1 00:00:02,600 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg pien L podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,440 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,919 Speaker 1: at Bloomberg dot com. Well, tobacco companies around the world 8 00:00:22,000 --> 00:00:25,400 Speaker 1: have been dealing with declining smoking rates for years. As 9 00:00:25,440 --> 00:00:28,240 Speaker 1: a result, many of the companies are undergoing a transformation 10 00:00:28,320 --> 00:00:32,680 Speaker 1: from traditional cigarettes to less harmful alternatives like vaping and 11 00:00:32,760 --> 00:00:34,640 Speaker 1: heated tobacco. To help us kind of get up to 12 00:00:34,640 --> 00:00:37,080 Speaker 1: speed on what's happening in the tobacco business, we welcome 13 00:00:37,320 --> 00:00:40,760 Speaker 1: Yasik al Sak. Yasik is, the chief operating officer for 14 00:00:40,800 --> 00:00:43,880 Speaker 1: Philip Morris Internationally, joins us on the phone. Yasick, thanks 15 00:00:43,880 --> 00:00:45,800 Speaker 1: so much for joining us. I wondering if you could 16 00:00:45,800 --> 00:00:48,479 Speaker 1: just give us a sense for what Philip Mars inter 17 00:00:48,560 --> 00:00:51,400 Speaker 1: National's trying to do here to kind of make that 18 00:00:51,479 --> 00:00:55,480 Speaker 1: transition from complete reliance on cigarettes to vaping and heated 19 00:00:55,480 --> 00:01:00,240 Speaker 1: tobacco and other products Hi, thank you for having me. Look, 20 00:01:00,320 --> 00:01:03,440 Speaker 1: I mean we started years ago with you know, once 21 00:01:03,480 --> 00:01:06,480 Speaker 1: we developed the product, you know, developed the science around 22 00:01:06,480 --> 00:01:09,080 Speaker 1: the product to substantiate and be sure really that the 23 00:01:09,120 --> 00:01:11,920 Speaker 1: product is a better alternative for you know, those who 24 00:01:12,040 --> 00:01:16,040 Speaker 1: don't don't quit. We'll answer so far in a forty 25 00:01:16,040 --> 00:01:18,920 Speaker 1: eight market. So this is I think the best testimony 26 00:01:19,000 --> 00:01:23,320 Speaker 1: how serious we are about essentially one day stopped selling 27 00:01:23,360 --> 00:01:26,080 Speaker 1: a compastible product and I go to the smoke class 28 00:01:26,120 --> 00:01:30,880 Speaker 1: of noncompastible alternatives. Forty eight markets. Markets are in. This 29 00:01:31,040 --> 00:01:35,760 Speaker 1: market is well about a five percent now and continue 30 00:01:35,800 --> 00:01:39,839 Speaker 1: and and and and it's growing. Um, we allocated most 31 00:01:39,880 --> 00:01:42,560 Speaker 1: of our resources, more more than a sixty percent of 32 00:01:42,560 --> 00:01:46,000 Speaker 1: our resources and now for the alternative product. And I 33 00:01:46,040 --> 00:01:49,040 Speaker 1: think we'll make this very wise decision. And I am 34 00:01:49,160 --> 00:01:51,840 Speaker 1: very proud for you know, this company, the boards that 35 00:01:52,040 --> 00:01:55,000 Speaker 1: we could stood up and say, look, there is a problem. 36 00:01:55,120 --> 00:01:58,200 Speaker 1: Let's solve the problem. That offer those who you know, 37 00:01:58,320 --> 00:02:01,920 Speaker 1: don't switch, don't quit, sorry, offer a better alternatives. And 38 00:02:01,920 --> 00:02:05,160 Speaker 1: we're very committed one day to you know, have Philip Morris, 39 00:02:05,240 --> 00:02:07,600 Speaker 1: who will be just remembered that you know, this was 40 00:02:07,640 --> 00:02:11,080 Speaker 1: the company in the past Coal used to sell compostible cigarettes. 41 00:02:11,120 --> 00:02:13,440 Speaker 1: I think it's for the benefit of a billion people 42 00:02:13,560 --> 00:02:16,839 Speaker 1: and and many other smokers and many other people even 43 00:02:16,919 --> 00:02:18,920 Speaker 1: get around them. So we are very excited about this 44 00:02:19,000 --> 00:02:22,720 Speaker 1: whole of thing and we will not stop. Yes, like, 45 00:02:22,919 --> 00:02:27,480 Speaker 1: how conclusive have your studies been about the degree to 46 00:02:27,480 --> 00:02:31,960 Speaker 1: which these heat not burn products are safer or less 47 00:02:32,000 --> 00:02:38,359 Speaker 1: cancerous than than smoked cigarettes. Look, it's very much ultimately 48 00:02:38,440 --> 00:02:43,639 Speaker 1: to the to the authorities or organizations like f d 49 00:02:43,760 --> 00:02:45,720 Speaker 1: A in a case of a US to to make 50 00:02:45,760 --> 00:02:49,240 Speaker 1: the final assessment. If you would ask my scientists, we 51 00:02:49,360 --> 00:02:52,520 Speaker 1: are we are very very sure that this products are 52 00:02:52,639 --> 00:02:55,280 Speaker 1: better alternative as safe for product than a than a 53 00:02:55,280 --> 00:02:57,880 Speaker 1: compastible cigarette, but to a degree that would actually have 54 00:02:58,480 --> 00:03:01,639 Speaker 1: it doesn't mean does meaning allow mean it doesn't mean 55 00:03:01,680 --> 00:03:04,800 Speaker 1: that the product is safe. Okay, the product is safer. 56 00:03:04,880 --> 00:03:07,680 Speaker 1: I mean so today, based on this knowledge, we know 57 00:03:07,880 --> 00:03:10,400 Speaker 1: that if you want to continue smoking, this is not 58 00:03:10,480 --> 00:03:13,040 Speaker 1: a great idea, you should diver quit. If you can't quit, 59 00:03:13,160 --> 00:03:15,639 Speaker 1: going a switch to this product, you have a very 60 00:03:15,680 --> 00:03:20,920 Speaker 1: significant reductions in exposure to the most harmful toxicons in 61 00:03:20,960 --> 00:03:24,720 Speaker 1: the smoke because we eliminated combustion, et cetera. Obviously, smoker 62 00:03:25,200 --> 00:03:28,840 Speaker 1: while switching to this product to reduce the significantly the 63 00:03:29,000 --> 00:03:32,880 Speaker 1: exposures so one would expect, and some of our our 64 00:03:32,960 --> 00:03:37,080 Speaker 1: studies actually concluded that as much as you can obviously 65 00:03:37,080 --> 00:03:40,080 Speaker 1: conclude based on a clinical status that this has a 66 00:03:40,120 --> 00:03:45,240 Speaker 1: positive impact very similar in many occasions to to to 67 00:03:45,240 --> 00:03:49,480 Speaker 1: to the same things as you would quit smoking. But 68 00:03:49,560 --> 00:03:51,560 Speaker 1: as I said, it is up to the regulators of 69 00:03:51,760 --> 00:03:56,800 Speaker 1: d A issued very recently our PMT A authorization order, 70 00:03:57,280 --> 00:04:00,880 Speaker 1: were awaiting every d A decisions with regards to the 71 00:04:00,920 --> 00:04:07,800 Speaker 1: modified risk application, and I'm very helpful, I'm very hopeful 72 00:04:07,920 --> 00:04:10,840 Speaker 1: that you know, so they will to reach that conclusion. 