WEBVTT - Bloomberg Businessweek Weekend - July 7th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Week inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.040 --> 0:00:22.880 Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. 0:00:22.920 --> 0:00:25.840 Carol Masser along with Matt Miller, who's filling in for Tim. 0:00:26.360 --> 0:00:29.680 Coming off a holiday shortened trading week following Independence Day 0:00:29.680 --> 0:00:32.640 in the US, so some are off and running, and 0:00:32.680 --> 0:00:35.519 with that we have some great summer reads courtesy of 0:00:35.560 --> 0:00:38.559 the Heist Issue. The annual double issue is available now 0:00:38.600 --> 0:00:42.200 on newstanmds, online at Bloomberg dot com, slash Businessweekend, of course, 0:00:42.240 --> 0:00:44.879 always on the Bloomberg terminal. Now. A bit later on, 0:00:44.960 --> 0:00:48.120 we'll talk to Way's co founder and serial entrepreneur Ory 0:00:48.240 --> 0:00:50.880 Levine for his insight on how to find the best 0:00:51.000 --> 0:00:55.680 use cases for artificial intelligence technology. And speaking of entrepreneurs, 0:00:55.880 --> 0:00:58.960 the co founders of Duke and Dame Salted Caramel Flavored 0:00:59.000 --> 0:01:03.040 Whiskey detail their journey from finance to the spirit's business. 0:01:03.520 --> 0:01:05.800 All of that to come, though, We begin with that 0:01:05.880 --> 0:01:08.959 dive into the twenty twenty three Heist issue now and 0:01:09.000 --> 0:01:12.440 it's fifty year full of stories of intrigue, thievery and scams. 0:01:12.680 --> 0:01:16.160 Good guys, bad guys. We got an overview with Bloomberg 0:01:16.200 --> 0:01:19.560 BusinessWeek Features editor Jeremy Kean and the editor of Bloomberg 0:01:19.600 --> 0:01:20.920 business Week, Joe Weber. 0:01:21.280 --> 0:01:23.640 We go cover to cover in Heist. 0:01:24.200 --> 0:01:28.720 There are you know, sortied tales, There are cliffhangers, there 0:01:28.760 --> 0:01:33.720 are ongoing mysteries. There are bank rubbers who are bad guys, 0:01:33.760 --> 0:01:34.800 or a bank rubbers. 0:01:34.480 --> 0:01:36.039 Who are maybe not bad guys. 0:01:36.080 --> 0:01:38.839 It's got it all. Jeremie Keane puts it all together. 0:01:39.440 --> 0:01:41.320 We wrote these stories out over the course of a week. 0:01:41.880 --> 0:01:44.000 So if Business Week kind of a shark week, this 0:01:44.080 --> 0:01:44.319 is it. 0:01:44.440 --> 0:01:45.320 I think it's so cool. 0:01:45.640 --> 0:01:47.920 But the thing is, when I first thought about it, 0:01:48.040 --> 0:01:50.280 when I first heard the concept, I thought cool because 0:01:50.320 --> 0:01:52.880 I want to someday be part of a heist. 0:01:53.080 --> 0:01:53.240 Right. 0:01:53.640 --> 0:01:55.920 I think we all you might regret that we all 0:01:55.960 --> 0:01:56.480 sort of do. 0:01:56.680 --> 0:01:59.440 But some of these thieves are really bad people, Like 0:01:59.480 --> 0:02:01.680 we talked about one of the stories yesterday made me 0:02:01.800 --> 0:02:05.680 very angry, like who steals benefits from the poorest people 0:02:05.680 --> 0:02:06.200 in America? 0:02:06.400 --> 0:02:06.640 Sad? 0:02:06.720 --> 0:02:06.880 Right? 0:02:07.160 --> 0:02:07.520 Yeah? 0:02:07.600 --> 0:02:10.560 Yes, And that and what feels really challenging about that 0:02:10.600 --> 0:02:13.359 one is all it would take is the government to 0:02:13.360 --> 0:02:16.080 put a little chip in a card and it would 0:02:16.120 --> 0:02:18.720 protect but because it's still a swipe, and we all 0:02:18.720 --> 0:02:22.440 know how vulnerable those ATM cards can be. Like some 0:02:22.520 --> 0:02:24.359 of the most vulnerable people don't have anybody having in 0:02:24.400 --> 0:02:28.359 their back. So the story's go in many different directions. 0:02:28.520 --> 0:02:31.480 Like I said before, Jeremy Keene is the architect of 0:02:31.520 --> 0:02:34.160 the issue and decide what goes what's not in the issue. 0:02:34.480 --> 0:02:38.160 One little fun fact, I know you read this one already. 0:02:38.600 --> 0:02:42.160 Jeremy did a story wrote for almost a year now. Jeremy, 0:02:42.160 --> 0:02:44.720 you've been working on this thing, right, put a filter 0:02:44.800 --> 0:02:49.040 in place to basically track all the crazy, weird stuff. 0:02:49.080 --> 0:02:51.240 That has been stolen since. 0:02:51.000 --> 0:02:54.760 Our last heist issue a year ago. Jeremy, what was 0:02:54.800 --> 0:02:57.440 your single favorite thing on that list? 0:02:58.600 --> 0:03:01.400 I think that would have to be foot statue of 0:03:01.400 --> 0:03:04.799 Gary the gorilla that was stolen from a garden center 0:03:05.000 --> 0:03:08.440 in Scotland. And one of the nice things when you 0:03:08.840 --> 0:03:12.200 drink you drill down into the into these news of 0:03:12.240 --> 0:03:14.200 the weird type stories and one of the things that's 0:03:14.240 --> 0:03:16.960 great is there's always additional little nuggets that are great. 0:03:17.000 --> 0:03:19.360 And one of my favorite things about that one was 0:03:19.360 --> 0:03:22.080 was after police asked people to call in with tips, 0:03:22.120 --> 0:03:24.880 people were saying, oh, I spotted this eight foot gorilla 0:03:24.960 --> 0:03:28.920 statue going down the highway, and they pointed out that 0:03:28.960 --> 0:03:31.760 in fact it was Gary's twin brother that was made 0:03:31.760 --> 0:03:35.400 by the same company, but not Gary. Gary remains missing. 0:03:35.520 --> 0:03:38.800 What about the morgue, Oh yeah. 0:03:38.640 --> 0:03:41.800 That's I mean, that's really quite a story. That's that's ongoing. 0:03:41.800 --> 0:03:43.640 In fact, I think one of some of the main 0:03:43.680 --> 0:03:47.000 people were just just pleaded not guilty in court a 0:03:47.000 --> 0:03:50.680 couple of days ago. This was the Harvard Medical School. 0:03:51.000 --> 0:03:55.560 The main morgue manager has been accused by the government 0:03:55.600 --> 0:03:59.760 of running a trafficking ring in cadaver parts, allegedly selling 0:04:00.120 --> 0:04:04.080 to other people who are using them. In one case, 0:04:04.120 --> 0:04:07.080 the allegation is in I think art might be a 0:04:07.080 --> 0:04:11.840 strong word for it, but some pretty grim crafts. 0:04:11.840 --> 0:04:13.880 And hey, one man's trash is another man's treasure. 0:04:14.320 --> 0:04:17.599 A law and order for you know episode, it's really cool. 0:04:17.600 --> 0:04:19.280 So I'm gonna do a thing here. One of the 0:04:19.279 --> 0:04:21.400 things I'm going to link this story to another story. 0:04:21.440 --> 0:04:22.000 You ready for this? 0:04:22.120 --> 0:04:29.040 Yes, there was an Oscar Mayer Wienermobile that lost a part. 0:04:29.360 --> 0:04:30.760 Matt, do you know what part it lost? 0:04:31.120 --> 0:04:33.480 It was stolen by thieves, the steering wheel. 0:04:33.560 --> 0:04:35.400 It was the catalytic converter. 0:04:35.760 --> 0:04:38.520 Ah, yes, because of the platinum and palladium. 0:04:39.000 --> 0:04:42.000 So they got that whole patch continued on to its 0:04:42.160 --> 0:04:45.960 scheduled event. I'm going to link this story to another 0:04:46.000 --> 0:04:51.159 one that was all about catalytic converter thefts, and we 0:04:51.240 --> 0:04:53.960 went big on this one. It's one of the longest 0:04:53.960 --> 0:04:57.720 stories we've ever published, definitely in the Heist issue. 0:04:58.200 --> 0:04:59.400 But I just. 0:04:59.360 --> 0:05:01.599 Tell you quickly, we don't call it the Oscar Mayer 0:05:01.640 --> 0:05:04.520 Wiener Mobile anymore. Oh it's been there's a new politically 0:05:04.520 --> 0:05:08.240 correct name. It's I think they really They renamed it 0:05:08.240 --> 0:05:09.040 the Frank Mobile. 0:05:09.120 --> 0:05:15.680 Okay, well, yes, yeah, so the Frankmobile lost its catalytic converter. 0:05:15.800 --> 0:05:17.719 That relates directly to this other story we did. 0:05:18.040 --> 0:05:21.119 We have for the past couple of years, keep seeing 0:05:21.120 --> 0:05:24.080 these headlines about all these catalytic converter thefts that have 0:05:24.160 --> 0:05:26.719 been happening across the country and in parking lot. 0:05:26.560 --> 0:05:27.360 After parking lot. 0:05:27.480 --> 0:05:31.680 Thieves were going in saws alls, climbing under vehicles, removing 0:05:31.680 --> 0:05:34.120 catalytic converters. And it turns out that was all because 0:05:34.560 --> 0:05:38.320 there are rare earths inside the catalytic converter that could 0:05:38.320 --> 0:05:42.239 be basically reprocessed, and thieves were making thousands of dollars 0:05:42.320 --> 0:05:44.600 off of them based on the. 0:05:44.560 --> 0:05:47.440 Model could be much more lucrative than others. 0:05:48.000 --> 0:05:50.480 What Evan showed wasn't just the trees that this had 0:05:50.680 --> 0:05:53.400 been happening in one off's all over the place. There's 0:05:53.440 --> 0:05:57.039 a forest of a story here. Tulsa Police Department brought 0:05:57.080 --> 0:06:00.880 down half a billion dollar crime ring that was built 0:06:01.279 --> 0:06:04.360 on your catalytic converters. I don't know for sure if 0:06:04.360 --> 0:06:06.839 the frankmobiles ended up there or not. That didn't affect 0:06:06.880 --> 0:06:10.240 it into that narrative. But Jeremy, what was so impressive 0:06:10.240 --> 0:06:11.320 to you about that story? 0:06:12.120 --> 0:06:15.359 First of all, it seems like almost every everybody you 0:06:15.520 --> 0:06:18.599 know knows somebody who's had the converter off their car 0:06:18.680 --> 0:06:22.279 stolen because they've become so valuable over the past five 0:06:22.400 --> 0:06:26.200 or so years, maybe longer. But it was also really 0:06:26.200 --> 0:06:29.320 fascinating to see the kind of illicit supply chain and 0:06:29.360 --> 0:06:34.320 the way that it ran, you know, through supposedly this 0:06:34.960 --> 0:06:37.960 a chop shop in New Jersey and then and then 0:06:38.080 --> 0:06:40.600 carrying on too Asia and possibly in Japan. 0:06:40.680 --> 0:06:43.560 I believe it was was It is like a scene 0:06:43.600 --> 0:06:47.040 out of remember the show Fargo. It's like a whole 0:06:47.200 --> 0:06:51.119 season of Fargo baked into this magazine article. For you, Jemy, 0:06:51.160 --> 0:06:52.400 what was another favorite of yours? 0:06:53.040 --> 0:06:55.919 Certainly one of the ones that stands out is the 0:06:56.000 --> 0:07:00.320 sneaker story that looked at a Ponzi scheme for sneakers, 0:07:00.600 --> 0:07:09.359 almost the you know the alledged Yes they they Essentially 0:07:09.360 --> 0:07:12.400 we had somebody who is taking options bets on sneakers. 0:07:12.440 --> 0:07:15.240 So when a when a coveted sneaker was about to 0:07:15.240 --> 0:07:17.720 be released four months down the road, one of the 0:07:17.760 --> 0:07:21.200 big shoe companies made an announcement. This is Michael Malexadae 0:07:21.240 --> 0:07:24.200 of Zade Kicks had a business where he'd say, Okay, 0:07:24.240 --> 0:07:27.480 we can place your orders now. This is how much 0:07:27.520 --> 0:07:30.520 we'll charge you, and in four or five months, we'll 0:07:30.520 --> 0:07:32.840 send you your shoes at the price. At a price 0:07:32.920 --> 0:07:36.320 that you know might be about what the company is 0:07:36.360 --> 0:07:39.320 selling them for. But because sneakers are now resold and 0:07:39.360 --> 0:07:42.120 their values go up depending how hot they are, if 0:07:42.120 --> 0:07:44.720 you can lock in a good price early on, you're 0:07:44.760 --> 0:07:46.880 going to be pretty excited. So he was selling people 0:07:46.920 --> 0:07:50.920 these pre sales, and eventually he reached a shoe that 0:07:51.080 --> 0:07:53.880 was so hot as the Air Jordan Cool Gray eleven. 0:07:53.960 --> 0:07:59.160 I believe that that they couldn't. He had so many 0:07:59.280 --> 0:08:01.760 orders that it was to be impossible to fill them, 0:08:01.840 --> 0:08:04.960 and the whole business came crashing down. He himself had 0:08:04.960 --> 0:08:07.480 to what basically went to the US attorney and said, 0:08:08.400 --> 0:08:11.120 you know, I'm in over my head, and. 0:08:11.160 --> 0:08:13.680 He went into hiding for a while, right yeah. 0:08:13.520 --> 0:08:16.040 I mean, because he was ahead, so many people mad at. 0:08:16.040 --> 0:08:17.960 Him, and we do not want to mess with sneaker 0:08:17.960 --> 0:08:21.360 and sneakerheads want their Air Jordan's and when they don't 0:08:21.360 --> 0:08:21.840 get them. 0:08:21.680 --> 0:08:22.560 They get very mad. 0:08:22.640 --> 0:08:25.320 So what's interesting about this one is he had like 0:08:25.480 --> 0:08:29.840 sixty thousand boxes worth of shoes, right Jeremy, and they're 0:08:29.880 --> 0:08:31.360 in the process of liquidating them. 0:08:31.360 --> 0:08:31.600 Still. 