WEBVTT - Banking Turmoil Weighs on Venture Capital 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.800 --> 0:00:24.720 We're looking at the impact of the bank collapses that 0:00:24.760 --> 0:00:27.520 we've seen this year on the startup world. For that, 0:00:27.520 --> 0:00:29.159 we want to bring in Jack Selby. He is the 0:00:29.160 --> 0:00:32.440 managing director over at Teal Capital. He joins us on 0:00:32.479 --> 0:00:36.479 the telephone from Phoenix, Arizona. Jack, great to get some 0:00:36.520 --> 0:00:39.080 of your time today. We've had a couple months to 0:00:39.120 --> 0:00:45.239 digest the the the collapses from Silvergate and SVB to 0:00:45.560 --> 0:00:50.800 Signature and First Republic. A lot of these banks obviously 0:00:51.159 --> 0:00:55.520 very tech focused, and a lot of startups and UH 0:00:55.720 --> 0:00:59.680 and VC's count counted on their funding. How is it 0:00:59.680 --> 0:01:02.440 playing out thus far, you know, two and a half 0:01:02.520 --> 0:01:03.000 months out. 0:01:04.760 --> 0:01:07.319 Yeah, Paul Matt, thanks again for having me. I appreciate it. 0:01:07.800 --> 0:01:09.959 You know, I think there's some there have been some 0:01:10.000 --> 0:01:15.000 really interesting takeaways, especially from the SVB collapse. So I think, 0:01:15.040 --> 0:01:18.400 on the one hand, to do the discredit, I would 0:01:18.400 --> 0:01:22.080 say of Silicon Valley and the tech world overall. It 0:01:22.200 --> 0:01:24.920 was pretty amazing after the fact for us all to 0:01:25.040 --> 0:01:30.200 learn that we had so much concentration risk with one institution. 0:01:30.680 --> 0:01:33.120 And so, you know, the analogy I would give you, like, 0:01:33.160 --> 0:01:37.120 imagine if every corn farmer in Iowa had money at 0:01:37.200 --> 0:01:38.959 you know, the first Bank of Des Moines and then 0:01:39.080 --> 0:01:41.399 you know, there was a dry season that obviously would 0:01:41.400 --> 0:01:44.880 be an exceptional crisis. And that's effectively what has happened, 0:01:45.319 --> 0:01:47.920 you know, with us in Silicon Valley having so much 0:01:47.920 --> 0:01:51.280 exposure to one to one bank and so, you know, 0:01:51.360 --> 0:01:55.040 shame on us from a fiduciary responsibility perspective, and I 0:01:55.080 --> 0:01:58.120 think it's a really eye opening outcome, and I think 0:01:58.160 --> 0:02:00.680 going forward, we will definitely pay a lot more attention, 0:02:01.720 --> 0:02:03.800 you know, to kind of the sleepy world of treasury 0:02:03.920 --> 0:02:06.920 and how we manage our cash, both within you know, 0:02:07.000 --> 0:02:11.040 our various funds and how our portfolio companies manage the 0:02:11.080 --> 0:02:12.560 cash as well. 0:02:12.680 --> 0:02:15.680 So Jack, we're trying to move on from that. I'm 0:02:15.720 --> 0:02:17.840 sure the VC community is trying to move on from that. 0:02:18.400 --> 0:02:20.840 In your world in Arizona, I know you've got a 0:02:20.840 --> 0:02:23.320 fund there that focuses on Arizona gives us give us 0:02:23.360 --> 0:02:25.920 kind of like the the pros and cons of the 0:02:26.000 --> 0:02:31.120 VC environment community in Arizona. 0:02:31.280 --> 0:02:33.960 Sure. So yeah, I started one hundred and fifteen million 0:02:34.000 --> 0:02:38.680 dollars fund AZBC here in Arizona that launched last August. 