WEBVTT - Former Dow CFO, Adobe's Use of Artificial Intelligence 0:00:00.120 --> 0:00:03.960 This is Bloomberg Business Week with Carol Messer and Tim 0:00:04.000 --> 0:00:12.520 Steneveek on Bloomberg Radio. 0:00:13.560 --> 0:00:15.720 All Right, everybody, you don't see this a lot these days, 0:00:15.760 --> 0:00:18.560 someone spending their entire career at a single company. But 0:00:18.640 --> 0:00:22.200 that's exactly what our next guest did. After thirty three 0:00:22.280 --> 0:00:26.520 years at Dow Howard and Ungerlider, he retired back in November. 0:00:27.040 --> 0:00:30.520 He oversaw Dow DuPont split into three separate public companies. 0:00:30.720 --> 0:00:34.720 We're talking about Dow DuPont, DuPont and then Corteva. I 0:00:34.800 --> 0:00:35.919 hope I'm saying that correctly. 0:00:36.080 --> 0:00:38.000 Fair to say, Carol, he's seen quite a few cycles 0:00:38.000 --> 0:00:40.760 and quite a few changes through his career at the 0:00:40.960 --> 0:00:45.120 chemicals giant. Howard Ungerlighter joins us on a zoom in 0:00:45.159 --> 0:00:48.880 New York City. Howard, good to have you with us. Look, 0:00:50.600 --> 0:00:51.479 why did you retire? 0:00:53.159 --> 0:00:56.920 Hey, Tim, Good afternoon, Carol. Thank you. Somewhere in the 0:00:56.920 --> 0:00:59.800 suburbs of Philadelphia. My mother is smiling if she's listening 0:00:59.840 --> 0:01:04.840 to nice introduction. Look, Look, thirty three years is a 0:01:04.840 --> 0:01:07.640 long time to be doing anything, and I just felt 0:01:07.680 --> 0:01:09.560 like it was the right time to continue with my 0:01:10.240 --> 0:01:12.920 leadership journey. You know, I just arrived in New York. 0:01:13.920 --> 0:01:17.319 You know, my grand my, well, all of my ancestors 0:01:17.319 --> 0:01:21.720 actually immigrated from Eastern Europe. My grandfather worked at a 0:01:21.800 --> 0:01:25.440 dry cleaner's for more than fifty years in Brooklyn, and 0:01:25.840 --> 0:01:28.880 you know, he just he instilled in me a work 0:01:28.920 --> 0:01:33.600 ethic around pressing pants. And I still remember early days. 0:01:33.920 --> 0:01:36.160 He's long since passed away, but when I was first 0:01:36.160 --> 0:01:40.520 at Dow more than thirty three years ago. Now, he 0:01:40.600 --> 0:01:42.200 used to call me and ask me at the end 0:01:42.200 --> 0:01:44.160 of the day how many pants that I pressed, because 0:01:44.200 --> 0:01:46.720 that was his view of hard work. And that's what 0:01:46.800 --> 0:01:48.680 he instilled in me. And I did that for thirty 0:01:48.680 --> 0:01:52.240 three years, and it was time to look where my 0:01:52.320 --> 0:01:53.920 leadership journey is going to take me next. 0:01:53.960 --> 0:01:56.320 Do you have a favorite moment though, within that thirty 0:01:56.360 --> 0:01:59.160 three year journey at Dow specifically. 0:02:00.160 --> 0:02:02.680 Oh, my goodness, you know, thirty three years. It seemed 0:02:02.720 --> 0:02:07.440 like every year was something special. Certainly the investor relations 0:02:07.560 --> 0:02:10.800 role that I did in a financial crisis. You know, 0:02:11.560 --> 0:02:14.399 I took that role in April of two thousand and eight, 0:02:15.880 --> 0:02:20.560 we announced the acquisition at Romanhaus in the summer. Lehman 0:02:20.720 --> 0:02:24.000 collapsed in September, and we all know what happened after that, So, 0:02:24.480 --> 0:02:26.919 you know the old adage of what doesn't kill you 0:02:27.000 --> 0:02:29.080 makes you stronger. I learned a lot about myself. I 0:02:29.160 --> 0:02:32.679 learned a lot about our great company called Dow through 0:02:32.720 --> 0:02:34.240 that period of the financial crisis. 0:02:34.240 --> 0:02:36.639 I still love that you went there because I always 0:02:36.680 --> 0:02:41.320 think that that is a time when the CFO that 0:02:41.400 --> 0:02:45.480 position was no longer about the earnings call or quarterly 0:02:45.520 --> 0:02:48.960 earnings report, only just that. But it became the CFOs 0:02:49.240 --> 0:02:52.280 kept companies alive and figured out the balance sheet and 0:02:52.320 --> 0:02:54.600 what they needed to do. And I just feel like 0:02:54.639 --> 0:02:58.400 from that day forward, CFOs meant something very different. 