WEBVTT - Bloomberg Businessweek Weekend - August 1st, 2025 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.640 --> 0:00:12.959 This is Bloomberg Business Week Daily reporting from the magazine 0:00:12.960 --> 0:00:17.599 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.520 and trends shaping today's complex economy. Plus global business finance 0:00:22.560 --> 0:00:25.880 and tech news as it happens. The Bloomberg Business Week 0:00:25.960 --> 0:00:31.440 Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:31.720 --> 0:00:34.760 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:35.200 --> 0:00:38.879 A FED decision that left rates unchanged as expected, and 0:00:39.080 --> 0:00:41.680 chair Jay Powell saying interest rates are in the right 0:00:41.680 --> 0:00:45.239 place to manage continued uncertainty around tarifs and inflation, so 0:00:45.680 --> 0:00:48.880 rate cut in September not likely, at least not right now. 0:00:49.159 --> 0:00:52.920 Plus tons of earnings, including from four of the Magnificent Seven, 0:00:53.000 --> 0:00:56.639 and of course more tariff talks, TIFFs and terms. This 0:00:56.680 --> 0:00:59.520 past week. I gotta say, Tim, was what some Wall 0:00:59.520 --> 0:01:02.360 Street pro said was a pivotal one for the second. 0:01:02.120 --> 0:01:05.360 Half a busy summer weeks, certainly to wrap up the 0:01:05.400 --> 0:01:07.920 month of July. This hour, we're going to hit on 0:01:07.920 --> 0:01:12.600 earnings from Apple, Amazon, Microsoft, and Meta plus Alphabet. The 0:01:12.640 --> 0:01:15.840 company reported earnings just about a week ago, and they 0:01:15.880 --> 0:01:19.040 said that the cloud computing unit at Google is its 0:01:19.080 --> 0:01:21.520 strongest source of growth. We're going to talk with the 0:01:21.560 --> 0:01:24.000 COO of Google Cloud also. 0:01:23.800 --> 0:01:27.840 This hour, and also on earnings. UK pharma company AstraZeneca 0:01:27.959 --> 0:01:31.640 reported results. It's CEO stat by Bloomberg headquarters and talked 0:01:31.640 --> 0:01:35.600 about doubling down on the US and sizing up Chinese competition. 0:01:36.080 --> 0:01:38.440 And then, speaking of drugs, the CEO of Compass Pathways 0:01:38.520 --> 0:01:41.880 joins us somehow psychedelics may be making their way to 0:01:42.080 --> 0:01:42.960 FDA approval. 0:01:43.440 --> 0:01:45.840 That's in our second hour, so too is a story 0:01:45.880 --> 0:01:50.400 about burning Man's existential financial crisis. All that to come, though, 0:01:50.440 --> 0:01:52.480 We kick off with earnings from a batch of the 0:01:52.520 --> 0:01:56.760 so called mag seven Apple, Amazon, Meta, and Microsoft, all 0:01:56.840 --> 0:01:59.840 reporting this past week. All of the details and more 0:02:00.240 --> 0:02:03.040 are on the Bloomberg terminal. We caught up with Laura Martin, 0:02:03.160 --> 0:02:05.720 senior analyst A and need him in Company who covers 0:02:05.760 --> 0:02:08.480 many of them, and started our post earnings review talking 0:02:08.480 --> 0:02:09.120 about Apple. 0:02:09.440 --> 0:02:12.240 Apple admitted that one hundred one thousand basis points, so 0:02:12.360 --> 0:02:15.480 one percent of their revenue growth, which was ten percent, 0:02:15.600 --> 0:02:18.640 well above average, was from pull forward, and the market's 0:02:18.639 --> 0:02:21.600 telling you they think that number was like five, you know, four. 0:02:21.600 --> 0:02:23.160 Half of the game. Basically. 0:02:23.560 --> 0:02:27.080 Apple also said they had eight hundred million dollars of 0:02:27.200 --> 0:02:31.240 costs from tariffs in that second that requorter they just reported, 0:02:31.280 --> 0:02:32.880 and it's going to go up to one point one 0:02:32.919 --> 0:02:36.320 billion visibly in the September quarter. But I think the 0:02:36.320 --> 0:02:38.720 market's telling you they think that could be higher in 0:02:38.760 --> 0:02:39.640 the September quarter. 0:02:39.720 --> 0:02:42.040 Oh so, does does this mean that we'll see fewer 0:02:42.080 --> 0:02:46.360 iPhones bought in the first fiscal quarter Apple? But Apple's 0:02:46.360 --> 0:02:49.400 December quarter, which typically is its biggest quarter, as a 0:02:49.400 --> 0:02:52.880 result of the pull forward that we saw in this quarter, I. 0:02:52.800 --> 0:02:54.160 Think it's worse, it's faster. 0:02:54.320 --> 0:02:57.480 So the June quarter over delivered because they pulled forward 0:02:57.560 --> 0:03:00.720 demand from the September quarter. Those are all old iPhones, 0:03:01.160 --> 0:03:03.480 and then in late September you typically get the new 0:03:03.600 --> 0:03:06.720 iPhone and then you start this new annual cycle of 0:03:06.720 --> 0:03:08.760 the new iPhone. And one of the things they said 0:03:09.160 --> 0:03:12.680 is that Siri and Apple Intelligence will only be integrated 0:03:12.760 --> 0:03:16.280 next year, by which they're probably talking calendar year, which 0:03:16.280 --> 0:03:19.680 means the earliest we'll see you know, generative AI features, 0:03:19.840 --> 0:03:22.720 drive and upgrade cycle for the iPhone would be not 0:03:22.800 --> 0:03:25.760 September of twenty five, it'd be September of twenty six. 0:03:26.240 --> 0:03:29.000 So then that tells you, so this is dead money again, right, 0:03:29.040 --> 0:03:33.280 there's nothing driving and there's risk here, not only China subsidies. 0:03:33.320 --> 0:03:36.480 Wrote drove a really nice China growth number, four point 0:03:36.520 --> 0:03:39.640 eight percent China revenue growth. People are worried that that 0:03:39.880 --> 0:03:44.080 is also like that subsidy isn't going to recur. And 0:03:44.160 --> 0:03:48.640 we've had a couple negative litigation regulatory decisions. Right, We've 0:03:48.680 --> 0:03:51.920 got the feed to twenty billion dollars a year is 0:03:51.960 --> 0:03:55.920 what Google Search pays Apple to be the default search 0:03:55.920 --> 0:03:59.280 engine on all iOS devices. I think that's pretty clear 0:03:59.400 --> 0:04:01.880 from Channel and DC that is not going to be 0:04:01.960 --> 0:04:04.160 allowed to persist. So that's twenty billion that will come 0:04:04.160 --> 0:04:08.000 out of services if it isn't allowed. And then similarly, 0:04:08.400 --> 0:04:10.760 we have the epic they got into Apple got a 0:04:10.840 --> 0:04:16.120 negative epic Games which allows that which allows consumers to 0:04:16.200 --> 0:04:20.080 pay directly to apps and not have Apple share thirty percent. 0:04:20.480 --> 0:04:23.320 So that's another that's an app store risk that over 0:04:23.360 --> 0:04:25.360 the next twelve months, not immediate, but over the next 0:04:25.400 --> 0:04:26.120 twelve months. 0:04:26.320 --> 0:04:28.000 You know, Laura, We've had the luxury of talking with 0:04:28.080 --> 0:04:31.839 you in the last week or two and talking specifically 0:04:32.000 --> 0:04:34.560 about Apple you've got a hold rating on it. It 0:04:34.560 --> 0:04:36.720 doesn't sound like you have a lot of concerns. I 0:04:36.720 --> 0:04:39.160 guess I should say why not put a cell rating 0:04:39.200 --> 0:04:39.520 on it. 0:04:39.800 --> 0:04:41.960 One of the issues is when you look at the 0:04:42.000 --> 0:04:46.000 other mag seven, they basically have a singular strategy, which 0:04:46.080 --> 0:04:51.520 is envision generative air as disruptive. We everyone else is 0:04:51.560 --> 0:04:54.640 going to spend eighty five to one hundred billion dollars 0:04:54.760 --> 0:04:58.320 in CAPEX in twenty twenty five alone, and we're going 0:04:58.360 --> 0:05:01.560 to grow at twenty percent in twenty six with no 0:05:02.080 --> 0:05:04.000 Every one of them has been pushed on what is 0:05:04.040 --> 0:05:06.640 that return on capital incremental capital? 