Speaker 12: Yeah, I mean, no doubt, and certainly, you know, during
Speaker 12: the time that we had been in a lot of
Speaker 12: our career, it was an opportunity, you know, your first
Speaker 12: and first out. But today is very different and you know,
Speaker 12: I definitely think, you know, addressing the virtual world, there
Speaker 12: is still a need to ensure connection and connection through
Speaker 12: work is really the best connection. But making sure that
Speaker 12: you're where you need to be and that you're contributing
Speaker 12: in those moments and that you're establishing relationships. You hear
Speaker 12: a lot of people in the hybrid work right now
Speaker 12: going out and even meeting with colleagues outside of work
Speaker 12: just to make sure they have a connection.
Speaker 6: But I think what you said earlier.
Speaker 12: You know, we talk about this concept of growth stock
Speaker 12: that's more important.
Speaker 6: I think than the FaceTime and we talk about it.
Speaker 12: Yeah, I do, because we talk about it in the
Speaker 12: book about And let me just take a minute on it.
Speaker 12: If you think about a growth stock, a growth stock,
Speaker 12: you can think of any company that comes to mind.
Speaker 12: Let's take Apple for example. They tend to grow at
Speaker 12: a much faster pace in their competitors, and they do
Speaker 12: that by reinventing themselves, by looking around on the corner,
Speaker 12: by investing in the right things. So when you apply
Speaker 12: that to yourself, whether you're working virtually or in the office,
Speaker 12: you're going to adopt a mentality that says, you know,
Speaker 12: I want to no matter where I am, no matter
Speaker 12: how well I'm doing in my current job, I'm going
Speaker 12: to be thinking future forward, and I'm going to be
Speaker 12: cultivating and growing and investing in the type of things
Speaker 12: that I need to to be able to learn and
Speaker 12: contribute at a higher rate, and those often lead to
Speaker 12: opportunities and career progression along your journey.
Speaker 3: So Christiana, it's kind of like, you know, don't wait
Speaker 3: for someone to tell you what you need to do,
Speaker 3: look around you and figure out what you need to
Speaker 3: do to either get to the next level or the
Speaker 3: next position, or the next opportunity.
Speaker 13: Yeah, we would definitely agree with that notion of staying curious,
Speaker 13: of thinking ahead of planning a bit in terms of saying, Hey,
Speaker 13: this year, what are my goals in terms of skills
Speaker 13: I'm going to need to build, what are my goals
Speaker 13: in terms of people I.
Speaker 10: Want to get to know?
Speaker 13: And in the spirit of meet the moment, we would
Speaker 13: also say, may the most of the opportunities that you
Speaker 13: do have. So specifically, in this hybrid and remote work environment,
Speaker 13: you may not, as Grace noted, have as many chances
Speaker 13: to just hang around the water cooler, but you're on
Speaker 13: zoom all the time. There's one way you can approach
Speaker 13: those meetings, like, oh, I got another zoom, I'm going
Speaker 13: to turn off my camera. I'm going to be doing
Speaker 13: my email while the meeting's going until they hear them
Speaker 13: call my name, all that kind of thing.
Speaker 10: We've all been there. Those are really important opportunities.
Speaker 13: There are other people on that call, and there are
Speaker 13: other chances that you've got to show up. So we
Speaker 13: would just also say, make the most of the chances
Speaker 13: that you get. If you're in the room, you're there
Speaker 13: for a reason, speak up, participate. That room nowadays may
Speaker 13: be virtual, but it's really important that if you're there,
Speaker 13: you're noted.
Speaker 3: That's a really good point. One thing we wanted to
Speaker 3: get into is this idea of don't fake it till
Speaker 3: you make it. And the reason we bring it up.
Speaker 3: We had a conversation with the head of one of
Speaker 3: the divis visions at one of the major cruise companies
Speaker 3: just on Friday, and this idea of when she got
Speaker 3: a big promotion that people were like, yeah, but you
Speaker 3: didn't have all the necessary experience, and she's like, yeah,
Speaker 3: you were kind of right, you know, but I think
Speaker 3: about the difference and forgive me. I don't like to
Speaker 3: make generalizations, but there has been a lot written about
Speaker 3: where men will be like I got it, I'll figure
Speaker 3: it out. Women are like, oh my god, I don't
Speaker 3: have all the qualifications. Again generalizations, but people have written
Speaker 3: about a lot of this grace. Let me go to
Speaker 3: you first. Why do you guys say don't fake it
Speaker 3: till you make it? Do what exactly do you mean?
Speaker 3: Because sometimes you don't have all the qualifications, but you
Speaker 3: can figure it out.
Speaker 6: Yeah.
Speaker 12: When we think about, you know, fake it till you
Speaker 12: make it, we don't think that's a bad thing.
Speaker 6: We think it's a good thing.
Speaker 12: The reason is because you do whatever you need to
Speaker 12: do to gain the confidence as you go into a
Speaker 12: new business, or a new environment or a new position.
Speaker 12: No one goes into a position when they know everything, okay,
Speaker 12: especially if you progress your career. So we think it's
Speaker 12: okay to stand up, whether you have to talk to
Speaker 12: yourself in the mirror, pump yourself off.
Speaker 6: But you're there for a reason.
Speaker 12: Believe you're there for a reason, and have the confidence
Speaker 12: to know you're going to figure it out, You're going
Speaker 12: to learn things, and you're going to be able to
Speaker 12: apply the talents you do have to be successful. That's
Speaker 12: very different than what you hear about imposter syndrome, where
Speaker 12: people say, Hey, they got the job and they're not qualified.
Speaker 6: We think that's unhealthy.
Speaker 12: But fake it till you make it means, you know,
Speaker 12: have the confidence that you're in that position or you've
Speaker 12: been given that opportunity for a reason, and have the
Speaker 12: faith that your past history will tell you that you'll
Speaker 12: learn and you'll achieve.
