WEBVTT - Brooks Brothers Filing for Bankruptcy 0:00:00.160 --> 0:00:03.760 This is Bloomberg Business Week with Carol Messer and Jason 0:00:03.840 --> 0:00:08.119 Kelly on Bloomberg Radio. Matt Townsend is here with us. 0:00:08.560 --> 0:00:11.840 We love talking to him about all things retail. You know, 0:00:12.039 --> 0:00:13.760 just one of the guys we missed. First of all, 0:00:13.800 --> 0:00:16.800 how are you, man, I'm good. I've been hanging out 0:00:16.800 --> 0:00:19.959 in Brooklyn for three months. Uh so how's that going. 0:00:21.200 --> 0:00:26.520 It's going okay. You know, it's raining right now, so 0:00:27.880 --> 0:00:32.040 for you, yeah, we get it. We totally get it. Um. 0:00:32.080 --> 0:00:34.640 Speaking of rain and kind of being kind of great 0:00:35.200 --> 0:00:38.360 man the retail industry. I feel like every every day 0:00:38.400 --> 0:00:41.159 it's something new. And you know, here's an iconic company 0:00:41.159 --> 0:00:47.519 tailor to the president's Brooks Brothers done bankruptcy, Yeah, bankruptcy um. Yeah. 0:00:47.600 --> 0:00:51.680 This follows several other big names, Juicy Penny Um being 0:00:51.680 --> 0:00:57.120 one of them. You know, Brooks Brothers, Historic Brand Um. 0:00:57.160 --> 0:00:59.760 Anybody sort of in the business world probably knows the name. 0:01:00.720 --> 0:01:04.400 But you know, they were struggling before Covid UM. And 0:01:04.440 --> 0:01:07.840 with what we see with a lot of retailers is 0:01:07.880 --> 0:01:11.640 that covid really accelerated some of their faults and sort 0:01:11.640 --> 0:01:14.200 of if they were headed down a bad path, this 0:01:14.319 --> 0:01:18.479 really accelerated. UM. Them even further into that into that path. 0:01:18.560 --> 0:01:20.960 And um, but this is going to say that Brooks 0:01:21.000 --> 0:01:23.720 Brothers is going away and they go in to bankruptcy 0:01:23.800 --> 0:01:25.880 with a loan to help them get through bankruptcy. You know, 0:01:25.920 --> 0:01:28.120 they have a plan to you know, shift more to 0:01:28.200 --> 0:01:30.880 casual wear, to kind of they still believe the brand 0:01:30.920 --> 0:01:33.600 has a lot of value in it. Um. But what 0:01:33.600 --> 0:01:35.560 will likely happen is they'll clean up their balance sheet 0:01:35.600 --> 0:01:37.840 and hopefully find a buyer that will come in and 0:01:37.840 --> 0:01:40.080 by the by the company and the brand and take 0:01:40.120 --> 0:01:42.959 it from there. That's that's the goal right now. Yeah, 0:01:43.000 --> 0:01:46.039 And so what happened with this specific name, Matt, I 0:01:46.040 --> 0:01:48.120 mean Brooks Frothers, I have to say, I mean, I 0:01:48.160 --> 0:01:50.000 agret this is going to be a shocker to you, 0:01:50.840 --> 0:01:53.640 Carol Master, But I grew up a little preppy. In fact, 0:01:53.720 --> 0:01:55.920 I believe my mother can keep me honest. Some of 0:01:55.920 --> 0:01:58.720 these I believe quick flex. I was in a Brooks 0:01:58.720 --> 0:02:02.400 Brothers fashion show when I was about six years old. 0:02:02.440 --> 0:02:08.160 And um, Debbie, if you're listening, I would like a picture. 0:02:08.440 --> 0:02:10.560 I want I want proof and I just want the 0:02:10.560 --> 0:02:13.919 picture to tweet out. Um So, but I mean, this 0:02:13.960 --> 0:02:16.320 is this isn't as Carol said, a you know tailor 0:02:16.400 --> 0:02:18.480 to the President's. I mean, this is a really well 0:02:18.520 --> 0:02:21.079 known name that had been doing well for a long 0:02:21.120 --> 0:02:25.160 time until it wasn't. Yeah, he gone through a couple 0:02:25.240 --> 0:02:28.400 different owners. It's always been a private company. UM. And 0:02:28.840 --> 0:02:33.240 you know the current owner is Italian. It comes from 0:02:33.280 --> 0:02:36.680 a sort of fashion family. And you know, he he 0:02:36.720 --> 0:02:38.720 had realized there was an issue. Try to make the 0:02:38.760 --> 0:02:43.080 brand peelmore to younger people, younger men, be more fresh 0:02:43.080 --> 0:02:45.440 and vibrant, go after some of the sportswear category. But 0:02:45.480 --> 0:02:47.400 at the end of the