0:03:00.639 --> 0:03:02.840 Carol, I couldn't agree more. Actually, my joke at the 0:03:02.919 --> 0:03:06.840 time was there were no equity investors. Everybody was a 0:03:06.840 --> 0:03:09.840 fixed income investor. They all wanted to ask about credit 0:03:09.960 --> 0:03:13.679 and risk and mitigation and trying to find where the 0:03:13.680 --> 0:03:16.200 bottom was. Now, that's fifteen plus years ago now, But 0:03:16.240 --> 0:03:18.920 I actually think you bring up a great point. You know, 0:03:18.960 --> 0:03:22.160 the role of CFO, I really think has evolved dramatically 0:03:22.200 --> 0:03:24.440 over the last twenty five thirty years. If you go 0:03:24.520 --> 0:03:28.160 back into the nineties, the best path to the CFO 0:03:28.639 --> 0:03:33.000 steat was most likely treasurer, a deal maker, a lot 0:03:33.000 --> 0:03:36.480 of m and A experience through the early part of 0:03:36.520 --> 0:03:41.160 the two thousands, after Enron and Sarbanes Oxley, it really 0:03:41.240 --> 0:03:46.240 became an accounting driven, compliance driven, controlled driven role. And 0:03:46.280 --> 0:03:49.360 I would say, really the financial crisis was the beginning 0:03:49.840 --> 0:03:54.160 of I think the evolution as a CFO as co pilot. 0:03:54.880 --> 0:03:57.800 You know, I am not a pilot by training, but 0:03:57.840 --> 0:04:00.640 I use that analogy because I think it's really apropos 0:04:00.720 --> 0:04:03.000 The CFO really has to be the co pilot of 0:04:03.040 --> 0:04:05.680 the enterprise today. And you think about what a co 0:04:05.800 --> 0:04:07.920 pilot does is they have to do everything that the 0:04:07.960 --> 0:04:11.600 pilot does. They may not have they have one fewer 0:04:11.680 --> 0:04:15.160 stripe on their on their shirt sleeve, but they have 0:04:15.240 --> 0:04:17.880 to be able to land, take off, talk to the 0:04:18.040 --> 0:04:20.960 talk to the crew, work with the work with air 0:04:21.000 --> 0:04:24.839 traffic control, navigate the plane, uh, you know, engage with 0:04:24.920 --> 0:04:27.320 the clients or the customers or the passengers. They have 0:04:27.400 --> 0:04:29.159 to be able to do everything the pilot does. So 0:04:29.240 --> 0:04:32.280 really CFO is co pilot, I think is is what 0:04:32.320 --> 0:04:34.279 this generation of CFOs really needs. 0:04:34.880 --> 0:04:38.360 I'm going to break a rule that I should not break, 0:04:38.400 --> 0:04:40.279 but I just can't help myself. Okay, now I'm still 0:04:40.279 --> 0:04:42.440 stuck on this idea that you know, your grandfather would 0:04:42.440 --> 0:04:44.920 call you early in your career and I just out 0:04:44.920 --> 0:04:49.040 of curiosity, is there any chemical that you worked on 0:04:49.440 --> 0:04:51.919 or anything you oversaw while you were at dow, Like, 0:04:52.000 --> 0:04:54.599 does this story comefort full circle that he would have 0:04:54.720 --> 0:04:57.360 used or that dry cleaners end up using in their process. 0:04:58.560 --> 0:05:02.520 Yeah. One one one is the perchlor ethylene. It's a 0:05:03.160 --> 0:05:06.560 product that now no longer makes and it's not really 0:05:06.560 --> 0:05:09.560 a product that drag cleaners use today for obviously for 0:05:09.680 --> 0:05:13.480 environmental reasons, but back thirty forty fifty years ago that 0:05:13.760 --> 0:05:17.440 was the molecule of choice for most drig cleaners. So 0:05:17.480 --> 0:05:20.200 he definitely used that at the time. That's a lot. 0:05:20.240 --> 0:05:21.159 That's a long time. 0:05:21.040 --> 0:05:23.279 Ago, tim, But you said they're no longer using it. 0:05:24.120 --> 0:05:24.880 Right, correct? 