0:05:06.839 --> 0:05:08.560 They all say, we don't know. We just think it's 0:05:08.600 --> 0:05:09.160 going to be big. 0:05:09.720 --> 0:05:12.880 If you don't believe that, if you're an investor and 0:05:12.960 --> 0:05:16.000 you think that jenerative AI is overhyped or the economics 0:05:16.000 --> 0:05:18.480 are further off into the future, Apple is a great 0:05:18.520 --> 0:05:22.000 place to hide. They are spending twenty billion dollars a year, 0:05:22.520 --> 0:05:25.800 not eighty five billion dollars a year. Jeneritive AI is 0:05:25.839 --> 0:05:28.920 sometime in the future. They're not spending they're not hiring 0:05:28.920 --> 0:05:31.360 people like Meta Is for one hundred million dollars each 0:05:31.400 --> 0:05:34.240 to work on superintelligence. This is Apple is a great 0:05:34.279 --> 0:05:36.599 place to hide. If you are an investor that doesn't 0:05:36.600 --> 0:05:38.480 believe in generative changing the world. 0:05:38.880 --> 0:05:39.719 Well, wait a minute. 0:05:39.760 --> 0:05:42.520 You know Apple often isn't you know, first mover or 0:05:42.760 --> 0:05:43.799 on some big changes. 0:05:43.880 --> 0:05:44.680 Right, We talked about it. 0:05:44.680 --> 0:05:46.520 Create the tablet, they didn't create the music player, they 0:05:46.520 --> 0:05:48.359 didn't create the smartphone. But they created the best of 0:05:48.400 --> 0:05:49.640 all those things exactly. 0:05:49.720 --> 0:05:52.720 So if they're saying, hey, guys, go ahead and spend 0:05:52.800 --> 0:05:55.000 you know, your billions or trillions or whatever the heck 0:05:55.040 --> 0:05:57.400 it is, figure out this AI thing and then we'll 0:05:57.440 --> 0:05:57.880 come in. 0:05:57.800 --> 0:06:00.760 And we'll collaborate or partner with somebody, maybe that's not 0:06:00.800 --> 0:06:01.920 such a bad strategy. 0:06:02.520 --> 0:06:03.799 So it's risky business. 0:06:03.880 --> 0:06:06.839 So on the call last night, Tim Cook got this question, 0:06:06.960 --> 0:06:10.000 and what he said is, I don't see a world 0:06:10.400 --> 0:06:13.440 where the consumer doesn't have an iPhone, which is basically 0:06:13.480 --> 0:06:15.080 a computer in his pocket. 0:06:15.560 --> 0:06:17.280 Okay, that's a vision of the. 0:06:17.200 --> 0:06:20.599 Future that Johnny Ive, who's gone to open AI is 0:06:20.600 --> 0:06:23.920 trying to displace. Johnny Ive, who developed every Apple product 0:06:23.920 --> 0:06:25.799 you have in your pocket while he was at Apple 0:06:25.839 --> 0:06:29.039 for twenty years, is now saying he regrets creating the 0:06:29.080 --> 0:06:32.600 screen because he thinks it makes people not pay attention 0:06:32.680 --> 0:06:35.080 to one another. So he's trying to move the next 0:06:35.120 --> 0:06:38.320 device with generative AI backing to not. 0:06:38.240 --> 0:06:38.880 Be a screen. 0:06:39.440 --> 0:06:43.080 So that may not work, but if it does Apple, 0:06:43.360 --> 0:06:45.880 that's a problem for app. That is an existential risk 0:06:45.960 --> 0:06:49.919 problem for Apple. So long as an iPhone and a 0:06:49.960 --> 0:06:53.120 screen are going to be sort of the user device 0:06:53.200 --> 0:06:55.919 of record and they're going to persist in ten years, 0:06:56.040 --> 0:06:58.159 you might be right, that might be possible. What you 0:06:58.279 --> 0:07:02.280 just said, Apple can copy the best of Android, which 0:07:02.279 --> 0:07:05.480 will have Gemini because Google has Gemini. 0:07:05.080 --> 0:07:06.920 In every product now, that will work. 0:07:07.200 --> 0:07:10.440 But if Jimmy I've and OpenAI or right, and screens 0:07:10.480 --> 0:07:14.200 are going away, that's problematic for a smartphone maker. 0:07:14.440 --> 0:07:17.520 I guess that's maybe where whatever they're working on for 0:07:17.560 --> 0:07:20.320 a face computer could come in. Laura, I want to 0:07:20.320 --> 0:07:22.960 go back to what you said about Gemini and Android 0:07:23.120 --> 0:07:26.800 because of the way that Gemini is baked into Google devices. Now, 0:07:27.040 --> 0:07:29.880 you say in your most recent note that Apple is 0:07:29.920 --> 0:07:32.760 a single product company, its valuation risk is material if 0:07:32.800 --> 0:07:36.000 iOS falls too far behind Android. Would you say that 0:07:36.040 --> 0:07:38.000 iOS is already behind Android right now? 0:07:38.280 --> 0:07:38.440 Oh? 0:07:38.480 --> 0:07:40.000 I would absolutely, I would. 0:07:40.040 --> 0:07:42.840 I mean when you look at Google's its revenue is 0:07:42.920 --> 0:07:46.400 accelerating over at Alphabet, and its costs are going down, 0:07:46.760 --> 0:07:50.720 so its productivity per employee is going up. Why Because 0:07:50.920 --> 0:07:54.720 eighty percent of engineers are using Gemini to do their 0:07:54.760 --> 0:07:57.760 first draft of code for new products. They're introducing new 0:07:57.760 --> 0:08:02.440 products faster. They over delivered on advertising because they're integrating 0:08:02.560 --> 0:08:06.440 all these bettern both Meta and Google. Because they're using 0:08:06.480 --> 0:08:09.880 generative AI to increase the conversion rate. So, yes, Gemini 0:08:10.040 --> 0:08:12.760 is being integrated into everything at Alphabet Android. 0:08:12.400 --> 0:08:13.280 Includion does it? 0:08:13.560 --> 0:08:15.880 Like two comments here? One is the network effects that 0:08:15.920 --> 0:08:18.480 Apple has, at least here in the US are really strong, right, 0:08:18.520 --> 0:08:21.200 the blue bubbles for when you're on I Message and 0:08:21.280 --> 0:08:23.680 the other Apple products that you have that ideally are 0:08:23.720 --> 0:08:26.720 supposed to work seamlessly with that. Plus, doesn't Gemini have 0:08:26.760 --> 0:08:28.400 an app that you can just use on your iPhone? 0:08:28.440 --> 0:08:30.600 So if you want to use Gemini as sort of 0:08:30.600 --> 0:08:32.800 a copilot here, if you are an engineer, you can 0:08:32.840 --> 0:08:35.040 just do it on your iPhone, but through an app 0:08:35.040 --> 0:08:36.880 that you get at the app store, right. 0:08:36.800 --> 0:08:37.800 If it's standalone. 0:08:38.200 --> 0:08:41.160 But I mean, I think my guess is where Alphabet's 0:08:41.200 --> 0:08:44.199 going is they're going to integrate your They're going to 0:08:44.280 --> 0:08:47.319 integrate Gemini into everything on your device. It's going to 0:08:47.400 --> 0:08:49.079 know where your appointments are, it's going to know who 0:08:49.120 --> 0:08:51.400 your friends are. It's going to be a personal assistant 0:08:51.760 --> 0:08:54.960 integrated into your Android phone. It's going to be a 0:08:54.960 --> 0:08:57.840 bigger idea than just a separate app where you go 0:08:57.920 --> 0:08:59.920 to it. It's going to be like, even if you 0:09:00.040 --> 0:09:03.120 listen to the meta vision of the world, super intelligence 0:09:03.200 --> 0:09:07.920 is about having a robot friend that does everything for 0:09:08.000 --> 0:09:10.679 you better than a human can make you. I mean, 0:09:10.679 --> 0:09:13.520 it's just I think these are bigger ideas than an 0:09:13.559 --> 0:09:14.120 app store. 