Speaker 4: Yeah, Christiana, jump on in here. Then sort of share
Speaker 4: your experience with this in the way that you thought
Speaker 4: about it when you were writing about this in the book.
Speaker 15: Yeah.
Speaker 13: The reason we you might think we're saying don't fake
Speaker 13: it till you make it is because what we're saying.
Speaker 10: Is get past that thinking.
Speaker 6: Right.
Speaker 13: You were put there for a reason, and your bosses
Speaker 13: aren't crazy. The people who hired you knew what they
Speaker 13: were doing.
Speaker 10: Right.
Speaker 13: Learning what you need to learn to fill in your
Speaker 13: gaps in a new role is not faking it right.
Speaker 10: That's being programmatic.
Speaker 13: That's being strategic, that's leaning into it, that's being forward thinking.
Speaker 13: So all we would say is don't fake it till
Speaker 13: you make it. Put a plan together to get the
Speaker 13: rest of what you need in terms of the experience,
Speaker 13: the skills, the confidence to do the new role that
Speaker 13: you were put in. But recognize that you are there
Speaker 13: for a reason in the meantime, and saying that I've
Speaker 13: got to learn and get down this learning curve in
Speaker 13: this new role is not the same as saying I'm
Speaker 13: an impostor and I don't belong here. We really really
Speaker 13: dislike the phrase imposter syndrome because that leaves you no
Speaker 13: place to go, that doesn't give you a path forward,
Speaker 13: and that's not a very confidence building mindset.
Speaker 4: You explore this idea in the book about making sure
Speaker 4: you're growing within a role, and you argue that you
Speaker 4: don't want to be too comfortable in a job, and
Speaker 4: I think for a lot of people that can be
Speaker 4: kind of tough because, okay, well, you know, they've worked
Speaker 4: so hard to get to a certain place and they're
Speaker 4: finally in that place, why do they want to be
Speaker 4: necessarily longing for something more grace?
Speaker 12: Yeah, So, you know, it starts with what we're trying
Speaker 12: to encourage people to do is to have and set
Speaker 12: a strategic path for your career and a cardinal direction.
Speaker 12: And a cardinal direction gets determined on what are your
Speaker 12: aspirations and they can evolve over time. So to your point,
Speaker 12: you know, we think it's important that if you're in
Speaker 12: a job and you feel like you know, I'm doing great.
Speaker 12: I might be getting great performance reviews, but you're no
Speaker 12: longer learning, then you have the obligation for yourself to
Speaker 12: meet your aspirations by continuing to look for opportunities to
Speaker 12: expand your capabilities and expand your contributions. And that can
Speaker 12: show up in a number of different ways. It might
Speaker 12: be raising your hand and saying, hey, I'd like to
Speaker 12: get involved in this particular project or this particular initiative
Speaker 12: that's outside my area, because you're going to know that
Speaker 12: you're going to grow through that experience. So that's kind
Speaker 12: of the basis of it. And it also is important
Speaker 12: if you set a cardinal direction of what you want
Speaker 12: to aspire, that you're checking in with yourself and saying,
Speaker 12: am I on track? And does the job that I'm
Speaker 12: doing today continue to grow me and progress me on
Speaker 12: that journey?
Speaker 3: Is it safe to say that, Christiana? I mean, there
Speaker 3: is a point that you get to that you might
Speaker 3: be like, I've out grown either this company or this
Speaker 3: career trajectory. I've hit the top, and it's just time
Speaker 3: to move on. And you just have to face that.
Speaker 3: Even as much as you might like the company the
Speaker 3: people you work with. If you really want to advance,
Speaker 3: sometimes you've just got to leave. It's not just about
Speaker 3: making more money, but advancing.
Speaker 13: Yes, we agree with the notion that if you want
Speaker 13: to keep growing, sometimes you have to go, and we
Speaker 13: call that a fork in the road. And sometimes those
Speaker 13: forks in your career path are forced on you by
Speaker 13: a company change of ownership or a leadership change in
Speaker 13: your management team, whatever, But sometimes it's because you're proactively realizing,
Speaker 13: like you said, that you have grown to a point
Speaker 13: where you need to do something different. And what we
Speaker 13: want to encourage you to do is be self aware
Speaker 13: enough to actually recognize those moments when they come, versus
Speaker 13: get surprised by them. And the way you can get
Speaker 13: surprised by them is if you don't go when you've
Speaker 13: kind of outgrown your current role, if you don't actually
Speaker 13: push yourself to get to something next or new, you
Speaker 13: could end up on what we call benevolent stagnation.
Speaker 1: Right.
Speaker 13: Benevolent stagnation is I'm still in the same job, I'm
Speaker 13: still performing. Everybody's kind of taken me for granted. I've
Speaker 13: noticed I'm not seeing the same increases in my comp
Speaker 13: I've noticed I'm not getting invited to some meetings. I've
Speaker 13: noticed I'm not being pulled into the cool projects. And
Speaker 13: we use the metaphor of a rocket in orbit, right,
Speaker 13: if you're in orbit around a planet, you still got
Speaker 13: to turn the gas on periodically or gravity is going
Speaker 13: to pull you down.
Speaker 10: Love that. It's the same thing at a job. You
Speaker 10: got to grow or you got to go.
Speaker 3: All right, Grace, Christiana, we only have about a minute
Speaker 3: left here, so just quickly, Grace, let me start with
Speaker 3: you thirty seconds. Some final thoughts here.
Speaker 12: I think I would just encourage you to really embrace
Speaker 12: ambition and realize that ambition is a good thing. It
Speaker 12: means you're going to create a path for yourself to
Speaker 12: achieve the best you could achieve. And it might be
Speaker 12: different for every person, but we would encourage people to
Speaker 12: do it because it's worth it having a career.
Speaker 3: Women especially, it's okay to be ambitious. I'm just going
Speaker 3: to put it out there, Christiana, thirty seconds here your
Speaker 3: final thoughts.
