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Speaker 2: This is Bloomberg Business Week Daily reporting from the magazine
Speaker 2: that helps global leaders stay ahead with insight on the people, companies,
Speaker 2: and trends shaping today's complex economy. Plus global business finance
Speaker 2: and tech news as it happens. The Bloomberg Business Week
Speaker 2: Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3: Hi everyone, welcome to the Bloomberg Business Wee Weekend Podcast. Yes,
Speaker 3: it was a big, big week with the FED cutting
Speaker 3: rates as expected, but surprising markets as Fedhair J. Powell
Speaker 3: said another cut in December not a given. Also, earnings
Speaker 3: from five of the mags seven Alphabet, Amazon, Apple, Meta
Speaker 3: and Microsoft.
Speaker 4: It was a lot, Tim, it was a lot. And
Speaker 4: so this hour what you need to know from the
Speaker 4: earnings of those megacap tech companies and on the massive
Speaker 4: AI build out and spend because that came Beryl is
Speaker 4: what moved to some of these stocks.
Speaker 3: Totally, totally. That was the big headlines. Also, we always
Speaker 3: love to get a read on how consumers are feeling
Speaker 3: and spending their money. We got a view from the
Speaker 3: chief financial officer at Wayfair, Kate Gulliver. She gave us
Speaker 3: a post check on a certain segment of the consumer.
Speaker 3: Are we talking about women who buy pillows?
Speaker 4: Well, more than just that, I mean people have the
Speaker 4: money to spend. Maybe some people who are actually moving
Speaker 4: right now, that's true, you know, trading in for bigger
Speaker 4: and better stuff, growing families. I don't know.
Speaker 3: And women who buy pillows.
Speaker 4: Okay, well you're speaking for yourself. You mentioned the pillows.
Speaker 4: It comes up. That's just a little tease for our
Speaker 4: chat with Kate. It actually does look like the US
Speaker 4: has a sovereign wealth fund. Now we're going to explain
Speaker 4: a little later.
Speaker 3: Have you checked who is the third biggest shareholder in
Speaker 3: Intel lately?
Speaker 4: It's interesting, Carol, because we also have a lot of debt. Yeah,
Speaker 4: and typically countries that don't have a lot of debt
Speaker 4: don't have a sovereign wealth fund.
Speaker 3: So many questions. We're going to try and answer some
Speaker 3: of them and what's going on. Plus in our second hour,
Speaker 3: over fifty five thousand runners will be participating in the
Speaker 3: New York City Marathon this weekend, including can I.
Speaker 4: Say, yeah, you can say it. You're not going to
Speaker 4: find her someone you know, someone I know? Really well,
Speaker 4: I'm not saying her name. She would not be happy
Speaker 4: about that. But our wife is running.
Speaker 3: That's why I don't say her name either.
Speaker 4: She is running the New York City Marathon.
Speaker 3: All right, Well, we're going to be talking with the
Speaker 3: CEO of the New York road Runners Club, so looking
Speaker 3: forward to that. First up, though, we start with this
Speaker 3: past week's earnings from the companies whose stocks influence US
Speaker 3: market moves more than any others. And as we said,
Speaker 3: it was a huge week for big tech earnings, Microsoft,
Speaker 3: Alphabet and Meta and many more. Couple more in fact,
Speaker 3: all showing that the AI spend is on. With a
Speaker 3: look at some of the MAGS seven reporting this week,
Speaker 3: we talked with Mark Mahaney. He's senior managing director and
Speaker 3: head of Internet Research at Evercore ISI. He's also author
Speaker 3: of Nothing but Net ten Timeless stock picking lessons from
Speaker 3: one of Wall Street's top tech analysts.
Speaker 4: Mark, I think we want to begin with Meta Platforms.
Speaker 4: Is the stock down as a result of what it's
Speaker 4: said about KAPEC next year?
Speaker 5: Yeah, that's the cappex and the total expense guidance that
Speaker 5: they for next year was more aggressive than the market
Speaker 5: wanted this company. Zuckerberg was very clear about it. He
Speaker 5: wants to be the AI leader. He's going all in
Speaker 5: on superintelligence, and investors are a little cautious and nervous
Speaker 5: about that.
Speaker 4: Why aren't they buying it?
Speaker 6: Well maybe for two or three reasons.
Speaker 5: Tim, You know you're here asking asking a really good question,
Speaker 5: which is why aren't they buying it? Well, maybe we
Speaker 5: don't really know what it is, so you know, all
Speaker 5: of us are sort of scratching our heads because I
Speaker 5: guess we're not super intelligent. I'm not trying to figure
Speaker 5: out exactly what's what's going to come out of that,
Speaker 5: Like what's what's the product going to be, what's the
Speaker 5: offering going to be, and how you're going to monetize it.
Speaker 5: That's one reason we just really don't know what super
Speaker 5: intelligence is quite yet. Second is it's very competitive. So
Speaker 5: Google's chasing it, open Aye is chasing it, and Metta isn't.
Speaker 5: There probably other companies too. I should assume Apple and
Speaker 5: Microsoft are too. And I think the market's just a
Speaker 5: little skeptical. It is skeptical that that Meta is going
Speaker 5: to be able to do this sufficiently effectively generate a
Speaker 5: good financial return. So that's why it's really those two
Speaker 5: reasons we don't know what that end market is, and
Speaker 5: we don't we don't. The market maybe is a little
Speaker 5: nervous about metas odds against that against that unknown end market.
Speaker 3: You know what's interesting too, and I've been thinking about
Speaker 3: this mark is and by the way, we're creating a
Speaker 3: super intelligence club right here at Bloomberg. So we would
Speaker 3: love for you to join in the next club meeting. Hey,
Speaker 3: you know, is part of it that, you know, the
Speaker 3: spend for Meta. It's not like they're one of the hypers,
Speaker 3: you know, they're not Microsoft or alphabet who can kind
Speaker 3: of offload some of the spending on other companies. Is
Speaker 3: that part of it?
Speaker 6: Yeah, I think that's right.
Speaker 5: I think I think you're right in saying that that
Speaker 5: Amazon sells super intelligence or can sell AI services to
Speaker 5: other companies. Microsoft does through Azure, they have cloud services,
Speaker 5: and so does Google.
Speaker 6: And there's not kind of.
Speaker 5: That obvious external you know, commercial enterprise offering. Meta doesn't
Speaker 5: have that, So the return is going to have to
Speaker 5: be on Meta itself. And so that maybe at the
Speaker 5: some level that maybe that's the third reason why the
Speaker 5: market's a little skeptical, and.
Speaker 3: So skepticism smart as we should be in any environment,
Speaker 3: especially when there's a big spend out there, you still
Speaker 3: have an outperform on Meta. So time give it a
Speaker 3: little time, right to kind of watch and see how
Speaker 3: this plays out.
Speaker 5: Yeah, I'm going to take up the opposite side of this.
Speaker 5: So this is what I've learned following Meta for a
Speaker 5: long time. But just in the last couple of years,
Speaker 5: this company aggressively invested in AI and they used it
Speaker 5: to dramatically improve their core products Instagram, WhatsApp, Facebook, And
Speaker 5: what's the evidence, Well, consumer engagement has increased materially over
Speaker 5: the last couple of years, and advertiser returns have increased
Speaker 5: materially over the last couple of years.
Speaker 6: What's the evidence of that?
Speaker 5: Meta has probably got the strongest advertising revenue growth, you know,
Speaker 5: twenty five twenty six percent at scale at two hundred billion,
Speaker 5: you know, revenue run rate. That's better growth than anybody
Speaker 5: else has in the direct competitor has in the sector.
Speaker 5: Maybe I'll be surprised by one name in there, but
Speaker 5: I doubt it. So to me, I step back and
Speaker 5: I think, well, they've actually shown a great ability to
Speaker 5: deploy AI to improve their core products. I'm going to
Speaker 5: give the benefit of the doubt that they could probably
Speaker 5: deploy AI to create new products. And you know, they
Speaker 5: just start off with so much I call them the
Speaker 5: three c's, compute, capital, and cranium, that you know that
Speaker 5: there's probably going to be more than just one winner
Speaker 5: in superintelligence, and I think metas a decent shots of
Speaker 5: winning it. And by the way, I don't have to bet.
Speaker 5: I don't have to spend too much on this. The
Speaker 5: stock trades it close to a market multiple. And this
Speaker 5: is so different Carol Vins. Three years ago when Metacore
Speaker 5: business was under attack existential risk coming from TikTok, and
Speaker 5: they were throwing money at this thing called the metaverse.
Speaker 5: This is three years later and there's no existential risk
Speaker 5: to Core Meta And in the meantime, they're throwing money
Speaker 5: into something or investing aggressively into something that some of
Speaker 5: the sharpest other technology companies are. There's probably there there
Speaker 5: If Amazon, if Google, if open Ai, Microsoft and Meta
Speaker 5: are all betting on or investing in superintelligence.
Speaker 3: I do think think about Metal Lot. You know, when
Speaker 3: they came out of their IPO and reception not necessarily
Speaker 3: so good, and the pivot in terms of was it mobile,
Speaker 3: that they needed to think about more and then the
Speaker 3: met and then you know, they moved quickly and then
Speaker 3: metaverse all in and then maybe that wasn't right, and
Speaker 3: they pivoted again, like there is something to be said
Speaker 3: that this company does. Look, you know, tim kind of
Speaker 3: what's going on and then making the necessary adjustment quickly.
Speaker 4: Well on that, Mark Mahaney, the idea of the cranium
Speaker 4: part of this, and maybe this is not what you're
Speaker 4: referring to when you said cranium, but we got to
Speaker 4: talk about face computers, this idea of the ray band,
Speaker 4: metagen two glasses, the success, the runaway success. I was
Speaker 4: surprised to see how successful, or I've been surprised to
Speaker 4: see how successful Meta has been when it comes to wearables.
Speaker 4: Ro and Mark German loves these things when he tried
Speaker 4: them a few months ago. And the user interface is
Speaker 4: the next You've covered a lot of cycles. Is the
Speaker 4: next platform for computing wearable glasses?
Speaker 6: I don't know. I guess I'm skeptical that it is.
Speaker 6: It's possible.
Speaker 5: I don't know why I doubt there's one solution out there.
Speaker 5: I think wearable glasses can be one solution. It's probably
Speaker 5: more than a niche, but I don't know that it's
Speaker 5: mass market, so I don't know what the something in
Speaker 5: the middle there. I guess I'm a little skeptical, but
Speaker 5: you know, they've certainly this is a heck of a
Speaker 5: lot of this product is a heck of a lot
Speaker 5: better than what I wasted money on with Google Glasses
Speaker 5: years ago.
Speaker 6: But all the stuff feeds on and builds on itself.
Speaker 4: Well, I'm just having trouble then understanding where superintelligence comes
Speaker 4: into this. And like you said, we haven't seen this before.
Speaker 4: But if that's what the big bet is and that's
Speaker 4: what all these companies are working on, how does that
Speaker 4: manifest in a product? Is it that Instagram just becomes
Speaker 4: that much better at knowing us and that our targeted
Speaker 4: advertising is that much better? Is that it?
Speaker 6: I hope they's do it in that.
Speaker 5: I think the vision that's been that Zuckerberger's talked about
Speaker 5: just as much as anybody else Sam Altman's talked about
Speaker 5: it is a personal digital assistant, so an AI system
Speaker 5: that would not only find information, do research for you,
Speaker 5: help you figure out how to buy a new car,
Speaker 5: what are the best running shoes for you, but also
Speaker 5: help you tasks like maybe buy that car or buy
Speaker 5: those shoes for you at the best price and get them,
Speaker 5: you know, with the fastest speed, and perform tasks for you,
Speaker 5: like help you book that family vacation, not in the
Speaker 5: average three and a half hours that most families take,
Speaker 5: but in the you know, thirty minutes or twenty minutes
Speaker 5: or fifteen minutes, and do all these tasks, you know,
Speaker 5: kind of do them for you and you can come
Speaker 5: back and have them done. So I think that's how
Speaker 5: to think about it, you know, I'm hoping that all
Speaker 5: that comes together.