day, the big problem is 0:02:48.360 --> 0:02:50.320 men just aren't wearing as many suits as they used 0:02:50.320 --> 0:02:54.639 to um, even in sort of once formal settings. UM. 0:02:55.360 --> 0:02:57.720 And and then and on top of that, lots of 0:02:57.800 --> 0:03:02.040 new competitors UM come up with you know, custom suits 0:03:02.080 --> 0:03:04.639 for a couple hundred bucks. Um, you know, when you're 0:03:04.760 --> 0:03:06.920 much less than you've got a Brooks Brothers suit for 0:03:07.560 --> 0:03:11.280 So it's a combination of just yet nimbore, nimble competition 0:03:11.320 --> 0:03:14.320 coming in the floor prices and good quality and just 0:03:14.360 --> 0:03:17.000 the category itself is just in decline. Well, let's bring 0:03:17.120 --> 0:03:20.200 in courtesy of Matt. He brought along a friend, Matt Rubel, 0:03:20.360 --> 0:03:23.840 he's former CEO and chairman of Collective Brands, former chairman 0:03:23.880 --> 0:03:28.560 presidency of Khan, also CEO of Pepe Jeans. Um someone 0:03:28.600 --> 0:03:33.000 who understands the retail world like Matt. Um just so well, Matt, 0:03:33.160 --> 0:03:35.600 nice to have you here with us. You know, we 0:03:35.840 --> 0:03:38.000 kicked off our conversation talking a little bit with Matt 0:03:38.040 --> 0:03:39.480 just to give us a low down on what happened 0:03:39.480 --> 0:03:41.640 with Brooks Brothers. But it does feel like we said 0:03:41.680 --> 0:03:44.280 at the top that every day, you know, there's a 0:03:44.320 --> 0:03:49.600 new retailer that's filing for bankruptcy. Um, we know we're overstored. 0:03:49.640 --> 0:03:52.000 How do you see it? Where does the retail world go? 0:03:52.360 --> 0:03:55.360 And what does Brooks Brothers, you know, closing or bankruptcy, 0:03:55.400 --> 0:03:59.760 I should say, you know, tell us, Um, well, first 0:03:59.760 --> 0:04:02.640 of all, Hall high grade to be with you, Um 0:04:02.760 --> 0:04:05.880 and listen, you've got to find it. There are about 0:04:05.880 --> 0:04:09.440 a million there are a little over a million stores 0:04:09.720 --> 0:04:14.080 in the United States today and they sell anything from 0:04:14.160 --> 0:04:17.440 need based product you know, like Walmart and things like that, 0:04:17.880 --> 0:04:22.360 you know, to aspirational products UM war trend related consumer 0:04:22.400 --> 0:04:27.839 products like apparel and and and it is the general 0:04:27.920 --> 0:04:31.560 consensus that we will lose between a hundred and fifty 0:04:31.600 --> 0:04:34.000 and two hundred thousand of those stores over the next 0:04:34.000 --> 0:04:38.760 twelve d eight eighteen months. And that was a momentum 0:04:38.760 --> 0:04:42.880 and a movement that was in place because of, you know, 0:04:43.000 --> 0:04:46.560 the ability to have brands come to you via your 0:04:46.640 --> 0:04:51.080 phone and via your computer, via your iPad, etcetera um 0:04:51.240 --> 0:04:54.479 that was accelerated during COVID, as well as the fact 0:04:54.480 --> 0:04:57.440 that when your doors are shut, you have no cash 0:04:57.480 --> 0:05:00.440 flow and you have no customers, and so they have 0:05:00.600 --> 0:05:03.440 to do it. So let's bring it down to the 0:05:03.480 --> 0:05:06.760 trend related consumer products versus supermarkets and and you know 0:05:06.880 --> 0:05:09.680 things like that. Um, I would just say the way 0:05:09.720 --> 0:05:14.520 customers are engaging as different and and Brooks Brothers ended 0:05:14.600 --> 0:05:17.240 up with you know, Claudio is a great um, a 0:05:17.279 --> 0:05:20.800 great long time business friend and a wonderful, wonderful guy. 0:05:20.920 --> 0:05:24.000 But what happened here is that you have a traditional 0:05:24.040 --> 0:05:28.040 brand in a slow moving category. I amend that did 0:05:28.040 --> 0:05:31.520 not evolve as quickly with the change in tape, and 0:05:31.640 --> 0:05:35.599 in conjunction with that, when the door shut, and also 0:05:35.720 --> 0:05:38.760 everybody goes and starts to be even more casual. So 0:05:39.160 --> 0:05:42.279 the movement toward work at home, the movement toward different 