Speaker 10: Love, love, owning the a word.
Speaker 13: As Grace said, The other thing we like to say
Speaker 13: to women in particular, but again applies to everybody, is
Speaker 13: if you're not in the driver's seat of your career,
Speaker 13: somebody else is and you can't get to a place
Speaker 13: you want to go to unless you're the one at
Speaker 13: the wheel. So we try to give you tools and
Speaker 13: ideas for how you could stay in the driver's seat
Speaker 13: of your career.
Speaker 3: Path well, and that plays into you. Also a chapter
Speaker 3: you guys have Steer about Steer into the Skid, which
Speaker 3: I really love. I had to steer into his skid
Speaker 3: and it was such a great opportunity that I ended
Speaker 3: up creating, but it didn't feel like it as I
Speaker 3: was going through it. So some great advice Grace Puma,
Speaker 3: former Chief operations officer PepsiCo, Christianna Smith, she former president
Speaker 3: of the Consumer Direct Division at Nike. Their new book
Speaker 3: Career Forward Strategies from Women who Have made it Thanks
Speaker 3: to you both.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Applecarplay and then brought auto with a Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 8: So you've gotten nothing to lose, Walter Learning, you own.
Speaker 6: All right, everybody.
Speaker 3: And some news out of the cruise industry today Viking
Speaker 3: Holdings filed confidentially for an initial public offering as the
Speaker 3: travel industry continues to rebound from its pandemic era slump.
Speaker 3: Viking's listing could raise five hundred million dollars or more,
Speaker 3: Bloomberg News reporting that earlier today.
Speaker 4: Our next guest knows quite a bit about the industry,
Speaker 4: and she actually didn't go to an Ivy League school,
Speaker 4: she writes in her new book. In fact, she describes
Speaker 4: herself in that book as quote floundering her twenties seemingly
Speaker 4: without direction. She did, though, go from selling cruises door
Speaker 4: to door to becoming the CEO of the company. Company
Speaker 4: we're talking about is Celebrity Cruises, the subsidiary of Royal
Speaker 4: Caribbean Group. All this Carol in a brand new book.
Speaker 4: It's called Making Waves, A Woman's Rise to the Top
Speaker 4: Using Smart's Heart and Courage.
Speaker 3: Lisa Lutuf Prolo is the author. She's also the vice
Speaker 3: Chair of External Affairs at Royal Caribbean and, as we said,
Speaker 3: former CEO of Celebrity Cruises. She joins us from Plantation, Florida.
Speaker 3: Lisa is so nice to have you here with us.
Speaker 3: We feel like there's a million ways to start with you.
Speaker 3: I hope you will indulge us a little bit because
Speaker 3: I have reported on Royal Caribbean, I've reported on some
Speaker 3: of yours. I am a sailor as well. But it's
Speaker 3: been interesting to watch the cruise industry in general pre pandemic,
Speaker 3: make it through the pandemic, which was remarkable, and then
Speaker 3: come out and seemingly be stronger than ever. Talk to
Speaker 3: us about the cruise industry, the trajectory that we've seen
Speaker 3: over the last few years here of okay, really tough
Speaker 3: times and then coming out of those tough time and
Speaker 3: doing just okay, better than okay.
Speaker 15: Yeah.
Speaker 16: Yeah, Well you know better than me because you're reporting
Speaker 16: on us all the time and interviewing many of the
Speaker 16: executives there, and I think it's pretty well determined and
Speaker 16: known that, Yeah, we're past those dark days and we're
Speaker 16: full steam ahead where.
Speaker 11: The industry is doing great.
Speaker 16: I heard what you just said about Viking, and that's
Speaker 16: just another indication that it's a pretty robust industry right now.
Speaker 4: Why do you think the industry is doing so well
Speaker 4: right now? What is it about cruising that really continues
Speaker 4: to attract people year after year.
Speaker 16: Guess what I would say is that it's the same
Speaker 16: as all travel. People want to experience the world, they
Speaker 16: want to get out there. The industry is robust, it's growing,
Speaker 16: it's exciting, a lot of wonderful new ships out there,
Speaker 16: and you know, the cruise industry is capitalizing on people's
Speaker 16: desire to experience things and travel and people spent two
Speaker 16: years not being able to do that, and now they're
Speaker 16: coming back in earnest pretty much in all forms of travel, for.
Speaker 3: Sure, Lisa, we got to ask because in the beginning
Speaker 3: of your book, you say you never considered writing a
Speaker 3: book is the first thing from your mind, never thought
Speaker 3: you had an interesting enough story to tell. And yet, FYI,
Speaker 3: any woman who becomes a CEO is a story. And
Speaker 3: I can't wait for the day where it's not a
Speaker 3: story because my whole trajectory in journalism and it's several
Speaker 3: decades like it has been a story. And so kudos
Speaker 3: to you forgetting there. But what ultimately said, Okay, I'm
Speaker 3: going to write this book.
Speaker 16: Well, first of all, a couple of things, if I
Speaker 16: if I could, Carol, I agree with you, it will
Speaker 16: be wonderful when it's.
Speaker 11: Not a story anymore.
Speaker 16: And what was interesting is that when I was first
Speaker 16: appointed to the role back in December of twenty fourteen.
Speaker 16: It was such a big story, and I was overwhelmed
Speaker 16: by it. And what I say in the book is
Speaker 16: I was actually quite annoyed by it because I was
Speaker 16: getting a just proportionate amount of attention because I was
Speaker 16: a woman, not because I had worked thirty years and
Speaker 16: accomplished so much that actually got me into the position.
