1 00:00:12,640 --> 00:00:15,360 Speaker 1: This is Wall Street Week. I'm David Western bringing you 2 00:00:15,520 --> 00:00:19,639 Speaker 1: stories of capitalism. Saudi Arabia's Vision twenty thirty project to 3 00:00:19,680 --> 00:00:23,320 Speaker 1: reshape its economy has a deadline only four short years away. 4 00:00:23,880 --> 00:00:26,200 Speaker 1: We go to the Kingdom to see how it's coming on. 5 00:00:26,239 --> 00:00:31,040 Speaker 1: An important part of the plan, tourism plus Israel's startup 6 00:00:31,160 --> 00:00:33,680 Speaker 1: nation has been put to the test with the Warren Gaza. 7 00:00:34,080 --> 00:00:38,000 Speaker 1: Has the conflict slowed down the tech juggernaut or actually 8 00:00:38,040 --> 00:00:41,600 Speaker 1: sped it up? And more people want to ski, but 9 00:00:41,680 --> 00:00:45,360 Speaker 1: they need snow and access to big mountains. We explore 10 00:00:45,400 --> 00:00:48,840 Speaker 1: the pluses and minuses of one possible solution, so called 11 00:00:49,080 --> 00:00:54,000 Speaker 1: Big Ski. But we start with the story of the 12 00:00:54,040 --> 00:00:57,600 Speaker 1: week for the Federal Reserve with Chair J. Powell reacting 13 00:00:57,760 --> 00:01:01,440 Speaker 1: forcefully to a grand jury subpoena looking into his testimony 14 00:01:01,600 --> 00:01:04,760 Speaker 1: about renovations in the Fed's DC office building. 15 00:01:05,319 --> 00:01:08,000 Speaker 2: The threat of criminal charges is a consequence of the 16 00:01:08,040 --> 00:01:12,160 Speaker 2: Federal Reserve setting interest rates based on our best assessment 17 00:01:12,280 --> 00:01:15,080 Speaker 2: of what will serve the public, rather than following the 18 00:01:15,120 --> 00:01:19,920 Speaker 2: preferences of the President. Public service sometimes requires standing firm 19 00:01:20,000 --> 00:01:23,160 Speaker 2: in the face of threats. I will continue to do 20 00:01:23,240 --> 00:01:26,880 Speaker 2: the job. The Senate confirmed me to do with integrity 21 00:01:27,120 --> 00:01:29,520 Speaker 2: and a commitment to serving the American people. 22 00:01:30,800 --> 00:01:34,039 Speaker 1: Everyone from central bankers around the world to several Republican 23 00:01:34,080 --> 00:01:38,520 Speaker 1: senators condemned the move, including Senior Senate Banking Committee member 24 00:01:38,680 --> 00:01:41,800 Speaker 1: Tom Tillis, who spoke with Bloomberg on Capitol Hill. 25 00:01:42,440 --> 00:01:45,800 Speaker 3: If suddenly the threat of a lawsuit can take a 26 00:01:45,880 --> 00:01:48,560 Speaker 3: chair out of play, how can anybody think that that's 27 00:01:48,600 --> 00:01:51,800 Speaker 3: anything more than a de facto ending the independence of 28 00:01:51,800 --> 00:01:53,400 Speaker 3: the FED. And we all know what that does to 29 00:01:53,480 --> 00:01:58,360 Speaker 3: markets worldwide. I will block any effort to name any 30 00:01:58,600 --> 00:02:02,680 Speaker 3: member of the FED board until this matter is resolved. 31 00:02:02,720 --> 00:02:06,120 Speaker 3: To move on would almost validate that this is a 32 00:02:06,160 --> 00:02:09,000 Speaker 3: way that you can actually get the FED under heel. 33 00:02:09,600 --> 00:02:12,440 Speaker 1: Bill Dudley is former president of the New York Fed 34 00:02:12,680 --> 00:02:15,760 Speaker 1: and now a Bloomberg contributor. There was a lot of 35 00:02:15,800 --> 00:02:19,040 Speaker 1: reaction to the news that there was a grand jury 36 00:02:19,080 --> 00:02:22,880 Speaker 1: subpoena against the Federal Reserve and Chair Powell. A lot 37 00:02:22,880 --> 00:02:28,360 Speaker 1: of reaction by politicians by the news media. There wasn't 38 00:02:28,400 --> 00:02:31,760 Speaker 1: as much reaction actually in the markets. So is one 39 00:02:31,760 --> 00:02:33,040 Speaker 1: of them right and one of them wrong? 40 00:02:33,760 --> 00:02:37,080 Speaker 4: Well, time will tell, but I think the market view 41 00:02:37,160 --> 00:02:40,880 Speaker 4: is Look, the issue is subpoena. It's a long way 42 00:02:40,880 --> 00:02:44,119 Speaker 4: from issuing a subpoena to actually having a grand jury, 43 00:02:44,160 --> 00:02:48,440 Speaker 4: indictment a trial, and that's going to take so long. 44 00:02:48,880 --> 00:02:51,360 Speaker 4: Paul is already longer going to be Chair. So I 45 00:02:51,360 --> 00:02:53,520 Speaker 4: think the market view is this is sort of a 46 00:02:53,560 --> 00:02:54,600 Speaker 4: lot of noise. 47 00:02:54,880 --> 00:02:57,720 Speaker 1: So it may not have the effects in the real world. 48 00:02:57,840 --> 00:03:02,880 Speaker 1: But Chair Powell, who had repeatedly just sloughed off christ 49 00:03:02,919 --> 00:03:05,440 Speaker 1: as the lass, had an entirely different reaction. It was 50 00:03:05,440 --> 00:03:07,920 Speaker 1: a very I thought, forceful statement that he take. 51 00:03:07,960 --> 00:03:08,640 Speaker 5: Oh very much so. 52 00:03:08,800 --> 00:03:11,360 Speaker 4: And the contrast was how he behaved previously, where he 53 00:03:11,440 --> 00:03:12,960 Speaker 4: was basically I'm not going to engage. I'm not going 54 00:03:13,000 --> 00:03:15,160 Speaker 4: to engage, and this time he said, no, you crossed 55 00:03:15,160 --> 00:03:18,680 Speaker 4: the line. You're accusing me of malfeasance and I'm not 56 00:03:18,720 --> 00:03:20,680 Speaker 4: going to take it. And so I think it because 57 00:03:20,880 --> 00:03:23,000 Speaker 4: because he was so measured before, this made it even 58 00:03:23,040 --> 00:03:23,679 Speaker 4: more effective. 59 00:03:23,919 --> 00:03:27,040 Speaker 1: So you've been in the room and whenever we ask 60 00:03:27,120 --> 00:03:29,480 Speaker 1: somebody who's on the FED, they say, oh, no, no, 61 00:03:29,520 --> 00:03:31,840 Speaker 1: we paid no attention to politics all absolutely not. Doesn't 62 00:03:31,840 --> 00:03:34,600 Speaker 1: affect us. But you are human beings. I mean, it 63 00:03:34,720 --> 00:03:36,760 Speaker 1: must play in the back of your mind somewhere, even 64 00:03:36,800 --> 00:03:38,120 Speaker 1: if it's not discussed in the meeting. 65 00:03:39,040 --> 00:03:41,600 Speaker 4: Look at the federals or transcripts of all the FMC 66 00:03:41,720 --> 00:03:44,920 Speaker 4: meetings released lag of five years, and you won't see 67 00:03:44,960 --> 00:03:49,080 Speaker 4: any discussion about political consideration. So I think that's actually true. 68 00:03:49,320 --> 00:03:51,640 Speaker 4: But you know, you're certainly right in the sense that 69 00:03:51,720 --> 00:03:55,040 Speaker 4: if the administration is putting tremendous pressure on the FED 70 00:03:55,080 --> 00:03:57,760 Speaker 4: to do something, that makes it a little bit more 71 00:03:57,760 --> 00:04:01,800 Speaker 4: difficult for the FED to deliver what the administration actually 72 00:04:01,840 --> 00:04:05,119 Speaker 4: wants because it creates the idea of are they doing 73 00:04:05,120 --> 00:04:07,160 Speaker 4: it because they think this is appropriate for the economy, 74 00:04:07,600 --> 00:04:10,840 Speaker 4: or are they caving to the administration's pressure. So I 75 00:04:10,880 --> 00:04:13,840 Speaker 4: think that's why it's actually counterproductive what they're doing. I 76 00:04:13,840 --> 00:04:15,880 Speaker 4: can imagine Powell like thinking, should I do one more 77 00:04:15,920 --> 00:04:18,600 Speaker 4: ray cut or not? Boy, Now, if I do a 78 00:04:18,680 --> 00:04:21,719 Speaker 4: ray cut, it looks like I'm bending to this pressure. 79 00:04:22,279 --> 00:04:24,240 Speaker 4: Maybe I better hold off. So it's actually making it 80 00:04:24,240 --> 00:04:25,640 Speaker 4: more difficult for the feder cut rates. 81 00:04:25,640 --> 00:04:29,360 Speaker 1: Frankly, as you say, chair pole is terribly up. In May, 82 00:04:29,640 --> 00:04:34,080 Speaker 1: there will be a new FED chair. How much difference 83 00:04:34,640 --> 00:04:36,719 Speaker 1: will the chair make in themselves? 84 00:04:36,800 --> 00:04:40,680 Speaker 4: I think the chair is certainly important because one they 85 00:04:41,080 --> 00:04:45,240 Speaker 4: control the agenda, the boards, Board of Governor's staff works 86 00:04:45,279 --> 00:04:49,120 Speaker 4: mainly for the chairman, so that's a lot of authority. 87 00:04:49,680 --> 00:04:51,440 Speaker 1: But at the end of the day, in terms of 88 00:04:51,480 --> 00:04:52,279 Speaker 1: the votes. 89 00:04:52,080 --> 00:04:54,240 Speaker 4: On the Federal Open Market Committee, the chair only has 90 00:04:54,279 --> 00:04:56,640 Speaker 4: one vote, and so I think the influence of the 91 00:04:56,680 --> 00:05:01,360 Speaker 4: chair really depends in part on how credible that person 92 00:05:01,440 --> 00:05:03,640 Speaker 4: is in terms of making the case for the monetary 93 00:05:03,680 --> 00:05:06,920 Speaker 4: policy that he wants to see implemented. So if someone 94 00:05:06,920 --> 00:05:09,279 Speaker 4: comes in and says we should cut one hundred basis 95 00:05:09,320 --> 00:05:13,440 Speaker 4: points and the economy doesn't suggest that that's appropriate, the 96 00:05:13,440 --> 00:05:15,640 Speaker 4: committee is going to say, well, that's what you think, 97 00:05:15,680 --> 00:05:18,320 Speaker 4: but we're going to dissent against that, and that's really 98 00:05:18,440 --> 00:05:20,120 Speaker 4: you know, that would actually be quite bad for the 99 00:05:20,200 --> 00:05:22,880 Speaker 4: chairman if the Chairman serve of lost a vote to 100 00:05:23,320 --> 00:05:25,560 Speaker 4: the rest of the committee. So I think there's quite 101 00:05:25,560 --> 00:05:28,640 Speaker 4: a few guardrails there. I think the broader question is 102 00:05:28,680 --> 00:05:31,839 Speaker 4: can the Trump administration put enough loyalists into the Federal 103 00:05:31,880 --> 00:05:35,760 Speaker 4: Reserve So it's not just the chairman, it's a majority 104 00:05:35,760 --> 00:05:38,680 Speaker 4: of voting members of the Federal Open Market Committee. And 105 00:05:38,720 --> 00:05:40,640 Speaker 4: that's why the LEAs of Cook case is so important, 106 00:05:40,920 --> 00:05:43,080 Speaker 4: because if leeds a Cook can be dismissed for cause, 107 00:05:43,120 --> 00:05:45,039 Speaker 4: So then maybe other people can be dismissed for cause 108 00:05:45,080 --> 00:05:47,880 Speaker 4: and then you get a much more rapid turnover of 109 00:05:48,040 --> 00:05:51,279 Speaker 4: the Board of Governors. Board of Governors has seven votes 110 00:05:51,279 --> 00:05:54,160 Speaker 4: on the FMC. The presidents have five, So if you 111 00:05:54,200 --> 00:05:56,360 Speaker 4: could take over the Board of Governors, you could actually 112 00:05:56,360 --> 00:05:58,520 Speaker 4: start to get the monetary policy you wanted. 