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Speaker 2: This is Bloomberg Business Week Insight from the reporters and
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Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 1: Hi, everyone, Welcome to the Bloomberg Business Wee Weekend Podcast.
Speaker 1: Tim is on assignment this weekend. Well, this past week
Speaker 1: a global selloff and overall volatility in stocks thanks to
Speaker 1: tariffs and trade wars, fedchair J Powell saying the US
Speaker 1: economy is fine, favorable US inflation prints. We also got
Speaker 1: US airlines warning about weakening demand, and many many headlines
Speaker 1: out of Washington, and that included continuing efforts by DOGE,
Speaker 1: the Department of Government Efficiency run by Elon Musk, in
Speaker 1: what may be a remaking of the US federal government.
Speaker 1: And so we're going to kick off this hour with
Speaker 1: a deep dive into the changes President Trump is making
Speaker 1: and policies he's pursuing, and ask what is his possible
Speaker 1: endgame domestically and globally. One view in just a moment,
Speaker 1: and got to say it kind of went a little viral.
Speaker 1: Also this hour, the chief financial officer of on Semiconductor,
Speaker 1: on Tariff's the macro and going public on a big deal,
Speaker 1: plus the rise in power demands and possible wider use
Speaker 1: of nuclear power, and Zach Dell, co founder of base Power,
Speaker 1: and yes, the son of Michael Dell, on backup power
Speaker 1: for stressed out grids. All of that to come first up, though,
Speaker 1: with a steady stream of headlines out of the White
Speaker 1: House regarding Tariff's, geopolitics and more, we've got a deep
Speaker 1: dive into how the United States relationship with the world
Speaker 1: may be changing short term and even possibly longer term.
Speaker 1: We wanted to try and suss out what President Trump's
Speaker 1: endgame may be when it comes to the United States
Speaker 1: and democracy. And to that end we turn to Ed Price,
Speaker 1: a former British trade official Non Residents senior fellow at
Speaker 1: and Why You. Ed has advised members of the European
Speaker 1: and British parliaments and writes often about politics, economic policy,
Speaker 1: and more.
Speaker 3: In my view, he is a good thing for America,
Speaker 3: the nation and America the democracy, because everybody's talking about
Speaker 3: America and the democracy and we're sitting here doing this again,
Speaker 3: and he is potentially a very bad thing for the
Speaker 3: Republic and the Union and the United States. And it
Speaker 3: might seem strange to make that distinction, because as things stand,
Speaker 3: we very often think of those things as the same. Right,
Speaker 3: we will say USA and we'll say America interchangeably. And
Speaker 3: as I try to argue in this column, I may
Speaker 3: be wrong. I think that Trump's absolute structural purpose, is
Speaker 3: foundational purpose, is to split those two things in half,
Speaker 3: to get them away from one from the other.
Speaker 4: Explain how he does that and what that means. People
Speaker 4: might hear you and say, wait a second, these things
Speaker 4: sound like something that are inextricably bound.
Speaker 3: So they're not, in my opinion, right, Seventeen seventy six
Speaker 3: is the moment that the American nation was born, and
Speaker 3: it was born of breaking the law and defying a king.
Speaker 3: So that's the rebelliousness, right, That's the flags on the
Speaker 3: back of pickups. It's great, It's all American. Seventeen eighty nine,
Speaker 3: when the Constitution is ratified, is the moment that we
Speaker 3: chose to be legalists and chose to be a republic.
Speaker 3: Alexander Hamilton in that intermigrament was saying, look, should we
Speaker 3: have a king right, and they were arguments about how
Speaker 3: powerful the president should be. These arguments have never been resolved.
Speaker 3: And we saw with Nixon, we saw with Kennedy the
Speaker 3: imperial presidency. Because again, we haven't decided as a nation
Speaker 3: what exactly our republic is fought. So if President Trump
Speaker 3: truly wanted to create a presidency with unlimited powers, he
Speaker 3: wouldn't be able to do it within the existing seventeen
Speaker 3: eighty nine United States framework. He would have to somehow
Speaker 3: appeal to the seventeen seventy six animal spirits to misuse
Speaker 3: the term of the nation.
Speaker 1: So is that where Doge comes in?
Speaker 3: Doge goitness me? So Elon Musk is supposed to be
Speaker 3: a genius. He doesn't realize he's the full guy, right,
Speaker 3: He's the four guy. He's going to be ousted at
Speaker 3: some point when Doge goes too far, which it will
Speaker 3: probably into entitlements, Trump will need.
Speaker 1: Which is what they are dealing with, which is what they.
Speaker 3: Want to do as we speak. Trump is going to
Speaker 3: need someone that wasn't affirmed by the confirmed by the
Speaker 3: Senate to get rid of quickly, and that's Musk. And
Speaker 3: I think we saw Musk on Fox the other day
Speaker 3: sweating it a little bit with Kudlog because it looked
Speaker 3: like he's starting to realize that maybe he's in trouble.
Speaker 3: His businesses aren't doing very well and so on. So
Speaker 3: Doze is the kind of battering ram. It's like the
Speaker 3: vanguard that's seeing how far, like a test balloon, how
Speaker 3: far this stuff can go. And when challenged, Musk will
Speaker 3: be quite easy to peel off.
Speaker 1: Well when is I just you know, because I think
Speaker 1: it's safe to say that some have thought government has
Speaker 1: gotten really big, and there's some security in that in
Speaker 1: that you don't move fast and break things that maybe
Speaker 1: shouldn't be broken. But at the same time, it's very
Speaker 1: easy to get lazy over existing structure, and waste does
Speaker 1: get created, and you know whether it's you know, So,
Speaker 1: what's the balance between good efficiency and disruption, especially in
Speaker 1: a government like the United States.
Speaker 3: Well, I guess there's two points.
Speaker 5: Right.
Speaker 3: One is that whether or not the American people want
Speaker 3: a big government is debatable. That's why we have elections.
Speaker 3: Whether or not the Americans want an all powerful government
Speaker 3: was already decided at the aforementioned Constitutional Congress, Right, So
Speaker 3: I'm very careful to try and prize away an efficient
Speaker 3: government from the size of the government. Donald Trump wants
Speaker 3: a smaller government, which he then says is more efficient.
Speaker 3: So those of us who are worried, and this is
Speaker 3: the second point, those of us who are worried about
Speaker 3: fiscal and debt, will go, Okay, that makes sense, But
Speaker 3: that's disingenuous because what he actually wants is a more
Speaker 3: powerful government.
Speaker 1: He wants a concentration of power.
Speaker 3: Scentration of power. So Lord Acton famously says that power corrupts,
Speaker 3: and absolute power corrupts absolutely. I think power accumulates as well,
Speaker 3: and this is what we should be watching for.
Speaker 4: I want to go back to what you said about
Speaker 4: Elon and Doge, because I think a lot of people
Speaker 4: have been proven wrong over the past few months when
Speaker 4: they said this is a honeymoon that is going to
Speaker 4: end badly. These two look pretty close at this point.
Speaker 4: And given Elon's status as the wealthiest person in the world,
Speaker 4: he proved in this election cycle that he's incredibly powerful
Speaker 4: with helping to elect people.
Speaker 3: And you're saying he might be there longer than I think.
Speaker 4: I think I am, yeah, just because he has the resources,
Speaker 4: and you know, he has said he wants to use
Speaker 4: these in other parts of the ballot.
Speaker 3: So the president with respect has a long and storied
Speaker 3: history of using and discarding people. And I don't think
Speaker 3: that Elon Musk rule of his wealth is I.
Speaker 4: Mean, there are many books written by those people who
Speaker 4: want there's described.
Speaker 3: There is a library of people that have been have
Speaker 3: been let down by the president. Should we say, I
Speaker 3: guess I'm contending. I mean, I can see too that
Speaker 3: maybe the time is something I couldn't possibly forecast. But
Speaker 3: I think the function of putting Musk into this thing
Speaker 3: called doge is that he's easy to get rid of.
Speaker 3: He's easy to point out later and say, this guy
Speaker 3: made these mistakes, not me right, and at that point
Speaker 3: he's gone.
Speaker 1: So when you hear things like Canada and this is
Speaker 1: something I think we all too are asking ourselves. You
Speaker 1: know again, what is the endgame here? Do you think
Speaker 1: in terms of President Trump?
Speaker 3: Honestly, I mean I might regret saying this. Okay, maybe
Speaker 3: this is my last appearance on your show. I don't know.
Speaker 3: I think he's serious. I think he's serious.
Speaker 1: Canadians are if we if it ever comes off kind
Speaker 1: of jokey on air, I'll be honest with you We've
Speaker 1: had people reach out and say, hey, this is serious.
Speaker 1: We don't think this is a I think.
Speaker 3: It's dead serious. I think Donald Trump's vision is a
Speaker 3: big sharpie around the entire of North America, including Greenland,
Speaker 3: with Trump Land written on it. And I think that
Speaker 3: there's some strategic sense to this, right because of the
Speaker 3: world of you know, you look at the Second World War,
Speaker 3: it was just who can get the biggest load of
Speaker 3: resources in one place. And if you look at Russia
Speaker 3: and China, they kind of have Eurasia on lock. So
Speaker 3: it would strategically make sense for the America, the North
Speaker 3: Americans to converge together, if not for the fact that
Speaker 3: we don't behave like that. And the very reason for
Speaker 3: this country is law, as I said seventeen eighty nine.
Speaker 3: So the seventeen eighty nine edition of the United States
Speaker 3: cannot annex Canada. It tried, it failed, It just it
Speaker 3: didn't work. But the sort of pre seventeen seventy six
Speaker 3: bubbling rebelliousness of the nation might And I feel that he's,
Speaker 3: as I say, dead serious.
Speaker 4: If he's dead serious, are you saying or predicting that
Speaker 4: he might in fact try to make Canada the fifty
Speaker 4: first state.
Speaker 3: I don't know that he would make it the fifty
Speaker 3: first state. I feel like that's a meme, but I
Speaker 3: think he would try to.
Speaker 4: Bring He talks about it.
