WEBVTT - The Money Tree for Biotech Startups Loses Its Leaves 0:00:01.840 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:06.840 Tim Stanevik. We're here every day bringing you the latest 0:00:06.840 --> 0:00:11.000 news from the world's of business and finance, clus technology, politics, economics, 0:00:11.039 --> 0:00:14.040 all harnessing the power of Business Week reporters and editors, 0:00:14.160 --> 0:00:17.000 not to mention our journalists and analyst in more than 0:00:17.040 --> 0:00:19.960 one and twenty countries. You can download Bloomberg Business Week 0:00:20.000 --> 0:00:22.880 on iTunes, SoundCloud, or Bloomberg dot com. You can also 0:00:22.880 --> 0:00:25.000 listen to our radio show at two pm Eastern Time 0:00:25.120 --> 0:00:28.200 on Bloomberg Radio or stream us live on YouTube and 0:00:28.240 --> 0:00:32.519 Bloomberg dot com. For a long time, biotech was a 0:00:32.560 --> 0:00:36.120 hot investment, as venture capital firms and investors really generally 0:00:36.400 --> 0:00:39.600 poured tons of money to startups in the industry. Tim, 0:00:39.680 --> 0:00:41.840 it's a bit different today, Yeah, this especially as VC 0:00:41.920 --> 0:00:43.959 investments are on track for the sharpest drop in more 0:00:43.960 --> 0:00:46.680 than two decades, surpassing the declines of the dot com 0:00:46.760 --> 0:00:49.600 crash and the financial crisis. So the question is what's 0:00:49.600 --> 0:00:52.680 a biotech startup to do. This story in the upcoming 0:00:52.680 --> 0:00:55.240 issue of Bloomberg Business Week. It's on newstands tomorrow, already 0:00:55.240 --> 0:00:57.560 online at Bloomberg dot com, slash Business week and on 0:00:57.600 --> 0:01:00.160 the Bloomberg with more, We've got Bloomberg News health care 0:01:00.200 --> 0:01:03.240 reporter Angelica Peoples on Zoom from Boston, along with the 0:01:03.320 --> 0:01:05.640 editor of the magazine, Joe Webber. He's right here in 0:01:05.680 --> 0:01:09.440 our Bloomberg Interactive, a broker's studio. So, Joel, we saw 0:01:09.480 --> 0:01:13.880 a VC investment really dry up compared to one the 0:01:13.920 --> 0:01:17.200 biotech UH in biotech VC investment in the US and 0:01:17.400 --> 0:01:20.640 the UK UH really dried up as well. So what 0:01:20.840 --> 0:01:23.760 is and here comes exactly that's the question. What's what's 0:01:23.760 --> 0:01:27.959 a biotech to do? Yet? Uh? Hoard your cash and uh, 0:01:28.040 --> 0:01:30.679 you know, Ben hoarded some more and find ways to 0:01:30.680 --> 0:01:34.319 make that cash grow if you can. Um So confession. 0:01:34.400 --> 0:01:38.119 I reached out while Angelica was at the JP Morgan 0:01:38.160 --> 0:01:42.200 Healthcare conference in San Francisco recently, and my thesis was, boy, 0:01:42.240 --> 0:01:45.720 the tech industry going through some stuff. Maybe maybe biotech 0:01:45.800 --> 0:01:48.000 is gonna be the big winner winner here And UH 0:01:48.160 --> 0:01:50.520 turns out no, right, Angelica, what'd you learn while you're 0:01:50.520 --> 0:01:55.360 out there? That's exactly right, Joel. Unfortunately biotech is taking 0:01:55.360 --> 0:01:57.760 a pretty big hit, just like tech stucks and other 0:01:57.880 --> 0:02:01.240 risky assets in this environment where we are um looking 0:02:01.280 --> 0:02:05.520 for safe Havens and this really started last year. U 0:02:06.840 --> 0:02:09.920 ushered in this huge wave of euphoria. Everyone was looking 0:02:09.960 --> 0:02:12.960 for the next Maderna UM and trying to invest in 0:02:13.000 --> 0:02:17.600 a hot new biotech company, and unfortunately that changed last year. 0:02:17.680 --> 0:02:23.200 We saw a steep drop in UM adventure funding and 0:02:23.240 --> 0:02:25.400 we're of seeing it in the public markets to where 0:02:25.400 --> 0:02:29.040 the stocks are down pretty significantly and everyone's just looking 0:02:29.040 --> 0:02:31.680 for ways to spend their money wisely. And that means 0:02:31.720 --> 0:02:33.919 that companies are having to get creative on what they 0:02:33.960 --> 0:02:37.440 do with their money. So what's the conversation like with 0:02:37.440 --> 0:02:40.240 with vcs, like when