Speaker 6: Look, I try, I spend a lot of time with Gemini.
Speaker 5: I've spent a lot of time with you know, chat
Speaker 5: ept and and you know, I've run it through its
Speaker 5: paces and doing projects and tasks like that. They're not
Speaker 5: they're not there yet, but I see the potential and
Speaker 5: I see the ongoing improvement. So I think that's what
Speaker 5: we're waiting for, These personal AI assistants that are going
Speaker 5: to be able to research, find information and perform tasks
Speaker 5: for us and going to do it seamlessly and quickly.
Speaker 5: And you know, that's what we're all sort of hoping for.
Speaker 3: That's Mark Mahaney, Senior Managing Director and head of Internet
Speaker 3: Research at Evercore ISO.
Speaker 4: On Thursday, both Apple and Amazon reported results. More on
Speaker 4: that ahead, We started with a look at the numbers
Speaker 4: from the world's largest online retailer with Bloomberg Intelligence senior
Speaker 4: analysts for e commerce and ath Leisure Punum Goyle.
Speaker 7: Sales were very get across the board, across all business segments, AWS,
Speaker 7: online advertising, even physical stores. So from a top line perspective,
Speaker 7: very very encouraging results. In fact, AWS was probably the
Speaker 7: bright spot here twenty percent gains. We haven't seen that
Speaker 7: in a while. On the margin side, I think AWS
Speaker 7: did really well, but then when it came to North
Speaker 7: America margins, they were weaker than we expected. So it's
Speaker 7: the only one area that I saw some skepticism, and
Speaker 7: I think that's largely due to their ability to want
Speaker 7: to maintain low prices to make sure the consumer keeps
Speaker 7: coming back and investing in its fulfillment.
Speaker 4: So you think that margins took a hit because Amazon
Speaker 4: is keeping prices low.
Speaker 7: Why, I mean, they want to drive market share gains. Right, So,
Speaker 7: if you think about what's happening in retail this year,
Speaker 7: tariffs have clearly added to costs and many retailers have
Speaker 7: decided to offset those costs through efficiencies to try to
Speaker 7: keep an hold prices steady or raise them selectively, so
Speaker 7: that could be part of the pressure. And then also,
Speaker 7: you know, Amazon has stepped up its game on shipping
Speaker 7: where it was the leader and it still is the leader,
Speaker 7: but they're continuing to invest there to get items to faster,
Speaker 7: same day, etc.
Speaker 3: So what else can you give us in terms of
Speaker 3: color on the retail side of the business, which is
Speaker 3: something that so many of us right identify very clearly
Speaker 3: with when it comes to Amazon.
Speaker 7: Yeah, I think, look, they're making all the right investments
Speaker 7: to improve profitability. In the longer term, Amazon's retail businesses
Speaker 7: finally break even too profitable. It took a long time
Speaker 7: to get here, and I think automation will be the
Speaker 7: next leg of growth to drive that further. But as
Speaker 7: I've mentioned you know earlier, AWS is driving their EBIT margins,
Speaker 7: so AWS some compensate these investments to a certain extent,
Speaker 7: and so can advertising because the margins here are just
Speaker 7: so much higher than they'll ever be able to get
Speaker 7: in the retail business.
Speaker 4: How is how is the advertising business during PUNAM It's
Speaker 4: doing really well.
Speaker 7: Like Brow twenty two, percent in constant currency in the quarter,
Speaker 7: so right where we expected. And I think, you know,
Speaker 7: that's a high profit business. It's about seventy five to
Speaker 7: eighty percent profit margins by our estimates, and that's flowing
Speaker 7: right to the bottom line. We see it going to
Speaker 7: one hundred billion dollars. So there's a lot of improvement
Speaker 7: that they can build in advertising and really drive that
Speaker 7: business higher.
Speaker 4: From here, where's that coming from? Is that coming from
Speaker 4: interstitials placed in Amazon Prime Video which cut a lot
Speaker 4: of people off guard when they started doing that. Was
Speaker 4: it last year maybe? Or yeah? Or is it or
Speaker 4: is it coming from like products that are paid for placement.
Speaker 7: I think it's a combination of both. You're absolutely right,
Speaker 7: these ads are driving incremental revenue, but if you think
Speaker 7: about the base of this revenue base, it's still coming
Speaker 7: from product advertisements. The ads do help, and they will
Speaker 7: become a larger drive as the ad business grows in size,
Speaker 7: but the core of it is still product advertising.
Speaker 4: That's Bloomberg Intelligence Senior analyst for e Commerce and ath
Speaker 4: Leisure Punham Goyle.
Speaker 3: Still ahead on Bloomberg BusinessWeek. The Trump White House continues
Speaker 3: its investment push. This time they're going nuclear.
Speaker 4: This is Bloomberg.
Speaker 2: This is Bloomberg Business Week Daily with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 3: The Trump administration is taking the same investment strategy it
Speaker 3: has applied to mining, steel and semiconductor companies to a
Speaker 3: new area, domestic nuclear reactors.
Speaker 4: The US will be the initial buyer for multiple reactors
Speaker 4: from Westinghouse. That's according to Simon Maine, a spokesman for
Speaker 4: Brookfield Asset Management. It's one of the manufacturer's owners now.
Speaker 3: Tim THATTT News comes just shortly after reporting that the
Speaker 3: White House is in early stage conversations with quantum computing
Speaker 3: companies to discuss potential financial support for an industry that's
Speaker 3: part of the growing race with China for technology supremacy.
Speaker 3: And after taking steaks, as you know, in a lot
Speaker 3: of other companies, we're talking about Intel, MP Materials, Trilogy Metals,
Speaker 3: and Lithium Americas.
Speaker 4: To help us make sense of what some say is
Speaker 4: a push to create a sovereign wealth fund, we caught
Speaker 4: up with a Bloomberg News economic stakecraft reporter Joe Doe
Speaker 4: and Bloomberg News Senior White House correspondent Josh Wingrove.
Speaker 8: Our reporting is that these talks are ongoing but preliminary.
Speaker 8: Remember Biden had his Chips Act and they sort of
Speaker 8: made all these pledges. Trump's administration has made clear that
Speaker 8: they are really redetermining, let's say, or reprofiling a lot
Speaker 8: of this funding. We've seen it, of course with the
Speaker 8: Intel discussions and then converting the Chips Act award into
Speaker 8: an equity stake. Frankly, Democrats wondered whether that was legal
Speaker 8: or not. And now the question is what they do
Speaker 8: with other chips AC funding, in particular on R and
Speaker 8: D funding. And our understanding is that that is what
Speaker 8: is being sort of kicked around now, not necessarily limited
Speaker 8: to quantum computing, but early stage, preliminary discussions. You know,
Speaker 8: I don't want to, you know, find myself at odds
Speaker 8: with the Wall Street Journal, but our understanding is that
Speaker 8: this is not yet proceeded to the you know, hashing
Speaker 8: out of direct stakes and that kind of stage of things.
Speaker 8: But I suppose time will tell. What is clear is
Speaker 8: essentially from all this reporting that there is a sort
Speaker 8: of a trajectory here, right the Trump administration sees quantum
Speaker 8: as a sector that it wants to bolster invest maybe
Speaker 8: add to its sort of strategic landscape, if you will,
Speaker 8: of industries that Trump is getting more and more involved
Speaker 8: in and you know, trying to support domestic development of
Speaker 8: and so whether you know how far it goes and
Speaker 8: how far it is. You're seeing some conflicting reporting on
Speaker 8: it candidly right now, but the trajectory seems to be
Speaker 8: pointing in one direction, which is the quantum is something
Speaker 8: they're sniffing around.
Speaker 3: All right, so Jojo, come on, and what you're hearing,
Speaker 3: But I also want to layer on top of that.
Speaker 3: You know, in essence, is the United States, via President Trump,
Speaker 3: kind of actually operating, if not officially, kind of a
Speaker 3: wealth fund of the United States as it continues to
Speaker 3: ponder taking positions in companies private or others, a lot
Speaker 3: of public companies already having taken stakes as well.
Speaker 9: In short, yes, listen, I think look at this quantum
Speaker 9: computing article that we have out, and you add it
Speaker 9: to some earlier reporting that Josh and I had about
Speaker 9: a tungsten deposit that the US is backing a US
Speaker 9: private company to purchase ad on top of that intel
Speaker 9: US steel imped materials. It goes on and on and on,
Speaker 9: and what we're really seeing is a United States federal
Speaker 9: government that is comfortable with having a pretty broad reaching
Speaker 9: portfolio that it is either taking active stakes in or
Speaker 9: financial backing to have some direction in terms of these
Speaker 9: companies that they believe are significant in terms of national security.
Speaker 9: And I think if I can tie it to that
Speaker 9: question of the Sovereign Wealth Fund question, if you look
Speaker 9: at this quantum computing story, as Josh has, at the
Speaker 9: very least, it points out how broad reaching the administration's
Speaker 9: idea of what is nationally significant for security purposes really is.
Speaker 4: Yeah, I think the question that I have is what happens,
Speaker 4: Josh or or yeah, Josh, I mean, what happens to
Speaker 4: the companies that do not get investments from the United States?
Speaker 4: What about competitors in the space, whether we're talking about
Speaker 4: quantum computing companies or we're talking about rare earth miners
Speaker 4: that we're talking about metal producers, like, what happens to those?
Speaker 8: I mean, this is the question of the sort of
Speaker 8: handful of conservatives who are willing to speak aloud what
Speaker 8: a larger number of conservatives have along and always believed
Speaker 8: and probably do but still believe, which is that they
Speaker 8: don't feel comfortable with presidents of either stripe picking winners
Speaker 8: and losers. Right, This used to be something that the
Speaker 8: Republican Party, you know, this was not a tree that
Speaker 8: they were barking up all that often. And so Trump
Speaker 8: has changed the calculus in so many ways. So I
Speaker 8: think there's a few things swirling here. Number one, of course,
Speaker 8: how far will it go? We just don't know. And
Speaker 8: it's also unclear whether Congress, including but not limited to Republicans,
Speaker 8: would start, you know, sticking its head up and saying, hey,
Speaker 8: wait a minute, in particular with how they're interpreting the
Speaker 8: Chips Act, which was bipartisan bill that, in the eyes
Speaker 8: of the lawmakers behind it, set out the rules of
Speaker 8: what you can and can't do. And number two is okay, well,
Speaker 8: if this is the new reality, and if the Republican
Speaker 8: Party is really moving on this, where does it go
Speaker 8: from here? And if you know, if the next president's
Speaker 8: a Democrat, decides to take it further than this, you know,
Speaker 8: or even roll it back. It's just really up in
Speaker 8: the air right now. But President Trump has made it clear,
Speaker 8: as as Secretary Lutnik, that they're both interested in this
Speaker 8: sort of idea of like getting skin in the game
Speaker 8: or getting something in exchange for taxpayer support. They call it,
Speaker 8: you know, they see it basically as a fairness issue.
Speaker 8: You do not get the support of the government if
Speaker 8: we're not getting something out of it ourselves. And so
Speaker 8: I think there's no sign that is going to slow
Speaker 8: down right now with this administration.