0:08:31.640 --> 0:08:34.440 The trial he got postponed actually to see how much 0:08:35.400 --> 0:08:38.240 they can actually make off his inventory that he did have. 0:08:39.240 --> 0:08:42.040 He's in bankruptcy proceedings and they have a receiver who's 0:08:42.160 --> 0:08:46.280 essentially going through the warehouse getting basically recovering as much 0:08:46.360 --> 0:08:47.760 value as it can. You can buy some of the 0:08:47.800 --> 0:08:49.120 sneakers on eBay. 0:08:49.640 --> 0:08:51.720 So I'll mention the other one that, I like, you're 0:08:51.760 --> 0:08:52.480 ready for this one. 0:08:52.559 --> 0:08:54.680 I'm amazed by the way to keep they go for 0:08:54.720 --> 0:08:58.079 such a high amount of money, such cheap, kind of trashy. 0:08:58.160 --> 0:08:59.880 We've been playing on stock x a little bit. 0:09:00.000 --> 0:09:02.760 Anyway, how did caare you? I mean, look, some sneakers 0:09:02.800 --> 0:09:03.760 are very cool. I'm not saying that. 0:09:03.800 --> 0:09:06.600 I'm just saying they're very inexpensive to make and often 0:09:07.440 --> 0:09:09.800 sewn together by like kids in Malaysia, I know. 0:09:09.880 --> 0:09:11.319 So it's unbelievable. 0:09:11.320 --> 0:09:12.880 Did they go to But then as you learned an 0:09:12.920 --> 0:09:15.280 air you know, my son steps into them and they 0:09:15.280 --> 0:09:18.800 go to a different place. Right, So I was a great, great, 0:09:19.000 --> 0:09:21.920 great movie. Okay, So the other story that I just 0:09:22.000 --> 0:09:23.840 while we were talking about the heist issue cover to 0:09:23.840 --> 0:09:26.640 cover bet reads we're trying to steal your summer here. 0:09:27.000 --> 0:09:29.360 The other one I will bring up is about the rhino. 0:09:30.240 --> 0:09:33.079 Yeah, but this is another one that's just for the 0:09:33.200 --> 0:09:35.160 bad people do this. 0:09:35.160 --> 0:09:35.760 Kind of stuff. 0:09:35.800 --> 0:09:39.400 Well, okay, so the rhino is now worth more dead 0:09:39.679 --> 0:09:42.120 than alive because of the value of its horn, which 0:09:42.160 --> 0:09:45.600 gets can get about forty thousand bucks in the black market. 0:09:46.120 --> 0:09:47.280 All this trade is illegal. 0:09:47.600 --> 0:09:50.680 So the effort that we write about in the story 0:09:51.280 --> 0:09:56.120 is the good guys tranquilize rhinos in Africa now, many 0:09:56.160 --> 0:09:59.599 of which are in Kruger National Park, South Africa. Tranquilize 0:09:59.600 --> 0:10:02.400 them and and then actually take a chainsaw and remove 0:10:02.520 --> 0:10:03.040 the horn. 0:10:03.320 --> 0:10:03.440 Right. 0:10:03.440 --> 0:10:06.360 I know, it's okay, turns out horn. Just like your fingernail. 0:10:06.400 --> 0:10:09.000 It's going to grow back. Takes about five years to 0:10:09.040 --> 0:10:11.120 do so, and in that time you can keep the 0:10:11.200 --> 0:10:15.280 running a live because it's not enticing a poacher. 0:10:15.480 --> 0:10:18.600 That was Bloomberg BusinessWeek editor Joel Weber and features editor 0:10:18.640 --> 0:10:21.959 for the magazine, Jeremy Keen Joel sticking around for our 0:10:22.000 --> 0:10:25.199 next segment. Coming up more from the heist issue, including 0:10:25.240 --> 0:10:28.080 a primer on what may be the biggest jewelry robbery 0:10:28.400 --> 0:10:32.000 ever and a scheme that siphons money from recipients of 0:10:32.080 --> 0:10:33.640 public assistance. 0:10:33.360 --> 0:10:36.440 Because millions of dollars of those benefits are being transferred 0:10:36.600 --> 0:10:39.000 through that really outdated technology. 0:10:39.440 --> 0:10:41.760 A lot of it's very vulnerable. 0:10:41.880 --> 0:10:44.960 You're listening to Bloomberg Business Week. This is Bloomberg. 0:10:45.440 --> 0:10:49.000 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:49.040 --> 0:10:52.400 live weekday afternoons from three to six Eastern Listen on 0:10:52.440 --> 0:10:56.199 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business 0:10:56.200 --> 0:10:58.600 app or watch us live on YouTube. 0:11:00.160 --> 0:11:02.839 Five years Bloomberg BusinessWeek has put out a heist issue 0:11:02.880 --> 0:11:06.400 around this time on the sordid tales of robberies and schemes, 0:11:06.440 --> 0:11:09.200 along with the characters trying to both orchestrate them and 0:11:09.280 --> 0:11:12.680 thwart them. This issue is out now on newsstands, online 0:11:12.679 --> 0:11:15.280 at Bloomberg dot com slash Businessweekend of Course on the 0:11:15.280 --> 0:11:18.360 Bloomberg and the Magazine team brings our next story to 0:11:18.440 --> 0:11:21.640 life with a special comic style tale that explains what 0:11:21.800 --> 0:11:25.560 might be the biggest jewelry heist ever and the aftermath 0:11:25.640 --> 0:11:28.480 is still playing out in court with more Matt Miller 0:11:28.480 --> 0:11:30.800 and I welcome back the editor of Bloomberg BusinessWeek, Jill 0:11:30.840 --> 0:11:33.920 Weber and senior editor for the magazine, Brett Began. 0:11:34.400 --> 0:11:36.240 Now, a lot of this is still a mystery. 0:11:36.360 --> 0:11:40.080 It's still a tail that's unfolding. But what we do 0:11:40.200 --> 0:11:41.040 now is. 0:11:40.960 --> 0:11:46.160 Basically that last July, at a pretty standard jewelry show 0:11:46.240 --> 0:11:49.319 that travels around and it was in San Mateo for 0:11:49.440 --> 0:11:53.120 three days. You had the jewelers. At the end of 0:11:53.160 --> 0:11:56.160 the show, we're packing up and they put most of 0:11:56.200 --> 0:12:02.440 their wares onto a tractor trailer that was being driven 0:12:02.720 --> 0:12:06.200 by Brinks from the jewelry show in San Mateo down 0:12:06.280 --> 0:12:07.280 to the La area. 0:12:07.440 --> 0:12:09.760 So to be clear, this is many jewelers, like more 0:12:09.800 --> 0:12:12.800 than a dozen jewelers, but they all put their goods 0:12:12.840 --> 0:12:16.120 into one Brinks truck together, right. 0:12:16.920 --> 0:12:19.520 Yes, that's that's more or less correct. They all put 0:12:19.559 --> 0:12:23.319 the jewels together and they're loaded on in these bags. 0:12:23.320 --> 0:12:27.640 They're seventy three bags worth of jewels loaded onto this 0:12:27.679 --> 0:12:32.720 truck in San Mateo. But you know, as they're loading 0:12:32.800 --> 0:12:37.720 the jewels on, and this came out later in depositions, 0:12:37.760 --> 0:12:40.960 but both of the drivers, both of the Brink drivers 0:12:41.480 --> 0:12:43.920 sort of saying, you know, there sort of was like 0:12:44.120 --> 0:12:48.440 some sketchy, sketchy guy kind of watching me off in 0:12:48.480 --> 0:12:52.600 the distance. And in fact, the organizer of the show 0:12:52.760 --> 0:12:55.840 had even ushered somebody out of the show who was 0:12:55.880 --> 0:12:57.480 not supposed to be there because it was. 0:12:57.440 --> 0:12:58.480 After five o'clock. 0:12:59.240 --> 0:13:03.240 And the second driver sort of says, well, I also 0:13:03.400 --> 0:13:06.120 saw someone. It's not clear if it's the same person 0:13:06.200 --> 0:13:11.120 that the first driver saw. So basically they see people 0:13:11.280 --> 0:13:14.400 there who were giving them kind of like weird looks, 0:13:14.840 --> 0:13:16.680 they kind of, you know, put it to the side 0:13:17.040 --> 0:13:21.520 and get in the truck. And drive from San Mateo 0:13:21.679 --> 0:13:25.760 down to la and on the way there they stop 0:13:25.960 --> 0:13:28.000 at a at a rest stop. 0:13:28.440 --> 0:13:31.040 Climb J rest stop to be specific. 0:13:31.880 --> 0:13:34.720 The flying jaygress up, which and one of the drivers 0:13:34.720 --> 0:13:36.760 gets out and goes to get something to eat. 0:13:36.880 --> 0:13:38.680 We don't know where he went. 0:13:38.760 --> 0:13:41.160 There was either a Wendy's or I believe a dunkin 0:13:41.200 --> 0:13:43.120 Dunnuts there, We're not sure which one. 0:13:43.000 --> 0:13:43.400 He went to. 0:13:44.080 --> 0:13:45.760 Now he's gone for twenty seven minutes. 0:13:45.800 --> 0:13:45.880 Now. 0:13:45.920 --> 0:13:47.720 One thing that's interesting to point out here is that 0:13:47.760 --> 0:13:50.240 while he's going to get food, the other driver is 0:13:50.360 --> 0:13:53.480 actually in what's known as the sleeping birth So according 0:13:53.559 --> 0:13:57.560 to Department of Transportation rules, there are guidelines about how 0:13:57.640 --> 0:14:01.080 much time you have to have off as a driver. 0:14:01.320 --> 0:14:04.679 So the second driver wasn't just sitting in the passenger 0:14:04.800 --> 0:14:07.000 seat or didn't go with the first driver to get food. 0:14:07.360 --> 0:14:09.400 He's actually sort of in the back of the cab 0:14:09.840 --> 0:14:13.160 in the sleeping berth. Driver one comes back from getting food, 0:14:13.160 --> 0:14:16.280 has gone for twenty seven minutes, notices that the tamper 0:14:16.320 --> 0:14:19.880 seal has been broken on the back of the truck. 0:14:20.080 --> 0:14:23.560 And the lock's busted too, right, right. 0:14:23.520 --> 0:14:27.160 Right, tamper seals gone. Lock is busted, but there's no alarm. 0:14:27.320 --> 0:14:29.160 There's no car alarm on this truck. 0:14:29.000 --> 0:14:33.160 Nor and that's that's where the mystery goes back to, 0:14:33.360 --> 0:14:35.720 like the pages of BusinessWeek, and you're going to have 0:14:35.760 --> 0:14:38.760 to pick it up there. What we will tell you 0:14:39.000 --> 0:14:43.080 is that there's lawsuits, right, because that's where the hest 0:14:43.080 --> 0:14:43.960 issue comes in. 0:14:44.560 --> 0:14:46.040 A wide range of money. 0:14:46.200 --> 0:14:49.360 Well, it's either one of the biggest jewelry heights of 0:14:49.400 --> 0:14:52.800 all time one hundred million according to the victims, or 0:14:52.880 --> 0:14:56.160 if your Brinks maybe closer to eight point seven million. 0:14:56.200 --> 0:14:58.840 We're really sorry about that, but you didn't actually declare 0:14:58.880 --> 0:15:00.240 the real value of the dude. 0:15:00.240 --> 0:15:02.200 You can only get back what you declare. 0:15:02.240 --> 0:15:03.680 So well, we'll see that. 0:15:04.120 --> 0:15:07.239 We'll see about that, because maybe Brinks wasn't actually securing 0:15:07.280 --> 0:15:09.800 their vehicle like they were supposed to have, right, So 0:15:10.520 --> 0:15:11.560 this is why you have lawyers. 0:15:11.560 --> 0:15:14.440 Bloomberg BusinessWeek, Jill Weber and Brett began with us there. 0:15:14.920 --> 0:15:17.560 We turned out to another story in the Heist issue 0:15:17.680 --> 0:15:21.120 that focuses on a scam targeting some of the poorest Americans. 0:15:21.560 --> 0:15:24.680 It details the low tech, high stakes world of robbing 0:15:24.720 --> 0:15:28.480 benefits recipients and how state and federal authorities aren't doing 0:15:28.600 --> 0:15:32.600 enough to prevent the theft. Bloomberg BusinessWeek freelance contributor Jessica 0:15:32.640 --> 0:15:34.280 Fu explains. 0:15:34.120 --> 0:15:40.280 Those benefits are transferred on really really outdated and outdated technology, 0:15:40.320 --> 0:15:44.440 which is a very simple card that you might get 0:15:44.440 --> 0:15:47.080 from you like a Starbucks gift card, for example, or 0:15:47.120 --> 0:15:50.640 a bed Bath and Beyond gift card. No chip, no PAP, 0:15:50.880 --> 0:15:52.040 just magnetic stripe. 0:15:52.440 --> 0:15:55.520 Because millions of dollars of those benefits are being transferred 0:15:55.680 --> 0:16:00.200 through that really outdated technology, a lot of it's very 0:16:00.280 --> 0:16:06.640 vulnerable to being stolen through really a really old school 0:16:07.120 --> 0:16:11.120 kind of theft, which is called skimming or way. 0:16:11.480 --> 0:16:12.200 I just want to jump in. 0:16:12.200 --> 0:16:13.880 It amazes me in this day and age, Matt, Right 0:16:13.920 --> 0:16:16.440 where you think I think about trying to do anything 0:16:16.440 --> 0:16:18.960 in the amount of security checks, and certainly when I'm 0:16:19.000 --> 0:16:22.320 doing banking or investing like anything like, there's so many 0:16:22.360 --> 0:16:25.680 different levels of security, Matt, and it isn't here. 0:16:25.480 --> 0:16:29.000 Well on these EBT cards. There isn't right, these benefit 0:16:29.120 --> 0:16:31.880 cards that I don't know do all states use these? 