you were there and what's put 0:02:40.280 --> 0:02:43.000 your finger on the pulse? What what's the vibe? So 0:02:43.080 --> 0:02:45.480 it's interesting because I speak to a lot of specialist 0:02:45.520 --> 0:02:49.000 vcs and they say that nothing has changed fundamentally UM. 0:02:49.040 --> 0:02:51.040 There's still a lot of great companies. There's a lot 0:02:51.040 --> 0:02:53.840 of great science out there, and that actually we kind 0:02:53.840 --> 0:02:56.960 of needed a reset because there were so many companies 0:02:57.280 --> 0:03:01.040 that we're getting started and easily finding money, and then 0:03:01.080 --> 0:03:04.400 it led to sort of this overheated market where anyone 0:03:04.440 --> 0:03:07.040 could get UM. You could fund a company based on 0:03:07.040 --> 0:03:10.560 a dream rather than data. So they're not really upset 0:03:10.639 --> 0:03:12.880 to see this. Of course, if you're a company, UM 0:03:12.919 --> 0:03:16.160 that can't find money, that's a bigger problem for you. 0:03:16.240 --> 0:03:18.480 And there's always the risk that even the good companies 0:03:18.520 --> 0:03:21.440 won't be able to fundraise in this environment. So I 0:03:21.520 --> 0:03:23.640 like the idea that you know this is there's a 0:03:23.639 --> 0:03:26.520 silver lining to this, that there's an opportunity here. I'm 0:03:26.520 --> 0:03:28.640 wondering if you got the sense from some of these 0:03:28.680 --> 0:03:31.080 folks you talked to out at the JP Morgan conference 0:03:31.080 --> 0:03:33.160 in San Francisco that this is part of a normal 0:03:33.200 --> 0:03:37.760 economic cycle, or or if this downturn is any different. Yeah, 0:03:37.800 --> 0:03:40.280 that's what a lot of people say, especially the vcs. 0:03:40.480 --> 0:03:43.520 They've been through these cycles before. It typically happens where 0:03:43.520 --> 0:03:46.720 there's a boom and a bust and it's nothing new. However, 0:03:46.920 --> 0:03:50.200 there are some differences this time around. There's this big 0:03:50.280 --> 0:03:54.880 new law, the Inflation Reduction Reduction Act, that could cap 0:03:55.240 --> 0:03:58.160 drug prices in a few years, and people are wondering 0:03:58.200 --> 0:04:01.720 what exactly that will mean. UM. We're ready hearing from 0:04:01.760 --> 0:04:05.440 some pharma companies that they are looking at um potentially 0:04:05.560 --> 0:04:08.880 less lucrative evaluations for companies that they might invest in, 0:04:09.200 --> 0:04:13.760 partner with, or eventually acquire. So that's an unknown and 0:04:13.800 --> 0:04:17.640 also coming off this period where evaluations were so hot, 0:04:17.680 --> 0:04:20.840 and you know, how will companies go moving forward? One 0:04:20.880 --> 0:04:23.120 person I talked to describe it as this sugar rush 0:04:23.200 --> 0:04:26.080 and now that sugar rush is over and and it's 0:04:26.080 --> 0:04:28.719 really a new playbook. Yeah, that's definitely not a good thing. 0:04:28.960 --> 0:04:30.800 Maybe there maybe there needs to be some sort of 0:04:30.839 --> 0:04:35.440 like pharmaceutical to prevent desire for sugar. I don't know, Angelica. 0:04:35.520 --> 0:04:37.960 I do wonder though, you know, a lot of money 0:04:38.160 --> 0:04:41.000 sometimes it gets used recklessly when there's what it's really 0:04:41.040 --> 0:04:43.000 kind of loose and money is cheap. But at the 0:04:43.080 --> 0:04:46.200 same time, it also provides the open opportunities I feel 0:04:46.200 --> 0:04:50.160 like for developments that really can change the way we're treated, 0:04:50.160 --> 0:04:53.440 whether it's health care or modalities. And I do wonder 0:04:53.640 --> 0:04:56.920 if the money isn't so easy, does it mean biotech 0:04:57.040 --> 0:04:59.880 really has to think hard about what they're going to 0:05:00.000 --> 0:05:03.479 work on, And maybe that's not great for innovation. Definitely. 