73 00:04:11,160 --> 00:04:14,560 Speaker 1: So so yes, so generally, just clearly clarify a little 74 00:04:14,600 --> 00:04:18,000 Speaker 1: bit for me, just what has the FDA ruled about 75 00:04:18,040 --> 00:04:21,120 Speaker 1: your products to date and what else are you awaiting 76 00:04:21,160 --> 00:04:25,960 Speaker 1: from them. The authorized US to the start commercialization of 77 00:04:26,080 --> 00:04:31,160 Speaker 1: hicles the product on the US in the US based 78 00:04:31,279 --> 00:04:37,160 Speaker 1: on the assessment that from the public health per perspective, 79 00:04:37,360 --> 00:04:39,479 Speaker 1: this is a right thing to have that product in 80 00:04:39,520 --> 00:04:41,960 Speaker 1: the market, which means that the product has to prove 81 00:04:42,120 --> 00:04:48,680 Speaker 1: that not only obviously worse than all is not worse 82 00:04:48,720 --> 00:04:51,280 Speaker 1: than a cigarette, but the product and this is in 83 00:04:51,320 --> 00:04:56,000 Speaker 1: a statement coming from DA significantly reduced the human potential 84 00:04:56,120 --> 00:04:59,520 Speaker 1: human exposure to a number of the very harmful constituents 85 00:04:59,560 --> 00:05:04,560 Speaker 1: include think the carcinogens. This is not conclusive from every 86 00:05:04,640 --> 00:05:08,800 Speaker 1: d A at this stage over the product. The usage 87 00:05:08,800 --> 00:05:11,799 Speaker 1: of this product will reduce that risk. That's the subject 88 00:05:11,839 --> 00:05:14,800 Speaker 1: of the second applications which is now pending with every 89 00:05:14,880 --> 00:05:17,120 Speaker 1: d A. But as the first step, I think a 90 00:05:17,720 --> 00:05:21,799 Speaker 1: statement from EVERYDA were very clear it is better, frankly speaking, 91 00:05:21,800 --> 00:05:26,120 Speaker 1: for smokers if they don't quit to switch to this product. Yes, yes, 92 00:05:26,440 --> 00:05:28,080 Speaker 1: I want to shop gears a little bit. Because you're 93 00:05:28,080 --> 00:05:32,159 Speaker 1: talking about diversifying away from just cigarettes that are traditional 94 00:05:32,320 --> 00:05:35,359 Speaker 1: in the way that they're smoked. What about the cannabis industry. 95 00:05:35,400 --> 00:05:38,320 Speaker 1: Do you foresee a time when that will provide a 96 00:05:38,360 --> 00:05:45,080 Speaker 1: significant portion of Philip Morris revenues? Definitely not that the stage. 97 00:05:45,120 --> 00:05:51,080 Speaker 1: Our focus is entirely on eliminating the combustion from the 98 00:05:51,120 --> 00:05:54,800 Speaker 1: from the tobacco, and I think if we really want 99 00:05:54,800 --> 00:05:57,840 Speaker 1: to be successful in a in a shorter period of time, 100 00:05:58,600 --> 00:06:01,640 Speaker 1: I'd rather have our company being focused just on the 101 00:06:01,680 --> 00:06:05,120 Speaker 1: tobacco and the problem of smoking and the cigarettes, etcetera. 102 00:06:05,120 --> 00:06:07,440 Speaker 1: I think any diversion at this moment of time, which 103 00:06:07,480 --> 00:06:12,680 Speaker 1: is elude our resources. Having said so, while developing these products, 104 00:06:12,680 --> 00:06:17,640 Speaker 1: we have developed a tremendous scientific and technological capability at 105 00:06:17,640 --> 00:06:21,360 Speaker 1: Philip Moore's International. And as we know, many other products 106 00:06:21,360 --> 00:06:24,479 Speaker 1: are also being used for the combustion, etcetera. And you know, 107 00:06:24,560 --> 00:06:27,080 Speaker 1: based on our knowledge, this is not necessarily the best 108 00:06:27,120 --> 00:06:30,480 Speaker 1: thing one could do. But as I said, from a company, 109 00:06:30,520 --> 00:06:34,520 Speaker 1: from a corporate perspective, from the corporate objective perspective, for us, 110 00:06:34,800 --> 00:06:38,040 Speaker 1: we just focus on solving that problem first and you know, 111 00:06:38,200 --> 00:06:40,920 Speaker 1: then we'll see what the future will will bring up. Yes, 112 00:06:41,040 --> 00:06:43,000 Speaker 1: like ol Sack, thank you so much for being with us. 113 00:06:43,240 --> 00:06:47,000 Speaker 1: Yessa Ozaki is chief operating officer at Philip Morris International, 114 00:06:47,080 --> 00:06:50,520 Speaker 1: joining us by phone. Interesting to see how they are 115 00:06:50,560 --> 00:06:54,640 Speaker 1: shifting gears to try to increase, uh, the proportion of 116 00:06:54,680 --> 00:06:58,240 Speaker 1: their business that is the heat not burn a product, 117 00:06:58,360 --> 00:07:02,080 Speaker 1: the vaping products, and Bloomberg Intelligence estimates that about five 118 00:07:02,080 --> 00:07:05,120 Speaker 1: percent of the revenues and eighteen came from these products. Uh. 119 00:07:05,279 --> 00:07:09,159 Speaker 1: The goal is by so just to give you a 120 00:07:09,160 --> 00:07:11,040 Speaker 1: sense of how much they're hoping to ramp it up, 121 00:07:13,840 --> 00:07:16,720 Speaker 1: we've been talking about jobs all morning. After that disappointing 122 00:07:16,840 --> 00:07:20,760 Speaker 1: us Payrolls report, it was below all the estimates, including 123 00:07:20,760 --> 00:07:24,200 Speaker 1: the lowest, with both the headline number coming in weaker 124 00:07:24,240 --> 00:07:26,760 Speaker 1: than expected as well as wage gains. Here to look 125 00:07:26,840 --> 00:07:29,840 Speaker 1: under the hood of the US jobs market is Tom Gimble, 126 00:07:30,160 --> 00:07:34,000 Speaker 1: founder and chief executive officer of LaSalle Network based in Chicago, 127 00:07:34,040 --> 00:07:37,320 Speaker 1: but joining us here in our Bloomberg Interactive Broker Studios. Tom, 128 00:07:37,360 --> 00:07:40,080 Speaker 1: You've been very bullish on this bond, on this job's 129 00:07:40,120 --> 00:07:43,680 Speaker 1: market for a while, and I'm wondering, does this job's 130 00:07:43,680 --> 00:07:46,440 Speaker 1: report some of the other data we've seen make you 131 00:07:46,520 --> 00:07:49,280 Speaker 1: change your view? You ready for this? I'm ready. It's 132 00:07:49,320 --> 00:07:54,480 Speaker 1: not a bad report today, Okay, later, grow down. If 133 00:07:54,480 --> 00:07:56,440 Speaker 1: it's not a quarter of a million jobs every month. 