Speaker 3: He talks about it all the time in Hue. Might
Speaker 3: or be it. I imagine that the Republicans would never
Speaker 3: be elected again because all of my Canadian friends are
Speaker 3: pretty liberal. I don't know how that works, right, but
Speaker 3: I think that what he wants is some control over
Speaker 3: the North American hemisphere. It's almost like the Monroe Doctrine
Speaker 3: is being extended north and being extended north at the
Speaker 3: expense of these polities that already exist, in particular Denmark
Speaker 3: and Canada.
Speaker 1: If we go along with your thinking, and some others
Speaker 1: think that he too is not kidding. Is it something
Speaker 1: that could happen without US military action?
Speaker 3: Well, I mean at some point the Canadians would not
Speaker 3: be happy about this, right, I mean, you can't tell
Speaker 3: a sovereign state you now belong to us. Others have
Speaker 3: tried that in history, Napoleon Stalin Hitler, and it never
Speaker 3: ends well. So I think that the US military would
Speaker 3: have to at some point invade. I mean this again,
Speaker 3: it's like amazing to hear yourself say this on a livestream,
Speaker 3: So I don't think Canada.
Speaker 1: But to be fair, the president has talked about it.
Speaker 1: So we start kind of carrying it out, like how
Speaker 1: this might happen.
Speaker 3: Sure, sure, I think it's not impossible. I mean, you
Speaker 3: could come in from green We have bases.
Speaker 4: There, we're Bloomberg. We got to talk markets, big picture
Speaker 4: and the way that they have responded to big picture
Speaker 4: President Trump's policies over the last few weeks, or what
Speaker 4: they view as his policies. Uh, do you think it's
Speaker 4: fair to say that the equity and bond markets have
Speaker 4: not necessarily been a check on the president?
Speaker 3: He said to himself, to him, right, you don't look
Speaker 3: at the stop market anymore.
Speaker 4: Yeah, but I mean he's said a lot of things.
Speaker 4: He said, you take that to heart.
Speaker 3: I think he's unrestrained. I think at this point he's
Speaker 3: he's not thinking about popularity in the way that he
Speaker 3: has previously. Something has changed in his demeanor.
Speaker 4: He's not running for reelection, so.
Speaker 3: Or well, I mean, you respect.
Speaker 4: That he's not supposed to.
Speaker 3: He's not supposed to run for reelection. Again, there's his
Speaker 3: whole thing, whole thing.
Speaker 6: This is this whole thing.
Speaker 3: I think he's fundamentally trying to reshape North America. I
Speaker 3: think Russia is a distraction. Of course, we have to
Speaker 3: talk about markets, right, so I don't want to pivot
Speaker 3: away from that. Yeah, but the question for me is China.
Speaker 3: Is he getting ready to hand Taiwan over py Ukraine?
Speaker 1: And full credit to our producer Ceci because she said,
Speaker 1: you know, as we were planning for this about how
Speaker 1: Trump and his cabinet have signaled that their content to
Speaker 1: sit back on Taiwan and China. You have Treasury Secretary
Speaker 1: Pssent even said he doesn't see China taking action against
Speaker 1: Taiwan in this term. So what does this messaging tell
Speaker 1: you is the seating ground on global democracy? Should we
Speaker 1: feel confident that Trump's presence is enough of a deterrent
Speaker 1: only got about forty five to fifty seconds.
Speaker 3: Democracy is okay because we voted for him. The Republic
Speaker 3: might not be. And this is what I mean. It
Speaker 3: might be that there's a period of massive populism in
Speaker 3: this country, including the seating of Taiwan, and democracy in
Speaker 3: Taiwan is in trouble. But in this country it's doing
Speaker 3: pretty well. And that's a real head scratcher right, because
Speaker 3: we may choose to abandon democratic allies.
Speaker 1: But democracy would continue here.
Speaker 3: Democracy here, I think for a while. Yep, I'm going to.
Speaker 1: Squeeze in one more question because your column ends with
Speaker 1: all of this political disruption doesn't necessarily mean the end
Speaker 1: of an era, but rather the beginning of one. Twenty
Speaker 1: five seconds said it before.
Speaker 3: Trump wants some sort of empire, some sort of imperium.
Speaker 3: I don't know if you would brand it like that.
Speaker 3: I don't know if you would be honest like that.
Speaker 3: But at core, he wants to solidify power, move himself
Speaker 3: to center stage, and create some kind of Autakia in
Speaker 3: North America.
Speaker 1: That was Ed Price, a former British trade official now
Speaker 1: non resident senior fellow at NYU. Coming up on Bloomberg
Speaker 1: Business Week, A sector that always bears close watching semiconductors.
Speaker 1: The CFO of on Semi is next. This is Bloomberg.
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 CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Intel got a new CEO this past week. TSMC sales
Speaker 1: quickened in the first two months of the year, driven
Speaker 1: by resilient demand for AI chips. Just a few of
Speaker 1: the headlines out of the semi world this past week
Speaker 1: and earlier this month, the chip company on Semiconductor made
Speaker 1: its pursuit of a Legro Microsystems public, disclosing an unsolicited
Speaker 1: bid valuing the company at six point nine billion dollars
Speaker 1: including debt. Now. That followed news last month that the
Speaker 1: company plans to cut about twenty four hundred jobs this
Speaker 1: year as part of a restructuring plan, and take related
Speaker 1: charges of fifty to sixty million dollars mostly this year.
Speaker 4: Here to talk about all of this, tariffs and the
Speaker 4: macro environment is the chief financial officer of on Semiiconductor,
Speaker 4: Thad trent along with Bloomberg News Senior editor Nina Trentman
Speaker 4: that is featured in the recent Bloomberg CFO Briefing newsletter
Speaker 4: can be found online at Bloomberg dot com slash CFO Briefing.
Speaker 4: Also sign up to get it there. Nina joins us
Speaker 4: here in the studio. Fad joins us from Phoenix.
Speaker 5: Fad.
Speaker 4: We want to start with you top of mind. I
Speaker 4: think for everybody is the macro, the jobs market, tariffs.
Speaker 4: How would you describe the US economy, the global economy,
Speaker 4: and the macro and vironment right now.
Speaker 7: Yeah, so, first of all, thanks for having me on look.
Speaker 7: In terms of the terraffs, there's definitely an impact that's
Speaker 7: happening out there right now. I would say what we're
Speaker 7: seeing from our perspective, and it's really been happening for
Speaker 7: the last three or four months, is a pause. Customers
Speaker 7: are really slowing down, trying to figure out what to do,
Speaker 7: what's the impact on the terraffs, and how they're going
Speaker 7: to adjust their supply chain to adjust to these terrorfs.
Speaker 7: Right now, what's happening with the uncertainty is that pause
Speaker 7: and customers just saying we're going to run kind of
Speaker 7: hand the mouth. We're going to be very very cautious
Speaker 7: in the short term until we get clarity. So I
Speaker 7: think clarity is really what we need for this to
Speaker 7: get kind of back to a growth environment again, given that,
Speaker 7: given that just the uncertainty around the globe. But what
Speaker 7: we're hearing from our customers is they're looking for alternatives,
Speaker 7: and we're in a spotted on SIDI where we can
Speaker 7: offer alternatives to our customers. We have a very large
Speaker 7: manufacturing footprint, a large manufacturing footprint in the United States,
Speaker 7: and we can offer our custom from res alternatives based
Speaker 7: on where they're located, where they're manufacturing is and hopefully
Speaker 7: help them navigate through the tariffs. But to answer your question,
Speaker 7: it's mostly a pause right now.
Speaker 1: It's a pause. Love that word to describe it. You said,
Speaker 1: tariff's definitely having an impact. This pause. Customers really slowing down.
Speaker 1: I'm looking at some of your biggest customers, the supply
Speaker 1: chain function on the Bloomberg WT Microelectronics, Arrow Electronics, Abnet,
Speaker 1: Hyundai Motor Tesla BYD you play a lot, Volkswagen, you
Speaker 1: play a lot into the automotive sector, but also the
Speaker 1: industrial space. All of them pausing, all of them slowing
Speaker 1: down or is it largely the automotive sector.
Speaker 7: Yeah, so you know, eighty over eighty percent of our
Speaker 7: business is automotive industrial, so that's where we focus. What
Speaker 7: we're seeing on both sides is a slowing in auto
Speaker 7: and industrial. If you think about those customer bases have
Speaker 7: really complex manufacturing and complex supply chains, and the pause
Speaker 7: is happening across the board and across all gields right now,
Speaker 7: we're seeing pockets of shoots of kind of green shoots
Speaker 7: that are looking good. But general I would say people
Speaker 7: are looking for certainty right now in terms of the
Speaker 7: geopolitical situation and where the dust is going to land
Speaker 7: on the tariffs and.
Speaker 5: That How does this impact your current situation at the company,
Speaker 5: Carol mentioned, you're restructuring, you're making job cuts, you're making
Speaker 5: changes sort of. How does this affect you?
Speaker 7: Yeah, So look for us directly, we don't think there's
Speaker 7: a huge impact or a material impact from the tariffs
Speaker 7: directly in terms of our business, but our in customers
Speaker 7: are being impacted by the tariffs right so the big
Speaker 7: concern is what does in demand do and what does
Speaker 7: the macro do as a result of these terraffs in
Speaker 7: the geopolitical situation. For us, there is a slowdown in
Speaker 7: the industry. Autos are soft right now. So you know,
Speaker 7: as you mentioned, we announced restructuring. We're looking at this
Speaker 7: is not just a cost reduction, but are restructuring. How
Speaker 7: do we take cost out of the company that's permanent.
Speaker 7: So we've been going through a transformation here at a
Speaker 7: semi for a number of years here and a lot
Speaker 7: of this is structural nature, where when we think about
Speaker 7: the market recovering, these are cost savings that are with
Speaker 7: us forever.
Speaker 1: Dad, you said autos are slowing down. Is that because
Speaker 1: of tariff concerns and automaker problems and issues or is
Speaker 1: it because of the consumer?
Speaker 2: Are both?