113 00:05:58,839 --> 00:06:00,800 Speaker 1: From the outside, the job of Chair of the Federal 114 00:06:00,839 --> 00:06:05,080 Speaker 1: Reserve looks pretty hard for anyone anytime. Is President Trump 115 00:06:05,120 --> 00:06:08,560 Speaker 1: making it harder for the next chair with what he's 116 00:06:08,600 --> 00:06:10,599 Speaker 1: saying and doing, including his grand jury subpoena? 117 00:06:10,760 --> 00:06:12,719 Speaker 4: Yeah, I think he is, because I think it's it's 118 00:06:13,200 --> 00:06:14,840 Speaker 4: when the new chair comes in, people are going to 119 00:06:14,880 --> 00:06:18,640 Speaker 4: be wondering, so are you President Trump's lackey or are 120 00:06:18,680 --> 00:06:21,560 Speaker 4: you going to be on the side of independent monetary 121 00:06:21,560 --> 00:06:24,080 Speaker 4: policy based on what the economy calls for in terms 122 00:06:24,080 --> 00:06:28,000 Speaker 4: of inflation, unemployment, what what what interest rate? Pastoul we 123 00:06:28,080 --> 00:06:31,280 Speaker 4: follow And so there's gonna be a question about are 124 00:06:31,320 --> 00:06:34,800 Speaker 4: you supporting the idea of an independent central bank or not? 125 00:06:34,920 --> 00:06:37,359 Speaker 4: And so the new incoming chair is caught in a 126 00:06:37,440 --> 00:06:40,800 Speaker 4: very difficult place. Frankly, I mean it's almost like they're 127 00:06:40,800 --> 00:06:43,760 Speaker 4: going to get someone mad at them if they if 128 00:06:43,800 --> 00:06:47,320 Speaker 4: they side on the side of independence of Monterrey. Pauls 129 00:06:47,360 --> 00:06:49,880 Speaker 4: let's set the right monetary policy. That might run into 130 00:06:49,960 --> 00:06:52,400 Speaker 4: conflict with the president. And obviously if he tries to 131 00:06:52,400 --> 00:06:55,360 Speaker 4: push the president's agenda and the and the FMC thinks 132 00:06:55,400 --> 00:06:57,440 Speaker 4: that's inappropriate, then he's going to get out on the 133 00:06:57,480 --> 00:07:00,320 Speaker 4: wrong side of the FMC. So I wouldn't want to 134 00:07:00,320 --> 00:07:01,039 Speaker 4: be the new chair. 135 00:07:01,120 --> 00:07:04,000 Speaker 1: Frankly, it strikes me when it comes to the Supreme Court, 136 00:07:04,680 --> 00:07:06,800 Speaker 1: the President typically goes out of his way to say 137 00:07:06,880 --> 00:07:09,120 Speaker 1: I didn't ask, for example, how they would vote on 138 00:07:09,160 --> 00:07:11,320 Speaker 1: this particular issue. I didn't ask that question of ask. 139 00:07:11,680 --> 00:07:14,240 Speaker 1: I'm not sure President Trump would have the same reticence 140 00:07:14,320 --> 00:07:17,240 Speaker 1: with the next FED chair of not asking them specifically, 141 00:07:17,240 --> 00:07:17,960 Speaker 1: what are you going to do? 142 00:07:18,800 --> 00:07:21,120 Speaker 4: I wouldn't be surprised if you asked them what to do. 143 00:07:21,200 --> 00:07:22,520 Speaker 4: And I think if I was a FED schaer, I'd 144 00:07:22,560 --> 00:07:25,640 Speaker 4: say it depends on the incoming economic data and what's 145 00:07:25,680 --> 00:07:28,520 Speaker 4: wanted to keep the economy on a smooth clude path. 146 00:07:28,920 --> 00:07:31,680 Speaker 4: I mean, look, I think President Trump, you know, is 147 00:07:31,680 --> 00:07:34,480 Speaker 4: coming at it from a real estate development perspective, and 148 00:07:34,560 --> 00:07:37,680 Speaker 4: which is lower rates are always good. But the reality 149 00:07:37,800 --> 00:07:40,680 Speaker 4: is lower rates aren't always good, because if you set 150 00:07:40,760 --> 00:07:42,480 Speaker 4: rates too low, the economy will overheat and you'll have. 151 00:07:42,480 --> 00:07:43,120 Speaker 1: An inflation problem. 152 00:07:43,160 --> 00:07:45,560 Speaker 4: It's sort of ironic in an environment where people are 153 00:07:45,560 --> 00:07:49,000 Speaker 4: worried about affordability that inflation is the thing that really 154 00:07:49,080 --> 00:07:52,040 Speaker 4: resonates with voters that you're pressing so hard for lower 155 00:07:52,080 --> 00:07:54,679 Speaker 4: interest rates, which would actually probably make inflation worse. 156 00:07:55,400 --> 00:07:58,120 Speaker 1: President Trump has said repeatedly I have the right to 157 00:07:58,160 --> 00:08:00,640 Speaker 1: express my views. I think I'm pretty sure this, and 158 00:08:01,320 --> 00:08:02,800 Speaker 1: there is a first men right. Even with the resident 159 00:08:02,840 --> 00:08:06,720 Speaker 1: United States expressive views. Is there a point where that 160 00:08:06,760 --> 00:08:09,480 Speaker 1: expression of views actually starts to do long term damage 161 00:08:09,520 --> 00:08:10,200 Speaker 1: to the institution. 162 00:08:10,920 --> 00:08:13,600 Speaker 4: I think how it depends on how you're expressing the 163 00:08:13,680 --> 00:08:15,920 Speaker 4: point of view. You could say, my view is that 164 00:08:15,960 --> 00:08:19,400 Speaker 4: the federshar Raser should interest rates more. Fine, that's just 165 00:08:19,440 --> 00:08:22,760 Speaker 4: an impression of view. Powell is an idiot. He better 166 00:08:23,280 --> 00:08:25,640 Speaker 4: lower interest rates by one hundred basis points or I'll 167 00:08:25,680 --> 00:08:28,440 Speaker 4: fire him. That's a totally different expression of a point 168 00:08:28,440 --> 00:08:30,600 Speaker 4: of view. One is saying what I think interest rates 169 00:08:30,960 --> 00:08:33,320 Speaker 4: should be. The other thing, not only is what do 170 00:08:33,440 --> 00:08:35,480 Speaker 4: I think introduce rate should be? This should be the 171 00:08:35,480 --> 00:08:38,959 Speaker 4: consequence of my decision. So I think there are two 172 00:08:38,960 --> 00:08:40,760 Speaker 4: different things. So I don't think anyone quarrels with the 173 00:08:40,760 --> 00:08:42,360 Speaker 4: President having a view on interest rates. 174 00:08:42,720 --> 00:08:46,440 Speaker 1: The latter is what the President has done, yes, which 175 00:08:46,480 --> 00:08:49,840 Speaker 1: would imply there is some damage being done. How long 176 00:08:49,960 --> 00:08:51,640 Speaker 1: lasting is that? I mean, there will be a new 177 00:08:51,679 --> 00:08:54,680 Speaker 1: president at some point, and let's assume a new person 178 00:08:54,720 --> 00:08:56,720 Speaker 1: comes in say no, I'm not going to criticize the 179 00:08:56,720 --> 00:08:59,640 Speaker 1: FED anymore. Does it restore the credibility or is there 180 00:09:00,400 --> 00:09:01,559 Speaker 1: lingering damage? 181 00:09:02,679 --> 00:09:04,360 Speaker 4: I mean, I think it depends on how the Federals 182 00:09:04,360 --> 00:09:06,120 Speaker 4: are behaves over the next couple of years. You know, 183 00:09:06,160 --> 00:09:08,480 Speaker 4: if the Federals are basically sticks to his knitting, he 184 00:09:08,600 --> 00:09:11,199 Speaker 4: touch monetary policy independent way, keeps the economy on a 185 00:09:11,240 --> 00:09:16,240 Speaker 4: smooth dijectory lasting damage. The President Trump's were swarted in 186 00:09:16,280 --> 00:09:17,800 Speaker 4: his attempts to take over the FED. 187 00:09:18,200 --> 00:09:19,800 Speaker 5: But if President. 188 00:09:19,480 --> 00:09:21,920 Speaker 4: Trump is somehow successful in taking over the FED and 189 00:09:21,960 --> 00:09:25,320 Speaker 4: getting a very accommodative monetary policy of the consequence that's 190 00:09:25,360 --> 00:09:28,320 Speaker 4: not appropriate for the economic outlook, then of course there'll 191 00:09:28,360 --> 00:09:31,200 Speaker 4: be more lasting damage to the FED. 192 00:09:31,480 --> 00:09:34,199 Speaker 1: Take us inside the room when the f OBC meets, 193 00:09:34,600 --> 00:09:38,200 Speaker 1: because historically it's sort of been like secret, we don't 194 00:09:38,240 --> 00:09:38,760 Speaker 1: know what's going on. 195 00:09:38,920 --> 00:09:41,640 Speaker 4: Well, you have the transcripts, and I think the transcripts 196 00:09:41,640 --> 00:09:44,240 Speaker 4: tram trips are pretty accurate about what the meetings are like. 197 00:09:44,640 --> 00:09:47,080 Speaker 4: You know, basically what happens at a meeting is typically 198 00:09:47,080 --> 00:09:50,600 Speaker 4: you have a briefing from from the from the system 199 00:09:50,640 --> 00:09:53,520 Speaker 4: open the manager about what's going on in markets. Then 200 00:09:53,520 --> 00:09:56,800 Speaker 4: you have a briefing from on the economy from the staff, 201 00:09:56,840 --> 00:09:59,560 Speaker 4: and then briefing on international staff, and then you have 202 00:09:59,559 --> 00:10:02,120 Speaker 4: a go around and everyone talks about their views on 203 00:10:02,160 --> 00:10:06,319 Speaker 4: the economic outlook. It's a pretty collegial place. I mean, 204 00:10:06,440 --> 00:10:09,359 Speaker 4: you know, if you you know, people want to understand 205 00:10:09,360 --> 00:10:13,440 Speaker 4: the views of others. People aren't yelling and screaming and arguing, 206 00:10:13,480 --> 00:10:17,440 Speaker 4: you know, vociferously. It's it's very respectful and you know, 207 00:10:17,480 --> 00:10:19,560 Speaker 4: people spend you know, quite a bit of time, you know, 208 00:10:19,559 --> 00:10:21,280 Speaker 4: when the meeting is not in place actually you know, 209 00:10:21,440 --> 00:10:23,480 Speaker 4: you know, talking in the hall, the coffee, you know, 210 00:10:23,520 --> 00:10:26,240 Speaker 4: having a cup of coffee on the break or at 211 00:10:26,280 --> 00:10:29,480 Speaker 4: the breakfast or lunch. So I would say, you know, 212 00:10:29,600 --> 00:10:32,320 Speaker 4: I find it to be quite collegial, you know, and 213 00:10:32,360 --> 00:10:36,680 Speaker 4: I think that's and I think that makes the institution 214 00:10:36,800 --> 00:10:37,480 Speaker 4: function better. 215 00:10:38,280 --> 00:10:41,719 Speaker 1: A collegiate place where one in Lisa Cook and now 216 00:10:41,800 --> 00:10:45,760 Speaker 1: two in the chair J Powell are under very public attack, 217 00:10:45,840 --> 00:10:47,160 Speaker 1: a personal attack, and I think. 218 00:10:47,040 --> 00:10:50,840 Speaker 4: People are feeling there, you know, that could be me. 219 00:10:51,640 --> 00:10:53,080 Speaker 4: So I think, you know, there's quite a bit of 220 00:10:53,120 --> 00:10:56,840 Speaker 4: sympathy for what those two people are going through. So 221 00:10:56,960 --> 00:11:01,359 Speaker 4: I think, yeah, I think the federal reserves of leadership, 222 00:11:01,480 --> 00:11:04,160 Speaker 4: you know, including you know, all the FO ANDC participants 223 00:11:04,240 --> 00:11:07,160 Speaker 4: are pretty you are very sympathetic to where Paul's coming from. 224 00:11:07,240 --> 00:11:10,240 Speaker 4: And I think they feel really good about what he 225 00:11:10,440 --> 00:11:13,080 Speaker 4: did and said it had to say in his video 226 00:11:13,120 --> 00:11:14,240 Speaker 4: message this past weekend. 