Speaker 16: But what I decided, and one of the reasons that
Speaker 16: I ended up writing the book, was that so many
Speaker 16: people told me it was a big deal, and I
Speaker 16: decided at a certain point in time, I was going
Speaker 16: to lean into that, and I was going to use
Speaker 16: this disproportionate voice that I had because I was a
Speaker 16: woman who made it to the CEO position to tell
Speaker 16: my story. And it's really a story about a young
Speaker 16: woman in my twenties who started at the bottom and
Speaker 16: ended up at the top. And it's really, if I
Speaker 16: can do what you can.
Speaker 11: Do a story.
Speaker 3: Well, I love that, right, And we do talk about
Speaker 3: often you start at the bottom, and in media often
Speaker 3: a lot of people do. Whether you start as a
Speaker 3: production assistant bringing somebody coffee, and you just work your
Speaker 3: tail off and you work your way up. Having said that,
Speaker 3: Lisa right, it was really easy to work your way up.
Speaker 4: Are you being facetious? Care I am?
Speaker 6: I am.
Speaker 3: Take us back to the early days and getting into
Speaker 3: the industry and what it was like to be a
Speaker 3: woman in the industry forty years ago, any industry, I think,
Speaker 3: I fail, like even forty years ago was kind of tough.
Speaker 16: Sure sure, sure, well, you know, my career started in
Speaker 16: sales and marketing, so for twenty one years I was
Speaker 16: in a very gender neutral environment.
Speaker 11: Didn't think a lot of it.
Speaker 16: Never never thought about being a woman, or the fact
Speaker 16: that it was maybe something that wasn't working to my advantage,
Speaker 16: or there weren't a lot of us because in sales
Speaker 16: and marketing there are quite a few women, even in
Speaker 16: leadership roles. I realized there was a gender disparity in
Speaker 16: two thousand and five when I went into operations, because
Speaker 16: that's a very male dominated part of our business. And again,
Speaker 16: our industry is old. You just said it yourself, Peril.
Speaker 16: It was forty years ago. It's still very much predominantly
Speaker 16: men in operations, and clearly in the CEO roles and
Speaker 16: running these brands and companies, that's still predominantly men. I
Speaker 16: never felt like being a woman impacted my ability to
Speaker 16: grow or achieve what I achieved in my career.
Speaker 11: I did find.
Speaker 16: It somewhat of an issue in some of the I
Speaker 16: had three roles in our company where I was the
Speaker 16: first woman to ever do it, and I guess I
Speaker 16: would use the word skepticism.
Speaker 11: When I was put into those roles.
Speaker 16: A lot of the men that were in those areas
Speaker 16: of the company were skeptical as to why I was
Speaker 16: there and if I belonged there, and I just had
Speaker 16: to build my credibility one interaction at a time.
Speaker 4: Lisa, do you think your story is still possible in
Speaker 4: twenty twenty four? And the reason I ask is because
Speaker 4: it's so rare to find somebody who's been at one
Speaker 4: company for pretty much their entire career. And yes, you
Speaker 4: did start working at a very young age in your
Speaker 4: family business in the restaurant. But I'm wondering if you
Speaker 4: still see this of somebody starting at one company and
Speaker 4: then working their way completely to the top of that company,
Speaker 4: because so often the only way to actually get a
Speaker 4: promotion or get more money is to jump to another
Speaker 4: company when you get another offer.
Speaker 16: Well, there's a lot of truth in that tim, I
Speaker 16: don't know if I know the answer to your question,
Speaker 16: because for thirty nine years I was in one company,
Speaker 16: and in our company, I see a lot of what
Speaker 16: happened with me. I see a lot of people who
Speaker 16: work their way up for decades. Our company is very
Speaker 16: committed to hiring from within, developing people, helping them grow.
Speaker 11: Moving them around so they learn more.
Speaker 16: So I was in a wonderful situation and it continues
Speaker 16: to be that way.
Speaker 11: However, if I think about.
Speaker 16: The new generations and I think about how people are
Speaker 16: right now, I'm not sure that that's going to happen.
Speaker 11: And I think part of one of our.
Speaker 16: Issues is people so many people being remote and it's
Speaker 16: difficult to be noticed. One of the things I talk
Speaker 16: about in the book is conducting your own PR campaign
Speaker 16: so that you do achieve what you want to achieve.
Speaker 11: And make it to the top.
Speaker 16: And it's hard to do that you're not there invisible
Speaker 16: and interacting every day.
Speaker 3: Hey, one day, I want to go back to when
Speaker 3: you talked about building your own credibility and that you
Speaker 3: said it was kind of okay that maybe people had
Speaker 3: some questions about your ability to do some of these
Speaker 3: leadership Roles having said that, because you said people had
Speaker 3: some hesitation about my leadership and that was fair. Why
Speaker 3: is it fair because you know, no offense. If you
Speaker 3: were a guy, they would be like, I got this. Yeah,
Speaker 3: I don't have all the experience. I haven't done it all,
Speaker 3: maybe exactly, but I got this. Don't worry about it,
Speaker 3: and it would be okay. Is it just men women
Speaker 3: in your view and your experience and what you've seen
Speaker 3: of us just kind of wired differently, or the world
Speaker 3: thinking that we're wired differently.
Speaker 11: Good question.
Speaker 6: You know.
Speaker 11: I didn't think about it that way, Carol.
Speaker 16: I you know, when I went into it and people
Speaker 16: I so here's how I looked at it. I looked
Speaker 16: at it as okay, there really have not been any
Speaker 16: women that have been your boss.
Speaker 11: There are very few women.
Speaker 16: There were three percent women on our bridges when I started,
Speaker 16: and there were thirty three percent when I stepped down
Speaker 16: last April. And maybe I cut them too much black
Speaker 16: in that regard. I was never I was never a
Speaker 16: chief engineer. I was never a hotel director, never drove
Speaker 16: a ship, fixed fixed an engine. So I'm like, all right,
Speaker 16: maybe they think I need subject matter expertise and yes,
Speaker 16: I'm a woman and there aren't there are none of
Speaker 16: us around. I'm looking left and right, and maybe I,
Speaker 16: you know, cut them more slack than they might have deserved.