0:05:42.279 --> 0:05:45.480 consumer behaviors, and how people will be will just chop 0:05:45.560 --> 0:05:48.920 their marketplace UM by a tremendous amount, and they can't 0:05:48.960 --> 0:05:51.840 support the overheads that are in place. That doesn't mean 0:05:51.880 --> 0:05:54.200 it's not a great brand. That doesn't mean it can't 0:05:54.200 --> 0:05:57.719 sell product going forward. UM. It can, but just not 0:05:57.839 --> 0:05:59.919 in the structure. And that's why you see the chapter 0:06:00.120 --> 0:06:05.320 eleven that came across. Yeah, Matt, you've run brands, You've 0:06:05.640 --> 0:06:11.120 analyzed brands, UM, you've talked to investors about brands. Given 0:06:11.160 --> 0:06:13.640 what you know about Brooks Brothers, would you be a 0:06:13.640 --> 0:06:18.039 buyer of the Brooks Brothers brand or company at this point, um, 0:06:18.080 --> 0:06:19.840 given that they're going to be, you know, going through 0:06:19.880 --> 0:06:22.479 a bidding process. And if so, what would you do 0:06:22.640 --> 0:06:27.760 with the brand? Um? The answer is yeah, I think 0:06:27.760 --> 0:06:30.480 that the brand Again, it's all the matter of you know, uh, 0:06:30.720 --> 0:06:35.719 you know, at what price. But the brand has tremendous awareness. UM. 0:06:35.839 --> 0:06:40.159 It stands for something very classic UH with it twist 0:06:40.920 --> 0:06:43.440 in uh in a long long terradition and has a 0:06:43.480 --> 0:06:48.600 great international appeal. So UM, what I would do is, 0:06:48.760 --> 0:06:50.720 you know, kind of bring it back to its route. 0:06:51.560 --> 0:06:56.800 I would upgrade its UM product content to really move 0:06:56.920 --> 0:07:01.000 to a higher level. I would UM refocused it. I 0:07:01.000 --> 0:07:04.440 would have a very very few stores. I would have 0:07:04.560 --> 0:07:08.360 international stores as well as the others, and then I 0:07:08.400 --> 0:07:11.480 would kind of create an engaging, you know, website that 0:07:11.640 --> 0:07:17.240 deals with UM a reinterpretation of how that consumer, the 0:07:17.360 --> 0:07:20.840 conceptual consumer that you know thirty years ago was relevant, 0:07:21.040 --> 0:07:25.760 how that consumer addresses today and how you bring him 0:07:25.800 --> 0:07:29.720 to life in his lifestyle through great tailoring and through 0:07:29.800 --> 0:07:33.320 great high quality product delivered vertically. There were being able 0:07:33.360 --> 0:07:36.480 to do it at better, better value. So you know, 0:07:36.560 --> 0:07:40.400 that's what I would do. But it's more likely gonna 0:07:40.600 --> 0:07:43.880 get fought by a licensing company or a brand you 0:07:43.880 --> 0:07:46.360 know company that's going to go out and chop it 0:07:46.440 --> 0:07:50.760 up into different categories and and it'll get massed out. 0:07:51.120 --> 0:07:56.360 So that's that's my perspective. UM. Just follow about the 0:07:56.400 --> 0:07:59.880 broader retail landscape. UM. You mentioned, you know, the extect 0:08:00.200 --> 0:08:03.000 for all the store closings, given what is happening with 0:08:03.000 --> 0:08:07.480 the virus now and that you know many states are 0:08:07.480 --> 0:08:11.560 going back into shutting down parts of the economy. UM. 0:08:11.600 --> 0:08:14.240 Do you think there's room for that? UM? I think 0:08:14.240 --> 0:08:18.640 you said something like two stores to being even bigger, 0:08:18.800 --> 0:08:20.960 that this could be even a larger fallout for the 0:08:20.960 --> 0:08:25.480 industry previously, it really depends on the real estate UM 0:08:25.520 --> 0:08:29.720 marketplace and how pungible that they are, meaning how flexible 0:08:29.800 --> 0:08:33.480 they'll be with working and then ultimately how the banks 0:08:33.480 --> 0:08:35.959 will be with the real estate UM groups as well, 0:08:36.440 --> 0:08:40.560 you know, because the current rent structure would not allow 0:08:41.480 --> 0:08:45.839 UM stores to on the diminished demand that one is 0:08:45.880 --> 0:08:50.040 going to see in certain categories UM work. That being said, 0:08:50.080 --> 0:08:53.800 there's helping wellness