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Speaker 1: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 1: A FED decision that left rates unchanged as expected, and
Speaker 1: chair Jay Powell saying interest rates are in the right
Speaker 1: place to manage continued uncertainty around tarifs and inflation, so
Speaker 1: rate cut in September not likely, at least not right now.
Speaker 1: Plus tons of earnings, including from four of the Magnificent Seven,
Speaker 1: and of course more tariff talks, TIFFs and terms. This
Speaker 1: past week. I gotta say, Tim, was what some Wall
Speaker 1: Street pro said was a pivotal one for the second.
Speaker 3: Half a busy summer weeks, certainly to wrap up the
Speaker 3: month of July. This hour, we're going to hit on
Speaker 3: earnings from Apple, Amazon, Microsoft, and Meta plus Alphabet. The
Speaker 3: company reported earnings just about a week ago, and they
Speaker 3: said that the cloud computing unit at Google is its
Speaker 3: strongest source of growth. We're going to talk with the
Speaker 3: COO of Google Cloud also.
Speaker 1: This hour, and also on earnings. UK pharma company AstraZeneca
Speaker 1: reported results. It's CEO stat by Bloomberg headquarters and talked
Speaker 1: about doubling down on the US and sizing up Chinese competition.
Speaker 1: And then, speaking of drugs, the CEO of Compass Pathways
Speaker 1: joins us somehow psychedelics may be making their way to
Speaker 1: FDA approval.
Speaker 3: That's in our second hour, so too is a story
Speaker 3: about burning Man's existential financial crisis. All that to come, though,
Speaker 3: We kick off with earnings from a batch of the
Speaker 3: so called mag seven Apple, Amazon, Meta, and Microsoft, all
Speaker 3: reporting this past week. All of the details and more
Speaker 3: are on the Bloomberg terminal. We caught up with Laura Martin,
Speaker 3: senior analyst A and need him in Company who covers
Speaker 3: many of them, and started our post earnings review talking
Speaker 3: about Apple.
Speaker 4: Apple admitted that one hundred one thousand basis points, so
Speaker 4: one percent of their revenue growth, which was ten percent,
Speaker 4: well above average, was from pull forward, and the market's
Speaker 4: telling you they think that number was like five, you know, four.
Speaker 5: Half of the game. Basically.
Speaker 4: Apple also said they had eight hundred million dollars of
Speaker 4: costs from tariffs in that second that requorter they just reported,
Speaker 4: and it's going to go up to one point one
Speaker 4: billion visibly in the September quarter. But I think the
Speaker 4: market's telling you they think that could be higher in
Speaker 4: the September quarter.
Speaker 3: Oh so, does does this mean that we'll see fewer
Speaker 3: iPhones bought in the first fiscal quarter Apple? But Apple's
Speaker 3: December quarter, which typically is its biggest quarter, as a
Speaker 3: result of the pull forward that we saw in this quarter, I.
Speaker 5: Think it's worse, it's faster.
Speaker 4: So the June quarter over delivered because they pulled forward
Speaker 4: demand from the September quarter. Those are all old iPhones,
Speaker 4: and then in late September you typically get the new
Speaker 4: iPhone and then you start this new annual cycle of
Speaker 4: the new iPhone. And one of the things they said
Speaker 4: is that Siri and Apple Intelligence will only be integrated
Speaker 4: next year, by which they're probably talking calendar year, which
Speaker 4: means the earliest we'll see you know, generative AI features,
Speaker 4: drive and upgrade cycle for the iPhone would be not
Speaker 4: September of twenty five, it'd be September of twenty six.
Speaker 4: So then that tells you, so this is dead money again, right,
Speaker 4: there's nothing driving and there's risk here, not only China subsidies.
Speaker 4: Wrote drove a really nice China growth number, four point
Speaker 4: eight percent China revenue growth. People are worried that that
Speaker 4: is also like that subsidy isn't going to recur. And
Speaker 4: we've had a couple negative litigation regulatory decisions. Right, We've
Speaker 4: got the feed to twenty billion dollars a year is
Speaker 4: what Google Search pays Apple to be the default search
Speaker 4: engine on all iOS devices. I think that's pretty clear
Speaker 4: from Channel and DC that is not going to be
Speaker 4: allowed to persist. So that's twenty billion that will come
Speaker 4: out of services if it isn't allowed. And then similarly,
Speaker 4: we have the epic they got into Apple got a
Speaker 4: negative epic Games which allows that which allows consumers to
Speaker 4: pay directly to apps and not have Apple share thirty percent.
Speaker 4: So that's another that's an app store risk that over
Speaker 4: the next twelve months, not immediate, but over the next
Speaker 4: twelve months.
Speaker 1: You know, Laura, We've had the luxury of talking with
Speaker 1: you in the last week or two and talking specifically
Speaker 1: about Apple you've got a hold rating on it. It
Speaker 1: doesn't sound like you have a lot of concerns. I
Speaker 1: guess I should say why not put a cell rating
Speaker 1: on it.
Speaker 4: One of the issues is when you look at the
Speaker 4: other mag seven, they basically have a singular strategy, which
Speaker 4: is envision generative air as disruptive. We everyone else is
Speaker 4: going to spend eighty five to one hundred billion dollars
Speaker 4: in CAPEX in twenty twenty five alone, and we're going
Speaker 4: to grow at twenty percent in twenty six with no
Speaker 4: Every one of them has been pushed on what is
Speaker 4: that return on capital incremental capital?
Speaker 5: They all say, we don't know. We just think it's
Speaker 5: going to be big.
Speaker 4: If you don't believe that, if you're an investor and
Speaker 4: you think that jenerative AI is overhyped or the economics
Speaker 4: are further off into the future, Apple is a great
Speaker 4: place to hide. They are spending twenty billion dollars a year,
Speaker 4: not eighty five billion dollars a year. Jeneritive AI is
Speaker 4: sometime in the future. They're not spending they're not hiring
Speaker 4: people like Meta Is for one hundred million dollars each
Speaker 4: to work on superintelligence. This is Apple is a great
Speaker 4: place to hide. If you are an investor that doesn't
Speaker 4: believe in generative changing the world.
Speaker 6: Well, wait a minute.
Speaker 1: You know Apple often isn't you know, first mover or
Speaker 1: on some big changes.
Speaker 6: Right, We talked about it.
Speaker 3: Create the tablet, they didn't create the music player, they
Speaker 3: didn't create the smartphone. But they created the best of
Speaker 3: all those things exactly.
Speaker 1: So if they're saying, hey, guys, go ahead and spend
Speaker 1: you know, your billions or trillions or whatever the heck
Speaker 1: it is, figure out this AI thing and then we'll
Speaker 1: come in.
Speaker 6: And we'll collaborate or partner with somebody, maybe that's not
Speaker 6: such a bad strategy.
Speaker 5: So it's risky business.
Speaker 4: So on the call last night, Tim Cook got this question,
Speaker 4: and what he said is, I don't see a world
Speaker 4: where the consumer doesn't have an iPhone, which is basically
Speaker 4: a computer in his pocket.
Speaker 5: Okay, that's a vision of the.
Speaker 4: Future that Johnny Ive, who's gone to open AI is
Speaker 4: trying to displace. Johnny Ive, who developed every Apple product
Speaker 4: you have in your pocket while he was at Apple
Speaker 4: for twenty years, is now saying he regrets creating the
Speaker 4: screen because he thinks it makes people not pay attention
Speaker 4: to one another. So he's trying to move the next
Speaker 4: device with generative AI backing to not.
Speaker 5: Be a screen.
Speaker 4: So that may not work, but if it does Apple,
Speaker 4: that's a problem for app. That is an existential risk
Speaker 4: problem for Apple. So long as an iPhone and a
Speaker 4: screen are going to be sort of the user device
Speaker 4: of record and they're going to persist in ten years,
Speaker 4: you might be right, that might be possible. What you
Speaker 4: just said, Apple can copy the best of Android, which
Speaker 4: will have Gemini because Google has Gemini.
Speaker 5: In every product now, that will work.
Speaker 4: But if Jimmy I've and OpenAI or right, and screens
Speaker 4: are going away, that's problematic for a smartphone maker.
Speaker 3: I guess that's maybe where whatever they're working on for
Speaker 3: a face computer could come in. Laura, I want to
Speaker 3: go back to what you said about Gemini and Android
Speaker 3: because of the way that Gemini is baked into Google devices. Now,
Speaker 3: you say in your most recent note that Apple is
Speaker 3: a single product company, its valuation risk is material if
Speaker 3: iOS falls too far behind Android. Would you say that
Speaker 3: iOS is already behind Android right now?
Speaker 7: Oh?
Speaker 5: I would absolutely, I would.
Speaker 4: I mean when you look at Google's its revenue is
Speaker 4: accelerating over at Alphabet, and its costs are going down,
Speaker 4: so its productivity per employee is going up. Why Because
Speaker 4: eighty percent of engineers are using Gemini to do their
Speaker 4: first draft of code for new products. They're introducing new
Speaker 4: products faster. They over delivered on advertising because they're integrating
Speaker 4: all these bettern both Meta and Google. Because they're using
Speaker 4: generative AI to increase the conversion rate. So, yes, Gemini
Speaker 4: is being integrated into everything at Alphabet Android.
Speaker 5: Includion does it?
Speaker 3: Like two comments here? One is the network effects that
Speaker 3: Apple has, at least here in the US are really strong, right,
Speaker 3: the blue bubbles for when you're on I Message and
Speaker 3: the other Apple products that you have that ideally are
Speaker 3: supposed to work seamlessly with that. Plus, doesn't Gemini have
Speaker 3: an app that you can just use on your iPhone?
Speaker 3: So if you want to use Gemini as sort of
Speaker 3: a copilot here, if you are an engineer, you can
Speaker 3: just do it on your iPhone, but through an app
Speaker 3: that you get at the app store, right.
Speaker 5: If it's standalone.
Speaker 4: But I mean, I think my guess is where Alphabet's
Speaker 4: going is they're going to integrate your They're going to
Speaker 4: integrate Gemini into everything on your device. It's going to
Speaker 4: know where your appointments are, it's going to know who
Speaker 4: your friends are. It's going to be a personal assistant
Speaker 4: integrated into your Android phone. It's going to be a
Speaker 4: bigger idea than just a separate app where you go
Speaker 4: to it. It's going to be like, even if you
Speaker 4: listen to the meta vision of the world, super intelligence
Speaker 4: is about having a robot friend that does everything for
Speaker 4: you better than a human can make you. I mean,
Speaker 4: it's just I think these are bigger ideas than an
Speaker 4: app store.
Speaker 5: By the way, some.
Speaker 4: CEO's visions of their apps are disappearing. So then you say,
Speaker 4: so what replaces them?
Speaker 5: Well, I don't know. Used to be websites, then we
Speaker 5: went to apps. What's next? It may not be apps?
Speaker 6: All right? You mentioned I want to just get to
Speaker 6: meta Amazon. What about Meta?
Speaker 1: You know? In terms of I mean that Stock was
Speaker 1: just off and running following it's quarterly update. Those ad
Speaker 1: sales number certainly catching everybody's attention, a mega megaspen when
Speaker 1: it comes to AI. What is your hot take on
Speaker 1: that one?
Speaker 4: So Stock up strongly, really strong fundamentals, just sixty percent margins,
Speaker 4: twenty two percent revenue growth and a huge company, which
Speaker 4: was the fastest of the group that we the big
Speaker 4: tech companies we call really strong fundamentals. We are cautious
Speaker 4: on Meta, and that is because they took their capex
Speaker 4: to seventy billion this year and one hundred billion next year,
Speaker 4: again no return in sight, and their stock comp per
Speaker 4: person is going through the roof as they hire super
Speaker 4: intelligence employees, with press reports saying they're paying one hundred
Speaker 4: to three hundred million over three years for each of
Speaker 4: these people.
Speaker 3: Pretty get it, I'll say, yeah.
Speaker 4: My guess is they're trying to change the world right,
Speaker 4: and they believe in super intelligence, which this isn't a
Speaker 4: vision of making you and I'm more productive. This is
Speaker 4: about replacing human beings with machines that teach machines. So
Speaker 4: it's literally terminator like life imitating art type of stuff.