Speaker 16: I didn't think about it that way, But what I
Speaker 16: decided to do when I met with that.
Speaker 11: Skepticism is just to you know, to turn it around.
Speaker 16: I come at everything from a very positive angle, and that's.
Speaker 11: That's how I looked at that. I said, Okay, I
Speaker 11: don't have subject matter expertise, but.
Speaker 16: I guarantee you there's a lot of other reasons why
Speaker 16: I'm here, and I'm going to show you that in
Speaker 16: a very short period of time.
Speaker 3: All Right, Lisa, sit tight, We're going to come back
Speaker 3: continue the conversation. We've got more time with Lisa lutev Perlow.
Speaker 3: She is the author of a new book, Making Waves
Speaker 3: of women's rise to the top using Smart's heart and courage.
Speaker 4: And just a little tease, We're going to start our
Speaker 4: next segment with the dark days of March twenty twenty,
Speaker 4: especially for the cruise industry, because that's where the book opens.
Speaker 3: I feel like, you know, you go back there and
Speaker 3: just that moment of the unexpected of Yet we're going
Speaker 3: to shut down the global economy, folks, We're doing it
Speaker 3: all right. Everybody I want to get back to. Our
Speaker 3: guests with us is Lisa LUTEV Perlow. She's the author
Speaker 3: of a new book, Making Waves of women's rise to
Speaker 3: the top using Smart's Heart and Courage. She's also Vice
Speaker 3: Chair of External Affairs at Royal Caribbean. She's the former
Speaker 3: CEO of Celebrity Cruises, which is of course a brand
Speaker 3: within the Royal Caribbean Group. And she is still with
Speaker 3: us from Plantation, Florida. So so good to have you here.
Speaker 3: We want to talk a little bit about COVID.
Speaker 4: Yeah, I mean, you found yourself at the helm of
Speaker 4: the company, Lisa, at a time that was incredibly challenging,
Speaker 4: to say the least. So take us back to March eighth,
Speaker 4: twenty twenty, which is where your book opens. What happened then?
Speaker 16: Well, March eighth of twenty twenty was actually a really
Speaker 16: exciting day for me. I boarded Celebrity Edge. We were
Speaker 16: we were celebrating International Women's Day, which is March eighth actually,
Speaker 16: and we were celebrating a history making, barrier breaking event
Speaker 16: where one hundred percent of our bridge on that ship
Speaker 16: was manned by women, and Captain Kate.
Speaker 11: Was at the helm, so it was a glorious event.
Speaker 16: We had worked really hard to improve our gender balance
Speaker 16: on our bridges. We were able to do this. Our
Speaker 16: guests were excited, our team were excited. I left the
Speaker 16: ship on Wednesday, blew home, went back into the office
Speaker 16: on Thursday, left for the weekend on Friday, and then,
Speaker 16: as you know very well, no we had a global
Speaker 16: chef down that weekend and ceased operations four fifteen months.
Speaker 16: So what I talk about in the first chapter of
Speaker 16: the book Sailing Through the Storm is I went from
Speaker 16: the highest of highs in my career to the lowest
Speaker 16: of lows within seventy two hours.
Speaker 11: And I will never forget that.
Speaker 3: I mean, yes, I think about for us like kind
Speaker 3: of going through the financial crisis and reporting on it.
Speaker 6: Were there.
Speaker 3: I don't know, we just felt like the world probably
Speaker 3: felt this way, but the dark days of oh my god,
Speaker 3: is this system going to come undone? How did you
Speaker 3: think about you were feeling, like you said, from a
Speaker 3: high to a low. But you're like, I'm responsible for
Speaker 3: this brand and the people who are connected with it.
Speaker 3: We got to figure out our way forward, and you
Speaker 3: obviously have a corporate parent who was involved in it too.
Speaker 3: But just take us through, like initially, how dark it
Speaker 3: was and what you were thinking.
Speaker 16: Well, I was thinking what all of us were thinking,
Speaker 16: is is this horrible thing that's impacted the world ever
Speaker 16: going to end? Are we ever going to see the
Speaker 16: light at the end of this tunnel? There were so
Speaker 16: many terrible things happening all at once, including our business
Speaker 16: shutting down. That was not the least of it, but
Speaker 16: it was just one of a global nightmare that we
Speaker 16: were all living through. And yes, our company played a
Speaker 16: very active role. I was only one of the executives
Speaker 16: dealing with it, but I did have to think about
Speaker 16: as a leader, how am I going to pivot and
Speaker 16: what are the things that I'm going to do that
Speaker 16: are going to get the twenty thousand people that work
Speaker 16: under my area of responsibility through this.
Speaker 11: How am I going to give them hope?
Speaker 15: You know?
Speaker 11: How am I going to give them confidence.
Speaker 16: That this is going to end and we're going to
Speaker 16: get back into business and our crew members spread all
Speaker 16: over the world are going to be able to get
Speaker 16: back to work. And some days I didn't even know that.
Speaker 16: So I learned more as a leader during COVID than
Speaker 16: probably the other thirty seven or thirty eight years of
Speaker 16: my career in the company.
Speaker 4: What are some of those things you could kind of
Speaker 4: impart on other people now that you learned in such
Speaker 4: a short time.
Speaker 16: I think the most important thing that all of us
Speaker 16: as leaders need to understand is when we need to
Speaker 16: pivot and what we need to be doing and the
Speaker 16: muscle that we need to be building at any given time.
Speaker 16: I was a CEO of a brand within a corporate
Speaker 16: S and P five hundred company. Shareholder value returning shareholder
Speaker 16: value transforming the financial performance of the brand was at
Speaker 16: the forefront of everything I did, how I led, what
Speaker 16: I thought about.
Speaker 11: Every single day.