134 00:07:56,520 --> 00:08:00,960 Speaker 1: People are unhappy. We added seventy jobs, unemployment stayed flat. 135 00:08:01,200 --> 00:08:02,960 Speaker 1: We've been going for what a hundred months in a 136 00:08:03,040 --> 00:08:06,480 Speaker 1: row of job creation, and it's not and it's not. 137 00:08:07,640 --> 00:08:10,440 Speaker 1: This is actually the argument, right, This is full employment, right, 138 00:08:10,840 --> 00:08:14,680 Speaker 1: this is what happens. But but then my question is, 139 00:08:14,840 --> 00:08:17,320 Speaker 1: if this is full employment, why are we not seeing 140 00:08:17,320 --> 00:08:20,480 Speaker 1: wages increase at a faster pace. Because it's a global 141 00:08:20,480 --> 00:08:22,800 Speaker 1: economy and we're not competing against the guy down the street. 142 00:08:22,800 --> 00:08:26,440 Speaker 1: We're competing against people in China and India and Mexico 143 00:08:26,640 --> 00:08:28,760 Speaker 1: and all tear. I would say that before the tariff 144 00:08:28,800 --> 00:08:32,520 Speaker 1: conversation that when jobs can be done. Thirty years ago 145 00:08:32,559 --> 00:08:36,000 Speaker 1: it was a call center for minimum wage being shifted overseas. 146 00:08:36,040 --> 00:08:39,839 Speaker 1: Today it's legal work, accounting work, i T work, high 147 00:08:39,840 --> 00:08:43,079 Speaker 1: salary jobs being shifted overseas. If you can have somebody 148 00:08:43,080 --> 00:08:46,000 Speaker 1: who's got a PhD in a master's degree doing i 149 00:08:46,160 --> 00:08:51,600 Speaker 1: T work or accounting work for of the cost, people say, oh, 150 00:08:51,800 --> 00:08:55,280 Speaker 1: that's not being patriotic. That's the exact same thing as 151 00:08:55,280 --> 00:08:57,440 Speaker 1: saying you don't hire you hire a freelancer to paint 152 00:08:57,440 --> 00:08:59,840 Speaker 1: your house because you say fifty, Why don't you support 153 00:08:59,880 --> 00:09:02,120 Speaker 1: the economy and give it to the person who's employing 154 00:09:02,160 --> 00:09:04,520 Speaker 1: thirty people as a painting company. So what do you 155 00:09:04,559 --> 00:09:07,800 Speaker 1: think the new kind of normal is in terms of 156 00:09:07,880 --> 00:09:10,400 Speaker 1: job creation given where we are in a cycle, And 157 00:09:10,679 --> 00:09:12,680 Speaker 1: you know it is because I guess the three months 158 00:09:12,800 --> 00:09:15,920 Speaker 1: run right is still a hundred fifty jobs. But job 159 00:09:16,000 --> 00:09:19,240 Speaker 1: creation is supply and demand right, So so demand is high, 160 00:09:19,320 --> 00:09:21,880 Speaker 1: supply is low, and you can get what you can get. 161 00:09:21,920 --> 00:09:24,560 Speaker 1: So you'd say, why isn't wages going up? If that's 162 00:09:24,559 --> 00:09:26,880 Speaker 1: the case. They are going up a little bit. But 163 00:09:27,320 --> 00:09:29,800 Speaker 1: we're in a situation also that there isn't a new 164 00:09:29,880 --> 00:09:32,600 Speaker 1: skill set that's being created. This isn't the mid two 165 00:09:32,679 --> 00:09:36,160 Speaker 1: thousands when no one understood e commerce, no one understood 166 00:09:36,240 --> 00:09:40,160 Speaker 1: data analytics. We're a more sophisticated employer market than we've 167 00:09:40,160 --> 00:09:43,719 Speaker 1: ever been before, and so things have just stabilized from 168 00:09:43,720 --> 00:09:47,040 Speaker 1: a standpoint of Companies aren't throwing crazy money out there anymore. 169 00:09:47,240 --> 00:09:50,800 Speaker 1: They understand how to drive revenues and profits ability, profitability, 170 00:09:51,000 --> 00:09:55,800 Speaker 1: and the biggest thing is the economy. It's interesting, it's 171 00:09:55,840 --> 00:09:58,120 Speaker 1: I don't believe it's as tied to the stock market 172 00:09:58,160 --> 00:09:59,839 Speaker 1: as it used to be. And when I say used 173 00:09:59,840 --> 00:10:01,920 Speaker 1: to be maybe a year or two years ago, where 174 00:10:01,920 --> 00:10:04,480 Speaker 1: the volatility on the stock market used to drive the 175 00:10:04,559 --> 00:10:06,640 Speaker 1: job numbers a little bit. The c suite would get 176 00:10:06,679 --> 00:10:08,959 Speaker 1: a little bit nervous if there was vat Now the 177 00:10:08,960 --> 00:10:11,760 Speaker 1: stock market volatility is the same way of global volatility 178 00:10:11,760 --> 00:10:14,720 Speaker 1: with Trump. Okay, well, it's put us putting aside stock 179 00:10:14,760 --> 00:10:17,360 Speaker 1: market volatility. There's been a lot of volatility and discussions 180 00:10:17,400 --> 00:10:20,120 Speaker 1: about trade. Uh. There was a great story on Bloomberg 181 00:10:20,160 --> 00:10:23,160 Speaker 1: dot com this morning talking about how CEO s. Even 182 00:10:23,200 --> 00:10:26,000 Speaker 1: though they don't necessarily think that some of the worst 183 00:10:26,040 --> 00:10:28,559 Speaker 1: case scenarios with the trade wars will come to pass, 184 00:10:28,960 --> 00:10:30,960 Speaker 1: they have to start preparing for that. So, given the 185 00:10:31,000 --> 00:10:34,199 Speaker 1: fact that you're talking with chief executive officers about their 186 00:10:34,240 --> 00:10:37,240 Speaker 1: hiring plans, are they pulling back some of their plans 187 00:10:37,280 --> 00:10:40,760 Speaker 1: because of this uncertainty? No? Not not as of now. 188 00:10:40,800 --> 00:10:43,400 Speaker 1: I mean, the Mexico thing is so new, right, I 189 00:10:43,400 --> 00:10:46,280 Speaker 1: mean that was the window on that was was was 190 00:10:46,360 --> 00:10:50,480 Speaker 1: so short. But with with China, there's a short term 191 00:10:50,520 --> 00:10:53,160 Speaker 1: and there's a long term view, and a lot of companies, 192 00:10:53,240 --> 00:10:56,560 Speaker 1: especially small to mid sized companies that have always been 193 00:10:56,640 --> 00:11:00,200 Speaker 1: the job hotbed for where where jobs are creating in 194 00:11:00,240 --> 00:11:02,960 Speaker 1: this country, they do realize that there may be a 195 00:11:02,960 --> 00:11:06,520 Speaker 1: short term six to twelve months of a dip. But 196 00:11:06,600 --> 00:11:09,040 Speaker 1: the whole goal of doing it is you either drive 197 00:11:09,120 --> 00:11:12,720 Speaker 1: costs down because of the tariffs that that China will renegotiate, 198 00:11:12,880 --> 00:11:15,920 Speaker 1: or manufacturer will come back here and their businesses will 199 00:11:15,960 --> 00:11:18,520 Speaker 1: increase eventually. That is the point. No one talks about 200 00:11:18,559 --> 00:11:20,320 Speaker 1: it a lot. But if the price is even out, 201 00:11:20,400 --> 00:11:24,680 Speaker 1: if salaries overseas rise and the price to import, where 202 00:11:24,679 --> 00:11:27,079 Speaker 1: are you gonna do it? You're gonna build it in America. 