0:02:39.240 --> 0:02:41.240 And so you know, really what I'm trying to do 0:02:41.360 --> 0:02:44.120 is fill what I think is the biggest void in 0:02:44.160 --> 0:02:48.079 the local Arizona ecosystem. So, as an example, Phoenix is 0:02:48.120 --> 0:02:50.600 the fifth largest city in the United States. We have 0:02:50.639 --> 0:02:53.760 people moving here every single day. Americopa County, I believe, 0:02:53.800 --> 0:02:56.600 has been the largest growing or the fastest growing county 0:02:56.639 --> 0:02:59.280 in the United States for the last decade, and so 0:02:59.400 --> 0:03:02.200 we're growing by leaps and bounds. But at the same time, 0:03:02.280 --> 0:03:04.600 to give a balance, you know, this has not been 0:03:04.800 --> 0:03:08.880 historically a top tier capital market city. So as an example, 0:03:09.320 --> 0:03:11.160 you know, like when we were doing our PayPal Ipo 0:03:11.240 --> 0:03:13.760 roadshow many years ago, you know, you would never stop 0:03:13.800 --> 0:03:16.080 through Phoenix on that road show. You'd go through smaller 0:03:16.120 --> 0:03:20.680 cities like Minneapolis and Philadelphia and Boston certainly, but Phoenix, 0:03:20.720 --> 0:03:22.480 you know, for whatever it's worth, has just not been 0:03:22.960 --> 0:03:26.400 a top notch capital marketplace. And so having lived here 0:03:26.480 --> 0:03:28.839 since we sold PayPal, you know twenty plus years ago, 0:03:29.320 --> 0:03:31.480 I wanted to figure out a way to solve that void. 0:03:31.680 --> 0:03:35.280 And so I figured that after kind of studying the 0:03:35.280 --> 0:03:37.080 market here and trying to figure out the best way, 0:03:38.080 --> 0:03:40.520 you know, my end result was to do it myself. 0:03:40.560 --> 0:03:42.080 And so that's why we launched the fund. And I 0:03:42.080 --> 0:03:44.960 think there's a great opportunity here just because again this 0:03:45.040 --> 0:03:47.840 is a population center that again has not had the 0:03:47.920 --> 0:03:49.440 capital capital of the match. 0:03:49.800 --> 0:03:53.640 By the way, tell us about how you made that decision. 0:03:53.680 --> 0:03:56.320 I mean, you killed it as a member of the 0:03:56.320 --> 0:03:57.320 PayPal mafia. 0:03:57.400 --> 0:03:58.080 I hope you don't. 0:03:57.920 --> 0:04:00.400 Mind that term, but I love it. And then and 0:04:00.440 --> 0:04:03.120 then you pick Phoenix, which is an awesome place. I've 0:04:03.120 --> 0:04:04.040 been there a couple of times. 0:04:04.040 --> 0:04:04.200 Wait. 0:04:04.240 --> 0:04:06.960 Wait, it's one hundred degrees today. Tomorrow it's going to 0:04:06.960 --> 0:04:08.760 be one hundred degrees and it's gonna be one hundred 0:04:08.760 --> 0:04:11.760 degrees jack until I come from my annual holiday in 0:04:11.880 --> 0:04:15.320 mid November when it's a lovely eighty eighty five degrees. 0:04:15.360 --> 0:04:17.360 But it's still it's such a cool place. 0:04:17.440 --> 0:04:19.000 Have you been to Phoenix, Paul, all the time we 0:04:19.080 --> 0:04:22.799 go to I love it too, sir, I mean Scottsdale. 0:04:23.440 --> 0:04:25.960 You can get to Tempe Flagstaff, Like, what made you 0:04:26.000 --> 0:04:26.719 pick Phoenix. 0:04:27.880 --> 0:04:29.560 Well, first, of course, I have to say as a 0:04:29.560 --> 0:04:31.840 good Arizona and it's a dry gentleman. 0:04:32.279 --> 0:04:34.080 Yes, of course I knew that was go. 0:04:35.640 --> 0:04:38.359 That aside. You know, it was really a family reason 0:04:38.360 --> 0:04:41.960 for me. My dad was a mad Men era advertiser 0:04:42.000 --> 0:04:43.320 who worked for Jay Walter Thompson. 0:04:43.440 --> 0:04:43.880 Some stories. 0:04:43.960 --> 0:04:47.120 We moved, Yeah, we moved a ton during my childhood. 0:04:47.120 --> 0:04:49.200 We moved seven different times. And actually the summer time 0:04:49.720 --> 0:04:51.240 was in the middle of my senior year of high 0:04:51.240 --> 0:04:52.880 school and my dad came down to Phoenix to take 0:04:52.880 --> 0:04:54.960 a job, and so I stayed where I was, which 0:04:55.040 --> 0:04:57.520 was in suburb Detroit, to get through high school and 0:04:57.520 --> 0:04:59.960 get through graduation, I should say, but my dad moved 0:05:00.040 --> 0:05:02.240 out here. My younger brother, as sensibly, grew up here 0:05:02.320 --> 0:05:04.880 in Scottsdale, And so if you fast