Speaker 4: Joe, you cover economic stakeecraft. You've spent many years covering
Speaker 4: metals and mining. You understand rare earth. This is sort
Speaker 4: of the perfect cross section of what you've been focused
Speaker 4: on for your career. But if we think about now
Speaker 4: the Trump administration taking investment in many different types of industries,
Speaker 4: from tac to metals to rare earths, what are people
Speaker 4: talking about could be next everything? I mean, I mean
Speaker 4: thro Intel in there, right, yeah, I.
Speaker 9: Mean this is the great experiment when you know, Josh
Speaker 9: and I and Ryan, we had the terrific scoop that
Speaker 9: Intel was suddenly on the map for an inequity stake, right.
Speaker 9: I think I think that really got the attention of
Speaker 9: investors in a way that like MP materials and critical
Speaker 9: minerals had not. I mean, the kind of scale you're
Speaker 9: talking about with Intel shows you how big this administration
Speaker 9: is willing to think in terms of using the full
Speaker 9: force of the United States federal government to put into motion
Speaker 9: the things it thinks are important and where we go
Speaker 9: from here. I mean the phone calls that I sometimes
Speaker 9: have with Josh and others saying, hey, we should look
Speaker 9: at this thing is wild and wild is being reportable.
Speaker 4: That was Bloomberg News Economic stakecraft reporter Joe Doe and
Speaker 4: Bloomberg News Senior White House correspondent Josh wing Grow.
Speaker 3: And speaking of Nvidia, it's also partnered with yet another company.
Speaker 3: This week, the AI chip maker took a two point
Speaker 3: nine percent stake in Nokia, using its chips to boost
Speaker 3: Nokia's software for five G and six G networks. Bloomberg's
Speaker 3: Ed Ludlow sitting down with the CEOs of both Nvidia
Speaker 3: and Nokia following that announcement, and here is some of
Speaker 3: that conversation with Jensen Wang and Justin Hotard.
Speaker 10: If we take advantage of this transition from general purpose
Speaker 10: computing to accelerated computing, from old types of all types
Speaker 10: of software to AI, we can take advantage of this
Speaker 10: transition of AI and six G for America to win
Speaker 10: back telecommunications again. It's been a long time since the
Speaker 10: American telecommunication network has been built on American technology.
Speaker 6: National security, I believe.
Speaker 10: For national security reasons, for economic reasons, our industry should
Speaker 10: be built on American technology, and for the very first time,
Speaker 10: we can do that. We have a brand new product
Speaker 10: line that takes advantage of computing, accelerated computing, and AI,
Speaker 10: and we have a great partner to help us deal
Speaker 10: with Nokia.
Speaker 11: There was a time where Nokia was already looking to America.
Speaker 11: You've been in the role since April, then may I
Speaker 11: stop by asking you what role the administration played in
Speaker 11: bringing you both together? If this is indeed a strategic priority.
Speaker 12: I don't think there was anything specific that the administration
Speaker 12: did other than they've created the environment to support innovation.
Speaker 12: I mean, Jensen's talked about manufacturing, but it's also about
Speaker 12: R and D and innovation and technology leadership. And if
Speaker 12: you think about where this world is going, and all
Speaker 12: those incredible devices are going to be built on nvidio platforms, robotics,
Speaker 12: autonomous vehicles, augmented reality, virtual reality, we need a different
Speaker 12: kind of network in the future, and that's what we realized,
Speaker 12: and that's why we wanted to forge this partnership so
Speaker 12: that we're building a network leveraging AI for AI services,
Speaker 12: and that's really the big change.
Speaker 11: And the technology is flowing both ways. I mean, what
Speaker 11: is it that you will be able to do with
Speaker 11: Nokia Jensen that you weren't able to do on your own.
Speaker 10: Well, first of all, Nokia is in all of the
Speaker 10: world's base stations, and this air scale platform of Nokia's
Speaker 10: and millions of base stations around the world. If our
Speaker 10: computers are not inside that base station doesn't help. It's
Speaker 10: no different than videos tech computing platforms not inside of
Speaker 10: cars doesn't help. And so the first thing is we
Speaker 10: need a partner to get us into the world's base stations.
Speaker 10: We also remember we're bringing AI to radio networks, AI
Speaker 10: to RAM so that we can make wireless tech communications
Speaker 10: a lot more efficient. Second, we're bringing AI for the radio,
Speaker 10: meaning on top of these radio networks and these telecommunication
Speaker 10: network we're going to be able to provide AI services,
Speaker 10: which is going to be able to make it easier
Speaker 10: for us to do robotics and autonomous vehicles and industrial
Speaker 10: automation and reach all of the different places around the world.
Speaker 10: That's kind of hard to do with Wi Fi, cellular reads, everything.
Speaker 10: And so we now have this fabric that we can
Speaker 10: deploy AI computing services on top of it. It's going
Speaker 10: to be completely revolutionary.
Speaker 4: That's in video. CEO Jensen Wong and Nokia CEO Justin
Speaker 4: Hotard speaking with Bloomberg zed Ludlow this week about their
Speaker 4: new partnership that has in Vidia taken a nearly three
Speaker 4: percent stake in Nokia.
Speaker 3: Now, I think what's interesting too. This past week, we
Speaker 3: did have a big Nvidia event, the GtC event in Washington,
Speaker 3: DC that they held, and we heard from Jensen Wong, right,
Speaker 3: the CEO of Nvidia, about a lot of stuff and
Speaker 3: a lot of things that move certainly the share price
Speaker 3: of Nvidia to the upside this past week, but a
Speaker 3: lot about relationships that it is forging and continues. But
Speaker 3: he did also say that the government has not offered
Speaker 3: to take a stake in their company and Vidia.
Speaker 4: Well, first for the moment, Carl, yes, can we afford it?
Speaker 3: Well, that's a good question. I mean, who do this
Speaker 3: movie come from.
Speaker 4: Obviously we could, we could afford it, but we're talking
Speaker 4: about a market cap company that this week hit five
Speaker 4: trillion dollars for the first time ever. It's also a
Speaker 4: little different than some of the other companies that the
Speaker 4: US has taken a stake in. It's not struggling. It
Speaker 4: basically prints cash. It has this incredible mote with its
Speaker 4: technology that AMD and Qualcom are trying to catch up
Speaker 4: with Right and others. So to me, it doesn't seem
Speaker 4: like the type of target that the US like. It
Speaker 4: doesn't need the US's help.
Speaker 3: Right doesn't need the support.
Speaker 4: It doesn't need this.
Speaker 3: It GE's doing. Didn't it hit five trillion?
Speaker 9: Yeah?
Speaker 3: Market cap this week? Yeah, I guess it's doing. Okay, Oh,
Speaker 3: you did say that. I just think it bears repeating.
Speaker 3: I'm just gonna say I do listen to you, Tim Hey.
Speaker 3: The other thing we should mention about when it comes
Speaker 3: to Nvidia, this was serious President Trump saying he didn't
Speaker 3: discuss approving sales of Nvidia's Blackwell chips to China with
Speaker 3: his counterpart, President xijimping. And that was one of the
Speaker 3: things that was part of the supposed to be part
Speaker 3: of the US China trade talks. But it was interesting.
Speaker 3: It was a big thing that was missing from whatever
Speaker 3: agreement they seem to come to.
Speaker 4: Well, speaking of trade, given the trade tensions between the
Speaker 4: US and many other parts of the world over this year.
Speaker 4: Some furniture makers have taken a big hit as a
Speaker 4: result of those tariffs, and the President says he does
Speaker 4: want to make more furniture here in the United States.
Speaker 3: That'll be good. That means I can buy more furniture.
Speaker 3: I hope my husband is listening.
Speaker 4: No, it means it's going to be more expensive, Darren.
Speaker 4: There is some beautiful stuff out of North Carolina.
Speaker 3: Though there is there always is. Hey, listen, We've got
Speaker 3: a great look at consumers spending, at least when it
Speaker 3: comes to things like couches, pillows, rugs, and all that
Speaker 3: good stuff, you know, home furnishings. The CFO of Wayfair,
Speaker 3: she joins us.
Speaker 13: Next, it still remains for us that the consumer is
Speaker 13: quite focused on promotional events, and so she you know,
Speaker 13: our consumers typically a woman, you know, mass market, and
Speaker 13: she needs those promotional events to really come in off
Speaker 13: the sidelines and get excited to shop. We've talked in
Speaker 13: the past about, you know, how the promotional events really
Speaker 13: work as a marketing banner to get someone interested in
Speaker 13: the category and to then bring them in to the site.
Speaker 13: And that is still the case. Those promotional events are
Speaker 13: pretty necessary to get the consumer engaged and excited.
Speaker 2: This is Bloomberg. This is Bloomberg Business Week Daily with
Speaker 2: Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3: Assuming the Essential Bank would follow its second straight interest
Speaker 3: rate cut with another in December, that officials are divided
Speaker 3: about how much to ease as the ongoing government shutdown
Speaker 3: limits the economic data usually at the basis of the
Speaker 3: rates decision. It's not only that there's division, it's not
Speaker 3: even about how much to ease. Some think there shouldn't.
Speaker 4: Be any easy policymakers did, though, receive a delayed report
Speaker 4: last week on the consumer price index and the whole
Speaker 4: reason we got this report, Carol, social security, cost.
Speaker 3: Of living, Yeah, totally. I mean, these are employees go
Speaker 3: one off, well you know, yes, yes, but it's also
Speaker 3: like those folks are voters and so you kind of
Speaker 3: don't want to mess around with them.
Speaker 4: Did that report though, did show that underlying inflation rose
Speaker 4: in September at the slowest pace in three months. Is
Speaker 4: inflation slow and consumer spending and is it affecting earnings?
Speaker 3: Good couple of questions there. We've got a great look
Speaker 3: at one slice of how consumers are shopping. Wayfair reported
Speaker 3: third quarter results that easily topped expectations. On the call,
Speaker 3: company management gave guidance for the current quarter that topped
Speaker 3: consensus estimates, and they spent a lot of time talking
Speaker 3: with Allison investors talking about the company's efforts to use AI.
Speaker 3: We caught up with Wayfair CFO Kate Gulliver, who said
Speaker 3: that consumers are still spending money on furniture.
Speaker 13: We're obviously quite pleased with the third quarter results and
Speaker 13: the subsequent reaction to them, and I do think it shows,
Speaker 13: you know, all the work that we've been building to
Speaker 13: over the last few years and the enduring strength in
Speaker 13: the model. And so you saw that top line come
Speaker 13: in pretty nicely at eight percent nine percent adjusted for
Speaker 13: the German business, and that really is compounding share gains
Speaker 13: there on the top line, and that of course flowed
Speaker 13: through quite nicely to adjusted EBITA gains.
Speaker 3: We described the consumer, Yeah, you know.
Speaker 13: It still remains for us that the consumer is quite
Speaker 13: focused on promotional events and so she, you know, our
Speaker 13: consumers typically a woman, you know, mass market and she
Speaker 13: needs those promotional events to really come in off the
Speaker 13: sidelines and get excited to shop. We've talked in the
Speaker 13: past about you know how the promotional events really work
Speaker 13: as a marketing banner to get someone interested in the
Speaker 13: category and to then bring them into the site. And
Speaker 13: that is still the case. Those promotional events are pretty
Speaker 13: necessary to get the consumer engaged and excited. We do
Speaker 13: see relatively more strength than that higher end consumer for us,
Speaker 13: that's consumers that are transacting on our paragold site, which
Speaker 13: is our luxury brand or specialty retail brands. We've said
Speaker 13: that those are actually growing at a faster rate than
Speaker 13: the core wayfare dot com business. And you are seeing
Speaker 13: more strength in that consumer segment.