0:05:03.600 --> 0:05:07.240 We saw this boom of platform companies as they like 0:05:07.320 --> 0:05:10.480 to call themselves, so companies that were working on many 0:05:10.520 --> 0:05:14.320 different diseases or um all kinds of areas as opposed 0:05:14.400 --> 0:05:17.599 to just one drug for one disease. And that was 0:05:17.640 --> 0:05:20.479 sort of the hot beam of one and this year 0:05:20.520 --> 0:05:25.120 already we're seeing the theme is prioritized. So one company Atitas, 0:05:25.120 --> 0:05:28.440 they're based here in Boston, the Boston area, and they 0:05:28.480 --> 0:05:30.840 said that they would stop the work that they've been 0:05:30.880 --> 0:05:34.479 doing on eye diseases and instead focus on blood disorders. 0:05:34.560 --> 0:05:36.839 And they're seeing that across the board, whether they're public 0:05:36.839 --> 0:05:40.200 companies are private, people are focusing on only the most 0:05:40.240 --> 0:05:44.200 important diseases or the drugs that have the biggest probability 0:05:44.279 --> 0:05:47.960 of success. And of course that means that those other diseases, 0:05:48.080 --> 0:05:51.159 those other patients who are waiting for medicines for their 0:05:51.160 --> 0:05:54.760 diseases are going to have to wait. Okay, so things 0:05:55.120 --> 0:05:58.480 not good here? How uh what do they look like 0:05:58.600 --> 0:06:01.719 in the UK compared to here or anywhere else, just 0:06:01.800 --> 0:06:04.039 to get a sense of, uh what, you know, what 0:06:04.120 --> 0:06:08.400 the industry feels like around the world. Across the board, 0:06:08.400 --> 0:06:13.240 we saw funding dip this year or compared to one UM. 0:06:13.279 --> 0:06:16.040 So it's not only the US, but of course the 0:06:16.120 --> 0:06:18.400 US and a lot of the companies I cover are 0:06:18.440 --> 0:06:22.040 focused here and so that's why particularly we're focused on 0:06:22.080 --> 0:06:25.839 and what's happening in this this part of the world. Okay, 0:06:25.880 --> 0:06:29.000 So Angelica if you know, the dominant theme over the 0:06:29.040 --> 0:06:32.680 last few years has been vaccines. What's what's kind of 0:06:32.680 --> 0:06:34.880 the most exciting thing to come out of or that 0:06:34.920 --> 0:06:38.200 biotech companies are thinking about right now. There's a lot 0:06:38.240 --> 0:06:40.200 of exciting stuff out there, so it's hard to pick 0:06:40.279 --> 0:06:43.280 exactly UM specific areas. But some of the ones that 0:06:43.360 --> 0:06:45.839 we have been talking to a lot of people about 0:06:45.960 --> 0:06:49.360 our obesity people are really really focused on that. I mean, 0:06:49.440 --> 0:06:52.440 you think about how many people are out there, UM. 0:06:52.520 --> 0:06:55.000 That could be a have a huge impact on public 0:06:55.000 --> 0:06:58.360 health and of course could be a very lucrative area 0:06:58.440 --> 0:07:02.039 for drugmakers. So we heard a lot of companies focused 0:07:02.040 --> 0:07:05.039 on obesity at the conference this year. UM an area 0:07:05.040 --> 0:07:07.760 that I'm really interested in, as well as gene therapy, 0:07:07.960 --> 0:07:12.440 so taking genetic diseases and actually potentially curing them UM 0:07:12.600 --> 0:07:15.600 by making permanent changes to someone's DNA. It sounds a 0:07:15.640 --> 0:07:19.320 little bit like science fiction, but it's actually reality UM. 0:07:19.400 --> 0:07:21.920 And then we're also seeing a lot of new technologies 0:07:21.920 --> 0:07:24.920 and cancer UM. So we spoke to one company, Siegeon, 0:07:25.040 --> 0:07:27.800 that's been at the forefront um of a type of 0:07:27.840 --> 0:07:30.920 cancer drug called an a d C and UM we 0:07:30.960 --> 0:07:33.120 spoke to their new CEO who said that they're going 0:07:33.160 --> 0:07:35.560 to keep working on that, and they're also looking for 0:07:35.960 --> 0:07:38.920 lots of new technologies, so it's it's a busy time 0:07:38.920 --> 0:07:42.240 out there. I actually think that the sector as a 0:07:42.280 --> 0:07:45.280 whole is again just like you know, one little big 0:07:45.360 --> 0:07:48.360 hit away from like everybody feeling like, you know, it's great, 0:07:48.680 --> 0:07:51.160 let's go back in and and you know, the big 0:07:51.160 --> 0:07:54.760 difference here versus like tech is it's so solutions, like 0:07:54.800 --> 0:07:58.040 all these things are people things that affect millions of people. Right, 0:07:58.080 --> 0:07:59.680 it's just ends up being a little bit of a 0:07:59.680 --> 0:08:01.560 crap shoot in terms of, um, what the r O 0:08:01.640 --> 0:08:05.280 I can look like. I totally agree, right, like these developments, Um, 0:08:05.360 --> 0:08:08.800 such great reporting, such great insight, Angelica, Thank you so much. 0:08:08.840 --> 0:08:12.040 Angelica Peebles, healthcare reporter, Bloomberg News via zoom from Boston. 