forward today, my 0:05:04.960 --> 0:05:07.280 dad lives five minutes away from me. My brother has 0:05:07.320 --> 0:05:08.800 a house here, and so it was just a really 0:05:08.800 --> 0:05:11.920 easy choice to come back and be New York family 0:05:12.000 --> 0:05:14.279 because I knew the place pretty well, and I you know, 0:05:14.279 --> 0:05:15.640 and I still have to go back and forth to 0:05:15.680 --> 0:05:18.400 California quite a bit, but proximity matters, and so I 0:05:18.400 --> 0:05:20.720 think that's one of the big things that Arizona is 0:05:20.720 --> 0:05:23.120 going to benefit from because you know California. You know, 0:05:23.160 --> 0:05:25.080 one of our favorite sports here in Arizona is to 0:05:25.120 --> 0:05:28.400 California Bash. So I won't get on that that topic 0:05:28.440 --> 0:05:30.599 too much, but I think the exodus out of California 0:05:30.640 --> 0:05:33.080 has a long way to go. And not everyone's moving 0:05:33.200 --> 0:05:36.280 to Austin, certainly, not everyone's moving to Miami. And if 0:05:36.279 --> 0:05:38.239 you can drive to Phoenix in five and a half hours, 0:05:38.279 --> 0:05:40.480 or if you can fly there on a forty five 0:05:40.480 --> 0:05:43.279 minute Southwest flight, proximity makes a big difference. And that's why, 0:05:43.800 --> 0:05:47.280 again another bullish reason, I think for our techncosystem, we've 0:05:47.320 --> 0:05:48.760 got a long way to run, all. 0:05:48.720 --> 0:05:51.159 Right, So tell us about some of the coolest businesses 0:05:51.200 --> 0:05:54.400 that you're into. You know what, what's coming out of 0:05:54.400 --> 0:05:57.960 Phoenix that's going to change the game for America. 0:05:58.080 --> 0:05:59.839 You know, it's a great question. And so I think, 0:06:00.360 --> 0:06:02.640 you know, as I look at the fund that we've 0:06:02.720 --> 0:06:05.800 raised here, we have, I think aid investments so far, 0:06:06.600 --> 0:06:08.719 there's really no rhyme or reason in terms of the 0:06:08.720 --> 0:06:11.680 different sectors that we've invested in to date. And I 0:06:11.720 --> 0:06:14.320 think it's just because the ecosystem here is so nascent, 0:06:14.680 --> 0:06:16.640 and if you ask me, the same question in five years, 0:06:16.680 --> 0:06:19.599 I could probably give you a much more sector specific answer, 0:06:19.680 --> 0:06:22.480 just based on where we've deployed capital. But frankly, I'm 0:06:22.520 --> 0:06:24.880 just looking for rockstar entrepreneurs and if I can wrap 0:06:24.880 --> 0:06:27.599 my head around what they're doing, then we'll take a look. 0:06:27.640 --> 0:06:30.279 And I think what Arizona will be good at is 0:06:30.279 --> 0:06:34.560 that where traditional industry is meeting technology for the first time. So, 0:06:34.640 --> 0:06:37.839 for example, you know, think about the biggest outcome that 0:06:37.839 --> 0:06:41.040 we've had here in terms of a publicly treaded technology company. 0:06:41.160 --> 0:06:43.960 So that company's Carbona, and so what is carbona? Carvana 0:06:44.040 --> 0:06:47.479 is a used car marketplace. That seems like a perfectly 0:06:48.040 --> 0:06:51.200 reasonable type of technology company to come out of Arizona. 0:06:51.360 --> 0:06:53.760 To put it conversely, do I think the next Open 0:06:53.800 --> 0:06:56.400 AI is going to come out of Phoenix? You know? Frankly, 0:06:56.440 --> 0:06:58.159 I don't. I think that's going to be the domain 0:06:58.360 --> 0:07:01.680 of the Stanford pal Alto Boston crowd. And I don't 0:07:01.680 --> 0:07:03.240 think there's anything wrong with that. But I think we 0:07:03.320 --> 0:07:06.000 just have to understand here in Arizona what we have 0:07:06.120 --> 0:07:08.479 a stripe then, and and where we may not. 0:07:10.320 --> 0:07:12.400 All right, Jack, great spending some time with you. I 0:07:12.400 --> 0:07:14.000 hope we can get you back on the show again. 