227 00:11:16,080 --> 00:11:19,200 Speaker 1: Up next competition in the Gulf between Saudi Arabia and 228 00:11:19,280 --> 00:11:35,120 Speaker 1: the UAE. This is a story about transforming a brand. 229 00:11:35,720 --> 00:11:38,560 Speaker 1: The Kingdom of Saudi Arabia has long been associated with 230 00:11:38,600 --> 00:11:41,679 Speaker 1: the Muslim holy cities of Mecca and Medina, and perhaps 231 00:11:41,720 --> 00:11:44,880 Speaker 1: even more so with oil, but the country's rulers have 232 00:11:44,920 --> 00:11:48,360 Speaker 1: been trying to diversify. What if it could become a 233 00:11:48,400 --> 00:11:53,120 Speaker 1: favorite vacation spot as well. Our colleague Jamana Bressecci brings 234 00:11:53,200 --> 00:11:55,640 Speaker 1: us the story. 235 00:11:56,400 --> 00:11:59,400 Speaker 6: Many countries seek to transform their economies, but few do 236 00:11:59,440 --> 00:12:02,480 Speaker 6: it with such a centralized approach and such vast amounts 237 00:12:02,480 --> 00:12:06,320 Speaker 6: of capital. Through its vision twenty thirty, Saudi Arabia wants 238 00:12:06,320 --> 00:12:08,520 Speaker 6: to shed its image as just an oil nation and 239 00:12:08,559 --> 00:12:12,560 Speaker 6: modernize its economy. Its goal that comes from the very top, 240 00:12:12,720 --> 00:12:15,480 Speaker 6: with the crown prints meeting President Trump and foreign business 241 00:12:15,520 --> 00:12:17,679 Speaker 6: leaders in the United States. At the end of twenty 242 00:12:17,720 --> 00:12:22,400 Speaker 6: twenty five, more than forty percent of Saudi Arabia's GDP 243 00:12:22,559 --> 00:12:25,360 Speaker 6: comes from oil, but by twenty thirty, the kingdom wants 244 00:12:25,360 --> 00:12:27,800 Speaker 6: that number to be closer to thirty five percent, with 245 00:12:27,880 --> 00:12:30,920 Speaker 6: around two thirds of GDP coming from non oil sources. 246 00:12:31,480 --> 00:12:34,520 Speaker 6: Just this month, the country started opening its property market 247 00:12:34,559 --> 00:12:37,240 Speaker 6: to foreign investors and announced plans to do the same 248 00:12:37,280 --> 00:12:40,040 Speaker 6: with its equity markets. After a year of poor returns, 249 00:12:40,559 --> 00:12:44,720 Speaker 6: in twenty twenty five, Saudi Arabia's benchmark index dropped thirteen percent, 250 00:12:44,920 --> 00:12:47,440 Speaker 6: despite strong stock performance in much of the rest of 251 00:12:47,480 --> 00:12:50,480 Speaker 6: the world. Stephen Cook is a Senior Fellow of Middle 252 00:12:50,520 --> 00:12:53,559 Speaker 6: East and Africa Studies at the Council on Foreign Relations. 253 00:12:53,920 --> 00:12:56,640 Speaker 7: Saudi economy has been a commercial economy, but it hasn't 254 00:12:56,640 --> 00:12:59,920 Speaker 7: really had genuine institutions of a market economy. Independent core, 255 00:13:00,400 --> 00:13:04,640 Speaker 7: which he hasn't even tackled yet, but rational investment laws 256 00:13:04,640 --> 00:13:08,240 Speaker 7: and the things that investors really really need in order 257 00:13:08,280 --> 00:13:12,439 Speaker 7: to operate outside of the hydrocarbon industry, you know. 258 00:13:12,480 --> 00:13:16,400 Speaker 8: With the Virgion twenty thirty, His Royal Highness the Crown 259 00:13:16,480 --> 00:13:21,680 Speaker 8: Brands said, we have to diversify the economy. We don't 260 00:13:21,760 --> 00:13:25,080 Speaker 8: want to continue relying on one source of income, which 261 00:13:25,120 --> 00:13:28,120 Speaker 8: is the oil. In a time where we have a 262 00:13:28,320 --> 00:13:34,960 Speaker 8: vast number of other things like mining natural resources, forest, fat, 263 00:13:35,160 --> 00:13:39,400 Speaker 8: gold and nature. We can do a lot in its 264 00:13:39,559 --> 00:13:43,480 Speaker 8: board culture and entertainment and tourism. 265 00:13:43,520 --> 00:13:47,040 Speaker 6: His Excellency ahmedal Fatib has been serving as Saudi Arabia's 266 00:13:47,080 --> 00:13:49,120 Speaker 6: Minister of Tourism since twenty twenty. 267 00:13:49,800 --> 00:13:54,680 Speaker 8: Tourism was one of the main pillars of Virgin twenty thirty, 268 00:13:54,720 --> 00:13:58,360 Speaker 8: and since then we have been working to modernize the country, 269 00:13:58,960 --> 00:14:04,319 Speaker 8: build a new destinys, new airlines, read airlines, new airports 270 00:14:04,360 --> 00:14:08,640 Speaker 8: including King Salman Airport, and the new hotels. 271 00:14:09,240 --> 00:14:12,200 Speaker 6: Leisure tourism might be relatively new to Saudi Arabia, but 272 00:14:12,240 --> 00:14:15,200 Speaker 6: for centuries millions of Muslims have come to Mecca and 273 00:14:15,280 --> 00:14:17,640 Speaker 6: Medina for the Hajh religious pilgrimage. 274 00:14:17,720 --> 00:14:19,960 Speaker 5: We are pleased to have the two holy cities. 275 00:14:20,320 --> 00:14:24,880 Speaker 8: They use to represent sixty percent of our international arrivals 276 00:14:25,360 --> 00:14:29,800 Speaker 8: back in twenty nineteen and last year they dropped to 277 00:14:30,280 --> 00:14:35,480 Speaker 8: forty six percent and the LEDGER increased, And therefore we 278 00:14:35,600 --> 00:14:41,520 Speaker 8: will continue pushing and promoting travel for Ledger to Saudi Arabia. 279 00:14:42,080 --> 00:14:44,520 Speaker 5: Travel to enjoy your holidays in. 280 00:14:44,480 --> 00:14:48,120 Speaker 8: Saudi Arabia, and in the same time the religious tourism 281 00:14:48,120 --> 00:14:51,240 Speaker 8: will grow to a much bigger number than what we 282 00:14:51,800 --> 00:14:52,640 Speaker 8: are having today. 283 00:14:53,720 --> 00:14:56,880 Speaker 6: But now Saudi Arabia wants to put a new foot forward. 284 00:14:57,320 --> 00:14:59,880 Speaker 6: It might look like the Maldives, but that's the Shabbara 285 00:15:00,120 --> 00:15:02,280 Speaker 6: Sorts Saudi Arabia on the Red Sea. 286 00:15:02,400 --> 00:15:06,680 Speaker 9: Well, we were born out of Vision twenty thirty. Vision 287 00:15:06,720 --> 00:15:08,920 Speaker 9: twenty thirty is trying to accomplish a number of different 288 00:15:08,920 --> 00:15:12,600 Speaker 9: things for the country, amongst which obviously creating a vibrant society, 289 00:15:12,680 --> 00:15:15,520 Speaker 9: opening up the kingdom and diversifying the economy. 290 00:15:16,520 --> 00:15:19,560 Speaker 6: John Pegano is CEO of Red Sea Global, a real 291 00:15:19,680 --> 00:15:22,840 Speaker 6: estate development company founded by the Crown Ference himself to 292 00:15:22,880 --> 00:15:25,080 Speaker 6: create the real estate that will become part of Saudi 293 00:15:25,120 --> 00:15:26,640 Speaker 6: Arabia's tourism offerings. 294 00:15:27,040 --> 00:15:30,400 Speaker 9: We have a beautiful, pristine environment which in the world 295 00:15:30,480 --> 00:15:33,880 Speaker 9: today doesn't exist. I mean, we've exploited our nature and 296 00:15:33,920 --> 00:15:37,160 Speaker 9: our environments globally. When I first came to Saudi Arabia, 297 00:15:37,240 --> 00:15:41,360 Speaker 9: I was shocked at how beautiful and pristine this environment was. 298 00:15:41,400 --> 00:15:44,600 Speaker 9: We had beautiful islands, a coastline that was largely untouched. 299 00:15:45,520 --> 00:15:48,680 Speaker 6: Pegano's shock is exactly the image that the kingdom wants 300 00:15:48,680 --> 00:15:51,680 Speaker 6: to change. Stephen Cook said, there's a long road ahead. 301 00:15:52,480 --> 00:15:55,120 Speaker 7: I was there before the opening up of Saudi Arabia. 302 00:15:55,120 --> 00:15:57,120 Speaker 7: It was extraordinary because nobody had been there. But in 303 00:15:57,240 --> 00:16:01,080 Speaker 7: terms of tourism, I think that yes, there'll be tourism 304 00:16:01,120 --> 00:16:05,760 Speaker 7: from you know, major Muslim countries, Indonesia, Malaysia, India which 305 00:16:05,880 --> 00:16:08,360 Speaker 7: has the second largest Muslim population in the world, even 306 00:16:08,400 --> 00:16:11,040 Speaker 7: though it's not a Muslim country. But also I think 307 00:16:11,080 --> 00:16:13,400 Speaker 7: there is a genuine interest in attracting people from the 308 00:16:13,400 --> 00:16:16,760 Speaker 7: West Americans and Europeans, and not just the kind of 309 00:16:17,440 --> 00:16:20,360 Speaker 7: you know, adventure tourism that they may have seen so far. 310 00:16:21,000 --> 00:16:23,880 Speaker 6: Beach res words attract wealthy tourists, but the kingdom is 311 00:16:23,920 --> 00:16:27,240 Speaker 6: also leaning into its rich history to combine luxury and 312 00:16:27,280 --> 00:16:30,160 Speaker 6: culture for what it hopes will be a unique experience. 313 00:16:30,560 --> 00:16:33,880 Speaker 10: Iloid that is an incredible place, a place like no other. 314 00:16:34,320 --> 00:16:38,360 Speaker 10: It's a region in northwest Saudi Arabia with incredible natural 315 00:16:38,400 --> 00:16:43,600 Speaker 10: and cultural significance. It's located on the ancient and since 316 00:16:43,720 --> 00:16:49,000 Speaker 10: route and many civilization has passed through four thousands of years. 317 00:16:49,280 --> 00:16:52,720 Speaker 6: Abiri Lakil is the CEO of the Royal Commission for Alahala, 318 00:16:52,840 --> 00:16:55,760 Speaker 6: which means glory in Arabic. The city is one of 319 00:16:55,840 --> 00:16:59,440 Speaker 6: eight UNESCO World Heritage Sites in Saudi Arabia and the 320 00:16:59,520 --> 00:17:02,760 Speaker 6: kingdom has big plans to make the destination a central 321 00:17:02,800 --> 00:17:04,520 Speaker 6: part of its tourism initiative. 322 00:17:05,160 --> 00:17:10,080 Speaker 10: Aloola is not just a historical site. Illola is a home. 323 00:17:10,520 --> 00:17:14,400 Speaker 10: Many families has left there for generations, and I would 324 00:17:14,440 --> 00:17:18,560 Speaker 10: say that an example would be Aliveela old town where 325 00:17:18,600 --> 00:17:22,880 Speaker 10: it was inhibited by the families starting from the twelfth 326 00:17:22,880 --> 00:17:28,880 Speaker 10: century until late ninety eighties. Now, if you bring all 327 00:17:28,880 --> 00:17:35,080 Speaker 10: of this together, the ancient past, the incredible nature, protected nature, 328 00:17:35,160 --> 00:17:39,040 Speaker 10: and the living culture and you know, living community, this 329 00:17:39,359 --> 00:17:43,800 Speaker 10: basically gets you a complete picture of Ilola. It's important 330 00:17:43,840 --> 00:17:46,960 Speaker 10: to say that Aliola is Saudi Abas treasure, but it's 331 00:17:47,000 --> 00:17:48,200 Speaker 10: also the gift for the world. 