0:05:25.360 --> 0:05:25.600 Is that? 0:05:25.680 --> 0:05:26.320 How come? 0:05:28.440 --> 0:05:31.520 Just? I mean, in terms of environmental footprint, there's molecules 0:05:31.520 --> 0:05:34.240 that are safer today, that are better for the environment 0:05:34.360 --> 0:05:37.960 and better for the clothes well and safer well. 0:05:37.880 --> 0:05:39.240 Can we go there for a little bit, because we 0:05:39.240 --> 0:05:41.520 thought about this when we were kind of planning. You know, 0:05:42.000 --> 0:05:45.080 it feels like one of the next industries already or 0:05:45.279 --> 0:05:47.920 will be on many people's radar is plastics and really 0:05:47.960 --> 0:05:51.080 the chemical industry is rolling this, and you know the 0:05:51.080 --> 0:05:53.280 report that came out earlier this month. I think Columbia 0:05:53.320 --> 0:05:57.520 and Rutgers about the detectable plastic fragments and a typical 0:05:57.600 --> 0:05:59.840 leader of bottled water some two hundred and forty thousand, 0:06:00.000 --> 0:06:04.320 and we've been talking a lot about microplastics and nanoplastics 0:06:04.320 --> 0:06:07.200 and how they're so much more dangerous. You know. I 0:06:07.240 --> 0:06:09.680 think about the graduate the movie and there he is 0:06:09.720 --> 0:06:11.160 in the pool and they're like, what are you gonna 0:06:11.160 --> 0:06:14.040 do with your life? And they're like plastics? So how 0:06:14.120 --> 0:06:16.200 are you thinking about? Having spent so much time in 0:06:16.240 --> 0:06:20.360 that industry? But what's the constructive conversation to have as 0:06:20.440 --> 0:06:24.119 we maybe move forward to and probably should move forward 0:06:24.160 --> 0:06:27.720 to you a continually cleaner world that doesn't impact our 0:06:27.800 --> 0:06:28.720 environment so much. 0:06:30.040 --> 0:06:32.440 Yeah, And I certainly I'm not here speaking on behalf 0:06:32.440 --> 0:06:34.760 of Dow because I'm no longer with a company, But 0:06:34.880 --> 0:06:37.080 what I would say is I think where the industry 0:06:37.160 --> 0:06:39.640 is heading, and Dow is certainly right there front and 0:06:39.680 --> 0:06:44.880 center is decarbonizing the value chains and driving for circularity. 0:06:45.480 --> 0:06:50.440 Plastics actually is the most sustainable alternative. It's more sustainable 0:06:50.440 --> 0:06:53.240 when you look at it on a total carbon life 0:06:53.320 --> 0:07:00.599 cycle perspective, than paper, than metal, than glass or other 0:07:00.839 --> 0:07:04.080 packaging substrates. The challenge is a lot of it, most 0:07:04.120 --> 0:07:07.320 of it today, unfortunately, is not recycled and it goes 0:07:07.360 --> 0:07:12.400 into the landfill. And so by driving decarbonization, meaning reducing 0:07:12.640 --> 0:07:16.080 or eliminating the use of hydrocarbons to make plastics using 0:07:16.160 --> 0:07:21.880 other materials as raw materials, as feedstocks, then driving circularity 0:07:22.000 --> 0:07:25.240 so that those materials, once they're transformed into a plastic 0:07:25.320 --> 0:07:28.440 or a polymer or packaging use or durable good use, 0:07:28.800 --> 0:07:32.320 don't go into the land fill, but actually get reused 0:07:32.760 --> 0:07:37.920 and recycled. I mean that ultimately will really benefit the planet. 0:07:38.760 --> 0:07:41.120 But does it not get recycled because it's just not 0:07:41.160 --> 0:07:42.240 cost efficient to do so. 0:07:43.920 --> 0:07:50.160 Yeah, it's more cost efficient today unfortunately to use virgin 0:07:50.960 --> 0:07:54.360 hydrocarbon resients and virgin polymers. What you know, we were 0:07:54.400 --> 0:07:57.400 advocating and what I would still support, is some kind 0:07:57.440 --> 0:08:00.600 of a market based price on carbon. It's not something 0:08:00.600 --> 0:08:03.080 that currently have is happening in the United States today, 0:08:03.120 --> 0:08:06.960 it is happening in other in other countries around the world. Canada, 0:08:07.000 --> 0:08:09.360 our neighbor, for example, does have a market based price 0:08:09.360 --> 0:08:12.120 on carbon. And if you implement a market based price 0:08:12.120 --> 0:08:16.400 in carbon that will encourage and financially incentivize people to 0:08:16.440 --> 0:08:17.720 actually do that recycling. 