Speaker 3: Doesn't sound like you're your pro AI in that in
Speaker 3: that context, let's stick let's.
Speaker 5: Stick to Meta as a stock.
Speaker 4: My concern is that we're goin we're losing five billion
Speaker 4: dollars a quarter on reality labs, and we're still funding
Speaker 4: the Metal and we're funding Quest goggles, and we're funding
Speaker 4: karlass Way banned glasses and now we're funding a jen
Speaker 4: Ai competition with companies twice their size. All of that
Speaker 4: feels like a lot of capital spending to me and
Speaker 4: actually costs to me without a clear sense.
Speaker 3: But investors are saying they are okay with it up
Speaker 3: to now because they believe that Mark Zuckerberg has this
Speaker 3: vision for super intelligence, which, to be honest, nobody has
Speaker 3: actually articulated to me, Well, what does that world look
Speaker 3: like that that Meta wants to create and thinks will
Speaker 3: be so profitable?
Speaker 6: Are they okay?
Speaker 1: Just because the ad sales number came in really strong,
Speaker 1: Like if it didn't, might everybody be like maybe not?
Speaker 6: Okay?
Speaker 4: Yes, absolutely, he is buying the right to spend money
Speaker 4: like a drunken sailor because his fundamentals and his core
Speaker 4: business are strongly over delivering consensussessments. The day that stops,
Speaker 4: the music stops, and suddenly people are going to take
Speaker 4: a hard look at these You know, he's making five
Speaker 4: year commitments for these super intelligence employees, and he's making
Speaker 4: ten year commitments with the money he's spending on data centers.
Speaker 5: So all of this money he.
Speaker 4: Has a free pass so long as his core business
Speaker 4: is growing twenty two.
Speaker 3: Percent okay, okay, totally makes sense sort of the free
Speaker 3: pass like Elon was, you know, allowed to be CEO
Speaker 3: of many different companies and investors were fine with it
Speaker 3: until they weren't. Jack Dorsey the same thing, right, It
Speaker 3: works until it doesn't. Yeah, what about though, the promise
Speaker 3: of this being profitable in the future, all this investment
Speaker 3: ultimately paying off beyond making ads more efficient? What is
Speaker 3: that vision? What does that world look like in your view?
Speaker 3: At least articulated by Mark Zuckerberg.
Speaker 4: So again, so Mark Mark is just he has got
Speaker 4: a big idea. He wants to replace Apple, that's for sure.
Speaker 4: So does open Ai. So Apple takes a thirty percent
Speaker 4: tithe on every dollar earned on its platform, and that
Speaker 4: hurts Mark Zuckerberg not only because Apple gets paid for
Speaker 4: a lot of work he is doing on Facebook and Instagram,
Speaker 4: but also it allows them to change policies and procedures
Speaker 4: like around security and safety and privacy.
Speaker 5: That costs Mark Zuckerberg ten.
Speaker 4: Billion in revenue three years ago, and since then, Mark
Speaker 4: Zuckerberg is all about replacing Apple or that piece of
Speaker 4: hardware with ybound glasses or Quest goggles or something or
Speaker 4: the metaverse.
Speaker 5: He's trying to displace Apple.
Speaker 4: And he wants to be the backbone that everybody has
Speaker 4: to pay thirty percent to. So that's his main economic mission.
Speaker 4: And now Jenerative AI comes along, which I think, you know,
Speaker 4: I think many CEOs thinks it changes everything. Even Apple
Speaker 4: said it's the biggest technological disruption of our lifetime.
Speaker 5: And they benefited from mobile.
Speaker 4: Which you would have thought that would they would have
Speaker 4: thought was bigger than Jenai, but apparently not.
Speaker 8: So.
Speaker 4: I guess the question is Meta is saying we think
Speaker 4: they're super intelligence. We think every human being is going
Speaker 4: to have a robot that they hold on to, maybe
Speaker 4: without a screw. We don't know, you know, we don't
Speaker 4: know what the form factor is. But that does things
Speaker 4: for you where you see the world differently and it
Speaker 4: helps you get through the world. But I don't think
Speaker 4: we know what that is yet, and he doesn't either.
Speaker 4: That's why he's hiring fifty smart people to have robots,
Speaker 4: train robots faster to do stuff humans can't do.
Speaker 1: Well, nobody can do what you can do. We want
Speaker 1: to ask you about Amazon. Sure this dock down still
Speaker 1: more than eight percent here in the aftermarket, and I
Speaker 1: think there is concerns about kind of the cloud spend comparison,
Speaker 1: you know, among the big hyperscalers, Amazon still the biggest
Speaker 1: when it comes to, you know, we think about what's
Speaker 1: going on in terms of the cloud.
Speaker 6: What you take here are.
Speaker 1: What we kind of need to be thinking about with Amazon,
Speaker 1: because investors seem pretty disappointed, are you?
Speaker 4: So I think here's what I think is going on
Speaker 4: with Amazon. Answer the first half of that question. So,
Speaker 4: they had very strong revenue growth up thirteen percent, which
Speaker 4: was like, you know, we were four percentage points low
Speaker 4: that and very strong EPs and margins. But the problem
Speaker 4: is they gave very tepid guidance. So people are really
Speaker 4: worried about tariff's impacts here, so they're worried about the
Speaker 4: next shoe to drop. They're advertising grew very robustly at
Speaker 4: thirty twenty three percent, which is great, And I think
Speaker 4: that would have been higher had not Tamu and Chean
Speaker 4: stopped advertising, you know, sort of on April tenth because
Speaker 4: they lost the Dominimus except rule exception.
Speaker 5: So I think that would have been higher.
Speaker 4: But that's a fabulous number nobody's focusing on today, and
Speaker 4: I think people investors we've talked to are frustrated with
Speaker 4: capital spending on Kuiper which has no revenue, capital spending
Speaker 4: after for ten years so far on Alexa no revenue,
Speaker 4: and like they're going to urban delivery same day, And
Speaker 4: I think people don't understand their core business of e commerce.
Speaker 5: I think people don't understand that as to use a capital.
Speaker 4: At the same time, they just raised their capex guidance.
Speaker 4: When you do the numbers to round numbers, one hundred
Speaker 4: and fifteen, one hundred and twenty billion this year. The
Speaker 4: next closest is Microsoft and Google at eighty five billion,
Speaker 4: so they're quite a bit above everybody else on this
Speaker 4: jenerative a I think, and then AWS has a nemic
Speaker 4: revenue growth, you know, neg I mean thirty two percent
Speaker 4: margins in the cloud business, and they were thirty nine
Speaker 4: percent ninety days ago, like what the heck? And they
Speaker 4: say their capacity constrained. So then we would forgive them
Speaker 4: if they only report seventeen percent revenue growth, But then
Speaker 4: why aren't your margins sixty percent?
Speaker 5: Why aren't they forty percent?
Speaker 4: Again it why not sell to the highest bid or
Speaker 4: the last you know, you know, one gig of capacity.
Speaker 4: So we saw that in both Azure over at Microsoft
Speaker 4: and in Google Cloud slower I mean.
Speaker 5: Growth rates, but really high margins. And that just didn't
Speaker 5: play out at.
Speaker 6: Amazon all right around the world.
Speaker 1: We went Thank you so much, Laura, always appreciate it.
Speaker 1: By the way, Laura's got a by rating on Amazon
Speaker 1: with a two hundred and sixty five dollars share price target.
Speaker 1: The stock right now just below two fifteen his share
Speaker 1: Laura Martin, have a great weekend.
Speaker 6: Senior analyst at need him in Cup Joining us.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
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Speaker 1: Microsoft this past week reported better than expected growth in
Speaker 1: its cloud business and said spending on AI infrastructure hit
Speaker 1: a record. The closely watched Azure cloud computing unit posted
Speaker 1: a thirty nine percent rise in sales during Microsoft's fiscal
Speaker 1: fourth quarter. Company also said sales at the cloud division
Speaker 1: grew thirty four percent to more than seventy five billion
Speaker 1: dollars during the year end of June thirtieth, the first
Speaker 1: time the company has disclosed a revenue figure for Azure.
Speaker 3: Meanwhile, the week before Google parent Alphabet and to deal
Speaker 3: with more than a billion dollars to provide cloud computing
Speaker 3: services to the software firm Service. Now, Alphabet's massive spend
Speaker 3: on AI has helped its score major client wins, especially
Speaker 3: among AI startups, all will making strides against its competitors
Speaker 3: such as Amazon Web Services and Azure from Microsoft. Remember,
Speaker 3: back in February, Salesforce agreed to spend at least two
Speaker 3: and a half billion dollars over seven years on Google's
Speaker 3: cloud services.
Speaker 1: And so no surprise perhaps to Google's cloud computing unit
Speaker 1: revenue topping analyst estimates when it recently gave it's coarly update.
Speaker 1: So yeah, we wanted to know more and we got
Speaker 1: the chance when we were joined by Francis Desuza. He
Speaker 1: is the first chief operating officer of Google Cloud.
Speaker 9: Yeah.
Speaker 10: Right now, it feels like there are two powerful mega
Speaker 10: trends that are playing out in the enterprise market. The
Speaker 10: first is, you know, the continued move by companies of
Speaker 10: their workloads to the cloud, of their applications to the cloud.
Speaker 10: And the second, much bigger trend that's playing at right
Speaker 10: now is the adoption of AI by companies and those
Speaker 10: two powerful mega trends are driving our business and fueling
Speaker 10: the growth that you saw in the quarter. And so
Speaker 10: what we're seeing on the AI side is, you know,
Speaker 10: this is the fastest in my career that I've seen
Speaker 10: at technology move from pilots to production. And so what
Speaker 10: we're in talking to customers, what they're telling is is
Speaker 10: they're recognizing the benefits that AI can bring into their
Speaker 10: company across the board. You know, we have companies that
Speaker 10: like Verizon that are using AI to help do customers support.
Speaker 10: We work at Seattle Children's Hospital that's using AI to
Speaker 10: inform physicians in their communications with patients. We also have
Speaker 10: companies like Papa John's or McDonald's that are using AI
Speaker 10: in the franchises. And so we're seeing broad adoption by
Speaker 10: enterprises across a number of places where they can see
Speaker 10: the benefits from AI.
Speaker 3: You just mentioned a few examples of companies that you
Speaker 3: work with. There are a lot of small businesses, though,
Speaker 3: and even large businesses that I think it's fair to
Speaker 3: say haven't fully harnessed what you view as the opportunity
Speaker 3: when it comes to AI. How big of an opportunity
Speaker 3: is it for Google Cloud? What's a number. How can
Speaker 3: you quantify this?
Speaker 10: Yeah, I think you're absolutely right in that we're the
Speaker 10: very early stages of what is a very large sort
Speaker 10: of adoption market in front.
Speaker 2: Of it now.
Speaker 10: You know, you look at the numbers we delivered, you know,
Speaker 10: last quarter and Google Cloud, we delivered thirteen point six
Speaker 10: billion dollars in revenue, and as you said, that's up
Speaker 10: thirty two percent year over year. So although the numbers
Speaker 10: are already big, we're still just at the very very
Speaker 10: beginning of AI adoption by companies. And that's true whether
Speaker 10: you look at small companies who are starting to use
Speaker 10: it in terms of their outreach to customers to scale
Speaker 10: up their presence from a marketing perspective, all the way
Speaker 10: to large enterprises. We're just at the very beginning of
Speaker 10: this big wave.
Speaker 8: You know.
Speaker 1: One of the things Francis said, I'm so glad we
Speaker 1: could get some time with you, is that, you know,
Speaker 1: everybody kind of throws out AI and large language models generally,
Speaker 1: and we're just trying to get more of an understanding
Speaker 1: of how this all impacts our world.
Speaker 6: Drilled down a little bit further.
Speaker 1: In terms of the customers that you are working with, big,
Speaker 1: medium and small and how they are using.
Speaker 6: AI and how it's going to impact our lives.