Speaker 16: And when you're out of business, you have to think
Speaker 16: about different things and you have to downplay those because
Speaker 16: there is no business to generate.
Speaker 11: But also you have to be able to switch.
Speaker 16: Yourself as a leader from a hard drive, results focused, driven,
Speaker 16: visionary strategic thinker.
Speaker 11: Two.
Speaker 16: Okay, let me give people what they need right now,
Speaker 16: which is empathy, which is support, which is compassion, and
Speaker 16: again which is hope. And so I really think that
Speaker 16: some leaders have a really difficult time flexing their style
Speaker 16: and being different on any given day relative to what
Speaker 16: the circumstances present. And I learned that during COVID, and
Speaker 16: I learned that as soon as I was able to
Speaker 16: do that, the way the team was feeling and the
Speaker 16: way our employees all over the world was feeling immediately
Speaker 16: changed because they that's what they were looking to me for.
Speaker 16: I was that beacon for them, and I needed to
Speaker 16: remember that every single day when I woke up.
Speaker 3: Well, we so appreciate that perspective. And we're going to
Speaker 3: take you back to the high point just before the pandemic,
Speaker 3: and you talked about the ship and the role of
Speaker 3: women and Captain Kate, our Charlie Pellett is a big cruiser,
Speaker 3: including celebrity cruises, and he wanted to know and we're
Speaker 3: going to ask you, do you follow Captain Kate on Instagram?
Speaker 3: And what has she done for your brand and being
Speaker 3: able to put out a ship? She was of what
Speaker 3: first time that an American woman was named captain of
Speaker 3: a mega cruise ship, so it was a big deal.
Speaker 3: What has that done for the brand?
Speaker 16: Oh, Carol, Well, you know she was the first and
Speaker 16: still only, I might add, American woman to ever be
Speaker 16: at the helm of a mega cruise ship. She was
Speaker 16: the captain on Celebrity Edge, which by the way, was
Speaker 16: the first ship to sail out of a US port
Speaker 16: post pandemic. January twenty sixth, twenty twenty one. Captain Kate
Speaker 16: was at the helm of Celebrity Edge and we were
Speaker 16: the first brand to.
Speaker 11: Go back into service.
Speaker 16: She was the first woman to take a ship out
Speaker 16: of the shipyard and send Azir France. I would follow
Speaker 16: Captain Kate everywhere, and I follow her on Instagram. And
Speaker 16: when you think about the things that you're proudest of
Speaker 16: in your career, appointing her and giving her that opportunity.
Speaker 11: As captain is one of the highlights for me and
Speaker 11: for her. And she is beloved.
Speaker 16: She's beloved by her crew, her guests, everybody that encounters her.
Speaker 16: She's an unbelievable navigator. She's extraordinary in every single way.
Speaker 16: And she's been a great advocate for Celebrity and she's
Speaker 16: been a great advocate for women mariners and recruiting them
Speaker 16: into our company.
Speaker 3: Here here, I love it. I'm a I'm a sailor.
Speaker 4: On the net was going to say, Lisa, can you
Speaker 4: tell can you tell that Carol spends a good portion
Speaker 4: of the summer on the high seas. You really, she really.
Speaker 11: Loves that, Carol. I love that.
Speaker 3: You're welcome. You're welcome.
Speaker 6: All right.
Speaker 3: So we went to kind of a little bit of
Speaker 3: a rapid fire round with you if we can. We've
Speaker 3: got about a minute and a half left, just quick answers.
Speaker 3: Work from home, yes or no? Or how you feel
Speaker 3: about it?
Speaker 11: You can be honest, be honest, mixed and both mixed
Speaker 11: and both.
Speaker 4: How about that mixed in both?
Speaker 11: Yeah, both work from home, don't work from home?
Speaker 2: Okay?
Speaker 11: And I feel mixedls and cons.
Speaker 4: Okay, So talk a little bit about your favorite place
Speaker 4: to cruise quickly.
Speaker 11: Alaska, wow?
Speaker 1: Really?
Speaker 16: Or the Galapoos where where nature plays a huge role.
Speaker 3: All right, leader you admire, doesn't have to you can
Speaker 3: you can excuse your current leaders because we don't want
Speaker 3: to put that on you.
Speaker 16: No, no, no, leader Ruth Vader Ginsburg because real quickly,
Speaker 16: Oh my gosh, what she did for everybody herself.
Speaker 3: Women, Yeah, everybody get to hear you. Next act, next act,
Speaker 3: next oh wait, your next port. Let's stay with the
Speaker 3: sailing metaphor. And just got about twenty five seconds.
Speaker 11: Okay, next chapter.
Speaker 16: You're gonna have to reinterview me at the beginning of May,
Speaker 16: and I can tell you.
Speaker 4: All right, I like it. May please look at that.
Speaker 4: Oh ad to the calendar.
Speaker 11: Oh yeah, I'm not done yet, folks.
Speaker 3: All right, Lisa, So I appreciate this. Have a great weekend.
Speaker 3: Lisa lutav Pro. She is the author of a new memoir,
Speaker 3: Making Waves, a woman's rise to the top, using Smart's
Speaker 3: heart encourage. I love it, love it, love it, love it.
Speaker 4: She's cool, very cool.
Speaker 6: We gonna check in with her.
Speaker 3: May put it to the Yeah, there's gonna be more.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: All right, everybody, it's time for Bloomberg Pursuits, and we
Speaker 3: get to highlight another super accomplished woman who is facing
Speaker 3: tim a tougher market environment.
Speaker 4: That environment, pricey timepieces, also known as luxury watches, demand
Speaker 4: for such as the Gerald Genta designed Royal Oaks sports Watch,
Speaker 4: Rolex's daytona chronograph or anything. Patek Philippe has begun to
Speaker 4: wane after surging demand during the pandemic, when cash flush
Speaker 4: consumers splashed out on established luxury models.