0:16:32.040 --> 0:16:36.160 They're so simple and so low security, and I guess 0:16:36.240 --> 0:16:39.480 these are cards that so the state puts the money 0:16:39.880 --> 0:16:44.040 in your account and you can either use these crappy 0:16:44.080 --> 0:16:47.400 cards to withdraw money from your account in cash, or 0:16:47.800 --> 0:16:50.400 you can use them at like grocery stores to pay 0:16:50.440 --> 0:16:53.440 for formula and diapers, right, yeah. 0:16:53.240 --> 0:16:57.360 Yeah, basically, so depending on what kind of situation you're in, 0:16:57.560 --> 0:17:00.200 you might receive cash benefits, which you can use, you know, 0:17:00.240 --> 0:17:02.560 to get cash and pay for any living expense, or 0:17:02.600 --> 0:17:05.560 you can get food benefits, and that's for people who 0:17:05.560 --> 0:17:09.600 are like a low poverty level or below poverty and 0:17:09.840 --> 0:17:13.720 those are specifically for food products, which includes infit formula for. 0:17:13.640 --> 0:17:15.080 Example, well, crystal cork. 0:17:15.400 --> 0:17:18.879 You start this story with a woman, a mother who 0:17:18.960 --> 0:17:23.080 is traveling across country with her children to see family, 0:17:23.520 --> 0:17:27.439 and she's already been robbed a number of times. She 0:17:27.600 --> 0:17:30.240 goes to an ATM in the middle of the night, 0:17:30.560 --> 0:17:32.439 right when the benefits are going to go into her 0:17:32.440 --> 0:17:34.639 account to try and make sure she has enough money 0:17:34.640 --> 0:17:37.480 to get back to her home in California, and sees 0:17:37.520 --> 0:17:41.600 that it's gone. Was that also an EBT card because 0:17:41.640 --> 0:17:46.200 it seems like too low security to use at an ATM. 0:17:46.720 --> 0:17:48.680 That was an EBT card? Yeah, So all of these 0:17:48.720 --> 0:17:53.720 benefits they get transferred to their intended recipients through you know, 0:17:53.760 --> 0:17:57.719 what's called an electronic Benefits transfer card and the technology 0:17:57.760 --> 0:18:01.640 for just has never been updated since it was first introduced. 0:18:01.960 --> 0:18:04.440 It's amazing that there's this problem and it hasn't been fixed. 0:18:04.440 --> 0:18:06.480 Who's doing it? What do we know about the criminal 0:18:06.520 --> 0:18:07.000 side of this? 0:18:08.560 --> 0:18:12.080 Yeah, I spoke to a few different people involved with 0:18:12.240 --> 0:18:17.639 kind of trying to track down who's skimming, who's cashing 0:18:17.640 --> 0:18:22.040 out the money, who's buying and then reselling infant formula. 0:18:22.320 --> 0:18:27.560 And there's the general sense for agencies and task forces 0:18:27.600 --> 0:18:31.640 that are looking into this issue that it's very disconnected 0:18:31.840 --> 0:18:34.240 groups of people who sometimes don't even know who they're 0:18:34.240 --> 0:18:38.800 working with. It sounds like there's a real compartmentalized nature 0:18:38.920 --> 0:18:41.720 of skimming crime these days. There are people who are 0:18:41.760 --> 0:18:45.399 involved with installing skimmers on ATMs, other people who are 0:18:45.440 --> 0:18:48.119 tasked with retriating them, other people who are tasked with 0:18:48.200 --> 0:18:51.720 cloning cards using that skim data, and others who are 0:18:51.760 --> 0:18:56.080 responsible for cashing it out and then moving money. And 0:18:56.960 --> 0:18:59.960 there's not a lot of communication, a lot of transparent 0:19:00.080 --> 0:19:02.959 and see within these networks, which makes it really tricky 0:19:03.280 --> 0:19:05.879 to unravel any kind of scheme. 0:19:06.160 --> 0:19:08.960 That was BusinessWeek contributor Jessica fu At a reminder the 0:19:09.000 --> 0:19:12.000 heist issue pick it up on newsstands, online, and of course, 0:19:12.080 --> 0:19:15.320 on the Bloomberg Terminal. Still ahead, on Bloomberg Business Week, 0:19:15.560 --> 0:19:20.199 famed international investor John Kleinheinz details his early days in 0:19:20.240 --> 0:19:23.760 post Soviet Russia in the early nineteen nineties and how 0:19:23.800 --> 0:19:27.399 his experiences inspired a novel on the allure and dangers 0:19:27.640 --> 0:19:31.520 of a crucial period in that country's history. This is Bloomberg. 0:19:35.480 --> 0:19:39.040 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:39.080 --> 0:19:43.119 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:19:43.320 --> 0:19:46.600 the Bloomberg Business App, and YouTube. You can also listen 0:19:46.680 --> 0:19:49.800 live on Amazon Alexa from our flagship New York station, 0:19:50.240 --> 0:19:54.000 Just say Alexa Play Bloomberg eleven thirty. 0:19:54.560 --> 0:19:57.680 New concerns emerging this past week that a Russian occupied 0:19:57.760 --> 0:20:01.040 nuclear reactor in southern Ukraine and could be the target 0:20:01.040 --> 0:20:04.920 of fresh attacks as Kiev in Moscow traded accusations over 0:20:04.920 --> 0:20:08.280 the threat of a radiological incident. As the war in 0:20:08.359 --> 0:20:11.800 Ukraine drags deep into its second straight summer, we wanted 0:20:11.840 --> 0:20:14.280 to look back at a time when a new democratic 0:20:14.320 --> 0:20:17.679 government in Russia had hoped to revolutionize the country for 0:20:17.760 --> 0:20:20.600 the better. We're talking about the early nineteen nineties just 0:20:20.680 --> 0:20:23.280 after the fall of the Berlin Wall. Our next guest 0:20:23.359 --> 0:20:25.440 arrived there hoping to get in on the country's new 0:20:25.440 --> 0:20:29.160 wealth and ended up finding some danger as well. John 0:20:29.200 --> 0:20:33.160 Kleinhinz is the CEO of Kleinhinz Capital Partners Full disclosure. 0:20:33.200 --> 0:20:35.199 He's also the father in law of our Bloomberg colleague 0:20:35.280 --> 0:20:38.679 Kelly Belknap. John's adventures inspired a book that he co 0:20:38.720 --> 0:20:41.560 wrote with Josh Haven called The Siberia Job, and he 0:20:41.600 --> 0:20:44.080 recently joined me and Matt Miller with the background. 0:20:44.440 --> 0:20:46.960 So I was one of the early investors in Russia 0:20:47.119 --> 0:20:50.840 during the voucher privatization in nineteen ninety four. And this 0:20:51.000 --> 0:20:53.960 was a program that was developed by the EBERD and 0:20:54.000 --> 0:20:59.560 the IMF to virtually or actually privatize all of Russian 0:20:59.600 --> 0:21:02.520 industry in one year. And it was a kind of 0:21:02.520 --> 0:21:06.879 a wild wooly time. They used the voucher program that 0:21:06.880 --> 0:21:09.560 they had developed in the Czech Republic in Hungary, and 0:21:09.600 --> 0:21:12.320 we were over there with probably one hundred investors, all 0:21:12.359 --> 0:21:15.920 trying to find the best companies. The you know, stocks 0:21:15.920 --> 0:21:18.840 were trading at one to two percent of intrinsic value 0:21:19.359 --> 0:21:20.800 of where they would have traded if they were on 0:21:20.840 --> 0:21:25.320 a Western exchange and well run oil companies or telecom companies. 0:21:25.400 --> 0:21:27.399 So it was just a fascinating time. 0:21:27.840 --> 0:21:29.439 And you know it's interesting is I used to do 0:21:29.480 --> 0:21:32.879 a show with Jim Rodgers, investor in commodities, and took 0:21:32.920 --> 0:21:35.920 his motorsp yeah, and who would take his motorcycle like 0:21:35.960 --> 0:21:37.720 to all the emerging markets. And I believe you went 0:21:37.720 --> 0:21:40.280 over to Russia as well, just to kind of get 0:21:40.320 --> 0:21:42.760 a scale of it, right, he was there, and you know, 0:21:42.840 --> 0:21:45.400 we would talk about it, what was that era, take 0:21:45.480 --> 0:21:47.359 us back there and what it was like to be 0:21:47.960 --> 0:21:51.000 at that very very early stage of a big change 0:21:51.119 --> 0:21:51.640 in Russia. 0:21:52.320 --> 0:21:54.679 So it was fascinating because my wife and I were 0:21:54.720 --> 0:21:57.560 there in nineteen ninety two, a couple of years after 0:21:57.640 --> 0:22:01.399 the Berlin Wall fell and the command economy in Russia 0:22:01.440 --> 0:22:05.440 had ground to a halt. The planned economy wasn't working, 0:22:05.920 --> 0:22:09.159 The currency didn't buy anything. There were no goods in 0:22:09.200 --> 0:22:11.879 the shops or no cars on the streets in Moscow. 0:22:12.280 --> 0:22:16.760 It was really a desolute time. And then flashed forward 0:22:16.800 --> 0:22:20.600 about fourteen fifteen months later in early ninety four, the 0:22:20.640 --> 0:22:23.000 free market economy is trying to take hold. You could 0:22:23.000 --> 0:22:26.639 buy anything you wanted with hard currency. There were hotels 0:22:26.680 --> 0:22:30.360 and restaurants opening up. Cars were on the streets, everybody 0:22:30.400 --> 0:22:33.159 had a deal, everybody was trying to either get a 0:22:33.240 --> 0:22:36.320 job or make an investment. And it was just in 0:22:36.359 --> 0:22:39.280 a very short period of time Russia just turned on 0:22:40.080 --> 0:22:43.640 and started on the road to free markets. 0:22:44.320 --> 0:22:47.480 So I know it didn't turn out terribly well, or 0:22:47.480 --> 0:22:51.359 at least my introduction to investing in Russia was in 0:22:51.400 --> 0:22:54.760 the early two thousands when I was interviewing Bob Amsterdam 0:22:54.800 --> 0:22:58.639 a lot who was a lawyer representing Mikhail Kodakowski after 0:22:59.200 --> 0:23:01.760 Putin was for some reason angry at him and decided 0:23:02.119 --> 0:23:04.720 he was liable for twenty billion. 0:23:04.440 --> 0:23:05.639 Dollars in tax fraud. 0:23:06.440 --> 0:23:09.199 How long did the period last before you realized that 0:23:09.240 --> 0:23:11.000 the rule of law was going to be a really 0:23:11.000 --> 0:23:12.480 big problem. 0:23:12.840 --> 0:23:15.200 So we put money to work early in nineteen ninety 0:23:15.200 --> 0:23:18.720 four through the voucher auctions, and by late ninety four 0:23:18.880 --> 0:23:21.720 most of those the stocks that we invested in were 0:23:21.800 --> 0:23:25.280 up eight to ten times, so it was a huge 0:23:25.359 --> 0:23:29.680 brief surge. In ninety four, ninety five, ninety six and 0:23:29.760 --> 0:23:33.160 ninety seven were great years in the markets in Russia. 0:23:34.040 --> 0:23:38.480 Companies were running themselves as much as they could, Like 0:23:38.560 --> 0:23:44.000 Western companies. Wall Street firms were opening up offices in Moscow. 0:23:45.040 --> 0:23:48.640 It looked like everything was going to plan. The ninety 0:23:48.720 --> 0:23:52.600 eight and ninety nine percent discounts. We saw Russia stocks 0:23:52.600 --> 0:23:56.600 closed to maybe sixty or seventy percent as the markets 0:23:56.600 --> 0:23:59.560 went up. What happened in nineteen ninety eight though, really 0:24:00.040 --> 0:24:04.800 through a curveball at Russia. There was an international financial 0:24:04.800 --> 0:24:08.480 crisis that started in Asia and then moved to Russia, 0:24:08.560 --> 0:24:12.520 and the IMF did a bailout of Russia in ninety eight. 0:24:13.119 --> 0:24:16.560 But Bob Ruben, who was Secretary of State, saw that 0:24:16.640 --> 0:24:20.840 a lot of the IMF money was being transferred from 0:24:21.080 --> 0:24:25.560 the Russian Central Bank to government officials accounts in Switzerland, 0:24:25.720 --> 0:24:28.320 and he quickly put a halt to the IMF bailout, 0:24:28.880 --> 0:24:33.159 and Russia collapsed and the banking system collapsed, and it 0:24:33.240 --> 0:24:36.760 really threw Russia into a bad spot. So that was 0:24:36.800 --> 0:24:39.600 sort of that honeymoon period for Russian markets kind of 0:24:39.680 --> 0:24:41.000 ended in nineteen ninety eight. 0:24:41.359 --> 0:24:43.600 John, how do you see it today in terms of 0:24:43.680 --> 0:24:47.240 the Russian invasion of Ukraine? And as long as Putin 0:24:47.359 --> 0:24:50.520 is in charge, it can never go back, It can 0:24:50.600 --> 0:24:51.240 never go back. 0:24:52.320 --> 0:24:55.920 It's an interesting deal. So Putin was Prime minister in 0:24:56.000 --> 0:24:59.879 ninety eight. Jeltsen resigned in ninety nine and replaced himself 0:24:59.880 --> 0:25:05.200 with Putin, and after Putin became president, the security services 0:25:05.240 --> 0:25:09.760 in Russia, the KGB and other intelligence services kind of 0:25:09.920 --> 0:25:13.199 kind of started to flow into the business world and 0:25:13.240 --> 0:25:17.240 become part of the private sector, and from that moment 0:25:17.280 --> 0:25:21.480 on it became less and less of a Western style 0:25:21.560 --> 0:25:24.480 free market. You know, someone told me recently that there 0:25:24.520 --> 0:25:28.640 are two hundred and fifty thousand KGB agents in Russia, 0:25:28.680 --> 0:25:31.760 but there are only seven thousand judges. So you know, 0:25:31.800 --> 0:25:35.840 the rule of law doesn't work in Russia. The dispute 0:25:35.880 --> 0:25:37.640 resolution doesn't work. 0:25:37.720 --> 0:25:38.760 It's it's really. 