Speaker 10: Yeah, we're seeing it show up in enterprises in a
Speaker 10: whole bunch of different ways, and so let me give
Speaker 10: you some examples. You know, some large manufacturers like Toyota,
Speaker 10: for example, or Honeywell are using AI on the factory
Speaker 10: floor to provide information to the people working on the
Speaker 10: factory floor to improve their operational ability, and also to
Speaker 10: provide access for their customers to engineering and technical support
Speaker 10: documents around the product, so make it easier for customers
Speaker 10: to navigate and find the information they need. We're seeing
Speaker 10: some hospitals, as I talked about, helping using AI to
Speaker 10: help provide physicians access to whether it's guidelines or any
Speaker 10: background information. In addition, we're seeing hospitals use AI to
Speaker 10: automatically transcribe the communications with their patients. So what AI
Speaker 10: will do is actually take the notes automatically and then
Speaker 10: upload it into the systems that it needs to. What
Speaker 10: that does is it frees up time for the medical
Speaker 10: professionals to do what they do best, which is deal
Speaker 10: with patients. We're seeing small businesses they're using AI to
Speaker 10: create marketing materials and do that much more efficiently. We're
Speaker 10: seeing large retailers like Wayfair that are using AI to
Speaker 10: create more personalized experiences for their customers when you come
Speaker 10: to the website, so you can imagine as you're using Wayfair,
Speaker 10: you can imagine how the furniture items will look in
Speaker 10: your environment, and that provides a better shopping experience for customers.
Speaker 10: So we're seeing a wide swath of ways that AI
Speaker 10: is being used in companies.
Speaker 1: I'm so glad you mentioned kind of the medical area
Speaker 1: and what they're doing, because I think a lot of
Speaker 1: folks come on our air and talk to the Bloomberg
Speaker 1: audience and talk about how AI might significantly impact not
Speaker 1: just hospitals, but just how we get medical care. You
Speaker 1: are the former CEO of Alumina, and I think about
Speaker 1: DNA sequencing and all of the information and data that
Speaker 1: could potentially improve how we are treated when it comes
Speaker 1: to healthcare. How are you thinking about that space and
Speaker 1: what it might mean for Google Cloud and demand there.
Speaker 10: Yeah, I think AI is going to have a very
Speaker 10: big impact in a number of ways across healthcare. Right,
Speaker 10: So if we talked about some ways where it's helping
Speaker 10: in the delivery of care by freeing up medical professionals
Speaker 10: from administrative tasks and using more of their time to
Speaker 10: actually interact with patients. In addition, it's also helping medical professionals,
Speaker 10: you know, get access to the information they need across
Speaker 10: a whole swath of information, so you know, they need
Speaker 10: to be able to stay on top of guidelines as
Speaker 10: they emerge, new research that's being published, as well as
Speaker 10: all the information on the patient, and increasingly, you know,
Speaker 10: we're getting more and more personalized information on a patient.
Speaker 10: You talked about genomics, there are a lot of images
Speaker 10: as well as previous lab tests, and so what AI
Speaker 10: can do is sort of take all that information and
Speaker 10: present it in a more digestible way so that you
Speaker 10: can make better decisions. In addition, AI can also help
Speaker 10: you know earlier in the process of drug development. We've
Speaker 10: seen fantastic advances with tools like alpha fold, which allows
Speaker 10: you to you know, deduce a three D protein structure
Speaker 10: US hundreds of millions of protein types. What that does,
Speaker 10: then is that allows you to identify maybe new druggable
Speaker 10: targets that allow you to treat diseases. And I can
Speaker 10: also help bring information together, you know, the genomic information,
Speaker 10: the phenotypic information, you know the imaging information and help
Speaker 10: us get better understanding of what causes diseases and how
Speaker 10: they develop, and that could give us new insights that
Speaker 10: allow us to think about how we can treat those
Speaker 10: diseases better. So in almost every part of the healthcare industry,
Speaker 10: you can see how AI can help improve that industry.
Speaker 3: We're speaking with Francis deesu'sa chief operating officer over at
Speaker 3: Google Cloud. Francis, I want to talk a little bit
Speaker 3: about competition. For years, Amazon has been number one. According
Speaker 3: to our Bloomberg Intelligence team and data from IDC. In
Speaker 3: twenty twenty three, AWS had about forty seven percent of
Speaker 3: the infrastructure as a service market share, Microsoft in second
Speaker 3: place with sixteen percent, and then Google coming in with
Speaker 3: about six percent. How do you get to number two
Speaker 3: then number one?
Speaker 10: What's really interesting is that as I talk to customers
Speaker 10: with their things as a convergence of two really big
Speaker 10: important spaces. One is the cloud spaces you talked about,
Speaker 10: and two AI. So nearly every customer conversation I have
Speaker 10: now in prospect conversation I have is really all about
Speaker 10: AI and how it will impact businesses. And we are
Speaker 10: the only hyperscaler that actually has our own AI stack.
Speaker 10: So if you think about every part of the AI
Speaker 10: technology stack, Google has leading technology. So for example, on
Speaker 10: the chip side, we're one of the largest partners in
Speaker 10: the world with Nvidia on GPUs, but we also have
Speaker 10: our own technology TPUs that are very highly performant and
Speaker 10: we run them in our data centers. In terms of
Speaker 10: the models, we work with a number of other model providers,
Speaker 10: so if you go into our model garden, you know
Speaker 10: you can access models from companies like Anthropic and deep Seek,
Speaker 10: but we also have the world's leading model with Gemini
Speaker 10: two dot five, which is performing really well on the
Speaker 10: top of the leader boards in almost every part of AI.
Speaker 10: And so here too we provide our own leading technologies,
Speaker 10: and it's Gemini, but it's also our image models, our
Speaker 10: video models, our time series models, our weather models, and
Speaker 10: then we also provide our own applications on top of that,
Speaker 10: like Agent Space that allow companies to easily develop their
Speaker 10: own agents. And then we have a leading cybersecurity portfolio.
Speaker 10: And so where we are differentiated in the market is
Speaker 10: that as we talk to customers, we're really the only
Speaker 10: hyperscaler that can talk about our own native AI stack
Speaker 10: that's leading technologies in each part of the stack as
Speaker 10: well as our cloud, and that's playing really well, and
Speaker 10: that's driving a lot of the results that you are seeing.
Speaker 1: I got to say, it's the thinking models, the Gemini
Speaker 1: two point five that really kind of are blowing everybody's minds.
Speaker 6: Hey, one thing I want to ask you, speaking.
Speaker 1: Of customers, Tim and I full disclosure, we talk about
Speaker 1: it a lot. Are a little bit obsessed with weimo.
Speaker 1: How much is weimo using Google Cloud. I'm just curious
Speaker 1: in terms of keeping that all going and running.
Speaker 10: Yeah, I totally understand why you love Weimo. I love
Speaker 10: weimo too. Living in San Francisco, I've been using it
Speaker 10: for a few years and my daughters and I love
Speaker 10: it as you can imagine, you know, being sister, you
Speaker 10: know parts of Google. We leverage technologies that Google Cloud
Speaker 10: is building as well as deep Mind is building, and
Speaker 10: so you as you could imagine, you know, there's really
Speaker 10: close interactions from a technology perspective across these different parts
Speaker 10: of Google.
Speaker 6: Hey, just thirty seconds left.
Speaker 5: Security.
Speaker 1: As we know your former background semant tech, you understand
Speaker 1: the importance of security specifically, and I'm just curious, what
Speaker 1: do you keep top of mind when you think about
Speaker 1: the security of Google Cloud and keeping it secure.
Speaker 10: Yeah, as you point out, security is a really important
Speaker 10: area for us to focus on, and it's a core
Speaker 10: part of the value that we deliver to our customers
Speaker 10: in terms of providing a very resilient, protected cloud. There
Speaker 10: are a number of things that you know that are
Speaker 10: top of mind for us and for our customers as
Speaker 10: we talk aboutecurity, especially in a world of AI. One
Speaker 10: is it's important that security companies are leaning deep into
Speaker 10: leveraging AI to improve their security capabilities. So we offer agents,
Speaker 10: for example, that customers can deploy as part of their
Speaker 10: security operations center as part of their threat intelligence gathering,
Speaker 10: and so we're also doing research on how AI can
Speaker 10: be leveraged by the bad actors and think about how
Speaker 10: you can stay on top of providing defenses for things
Speaker 10: like you know, altered images and videos and deep fakes.
Speaker 10: It's also important to our customers that the security we
Speaker 10: provide works multi clouds, so not just for Google Cloud,
Speaker 10: but that they can have the same security posture for
Speaker 10: workloads that they have on other clouds as well, and
Speaker 10: so that's an important part of the conversation too. So
Speaker 10: provide leading edge technologies, stay on top of AI and
Speaker 10: the expanding sort of threat landscape that opens up. And
Speaker 10: then also make sure that whatever you give us, you know,
Speaker 10: works across clouds.
Speaker 1: So glad we could get some time with you to SUSA.
Speaker 1: He's the Chief Operating Officer at Google Cloud, former CEO
Speaker 1: of Alumina, and also former president at Samantech, where he
Speaker 1: oversaw the security and data management portfolio.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Applecarplay and
Speaker 2: the Android Auto with the Bloomberg Business App. You can
Speaker 2: also listen live on Amazon Alexa from our flagship New
Speaker 2: York station, Just Say Alexa played Bloomberg eleven.
Speaker 1: Thirty Shares of Astra Zeneca rose this past week, right
Speaker 1: after it reported better than expected sales and rising profit
Speaker 1: for the second quarter, spurred by its stable of cancer
Speaker 1: medicines and growth in the US. The company recently pledged
Speaker 1: fifty billion dollars by twenty thirty in both production and
Speaker 1: research and development in the United States, as it seeks
Speaker 1: to show President Trump's administration it is serious about making
Speaker 1: medicines locally.
Speaker 3: A few days later, President Donald Trump sent letters to
Speaker 3: seventeen of the world's largest drug makers demanding that they
Speaker 3: charged the US what other country pay for new medicines.
Speaker 3: The letter added that they immediately lower what they charge
Speaker 3: Medicaid for existing drugs and guarantee that future medicines be
Speaker 3: launched and remain at prices on par with what they
Speaker 3: cost overseas. On top of that, US Commerce Secretary Howard
Speaker 3: Lutnik also said that the US will impose a massive
Speaker 3: tariff if pharmaceuticals are not made in the US. For
Speaker 3: the latest head on over to Bloomberg dot com.
Speaker 1: Tar of certainly top of mind for many global pharmaceutical executives.
Speaker 1: One of them Pascal Surio. He is Astrozenica's chief executive officer,
Speaker 1: and he joined us alongside Bloomberg News health reporter Madison
Speaker 1: Mueller in studio.
Speaker 11: I mean, I think, first of what it's important to
Speaker 11: really think about what every country would want to do,
Speaker 11: because every country would want to make sure they can
Speaker 11: they can secure the health of their citizens.
Speaker 9: It's a question of national security.
Speaker 11: So nobody should be surprised that the president wants to
Speaker 11: reshow manufacturing of pharmaceutical products. I personally have seen this
Speaker 11: have been since several years, and we decided several years
Speaker 11: ago to increase some manufacturing footprint in the US so
Speaker 11: we can actually manufacture many scenes for American patients in America.
Speaker 11: Every country would want to do that, and a big
Speaker 11: country like America, of course kind effort to do it.
Speaker 3: You said that you made that decision several years ago.
Speaker 3: How much of the fifty billion dollar pledge was planned
Speaker 3: before the President threatened these terraffs.
Speaker 11: Well, we've been pursuing this strategy of manufacturing in China
Speaker 11: for China, in the US, for the US since five
Speaker 11: six years and quite frankly, COVID actually showed us we
Speaker 11: were on the right track because we all saw what
Speaker 11: happened during COVID, and so we accelrated this movement. And
Speaker 11: so our fifty billion commitment is a commitment to R
Speaker 11: and D but also commitment to manufacturing. We announced together
Speaker 11: with the Governor of Virginia, a multi billion dollar investment
Speaker 11: in manufacturing in Virginia. And the Governor of Virginia has
Speaker 11: been incredibly fast with this team. So the three days
Speaker 11: to reach an agreement, it's incredible. So we're very happy
Speaker 11: to be there. We are building on you R and
Speaker 11: the site and Kendle Square, Cambridge, Massachusett with twenty five
Speaker 11: hundred scientists that we'll be working there, and there's more
Speaker 11: to come. We're just finishing the build of a Celtes
Speaker 11: RP manufacturing site in Rockville, Maryland. We've expanded in California.