0:08:12.160 --> 0:08:14.480 Check out this story in the upcoming issue of Bloomberg 0:08:14.480 --> 0:08:17.200 Business Week on newstands tomorrow, online already and on the 0:08:17.240 --> 0:08:20.080 Bloomberg terminal. Our thanks. Ohay's to Joe Webber, editor of 0:08:20.120 --> 0:08:24.760 Bloomberg Business Week. This is Bloomberg Radio. These sees Bloomberg 0:08:24.760 --> 0:08:30.200 Business Week with Carol Messer and Tim Stanovic on Bloomberg Radio. Well, 0:08:30.240 --> 0:08:32.880 as you know, the World Economic Forum's annual meeting at Davos. 0:08:32.920 --> 0:08:35.840 It continues. We've heard from a lot of politicians, well, 0:08:35.880 --> 0:08:37.439 not too many, because a lot of them I think 0:08:37.480 --> 0:08:40.440 held back because it concerns about the war and some 0:08:40.480 --> 0:08:43.120 of the political stories going on around the world. But 0:08:43.160 --> 0:08:48.559 also executives, investors, bankers, corporate types, academics, even former US 0:08:48.600 --> 0:08:52.679 Treasury Secretary Larry Summers. Yeah ye highlighted branding aspects for 0:08:52.760 --> 0:08:55.960 the global economy, but also warned us political battles over 0:08:56.000 --> 0:08:59.240 the debt ceiling are concern also, they're lots of corporate 0:08:59.280 --> 0:09:03.120 executives and Bloomberg Quick Take correspondent Madison Mills joins us 0:09:03.160 --> 0:09:06.080 now via zoom from Davos. Madison, good to have you 0:09:06.200 --> 0:09:08.679 with us this afternoon, for us, this evening for you. 0:09:08.800 --> 0:09:10.440 First of all, what are you seeing, what are you 0:09:10.440 --> 0:09:13.440 hearing on the ground at Davos. Hey, guys, thank you 0:09:13.520 --> 0:09:16.280 so much for having me. Great to chat with you. Uh, 0:09:16.320 --> 0:09:17.920 you know, it's a lot of the same things that 0:09:17.920 --> 0:09:19.920 are always on the agenda here at Davos. I was 0:09:20.000 --> 0:09:22.080 lucky enough to come here over the summer and it's 0:09:22.200 --> 0:09:26.480 eerily similar. Talking about, of course, that war in Ukraine, 0:09:26.520 --> 0:09:30.520 the Russian invasion there and the big economy question, right, 0:09:30.559 --> 0:09:33.640 are we going to have a recession in One thing 0:09:33.679 --> 0:09:37.839 that's been really interesting is hearing how cautiously optimistic people are. 0:09:38.440 --> 0:09:41.480 Cities CEO Jane Fraser talk with David weston are very 0:09:41.520 --> 0:09:45.120 Own yesterday and she said she's very optimistic about the 0:09:45.120 --> 0:09:48.880 recession being short and not that deep because she's really 0:09:48.920 --> 0:09:53.600 betting on us households maintaining their own balance sheets in 0:09:53.640 --> 0:09:56.920 the face of that high services inflation that we are seeing. 0:09:57.000 --> 0:10:00.280 So interesting to hear that kind of positive tone from 0:10:00.280 --> 0:10:03.040 a lot of the CEOs at Davos, while you know, 0:10:03.320 --> 0:10:05.679 we report all the time on individuals back in the 0:10:05.840 --> 0:10:10.000 US who are still struggling with those incredibly high prices 0:10:10.040 --> 0:10:12.720 on things like um, eggs. You know, I was at 0:10:12.760 --> 0:10:14.959 the grocery store here in Davos tonight and noticed that 0:10:15.000 --> 0:10:17.640 eggs are actually the only thing that's cheaper in Switzerland 0:10:17.679 --> 0:10:20.320 that I can are yelling hitting it's I mean, the 0:10:20.360 --> 0:10:24.199 prices here, Carol would blow your mind. It's it's incredibly expensive, 0:10:24.200 --> 0:10:27.600 but eggs, I think because of I'm not acent on this, 0:10:27.679 --> 0:10:30.440 but I think because the Avian flu impact is lower 0:10:30.840 --> 0:10:33.480 in Europe than it is in the US only five 0:10:33.559 --> 0:10:37.240 dollars for a dozen eggs in Switzerland's the only thing 0:10:37.240 --> 0:10:39.320 I could find that's cheaper here. You know, I do 0:10:39.400 --> 0:10:41.640 feel like Maddie like some of these big events that 0:10:41.720 --> 0:10:45.880 brings UH leaders from different walks of life, politicians, UM, 0:10:46.320 --> 0:10:49.320 the corporate community, you know, all kinds of you know, 0:10:49.440 --> 0:10:52.120 think tanks, academics, just like something like a milk in 0:10:52.200 --> 0:10:55.600 or some other events. UM. I do wonder, you know, 0:10:55.679 --> 0:10:58.960 what the major trends are beyond the overall mood and thought. 0:10:59.360 --> 0:11:01.040 You know, what do you picking up on your someone 0:11:01.080 --> 0:11:03.520 who really like, you know, kind of seizes on some 0:11:03.600 --> 0:11:05.760 of the interesting innovations that are going on there. What 0:11:05.800 --> 0:11:09.240 are you seeing? Yeah, you know one story that I 0:11:09.280 --> 0:11:12.120 feel like isn't necessarily making headlines that I'm hearing a 0:11:12.160 --> 0:11:14.920 lot of the c e O s and UM decision 0:11:14.960 --> 0:11:17.520 makers talk about sort of off the record, is this 0:11:17.600 --> 0:11:21.720 idea and sort of this anger towards younger employees and 0:11:21.720 --> 0:11:23.680 the people who are a little bit hesitant to get 0:11:23.720 --> 0:11:28.840 back to work are Yeah, we heard from our Bloomberg 0:11:28.840 --> 0:11:32.760 Opinions Alison Schrager. She's moderating a ton of panels this week, 0:11:32.800 --> 0:11:35.160 and she also told me that um. She was speaking 0:11:35.160 --> 0:11:38.760 with executives from Sony yesterday who all just said, you know, 0:11:38.840 --> 0:11:43.360 even in in countries where high work ethic across all 0:11:43.440 --> 0:11:46.640 age ranges is really valued, they're starting to have a 0:11:46.640 --> 0:11:50.000 lot of trouble getting younger employees in the office. And 0:11:50.000 --> 0:11:52.960 they're also experiencing a lot of ghosting. So gen Z 0:11:53.080 --> 0:11:57.000 employees will sign contracts at these companies and then just 0:11:57.080 --> 0:11:59.199 won't show up for the their first day of work 0:11:59.240 --> 0:12:02.360 and we'll never contact the company again. So I'm really 0:12:02.360 --> 0:12:05.280 hearing a lot of anger from CEO is about younger 0:12:05.320 --> 0:12:08.120 employees not getting back to work and not necessarily working 0:12:08.160 --> 0:12:10.480 as hard. But does that lead to a shift, Maddie 0:12:10.480 --> 0:12:12.959 in the way that that companies are thinking about compensation 0:12:13.040 --> 0:12:15.000 or the way the companies are thinking about work. I mean, 0:12:15.240 --> 0:12:18.680 certainly that that's not the theme of Davos this year, 0:12:18.720 --> 0:12:21.600 but getting people back to the office is certainly a 0:12:21.640 --> 0:12:23.320 theme here in the United States, and we're seeing it 0:12:23.320 --> 0:12:26.040 from a lot of individual companies. Is that discussion happening 0:12:26.040 --> 0:12:29.600 at all? I think it's critical, and I feel like 0:12:29.760 --> 0:12:32.280 quiet quitting is also something that's coming up a lot. 0:12:32.320 --> 0:12:34.560 But what's interesting is at the same time they're talking 0:12:34.600 --> 0:12:37.640 about the struggles with younger employees, but then they talk 0:12:37.720 --> 0:12:40.720 about also needing to source the on employees, and in 0:12:40.760 --> 0:12:43.720 this kind of dichotomy of like, I'm struggling to get 0:12:43.720 --> 0:12:45.960 them in the office, but I also genuinely want to 0:12:46.040 --> 0:12:49.640 hire younger people and want to involve them. So, um, 0:12:49.679 --> 0:12:52.240 it's interesting to kind of hear that struggle there. I 0:12:52.240 --> 0:12:54.960 spoke with the CEO of ernst In earlier today, Carmine 0:12:55.000 --> 0:12:57.160 de Cibio, and one thing that he pointed out that 0:12:57.160 --> 0:12:59.840 that was a lesson to me was that, um, he 0:13:00.080 --> 0:13:04.240 not necessarily seen a huge amount of talent emerging from 0:13:04.280 --> 0:13:06.600 all of those big tech layoffs that we talked about. 