Speaker 7: Oh, it's a consumer, It's more consumer now Now, I
Speaker 7: would say what's been happening over time is consumer based, right,
Speaker 7: I think the demand for autos has been coming down
Speaker 7: for a period of time now. The short term, what
Speaker 7: I've been talking about over the last couple of months
Speaker 7: has definitely been tariff based, where if you're an automaker
Speaker 7: and you're importing from Mexico or Canada, you're seriously considering
Speaker 7: what that supply chain looks like, what that manufacturing footprint
Speaker 7: looks like, and that is causing a pause right now
Speaker 7: with those customers.
Speaker 4: You've got manufacturing sites around the globe. You mentioned what
Speaker 4: you do here in the US. The investments that are
Speaker 4: being announced in this semi area. TSMC to spend an
Speaker 4: additional one hundred billion dollars in US plants to boost
Speaker 4: semiconductor manufacturing in the US. How is that going.
Speaker 3: To impact you?
Speaker 4: Will it impact you? Directly? Will it impact you in directly?
Speaker 7: Look, it's not going to have a direct impact for
Speaker 7: US because we manufacture about sixty five percent of our
Speaker 7: products in house, so we have a large manufacturing footfront ourselves.
Speaker 7: So a TSMC coming into the United States isn't going
Speaker 7: to impact us directly. But it's really good for the industry.
Speaker 7: The more manufacturing we can get into the United States
Speaker 7: is going to be great for obvious reasons national security.
Speaker 7: So I think for the industry, the supply chain, given
Speaker 7: what's going on for our customers, I think it's all good.
Speaker 7: Even though it may not impact us directly. Our customers
Speaker 7: buy other products from our peers that have manufacturing and TSMC,
Speaker 7: so the more that we can have a diverse supply
Speaker 7: chain is going to be great for the industry. So
Speaker 7: I think these investments are great overall for our customers
Speaker 7: and for the semiconductor industry.
Speaker 5: Should we expect more investments from you in the US?
Speaker 5: I know that you're investing more in the Czech Republic
Speaker 5: where you already have a site and you're building that out,
Speaker 5: But what is your CAPEC strategy entail with regards to
Speaker 5: US investments.
Speaker 7: Yeah, we've been making big investments over the last three years,
Speaker 7: I would say, and that's in manufacturing capacity. A lot
Speaker 7: of that investment phases behind us at this point. We've
Speaker 7: made big investments in the United States. We acquired a
Speaker 7: fab in East Fishfield, New York. We have a large
Speaker 7: manufacturing site in New Hampshire. So we've been making big
Speaker 7: investments over the last several years. You brought up the
Speaker 7: Czech Republic. When we think about investments in our footprint,
Speaker 7: it's what we call brownfield investments. It's not a greenfield
Speaker 7: investment that becomes a capital light investment for us, so
Speaker 7: it saves about forty percent capital When we think about
Speaker 7: a brownfield investment investing in a site where we already
Speaker 7: have a location, already have the infrastructure. So in the
Speaker 7: Czech Republic, we have a large site there that we
Speaker 7: are expanding. We are going to continue to invest in
Speaker 7: that site over time, but that investment is a lower
Speaker 7: capital and it's also faster time to market, so we
Speaker 7: can get to market two years faster with a brownfield
Speaker 7: investment than a greenfield investment.
Speaker 1: All right, So you've done a lot of investments around
Speaker 1: the world, and in terms of your manufacturing sites, you
Speaker 1: also spend money sometimes when it comes to a deal.
Speaker 1: I know you might be limited in what you can
Speaker 1: talk about, but that takeover offer for a Legro microsystem
Speaker 1: unsolicited bid values the company about six point nine billion
Speaker 1: dollars that includes debt. Offers are not often made public
Speaker 1: sometimes though done to kind of put some pressure on
Speaker 1: shareholders on the target. What can you tell us about
Speaker 1: this deal moving any closer to being a done deal?
Speaker 7: Yeah, Look, we put out a press release that I
Speaker 7: think details really are sequence of events that have gotten
Speaker 7: us to this point. Let me start with the strategic
Speaker 7: rationale of why this is compelling for on Semi. So
Speaker 7: in on Semi we focus on intelligent power intelligence sensing
Speaker 7: as we talked about for auto industrial and the AI
Speaker 7: data center. Allegro Microsystems has got a great portfolio of
Speaker 7: sensing products that sell into automotive industrial, very very consistent market,
Speaker 7: and we believe with our scale and our go we
Speaker 7: can take that product broader and create innovative products for
Speaker 7: our customers. Both companies have a culture of innovation, so
Speaker 7: I think we're going to be combining companies that have
Speaker 7: common themes of innovation and it allows us to bring
Speaker 7: more value to our customers. That's really the strategic value
Speaker 7: of this in terms of what we're wanting to happen
Speaker 7: here is we're wanting to get some meaningful engagement with
Speaker 7: their board, hoping to get some dialogue. At this point,
Speaker 7: we haven't gotten that. Thus we went public with our
Speaker 7: offer to say we're here and we're hoping that we
Speaker 7: get some engagement from this point forward.
Speaker 5: Yeah, it's interesting that you're pursuing this deal at a
Speaker 5: time when dealmaking was supposed to pick up, but we
Speaker 5: haven't really seen it, and many companies are saying, well,
Speaker 5: the current environment is just so uncertain.
Speaker 8: So talk to us.
Speaker 5: About how the company came to this conclusion that now
Speaker 5: is actually a good time.
Speaker 7: Yeah. You know, when you think about a strategic deal
Speaker 7: for us, it's got to click a few boxes, right.
Speaker 7: I mean, you've got to have the strategic nature, the
Speaker 7: rationale in terms of what we can bring to our customers,
Speaker 7: and then you have to have the financial side of
Speaker 7: the things. So you know, we think about the creative deals,
Speaker 7: how quickly we can get to accretion and the shareholder
Speaker 7: value that we can create over time. The element that
Speaker 7: you have to take into consideration is the regulatory environment
Speaker 7: and that is the unknown right now. I don't think
Speaker 7: the regulatory environment has really changed much, you know, from
Speaker 7: administration to administration. So when you think about this, the
Speaker 7: hurdle is higher when you think about you're going to
Speaker 7: go to bat for something like this, but you have
Speaker 7: to have conviction that it's going to make sense and
Speaker 7: that you can get through that regulatory environment. When we
Speaker 7: look at it, we don't compete head to head on
Speaker 7: any of those products, and we've analyzed everything that we
Speaker 7: can see publicly, and we don't believe there's going to
Speaker 7: be a barrier. It may take some time, but we
Speaker 7: believe we can get this one across the line.
Speaker 4: That if you cannot get this one across the line,
Speaker 4: if you have to walk away, or if the deal
Speaker 4: falls through, if it doesn't work out for some reason,
Speaker 4: who do you pursue next?
Speaker 7: Well, look, that's hard to say. Right this one has
Speaker 7: a lot of strategic value to us. We're committed to
Speaker 7: the proposal that we have on the table. We're hoping
Speaker 7: to get that board and management team engaged and get
Speaker 7: in a room and talk about how we can get
Speaker 7: a combination together.
Speaker 1: Could the price go up and are you willing to
Speaker 1: raise the price if necessary to get the deal across
Speaker 1: the finish line.
Speaker 7: Look, that's to be determined. At this point. Everything that
Speaker 7: we've been able to look at is based on publicly
Speaker 7: available information. We want to get together with that management team,
Speaker 7: understand the true value, and then we'll make determinations. At
Speaker 7: that point. We have a very compelling offer. There's it's
Speaker 7: a fifty seven percent premium to the unaffected price.
Speaker 1: That was on Semiconductor CFO Thad trent along with Bloomberg
Speaker 1: News Senior editor Nina Trettman. That was featured in a
Speaker 1: recent Bloomberg CFO Briefing newsletter, which can be found at
Speaker 1: Bloomberg dot com slash CFO Briefing. A new one comes
Speaker 1: out on Sunday. Still ahead on Bloomberg BusinessWeek, two views
Speaker 1: on the energy space, one on the surge and interest
Speaker 1: in nuclear the other a startup providing backup power. That's next.
Speaker 1: This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: Just say Alexa played Bloomberg eleven thirty.
Speaker 1: Shares in nuclear power stocks rose this past week after
Speaker 1: technology and energy companies pledged to support wider use of
Speaker 1: nuclear power to cater to surging demand from data centers
Speaker 1: and factories. Amazon Meta Platforms, Occidental Petroleum and Now are
Speaker 1: among the initial members of the Large Energy Users Group,
Speaker 1: which is backing a global effort announced in twenty twenty
Speaker 1: three to triple the world's nuclear capacity by twenty fifty.
Speaker 1: It's all about meetings surging US demand for electricity, which
Speaker 1: will surge almost sixteen percent over the next five years,
Speaker 1: more than triple the estimate from a year ago, driven
Speaker 1: by new data centers and factories that are going to
Speaker 1: suck up power. That's according to the energy consulting group
Speaker 1: Grid Strategies. To hear more about the role nuclear power
Speaker 1: will play in meeting that demand, Tim and I spoke
Speaker 1: with the president and CEO of ANI. The Nuclear Energy Institute,
Speaker 1: Maria korsnik Anyi, is the lobbying arm of the nuclear
Speaker 1: power industry. She began with a near term forecast for
Speaker 1: the industry.
Speaker 9: In the next two years, we're expecting at least four
Speaker 9: grid scale applications for four different sites, a handful of
Speaker 9: microreactor applications, five sites with construction activities in flight, and
Speaker 9: two microreactor startups. So when I say that nuclear is moving,
Speaker 9: I just want you to feel that not only is
Speaker 9: the R and D, which we're going to be very
Speaker 9: thankful to, our national labs have brought a lot of
Speaker 9: different ideas to the marketplace, but you're actually now seeing
Speaker 9: it go into site applications and construction applications to get
Speaker 9: things moving.
Speaker 4: What would you say is the difference between the Biden
Speaker 4: administration's approach to nuclear energy versus the Trump administration's approach
Speaker 4: to nuclear energy? How did things change in January?
Speaker 9: So that's interesting. You know, this is maybe one of
Speaker 9: the only things, but one of the very few things
Speaker 9: that gets bipartisan support. And interesting if you think about
Speaker 9: nuclear right and you say, hey, well, it's very reliable.
Speaker 9: You know, it's clean, it's carbon free, it has jobs.