Speaker 11: So so it's a sort of multi prane effort across
Speaker 11: many states across the US.
Speaker 12: You know, you've said that Virginia obviously has made it
Speaker 12: easy to make manufacturing investments there in North Carolina is
Speaker 12: pretty similar. Are there other states in the US where
Speaker 12: you're having these types of good conversations that are you know,
Speaker 12: incentivizing businesses like yours to invest.
Speaker 11: Well, you know, it's hard for me to point the
Speaker 11: point that any state that is better than another. Let
Speaker 11: me just say that we have.
Speaker 6: No problem.
Speaker 3: From different in New Jersey.
Speaker 11: Let me let me just say that the company like
Speaker 11: is for other science. So science is key, and so
Speaker 11: you need to be able to recruit the right sciences,
Speaker 11: the right engineers. And in Virginia you can do this
Speaker 11: because you have some of the best university universities. The
Speaker 11: other part is dealing with partners in a public sector
Speaker 11: that understand us, that we trust each other.
Speaker 9: We can move fast.
Speaker 11: You know, I always tell people in our company talk
Speaker 11: about Astrazenica speed because there's a lot of competition. We
Speaker 11: need to move fast. I've learned Virginia speed. The governor
Speaker 11: has moved so quickly. So this is the kind of
Speaker 11: thing we want to see, whether it's in America, in
Speaker 11: a state or in a country. We want speed and
Speaker 11: we want people to understand how we think.
Speaker 3: You want speed. You want people to understand how you
Speaker 3: think you want to You said you want to follow
Speaker 3: the science. There has been criticism that Robert F. Kennedy Junior,
Speaker 3: the Secretary of Health and Human Services, has not necessarily
Speaker 3: always followed the science with his comments when it comes
Speaker 3: to medicine, when it comes to drugs, when it comes
Speaker 3: to vaccines. How do you look at that and his
Speaker 3: role there.
Speaker 11: Well, you know, I'm not here to actually get involved
Speaker 11: in political discourses. Let me just say that as a company,
Speaker 11: sciences at the heart of everything we do. The reason
Speaker 11: we have such a large oncology pipeline and particular and
Speaker 11: beyond this is because we've focused on science for the
Speaker 11: last ten twelve years, and America is where science in
Speaker 11: our industry is happening. And that's why it's so critical
Speaker 11: to preserve this biosciences leadership the US hires globally. China
Speaker 11: is also becoming a very big source of innovation in
Speaker 11: our industry. Your open fortunately is fulling behind for a
Speaker 11: variety of reasons. So innovation is happening here. We need
Speaker 11: to keep this going.
Speaker 9: We need to.
Speaker 11: Actually continue supporting the leadership. And that's why we invest
Speaker 11: fifty billion dollars in this country, not only in manufacturing,
Speaker 11: but also in R and D.
Speaker 1: What about China, I'd love you to kind of explore
Speaker 1: that a little bit. What are you investing in and
Speaker 1: building out in China and what might surprise our audience
Speaker 1: about the innovation that's happening in China, especially when it
Speaker 1: comes to pharmaceuticals.
Speaker 9: Yeah, I think my great question I think we need
Speaker 9: to start.
Speaker 11: With is the the hypothesis, the assumption that basically the
Speaker 11: more products, so the more innovation exists in the world,
Speaker 11: the better it is for everybody, for every patient, because
Speaker 11: if you have a patient with cancer, the only thing
Speaker 11: that you care about is to be cured if you
Speaker 11: can be cured, right, and so innovation in China has
Speaker 11: really ramped up very rapidly. In the last few years,
Speaker 11: China has gone from making generics to ME TOOS to
Speaker 11: metwo plus what we call MEET two plus in our industry,
Speaker 11: to truly innovate these days, innovate in new technologies and
Speaker 11: cell therapy in si RN, in many many technologies, and
Speaker 11: so China has become the second engine of innovation, not
Speaker 11: as big as the US. The US remains the leader
Speaker 11: in that field, but China is ramping up very quickly.
Speaker 1: Is the administration with some of it, some would say
Speaker 1: questionable disruptive policies. There's been a lot of reporting about
Speaker 1: scientists kind of leaving the United States and going elsewhere.
Speaker 1: Are you seeing signs of that, whether it's to Europe,
Speaker 1: to China to elsewhere because of not supporting you know,
Speaker 1: academia and academic universities.
Speaker 6: Some of that seems to be coming back.
Speaker 11: But yeah, but you know, in these things, it's always
Speaker 11: difficult to discern what is anecdotal versus what is systemic.
Speaker 11: What we have seen in China is really a substantial
Speaker 11: return of scientists from the US but also from the
Speaker 11: UK and elsewhere, but not because of policy, simply because
Speaker 11: they could see opportunities in China. There is money, there
Speaker 11: is capital that can be invested. The Chinese are willing
Speaker 11: to take risk. The government has facilitated the return of
Speaker 11: the scientists and they've come back. But I can tell
Speaker 11: you that a lot of the scientists we work with
Speaker 11: and China in about the companies that we partner with,
Speaker 11: many of these people are American American Chinese. I mean
Speaker 11: they go back and forth, back and forth. There are
Speaker 11: bridge between the US and China, but they've gone to
Speaker 11: China because of the opportunities to create a company, be funded,
Speaker 11: tech risk and hopefully be successful and buy and large.
Speaker 9: They've been quite successful.
Speaker 11: I want to say though, that the leadership remains with
Speaker 11: the US and we need to maintain this, of course,
Speaker 11: I mean the country needs to maintain this.
Speaker 12: There's been some concern though that companies like yours, you know,
Speaker 12: not necessarily astro but big pharmaceutical companies are going to
Speaker 12: China for most of their biotech deals. Now, you know,
Speaker 12: what would you say to that and what would US
Speaker 12: biotech companies need to do to sort of attract investments
Speaker 12: from from.
Speaker 11: Well, I mean the first thing I would say is
Speaker 11: that if you're a patient, you don't care. What you
Speaker 11: want is a drug that will help you. Right, So
Speaker 11: when we do a deal with a Chinese company, typically
Speaker 11: it's because they've discovered a product and they need help
Speaker 11: to globalize it. Because discovering something in a lab is
Speaker 11: one thing. It doesn't require a huge amount of money.
Speaker 11: It require us very talented people, but the capital requirement
Speaker 11: is limited. When you want to develop globally, then you
Speaker 11: need to scale. You need billions of dollars of investment
Speaker 11: in phase two, phase three, and you do the scale.
Speaker 11: You know the people, the expertise. So what we do
Speaker 11: is we licen sindle product and then we develop them
Speaker 11: globally and then bring them to patients, so they start
Speaker 11: the innovation started in China but becomes a global medicine
Speaker 11: for everybody, so it really benefits everybody around the world.
Speaker 3: I want to go back to sort of a global
Speaker 3: domestic question the idea of your listing and the Times
Speaker 3: of London has said that astro Zeneka is looking to
Speaker 3: move it's listening to the US. Are you going to
Speaker 3: do that?
Speaker 6: Well, you just shared with us.
Speaker 11: Yeah, we don't comment on rumors, and you know, as
Speaker 11: a company over the last ten years we've had so
Speaker 11: many rumors. We don't comment on rumors. The only thing
Speaker 11: I will say really is the United States is really
Speaker 11: core to our company. By two thousand and thirty, we
Speaker 11: expect fifty percent of our revenue to come out of
Speaker 11: the United States. Today it's forty four to forty five percent,
Speaker 11: tremendously in the US in the first half. The US
Speaker 11: is the country that innovates I just told you, but
Speaker 11: also the countries that uptake the innovation faster, patients benefit
Speaker 11: much faster. So we want to invest here and we
Speaker 11: want to grow here, and that is a very critical
Speaker 11: part of our company globally.
Speaker 6: Just curious in terms of growth.
Speaker 1: You know, we've talked about earnings and your cancer drugs
Speaker 1: are certainly important in terms of growth. Where do you
Speaker 1: see kind of the most significant growth trends when it
Speaker 1: comes to pharmaceuticals. We've spent the last what is it, Madison,
Speaker 1: the last couple of years talking about the obesity drugs
Speaker 1: and weight loss drugs.
Speaker 6: But where do you see it?
Speaker 1: We talk often about genes and genetic and immunotherapy.
Speaker 6: Where do you see the real growth coming in the
Speaker 6: next I don't know, five to ten years.
Speaker 11: A great question, but it's almost all of the above.
Speaker 11: I mean of course my check managing what I would
Speaker 11: call sat rolo abdominal fat. Because everybody talks about obesity,
Speaker 11: what really matters is how much fat do you have
Speaker 11: in your domains that surrounds you, your liver, your punkreas,
Speaker 11: your heart and creates inflammation and insulin resistance and all
Speaker 11: the consequences.
Speaker 9: We can think about hypertension and others.
Speaker 11: So this is really a big epitieomic globally. We need
Speaker 11: to address that and that's what companies like lilian Over
Speaker 11: are doing today and we are we want to do
Speaker 11: this with all agents. But then you know, we have
Speaker 11: development in antibody drug conjugates, we have developments in by
Speaker 11: specific antibodies for cancer. One of the most exciting new
Speaker 11: technology is cell therapy because cells upy will apply to ematology, cancers,
Speaker 11: but also potentially sold tumors and immune diseases. We have
Speaker 11: no cases, small numbers early days, but small cases that
Speaker 11: young women who suffer from lupus, which is a terrible.
Speaker 6: Disease can be a family member who has can be cured.
Speaker 11: I mean these patient stay, their life is about taking drugs.
Speaker 11: Theories with all the consequences, you can imagine the organs
Speaker 11: are destroyed over time by the disease. They can be cured.
Speaker 11: You have people with my LOOMA that can be cured.
Speaker 11: And so as we progress this technology and make it
Speaker 11: more usable, is more easily usable, and more affordable, it
Speaker 11: can really transform many fields of medicine, pharmacology to imnology.
Speaker 12: I know you've had an amazing tenure at Astra and
Speaker 12: there's sort of an obsession in the UK with your
Speaker 12: succession plans and what comes next. You know, not to
Speaker 12: say that you're leaving anything.
Speaker 6: We don't want you to.
Speaker 13: We don't want you to go.
Speaker 12: What do you want to accomplish before you and your
Speaker 12: tenure at Astra.
Speaker 11: Well, one of the things is that I wanted to
Speaker 11: do is have a great team, and I have a
Speaker 11: great team.
Speaker 9: That's it.
Speaker 11: I have really a fantastic team. And that's why what
Speaker 11: you should worry about my succession. We have a great
Speaker 11: team and people who can succeed me. So that's I
Speaker 11: think one thing, and we need to we constantly try
Speaker 11: to improve the team, not only my direct reports, but
Speaker 11: they are direct reports and the company as a whole.
Speaker 9: Two is the.
Speaker 11: Second piece is almost unachievable because science is never going
Speaker 11: to be stopping. And the more I progress, the get
Speaker 11: the older it gets, the more science get exciting, and
Speaker 11: the more excited you. I mean, there's no better time
Speaker 11: to be in our industry than there's so much innovation,
Speaker 11: so much hope to cure diseases that can't be cured today.
Speaker 11: And the last thing was really to finish our site
Speaker 11: in Cambridge, because I keep joking internality I want to
Speaker 11: have the two Cambridges, one in Cambridge, you care when
Speaker 11: in Cambridge and Boston.
Speaker 9: But that's for the joke.
Speaker 11: But the most exciting really is the science and the
Speaker 11: pursuit of new technologies and new products that will make
Speaker 11: a difference and change the future of medicine. So that's
Speaker 11: how those things I want to add resk. But I
Speaker 11: have to accept that some poe biotoje is going to
Speaker 11: catch up with me.
Speaker 6: And unless you.