Speaker 4: Are you talked about promotions? You mentioned them. You have
Speaker 4: to get consumers excited. Do you have to get them
Speaker 4: more excited now than you did any other part of
Speaker 4: this year. We're really trying to understand the economic environment
Speaker 4: out there.
Speaker 13: You know what's interesting is this category in particular has
Speaker 13: been down for so long. So the category you know,
Speaker 13: obviously boom during COVID and then at a pretty significant
Speaker 13: significant pullback twenty two, twenty three, twenty four, So throughout
Speaker 13: you know, twenty four and twenty five for this category,
Speaker 13: promotions have been critical. You know, I would say what
Speaker 13: we have seen, you know, really throughout twenty five is
Speaker 13: there's also been some mix shift dynamics. In addition to
Speaker 13: sort of higher end consumer and mass market consumer. You
Speaker 13: do see consumers that are shopping are shopping for, you know,
Speaker 13: things like decorative accents, decors, you know, maybe things with
Speaker 13: a lower ticket than you know, buying a new couch
Speaker 13: or a new chair. And I think that's the idea.
Speaker 13: Someone wants to refresh and is excited about that, but
Speaker 13: they want to be mindful of how much they're spending,
Speaker 13: and so they're looking for the smaller pieces maybe opposed
Speaker 13: to the big piece.
Speaker 3: Well, you know, to that point, you know, Kate, I
Speaker 3: think about the pandemic. We realize that's the anomaly. I mean,
Speaker 3: I'm looking at your stock is up one hundred and
Speaker 3: forty two percent this year, which is quite a run,
Speaker 3: but it's still down about sixty nine percent from twenty
Speaker 3: twenty one. We know everyone was at home spending on
Speaker 3: their home. That's why people were working at at home,
Speaker 3: spending on their pets. There was a lot of stuff
Speaker 3: going on. So I am curious about when you look
Speaker 3: at the third quarter growth, how much came from intrinsic
Speaker 3: share capture versus category stabilization. Because it does sound like
Speaker 3: we're seeing a lot of stabilization here.
Speaker 13: It's a great question. We think the category itself is
Speaker 13: roughly flat to slightly down. So I do think the
Speaker 13: category has stabilized, and we see now we look at
Speaker 13: a variety of different data sources and you know, they're
Speaker 13: all slightly different, but they coalesce around a flatish category.
Speaker 13: This is in contrast to last year where the category
Speaker 13: was down maybe you know, mid single digits to high
Speaker 13: single digits. So that's certainly an improvement, but we don't
Speaker 13: yet see the category is having returned to growth. So
Speaker 13: when we look at sort of eight percent growth, right,
Speaker 13: that's definitely us gaining share on a category that is say, flatish.
Speaker 4: When consumers are buying from Wayfair, are they buying to
Speaker 4: replace stuff or is this trade up activity? What is
Speaker 4: what is the data telling us or telling you?
Speaker 13: Yeah, that's a that's a great question. We're certainly starting
Speaker 13: to you know, hear that a bit from folks. You know,
Speaker 13: have we hit replacement cycles? And really to the conversation
Speaker 13: we were having around the pandemic, it speaks to so
Speaker 13: much of the pull forward and demand that happened during
Speaker 13: that pandemic. Period. You know, I think we see a
Speaker 13: few things that drive you know, purchase events. One is moving,
Speaker 13: and obviously that part of the category has still been
Speaker 13: you know, quite suppressed. One would be life cycle changes.
Speaker 13: So you know, your kid, you had a baby, and
Speaker 13: now they're moving into a toddler bed, or the kids
Speaker 13: leaving the home and you're turning their betterment into an office,
Speaker 13: so sort of as your life cycle evolves, regardless of
Speaker 13: if you're moving. And then a third would be you know,
Speaker 13: replacement categories or sort of you know, juging up your room.
Speaker 13: In replacement cycles, I think a lot of folks are
Speaker 13: eager to see if you know, what was bought in
Speaker 13: twenty twenty and twenty twenty one needs to be replaced
Speaker 13: at this time. And I think what's helpful to understand
Speaker 13: there is there's this very category by category specifics. So
Speaker 13: if you bought you know, opening price point outdoor furniture
Speaker 13: and you live in the Northeast, maybe five years is
Speaker 13: you know an appropriate timeframe. But if you bought a
Speaker 13: you know, nice couch, you know you're certainly not hitting
Speaker 13: the replacement cycle on that yet.
Speaker 3: I got to say, I love Jijing. I love buying
Speaker 3: pillows but I'm afraid if I bring any more pillows home,
Speaker 3: my husband's going to divorce me because he's like, I
Speaker 3: can't even fire is bad. I can't find the bed anymore. Hey, listen,
Speaker 3: you talk Kate about the higher end brands like Paragold.
Speaker 3: You're seeing some strengths certainly in that area. I am
Speaker 3: curious too about your retail expansion, the physical store retail
Speaker 3: expansion or your loyalty program, if that's adding incremental customers
Speaker 3: versus shifting existing digital ones. What are you seeing on
Speaker 3: that front.
Speaker 13: Yeah, great question. So on the physical retail side, we
Speaker 13: are adding incremental customers. We're actually seeing in our first
Speaker 13: large format Wayfare store that's been opened for a little
Speaker 13: over a year now, more than fifty percent of the
Speaker 13: folks who are transacting in that store are actually new
Speaker 13: to the customer file. We have a one hundred million
Speaker 13: customer file right so to be getting new customers at
Speaker 13: this stage is pretty exciting. So it's definitely acting as
Speaker 13: a way into the brand Paragold. We actually just opened
Speaker 13: two stores for Paragold. So we open one in Houston
Speaker 13: in the spring or of early summer, and then we
Speaker 13: just opened in West Palm Beach in Florida a week ago.
Speaker 13: So it's very early days on those stores, but we
Speaker 13: do think that they should work as a nice customer
Speaker 13: acquisition channel. The loyalty program, which is about a year old,
Speaker 13: I would say that's acting more for existing customers to
Speaker 13: get them to be increasingly sticky with us. So what
Speaker 13: we're seeing from loyalty customers is nice incrementality, meaning you know,
Speaker 13: if they were going to purchase, you know, six or
Speaker 13: eight times a year, and maybe they're buying one to
Speaker 13: two from us. Hopefully we're getting that next purchase that's
Speaker 13: second or third purchase as well.
Speaker 4: Now, Kate on the layoffs that we've heard from other
Speaker 4: companies just in recent days. Amazon planning to eliminate roughly
Speaker 4: fourteen thousand corporate jobs. This as Andy jasse Warren that
Speaker 4: AI will shrink the company's workforce. You have a twenty
Speaker 4: five hundred person tech team. How are you thinking about headcount?
Speaker 4: Are you re allocating headcount toward AI applications or are
Speaker 4: productivity gains allowing you to do more with a similar
Speaker 4: cost base. What are the numbers there?
Speaker 13: Yeah, it's a great question. Actually, our CTO, Fiona tan
Speaker 13: was on our earnings called this morning speaking to some
Speaker 13: of what we're seeing from AI, both on the top
Speaker 13: line perspective and where we're going with you know, personalization,
Speaker 13: but also on you know efficiency. Every employee in the company,
Speaker 13: not just in tech, is actually enabled with AI you
Speaker 13: know tools and AI resources, and right now what we're
Speaker 13: seeing is really nice you know efficiency and enhancements to
Speaker 13: individual employee work. And then in different pockets throughout the company,
Speaker 13: including within tech, you know, as we use more specialized
Speaker 13: dayye tools, you see you know, uptakeing efficiency there. I
Speaker 13: frequently actually talk about our legal team, so not a
Speaker 13: tech team, but a team that you know, has been
Speaker 13: able to adopt AI quite rapidly for document review and
Speaker 13: the ability for them to sort of manage, for example,
Speaker 13: increase lease load as we've been expanding the physical retail
Speaker 13: network without having to add incremental folks has been pretty impressive,
Speaker 13: and so we certainly are seeing gains you know, from
Speaker 13: that efficiency.
Speaker 3: Internally, Hey, do you feel like, though, in this environment
Speaker 3: that you want to be lean and mean? I mean,
Speaker 3: I guess I feel like all companies want to be
Speaker 3: lean and mean, Kate, But I do wonder if you're seeing,
Speaker 3: you know, as you look down the road. We are
Speaker 3: in this funny environment funny not funny, haha, but funny
Speaker 3: difficult in that with the government shutdown, we're not getting data.
Speaker 3: So we're trying to figure out by talking to folks
Speaker 3: like you, where we are in our economy. So do
Speaker 3: you feel like there's pressure to be leaner and meaner
Speaker 3: that maybe I don't know a month ago or so,
Speaker 3: or you feel more confident about what's kind of coming
Speaker 3: down the road here?
Speaker 13: You know, I think you firmed it wellcome Beryl, and
Speaker 13: who said you should always feel you know the importance
Speaker 13: of being lean. I mean, we're a mass market retailer, right,
Speaker 13: We operate on basis points of margin, so we absolutely
Speaker 13: need to be men highly focused on cost at all times,
Speaker 13: regardless of the macro that we're operating in. And over
Speaker 13: the last several years you saw us go through a
Speaker 13: number of restructurings frankly to bring down that overhead cost
Speaker 13: pretty significantly. Our most recent restructuring was actually March of
Speaker 13: this year. We're to the conversation on tech employees. We
Speaker 13: did lay off some of our tech team as we
Speaker 13: completed our replatforming exercise, and we're able to actually increase
Speaker 13: some efficiency on that team point in more of those resources,
Speaker 13: you know, towards AI, et cetera, as they have stayed. So,
Speaker 13: you know, we continue to be quite focused on efficiency
Speaker 13: and efficiency gains. We feel good about, you know, where
Speaker 13: the team is right now and the efficiency that we're
Speaker 13: seeing from that operating team. But that comes on the
Speaker 13: heels of you know, several rounds of restructuring over the
Speaker 13: last twenty four months.
Speaker 4: Well on AI. On the consumer side, when it comes
Speaker 4: to AI, I'm wondering about the traction from use and
Speaker 4: decorify the decorating platform the new pilot. How has that
Speaker 4: been with shoppers so far? Is it driving broader consumer
Speaker 4: adoption of AI lead design?
Speaker 13: Yeah, so we've tested out a number of AI you
Speaker 13: know tooling as it relates to how the consumer can
Speaker 13: experience our website. We offer millions of different skews across
Speaker 13: thousands of suppliers, across a wide range of styles. So
Speaker 13: the holy grail is really personalization. And how do you know,
Speaker 13: all three of us maybe searching for, you know, the
Speaker 13: throw pillows for the bed that Carol was talking about,
Speaker 13: and we all may have a different aesthetic, So how
Speaker 13: do we land on the site and get to our
Speaker 13: aesthetic as fast as possible to glorify. And you know,
Speaker 13: now we have a tab on the app called Discover.
Speaker 13: These are ways for individuals to sort of browse and
Speaker 13: engage in a way that should be more personalized for them,
Speaker 13: and we do see great engagement there. But even on
Speaker 13: you know, the main part of the app, so not
Speaker 13: using one of these specialized tools or the main part
Speaker 13: of the website, we were using generative AI to make
Speaker 13: that experience better. We spoke on the call this morning
Speaker 13: about combining generator of AI from a merchandising perspective with
Speaker 13: actually human designers. And for folks that landed on those
Speaker 13: SKUs that were the combo of the boat, we saw
Speaker 13: a third uplift and sort of engagement with that skew.
Speaker 13: That's really exciting because that means that sku is probably
Speaker 13: far more relevant to you than where you were going
Speaker 13: to land before.
Speaker 4: That was wayfair cfo K Gulliver joining us from Boston.