332 00:17:48,840 --> 00:17:53,359 Speaker 6: Which year did Alerala open for international tourists. 333 00:17:53,440 --> 00:17:57,879 Speaker 10: We started our efforts back in twenty nineteen. Today we 334 00:17:57,960 --> 00:18:01,879 Speaker 10: have received around three hundred thousd and guests visitors to 335 00:18:01,880 --> 00:18:05,400 Speaker 10: eleven thirty percent of which our international visitation. So we're 336 00:18:05,440 --> 00:18:08,960 Speaker 10: try getting around two million visitors by twenty thirty five. 337 00:18:09,480 --> 00:18:12,119 Speaker 6: If Lalas planned to bring in two million visitors by 338 00:18:12,160 --> 00:18:15,560 Speaker 6: twenty thirty five, sounds ambitious when it attracted only fifteen 339 00:18:15,600 --> 00:18:18,439 Speaker 6: percent of that last year. That's because it is. It 340 00:18:18,520 --> 00:18:22,200 Speaker 6: echoes the kingdom's big target of getting fifty million foreign 341 00:18:22,320 --> 00:18:24,679 Speaker 6: visitors a year by the end of the decade, in 342 00:18:24,720 --> 00:18:28,000 Speaker 6: addition to one hundred million local tourists. It's a goal 343 00:18:28,040 --> 00:18:31,080 Speaker 6: that is even more stunning considering the kingdom only opened 344 00:18:31,119 --> 00:18:34,320 Speaker 6: its borders to leisure tours in twenty nineteen. Do you 345 00:18:34,359 --> 00:18:36,160 Speaker 6: feel like you're on track to get there? 346 00:18:36,440 --> 00:18:37,520 Speaker 5: I'm very comfortable. 347 00:18:38,320 --> 00:18:41,040 Speaker 8: The fifty million will puts out Arabia among the top 348 00:18:41,680 --> 00:18:44,280 Speaker 8: ten most visited countries around the world. 349 00:18:44,400 --> 00:18:45,120 Speaker 5: And how much of a. 350 00:18:45,119 --> 00:18:49,360 Speaker 6: Draw are those big mega events the World Expo potentially 351 00:18:49,440 --> 00:18:51,879 Speaker 6: FIFA World Cup. How much of a draw is that 352 00:18:51,960 --> 00:18:54,840 Speaker 6: going to be in terms of bringing in those international 353 00:18:54,840 --> 00:18:57,640 Speaker 6: tours and where does it fit in to your broader plan. 354 00:18:57,880 --> 00:19:01,520 Speaker 8: It is very important for us to the rebeat the 355 00:19:01,600 --> 00:19:05,879 Speaker 8: visitors who will come again and again, to spend their 356 00:19:05,880 --> 00:19:09,200 Speaker 8: holidays in Saud Arabia, not to come only for business 357 00:19:09,400 --> 00:19:11,760 Speaker 8: or to visit their families and friends. 358 00:19:11,960 --> 00:19:16,280 Speaker 6: Adding leisure tourism to its offerings requires a big capital outlay. 359 00:19:16,760 --> 00:19:19,879 Speaker 6: The government plans to spend almost one trillion dollars in 360 00:19:20,000 --> 00:19:24,000 Speaker 6: all to transform its tourism industry. Private investment in tourism 361 00:19:24,160 --> 00:19:26,920 Speaker 6: rose to three point eight billion dollars in twenty twenty four, 362 00:19:27,160 --> 00:19:29,960 Speaker 6: and about forty percent of that comes from foreign capital. 363 00:19:30,320 --> 00:19:33,040 Speaker 6: How important is it to get private sector involvement with 364 00:19:33,119 --> 00:19:35,399 Speaker 6: all of these events and projects that you're putting together. 365 00:19:35,560 --> 00:19:38,439 Speaker 8: It's very important. It is part of Vision twenty thirty. 366 00:19:38,720 --> 00:19:42,560 Speaker 8: We want the private sector to drive. We are a 367 00:19:42,640 --> 00:19:48,000 Speaker 8: regulator when we open the sector. The government started to 368 00:19:48,040 --> 00:19:51,960 Speaker 8: stimulate the sector, but down the road this sector has 369 00:19:52,000 --> 00:19:55,520 Speaker 8: to be run by the private sector. The private sector 370 00:19:55,640 --> 00:19:59,520 Speaker 8: and the tourism build the hotel, build the shopping mall, 371 00:19:59,600 --> 00:20:01,359 Speaker 8: and build the restaurants, et cetera. 372 00:20:01,440 --> 00:20:02,600 Speaker 5: And they operated. 373 00:20:03,240 --> 00:20:06,280 Speaker 8: They are the investor, they are the operator, but they 374 00:20:06,480 --> 00:20:10,200 Speaker 8: have to The private sectors in Saudi Arabia is contributing 375 00:20:10,640 --> 00:20:14,800 Speaker 8: heavily and building new destinations and the new experiences. 376 00:20:14,840 --> 00:20:16,280 Speaker 5: We cannot do it. 377 00:20:16,359 --> 00:20:19,800 Speaker 8: Alon the private sector rule is very vital to the 378 00:20:19,880 --> 00:20:21,040 Speaker 8: success of this sector. 379 00:20:21,200 --> 00:20:24,000 Speaker 6: The Kingdom of Saudi Arabia also has stiff competition from 380 00:20:24,040 --> 00:20:27,320 Speaker 6: its neighbor, the United Arab Emirates and beach destinations in 381 00:20:27,359 --> 00:20:28,679 Speaker 6: Africa and Asia. 382 00:20:28,720 --> 00:20:31,920 Speaker 7: This is a dynamic throughout the region. There is competition 383 00:20:31,960 --> 00:20:36,480 Speaker 7: among all of these countries in cities actually and even 384 00:20:36,520 --> 00:20:38,840 Speaker 7: within them. You know, there's a competition between Abu Abi 385 00:20:38,840 --> 00:20:42,959 Speaker 7: and Dubai, even though they're both in the UAE. And 386 00:20:43,040 --> 00:20:45,520 Speaker 7: I think that that the Saudi has always looked themselves 387 00:20:45,560 --> 00:20:48,240 Speaker 7: as the big dog in the region, but they lagged 388 00:20:48,320 --> 00:20:52,520 Speaker 7: behind in terms of the kind of ability to attract 389 00:20:52,560 --> 00:20:57,720 Speaker 7: businesses and firms and bilbies gleaming gleaming cities. 390 00:20:58,080 --> 00:21:01,360 Speaker 6: International visitors account for almost eighty percent of the UAEES 391 00:21:01,440 --> 00:21:05,160 Speaker 6: tourism expenditure, and right now Dubai offers tour is something 392 00:21:05,200 --> 00:21:08,560 Speaker 6: that much of the rest of Saudi Arabia doesn't alcohol, 393 00:21:08,720 --> 00:21:10,400 Speaker 6: but even that is changing. 394 00:21:11,240 --> 00:21:13,520 Speaker 7: Well, you can get alcohol in the diplomatic core. You 395 00:21:13,520 --> 00:21:15,640 Speaker 7: could always get it through diplomatic pouch, but now there's 396 00:21:15,680 --> 00:21:22,080 Speaker 7: actually a shop. And so Saudi's proclaim, not officially, but 397 00:21:22,119 --> 00:21:25,480 Speaker 7: they would say, you know, this is a precursor. This 398 00:21:25,680 --> 00:21:28,639 Speaker 7: is the first step towards legalizing alcohol in the kingdom. 399 00:21:28,720 --> 00:21:31,280 Speaker 7: I don't think anybody knows when that's going to happen, 400 00:21:31,359 --> 00:21:33,920 Speaker 7: and from I think the Saudi perspective, that's not make 401 00:21:34,040 --> 00:21:36,400 Speaker 7: or break. People will want to come to Saudi Arabia. 402 00:21:36,520 --> 00:21:41,040 Speaker 7: They'll want to see Jidda and Riad and al Ula 403 00:21:41,160 --> 00:21:43,800 Speaker 7: and other places, and it won't deter them if they 404 00:21:43,880 --> 00:21:46,880 Speaker 7: can't get a glass of wine, but it certainly would 405 00:21:46,920 --> 00:21:48,960 Speaker 7: be a nice addition if they could. 406 00:21:49,160 --> 00:21:52,760 Speaker 6: A growing tourism industry is also changing things at home. 407 00:21:52,960 --> 00:21:57,119 Speaker 9: Look, I think that the transformation has been breathtaking. I 408 00:21:57,200 --> 00:21:59,160 Speaker 9: first came to Saudi Arabia for the very first time 409 00:21:59,160 --> 00:22:04,560 Speaker 9: in twenty seventy, and you know the changes in society, 410 00:22:05,080 --> 00:22:09,080 Speaker 9: the changes I mean simple things like cinemas and music, 411 00:22:09,520 --> 00:22:12,440 Speaker 9: women driving, and you know you're walking around today in 412 00:22:12,520 --> 00:22:16,240 Speaker 9: a western business suit, which back then you probably didn't see. 413 00:22:16,480 --> 00:22:20,639 Speaker 10: The local community as are basically the heart of our vision. 414 00:22:20,880 --> 00:22:24,840 Speaker 10: Since the beginning, we ensured that we have set in 415 00:22:24,880 --> 00:22:29,600 Speaker 10: case an approach that ensures empowering our local community through education, 416 00:22:29,960 --> 00:22:34,760 Speaker 10: seward shop and opportunities. 417 00:22:35,119 --> 00:22:39,480 Speaker 6: Is Saudi infrastructure ready to accommodate this potential influx of 418 00:22:39,600 --> 00:22:40,560 Speaker 6: future tourists. 419 00:22:40,600 --> 00:22:42,200 Speaker 5: Oh, yes, we're ready. 420 00:22:42,200 --> 00:22:46,560 Speaker 8: Today we have catered for one hundred and sixteen without 421 00:22:46,640 --> 00:22:51,320 Speaker 8: any issue. But definitely we are We're building new destinations, 422 00:22:51,440 --> 00:22:56,600 Speaker 8: new experiences. I believe we are ready to cater for 423 00:22:57,080 --> 00:23:02,600 Speaker 8: the with the projects in the pipeline and construction, whether 424 00:23:03,359 --> 00:23:08,920 Speaker 8: read Airlines or King Salman Airport that will happen, and 425 00:23:09,119 --> 00:23:13,600 Speaker 8: many other airports like Abha Airport, Asier Airport, which is important, 426 00:23:14,480 --> 00:23:19,760 Speaker 8: and the hotel rooms that are under constructions in the 427 00:23:19,840 --> 00:23:23,400 Speaker 8: a year and many other destinations or location. 428 00:23:24,200 --> 00:23:25,879 Speaker 5: We will be absolutely fine. 429 00:23:26,080 --> 00:23:29,840 Speaker 8: I don't think we will have a challenge to achieve 430 00:23:29,880 --> 00:23:31,359 Speaker 8: the one hundred and fifty billion. 431 00:23:31,680 --> 00:23:34,119 Speaker 6: The irony is that to change the world's impression of 432 00:23:34,119 --> 00:23:37,120 Speaker 6: Saudi Arabia, it needs foreigners to come see what it is. 433 00:23:37,520 --> 00:23:39,960 Speaker 6: But it's also foreign capital that will help fund the 434 00:23:39,960 --> 00:23:41,560 Speaker 6: success of its new image. 435 00:23:43,520 --> 00:23:46,560 Speaker 1: Coming up amid signs that the ceasefiring guys and may 436 00:23:46,560 --> 00:23:49,639 Speaker 1: be more fragile than ever. We go to Israel to 437 00:23:49,680 --> 00:23:51,960 Speaker 1: see what the fighting has done to the tech industry 438 00:23:52,200 --> 00:24:06,280 Speaker 1: on which the country depends. This is a story about 439 00:24:06,359 --> 00:24:11,280 Speaker 1: success born of adversity. Israel is known as the startup nation, 440 00:24:11,600 --> 00:24:14,719 Speaker 1: because of all the successful tech companies it has hatched, 441 00:24:15,080 --> 00:24:19,760 Speaker 1: accounting for more than one half of the country's annual exports. 