0:08:18.240 --> 0:08:20.480 But what about the idea of these plastics actually getting 0:08:20.520 --> 0:08:25.760 into our bloodstreams through microplastics? Now, nanoplastics is the study 0:08:25.800 --> 0:08:27.520 that Carol was referring to that we talked about on 0:08:27.560 --> 0:08:28.320 our air a couple. 0:08:28.120 --> 0:08:28.640 Of weeks ago. 0:08:29.400 --> 0:08:32.679 That's something that's relatively new to me and that that 0:08:32.960 --> 0:08:33.880 we're just learning about. 0:08:34.000 --> 0:08:34.200 Now. 0:08:34.280 --> 0:08:35.240 How do you think about all that? 0:08:36.840 --> 0:08:39.800 Yeah, I think we need a lot more scientific study. 0:08:39.840 --> 0:08:41.720 I mean, that's really that we need to let the 0:08:41.800 --> 0:08:46.720 science drive the answer. Uh. And I mean I would 0:08:46.800 --> 0:08:49.079 say that's the that's the biggest thing that we can 0:08:49.160 --> 0:08:51.520 do as a society. 0:08:52.080 --> 0:08:54.079 Would you say there's not evidence for that at this point? 0:08:55.480 --> 0:08:55.560 No? 0:08:56.960 --> 0:08:57.839 Not significant. 0:08:57.960 --> 0:08:58.040 No. 0:08:58.360 --> 0:09:01.400 We're talking with Howard Underlider. He is former president chief 0:09:01.440 --> 0:09:04.760 financial officer at Dow and he's joining us on Zoom 0:09:05.160 --> 0:09:07.280 in New York City. One more thing. I want to 0:09:07.360 --> 0:09:09.199 kind of go back to what we ended on Howard, 0:09:09.240 --> 0:09:11.760 if I may. And I was just thinking about all 0:09:11.800 --> 0:09:14.240 those things and even really wonderful and just kind of 0:09:14.280 --> 0:09:17.160 going with us on it and talking about it. But 0:09:17.280 --> 0:09:19.480 I think there are a lot of industries out there, 0:09:19.520 --> 0:09:21.720 like I think about I spent a big check in 0:09:21.720 --> 0:09:25.320 my career, like watching what happened with cigarettes and the 0:09:25.360 --> 0:09:32.520 settlement pesticide, sugar, trans fats, lead, asbestos, mercury, red dye 0:09:32.600 --> 0:09:37.760 number five. Yeah, exactly. Although they that settlement, you know, 0:09:37.840 --> 0:09:40.240 no wrongdoing to be you know, just to be fair 0:09:40.480 --> 0:09:43.520 and transparent. There are so many things we learned years 0:09:43.520 --> 0:09:45.840 after we've been using them that they are bad for society, 0:09:45.840 --> 0:09:48.800 for individuals. So at the same time, so much that 0:09:48.880 --> 0:09:53.720 companies do that have improved our lives in immeasurable ways. 0:09:54.000 --> 0:09:57.319 How does the chemical industry, though, adapt to kind of 0:09:57.360 --> 0:10:00.440 an environment where we are looking to make or that 0:10:00.480 --> 0:10:04.600 we're not impacting individuals, not impacting the environment. You know, 0:10:04.640 --> 0:10:06.960 carbon credits are one thing, but we want to make 0:10:06.960 --> 0:10:09.240 sure that we're actually not creating harm in the first place. 0:10:10.640 --> 0:10:12.960 Sure, And I think, I mean, it's a great question, 0:10:13.080 --> 0:10:15.280 Carol and Tim and I would just say that I think, 0:10:15.400 --> 0:10:18.840 you know, spending thirty three years of my career at DOW, 0:10:19.280 --> 0:10:22.400 it was all about the science, right and every you know, 0:10:22.520 --> 0:10:28.000 and science, technology improves, analytics improve and the industry at 0:10:28.120 --> 0:10:32.160 least coming from a Dow perspective has improved over the 0:10:32.240 --> 0:10:36.160 last thirty years in a significant way. And you know, 0:10:36.240 --> 0:10:39.600 you try to use the best available data and analytics 0:10:40.240 --> 0:10:44.040 and tools and technologies to develop the right polymers. And 0:10:44.200 --> 0:10:47.720 there are many there are many chemicals that used to 0:10:47.720 --> 0:10:50.480 be used decades ago which are no longer used because 0:10:50.520 --> 0:10:55.240 we found much safer molecules in order to be able 0:10:55.280 --> 0:10:58.160 to deliver the products and the features and the benefits 0:10:58.160 --> 0:11:01.840 that we as consumers and co owners like. And I 0:11:01.840 --> 0:11:03.880 would just say that we've got to continue to do 0:11:03.920 --> 0:11:08.000 that as an industry and frankly as a society. 