203 00:11:27,360 --> 00:11:29,480 Speaker 1: It's a long term play, but that is the goal. 204 00:11:29,640 --> 00:11:32,200 Speaker 1: Are you Are you seeing any signs? I mean, as 205 00:11:32,240 --> 00:11:34,160 Speaker 1: you talk to I guess some companies that you know, 206 00:11:34,200 --> 00:11:36,440 Speaker 1: you guys are one of the biggest recruiters and staffers 207 00:11:36,520 --> 00:11:39,920 Speaker 1: around all right, our companies actually thinking that? Are they 208 00:11:40,000 --> 00:11:42,080 Speaker 1: investing in for that? Are they just saying, listen, let's 209 00:11:42,080 --> 00:11:44,200 Speaker 1: see how this plays out over the next you know, 210 00:11:44,280 --> 00:11:46,800 Speaker 1: could be a year two. The biggest difference between now 211 00:11:47,000 --> 00:11:50,160 Speaker 1: and the bull market of the mid two thousands is 212 00:11:50,280 --> 00:11:53,320 Speaker 1: it's not mass hiring, right that you don't see people 213 00:11:53,360 --> 00:11:55,880 Speaker 1: going out and signing a lease for another hundred thousand 214 00:11:55,960 --> 00:11:59,320 Speaker 1: square feet and hiring two people. But you do see 215 00:11:59,400 --> 00:12:03,319 Speaker 1: consistent hiring. You see companies back filling attrition, and that 216 00:12:03,679 --> 00:12:06,120 Speaker 1: where you're gonna start seeing things towards the latter half 217 00:12:06,120 --> 00:12:08,800 Speaker 1: of the year. I feel in in wage growth to 218 00:12:08,840 --> 00:12:12,400 Speaker 1: an extent is companies are now giving money to their 219 00:12:12,400 --> 00:12:14,959 Speaker 1: employees in advance of them having to leave and get 220 00:12:14,960 --> 00:12:18,320 Speaker 1: a counter offer. It's a really interesting phenomenon. They're giving 221 00:12:18,360 --> 00:12:22,240 Speaker 1: salary increases ahead of schedule so people won't go look 222 00:12:22,240 --> 00:12:27,160 Speaker 1: and leave in what areas of work, maybe not in broadcasting. 223 00:12:27,160 --> 00:12:32,280 Speaker 1: With the look you just give me, I will say that. No. 224 00:12:32,400 --> 00:12:34,160 Speaker 1: The reason why I say that is because if that's 225 00:12:34,160 --> 00:12:36,200 Speaker 1: the case again, it goes back to why we're not 226 00:12:36,240 --> 00:12:38,760 Speaker 1: seeing it in the average numbers. Well, the average numbers 227 00:12:38,760 --> 00:12:41,480 Speaker 1: are skewed two across the board with service workers and 228 00:12:41,480 --> 00:12:43,640 Speaker 1: different things. We've also see you see that the boost 229 00:12:43,960 --> 00:12:46,800 Speaker 1: minimum wage has a boost when they do that municipalities 230 00:12:46,840 --> 00:12:49,360 Speaker 1: and there's those issues. So I mean, sometimes the numbers 231 00:12:49,360 --> 00:12:51,200 Speaker 1: are the numbers, and you guys have economists on here 232 00:12:51,240 --> 00:12:53,240 Speaker 1: all the day. They're the ones to tell you why, 233 00:12:53,280 --> 00:12:55,800 Speaker 1: how the numbers can be manipulated. I'm telling you that 234 00:12:55,840 --> 00:12:58,080 Speaker 1: companies are hiring. It's a great job market if you 235 00:12:58,080 --> 00:13:00,840 Speaker 1: have the skills, and they're really other interesting fact is 236 00:13:01,120 --> 00:13:03,800 Speaker 1: employees aren't leaving to get more money elsewhere at other 237 00:13:03,800 --> 00:13:05,679 Speaker 1: companies because they don't want to be the lowman on 238 00:13:05,720 --> 00:13:09,040 Speaker 1: the totem pole, because they're afraid, just like you're saying, 239 00:13:09,080 --> 00:13:11,360 Speaker 1: you think companies are afraid. So it's a really interesting 240 00:13:11,400 --> 00:13:15,480 Speaker 1: sociological dynamic and business. Tom gimble thanks so much. Tom Gimbell, 241 00:13:15,480 --> 00:13:17,600 Speaker 1: founder and CEO of LaSalle Network, one of the leading 242 00:13:17,640 --> 00:13:20,000 Speaker 1: staffing and recruiting firms in the country joining us in 243 00:13:20,040 --> 00:13:27,720 Speaker 1: our Bloomberg Interactive Broker Studio. We are trained on the 244 00:13:27,760 --> 00:13:30,559 Speaker 1: FED today and whether we're going to get rate cuts, 245 00:13:30,559 --> 00:13:33,959 Speaker 1: but trade is very much on the forefront for both 246 00:13:33,960 --> 00:13:36,720 Speaker 1: companies and traders. Enjoining us here to talk about what 247 00:13:37,120 --> 00:13:41,320 Speaker 1: big companies are doing, particularly the industrial space, with respect 248 00:13:41,440 --> 00:13:43,600 Speaker 1: to the threat of tariffs is our own of course. 249 00:13:43,600 --> 00:13:46,600 Speaker 1: Brooks Sutherland, Bloomberg opinion columnists joining us here in our 250 00:13:46,600 --> 00:13:52,120 Speaker 1: Bloomberg Interactive Broker Studios broke how much action have industrial 251 00:13:52,160 --> 00:13:55,760 Speaker 1: companies taken to immunize themselves from some of the tariffs 252 00:13:55,760 --> 00:13:58,440 Speaker 1: that have been threatened so far. So they've all been 253 00:13:58,520 --> 00:14:01,040 Speaker 1: talking about it in awful lot, and they've all been 254 00:14:01,559 --> 00:14:06,679 Speaker 1: looking at particularly minimizing their exposure to China. That could 255 00:14:06,679 --> 00:14:09,839 Speaker 1: mean sourcing products from different places, that could mean even 256 00:14:09,920 --> 00:14:13,960 Speaker 1: doing something as drastic as moving a manufacturing facility. Um. 257 00:14:14,160 --> 00:14:16,960 Speaker 1: But you know, in terms of actually limiting their exposure 258 00:14:17,000 --> 00:14:19,320 Speaker 1: to China, it's a little bit tricky because they all 259 00:14:19,640 --> 00:14:23,360 Speaker 1: evoke these localized manufacturing strategies that are meant to sort 260 00:14:23,360 --> 00:14:25,720 Speaker 1: of insulate them from the trade where fallout. And I 261 00:14:25,760 --> 00:14:28,040 Speaker 1: think what we've really seen is that you can have 262 00:14:28,080 --> 00:14:31,480 Speaker 1: a localized manufacturing you know strategy, but you're never going 263 00:14:31,520 --> 00:14:35,479 Speaker 1: to have your entire supply chain concentrated in an individual 264 00:14:35,520 --> 00:14:37,800 Speaker 1: country anywhere where you sell your