Speaker 4: After earnings, many financial firms raise their price targets on
Speaker 4: the stock, including Goldman, Sacks, JP, Morgan, Stiefel, City, Needham
Speaker 4: and more.
Speaker 3: And that wraps up our first hour of the weekend
Speaker 3: edition of Bloomberg Business Week from Bloomberg Radio Ahead. In
Speaker 3: our next sixty minutes, Jimmy Wales, the founder of Wikipedia,
Speaker 3: on building trust in today's very skeptical world.
Speaker 4: Plus where's the beef Next? Yeah, we catch up with
Speaker 4: the founder and CEO of the jerky company Archer and
Speaker 4: the New.
Speaker 3: York City Marathon yep, it is running this weekend. An
Speaker 3: inside view from one runner and the individual behind the event.
Speaker 3: By the way, he's already were working on next year's.
Speaker 3: This is Bloomberg Business Week. I'm Carol Masser and.
Speaker 4: I'm Tim Stenovek. Stay with us. More from Bloomberg Business
Speaker 4: Week Daily coming up after this.
Speaker 2: This is Bloomberg Business Week Daily, reporting from the magazine
Speaker 2: that helps global leaders stay ahead. With insight on the people, companies,
Speaker 2: and trends shaping today's complex economy. Plus global business, finance
Speaker 2: and tech news as it happens. Bloomberg Business Week Daily
Speaker 2: with Carol Masser and Tim Stenevek on Bloomberg Radio Funny Ahead.
Speaker 3: In our second hour of the weekend edition of Bloomberg
Speaker 3: Business Week, Including protein is the New nutrition fad, We
Speaker 3: talk with the founder of a grass fed beef and
Speaker 3: all natural Turkey beef stick company say that five times fast.
Speaker 4: I was going to and then I decided not.
Speaker 3: It's a tough line.
Speaker 4: Plus it's one of the world's biggest races. The CEO
Speaker 4: of New York road Runners talks about putting on the
Speaker 4: New York City Marathon. It is how opening this weekend.
Speaker 3: It is indeed first up this hour. Wikipedia has a
Speaker 3: unique place in online culture, before AI, before chat ChiPT
Speaker 3: if you needed a quick place to get an overview
Speaker 3: on almost any topic, you go to Google, and then
Speaker 3: you'd click on Wikipedia. It's almost too good to be true.
Speaker 3: In today's world. It is built on trust and community
Speaker 3: all online.
Speaker 4: We talk about it a lot in media, in business
Speaker 4: with friends and family, and most definitely in politics. Jimmy
Speaker 4: Whale's founder of Wikipedia, knows a thing or two about trust.
Speaker 4: He's got a new book out. It's called These Seven
Speaker 4: Rules of Trust, a Blueprint for building Things that Last.
Speaker 4: We sat down with them this week in the Bloomberg
Speaker 4: Business Week Daily Studio, and we wanted to know why
Speaker 4: Wikipedia works in a world where so many people don't
Speaker 4: trust one another, and they don't trust what they see.
Speaker 4: That issue of trust is something he's been thinking about.
Speaker 14: It was a couple of years ago I had had
Speaker 14: some ideas around this, and yeah, just just started and
Speaker 14: it's obviously turned out to be quite timely, as we
Speaker 14: have a lot of issues around trust in society, and
Speaker 14: you know, I want to encourage people to let's get
Speaker 14: back to society of trust.
Speaker 8: You know.
Speaker 4: It's funny, Carolyn, I spent a lot of time talking
Speaker 4: about this ahead of the interview because Wikipedia sort of
Speaker 4: seems and look, it's had its challenges. Of course, it's
Speaker 4: had its controversies, but for things that are online, it's
Speaker 4: kind of as weird utopia.
Speaker 3: In the sense that it's kind of remarkable.
Speaker 4: It's really remarkable. I mean, we know anonymous people online
Speaker 4: are oftentimes are full of bitrio and hate. We can
Speaker 4: see that even when people use their names on social
Speaker 4: media platforms. We lock our doors when we leave the house.
Speaker 4: Why does trust work on Wikipedia? But kind of seems
Speaker 4: like nowhere else right now?
Speaker 14: Yeah, I mean I think for me, you know, one
Speaker 14: of the seven rules of trust that is most meaningful
Speaker 14: in that regard is purpose. Like Wikipedia has a very
Speaker 14: simple purpose, which is to build an encyclopedia, and we
Speaker 14: may all our decisions around that, and the rules about
Speaker 14: participation and so forth. And that's very different from social media,
Speaker 14: where there isn't a clear purpose other than free speech
Speaker 14: and openness, and therefore that toxicity really creeps in quite
Speaker 14: a lot in social media. You know, people say outrageous
Speaker 14: things because they get rewarded for it. They get more followers,
Speaker 14: they get more engagement, and they algorithms love that.
Speaker 3: You talk about clickbait all the time.
Speaker 14: Clickbait all the time, And you know, that's very different
Speaker 14: from the world of Wikipedia, where I mean, thank goodness,
Speaker 14: our headlines are so boring.
Speaker 4: There's no clickbait.
Speaker 14: You know, it's like the erical on Thomas Jefferson's called
Speaker 14: Thomas Jefferson, you know, but it does what it says
Speaker 14: on the den. You know, that's a that's a very
Speaker 14: British expression, afraid. But but yeah, I mean, I do
Speaker 14: think that that having a simple purpose is a part
Speaker 14: of what keeps us focused and keeps our community focused.
Speaker 3: How do you describe facts? How do you determine facts?
Speaker 3: And I am amazed in I mean, I've been doing
Speaker 3: this a few years and I felt like when I started,
Speaker 3: it was very clear fact versus ficion in terms of
Speaker 3: reporting and doing stories. And I feel like there's a
Speaker 3: lot of great area and I just feel like a
Speaker 3: fact is a fact. So how do you guys determine
Speaker 3: what's a fact in an entry?
Speaker 14: Yeah, I mean we're really old fashioned, Like what we
Speaker 14: look for are reliable sources. So we want, you know,
Speaker 14: sort of academic research or quality newspapers, quality magazines, quality books.
Speaker 14: Really old fashioned and you know, the idea that we
Speaker 14: should treat you know, the New England Journal of Medicine
Speaker 14: as the same as social media influence our line is
Speaker 14: obviously just wrong. Like you really want facts, and that's
Speaker 14: what people want from Wikipedia.
Speaker 4: They don't want.
Speaker 3: Sources matter us.
Speaker 14: Sources really matter, Like having a good quality source is
Speaker 14: what it's all about.
Speaker 3: But why don't sources matter to everybody? And other people
Speaker 3: will say, Okay, I believe this source is reliable, so
Speaker 3: like you know what I mean, like when we're living
Speaker 3: in like.
Speaker 14: Different worlds, I think, I think, and I think that's
Speaker 14: a huge problem. I mean, I do think, you know,
Speaker 14: it's really important. I mean one of the problems that
Speaker 14: we've seen is that a lot of the media, in
Speaker 14: response to the changing and very difficult financial model for journalism,
Speaker 14: they've chased after a really partisan audiences, and so, you know,
Speaker 14: sometimes you read something and you're like, yeah, that was
Speaker 14: that was interesting, that was good, But I'm not sure
Speaker 14: I got both sides of the story there. I live
Speaker 14: in the UK and we have a just an example,
Speaker 14: two quality newspapers, the Guardian and the Telegraph, left leaning,
Speaker 14: right leaning. They're both great newspapers. But I often read
Speaker 14: one and I'm like, oh, but and then I go
Speaker 14: read the other and I'm like, yeah, you probably should
Speaker 14: have been somewhere in the middle, both of you, and
Speaker 14: it would have been I think a better story had
Speaker 14: you said, well, you know, we got one side of
Speaker 14: the story, but we actually had to go out and
Speaker 14: find somebody to tell us a little bit about the others.
Speaker 14: And you know, you can't be to like the moon
Speaker 14: is made of rocks or is it cheese?
Speaker 4: Who knows?
Speaker 14: I don't mean that, but seriously hopefully geez. But but
Speaker 14: you know, like seriously thinking about like who are we
Speaker 14: talking to and are we are we getting to the
Speaker 14: bottom of this.
Speaker 4: With media, with trust and media here in the United
Speaker 4: States declining and having declined over the last few years,
Speaker 4: in your view, is there something that we can do
Speaker 4: better that the media can do better that it can
Speaker 4: borrow from what has worked at Wikipedia, what has worked
Speaker 4: with the trust, the methods of trust that you've studied,
Speaker 4: that can make us build trust again with our audiences.
Speaker 13: Yeah.
Speaker 14: I mean, well, the good news is that the financial press,
Speaker 14: like Bloomberg, is still among the most trusted. And I
Speaker 14: think that's because by the mandate of what you're trying
Speaker 14: to do informing business people and investors, you have to
Speaker 14: be like ruthlessly objective. You're not chasing after partisan audiences
Speaker 14: and things like that. But I do think we gets
Speaker 14: up data, big data. Data is important transparency. I think,
Speaker 14: you know, realistically, you know, one of the things that
Speaker 14: Wikipedia does that's kind of odd is we'll have a
Speaker 14: you know, at the top of a page the neutrality
Speaker 14: of this article has been disputed, and I we've all
Speaker 14: seen it.
Speaker 6: Yeah, we've all seen it.
Speaker 14: And I always say, you know, I kind of wish
Speaker 14: sometimes the New York Times would put a banner up
Speaker 14: just saying, you know, we had a big fight.
Speaker 6: In the newsroom.
Speaker 14: We weren't quite sure, so we decided to this. But yeah, yeah,
Speaker 14: but here's a little bit of their inside thinking, like
Speaker 14: we did want to report this, We're not sure we've
Speaker 14: got the full story yet, because that pretending to be
Speaker 14: perfection all the time. People see through that, and they know,
Speaker 14: of course, and I think they're willing to say, yeah, like, actually,
Speaker 14: journalism is quite hard, you know, so a little more
Speaker 14: transparency is always good.
Speaker 3: Do you get pressure a lot from companies, politicians, individuals
Speaker 3: to like change an entry?
Speaker 13: No?
Speaker 6: Not really.
Speaker 14: I mean people, Uh, you know, I meet a lot
Speaker 14: of people and people often are like, well, you know
Speaker 14: my Wikipedia entry, what about this?
Speaker 4: What about that?
Speaker 14: Yeah, send us an email, like you know, we'll have
Speaker 14: somebody look at that. That's all fine in general. Note
Speaker 14: and actually we're.
Speaker 4: Very you really to say, just send them an email
Speaker 4: and I'm not going to do anything about it.
Speaker 14: Kind of yeah, okay, but no, sometimes people have a
Speaker 14: legitimate point. They're like, oh, well, you know I did
Speaker 14: this thing and it was in the press, and you
Speaker 14: know it's like, okay, well maybe we just overlooked it,
Speaker 14: and that's that's great, But you know they at a
Speaker 14: deeper level. One of the things that's really important is,
Speaker 14: you know, we aren't funded by governments, we aren't funded
Speaker 14: by sort of major donors. We're funded by people giving
Speaker 14: their twenty dollars and that makes a big difference for
Speaker 14: our intellectual independence. We're not worried like if we've got
Speaker 14: something negative about whatever, then we might lose our donation.
Speaker 4: How is how is the fundraising going? Because I feel
Speaker 4: like I've gotten a lot of messages from you throughout
Speaker 4: the years, through the from Jimmy Wills on Wikipedia, We've
Speaker 4: all seen it. We're all is it going okay? Is
Speaker 4: funding going? Okay?
Speaker 6: It's okay.
Speaker 14: Yeah, We've we've been h you know, we're stable, We're
Speaker 14: very cautious with money, so we always try to build
Speaker 14: our reserves and so on. And then you know, recently,
Speaker 14: I don't know, Elon tweeted defund Wikipedia. I think we
Speaker 14: were about five million dollars that day.