0:09:14.600 --> 0:09:15.280 By the way, some. 0:09:16.040 --> 0:09:19.080 CEO's visions of their apps are disappearing. So then you say, 0:09:19.160 --> 0:09:20.360 so what replaces them? 0:09:20.520 --> 0:09:22.760 Well, I don't know. Used to be websites, then we 0:09:22.840 --> 0:09:26.199 went to apps. What's next? It may not be apps? 0:09:26.760 --> 0:09:28.920 All right? You mentioned I want to just get to 0:09:28.960 --> 0:09:31.199 meta Amazon. What about Meta? 0:09:31.480 --> 0:09:33.400 You know? In terms of I mean that Stock was 0:09:33.480 --> 0:09:37.640 just off and running following it's quarterly update. Those ad 0:09:37.679 --> 0:09:41.199 sales number certainly catching everybody's attention, a mega megaspen when 0:09:41.240 --> 0:09:44.400 it comes to AI. What is your hot take on 0:09:44.440 --> 0:09:44.800 that one? 0:09:46.400 --> 0:09:53.800 So Stock up strongly, really strong fundamentals, just sixty percent margins, 0:09:54.000 --> 0:09:58.280 twenty two percent revenue growth and a huge company, which 0:09:58.400 --> 0:10:00.880 was the fastest of the group that we the big 0:10:00.920 --> 0:10:05.320 tech companies we call really strong fundamentals. We are cautious 0:10:05.360 --> 0:10:08.120 on Meta, and that is because they took their capex 0:10:08.160 --> 0:10:11.440 to seventy billion this year and one hundred billion next year, 0:10:11.800 --> 0:10:16.480 again no return in sight, and their stock comp per 0:10:16.559 --> 0:10:19.640 person is going through the roof as they hire super 0:10:19.679 --> 0:10:23.520 intelligence employees, with press reports saying they're paying one hundred 0:10:23.520 --> 0:10:26.080 to three hundred million over three years for each of 0:10:26.120 --> 0:10:26.720 these people. 0:10:26.800 --> 0:10:29.840 Pretty get it, I'll say, yeah. 0:10:30.080 --> 0:10:32.400 My guess is they're trying to change the world right, 0:10:32.480 --> 0:10:36.040 and they believe in super intelligence, which this isn't a 0:10:36.120 --> 0:10:39.240 vision of making you and I'm more productive. This is 0:10:39.240 --> 0:10:42.839 about replacing human beings with machines that teach machines. So 0:10:42.880 --> 0:10:46.400 it's literally terminator like life imitating art type of stuff. 0:10:46.440 --> 0:10:49.440 Doesn't sound like you're your pro AI in that in 0:10:49.440 --> 0:10:51.960 that context, let's stick let's. 0:10:51.800 --> 0:10:53.080 Stick to Meta as a stock. 0:10:53.360 --> 0:10:56.840 My concern is that we're goin we're losing five billion 0:10:56.880 --> 0:10:59.640 dollars a quarter on reality labs, and we're still funding 0:10:59.679 --> 0:11:02.559 the Metal and we're funding Quest goggles, and we're funding 0:11:02.679 --> 0:11:06.480 karlass Way banned glasses and now we're funding a jen 0:11:06.600 --> 0:11:10.240 Ai competition with companies twice their size. All of that 0:11:10.280 --> 0:11:12.599 feels like a lot of capital spending to me and 0:11:13.360 --> 0:11:16.360 actually costs to me without a clear sense. 0:11:16.440 --> 0:11:20.040 But investors are saying they are okay with it up 0:11:20.120 --> 0:11:22.960 to now because they believe that Mark Zuckerberg has this 0:11:23.120 --> 0:11:26.440 vision for super intelligence, which, to be honest, nobody has 0:11:26.480 --> 0:11:29.640 actually articulated to me, Well, what does that world look 0:11:29.760 --> 0:11:32.280 like that that Meta wants to create and thinks will 0:11:32.320 --> 0:11:33.040 be so profitable? 0:11:33.040 --> 0:11:33.640 Are they okay? 0:11:33.679 --> 0:11:36.600 Just because the ad sales number came in really strong, 0:11:36.640 --> 0:11:38.640 Like if it didn't, might everybody be like maybe not? 0:11:38.720 --> 0:11:39.080 Okay? 0:11:40.000 --> 0:11:44.680 Yes, absolutely, he is buying the right to spend money 0:11:44.920 --> 0:11:47.800 like a drunken sailor because his fundamentals and his core 0:11:47.920 --> 0:11:53.920 business are strongly over delivering consensussessments. The day that stops, 0:11:54.280 --> 0:11:56.920 the music stops, and suddenly people are going to take 0:11:56.920 --> 0:12:00.880 a hard look at these You know, he's making five 0:12:00.960 --> 0:12:04.120 year commitments for these super intelligence employees, and he's making 0:12:04.120 --> 0:12:07.120 ten year commitments with the money he's spending on data centers. 0:12:07.480 --> 0:12:08.760 So all of this money he. 0:12:08.760 --> 0:12:12.480 Has a free pass so long as his core business 0:12:12.559 --> 0:12:13.720 is growing twenty two. 0:12:13.520 --> 0:12:17.840 Percent okay, okay, totally makes sense sort of the free 0:12:17.840 --> 0:12:20.880 pass like Elon was, you know, allowed to be CEO 0:12:20.920 --> 0:12:23.079 of many different companies and investors were fine with it 0:12:23.160 --> 0:12:25.800 until they weren't. Jack Dorsey the same thing, right, It 0:12:25.840 --> 0:12:30.600 works until it doesn't. Yeah, what about though, the promise 0:12:30.760 --> 0:12:34.559 of this being profitable in the future, all this investment 0:12:34.960 --> 0:12:38.440 ultimately paying off beyond making ads more efficient? What is 0:12:38.480 --> 0:12:40.680 that vision? What does that world look like in your view? 0:12:40.840 --> 0:12:42.760 At least articulated by Mark Zuckerberg. 0:12:44.720 --> 0:12:48.240 So again, so Mark Mark is just he has got 0:12:48.280 --> 0:12:50.600 a big idea. He wants to replace Apple, that's for sure. 0:12:50.880 --> 0:12:54.040 So does open Ai. So Apple takes a thirty percent 0:12:54.120 --> 0:12:58.720 tithe on every dollar earned on its platform, and that 0:12:58.840 --> 0:13:01.440 hurts Mark Zuckerberg not only because Apple gets paid for 0:13:01.520 --> 0:13:04.800 a lot of work he is doing on Facebook and Instagram, 0:13:05.040 --> 0:13:08.400 but also it allows them to change policies and procedures 0:13:08.440 --> 0:13:10.559 like around security and safety and privacy. 0:13:11.040 --> 0:13:12.720 That costs Mark Zuckerberg ten. 0:13:12.640 --> 0:13:15.480 Billion in revenue three years ago, and since then, Mark 0:13:15.559 --> 0:13:19.280 Zuckerberg is all about replacing Apple or that piece of 0:13:19.280 --> 0:13:25.360 hardware with ybound glasses or Quest goggles or something or 0:13:25.400 --> 0:13:26.160 the metaverse. 0:13:26.480 --> 0:13:28.160 He's trying to displace Apple. 0:13:27.920 --> 0:13:30.600 And he wants to be the backbone that everybody has 0:13:30.640 --> 0:13:33.920 to pay thirty percent to. So that's his main economic mission. 0:13:34.160 --> 0:13:37.280 And now Jenerative AI comes along, which I think, you know, 0:13:37.440 --> 0:13:40.760 I think many CEOs thinks it changes everything. Even Apple 0:13:40.800 --> 0:13:43.679 said it's the biggest technological disruption of our lifetime. 0:13:44.160 --> 0:13:45.880 And they benefited from mobile. 0:13:45.640 --> 0:13:47.280 Which you would have thought that would they would have 0:13:47.280 --> 0:13:49.160 thought was bigger than Jenai, but apparently not. 0:13:49.559 --> 0:13:49.679 So. 0:13:50.440 --> 0:13:53.400 I guess the question is Meta is saying we think 0:13:53.400 --> 0:13:56.280 they're super intelligence. We think every human being is going 0:13:56.320 --> 0:13:59.440 to have a robot that they hold on to, maybe 0:13:59.440 --> 0:14:01.120 without a screw. We don't know, you know, we don't 0:14:01.120 --> 0:14:05.040 know what the form factor is. But that does things 0:14:05.080 --> 0:14:07.320 for you where you see the world differently and it 0:14:07.320 --> 0:14:09.400 helps you get through the world. But I don't think 0:14:09.440 --> 0:14:11.080 we know what that is yet, and he doesn't either. 0:14:11.120 --> 0:14:14.200 That's why he's hiring fifty smart people to have robots, 0:14:14.280 --> 0:14:17.520 train robots faster to do stuff humans can't do. 0:14:17.880 --> 0:14:19.560 Well, nobody can do what you can do. We want 0:14:19.560 --> 0:14:23.680 to ask you about Amazon. Sure this dock down still 0:14:23.720 --> 0:14:25.920 more than eight percent here in the aftermarket, and I 0:14:25.960 --> 0:14:30.040 think there is concerns about kind of the cloud spend comparison, 0:14:30.320 --> 0:14:33.240 you know, among the big hyperscalers, Amazon still the biggest 0:14:33.280 --> 0:14:36.480 when it comes to, you know, we think about what's 0:14:36.520 --> 0:14:38.000 going on in terms of the cloud. 