0:25:40.000 --> 0:25:43.440 A state run economy by the security services. 0:25:43.680 --> 0:25:47.040 And from an investor's perspective, what a missed opportunity. 0:25:47.920 --> 0:25:49.639 Yeah, I think so, I think. You know, if Russia, 0:25:49.760 --> 0:25:52.119 you know, Russia, unfortunately, they didn't have the institutions in 0:25:52.160 --> 0:25:56.960 place after you know, sixty seven years of communism to 0:25:57.480 --> 0:25:59.800 deal with the bumps in the road, like the financial 0:25:59.840 --> 0:26:02.920 care in nineteen ninety eight. We fortunately in the US 0:26:02.960 --> 0:26:06.000 we do, in Europe we do, but Russia didn't, and 0:26:06.040 --> 0:26:09.159 so they reverted to their old ways and reverted to 0:26:10.720 --> 0:26:15.520 a corrupt system that they were familiar with, and all 0:26:15.600 --> 0:26:19.080 the people who were playing the rules, by the Western 0:26:19.240 --> 0:26:23.280 rules were kind of at a disadvantage, and you know, 0:26:24.240 --> 0:26:25.320 they were thrown for a loop. 0:26:25.560 --> 0:26:27.080 And I guess what I mean is just a follow 0:26:27.240 --> 0:26:29.720 is just an opportunity that Russia could be, you know, 0:26:29.840 --> 0:26:33.480 with the energy, you know component that it has in commodities, 0:26:33.520 --> 0:26:35.919 that it could really be a decent and big player 0:26:35.960 --> 0:26:36.919 on the global scale. 0:26:38.080 --> 0:26:41.160 So you know, Russia stocks continue to trade in Moscow 0:26:41.440 --> 0:26:44.720 and there continues to be a stock market. As an 0:26:44.760 --> 0:26:48.440 American investor, you can't participate in it, but it's still there. 0:26:48.480 --> 0:26:51.280 And you know, you know, Japan had a stock market 0:26:51.440 --> 0:26:55.119 before World War Two that stopped trading and then started 0:26:55.119 --> 0:26:58.119 trading again in nineteen forty nine or nineteen fifty. I 0:26:58.880 --> 0:27:01.040 think there's a chance that, right, we'll come back. And 0:27:02.000 --> 0:27:06.880 you know, these things go in cycles, these these corrupt 0:27:06.880 --> 0:27:11.840 totalitarian regimes there, they drain all the talent there, they 0:27:12.119 --> 0:27:15.440 force all the human capital out of countries, and eventually 0:27:15.480 --> 0:27:17.960 they fail. And once they fail, they don't really have 0:27:17.960 --> 0:27:20.560 any choice but to come back and try the free 0:27:20.600 --> 0:27:22.879 market way again. And I think that'll happen. 0:27:23.080 --> 0:27:24.920 Can I just ask you something. So when you say 0:27:25.000 --> 0:27:27.560 free market, then I know we're talking Russia. But then 0:27:27.560 --> 0:27:30.320 when you look at something like China, does it continue 0:27:30.359 --> 0:27:33.720 to kind of do this interesting capitalistic but not really 0:27:34.359 --> 0:27:36.960 you know, society, or does it eventually become more of 0:27:37.000 --> 0:27:38.080 a free market world. 0:27:39.320 --> 0:27:42.160 So so China is interesting because China is a command 0:27:42.200 --> 0:27:45.600 economy from a macro perspective, but on a micro basis, 0:27:46.040 --> 0:27:48.520 a lot of the economy works on a on a 0:27:48.640 --> 0:27:53.240 free market competitive basis, so it's it's sort of a hybrid. 0:27:53.280 --> 0:27:56.080 And I think I think China is now seeing the 0:27:56.400 --> 0:28:00.720 disadvantages of a command economy as as they try to 0:28:00.720 --> 0:28:04.920 deal with with the slowdown. So, you know, it's interesting. 0:28:05.000 --> 0:28:08.160 China could really go either way. In my opinion, Russia 0:28:08.240 --> 0:28:11.840 has has got to you know, fail before it can 0:28:12.160 --> 0:28:14.160 it can try the free market way again. 0:28:14.480 --> 0:28:16.600 Was there any ever a time when you were there 0:28:16.600 --> 0:28:19.520 that you felt like your life was threatened? I know 0:28:19.560 --> 0:28:22.200 that Bob told me at one point, you know, when 0:28:22.200 --> 0:28:24.920 he was defending Kotokowski. The KGV came to his room 0:28:24.920 --> 0:28:26.399 and said, like, you have two hours to get out 0:28:26.440 --> 0:28:28.680 of this country, buddy, and he had to leave. 0:28:29.840 --> 0:28:30.040 Yeah. 0:28:30.080 --> 0:28:32.640 I think fortunately I was there early and the Russians 0:28:32.680 --> 0:28:35.399 were welcoming Western investors, and they were excited to have 0:28:35.440 --> 0:28:38.120 a stock market and a capital market where they could 0:28:38.160 --> 0:28:40.480 raise money. There there were at the time I was there, 0:28:40.600 --> 0:28:44.600 very few American investors had ever been hurt or threatened. 0:28:45.280 --> 0:28:46.800 It was early, It was early days. There was a 0:28:46.840 --> 0:28:49.600 little bit of innuendo, a little bit of threat but 0:28:49.600 --> 0:28:53.160 but and and we you know, we got a big 0:28:53.680 --> 0:28:56.200 could We controlled a big position in a cigarette company, 0:28:56.240 --> 0:28:58.200 and at one stage where we found out our partners 0:28:58.240 --> 0:29:01.080 were the mafia, and we were kind of forced out 0:29:01.120 --> 0:29:05.040 of that position. So I guess there were some implicit threats, 0:29:05.080 --> 0:29:07.440 but overall I wasn't too concern. 0:29:07.360 --> 0:29:10.360 You're listening to Bloomberg Business Week. Up next stories fit 0:29:10.400 --> 0:29:13.920 for the BusinessWeek heist issue. We continue speaking with John Kleinhins, 0:29:13.920 --> 0:29:16.440 the CEO of Klein Heights Capital and the man who 0:29:16.480 --> 0:29:19.440 inspired a fictional book about the early days of chasing 0:29:19.480 --> 0:29:23.120 money in post Soviet Russia. Stick around more to come. 0:29:23.320 --> 0:29:24.160 This is Bloomberg. 0:29:24.600 --> 0:29:28.160 You're listening to the Bloomberg Business Week podcast. Catch us 0:29:28.200 --> 0:29:31.560 live weekday afternoons from three to six Eastern Listen on 0:29:31.600 --> 0:29:35.360 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business 0:29:35.360 --> 0:29:37.600 app or watch us live on YouTube. 0:29:38.440 --> 0:29:40.640 More now from our recent conversation Matt Miller and I 0:29:40.680 --> 0:29:44.200 had with John Kleinhights, the CEO of Klein Heights Capital Partners, 0:29:44.240 --> 0:29:47.440 is a renowned international investor who both inspired and co 0:29:47.520 --> 0:29:50.680 wrote a novel called The Siberia Job about a lucrative 0:29:50.720 --> 0:29:53.320 period for investors in Russia on the fall of the 0:29:53.360 --> 0:29:56.840 Berlin Wall. In this excerpt, John explains some of the 0:29:56.880 --> 0:29:59.640 perils he encountered on his journey into a new post 0:29:59.680 --> 0:30:00.640 so fa it world. 0:30:01.040 --> 0:30:03.200 So, my community were just a lot of a lot 0:30:03.200 --> 0:30:06.440 of Westerners who were investors over there, and guys like 0:30:06.480 --> 0:30:08.800 Bill Browner, who's a good friend of mine, and Bernie 0:30:08.840 --> 0:30:13.280 Sucher who ran a bank and a securities company, owned restaurants. 0:30:13.320 --> 0:30:16.240 And for the most part that the Westerners who stuck 0:30:16.280 --> 0:30:18.160 around did not make a lot of money. It was 0:30:18.400 --> 0:30:21.520 it was a tough deal. The Russians. The Russians did great, 0:30:21.680 --> 0:30:24.320 and they did great by by getting control of the 0:30:24.320 --> 0:30:28.400 cash flows and taking money anyway they could and controlling 0:30:28.440 --> 0:30:32.680 the enterprise by whatever ways or whatever mechanism they could. 0:30:33.040 --> 0:30:35.560 You know, the Russians did well. The Western investors really. 0:30:35.360 --> 0:30:37.560 Did and did you have any. 0:30:39.000 --> 0:30:43.240 Interaction with Putin or the KGB, because I mean, who 0:30:43.240 --> 0:30:46.120 were the king makers there? Who were the ones who said, like, Okay, 0:30:46.160 --> 0:30:49.440 you're going to own the steel industry, and you're going 0:30:49.520 --> 0:30:51.920 to own the grain industry, and you're going to be 0:30:52.560 --> 0:30:53.600 the shipping magnate. 0:30:53.920 --> 0:30:54.120 You know. 0:30:54.800 --> 0:30:58.520 Yeah, So a lot of that happened after the nineteen 0:30:58.560 --> 0:31:03.040 ninety eight after I was gone. So and I you know, 0:31:03.160 --> 0:31:06.320 I was very fortunate that I ran a Russia fund 0:31:06.680 --> 0:31:08.400 for a while, but when I when I set up 0:31:08.400 --> 0:31:11.200 my own business, it was not a Russia specific company, 0:31:11.240 --> 0:31:14.680 So I just wasn't there when when that was going on. 0:31:14.960 --> 0:31:17.400 I did see a couple of early what I would 0:31:17.400 --> 0:31:21.760 call stars, people who did it right. You know, veggiet 0:31:21.800 --> 0:31:26.120 Alex Spirov and Leonid Fadune who ran Luke Oil, were 0:31:26.160 --> 0:31:29.480 fantastic operators, and you know, took a three hundred million 0:31:29.520 --> 0:31:32.480 dollar company in nineteen ninety four is now I think 0:31:32.480 --> 0:31:35.320 it's got a sixty billion dollar market camp. So there 0:31:35.360 --> 0:31:37.320 were some people who did it the right way, but 0:31:37.400 --> 0:31:40.520 a lot of people did it by sort of murky 0:31:41.320 --> 0:31:42.160 murky methods. 0:31:42.360 --> 0:31:44.440 So tell us about Josh Haven coming to you and saying, hey, 0:31:44.440 --> 0:31:45.760 I want to write a book. How did this come 0:31:45.800 --> 0:31:46.000 to be? 0:31:46.600 --> 0:31:50.560 So I've always wanted to tell this story and it's 0:31:50.560 --> 0:31:52.920 been on my to do list for thirty years. And 0:31:53.200 --> 0:31:56.040 about two years ago, my partner in this book and 0:31:56.040 --> 0:31:58.920 in this story was killed in a helicopter ski accident, 0:31:58.960 --> 0:32:01.320 a guy named Peter Kellner who was one of the 0:32:01.480 --> 0:32:05.560 richest men in Eastern Europe. And so when he was killed, 0:32:05.600 --> 0:32:08.440 I decided I wanted to write this story. I was 0:32:08.440 --> 0:32:10.960 introduced to a literary agent in New York who helped 0:32:11.000 --> 0:32:15.040 me meet a number of authors, and I met Josh 0:32:15.280 --> 0:32:19.000 Josh Gilertner, and Josh and I interviewed about a dozen 0:32:19.040 --> 0:32:22.720 people that were involved in this deal, and we did research, 0:32:22.840 --> 0:32:26.760 we told stories, we told anecdotes, and Josh did just 0:32:26.800 --> 0:32:30.000 an amazing job putting all of this together in a 0:32:30.080 --> 0:32:33.800 way that makes it very readable and very fun. It's 0:32:33.840 --> 0:32:35.600 a quick story. It's about a three and a half 0:32:35.680 --> 0:32:39.280 four hour read. It's a total page turner. It's a 0:32:39.320 --> 0:32:41.960 true story, and almost all the stories in it are true. 0:32:41.960 --> 0:32:44.280 They're put together in a way that I would characterize 0:32:44.320 --> 0:32:47.560 this somewhat fictional. So we decided we opted for a 0:32:47.600 --> 0:32:50.719 fictional formats just because it would be too difficult to 0:32:50.760 --> 0:32:54.160 go back thirty years and get all the facts right. 0:32:54.240 --> 0:32:54.640 Correct. 0:32:55.520 --> 0:32:59.760 Did you, John, leave part of any of your heart 0:32:59.800 --> 0:33:03.760 in Russia? I mean, is it something that made you 0:33:03.840 --> 0:33:04.800 sad that it turned out the. 0:33:04.800 --> 0:33:05.280 Way it did? 0:33:06.240 --> 0:33:09.040 Absolutely? Absolutely, I mean it was And I talked to, 0:33:09.200 --> 0:33:11.400 you know, all these people that I interviewed for the book, 0:33:11.440 --> 0:33:13.200 we interviewed for the book. You know, we all felt 0:33:13.240 --> 0:33:15.800 the same way. I mean, it was going so well 0:33:16.280 --> 0:33:18.680 in the mid nineties and it looks so positive in 0:33:18.720 --> 0:33:20.720 the Russians. A lot of Russians wanted to do it 0:33:20.760 --> 0:33:24.040 the right way, and it's just it's a sad and 0:33:24.080 --> 0:33:29.120 disappointing era that they didn't achieve liftoff in the free 0:33:29.160 --> 0:33:29.840 market world. 0:33:30.080 --> 0:33:33.320 That was John Kleinhinz, the CEO of Kleinhinz Capital Partners. 