Speaker 6: So you know, so you can text us.
Speaker 4: You know, you guys have been in touch you and say,
Speaker 4: tweet about us again.
Speaker 3: Well, you have had some convers raise money. You have
Speaker 3: had some conversations with Elon over the years. All right,
Speaker 3: we're continuing at Jimmy Wales, founder of Wikipedia. He's got
Speaker 3: a new book out, it's out tomorrow, The Seven Rules
Speaker 3: of Trust, a blueprint for building things that last. Elon Musk,
Speaker 3: You've had an ongoing relationship or text relationship with him.
Speaker 14: I've known him for years.
Speaker 3: Actually, now anything old, aren't we all? I like to think,
Speaker 3: like a fine wine just getting better. But he has
Speaker 3: talked about defunding Wikipedia, and you said, you know that
Speaker 3: has brought in a lot of money, So thank you, Elon.
Speaker 3: What are the conversations that you've had with him back
Speaker 3: and forth?
Speaker 14: I mean, you know, he believes Wikipedia has become Wikipedia,
Speaker 14: which is not true. And you know, I encourage him
Speaker 14: to sort of a better messages.
Speaker 6: To say, if you feel like Wikipedia.
Speaker 14: Has got some bias, encourage people to come and participate
Speaker 14: people who agree with you. Don't paint us as like,
Speaker 14: oh they've gone their crazy left wing activists or something
Speaker 14: we aren't. And by the way, he's so encouraging crazy
Speaker 14: lifting activists to come and bother us, and that's not
Speaker 14: good either. So you know, realistically, I can't predict what
Speaker 14: Elon's going to say or do. He's Elon. You know,
Speaker 14: he does what he likes.
Speaker 3: Well, what's he like? One on one? You were and
Speaker 3: work to be fully transparent. We listened to a podcast
Speaker 3: and I think you brought up something about like Elon
Speaker 3: one on one versus Elon. He's always been per former.
Speaker 14: Yeah, he's always been very nice to me in private
Speaker 14: and you know, civil and so forth. And I've met
Speaker 14: him in person a few times, and yeah, and then
Speaker 14: he's a huge public persona and a huge public character,
Speaker 14: and sometimes I just I slightly ignore that because I'm like, oh,
Speaker 14: he's just being elon in public. If I ran into him,
Speaker 14: I think we would have a very friendly chat.
Speaker 4: You know. Over the last twenty plus years, Wikipedia has
Speaker 4: had has kind of lived on despite massive changes with technology.
Speaker 4: We're undergoing one right now with AI and the way
Speaker 4: that people are using lms. You have said that you
Speaker 4: are building Wikipedia to last one hundred more years. How
Speaker 4: do you ensure that you do that when you don't
Speaker 4: even know what technology will be around?
Speaker 6: Well, it's true, we have no idea.
Speaker 14: So all we can do is preserve our intellectual independence,
Speaker 14: keep an eye on the finances, to make sure we're
Speaker 14: not vulnerable, uh, you know, be open and keep our
Speaker 14: community's mind open and active to say, oh, how do
Speaker 14: we adapt to new technology? Is there things here we
Speaker 14: could use? What can we do to preserve our mission,
Speaker 14: which is free knowledge for everyone?
Speaker 4: That was Jimmy Wales, the founder of Wikipedia, on his
Speaker 4: new book, The Seven Rules of Trust, a blueprint for
Speaker 4: building things that last.
Speaker 3: You're listening to Bloomberg Business Week coming up. Got to
Speaker 3: get the protein in as many ways as possible. Everybody's
Speaker 3: talking about protein.
Speaker 4: I don't know.
Speaker 3: I grew up with my family like you always had protein,
Speaker 3: Like you knew that that was part of a healthy diet.
Speaker 3: But anyway, did you see we got what protein? And
Speaker 3: pop tarts?
Speaker 4: Yeah?
Speaker 3: Well I don't even get that.
Speaker 4: Okay, we did, sorry pop tarts. But there's all that,
Speaker 4: like the even the nice like organic quote unquote organic
Speaker 4: fig bars have protein. They have a new version out
Speaker 4: with extra protein. It's all about the GLP ones. What
Speaker 4: is I know exactly we want their protein?
Speaker 3: Anyway, on this we had a great conversation. We caught
Speaker 3: up with Eugene Kang. He is founder and CEO of
Speaker 3: the meat stick company Archer Meat. I ate actually a
Speaker 3: meat sticky.
Speaker 4: You didn't get you a conversation. I went upstairs. I
Speaker 4: got meat sticks for everybody?
Speaker 6: Did.
Speaker 3: This is Bloomberg.
Speaker 2: This is Bloomberg Business Week Daily with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 4: Protein. In the words of Derek Zulander, so hot.
Speaker 3: Right now or Paris Hilton, that's hot.
Speaker 4: We don't know if you saw this last week, Carol,
Speaker 4: but I know you did. Actually, I know you saw
Speaker 4: this because you mentioned it earlier. I did the protein
Speaker 4: and the pop tarts. Yeah, yeah, bizarre, listen, but I
Speaker 4: protein pop tarts.
Speaker 3: But I do feel like we're turning around products and
Speaker 3: we're looking for some key things like fiber or protein
Speaker 3: or you know what I'm saying, Yeah, some vitamins or something.
Speaker 3: We are doing that by protein and everything.
Speaker 4: What PepsiCo said they have plans for a higher protein
Speaker 4: version of ritos.
Speaker 3: I mean, come on, come on.
Speaker 4: Okay, Elsewhere protein is being outed to popcorn, pasta, bread,
Speaker 4: cookie dough, ice cream, and macaroni and cheese. I kind
Speaker 4: of want to go old school though, the original source
Speaker 4: of protein.
Speaker 3: We talked about this a lot in the newsroom today.
Speaker 4: Ganga is all about this. He's found in ceo of Archer.
Speaker 4: It makes meat sticks from grass fed beef and all
Speaker 4: natural turkey. He joins us from LA talk about timing, Eugene.
Speaker 4: How are you leaning into the protein craze right now?
Speaker 4: Is this what people?
Speaker 6: Yeah?
Speaker 15: Thanks for having me on, Tim McCarroll and yeah, absolutely protein. Look,
Speaker 15: it's been around for a while, and particularly meat snacks
Speaker 15: and protein is the hottest sort of trend right now,
Speaker 15: and we're really we're really proud of the fact that,
Speaker 15: you know, meat snacks is kind of an original kind
Speaker 15: of source right of protein, and you don't have to
Speaker 15: add necessarily protein to it like some of the other
Speaker 15: innovations that you guys got to noted earlier.
Speaker 4: So we we know you are the official meat snack
Speaker 4: partner of the La Dodgers. You're a Dodger fan. Dodgers
Speaker 4: are playing tonight Game one of the World Series. Ellie
Speaker 4: Dodgers at Toronto Blue Jays your startup though, How did
Speaker 4: the partnership come together like this?
Speaker 15: Yeah, you know, we there was a couple of other
Speaker 15: consumer brands that were partnered with the Dodgers last year,
Speaker 15: most notably health Fate Kombucha, which is one of the
Speaker 15: largest kombucha brands in the country. So we had kind
Speaker 15: of reached out to the Dodgers saying, hey, look, we're
Speaker 15: looking to build potentially a bigger production facility in LA.
Speaker 15: We're growing our business pretty rapidly, doesn't make sense to
Speaker 15: kind of partner up, and they absolutely loved it.
Speaker 16: Thought it was a great idea.
Speaker 15: So I got to work quickly on a partnership framework
Speaker 15: earlier in the year around spring training, and you know,
Speaker 15: kind of summit to it right before the season starts.
Speaker 4: Do you guys pay for that or do you offer
Speaker 4: a deal on like Like I've always wondered how the
Speaker 4: finances of this stuff works. Take us into the numbers.
Speaker 15: Yeah, yeah, I know, we do pay for it, but
Speaker 15: in return, we obviously get you know, advertisement throughout the stadium,
Speaker 15: products sold in the concession stand, available in the clubhouse.
Speaker 15: So I think there's a few notable Dodgers that are
Speaker 15: probably eating our protein snacks as well. And you know,
Speaker 15: we also get to use sort of their collateral or
Speaker 15: their assets on a lot of more collateral for the
Speaker 15: broader Southern California market, whether it's displays or any kind
Speaker 15: of retail programming.
Speaker 3: Hey, talk to us more broadly, because you guys are
Speaker 3: in Costco, Whole Foods, Walmart, Starbucks, Targets seven eleven. I mean,
Speaker 3: if we're on a road trip, I mean that is
Speaker 3: certainly one of the snacks people pick up. Talk to
Speaker 3: us about the growth that you are seeing in the marketplace.
Speaker 16: Yeah, the growth has been incredible.
Speaker 3: What's incredible. We love numbers here.
Speaker 15: We're growing one hundred percent year every year. You know,
Speaker 15: you know, we're approaching close to over five hundred million
Speaker 15: revenue in the next twelve months. You know, we were
Speaker 15: a little over one hundred million two years ago. So
Speaker 15: growth has been absolutely incredible for us. You know, the category,
Speaker 15: obviously because of US, is doing incredibly well. You know,
Speaker 15: PREMI sort of better for you brands have really just
Speaker 15: taken over sort of the zeitgeist with consumers, and you know,
Speaker 15: we benefit not only from the premium better for you
Speaker 15: side of it, but also the fact that we were
Speaker 15: a portable, dense protein pack snack.
Speaker 4: You know, I'm I'm how do you? How do you
Speaker 4: do this? I'm wondering about funding and bootstrapping versus raising money.
Speaker 4: The growth the new facility that you are opening soon
Speaker 4: in Vernon, California, the one that you just opened excuse
Speaker 4: me earlier this month. Did you take on external funding
Speaker 4: for this?
Speaker 15: We took on debt, but I mean we are we're
Speaker 15: cash flowing, We're you know, we're profitable. So for us,
Speaker 15: it was you know, we weren't We didn't have to
Speaker 15: necessarily raise equity or anything.
Speaker 16: Like that.
Speaker 15: We do have a private equity growth investor that wash
Speaker 15: that came in early on in our life stage. Okay,
Speaker 15: no institutional funding as of.
Speaker 4: The private equity investor. So how much do they own?
Speaker 15: They own a minority stake in the business. You know,
Speaker 15: my partner and I still own majority steak, but there
Speaker 15: they are kind of shoulders shoulder in terms of like
Speaker 15: sort of ownership structure.
Speaker 3: I'm curious in a world of GLP one drugs and
Speaker 3: people you know, looking to lose weight, they are losing
Speaker 3: weight thinking about their diet, how is that impacting you
Speaker 3: if at all? And I'm looking at you know, you've
Speaker 3: got a grass fed beef jerky, a classic zero sugar,
Speaker 3: So I'm just curious how you're adapting and just talk
Speaker 3: to us little bit about the impact if there is any.
Speaker 15: Yeah, you know, we haven't seen an impact in a
Speaker 15: negative way. If anything's been positive. We're not able to
Speaker 15: quantitatively tie our brand performance to GLP one, but will
Speaker 15: we Studies have shown that, you know, folks that are
Speaker 15: on GLP one adopt to meet snacks at a much
Speaker 15: higher rate because they're just i think seeking a bit
Speaker 15: more protein in general on their diet. Post GLP one.
Speaker 15: So for us, we feel like it's a it's a
Speaker 15: major tail wind for our business.