0:13:06.720 --> 0:13:09.720 He was saying he's still struggling to get coders and 0:13:09.800 --> 0:13:12.559 engineers in the door, and he feels like if the 0:13:12.640 --> 0:13:16.040 layoffs were as bad as they potentially seem like they are, 0:13:16.160 --> 0:13:18.839 he wouldn't be struggling as much to get that talent. 0:13:18.920 --> 0:13:21.640 So I thought that was also really really interesting. All right, everybody, 0:13:21.679 --> 0:13:24.360 we're talking to blueber Crick Take correspondent Madison Mills. She 0:13:24.600 --> 0:13:29.320 is in Davo, Switzerland for the World Economic Forum annual meeting, 0:13:30.000 --> 0:13:31.760 which is being held again in the winter for the 0:13:31.800 --> 0:13:33.840 first time was it, Mattie three years that this is 0:13:33.920 --> 0:13:36.839 because of the pandemic. It's a long time. Um. One 0:13:36.840 --> 0:13:38.200 thing I want to get to and it's something you 0:13:38.240 --> 0:13:40.760 guys at Quick take cover a lot. I know Tim 0:13:40.800 --> 0:13:44.320 covers it, loves it and that has to be anything 0:13:44.320 --> 0:13:46.920 to do with space. And you caught up with a 0:13:47.040 --> 0:13:49.720 particular CEO. Give us a little bit of background about 0:13:50.160 --> 0:13:54.679 Dylan Taylor and his company. Yeah, Dylan Taylor is and Tim, 0:13:54.679 --> 0:13:56.400 I can't wait to talk to you about this mind back, 0:13:56.440 --> 0:13:58.920 because I feel like you would love this guy. Uh. 0:13:59.000 --> 0:14:02.000 Dylan Taylor runs space Voyager. They do a lot of 0:14:02.040 --> 0:14:06.600 investment and get investment in the future of commercial space travel. 0:14:06.640 --> 0:14:09.240 And he really believes something that some people push back 0:14:09.480 --> 0:14:12.920 against here at Davos, the idea that commercial space travel 0:14:13.120 --> 0:14:16.120 is just as good for the climate as anything we 0:14:16.160 --> 0:14:18.360 can do on Earth. UM. He was lucky enough to 0:14:18.360 --> 0:14:20.800 be able to go to space as part of one 0:14:20.800 --> 0:14:23.520 of Jeff Bezos Blue Origin trips, and he said that 0:14:23.520 --> 0:14:27.320 that overview effect is really critical and real that when 0:14:27.360 --> 0:14:29.960 you're able to look down at at planet Earth, it 0:14:30.040 --> 0:14:32.720 can just change your life and change your perspective and 0:14:32.760 --> 0:14:35.400 make you realize the importance of climate. I think we 0:14:35.480 --> 0:14:38.600 have some sound from Dylan Taylor that I I want 0:14:38.640 --> 0:14:42.160 us to take a listen to. I think the biggest 0:14:42.160 --> 0:14:45.160 space story in three uh, you know, just to pick 0:14:45.200 --> 0:14:49.360 a couple. I think will likely get another all private 0:14:49.920 --> 0:14:52.720 astronaut mission to the Space Station, so that'll be an 0:14:52.760 --> 0:14:57.560 important milestone. But probably the most important would be SpaceX 0:14:58.400 --> 0:15:02.320 making orbit, hopefully with their new Starship, which is their 0:15:02.360 --> 0:15:05.520 new generation rocket, which if it works and if it 0:15:05.600 --> 0:15:08.320 makes orbit, which I believe it will, it could completely 0:15:08.400 --> 0:15:12.520 change the game and reduce the launch costs by another 0:15:12.640 --> 0:15:18.160 order of magnitude. So, of course, my follow up question 0:15:18.200 --> 0:15:20.480 was are you concerned at all about Elon Musk and 0:15:20.520 --> 0:15:22.960 the impact he could have on the potential of future 0:15:23.000 --> 0:15:26.040 space travel coming out of SpaceX, And he said he's 0:15:26.040 --> 0:15:27.680 not concerned at all. That there are a lot of 0:15:27.720 --> 0:15:30.560 executives at SpaceX doing a lot of great work who 0:15:30.640 --> 0:15:32.920 are not related to you On Musk in anyway. So 0:15:33.000 --> 0:15:37.440 he's he's really optimistic about SpaceX and the impact SpaceX 0:15:37.480 --> 0:15:40.760 could have on space travel heading into this year. Yeah, 0:15:40.760 --> 0:15:44.160 I mean, what has shown, Maddie