Speaker 9: You know, like, there's enough in there to love. On
Speaker 9: both sides of the aisle. On the Democrat side, you're
Speaker 9: going to get it more for the carbon free aspect
Speaker 9: of it. On the Republican side, you're going to get
Speaker 9: it more for the energy security, national security, high reliability
Speaker 9: of the energy source, and both sides love the jobs.
Speaker 1: So talk a little bit more about the build out.
Speaker 1: You know, you kick things off with, you know, things
Speaker 1: that are happening now. Realistically, a lot of folks said,
Speaker 1: when we really think about nuclear energy while the US
Speaker 1: is active, that it's still a very small portion of
Speaker 1: our electricity generation right in terms of a power provider,
Speaker 1: that that build out might be eight to ten years away.
Speaker 1: You're in it, you're talking to the players that are
Speaker 1: in it. What is the realistic timeframe that it is
Speaker 1: a substantial or more substantial part of a generation of
Speaker 1: power here in the United States.
Speaker 9: So today nuclear is about twenty percent, just under twenty
Speaker 9: percent of the generation. But to your point, let's talk
Speaker 9: about all of that demand. And you mentioned earlier the
Speaker 9: AI demand that's really getting into the marketplace.
Speaker 10: But you know, it's not just AI, it's.
Speaker 9: Also ensuring, manufacturing. It's also the fact that you want
Speaker 9: to build out the clean energy supply that we have today,
Speaker 9: and so all of that together is really driving this
Speaker 9: demand much higher than what we had imagined even just
Speaker 9: a few years ago. The next few years, you're going
Speaker 9: to see ones and twos of things built. Think pilot
Speaker 9: projects over the next few years, and I think in
Speaker 9: the twenty thirties and the twenty forties of very significant buildout.
Speaker 9: And I want to add, it's not just a build
Speaker 9: out in the United States. The conversation we're having about
Speaker 9: nuclear it's happening around the globe.
Speaker 10: Well, and why is it so important?
Speaker 1: Look at Europe, look at France, look at China, look
Speaker 1: at various nations in terms of their percentage of power
Speaker 1: generation being larger than what it is in the United States.
Speaker 11: If the US.
Speaker 1: Doesn't have a role in this area, what does that mean?
Speaker 10: Yeah, so let's just try that on for size.
Speaker 9: Who is interested in building a lot of commercial nuclear
Speaker 9: Russia and China, And they're not only interested in building
Speaker 9: it in their own country. Today, right now Russia is
Speaker 9: building nuclear plants in ten other countries.
Speaker 10: And why is that?
Speaker 9: Well, it wasn't too long ago where we saw Russia
Speaker 9: turn off the gas supply to Europe. So I would
Speaker 9: tell you there's a geopolitical strategy on some countries that
Speaker 9: would like to control other countries energy supply, and why
Speaker 9: should we fall for that. So we have fantastic technology,
Speaker 9: we have the ability to really help our allies and
Speaker 9: in that way we protect them from this kind of behavior.
Speaker 9: And it would be sad to see this replicated in
Speaker 9: ten to twenty years we look back and say, oh,
Speaker 9: why do they have the power over commercial nuclear industry?
Speaker 9: Why do they have the power over all of these
Speaker 9: different countries. We shouldn't let ourselves get there. So from
Speaker 9: a national security perspective, from an energy security perspective, the
Speaker 9: United States needs to lead in commercial nuclear power.
Speaker 1: That's the president and CEO of ANYI, the Nuclear Energy Institute,
Speaker 1: Maria Korsnik. While on the subject of power, you might
Speaker 1: recall back in February, more than one hundred million people
Speaker 1: faced frigid conditions across the eastern and central US, including
Speaker 1: the entire state of Texas, as an arctic blast threatened
Speaker 1: to break low temperature records. Someone who knows a bit
Speaker 1: about Texas and the Texas State grid is Zach Dell,
Speaker 1: who is co founder and CEO of Based Power Company.
Speaker 1: You joined Tim and me from Houston, kicking off our
Speaker 1: chat with a reminder of Texas's place in the US
Speaker 1: energy space.
Speaker 8: Texas is the energy capital of the country. It leads
Speaker 8: to the country in renewable generation. We have more wind
Speaker 8: and more solar than almost anywhere in the country, and
Speaker 8: that's because Texas is the middle of the wind corridor,
Speaker 8: it's in the middle of the sun Belt, and it's
Speaker 8: a great place to develop energy infrastructure. It's a free market,
Speaker 8: it's a deregulated energy market for the most part. Or
Speaker 8: Coat is one of the largest electricity markets in the country,
Speaker 8: and so it's a great place to build energy technology.
Speaker 8: That's why we've decided to start the company here in Texas.
Speaker 8: But it's also a part of the country that's seen
Speaker 8: incredible population growth, it's seen incredible growth in heavy industry,
Speaker 8: and that's put a lot of stress on the grid.
Speaker 8: And so we started the company to increase our capacity
Speaker 8: for energy consumption and add resources to the power grid
Speaker 8: in the form of distributed battery storage to help absorb
Speaker 8: some of that growth, absorb from that demand, and set
Speaker 8: us up for a future of energy abundance and human
Speaker 8: prosperity here in the state.
Speaker 4: Zach explain where exactly the company lives on the grid
Speaker 4: in the sense of Okay, it's not necessarily a utility,
Speaker 4: it's not necessarily an energy provider.
Speaker 8: How do you define it exactly, So we are a
Speaker 8: distributed energy technology company. So we deploy our storage assets
Speaker 8: on the grid edge on site with our customers. So
Speaker 8: we install batteries on homes today. Customers sign up for
Speaker 8: base Power, we go install our battery on their home.
Speaker 8: When the grid is up and running. We use that
Speaker 8: battery to support the power grid in times of high demand.
Speaker 8: When the grid goes down. The customer gets that battery
Speaker 8: to protect their home from power averages.
Speaker 1: Well and tell us about it. Like a customer that
Speaker 1: signs up, Zach, exactly what are they getting. They're getting
Speaker 1: batteries right, and there's installation that's involved. I'm curious about
Speaker 1: how it works. What they get. My understanding is the
Speaker 1: batteries are big. What it costs? Give me give us
Speaker 1: an idea.
Speaker 8: Yes, So customers sign up and pay four ninety five
Speaker 8: upfront and sixteen dollars a month and get all the
Speaker 8: benefits of home backup protection without the high up cost
Speaker 8: of buying a large generator or buying a traditional home battery.
Speaker 8: So we install a battery that's twenty five kill a
Speaker 8: wide hours for one system, and you can get two
Speaker 8: systems installed, which gets you to fifty kill a lot hours,
Speaker 8: which will protect your home for up to one to
Speaker 8: two days, depending on the size of the home and
Speaker 8: the event of a power out. So you get a
Speaker 8: really large battery for really low upfront cost and a
Speaker 8: low monthly fee, cheaper than a gym membership, cheaper than
Speaker 8: a Netflix subscription, cheaper than Amazon Prime. And when the
Speaker 8: grid's up and running, you're buying your electricity from us.
Speaker 8: We're able to save you ten to twenty percent a
Speaker 8: month on power. And when the grid goes down, you
Speaker 8: get to protect your home, keep that fridge going, keep
Speaker 8: your ac running, keep your lights on, and keep your
Speaker 8: family safe.
Speaker 2: Zach.
Speaker 4: We're talking about this in the context of Texas, of course,
Speaker 4: and a lot of focus has been on Texas's grid. Also,
Speaker 4: California is grid another state that comes into focus. Any
Speaker 4: plans to expand to California.
Speaker 8: Absolutely, I mean, we hope to be in all fifty
Speaker 8: states over the next couple of years, and we're working
Speaker 8: to partner with some of the regulated utilities in states
Speaker 8: like California that don't have a regulated energy market. Texas
Speaker 8: is an amazing place to start the business because the
Speaker 8: vast majority of the state, about eighty percent, is deregulated,
Speaker 8: So we are actually a retail actor provider and a
Speaker 8: battery developer, So we sell power directly to the homeowner
Speaker 8: and then we own and operate the batteries on site.
Speaker 8: In a state like California, you have regulator utilities like
Speaker 8: LEDWP and PGNE that have kind of geographic monopolies over
Speaker 8: certain areas, and so we'll partner directly with those regulated
Speaker 8: utilities provide our hardware and software to them to enter
Speaker 8: those markets.
Speaker 1: And from what I understand too, Zach, that the success
Speaker 1: of the company's contingent on more and more people right
Speaker 1: signing up, right, you need to kind of have a network.
Speaker 8: Well, not necessarily. We're able to operate our batteries at
Speaker 8: the individual level, so we don't necessarily there's not like
Speaker 8: traditional network effect benefits to more people signing up. But
Speaker 8: obviously businesses benefit from scale and we benefit from scale
Speaker 8: in the same ways. But it's not like the system
Speaker 8: doesn't work well if a couple of people in the
Speaker 8: neighborhood have it. There's really no meaningful difference if you're
Speaker 8: the only one in your neighborhood or everyone in your
Speaker 8: neighborhood has base power, all right.
Speaker 1: So if you're as an individual, there's no difference. But
Speaker 1: what do you get out of building that scale.
Speaker 8: Well, we benefit from scale, just like most businesses benefit
Speaker 8: from scale. So we have economies of scale on the
Speaker 8: supply chain side, on the engineering side, building out our team,
Speaker 8: our resources. The larger we get, the lower the cost
Speaker 8: that we can provide to the customer. So our goals
Speaker 8: of business is to develop a compounding cost advantage to
Speaker 8: vertical integration. So we develop our own batteries, we develop
Speaker 8: our own software, we manage the insolution, we sell power
Speaker 8: directly with the homeowner, and by doing all those things,
Speaker 8: we can drive the cost down for the customer and
Speaker 8: deliver the most affordable and most reliable power.
Speaker 1: Right because from what I understand too, you're monitoring what
Speaker 1: the prices of energy and so when it goes down,
Speaker 1: you guys are filling up the batteries. Correct, that's right.
Speaker 4: If a power company sees what you're doing right now
Speaker 4: and says, wait a second, that's a really good idea.