products. And so I 265 00:14:37,800 --> 00:14:41,760 Speaker 1: think you see these manufacturers continually keep getting tripped up 266 00:14:41,800 --> 00:14:43,880 Speaker 1: in the trade war, and I think part of the 267 00:14:43,880 --> 00:14:46,760 Speaker 1: difficulty is there's just so much uncertainty that even making 268 00:14:46,800 --> 00:14:50,240 Speaker 1: these kinds of changes just gets very tricky. I think 269 00:14:50,280 --> 00:14:52,400 Speaker 1: you have to make a bet on first of all, 270 00:14:52,440 --> 00:14:54,400 Speaker 1: do you think Trump's going to get reelected? Are we 271 00:14:54,480 --> 00:14:56,640 Speaker 1: still going to be talking about this in a few years, 272 00:14:56,800 --> 00:14:59,440 Speaker 1: or do you think this is going to peter out? Um, 273 00:14:59,480 --> 00:15:02,400 Speaker 1: you know, these very expensive decisions, and I just don't 274 00:15:02,440 --> 00:15:04,800 Speaker 1: think that a lot of CEOs know where to go. 275 00:15:05,400 --> 00:15:07,920 Speaker 1: And the other thing is that you may make a 276 00:15:07,960 --> 00:15:10,840 Speaker 1: move that that ends up looking very stupid later on 277 00:15:10,880 --> 00:15:12,640 Speaker 1: down the road. Go pro s that it was moving 278 00:15:12,640 --> 00:15:15,880 Speaker 1: its facilities in China to Mexico, and now of course 279 00:15:15,920 --> 00:15:18,960 Speaker 1: we have terroriffs being put back on Mexican goods, and 280 00:15:19,000 --> 00:15:20,760 Speaker 1: who knows how long that will last. So it's just 281 00:15:20,800 --> 00:15:23,760 Speaker 1: I mean, it's a very dicey environment to make any 282 00:15:23,760 --> 00:15:25,720 Speaker 1: types of changes to your supply chain, but you have 283 00:15:25,880 --> 00:15:27,240 Speaker 1: to do it. At the end of the day, if 284 00:15:27,320 --> 00:15:29,160 Speaker 1: you want to try to protect your business from these 285 00:15:29,200 --> 00:15:31,360 Speaker 1: increased costs. It's interesting you raise a good point at 286 00:15:31,440 --> 00:15:33,840 Speaker 1: I think about some of these global industrial companies based 287 00:15:33,840 --> 00:15:36,680 Speaker 1: in the US, and I think about their supply chains, 288 00:15:36,760 --> 00:15:40,840 Speaker 1: and they're just you know, mind, they're so incredibly complex. 289 00:15:41,080 --> 00:15:44,600 Speaker 1: I want to realistically what they can even do at 290 00:15:44,600 --> 00:15:46,800 Speaker 1: the end of the day. It's mentioning to see, um, 291 00:15:46,840 --> 00:15:49,040 Speaker 1: you know, how much they just pass along or take 292 00:15:49,080 --> 00:15:51,480 Speaker 1: into the margin. Are you hearing anything from the companies 293 00:15:51,480 --> 00:15:54,480 Speaker 1: about any kind of percentages they think they can pass 294 00:15:54,560 --> 00:15:59,080 Speaker 1: long versus mitigate through you know, relocating some some suppliers. 295 00:15:59,520 --> 00:16:02,640 Speaker 1: So right now, the industrial sector has actually been very 296 00:16:02,640 --> 00:16:05,800 Speaker 1: successful at passing on price increases, but that is based 297 00:16:05,840 --> 00:16:08,480 Speaker 1: on the tariffs that we've seen thus far, and you 298 00:16:08,520 --> 00:16:11,880 Speaker 1: are starting to see some cracks in the industrial economy. 299 00:16:11,920 --> 00:16:15,200 Speaker 1: We had obviously those not great numbers from I S 300 00:16:15,360 --> 00:16:17,520 Speaker 1: M earlier this weekend from I H S Market on 301 00:16:17,600 --> 00:16:20,480 Speaker 1: the manufacturing activity in the U S sort of teetering 302 00:16:20,560 --> 00:16:23,320 Speaker 1: on the brink of slipping into a contraction. So I 303 00:16:23,360 --> 00:16:25,880 Speaker 1: don't know how much demand there is to soak up 304 00:16:25,920 --> 00:16:28,520 Speaker 1: another round of price increases. And that's why it gets 305 00:16:28,560 --> 00:16:31,640 Speaker 1: really problematic when you start talking about putting tariffs on 306 00:16:31,680 --> 00:16:35,400 Speaker 1: the remaining three billion dollars of goods from China or 307 00:16:35,760 --> 00:16:38,600 Speaker 1: you know, following through on this Mexico threat. So one 308 00:16:38,760 --> 00:16:42,480 Speaker 1: argument has been that these tariffs, should they go into effect, 309 00:16:42,800 --> 00:16:45,640 Speaker 1: could be a short term pain for these companies and 310 00:16:45,680 --> 00:16:47,840 Speaker 1: for the broader U S economy, but down the road 311 00:16:48,200 --> 00:16:50,560 Speaker 1: it will actually be a benefit for the United States 312 00:16:50,600 --> 00:16:52,960 Speaker 1: because a lot of these companies will just simply bring 313 00:16:53,000 --> 00:16:57,040 Speaker 1: their supply chains back to the US and that will 314 00:16:57,080 --> 00:17:00,960 Speaker 1: add to the economy. Here. Have you seen any evidence 315 00:17:01,000 --> 00:17:04,280 Speaker 1: of companies looking to do that to simplify their supply 316 00:17:04,359 --> 00:17:08,159 Speaker 1: chains perhaps bring more back to the United States. No, 317 00:17:08,560 --> 00:17:11,000 Speaker 1: And I think part of the issue is that most 318 00:17:11,080 --> 00:17:14,000 Speaker 1: of the companies that I cover are multinational and sort 319 00:17:14,000 --> 00:17:16,119 Speaker 1: of the flip side of the argument that you're making 320 00:17:16,160 --> 00:17:17,639 Speaker 1: is that you can see a lot of these companies 321 00:17:17,680 --> 00:17:21,480 Speaker 1: find themselves shut out of China because China is increasingly 322 00:17:22,080 --> 00:17:25,600 Speaker 1: realizing it probably needs to develop its own homegrown technologies. 