0:11:09.120 --> 0:11:11.720 Love that. Well, then let's go a little bit further 0:11:11.840 --> 0:11:15.040 in terms of what you do next. And I think 0:11:15.080 --> 0:11:17.120 I've read somewhere where you want to make an impact 0:11:17.200 --> 0:11:19.880 or continue to make an impact, and it could come 0:11:19.880 --> 0:11:22.400 in a couple different ways, whether it's CEO of a 0:11:22.440 --> 0:11:26.640 publicly held company or private equity. When you say impact, 0:11:26.880 --> 0:11:28.600 what do you want to do specifically, Howard? 0:11:30.120 --> 0:11:32.720 Yeah, So let me start with what I am doing. 0:11:32.880 --> 0:11:36.160 So I've signed up as an operating advisor for cdn 0:11:36.320 --> 0:11:39.040 R based here in New York. I'm also on the 0:11:39.040 --> 0:11:42.319 board of Kindrel, which was the IBM spin out of 0:11:42.360 --> 0:11:46.960 the managed infrastructure business a few years ago with Martin 0:11:47.000 --> 0:11:49.400 Schroeder and David and the team there at Kindrel, and 0:11:49.480 --> 0:11:52.679 I'm enjoying both of those roles phenomenally well. You know, 0:11:53.840 --> 0:11:58.320 creating long term value for all stakeholders is what I 0:11:58.320 --> 0:12:01.000 would say gets me very, very really excited. I mean, 0:12:01.240 --> 0:12:06.480 dealing with complex three dimensional problems and challenges and working 0:12:06.520 --> 0:12:10.000 to create long term value, not just for shareholders or 0:12:10.040 --> 0:12:12.680 the owners of a company, but really and what I 0:12:12.760 --> 0:12:16.080 learned in my thirty three year career is you have 0:12:16.200 --> 0:12:20.360 to invest and create value for all of the stakeholders. 0:12:20.360 --> 0:12:24.360 That's your customers, the communities in which you operate, and 0:12:24.440 --> 0:12:27.280 the citizens and the ultimate end consumers. Depending on where 0:12:27.280 --> 0:12:29.760 you are in the value chain, would you be focused. 0:12:29.480 --> 0:12:32.280 On would you consider going full time in house somewhere 0:12:32.320 --> 0:12:34.560 and as a CFO or CEO. 0:12:36.880 --> 0:12:39.080 Sure, I would. I mean, I'm having lots of interesting 0:12:39.120 --> 0:12:41.880 conversations as you don't imagine. I mean, I promised myself. 0:12:42.080 --> 0:12:43.720 A lot of the people that I've spoken with that 0:12:43.760 --> 0:12:48.439 I respect, they say you can say yes to every conversation, 0:12:48.840 --> 0:12:51.240 but don't say yes to anything full time for at 0:12:51.320 --> 0:12:53.640 least six months. Give yourself a little bit of grace, 0:12:54.080 --> 0:12:57.600 give yourself six months to really refresh and hit the 0:12:57.640 --> 0:12:59.640 reset button. So I mean, I'm doing just that. I'm 0:12:59.640 --> 0:13:02.240 having conversations, But I will tell you I really am 0:13:02.320 --> 0:13:05.720 enjoying the CD and R folks. I'm enjoying being on 0:13:05.760 --> 0:13:10.319 the board of Kindrel, and I'm really enjoying the conversations 0:13:10.320 --> 0:13:12.920 that I'm having a bone and beyond that as well. 0:13:13.080 --> 0:13:15.640 Hey, Carol and I were talking earlier in the day 0:13:15.720 --> 0:13:18.400 about Archer Daniels Midland. I don't know if you saw 0:13:18.400 --> 0:13:20.160 this news. I know you were traveling today, so forgive 0:13:20.160 --> 0:13:23.600 me if you haven't. But Archer Daniels Midland plunged twenty 0:13:23.640 --> 0:13:26.960 four percent, the most ever in a single day, after 0:13:27.000 --> 