Speaker 4: What's to stop con ED or PGNE on California from
Speaker 4: basically replicating what you're doing, but they already have the
Speaker 4: relationship with the customer.
Speaker 8: Well, it's very hard. You have to become an expert
Speaker 8: in battery hardware engineering, power electronics, supply chain operations. You
Speaker 8: have to deploy these batteries on site, you have to
Speaker 8: interface directly with the customers, you have to build a
Speaker 8: consumer brand. There's a lot of interesting and challenging distributed
Speaker 8: system software problems that you have to solve to deploy
Speaker 8: this technology. So we're really excited to partner with those
Speaker 8: utilities and help them deploy battery technology in their service territories.
Speaker 8: As you guys know, these investor own utilities are not
Speaker 8: incentivized to invest money in op X in R and
Speaker 8: D their cap X driven businesses. They earn a regulated
Speaker 8: way of return on their CAPEX, and so their incentive
Speaker 8: is really to deploy CAPEX and their service territory and
Speaker 8: they add that into their rate base and that kind
Speaker 8: of influences what they end up charging the end consumer.
Speaker 8: Our business is a little bit different.
Speaker 10: We're an R and D driven business.
Speaker 8: We develop technology and we bet that that technology is
Speaker 8: going to benefit the customer and we benefit downstream of that,
Speaker 8: and so we think that we're an obvious partner or
Speaker 8: some of these regulated utilities as kind of an R
Speaker 8: and D partner where we can develop technology and then
Speaker 8: we can go deploy that technology in their service territory.
Speaker 8: They benefit, we benefit, and the homeowner benefits as well.
Speaker 1: So curious, are you profitable or how many states do
Speaker 1: you think you have to reach out to or expand
Speaker 1: to before you are profitable.
Speaker 8: I don't think about it as a number of states number.
Speaker 8: It's really about building the fleet and getting to scale.
Speaker 8: And so we started the company a little under two
Speaker 8: years ago. We launched a product in May. We've been
Speaker 8: scaling rapidly. We're doing on the order of twenty battery
Speaker 8: installation of the day. We'll continue to scale up at
Speaker 8: a faster and faster rate and move outside of Texas
Speaker 8: and states like California. And you know, we think there's
Speaker 8: a really attractive kind of economic proposition for the business
Speaker 8: going forward.
Speaker 1: Zachdale, co founder and CEO based Power Company. And that
Speaker 1: wraps up our first hour of the weekend edition of
Speaker 1: Bloomberg Business Week from Bloomberg Radio. Ahead in our next hour,
Speaker 1: Melinda Gates Venture arm NBA, Students Lord Overseas and how
Speaker 1: to challenge segregation enacted under the color of law. We
Speaker 1: look at the state of fair housing. This is Bloomberg
Speaker 1: Business Week. I'm Carol Master along with Tim Stenoveek.
Speaker 2: You are listening to the Bloomberg Business Week podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern
Speaker 2: Listen on Apple cart Play and Android Auto with the
Speaker 2: Bloomberg Business app, or watch us live on YouTube.
Speaker 1: Plenty Ahead in our second hour of the weekend edition
Speaker 1: of Bloomberg Business Week, Tim just a reminder is on
Speaker 1: assignment this weekend. Now for the next sixty minutes, we
Speaker 1: will touch upon the world of MBAs, including studying overseas
Speaker 1: and this year's NBA job market, Plus where the VC
Speaker 1: firm founded by Melinda French Gates is finding opportunities, and
Speaker 1: the state affair housing in the United States with the
Speaker 1: author of How to Challenge Segregation Enacted under the Color
Speaker 1: of Law. First up this hour and update from the
Speaker 1: world of venture capital.
Speaker 10: Well.
Speaker 4: Quite a few of the companies that Pivotal Ventures has
Speaker 4: invested in are familiar to our viewers and listeners. Elvest
Speaker 4: and Little Otter, to name just a couple. Those founders
Speaker 4: and CEOs have been on our air. Other investments include
Speaker 4: Hugh Founder's First Capital Partners, Millie Monamie, Summer Health, and more.
Speaker 4: Pivot Ventures was found in nearly a decade ago by
Speaker 4: Melinda French Gates, and it seeks to, in its own words, quote,
Speaker 4: accelerate social progress through high impact investments, bilanthrope partnerships, and advocacy.
Speaker 4: The companies also invested in nearly two dozen funds. We've
Speaker 4: got with us. Aaron Harkless Moore, Senior director of Investments
Speaker 4: at Pivotal Ventures. She joins us from Washington, DC, erin,
Speaker 4: when you're looking out over the investment landscape, what are
Speaker 4: the boxes that the companies or the funds you want
Speaker 4: to invest in, or you are looking to invest in,
Speaker 4: what are the boxes they have to check?
Speaker 10: Tim, Carol, thanks for having me on today. It's great
Speaker 10: to be with you. We're excited about this market opportunity
Speaker 10: that we see in investing in innovators that are building
Speaker 10: the next generation of companies that are tackling some of
Speaker 10: the biggest challenges facing our society in caregiving and women's
Speaker 10: health and mental health. So we want to see founders
Speaker 10: that have lived experience in building in the areas that
Speaker 10: they're targeting, and that are taking advantage of huge market opportunities.
Speaker 10: Our strategy at Pivotal is to invest in both funds
Speaker 10: and directly into startups that are again innovating in what
Speaker 10: they're doing, and so we're looking for founders that are
Speaker 10: going to bring game changing technologies to the table and
Speaker 10: also backing the investors that are going to capitalize them
Speaker 10: as well.
Speaker 1: Aaron, we love size and scope here at Bloomberg. Give
Speaker 1: me an idea of how much stuff gets pitched to you,
Speaker 1: how much comes across your desk, whether it's a startup
Speaker 1: or a fund that says, help, we're doing something good,
Speaker 1: but we need either some funding or some assistance to
Speaker 1: even you know, increase our impact.
Speaker 10: Sure, our pipeline is very robust, and I think it's
Speaker 10: a it's a hallmark of our strategy that we try
Speaker 10: to do a couple of things differently. You know, when
Speaker 10: we're accessible, we don't need a warm intro. So if
Speaker 10: founders can find us, you know, on LinkedIn, at conferences,
Speaker 10: at events, we're happy to take those meetings and get
Speaker 10: to know get to know them and what they're trying
Speaker 10: to build. We also want to invest early when we can.
Speaker 10: You know, typically for fund managers on that side of
Speaker 10: the table, you will focus a lot on emerging managers,
Speaker 10: those that are often first time funds. And I actually
Speaker 10: like to think of them in a different frame, is
Speaker 10: its next generation managers that are finding new patterns and
Speaker 10: new types of founders and innovations that they can back.
Speaker 10: So our pipeline is robust and we're excited to be
Speaker 10: deploying capital in this market environment.
Speaker 4: Well, how would you describe the market environment right now?
Speaker 4: Because so much of what we talk about is about
Speaker 4: investment in AI. I mean, there's even a headline from
Speaker 4: our Bloomberg News team Anthropic finalizes three point five billion
Speaker 4: dollar funding around at a sixty one point five billion
Speaker 4: dollar valuation. Do you feel like you're you're missing out
Speaker 4: at all because of a lack of AI investments right now?
Speaker 2: Not at all.
Speaker 10: We are investing in AI. Our fund managers are you
Speaker 10: mentioned Little Otter as well at the top of the
Speaker 10: introduction one of our newer investments. You know, they raised
Speaker 10: a little over nine million dollars to continue to bring
Speaker 10: AI into their behavioral health and mental health platform to
Speaker 10: support children and families and caregivers. And so you know,
Speaker 10: AI is present in our strategy and the funds and
Speaker 10: the companies that we're investing in, and we think AI
Speaker 10: is essential to modernize our healthcare system, our caregiving and infrastructure,
Speaker 10: foundational industries like manufacturing and supply change, wealth tech. It's
Speaker 10: showing up across our fun portfolio, in our and directly
Speaker 10: in some of the companies we're backing. So it's important
Speaker 10: in something that we're spending a lot of time in
Speaker 10: at Pivotal Ventures.
Speaker 4: Yeah, I should note Rebecca Edgar, the co founder and
Speaker 4: CEO of Little Otter, was on our program that was
Speaker 4: back on Valentine's Day Carols just a little over a
Speaker 4: week ago.
Speaker 1: It was a great conversation. Yeah, it was a really
Speaker 1: rewarding conversation. I feel like eye opening for all of us.
Speaker 1: I am curious too about the caregiving component that you
Speaker 1: guys are investing in. I feel like that comes up
Speaker 1: more and more in terms of, you know, if it's
Speaker 1: a book on like how to lead, how to manage,
Speaker 1: how to move ahead, you got to think about the
Speaker 1: caregiving component in your personal life, but also have society
Speaker 1: at large talk to us about how you approach caregiving
Speaker 1: and what you see as the biggest kind of struggles
Speaker 1: that we need to really invest in and overcome.
Speaker 10: Sure, just to give a shout out to all the caregivers.
Speaker 10: We're all caregivers at some point in our lives, you know,
Speaker 10: whether you're caring for young people, the aging, your own
Speaker 10: family members, your spouse, a friend, a neighbor. We've supported
Speaker 10: some research at Pivotal Ventures that size the care economy
Speaker 10: is a six hundred and forty eight billion dollar market.
Speaker 10: That's huge. It's actually bigger than the pharmaceutical industry. And
Speaker 10: we need that modern caregiving system to support women and
Speaker 10: families in all of us to be able to, you know,
Speaker 10: do our work and be productive and active contributors to society. So,
Speaker 10: you know, we think that those investments in those systems,
Speaker 10: whether it be from childcare all the way through to
Speaker 10: tools to optimize the home and caregiving in the home,
Speaker 10: to the eldercare space and in the aging side of
Speaker 10: the spectrum, all are huge opportunities. We have funds and
Speaker 10: companies in our portfolio that we're tracking that are innovating
Speaker 10: in those spaces, and we think it's a big market
Speaker 10: and others should be paying attention and deploying capital there
Speaker 10: as well.
Speaker 4: Where do the funds of funds come in here versus
Speaker 4: the direct investments? Like how do you think of when
Speaker 4: to make an investment in a company versus when to
Speaker 4: deploy capital to a fund of funds.