is that private companies 0:15:44.200 --> 0:15:47.360 can now do what governments were only able to do 0:15:47.480 --> 0:15:49.160 just a few years ago, and I think it's remarkable 0:15:49.160 --> 0:15:51.440 to see the private investment in the industry. Of course, 0:15:51.760 --> 0:15:54.360 these companies, we should remember, still rely on government contracts 0:15:54.360 --> 0:15:56.640 for much of the funding, so it is still taxpayer 0:15:56.680 --> 0:16:00.200 money that is supporting many of these launches. At the 0:16:00.240 --> 0:16:02.280 same time, it's remarkable to see, Carol, what the private 0:16:02.280 --> 0:16:04.000 sector has done. Yeah, I think about it. You know, 0:16:04.080 --> 0:16:05.640 you guys have heard it. I just when my dad 0:16:05.720 --> 0:16:07.680 was involved in the sixties, you know, in the space program, 0:16:07.720 --> 0:16:10.120 it was all government run and government initiatives, and it's 0:16:10.160 --> 0:16:12.560 really I think he'd be fascinated to see, you know, 0:16:12.600 --> 0:16:17.400 the role of the private sector so aggressively and so successfully, Maddie, 0:16:17.720 --> 0:16:21.280 you know, really carrying the baton if you will. Um. 0:16:21.320 --> 0:16:23.080 And I think it's a good thing, you know, moving 0:16:23.240 --> 0:16:26.600 out of the government sector in the public sector. Yeah, 0:16:26.600 --> 0:16:29.360 it's so interesting. He wants to fund and build the 0:16:29.400 --> 0:16:32.480 first commercial space station, and he really believes in the 0:16:32.520 --> 0:16:36.360 ability for that to exist alongside a government funded space 0:16:36.400 --> 0:16:38.320 station as well. His point is like why I not 0:16:38.480 --> 0:16:41.640 have multiple going on up there, you know. So it's 0:16:41.840 --> 0:16:44.560 it's really interesting to see and um, something that I'm 0:16:44.600 --> 0:16:47.920 excited for us to continue to cover all right, Uh, Mattie, 0:16:47.920 --> 0:16:49.280 Before we let you go, I want to talk a 0:16:49.280 --> 0:16:53.000 little crypto. We did report the Bloomberg News team that 0:16:53.040 --> 0:16:56.160 the crypto firm Genesis is said to plant bankruptcy filing 0:16:56.640 --> 0:16:59.640 could come sometime this week, according to our team here 0:16:59.640 --> 0:17:01.800 at bloom Broke News. What are you hearing on the 0:17:01.840 --> 0:17:04.480 ground there about crypto regulation just in the last minute 0:17:04.480 --> 0:17:06.960 that we have with you, you know, Tim, I can't 0:17:06.960 --> 0:17:09.720 tell if it's just kind of talk because it's something 0:17:09.760 --> 0:17:13.280 that people can agree on. It's not a superpartisan topic. 0:17:13.400 --> 0:17:16.640 But um, everyone seems really excited to talk about crypto 0:17:16.680 --> 0:17:20.000 regulation and agree on the idea that regulation is needed. 0:17:20.080 --> 0:17:23.920 But I haven't heard anyone talk about crypto being dead. Um. 0:17:23.960 --> 0:17:26.479 I was able to speak with the chief policy officer 0:17:26.560 --> 0:17:30.320 of coin Base, and he met with the congressional delegation 0:17:30.400 --> 0:17:32.639 of d C lawmakers who are here at Davos and 0:17:32.680 --> 0:17:35.560 pitched the same thing to them that it was you know, 0:17:35.640 --> 0:17:38.200 a bad actor in sam Maigmund freedom f t X, 0:17:38.280 --> 0:17:41.040 that the industry is not bad and so he's really 0:17:41.040 --> 0:17:42.960 hopeful that crypto is going to have a rebound in 0:17:43.920 --> 0:17:47.040 All right, what's a cup of coffee cost? Cost? Come on? 0:17:48.000 --> 0:17:51.000 I got nice coffee when I landed with Carol was 0:17:51.119 --> 0:17:57.159 nine dollars, nine dollars, nine dollars. It is Switzerland. I 0:17:57.200 --> 0:18:00.640 am saving those receipts, guys, it is it is when 0:18:00.680 --> 0:18:04.040 your boss is like, come on, Maddie, what is this? Um? 0:18:04.840 --> 0:18:07.800 Sorry to my boss is in advance. All right, looking 0:18:07.840 --> 0:18:10.119 forward to more of your reporting. Of course, our Maddie 0:18:10.160 --> 0:18:12.760 Mills and Bloomberg cricktake on the ground in Davos, Switzerland 0:18:13.040 --> 0:18:15.399 at the World Economic Form. You can catch all of 0:18:15.480 --> 0:18:18.320 our coverage just head to Bloomberg dot com. These sees 0:18:18.359 --> 0:18:22.800 Bloomberg Business Week with Carol Messer and Tim Stanovic on 0:18:23.000 --> 0:18:26.320 Bloomberg Radio. We've got a great guest with us, well 0:18:26.400 --> 0:18:29.800 known voice for the investment community and certainly the Bloomberg audience. 