Speaker 1: Create a pill that keeps us going, I'm kind of
Speaker 1: even my fingers crosses exactly, gp Ones right, we think
Speaker 1: it's going to be curel Pascal, we really enjoyed this.
Speaker 1: Thank you so much for having for all the time.
Speaker 1: Pascal Sorio he is Astrozenicas chief executive officer, and of
Speaker 1: course Bloomberg us his own health reporter Madison Mueller, always
Speaker 1: a must read on the Bloomberg and at Bloomberg dot Com.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Applecarplay and the Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Plendy ahead in our second hour of the weekend edition
Speaker 1: of Bloomberg Business Week, including the long and winding trip
Speaker 1: to FDA approval for one psychedelic treatment.
Speaker 6: That trip, by the way, it's continuing.
Speaker 3: Plus, while the organization behind Burning Man's Desert Utopia is
Speaker 3: now facing an existential financial.
Speaker 1: Crisis, and jewelry from the Roaring twenties making a comeback,
Speaker 1: giving the new Tesla diner a test drive, and the
Speaker 1: surprising complexity of Hey Keyfob.
Speaker 6: It's all in Bloomberg Pursuits Later on this hour.
Speaker 3: First Up This Hour. A few weeks ago, Robert F.
Speaker 3: Kennedy Junior, the Secretary of Health and Human Services, said
Speaker 3: he could envision approval for psychedelic drugs is treatment for
Speaker 3: depression and trauma. If clinical studies have been conducted, it
Speaker 3: comes as psychedelics are making inroads in deep red states
Speaker 3: like Texas, where former Trump Cabinet secretary and ex Governor
Speaker 3: Rick Perry has thrown his full support behind the effort.
Speaker 3: That may have caught the attention of the team over it.
Speaker 3: They publicly traded small cap psychedelic company Compass Pathways. They're
Speaker 3: in pursuit of FDA approval. Kabirnth is the company's CEO.
Speaker 8: A Compass Pathways where a company in the final stages
Speaker 8: of developing synthetic psilocybin as a potential treatment for treatment
Speaker 8: resistant depression or what we call patients living with persistent depression.
Speaker 8: That's a big problem affecting some three million people in
Speaker 8: the US, and it's debilitating. Many of them are unable
Speaker 8: to work. The majority will have had some sort of
Speaker 8: suicidal thoughts in the course of their depressive illness. So
Speaker 8: we're a leading psychedelic company and potentially the closest to
Speaker 8: regulatory approval.
Speaker 3: You've used the word potential twice. You said it's a
Speaker 3: potential treatment, and you said potentially you're a leading company
Speaker 3: there when it comes to FDA approval. Is it unproven?
Speaker 8: We have generated robust evidence now from two studies. The
Speaker 8: first was published a couple of years ago, and then
Speaker 8: just last month we released more data from the first
Speaker 8: of our final stage studies. So what can I tell
Speaker 8: you about that? First safety this we didn't see any
Speaker 8: unexpected safety signals in this treatment of patients living with
Speaker 8: persistent depression. And secondly, after just a single treatment, after
Speaker 8: six weeks, we saw a significant reduction in depressive symptom.
Speaker 8: And just to emphasize that, because you'll be aware of
Speaker 8: the kind of the typical paradigm of antidepressants something you
Speaker 8: take daily, this was a single treatment and with the
Speaker 8: effect measured after six weeks. Now we have already are two
Speaker 8: for two in terms of these trials clinical trials that
Speaker 8: we've conducted, but we're continuing to see more evidence generated
Speaker 8: first in one of these late stage trials, and second
Speaker 8: we have another study ongoing where we're also looking at
Speaker 8: the impact potentially of another treatment.
Speaker 1: We should point out that about a month ago, in
Speaker 1: that study came out, the stock your shares tumbled almost
Speaker 1: fifty percent, hitting a record low. What I guess I
Speaker 1: want to understand, so it was below what Wall Street expected.
Speaker 1: It did meet your goal from what I understand your
Speaker 1: company goal, but Wall Street was very disappointed. Tell us
Speaker 1: how this works. How does one psilocybin treatment kind of
Speaker 1: cure depression, persistent depression.
Speaker 8: Psilocymin you can think of as if you like a key,
Speaker 8: a key that unlocks a door or a set of
Speaker 8: doors in the brain, and while those doors are open,
Speaker 8: that enables the patient to work through some of their
Speaker 8: fixed negative thinking and potentially have relief from their depressive symptoms.
Speaker 8: To do that, there is a profound subjective experience, So
Speaker 8: there is a psychedelic experience that lasts six to eight hours,
Speaker 8: and as I say, during the course of that, the
Speaker 8: drug is working in such a way that it unlocks
Speaker 8: these doors and allows the person, the patient to engage
Speaker 8: with some of those negative thoughts and potentially, as I say,
Speaker 8: get relief from those depressive symptoms. The fact is, as
Speaker 8: I say, we've seen, and what's amazing, that one single
Speaker 8: treatment can show sustained effects at least through to six
Speaker 8: weeks and potentially longer. In our earlier trial, our earlier
Speaker 8: clinical study that we did, we saw that for many
Speaker 8: patients that were suspen out to twelve weeks.
Speaker 6: What's many? How many? Forgive me Tim, like, I'm just
Speaker 6: curious how many.
Speaker 8: So that was a study of around two hundred and
Speaker 8: thirty patients of whom a significant number were on what
Speaker 8: we call the active dose of the medication, and what
Speaker 8: we saw was a quarter of them had from that
Speaker 8: single dose they were actually sustained freer depression out to
Speaker 8: twelve weeks. And in this population of people who have
Speaker 8: typically tried multiple treatments and for whom very little is
Speaker 8: any longer working, that was a remarkable response.
Speaker 3: When patients do take this single dose, what is the
Speaker 3: environment that they're in during that six to eight hours,
Speaker 3: and are they guided in some way by a therapists
Speaker 3: of sorts.
Speaker 8: It's a physically it's a calm, comfortable setting. They have
Speaker 8: the option of ice shades, there's music playing, and there
Speaker 8: are appropriate safety safeguards in place. Psilocybin is a very
Speaker 8: inner directed mechanism, so what actually happens is the patient
Speaker 8: has this profound influence, but where there is some in
Speaker 8: the room, it's largely silent. There is not directed therapy
Speaker 8: in the course of that intervention.
Speaker 3: How do you run an effective clinical trial for a
Speaker 3: drug that the experience is such that the person knows
Speaker 3: they've taken this drug rather than a placebo. Somebody who
Speaker 3: takes a placebo is not going to have a psychedelic
Speaker 3: reaction to the placebo.
Speaker 8: At Compass, we thought about this before we even started
Speaker 8: our studies. So our prior big study, the one I
Speaker 8: reference with two hundred and thirty patients, we designed that
Speaker 8: in such a way that there was the choice of
Speaker 8: three different doses of psilocybin. One was a low dose,
Speaker 8: a second was an intermediate dose. And in patients who've
Speaker 8: never had this experience before, that's truly confounding in terms
Speaker 8: of they cannot tell whether they got a medium dose
Speaker 8: or a high dose of that drug. This is important because,
Speaker 8: as you say, otherwise, it will be very obvious. But
Speaker 8: that design was very effective for that earlier stage study
Speaker 8: we did, and we've replicated that in one of our
Speaker 8: late stage studies.
Speaker 1: We're talking with Kabir Andathi's chief executive officer of Compass
Speaker 1: Pathways here in studio. You keep saying synthetic. What's the
Speaker 1: difference between synthetic and naturally occurring?
Speaker 8: So we are manufacturing a pill to the highest standards
Speaker 8: of purity, no contamination. We know exactly what is in
Speaker 8: the pill. This is a manufactured pill that we are
Speaker 8: treating with, so that.
Speaker 1: You know exactly in terms of dosage. Is that what
Speaker 1: I'm saying, So if naturally occurring is different.
Speaker 8: Potentially it is naturally occurring whereas well as is synthetic.
Speaker 8: So we know exactly what's in it, we know the
Speaker 8: exact pill.
Speaker 6: What will it cost?
Speaker 8: It's primiture to speculate on that at the moment we're
Speaker 8: still conducting these final stages of our studies.
Speaker 6: But expensive and.
Speaker 1: Would it be something I mean, if you get f
Speaker 1: to a approval, is it safe to make the assumption
Speaker 1: that it would be covered.
Speaker 8: The whole premise for founding Compass Pathways was to enable
Speaker 8: that form of broad access. So the reason that the
Speaker 8: company has gone through doing these rigorous, robustical studies so
Speaker 8: that we is exactly so that we can discuss that
Speaker 8: with the FDA potential for regulatory approval, and then if
Speaker 8: we're fortunate enough to get there, the chance to negotiate
Speaker 8: with both commercial insurers and government pairs. Let's remind ourselves
Speaker 8: that these three million people that I referred to, they
Speaker 8: are relying on insurers, commercial insurers and government pairs to
Speaker 8: actually cover their drugs. I believe we will be able
Speaker 8: to demonstrate significant value given how different this is from
Speaker 8: other treatments available today in depression.
Speaker 3: Kaviir Carol mentioned that the Associated Press reported earlier this
Speaker 3: month that RFK Junior recently talked to members of Congress
Speaker 3: about psychedelic therapy for depression and trauma. Apart from that,
Speaker 3: have you seen any real signs of support for the
Speaker 3: administration for this new class of drugs or type of
Speaker 3: type of treatment.
Speaker 8: We have had support from the FDA throughout our development process.
Speaker 8: We have breakthrough designation.
Speaker 9: Before Robert F.
Speaker 3: Kennedy Junior took over as HJ, we have had.
Speaker 8: A mot cbated and engaged agency. We're excited to see
Speaker 8: the voices from HHS from Veterans Affairs today suggesting that
Speaker 8: they also see the potential for this class, and we're
Speaker 8: very happy to work to see how we could potentially
Speaker 8: accelerate access while at the same time ensuring that we
Speaker 8: continue to generate really good, robust, good evidence that these
Speaker 8: are safe and effective.
Speaker 1: Talk to us about timeline, though, is it I feel
Speaker 1: like we've been I know Blimberg has been reporting on
Speaker 1: this class of drugs and treatments, and I think we've
Speaker 1: all seen pieces that's right for a long time that
Speaker 1: for people who or other treatments don't seem to be
Speaker 1: making a change for them.
Speaker 6: So I don't know.
Speaker 1: Is it another few years, is it the end of
Speaker 1: this year, is it the end of next year?
Speaker 6: And is it that the.
Speaker 1: Trump administration could somehow shuttle this through much more quickly.
Speaker 8: I think there are clearly people in the current administration who,
Speaker 8: as I say, see the potential of this. Well, we
Speaker 8: want to make sure what we do this right as well,
Speaker 8: so we want to make sure we do that in
Speaker 8: the right way, with the right rigor and so on.
Speaker 8: We are conducting, as I say, the final stages of studies.
Speaker 8: We have two ongoing of which the second will wrap
Speaker 8: up in the second half of next year. The data
Speaker 8: we released last month, though it hasn't yet been reviewed
Speaker 8: by the FDA, we have a meeting planned with them
Speaker 8: where we'll discuss with them and we'll discuss the potential
Speaker 8: for any acceleration of a filing and a regulatory process.
Speaker 1: Do you also think about other usages, whether it's PTSD
Speaker 1: and other applications, And I'm just curious where what you
Speaker 1: might be exploring in that world.
Speaker 8: Our next priority, beyond persistent depression is indeed PTSD. That
Speaker 8: is something with very high prevalence, some thirteen million in
Speaker 8: the US, for which there are only two very old
Speaker 8: drugs approved, and unfortunately recently there have been two advisory
Speaker 8: committees recommending against new drugs in that space. So yes,
Speaker 8: we see PTSD as a key area. We generated some
Speaker 8: data last year and we will be announcing the design
Speaker 8: of another late stage trial for PTSD.
Speaker 3: I know the US FDA is the gold standard for
Speaker 3: going through the regulatory process to be viewed by the
Speaker 3: world as a credible treatment for something, but these days
Speaker 3: is it worth going after approval in another country to
Speaker 3: try to do this on a smaller scale to prove
Speaker 3: that yes, it indeed works.