0:07:14.280 --> 0:07:16.480 Maybe we'll take it on the road. Yeah, we'll head 0:07:16.480 --> 0:07:17.680 out there and get down there. 0:07:19.200 --> 0:07:19.640 Hold back. 0:07:19.880 --> 0:07:21.200 Yeah, it's nice out there. 0:07:21.280 --> 0:07:25.600 It's fantastic. Jack Selby, managing director at Teal Capital, talking 0:07:25.600 --> 0:07:28.400 to us also about ac VC, which is the one 0:07:28.480 --> 0:07:30.600 hundred and fifteen million dollar fun that kicked off last 0:07:30.600 --> 0:07:35.679 August in the heart there of Arizona, and looking forward 0:07:35.720 --> 0:07:38.520 to seeing what they can come up with because it 0:07:38.600 --> 0:07:41.840 is an incredible region of the United States and a 0:07:41.840 --> 0:07:43.880 great place to visit and probably to live as well, 0:07:43.920 --> 0:07:46.239 if you're down with the dry heat. 0:07:50.120 --> 0:07:53.960 This is Bloomberg Business Week with Carol Messer and Jim 0:07:54.000 --> 0:07:56.280 Stenebek on Bloomberg Radio. 0:07:57.960 --> 0:08:02.960 Every Way, all right, Jerry Smith is taking care of 0:08:03.040 --> 0:08:07.040 business as the CEO of ODP Corporation, that is the 0:08:07.080 --> 0:08:10.440 parent company of Office Depot, which is why I mentioned 0:08:10.480 --> 0:08:14.240 that as a brand here. As we're throwing around some names, 0:08:14.240 --> 0:08:16.840 Paul pulls out Converse. Why why did you say Converse? 0:08:17.000 --> 0:08:19.720 Chuck Taylor's the all time classic shoe. I just bought 0:08:19.760 --> 0:08:21.720 a new pair this weekend. That's the top of mind. 0:08:21.880 --> 0:08:24.680 That's cool. So you don't wear loafers all the time. 0:08:24.680 --> 0:08:26.720 No, I don't the case go a little casual. 0:08:26.840 --> 0:08:27.480 That's interesting. 0:08:27.520 --> 0:08:29.760 I love see Paul swinging on the weekend. Well, maybe 0:08:29.760 --> 0:08:32.080 you put on those Chuck Taylors to go pick up 0:08:32.840 --> 0:08:37.240 a shredder or paper cutter or a fax machine. 0:08:37.360 --> 0:08:40.000 And it's the toner that gets you though. I mean that, yes, 0:08:40.280 --> 0:08:42.360 the print, yes, ink for the printer. 0:08:42.440 --> 0:08:45.120 It's the Yeah, the printer ink. I'm always like, every 0:08:45.200 --> 0:08:49.120 few weeks I'm back at an office depot or a 0:08:49.160 --> 0:08:51.439 best Buy looking for that, because if you don't print 0:08:51.440 --> 0:08:53.360 every day, it runs out quick. Let's get to Jerry 0:08:53.360 --> 0:08:56.959 Smith right now on Zoom from Boca Ratona, Florida. Jerry, 0:08:57.000 --> 0:09:00.600 thanks so much for joining us talk to us about 0:09:00.640 --> 0:09:03.720 the transformation. I mean, obviously people aren't gonna be coming 0:09:03.760 --> 0:09:05.959 to office Depot for fax machines anymore. I don't know 0:09:06.000 --> 0:09:09.280 why I said that, but they are gonna need the 0:09:09.360 --> 0:09:14.000 printer inc What else are we looking for at office depot? 0:09:14.040 --> 0:09:16.079 And how does office depot look different now than it 0:09:16.120 --> 0:09:17.720 did when I went there, say, ten years ago. 0:09:18.760 --> 0:09:21.120 Yeah, thanks Paul Matt for having me for I've been 0:09:21.120 --> 0:09:23.679 here about six years and let me talk about the transformation. 0:09:23.880 --> 0:09:27.000 We have a strong B two C business. Our office 0:09:27.000 --> 0:09:28.480 depot brand that you know, it's about a four and 0:09:28.480 --> 0:09:31.960 a half billion dollar company. We're going into category expansions, 0:09:32.000 --> 0:09:36.040 whether it's you know, party supplies, dorms, tech, furniture, copy 0:09:36.040 --> 0:09:38.320 and print, so we have wide range of products. Again, 0:09:38.360 --> 0:09:40.079 that's about a four a half billion dollar business. We 0:09:40.160 --> 0:09:42.960 call it our first horizon, a start cash engine for 0:09:42.960 --> 0:09:45.640 the company. But we have a four billion dollar B 0:09:45.679 --> 0:09:48.439 to B business that's growing. Are we crushed our earnings? 