0:13:29.920 the company suspended its CFO and cut its earnings out loook, 0:13:29.960 --> 0:13:33.200 pending an investigation into its accounting practices. We should know. 0:13:33.679 --> 0:13:36.240 That's what we know so far. No wrongdoing has been 0:13:37.080 --> 0:13:39.800 there's no wrongdoing being accused of anyone at this point, 0:13:39.880 --> 0:13:42.920 but there is an investigation going on. Just as a 0:13:42.920 --> 0:13:45.720 CFO a former CFO. How do you read into something 0:13:45.760 --> 0:13:47.079 like that, like news like that. 0:13:48.960 --> 0:13:52.000 Yeah, Look, all I know is what I read on 0:13:52.040 --> 0:13:55.040 Bloomberg on my phone on the way from the airport. 0:13:55.080 --> 0:13:58.360 So I can't comment on that specific issue. What I 0:13:58.360 --> 0:14:01.199 would say though, in terms of being a publicly traded 0:14:01.240 --> 0:14:05.120 company or any company the United States, US gap accounting 0:14:06.000 --> 0:14:09.000 is the Bible. It's a combination of the Old Testament, 0:14:09.040 --> 0:14:11.839 the New Testament, to Kuran, pick your favorite, pick your 0:14:11.840 --> 0:14:15.840 favorite religion. You have to abide by US gap accounting. 0:14:16.400 --> 0:14:18.760 That is table stakes. Now, if all you do is 0:14:18.760 --> 0:14:21.120 focus on the gap accounting, then you're not likely in 0:14:21.160 --> 0:14:24.320 a great long term value for stakeholders. But you have 0:14:24.440 --> 0:14:28.960 to start with gap accounting. It all starts and stops 0:14:28.960 --> 0:14:30.680 at gap a county. You have to do that. So 0:14:31.120 --> 0:14:34.080 I would imagine, you know, we'll see what happens over 0:14:34.120 --> 0:14:36.320 the next over the next few weeks and months. Is 0:14:36.360 --> 0:14:37.400 that story unfold? 0:14:37.520 --> 0:14:39.040 This has been great because we've been covering so much 0:14:39.040 --> 0:14:41.480 as kind of going on in our news today and 0:14:41.560 --> 0:14:44.000 kind of some of the big narratives, if you will. 0:14:44.000 --> 0:14:46.120 Having said that, politics is a big narrative, and we 0:14:46.160 --> 0:14:52.760 know we've got the New Hampshire primary underway. Politics, how 0:14:52.760 --> 0:14:56.080 do you believe Global CEOs us CEO should be planning 0:14:56.160 --> 0:14:58.840 for the outcome here in the United States come November. 0:15:00.960 --> 0:15:04.920 Look, I think you know businesses have to have to 0:15:04.960 --> 0:15:08.920 go through many different political cycles. Right, If you're going 0:15:09.000 --> 0:15:11.560 to be successful over the long term, you know you're 0:15:11.560 --> 0:15:16.280 going to outlive an individual elected official if you're doing 0:15:16.480 --> 0:15:19.440 if you're doing the service for the industry. When I 0:15:19.440 --> 0:15:23.400 think about twenty twenty four, you know, certainly the economy. 0:15:23.560 --> 0:15:26.240 You know, what I heard Jenet Yellen talk about the 0:15:26.280 --> 0:15:28.600 other day was that, you know, declaring success and a 0:15:28.640 --> 0:15:32.840 soft landing. I hope she is right. I hope we 0:15:32.920 --> 0:15:36.560 are dealing with a soft landing. With that said, you know, 0:15:36.720 --> 0:15:40.360 we it's never been done yet. So what I would 0:15:40.440 --> 0:15:44.320 say to fellow CFOs out there or people who are 0:15:44.360 --> 0:15:48.480 running companies, is, you know, prepare for a choppy twenty 0:15:48.520 --> 0:15:51.120 twenty four. Prepare for a twenty twenty four that looked 0:15:51.160 --> 0:15:53.800 a lot like twenty twenty three. I think for the 0:15:53.840 --> 0:15:57.800 most part, certainly in the upstream parts of most value chains, 0:15:57.840 --> 0:16:01.400 de stocking is most likely over. It's an open question 0:16:01.760 --> 0:16:04.720 on whether that d stocking will come to an end 0:16:04.920 --> 0:16:08.600 or continue to extend in some of the downstream consumer 0:16:08.680 --> 0:16:13.000 oriented areas. But I