Speaker 8: We will be exploring approval in a range of countries.
Speaker 8: So our studies have been international, US, Canada, Europe as well.
Speaker 8: We have taken advice over the years from the European
Speaker 8: regulatory authorities. We're a UK based company as well, so
Speaker 8: we've been speaking to the MHRA, the regulatory authority in
Speaker 8: the UK. So yes, this is a problem, sadly for
Speaker 8: patients across the world, and we would look to exploit
Speaker 8: it where we can.
Speaker 1: I'm just curious in terms of big Farmer, have you
Speaker 1: had any preliminary discussions with larger, larger pharmaceutical partners interested
Speaker 1: in commercialization, co commercialization or distribution.
Speaker 8: What I know is the Big Farmer is tracking this
Speaker 8: space closely. And what's been great is to see the
Speaker 8: re entry of some big fama back into psychiatry over
Speaker 8: the last couple of years. So I know they watched
Speaker 8: this space. But we at Compass are determined that we
Speaker 8: can do this ourselves and are excited about the opportunity
Speaker 8: to bring this potential new treatment to patients who so
Speaker 8: clearly needed.
Speaker 1: So no strategic alignment that you would consider. You plan
Speaker 1: on doing this alone.
Speaker 8: That's our planted.
Speaker 6: Okay, great staff, stay in touch.
Speaker 13: Thank you.
Speaker 1: Let us sta how things are going. I really appreciate it.
Speaker 1: Kiber be well. Kabir Kath, He's chief executive officer of
Speaker 1: Compass Pathways, joining us right here in studio.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 3: Thirty, Well, Larry Page, Sergei Brin, Eric Schmid are all
Speaker 3: so called burners. Mark Zuckerberg is gone, as has Elon Musk.
Speaker 3: Sam Altman called the festival quote the most beautiful man
Speaker 3: made thing I've ever seen, and suggested it was what
Speaker 3: a post agi world can look like, like poetry. It's something.
Speaker 3: Apparently there are a lot of drugs there too. I'm
Speaker 3: just I'm just gonna say that we're talking about Burning Man,
Speaker 3: and as I've been told by friends who've gone, I
Speaker 3: wouldn't get it and I wouldn't like it.
Speaker 6: Friends you've gone, you've never gone.
Speaker 3: Oh I've never gone.
Speaker 7: No.
Speaker 6: Did your friends like it?
Speaker 13: Yeah?
Speaker 3: But he was like, he's like yeah, He's like, you
Speaker 3: would hate it. You got to let go, and I
Speaker 3: don't let go of anything.
Speaker 6: You didn't like it.
Speaker 3: Anyway, that's enough about me. I want to talk to
Speaker 3: Ted Alcore and he's a Bloomberg BusinessWeek freelance contributor. He
Speaker 3: wrote about the magazine for the magazine about Burning Man's crisis.
Speaker 3: He joins us from New Mexico, it's an existential financial
Speaker 3: crisis that the organization is facing. Ted, we're going to
Speaker 3: talk about that in a minute, But have you first
Speaker 3: have you been to the Burning Man event in the
Speaker 3: Black Rock Desert?
Speaker 10: I have.
Speaker 13: I feel like you know, I'm a big believer in
Speaker 13: getting a taste of what you're going to report on
Speaker 13: knowing a little bit of what you're writing about.
Speaker 3: Okay, so describe it. Just describe it for people who
Speaker 3: haven't been.
Speaker 13: It's hard to put into words, admittedly, and I don't
Speaker 13: mean that as hyperbole. It's a very strange, unusual environment
Speaker 13: visually and socially. You know, eighty thousand people in the
Speaker 13: desert with a lot of lights, a lot of noise.
Speaker 13: I've heard rumored there are some substances there and certainly
Speaker 13: very few rules, but you know, interesting things occur out
Speaker 13: of it, and you know, obnoxious things too, but it's
Speaker 13: certainly something that keeps people going back here after year.
Speaker 3: One of the very few rules, though, is that there's
Speaker 3: no money exchanged at the event, apart from the ticket
Speaker 3: that you buy ahead of time. And that is the
Speaker 3: core fundamental tension that you write about. It has to
Speaker 3: do with commerce and money. That's really at the root
Speaker 3: of Burning Man's financial woes. It just can't do money
Speaker 3: explain what's going on.
Speaker 13: Yeah, I mean, basically it's bound to these principles that
Speaker 13: kind of emerged from this sort of utopian project of
Speaker 13: you know, getting away from the traditional capitalist economy, decommodifying
Speaker 13: the event. Everything there is based on gifting. You know,
Speaker 13: for nine days, people get by on what they what
Speaker 13: they brought, and what other people give them. But the organization,
Speaker 13: the nonprofit that runs this, of course, has to operate
Speaker 13: in the real world where det collectors do come for
Speaker 13: your bills. And you know, for a period of time
Speaker 13: the event was growing and there was a ton of
Speaker 13: interest and ticket sales were covering the costs. But in
Speaker 13: the last few years, costs have increased a lot, you know,
Speaker 13: economic the inflation, but also you know in terms of
Speaker 13: labor and other costs for events like this, and the
Speaker 13: ticket prices just haven't kept up, and so the sort
Speaker 13: of the business model of bringing this group together is
Speaker 13: increasingly in doubt. And it kind of caught up to
Speaker 13: them this last year when tickets actually didn't sell out completely,
Speaker 13: particularly this higher price trant or tickets, and all of
Speaker 13: a sudden the organization came out of the desert and
Speaker 13: was basically twenty million dollars in the hole.
Speaker 6: Wow, that's a lot of money.
Speaker 1: You write in the story that back in nineteen ninety
Speaker 1: anything close to when they sold anything close to a
Speaker 1: ticket or what you could call it was actually a
Speaker 1: suggestion of ten dollars in donations and price tickets or
Speaker 1: the price of tickets kind of stayed around. I guess
Speaker 1: that level for a while. What does it cost today
Speaker 1: and why aren't people maybe as interested? Because I feel
Speaker 1: like we used to talk about it a lot here,
Speaker 1: because a lot of business folks, certainly in the tech community,
Speaker 1: used to show up there. So talk to us about
Speaker 1: what it costs today, and maybe why interest is waning?
Speaker 13: Yeah, I mean, well, when it started, it was just
Speaker 13: a bunch of people driving out into the desert, So
Speaker 13: I don't think feel people felt compelled to sort of
Speaker 13: make a donation. I dug up this flyer from the
Speaker 13: first time that the event was held in Nevada with
Speaker 13: as you said, it suggested ten dollars donation. Yeah, last year,
Speaker 13: the standard price ticket was five hundred and seventy five dollars.
Speaker 13: This year it's seven hundred and forty nine dollars. So
Speaker 13: it's a big difference. And admittedly the event has gotten
Speaker 13: a lot more formalized A lot more, you know, law abiding,
Speaker 13: I guess, and believe me, there's plenty of debates over
Speaker 13: whether which of those costs are necessary. But if you
Speaker 13: have to spend three point two million dollars on porta potties,
Speaker 13: which is how much they spent last year, you can
Speaker 13: imagine the sort of scale of public services that the
Speaker 13: that the organization has to has to offer these days.
Speaker 13: And that gives into a lot of tension within sort
Speaker 13: of the Burner burning Man community, because, as you said,
Speaker 13: there's there's been this diminution in the number of people
Speaker 13: that went to Nevada for the event last year, and
Speaker 13: it's caused a lot of people to wonder has Burning
Speaker 13: Man jumped the shark or was it you know, they
Speaker 13: had an off year. There was a very well publicized
Speaker 13: monsoon that led a lot of people sort of stranded
Speaker 13: in mud the year before. You know, is this just
Speaker 13: sort of like a temporary thing or a secular trend?
Speaker 13: And as I also went on to report, a lot
Speaker 13: of people who are who sort of identify as Burners
Speaker 13: or Burning Man people aren't going to Nevada anymore. They're
Speaker 13: actually going to regional events that have proliferated it around
Speaker 13: the world, and now there's around one hundred of them,
Speaker 13: and in fact.
Speaker 6: Then they pay and they pay a franchise fee.
Speaker 13: Right, No, you know, these events basically if they meet
Speaker 13: the goals of Burning Man, they sick to the principles
Speaker 13: that provide some monicam of safety. They can use that,
Speaker 13: they can get sanctioned and they can exist, and they're offered,
Speaker 13: they're asked to give a suggested donation of the organization,
Speaker 13: but they don't tie basically the mothership and more people
Speaker 13: now are experiencing Burning Man in those places than in
Speaker 13: Nevada in Black Rock City.
Speaker 3: Okay, Well, speaking of donations, Carol mentioned twenty million dollars
Speaker 3: was a lot of money, and for an organization nonprofit
Speaker 3: being short, twenty million dollars certainly is. But to somebody
Speaker 3: who's one of the wealthiest people in the world, indeed
Speaker 3: the wealthiest person in the world. The names of people
Speaker 3: who are Burning Men supporters, Larry Page, Sergei Brin, Eric Schmidt,
Speaker 3: they're all billionaires. Mark Zuckerberg one of the wealthiest people
Speaker 3: in the world. Elon Musk is the wealthiest person in
Speaker 3: the world. Twenty million dollars would be nothing for some
Speaker 3: of these billionaires. What did the CEO of the organization
Speaker 3: tell you about her relationship with the wealthiest people in
Speaker 3: the world and who have been supporters of Burning Men,
Speaker 3: and how they could or could not help fill the
Speaker 3: gap here.
Speaker 13: I think it's pretty popularly understood that sort of Silicon
Speaker 13: Valley's elites have, you know, are very connected with Burning Man.
Speaker 13: But even to me, I was surprised to learn how
Speaker 13: fundamental a very small number of those uber wealthy people
Speaker 13: have been to the organization. It was in a fundraising
Speaker 13: prospectus that was sort of an internal document that I
Speaker 13: learned that just five individuals have provided the organization two
Speaker 13: thirds of its philanthropic funding in the last ten years,
Speaker 13: over million dollars. They wouldn't tell me the exact names,
Speaker 13: but I think you've mentioned a few most likely, And
Speaker 13: as the fundraisers for the organization told me Britch, people
Speaker 13: are weird about money, and folks who are willing to
Speaker 13: go or in fact eager to go out into the
Speaker 13: desert spend a lot of money on a flame belching
Speaker 13: vehicle to drive around, or as one I spoke with,
Speaker 13: you know runs a big camp for all this extended
Speaker 13: family and friends they give out. They gave out a
Speaker 13: kilo of high grade Iranian saffron, you know, which has
Speaker 13: some hallucinogenic properties. You know, people are very willing to
Speaker 13: make those sort of private contributions, but they're a lot
Speaker 13: more reticent to support the organization, and so they're trying
Speaker 13: to pivot. Basically, the organization, the Burning Man Organization's point
Speaker 13: of view is we're like another arts organization. We're like
Speaker 13: the met Opera, you know, or American Ballet Theater. We
Speaker 13: need people to support us because ticket revenues are alone
Speaker 13: aren't going to pay the bills, but get it can
Speaker 13: Mincing wealthy donors to sort of pitch in for the
Speaker 13: more humdrum kind of costs of putting on the event
Speaker 13: has been a challenge, and they fell very short of
Speaker 13: their twenty million dollar fundraising goal this last year. Last
Speaker 13: I heard they'd raised seven million dollars.
Speaker 6: So fundraising not going so well.
Speaker 13: So everything hangs in the balance here For the sales
Speaker 13: this year, I think, you know, they've tried to be
Speaker 13: more firm about asking a higher ticket price and sort
Speaker 13: of coaxing people to pitch in what they say is
Speaker 13: the true cost. But they're between a little bit of
Speaker 13: a rock and a hard place, because the higher they
Speaker 13: raise prices, they're losing their lower income adherents, some long
Speaker 13: time members of their community who kind of make the event,
Speaker 13: who build the event. And so if they raise prices
Speaker 13: too much, they're going to lose the things that make
Speaker 13: that whole event what it is.
Speaker 1: We cover the US Open and it's lots of sponsorships,
Speaker 1: big well known companies, any companies interested in sponsoring this event.
