Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelly and I'm Taylor Riggs. Welcome to the Bloomberg
Speaker 1: Business Week Weekend Podcast. In this episode, we're going to
Speaker 1: bring you news of the week, insights from the magazine,
Speaker 1: and more, and this week a host of stories all
Speaker 1: over the world, all over the map. Victoria's secret, they
Speaker 1: have more than a Jeffrey Epstein problem, Taylor. We also
Speaker 1: take you to Minneapolis. They're taking aim at single family homes.
Speaker 1: Will be the hunger Games of the entertainment industry. That
Speaker 1: is a pun intended. It is this week's cover story.
Speaker 1: First up, though, Jason, So, raising venture capital money is
Speaker 1: complicated on all sides of the equation for both the
Speaker 1: funders and the funds, and the level of difficulty only
Speaker 1: gets more difficult if you are a woman, and that
Speaker 1: is still the case in Silicon Valley, even at the
Speaker 1: best known shop. Sarah McBride back with me from San Francisco,
Speaker 1: taking us inside the experience of one partner at Sequoia Capital.
Speaker 1: That's Just Lee. Sarah, great to have you with us
Speaker 1: and tell us about Jess So. Just Lee is the
Speaker 1: first US investing partner at Sequoia Capital, who's a woman.
Speaker 1: So the firm was founded in nineteen seventy two, and
Speaker 1: for decades there were no women partners here in the US,
Speaker 1: And then a couple of years ago the firm hired
Speaker 1: just Lee, who is a former product manager at Google
Speaker 1: and CEO of a startup called polly Vore. And it
Speaker 1: was a big deal and everybody was looking to see
Speaker 1: how she did, especially since Sequoia had been in the
Speaker 1: news a couple of times over some of the things
Speaker 1: that partners had done that people thought weren't that female friendly.
Speaker 1: So there was a lot riding on her shoulders, right,
Speaker 1: and specifically, Mike Mooret's on this network said, and I'm
Speaker 1: quoting here, what we're not prepared to do is lower
Speaker 1: our standards when asked about bringing in women partners. That's
Speaker 1: a tough beat, to say the least. And yet Just
Speaker 1: Lee perseveres, she takes the partnership, what has her experience
Speaker 1: been like with more it than others? Right to be fair,
Speaker 1: a lot of people thought that she was brought in
Speaker 1: as a direct result of those comments. Segoya had actually
Speaker 1: been trying to recruit her before that point, but the
Speaker 1: timing was just unfortunate. So um, she told me this
Speaker 1: crazy experience she had right after she joined Sequoia Capital. Normally,
Speaker 1: partners from a big prestigious firm like that have to
Speaker 1: be kind of careful when they go out into the world.
Speaker 1: They get mobbed. Every entrepreneur wants to pitch them their
Speaker 1: startup idea. And she described for my colleague Lizette Chapman
Speaker 1: and me going down to a conference at Upfront Ventures
Speaker 1: in l A. So there were lots of entrepreneurs, lots
Speaker 1: of other vcs people who normally would have given their
Speaker 1: eye teeth to talk to a partner at Sequoia Capital,
Speaker 1: and she says that, you know, she was a new partner,
Speaker 1: so people didn't know who she was. But she described
Speaker 1: walking around the room and people just looked at her,
Speaker 1: saw a young face, an Asian woman, and didn't even
Speaker 1: look down at her name tag to see who she was,
Speaker 1: just assumed she was in marketing or just not an
Speaker 1: important person that they didn't even need to look at
Speaker 1: her name tag. That wouldn't happen now because she's a
Speaker 1: more recognizable figure now. But I think that just was
Speaker 1: a devastating anecdote that shows the subconscious mindset that a
Speaker 1: lot of people in technology have well, And one of
Speaker 1: the really important things about your story that I appreciated
Speaker 1: was this notion of the complexity of women dealing with
Speaker 1: other women in the VC and tech world. Talk a
Speaker 1: little bit about that, because it's not this straight ahead
Speaker 1: like women helping other women, sisters doing it for themselves
Speaker 1: kind of thing. It's very different, right, So I do
Speaker 1: think that now there's an attitude where most women do
Speaker 1: want to help other women, but it hasn't always been
Speaker 1: like that. And even a lot of the women who
Speaker 1: think they want to help other women sometimes subconsciously realize
Speaker 1: they're sort of an outsider and don't want to be
Speaker 1: lumped in with the other outsiders. This is something I've
Speaker 1: written about over the years. There was an academic study
Speaker 1: that came out a couple of years ago that showed
Speaker 1: when women were evaluating startup pitches and men were evaluating
Speaker 1: startup pitches, the women were a lot harder on the
Speaker 1: pitches that came from other women, whereas the men were
Speaker 1: actually more likely to be supportive of those pitches. Young
Speaker 1: women founders have told me that they dread going to
Speaker 1: pitch women, but because women are harder on them and
Speaker 1: ask tougher questions. Now, I think a lot of people
Speaker 1: have done some thinking about how women are treated and
Speaker 1: how women can help each other, and there's less likelihood
Speaker 1: of that happening. There's a group here in Silicon Valley
Speaker 1: that just Lee is deeply involved with, called All Rays,
Speaker 1: where there's a conscious effort to help women founders and
Speaker 1: women entrepreneurs. So I think because people have really examined
Speaker 1: their own behavior, hopefully that happens less. But that's an
Speaker 1: unfortunate tendency. And so did you leave this story and
Speaker 1: leave your conversations with just more optimistic about the future
Speaker 1: of women in Silicon Valley, especially on the investors side,
Speaker 1: You know, I did. I think there's a tendency to
Speaker 1: tell each other great, the sisterhood, everybody helping each other,
Speaker 1: and it's a lot more complicated than that. But overall
Speaker 1: I did leave a lot more up to mystic well,
Speaker 1: and as you point out importantly in this story, it
Speaker 1: feels like we are at least getting to this moment
Speaker 1: where it's not enough to say, okay, we have a
Speaker 1: woman who is a partner, that most firms are taking
Speaker 1: a little bit more of a holistic approach here that's right,
Speaker 1: they are. They want to have at least two women.
Speaker 1: There are plenty of studies that show that once you
Speaker 1: get to the benefits multiply much more. There are efforts
Speaker 1: to just do more than pay lip service and not
Speaker 1: just promote the woman, but make sure she's comfortable in
Speaker 1: the position. And that's Sarah McBride a really smart story
Speaker 1: taking you inside the world of venture capital, the gender relations,
Speaker 1: the gender and balance. It's complicated, well safe to say.
Speaker 1: One of the most important and certainly controversial sports figures
Speaker 1: of the last twenty years, maybe the last century if
Speaker 1: we really stop and think about it, is Lance Armstrong.
Speaker 1: Well he's back in a way. Mat x Chafkin caught
Speaker 1: up with him, he joins me from San Francisco. So, Max,
Speaker 1: you spent some time with the man himself. Take us
Speaker 1: to Lance armstrong state of mind here in twenty nineteen. Yeah, So,
Speaker 1: like you said, Lance Armstrong, you know, one of the
Speaker 1: most controversial athletes, you know, pre controversy arguably, you know,
Speaker 1: one of the greatest athletes, won the Tour de France
Speaker 1: a record seven times UM and you know in the
Speaker 1: US particularly, you know there is really no one in
Speaker 1: in cycling or even endurance sports UM like him. Over
Speaker 1: the last couple of decades. UM, so he was banned
Speaker 1: from sports, you know, totally disgraced. UM according to the
Speaker 1: U s Anti Doping Agency. You know, it was the
Speaker 1: he was like the worst doper in history, part of
Speaker 1: the part of a team that did something just unprecedented
Speaker 1: and UM, according to government bad. The government suited him
Speaker 1: for a hundred million dollars. It's one of these things
Speaker 1: you would think, you know, Okay, this guy is never
Speaker 1: coming back from this. And what the story is about
Speaker 1: is kind of the way that Lance Armstrong UM sort
Speaker 1: of meticulously built this comeback and he started beginning with
Speaker 1: a podcast in UM. It was this confessional podcast and
Speaker 1: as the story talks about, you know, while he was
Speaker 1: doing that, it kind of looks like this you know,
Speaker 1: total you know, vanity project. But he was sort of
Speaker 1: putting the pieces into place to to start to rebuild
Speaker 1: his business empire. Well, and what you capture in this
Speaker 1: story so well, I thought, is what made him so successful,
Speaker 1: whether it was pre doping early early in his career,
Speaker 1: or even as candidly a cheater, This guy is a grinder,
Speaker 1: you know, like whatever he's gonna do he's just gonna
Speaker 1: do it and do it and do it and do it.