think, you know, hoping for the best, 0:16:13.040 --> 0:16:16.080 but preparing for something less than the best is what 0:16:16.320 --> 0:16:18.800 you know. I always tried to do, and certainly what 0:16:19.480 --> 0:16:22.280 multiple crises, whether you go back to the financial crisis 0:16:22.320 --> 0:16:25.120 that we were talking about or the pandemic, you have 0:16:25.200 --> 0:16:28.600 to do scenario planning. You have to have a plan, Howard, 0:16:28.680 --> 0:16:29.800 a plan B and C. 0:16:30.160 --> 0:16:31.960 We have to run, do come back. It's one of 0:16:32.000 --> 0:16:35.800 our favorite kind of conversations, Howard Underlider. Thank you so much, Carol. 0:16:35.840 --> 0:16:37.440 I think I told you about this last week. 0:16:37.520 --> 0:16:37.840 Yeah. 0:16:37.840 --> 0:16:39.680 So some good friends over at our place a couple 0:16:39.760 --> 0:16:43.560 of weeks ago. They picked up the dad picked up 0:16:43.760 --> 0:16:46.920 the family's holiday card, showed his family on a fall 0:16:46.960 --> 0:16:50.600 day in Central Park, beautiful smiling leaves behind him. He said, 0:16:50.640 --> 0:16:52.720 you want to know a secret about this card? Yeah, said, yeah, 0:16:52.720 --> 0:16:54.080 of course I want to a secret. It's a holiday card. 0:16:54.080 --> 0:16:57.960 They're no secrets here, he said, Okay. He used photoshops 0:16:58.000 --> 0:17:00.600 AI feature to remove people from the photo and put 0:17:00.840 --> 0:17:03.160 freeze back in place, so it actually makes them look 0:17:03.200 --> 0:17:05.840 like they were alone in Central Park on a fall weekend. 0:17:06.240 --> 0:17:08.400 That's your friend's not an expert at this time, that's 0:17:08.440 --> 0:17:08.639 the thing. 0:17:08.720 --> 0:17:10.720 Yeah, he No, he's a doctor. He has no idea 0:17:10.720 --> 0:17:12.639 how like he's not trained in photoshop. Like it wouldn't 0:17:12.640 --> 0:17:13.760 be that impressive if somebody. 0:17:13.600 --> 0:17:15.880 But he trades a graphic artist on the side. 0:17:16.480 --> 0:17:18.240 He said he watched a YouTube video and then it 0:17:18.280 --> 0:17:19.879 was like he said, he called it. He was so 0:17:20.040 --> 0:17:22.040 easy to do. I thought it was kind of cool 0:17:22.040 --> 0:17:25.440 because like it's professional photo editing, but it's actually using 0:17:25.480 --> 0:17:27.439 generative AI. And all he had to do was like 0:17:28.119 --> 0:17:31.520 put the cursor over this one area and then trees appear. 0:17:31.640 --> 0:17:31.800 Well. 0:17:31.800 --> 0:17:34.200 Our next guest is nodding. She is in studio. We're 0:17:34.200 --> 0:17:36.439 delighted to have with us, Ashley Still. She's senior vice 0:17:36.440 --> 0:17:39.240 president of Creative Business at Adobe. As I said, here 0:17:39.760 --> 0:17:43.360 at Bloomberg headquarters in New York City, you're nodding because 0:17:43.600 --> 0:17:45.520 like anybody can do this. Now it seems like. 0:17:45.840 --> 0:17:50.000 Yes, that is my favorite holiday card story. Now, thank 0:17:50.040 --> 0:17:52.080 you so much for showing that. And it's great to 0:17:52.119 --> 0:17:56.240 be here. And that really just crystallizes the power of 0:17:56.320 --> 0:18:01.320 generative AI to make creativity more approachable or accessible to everybody. 0:18:01.680 --> 0:18:02.880 So I think the thing that I want to talk 0:18:02.920 --> 0:18:04.439 about with you, like we want to go a lot 0:18:04.480 --> 0:18:05.840 of places. We want to talk about the economy in 0:18:05.880 --> 0:18:08.040 what you're hearing from companies and sort of like the 0:18:08.080 --> 0:18:09.960 B to B side of things. But I want to 0:18:09.960 --> 0:18:12.439 talk about how you're leveraging AI in this different way 0:18:12.440 --> 0:18:13.959 because I think there's a lot of concern right now 0:18:14.000 --> 0:18:16.399 about generative AI and it being quote unquote safe and 0:18:16.480 --> 0:18:20.199 like copyright issues. We see New York Times filing lawsuits. 