323 00:17:25,680 --> 00:17:28,920 Speaker 1: You see this in aviation, where they're investing very significantly 324 00:17:29,040 --> 00:17:32,040 Speaker 1: in developing a rival to Boeing and Airbus jets. Now 325 00:17:32,040 --> 00:17:34,159 Speaker 1: there's still a few years away from that, but I 326 00:17:34,200 --> 00:17:37,520 Speaker 1: think the trade war has probably reinforced how important that 327 00:17:37,640 --> 00:17:41,280 Speaker 1: is to them. Similarly, in gas turbines, they're investing significantly 328 00:17:41,359 --> 00:17:44,399 Speaker 1: and having technology that competes with the highest level of 329 00:17:44,400 --> 00:17:46,960 Speaker 1: the g and Siemens produced and Semens CEO s just 330 00:17:47,000 --> 00:17:49,280 Speaker 1: the other day he expects them to have that capability 331 00:17:49,280 --> 00:17:52,760 Speaker 1: by so, how much market share or GE and Siemens 332 00:17:52,800 --> 00:17:54,560 Speaker 1: going to be able to get in the gas turbine 333 00:17:54,560 --> 00:17:57,280 Speaker 1: market in China, which is expected to be the biggest 334 00:17:57,440 --> 00:18:00,359 Speaker 1: market for gas turbines for the foreseeable few Sure, so, 335 00:18:00,400 --> 00:18:03,560 Speaker 1: I think if you make too drastic of a move 336 00:18:03,600 --> 00:18:06,239 Speaker 1: and try to refocus yourself on the US, you do 337 00:18:06,400 --> 00:18:08,560 Speaker 1: risk being cut out of some of these other markets 338 00:18:08,840 --> 00:18:11,240 Speaker 1: that realistically are going to be growing a lot faster 339 00:18:11,280 --> 00:18:13,440 Speaker 1: than the U S, which is fairly mature at this point. 340 00:18:13,800 --> 00:18:16,400 Speaker 1: It's interesting. I think a lot of industrial companies are thinking, 341 00:18:16,480 --> 00:18:18,000 Speaker 1: I've I've read a lot about our work, and it 342 00:18:18,119 --> 00:18:21,200 Speaker 1: we can maybe pull our production or sourcing out of China, 343 00:18:21,240 --> 00:18:24,119 Speaker 1: maybe put in some other countries that might be you know, 344 00:18:24,200 --> 00:18:27,120 Speaker 1: almost as good, almost as efficient. Have you heard any 345 00:18:27,280 --> 00:18:30,920 Speaker 1: particular countries or regions that might benefit from the change 346 00:18:30,920 --> 00:18:34,080 Speaker 1: in supply chain. Yeah, I think people are looking at Vietnam, 347 00:18:34,160 --> 00:18:37,080 Speaker 1: They're looking at Indonesia, They're looking at those areas. But 348 00:18:37,160 --> 00:18:41,480 Speaker 1: of course those countries can be economically linked to what 349 00:18:41,640 --> 00:18:44,240 Speaker 1: ultimately happens with China. If you see a drop off 350 00:18:44,240 --> 00:18:46,960 Speaker 1: in demand in China, that can sort of make its 351 00:18:46,960 --> 00:18:49,680 Speaker 1: way throughout the Southeast Asian economy. And so I think 352 00:18:50,080 --> 00:18:52,360 Speaker 1: there are risks to that as well. Obviously there are 353 00:18:52,400 --> 00:18:56,240 Speaker 1: some political questions with those economies as well. And the 354 00:18:56,320 --> 00:18:58,560 Speaker 1: other thing is just that this is very expensive. You 355 00:18:58,640 --> 00:19:00,880 Speaker 1: just can't do this over night. And so I think 356 00:19:00,880 --> 00:19:03,320 Speaker 1: that gets back to the question of how long do 357 00:19:03,359 --> 00:19:05,159 Speaker 1: you think we're going to be in this mess for? 358 00:19:05,400 --> 00:19:08,520 Speaker 1: And you know, do you think that the dynamic has 359 00:19:08,560 --> 00:19:11,240 Speaker 1: now shifted so much that China is completely unsafe to 360 00:19:11,440 --> 00:19:13,720 Speaker 1: use as a as a sourcing for your products or 361 00:19:13,800 --> 00:19:15,320 Speaker 1: do you think that you're going to wait this out? 362 00:19:15,560 --> 00:19:19,280 Speaker 1: So what other levers do these big industrial companies have 363 00:19:19,400 --> 00:19:22,280 Speaker 1: that are multinationals? Can they? I mean, is it just 364 00:19:22,640 --> 00:19:26,480 Speaker 1: cutting jobs and cutting costs? I think a lot of 365 00:19:26,520 --> 00:19:29,399 Speaker 1: it is going to be cutting jobs and cutting costs. 366 00:19:29,440 --> 00:19:31,520 Speaker 1: I mean, I think you've already seen a pretty significant 367 00:19:31,560 --> 00:19:34,800 Speaker 1: move in the industry toward automation, towards robotics, and I 368 00:19:34,840 --> 00:19:37,080 Speaker 1: think if you think that this is the new normal 369 00:19:37,600 --> 00:19:39,399 Speaker 1: of having higher costs that you have to deal with 370 00:19:39,400 --> 00:19:41,880 Speaker 1: in your business, that's only going to incentivize these companies 371 00:19:41,880 --> 00:19:44,760 Speaker 1: to invest even more in that technology and sort of 372 00:19:44,800 --> 00:19:48,200 Speaker 1: intermediate some of these other cost pressures. Um Now, of course, 373 00:19:48,640 --> 00:19:50,840 Speaker 1: you know, it's sort of an ironic twist for a 374 00:19:50,880 --> 00:19:55,360 Speaker 1: president who really campaigned on increasing manufacturing jobs and instead, 375 00:19:55,520 --> 00:19:58,040 Speaker 1: you know, one side effect that we are already seeing 376 00:19:58,080 --> 00:19:59,720 Speaker 1: from the trade wars that there's been a lot of 377 00:19:59,720 --> 00:20:03,120 Speaker 1: cut to the manufacturing sector. Challenger Gray had numbers out 378 00:20:03,160 --> 00:20:07,240 Speaker 1: earlier this week that showed a six increase in manufacturing 379 00:20:07,320 --> 00:20:09,679 Speaker 1: job cuts so far this year relative to this period 380 00:20:09,760 --> 00:20:12,320 Speaker 1: last year. So you're already feeling the pain there. The 381 00:20:12,359 --> 00:20:16,240 Speaker 1: jobs report today only three thousand manufacturing job gains. That's 382 00:20:16,400 --> 00:20:18,760 Speaker 1: very weak numbers, sort of consistent with the trend we've 383 00:20:18,800 --> 00:20:21,040 Speaker 1: seen so far. And so you know, I do think 384 00:20:21,119 --> 00:20:24,960 Speaker 1: ultimately manufacturing companies aren't passing costs on directly to the 385 00:20:24,960 --> 00:20:28,439 Speaker 1: consumer because they don't sell necessarily to you and me. 386 00:20:28,640 --> 00:20:31,880 Speaker 1: But the consumer, the ravage American, is going to feel 387 00:20:31,880 --> 00:20:34,359 Speaker 1: it in one way or another. Brook Sutherland, Thank you 388 00:20:34,440 --> 00:20:37,960 Speaker 1: so much. Brooks Southerland, Deals and Industrials columnist for Bloomberg Opinion, 389 00:20:38,040 --> 00:20:40,520 Speaker 1: joining us in our Bloomberg and Reactive Brooker studio. She 390 00:20:40,560 --> 00:20:42,640 Speaker 1: covers all things industrials and I think that was very 391 00:20:42,640 --> 00:20:45,000 Speaker 1: interestingly say that Brooks comments about how we are really 392 00:20:45,359 --> 00:20:48,080 Speaker 1: seeing it in the manufacturing numbers starting to come out 393 00:20:48,119 --> 00:20:49,639 Speaker 1: over the last couple of months, a little bit of 394 00:20:49,840 --> 00:20:53,199 Speaker 1: you know, a crack in the industrial story. Well, to me, 395 00:20:53,480 --> 00:20:56,000 Speaker 1: my big takeaway is they just don't have that many lovers. 