Speaker 3: And that is the handout to one top executive in
Speaker 3: the Swiss luxury watch industry. Here with that story is
Speaker 3: the editor of Bloomberg Pursuits, Chris Rouser, along with the
Speaker 3: Bloomberg News reporter Andy Hoffman, who wrote it. Andy, joining
Speaker 3: us from Geneva, Switzerland. Chris, you love watches, watches all right?
Speaker 3: Tell us about the germination of this story.
Speaker 17: The luxury watch business is dominated by four top brands
Speaker 17: who have a huge percent of the market share, and
Speaker 17: one of them is Odamar p Gay, which is an
Speaker 17: independent brand. It's not part of a big luxury conglomerate.
Speaker 17: And this woman, a Laria Aresta, has just taken over
Speaker 17: and Andy got one of the first interviews with her
Speaker 17: and it was really cool.
Speaker 4: So Andy, come on in here, because her path to
Speaker 4: becoming a CEO of the company, it's it's not typical
Speaker 4: in the luxury watch world. She was formerly selling consumer
Speaker 4: products for Procter and Gamble. Tell us about it.
Speaker 15: Indeed, it's a very unusual, unorthodox appointment to have someone
Speaker 15: like a Laria Aresta head a brand, a luxury Swiss
Speaker 15: watch brand like Odamar p Gay number one. She's a woman.
Speaker 15: There are just am full of women in the Swiss
Speaker 15: luxury watch industry in top executive roles, and with her
Speaker 15: appointment as the CEO of Votamarpigue, she's in that top
Speaker 15: job in this industry.
Speaker 3: Can we just ask for a moment since it is,
Speaker 3: you know, Women's month, we get a month, you know,
Speaker 3: we got International Women's Day on Friday. But is it
Speaker 3: just because men buy a lot of these luxury watches
Speaker 3: or what is? Why is it? Or is it just
Speaker 3: the history? And that's just I don't know why a
Speaker 3: lot of women don't don't rise to the top of
Speaker 3: this industry.
Speaker 15: Andy, it's a fair question. Obviously, the market is more
Speaker 15: men than women. Men are more interested in luxury watches
Speaker 15: than women, although that is changing and it's changing quickly.
Speaker 15: But you know, the Swiss industry is quite closed off,
Speaker 15: it's quite conservative, and it rarely takes big chances. And
Speaker 15: you know, a bold move like this appointing a woman
Speaker 15: to the top job who comes from the consumer goods industry.
Speaker 15: Although to be fair, she did work for a Swiss
Speaker 15: company called Ferminish before this in the heading up the
Speaker 15: perfume and ingredients division. It is still quite a bold
Speaker 15: and unusual step.
Speaker 17: And by the way, when Andy's had a hand, she's
Speaker 17: one of a handful of women executives. That's like if
Speaker 17: three of your fingers fell off your hand, Like there
Speaker 17: are no women leading these companies. This is very unusual
Speaker 17: and really great.
Speaker 3: So big, big, big deal. Yeah yeah, So Andy, talk
Speaker 3: a little bit more about how she got there.
Speaker 15: Indeed, well, you know, she's a Laria Arresta is an
Speaker 15: Italian national, but she's also Swiss national. Now she's lived
Speaker 15: in Switzer Loan long enough to get her passports. And
Speaker 15: you know, she has spent most of her career a
Speaker 15: good two decades at Procter and Gamble, And of course
Speaker 15: Procter and Gamble is a consumer goods juggernaut, and they
Speaker 15: have their own way of doing business and management and
Speaker 15: philosophy about selling product. When she was at Procter and
Speaker 15: Gamble for over twenty years, she was in Cincinnati. At
Speaker 15: one point she was here in Switzerland where Procter and
Speaker 15: Gamble here in Geneva, have a big Outpost their European headquarters,
Speaker 15: and she oversaw a number of different brands. She talked
Speaker 15: about when we spoke to her about how passionate that
Speaker 15: consumers of those brands could become about those products. And
Speaker 15: you know, while it's a different price point, at the
Speaker 15: end of the day, creating passion it for product by
Speaker 15: the end user, that's the goal. And want, you know,
Speaker 15: to spend fifty thousand dollars on a Swiss watch, which
Speaker 15: is how you know, basically the average price of an
Speaker 15: Otamar pgay watch best known for their gerald genta royal
Speaker 15: oak design. You need that client to be passionate about it,
Speaker 15: and a Laria told us that passion for a product
Speaker 15: and for a brand that you know, she helped foster
Speaker 15: and saw in some of the better known Propter and
Speaker 15: Gamble products, most notably the Swiffer broom, which is sort
Speaker 15: of a category creating product.
Speaker 17: Raise your hand if you're passionate about it.
Speaker 4: But who would have thought that somebody you know goes
Speaker 4: from selling a Swiffer broom to selling a fifty thousand
Speaker 4: dollars watch. Chris, I mean, this is this is such
Speaker 4: a huge change, and I'm wondering about whether or not
Speaker 4: people in the watch community look at an appointment like this.
Speaker 17: It's exciting because not only do they not hire a
Speaker 17: lot of people with like different sort of who have
Speaker 17: come from different price points and stuff like that, they
Speaker 17: just don't hire people from outside very often at all.
Speaker 17: You really often see people from promoted from within. Sometimes
Speaker 17: the companies you don't even know who the CEO is
Speaker 17: because it's just so internal, and the brand is the spokesman.
Speaker 17: And so this is very interesting, and she's coming in
Speaker 17: at a really interesting time because watches have never done
Speaker 17: better than they've done in the past couple of years,
Speaker 17: that near the tail end of the pandemic, off the chart,
Speaker 17: off the charts, and that's softening, and so she's facing
Speaker 17: she's coming in off of maybe the Cut brand's best
Speaker 17: years ever, knowing that she's not going to be able
Speaker 17: to maybe pick that up up that pace. And then
Speaker 17: also Odimar Pigue is really dependent on that one watch
Speaker 17: that Andy mentioned, the Royal Oak, that's their star, and
Speaker 17: they don't really have a lot of our alternatives. So Andy,
Speaker 17: I wonder what if you could tell us a little
Speaker 17: bit about what she's up against and how she looks
Speaker 17: at that.