Speaker 10: Yeah, both are pillars of our strategy. Our portfolio of
Speaker 10: fund investments is essential to changing the face of our
Speaker 10: investment ecosystem and the venture capital sector in particular. There's
Speaker 10: been some data, you know, pitch Book is put out
Speaker 10: and others. You know, about seventeen percent of decision makers
Speaker 10: at US venture capital firms right now are women. That
Speaker 10: number is almost doubled in the last decade, but we
Speaker 10: still have a long way to go, and so as
Speaker 10: part of our strategy, we think it's incredibly important to
Speaker 10: back these women investors who are deploying capital and finding
Speaker 10: great founders in every sector, whether that be supply chain
Speaker 10: and manufacturing as I mentioned, and the tech that's innovating there,
Speaker 10: to digital health, to the consumer space. You know, we
Speaker 10: want to find women leaders and investors of all stripes
Speaker 10: that are that are deploying capital across those sectors. And
Speaker 10: our direct investing strategy is complements that. It's not really
Speaker 10: an either or. I think it's a both and and
Speaker 10: we see opportunities again in this care economy thesis. Women's
Speaker 10: health as well maternal health, menopause, and care around those
Speaker 10: themes is a huge opportunity. So you know, with our
Speaker 10: direct investing, we try to flex and focus on areas
Speaker 10: that are aligned back to our broader mission at Pivotal
Speaker 10: to get more power to more people, especially women.
Speaker 4: I did mention the Pivotal Ventures was founded close to
Speaker 4: a decade ago by Melinda French Gates. Just clear clear
Speaker 4: something up for us. Is there other money in there
Speaker 4: right now or is this all money from Melinda French Gates?
Speaker 4: Do you have other.
Speaker 10: LPs capital solely from Melinda? Again, she started Pivotal about
Speaker 10: a decade ago in twenty fifteen, really with a mission
Speaker 10: to advance social progress and advance women's power and influence,
Speaker 10: get more power. As I said before, two more people.
Speaker 10: And one thing that was innovative when Melinda set this
Speaker 10: up was this idea that you need multiple tools to
Speaker 10: advance this objective and to see our mission, and that
Speaker 10: includes philanthropy, that also includes the investing and the investment
Speaker 10: capital that we're deploying.
Speaker 4: Do you think that gives you more leeway in terms
Speaker 4: of timing there's not as much pressure for returns over
Speaker 4: a certain period of time. Do you think it changes
Speaker 4: your investment strategy because there is this patient capital.
Speaker 10: Our strategy is long term, as you noted, and I
Speaker 10: do agree that having that ability to see the full
Speaker 10: picture and deploy multiple tools in our tool get as
Speaker 10: a platform is huge to drive our mission and the
Speaker 10: type of change that we want to see in the world.
Speaker 10: But let me be clear, this is a strategy that
Speaker 10: is centered on achieving best in class financial return by
Speaker 10: investing in these funds and some of the themes that
Speaker 10: we've discussed like care economy and women's health and AI,
Speaker 10: we think there's a great potential to deliver you know,
Speaker 10: best in class market rate returns again over the long term.
Speaker 10: But we do have that patience in our in our
Speaker 10: with our founder alongside us to do just that.
Speaker 1: Aaron, do you feel like that the establishment, the financial establishment,
Speaker 1: especially when it comes to women founders and funders, are
Speaker 1: still kind of forgotten and overlooked.
Speaker 10: It's easy to stick with the patterns that that one notes.
Speaker 10: I've been investing in funds and for close to two
Speaker 10: decades now, and you know, I think that it's it's
Speaker 10: no one gets fired for sort of following the same playbook.
Speaker 10: What excites me about what we're doing at Pivotal Ventures
Speaker 10: is we're recasting a different playbook that that I think
Speaker 10: will show other investors and other stakeholders and the financial
Speaker 10: ecosystem and the investment industry that there is real value
Speaker 10: to be had by bringing different perspectives to the table,
Speaker 10: looking at opportunities like this care economy that are huge
Speaker 10: against six hundred and forty eight billion dollar market. That's
Speaker 10: the type of paradigm shifting we want to see. And
Speaker 10: it's really it comes back to, you know, having that
Speaker 10: patience and time horizon to play it out and being
Speaker 10: long term focused.
Speaker 4: What is your time horizon for an investment.
Speaker 10: It's a typical it's an early stage and investor timeline.
Speaker 10: You know, we're deploying capital year over year, and you know,
Speaker 10: on our funds their typical venture early stage fund that
Speaker 10: will be investing over a three to four year time
Speaker 10: period and then harvesting the gains beyond that. So you know,
Speaker 10: it's it's a long time horizon. I'd say, you know,
Speaker 10: decade plus that we're really looking to drive the results
Speaker 10: that we want to see both in our funds and
Speaker 10: with our companies. If they return capital sooner, that's great,
Speaker 10: but you know, not at the sacrifice for your building.
Speaker 10: I think an enduring platform as a fund manager or
Speaker 10: a business as a founder.
Speaker 1: That was Aaron Harkless Moore, Senior director of Investments at
Speaker 1: Pivotal Ventures. Coming up on Bloomberg Business Week, the NBA
Speaker 1: jobs market, and more. That's coming up next. This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Apple car Play
Speaker 2: and the Android Auto with the Bloomberg Business app. You
Speaker 2: can also listen live on Amazon Alexa from our flagship
Speaker 2: New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 4: The story from our Bloomberg News team getting our attention.
Speaker 4: At business schools across the US, graduation fast approaching the mood.
Speaker 4: Though subdued NBA programs that once offered a glide path
Speaker 4: to lucrative jobs are finding fewer and fewer seats on
Speaker 4: Wall Street and in corporate America for their graduates. At
Speaker 4: every one of the nation's top schools known as the
Speaker 4: mag seven. I didn't know this, they were known as
Speaker 4: the Maxie.
Speaker 8: I didn't either.
Speaker 4: Job blason and outcomes have declined since twenty twenty one,
Speaker 4: and this year is looking no better. No joke, Carol.
Speaker 4: You can attest to this. As I was writing this intro,
Speaker 4: I got an email from Dean mclaris at Columbia.
Speaker 2: Business School, right grad grad.
Speaker 4: The subject says hire CBS and it's like an email
Speaker 4: talking about recruiting.
Speaker 1: All right, So that is the view from schools inside
Speaker 1: the United States. Let's go outside the US to France.
Speaker 1: We've got Emmanuel mctay, dean of the French Business School
Speaker 1: Etic Business School with us, as well as Dimitri Cassanides,
Speaker 1: Bloomberg New Senior editor. She spearheads our global business coverage
Speaker 1: business school coverage, I should say for Bloomberg Business WEEKND.
Speaker 1: They're both here in our Bloomberg Interactor Broker studio. Welcome, Welcome,
Speaker 1: Nice to have you here. Hello, Dean Mattay. Before we
Speaker 1: get going, we want to ask you about what you
Speaker 1: are hearing and seeing from other business school deans during
Speaker 1: your visit here to the United States and other as
Speaker 1: the schools. How much is the job market a topic
Speaker 1: right now?
Speaker 6: What is striking here is, as always, I mean, the
Speaker 6: power of the higher education institutions, their entrepreneurial spirit, the
Speaker 6: amount of resources that they have to reach their ambitions.
Speaker 6: But also I could feel some kind of anxiety about
Speaker 6: you know, research funding, about the capacity of welcoming foreign students,
Speaker 6: foreign researchers, foreign professors. So I could feel that it
Speaker 6: was kind of mixed feelings as always, and I mean,
Speaker 6: the best educational system in the world, especially for business,
Speaker 6: but at the same time, some question about tomorrow, uncertainty
Speaker 6: about tomorrow.
Speaker 4: I know, you know, I don't want to use the
Speaker 4: term frenemies, but you are also competitive with these schools.
Speaker 4: Is this only good news for you if there's an
Speaker 4: in the United States that's not as conducive to attracting
Speaker 4: foreign students foreign professors, Is it just great news for UNFL.
Speaker 6: But I mean bad news for the US is bad
Speaker 6: news for US. And of course, if I was really egoistic,
Speaker 6: I would say, yes, it's good news for US. We
Speaker 6: will have more foreign students coming to US and probably
Speaker 6: will have opportunity to recruit talented professors and researchers from
Speaker 6: the US market. But no, I think it's not good
Speaker 6: news because we tend to see US in a very
Speaker 6: global market, in a very global higher education system, and
Speaker 6: we see more and more countries I mean turning in
Speaker 6: onto themselves, not only the US, I mean the UK, Canada,
Speaker 6: I mean, you name them Scandinavian countries and they want
Speaker 6: less and less immigration and including foreign students, and it's
Speaker 6: not good news at all. I mean, I visited a
Speaker 6: lot of countries all around the world, and what we
Speaker 6: can see is that when there is a country which
Speaker 6: you know, try to decrease immigration, and especially a students immigration,
Speaker 6: it's a disaster for the country and for the schools.
Speaker 3: Wow.
Speaker 11: Yeah, that's not surprising. And I think I'm hearing very
Speaker 11: much the same from other people that we're talking to.
Speaker 11: I mean, I think it's of great concern because of
Speaker 11: just the points that Dematase is making, and I think
Speaker 11: there is a big concern. Sometimes we think, oh, it's
Speaker 11: a problem for students in terms of the immigration challenges
Speaker 11: that we're confronting, but I think it is a huge
Speaker 11: concern on the research and faculty front. When we've seen
Speaker 11: the shifts in education on global business schools over the
Speaker 11: last decade or two decades, one big thing we've noticed
Speaker 11: is a lot of talent coming to this country to
Speaker 11: our business schools. Look at the deans of a lot
Speaker 11: of our business schools and where they've come from. So
Speaker 11: it's a challenge on many fronts. And I think that
Speaker 11: there is definitely. You know, however openly they're sort of
Speaker 11: airing this anxiety. There is a great deal of anxiety
Speaker 11: right now and really just kind of wait and see
Speaker 11: and where is this all going.