0:33:33.640 --> 0:33:35.640 Even more of that conversation can be heard on our 0:33:35.680 --> 0:33:39.400 Bloomberg BusinessWeek podcast. Feed the book based on his experience 0:33:39.400 --> 0:33:42.760 in Russia. It is entitled The Siberia Job. It's available 0:33:42.800 --> 0:33:45.200 as well now. And that wraps up the first hour 0:33:45.240 --> 0:33:48.600 of the weekend edition of Bloomberg Business Week from Bloomberg Radio. Ahead, 0:33:48.640 --> 0:33:52.000 in our next hour, we're talking to entrepreneurs and change 0:33:52.000 --> 0:33:54.880 makers Matt and I speak with Way's co founder Aurie 0:33:54.920 --> 0:33:58.400 Levine on whether artificial intelligence presents us with more problems 0:33:58.480 --> 0:34:02.320 than solutions, and a pair of former financiers break down 0:34:02.360 --> 0:34:05.000 their path to market in the world of high end spirits. 0:34:05.240 --> 0:34:07.080 We'll talk to the co founders of Duke and Dame 0:34:07.240 --> 0:34:12.040 salted caramel flavored whiskey, plus a seasoned executive with credentials 0:34:12.080 --> 0:34:15.160 from some of the world's most influential firms on diversifying 0:34:15.200 --> 0:34:18.480 corporate boards. This is Bomberg BusinessWeek. 0:34:22.760 --> 0:34:26.319 You're listening to the Bloomberg Business Week podcast. Catch us 0:34:26.360 --> 0:34:30.360 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:34:30.560 --> 0:34:33.840 the Bloomberg Business app, and YouTube. You can also listen 0:34:33.960 --> 0:34:37.040 live on Amazon Alexa from our flagship New York station, 0:34:37.520 --> 0:34:40.200 Just Say Alexa play Bloomberg eleven. 0:34:39.960 --> 0:34:43.840 Thirty Carol Master along with Matt Miller, who's filling in 0:34:43.880 --> 0:34:46.200 for Tim this week. Plenty head on our second hour 0:34:46.200 --> 0:34:49.000 of the weekend edition of Bloomberg Business Week, including a 0:34:49.040 --> 0:34:52.120 dive into the highly competitive business of alcohol and how 0:34:52.160 --> 0:34:54.560 two friends left Wall Street with the dream of creating 0:34:54.640 --> 0:34:56.920 a one of a kind whiskey. We'll hear from the 0:34:56.920 --> 0:35:00.160 co founders of Duke and Dame, plus board member The 0:35:00.239 --> 0:35:04.320 Not Worldwide Carolyn Everson on the booming global wedding business 0:35:04.360 --> 0:35:08.520 and creating more equitable representation in the boardroom. First up 0:35:08.560 --> 0:35:11.200 this hour, we welcome back Ory Levine, co founder of 0:35:11.239 --> 0:35:15.040 the satellite navigation platform Ways. Last time around, he joined 0:35:15.080 --> 0:35:16.719 us to talk about his new book, fall in Love 0:35:16.719 --> 0:35:20.040 with the Problem, Not the Solution, a handbook for entrepreneurs. 0:35:20.440 --> 0:35:23.280 He's got plenty to say about how that philosophy applies 0:35:23.280 --> 0:35:26.319 to our use of artificial intelligence, and about whether he 0:35:26.400 --> 0:35:29.560 wishes he stayed on at Ways, which Google bought for 0:35:29.719 --> 0:35:32.960 one point one five billion dollars a decade ago. 0:35:33.239 --> 0:35:36.560 People have regrets of the stuff that they haven't done. 0:35:36.719 --> 0:35:38.479 I think we might have talked about this, but you don't. 0:35:38.560 --> 0:35:42.520 You know, I am moved on. I left after the 0:35:42.560 --> 0:35:46.279 acquisition so I can build more startups and and I 0:35:46.320 --> 0:35:48.799 am very happy with the decision back then. And at 0:35:48.800 --> 0:35:50.960 the end of the day, Look, when you're making a decision, 0:35:51.800 --> 0:35:55.000 it's the right decision, the right decisions, or no decisions, 0:35:55.160 --> 0:35:55.839 And this is it. 0:35:56.120 --> 0:35:57.839 So you've got a T shirt on that says fall 0:35:57.880 --> 0:35:59.600 in Love with the Problem, not the Solution. So those 0:35:59.640 --> 0:36:02.279 on our streaming service and YouTube can see this. You've 0:36:02.280 --> 0:36:04.680 also got a book out with that title AI. Is 0:36:04.680 --> 0:36:07.080 it a problem? Is it a solution? Is it both? 0:36:08.000 --> 0:36:11.160 Is it yet to be determined? But it's definitely a solution. 0:36:11.520 --> 0:36:13.879 We just not clear what is the problem yet. 0:36:14.280 --> 0:36:17.360 Well, as a startup guy, you've got to look at 0:36:17.360 --> 0:36:22.120 a technology like that and automatically start thinking of applications, 0:36:22.239 --> 0:36:27.680 right of ways to use it for progress or profits. 0:36:27.760 --> 0:36:30.520 What do you think about the potential of AI? 0:36:30.880 --> 0:36:34.120 So in general, my approach would we start with the problem, right, 0:36:34.200 --> 0:36:37.720 start with the use case, and only then build a solution. 0:36:37.880 --> 0:36:41.200 I mean this key is because the generative language is 0:36:41.360 --> 0:36:42.120 very powerful. 0:36:42.200 --> 0:36:42.359 Right. 0:36:43.120 --> 0:36:45.319 If we ask one hundred people on the street, have 0:36:45.400 --> 0:36:47.839 you tried that? Then probably all of them are going 0:36:47.880 --> 0:36:50.200 to say yes. The challenge is that if you're going 0:36:50.239 --> 0:36:53.399 to ask them are you still using it? And very 0:36:53.440 --> 0:36:56.239 few are going to tell you yes, which basically means 0:36:56.239 --> 0:36:58.640 that we are not a product market fit yet, or 0:36:59.000 --> 0:37:02.760 it's not applicable for the consumer market, for the mass market. Yet. 0:37:03.360 --> 0:37:05.759 There are some cases that I would say this is awesome, right, 0:37:05.800 --> 0:37:08.040 So if you are if you are in the business 0:37:08.080 --> 0:37:11.520 of generating content, this is going to be very helpful 0:37:11.560 --> 0:37:14.280 to you can generate way more content. 0:37:14.000 --> 0:37:15.960 Based on that or are you investing in it? 0:37:16.840 --> 0:37:16.920 No? 0:37:17.120 --> 0:37:20.040 Not yet. Many of my companies are actually using AI, 0:37:20.200 --> 0:37:21.879 but not that generating language yet. 0:37:22.080 --> 0:37:22.480 Why not? 0:37:24.120 --> 0:37:28.280 Because you know, it was not available until recently. And 0:37:28.400 --> 0:37:31.440 now I have one company in the medical space that 0:37:31.600 --> 0:37:36.040 is actually having the knowledge and requires the language generation 0:37:36.200 --> 0:37:38.320 for that, and this is going to be a leapfrog 0:37:38.400 --> 0:37:38.719 for them. 0:37:38.920 --> 0:37:41.400 Do you still think about I know WAYS was ten 0:37:41.480 --> 0:37:45.120 years ago, but do you still think about navigation and 0:37:45.800 --> 0:37:50.040 the possible the possibilities that AI could help in that space? 0:37:50.080 --> 0:37:52.600 I mean, my first thought when I heard your name 0:37:52.800 --> 0:37:55.560 and AI was I wonder if this could help me 0:37:55.600 --> 0:37:57.960 avoid speeding tickets more often? 0:37:58.080 --> 0:38:01.040 Because that's one of the. 0:38:00.080 --> 0:38:02.920 Fits of Ways is that I can see where others 0:38:02.920 --> 0:38:07.279 have pointed out that the costs because waiting. So do 0:38:07.320 --> 0:38:10.120 you think AI could help at all in making you know, 0:38:10.200 --> 0:38:12.120 Google Maps a better product for example? 0:38:12.320 --> 0:38:15.440 So so Ways is based in a lot of cases 0:38:15.480 --> 0:38:18.719 on crowdsource on one hand, than AI on the other hand. Right, 0:38:18.800 --> 0:38:23.359 and so we can understand, we can use the they 0:38:23.440 --> 0:38:26.560 you know, we can look at different users and from 0:38:26.719 --> 0:38:30.440 their behavior understand what is going on and so we 0:38:30.560 --> 0:38:33.399 have built the AI system before we even knew how 0:38:33.440 --> 0:38:37.200 to say that, right, And I think that many companies 0:38:37.239 --> 0:38:42.080 have built an AI capabilities into their product before we 0:38:42.200 --> 0:38:45.879 actually had the region or the generation of the language. 0:38:47.040 --> 0:38:49.399 Do you think of generative AI as akin to some 0:38:49.480 --> 0:38:51.759 other tech development? I mean, I don't know. I think 0:38:51.760 --> 0:38:54.400 folks have been talking about the creation of the Internet. 0:38:54.440 --> 0:38:55.920 I don't know, how do you think about it? 0:38:55.960 --> 0:38:59.160 People are saying that this is the biggest revolution every 0:38:59.280 --> 0:39:01.240 right that I would say, no, no, no, wait a minute, 0:39:01.320 --> 0:39:04.600 It's not there yet. It's definitely not as big as 0:39:04.600 --> 0:39:07.160 the Internet itself. It's definitely not as big as the 0:39:07.200 --> 0:39:11.600 mobile phone itself. It's definitely not as big as the smartphones. 0:39:11.680 --> 0:39:13.200 Right, yeah, the PC yet? 0:39:13.640 --> 0:39:14.320 Is it a yet? 0:39:14.480 --> 0:39:17.239 Or is it might be yet? But because at the 0:39:17.360 --> 0:39:19.239 end of the day, what all the other tools that 0:39:19.280 --> 0:39:24.960 I've mentioned did is that they interconnect people and they 0:39:25.160 --> 0:39:29.480 enable people to become better, better, to communicate, better, to 0:39:29.520 --> 0:39:35.960 access the information better for anywhere, anytime, anywhere, And this 0:39:36.080 --> 0:39:39.480 increased the abilities of the people. Now we are looking 0:39:39.520 --> 0:39:43.760 into a system that may be able to generate content 0:39:43.800 --> 0:39:47.280 by itself, but less likely to be creative. 0:39:47.760 --> 0:39:51.360 Well, you know, if you're talking about falling over the problem. 0:39:51.560 --> 0:39:53.840 All of the things that we just talked about, the Internet, 0:39:53.920 --> 0:39:57.120 the mobile phone, the PC. Right, they were solving the 0:39:57.200 --> 0:40:01.560 problem of I guess connectivity in some ways, but now 0:40:01.640 --> 0:40:03.280 those things are the problem. 0:40:03.480 --> 0:40:05.120 Or connectivity is the problem. 0:40:05.160 --> 0:40:08.880 I have how many email accounts, I have three cell phones, 0:40:08.960 --> 0:40:13.799 I have you know, IB and Facebook, and I want 0:40:13.840 --> 0:40:16.960 to be less connected. So for me, the problem that 0:40:17.000 --> 0:40:19.279 AI could solve is helping me deal with all of 0:40:19.320 --> 0:40:20.480 this connectivity that I have. 0:40:20.640 --> 0:40:24.040 Absolutely, I agree. Right, So what you're basically saying is 0:40:24.040 --> 0:40:27.320 that I'm overwhelmed with information and I would like something 0:40:27.360 --> 0:40:32.200 to you know, scan out from this information and figure 0:40:32.200 --> 0:40:34.440 out what is really important and bring that to me 0:40:35.000 --> 0:40:35.759 in a better way. 0:40:35.920 --> 0:40:37.560 Just the signal no more noise please? 0:40:38.040 --> 0:40:38.360 Yes? 0:40:38.400 --> 0:40:42.640 Definitely yes. And is that something that the current engine 0:40:42.640 --> 0:40:47.080 can do, probably with enough training, Definitely yes. Is that 0:40:47.160 --> 0:40:50.319 the use case that we will end up with? Maybe yes? 0:40:50.800 --> 0:40:53.600 So would you say, and I'm thinking about our audience 0:40:53.640 --> 0:40:57.239 and investing audience, you know, who have just watched this 0:40:57.400 --> 0:41:00.600 AI euphoria and we've seen something like an video but 0:41:00.719 --> 0:41:03.480 some other names just go kind of off off the charts. 0:41:03.680 --> 0:41:06.160 Would you say it's too early to make that investment play. 0:41:07.800 --> 0:41:10.439 No, I think that if you don't play in this game, 0:41:10.520 --> 0:41:11.880 then definitely you are going. 0:41:11.719 --> 0:41:14.080 To lose, right, So it's not too early to go into. 0:41:13.880 --> 0:41:16.320 Some of the It's not too early. And to a certain extent, 0:41:16.400 --> 0:41:18.560 what I would like to also mention is, look, we 0:41:18.600 --> 0:41:20.280 look at it and we say, Okay, wait a minute. 0:41:20.320 --> 0:41:23.319 That chat GPT just appear in our life about six 0:41:23.360 --> 0:41:25.080 months ago. So you look at it and you say, 0:41:25.440 --> 0:41:29.320 in six months, it's done so much. Right, Wait a minute, 0:41:29.920 --> 0:41:34.040 open AI is seven years old. It takes a lot 0:41:34.080 --> 0:41:38.040 of time to create value. And the first part of 0:41:38.120 --> 0:41:42.000 this value or the value generation journey was about creating 0:41:42.040 --> 0:41:44.480 the technology, and now we are looking for the use 0:41:44.520 --> 0:41:48.440 case that will make it valuable. In some cases it's 0:41:48.440 --> 0:41:50.960 already there, but in some cases it's not there yet. 0:41:51.640 --> 0:41:55.160 Do you have an overarching investment strategy? 