442 00:24:23,000 --> 00:24:26,040 Speaker 11: There are more Israeli companies listed on the Nasdaq than 443 00:24:26,080 --> 00:24:28,320 Speaker 11: any country in the world outside of China, in the 444 00:24:28,400 --> 00:24:29,800 Speaker 11: United States and maybe Japan. 445 00:24:31,520 --> 00:24:34,400 Speaker 1: One might have thought that the Israeli tech juggernaut would 446 00:24:34,400 --> 00:24:37,600 Speaker 1: slow down during the nation's war against Hamas, but it 447 00:24:37,680 --> 00:24:40,920 Speaker 1: turns out that it's done the opposite. Since the war 448 00:24:41,000 --> 00:24:44,760 Speaker 1: began in twenty twenty three, Israeli high tech companies have 449 00:24:45,000 --> 00:24:48,959 Speaker 1: raised more money than ever, some fifteen point six billion 450 00:24:49,040 --> 00:24:52,640 Speaker 1: dollars in twenty twenty five, up from twelve point two 451 00:24:52,680 --> 00:24:54,320 Speaker 1: billion in twenty twenty four. 452 00:24:55,359 --> 00:24:59,959 Speaker 11: The entire tech sector, despite war, has actually grown considered 453 00:25:00,359 --> 00:25:03,920 Speaker 11: record number of exits. This year, For instance, Google made 454 00:25:03,960 --> 00:25:07,560 Speaker 11: its largest acquisition not just of an Israeli company, but 455 00:25:07,640 --> 00:25:10,800 Speaker 11: its largest private acquisition of any company in its history, 456 00:25:11,119 --> 00:25:13,359 Speaker 11: for over thirty billion dollars, where it bought the cloud 457 00:25:13,440 --> 00:25:17,760 Speaker 11: security company Whiz in the middle of this post October 458 00:25:17,800 --> 00:25:19,280 Speaker 11: seventh attack on Israel. 459 00:25:20,280 --> 00:25:23,439 Speaker 1: Dan Senor is the author of Startup Nation and The 460 00:25:23,520 --> 00:25:27,560 Speaker 1: Genius of Israel, and hosts the Call Me Back podcast. 461 00:25:28,560 --> 00:25:32,320 Speaker 11: Israel's number of exits from the tech sector in twenty 462 00:25:32,359 --> 00:25:35,159 Speaker 11: twenty five will be about three hundred percent higher than 463 00:25:35,160 --> 00:25:38,720 Speaker 11: twenty twenty four. In the defense tech sector, which is 464 00:25:39,080 --> 00:25:41,800 Speaker 11: an area of considerable growth, there are some fewer than 465 00:25:41,840 --> 00:25:46,000 Speaker 11: three hundred defense tech startups on October sixth, twenty twenty three. 466 00:25:46,240 --> 00:25:48,720 Speaker 11: In terms of the number of startups, the amount of 467 00:25:48,720 --> 00:25:51,480 Speaker 11: private funding coming into Israel, and then the number of exits, 468 00:25:51,720 --> 00:25:54,760 Speaker 11: it's all kind of multiples higher than we've seen in 469 00:25:54,760 --> 00:25:55,600 Speaker 11: a couple of years. 470 00:25:56,119 --> 00:25:58,879 Speaker 1: Israel's tech sector has become one of the largest in 471 00:25:58,920 --> 00:26:03,600 Speaker 1: the worldcounting for seventeen percent of the country's GDP, compared 472 00:26:03,640 --> 00:26:06,960 Speaker 1: to thirteen percent for South Korea, ten percent for the 473 00:26:07,080 --> 00:26:10,679 Speaker 1: United States, and less than five percent for the EU. 474 00:26:11,840 --> 00:26:15,800 Speaker 11: So for some time now, Israel has been punching above 475 00:26:15,840 --> 00:26:19,119 Speaker 11: its weight. Highest density of multinationals that have set up 476 00:26:19,119 --> 00:26:24,240 Speaker 11: operations in Israel, countries that don't set up R and 477 00:26:24,280 --> 00:26:26,760 Speaker 11: D shops outside of the United States anywhere in the world, 478 00:26:26,760 --> 00:26:29,320 Speaker 11: and they're setting them up many tech companies in Israel. 479 00:26:29,400 --> 00:26:32,399 Speaker 11: So for some time now, Israel has been what we 480 00:26:32,440 --> 00:26:35,919 Speaker 11: call the startup nation, this innovation ecosystem that much of 481 00:26:35,960 --> 00:26:39,640 Speaker 11: the world is depending on. The big changes. Most recently 482 00:26:39,760 --> 00:26:42,159 Speaker 11: is more and more cooperation with the Golf with the 483 00:26:42,200 --> 00:26:45,000 Speaker 11: Golf States, some in very public ways like the UAE 484 00:26:45,400 --> 00:26:48,640 Speaker 11: and Bahrain, some in not so public ways like Saudi Arabia, 485 00:26:48,800 --> 00:26:51,720 Speaker 11: where you're seeing more and more investment from these countries 486 00:26:51,760 --> 00:26:55,760 Speaker 11: into the Israeli tech ecosystem because they realize to really 487 00:26:55,880 --> 00:27:01,520 Speaker 11: thrive they need to coinnovate with another tech ecosystem. 488 00:27:01,760 --> 00:27:04,119 Speaker 12: There's four hundred and fifty multinationals that have set up 489 00:27:04,160 --> 00:27:06,760 Speaker 12: shop in Israel, so when you talk about the maturity, 490 00:27:06,800 --> 00:27:09,840 Speaker 12: it's not just the companies, it's the overall ecosystem has 491 00:27:09,880 --> 00:27:13,439 Speaker 12: become so powerful because we've all been working together and 492 00:27:13,480 --> 00:27:15,840 Speaker 12: figuring out how to develop things that benefit Israel and 493 00:27:15,880 --> 00:27:17,920 Speaker 12: the world through this ecosystem. 494 00:27:18,160 --> 00:27:21,679 Speaker 1: Ellie Raisin is the chief strategic Officer at our Crowd, 495 00:27:22,000 --> 00:27:26,000 Speaker 1: an online investment platform based in Israel that connects investors 496 00:27:26,080 --> 00:27:27,680 Speaker 1: from around the world. 497 00:27:28,040 --> 00:27:30,720 Speaker 12: We've set up at our Crowd a Super Interesting Fund, 498 00:27:30,760 --> 00:27:32,640 Speaker 12: which is a three part fund, or what we call 499 00:27:32,680 --> 00:27:36,560 Speaker 12: the tree Pont Fund, between the US, Israel, and Korea 500 00:27:36,680 --> 00:27:40,320 Speaker 12: for not just developing or designing deep tech, but being 501 00:27:40,320 --> 00:27:42,639 Speaker 12: able to produce it in partnership with strong partners in 502 00:27:42,720 --> 00:27:43,480 Speaker 12: Korea and in. 503 00:27:43,440 --> 00:27:46,560 Speaker 1: The US and why Korea particularly so. 504 00:27:46,640 --> 00:27:51,640 Speaker 12: Korea is a super energetic, highly technologized ecosystem and economy. 505 00:27:51,640 --> 00:27:54,400 Speaker 12: To begin with, it's less well known because it's somewhat insular. 506 00:27:54,960 --> 00:27:57,359 Speaker 12: At the same time, though the US looks at Korea 507 00:27:57,440 --> 00:28:01,359 Speaker 12: is an incredibly strategic ally all all sorts of crossovers 508 00:28:01,640 --> 00:28:04,840 Speaker 12: for our goals and our capabilities. Among the three countries 509 00:28:05,080 --> 00:28:07,920 Speaker 12: where we really see that union is being incredibly powerful. 510 00:28:08,800 --> 00:28:12,240 Speaker 13: Israel is a good partner for the Korean startup ecosystems 511 00:28:12,320 --> 00:28:16,480 Speaker 13: because they are very known for the startup colindations. 512 00:28:17,240 --> 00:28:20,639 Speaker 1: Yun Jun Kim is the CEO of NH Ventures, a 513 00:28:20,720 --> 00:28:25,320 Speaker 1: subsidiary of non Here Financial Group. In July, NH joined 514 00:28:25,359 --> 00:28:28,480 Speaker 1: forces with Our Crowd to create an eighty million dollar 515 00:28:28,600 --> 00:28:32,080 Speaker 1: fund to invest in Israeli startups in Korea. 516 00:28:32,320 --> 00:28:35,720 Speaker 13: We have a lot of interest about the technology in Israel, 517 00:28:35,800 --> 00:28:39,480 Speaker 13: but we don't have a lot of chance to visit 518 00:28:39,520 --> 00:28:45,000 Speaker 13: each other and how to communicate each other. Fortunately, we 519 00:28:45,040 --> 00:28:49,400 Speaker 13: can establish the CLNCIER fund between Israel and our Crowd 520 00:28:49,440 --> 00:28:54,160 Speaker 13: and NH That makes a lot of information for from 521 00:28:54,520 --> 00:28:59,000 Speaker 13: Israel to Korean Korea to Israel. We think Israel can 522 00:28:59,080 --> 00:29:04,959 Speaker 13: be the good partner to support expand the Korean statsop 523 00:29:05,280 --> 00:29:09,920 Speaker 13: go to the US market Israel also they can find 524 00:29:09,960 --> 00:29:15,880 Speaker 13: a pattern to manufacturing. Korea can provide the quick quality 525 00:29:16,200 --> 00:29:17,600 Speaker 13: and leads theable price. 526 00:29:18,440 --> 00:29:22,720 Speaker 1: Israeli tech startups run the gamut from defense to cybersecurity, 527 00:29:22,920 --> 00:29:27,320 Speaker 1: to biotech to AI, but whatever the technology, it often 528 00:29:27,360 --> 00:29:30,600 Speaker 1: traces back to Israel's mandatory military service. 529 00:29:31,400 --> 00:29:34,240 Speaker 12: The military is sort of a bedrock of all Israeli 530 00:29:34,280 --> 00:29:36,880 Speaker 12: innovation because of a couple of things. One is there 531 00:29:36,880 --> 00:29:41,120 Speaker 12: many really fascinating technologies that are both defense in nature 532 00:29:41,120 --> 00:29:43,280 Speaker 12: but also civilian in nature that are brought up through 533 00:29:43,280 --> 00:29:47,120 Speaker 12: the military. And the other, less spoken about but highly impactful, 534 00:29:47,240 --> 00:29:49,880 Speaker 12: is the incredible development of leadership and teamwork that happens 535 00:29:49,880 --> 00:29:52,480 Speaker 12: in the military, and those teams and those leaders transition 536 00:29:53,080 --> 00:29:58,000 Speaker 12: into roles leading civilian companies. We invest in defense companies certainly, 537 00:29:58,000 --> 00:30:00,520 Speaker 12: and cyber but most of our investments are most of 538 00:30:00,520 --> 00:30:03,240 Speaker 12: our investments are in things that are commercial or civilian use. 539 00:30:04,080 --> 00:30:06,840 Speaker 1: Has that line between civilian and defense become blurrier as 540 00:30:06,840 --> 00:30:07,840 Speaker 1: we talk about dual. 541 00:30:07,720 --> 00:30:11,200 Speaker 12: Use, Absolutely so. We see that all the time now, 542 00:30:11,680 --> 00:30:16,600 Speaker 12: both because some inventions are inherently dual use and because 543 00:30:16,720 --> 00:30:20,000 Speaker 12: many of the entrepreneurs are seeing a real opportunity now 544 00:30:20,040 --> 00:30:23,800 Speaker 12: to serve the incredibly impactful defense needs that are experienced 545 00:30:23,840 --> 00:30:25,600 Speaker 12: not only in Israel but all around the world for 546 00:30:25,640 --> 00:30:27,120 Speaker 12: the reasons that we all understand. 