0:09:48.480 --> 0:09:51.440 We we we met top line. We beat both a 0:09:51.840 --> 0:09:54.520 operating income e as well as earnings per share of 0:09:54.600 --> 0:09:57.760 by forty percent and really good free cash flow as well. 0:09:58.080 --> 0:09:59.560 We also have a supply chaining. 0:09:59.360 --> 0:10:01.960 Services businesiness as well as we're creating a new category 0:10:02.000 --> 0:10:05.000 called Verrus, which is a B to B procurement platform. 0:10:05.360 --> 0:10:08.720 The team that developed the twenty five thirty five billion 0:10:08.760 --> 0:10:13.120 dollar Amazon Amazon Business Platform. Now we're here ODP, we're 0:10:13.160 --> 0:10:15.920 running virus, and we're building a direct B to B 0:10:16.120 --> 0:10:18.920 procurement relationship that will be all indirects. Ben I love 0:10:18.960 --> 0:10:21.360 hearing you guys talk about all the different products you 0:10:21.360 --> 0:10:23.200 can buy to run the business. That's exactly help what 0:10:23.280 --> 0:10:26.760 Verrus is. We launched that platform in October, just early days, 0:10:26.760 --> 0:10:29.320 but we're wrapping that now. But we're really excited with 0:10:29.720 --> 0:10:33.119 the new office depot. We think, honestly think we're super undervalued. 0:10:33.679 --> 0:10:36.480 We're less than four times even from a multiple perspective, 0:10:36.480 --> 0:10:37.120 and I've got. 0:10:36.920 --> 0:10:39.120 A growing B to B half. 0:10:39.160 --> 0:10:41.320 Our business is B to B and growing both top 0:10:41.360 --> 0:10:43.400 line and bottom line. And we have these two non 0:10:43.480 --> 0:10:45.200 valued assets we think are going to be worth a 0:10:45.200 --> 0:10:46.480 ton of money in the future as well. 0:10:46.920 --> 0:10:50.040 Hey, Jerry, When I think of office depot and I think 0:10:50.080 --> 0:10:52.679 about the growth drivers of your business, I often think 0:10:52.679 --> 0:10:56.360 about new small business formation. I got have I got 0:10:56.360 --> 0:10:58.880 to get that right. Where are we now in the 0:10:58.920 --> 0:11:01.800 economy potentially one going to recession. How do you guys 0:11:01.800 --> 0:11:04.600 think about new small business kind of formation? 0:11:06.040 --> 0:11:06.240 Great? 0:11:06.280 --> 0:11:09.319 Great question, And we saw a lot of strength in 0:11:09.400 --> 0:11:11.720 Q one. I was listening to you guys as before 0:11:11.760 --> 0:11:14.600 we came on, and we saw strength and small business. 0:11:14.600 --> 0:11:15.320 We saw both on. 0:11:15.640 --> 0:11:18.400 Our B to B business ODP business solutions as well. 0:11:18.400 --> 0:11:20.240 If we have three segments on the retail site, we 0:11:20.280 --> 0:11:23.560 have home office, we have small business and education and 0:11:23.800 --> 0:11:25.440 small business across the board. 0:11:25.480 --> 0:11:27.800 I think it's behaving stronger than the consumer. 0:11:28.120 --> 0:11:30.360 A little bit of sto office and a consumer, not 0:11:30.480 --> 0:11:32.800 a lot, but we're seeing a lot more strength and 0:11:32.840 --> 0:11:35.520 small business. We actually saw small business come out of 0:11:35.559 --> 0:11:38.160 COVID faster than the other business, so we see a 0:11:38.200 --> 0:11:39.560 lot of We still see a ton. 0:11:39.440 --> 0:11:41.280 Of strength and small business and medium business. 0:11:41.360 --> 0:11:43.880 And so why we have these four different routes to 0:11:43.960 --> 0:11:46.520 market and we think it's a big available market, but 0:11:46.559 --> 0:11:48.320 we're still seeing strength. 