0:41:55.280 --> 0:41:56.120 I mean you've. 0:41:57.560 --> 0:42:03.480 Created and sold to billion dollar businesses. Probably people come 0:42:03.480 --> 0:42:06.360 to you with pitches left and right all the time. 0:42:07.080 --> 0:42:10.640 There is there one kind of overarching strategy that you 0:42:10.760 --> 0:42:12.560 use to drive your investments. 0:42:13.000 --> 0:42:15.239 I do, right, because at the end of the day, 0:42:16.120 --> 0:42:19.319 my mission in life is to create value, and I 0:42:19.440 --> 0:42:22.759 can create value through different Ways. One of them is 0:42:22.800 --> 0:42:26.359 you know, building solutions to a problem that will help 0:42:26.440 --> 0:42:29.320 you to become better. And so this is Ways or 0:42:29.480 --> 0:42:33.920 Movie or pont Era or Zunka or C three or 0:42:34.160 --> 0:42:36.799 Fairfly or many of my startups. And the other one 0:42:36.840 --> 0:42:40.279 is through guiding and mentoring and teaching others. Right, And 0:42:40.320 --> 0:42:43.560 the book is about fulfilling my destiny of creating value 0:42:44.120 --> 0:42:47.360 as sharing the know how and to a certain extent, 0:42:48.000 --> 0:42:50.160 when you share the know how, when I go into 0:42:50.200 --> 0:42:52.960 a company and I help them, at the end of 0:42:53.000 --> 0:42:55.840 the day, what happens is that they sign up to 0:42:55.960 --> 0:43:00.440 my know how and that increased their likelihood of being seccessful. 0:43:01.000 --> 0:43:04.480 So my methodology is not about guessing what's right, is 0:43:04.520 --> 0:43:05.719 creating what's right. 0:43:06.520 --> 0:43:09.319 So for entrepreneurs, you might grab your book and kind 0:43:09.360 --> 0:43:13.400 of get you know, fall into your philosophy and benefit 0:43:13.440 --> 0:43:15.920 from it. I do wonder or what you think is 0:43:15.960 --> 0:43:19.120 one of our biggest problems today that needs solving. 0:43:20.040 --> 0:43:22.200 You know, we can look at many problems, right, So 0:43:22.320 --> 0:43:24.320 a lot of us are speaking about wait a minute, 0:43:24.320 --> 0:43:25.800 we are way too much connected. 0:43:25.880 --> 0:43:26.000 Right. 0:43:26.040 --> 0:43:29.239 You look at the younger generation and they are connected 0:43:29.320 --> 0:43:32.880 into social media and the levels that are beyond imagination. Right, 0:43:32.960 --> 0:43:35.160 and in some cases they're not happy, right, And so 0:43:35.600 --> 0:43:38.680 happiness of younger generation is a challenge. Right. You look 0:43:38.719 --> 0:43:42.239 at medical services, right, medical services in the US are 0:43:42.320 --> 0:43:45.000 five times more expensive than they are in Germany. 0:43:45.520 --> 0:43:47.279 Now, it's not right to live in Germany, he talks 0:43:47.280 --> 0:43:47.839 about all the time. 0:43:48.320 --> 0:43:50.839 And it's not that they're better in Germany. In here 0:43:50.920 --> 0:43:53.760 that in Germany. Right, it's simply five times more expensive. 0:43:53.760 --> 0:43:55.359 So you look at it and say, okay, wait a minute, 0:43:55.440 --> 0:43:58.920 this is waste of resources. Right. We started weighs in 0:43:58.960 --> 0:44:01.160 two thousand and seven in order to help people to 0:44:01.160 --> 0:44:03.799 avoid traffic jams. There are more traffic jams today than 0:44:03.800 --> 0:44:06.160 they're work in two thousand and seven, right, So obviously 0:44:07.000 --> 0:44:09.520 this problem is not done yet and we will need 0:44:09.520 --> 0:44:11.440 to address that as well. And so that's a lot 0:44:11.480 --> 0:44:13.640 of big problems that needs to be addressed. And I 0:44:13.680 --> 0:44:16.359 think that at the end of the day, it's the 0:44:16.520 --> 0:44:20.000 entrepreneurs that are going to change the world, and our 0:44:20.080 --> 0:44:21.840 role is to encourage them. 0:44:21.920 --> 0:44:24.399 That was Aory Levine, co founder of Ways, also an 0:44:24.400 --> 0:44:27.240 investor in move It, which Intel bought for one billion 0:44:27.280 --> 0:44:30.319 dollars back in twenty twenty. His book out now, Fall 0:44:30.360 --> 0:44:33.120 in Love with the problem, not the solution. A handbook 0:44:33.160 --> 0:44:36.600 for entrepreneurs. You're listening to Bloomberg business Week. Coming up 0:44:36.640 --> 0:44:39.200 the story of two friends who left Wall Street behind 0:44:39.480 --> 0:44:41.719 for a chance to create their own brand of whiskey 0:44:41.800 --> 0:44:44.640 with a personal twist. The co founders of Duke and Dame, 0:44:44.719 --> 0:44:48.120 salted caramel flavored whiskey joins us on the other side. 0:44:48.280 --> 0:44:49.120 This is Bloomberg. 0:44:49.600 --> 0:44:53.160 You're listening to the Bloomberg Business Week podcast. Catch us 0:44:53.200 --> 0:44:56.560 live weekday afternoons from three to six Eastern Listen on 0:44:56.640 --> 0:45:00.960 Bloomberg dot com, the iHeartRadio app, and the Bloomberg or 0:45:01.040 --> 0:45:03.239 watch us live on YouTube. 0:45:04.120 --> 0:45:06.080 Up next, we have the story of two friends who 0:45:06.120 --> 0:45:08.319 left the financial world for a chance to feel what 0:45:08.360 --> 0:45:11.640 they felt was avoid In the Fine Spirit segment, Amani 0:45:11.719 --> 0:45:14.839 McCauley and Shima Bury are the co founders of Duke 0:45:14.880 --> 0:45:18.560 and Dame, an award winning salted caramel flavored whiskey which 0:45:18.560 --> 0:45:20.840 has grown into one of the elite, black owned and 0:45:20.920 --> 0:45:24.680 independent alcoholic brands on the market today. The duo recently 0:45:24.760 --> 0:45:27.360 joined me and Matt Miller in studio to talk about 0:45:27.360 --> 0:45:30.560 their unique journey. Amani kicked it off for us. 0:45:30.880 --> 0:45:36.000 I started my career at Lehman Brothers many years ago, remember. 0:45:35.719 --> 0:45:38.839 Them drink I do, I do, I do. 0:45:40.440 --> 0:45:44.440 And you know, after about eleven years on Wall Street 0:45:44.480 --> 0:45:48.040 doing investment banking, got to a point where I realized 0:45:48.080 --> 0:45:50.080 it was time for change. You know, I wanted to 0:45:50.800 --> 0:45:53.000 go work different parts of my brain. I wanted a 0:45:53.040 --> 0:45:57.840 different type of adventure and challenge. I wanted a new life. 0:46:00.360 --> 0:46:04.040 Left investment banking behind and packed up all my stuff 0:46:04.239 --> 0:46:07.960 and went traveling for a little bit, and then ended 0:46:08.000 --> 0:46:10.520 up in Miami hanging out with Chima. And you know, 0:46:10.560 --> 0:46:12.279 we'll get into we'll get into that point. 0:46:14.239 --> 0:46:15.560 And you have a finance background. 0:46:15.760 --> 0:46:19.240 Yeah, so you'm talking about be a commodity and currency 0:46:19.239 --> 0:46:22.680 trader for many years as well. So we we both 0:46:22.920 --> 0:46:26.319 loved finance. We actually met through a mutual friend at 0:46:26.360 --> 0:46:28.520 her going away party who also worked in finance. So 0:46:28.560 --> 0:46:31.040 I had recently moved to New York and Amani was 0:46:31.080 --> 0:46:33.560 here working and she's like, you guys are similar. 0:46:33.640 --> 0:46:35.240 You guys should definitely connect. 0:46:35.320 --> 0:46:38.800 And uh so, not only you know, obviously working in finance, 0:46:38.840 --> 0:46:43.040 but socially we had a lot of similar interest and yep, yep, 0:46:43.080 --> 0:46:45.600 a lot of that and it led us and traveling, 0:46:45.840 --> 0:46:50.000 traveled out a bit, and we definitely honed in our 0:46:50.040 --> 0:46:53.719 ability to notice great spirits. So we decided to make one. 0:46:54.360 --> 0:46:55.040 That's pretty cool. 0:46:55.080 --> 0:46:57.279 I mean, how do you make that leap from we 0:46:57.360 --> 0:46:58.600 like to travel and we like. 0:46:58.600 --> 0:47:01.360 To drink because I like to travel and I like 0:47:01.400 --> 0:47:02.919 to drink and I love my job. 0:47:03.080 --> 0:47:04.279 I mean, it is it is? 0:47:04.640 --> 0:47:07.880 You know now, I guess in twenty twenty three, you 0:47:07.880 --> 0:47:09.880 could look back and say, man, people are making so 0:47:10.040 --> 0:47:13.160 much money in liquor. Yes, but that wasn't the case then, 0:47:13.400 --> 0:47:16.319 that was it? So how did you decide like we 0:47:16.360 --> 0:47:19.520 could do this better or there's not you know, I 0:47:20.000 --> 0:47:23.080 like this whiskey and that bourbon, but there's nothing that 0:47:23.239 --> 0:47:24.040 really hits it. 0:47:24.000 --> 0:47:25.760 For me, and I'm gonna need to make it myself. 0:47:25.800 --> 0:47:27.920 By the way, it's not the case now, like some 0:47:27.960 --> 0:47:30.200 people are making money in liquor, but it's a. 0:47:30.280 --> 0:47:31.719 And if you've got a great product like we do, 0:47:31.760 --> 0:47:33.200 you know, I mean, you definitely have the potential to 0:47:33.200 --> 0:47:36.200 make a good amount of money. So so the idea 0:47:36.280 --> 0:47:38.680 to answer your question, we I was at dinner one 0:47:38.760 --> 0:47:41.560 night when I was working and with a bunch of 0:47:41.600 --> 0:47:45.160 buddies and this was when Fireball first came out that whiskey. 0:47:45.280 --> 0:47:47.759 I know it well, and I've done a shot ski 0:47:48.000 --> 0:47:49.239 we all have. 0:47:49.520 --> 0:47:49.960 We all have. 0:47:50.080 --> 0:47:52.480 We all know it very well, and it had just 0:47:52.560 --> 0:47:54.600 come out, so it was the biggest craze. And we're 0:47:54.680 --> 0:47:56.920 at dinner and when my buddy's brought around for the table, 0:47:57.080 --> 0:48:00.080 so we take the shot. Starts well, it starts a conversation. 0:48:00.239 --> 0:48:03.000 If you could start your own flavored whiskey, what would 0:48:03.040 --> 0:48:05.319 it be. Conversation comes to me and I say I 0:48:05.320 --> 0:48:08.680 would do something reminiscent of a Werther's original sugar. 0:48:09.200 --> 0:48:12.880 Sugar Daddy's candy. And everybody's like, wow, what a great idea. 0:48:12.920 --> 0:48:14.440 But of course we all went back to work. 0:48:14.760 --> 0:48:15.680 Nothing happened. 0:48:15.880 --> 0:48:17.920 Many years later, I had left New York, moved back 0:48:17.920 --> 0:48:20.919 to South Florida, where'm from. As Amani mentioned, he had quit, 0:48:20.960 --> 0:48:22.600 traveled around the world, came to hang out with me 0:48:22.640 --> 0:48:27.239 in Miami, and hey, remember this idea, Well, let's look 0:48:27.280 --> 0:48:27.680 into it. 0:48:27.920 --> 0:48:29.040 He went back to New York. 0:48:29.400 --> 0:48:33.759 Our kitchens looked like chemistry labs, you know, beakers, pipettes. 0:48:33.239 --> 0:48:33.839 And things like that. 0:48:33.880 --> 0:48:36.520 Coming out with this, You're playing in the kitchens literally 0:48:36.960 --> 0:48:40.319 sampling with our friends. Everybody's like, what is this and 0:48:40.360 --> 0:48:43.279 why is this amazing. We met and a couple distilleries 0:48:43.320 --> 0:48:46.560 and left saying, wow, we could do this. Now we've 0:48:46.600 --> 0:48:49.520 won ten International Spirit Awards read a third best Flavor Whisky. 0:48:49.320 --> 0:48:49.680 In the World. 0:48:49.840 --> 0:48:52.640 How difficult, though, was it? From taking it from your kitchen, 0:48:53.000 --> 0:48:54.840 coming up with something that everybody's like, hey, this is 0:48:54.880 --> 0:48:57.279 really cool, then to actually the bottle you brought in 0:48:57.320 --> 0:49:04.480 and edited out the kitchen part. 0:49:05.239 --> 0:49:12.600 That's anytime you have an idea and you're considering, you know, 0:49:12.680 --> 0:49:15.960 taking it from the idea stage into something actually actually tangible, 0:49:16.600 --> 0:49:18.839 it's it feels difficult, but. 0:49:18.800 --> 0:49:20.480 Do you just play around with the recipe? Is it 0:49:20.600 --> 0:49:21.200 literally it? 0:49:22.239 --> 0:49:26.600 And even when Shema first proposed the idea, I was like, huh, 0:49:26.600 --> 0:49:31.040 that's that's interesting. Uh, you know, salted caramel whiskey. But 0:49:31.120 --> 0:49:33.239 I think you know. One of the first things we 0:49:33.280 --> 0:49:36.160 did we found a distillery, as Chima mentioned, and went 0:49:36.200 --> 0:49:38.839 to go hang out there. We spent four hours, they 0:49:38.840 --> 0:49:41.879 opened the doors to us, spent four hours asking every 0:49:41.960 --> 0:49:45.640 question under the sun. I remember walking out of that building. 