547 00:30:28,000 --> 00:30:30,800 Speaker 1: So perhaps it should come as no surprise that the 548 00:30:30,840 --> 00:30:33,440 Speaker 1: onset of the war also opened a new front for 549 00:30:33,560 --> 00:30:37,280 Speaker 1: startup technologies, including those that may have been developed for 550 00:30:37,360 --> 00:30:39,120 Speaker 1: civilian or dual use. 551 00:30:40,080 --> 00:30:45,400 Speaker 14: From day one, we wanted to bring innovation to the 552 00:30:45,440 --> 00:30:49,760 Speaker 14: battery sector, the battery industry. We wanted to integrate our 553 00:30:50,160 --> 00:30:53,280 Speaker 14: technology into every battery in the war. That's still our vision, 554 00:30:53,800 --> 00:30:56,800 Speaker 14: but I think the vision is now even bigger as 555 00:30:56,840 --> 00:31:00,160 Speaker 14: we see the potential in other markets. 556 00:31:00,200 --> 00:31:03,840 Speaker 1: CEO Moshel Biton so a clear potential for growth for 557 00:31:03,920 --> 00:31:07,800 Speaker 1: his battery parts company once that Israel Hamas war started. 558 00:31:08,600 --> 00:31:11,920 Speaker 14: It's not a way we wanted to deploy our technology 559 00:31:12,000 --> 00:31:14,480 Speaker 14: or if you'll ask me, what where Our vision or 560 00:31:14,560 --> 00:31:17,400 Speaker 14: dream is not to be on the defense sector. But 561 00:31:17,560 --> 00:31:21,040 Speaker 14: we understand now that this is also on obligations kind of. 562 00:31:21,080 --> 00:31:24,640 Speaker 14: This is our service. That's one of the things that 563 00:31:24,880 --> 00:31:27,520 Speaker 14: actually shifted and changed during October seven. 564 00:31:28,880 --> 00:31:32,120 Speaker 1: War is never a good thing, and the Israel Hamas 565 00:31:32,160 --> 00:31:35,720 Speaker 1: war has been particularly horrific, starting with the attacks on 566 00:31:35,800 --> 00:31:39,920 Speaker 1: Israeli civilians and followed by the devastation of much of Gaza. 567 00:31:40,880 --> 00:31:46,200 Speaker 14: Most of the investors, they were very They empathy and 568 00:31:46,440 --> 00:31:51,200 Speaker 14: a lot of supports and asked how we actually manage 569 00:31:51,200 --> 00:31:54,480 Speaker 14: and when we ask if we need anything. Of course, 570 00:31:54,520 --> 00:31:58,240 Speaker 14: there are investors that were silent, and some investors even 571 00:31:58,400 --> 00:32:02,080 Speaker 14: ask like direct questions about the situation in the war. 572 00:32:02,640 --> 00:32:07,120 Speaker 14: And sometimes it's failed a bit accord when you know, fum, 573 00:32:07,200 --> 00:32:11,080 Speaker 14: foreigner's blaming you on things that are not in your 574 00:32:11,120 --> 00:32:14,840 Speaker 14: control a private company, business company, or not part or 575 00:32:15,200 --> 00:32:17,760 Speaker 14: represent any government, and I'm blaming you. 576 00:32:18,560 --> 00:32:21,280 Speaker 12: The war definitely had impact in terms of which companies 577 00:32:21,520 --> 00:32:24,200 Speaker 12: essentially were newly created or like we discussed where they 578 00:32:24,280 --> 00:32:26,600 Speaker 12: leaned into in terms of their customer base or defense 579 00:32:26,720 --> 00:32:30,400 Speaker 12: use cases. We also did see through the war investors 580 00:32:30,600 --> 00:32:33,440 Speaker 12: sort of in some cases take a little bit of 581 00:32:33,440 --> 00:32:37,000 Speaker 12: a step back because mostly because of optics, not because 582 00:32:37,040 --> 00:32:40,000 Speaker 12: of anything substantive. And now that the war's over, I'll 583 00:32:40,000 --> 00:32:43,240 Speaker 12: tell you that we've seen this huge pickup in foreign 584 00:32:43,240 --> 00:32:45,920 Speaker 12: investor interest in Israel. So in the last few weeks, 585 00:32:46,320 --> 00:32:49,280 Speaker 12: I personally have hosted Japanese, Korean, and I'm about to 586 00:32:49,280 --> 00:32:52,920 Speaker 12: host the Taiwanese delegation minutes before you and I joined 587 00:32:52,960 --> 00:32:56,520 Speaker 12: this call, hosted as a large group of Canadian entrepreneurs 588 00:32:56,520 --> 00:32:58,600 Speaker 12: here in our office. So what we're seeing is a 589 00:32:58,640 --> 00:33:01,880 Speaker 12: real pickup in four or an investor comfort with investing in. 590 00:33:01,920 --> 00:33:05,760 Speaker 1: Israel out of adversity has come at least some success 591 00:33:05,960 --> 00:33:10,440 Speaker 1: for the startup nation, success involving businesses from halfway across 592 00:33:10,480 --> 00:33:11,000 Speaker 1: the world. 593 00:33:12,000 --> 00:33:18,520 Speaker 13: I think most important thing is Israel always try to 594 00:33:18,920 --> 00:33:22,600 Speaker 13: go global because their domestic market is not so big, 595 00:33:23,120 --> 00:33:27,520 Speaker 13: and Korea also need to expand the market horizon to 596 00:33:27,720 --> 00:33:32,080 Speaker 13: the global market, but they have their own strength point. 597 00:33:32,480 --> 00:33:37,040 Speaker 13: We try to combine those strengths points we can raise 598 00:33:37,160 --> 00:33:42,440 Speaker 13: the global success. It's a very piscically separated, but our 599 00:33:42,560 --> 00:33:47,160 Speaker 13: idea with NAG Investments and our Crows is making the 600 00:33:47,400 --> 00:33:51,560 Speaker 13: same thing. So that is a very important thing. Israel 601 00:33:51,680 --> 00:33:54,720 Speaker 13: and Korea also a very good relationship with the US. 602 00:33:55,400 --> 00:33:57,840 Speaker 11: We need to be opening up cooperation with Israel. So 603 00:33:57,840 --> 00:34:00,880 Speaker 11: that was already starting to happen Beforetober seventh, and then 604 00:34:00,920 --> 00:34:06,200 Speaker 11: obviously since October seventh, you've seen this incredible flourishing in 605 00:34:06,280 --> 00:34:10,240 Speaker 11: ways that were completely unexpected in areas related to defense 606 00:34:10,320 --> 00:34:13,480 Speaker 11: tech and cybersecurities that has just gone to another level. 607 00:34:13,520 --> 00:34:17,000 Speaker 11: So many of those same players, the Gulf States in particular, 608 00:34:17,200 --> 00:34:19,959 Speaker 11: want to piggyback onto Israel's strength in these areas even 609 00:34:20,040 --> 00:34:24,000 Speaker 11: more because they've seen how successful Israel has been. And 610 00:34:24,040 --> 00:34:28,240 Speaker 11: then this startup nation that was buzzing long before October seventh, 611 00:34:28,280 --> 00:34:30,000 Speaker 11: twenty twenty three, continues to do so. 612 00:34:33,680 --> 00:34:37,319 Speaker 1: Up next, skiing is more popular than ever, despite the 613 00:34:37,400 --> 00:34:40,320 Speaker 1: lack of snow in some of America's top ski areas. 614 00:34:40,760 --> 00:34:43,440 Speaker 1: We take a look at the ups and downs of 615 00:34:43,680 --> 00:34:55,240 Speaker 1: big ski. This is a story about what you gain 616 00:34:55,360 --> 00:34:58,040 Speaker 1: from joining a team and what you lose when you 617 00:34:58,080 --> 00:35:01,880 Speaker 1: stopped flying solo. In the last twenty years, two major 618 00:35:01,920 --> 00:35:05,200 Speaker 1: players came to dominate the ski industry, turning the sport 619 00:35:05,280 --> 00:35:09,479 Speaker 1: from a local pastime into a global portfolio. Scarlet Food 620 00:35:09,560 --> 00:35:10,640 Speaker 1: brings us the story. 621 00:35:12,239 --> 00:35:13,920 Speaker 15: This is the view open winter Park. I mean we 622 00:35:13,960 --> 00:35:15,920 Speaker 15: are in desperate need of snow. You can see how 623 00:35:15,920 --> 00:35:17,239 Speaker 15: fit in that snowpack is. 624 00:35:21,600 --> 00:35:24,600 Speaker 16: In the past year, skiers have dealt with record high prices, 625 00:35:24,840 --> 00:35:29,200 Speaker 16: record low snow, and disruption on the slopes caused by strikes. 626 00:35:29,480 --> 00:35:33,040 Speaker 16: Despite the challenges, the industry is booming, with the number 627 00:35:33,040 --> 00:35:36,719 Speaker 16: of skiers rising almost seventeen percent from twenty sixteen, and 628 00:35:36,920 --> 00:35:40,360 Speaker 16: for the sixty million plus skiers visiting US resorts each winter, 629 00:35:40,880 --> 00:35:43,720 Speaker 16: there is a choice to make buy a megapass before 630 00:35:43,760 --> 00:35:46,279 Speaker 16: the season starts. That gives you access to up to 631 00:35:46,320 --> 00:35:48,960 Speaker 16: eighty mountains around the world, but leaves you at the 632 00:35:49,000 --> 00:35:50,640 Speaker 16: mercy of seasonal conditions. 633 00:35:50,840 --> 00:35:53,239 Speaker 17: Our job is really to have a long term relationship 634 00:35:53,280 --> 00:35:55,399 Speaker 17: with our guests and so that they feel like they're 635 00:35:55,400 --> 00:35:58,080 Speaker 17: making a commitment to us year in and year route good weather, 636 00:35:58,200 --> 00:35:58,920 Speaker 17: bad weather. 637 00:35:59,120 --> 00:36:02,600 Speaker 16: Or go school by a less expensive pass at your 638 00:36:02,640 --> 00:36:06,160 Speaker 16: favorite resort, preserving that hometown feel. 639 00:36:06,360 --> 00:36:08,680 Speaker 18: It's been a great thing, I think for our industry 640 00:36:09,200 --> 00:36:11,759 Speaker 18: because it's a challenging industry that we have. 641 00:36:12,239 --> 00:36:14,799 Speaker 16: Ski mountains have to make a similar decision. Are they 642 00:36:14,880 --> 00:36:16,680 Speaker 16: in with the megapass or are they out. 643 00:36:16,920 --> 00:36:20,280 Speaker 19: The one thing that hasn't changed is you get people 644 00:36:20,320 --> 00:36:22,759 Speaker 19: to come here. They get out on the hill, they 645 00:36:22,800 --> 00:36:25,560 Speaker 19: go skiing, they have a great time, and they want 646 00:36:25,560 --> 00:36:26,160 Speaker 19: to come back. 647 00:36:26,880 --> 00:36:30,360 Speaker 16: Whatever they decide, they have veil resorts to think or blame. 648 00:36:30,880 --> 00:36:34,880 Speaker 16: CEO Robcats introduced the Epic Pass eighteen years ago, offering 649 00:36:34,920 --> 00:36:37,480 Speaker 16: a deal to skiers and shaking up the business of 650 00:36:37,520 --> 00:36:38,600 Speaker 16: skiing in the process. 651 00:36:38,760 --> 00:36:41,320 Speaker 17: So it was a massive discount when we offered it 652 00:36:41,360 --> 00:36:43,759 Speaker 17: at yeah, five hundred and seventy nine dollars, But the 653 00:36:43,800 --> 00:36:46,120 Speaker 17: thinking was is that we could at that low price point, 654 00:36:46,200 --> 00:36:48,560 Speaker 17: we could put many more people in the product, and 655 00:36:48,600 --> 00:36:50,399 Speaker 17: all of a sudden that would start to create more 656 00:36:50,440 --> 00:36:53,920 Speaker 17: of a subscription model to the ski business rather than 657 00:36:54,000 --> 00:36:56,319 Speaker 17: just this kind of daily feast or famine model, which 658 00:36:56,360 --> 00:37:00,000 Speaker 17: was the lift ticket business. 