Speaker 1: And that's kind of what he's done here, as you say,
Speaker 1: very meticulously building this up so help us understand what
Speaker 1: he's doing. He's got this podcast, but there's merch, I mean,
Speaker 1: there's an event series he's out and about what's he
Speaker 1: up to? So yeah, I mean, probably the best way
Speaker 1: to think of about him is as like a YouTube
Speaker 1: star or an influencer. Um, he's got a a new
Speaker 1: media platform with a pretty sizable audience. Story during the
Speaker 1: Tour de France with which just uh wrapped up a
Speaker 1: you know, a little less than a week ago. You know,
Speaker 1: this podcast was was near the top of the iTunes charts. Um.
Speaker 1: And he's sort of using that and using the community
Speaker 1: of fans that that, you know, as he pointed out
Speaker 1: to me, they never went away. I mean, you know,
Speaker 1: Nike and and every authority figure can say Lance Armstrong
Speaker 1: is bad, um, but there's like a pretty sizeable chunk
Speaker 1: of sports fandom that will love him no matter what.
Speaker 1: And kind of what he figured out and what others
Speaker 1: have figured out, frankly, is that if you have a
Speaker 1: new media platform like a podcast, you can bring those
Speaker 1: people to you you know, once a week or or
Speaker 1: every day or what have you, and then you can
Speaker 1: you can send them to events. So so Armstrong has
Speaker 1: these um they're not races be as he's sort of
Speaker 1: banned from uh you know, organized cycling, from sanctioned races,
Speaker 1: but their rides um and uh. And then he has
Speaker 1: basically an athletic brand called We Do uh W E
Speaker 1: d U uh and and the they're selling kits cycling
Speaker 1: gear basically, and water bottles and and you know the
Speaker 1: kind of stuff that that apparel companies have sold. And
Speaker 1: then he's got one of these kind of um Patreon
Speaker 1: style membership programs where fans are paying sixty dollars a
Speaker 1: year and they get you know, special access to gear,
Speaker 1: they get you know, special live Q and a podcasts
Speaker 1: and and you know all sorts of little member perk
Speaker 1: stickers and kind of the what's amazing here to me anyway,
Speaker 1: is he's basically, I mean, he's not as rich as
Speaker 1: he used to be, you know, and he's talked on
Speaker 1: the podcast about you know, he misses his private jet
Speaker 1: or whatever. But but he's kind of got the band
Speaker 1: back together. And you know, I was listening to the
Speaker 1: podcast during the Tour de France, and you know it
Speaker 1: was I mean, it was a really exciting tour. And um,
Speaker 1: you've got Lance Armstrong wrong. Uh, you know the disgrace
Speaker 1: cyclist George Hincope, his his teammate who was you know,
Speaker 1: a domestique which is like a sort of a helper
Speaker 1: cyclist on the on the great um Us postal teams
Speaker 1: of the of the late nineties. And then you have
Speaker 1: Johann Berneil, who was another um sort of acute you know,
Speaker 1: part of the alleged you know, doping conspiracy. So it's
Speaker 1: like all these guys who basically the cycling authority who
Speaker 1: you know, sort of mainstream sports has said, you know,
Speaker 1: get out there. They're back in and they're all together
Speaker 1: and they're sort of doing what they've always done well
Speaker 1: and notably. I mean, wasn't Hincope one of the guys
Speaker 1: who ultimately helped take Armstrong down? Yeah, you know I
Speaker 1: talked to Hincopy about that. I mean he I think
Speaker 1: you know, basically, Armstrong, you know, had had a difficult time.
Speaker 1: Obviously the government was was going after um, you know him,
Speaker 1: and then and then attempting to flip all these witnesses
Speaker 1: and and you know, I think Hinkompe and a bunch
Speaker 1: of other people in that circle sort of briefly lost
Speaker 1: touch with Armstrong and uh, Hincopy told me, you know,
Speaker 1: they didn't seek for a while, but you know they've
Speaker 1: built back the relationship and and it's something that I think,
Speaker 1: you know, sports fans in general are doing for better
Speaker 1: or worse. Now, we should say there are a lot
Speaker 1: of people, um, both in terms of sort of the
Speaker 1: cancer world. You know, Lance Armstrong was was a huge
Speaker 1: um sort of activist, philanthropists and and cancer. A lot
Speaker 1: of people felt betrayed. Those people, many of them still
Speaker 1: feel betrayed. Um. You also have a lot of people,
Speaker 1: you know in sports who who still you know, are
Speaker 1: never going to forgive this guy. And you know they're
Speaker 1: good reasons for that. There's a long paper trail of
Speaker 1: basically betrayal. Right well, because it wasn't only what he did,
Speaker 1: but the vitriol with which he defended himself, which leads
Speaker 1: me to this last question, which is how is he
Speaker 1: from a personality perspective, because to say he was defiant
Speaker 1: for a long time is an understatement. And you know
Speaker 1: he uses language that I won't repeat here on this
Speaker 1: family program about his state of mind throughout what's he
Speaker 1: like now? He's you know, I think Lance Armstrong is
Speaker 1: sort of a communications genius, and he, you know, during
Speaker 1: his his career was able to take this kind of
Speaker 1: niche sport um and this really unique story, you know,
Speaker 1: his the fact that he survived you know, late stage
Speaker 1: testicular cancer and basically turned cycling into a huge thing
Speaker 1: make make himself, uh you know, a skinny road cyclist,
Speaker 1: not normally a marketable commodity into you know, one of
Speaker 1: the highest paid athletes in the world. Um, he's kind
Speaker 1: of doing the same thing now. So so like he's
Speaker 1: still combative. I mean he he you know, told me
Speaker 1: he hates the media, and you know, kind of apologized
Speaker 1: to me for it, and and and uh and so
Speaker 1: there's kind of this weird thing where he he sort
Speaker 1: of hates the media and and he he doesn't he
Speaker 1: hasn't stopped hating the media, hasn't stopped being sort of
Speaker 1: a difficult interview and and all of those things. But
Speaker 1: he's also kind of found ways to cultivate the parts
Speaker 1: of his personality that you know, make for good podcast.
Speaker 1: I mean, what's what's so wonderful? I mean, and you know,
Speaker 1: even if you really don't like Lance Armstrong, you kind
Speaker 1: of have to admit that the podcast themselves are super
Speaker 1: entertaining because he is good at it. He can be vulnerable,
Speaker 1: he can mind those pieces of himself that are really compelling,
Speaker 1: and so it's it's you know, even if you don't
Speaker 1: like him, you sort of can't help. But listen, that's
Speaker 1: Max Chafkin and Jason that Land's Armstrong. I hadn't thought
Speaker 1: about him and so long I'm going to call him
Speaker 1: my new combat kid. Yeah. Absolutely, And you know, the
Speaker 1: podcast format is really amenable apparently to him. He's a
Speaker 1: little bit confessional and it seems to be working. So
Speaker 1: Victoria's Secret very much in the news, not in the
Speaker 1: way that it would like to be. It's CEO and
Speaker 1: his association, his longtime association with Jeffrey Epstein, who is
Speaker 1: under an enormous amount of scrutiny currently in jail in
Speaker 1: New York City awaiting trial. Jordan Holman follows all of
Speaker 1: this for us and takes us inside Victoria's Secret. Not
Speaker 1: a great moment for Victoria's Secret, correct, So it's not
Speaker 1: a great moment, right, now for Victoria's Secret for multiple reasons.
Speaker 1: So they're CEO um Les Wexner, who also runs L
Speaker 1: brands in bath and body works. He has a longtime
Speaker 1: friendship with Jeffrey Epstein. At one point, Um Jeffrey Epstein
Speaker 1: was the power of attorney for Less Wexner. They say
Speaker 1: that they suffered ties more than a dozen years ago,
Speaker 1: but just the skeletons in that closet have caused more
Speaker 1: issues for the company down the line in terms of
Speaker 1: the modeling agency they use and just responding to consumer
Speaker 1: demand for today and so beyond the relationship between these
Speaker 1: two men, which I think it's safe to say more
Speaker 1: to come on that it feels like there's more to
Speaker 1: be revealed. This is coming at a time where Victoria's
Speaker 1: Secret does not feel, shall we say, without being too glib,
Speaker 1: doesn't feel very twenty nineteen. No, not at all. So
Speaker 1: they've in the past few years, Victoria's Secret has gotten
Speaker 1: a lot of criticism for not being body positive, more
Speaker 1: inclusive with their advertising, who's on their catwalks for the
Speaker 1: fashion show. And at the same time they've had a
Speaker 1: lot of competitors come into the space and say, actually,
Speaker 1: we want to make laundry for women and not for
Speaker 1: men just to look at, and Victoria's Secret has not
Speaker 1: quickly shifted to that trend. That's happening because it's fair
Speaker 1: to say, I think Jordan's that no one has essentially
Speaker 1: used sex and maybe more specifically sexy ness to better
Speaker 1: effect or two more profitable effect than Victoria's Secret. As
Speaker 1: you point out in your story, the words sexy finds
Speaker 1: itself into the names of its products. Yes, literally, they've
Speaker 1: trademarked dozens of products with the name sex sexy in it,
Speaker 1: and then on top of it. Some history on Victoria's Secret.