0:11:48.679 --> 0:11:50.720 We are being cautiously optimistic. Of course. 0:11:50.760 --> 0:11:53.760 We have a net cash positive balance sheet. We've saved 0:11:53.800 --> 0:11:56.640 over five hundred million dollars of expense over the last 0:11:56.679 --> 0:11:59.160 six years. And I'm always talking about the low cost model, 0:11:59.360 --> 0:12:01.160 So we're not going to ahead of our skis. We're 0:12:01.160 --> 0:12:03.360 going to make sure we're conservative and again having a 0:12:03.360 --> 0:12:06.040 strong balance sheet compared to some of the other retailers 0:12:06.120 --> 0:12:08.400 you were talking about before. You know, we're in a 0:12:08.440 --> 0:12:11.880 really strong position. We're a true omni channel company and 0:12:11.920 --> 0:12:13.199 so we think we're positioned well. 0:12:13.280 --> 0:12:14.240 But small business is an. 0:12:14.200 --> 0:12:16.640 Area we're focused on really hard. We're excited with the 0:12:16.640 --> 0:12:17.320 potential there. 0:12:17.840 --> 0:12:22.160 Who are your big competitors. As Paul Sweeney knows, I 0:12:22.320 --> 0:12:24.239 like to pull up a comp screen on the Bloomberg 0:12:25.200 --> 0:12:28.560 just as a standard gives me a five year look 0:12:28.559 --> 0:12:30.960 at your stock performance, and if I put you up 0:12:31.000 --> 0:12:34.040 against Home Depot and bed Bath and Beyond, which are 0:12:34.040 --> 0:12:36.880 two companies, I would think of you crushed them. You know, 0:12:36.920 --> 0:12:39.800 you doubled over the past five years, whereas Home Depot's 0:12:39.840 --> 0:12:42.120 only up seventy two percent, bed Bath and Beyond is 0:12:42.120 --> 0:12:45.319 only up eight percent. Who else are you looking out for? 0:12:45.360 --> 0:12:47.599 I mean, should I be running you against an Amazon 0:12:47.679 --> 0:12:49.640 for example? Is that your biggest competitor? 0:12:50.559 --> 0:12:52.680 Well, I think we have a pencils which space of 0:12:52.679 --> 0:12:54.240 our go to market. So we have these four but 0:12:54.320 --> 0:12:57.760 different business units from a retail perspective. 0:12:57.240 --> 0:12:59.839 I think you're I think it's good analysis right there. 0:13:00.120 --> 0:13:03.520 Obviously, Staples is private on the as a company now, 0:13:03.520 --> 0:13:06.320 so hard for a compare on the B to B side. 0:13:07.080 --> 0:13:08.480 You know it's Staples, it's W. B. 0:13:08.600 --> 0:13:12.160 Mason, both private companies as well as a little bit 0:13:12.240 --> 0:13:14.680 if you look at some of the you know, Fastenals 0:13:14.760 --> 0:13:17.840 or the Grangers of the world. From an MRO space, 0:13:17.880 --> 0:13:21.160 they come down sometimes, but it's pretty open space from 0:13:21.240 --> 0:13:25.280 a competition side. And because the fact we have our 0:13:25.440 --> 0:13:28.439 very supply chain business unit, we have nine million square 0:13:28.480 --> 0:13:32.160 feet of distribution space, six hundred trucks, we're one of 0:13:32.160 --> 0:13:34.720 the few companies that delivers next day and ninety nine 0:13:34.760 --> 0:13:36.920 percent of the ZIP codes and not just to the 0:13:36.920 --> 0:13:39.720 back dock to the desktop, which is a really competitive advantage. 0:13:40.400 --> 0:13:42.800 Only US and the other guys up in Massachusetts really 0:13:42.800 --> 0:13:44.880 can go off and have that type of delivery. So 0:13:44.960 --> 0:13:47.840 for that Fortune's five hundred account, that's our only competitor. 0:13:48.120 --> 0:13:51.679 And then from a supply chain services space, we're ramping. 0:13:51.440 --> 0:13:53.040 That business up. We have all that asset. 0:13:53.080 --> 0:13:55.679 Obviously it's traditional three pls and I want to call 0:13:55.679 --> 0:13:57.679 out Varus and we'll come back in the future as 0:13:57.720 --> 0:14:00.439 Varus wramps up more of it. This is a category recreation. 