396 00:20:56,040 --> 00:20:59,040 Speaker 1: They don't have the ability to bring a lot of 397 00:20:59,119 --> 00:21:01,880 Speaker 1: jobs back here because they cater to all of these 398 00:21:01,920 --> 00:21:05,200 Speaker 1: other countries. It's not so simple, but it's interesting. Yeah, 399 00:21:05,240 --> 00:21:06,720 Speaker 1: and and and it goes back to the you know 400 00:21:06,760 --> 00:21:08,879 Speaker 1: what has happened really over the last couple of generations, 401 00:21:09,040 --> 00:21:12,960 Speaker 1: which is a really a global supply chain across many industries. 402 00:21:12,960 --> 00:21:16,080 Speaker 1: The questions can you unwind that? Very difficult appears. This 403 00:21:16,160 --> 00:21:22,760 Speaker 1: is Bloomberg. So we've talked a lot about the macro economy. 404 00:21:22,880 --> 00:21:25,680 Speaker 1: Let's take a look at specific companies that are actually 405 00:21:25,800 --> 00:21:29,440 Speaker 1: tapping the market and doing wonderfully. Online fashion retailer Revolved 406 00:21:29,440 --> 00:21:32,440 Speaker 1: Group jumped it's in its trading debut after raising two 407 00:21:32,640 --> 00:21:34,960 Speaker 1: d and twelve million dollars in its I p O. 408 00:21:35,040 --> 00:21:37,520 Speaker 1: Joining us now is the CFO of that company, Jesse 409 00:21:37,600 --> 00:21:42,720 Speaker 1: Timmerman's from Cerritos, California. Jesse, congratulations on the I p O. 410 00:21:42,880 --> 00:21:46,879 Speaker 1: It does seem to be well received. Uh, increase in 411 00:21:47,160 --> 00:21:50,160 Speaker 1: the share prices after the I p O. Just give 412 00:21:50,240 --> 00:21:53,560 Speaker 1: us a sense? What is Revolve Group? Yeah, and thanks 413 00:21:53,600 --> 00:21:55,679 Speaker 1: for having me. Revolved Group is really you know, what 414 00:21:55,720 --> 00:21:58,919 Speaker 1: we believe is that the leading fashion destination for this 415 00:21:59,000 --> 00:22:02,119 Speaker 1: next generation can humor that millennial female that's looking for 416 00:22:02,160 --> 00:22:06,280 Speaker 1: the latest and greatest fashion. So, Jesse, so how do 417 00:22:06,320 --> 00:22:10,040 Speaker 1: you target your customers? Like, how do you attract your customers? 418 00:22:10,080 --> 00:22:13,919 Speaker 1: Per Se? Yeah, it's a it's a combination UM of 419 00:22:13,960 --> 00:22:16,560 Speaker 1: our data driven merchandising strategy and you know, bringing the 420 00:22:16,640 --> 00:22:20,320 Speaker 1: latest and greatest style, but combined with a very social 421 00:22:20,359 --> 00:22:24,600 Speaker 1: media brand marketing, influencer led marketing strategy that really speaks 422 00:22:24,640 --> 00:22:26,919 Speaker 1: to this millennial consumer. You know, where we want to 423 00:22:27,000 --> 00:22:28,920 Speaker 1: be where she is and right now she is on 424 00:22:28,960 --> 00:22:32,280 Speaker 1: her phone and UM constantly UM looking for the latest 425 00:22:32,280 --> 00:22:36,000 Speaker 1: and greatest and discovering. So, but what does that mean, Jesse? 426 00:22:36,119 --> 00:22:38,399 Speaker 1: Because I think every retailer wants that, right, So is 427 00:22:38,440 --> 00:22:41,720 Speaker 1: this advertising on Instagram and Facebook and uh you know 428 00:22:41,760 --> 00:22:44,919 Speaker 1: that that which is which is what every retailer is 429 00:22:44,920 --> 00:22:48,480 Speaker 1: trying to do or is it uh something different? Yeah, 430 00:22:48,480 --> 00:22:53,680 Speaker 1: about of our our marketing budget goes towards influencer led 431 00:22:53,920 --> 00:22:58,240 Speaker 1: brand marketing, so that means influencers will wear our clothes 432 00:22:58,280 --> 00:23:01,120 Speaker 1: and speak about our brand on on Instagram and their 433 00:23:01,160 --> 00:23:05,040 Speaker 1: followers then see that, um and react. The other our 434 00:23:05,080 --> 00:23:06,840 Speaker 1: marketing strategy is the more you know, what we call 435 00:23:06,920 --> 00:23:10,200 Speaker 1: today is a more traditional digital based advertising, the Googles 436 00:23:10,200 --> 00:23:13,639 Speaker 1: and facebooks of the world. So give us a sense, um, 437 00:23:13,800 --> 00:23:16,359 Speaker 1: kind of how the competitive landscape for you? Who do 438 00:23:16,400 --> 00:23:21,680 Speaker 1: you really compete against? Uh, for these consumers and their dollars. Yeah, 439 00:23:21,680 --> 00:23:23,840 Speaker 1: it's really tough, um, you know to call out a 440 00:23:23,840 --> 00:23:26,919 Speaker 1: single competitor. We feel like we're well positioned, um in 441 00:23:26,920 --> 00:23:31,240 Speaker 1: this intersection of the landscape moving towards e commerce from 442 00:23:31,240 --> 00:23:34,600 Speaker 1: the traditional department stores and also the millennial purchasing power 443 00:23:34,680 --> 00:23:37,080 Speaker 1: increasing over time. You know, there's a lot of uh, 444 00:23:37,240 --> 00:23:38,920 Speaker 1: you know, good companies out of Europe that are doing 445 00:23:38,920 --> 00:23:41,440 Speaker 1: well in connecting with this consumer. There's some some in 446 00:23:41,520 --> 00:23:44,400 Speaker 1: the private markets, um, you know, if we look, if 447 00:23:44,440 --> 00:23:46,920 Speaker 1: we look to the traditional department stores, we found they haven't, 448 00:23:46,960 --> 00:23:48,639 Speaker 1: you know, they haven't been able to connect with this 449 00:23:48,680 --> 00:23:52,840 Speaker 1: millennial consumer the way we have. I think it's really interesting. 450 00:23:52,880 --> 00:23:54,840 Speaker 1: I'm looking right now at some of the offerings and 451 00:23:55,119 --> 00:23:58,840 Speaker 1: the concept of using influencers is something that has been 452 00:23:58,840 --> 00:24:02,560 Speaker 1: gaining steam and is really compelling to me. So is 453 00:24:02,600 --> 00:24:06,360 Speaker 1: it something where an influencer can wear something and then 454 00:24:06,440 --> 00:24:09,080 Speaker 1: you can click in and buy it? In other words, 455 00:24:09,119 --> 00:24:12,960 Speaker 1: is there some kind of linking of your website to 456 00:24:13,560 --> 00:24:18,080 Speaker 1: some of these Instagram posts or other things? Yeah, you know, 457 00:24:18,160 --> 00:24:20,320 Speaker 1: there's a very what we believe, you know, creates a 458 00:24:20,359 --> 00:24:23,359 Speaker 1: brand halo, so more than anything, that creates that connection 459 00:24:23,400 --> 00:24:26,119 Speaker 1: with the consumer. And she's seeing our our influencers and 