Speaker 1: It was created more than forty years ago by a
Speaker 1: man who went into a department store to buy lingerie
Speaker 1: for his wife, did not love the arians, and said, hey,
Speaker 1: I'm going to create a store that men feel comfortable
Speaker 1: buying women's underwear. That's how you get Victoria's Secret. So
Speaker 1: they were founded with men in mind, even though there
Speaker 1: in customers a woman. So that is you know, they're
Speaker 1: dealing with that history, and that's why they're kind of
Speaker 1: very slow to respond to this. Women are speaking oun
Speaker 1: saying we don't want that type of product anymore, and
Speaker 1: that's reflecting in their sales. They've lost twenty billion dollars
Speaker 1: in market value in just the past four years. That's
Speaker 1: such an interesting point to history and really important important
Speaker 1: to point out. And you know, you fast forward to
Speaker 1: closer to the president, and you have this chief marketing
Speaker 1: officer who is seen as this uber powerful guy in
Speaker 1: the modeling industry and in the sort of lingerie fashion industry.
Speaker 1: You have a great anecdote about him backstage at the
Speaker 1: fashion show. Tell us about that. So ed Razik, he
Speaker 1: is the chief marketing officer of Victoria's Secret. He's seventy
Speaker 1: one years old, and he's really he's the one who
Speaker 1: runs this fashion show. Less Wexner's a little bit more
Speaker 1: removed from it, and he takes his job very seriously.
Speaker 1: So um in between the tapings of the Victoria's Secret
Speaker 1: fashion shows as two tapings, he gathers all the models together,
Speaker 1: all the angels, and basically talks to them as if
Speaker 1: he's a coach, giving them a pep talk before the
Speaker 1: big game. And he says, literally, in the history of
Speaker 1: the world, there has not been a more important job
Speaker 1: than being a Victoria's Secret Angel. Only a hundred and
Speaker 1: sixty five women have had this job. At this point
Speaker 1: in the history of the world. It's very over the top.
Speaker 1: He's very much looking at their jobs through this lens
Speaker 1: of you guys are wearing you know, these underwear with
Speaker 1: the angel wings, and this is the most important job
Speaker 1: and used to be proud of yourselves and most women
Speaker 1: can't do this, right, amazing? I mean that, I have
Speaker 1: to say reading this, you just encounter this company, especially
Speaker 1: in light of what their competitors are doing, as you mentioned,
Speaker 1: that just feels out of step. Tell us a little
Speaker 1: bit about the competition, because to be fair, Victoria's Secret
Speaker 1: wasn't the only company you think about American Apparel. You
Speaker 1: think about Abercrombie and Fitch, all of whom, each of
Speaker 1: whom have used sex to sell in different ways as well.
Speaker 1: And yet those other companies have kind of gotten the joke. Yeah,
Speaker 1: so in retail it's not new to use sexy to advertise.
Speaker 1: But what's happened with the companies you name American Apparel
Speaker 1: and you have Abercambi Infins. They got hit by that,
Speaker 1: you know, people, they got a lot of criticism. They
Speaker 1: had to reel that back. Um, American Apparel isn't as
Speaker 1: strong as they used to be. Abercombie, they you know,
Speaker 1: turned on the lights and they've changed their mannequins, all
Speaker 1: that kind of stuff. Victoria's Secret has been more resistant
Speaker 1: and so during this time, even though they still have
Speaker 1: a lot of market share in the lingerie industry, you
Speaker 1: have American Eagles Area, which is like braw Letts and
Speaker 1: more body positive, and teams really love it, and they're
Speaker 1: marketing and using women of all sizes, not like what
Speaker 1: you're used to seeing if you walk into a Victoria's
Speaker 1: Secret store. So you have that, you have smaller competitors
Speaker 1: like Third Love Um and it's all with the woman
Speaker 1: in mine at the end of the day. And that's
Speaker 1: not what's happening at Victoria's Secret. And that's Jordan Holman Taylor,
Speaker 1: what a smart story, because it's very bloomberg in a
Speaker 1: lot of ways, that Jeffrey Epstein story. Its tentacles are
Speaker 1: going everywhere, and yet Victoria's Secret, it's bigger than just
Speaker 1: this one guy. Crazy enough, though, Jason, we took a
Speaker 1: look at the annual revenue this company, Victoria's Secret still
Speaker 1: pulling in more than seven billion dollars. Hard to see
Speaker 1: how they're going to go anywhere from here exactly so Taylor,
Speaker 1: one of the most interesting battle grounds right now across
Speaker 1: all of the world. A business is streaming your eyeballs.
Speaker 1: Everybody wants them. Felix to Lette is here to bring
Speaker 1: us up to date on the streaming wars. It's getting crazy,
Speaker 1: it is. It's this incredible showdown and the next year
Speaker 1: it's just going to get even more fierce and even
Speaker 1: more brutal. For you know, all these tech and media
Speaker 1: companies are piloting into the space. So we've talked to
Speaker 1: you before about this collision, you know, this collision course
Speaker 1: that all these companies have been on. It's been looming
Speaker 1: for a while. But as you say, this is really
Speaker 1: where it comes to bear. Netflix doesn't have this to
Speaker 1: themselves anymore. Netflix and Amazon, I guess I should say,
Speaker 1: don't have this to themselves anymore. Disney seems to be
Speaker 1: and Disney is leading the charge. So Disney Plus will
Speaker 1: be arriving in November. That's gonna be huge, um, you know.
Speaker 1: And then following after closely after that, um, you know,
Speaker 1: next spring, we're gonna have HBO, Max is going to
Speaker 1: be arriving. NBC is putting together they're streaming uh subscription
Speaker 1: video on demand service, so uh, and also you have
Speaker 1: Apple coming in sometimes this fall also with Apple Video
Speaker 1: TV Plus, which is gonna be coming in there. So
Speaker 1: it's you know, yeah, for a long time it was
Speaker 1: kind of Netflix, a little bit of Amazon, maybe check
Speaker 1: out CBS All Access. All of a sudden, it's just
Speaker 1: gonna be this uh, you know, wide open field. Well,
Speaker 1: and you have to hand it to Netflix. I mean,
Speaker 1: they really sort of paved the way, and it feels
Speaker 1: to me like everyone else playing catch up. Really at
Speaker 1: this point, how worried is Netflix? I don't think they're
Speaker 1: too worried in the sense that they do have a
Speaker 1: little bit of a buffer. They have the rights for
Speaker 1: a lot of these shows that they've licensed from these companies.
Speaker 1: Some of them are coming to an end. And there's
Speaker 1: been a lot of news recently about you know, a
Speaker 1: T and T paying this vast amount of money to
Speaker 1: get Friends back from Netflix, one of Netflix's most popular shows,
Speaker 1: which is to me kind of amazing. Also, but you
Speaker 1: know that's gonna cost you know, hundred million dollars or
Speaker 1: whatever they were getting from Netflix. You give up that
Speaker 1: money so you can bring it over to HBO Max
Speaker 1: and hope that you know, Friends fans will come over
Speaker 1: to HBO Max as a new service. But it kind
Speaker 1: of like gets to what's also just so daunting about
Speaker 1: this competition is you know, for years these media companies,
Speaker 1: you know, as DVD sales were declining, they made up
Speaker 1: that money by licensing their show to Netflix and Amazon.
Speaker 1: And it was kind of easy money. I mean it
Speaker 1: was you didn't really have to do much. You already
Speaker 1: made the shows and they were getting good prices for them.
Speaker 1: And now it's that's part of the difficult decision. Okay,
Speaker 1: we're gonna give up that easy money. We're gonna bring
Speaker 1: those shows back. And the big question is how many
Speaker 1: of those subscribers can you bring back and get them
Speaker 1: to test out these new services. One of the questions
Speaker 1: that I keep thinking about is how do you delineate
Speaker 1: value between existing shows? The Friends, which, as you say,
Speaker 1: like has a popularity that I think baffles at least me.