0:14:00.559 --> 0:14:03.920 No one's enter into space. We think it's a huge space. 0:14:04.000 --> 0:14:06.640 That team came over because they saw the opportunity and 0:14:06.679 --> 0:14:08.640 we think it's about a four hundred billion dollar space 0:14:08.720 --> 0:14:11.599 of indirect spend B to B across the US. And 0:14:11.720 --> 0:14:15.240 so that from a competitor space, we're really excited year two, 0:14:15.320 --> 0:14:17.560 year three, or four, that's going to be a huge 0:14:17.600 --> 0:14:18.840 value opportunity for the company. 0:14:19.600 --> 0:14:21.840 Hey, Jerry, Matt and I are probably outliers here. 0:14:21.920 --> 0:14:24.320 We come into the office every day of the week. 0:14:24.400 --> 0:14:25.480 That's just how we roll. 0:14:25.840 --> 0:14:27.280 Plus we were told to do that. We don't have 0:14:27.360 --> 0:14:30.440 a choice, but most people are kind of really embracing 0:14:30.520 --> 0:14:32.960 this hybrid thing, you know, three four days or whatever 0:14:33.080 --> 0:14:36.320 it is, home office, home office. So how did that 0:14:36.720 --> 0:14:39.040 impact your business over the last three to four years 0:14:39.080 --> 0:14:41.760 and kind of how about going forward? 0:14:42.680 --> 0:14:43.360 Yeah, great question. 0:14:43.600 --> 0:14:46.000 Obviously during COVID when everything we were shut down, yea, 0:14:46.240 --> 0:14:49.080 we you know, a bit of everyone had the dip, 0:14:49.520 --> 0:14:53.280 and we obviously focus on costswell, but hybrid's awesome for us. 0:14:53.400 --> 0:14:56.000 And so we're back to our on our traditional B 0:14:56.120 --> 0:14:59.520 to B business almost our twenty nineteen pre COVID levels 0:14:59.680 --> 0:15:01.080 before and that's that. 0:15:01.360 --> 0:15:02.760 You know, we get a lot of data. 0:15:02.800 --> 0:15:05.880 We're looking at badge swipes, so that's all about fifty 0:15:05.920 --> 0:15:06.840 to fifty five percent. 0:15:07.240 --> 0:15:08.520 But we do believe hybrid. 0:15:08.920 --> 0:15:10.800 I don't think people buy office supplies when they have 0:15:10.840 --> 0:15:11.840 a hybrid business anymore. 0:15:11.880 --> 0:15:13.560 I think they come in they're using the office supplies 0:15:13.560 --> 0:15:16.120 in the office and we love that. So obviously that 0:15:16.280 --> 0:15:18.480 helps our B to B business on the sea side. 0:15:18.520 --> 0:15:21.080 Obviously COVID was really good for that, and so as 0:15:21.320 --> 0:15:23.560 that's why we're focused on home office as well as 0:15:23.600 --> 0:15:27.840 small business on our B to C side. Varius is 0:15:27.880 --> 0:15:32.120 online and that obviously is very i'll say inflection proof 0:15:32.160 --> 0:15:33.880 in the future as we go through that. And so 0:15:33.960 --> 0:15:36.560 again having that supply chain business, they can deliver the 0:15:36.600 --> 0:15:38.280 next day, they can deliver to a store, they can 0:15:38.320 --> 0:15:41.160 deliver to it the consumer, they delivered to a small business. 0:15:41.200 --> 0:15:43.240 But we're really optimistic right now. 0:15:43.320 --> 0:15:46.520 Obviously with the return for office as a tailwind, you 0:15:46.600 --> 0:15:49.680 see more and more people going from every day I 0:15:49.760 --> 0:15:52.760 see in another company announcing I saw Delta day announcing 0:15:52.800 --> 0:15:53.320 they're going to go. 0:15:53.360 --> 0:15:55.960 Back to more of a hybrid, and so hybrid is 0:15:56.040 --> 0:15:56.640 really really. 