0:14:38.840 --> 0:14:40.920 What you take here are. 0:14:40.880 --> 0:14:42.920 What we kind of need to be thinking about with Amazon, 0:14:42.960 --> 0:14:44.880 because investors seem pretty disappointed, are you? 0:14:47.080 --> 0:14:48.800 So I think here's what I think is going on 0:14:48.840 --> 0:14:51.400 with Amazon. Answer the first half of that question. So, 0:14:51.840 --> 0:14:56.640 they had very strong revenue growth up thirteen percent, which 0:14:56.720 --> 0:15:00.240 was like, you know, we were four percentage points low 0:15:00.320 --> 0:15:04.400 that and very strong EPs and margins. But the problem 0:15:04.480 --> 0:15:07.440 is they gave very tepid guidance. So people are really 0:15:07.480 --> 0:15:11.240 worried about tariff's impacts here, so they're worried about the 0:15:11.280 --> 0:15:15.120 next shoe to drop. They're advertising grew very robustly at 0:15:15.280 --> 0:15:17.800 thirty twenty three percent, which is great, And I think 0:15:17.840 --> 0:15:21.200 that would have been higher had not Tamu and Chean 0:15:21.720 --> 0:15:25.000 stopped advertising, you know, sort of on April tenth because 0:15:25.040 --> 0:15:27.560 they lost the Dominimus except rule exception. 0:15:28.000 --> 0:15:29.320 So I think that would have been higher. 0:15:29.320 --> 0:15:32.360 But that's a fabulous number nobody's focusing on today, and 0:15:32.400 --> 0:15:35.560 I think people investors we've talked to are frustrated with 0:15:35.720 --> 0:15:39.160 capital spending on Kuiper which has no revenue, capital spending 0:15:39.360 --> 0:15:42.440 after for ten years so far on Alexa no revenue, 0:15:42.800 --> 0:15:47.040 and like they're going to urban delivery same day, And 0:15:47.080 --> 0:15:50.000 I think people don't understand their core business of e commerce. 0:15:50.200 --> 0:15:52.160 I think people don't understand that as to use a capital. 0:15:52.240 --> 0:15:55.240 At the same time, they just raised their capex guidance. 0:15:55.560 --> 0:15:58.320 When you do the numbers to round numbers, one hundred 0:15:58.360 --> 0:16:01.040 and fifteen, one hundred and twenty billion this year. The 0:16:01.080 --> 0:16:03.960 next closest is Microsoft and Google at eighty five billion, 0:16:04.240 --> 0:16:06.680 so they're quite a bit above everybody else on this 0:16:06.800 --> 0:16:09.840 jenerative a I think, and then AWS has a nemic 0:16:09.880 --> 0:16:13.600 revenue growth, you know, neg I mean thirty two percent 0:16:13.680 --> 0:16:16.520 margins in the cloud business, and they were thirty nine 0:16:16.520 --> 0:16:19.400 percent ninety days ago, like what the heck? And they 0:16:19.400 --> 0:16:22.360 say their capacity constrained. So then we would forgive them 0:16:22.400 --> 0:16:25.640 if they only report seventeen percent revenue growth, But then 0:16:25.680 --> 0:16:27.360 why aren't your margins sixty percent? 0:16:27.400 --> 0:16:28.520 Why aren't they forty percent? 0:16:28.560 --> 0:16:31.040 Again it why not sell to the highest bid or 0:16:31.040 --> 0:16:35.120 the last you know, you know, one gig of capacity. 0:16:35.440 --> 0:16:38.600 So we saw that in both Azure over at Microsoft 0:16:38.880 --> 0:16:41.960 and in Google Cloud slower I mean. 0:16:41.880 --> 0:16:44.880 Growth rates, but really high margins. And that just didn't 0:16:44.880 --> 0:16:45.400 play out at. 0:16:45.320 --> 0:16:46.880 Amazon all right around the world. 0:16:46.920 --> 0:16:49.640 We went Thank you so much, Laura, always appreciate it. 0:16:49.640 --> 0:16:52.280 By the way, Laura's got a by rating on Amazon 0:16:52.320 --> 0:16:54.520 with a two hundred and sixty five dollars share price target. 0:16:54.560 --> 0:16:56.800 The stock right now just below two fifteen his share 0:16:56.880 --> 0:16:58.560 Laura Martin, have a great weekend. 0:16:58.600 --> 0:17:01.000 Senior analyst at need him in Cup Joining us. 0:17:05.960 --> 0:17:09.959 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:17:10.040 --> 0:17:13.480 live weekday afternoons from two to five pm Eastern. Listen 0:17:13.520 --> 0:17:17.080 on Applecarplay and Android Auto with the Bloomberg Business app, 0:17:17.240 --> 0:17:19.639 or watch us live on YouTube. 0:17:19.720 --> 0:17:22.480 Microsoft this past week reported better than expected growth in 0:17:22.560 --> 0:17:25.959 its cloud business and said spending on AI infrastructure hit 0:17:26.000 --> 0:17:29.479 a record. The closely watched Azure cloud computing unit posted 0:17:29.480 --> 0:17:32.320 a thirty nine percent rise in sales during Microsoft's fiscal 0:17:32.359 --> 0:17:35.159 fourth quarter. Company also said sales at the cloud division 0:17:35.200 --> 0:17:38.119 grew thirty four percent to more than seventy five billion 0:17:38.160 --> 0:17:40.800 dollars during the year end of June thirtieth, the first 0:17:40.880 --> 0:17:43.880 time the company has disclosed a revenue figure for Azure. 0:17:44.200 --> 0:17:47.800 Meanwhile, the week before Google parent Alphabet and to deal 0:17:47.840 --> 0:17:50.720 with more than a billion dollars to provide cloud computing 0:17:50.760 --> 0:17:55.000 services to the software firm Service. Now, Alphabet's massive spend 0:17:55.040 --> 0:17:58.000 on AI has helped its score major client wins, especially 0:17:58.040 --> 0:18:01.920 among AI startups, all will making strides against its competitors 0:18:01.920 --> 0:18:06.160 such as Amazon Web Services and Azure from Microsoft. Remember, 0:18:06.359 --> 0:18:09.120 back in February, Salesforce agreed to spend at least two 0:18:09.119 --> 0:18:12.240 and a half billion dollars over seven years on Google's 0:18:12.240 --> 0:18:13.119 cloud services. 0:18:13.440 --> 0:18:16.840 And so no surprise perhaps to Google's cloud computing unit 0:18:17.000 --> 0:18:21.159 revenue topping analyst estimates when it recently gave it's coarly update. 0:18:21.560 --> 0:18:24.040 So yeah, we wanted to know more and we got 0:18:24.040 --> 0:18:26.639 the chance when we were joined by Francis Desuza. He 0:18:26.760 --> 0:18:29.840 is the first chief operating officer of Google Cloud. 0:18:30.000 --> 0:18:30.200 Yeah. 0:18:30.280 --> 0:18:32.480 Right now, it feels like there are two powerful mega 0:18:32.520 --> 0:18:35.159 trends that are playing out in the enterprise market. The 0:18:35.200 --> 0:18:38.399 first is, you know, the continued move by companies of 0:18:38.440 --> 0:18:41.760 their workloads to the cloud, of their applications to the cloud. 0:18:42.040 --> 0:18:44.479 And the second, much bigger trend that's playing at right 0:18:44.520 --> 0:18:48.240 now is the adoption of AI by companies and those 0:18:48.280 --> 0:18:51.639 two powerful mega trends are driving our business and fueling 0:18:51.640 --> 0:18:53.879 the growth that you saw in the quarter. And so 0:18:54.280 --> 0:18:56.760 what we're seeing on the AI side is, you know, 0:18:56.800 --> 0:18:59.760 this is the fastest in my career that I've seen 0:18:59.800 --> 0:19:03.320 at technology move from pilots to production. And so what 0:19:03.520 --> 0:19:06.159 we're in talking to customers, what they're telling is is 0:19:06.160 --> 0:19:09.280 they're recognizing the benefits that AI can bring into their 0:19:09.320 --> 0:19:12.159 company across the board. You know, we have companies that 0:19:12.400 --> 0:19:16.480 like Verizon that are using AI to help do customers support. 