0:49:45.760 --> 0:49:48.520 We looked at each other like hm, hm, this might 0:49:48.560 --> 0:49:50.600 not be as impossible as it might have thought a 0:49:50.640 --> 0:49:52.880 week or so ago. And so that's really when we 0:49:52.920 --> 0:49:56.080 started thinking, all right, let's let's keep exploring. So we 0:49:56.080 --> 0:49:59.799 started doing research and then we started prototyping. So we 0:49:59.840 --> 0:50:02.280 we we had an idea of what we wanted to create, 0:50:02.360 --> 0:50:05.360 right because at the time, a lot of the options 0:50:05.400 --> 0:50:08.759 in the flavor whiskey space, you know, consumers felt where 0:50:09.200 --> 0:50:15.400 overly sweet, syrapy syrup, you know, had an artificial element 0:50:15.520 --> 0:50:18.560 and taste, the after taste, and we thought, you know, 0:50:18.640 --> 0:50:21.000 if we're gonna do this, it has to be a 0:50:21.040 --> 0:50:25.080 whiskey first that happens to have amazing Roman flavor. It 0:50:25.160 --> 0:50:29.480 has to be one natural, right, nothing artificial at all. 0:50:30.280 --> 0:50:32.600 It has to be it can't be sweet like you're 0:50:32.640 --> 0:50:35.600 drinking cought syrup or something like that. And so Duken 0:50:35.719 --> 0:50:37.880 Dame has only one gram of sugar per serving. 0:50:38.000 --> 0:50:43.000 I was shocked when I read that, and that's amazing, right. 0:50:42.880 --> 0:50:45.400 And it's in how we formulated it really kind of 0:50:45.480 --> 0:50:47.799 leads to how we're able to accomplish that, and you know, 0:50:48.800 --> 0:50:51.520 to put in perspective. Jack Daniels, Tennessee honey has five 0:50:51.520 --> 0:50:54.520 grams of sugar preserving five times and the world. 0:50:54.360 --> 0:50:57.439 Is aware of it, and they want I'm going past 0:50:57.440 --> 0:50:59.960 the bomb, Well, I'm going to open it up and start. 0:51:00.040 --> 0:51:03.640 But so money, what you're saying is initially, initially it's daunting, 0:51:03.719 --> 0:51:05.279 but you put one foot in front of the other. 0:51:07.480 --> 0:51:18.239 And so by the time so by the time we 0:51:18.280 --> 0:51:21.200 started playing around in our kitchens, and you know, we 0:51:21.200 --> 0:51:24.920 weren't you know, just full disclosure, we were not breaking 0:51:24.960 --> 0:51:26.880 the law. We did not have little this, you know, 0:51:26.960 --> 0:51:30.680 little distillery sets in our kitchens. But we were sampling 0:51:30.719 --> 0:51:33.399 different types of whiskeys, different types of flavoring. It's kind 0:51:33.400 --> 0:51:36.719 of formulating what we imagined our whiskey would be. 0:51:40.920 --> 0:51:41.239 We did. 0:51:41.480 --> 0:51:47.040 We did it, but deconstructed, not officially, but a couple 0:51:47.120 --> 0:51:49.719 of a couple of months later and I'm in New 0:51:49.800 --> 0:51:50.960 York teams in Florida. 0:51:51.040 --> 0:51:53.440 We were taking notes. We're like, all right, man, try this, 0:51:53.520 --> 0:51:57.000 one milli liter of that, one mill of this. And 0:51:57.040 --> 0:51:59.440 then eventually we got to a point where like, oh, 0:51:59.560 --> 0:52:01.480 I think that that's it. Then you know, we took 0:52:01.520 --> 0:52:05.360 some old whiskey bottles, scraped off whatever label was on there, 0:52:06.120 --> 0:52:08.120 made of batch filled it up, and then we run 0:52:08.160 --> 0:52:11.040 around and have people sample. And so it was at 0:52:11.040 --> 0:52:13.680 that point when our friends are sampling and our family 0:52:13.680 --> 0:52:16.839 sampling it that we're getting this feedback that blew us away, like, wow, man, 0:52:16.880 --> 0:52:19.399 this is amazing. Dude, you've made this in your kitchen. Dude, 0:52:19.440 --> 0:52:21.399 you have to make this and get on the phone. 0:52:21.440 --> 0:52:23.080 You're like, waitmen, you're getting the same feedback. 0:52:23.640 --> 0:52:24.520 Well, what do you want to do? 0:52:25.239 --> 0:52:28.800 And it was at that point that it actually became real. 0:52:29.040 --> 0:52:32.600 That's Amani McCauley and Shimaburi. They are the co founders 0:52:32.640 --> 0:52:35.960 of Duke and Dame and they provided the backstory and 0:52:36.080 --> 0:52:38.040 up next they're going to talk about the hurdles they 0:52:38.040 --> 0:52:41.160 faced as they tried to turn whiskey stardom into profits. 0:52:41.360 --> 0:52:42.839 You know, we're not check right, but in the VC 0:52:42.920 --> 0:52:45.880 world nowadays, no one's just giving you a check for 0:52:45.880 --> 0:52:48.600 one idea, right. They need proof of concept. You have 0:52:48.640 --> 0:52:50.359 to go build it first, show that it works. Yeah, 0:52:50.360 --> 0:52:52.640 the income ask for money. So we took the same approach. 0:52:52.920 --> 0:52:56.160 Let's go build it first. We created this great product. 0:52:56.600 --> 0:52:58.600 You know, we got some validation from the market that 0:52:58.680 --> 0:53:00.000 it was good, and we created a bit. 0:53:00.360 --> 0:53:03.040 You're listening to Bloomberg business Week. This is Bloomberg. 0:53:07.200 --> 0:53:10.759 You're listening to the Bloomberg Business Week podcast. Catch us 0:53:10.800 --> 0:53:14.759 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:53:15.000 --> 0:53:18.280 the Bloomberg Business app, and YouTube. You can also listen 0:53:18.400 --> 0:53:21.520 live on Amazon Alexa from our flagship New York station, 0:53:21.960 --> 0:53:24.720 Just say Alexa play Bloomberg eleven thirty. 0:53:26.520 --> 0:53:29.239 All right, let's continue our conversation with Mommy McCauley and 0:53:29.280 --> 0:53:32.040 Shima Beory, co founders of Duke and Dame, an award 0:53:32.040 --> 0:53:35.480 winning salted caramel flavored whiskey. Matt Miller and I just 0:53:35.600 --> 0:53:37.719 pumped open one of their bottles, and a money is 0:53:37.719 --> 0:53:39.760 walking us through the tasting process. 0:53:40.360 --> 0:53:43.440 So the nose, you're getting that really robust caramel rome. 0:53:43.480 --> 0:53:44.680 You want to describe it a little bit. 0:53:44.640 --> 0:53:46.880 It does smell like caramel like, it really smells delicious. 0:53:46.880 --> 0:53:50.280 And by the way, this are this flavor has gotten 0:53:50.400 --> 0:53:52.800 very big. Also, probably wasn't as big when you started 0:53:52.840 --> 0:53:55.200 as it is now because now the caramel is a thing. 0:53:55.280 --> 0:53:55.759 It's a thing. 0:53:55.920 --> 0:53:57.479 So your first loves salt the camel. 0:53:57.480 --> 0:53:58.560 All right, let's take the first step. 0:54:00.040 --> 0:54:01.800 Very smooth, very smooth. 0:54:01.840 --> 0:54:05.040 There you go, getting that harsh whiskey. A lot of 0:54:05.080 --> 0:54:06.239 people to whiskey, right. 0:54:06.320 --> 0:54:06.480 Yeah. 0:54:06.520 --> 0:54:08.120 I was actually worried that I was going to look 0:54:08.800 --> 0:54:12.000 a little bit more feminine because I have a difficult 0:54:12.040 --> 0:54:14.520 time drinking whiskey. 0:54:15.200 --> 0:54:15.680 I don't know. 0:54:15.880 --> 0:54:19.520 I always tell people, Notice you just took this very sick. 0:54:19.600 --> 0:54:21.680 You're smiling and yeah, it's. 0:54:21.640 --> 0:54:23.480 Not like you don't get that bit exactly. 0:54:23.600 --> 0:54:25.719 So take your second ship and we'll talk about it. 0:54:26.200 --> 0:54:28.720 Mm hmm, less sweet. 0:54:28.840 --> 0:54:32.640 You're getting more tenants from the from the bourbon that 0:54:32.640 --> 0:54:33.239 we use, so. 0:54:33.160 --> 0:54:35.160 We don't hate me, but this would be great. All 0:54:35.160 --> 0:54:36.400 support over vanilla. 0:54:36.120 --> 0:54:38.399 Ice, absolutely, we have a lot of customers that love 0:54:38.400 --> 0:54:42.880 it over vanilla and an old fashioned Yeah. Well, actually 0:54:43.600 --> 0:54:45.799 one of our many of our accounts are switching from 0:54:45.880 --> 0:54:48.440 using vodka to us in the espresso martini. 0:54:48.719 --> 0:54:51.800 It has such a nice like after feel and warmth. 0:54:52.040 --> 0:54:53.520 Yeah like it. 0:54:53.560 --> 0:54:54.080 I forgot this. 0:54:54.560 --> 0:54:55.120 Are you okay? 0:54:56.120 --> 0:54:57.120 I like it? Now? 0:54:57.200 --> 0:55:00.279 Are you getting the oakiness and a little spy on 0:55:00.280 --> 0:55:01.040 that second sip? 0:55:01.280 --> 0:55:01.520 Yeah? 0:55:01.600 --> 0:55:02.920 It was definitely a little different. 0:55:02.960 --> 0:55:03.080 Yea. 0:55:03.160 --> 0:55:05.239 Yeah, so it was just this beautiful layer it taste 0:55:05.280 --> 0:55:07.160 profile that really makes Duke and dam unique. 0:55:07.320 --> 0:55:09.400 So one of the things we wanted to talk to 0:55:09.440 --> 0:55:11.359 you about. We had a great conversation off air while 0:55:11.400 --> 0:55:15.319 we were doing some news funding you guys bootstrapped it. Yes, 0:55:15.640 --> 0:55:16.440 talk to us about that. 0:55:16.640 --> 0:55:17.480 How hard was it. 0:55:17.640 --> 0:55:22.840 Yeah, Well, our plan was to you know, you know, 0:55:22.880 --> 0:55:25.200 we're not check right, But in the VC world nowadays, 0:55:25.920 --> 0:55:28.080 no one's just giving you a check for one idea, right, 0:55:28.680 --> 0:55:30.479 They need proof of concept. You have to go build 0:55:30.480 --> 0:55:32.200 it first, show that it works, and then come ask 0:55:32.239 --> 0:55:34.960 for money. So we took the same approach. Let's you know, 0:55:35.000 --> 0:55:37.759 we didn't feel comfortable asking our friends and family for 0:55:37.920 --> 0:55:42.240 money on just some crazy idea. Okay, let's go build 0:55:42.239 --> 0:55:46.640 it first. We created this great product. We you know, 0:55:46.680 --> 0:55:49.000 we got some validation from the market that it was good. 0:55:49.239 --> 0:55:51.440 Just wasn't us that thought it was good. And we 0:55:51.480 --> 0:55:55.440 created a business and a few years later we were 0:55:55.440 --> 0:55:57.880 able to go to friends and family door a raise 0:55:59.600 --> 0:56:01.600 and it was much more successful than we thought. But 0:56:01.640 --> 0:56:04.239 because we could show hey, first you can touch and 0:56:04.280 --> 0:56:06.799 feel and taste the product, it's good. 0:56:07.880 --> 0:56:10.400 The two of us like shooting the breeze. 0:56:10.640 --> 0:56:13.839 We can show the retailers that we got into whether 0:56:13.880 --> 0:56:18.080 it was Total line ABC in Florida, Mark Classico at 0:56:18.080 --> 0:56:20.640 the time, so we could show the hey, look at 0:56:20.680 --> 0:56:25.080 what we've done a cruise. So that made the rays easier. 0:56:25.760 --> 0:56:28.040 It happened a little bit later than anticipated because of 0:56:28.080 --> 0:56:30.520 COVID right parts to ask people for money when this 0:56:31.000 --> 0:56:31.800 stock before. 0:56:31.560 --> 0:56:32.520 You tw twenty seventeen. 0:56:32.600 --> 0:56:33.680 Was that when you guys do. 0:56:33.680 --> 0:56:36.000 We started a business in twenty seventeen, We launched a 0:56:36.040 --> 0:56:39.080 product in twenty eighteen, and. 0:56:38.960 --> 0:56:41.600 Then during the pandemic, did you think, oh my god, 0:56:41.920 --> 0:56:47.680 this is it. We're going to be killed Nobody everybody 0:56:47.719 --> 0:56:48.680 was drinking well? 0:56:49.360 --> 0:56:50.520 Or was that a boom when. 0:56:50.360 --> 0:56:54.120 You well, the global brands and the big guys were 0:56:54.120 --> 0:56:57.799 doing great, right. The lifeline of smaller companies or craft 0:56:57.880 --> 0:57:00.200 spirit companies like ours, especially just a year and a 0:57:00.200 --> 0:57:02.319 half in, is what we call liquid lips. So when 0:57:02.360 --> 0:57:04.319 you go into liquor store and you see the brand 0:57:04.360 --> 0:57:07.920 ambassador giving you samples, that shut off. We couldn't do 0:57:08.000 --> 0:57:12.759 events and activations because that shut off. So people couldn't 0:57:12.800 --> 0:57:16.120 sample this new bottle, this spirit. If they knew Tito's, 0:57:16.160 --> 0:57:17.640 they would go and buy it because they just knew 0:57:17.640 --> 0:57:21.640 it already. But we definitely did some creative things that 0:57:21.720 --> 0:57:25.120 where we actually grew during the pandemic. Most brands that 0:57:25.240 --> 0:57:28.439 started off actually fell off or folded because they didn't 0:57:28.440 --> 0:57:31.720 have that already brand recognition. But we pivoted. We did 0:57:31.760 --> 0:57:34.760 some things within our supply chain which mattered. We really 0:57:34.840 --> 0:57:37.640 used our connections, our network where everyone was listening to 0:57:38.840 --> 0:57:42.560 streaming radio. We networked and found a whole bunch of 0:57:42.800 --> 0:57:45.560 on air DJs, had them wearing Duke and Dame shirts 0:57:45.560 --> 0:57:47.280 and bottles and giveaways and things like that. 0:57:47.320 --> 0:57:51.600 It really forced us to transition to digital. Yeah that's awesome, 0:57:51.600 --> 0:57:55.360 which we had not done or now that was a 0:57:55.640 --> 0:57:58.120 part of it, but really just how do you reach 0:57:58.160 --> 0:58:00.440 the consumer exact right? 