concepts. There's other concepts that are you 0:08:53.840 --> 0:08:58.040 know out there that are doing fine UM. But you know, restaurants, 0:08:58.040 --> 0:09:01.120 there's about six hundred and eighty thousand or restaurant locations 0:09:01.679 --> 0:09:07.000 around the United States. You know, fast casual and you 0:09:07.040 --> 0:09:09.880 know quick QUSR is going to be fine, but you 0:09:09.920 --> 0:09:13.920 know casual and fine dining there in trouble and they've 0:09:13.920 --> 0:09:16.440 got some real issues. And so you're gonna see you know, 0:09:17.440 --> 0:09:20.440 of those UM go away and a lot of the 0:09:20.440 --> 0:09:23.320 creativity that's come to bear here. You know, you live 0:09:23.360 --> 0:09:25.600 in Brooklyn, so you get to see all the great 0:09:25.679 --> 0:09:28.320 creativity here in more than May. We have some great, 0:09:28.640 --> 0:09:31.360 great restaurants too. They're going to go out of business 0:09:31.559 --> 0:09:35.439 and it's UM, it's just a shame that the creativity 0:09:35.480 --> 0:09:38.240 that's been layered into this marketplace is going to go away. Yeah, 0:09:38.280 --> 0:09:40.760 we're gonna check out at Danielle Blue a little bit 0:09:40.800 --> 0:09:43.520 later on to to just talk about because he's slowly reopening. 0:09:43.520 --> 0:09:46.280 But you know, everybody's learning to pivot UM. Matt, We've 0:09:46.320 --> 0:09:51.280 just got about seconds left here. You know, who wins 0:09:51.400 --> 0:09:53.800 ultimately in this and what's the biggest consumer trend that 0:09:53.840 --> 0:09:59.280 comes out of the virus? Just quickly? Who wins? Uh? 0:09:59.640 --> 0:10:01.960 Quite honestly, it's going to be bar belled. Is the 0:10:02.000 --> 0:10:04.720 people with capital who can really go out and you know, 0:10:04.920 --> 0:10:07.880 kind of work their way through this. And then it's 0:10:07.880 --> 0:10:11.920 going to be the creative new businesses UM that are 0:10:11.960 --> 0:10:15.679 really close to their consumers and they're fast, so they 0:10:15.760 --> 0:10:17.840 have to be you know, what's the best supply chain, 0:10:18.000 --> 0:10:20.880 the fast one. What's the best way to deal with 0:10:20.880 --> 0:10:24.080 your customer as closely as you possibly can to make 0:10:24.120 --> 0:10:28.520 it a personalized experience. You know the Chanel group at 0:10:28.520 --> 0:10:30.360 the luxury end, peopleould say, oh my god, they're gonna 0:10:30.360 --> 0:10:33.480 have a hard time. Well, they're developing technologies that are 0:10:33.520 --> 0:10:37.199 helping UM. There are all sorts of companies that are 0:10:37.200 --> 0:10:41.800 developing unique technologies. So people who can pivot UM and 0:10:41.920 --> 0:10:44.440 be fast and then those who have capital in scale 0:10:44.760 --> 0:10:47.000 makes sense. Well, we're gonna leave it there. Thank you 0:10:47.040 --> 0:10:49.719 both so much. What a great conversation. Chairman of the 0:10:49.760 --> 0:10:52.400 executive board at mid Ocean Partners of long history in 0:10:52.520 --> 0:10:56.120 the retail business, which you just proved with some great insights, 0:10:56.160 --> 0:10:59.720 and our own Matt Towns and editor for Bloomberg joining 0:10:59.800 --> 0:11:03.600 us from Brooklyn. The two mats really delivering here. You're 0:11:03.679 --> 0:11:07.360 listening to Bloomberg Business Week with Carol Masser and Jason 0:11:07.480 --> 0:11:11.400 Kelly on Bloomberg Radio. So I'm going to go back 0:11:11.400 --> 0:11:13.560 to a story Jason I mentioned it before because I 0:11:13.559 --> 0:11:16.200 do want to get um Jimmie Metzel's thoughts on this. 0:11:16.240 --> 0:11:17.720 It was a Bloomberg News story. It was covered by 0:11:17.800 --> 0:11:21.160 Nick Wadhams. We talked about it yesterday. It's covering how 0:11:21.200 --> 0:11:24.000 the US is inability to handle the pandemic is basically 0:11:24.040 --> 0:11:27.520 hurting its economic might and ultimately as a result of that, 0:11:27.559 --> 0:11:30.560 it's geopolitical influence. At the same time, we know President 0:11:30.559 --> 0:11:32.120 Trump there's a lot of stuff going on between the 0:11:32.160 --> 0:11:35.520 U S and China. They are looking to ban TikTok 0:11:35.600 --> 0:11:38.920 in the US as one way to retaliate against China. 