0:19:17.080 --> 0:19:20.359 We work at Seattle Children's Hospital that's using AI to 0:19:20.480 --> 0:19:24.640 inform physicians in their communications with patients. We also have 0:19:24.680 --> 0:19:28.040 companies like Papa John's or McDonald's that are using AI 0:19:28.080 --> 0:19:31.520 in the franchises. And so we're seeing broad adoption by 0:19:31.680 --> 0:19:35.040 enterprises across a number of places where they can see 0:19:35.040 --> 0:19:36.040 the benefits from AI. 0:19:36.359 --> 0:19:38.480 You just mentioned a few examples of companies that you 0:19:38.520 --> 0:19:40.480 work with. There are a lot of small businesses, though, 0:19:40.520 --> 0:19:43.480 and even large businesses that I think it's fair to 0:19:43.520 --> 0:19:47.679 say haven't fully harnessed what you view as the opportunity 0:19:47.680 --> 0:19:49.800 when it comes to AI. How big of an opportunity 0:19:49.840 --> 0:19:52.200 is it for Google Cloud? What's a number. How can 0:19:52.240 --> 0:19:52.960 you quantify this? 0:19:53.400 --> 0:19:55.520 Yeah, I think you're absolutely right in that we're the 0:19:55.680 --> 0:19:58.440 very early stages of what is a very large sort 0:19:58.440 --> 0:19:59.960 of adoption market in front. 0:19:59.800 --> 0:20:00.400 Of it now. 0:20:00.800 --> 0:20:03.159 You know, you look at the numbers we delivered, you know, 0:20:03.240 --> 0:20:06.640 last quarter and Google Cloud, we delivered thirteen point six 0:20:06.680 --> 0:20:08.840 billion dollars in revenue, and as you said, that's up 0:20:08.880 --> 0:20:11.639 thirty two percent year over year. So although the numbers 0:20:11.680 --> 0:20:14.080 are already big, we're still just at the very very 0:20:14.119 --> 0:20:18.040 beginning of AI adoption by companies. And that's true whether 0:20:18.080 --> 0:20:20.320 you look at small companies who are starting to use 0:20:20.359 --> 0:20:23.359 it in terms of their outreach to customers to scale 0:20:23.440 --> 0:20:26.520 up their presence from a marketing perspective, all the way 0:20:26.560 --> 0:20:28.720 to large enterprises. We're just at the very beginning of 0:20:28.760 --> 0:20:29.400 this big wave. 0:20:29.600 --> 0:20:29.800 You know. 0:20:29.880 --> 0:20:31.480 One of the things Francis said, I'm so glad we 0:20:31.480 --> 0:20:33.239 could get some time with you, is that, you know, 0:20:33.320 --> 0:20:36.920 everybody kind of throws out AI and large language models generally, 0:20:36.960 --> 0:20:39.480 and we're just trying to get more of an understanding 0:20:39.520 --> 0:20:41.600 of how this all impacts our world. 0:20:41.680 --> 0:20:43.080 Drilled down a little bit further. 0:20:43.119 --> 0:20:45.480 In terms of the customers that you are working with, big, 0:20:45.520 --> 0:20:49.240 medium and small and how they are using. 0:20:48.960 --> 0:20:50.960 AI and how it's going to impact our lives. 0:20:52.119 --> 0:20:54.920 Yeah, we're seeing it show up in enterprises in a 0:20:54.920 --> 0:20:56.600 whole bunch of different ways, and so let me give 0:20:56.640 --> 0:21:00.320 you some examples. You know, some large manufacturers like Toyota, 0:21:00.400 --> 0:21:04.320 for example, or Honeywell are using AI on the factory 0:21:04.359 --> 0:21:07.040 floor to provide information to the people working on the 0:21:07.080 --> 0:21:11.119 factory floor to improve their operational ability, and also to 0:21:11.200 --> 0:21:15.520 provide access for their customers to engineering and technical support 0:21:15.720 --> 0:21:19.240 documents around the product, so make it easier for customers 0:21:19.280 --> 0:21:23.160 to navigate and find the information they need. We're seeing 0:21:23.960 --> 0:21:28.240 some hospitals, as I talked about, helping using AI to 0:21:28.359 --> 0:21:33.320 help provide physicians access to whether it's guidelines or any 0:21:33.359 --> 0:21:37.560 background information. In addition, we're seeing hospitals use AI to 0:21:37.800 --> 0:21:42.600 automatically transcribe the communications with their patients. So what AI 0:21:42.680 --> 0:21:45.320 will do is actually take the notes automatically and then 0:21:45.440 --> 0:21:48.159 upload it into the systems that it needs to. What 0:21:48.200 --> 0:21:51.159 that does is it frees up time for the medical 0:21:51.160 --> 0:21:53.840 professionals to do what they do best, which is deal 0:21:53.920 --> 0:21:58.359 with patients. We're seeing small businesses they're using AI to 0:21:58.440 --> 0:22:02.440 create marketing materials and do that much more efficiently. We're 0:22:02.440 --> 0:22:05.960 seeing large retailers like Wayfair that are using AI to 0:22:06.040 --> 0:22:09.600 create more personalized experiences for their customers when you come 0:22:09.600 --> 0:22:12.959 to the website, so you can imagine as you're using Wayfair, 0:22:13.000 --> 0:22:15.840 you can imagine how the furniture items will look in 0:22:15.920 --> 0:22:19.600 your environment, and that provides a better shopping experience for customers. 0:22:19.600 --> 0:22:23.080 So we're seeing a wide swath of ways that AI 0:22:23.200 --> 0:22:24.400 is being used in companies. 0:22:24.560 --> 0:22:27.359 I'm so glad you mentioned kind of the medical area 0:22:27.440 --> 0:22:29.280 and what they're doing, because I think a lot of 0:22:29.280 --> 0:22:32.160 folks come on our air and talk to the Bloomberg 0:22:32.200 --> 0:22:36.760 audience and talk about how AI might significantly impact not 0:22:36.800 --> 0:22:39.919 just hospitals, but just how we get medical care. You 0:22:40.040 --> 0:22:42.320 are the former CEO of Alumina, and I think about 0:22:42.400 --> 0:22:46.560 DNA sequencing and all of the information and data that 0:22:46.600 --> 0:22:49.640 could potentially improve how we are treated when it comes 0:22:49.640 --> 0:22:52.800 to healthcare. How are you thinking about that space and 0:22:52.840 --> 0:22:55.200 what it might mean for Google Cloud and demand there. 0:22:56.160 --> 0:22:57.639 Yeah, I think AI is going to have a very 0:22:57.720 --> 0:23:01.399 big impact in a number of ways across healthcare. Right, 0:23:01.440 --> 0:23:03.679 So if we talked about some ways where it's helping 0:23:03.960 --> 0:23:07.720 in the delivery of care by freeing up medical professionals 0:23:08.200 --> 0:23:11.679 from administrative tasks and using more of their time to 0:23:11.720 --> 0:23:15.800 actually interact with patients. In addition, it's also helping medical professionals, 0:23:16.040 --> 0:23:19.640 you know, get access to the information they need across 0:23:19.680 --> 0:23:22.359 a whole swath of information, so you know, they need 0:23:22.400 --> 0:23:24.520 to be able to stay on top of guidelines as 0:23:24.520 --> 0:23:27.760 they emerge, new research that's being published, as well as 0:23:27.800 --> 0:23:30.760 all the information on the patient, and increasingly, you know, 0:23:30.760 --> 0:23:33.320 we're getting more and more personalized information on a patient. 0:23:33.359 --> 0:23:35.879 You talked about genomics, there are a lot of images 0:23:36.119 --> 0:23:38.480 as well as previous lab tests, and so what AI 0:23:38.600 --> 0:23:41.520 can do is sort of take all that information and 0:23:41.600 --> 0:23:44.359 present it in a more digestible way so that you 0:23:44.400 --> 0:23:48.440 can make better decisions. In addition, AI can also help 0:23:48.560 --> 0:23:51.360 you know earlier in the process of drug development. We've 0:23:51.400 --> 0:23:56.320 seen fantastic advances with tools like alpha fold, which allows 0:23:56.359 --> 0:24:00.000 you to you know, deduce a three D protein structure 0:24:00.119 --> 0:24:03.240 US hundreds of millions of protein types. What that does, 0:24:03.280 --> 0:24:06.440 then is that allows you to identify maybe new druggable 0:24:06.520 --> 0:24:09.800 targets that allow you to treat diseases. And I can 0:24:09.840 --> 0:24:13.120 also help bring information together, you know, the genomic information, 0:24:13.240 --> 0:24:17.720 the phenotypic information, you know the imaging information and help 0:24:17.840 --> 0:24:21.880 us get better understanding of what causes diseases and how 0:24:21.920 --> 0:24:25.000 they develop, and that could give us new insights that 0:24:25.080 --> 0:24:26.880 allow us to think about how we can treat those 0:24:26.920 --> 0:24:31.240 diseases better. So in almost every part of the healthcare industry, 0:24:31.480 --> 0:24:34.160 you can see how AI can help improve that industry. 