Speaker 1: I'm also baffled by the continuing popularity in my own
Speaker 1: house with my teenagers of the office, I mean, which
Speaker 1: is another hundred million a year property which NBC is
Speaker 1: going to bring back for their stream in straw. Yeah,
Speaker 1: I mean, what is a successful show? I mean that
Speaker 1: is a huge question that we knew what a successful
Speaker 1: show was in the old paradigm of broadcast and cable television,
Speaker 1: and now this is a new world. It's not based
Speaker 1: on advertising as much. Now it's based on this fierce
Speaker 1: competition for subscribers um and that changes the dynamic of
Speaker 1: what you know in your strategy. I mean, it's interesting
Speaker 1: that one of the things that's happening now is you
Speaker 1: see this kind of similar uh, you know, all these
Speaker 1: services are trying to create tent pole events and blockbusters,
Speaker 1: sort of similar to what you had with Hollywood studios
Speaker 1: and the movie business. And I think a lot of
Speaker 1: that is, you know, shows like Game of Thrones that
Speaker 1: just creates so that are hugely expensive, but if they click,
Speaker 1: if they work and bring in uh you know, vast
Speaker 1: numbers of new subscribers and hopefully hold onto them for
Speaker 1: multiple seasons. And so yeah, that's part of the escalation
Speaker 1: of this competition. Also, I mean Amazon going out and
Speaker 1: paying two d and fifty million dollars for the rights
Speaker 1: um to do a Lord of the Rings TV series,
Speaker 1: And that's before you even start shooting, before you've even
Speaker 1: you know, hired a single actor, started script I mean,
Speaker 1: it's going to cost a lot of money, and um, everybody,
Speaker 1: it's great for you know, the the TV writers and creators, um,
Speaker 1: you know, that's the peak TV phenomenon. But I guess
Speaker 1: if you're writing the checks, it can look a little
Speaker 1: bit more like a value. Jason brought up a good
Speaker 1: point about trying to differentiate the value between existing shows
Speaker 1: and new shows. We've talked a lot about Netflix spending
Speaker 1: four or five billion dollars wacky it, you know, sometimes
Speaker 1: per quarter when we're taking a look at negative free
Speaker 1: cash flow, for example, are some of the new entrants
Speaker 1: prepared to pay that price to really heavy, heavily invest
Speaker 1: in original programming. I don't think anyone's gonna be able
Speaker 1: to match Netflix's programming budget out of the gate. I mean, uh,
Speaker 1: but they are going to spend a lot of money.
Speaker 1: Will it be enough? I mean, what's crazy? As you
Speaker 1: talk about, Oh, you know Apple, they're only going to
Speaker 1: spend a billion or two of them. That's not enough,
Speaker 1: you know. I mean Disney, which has the most enormous
Speaker 1: library of content in the world. The fact that they
Speaker 1: before they launched a new Plus and you know that
Speaker 1: they went out and oh we gotta go by twenty
Speaker 1: one century Fox. We need to really stock up on
Speaker 1: some shows. I mean, it's crazy, UM. And I think
Speaker 1: it does get to the dynamic that's changed. I mean,
Speaker 1: in the old world, if your network, UM, you know,
Speaker 1: had a little lull in programming, you're kind of insulated
Speaker 1: from UM, you know by being part of a bundle
Speaker 1: UM and people. It was hard to cancel, you know,
Speaker 1: in the subscribe. In the you know, streaming world, it's
Speaker 1: so easy to just you know, I've seen everything I
Speaker 1: want to see here, there's nothing else for me. I'm
Speaker 1: just gonna cancel this. It takes a couple of clicks.
Speaker 1: You don't have long term contracts UM, and so the
Speaker 1: churn rates are much higher. And you also have this
Speaker 1: phenomenon that people talk about now it's just the bingeing churn,
Speaker 1: which is, oh, I want to see that one show.
Speaker 1: You know, I'll subscribe, go in there, spend a week
Speaker 1: watching the show, and after a month, I'll cancel the service. UM.
Speaker 1: I think the good thing for these in this competition, UM,
Speaker 1: for the new services, is that consumer surveys show that
Speaker 1: people are willing to go test out a new service
Speaker 1: based off and on one show. So you can definitely
Speaker 1: pull people in, but the trick is, you know, how
Speaker 1: are you going to keep them? And I think to
Speaker 1: do that, yeah, you're gonna have to have vast amounts
Speaker 1: of um, you know, spend vast amounts on programming, both
Speaker 1: for original new shows and also to have you know,
Speaker 1: a really deep bench of classics. One of the things
Speaker 1: that I think certainly knocked me back, and I think
Speaker 1: even you in reporting this was the vast amount of
Speaker 1: money that Netflix alone is spending on marketing. I mean,
Speaker 1: and you have some great examples in the story of
Speaker 1: the links that they are going to to get in
Speaker 1: front of people. Talk to us about that. Yeah, I
Speaker 1: mean two point four billion dollars in marketing in two
Speaker 1: thousand and eighteen, which we were comparing that was more
Speaker 1: than you know, it's basically what HBO was spending on
Speaker 1: all of their programming and two thousands seventeen just to
Speaker 1: give you some comparisons. So, yeah, Netflix is spending a
Speaker 1: lot of money, um getting out there. Of course, they're
Speaker 1: you know, also pushing the boundaries in terms of you know,
Speaker 1: this is not just a US service. They're going all
Speaker 1: over the world with that. So that's part of the
Speaker 1: cost um but they have this incredible brand name, and yeah,
Speaker 1: they just all the different touchpoints. And there's gonna be
Speaker 1: so many shows, so many news shows, so much competition
Speaker 1: that just trying to get people's attention is going to
Speaker 1: cost huge amount of money, to the point where this
Speaker 1: is my favorite anecdote in the story, stickers in public
Speaker 1: bathrooms that have lines of cocaine and build up dollar
Speaker 1: bills to promote an arcas. Yeah, I mean that's you know,
Speaker 1: that's part of every show. You got to come up
Speaker 1: with some campaign. Uh, try and make some noise, because
Speaker 1: things do kind of come and go um a captive audience.
Speaker 1: Taylor clearly talk to me about pricing strategy, you know,
Speaker 1: because we really vary five nine for Hulu. HBO comes
Speaker 1: out fifteen dollars a month. Is it going to be
Speaker 1: a race to the bottom we're given the competitive force?
Speaker 1: Is we're all now just gonna pay five dollars a month? Yeah,
Speaker 1: I think it's it's incredible. There's gonna be a lot
Speaker 1: of pressure on HBO at that price. I mean, Disney
Speaker 1: Plus is coming in at you know, seven dollars a month,
Speaker 1: which is I mean that's like if you have kids,
Speaker 1: you're like that's babysitting costs alone. That's nothing. I'll just
Speaker 1: get that. And and yeah, I think it's gonna put
Speaker 1: a lot of pressure. Um. Netflix just raise their prices
Speaker 1: earlier this year, and what happened, you know, for the
Speaker 1: first time, they lost net subscribers in the second quarter
Speaker 1: because of those price hikes, and they didn't even raise
Speaker 1: the price that much. Um. So I think what that
Speaker 1: shows is, Yeah, it's gonna be a lot of pressure
Speaker 1: to keep prices down. And uh, you know, Disney says
Speaker 1: they don't expect to turn a profit on Disney Plus
Speaker 1: two thousand, twenty four. I mean, I think everybody is
Speaker 1: going to be losing money in the short term. And
Speaker 1: I think your hope is that, you know, three or
Speaker 1: four or five years from now, you survive, as you know,
Speaker 1: one of the top two or three services, and the
Speaker 1: competition falls back a little bit and at that point
Speaker 1: maybe you can bring up prices. You mentioned earlier this
Speaker 1: notion of peak TV, and I feel like we've been
Speaker 1: talking about that for a couple of years now. How
Speaker 1: much longer will this peak last? And what is the
Speaker 1: other side of the peak? Look like? The one way
Speaker 1: in which it's changing now is I think, uh, you're
Speaker 1: gonna see Netflix with this new increased pressure, be a
Speaker 1: little bit more conscious cost conscious about you know, uh,
Speaker 1: you know, is a show working, is an audience growing?
Speaker 1: Is it bringing in new subscribers? And if it's not,
Speaker 1: we're not going to renew it. And I think that's
Speaker 1: the thing you're starting to hear out of Hollywood now,
Speaker 1: is you know that they're being a little bit more
Speaker 1: um judiciows about renewals and um that you know, that
Speaker 1: might put a little bit of pressure on shows and
Speaker 1: it's gonna upset some fans and your favorite show gets canceled.
Speaker 1: That's Felix Gette Jason my key takeaway here. I cannot
Speaker 1: wait to see the amount of capex and negative free
Speaker 1: cash flow. As these companies spend so much on original programming,
Speaker 1: I don't think any of them are expected to post
Speaker 1: a profit through well. A major interview down in Mexico
Speaker 1: City this week, the first international interview with the relatively
Speaker 1: new President of Mexico. He has spent a lot of
Speaker 1: time am Low as they call him, has talking to
Speaker 1: the Mexican people. Now he's talking to the world. John
Speaker 1: Michael Thwaite, our editor in chief, conducted the interview, he
Speaker 1: joins me from Mexico City. So John, this was a
Speaker 1: big get. As they say, what do you think lad
Speaker 1: uh M low to talk to us at this moment.