0:11:39.000 --> 0:11:41.680 Over its handling of the virus. Meantime, China is moving 0:11:41.679 --> 0:11:45.280 full steam ahead. So once again we want some insight 0:11:45.400 --> 0:11:47.400 on what's going on between the US and China and 0:11:47.440 --> 0:11:49.760 where China is headed back with us. Is Jamie Metzel 0:11:50.200 --> 0:11:54.600 Senior Fellow at Atlantic Council Technology Futurist. He's former director 0:11:55.040 --> 0:11:57.360 on the U. S National Security Council at the State 0:11:57.360 --> 0:12:00.360 Department and on the Senate Foreign Relations Committee. Any wrote 0:12:00.559 --> 0:12:03.920 Hacking Darwin, Genetic Engineering, and the Future of Humanity. We've 0:12:03.920 --> 0:12:07.240 talked about him about so many big macro issues, and 0:12:07.559 --> 0:12:09.480 Jamie's back with us on the phone and near How 0:12:09.520 --> 0:12:12.440 are you? I'm you know? Would I always say? Is 0:12:12.640 --> 0:12:16.440 I am good? But this is a sure crazy world? 0:12:16.720 --> 0:12:19.360 So what can you do? Well? So where do we 0:12:19.400 --> 0:12:22.800 start when it comes to US and China? Because I 0:12:22.840 --> 0:12:24.520 do feel like there's a ton of stories already on 0:12:24.559 --> 0:12:28.360 the Bloomberg um today. But we've certainly seen the momentum 0:12:28.360 --> 0:12:29.880 pick up over the last couple of weeks, in the 0:12:29.960 --> 0:12:34.079 last month or so. So what are you watching, Jamie? Well, 0:12:34.160 --> 0:12:37.199 certainly U S China relations are bad and they are 0:12:37.240 --> 0:12:42.640 getting worse, and after so many decades of coupling, we're 0:12:42.679 --> 0:12:47.960 seeing a pretty aggressive and rapid decoupling. And the really 0:12:48.040 --> 0:12:52.800 hard part is that while China is really getting its 0:12:52.840 --> 0:12:57.360 act together, even though as you know Carol and Jason 0:12:57.400 --> 0:13:00.520 I have a huge criticism of China and the origins 0:13:00.559 --> 0:13:03.840 of the pandemic in terms of responding, they've done a 0:13:03.840 --> 0:13:06.959 pretty great job in their economy is starting to come back. 0:13:07.440 --> 0:13:12.480 And the United States, with our spectacular failure to respond 0:13:12.640 --> 0:13:16.360 to the pandemic, this is a country that if the 0:13:16.400 --> 0:13:20.600 pandemic wasn't enough, um, having a leader who's hitting us 0:13:20.640 --> 0:13:24.160 against each other is just adding fuel to that to 0:13:24.240 --> 0:13:26.400 that fire. And so we all live in this world 0:13:26.520 --> 0:13:30.200 created by our parents and grandparents and great grandparents who 0:13:30.600 --> 0:13:33.600 fought in one two world wars when the Cold War, 0:13:34.480 --> 0:13:37.360 and now we are America is kind of falling apart. 0:13:37.440 --> 0:13:40.480 And it's not just the future of America the mistake, 0:13:40.559 --> 0:13:42.840 but the future of the world. Yeah, I mean, we're 0:13:42.880 --> 0:13:46.439 losing this war at the moment, Jamie. Isn't that fair 0:13:46.480 --> 0:13:50.679 to say? I think we are and and you use 0:13:50.760 --> 0:13:54.640 the word war, it's a very strong term. But there's 0:13:54.640 --> 0:13:58.600 a there's a competition, and we have all grown up 0:13:58.640 --> 0:14:01.480 in a world where the United States in many ways 0:14:01.640 --> 0:14:05.920 set the terms of that competition, whether it's free trade, 0:14:05.960 --> 0:14:09.360 open markets, free speech, and the United States was always 0:14:09.400 --> 0:14:16.400 imperfect um. But now the world is is America is 0:14:16.440 --> 0:14:19.960 not playing the traditional role that it's played. We feel 0:14:20.120 --> 0:14:23.480 just things are falling apart, and China is moving very 0:14:23.520 --> 0:14:26.960 aggressively to make the world look and feel a bit 0:14:26.960 --> 0:14:30.000 more like China. That's we're seeing now in Hong Kong. 0:14:30.160 --> 0:14:33.960 We're seeing now with the