Speaker 13: Well, you know that Burning Man organization has tried to,
Speaker 13: i think adapt to new times. They're trying to interest
Speaker 13: a new generation, right of the gen zers who haven't
Speaker 13: who have not been attending, who don't know how to
Speaker 13: get a ticket or pay a price. They've embraced some
Speaker 13: kinds of social media trying to put the word out
Speaker 13: about their tickets. But they're really hedged in by again
Speaker 13: those principles that they're philosophical principles, because if they step
Speaker 13: into a realm where it looks like they're commodifying what
Speaker 13: they're doing, they get so much blowback from this pretty
Speaker 13: intense community. They reposted a TikTok with you know, some
Speaker 13: folks kind of like doing shot skis and like trampolining
Speaker 13: in baby oil, and people lost their minds on Reddit
Speaker 13: and so yeah, to bring in companies, private companies, or
Speaker 13: to seek other sources of revenue, I think is really
Speaker 13: anathema to who they are. But you know that limits
Speaker 13: their options about how to monetize monetize what they do.
Speaker 3: I don't want to give away the whole story. It's
Speaker 3: worth the read. It has been among the top red
Speaker 3: stories on the Bloomberg terminal since this came out, and
Speaker 3: I've had people text me about it. Actually, my dad
Speaker 3: loved this story. He's like a I guess you.
Speaker 6: Could say, does the where she had gone?
Speaker 3: No observer a distant observer of burning Man. I think
Speaker 3: it's fair to say, I don't want to give the
Speaker 3: whole thing away, but can you just tell us a
Speaker 3: little bit about a potential solution here? This voluntary burning
Speaker 3: Man wealth tax?
Speaker 13: Yeah, got to go there. Well. One of the board
Speaker 13: members of the burning Man project who is has told me,
Speaker 13: is one of the major donors that supported it farhad Mohet,
Speaker 13: who's shold Shopzilla for over a half billion dollars twenty
Speaker 13: years ago and has had some other very successful ventures since.
Speaker 13: You know, he's all in on a more ambitious vision
Speaker 13: for burning Man and His view is that wealthy people
Speaker 13: like himself should pay a bigger share, and he made
Speaker 13: this amazing website which he calls the Burning Man Principal
Speaker 13: Pause Calculate, which is essentially he says, if you go
Speaker 13: to Burning Man for nine days and you know, don't
Speaker 13: work and you just play your capital, your money should
Speaker 13: go with you. It shouldn't go with you, it should
Speaker 13: actually take that time off. And so the interest that
Speaker 13: your wealth generates in that nine days, you should contribute
Speaker 13: to the Burning Man organization. And if you put in
Speaker 13: your wealth and his calculator and you're like me, freelance
Speaker 13: journalists income, you find wow, based on my income or
Speaker 13: my wealth, I don't know anything. But he put in
Speaker 13: for me, you know, okay, well you got one billion dollars.
Speaker 13: Oh you have ten bills, Oh you have one hundred
Speaker 13: and fifty billion dollars. And he's thinking about somebody specific,
Speaker 13: and he says like, this guy needs to give one
Speaker 13: point three billion dollars to the Burning Man organization. And
Speaker 13: I was like, well, that exceeds their expenses. What are
Speaker 13: you going to do the rest? And he said, we'll
Speaker 13: flip it on its head. We'll give the money out
Speaker 13: to all the burners as a universal burner income, you know,
Speaker 13: and then we're really living our values and so you know,
Speaker 13: apparently a few people he's spoken with about are enthusiastic scores.
Speaker 13: This is a voluntary I would kind of describe it
Speaker 13: as a wealth tax, but it's suggested donation going back
Speaker 13: to their roots and we'll see if it takes hold.
Speaker 6: What was he smoking? Oh sorry, no, I'm just saying this, Saffron.
Speaker 13: I think.
Speaker 3: I don't know. I don't know it was it. Read
Speaker 3: the story, reading the story.
Speaker 6: I don't know anyway, unbelievable read.
Speaker 1: As Tim mentioned, it has been among the most read
Speaker 1: stories throughout the week. Ted Alcorn, He's contributor at Bloomberg
Speaker 1: business Week. Check out a story about burning Man Festival
Speaker 1: facing its extential existential financial crisis.
Speaker 6: It's an incredible read.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Applecarplay and the Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 6: It's not for Bloomberg Pursuits.
Speaker 1: And this week it's the Jewelry special featured in the
Speaker 1: magazine out on newstands later this month and already available
Speaker 1: online on the Bloomberg and at bloomberg dot Com and
Speaker 1: tim It's all about the one hundred years of Art
Speaker 1: Deco influence. I love the history that we find out
Speaker 1: about kind of how it all came to be, and
Speaker 1: so we're going to get into that jewelry that's over
Speaker 1: a century old, that worth millions of dollars.
Speaker 3: Here with more is Bloomberg contributing a jewelry rider and
Speaker 3: founder of La Patiala, the luxury encyclopedia, Kristin Shirley. Back
Speaker 3: with us. Kristin, I want to start with some history
Speaker 3: and definitions here. What is art Deco and just give
Speaker 3: us some background?
Speaker 14: Sure, So the Art Deco period started in the early
Speaker 14: nineteen hundreds and really crystallized in nineteen twenty five at
Speaker 14: the big exhibition in Paris for Art Deco jewelry. There
Speaker 14: are a lot of different styles, but what they share
Speaker 14: is graphic, linear design, few colors, but bold colors when
Speaker 14: they're used, and the use of diamonds, black enamel and honor.
Speaker 6: What did it come to be?
Speaker 1: Like? I always think about, you know, trends and waves
Speaker 1: fashion art jewelry, Like what is it like, take us
Speaker 1: back to nineteen twenty five.
Speaker 14: Sure, so this was a reaction to the very floral,
Speaker 14: swirlly motifs of the period that the late eighteen hundreds.
Speaker 14: So these new geometric motifs were sort of the opposite
Speaker 14: of that. These designers were looking at modernity, and modernity
Speaker 14: to them was strict geometric lines. We were entering the
Speaker 14: industrial era with you know, Ford assembly lines and new
Speaker 14: buildings and tanks. And unfortunately, World War One came in
Speaker 14: and sort of put a stop to this design period,
Speaker 14: and then it picked it up at the back of
Speaker 14: the war, and then the exhibition happened in nineteen twenty five,
Speaker 14: once the europe had had a chance to recover.
Speaker 3: I think a lot of people are really familiar with
Speaker 3: our Deco buildings, especially here in New York, maybe the
Speaker 3: Chrysler Building or the Empire State Building. But jewelry before
Speaker 3: reading your piece was kind of new to me. It
Speaker 3: didn't occur to me that the Art Deco movement extended
Speaker 3: toward jewelry.
Speaker 14: Yes, our Deco jewelry is actually one of the most
Speaker 14: enduring and timeless jewelry trends that they there is no
Speaker 14: matter what year the pieces are from They really have
Speaker 14: this ultra modern look. So in our story, we combined
Speaker 14: vintage pieces from the early nineteen hundreds with pieces that
Speaker 14: were made this year, and I think looking at them,
Speaker 14: you can't really tell what's vintage and what's new because
Speaker 14: it still looks so fresh. And it's one of the
Speaker 14: very few periods that you can say that about.
Speaker 6: That is so true.
Speaker 1: And it's funny because I had to go back and forth.
Speaker 1: I'm like, Oh, that's new stuff, which is fascinating. Christin
Speaker 1: take us back though, to November that auction at Christie's,
Speaker 1: because I'm always curious about too. Why you guys decide
Speaker 1: to talk about this right now? It sounds like all
Speaker 1: of a sudden pieces have been coming up for auction
Speaker 1: and investors, buyers, they're really interested in them.
Speaker 14: Yes, I think Art deco is always enduring. But there
Speaker 14: was a huge collection of a private family collection of
Speaker 14: jewelry that came up for auction and Christie's in November,
Speaker 14: and the piece is sold for exceptional sums, you know,
Speaker 14: two to three times and many amounts, and that's because
Speaker 14: the provenance was secure. It had been in the same
Speaker 14: family ever since it was commissioned, since the nineteen twenties,
Speaker 14: which is very rare and have massive, massive gemstones that
Speaker 14: you sometimes can't find today because the mines have then depleted.
Speaker 14: So when we were looking at the jewelry world this year,
Speaker 14: we said, what is the biggest story, And for me,
Speaker 14: it was that art Deco started one hundred years ago
Speaker 14: really and is still as desirable today. Someone spent four
Speaker 14: point four million francs on a single necklace. That's pretty wild.
Speaker 6: Well, all right, what was that necklace?
Speaker 14: It was a beautiful Cartier necklace and it had about
Speaker 14: one hundred and thirty carrots of diamonds and it was
Speaker 14: just very strict geometric, absolutely stunning, a perfect example of
Speaker 14: Art Deco style.
Speaker 6: I think I have a version of that in rhinestones.
Speaker 6: We're just not the same thing.
Speaker 1: No, but it's really just I mean, you look at
Speaker 1: something like that, it's timeless. I also love I mean
Speaker 1: walk us through some of the other pieces and also
Speaker 1: kind of go back to some old Hollywood icons many
Speaker 1: decades ago, who also kind of show show case pieces.
Speaker 14: Yes, if we're looking at Hollywood in the nineteen twenties
Speaker 14: and nineteen thirties, these starlets were saying, I want to
Speaker 14: wear art Deco jewelry. I don't care what era of
Speaker 14: the movie is taking place, And so we see it
Speaker 14: in a Cleopatra movie, which the Costume Archives at Paramount
Speaker 14: described as the most Art Deco movie of all time.
Speaker 14: You wouldn't think Cleopatra would be wearing Art Deco jewelry
Speaker 14: and clothing, but it was just so avant garde and
Speaker 14: of the moment that that's how they dressed her. And
Speaker 14: it's really an interesting thing to see. Then if we're
Speaker 14: looking at the actual pieces that we shot. We shot
Speaker 14: a mix of vintage from the nineteen twenties and nineteen
Speaker 14: thirties from makers including Chomet and Bulgarie, and then we
Speaker 14: shot modern pieces from independent designers like Passen, Adam Neely
Speaker 14: and Jessica McCormack, and the top houses of the day
Speaker 14: like being Cleifan, Ourpels, Buchmarl and Cartier.
Speaker 3: What about now in sort of everyday jewelry and the
Speaker 3: influence of Art Deco one hundred years ago on designers today.
Speaker 14: Well, I think people would be surprised that a lot
Speaker 14: of the jewelry they're wearing is Art Deco inspired. If
Speaker 14: you're wearing something that's geometric, it's got white diamonds and
Speaker 14: black enamel. That is quintessential art Deco right there. Anything
Speaker 14: with like a cavish and gemstone inside a geometric setting
Speaker 14: also buried art Deco. And we see these designers pulling
Speaker 14: inspiration from all sorts of Art Deco pieces. For example,
Speaker 14: Fernando Storage that we featured in the story, his pieces
Speaker 14: were inspired by the Chrysler Building and New York City's
Speaker 14: iconic Art Deco buildings. So designers are bringing in Art
Speaker 14: Deco influences from outside of the jewelry world too.
Speaker 6: I have to say, the airrings are amazing.
Speaker 1: Folks should go online and check it out or go
Speaker 1: to the Bloomberg And my understanding on all of this
Speaker 1: or a lot of those prices are upon request unless
Speaker 1: news and there are a lot of prices upon request,
Speaker 1: So as my mom used to say, if you have
Speaker 1: to ask. Kristin, thanks so much. It's an incredible spread.
Speaker 1: And read the jewelry special here in pursuits. Kristin Shirley,
Speaker 1: thank you so much. Bloomberg's contributing jewelry writer and founder
Speaker 1: of Patilla joining us here. All right, art Deco matters,
Speaker 1: We got that, and so too, it seems Tim keyfobs,
Speaker 1: especially when you take into account what goes into them.
Speaker 3: Yeah, I learned that the hard way. A couple of
Speaker 3: years ago. I lost the humble key fob for my
Speaker 3: twenty eighteen subrew outback and it was many, many, many
Speaker 3: hundreds of dollars to replace it. I was like, this
Speaker 3: is insane.