0:58:00.600 --> 0:58:04.040 Yep, yeah, So we had to pivot and do that 0:58:04.160 --> 0:58:08.520 instead of relying on the traditional way of introducing customers 0:58:08.560 --> 0:58:12.040 through experiential marketing, and that was the big thing. So 0:58:12.160 --> 0:58:14.440 for us, we could tout the awards. We won a 0:58:14.440 --> 0:58:17.520 bunch of awards actually before we launched, so in fact 0:58:17.880 --> 0:58:20.280 we had this great product, but we had to compete 0:58:20.280 --> 0:58:23.880 against Tennessee Honey and Crown Apple and things like that. 0:58:24.280 --> 0:58:25.960 Now I'm on and I we were talking. 0:58:26.000 --> 0:58:26.959 We're like, all right, we. 0:58:26.880 --> 0:58:29.040 Need to hang a medal on the bottle similar to this, 0:58:29.160 --> 0:58:29.360 you know. 0:58:29.520 --> 0:58:34.200 So we applied to four contests. We actually won were 0:58:34.240 --> 0:58:37.400 placed in all four, which was insane. We actually got 0:58:37.440 --> 0:58:40.040 the top award at the Consumer Choice Award, which is 0:58:40.520 --> 0:58:43.360 the SIPs Award, And when we hit the market right away. 0:58:43.400 --> 0:58:45.280 Within two weeks, we got into total Wine. 0:58:45.400 --> 0:58:46.760 That's pretty cool, which is huge. 0:58:46.880 --> 0:58:49.120 Did you apply for any funding, I'm a small business, 0:58:49.200 --> 0:58:50.600 loans or anything like that. 0:58:50.760 --> 0:58:54.240 No, no, no, no, we had a couple of nig. 0:58:57.240 --> 0:58:57.880 You're right right. 0:58:58.000 --> 0:59:00.280 So we were fortunate that we were able to to 0:59:00.320 --> 0:59:03.760 do something while we were working and say, can I. 0:59:03.680 --> 0:59:04.800 Ask you are you profitable? 0:59:05.480 --> 0:59:05.600 No? 0:59:05.680 --> 0:59:06.000 Not yet? 0:59:06.120 --> 0:59:06.760 Okay. 0:59:07.000 --> 0:59:11.280 Liquor industry is very tough, as we as we continue 0:59:11.320 --> 0:59:13.400 to expand our distribution. Yeah, yeah, yeah, but but the 0:59:13.920 --> 0:59:17.240 model will prove yeah that way. But right now when 0:59:17.280 --> 0:59:19.640 five market is Florida, New York, Michigan, Maryland, DC, as 0:59:19.640 --> 0:59:22.200 I mentioned, and we shipped thirty eight states, seven Caribbean markets, 0:59:22.200 --> 0:59:23.400 every kind of a cruisive in the world. 0:59:23.400 --> 0:59:25.040 We just started with the Royal Caribbees. 0:59:25.600 --> 0:59:26.320 They drink a lot. 0:59:28.440 --> 0:59:31.320 Yes, we like the fact that they drink. It helps. 0:59:31.680 --> 0:59:36.880 So what's next? Do you expand the line or how 0:59:36.880 --> 0:59:37.880 do you think about it? 0:59:37.960 --> 0:59:40.960 So I think we're at a point now where we're 0:59:41.000 --> 0:59:43.920 really ready to invest in that next stage of growth. 0:59:44.240 --> 0:59:47.680 So we were able to bring in a large investor 0:59:47.840 --> 0:59:51.720 earlier this year, and so we're really now starting to 0:59:52.800 --> 0:59:55.120 do all the things you wish you could have done 0:59:55.520 --> 0:59:57.920 that you couldn't do before, so investing more marketing and 0:59:57.960 --> 1:00:01.120 promotional activities. Of course, Chiem and I have done everything 1:00:01.240 --> 1:00:04.400 from day one. Staff sounds like we have zero full 1:00:04.440 --> 1:00:07.720 time employees other than us, but we're actually now starting to, 1:00:08.280 --> 1:00:11.680 you know, think about building a staff. We're interviewing for 1:00:11.760 --> 1:00:15.200 a marketing role and for sales roles on the ground, 1:00:15.280 --> 1:00:19.800 so we're really trying to kind of take Duke and Dame. 1:00:19.760 --> 1:00:20.800 To that next level. 1:00:21.000 --> 1:00:23.360 So that's what we're focused on now in terms of 1:00:23.480 --> 1:00:27.000 portfolio and brand extensions. You know, let's just say we're 1:00:27.000 --> 1:00:27.720 in the lab. 1:00:30.440 --> 1:00:31.440 You're in the kitchen. 1:00:37.680 --> 1:00:39.520 To find a distiller or did you have to go 1:00:39.560 --> 1:00:40.400 through many or. 1:00:41.160 --> 1:00:44.600 Well it was funny, so before we started on research, 1:00:45.400 --> 1:00:48.000 you know, you think it's hard, right, but then once 1:00:48.000 --> 1:00:50.320 you get into it, you find out that, oh, you know, 1:00:51.880 --> 1:00:54.120 buy versus build. You can go build your own, but 1:00:54.320 --> 1:00:58.120 there's a lot of capital investment required for that if 1:00:58.120 --> 1:01:00.200 you wanted to work with a third party distiller. We 1:01:00.200 --> 1:01:02.640 were very surprised to learn that, oh, some of our 1:01:02.680 --> 1:01:05.439 favorite brands you actually don't distill. 1:01:05.120 --> 1:01:05.760 Their own whiskey. 1:01:05.760 --> 1:01:10.560 It's amazing, Like, wait a minute, you can do that. 1:01:12.680 --> 1:01:15.640 So we were able to find We spoke to a 1:01:15.640 --> 1:01:17.920 few and we found one who was actually based in 1:01:17.960 --> 1:01:21.280 Florida that they make amazing whiskey, and they make amazing 1:01:21.280 --> 1:01:21.960 whiskey for us. 1:01:22.080 --> 1:01:24.680 Such a fun conversation with Ammy McCauley and Schiman Bury, 1:01:24.720 --> 1:01:27.600 co founders of Duke and Dame salted caramel flavored whiskey. 1:01:27.960 --> 1:01:31.000 You're listening to Bloomberg business Week coming up. Online wedding 1:01:31.000 --> 1:01:34.760 planning platform than Not is enjoying record revenues well also 1:01:34.840 --> 1:01:38.480 ensuring that people from every demographic can enjoy its services. 1:01:38.760 --> 1:01:44.000 I think the goal is to have boardrooms represent a 1:01:44.080 --> 1:01:48.080 diverse set of individuals because that's the customer base that 1:01:48.160 --> 1:01:49.880 these companies are representing. 1:01:50.040 --> 1:01:52.680 More on the changing landscape of the corporate boardroom. When 1:01:52.720 --> 1:01:54.520 we come back, this is Bloomberg. 1:01:55.040 --> 1:01:58.600 You're listening to the Bloomberg Business Week podcast. Catch us 1:01:58.640 --> 1:02:02.000 live weekday afternoons from three to six Eastern Listen on 1:02:02.040 --> 1:02:06.080 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 1:02:06.360 --> 1:02:08.600 or watch just Live on YouTube. 1:02:09.120 --> 1:02:11.080 Women hold a third of S and P five hundred 1:02:11.120 --> 1:02:13.560 board seats for the first time ever after scores of 1:02:13.600 --> 1:02:16.840 men gave up their directorships in May, a long elusive 1:02:16.840 --> 1:02:20.000 goal that's been touted as a baseline for lasting change. 1:02:20.280 --> 1:02:22.760 Caroline Everson is a board member of the NOT Worldwide, 1:02:22.760 --> 1:02:26.520 the global wedding marketplace operating in sixteen countries, and right 1:02:26.560 --> 1:02:28.080 now business is booming. 1:02:28.400 --> 1:02:31.120 The wedding industry is a two hundred and fifty billion 1:02:31.200 --> 1:02:36.280 dollar industry. It is extremely robust. Twenty twenty two was 1:02:36.400 --> 1:02:38.920 considered sort of the super Bowl of weddings because there 1:02:38.960 --> 1:02:41.720 was such pent up demand. We had two point six 1:02:41.800 --> 1:02:45.920 million IDs in the United States alone this year'll it'll 1:02:46.520 --> 1:02:49.040 go back to pre COVID levels at about two point 1:02:49.080 --> 1:02:53.080 one million, and then NOT have achieved its highest revenue 1:02:53.120 --> 1:02:56.040 and its history in twenty twenty two with four hundred 1:02:56.040 --> 1:02:59.920 million dollars in revenue, and it's been profitable for ten years. 1:03:00.120 --> 1:03:04.200 So it is a very strong business. And yet one 1:03:04.240 --> 1:03:07.000 of the reasons why I joined the board is I 1:03:07.080 --> 1:03:08.920 think that we are going to go through a pretty 1:03:08.920 --> 1:03:12.960 massive transformation. When you think about the advent of AI 1:03:13.120 --> 1:03:15.360 and what it can do for wedding planning, I think 1:03:15.400 --> 1:03:19.880 it's going to be a phenomenal user experience. So I'm 1:03:20.000 --> 1:03:22.880 very bullish about the opportunity. We've got a lot of 1:03:22.920 --> 1:03:27.480 growth globally, and also it's a very nascent advertising business, 1:03:27.520 --> 1:03:30.280 and having been part of the team that helped build 1:03:30.360 --> 1:03:33.960 metas advertising business, I think there is a pretty significant 1:03:33.960 --> 1:03:35.640 opportunity for us to do that at the NOT. 1:03:35.960 --> 1:03:37.520 You know, it's interesting that you went there in terms 1:03:37.560 --> 1:03:41.720 of advertising and Meta, the evolution of ads maybe as 1:03:41.760 --> 1:03:44.240 a result of AI, Is it going to change dramatically? 1:03:44.320 --> 1:03:46.560 Should we all be kind of ready for something very different? 1:03:47.000 --> 1:03:50.400 I think so. I mean I'm already seeing significant change. 1:03:50.520 --> 1:03:54.440 So when you think about the scale at which companies 1:03:54.680 --> 1:03:59.160 do advertising these days across digital platforms, AI has actually 1:03:59.160 --> 1:04:02.600 been utilized by companies like Meta and Google for years. 1:04:02.920 --> 1:04:04.960 What I think you're going to see a big difference 1:04:05.080 --> 1:04:08.640 is in the creative development. What we're seeing now is 1:04:08.760 --> 1:04:14.240 using generative AI, marketers can literally put together thousands, if 1:04:14.240 --> 1:04:17.800 not hundreds of thousands of varieties of campaigns in a 1:04:18.000 --> 1:04:21.360 much more efficient and effective way than NOT has been 1:04:21.400 --> 1:04:24.200 experimenting with some of that. Marketing has already seen a 1:04:24.280 --> 1:04:27.880 twenty percent lift in conversion. So I think that's going 1:04:27.920 --> 1:04:31.160 to be a pretty transformational trend in digital advertising. 1:04:31.520 --> 1:04:35.840 You talk about transformational and boards are transforming. You are 1:04:35.880 --> 1:04:38.920 part of that. I am curious though, when you in 1:04:38.920 --> 1:04:41.840 a week where we saw Supreme Court rulings dealing with 1:04:41.880 --> 1:04:46.480 affirmative action, you rejecting the use of race in university admissions. 1:04:46.480 --> 1:04:48.200 We've been talking about, well, how does that maybe impact 1:04:48.320 --> 1:04:52.240 ultimately the business community. What are the conversations that boards 1:04:52.360 --> 1:04:55.000 or companies are having as we see these changes. 1:04:55.720 --> 1:04:57.960 My experience through all the companies that I have the 1:04:58.000 --> 1:05:00.440 privilege of serving on is that the you have an 1:05:00.520 --> 1:05:04.960 unwaivering commitment to the principles of diversity, equity, and inclusion, 1:05:05.160 --> 1:05:08.200 and that is not going to change. I think the 1:05:09.280 --> 1:05:14.280 goal is to have boardrooms represent a diverse set of 1:05:14.400 --> 1:05:18.840 individuals because that's the customer base that these companies are representing. 1:05:19.360 --> 1:05:22.160 And so each search that I have been part of, 1:05:22.360 --> 1:05:25.960 either for myself or in looking at new colleagues that 1:05:26.000 --> 1:05:28.560 could potentially join the boards that I'm on, there are 1:05:28.560 --> 1:05:31.400 a lot of criteria that the board of directors goes 1:05:31.440 --> 1:05:34.800 through and really thinks about what skill set does the 1:05:34.800 --> 1:05:39.400 boardroom need in order to help advise management, and that 1:05:39.480 --> 1:05:41.800 can span many, many different areas. 1:05:41.960 --> 1:05:45.240 That's Carolyn Everson, board member of the not Worldwide. She's 1:05:45.240 --> 1:05:47.120 also on the board of the Walt Disney Company and 1:05:47.360 --> 1:05:51.280 under Armor. Carolyn is former president of Instacart, former VP 1:05:51.360 --> 1:05:53.960 of Global Business Group at Meta, and a former corporate 1:05:54.040 --> 1:05:58.680 VP at Microsoft. Her full interview available on our podcast feed. 1:05:59.080 --> 1:06:01.120 And that wraps up the weekend edition of Bloomberg Business 1:06:01.160 --> 1:06:03.760 Week from Bloomberg Radio. Thank you so much for joining us. 1:06:04.000 --> 1:06:06.520 Be sure to tune into Bloomberg Business Week Monday through Friday, 1:06:06.600 --> 1:06:09.240 starting at three pm Wall Street Time on Bloomberg Radio 1:06:09.520 --> 1:06:12.600 and on Series XM Channel one nineteen. 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