um with the Chinese national 0:14:33.960 --> 0:14:37.280 security laws applying in Hong Kong apply to people all 0:14:37.280 --> 0:14:41.200 around the world, um, at least according to Chinese law. 0:14:41.320 --> 0:14:44.200 So that that's what's at stake is what does the 0:14:44.200 --> 0:14:46.800 world look like that we want to live in? And 0:14:46.840 --> 0:14:50.160 the United States is losing influence by the day. Well, 0:14:50.200 --> 0:14:53.040 and you know we're Bloomberg, right and we care about 0:14:53.440 --> 0:14:56.560 how things impact us, certainly on a social level, but 0:14:56.640 --> 0:14:59.280 on an economic level, on a business level, what does 0:14:59.320 --> 0:15:02.520 this mean for US businesses who have been since I 0:15:02.560 --> 0:15:06.720 began my career in business news, it was all about 0:15:06.840 --> 0:15:10.080 tapping into the Chinese market and their billion plus at 0:15:10.120 --> 0:15:13.680 that time population and consumer base. So what does it 0:15:13.760 --> 0:15:17.720 mean for American businesses? Well, American businesses are going to 0:15:17.800 --> 0:15:21.960 have to really think hard about what's their right relationship 0:15:22.040 --> 0:15:27.000 with China. And that doesn't mean no relationship, It just means, 0:15:27.200 --> 0:15:30.480 um that a lot of the old assumptions will no 0:15:30.640 --> 0:15:35.000 longer be true and certainly will be very difficult for 0:15:35.760 --> 0:15:39.640 American companies to operate in China if they do anything 0:15:39.720 --> 0:15:43.040 other than what the Chinese government wants. And that's true 0:15:43.120 --> 0:15:46.920 for small companies, but even for big companies like Apple. 0:15:47.560 --> 0:15:53.200 Um And it's certainly the case that uh that American 0:15:53.240 --> 0:15:58.120 companies will have less legal protection in in China because 0:15:58.160 --> 0:16:02.000 the United States government just has less and less leverage. 0:16:02.320 --> 0:16:04.960 And I think that over time, um, it's not just 0:16:05.080 --> 0:16:08.680 decoupling between the United States and China, but the world 0:16:09.040 --> 0:16:13.800 is going to more evolve into two broad competitive ecosystems, 0:16:13.880 --> 0:16:19.040 the greater US competitive ecosystem and the greater China competitive ecosystem. 0:16:19.040 --> 0:16:21.120 And that doesn't mean that everyone will have to be 0:16:21.600 --> 0:16:24.000 the other countries and communities will have to be all 0:16:24.120 --> 0:16:26.360 in with one or the other, kind of like in 0:16:26.400 --> 0:16:28.720 the Cold War. You're gonna it's going to be a 0:16:28.800 --> 0:16:33.640 really important strategic decision that every company and every country makes, 0:16:33.760 --> 0:16:36.600 is where do you fit in relation to those two poles? Well, 0:16:36.600 --> 0:16:38.960 and speaking of decisions. I mean, Jason Wright, we came 0:16:39.000 --> 0:16:40.560 on air and one of the headlines that crossed was 0:16:40.600 --> 0:16:44.960 Google scrapping its cloud initiative in China, and specifically in 0:16:45.080 --> 0:16:49.080 Part two, concerns over geopolitical tensions and the pandemic, according 0:16:49.080 --> 0:16:51.440 to those in the know. So you know, Jamie, we're 0:16:51.440 --> 0:16:54.480 already seeing companies make decisions about kind of where they 0:16:54.480 --> 0:16:59.200 want to play. It's true, um, and yet companies liked 0:16:59.280 --> 0:17:02.240 what we'll use. Going to this Google example, there are 0:17:02.320 --> 0:17:06.760 now some really strong Chinese competitors. So in the early 0:17:06.880 --> 0:17:10.320 days it was, well, China is ripping off source code 0:17:10.320 --> 0:17:12.520 and that's this whole Huawei. I mean, there's a lot 0:17:12.520 --> 0:17:17.680 of Cisco that's in Huawei which is just stolen code. Um. 0:17:17.680 --> 0:17:21.520 But now there are these national champion Chinese companies that 0:17:21.600 --> 0:17:26.879 have huge advantages because they are back. They're essentially in 0:17:26.960 --> 0:17:31.520 many ways arms of the state, backed by massive resources, 0:17:32.080 --> 0:17:37.160 by a captive consumer base, and the next staff of 0:17:37.280 --> 0:17:40.399 this global China, which is what the Chinese leadership wants 0:17:40.720 --> 0:17:42.480 is for China to be the leading country in the 0:17:42.480 --> 0:17:46.600 world by And that doesn't mean it's leading like they 0:17:46.600 --> 0:17:49.120 have bigger companies. It means that we're all in many 0:17:49.119 --> 0:17:52.719 ways living in China's world, like for the last seventy 0:17:52.720 --> 0:17:55.919 five years, most everyone has lived in America's world. And 0:17:55.920 --> 0:17:58.040 if we don't want that, we better get our act 0:17:58.080 --> 0:18:01.520 together here at home. Jamie. We're so happy to have 0:18:01.600 --> 0:18:03.960 you here, in part because so much has happens. Is 0:18:04.000 --> 0:18:06.159 the last time we talked to you, uh, and it 0:18:06.240 --> 0:18:09.560 wasn't that long ago. To be honest, I want to 0:18:09.560 --> 0:18:14.080 talk to you about sort of social protests, uh. Injustice. 0:18:14.560 --> 0:18:18.159 We're seeing it globally, we're obviously seeing it uh in 0:18:18.480 --> 0:18:22.600 an amazing way here domestically, but we also can't forget 0:18:22.880 --> 0:18:26.280 what we've seen go on in Hong Kong. Talk about 0:18:26.320 --> 0:18:28.320 Hong Kong first and then maybe bring it back to 0:18:28.359 --> 0:18:31.640 the United States. Yeah, So what we're seeing in Hong 0:18:31.720 --> 0:18:34.919 Kong is connected to the conversation that we had in 0:18:35.040 --> 0:18:39.160 the last block, in the sense that China has its 0:18:39.240 --> 0:18:41.800 view of the world. It's how it has its sense 0:18:41.840 --> 0:18:45.200 of how everybody should be and behave in the level 0:18:45.240 --> 0:18:48.400 of control that China should have. The United States has 0:18:48.440 --> 0:18:51.560 a very very different view, and that's why for so 0:18:51.640 --> 0:18:54.520 many decades, the United States and the role of the 0:18:54.600 --> 0:18:57.760 United States has countered in many ways the ambitions of 0:18:57.840 --> 0:19:00.960 countries like China, Soviet You and and and others. With 0:19:01.040 --> 0:19:03.879 the United States now on its knees, UM, there's a 0:19:03.920 --> 0:19:08.040 lot of maneuverability for other countries like China and Russia 0:19:08.119 --> 0:19:10.439 that have designs that are different from ours. So China, 0:19:10.920 --> 0:19:13.879 as you, Jason and Carroll, No, they signed of their 0:19:13.920 --> 0:19:17.760 own accord the basic law in and it afforded the 0:19:17.800 --> 0:19:20.480 people of Hong Kong is certain this one country, two 0:19:20.480 --> 0:19:26.680 systems model with basic rights for fifty years until un 0:19:26.800 --> 0:19:30.120 and this national security lot just strips it away. And 0:19:30.200 --> 0:19:32.639 in in a different time, the United States would have 0:19:32.640 --> 0:19:36.800 played a very active role in the United Kingdom saying hey, 0:19:36.840 --> 0:19:40.080 wait a second, there's an international agreement that's been registered 0:19:40.119 --> 0:19:41.879 with the u N you signed it. This is a 0:19:41.880 --> 0:19:46.720 clear a clear violation of that UM. But now UM. 0:19:46.840 --> 0:19:49.760 But in this environment, it's kind of anything goes. And 0:19:49.760 --> 0:19:53.040 that's why China is moving so aggressively, and the people 0:19:53.080 --> 0:19:56.800 of Hong Kong don't really have a place to appeal 0:19:56.880 --> 0:20:00.520 to UH. And that's that's what's so magic. I mean, 0:20:00.560 --> 0:20:04.560 their basic rights are being stripped and there's nothing they 0:20:04.560 --> 0:20:07.080 can do. And that's how that's how people have always 0:20:07.080 --> 0:20:13.920 felt within oppressive societies. But now that that spaces is growing, 0:20:14.000 --> 0:20:17.200 and and that's the issue, is that that in our 0:20:17.240 --> 0:20:20.600 world there are the structures, there are the superstructures of 0:20:20.680 --> 0:20:25.840 laws and and sovereign states, and then there's there are cultures. Um. 0:20:25.880 --> 0:20:28.600 And it wasn't