Speaker 1: I think two things. One was a personal thing. He
Speaker 1: came to see Bloomberg when he was in opposition and
Speaker 1: he was impressed we saw him. The second thing is
Speaker 1: actually I think he does need to reach out to
Speaker 1: the world. You have the situation where he has approval ratings. Um,
Speaker 1: he is an austere populist. He's not spending money, rather
Speaker 1: the opposite, which is very, very unusual for somebody from
Speaker 1: the left. But he's got the people behind him because
Speaker 1: they think that he's against corruption. He's lean, drives around
Speaker 1: and rather not tawdry but not exactly smart voxwagon. Um,
Speaker 1: that's the bit he's doing very well. The bit he's
Speaker 1: not doing so well is reaching out to the business community,
Speaker 1: reaching out to investors, and they're there are bigger doubts
Speaker 1: about him. And why is that? I mean, is this
Speaker 1: purely economically? You look at the data coming out of
Speaker 1: Mexico and it doesn't look great, to say the least,
Speaker 1: it's slowed it's slowed down a bit and that's a mixture.
Speaker 1: That's some ways part of the good things he's doing.
Speaker 1: He's just said, I do not want I want to
Speaker 1: keep the primary surplus. I don't want to spend money.
Speaker 1: I think there's far too much money being spent corruptly,
Speaker 1: and I'm going to crack down on it. And I
Speaker 1: think on the whole, the business and the investment community
Speaker 1: quite like that. The stuff they worry about is, I
Speaker 1: suppose the economic nationalism. He's pulled back and said he
Speaker 1: doesn't want to do any more oil auctions, cancel those.
Speaker 1: And he also kind of interfered a bit. And he
Speaker 1: has this thing where every morning he does the Bress
Speaker 1: Confidence about some ninety minutes um where he just talks
Speaker 1: about what's on his mind. But he has done things like,
Speaker 1: for instance, he scrapped an air an airport project. Most
Speaker 1: people think that Mexico City needs a big new airport.
Speaker 1: He scrapped this thirteen billion one, even though it's sort
Speaker 1: of some way halfway through, and that I think, you know,
Speaker 1: that's not a good thing with investors. Investors don't like
Speaker 1: things where there's suddenly uncertainty. Well, it's hard to talk
Speaker 1: about him without talking about his neighbor in the north,
Speaker 1: Donald Trump. There have been many comparisons made between the
Speaker 1: two men their relationship. If they were on Facebook, I
Speaker 1: think they'd call it complicated, right, John, So what did
Speaker 1: he had to say? What did you take away from
Speaker 1: his view of President Trump? Well, he has been rather
Speaker 1: remarkable in that respect. Again, you know, from Mexico, man
Speaker 1: of the left, not generally somebody who would temper his
Speaker 1: words about Trump. And indeed, in the last time we
Speaker 1: spoke to him back in two thousand and seventeen, or
Speaker 1: the last time he did a big formal interview with us,
Speaker 1: he complained that Trump was setting up an atmosphere of
Speaker 1: hatred towards Mexicans and Mexican Americans. Ever since he has
Speaker 1: become president, he has been remarkably calm no matter what
Speaker 1: Trump says. He sometimes stands up to Trump, but on
Speaker 1: the whole he's resolutely polite back and even in our
Speaker 1: interview he talks about Trump becoming more moderate, which to
Speaker 1: some extent, I'm rather surprised that Fox News and Trump
Speaker 1: have not seized on as proof that he has many
Speaker 1: friends across the border. But he sits there and he
Speaker 1: takes it. He does fight back on some things an
Speaker 1: animos not probably will not agree to do this thing
Speaker 1: called safe third country status, which is what Gratemalad will
Speaker 1: have been forced into, which is where you are. You say, look,
Speaker 1: I will look after anyone looking for asylum has to
Speaker 1: get asylum with me first, Rob and come to America
Speaker 1: and Mexico. I think he's likely to say no to that.
Speaker 1: You know, he notably did not attend the G twenty
Speaker 1: summit John and has not been as engaged maybe with
Speaker 1: the broader cadra of world leaders. What do you make
Speaker 1: a that and what does that say about his statue?
Speaker 1: He's very clear. He's very clear he wants to focus
Speaker 1: purely on Mexico. He doesn't want to travel. And we asked,
Speaker 1: you know, you can talk to him about whether he
Speaker 1: would come and meet Trump, and I think the answers
Speaker 1: he'd rather Trump came to meet him. He's not being impolite,
Speaker 1: but he's basically told the Mexican people that he'd spend
Speaker 1: the first year here focusing on what he thinks he
Speaker 1: needs to do for the country. And I think also
Speaker 1: that's his style. You could see from the interview he
Speaker 1: talks very slowly, very deliberately. On the campaign, trail. He
Speaker 1: does these rallies every weekend, again a little bit like Trump,
Speaker 1: but with a very different style. He goes to all
Speaker 1: corners of Mexico and he tells them, look, he's fighting
Speaker 1: for them and he's doing things for them. And it's
Speaker 1: a very big change from pennonetto who is his predecessor.
Speaker 1: So put him in the pantheon, as it were, of
Speaker 1: the world leaders that you've talked to just over the
Speaker 1: past couple of years. I'm thinking of Putin or to Wan, May, Trump,
Speaker 1: etcetera merkele. Where does he fit in? How does he
Speaker 1: compare to his peers around the world. He has one
Speaker 1: similarity with o Down is that he believes a little
Speaker 1: bit and what might be described as an unorthodox economics um.
Speaker 1: You know, he has a sort of theory that if
Speaker 1: he cut spending, everything will be fine, and that there
Speaker 1: are some bits where and he often lashes out at
Speaker 1: what he calls sort of neoliberal So he doesn't now
Speaker 1: now that the g d p as number is not
Speaker 1: advancing as he hoped, you know, he makes comments like that.
Speaker 1: But it is a very very different style to a
Speaker 1: do and it's a much more gentle one. I think
Speaker 1: the really remarkable thing about him is this sort of
Speaker 1: man of the left who doesn't want to spend money thing.
Speaker 1: You know that that is a really unusual thing. Imagine
Speaker 1: you would spend all your life, um, Jason Kelly, waiting
Speaker 1: to become Prime Minister of Ireland or deep President of America,
Speaker 1: and throughout that entire time you had sat on the
Speaker 1: left wing talking about spending on this, doing this, doing that,
Speaker 1: and then you come into power and then actually do
Speaker 1: the opposite. You clamp down on spending because you partly
Speaker 1: because you think there is too much corruption, but also
Speaker 1: because you just want to be absolutely clear that max
Speaker 1: Go is not going to be badly run. And that's
Speaker 1: his That's a novel way of looking at it, and
Speaker 1: I think that's a very different thing. And whether he
Speaker 1: can keep on pulling that off, we'll see. That's Winberg
Speaker 1: editor in Chief John Michael Thwaite and Taylor. I was
Speaker 1: really eager to catch up with him post interview, just
Speaker 1: to see where he puts Amlo in the pantheon of
Speaker 1: world leaders that he talks to all the time while
Speaker 1: in talking about his relationship with the US, and then
Speaker 1: define some of those fiscal hawks. So if you're looking
Speaker 1: for a revolution in housing. Look no further apparently than
Speaker 1: Minneapolis didn't necessarily see that one coming. Noah bu Hire
Speaker 1: joins me from Seattle, where he has taken a look
Speaker 1: at what's happening there in the Midwest. So an unlikely place, Noah,
Speaker 1: to say the least. But what's going on in that
Speaker 1: sitting Yeah. Um, So what happened is last year Minneapolis.
Speaker 1: Every ten years, all the cities in the Twin Cities
Speaker 1: regions are quired to go through this long range planning exercise.
Speaker 1: And you know, often this this is a pretty boring exercise.
Speaker 1: Not a lot of people pay attention to it. But
Speaker 1: what happened last year when Minneapolis went through this is
Speaker 1: that they decided to really take a hard look at
Speaker 1: housing access and quality around housing. And as they were
Speaker 1: drafting this planet's over a thousand pages, it's got all
Speaker 1: sorts of stuff in it, Um, they came up with
Speaker 1: a really interesting idea, which is basically that this whole
Speaker 1: concept of single family zoning, putting one house on each
Speaker 1: residential lot, really didn't fit what the city wanted to
Speaker 1: do and what the city needed in terms of how
Speaker 1: it should grow. So um, the proposal in this really long,
Speaker 1: dense document. Uh basically was to allow by right developers
Speaker 1: to put up to a triplex on all of those
Speaker 1: single family lots. And you know, this sounds like a
Speaker 1: kind of technical thing, but it's actually a really big
Speaker 1: deal in America because it's not just Minneapolis. All across
Speaker 1: the country we've developed or in the latter half of
Speaker 1: the twentieth century, these zoning laws were a big reason
Speaker 1: why we developed really uh, low density cities. So what
Speaker 1: the leaders there in Minneapolis were trying to solve for
Speaker 1: was was a housing affordability crisis and the fact that
Speaker 1: a lot of people wanted um to move into their town.