0:24:34.400 --> 0:24:37.680 We're speaking with Francis deesu'sa chief operating officer over at 0:24:37.840 --> 0:24:40.080 Google Cloud. Francis, I want to talk a little bit 0:24:40.080 --> 0:24:43.639 about competition. For years, Amazon has been number one. According 0:24:43.680 --> 0:24:46.520 to our Bloomberg Intelligence team and data from IDC. In 0:24:46.560 --> 0:24:50.359 twenty twenty three, AWS had about forty seven percent of 0:24:50.400 --> 0:24:53.320 the infrastructure as a service market share, Microsoft in second 0:24:53.320 --> 0:24:56.760 place with sixteen percent, and then Google coming in with 0:24:56.880 --> 0:24:59.680 about six percent. How do you get to number two 0:25:00.080 --> 0:25:00.760 then number one? 0:25:01.920 --> 0:25:05.040 What's really interesting is that as I talk to customers 0:25:05.119 --> 0:25:07.840 with their things as a convergence of two really big 0:25:07.880 --> 0:25:11.320 important spaces. One is the cloud spaces you talked about, 0:25:11.359 --> 0:25:15.320 and two AI. So nearly every customer conversation I have 0:25:15.440 --> 0:25:18.359 now in prospect conversation I have is really all about 0:25:18.400 --> 0:25:21.840 AI and how it will impact businesses. And we are 0:25:21.880 --> 0:25:25.480 the only hyperscaler that actually has our own AI stack. 0:25:25.560 --> 0:25:28.000 So if you think about every part of the AI 0:25:28.080 --> 0:25:32.520 technology stack, Google has leading technology. So for example, on 0:25:32.560 --> 0:25:35.040 the chip side, we're one of the largest partners in 0:25:35.040 --> 0:25:37.879 the world with Nvidia on GPUs, but we also have 0:25:37.960 --> 0:25:42.560 our own technology TPUs that are very highly performant and 0:25:42.560 --> 0:25:45.000 we run them in our data centers. In terms of 0:25:45.040 --> 0:25:49.240 the models, we work with a number of other model providers, 0:25:49.280 --> 0:25:51.200 so if you go into our model garden, you know 0:25:51.320 --> 0:25:54.400 you can access models from companies like Anthropic and deep Seek, 0:25:54.760 --> 0:25:57.400 but we also have the world's leading model with Gemini 0:25:57.440 --> 0:26:00.159 two dot five, which is performing really well on the 0:26:00.200 --> 0:26:02.960 top of the leader boards in almost every part of AI. 0:26:03.359 --> 0:26:06.680 And so here too we provide our own leading technologies, 0:26:06.720 --> 0:26:09.520 and it's Gemini, but it's also our image models, our 0:26:09.640 --> 0:26:13.800 video models, our time series models, our weather models, and 0:26:13.840 --> 0:26:16.479 then we also provide our own applications on top of that, 0:26:17.200 --> 0:26:20.080 like Agent Space that allow companies to easily develop their 0:26:20.119 --> 0:26:24.000 own agents. And then we have a leading cybersecurity portfolio. 0:26:24.119 --> 0:26:27.240 And so where we are differentiated in the market is 0:26:27.240 --> 0:26:29.240 that as we talk to customers, we're really the only 0:26:29.320 --> 0:26:32.080 hyperscaler that can talk about our own native AI stack 0:26:32.160 --> 0:26:35.440 that's leading technologies in each part of the stack as 0:26:35.480 --> 0:26:38.119 well as our cloud, and that's playing really well, and 0:26:38.160 --> 0:26:40.439 that's driving a lot of the results that you are seeing. 0:26:40.640 --> 0:26:42.640 I got to say, it's the thinking models, the Gemini 0:26:42.760 --> 0:26:46.040 two point five that really kind of are blowing everybody's minds. 0:26:46.160 --> 0:26:47.800 Hey, one thing I want to ask you, speaking. 0:26:47.560 --> 0:26:51.160 Of customers, Tim and I full disclosure, we talk about 0:26:51.160 --> 0:26:53.159 it a lot. Are a little bit obsessed with weimo. 0:26:53.560 --> 0:26:56.560 How much is weimo using Google Cloud. I'm just curious 0:26:56.720 --> 0:26:59.959 in terms of keeping that all going and running. 0:27:01.280 --> 0:27:04.000 Yeah, I totally understand why you love Weimo. I love 0:27:04.000 --> 0:27:06.359 weimo too. Living in San Francisco, I've been using it 0:27:06.400 --> 0:27:08.720 for a few years and my daughters and I love 0:27:08.760 --> 0:27:11.840 it as you can imagine, you know, being sister, you 0:27:11.880 --> 0:27:15.560 know parts of Google. We leverage technologies that Google Cloud 0:27:15.600 --> 0:27:18.119 is building as well as deep Mind is building, and 0:27:18.160 --> 0:27:21.040 so you as you could imagine, you know, there's really 0:27:21.080 --> 0:27:24.680 close interactions from a technology perspective across these different parts 0:27:24.720 --> 0:27:25.119 of Google. 0:27:25.560 --> 0:27:27.000 Hey, just thirty seconds left. 0:27:27.040 --> 0:27:27.600 Security. 0:27:28.280 --> 0:27:33.520 As we know your former background semant tech, you understand 0:27:33.560 --> 0:27:37.720 the importance of security specifically, and I'm just curious, what 0:27:37.800 --> 0:27:39.440 do you keep top of mind when you think about 0:27:39.440 --> 0:27:41.960 the security of Google Cloud and keeping it secure. 0:27:43.160 --> 0:27:46.320 Yeah, as you point out, security is a really important 0:27:46.320 --> 0:27:48.920 area for us to focus on, and it's a core 0:27:48.960 --> 0:27:51.440 part of the value that we deliver to our customers 0:27:51.480 --> 0:27:55.240 in terms of providing a very resilient, protected cloud. There 0:27:55.280 --> 0:27:56.959 are a number of things that you know that are 0:27:57.000 --> 0:27:59.239 top of mind for us and for our customers as 0:27:59.240 --> 0:28:02.800 we talk aboutecurity, especially in a world of AI. One 0:28:03.040 --> 0:28:07.120 is it's important that security companies are leaning deep into 0:28:07.240 --> 0:28:11.680 leveraging AI to improve their security capabilities. So we offer agents, 0:28:11.720 --> 0:28:14.520 for example, that customers can deploy as part of their 0:28:14.520 --> 0:28:18.440 security operations center as part of their threat intelligence gathering, 0:28:19.160 --> 0:28:22.840 and so we're also doing research on how AI can 0:28:22.880 --> 0:28:26.000 be leveraged by the bad actors and think about how 0:28:26.000 --> 0:28:28.800 you can stay on top of providing defenses for things 0:28:28.920 --> 0:28:32.400 like you know, altered images and videos and deep fakes. 0:28:32.960 --> 0:28:35.760 It's also important to our customers that the security we 0:28:35.840 --> 0:28:39.800 provide works multi clouds, so not just for Google Cloud, 0:28:39.840 --> 0:28:42.400 but that they can have the same security posture for 0:28:42.440 --> 0:28:44.680 workloads that they have on other clouds as well, and 0:28:44.720 --> 0:28:47.120 so that's an important part of the conversation too. So 0:28:47.240 --> 0:28:50.440 provide leading edge technologies, stay on top of AI and 0:28:50.480 --> 0:28:54.400 the expanding sort of threat landscape that opens up. And 0:28:54.400 --> 0:28:56.800 then also make sure that whatever you give us, you know, 0:28:56.960 --> 0:28:58.240 works across clouds. 0:28:58.400 --> 0:29:00.640 So glad we could get some time with you to SUSA. 0:29:00.680 --> 0:29:03.160 He's the Chief Operating Officer at Google Cloud, former CEO 0:29:03.200 --> 0:29:06.400 of Alumina, and also former president at Samantech, where he 0:29:06.480 --> 0:29:09.280 oversaw the security and data management portfolio. 0:29:10.360 --> 0:29:14.240 This is the Bloomberg Business Week Daily Podcast. Listen live 0:29:14.320 --> 0:29:17.760 each weekday starting at two pm Eastern on Applecarplay and 0:29:17.800 --> 0:29:20.480 the Android Auto with the Bloomberg Business App. You can 0:29:20.480 --> 0:29:23.640 also listen live on Amazon Alexa from our flagship New 0:29:23.720 --> 0:29:27.040 York station, Just Say Alexa played Bloomberg eleven. 