659 00:37:00,000 --> 00:37:03,000 Speaker 16: This relationship with Veil Resorts, now the largest ski resort 660 00:37:03,040 --> 00:37:05,880 Speaker 16: operator in the world, goes back to the nineteen nineties 661 00:37:06,080 --> 00:37:08,279 Speaker 16: when he oversaw a deal that rescued what was then 662 00:37:08,520 --> 00:37:11,920 Speaker 16: Vail Associates. Katz joined the board and became CEO in 663 00:37:11,960 --> 00:37:14,560 Speaker 16: two thousand and six. He left the company in twenty 664 00:37:14,600 --> 00:37:17,680 Speaker 16: twenty one and returned in twenty twenty five. During his 665 00:37:17,719 --> 00:37:20,719 Speaker 16: first go round, he grew the company from five resorts 666 00:37:21,000 --> 00:37:22,920 Speaker 16: to a portfolio of thirty seven. 667 00:37:23,160 --> 00:37:25,399 Speaker 17: I think initially the pitch was just, hey, we thought 668 00:37:25,480 --> 00:37:28,280 Speaker 17: that there was an opportunity for us to really apply 669 00:37:28,360 --> 00:37:31,880 Speaker 17: better management techniques to these other resorts that we bought, 670 00:37:31,920 --> 00:37:35,240 Speaker 17: And the two resorts that we bought initially were Keystone 671 00:37:35,280 --> 00:37:37,879 Speaker 17: and Breckenridge, which were right down the road from Vale 672 00:37:37,880 --> 00:37:39,920 Speaker 17: and Beaver Creek, and so the thought was also we 673 00:37:39,920 --> 00:37:43,320 Speaker 17: could start actually managing them and doing it more efficiently. 674 00:37:43,440 --> 00:37:45,400 Speaker 17: We could also offer some things so people could go 675 00:37:45,480 --> 00:37:48,040 Speaker 17: to these different resorts and market to that in a 676 00:37:48,080 --> 00:37:49,000 Speaker 17: more unified way. 677 00:37:51,560 --> 00:37:54,560 Speaker 16: Vail initially targeted other neighboring resorts in Colorado. 678 00:37:54,880 --> 00:37:57,839 Speaker 19: The first group of founders that are Rappo Basin hung 679 00:37:57,880 --> 00:38:00,759 Speaker 19: onto the place till seventy two, and other dependent guy 680 00:38:01,040 --> 00:38:04,239 Speaker 19: owned it till nineteen seventy eight. And then in the 681 00:38:04,320 --> 00:38:09,440 Speaker 19: late nineties what was called Ralston Resort, which was Rapo 682 00:38:09,560 --> 00:38:14,800 Speaker 19: based in Keystone and Breckenridge, merged with Veil Associates, forming 683 00:38:14,920 --> 00:38:15,719 Speaker 19: Veil Resorts. 684 00:38:16,440 --> 00:38:19,360 Speaker 16: It wasn't long before Vale controlled roughly forty three percent 685 00:38:19,400 --> 00:38:22,520 Speaker 16: of Colorado's ski areas by count. In nineteen ninety seven, 686 00:38:22,600 --> 00:38:25,200 Speaker 16: the US Department of Justice forced a sale on a 687 00:38:25,280 --> 00:38:30,320 Speaker 16: Rapa Ho Basin, citing Vale's excessive market concentration. Still a Basin, 688 00:38:30,400 --> 00:38:33,479 Speaker 16: as locals call it, chose to continue partnering with Vail, 689 00:38:33,680 --> 00:38:36,520 Speaker 16: which meant it was included in the first iteration of 690 00:38:36,520 --> 00:38:37,280 Speaker 16: the Epic pass. 691 00:38:37,400 --> 00:38:40,120 Speaker 17: The view at that point was that the company's multiple 692 00:38:40,640 --> 00:38:43,200 Speaker 17: was well below a lot of other travel companies, and 693 00:38:43,239 --> 00:38:45,160 Speaker 17: there was a real sense that the ski industry was 694 00:38:45,200 --> 00:38:48,520 Speaker 17: really a feast or famine business where if it snowed, 695 00:38:48,640 --> 00:38:50,800 Speaker 17: you did well. If it didn't snow, you didn't do well. 696 00:38:50,840 --> 00:38:53,920 Speaker 17: And actually, ski resorts had been declining in the United 697 00:38:53,920 --> 00:38:56,399 Speaker 17: States from like, you know, seven hundred and twenty ski 698 00:38:56,440 --> 00:38:59,640 Speaker 17: resorts I think in the late seventies to five hundred. 699 00:38:59,440 --> 00:39:00,480 Speaker 15: And fifties resorts. 700 00:39:00,680 --> 00:39:03,160 Speaker 17: So the business was really struggling, and the focus was 701 00:39:03,840 --> 00:39:06,360 Speaker 17: that there was not the stability and the confidence in 702 00:39:06,360 --> 00:39:08,120 Speaker 17: the future of the industry because of the ups and 703 00:39:08,160 --> 00:39:10,440 Speaker 17: downs of weather. So the thinking was, how could we 704 00:39:10,520 --> 00:39:12,680 Speaker 17: stabilize that, And so what we came up with was 705 00:39:12,719 --> 00:39:16,640 Speaker 17: really offering an incredible value to our guests by giving 706 00:39:16,680 --> 00:39:20,120 Speaker 17: them a huge discount on this season pass and trading 707 00:39:20,160 --> 00:39:22,440 Speaker 17: with them right essentially giving them this great discount, this 708 00:39:22,520 --> 00:39:25,799 Speaker 17: great value, but then also our guests taking some of 709 00:39:25,840 --> 00:39:27,840 Speaker 17: the risk of weather for the rest of the season. 710 00:39:28,239 --> 00:39:30,839 Speaker 16: Before EPIC was introduced in two thousand and eight, a 711 00:39:30,840 --> 00:39:33,920 Speaker 16: season pass at Veil Resort would cost you around eighteen 712 00:39:34,000 --> 00:39:37,960 Speaker 16: hundred dollars. With an EPIC pass. Today, an adult skier 713 00:39:38,000 --> 00:39:41,280 Speaker 16: has unlimited access to forty two veil owned or partner 714 00:39:41,320 --> 00:39:44,720 Speaker 16: mountains around the world for just over one thousand dollars. 715 00:39:45,200 --> 00:39:50,640 Speaker 16: How did this pass model change how you plan capital expenditures, 716 00:39:50,680 --> 00:39:52,280 Speaker 16: how you assess risk overall? 717 00:39:52,560 --> 00:39:54,759 Speaker 17: It made a big difference. So you know, historically in 718 00:39:54,760 --> 00:39:56,920 Speaker 17: the ski industry, you would wait to see how the 719 00:39:56,960 --> 00:39:59,440 Speaker 17: ski season was, and if it snowed and you had 720 00:39:59,440 --> 00:40:01,279 Speaker 17: to go to year, then you'd make commitments for the 721 00:40:01,320 --> 00:40:04,279 Speaker 17: following year for capital. But as we started to do 722 00:40:04,400 --> 00:40:06,160 Speaker 17: well with our season pass business, we all of a 723 00:40:06,200 --> 00:40:09,280 Speaker 17: sudden started to move back when we were willing to commit. 724 00:40:09,560 --> 00:40:11,480 Speaker 17: So we started saying, hey, wait, we could commit to 725 00:40:11,520 --> 00:40:14,440 Speaker 17: things in December, or in September or in March the 726 00:40:14,520 --> 00:40:15,080 Speaker 17: year before. 727 00:40:17,280 --> 00:40:21,000 Speaker 16: Then came competition. In twenty eighteen, Altara brought together Mammoth 728 00:40:21,000 --> 00:40:24,160 Speaker 16: Resorts and Squaw Valley now known as Palisades Tahoe in 729 00:40:24,200 --> 00:40:28,560 Speaker 16: California and Deer Valley in Utah. Soon Altara launched the 730 00:40:28,800 --> 00:40:32,280 Speaker 16: Icon Pass, its version of the Epic Pass. Here's Jared Smith, 731 00:40:32,520 --> 00:40:33,560 Speaker 16: CEO of Altera. 732 00:40:34,040 --> 00:40:36,560 Speaker 15: The premise or the thesis for the business was really 733 00:40:37,280 --> 00:40:40,360 Speaker 15: that there was some space in the industry for another 734 00:40:40,560 --> 00:40:43,560 Speaker 15: large player. The introduction of epic Pass by Veil was 735 00:40:43,640 --> 00:40:46,360 Speaker 15: a game changer for the industry, no doubt about it. 736 00:40:46,360 --> 00:40:49,799 Speaker 15: It's one of those unique products that is truly win win. 737 00:40:50,120 --> 00:40:52,640 Speaker 15: What we were able to do at icon Pass was 738 00:40:52,960 --> 00:40:55,960 Speaker 15: take that core model, which was for Veil of its 739 00:40:55,960 --> 00:40:59,600 Speaker 15: owned and operated resorts largely, and take that and put 740 00:40:59,640 --> 00:41:01,640 Speaker 15: together a network of people that didn't have to be 741 00:41:01,680 --> 00:41:04,600 Speaker 15: owned by the same corporation to enjoy those same benefits, 742 00:41:05,120 --> 00:41:08,920 Speaker 15: and in turn, to give consumers the opportunity to have 743 00:41:09,000 --> 00:41:12,760 Speaker 15: that same exposure in that same cost benefit analysis across 744 00:41:13,000 --> 00:41:15,840 Speaker 15: a whole variety of other resorts. 745 00:41:16,120 --> 00:41:20,040 Speaker 16: The two dominant megapasses ushered in a new demographic of skiers. 746 00:41:20,480 --> 00:41:23,360 Speaker 18: The new megapass is really what it did initially was 747 00:41:23,440 --> 00:41:26,399 Speaker 18: drive the prices down. It's just that there are ski 748 00:41:26,440 --> 00:41:28,759 Speaker 18: areas out there, there are companies out there that do 749 00:41:28,840 --> 00:41:32,480 Speaker 18: want to drive guests to that mega resort pass or 750 00:41:32,480 --> 00:41:35,720 Speaker 18: that multi resort pass, and in doing so, they're trying 751 00:41:35,719 --> 00:41:38,640 Speaker 18: to entice you with that great price point. 752 00:41:38,760 --> 00:41:40,840 Speaker 17: It's kind of a membership, right. So I think people 753 00:41:41,040 --> 00:41:43,600 Speaker 17: historically said the only, you know, the only kind of 754 00:41:43,600 --> 00:41:45,400 Speaker 17: person who could buy a season pass has to be 755 00:41:45,400 --> 00:41:48,080 Speaker 17: a local. So the fact that we made the product 756 00:41:48,400 --> 00:41:52,040 Speaker 17: price competitive for the destination skier, Somebody coming from New 757 00:41:52,120 --> 00:41:54,560 Speaker 17: York or Florida or Texas, all of a sudden, they 758 00:41:54,640 --> 00:41:56,640 Speaker 17: start to feel like they were a local as well. 759 00:41:59,040 --> 00:42:04,680 Speaker 16: For resorts, unpredictability reinforce the case for the megapass as 760 00:42:04,719 --> 00:42:08,680 Speaker 16: the industry depends more heavily on capital intensive snowmaking equipment. 761 00:42:08,840 --> 00:42:11,719 Speaker 17: As we started to acquire resorts in different regions, all 762 00:42:11,760 --> 00:42:15,040 Speaker 17: of a sudden, the pass provided access to different regions 763 00:42:15,040 --> 00:42:17,439 Speaker 17: who all have different weather patterns, and so that made 764 00:42:17,440 --> 00:42:19,560 Speaker 17: the pass even more attractive. 