Speaker 4: Got to talk beef prices. US beef prices have skyrocketed
Speaker 4: to record levels. It's challenged the President's pledged to make
Speaker 4: groceries more affordable. Earlier this week, the President attacked US
Speaker 4: cattle ranchers over their criticism of his plan to slash
Speaker 4: record beef prices by importing sydniafinitely more tara free meat
Speaker 4: from Argentina. How much have your prices gone up? Not
Speaker 4: the prices that you reflect to consumers, I'm like talking
Speaker 4: the prices you pay for the for the beef product.
Speaker 6: Yeah.
Speaker 15: So we we kind of knew early on that the
Speaker 15: beef prices were going to be as high as a were.
Speaker 15: If you look at we look at cattle reports a
Speaker 15: year out and this time last year, it was clear
Speaker 15: that the domestic cattle herd is actually kind of thinning out,
Speaker 15: just given all the record droughts that we've had in
Speaker 15: the last few years. And so if you think about
Speaker 15: you know, cattle herd thinning out, you know, potentially a
Speaker 15: trade war, it's all being going to spell disaster. Right,
Speaker 15: So we were able to hedge our commodities for the
Speaker 15: full year, so we were somewhat not going to say
Speaker 15: completely insulated, but somewhat insulated. And obviously we did see
Speaker 15: his spike in pricing for sure on the beef price.
Speaker 15: But anyone that would tell you that the beef price
Speaker 15: is from an industry respect it was coming out of
Speaker 15: his left field, is I would be very shocked to
Speaker 15: find out. I think everyone knew that this day was coming.
Speaker 15: I don't think the average consumer knew was coming, but
Speaker 15: I think most folks that were in the industry about
Speaker 15: a year ago knew that this was kind of coming
Speaker 15: down the pocket.
Speaker 4: Can you give us an idea of how much your
Speaker 4: rop costs would have gone up had you not hedge?
Speaker 4: Though we're talking record prices right now, so I think, wow,
Speaker 4: that's pretty amazing. I mean, kudos for hedging.
Speaker 3: Yeah, yeah, I'm curious about the process, Like, so you're
Speaker 3: doing this all here in the US, correct all of it?
Speaker 6: So?
Speaker 3: Is it robot robots? Is there humans involved?
Speaker 9: Like?
Speaker 3: What's what's involved?
Speaker 4: They not robots?
Speaker 3: No, I know the cares are not yet, but tell us,
Speaker 3: like what the process is because I'm just figuring out
Speaker 3: your costs? Is it is beef the biggest or give
Speaker 3: us a little bit of what the business is.
Speaker 15: By far the biggest. So we have manufacturing plants that
Speaker 15: we own, and then we also have co manufacturing partner
Speaker 15: STRUFF that throughout the country as well. I'd say there
Speaker 15: is labor involved, for sure, there is some automation depending
Speaker 15: on part of the process that I think about. We're
Speaker 15: bringing in raw beef, right, We're not doing any kind
Speaker 15: of slaughtering or anything like that. It's all just raw
Speaker 15: beef that comes into our processing plants. Everything is either
Speaker 15: grinded or cut. It's cooked in a big, big oven
Speaker 15: that you can imagine, and then from there it's packaged out,
Speaker 15: whether it's individually wrapped like a beef stick or a
Speaker 15: beef trikey that's in you know, bits and pieces in
Speaker 15: a sort of receivable pouch. You know, parts of the packaging.
Speaker 15: Most of the packaging process is automated. I would obviously
Speaker 15: say that the raw kind of processing handling of the
Speaker 15: product is still somewhat requires it' required labor, but that's
Speaker 15: also got a lot of efficiencies in machinery there.
Speaker 3: So okay, all right, interesting, you know, it's interesting, you know,
Speaker 3: as we hear you talking you talk about your growth rates.
Speaker 3: I mean there were go back a few years even
Speaker 3: before GLP one, that people were trying to cut back
Speaker 3: on their consumption of beef. And I think, you know,
Speaker 3: people even you know you shouldn't have it too often,
Speaker 3: and it feels like people are really into your product.
Speaker 3: You know, what's changed? Do you think?
Speaker 9: You know?
Speaker 15: I think I don't think anything's changed. I think it's accelerated.
Speaker 15: I think our thesis from the very beginning was, you know,
Speaker 15: we are sourcing high quality premium beef, right, so it's
Speaker 15: all one hundred percent grass fed, pasture rays. And so
Speaker 15: for us, we had this thesis like, look, if you're
Speaker 15: gonna eat protein and beef, please make sure you're you're
Speaker 15: eating the right highest quality of protein. And so I
Speaker 15: think that trend line has converged where the consumer is today,
Speaker 15: and I think folks are realizing, like, you know, hey,
Speaker 15: look there's nothing wrong with feeding animal based protein, but
Speaker 15: if you're gonna eat it, make sure you're sourcing, you know,
Speaker 15: the highest quality, because we think that's better for you,
Speaker 15: whether it's antibiotic free, free range, grass fed, et cetera.
Speaker 4: We're speaking with Eugen Kang. We're speaking with Eugene Kang.
Speaker 4: He's the founder and CEO of Archer makes meat sticks
Speaker 4: from grass fed beef and all natural turkey. Joins us
Speaker 4: from LA. What's the product pipeline look like beyond turkey,
Speaker 4: beyond beef.
Speaker 15: Yeah, Look, I think we launched a really cool bison
Speaker 15: pasture raised bison jerky and whole foods and sprouts nationwide.
Speaker 3: Kind of Beisenberger. They're kind of good.
Speaker 15: Bison's really fun. Not not a lot of source for it, so,
Speaker 15: you know, harder scale. Look, look, we're exploring other protein
Speaker 15: alternatives right other animals in whether it's the stick or
Speaker 15: meat or beef jerky or jerky format. I'd say for us,
Speaker 15: given the growth, we actually feel like a lot of
Speaker 15: our sort of white space is still in distribution. I mean,
Speaker 15: convenience channel is you know, roughly thirty to forty percent
Speaker 15: of the overall meats in that category, and we play
Speaker 15: in less than one percent of it today, So we
Speaker 15: think there's big white space there, a lot of you know,
Speaker 15: despite all the store counts that we're in today, we
Speaker 15: actually think there's still plenty of distribution to go get
Speaker 15: in our current format and then continue to innovate on
Speaker 15: the pack format, right, Like, this consumer is completely new
Speaker 15: to the category despite it being a category it's been
Speaker 15: around for twenty years. Like our consumers that we brought
Speaker 15: in through this like premiumization, this better for you position
Speaker 15: is entirely incremental, and so for us, it's like, Okay,
Speaker 15: how do we think about new unique platformats to meet
Speaker 15: the consumer where they are given the US education And
Speaker 15: that's kind of our view right now.
Speaker 4: Just very briefly. Competition, there's no shortage. You've got Chomps,
Speaker 4: You've got Vermont, that's just a couple country. You got
Speaker 4: other ones as well. I mean those are the two
Speaker 4: on the tip of my tongue. How do you stand out?
Speaker 15: Yeah, I mean we're the fourth largest in the country.
Speaker 15: You know, we are right behind the big conventional stalwarts
Speaker 15: like a jack Link's like a slim Gym. Those are
Speaker 15: more conventionally positioned and they're like legacy brands. Chomps is
Speaker 15: a phenomenal brand as well. I mean we are kind
Speaker 15: of neck and neck in terms of like size and
Speaker 15: scale and ultimately driving a lot of the growth.
Speaker 16: Frankly in the category. I would actually argue that.
Speaker 15: If you removed us in Chumps from the ecosystem, the
Speaker 15: category wouldn't be growing as fast as it would be, So.
Speaker 3: Eugene, that's really quick ten seconds. You're going to go
Speaker 3: it alone? Or are you looking for someone to buy
Speaker 3: you guys out?
Speaker 15: Like the company has been built on scalability and sustainability,
Speaker 15: and for us, you know, we're always open to options, right.
Speaker 4: That was Eugene Gang, founder and CEO of the meatstick company.
Speaker 3: Archer still Ad on Bloomberg Business Week. Over fifty five
Speaker 3: thousand runners we'll be pounding the pavement for the New
Speaker 3: York City Marathon this weekend. We talked to the CEO
Speaker 3: behind it all.
Speaker 4: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
Speaker 1: us live weekday afternoons from two to five eastering. Listen
Speaker 1: on Applecarplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 4: This weekend, more than fifty five thousand people from all
Speaker 4: over the world, we'll take to the streets of New
Speaker 4: York City to run the more than twenty six miles
Speaker 4: through the five boroughs of the city.
Speaker 3: You know someone who's going to be running in it.
Speaker 4: My wife is doing it this year. She's wanted to
Speaker 4: do it for years. Really she is.
Speaker 3: Yeah, that's so much, is it?
Speaker 4: Kid's gotten the way of planning for this over the
Speaker 4: last two years, but she's finally making it happen. We're
Speaker 4: excited to cheer for her, and you guys should all
Speaker 4: cheer for her too when you see her running. We've
Speaker 4: got with us Rob Similcare, CEO of New York road Runners.
Speaker 4: It's the nonprofit that puts on the TCS New York Marathon.
Speaker 4: He joins us from New York. Rob, good to have
Speaker 4: you with us. The Roadrunners. You guys do stuff throughout
Speaker 4: the year, but no question. Do you pretty much start
Speaker 4: planning the marathon the Monday after the Sunday of the marathon.
Speaker 16: No, we don't wait that long.
Speaker 17: We've already been planning the twenty twenty six marathon now
Speaker 17: for several months. So yeah, we get out more than
Speaker 17: a year ahead because this is a massive operation, as
Speaker 17: you can imagine, more than fifty five thousand runners going
Speaker 17: from Staten Island to Central Park, and we've got hundreds
Speaker 17: of staff, thousands of volunteers involved in this, so it's
Speaker 17: really like a military operation.
Speaker 16: And the planning begins more than a year out.
Speaker 4: It's pretty remarkable for anyone who has not seen it.
Speaker 4: It's I think it's actually one of the best days
Speaker 4: to be New York City.
Speaker 3: It's pretty cool, right, Oh.
Speaker 4: I mean I always get I get like goosebumps when
Speaker 4: I watch because it's like everybody is so happy, even
Speaker 4: though some of them look like they're in pain. It's
Speaker 4: pretty well, we just never see. It's the way that
Speaker 4: New Yorkers come together in a way that I can't
Speaker 4: believe I'm selling this thing, but I mean I find
Speaker 4: in every year a friend who comes in every year
Speaker 4: to do it, and he runs marathons all over the world,
Speaker 4: and he's like, there is nothing like the New York
Speaker 4: City Marathon.
Speaker 3: Rob, Why do you think that is the case?
Speaker 17: I just think that, you know, he said it in
Speaker 17: a way, it's a day that New Yorkers come out
Speaker 17: to cheer for total strangers. You know, you don't see
Speaker 17: that every day in a city like New York. We're
Speaker 17: known to be pretty tough. New York can be a
Speaker 17: tough place to live, and you know, we're obviously all
Speaker 17: really tough people in New York City.
Speaker 16: That's part of what makes this New Yorkers.
Speaker 17: But it's the day that we come out, we cheer
Speaker 17: for strangers, whether they're from down the block or across
Speaker 17: the world, because I think everybody respects what it takes
Speaker 17: to run twenty six point two miles, and everybody wants
Speaker 17: them to succeed. You know, we're not rooting against anybody.
Speaker 17: We're rooting for everyone. And we may be out there
Speaker 17: to see our spouse or our colleague or our friend,
Speaker 17: but every person who passes, we're rooting for them to
Speaker 17: succeed in their goal or reaching the finish line.
Speaker 3: So fifty five thousand people all over the world, how
Speaker 3: many people like actually reach out to be a part
Speaker 3: of this. I'm assuming that there is a number that
Speaker 3: you guys just don't want to exceed.