460 00:24:26,160 --> 00:24:28,840 Speaker 1: our clothes UM every day as she as she looks 461 00:24:28,880 --> 00:24:30,680 Speaker 1: for the latest and greatest. Now that said, there are 462 00:24:30,680 --> 00:24:34,280 Speaker 1: ways to go from Instagram to our website and then 463 00:24:34,280 --> 00:24:37,080 Speaker 1: most recently, we were chosen as one of the UM 464 00:24:37,280 --> 00:24:40,840 Speaker 1: twenty first partners with the Instagram Direct Checkout, which creates 465 00:24:40,880 --> 00:24:43,800 Speaker 1: another avenue for for that customer to check out directly 466 00:24:43,800 --> 00:24:46,760 Speaker 1: from Instagram. All right, Jesse, you're the CFO, you're the 467 00:24:46,760 --> 00:24:49,879 Speaker 1: money person. You just got two twelve million dollars in 468 00:24:49,920 --> 00:24:52,960 Speaker 1: your account? How are you going to spend it? Yeah, 469 00:24:53,080 --> 00:24:55,959 Speaker 1: and and maybe I will clarify that, Um, most of 470 00:24:56,000 --> 00:24:58,719 Speaker 1: that was secondary, So not much going on the balance 471 00:24:58,720 --> 00:25:02,040 Speaker 1: she were. You know, we're We've been profitable for fifteen 472 00:25:02,040 --> 00:25:04,440 Speaker 1: out of sixteen years. We have cash on the balance 473 00:25:04,480 --> 00:25:07,560 Speaker 1: sheet with no debt, so you know, we're well positioned. Um. 474 00:25:07,680 --> 00:25:10,320 Speaker 1: You know, there's there will be opportunities to you know, 475 00:25:10,359 --> 00:25:13,040 Speaker 1: expand in the future, but um, you know, a big 476 00:25:13,080 --> 00:25:16,040 Speaker 1: piece of this was secondary. Jesse, I want to pick 477 00:25:16,080 --> 00:25:18,280 Speaker 1: up what where you're talking about the Instagram check out, 478 00:25:18,320 --> 00:25:19,840 Speaker 1: because that's sort of where I was heading, and that 479 00:25:19,880 --> 00:25:22,400 Speaker 1: seems to be an increasing push by some of these 480 00:25:22,440 --> 00:25:25,639 Speaker 1: big social media companies, with Facebook starting to sort of 481 00:25:25,640 --> 00:25:28,840 Speaker 1: play around with payments. Also. I'm just wondering how much 482 00:25:28,880 --> 00:25:31,000 Speaker 1: do you think that is the future in some ways 483 00:25:31,400 --> 00:25:34,960 Speaker 1: of social media and how it interacts with its advertisers 484 00:25:35,000 --> 00:25:38,640 Speaker 1: and its retail brands. Yeah, it's um, you know, we're 485 00:25:38,640 --> 00:25:41,120 Speaker 1: in the very early stages, so it's hard to tell 486 00:25:41,160 --> 00:25:44,040 Speaker 1: at this point. Um Um, but I think it is 487 00:25:44,080 --> 00:25:47,240 Speaker 1: interesting and consumers are looking for, you know, new ways 488 00:25:47,320 --> 00:25:50,520 Speaker 1: to transact, you know, whether it's you know, outside of 489 00:25:50,520 --> 00:25:53,800 Speaker 1: the more traditional credit cards into the alternative payments or 490 00:25:53,880 --> 00:25:56,920 Speaker 1: installment plans UM. So again very early we think it. 491 00:25:57,080 --> 00:25:59,280 Speaker 1: You know, it could be powerful, but um, you know, 492 00:25:59,320 --> 00:26:01,520 Speaker 1: too early to call so jess it give us a 493 00:26:01,560 --> 00:26:05,119 Speaker 1: sense of where you get your product, the clothing that 494 00:26:05,200 --> 00:26:07,440 Speaker 1: your suppliers. How do you keep on keep in front 495 00:26:07,480 --> 00:26:11,679 Speaker 1: of what is a fickle uh consumer segment? Yeah, that 496 00:26:11,800 --> 00:26:14,200 Speaker 1: is one of the core pillars to the company. Mike 497 00:26:14,200 --> 00:26:17,560 Speaker 1: and Michael are co founders, were not fashion guys. Um, 498 00:26:17,640 --> 00:26:19,960 Speaker 1: they were you know, one was an engineer, one was 499 00:26:20,000 --> 00:26:23,680 Speaker 1: a finance major. So from day one they approached this 500 00:26:24,000 --> 00:26:27,399 Speaker 1: UM this proposition very differently, and it's been data driven 501 00:26:27,440 --> 00:26:30,360 Speaker 1: from day one. So we look at data UM and 502 00:26:30,400 --> 00:26:33,680 Speaker 1: we read the latest and greatest and then drive behind that. 503 00:26:33,760 --> 00:26:36,520 Speaker 1: So we carry a very broad and shallow inventory base. 504 00:26:36,880 --> 00:26:39,080 Speaker 1: If the data tells us something hits, then we'll go 505 00:26:39,160 --> 00:26:41,399 Speaker 1: deep on that. But it's a constant iteration. We have 506 00:26:41,440 --> 00:26:45,280 Speaker 1: over forty styles on the site and constantly gathering data there. 507 00:26:45,280 --> 00:26:48,560 Speaker 1: We also have developed a portfolio of over twenty of 508 00:26:48,560 --> 00:26:50,719 Speaker 1: our own brands and we use that data to tell 509 00:26:50,800 --> 00:26:53,520 Speaker 1: us where we need to go and develop additional brands 510 00:26:53,600 --> 00:26:56,560 Speaker 1: or additional styles within those own brands. Very interesting. Jesse 511 00:26:56,600 --> 00:26:59,680 Speaker 1: Timmerman's chief financial officer Fort Revolved grew at the company 512 00:26:59,720 --> 00:27:04,359 Speaker 1: went public today. The stock is a fifty and fifty cents, 513 00:27:04,359 --> 00:27:08,679 Speaker 1: so a fantastic first day of trading for the company 514 00:27:08,760 --> 00:27:11,400 Speaker 1: Revolved Group. Jesse, thanks so much for joining us. It's 515 00:27:11,440 --> 00:27:14,480 Speaker 1: interesting how they're you know, the retail industry continues to evolve. 516 00:27:14,800 --> 00:27:16,919 Speaker 1: You know that the traditional bricks and mortar in the 517 00:27:16,960 --> 00:27:19,320 Speaker 1: mall that seems to be a thing in the past, 518 00:27:19,359 --> 00:27:21,760 Speaker 1: and we're seeing new models come into the retail space 519 00:27:21,800 --> 00:27:24,720 Speaker 1: in this one obviously extraordinarily successful in the stock market. 520 00:27:24,800 --> 00:27:28,119 Speaker 1: Day one. Thanks for listening to the Bloomberg P and 521 00:27:28,240 --> 00:27:31,280 Speaker 1: L podcast. You can subscribe and listen to interviews at 522 00:27:31,320 --> 00:27:35,760 Speaker 1: Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm 523 00:27:35,800 --> 00:27:39,240 Speaker 1: pim Fox. I'm on Twitter at pim Fox. I'm on 524 00:27:39,280 --> 00:27:42,719 Speaker 1: Twitter at Lisa abramowits one before the podcast. You can 525 00:27:42,720 --> 00:27:45,119 Speaker 1: always catch us worldwide on Bloomberg Radio.