Speaker 15: Indeed, well, you know, a Laria told us that she's
Speaker 15: not focused on the numbers. She's focused on, you know, maintaining,
Speaker 15: preserving and adding value to the brand Odemar Piguer, which
Speaker 15: is a family owned company. As we said, it's independent,
Speaker 15: it's not one of the big part of one of
Speaker 15: the big you know, watch making conglomerates like Schwatch or Riachmall.
Speaker 15: And it's about preserving that value for the family shareholders
Speaker 15: for the next generation. And so if that means producing
Speaker 15: less watches or meeting the demand in a more effective way,
Speaker 15: is things sort of slow down from the boom time
Speaker 15: that we've had, she's willing to do that, you know.
Speaker 15: And odo Marpga is increasing its production capacity, but that
Speaker 15: doesn't necessarily mean that they're going to produce watches at capacity.
Speaker 3: So what does that mean in terms of pricing? One
Speaker 3: quote from your article really struck me. I don't have
Speaker 3: pricing as a factor of my business strategy. For me,
Speaker 3: what drives is the ultimate goal of sustainable, long term independence.
Speaker 3: But what does that mean A pricing? Does that mean
Speaker 3: she's going to make it competitive pricing or willing to
Speaker 3: charge what it's worth or what it costs.
Speaker 15: What does that mean, well, what we've seen from some
Speaker 15: of the big brands, almost all the big brands over
Speaker 15: the past few years, as demand surge, they've raised prices.
Speaker 15: They've raised prices to while not necessarily increasing production, whether
Speaker 15: they could or they couldn't, but price has been a
Speaker 15: very useful tool in terms of growing revenue. And the
Speaker 15: year before Alaria Aresta joined the Automarpiguet, they their sales
Speaker 15: were about two point four billion Swiss francs, which is,
Speaker 15: you know, which is by far a record for the company,
Speaker 15: and many other watchmakers experienced record sales in twenty twenty
Speaker 15: three after record sales in twenty twenty two, and some
Speaker 15: of this was done by price. But I think you
Speaker 15: know what she's what Alaria is saying here is that
Speaker 15: you know, it's not about taking price just to increase sales.
Speaker 15: It's about maintaining that that value proposition that you know,
Speaker 15: the brand has given in the past and will continue
Speaker 15: to do so in the future. And I think you know,
Speaker 15: it's clear she's going to double down on the on
Speaker 15: the complications, on the on the high end materials, on
Speaker 15: the finishing that that one gets with Todomar Pgay watches,
Speaker 15: and I think that's you know, the the tool or
Speaker 15: the lever she intends to use as opposed to pricing.
Speaker 4: So if if you as you follow Andy her next moves,
Speaker 4: her performance over the next couple of years, what are
Speaker 4: you watching for? What are the metrics that you're going
Speaker 4: to pay close attention to to judge whether or not
Speaker 4: her run there is successful.
Speaker 15: Well, it's going to take a long time, uh to
Speaker 15: be fair, to really get a good sense, because the
Speaker 15: kind of you know, the watches that the company will
Speaker 15: produce this year and next year, that's already determined. I
Speaker 15: mean those watches have been being developed research and development
Speaker 15: for years beforehand. There's that kind of lean time in
Speaker 15: terms of coming up with a new watch. I think,
Speaker 15: you know, we're going to see, we're gonna we're going
Speaker 15: to see the culture of Odamar Piga and if it
Speaker 15: you know, and how it's maintained or how it changes. Obviously,
Speaker 15: her predecessor very much was able to focus the culture
Speaker 15: and the message of the brand, and we'll see how
Speaker 15: that evolves. There is some skepticism, there's no doubt of
Speaker 15: putting an outsider into a role like this, but I
Speaker 15: think at the same time, it shows a maturity from
Speaker 15: the board and the family shareholders for seeing you know
Speaker 15: what this brand, this over a century old Swiss brand
Speaker 15: is in terms of its proposition as a consumer product,
Speaker 15: a luxury consumer product where the watch has cost about
Speaker 15: fifty thousand dollars, but it's a consumer product.
Speaker 3: Watch Firehouse one of those things we'll put a deposit.
Speaker 3: Christ You know you love watches. We love talking watches
Speaker 3: too with you on a regular basis. Kind of some
Speaker 3: final thoughts here.
Speaker 17: A lot of the brands that raise prices and the
Speaker 17: luxury high end brands are have tended to do well
Speaker 17: as the market has softened over the past year. But
Speaker 17: I personally am excited for all the people who entered
Speaker 17: the watch market at a lower price point and are
Speaker 17: enthusiasts and care about these really expensive watches and like
Speaker 17: to talk about them and look at them online. But
Speaker 17: who go out and buy a new, interesting mechanical time
Speaker 17: piece at an entry price price point which could be
Speaker 17: five thousand dollars, it could be two thousand dollars, it
Speaker 17: could be eight hundred dollars. And that's what's been really
Speaker 17: fun for me in the past year to see people
Speaker 17: sort of get into.
Speaker 3: Yeah, it makes accessibility of it all right, great stuff,
Speaker 3: and I have to say there's really fun stats too,
Speaker 3: and especially about kind of what some of the watches
Speaker 3: were going at the peak, Oh my god, and then
Speaker 3: how much they've come down since that point. Both of you,
Speaker 3: thank you so much, really appreciate it. Are thanks to
Speaker 3: both Bloomberg News Luxury Watches reporter Andy Hoffman of course
Speaker 3: always the editor of Bloomberg Pursuits, Chrisfrauser. Guys, thank you.
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