Speaker 1: I have to say one of the things, my daughter
Speaker 1: is just finishing up an undergraduate degree, but spent a
Speaker 1: year over in London at the Lendon School of Economics,
Speaker 1: and it was such a great combination of US versus
Speaker 1: being overseas for a full year. The importance of partnerships
Speaker 1: for you in linking up with US business school. Talk
Speaker 1: to us a little bit about that.
Speaker 7: How important that is?
Speaker 6: Definitely. I mean, we want our students, wherever they are from,
Speaker 6: we want them to go to the best schools all
Speaker 6: around the world. So we have here in the US.
Speaker 6: Basically we have three hundred partners academic partners all around
Speaker 6: the world, mostly for exchanges double degrees. But we have
Speaker 6: among these three hundred ten, let's say, strategic partners, including
Speaker 6: one here in the US. So Berkeley has Business School
Speaker 6: in California with whom we have launched a joint degree
Speaker 6: for quite a large cohort of students or a Master
Speaker 6: in Management, and students spend time in Paris, first on
Speaker 6: at a campus and then they go to Seoul core
Speaker 6: are So at a SKK business school, and then they
Speaker 6: spent one year at Berkeley Hearts. And yes, the graduates
Speaker 6: from this programmer I mean great people and fine easily
Speaker 6: good positions on the job market. So this is why
Speaker 6: we are here today on the Eastern Court Coase to
Speaker 6: find another strategy partner.
Speaker 4: And who's that strategic partner going to day? I mean,
Speaker 4: who do you want that to be?
Speaker 6: So we have already partners here of course, as you
Speaker 6: can guess in New York, in Boston we have a
Speaker 6: double degree agreement with the MI T, we have Pittsburgh.
Speaker 6: So we are talking to all of them and will
Speaker 6: I mean find the best partner here just to I
Speaker 6: mean join lounge joint program to probably lounge initiatives in
Speaker 6: terms of entrepreneurship artificial intelligence. So we want to do
Speaker 6: more than just exchange and.
Speaker 1: Yeah, meter to do more students, more NBA students in
Speaker 1: the United seeing that they want a program that is
Speaker 1: not just US based. Do they want to have some
Speaker 1: exposure overseas?
Speaker 11: I mean, anecdotally, we are hearing that I don't have
Speaker 11: a lot of the data on that, But in interviewing
Speaker 11: a lot of the students in the last few months
Speaker 11: about any number of issues that we've been reaching out on,
Speaker 11: that is definitely something that they're seeing. And I think
Speaker 11: that there's probably something about what's going on in the
Speaker 11: world right now and in our country with the government
Speaker 11: and the new administration that's making students and prospective students consider,
Speaker 11: you know, it might be that I'm not going to
Speaker 11: be working in the US, maybe I will want to
Speaker 11: go work abroad. What you know, where are the kinds
Speaker 11: of programs that are going to really position me the best?
Speaker 11: And I think that some of what Dean Matase is
Speaker 11: describing with their partnerships also is something that's seen as
Speaker 11: an if you're a student that's coming out having done
Speaker 11: one of those programs, there is a competitive advantage to that.
Speaker 1: I also think about oh, please jump in.
Speaker 6: Oh, I mean we now welcome every year something like
Speaker 6: one hundred American students at EDEK.
Speaker 1: This is how big is your student base?
Speaker 6: All ten thousands, okay, from all over the world, so
Speaker 6: one hundred and twenty countries. What they are looking for
Speaker 6: is probably a good retail on investment because of course
Speaker 6: suits and fees in France are not the same as
Speaker 6: the one in the US. Also probably lifestyle. And also
Speaker 6: something which is very important these days is that, I
Speaker 6: mean the purpose of the school is to put business
Speaker 6: at the service of common good and this is something
Speaker 6: maybe that these days in the US is going to
Speaker 6: be i mean put into questions. So we have a
Speaker 6: lot of research on climate finance, on ESG, on sustainability,
Speaker 6: and this is something that they're going to learn still
Speaker 6: learn in Europe and in France especially, which I suspect
Speaker 6: will be less a bit less the case in the
Speaker 6: US this day.
Speaker 11: Right That is definitely one piece of it. Is there
Speaker 11: some pulling away from some commitments that we see with
Speaker 11: our government right now, and that throwing into question where
Speaker 11: we saw business school students wanting to go over the
Speaker 11: last decade, wanting to do more good with what they're doing,
Speaker 11: and now suddenly you find yourself in an environment where
Speaker 11: it's like is that going to be prioritized? Are the
Speaker 11: companies going to be prioritizing that? Like what are the
Speaker 11: opportunities for that? So I think that the other thing
Speaker 11: I wanted to quickly touch on, Dematist was you had
Speaker 11: mentioned a number of the rise and the number of
Speaker 11: American students studying now leaving the US to study business.
Speaker 11: Is there a number you can attach to that. I mean,
Speaker 11: what have you seen over the last couple of years
Speaker 11: in terms of not just specific to a deck, but
Speaker 11: you know, broadly speaking, you.
Speaker 6: Mean in terms of American students moving to Europe. Yeah, yeah,
Speaker 6: so's it's been increasing in France. I mean we are
Speaker 6: now welcoming I think four thousand and five hundred American students,
Speaker 6: I mean amongst four hundred and fifty thousand students. So
Speaker 6: it's not so many of them. I remember that twenty
Speaker 6: to thirty years ago we barely could see American students
Speaker 6: in our schools. I mean it's the American students wanted
Speaker 6: to stay here. And year after year we can see
Speaker 6: that the number are increasing, and in all of the programs,
Speaker 6: so including in the bachelor program. So we have a
Speaker 6: young student moving from the US to Europe and to
Speaker 6: France to study I mean business. It's the case for
Speaker 6: the masterin Management and also at the NBA level. So yeah,
Speaker 6: I think over the past two years we have increased
Speaker 6: the number of American students by twenty five persons.
Speaker 12: Wow.
Speaker 4: The inserted regions of the US. Different business schools are
Speaker 4: known for different specialties. If we go to Silicon Valley,
Speaker 4: we'll talk to a lot of Stanford graduates. For example,
Speaker 4: here in New York, you know, the Wall Street sort
Speaker 4: of feeds from NYU and from Colombia. Is there an
Speaker 4: industry that your business school feeds into?
Speaker 6: Finance and asset management? I mean, this is we were
Speaker 6: talking about that just before. I mean and in a
Speaker 6: very special way. Because we have a kind of recipe,
Speaker 6: good recipe to monetize the results of our research. So
Speaker 6: we launch a research center in asset management twenty years ago,
Speaker 6: and the story ended up with EDEK selling a spin
Speaker 6: off in finance for two hundred million euros at the
Speaker 6: stock Extende of Singapore. So we have to compete with
Speaker 6: American business just what you teach, Yeah exactly, Yeah, we
Speaker 6: have to compete with you guys and you I mean,
Speaker 6: schools here are a lot of resources, huge endowments. We
Speaker 6: don't reach the same amount, So we have to find
Speaker 6: other ways to find resources.
Speaker 1: That's fascinating, and so that helped to finance the school education.
Speaker 6: It goes to the foundation, to the ed Foundation, and
Speaker 6: thanks to this money, we we launch Aventure fund for
Speaker 6: impact startups. We are financed a research center on climate finance.
Speaker 1: That was Emmanuel Mattey, dean of the French business school
Speaker 1: Edek Business School, along with Dimitri Cassanin's Bloomberg News senior editor,
Speaker 1: Still Ahead on Bloomberg Business Week a blueprint for undoing
Speaker 1: segregated housing in the US.
Speaker 12: It debunked this myth of de facto segregation and showed
Speaker 12: that the segregation of our communities which still persists today,
Speaker 12: was created by intentional government policy, and those policies were
Speaker 12: in violation of the Constitution, and so we have an
Speaker 12: obligation to remedy the ongoing impacts of those policies.
Speaker 1: This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 2: weekday starting a two pm Eastern up on Apple CarPlay
Speaker 2: and the Android Auto with the Bloomberg Business app. You
Speaker 2: can also listen live on Amazon Alexa from our flagship
Speaker 2: New York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 4: Well, we got some news in the world of real
Speaker 4: estate affordable housing. To be specific, millions of dollars in
Speaker 4: federal contracts for affordable housing were canceled after a Department
Speaker 4: of Government Efficiency Review of Nonprofits website and LinkedIn profiles
Speaker 4: for terms associated with DEI. That's according to current and
Speaker 4: former staff at the US Department of Housing and Urban Development.
Speaker 4: That canceled awards Carroll include ongoing projects in more than
Speaker 4: one thousand communities to address homelessness, disaster recovery, persistent poverty,
Speaker 4: and other housing issues. This according to a list seen
Speaker 4: by Bloomberg City Lab.
Speaker 1: And this came from our own reporter Kristen Camps, who
Speaker 1: covers housing and design housing policies, something that Leah Rothstein
Speaker 1: knows very well. She's a housing expert and author author
Speaker 1: of Just Action, How to Challenge Segregation Enacted under the
Speaker 1: Color of Law, which she co wrote with her father, Richard.
Speaker 1: She joins us now from Oakland, California. So great to
Speaker 1: have you here with us, and really timely topical, Leah.
Speaker 1: This book is a fall up to your dad's book,
Speaker 1: The Color of Law, which explored how housing became so segregated.
Speaker 1: For those who maybe don't really understand kind of some
Speaker 1: of the history here or have forgotten, perhaps remind us
Speaker 1: kind of how housing became so segregated.
Speaker 12: Sure, well, you know the subtitle of the Color of
Speaker 12: Law is a forgotten history of how government segregated America.
Speaker 12: So it's not uncommon to have forgotten this particular fact
Speaker 12: of our history. You know, we have an idea in
Speaker 12: this country that we've adopted that the racial segregation of
Speaker 12: our communities is a form of de facto segregation, a
Speaker 12: kind of segregation that was created by private actors or
Speaker 12: personal preferences, or economic conditions, or by accident. And what
Speaker 12: the Color of Law shows, with detail after detail of
Speaker 12: government policy from decades of this country's history, government policy
Speaker 12: from local, state, and federal levels that intentionally, explicitly and
Speaker 12: purposely created racially segregated communities. So it debunked this myth
Speaker 12: of de facto segregation and showed that the segregation of
Speaker 12: our communities, which still persists today, was created by intentional
Speaker 12: government policy, and those policies were in violation of the Constitution.