0:29:26.840 --> 0:29:30.800 Thirty Shares of Astra Zeneca rose this past week, right 0:29:30.840 --> 0:29:33.719 after it reported better than expected sales and rising profit 0:29:33.800 --> 0:29:36.760 for the second quarter, spurred by its stable of cancer 0:29:36.800 --> 0:29:39.920 medicines and growth in the US. The company recently pledged 0:29:40.040 --> 0:29:43.520 fifty billion dollars by twenty thirty in both production and 0:29:43.560 --> 0:29:46.520 research and development in the United States, as it seeks 0:29:46.520 --> 0:29:50.000 to show President Trump's administration it is serious about making 0:29:50.040 --> 0:29:51.240 medicines locally. 0:29:51.520 --> 0:29:54.560 A few days later, President Donald Trump sent letters to 0:29:54.720 --> 0:29:58.120 seventeen of the world's largest drug makers demanding that they 0:29:58.240 --> 0:30:01.320 charged the US what other country pay for new medicines. 0:30:01.640 --> 0:30:04.520 The letter added that they immediately lower what they charge 0:30:04.560 --> 0:30:08.600 Medicaid for existing drugs and guarantee that future medicines be 0:30:08.680 --> 0:30:11.560 launched and remain at prices on par with what they 0:30:11.600 --> 0:30:15.440 cost overseas. On top of that, US Commerce Secretary Howard 0:30:15.480 --> 0:30:18.720 Lutnik also said that the US will impose a massive 0:30:18.760 --> 0:30:21.720 tariff if pharmaceuticals are not made in the US. For 0:30:21.800 --> 0:30:24.080 the latest head on over to Bloomberg dot com. 0:30:24.360 --> 0:30:27.880 Tar of certainly top of mind for many global pharmaceutical executives. 0:30:28.160 --> 0:30:32.640 One of them Pascal Surio. He is Astrozenica's chief executive officer, 0:30:32.760 --> 0:30:35.960 and he joined us alongside Bloomberg News health reporter Madison 0:30:36.000 --> 0:30:37.040 Mueller in studio. 0:30:37.240 --> 0:30:39.200 I mean, I think, first of what it's important to 0:30:39.280 --> 0:30:42.600 really think about what every country would want to do, 0:30:42.680 --> 0:30:44.959 because every country would want to make sure they can 0:30:45.320 --> 0:30:47.760 they can secure the health of their citizens. 0:30:47.840 --> 0:30:49.560 It's a question of national security. 0:30:49.880 --> 0:30:53.320 So nobody should be surprised that the president wants to 0:30:54.200 --> 0:30:59.720 reshow manufacturing of pharmaceutical products. I personally have seen this 0:30:59.800 --> 0:31:02.840 have been since several years, and we decided several years 0:31:02.840 --> 0:31:06.120 ago to increase some manufacturing footprint in the US so 0:31:06.160 --> 0:31:10.560 we can actually manufacture many scenes for American patients in America. 0:31:10.600 --> 0:31:12.920 Every country would want to do that, and a big 0:31:12.920 --> 0:31:15.360 country like America, of course kind effort to do it. 0:31:15.720 --> 0:31:18.240 You said that you made that decision several years ago. 0:31:18.360 --> 0:31:21.320 How much of the fifty billion dollar pledge was planned 0:31:21.360 --> 0:31:23.920 before the President threatened these terraffs. 0:31:24.000 --> 0:31:27.200 Well, we've been pursuing this strategy of manufacturing in China 0:31:27.240 --> 0:31:29.960 for China, in the US, for the US since five 0:31:30.040 --> 0:31:33.000 six years and quite frankly, COVID actually showed us we 0:31:33.000 --> 0:31:35.200 were on the right track because we all saw what 0:31:35.280 --> 0:31:39.080 happened during COVID, and so we accelrated this movement. And 0:31:39.120 --> 0:31:42.440 so our fifty billion commitment is a commitment to R 0:31:42.520 --> 0:31:45.840 and D but also commitment to manufacturing. We announced together 0:31:45.920 --> 0:31:48.960 with the Governor of Virginia, a multi billion dollar investment 0:31:49.000 --> 0:31:52.520 in manufacturing in Virginia. And the Governor of Virginia has 0:31:52.520 --> 0:31:55.440 been incredibly fast with this team. So the three days 0:31:55.480 --> 0:31:58.560 to reach an agreement, it's incredible. So we're very happy 0:31:58.600 --> 0:32:00.600 to be there. We are building on you R and 0:32:00.680 --> 0:32:04.200 the site and Kendle Square, Cambridge, Massachusett with twenty five 0:32:04.280 --> 0:32:07.280 hundred scientists that we'll be working there, and there's more 0:32:07.320 --> 0:32:10.360 to come. We're just finishing the build of a Celtes 0:32:10.480 --> 0:32:16.080 RP manufacturing site in Rockville, Maryland. We've expanded in California. 0:32:16.160 --> 0:32:20.080 So so it's a sort of multi prane effort across 0:32:20.120 --> 0:32:21.560 many states across the US. 0:32:21.880 --> 0:32:24.440 You know, you've said that Virginia obviously has made it 0:32:24.480 --> 0:32:28.120 easy to make manufacturing investments there in North Carolina is 0:32:28.160 --> 0:32:30.840 pretty similar. Are there other states in the US where 0:32:31.200 --> 0:32:34.160 you're having these types of good conversations that are you know, 0:32:34.200 --> 0:32:37.640 incentivizing businesses like yours to invest. 0:32:37.960 --> 0:32:40.520 Well, you know, it's hard for me to point the 0:32:40.520 --> 0:32:44.120 point that any state that is better than another. Let 0:32:44.160 --> 0:32:45.720 me just say that we have. 0:32:45.720 --> 0:32:46.720 No problem. 0:32:50.520 --> 0:32:53.040 From different in New Jersey. 0:32:53.280 --> 0:32:54.960 Let me let me just say that the company like 0:32:55.520 --> 0:32:59.760 is for other science. So science is key, and so 0:32:59.840 --> 0:33:01.880 you need to be able to recruit the right sciences, 0:33:01.920 --> 0:33:04.600 the right engineers. And in Virginia you can do this 0:33:04.680 --> 0:33:07.560 because you have some of the best university universities. The 0:33:07.640 --> 0:33:10.560 other part is dealing with partners in a public sector 0:33:10.600 --> 0:33:13.280 that understand us, that we trust each other. 0:33:13.400 --> 0:33:14.320 We can move fast. 0:33:14.920 --> 0:33:17.680 You know, I always tell people in our company talk 0:33:17.680 --> 0:33:21.480 about Astrazenica speed because there's a lot of competition. We 0:33:21.520 --> 0:33:25.040 need to move fast. I've learned Virginia speed. The governor 0:33:25.080 --> 0:33:27.520 has moved so quickly. So this is the kind of 0:33:27.560 --> 0:33:29.680 thing we want to see, whether it's in America, in 0:33:29.720 --> 0:33:31.800 a state or in a country. We want speed and 0:33:31.840 --> 0:33:34.120 we want people to understand how we think. 0:33:34.040 --> 0:33:35.800 You want speed. You want people to understand how you 0:33:35.800 --> 0:33:37.480 think you want to You said you want to follow 0:33:37.520 --> 0:33:41.200 the science. There has been criticism that Robert F. Kennedy Junior, 0:33:41.200 --> 0:33:43.800 the Secretary of Health and Human Services, has not necessarily 0:33:43.840 --> 0:33:46.000 always followed the science with his comments when it comes 0:33:46.080 --> 0:33:48.640 to medicine, when it comes to drugs, when it comes 0:33:48.680 --> 0:33:51.239 to vaccines. How do you look at that and his 0:33:51.360 --> 0:33:51.840 role there. 0:33:52.600 --> 0:33:55.640 Well, you know, I'm not here to actually get involved 0:33:55.640 --> 0:34:00.120 in political discourses. Let me just say that as a company, 0:34:00.120 --> 0:34:02.840 sciences at the heart of everything we do. The reason 0:34:02.880 --> 0:34:06.800 we have such a large oncology pipeline and particular and 0:34:07.600 --> 0:34:10.239 beyond this is because we've focused on science for the 0:34:10.320 --> 0:34:15.200 last ten twelve years, and America is where science in 0:34:15.239 --> 0:34:18.200 our industry is happening. And that's why it's so critical 0:34:18.239 --> 0:34:23.600 to preserve this biosciences leadership the US hires globally. China 0:34:23.680 --> 0:34:26.400 is also becoming a very big source of innovation in 0:34:26.440 --> 0:34:30.000 our industry. Your open fortunately is fulling behind for a 0:34:30.080 --> 0:34:33.319 variety of reasons. So innovation is happening here. We need 0:34:33.360 --> 0:34:34.240 to keep this going. 