0:18:21.480 --> 0:18:23.159 What do you do at Adobe to make sure that 0:18:23.560 --> 0:18:26.520 what you are providing customers with they can then go 0:18:26.600 --> 0:18:28.560 put on their holiday card and they're not going to 0:18:28.560 --> 0:18:29.360 get in trouble for it. 0:18:29.480 --> 0:18:35.520 Absolutely, So obviously the creative community is incredibly important to us. 0:18:35.600 --> 0:18:38.200 You know, as you mentioned, your friend is a doctor, 0:18:38.720 --> 0:18:43.280 but many of our customers are artists and designers, but 0:18:43.400 --> 0:18:47.119 also businesses. And so we made a decision very early 0:18:47.560 --> 0:18:51.600 in all of our research and development around generative AI 0:18:52.119 --> 0:18:55.800 to actually build our own foundational models and use our 0:18:55.880 --> 0:18:59.800 own content that we have licensed to to train the models. 0:19:00.240 --> 0:19:03.879 And that really separates us from pretty much everybody else 0:19:04.000 --> 0:19:07.760 because our content is what we call creator friendly. It 0:19:07.840 --> 0:19:09.320 respects the intellectual property. 0:19:09.359 --> 0:19:12.639 If you're training with content that you guys have rights to, 0:19:12.800 --> 0:19:14.960 it's going to stay within that universe exactly. 0:19:15.240 --> 0:19:18.120 So we don't go scrape content from the public Internet. 0:19:18.520 --> 0:19:21.320 We only use and we have a service called Adobe 0:19:21.320 --> 0:19:25.359 Stock where photographers and creators all over the world have 0:19:25.480 --> 0:19:29.920 actually contributed their content and given us a license to that. 0:19:29.960 --> 0:19:34.600 They've been compensated for us to train to both resell 0:19:34.640 --> 0:19:38.760 that content but also train our AI models on that content. 0:19:39.040 --> 0:19:41.440 Take me through this decision here, because this is Adobe, 0:19:41.480 --> 0:19:43.399 this is not Adobe's first rodeo, whereas a lot of 0:19:43.400 --> 0:19:46.360 these startups it is their first rodeo. So when did 0:19:46.359 --> 0:19:50.360 this decision happen and how expensive has this decision been 0:19:50.359 --> 0:19:51.919 over the course of development. 0:19:52.320 --> 0:19:54.560 Well, I mean we first of all, we've been developing 0:19:54.600 --> 0:19:58.480 AI for a decade, so we're not new to needing 0:19:58.560 --> 0:20:02.680 to think through the data that you're using to train models. 0:20:02.760 --> 0:20:06.600 We've been uh you know, kind of building that uh 0:20:06.640 --> 0:20:09.919 that muscle for a decade. We also have been in 0:20:09.960 --> 0:20:13.760 the stock business for at least a decade. It's not 0:20:13.880 --> 0:20:17.800 for the stock photos business, and uh and so from 0:20:17.880 --> 0:20:21.480 early on we actually have had the rights to and 0:20:22.160 --> 0:20:25.840 we realized probably again probably like at least date or 0:20:25.840 --> 0:20:30.439 ten years ago, that we needed to expand the idea 0:20:30.520 --> 0:20:34.439 of stock content to be not just reselling again for 0:20:34.640 --> 0:20:37.840 licensed content, but to be using for training. So this 0:20:37.960 --> 0:20:38.880 is actually not new. 0:20:39.240 --> 0:20:41.600 So when you hear all the concerns and worries that 0:20:41.640 --> 0:20:43.760 are out there. Do you think that there is somewhat 0:20:43.800 --> 0:20:47.879 of an easy solution in terms of the worries about 0:20:48.000 --> 0:20:50.679 kind of what generative AI can do and where it 0:20:50.720 --> 0:20:51.120 can go. 0:20:51.640 --> 0:20:55.280 Well, in terms of copyright, I think they're choices, right, 0:20:55.520 --> 0:20:58.159 there's lots of lots of topics around generate event. I 0:20:58.200 --> 0:21:00.760 mean it's in terms of but in terms of copyright, 0:21:00.800 --> 0:21:04.120 I think it's about choices. There's models. So for example, 0:21:04.240 --> 0:21:09.840 if you want to create a Starbucks coffee cup using Firefly, 0:21:09.960 --> 0:21:13.959