coincidental that in the is we had 0:20:28.680 --> 0:20:31.920 more and more fascist states because that was a trend, 0:20:32.000 --> 0:20:35.600 and then in the nineties we had more democratic states 0:20:35.640 --> 0:20:38.280 because that was a trend. And now we're seeing a 0:20:38.400 --> 0:20:42.800 return to a much more dangerous world. Um. And it 0:20:42.840 --> 0:20:44.479 wasn't that the old world was so great. They were 0:20:44.520 --> 0:20:48.440 all kinds of cracks and breaks and crevices and shortcomings 0:20:48.440 --> 0:20:50.920 in the old world. But if you had a problem 0:20:51.000 --> 0:20:54.399 with what was before, you're really going to have a problem, 0:20:54.440 --> 0:20:57.199 in my view, with what's what's coming. So is it 0:20:57.200 --> 0:20:59.680 it's not just the US withdrawing though, like you said, 0:20:59.680 --> 0:21:02.160 who's going to keep China in check? Right, Jamie, It's 0:21:02.200 --> 0:21:04.920 not just the US kind of withdrawing. It's other countries 0:21:04.960 --> 0:21:10.080 as well. Absolutely, But at least since and even before that, 0:21:10.440 --> 0:21:13.960 the United States has had a special role as kind 0:21:14.040 --> 0:21:17.360 of the rally er in chief that we have all 0:21:17.400 --> 0:21:20.760 these allies and partners and friends. The United States played 0:21:20.800 --> 0:21:24.879 the leading role in creating the United Nations, supporting the 0:21:24.960 --> 0:21:29.919 concept of human rights and international law, and then the 0:21:29.960 --> 0:21:34.040 other countries played in many ways, and they played a 0:21:34.119 --> 0:21:37.240 very critical role, but the United States was the leader. 0:21:37.600 --> 0:21:41.080 And now with the United States pulling back and with 0:21:41.200 --> 0:21:46.520 China very aggressively stepping up, there's this period of disarray 0:21:47.240 --> 0:21:50.680 um where there's not a systemic response. There's not a 0:21:50.720 --> 0:21:53.280 systemic response here in the United States where we have 0:21:53.720 --> 0:21:59.080 such deep problems, and there's also not a systemic response 0:21:59.760 --> 0:22:02.560 to these big issues globally. And it's it's not just 0:22:02.680 --> 0:22:05.919 Hong Kong. It's we have three billion people on Earth 0:22:06.440 --> 0:22:10.719 who are living in extreme poverty, and now under covid UM, 0:22:10.800 --> 0:22:12.600 those people are going to be in much had much 0:22:12.720 --> 0:22:16.879 greater threat. Who is leading the charge to help those people? 0:22:16.960 --> 0:22:19.960 And and traditionally the United States would rally everybody else, 0:22:20.359 --> 0:22:24.399 And now we're in disarray, and it's it's unclear whether 0:22:24.480 --> 0:22:28.840 we will or we can or will do that. I 0:22:28.880 --> 0:22:30.960 have so many questions, Jamie, as I always do. You 0:22:31.040 --> 0:22:33.840 come on to two things. You said. You said the 0:22:33.880 --> 0:22:35.560 US is on its knees, and I just wish you 0:22:35.600 --> 0:22:37.240 could if you would just give a little bit more 0:22:37.280 --> 0:22:40.480 on that. And I also wonder, you know, what's changed. 0:22:40.600 --> 0:22:43.520 Was this China's mission all along and shame on the 0:22:43.560 --> 0:22:46.080 rest of the world and not acknowledging it, or was 0:22:46.119 --> 0:22:48.400 it that China now is more established, as you said, 0:22:48.400 --> 0:22:51.760 they've got global competitors and global companies that they don't 0:22:51.800 --> 0:22:53.639 necessarily have to rely so much on the rest of 0:22:53.680 --> 0:22:57.679 the world. Pick one, pick up, so you know so 0:22:57.840 --> 0:23:00.680 so china It's mission was always mean. It didn't ever 0:23:00.760 --> 0:23:04.240 want to play a secondary role, even in this US 0:23:04.400 --> 0:23:08.400 led world, And that was always China's ambition. After the 0:23:08.440 --> 0:23:10.719 two thousand and the old thing used to be um 0:23:10.760 --> 0:23:12.840 to kind of lay low and wait for your moment. 0:23:12.920 --> 0:23:15.240 And then there was the two thousand two thousand nine 0:23:15.240 --> 0:23:18.960