Speaker 1: And they were also looking at some historic racial inequity
Speaker 1: in housing. Uh. You have, for instance, in Minneapolis, about
Speaker 1: six of whites are homeowners, but just around of blacks are.
Speaker 1: That's actually one of the biggest gaps in the nation.
Speaker 1: And you know, this is a city in the north.
Speaker 1: This is not exactly where people think that kind of
Speaker 1: disparity would exist. Yeah, and you point out on that
Speaker 1: exact point. I mean, you put out something really interesting
Speaker 1: in your story. You quote the mayor of Minneapolis, that's
Speaker 1: Jacob Fry. You quote him quote you had these intentionally
Speaker 1: lea segregationists and racist policies that effectively barred blacks from
Speaker 1: living in certain parts of town. But then once that
Speaker 1: became illegal, the city quotes started doing it in other
Speaker 1: ways through the zoning code. And what you end up
Speaker 1: with is a very, to say the least, sort of
Speaker 1: bifurcated city, both in terms of the geography of it
Speaker 1: and as you say, homeownership really being a sharp divide racially. Yeah, yeah,
Speaker 1: I mean that's that's exactly what the city leaders were
Speaker 1: pushing back on. And so when I went there earlier
Speaker 1: this year, I really went with two questions. One was,
Speaker 1: how did they get this to happen? Uh? This, these
Speaker 1: are the This is a kind of policy that just
Speaker 1: has been particularly fraught for local governments to take on
Speaker 1: in America because you have a lot of pushback from
Speaker 1: folks who own those single family homes Historically, Uh, we
Speaker 1: hear a lot about nimbism. Not in my backyard. Um.
Speaker 1: But the other question I was really interested in was
Speaker 1: will it work? I mean, when you actually pass this
Speaker 1: and put something like this into effect, is it going
Speaker 1: to achieve the equity and affordability goals that the city
Speaker 1: has set out? And so what did you find. Well,
Speaker 1: it's complicated, right, So on the first question, Uh, you know,
Speaker 1: it was quite a fight. I mean, they're I think
Speaker 1: one of the keys to this thing passing is that
Speaker 1: you had a change election in seventeen and you had
Speaker 1: a motivated city council UH led by UM, a politician
Speaker 1: named Lisa Bender who has a background in city planning,
Speaker 1: and set this as a as a long term goal
Speaker 1: and really worked diligently toward getting the political support for it.
Speaker 1: You also had a grassroots effort to back this plan
Speaker 1: that really spun a very positive message. Their slogan was
Speaker 1: neighbors for More neighbors UH. That really resonated with a
Speaker 1: lot of people in Minneapolis. So they built this broad
Speaker 1: coalition of people who were for the plan UM, which
Speaker 1: was pretty effective encountering UM, the NIM the sentiment, which
Speaker 1: for sure was there. I mean, this was an incredibly
Speaker 1: divisive political fight in Minneapolis last year, and the local
Speaker 1: council passed it in December. It's still awaiting sign off
Speaker 1: from a regional council, but that's expected in September. Well,
Speaker 1: and I like one of the things, one of the
Speaker 1: things you point out, no, which I really loved in
Speaker 1: your story. Is this idea that this slogan, you know,
Speaker 1: neighbors for more neighbors sort of turns on its head
Speaker 1: what we normally see as you know, neighbors for fill
Speaker 1: in the blank, which is usually neighbors against anything changing
Speaker 1: around them, Right, Yeah, Yeah, I mean they they certainly
Speaker 1: had a sense of humor, and we're good at using
Speaker 1: social media to sort of put this idea out there,
Speaker 1: and they really brought a lot of the city along
Speaker 1: with them. And so will it work because this is
Speaker 1: an experiment that is going to be looked at very
Speaker 1: closely by big cities around the United States. You know,
Speaker 1: Bender herself has gotten a lot of praise from well
Speaker 1: beyond Minneapolis for being very aggressive. This has become an
Speaker 1: issue in the election on the Democratic side already. But
Speaker 1: the question is what's going to happen? Yeah, I mean
Speaker 1: I think I think it's complicated and we're just gonna
Speaker 1: have to see how it plays out. One thing that
Speaker 1: I think is important to know is when I when
Speaker 1: I talked, I spent some time with a builder who
Speaker 1: has actually done a few triplexes around um Or. He
Speaker 1: just completed a triplex. He got a variance to do
Speaker 1: one um in in Minneapolis, and he basically told me,
Speaker 1: you know, these projects are really idiosyncratic. It's it's gonna
Speaker 1: be hard to make it a giant business opportunities. So
Speaker 1: it's it's hard to think how that one change is
Speaker 1: going to add a ton of new density to the
Speaker 1: city or a ton of new housing. UM. The plan,
Speaker 1: the urban plan that the city put forward also allows
Speaker 1: for more density for basically mid size and larger apartment
Speaker 1: buildings in other parts of town. And that's actually where
Speaker 1: it gets really interesting because the city wants to usher
Speaker 1: in this development boom, but they also want to make
Speaker 1: sure that some of those new units are affordable to
Speaker 1: you know, working class people, to low income people, and
Speaker 1: they're working through the policy for how to make that work. Uh.
Speaker 1: But in the meantime, the policy that they floated has
Speaker 1: really put a lot of the real estate industry locally. They're, uh,
Speaker 1: you know, up in arms. They're quite up in arms
Speaker 1: about it because they think they're basically being forced to
Speaker 1: pay for the city's affordable housing goals, and they think
Speaker 1: it's a non starter for a lot of their projects.
Speaker 1: So we're going to have to see how this plays
Speaker 1: out over time. UM. But like you said, this is
Speaker 1: a very very important case study in America right now
Speaker 1: for how we're gonna uh tackle our housing affordability problem,
Speaker 1: which is which is not just you know, something that's
Speaker 1: happening on the coasts is happening in the heartland. That's
Speaker 1: noah boo higher and Jason, this is a zoning story.
Speaker 1: It is a home price appreciation story. Interestingly enough that
Speaker 1: a lot of the residents maybe not three old with
Speaker 1: the new law that's going into place. Well, and I
Speaker 1: have to think, you know, coming from California being in
Speaker 1: New York, now, Taylor, you understand better than anyone. This
Speaker 1: has really complicated this whole affordable housing issue. And it's
Speaker 1: time for another edition of Business Week Talks. This week,
Speaker 1: my co host Carol Master and I sat down with
Speaker 1: the CEO of nasdac so NASA got with earnings and
Speaker 1: joining us to talk about that and really the bigger
Speaker 1: picture of the market environment, the trading environment. Is Adina Freedman.
Speaker 1: She's the CEO of NaSTA, So nice to have you
Speaker 1: here with us. It's great to be here. Thank you.
Speaker 1: Let's talk about the quarter um a little bit of
Speaker 1: a it feels like well street, we to get a
Speaker 1: little bit of a mixed picture. You did have an
Speaker 1: earnings be a little bit light on the revenues. How
Speaker 1: do you see the quarter? Well, from our perspective, we
Speaker 1: really focus on organic growth, and in our non trading
Speaker 1: businesses we grew eight percent every year, so we're really
Speaker 1: pleased with continued progress of our technology business or index
Speaker 1: and data businesses, as well as the really healthy environment
Speaker 1: we're seeing for I p o S in our corporate
Speaker 1: services business. The trading business has some fluctuation in it
Speaker 1: in terms of just overall volumes and in impact that
Speaker 1: we're having in certain parts of our market, but at
Speaker 1: the same time, we're very pleased with the market share
Speaker 1: we're experiencing in the S equities and options markets as
Speaker 1: well as our Nordic equities markets. So from a competitive perspective,
Speaker 1: we feel very good about our core marketplaces and at
Speaker 1: the same time we managed through different environments that that
Speaker 1: operate there. But in our non trading businesses, that's where
Speaker 1: we're really driving for growth and we're experiencing that. We're
Speaker 1: very pleased with that, and so talk to us about
Speaker 1: the market technology business, especially because that's something people are
Speaker 1: keeping a very close eye on one of the drivers
Speaker 1: underneath their sure Well, we actually just came out with
Speaker 1: a new metric called a r R that we launched
Speaker 1: this quarter that really shows you the recurring revenue streams
Speaker 1: and looking at kind of how we look at our
Speaker 1: our growth of our recurring revenue in that business market technology. Today,
Speaker 1: we provide the technology that powers a hundred and thirty
Speaker 1: other markets around the world, and we also provide market
Speaker 1: monitoring technology for a hundred and fifty broker dealer firms.