765 00:42:19,080 --> 00:42:20,799 Speaker 15: Where we're able to make some of the investment in 766 00:42:20,800 --> 00:42:25,000 Speaker 15: the physical plants here, combined with the technology advancements that 767 00:42:25,040 --> 00:42:28,479 Speaker 15: you've seen in the quality of things like snowmaking, which 768 00:42:28,800 --> 00:42:32,160 Speaker 15: uses less energy and uses less water to produce actually 769 00:42:32,280 --> 00:42:36,359 Speaker 15: more yield and what we're able to put on the hill. 770 00:42:36,440 --> 00:42:38,720 Speaker 16: But as demand for the Epic Pass grew, it became 771 00:42:38,840 --> 00:42:41,440 Speaker 16: kind of a victim of its own success. Two seasons 772 00:42:41,480 --> 00:42:44,279 Speaker 16: ago they al sold a record number of passes. It's 773 00:42:44,320 --> 00:42:46,920 Speaker 16: too early to tally up this season's past sales, but 774 00:42:47,040 --> 00:42:49,760 Speaker 16: Vale said the total number of skiers is down twenty 775 00:42:49,760 --> 00:42:51,520 Speaker 16: percent from the same time last year. 776 00:42:51,840 --> 00:42:55,080 Speaker 20: The locals don't love the whole epic situation because of 777 00:42:55,120 --> 00:42:58,440 Speaker 20: the crowds, because of the prices, because of the concentration 778 00:42:58,640 --> 00:43:01,880 Speaker 20: on just finances and money. 779 00:43:01,920 --> 00:43:05,000 Speaker 15: I think there's no doubt that anytime you make something 780 00:43:05,000 --> 00:43:08,400 Speaker 15: more accessible and more affordable, there's an opportunity that you 781 00:43:08,480 --> 00:43:10,279 Speaker 15: have too much of a good thing right and you 782 00:43:10,320 --> 00:43:12,359 Speaker 15: have some people who come, or lots of people who 783 00:43:12,400 --> 00:43:14,680 Speaker 15: come as a result of that affordability, and they want 784 00:43:14,680 --> 00:43:16,960 Speaker 15: to come at the peak times. So I think there 785 00:43:17,040 --> 00:43:19,080 Speaker 15: are there are lots of examples in the ski industry 786 00:43:19,200 --> 00:43:22,760 Speaker 15: of you know, peak windows on high holidays with great 787 00:43:22,760 --> 00:43:25,239 Speaker 15: snow conditions where lots of people want to come out 788 00:43:25,719 --> 00:43:28,120 Speaker 15: and do the thing that they love. That can lead 789 00:43:28,120 --> 00:43:29,400 Speaker 15: to longer lines. 790 00:43:29,520 --> 00:43:32,640 Speaker 16: In twenty nineteen, A Basin ended its partnership with Vail, 791 00:43:32,880 --> 00:43:34,640 Speaker 16: cutting off ties with the epic. 792 00:43:34,360 --> 00:43:37,239 Speaker 19: Pass Arapobasin opened early. It was one of the first 793 00:43:37,239 --> 00:43:41,200 Speaker 19: resorts in the country and the concept of ski resorts 794 00:43:41,280 --> 00:43:42,520 Speaker 19: was very different back then. 795 00:43:42,719 --> 00:43:43,440 Speaker 1: I was a scale. 796 00:43:43,880 --> 00:43:46,800 Speaker 16: Alan Hensroth is president and COO of A Basin. 797 00:43:47,000 --> 00:43:50,880 Speaker 19: By twenty nineteen twenty eighteen, we felt we could really 798 00:43:51,239 --> 00:43:54,440 Speaker 19: do this better. Not being part of vale Veil was 799 00:43:54,480 --> 00:43:56,840 Speaker 19: a great company for us in a lot of ways, 800 00:43:57,160 --> 00:43:59,960 Speaker 19: but we've kind of outgrown that and we're looking for 801 00:44:00,239 --> 00:44:03,799 Speaker 19: something different. We just thought we needed more control over 802 00:44:03,840 --> 00:44:07,400 Speaker 19: our passes, more control of people coming here, more control 803 00:44:07,480 --> 00:44:10,600 Speaker 19: of the actual experience that all our guests were having. 804 00:44:11,040 --> 00:44:14,359 Speaker 19: And Veil was such a big successful company that they 805 00:44:14,360 --> 00:44:16,600 Speaker 19: brought really more people here than we could handle at 806 00:44:16,680 --> 00:44:20,560 Speaker 19: one time, So we made a change in our past relationships. 807 00:44:21,960 --> 00:44:24,759 Speaker 16: In twenty twenty four, A Basin completed its journey from 808 00:44:24,760 --> 00:44:27,400 Speaker 16: being an independent resort to a partner of Veil, to 809 00:44:27,520 --> 00:44:30,719 Speaker 16: independent again to now a partner of Alterra. For a 810 00:44:30,760 --> 00:44:33,240 Speaker 16: ski area that's passed through the hands of companies big 811 00:44:33,280 --> 00:44:35,960 Speaker 16: and small, A Basin is hoping for the best of 812 00:44:35,960 --> 00:44:39,720 Speaker 16: both worlds, an independent feel on a megapass. 813 00:44:39,960 --> 00:44:40,120 Speaker 7: You know. 814 00:44:40,200 --> 00:44:42,520 Speaker 19: Of course, when the sale went down, you know, and 815 00:44:42,560 --> 00:44:45,319 Speaker 19: it was almost a year leading to the closing of 816 00:44:45,360 --> 00:44:48,759 Speaker 19: the sale, people were concerned. But as last year went 817 00:44:48,800 --> 00:44:52,479 Speaker 19: on and they realized we weren't turning into a bunch 818 00:44:52,480 --> 00:44:55,320 Speaker 19: of monsters, I think more and more people are accepting 819 00:44:55,360 --> 00:44:58,560 Speaker 19: that A Basin's going to be okay and we're going 820 00:44:58,600 --> 00:45:01,399 Speaker 19: to do just fine. One thing about being part of 821 00:45:02,320 --> 00:45:06,359 Speaker 19: a family of more resorts is, you know, there are 822 00:45:06,440 --> 00:45:10,400 Speaker 19: some people that are committed skiers and they want to 823 00:45:10,400 --> 00:45:14,399 Speaker 19: buy a season pass to one place and they're satisfied 824 00:45:14,440 --> 00:45:17,960 Speaker 19: with that. But I think there's another group of people 825 00:45:18,719 --> 00:45:21,960 Speaker 19: that like some diversity. They want to try different resorts, 826 00:45:21,960 --> 00:45:24,440 Speaker 19: they want to ski at different resorts, they want to 827 00:45:24,480 --> 00:45:28,279 Speaker 19: have choices. And you know, when we decided to leave Vail, 828 00:45:29,040 --> 00:45:32,400 Speaker 19: we could have been independent, but we thought people really 829 00:45:32,440 --> 00:45:36,280 Speaker 19: wanted choices, and we thought we'd have the best future 830 00:45:37,120 --> 00:45:40,640 Speaker 19: when there were opportunities for people to take advantage of 831 00:45:40,680 --> 00:45:41,480 Speaker 19: those choices. 832 00:45:42,120 --> 00:45:44,120 Speaker 18: Today, you know, we have I think it's roughly two 833 00:45:44,160 --> 00:45:47,759 Speaker 18: thirds of our resorts fall into that independent category. Like 834 00:45:47,840 --> 00:45:51,280 Speaker 18: last year, independent resorts did see an uptick in visitation, 835 00:45:51,440 --> 00:45:54,439 Speaker 18: which was great to see, and we saw a little 836 00:45:54,480 --> 00:45:57,160 Speaker 18: bit of a little bit of decline in some of 837 00:45:57,160 --> 00:45:59,719 Speaker 18: our larger extra large resorts. You know, just the way 838 00:45:59,760 --> 00:46:03,239 Speaker 18: the aendulum swings is that if you're not happy in 839 00:46:03,280 --> 00:46:05,840 Speaker 18: one aspect of the sport, maybe you're going to go 840 00:46:05,840 --> 00:46:07,160 Speaker 18: find something a little bit different. 841 00:46:07,960 --> 00:46:11,080 Speaker 16: While Abasin joins a new team and navigates another chapter, 842 00:46:11,560 --> 00:46:14,040 Speaker 16: there's still the choice to skied the old fashioned way 843 00:46:14,480 --> 00:46:18,400 Speaker 16: at smaller independent resorts like mad River Glen in Waitefield Vermont, 844 00:46:18,800 --> 00:46:21,239 Speaker 16: which runs on a skier owned co op model and 845 00:46:21,400 --> 00:46:24,120 Speaker 16: is the last remaining slope in the continental US to 846 00:46:24,200 --> 00:46:25,560 Speaker 16: operate a single chairlift. 847 00:46:25,800 --> 00:46:27,480 Speaker 21: We really are known for our black tails. 848 00:46:27,719 --> 00:46:29,400 Speaker 16: Matt Lillard is the general manager. 849 00:46:29,719 --> 00:46:32,279 Speaker 21: The co op has three thousand shares, but there can 850 00:46:32,320 --> 00:46:34,920 Speaker 21: only be twenty five hundred owners of those shares, so 851 00:46:35,040 --> 00:46:37,200 Speaker 21: everybody that has a share gets a vote. You can 852 00:46:37,200 --> 00:46:39,160 Speaker 21: only own a maximum of four shares, but that's still 853 00:46:39,200 --> 00:46:40,719 Speaker 21: only one vote. So that's one of the key things 854 00:46:40,760 --> 00:46:43,160 Speaker 21: about a cooperative is you can't have somebody come in 855 00:46:43,160 --> 00:46:44,560 Speaker 21: and buy up a bunch of shares and have an 856 00:46:44,560 --> 00:46:47,040 Speaker 21: outweighted say, like you would a normal corporation. 857 00:46:47,320 --> 00:46:50,080 Speaker 16: What problems do the co op ownership structure solve that 858 00:46:50,200 --> 00:46:51,480 Speaker 16: traditional ownership did not. 859 00:46:52,040 --> 00:46:53,880 Speaker 21: I think what it does is it was able to 860 00:46:53,960 --> 00:46:56,560 Speaker 21: pull the passion that the skiers have for the mountain 861 00:46:56,960 --> 00:46:59,480 Speaker 21: into an entity that can take care of So it 862 00:46:59,600 --> 00:47:02,560 Speaker 21: enabled those people to have a say in what was 863 00:47:02,600 --> 00:47:05,480 Speaker 21: going on here and support it with financially and with 864 00:47:05,520 --> 00:47:08,200 Speaker 21: their visits. The shareholders have a bigger say in a 865 00:47:08,280 --> 00:47:11,120 Speaker 21: cooperative than they will, you know, at a publicly traded 866 00:47:11,200 --> 00:47:14,200 Speaker 21: place like Vale Resorts or something private like Alterra. So 867 00:47:14,200 --> 00:47:16,279 Speaker 21: they get to say that we want low skiered nsity, 868 00:47:16,320 --> 00:47:18,120 Speaker 21: and that's one of their primary goals. It's written into 869 00:47:18,160 --> 00:47:20,520 Speaker 21: the bylaws, it's written into the articles of the corporation. 870 00:47:20,960 --> 00:47:22,880 Speaker 21: So that's basically saying that when you're on the mountain, 871 00:47:22,960 --> 00:47:24,799 Speaker 21: they don't want it to be crowded. They want to 872 00:47:24,800 --> 00:47:26,760 Speaker 21: be all the ski They want their own people whizzing 873 00:47:26,800 --> 00:47:27,200 Speaker 21: by them. 874 00:47:27,520 --> 00:47:29,680 Speaker 16: He says. The co ops sold out of shares this year, 875 00:47:30,080 --> 00:47:32,880 Speaker 16: even if that means bring skiers up one chair at 876 00:47:32,920 --> 00:47:35,239 Speaker 16: a time. So I sit down, yep, So. 877 00:47:35,239 --> 00:47:38,200 Speaker 5: I sit down, and then what's our get going. You'll 878 00:47:38,320 --> 00:47:39,640 Speaker 5: close the safety bar and that's it. 879 00:47:39,840 --> 00:47:40,120 Speaker 6: That's it. 880 00:47:42,920 --> 00:47:44,759 Speaker 1: That does it for us here at Wall Street Week, 881 00:47:44,920 --> 00:47:47,960 Speaker 1: I'm David Weston. See you next week for more stories 882 00:47:48,080 --> 00:47:59,959 Speaker 1: of capitalism.