Speaker 12: And so we have an obligation to remedy the ongoing
Speaker 12: impacts of those policies.
Speaker 4: And that's exactly where your book picks up just action
Speaker 4: how to challenge segregation and acted under the color of Law.
Speaker 4: So what is the solution here, Well.
Speaker 12: There's no one solution, just like there wasn't one policy
Speaker 12: that created segregation. It was many, many actions and policies
Speaker 12: of governments.
Speaker 1: Well, can we go there, just remind us of the policies,
Speaker 1: As you said, it wasn't just one policy, Like what
Speaker 1: were some of those specific policies.
Speaker 12: Sure, there was redlining policies which determined where banks could
Speaker 12: or would give loans for mortgages and small business lending,
Speaker 12: and it determined that neighborhoods where African Americans lived were
Speaker 12: not good places to provide loans to homeowners or business owners,
Speaker 12: and so African Americans in those neighborhoods had no access
Speaker 12: to mortgages and couldn't buy homes and build wealth. That's
Speaker 12: one example. Another, the most powerful example is how the government,
Speaker 12: the federal government subsidized the suburbanization of our country in
Speaker 12: the mid twentieth century after World War II, when we
Speaker 12: didn't have a lot of suburbs in this country. Most
Speaker 12: people lived in urban centers, and the federal government, through
Speaker 12: the Federal Housing Administration, helped to subsidize developers to build
Speaker 12: the suburbs that we are used to today, and did so
Speaker 12: on the condition that those developers only sell their homes
Speaker 12: to whites and This was explicit government policy written into
Speaker 12: the FHA manual, written into the d of the homes
Speaker 12: that these developers built, saying that the home could only
Speaker 12: ever be owned or occupied by whites. Now, those homes,
Speaker 12: when they were first built and sold, they were affordable
Speaker 12: for working families of any race. The white families that
Speaker 12: got into those homes got into home ownership when it
Speaker 12: was affordable. And those homes and suburban areas around the
Speaker 12: country are no longer affordable to working families. So the
Speaker 12: white families that got into them when they cost one
Speaker 12: hundred thousand dollars in today is money built up wealth
Speaker 12: as those homes accumulated in value. Now there were several
Speaker 12: hundred thousand dollars, in some places over a million dollars,
Speaker 12: and so those white families accumulated wealth through the increased
Speaker 12: value of their homes, while African American families, who were
Speaker 12: explicitly prohibited from getting into home ownership when it was affordable,
Speaker 12: weren't allowed to build wealth in the same way. So
Speaker 12: we have a wealth gap today that exists because of
Speaker 12: those past government policies.
Speaker 4: Is it fair to say that the explicit things that
Speaker 4: you and that your dad talked about in his first book,
Speaker 4: those are no longer enacted current.
Speaker 12: Many of them are no longer enacted as explicitly as
Speaker 12: they were. There's many policies and programs that have a
Speaker 12: racially discriminatory impact, if not an explicit intent, that are
Speaker 12: still you know, in place today. But you know the
Speaker 12: example I gave about the subsidized suburban homes. So you know,
Speaker 12: since then we've passed the Fair Housing Act, which says
Speaker 12: we can no longer discriminate in the sale and rental
Speaker 12: of housing. Those restrictive covenants on the deeds of the
Speaker 12: homes are no longer legally enforceable. But even those though
Speaker 12: those laws have changed, the situation doesn't just resolve itself.
Speaker 12: When the homes and suburbs that were created through government subsidies,
Speaker 12: you know, are no longer affordable to families who don't
Speaker 12: have intergenerational wealth. So they're not affordable to African American
Speaker 12: families who were denied the opportunity to build the same
Speaker 12: wealth that whites could. So this is how, even when
Speaker 12: those racially explicit policies get changed or revoked, the consequences
Speaker 12: are ongoing unless we take intentional action to change them.
Speaker 4: Okay, So that brings us up to speed to essentially today.
Speaker 4: And you know you said mainly the explicit policies are
Speaker 4: no longer there, But there are these implicit policies I
Speaker 4: think that many would argue still do prevent homes from
Speaker 4: being built in certain areas and do perhaps prevent more
Speaker 4: people from living in certain areas. And a lot of
Speaker 4: those happen on the local levels, such as zoning. How
Speaker 4: do you look at that?
Speaker 12: Yep, yeah, Well, in just Action, we focus explicitly on
Speaker 12: local policies and programs because that's where we can have
Speaker 12: an impact as residents, as organized activists, as voters. And
Speaker 12: that's also what can have the biggest impact on challenging segregation.
Speaker 12: Even though the federal government had a large role to
Speaker 12: play in creating segregation, once it's established, laws like zoning,
Speaker 12: like you know, housing development subsidies, Section eight, program administration,
Speaker 12: all of these happen on the local level. So there's
Speaker 12: a lot that can be done locally to challenge the
Speaker 12: segregation that was set up by the federal government. So
Speaker 12: zoning is a perfect example. Passed by local city councils,
Speaker 12: planning commissions, and zoning has enforced segregation by ensuring that
Speaker 12: in more affluent, whier areas. Those areas tend to be
Speaker 12: zoned only to allow single family homes, so that ensures
Speaker 12: that homes in those areas remain unaffordable to only the
Speaker 12: most affluent people because as demand increases, you can't build
Speaker 12: more homes to meet that demand. You're limited by how
Speaker 12: many lots there are in that community because you can
Speaker 12: only build one home per lot. So some communities are
Speaker 12: challenging single family only zoning to allow more than one
Speaker 12: home per lot, which can open up access to that
Speaker 12: community to a broader range of households because there's a
Speaker 12: broader range of housing sizes and affordability options created.
Speaker 1: How does the division politically within this nation, you know,
Speaker 1: either to prevent seeing more equality when it comes to
Speaker 1: housing and more diversity when it comes to housing.
Speaker 12: Yeah, great question. It's cyclical, right. So when we live
Speaker 12: around people who only look like us and have similar
Speaker 12: life experiences than us, we tend to not support policies
Speaker 12: that we see as helping other people. And when we
Speaker 12: live in neighborhoods that are more integrated and we have
Speaker 12: more access and more exposure to people who are different
Speaker 12: from us, there's less polarization. We understand each other's life
Speaker 12: experiences and hopes and dreams. We understand we're not that different,
Speaker 12: and people tend to support policies that help a broader
Speaker 12: range of people when they have personal relationships with people
Speaker 12: who they think of as other. So the segregation of
Speaker 12: our communities keeps us polarized because we don't have we
Speaker 12: don't have natural social contact with people who are different
Speaker 12: from us, and then we tend to continue to support
Speaker 12: that maintain that segregation.
Speaker 4: You mentioned that you focus on the local level because
Speaker 4: that's where people can have an impact, from voting to
Speaker 4: zoning and more. Can you share with us some examples
Speaker 4: of communities in certain areas of the country that you
Speaker 4: think are doing this well and why they're doing it well,
Speaker 4: how they're doing it well.
Speaker 12: Sure, so, you know, in our book we give dozens
Speaker 12: of examples of strategies and programs that local communities can adopt,
Speaker 12: and for each one we give an example of a
Speaker 12: community somewhere in the country that successfully adopted that. So
Speaker 12: there isn't I would say, one that's doing everything, because
Speaker 12: there's so many pieces to this puzzle, but there's many
Speaker 12: communities that are doing something. Zoning changes have been you know,
Speaker 12: catching on around the country to meet the affordable housing
Speaker 12: crisis that the whole country is now feeling. And there's
Speaker 12: some success stories around the organizing for zoning changes. There's
Speaker 12: an example I love is a community land trust model,
Speaker 12: which is a locally formed nonprofit organization that creates permanently
Speaker 12: affordable home ownership opportunities in areas with housing costs that
Speaker 12: are rapidly rising. So we wrote about a group in Durham,
Speaker 12: North Carolina that was a predominantly African American community that
Speaker 12: was gentrifying and you know, it was near Durham, Sorry,
Speaker 12: it was near Duke University, which was increasing enrollment and
Speaker 12: investors were buying at properties and the longtime residents were
Speaker 12: being displaced. And in that time, the residents there started
Speaker 12: going door to door talking to each other about what
Speaker 12: they wanted to do to improve conditions in their neighborhood.
Speaker 12: You know, simple beginning community organizing, right. They were talking
Speaker 12: to their neighbors. They decided they wanted a park in
Speaker 12: their neighborhood because they didn't have a park. Kids were
Speaker 12: playing in the street, and so they advocated that the
Speaker 12: city turn a vacant lot into a park, and they won.
Speaker 12: They started to see, oh, we can really make change here.
Speaker 12: They learned about the community land trust model and started.
Speaker 12: They crowdfunded to buy two vacant lots and built homes
Speaker 12: on them and sold them at affordable prices to and
Speaker 12: moderate income families. In the land trust model, in the
Speaker 12: home sale, the land trust retains ownership of the land
Speaker 12: underneath the home, so only the home is sold, so
Speaker 12: it's more affordable than if you were buying the home
Speaker 12: and the land. And when the homeowner wants to resale
Speaker 12: resell the home, they have to adhere to a maximum
Speaker 12: resale price, and that ensures that the home is affordable
Speaker 12: every time it's resold. So this group that started by
Speaker 12: going door to door to get a park in their
Speaker 12: neighborhood now has a land trust with over three hundred
Speaker 12: properties all around the city. They've prevented a lot of
Speaker 12: displacement in this neighborhood by creating affordable homes in an
Speaker 12: area that home prices were increasing really fast that people
Speaker 12: couldn't keep up with one great example, but there's over
Speaker 12: three hundred communities around the country with a land trust
Speaker 12: and they're growing rapidly. It's a great model, a great
Speaker 12: tool in the toolbox for addressing these issues.
Speaker 1: That's Leah Rothstein, author of Just Action, How to Challenge
Speaker 1: Segregation Enacted under the Color of Law, wraps up the
Speaker 1: weekend edition of Bloomberg BusinessWeek from Bloomberg Radio. Thank you
Speaker 1: so much for joining us. Be sure to tune into
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