Speaker 16: Yeah, that's right. I mean this year we had over.
Speaker 17: Two hundred thousand applications to our drawing, so that was
Speaker 17: a big number. We also have a countless number of
Speaker 17: requests coming in for people to run for charities or
Speaker 17: other organizations in the marathon. So the interest level, if
Speaker 17: you add it all up, is probably close to half
Speaker 17: a million people who would like to run the marathon
Speaker 17: and reach out to try to.
Speaker 16: Do it every year.
Speaker 17: We obviously want to keep the number to a number
Speaker 17: that we think is manageable. So this year we're going
Speaker 17: to be in that fifty five thousand plus range to
Speaker 17: make sure that everybody has a great day. But we're
Speaker 17: always looking for ways to get more people into the marathon,
Speaker 17: and the application window for next year is already open.
Speaker 17: You can already apply to be a part of our
Speaker 17: Team for Kids charity team for twenty twenty six on
Speaker 17: our website and YRR dot org.
Speaker 16: We also have a sweepstakes going on right now.
Speaker 17: You can enter to buy a chance to get free
Speaker 17: entry for you and a friend into the marathon next year,
Speaker 17: and the proceeds from that go to support our nonprofit
Speaker 17: mission to get kids and adults running in New York.
Speaker 4: Yeah, it is really it's really hard to get into, Carol.
Speaker 4: I mean my wife did because we live in New York.
Speaker 4: She did the New York road Runners. I think it's
Speaker 4: nine plus one, Is that right? Rob?
Speaker 16: That's right?
Speaker 6: But do you still do this?
Speaker 4: Do you still do that?
Speaker 6: Or yeah? We do?
Speaker 4: Okay, explain how that works for New Yorkers.
Speaker 17: You're in the Yeah, if you're in the New York
Speaker 17: area and you run nine races in a calendar year,
Speaker 17: plus volunteer at one of them, you are guaranteed entry
Speaker 17: into the next year's marathon.
Speaker 16: So that's one of the most popular.
Speaker 17: Ways to get in and obviously favors New York City
Speaker 17: area residents.
Speaker 16: And yeah, we had a lot of people get in
Speaker 16: that way.
Speaker 4: Okay, so let's talk economic impact here, because I got
Speaker 4: my buddy coming in. It comes in every year. This time,
Speaker 4: he's not coming in solo. He's bringing his two kids,
Speaker 4: he's bringing his wife. They're staying at a fancy hotel
Speaker 4: in Midtown. They're gonna make a vacation of it. He's
Speaker 4: going to drop some serious coin to do that. I
Speaker 4: imagine the New York City Marathon has a huge economic
Speaker 4: effect on the city.
Speaker 6: Yes.
Speaker 17: In fact, we just completed a study about a month
Speaker 17: ago on the economic impact of the marathon.
Speaker 16: And New York Roadrunners across the board on New York.
Speaker 17: City, and we found that the marathon contributes just about
Speaker 17: seven hundred million dollars a year to the economy of
Speaker 17: New York City. All year, New York Roadrunners, with our
Speaker 17: other races and events, contributes close to a billion dollars.
Speaker 17: And so that's actually more economic impact than all of
Speaker 17: the Mets and Yankees home games, Wow combined and.
Speaker 16: The story of your friends a big part of the
Speaker 16: reason why.
Speaker 17: Right, You've got people from all over the world who
Speaker 17: are coming to New York. They're bringing their friends, they're
Speaker 17: bringing their family. A lot of them are staying in
Speaker 17: hotels multiple nights. About forty percent of our field this
Speaker 17: year will be international. So those folks are coming in
Speaker 17: for a sustained period of time. They're staying at hotels,
Speaker 17: they're eating at restaurants, they're going to Broadway shows, they're
Speaker 17: doing all the things you do when you visit New
Speaker 17: York And so running the marathon is just kind of
Speaker 17: the centerpiece of a big trip to New York City.
Speaker 17: And let's face it, November is not peak tourist season, right,
Speaker 17: So we're bringing in a huge number of visitors to
Speaker 17: the city at a time that otherwise would be pretty quiet.
Speaker 3: Wait, Rob, how much of that spending is the car
Speaker 3: bload before the marathon?
Speaker 5: Right?
Speaker 3: Like all those restaurants offering up pasta, I mean there's
Speaker 3: a lot of that going on.
Speaker 4: Too, right.
Speaker 17: Oh yeah, this is a good week to own an
Speaker 17: Italian restaurant in New York City, And we know that
Speaker 17: they are all dialed up their pasta menus, their prefigs menus.
Speaker 17: So absolutely it's a very good week for the pasta
Speaker 17: and rice too.
Speaker 16: Rice is also good carbs.
Speaker 4: You know, Carol and I travel the week in the
Speaker 4: two days after the marathon every year, and one cool
Speaker 4: thing about New York is you see everybody who completed
Speaker 4: the marathon on the subway on the way home, they
Speaker 4: wear they're wearing the metals then throughout the week and
Speaker 4: I I just remember the lastew years because we've we're
Speaker 4: going to Schwab Impact next week, Carol. Right, it's always
Speaker 4: around this time of year. We fly on the plane,
Speaker 4: there's always people wearing their medals at the airport on
Speaker 4: the plane with us, and you know, there's this cool
Speaker 4: like moment that you have with these people who are like, congratulations,
Speaker 4: that was a lot of work you did it.
Speaker 3: It's like such a community feel. It is pretty amazing.
Speaker 4: Right, So it's not New York the New York that
Speaker 4: Rob was describing, right, like the sharp elbows, like give
Speaker 4: me some room on the subway.
Speaker 3: Here, it's really really sweet, like in a world where
Speaker 3: it feels like there's a lot coming at people. I
Speaker 3: don't know what year are you guys in doing this.
Speaker 17: Next year will be the fiftieth anniversary of the Five
Speaker 17: Borough New York City Marathon that started and starts in
Speaker 17: Staten Island and ends in New York City, So the
Speaker 17: original race was just lapsed in Central Park in the
Speaker 17: early seventies. But next year will be really a big,
Speaker 17: big anniversary because that's what people think of when they
Speaker 17: think of the marathon is crossing the Arizona Bridge, running
Speaker 17: through all five boroughs, So next year.
Speaker 16: Will be a big year with that fiftieth anniversary.
Speaker 3: I just love it. How much has the race I
Speaker 3: mean you said how it started, you know, laps around
Speaker 3: Central Park? How often? How much has the route changed
Speaker 3: over the years.
Speaker 17: It hasn't changed very much since they started that race,
Speaker 17: covering five brows. Minor changes here and there, but it
Speaker 17: really has not changed very much. That start line on
Speaker 17: the Staten Island side of the Arizona and Hours Bridge,
Speaker 17: and that finish line right a tavern on the Greens,
Speaker 17: So you're running the same course that people have been
Speaker 17: running for decades and decades, And I think that's one
Speaker 17: of the things that makes it special because you can
Speaker 17: compare your times to the times of your friends years ago,
Speaker 17: the times of yourself if you've run it a lot
Speaker 17: of years. So that's one of the things that runners
Speaker 17: love to do, is compare times, and it's you know,
Speaker 17: it's stayed pretty constant, so those comparisons hold true.
Speaker 4: Yeah, I'm wondering how much the Athletes with Disabilities program
Speaker 4: has changed in over the years, because that, to me,
Speaker 4: is one of the most special parts of the marathon.
Speaker 4: And I know that there are different physical impairments that
Speaker 4: make athletes with disabilities eligible to run in the New
Speaker 4: York City Marathon. But seeing those folks, whether they're visually
Speaker 4: impaired and they're guided by another runner, or they're using
Speaker 4: hand cycles because they've lost the use of their legs, well,
Speaker 4: that's actually a separate race, we should note. But it's
Speaker 4: pretty remarkable to see. Rob.
Speaker 16: Yeah, thank you for bringing that up.
Speaker 17: I mean, we do have a significant number of athletes
Speaker 17: with disabilities who enter our race. There are a number
Speaker 17: of ways for them to do that. They can enter
Speaker 17: directly with us. We have our own AWD as we
Speaker 17: call it program. We have a great partnership with Achilles International.
Speaker 17: I think if you've run our races or stood on
Speaker 17: the sidelines for a lot of our races, you'll see
Speaker 17: the Achilles athletes going by. They always wear this highlighter
Speaker 17: yellow shirt and they always are I think some of
Speaker 17: the stars of the marathon. People will yell out, go
Speaker 17: Achilles when they see these athletes go by. You'll see
Speaker 17: them with you know, one or sometimes two guides on
Speaker 17: either side of them, just to make sure they stay safe.
Speaker 17: And I think that's what the marathon is all about.
Speaker 17: It's what inspires people, is folks overcoming these incredible odds.
Speaker 16: You know.
Speaker 17: We just released a film that's on YouTube actually out
Speaker 17: today called twenty six point two. I recommend everybody check
Speaker 17: it out. It's a short film about thirty minutes long,
Speaker 17: and it tells the story of four runners who ran
Speaker 17: the marathon last year, and they each had significant challenges.
Speaker 17: One was overcoming cancer, one had had a stroke, one
Speaker 17: was you know, basically having to walk the marathon, you know,
Speaker 17: and they're incredible stories, and I think that's the thing
Speaker 17: that makes the marathon special.
Speaker 16: Yes, we love the fast.
Speaker 17: Runners, we love the ones who win and who run
Speaker 17: it under three or even two and a half hours,
Speaker 17: but it's those stories of overcoming struggle and challenges that
Speaker 17: I think make it really special.
Speaker 3: That's pretty cool. Yeah, a documentary, right, and just to
Speaker 3: kind of show you're right. It's the people, right, and
Speaker 3: some of them who are struggling physically and maybe even emotionally, right,
Speaker 3: but they all come together and with this common goal.
Speaker 3: It's a pretty cool thing. Rob, Thank you so much.
Speaker 3: Good luck fingers crossed. Really good weather. We've had some
Speaker 3: good weekend weather, so let's hope it continues this weekend.
Speaker 3: And good luck to your wife.
Speaker 16: Yeah.
Speaker 4: Uh, she's training, she's been training, she's excited. She's wanted
Speaker 4: to do this for years. I mean we've lived in
Speaker 4: New York for like, gosh, close to twenty years at
Speaker 4: this point. Yeah, and this is finally the year she's
Speaker 4: making it happen. So really cool. Rob Similcare CEO of
Speaker 4: New York road Runners. He's also a two time New
Speaker 4: York Marathon finisher as well. See the medals there behind him.
Speaker 4: The New York road Runners is the nonprofit that puts
Speaker 4: on the TCS New York Marathon. Rob joining us from
Speaker 4: New York, I do seriously want to encourage anybody who
Speaker 4: has never seen the marathon. It is one of the
Speaker 4: most special days here in New York. City. Go check
Speaker 4: it out. We have friends coming in from Westchester County.
Speaker 4: We have friends coming in from New Jersey. Everybody makes
Speaker 4: a day of it. They're not just coming to watch
Speaker 4: my wife. They're like, yeah, I mean I haven't done
Speaker 4: it a long time. Great thing and a little secret.
Speaker 4: Where bring the kids bikes as the last runners go through,
Speaker 4: sneak onto those closed roads and bike through.
Speaker 8: Rob.
Speaker 4: I probably shouldn't say I see Rob. He's probably don't
Speaker 4: say this to stay away from the New York City
Speaker 4: sanitation trucks that are coming to clean up everything.
Speaker 3: But the kids can just ride the roads, right, Yeah,
Speaker 3: the kids can just ride their roads.
Speaker 4: This is a special day in New York.
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