Speaker 1: So it's becoming a very scaled business for us. We're
Speaker 1: investing heavily in growth in that business, so in terms
Speaker 1: of generating a creating a new next gen system technology
Speaker 1: system to support our clients, moving more towards the platform
Speaker 1: as a service model, and expanding our market technology implementations
Speaker 1: beyond just the traditional capital markets into other industry verticals
Speaker 1: like insurance, um in some cases betting and other things
Speaker 1: that we've been getting involved and you guys have some
Speaker 1: news about betting and also getting involved with footballers or
Speaker 1: footballers right in terms of where clients can actually what
Speaker 1: makes some bets on them. So we are we are
Speaker 1: providing the technology to a company called the Football Index
Speaker 1: that's a UK based firm, so Football and that Carlans
Speaker 1: means soccer and UM and basically that it allows people
Speaker 1: to bet on certain players and and understand it's almost
Speaker 1: like fantasy football in a betting context. And they've created
Speaker 1: a marketplace that allows people to essentially buy interest in
Speaker 1: a player and then watch that player, UM that player's
Speaker 1: performance and understand kind of what the returns are from that.
Speaker 1: More deals like that coming. Different sports are different industries
Speaker 1: in a similar way. Well, we already are in the
Speaker 1: horse racing business. We have three racing authorities that use
Speaker 1: our paramutual betting platform and we do see that as
Speaker 1: an as an industry vertical that is obviously very relevant
Speaker 1: to real time price discovery and and high high transaction
Speaker 1: processing capacity, as well as the potential for more advanced
Speaker 1: surveillance technology. We actually have a module well and are
Speaker 1: we have a technology that we provide to the industry
Speaker 1: with regulators, exchanges and market participants that help the monitor
Speaker 1: for manipulation other nefarious behavior in the markets. Well, you
Speaker 1: can use that same technology and a betting context as well.
Speaker 1: And we do have a module that we created specifically
Speaker 1: for sports betting that would allow you to monitor the
Speaker 1: behaviors of the different people who are betting in your platform.
Speaker 1: You know, I've got to ask you because when you
Speaker 1: hear about these sports things, I think, you know, you
Speaker 1: go back, what a decade or a couple of decades,
Speaker 1: we wouldn't have thought the nastac or and exchanges would
Speaker 1: be getting into this, but it's a different environment. Does
Speaker 1: that become much more of your business, those kind of
Speaker 1: new um platforms, if you will, versus kind of the
Speaker 1: core marketing and net core marketing, but core trading so well.
Speaker 1: Today the trading business are trading revenue is is about
Speaker 1: overallent depending on the quarter of our overall revenue are
Speaker 1: recurring revenue streams are that can come from data and analytics,
Speaker 1: It can come from our corporate services, and it also
Speaker 1: comes from market technology. Our technology business think of us
Speaker 1: is almost like Switzerland. We can provide that technology to
Speaker 1: other exchanges, We could provide some of that technology to
Speaker 1: some of our competitors. We provide that technology to markets
Speaker 1: in very different spaces, not just in the traditional capital markets.
Speaker 1: And it is the fastest growing part of our business.
Speaker 1: Does it become the biggest part of your business of ultimately, well,
Speaker 1: I would love to think that as an opportunity for
Speaker 1: us over a very long term. But we obviously have
Speaker 1: other great parts of our business as well, So when
Speaker 1: you think about what's out there in terms of potential acquisitions,
Speaker 1: we've seen a huge amount of consolidation and a lot
Speaker 1: of mergers and acquisitions across the exchange business broadly defined.
Speaker 1: More to be done in the short term in terms
Speaker 1: of buying buying up things, well, I think we number
Speaker 1: one are Our primary focus is on organic growth and
Speaker 1: we do feel very good about how we're delivering on that,
Speaker 1: but we do find opportunities to make some acquisitions. We
Speaker 1: recently bought a company called snob that helps expand UH
Speaker 1: and catalyze more business into the market technology space UM.
Speaker 1: We also bought Investment, which is in our data and
Speaker 1: analytics business supporting our investment management firms. And we bought Quandole,
Speaker 1: which is a very small platform but it's in an
Speaker 1: interesting space around alternative data. So we do find ways
Speaker 1: to leverage technology or leverage acquisitions to help execute our strategy.
Speaker 1: But we have a very defined strategy, so we want
Speaker 1: to make sure that our primary focus is how we
Speaker 1: grow our relations with our clients in an organic way
Speaker 1: potentially catalyze with some acquisitions. That's as x CEO Adina Freeman.
Speaker 1: And for our full conversation, download the Bloomberg Talks podcast
Speaker 1: wherever you get your podcasts. So we heard earlier in
Speaker 1: the show from Jordan Holman on what's happening at Victoria's
Speaker 1: Secret of fascinating look at where that company may need
Speaker 1: to go next, And what was clear about that story
Speaker 1: is that there's a reckoning of sorts happening. Well, if
Speaker 1: you go back to the pursuit section toward the back
Speaker 1: of the magazine, Jordan has another piece she works very
Speaker 1: hard here at Bloomberg and it's this week's critic, And
Speaker 1: the headline alone really grabbed my attention. Who gets to
Speaker 1: be an American? Jordan's back with me here in New York.
Speaker 1: Tell me about this story, because I have to say,
Speaker 1: it really stopped me in my tracks because you take
Speaker 1: this very important notion of American and Americanism and the
Speaker 1: use of the word American in art and sort of
Speaker 1: unpack it a bit. Take me here for sure. So
Speaker 1: this year, I think one of the main conversations that's
Speaker 1: happening is who is an American? What makes you an
Speaker 1: authentic American. And as I've been mulling this question, I've
Speaker 1: been reading a lot. So there's a few handful of books.
Speaker 1: You have An American Summer, in American Merrits, you have
Speaker 1: An American Son, which is a play, and all of
Speaker 1: them actually deal with the black experience, which is kind
Speaker 1: of a shocking thing because that's not what comes to
Speaker 1: mind when a lot of people are talking about who's
Speaker 1: real America. And so I wanted to explore in this
Speaker 1: piece that this is a great subversion that's happening with
Speaker 1: this artwork, saying I'm going to show you a very
Speaker 1: specific story about an African American, and that's going to
Speaker 1: be authentic America. You quote the author of An American Marriage.
Speaker 1: I believe that saying that when she told she told
Speaker 1: her editor quote An American Marriage sounded like a novel
Speaker 1: about some white people in Connecticut experiencing feelings. I thought
Speaker 1: that just captured it so perfectly, because that is not
Speaker 1: at all what this book is about, not at all.
Speaker 1: So An American Marriage is the New York Times best
Speaker 1: selling book, and it is about a couple in Atlanta,
Speaker 1: So a black couple in Atlanta. The husband is wrongfully convicted,
Speaker 1: goes to prison, and now you're looking at what is
Speaker 1: life like when you have um an incarcerated partner. And
Speaker 1: so I loved that quote that she said as well,
Speaker 1: because even as African Americans, we've been so in and
Speaker 1: day to say like this is you know, America is
Speaker 1: wide America. And so even pushing that joke and making
Speaker 1: it reality, that's amazing, and that and oprahset that is
Speaker 1: why I picked up that book. And so it's part
Speaker 1: of that process of your giving the reader a challenge.
Speaker 1: Even before they open that book and delve into that story,
Speaker 1: you're making them think differently about like who who stories
Speaker 1: do we care about? And what does that represent in
Speaker 1: this country? Well, and as you point out, when we
Speaker 1: think about that word used in novels and movies, you
Speaker 1: think about American beauty, you know, the sort of onwi
Speaker 1: of white suburbia. You think about American Pastoral Philip Roth's
Speaker 1: novel that was turned into a movie, and those are
Speaker 1: obviously very different experience, very suburban white experiences. And yet
Speaker 1: this is happening in a different way here in twenty nineteen.
Speaker 1: You talk about an American summer, which is again a
Speaker 1: very different picture of Chicago. Right, Yes, so I'm from Chicago.
Speaker 1: I love this book, And this book is about three
Speaker 1: months in the summer. What is the effect of gun
Speaker 1: violence in the city on the people who live in
Speaker 1: these neighborhoods. So we're looking at a mother who's lost
Speaker 1: a child from gun violence, or a friend who watched his,
Speaker 1: uh you know, sixty year old friend die from gun violence,
Speaker 1: and what is the effects of living in that and
Speaker 1: not feeling like you're getting resources um to survive that.