Speaker 6: It's insane.
Speaker 3: I actually think it was like, not cool, cool, it's
Speaker 3: not cool.
Speaker 1: No, they're crazy. We're always like in our house, don't
Speaker 1: lose the keyfob.
Speaker 6: With more on that.
Speaker 3: I got a guy though, Now you.
Speaker 6: Got a guy?
Speaker 2: A guy?
Speaker 3: Yeah, Timmy's like, you have a guy for every Yeah,
Speaker 3: I didn't. Let's just say I didn't go with the
Speaker 3: official subreu one. I got a guy. He showed up.
Speaker 1: You maybe from California, but you have definitely become a
Speaker 1: New York. All right, let's get to it, and we're
Speaker 1: al just going to get a little bit into her
Speaker 1: recent drive by with the Tesla Diner. Bloombergotto columnist Hannah
Speaker 1: Elliott joining us. Now, Hannah, good to have you here.
Speaker 1: Let's talk key fobs first of all, because I think
Speaker 1: we just think they're this silly little thing, but apparently
Speaker 1: there's a lot that goes into them, especially for a
Speaker 1: luxury car or higher end car.
Speaker 7: Hi, guys, that's exactly right. And Tim, that was so
Speaker 7: not cool. I'm very upset by your tale of your
Speaker 7: lost key fob.
Speaker 3: Well, I called the super dealer and I think they
Speaker 3: were said like it'd be in the many hundreds of
Speaker 3: dollars to replace it. So I looked at Reddit and
Speaker 3: I found that you can actually call a like a
Speaker 3: special type of locksmith and they can bring you an
Speaker 3: aftermarket one that works just as well. That was like,
Speaker 3: it was like one hundred and fifty two hundred bucks.
Speaker 7: That's a great hack. We should all take a queue.
Speaker 7: That's a great hack. And Carol to your point, Yeah,
Speaker 7: key fobs are something that we don't really think about
Speaker 7: until we have to, like if we lose it. But
Speaker 7: actually it is kind of a calling card for your
Speaker 7: car because it is the first and primary way that
Speaker 7: you are going to interact with the vehicle. Actually, and
Speaker 7: automakers do know this. They've kind of come to embrace it,
Speaker 7: embrace it in recent years, especially the higher end, like
Speaker 7: I'm thinking of Bentley for instance, which has this amazing,
Speaker 7: pretty heavy sort of ovoid key fob that has this
Speaker 7: really cool burling on it and this Bentley b on
Speaker 7: the top and that it that is on the top
Speaker 7: specifically so that when you leave the key like on
Speaker 7: a bar or on a table in a restaurant, it's
Speaker 7: sort of a low key, humble brag that, oh I've
Speaker 7: got a Bentley.
Speaker 6: Which really low key.
Speaker 11: Maybe not that.
Speaker 7: Low y, maybe not that.
Speaker 1: The other thing that was interesting to like some people,
Speaker 1: I love what you talk about the BMW key fob
Speaker 1: that like kind of went maybe too far.
Speaker 7: Yeah, you know again, this is sort of a new
Speaker 7: era of exploration in the key fob segment, and we
Speaker 7: got a credit BMW. They really they shot for the
Speaker 7: moon on this. In about twenty fifteen, they developed this
Speaker 7: display key, which was this really big, oversized fob with
Speaker 7: a screen on it and it had a ton of function.
Speaker 7: Is literally kind of like an iPhone, a small iPhone.
Speaker 7: But it was a six hundred and seventy dollars option
Speaker 7: and it is no longer offered. It was discontinued in
Speaker 7: twenty twenty two because of low consumer interest. So that
Speaker 7: was a no. That was a no.
Speaker 3: How did Cadillac and General Motors kind of mess up
Speaker 3: with their high end competitor.
Speaker 7: This is an interesting thing too. This is a this
Speaker 7: is a miss. And we recently drove the Cadillac Celestic,
Speaker 7: which is their Rolls Royce competitor, and I actually did
Speaker 7: like that vehicle. But the one thing that was a
Speaker 7: big miss is the key was not special. It was
Speaker 7: a plastic key, a thick leather sheath that was the
Speaker 7: same key that you would get in any other Cadillac,
Speaker 7: And for a car that is supposed to be going
Speaker 7: up against, for instance, a Rolls Royce, the key just
Speaker 7: felt like a total flop. It did not have any
Speaker 7: of the signature or subtle details and just touch points
Speaker 7: that the car itself had. It just was a plastic fob.
Speaker 7: It was kind of a dud wo. Yeah, it's exactly
Speaker 7: so these things do matter. On the other side of things,
Speaker 7: Lotus with their electric suv that Eleetre has developed this
Speaker 7: thing they're calling the pebble, which is a fob, but
Speaker 7: it's shaped kind of like a guitar pick, and it's small,
Speaker 7: it's light, it's very simple. They told me that they
Speaker 7: developed it so that if you have it in your pocket,
Speaker 7: it's not going to ruin the line of your clothing
Speaker 7: or your suit, which I thought was really cool.
Speaker 1: So you know, is it in some looking forward, is
Speaker 1: there a point where it's just.
Speaker 6: Not going to matter because we're not going to need anything.
Speaker 7: Honestly, I think we are going in that direction. Of
Speaker 7: course we can't, you know. Of course, for instance, Tesla
Speaker 7: and Rivian have like credit card sized quote unquote keys
Speaker 7: that you can use to unlock the vehicle. Also, of
Speaker 7: course we have apps that now basically can control a
Speaker 7: lot of vehicles from starting, limp to control and climate, audio,
Speaker 7: windows settings, everything that is great. I mean it's not
Speaker 7: great if you if you lose your phone, or your
Speaker 7: phone's dead, or you break your phone, so there's it's
Speaker 7: not perfect. But to your point, Carol, I think we
Speaker 7: are moving in that direction.
Speaker 14: All right.
Speaker 1: Well I only said that because you said that in
Speaker 1: your story, and that's how you can do.
Speaker 6: All right, tam go.
Speaker 3: Let's move in the direction of food, because Hannah, you
Speaker 3: usually get to write about cars, but sometimes you get
Speaker 3: to write about burgers and grilled cheeses and chili fries.
Speaker 3: And you went to the recent Tesla diner and know
Speaker 3: you were not allowed to park your own rolls Royce
Speaker 3: the Tesla.
Speaker 7: Diner Tesla parking only they do. They do have eighty superchargers,
Speaker 7: which is one of the highest concentrations of superchargers in
Speaker 7: the country. There are a few that are bigger, like
Speaker 7: out in the desert on the way to Vegas I've seen.
Speaker 7: But yeah, this is Tesla parking only, although they will
Speaker 7: valet your car or you can street park like I did.
Speaker 7: So how was it, Well, it was really an experience.
Speaker 7: Let me tell you. If you are a Tesla owner
Speaker 7: or a Tesla fan, I think you will find it
Speaker 7: to be really fun. It was really different. I win
Speaker 7: in not knowing what to expect. I will say I
Speaker 7: have driven by many times in the past few days
Speaker 7: and seen a line of people around the block, so
Speaker 7: there is a lot of excitement about this. The diner
Speaker 7: itself looks very jetson zy. It's round, it has neon lights.
Speaker 7: They're playing you know, movies on big screens. It's like
Speaker 7: a drive in actually, so there's a lot to see.
Speaker 7: The food itself was better than I expected. It was
Speaker 7: developed by Eric Greenspan, who was a Cordon Blue trained chef.
Speaker 7: He's had many successful restaurants here in La. He's developed
Speaker 7: his own style of New American cheese, so he is
Speaker 7: really well respected, and I actually ran into him at
Speaker 7: the diner. He was really nice enough to order for me.
Speaker 7: We got an array of sandwiches, including a tunamel, a
Speaker 7: grilled cheese, a hamburger, some chili cheese fries, a coffee,
Speaker 7: and the food was good. Now, I admit I don't
Speaker 7: often eat chili cheese fries, but Eric developed this particular
Speaker 7: Wagu beef style chili cheese fry that he told me
Speaker 7: reminded him of when he was in high school and
Speaker 7: he would have a cheat day on his diet and
Speaker 7: he would always eat cheese fries chili cheese fries. So
Speaker 7: which was and they were good. They were good. They
Speaker 7: were very like down home comfort. No sell it on
Speaker 7: the menu, you know, I might have missed that, but
Speaker 7: none that I saw. The whole idea here is it's
Speaker 7: an American drive and diner, like the kind you saw
Speaker 7: in the fifties and sixties.
Speaker 6: Is it gonna make people buy a Tesla?
Speaker 7: Oh, that's a good question. I don't think so. I
Speaker 7: don't think so. This feels to me more like Tesla
Speaker 7: is celebrating the people who are already in love with
Speaker 7: the brand, and I do think that is really admirable.
Speaker 7: I you know, I love the idea of an automotive
Speaker 7: brand spending a lot of money and resources and time
Speaker 7: to celebrate its owners. And Tesla has extremely dedicated owners,
Speaker 7: especially considering everything that the company itself has been through
Speaker 7: in recent months. You know, it's really suffered in terms
Speaker 7: of sales and revenue and profits and earnings and all that.
Speaker 7: So it's great for people who lef Tesla. And honestly,
Speaker 7: I would go back and get a burger if the
Speaker 7: line was if I didn't have to wait in line.
Speaker 7: That's really the The line now is really long.
Speaker 3: What about the Optimist robot? Isn't that supposed to make
Speaker 3: things move more smoothly?
Speaker 7: Yeah, well, Optimism was not present my friends and I
Speaker 7: did ask, and I was told that, uh, optimis is
Speaker 7: on a break.
Speaker 3: I thought those a whole point of robots is they
Speaker 3: didn't need to take breaks. You don't need to pay them,
Speaker 3: they don't need to sleep. Come on, I know.
Speaker 7: And I did also ask, now was somebody else operating
Speaker 7: optimists you know remotely? And I got a no comment,
Speaker 7: So you know that that might have been brought out
Speaker 7: to sort of generate some buzz at the start of
Speaker 7: the at the opening, but no, unfortunately Optimist was not there.
Speaker 6: H yeah, I can't.
Speaker 7: Yeah, but I would say, honestly, the sleeper hit of
Speaker 7: the diner menu is the tuna melt. I yeah, like,
Speaker 7: not something I would normally go for, but it was great.
Speaker 6: We're heading to the West Coast for a work trip
Speaker 6: in the falls. Maybe yeah, maybe take a week? Wait,
Speaker 6: can we take away Mode diner?
Speaker 7: That's a great idea.
Speaker 3: I love that they would not. As long as Elon
Speaker 3: doesn't see you, I think you'd be okay, limeblt you
Speaker 3: did ask?
Speaker 7: I did ask Eric, has Elon been by it? And
Speaker 7: he said that he had been, But I feel like
Speaker 7: we would have heard about it, so maybe he went
Speaker 7: by before it open.
Speaker 14: I don't know.
Speaker 6: Yeah, we'll keep an eye on it right Oh.
Speaker 3: Thanks to Hannah Elliott, a Bloomberg News auto columnist, also
Speaker 3: diner expert and knows everything about Keith Fobs.
Speaker 6: Got to say that story. Both those stories are fun,
Speaker 6: fun reads.
Speaker 1: That wraps up our weekend edition of Bloomberg Business Week
Speaker 1: from Bloomberg Radio.
Speaker 6: Thank you so much for joining us.
Speaker 3: Be sure to tune into Bloomberg Business Week daily Monday
Speaker 3: through Friday, starting at two pm Wall Street Time on
Speaker 3: Bloomberg TV, Bloomberg Radio, and on Sirius XM Channel one
Speaker 3: twenty one. You can also listen to us on Apple
Speaker 3: car Play and Android Auto Free in the Apple app
Speaker 3: Store or on Google Play.
Speaker 1: You can also watch our daily broadcast on YouTube. Just
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Speaker 3: I'm Tim Stunnoberk and I'm Carol Masser.
Speaker 6: Have a great and safe weekend. Everyone.
Speaker 2: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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