0:18:30.080 --> 0:18:32.320 Howard Marks is with us, the co chairman co founder 0:18:32.320 --> 0:18:34.920 of oak Tree Capital Group, known for his investing in 0:18:35.000 --> 0:18:38.480 distressed securities. The firm has some one hundred sixty three 0:18:38.480 --> 0:18:40.879 billion dollars in assets under management and joints. Tim and 0:18:40.960 --> 0:18:43.920 myself here in our interactive broker's studio. How are you. 0:18:44.280 --> 0:18:46.560 I'm very good, Thank you. How are you doing well? 0:18:46.960 --> 0:18:49.000 Looking at your research? We looked over it and I've 0:18:49.040 --> 0:18:51.720 got to say, it's all about sea change. I'm a 0:18:51.800 --> 0:18:54.240 sailor and I know, and I have been for years. 0:18:54.560 --> 0:18:56.280 See change it can be a good thing and it 0:18:56.359 --> 0:19:00.880 can be a bad thing. Tell us about your thinking here. Well, 0:19:00.960 --> 0:19:03.760 the point is that the sea change is something more 0:19:03.880 --> 0:19:10.040 fundamental than a minor cyclical fluctuation. UH. It suggests a 0:19:10.200 --> 0:19:15.520 total transformation that will be somewhat long lasting. And the 0:19:15.640 --> 0:19:20.399 does and by definition it doesn't happen often. UH. But 0:19:20.960 --> 0:19:25.240 the point of the memo was that ever since the 0:19:26.280 --> 0:19:30.160 global financial crisis, the FED put in emergency measures direct 0:19:30.600 --> 0:19:34.399 rescue the economy and the markets. UH, and they worked, 0:19:35.280 --> 0:19:38.359 but they were continued for a long time. Zero rates 0:19:38.600 --> 0:19:42.439 were the rule for seven years, which I was stunned 0:19:42.480 --> 0:19:46.840 to find out when I researched it. UH and UH 0:19:47.440 --> 0:19:53.320 that kind of conditioned the markets to depend on ultra 0:19:53.400 --> 0:19:56.520 low rates, which was unrealistic. And then when they tried 0:19:56.880 --> 0:20:00.040 in sixteen seventeen eighteen to raise rates, they got a 0:20:00.119 --> 0:20:03.119 lot of pushback. The fourth quarter of eighteen, you may 0:20:03.200 --> 0:20:07.240 recall they took a ten year to UH, the FED 0:20:07.320 --> 0:20:10.440 funds rate hit three and a quarter and the fourth 0:20:10.520 --> 0:20:13.280 quarter of eighteen was the worst fourth quarter in history 0:20:13.560 --> 0:20:16.080 as a consequence, So, uh, they were in a low 0:20:16.200 --> 0:20:21.720 return trap. And lenders likewise were in a low return trap. 0:20:22.040 --> 0:20:23.880 You know. I I gave a speech for eight years 0:20:24.040 --> 0:20:27.359 entitled investing in a low return World, and and it 0:20:27.480 --> 0:20:29.800 wasn't fun because how do you get a good return 0:20:29.880 --> 0:20:33.240 in a low return world? You either, uh, you either 0:20:33.359 --> 0:20:36.320 accept the low returns or you take on more risk 0:20:36.400 --> 0:20:38.320 to try to get a high return. And that may 0:20:38.359 --> 0:20:40.840 not be a great idea either. So there is no 0:20:41.000 --> 0:20:44.240 easy out. And and we labored in the in the 0:20:44.320 --> 0:20:48.840 wilderness for a decade with low yields prevalent, and I 0:20:49.000 --> 0:20:52.000 think that that's not going to be the case to 0:20:52.119 --> 0:20:55.399 the same degree going forward. It's not just you know, 0:20:55.520 --> 0:20:57.600 low yields not being prevalent as being part of this 0:20:57.680 --> 0:20:59.760 sea change. What else do you see, which, by the way, 0:20:59.760 --> 0:21:01.560 you are this is only the third sea change you've 0:21:01.560 --> 0:21:03.879 seen in your career? Yes, well, in the in the 0:21:04.880 --> 0:21:10.040 the seventies, I saw the adoption of risk return thinking. 0:21:10.119 --> 0:21:14.560