0:15:56.520 --> 0:15:59.560 Good for our business and a tailwind, and we've adapted 0:15:59.600 --> 0:16:02.680 our business to have that flexibility. For example, our retail 0:16:02.720 --> 0:16:05.000 stores is the only one in the country that has 0:16:05.040 --> 0:16:07.640 a twenty minute guarantee when you order online to pick 0:16:07.720 --> 0:16:09.720 up in stores that we'll give you twenty dollars and 0:16:09.800 --> 0:16:11.600 so we will put a lot of work and effort 0:16:11.640 --> 0:16:14.280 by that, and we think that's a huge differentiator. People 0:16:14.320 --> 0:16:15.440 do want to go and they need something I to 0:16:15.960 --> 0:16:17.840 our store team will do a great job and we 0:16:17.960 --> 0:16:20.560 run the seventy seven Net Promoter Score, which is world 0:16:20.600 --> 0:16:21.200 class from. 0:16:21.120 --> 0:16:23.040 A customers experience perspective as well. 0:16:23.280 --> 0:16:26.320 So we're happy with the tailwinds. Obviously, if everyone returns 0:16:26.360 --> 0:16:28.400 the office, it gets even better. But we think we're 0:16:28.440 --> 0:16:30.680 in a really position well across all our routes to market. 0:16:31.080 --> 0:16:33.800 Jerry, fascinating stuff. Great to have you on the program. 0:16:34.240 --> 0:16:36.200 Thanks so much for joining us. Jerry Smith there the 0:16:36.280 --> 0:16:39.840 chief executive officer of ODP Corp. It's the parent company 0:16:39.880 --> 0:16:41.880 of Office Depot And you know, I wouldn't have known 0:16:41.920 --> 0:16:43.760 that they doubled the stock over the past five years 0:16:43.800 --> 0:16:46.600 had I not no, I know, looked up the company there. 0:16:46.960 --> 0:16:49.240 I also wouldn't have known about Varis because it's a 0:16:49.440 --> 0:16:52.640 B to B digital platform. It's not something that the 0:16:52.720 --> 0:16:56.040 public kind of sees and of course analysts will know 0:16:56.160 --> 0:16:58.200 about it. But this is why we do these kind 0:16:58.200 --> 0:16:58.720 of interviews. 0:16:59.840 --> 0:16:59.920 An. 0:17:00.120 --> 0:17:05.920 It's an exciting product obviously for Jerry, and they've got, 0:17:06.280 --> 0:17:09.680 you know, big competition in Ali Baba and Amazon, but 0:17:09.760 --> 0:17:13.160 they have it looks like the brain power, the people 0:17:13.240 --> 0:17:14.520 power to really move that market. 0:17:14.760 --> 0:17:16.720 Yeah, we have these company CEOs on I tend to 0:17:16.840 --> 0:17:20.000 cheat a little bit. I'll message the bi an also 0:17:20.160 --> 0:17:22.080 say hey, you got a couple of smart questions. You 0:17:22.160 --> 0:17:26.040 knew smart virus. I knew so Jen bartashes Bloomberg Intelligence. 0:17:26.080 --> 0:17:30.200 He's got all the research on ODP is the ticker 0:17:30.280 --> 0:17:32.080 to put in there, so interesting stuff. 0:17:32.119 --> 0:17:32.959 We're down with ODP. 0:17:33.440 --> 0:17:35.800 Sure, yeah, you know me exactly. 0:17:37.000 --> 0:17:40.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:17:40.640 --> 0:17:44.600 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:17:44.840 --> 0:17:48.080 the Bloomberg Business app, and YouTube. You can also listen 0:17:48.200 --> 0:17:51.280 live on Amazon Alexa from our flagship New York station. 0:17:51.760 --> 0:17:54.520 Just say Alexa play Bloomberg eleven thirty. 0:17:56.680 --> 0:18:00.520 Now we can get to Joel and full I've been 0:18:00.640 --> 0:18:03.600 looking forward to this all day. Slash angry about it 0:18:03.720 --> 0:18:07.320 since I read the story, and you know, I moved back. 0:18:07.440 --> 0:18:09.920 A little personal note before we get into it. I 0:18:10.000 --> 0:18:12.440 moved back here from Berlin a couple of years ago, 0:18:12.560 --> 0:18:17.560 not expecting childcare to be such an incredibly expensive and 0:18:17.800 --> 0:18:23.360 frustrating proposition because in Germany. In Germany, you know, it's 0:18:23.560 --> 0:18:28.320 free and it's wonderful from the age of one. That's 0:18:28.359 --> 0:18:31.959 when you get into Kita and they have like clowns 0:18:32.160 --> 0:18:35.960 and bio organic food and field trips and it's amazing. 0:18:36.080 --> 0:18:39.640