Speaker 1: So the title of it is an American summer, and
Speaker 1: everyone loves summer conjures these images of going to the
Speaker 1: beach and having fun and being on vacation. But this author,
Speaker 1: Alex Catlowitz, he's making the argument that this too is
Speaker 1: an American summer for millions of people living in this country,
Speaker 1: and how about we give more attention to that, right well,
Speaker 1: And you also point out towards the end of this piece,
Speaker 1: which I highly recommend, this notion that what these books
Speaker 1: specifically are doing in the play you mentioned as well,
Speaker 1: is move a lot of this experience from a section
Speaker 1: maybe in a different part the bookstore, the African American section,
Speaker 1: much more into the front area in a lot of ways,
Speaker 1: you know, among all the other novels that people may
Speaker 1: be picking up, and you talk about, you know the
Speaker 1: power of seeing people read this on a train or
Speaker 1: on a beach or on a plane, and that really
Speaker 1: hopefully moves the conversation in a different direction totally. I
Speaker 1: think one of the biggest frustrations that African American writers
Speaker 1: of playwrights have is that they get typecast is like,
Speaker 1: you can be in this section and your audience is
Speaker 1: this Black Americans and enjoy that. But what I've really
Speaker 1: enjoyed about seeing these books is that I see white people,
Speaker 1: Asian people, all of different people reading it. And by
Speaker 1: reading it, you're slowly starting to unravel the assumptions we
Speaker 1: have about who belongs here, whose stories matter, and like
Speaker 1: what this country represents. And I think that's really the power.
Speaker 1: And so an American Son, the play with Carrie washington
Speaker 1: Um going through a night in a police station trying
Speaker 1: to hear word of her missing black son, that's going
Speaker 1: to go to Netflix now, So that's going to get
Speaker 1: even wider audience to start thinking about who's an American. Well,
Speaker 1: and you point out, I'm glad you brought that up,
Speaker 1: because you point out there too, that the algorithms ultimately
Speaker 1: will say to you, Okay, you liked Scandal, You're gonna
Speaker 1: like this, and so you don't. That discover ability becomes
Speaker 1: that much more important. Jordanholm in really really great piece
Speaker 1: in the Pursuit section. She is this week's critic. Thank
Speaker 1: you so much, Thank you so one of the coolest
Speaker 1: cats we know. Hannah Elliott back with me in New
Speaker 1: York City. This headline really grabbed me. The twenty million
Speaker 1: dollar Porsche that may not be a Porsche, Say what right, Well,
Speaker 1: it depends on who you ask. Now, this is the
Speaker 1: Type sixty four, a car from ninety nine made by
Speaker 1: Ferdinand Porsche himself. Now, so the Visa is selling it
Speaker 1: next month at They're Big Pebble Beach Auction, and so
Speaker 1: the Visa is calling it the Porsche Type sixty four
Speaker 1: because it was indeed made by Ferdinand Porsche. However, Porsche
Speaker 1: Company wasn't started until ten years after this car was made.
Speaker 1: This car was also made mostly VW parts or parts
Speaker 1: that Mr Porsche built himself, and um it's been augmented
Speaker 1: with parts from Fiat and a bunch of other obscure
Speaker 1: German parts makers. So is it a Porsche or isn't
Speaker 1: it. It It really depends on who you ask, And that's
Speaker 1: kind of the controversy, right. And the heritage of this car,
Speaker 1: to say the least, is complicated. Even beyond the timing
Speaker 1: we're talking about the Nazi Party in Germany. Porsche himself
Speaker 1: was ultimately served time in jail for war crimes. He
Speaker 1: was associated more than associated with the Nazis. But even
Speaker 1: the car, as you mentioned, is sort of coupled together
Speaker 1: with all these different parts, not in a way that
Speaker 1: we're used to seeing in these types of cars. Right,
Speaker 1: that's again part of the controversy. Um. This car was
Speaker 1: owned for over four years by the same man Otto
Speaker 1: Matthew who had it until he died. In Otto race
Speaker 1: the car and it got crashed, as it happens in racing.
Speaker 1: The car has been painted a bunch of colors, turquoise, silver, black, UM.
Speaker 1: The engine has been switched out multiple times, the breaks,
Speaker 1: the transmission, it's been a lot of things. Um. Some
Speaker 1: of the original parts are still with the car, however
Speaker 1: they're not in the car. So again, this is it's
Speaker 1: it's really getting to the nut of what is original.
Speaker 1: This car has never been restored though so a lot
Speaker 1: of people say, look, this is the car in pristine
Speaker 1: condition because it has never been restored. This is truly
Speaker 1: how it is. What you see is what you get.
Speaker 1: But other people say, well, it hardly has any of
Speaker 1: the original parts that were put in by Mr Porsche himself.
Speaker 1: In again, it's really controversial, and so as you say,
Speaker 1: different people feel very strongly about this, and in the
Speaker 1: middle of it essentially saying nothing is the modern Porsche
Speaker 1: company itself is Porsche. And that's another very interesting aspect.
Speaker 1: The Porsche Museum UM during the nineteen fifties and sixties
Speaker 1: tried to buy this car many times. There are over
Speaker 1: forty letters between Otto Matthew, the owner, and the Porsche
Speaker 1: family trying to buy this car back as part of
Speaker 1: the Porsche heritage. The Porsche Museum is a great space
Speaker 1: and Stutgard, Germany has many members of the Porsche family there.
Speaker 1: You would think they would want this if they recognize
Speaker 1: it as part of their lineage. The DNA of the company,
Speaker 1: of course, you can see this car looks very much
Speaker 1: like the three Porsche. The museum has not responded to
Speaker 1: a request for comment, has not released any official comments
Speaker 1: on this car. They are very very quiet about it. Yeah,
Speaker 1: it's interesting too. As you point out, Porsche himself, Mr
Speaker 1: Porsche himself referred to this car the type sixty four
Speaker 1: as in English the ancestor. So that seems to tell
Speaker 1: you at least something about this certainly, and there's no
Speaker 1: denying that if you look at this car you can
Speaker 1: see the influences into the three six and even the
Speaker 1: nine eleven, the cars that came after it. It's certainly
Speaker 1: UH is in part the ether of what became Porsche.
Speaker 1: So exactly. Well, it's a wonderful story. So moving on,
Speaker 1: just more evidence that you are such a cool chick.
Speaker 1: If I may say that you write in this week's
Speaker 1: the one I believe about a really cool guitar, Cindy
Speaker 1: Guitarist tell us about this. It's a beautiful that talk
Speaker 1: about a beautiful piece of machinery. Wow, I love it.
Speaker 1: And it's so rare to find instruments that are being handmade. Still,
Speaker 1: these are built by UH Cindy of Cindy Guitars um
Speaker 1: in the shop Carmine Street Guitars in New York City.
Speaker 1: And the cool thing about these cars are guitars are handmade,
Speaker 1: but they're using wood reclaimed from historic buildings around New York,
Speaker 1: buildings from the Bowery Old churches, um old saloons, and
Speaker 1: they're made, you know, over months of time by hand
Speaker 1: to be really customized, and so so much of what
Speaker 1: they do when their customized is they try and capture
Speaker 1: the personality of the player, right, tell us how you
Speaker 1: do that? Well, there's a lot of talking going on,
Speaker 1: a lot of back and forth consultations. You know, what
Speaker 1: is special to that artist. Maybe it would be a
Speaker 1: little eye on the back of the back of the
Speaker 1: guitar that is like any you know to ward off
Speaker 1: bad spirits or pinstriping flames, you name it, right, Keith
Speaker 1: Richards he plays one of these, Yes he does. All right,
Speaker 1: So what's this going to run you? The one we
Speaker 1: feature in this section is about four thousand dollars. Wow.
Speaker 1: And so if you're looking for this type of guitar,
Speaker 1: what else might you go? Because you guys always talk
Speaker 1: about the competition. Sure, there's Tom Anderson guitars and he's
Speaker 1: really the icon of the era. He's in California, he's
Speaker 1: been doing it since the seventies. Yeah, alright, so people
Speaker 1: should go out and buy this one, think, Yeah, I like,
Speaker 1: I mean, I like, it's Cindy's in her twenties. Still,
Speaker 1: it's very rare to find a young woman. She's apprentice
Speaker 1: apprentice there for many years and she's really a rising star. Wow,
Speaker 1: it's a really really cool looking guitar, cars, guitars. You're
Speaker 1: good for everything, Anna Elliott, thanks so much, thank you,
Speaker 1: And that wraps up Bloomberg Business Week's weekend of podcast.
Speaker 1: Thanks for joining us. I'm Taylor Riggs in for Carol Masser,
Speaker 1: and I'm Jason Kelly. Be sure to tune into Bloomberg
Speaker 1: Business Week Radio Live Monday through Friday starting at two
Speaker 1: pm wall ST Time. Can catch the show live, get
Speaker 1: the daily podcast for the ride home wherever you download
Speaker 1: your podcast, and you get this week's edition of the
Speaker 1: magazine on newsstands now. This is Bloomberg