0:34:34.360 --> 0:34:34.879 We need to. 0:34:34.960 --> 0:34:38.800 Actually continue supporting the leadership. And that's why we invest 0:34:38.880 --> 0:34:42.400 fifty billion dollars in this country, not only in manufacturing, 0:34:42.440 --> 0:34:43.319 but also in R and D. 0:34:43.640 --> 0:34:45.880 What about China, I'd love you to kind of explore 0:34:45.880 --> 0:34:48.520 that a little bit. What are you investing in and 0:34:48.560 --> 0:34:52.239 building out in China and what might surprise our audience 0:34:52.280 --> 0:34:55.160 about the innovation that's happening in China, especially when it 0:34:55.160 --> 0:34:56.040 comes to pharmaceuticals. 0:34:56.120 --> 0:34:58.680 Yeah, I think my great question I think we need 0:34:58.719 --> 0:34:59.320 to start. 0:34:59.120 --> 0:35:03.560 With is the the hypothesis, the assumption that basically the 0:35:03.600 --> 0:35:05.839 more products, so the more innovation exists in the world, 0:35:05.880 --> 0:35:08.479 the better it is for everybody, for every patient, because 0:35:08.520 --> 0:35:10.239 if you have a patient with cancer, the only thing 0:35:10.320 --> 0:35:12.040 that you care about is to be cured if you 0:35:12.120 --> 0:35:16.920 can be cured, right, and so innovation in China has 0:35:16.960 --> 0:35:19.560 really ramped up very rapidly. In the last few years, 0:35:19.960 --> 0:35:23.200 China has gone from making generics to ME TOOS to 0:35:23.280 --> 0:35:25.759 metwo plus what we call MEET two plus in our industry, 0:35:26.440 --> 0:35:30.040 to truly innovate these days, innovate in new technologies and 0:35:30.120 --> 0:35:35.640 cell therapy in si RN, in many many technologies, and 0:35:35.719 --> 0:35:39.799 so China has become the second engine of innovation, not 0:35:39.880 --> 0:35:42.920 as big as the US. The US remains the leader 0:35:43.040 --> 0:35:45.720 in that field, but China is ramping up very quickly. 0:35:46.200 --> 0:35:51.000 Is the administration with some of it, some would say 0:35:51.120 --> 0:35:55.640 questionable disruptive policies. There's been a lot of reporting about 0:35:56.080 --> 0:35:59.440 scientists kind of leaving the United States and going elsewhere. 0:35:59.480 --> 0:36:01.200 Are you seeing signs of that, whether it's to Europe, 0:36:01.200 --> 0:36:03.840 to China to elsewhere because of not supporting you know, 0:36:03.880 --> 0:36:05.799 academia and academic universities. 0:36:06.000 --> 0:36:07.680 Some of that seems to be coming back. 0:36:07.800 --> 0:36:10.360 But yeah, but you know, in these things, it's always 0:36:10.440 --> 0:36:14.200 difficult to discern what is anecdotal versus what is systemic. 0:36:14.480 --> 0:36:18.480 What we have seen in China is really a substantial 0:36:18.520 --> 0:36:21.200 return of scientists from the US but also from the 0:36:21.280 --> 0:36:24.560 UK and elsewhere, but not because of policy, simply because 0:36:24.960 --> 0:36:28.120 they could see opportunities in China. There is money, there 0:36:28.160 --> 0:36:31.360 is capital that can be invested. The Chinese are willing 0:36:31.400 --> 0:36:34.920 to take risk. The government has facilitated the return of 0:36:35.040 --> 0:36:37.839 the scientists and they've come back. But I can tell 0:36:37.840 --> 0:36:39.879 you that a lot of the scientists we work with 0:36:40.000 --> 0:36:42.839 and China in about the companies that we partner with, 0:36:43.200 --> 0:36:45.960 many of these people are American American Chinese. I mean 0:36:45.960 --> 0:36:48.239 they go back and forth, back and forth. There are 0:36:48.320 --> 0:36:52.480 bridge between the US and China, but they've gone to 0:36:52.640 --> 0:36:56.920 China because of the opportunities to create a company, be funded, 0:36:57.120 --> 0:37:01.240 tech risk and hopefully be successful and buy and large. 0:37:01.280 --> 0:37:02.920 They've been quite successful. 0:37:03.480 --> 0:37:07.480 I want to say though, that the leadership remains with 0:37:07.560 --> 0:37:09.840 the US and we need to maintain this, of course, 0:37:10.040 --> 0:37:11.560 I mean the country needs to maintain this. 0:37:12.360 --> 0:37:16.080 There's been some concern though that companies like yours, you know, 0:37:16.160 --> 0:37:19.480 not necessarily astro but big pharmaceutical companies are going to 0:37:19.600 --> 0:37:22.440 China for most of their biotech deals. Now, you know, 0:37:22.480 --> 0:37:25.440 what would you say to that and what would US 0:37:25.480 --> 0:37:29.320 biotech companies need to do to sort of attract investments 0:37:29.400 --> 0:37:30.040 from from. 0:37:29.920 --> 0:37:31.920 Well, I mean the first thing I would say is 0:37:31.920 --> 0:37:34.960 that if you're a patient, you don't care. What you 0:37:35.000 --> 0:37:37.399 want is a drug that will help you. Right, So 0:37:37.960 --> 0:37:42.960 when we do a deal with a Chinese company, typically 0:37:43.040 --> 0:37:46.239 it's because they've discovered a product and they need help 0:37:46.320 --> 0:37:50.080 to globalize it. Because discovering something in a lab is 0:37:50.120 --> 0:37:52.279 one thing. It doesn't require a huge amount of money. 0:37:52.320 --> 0:37:55.320 It require us very talented people, but the capital requirement 0:37:55.800 --> 0:37:58.799 is limited. When you want to develop globally, then you 0:37:58.840 --> 0:38:02.520 need to scale. You need billions of dollars of investment 0:38:02.640 --> 0:38:05.000 in phase two, phase three, and you do the scale. 0:38:05.040 --> 0:38:07.319 You know the people, the expertise. So what we do 0:38:07.400 --> 0:38:09.879 is we licen sindle product and then we develop them 0:38:09.920 --> 0:38:13.520 globally and then bring them to patients, so they start 0:38:13.600 --> 0:38:17.719 the innovation started in China but becomes a global medicine 0:38:17.760 --> 0:38:21.720 for everybody, so it really benefits everybody around the world. 0:38:22.680 --> 0:38:24.760 I want to go back to sort of a global 0:38:24.840 --> 0:38:28.879 domestic question the idea of your listing and the Times 0:38:28.880 --> 0:38:31.160 of London has said that astro Zeneka is looking to 0:38:31.160 --> 0:38:33.759 move it's listening to the US. Are you going to 0:38:33.800 --> 0:38:34.000 do that? 0:38:34.960 --> 0:38:37.560 Well, you just shared with us. 0:38:38.000 --> 0:38:40.400 Yeah, we don't comment on rumors, and you know, as 0:38:40.400 --> 0:38:42.600 a company over the last ten years we've had so 0:38:42.680 --> 0:38:46.480 many rumors. We don't comment on rumors. The only thing 0:38:46.520 --> 0:38:50.160 I will say really is the United States is really 0:38:50.280 --> 0:38:53.680 core to our company. By two thousand and thirty, we 0:38:54.040 --> 0:38:56.239 expect fifty percent of our revenue to come out of 0:38:56.239 --> 0:38:59.080 the United States. Today it's forty four to forty five percent, 0:39:00.160 --> 0:39:03.560 tremendously in the US in the first half. The US 0:39:03.640 --> 0:39:06.200 is the country that innovates I just told you, but 0:39:06.280 --> 0:39:11.440 also the countries that uptake the innovation faster, patients benefit 0:39:11.560 --> 0:39:14.640 much faster. So we want to invest here and we 0:39:14.680 --> 0:39:17.760 want to grow here, and that is a very critical 0:39:17.840 --> 0:39:19.400 part of our company globally. 0:39:20.280 --> 0:39:21.480 Just curious in terms of growth. 0:39:21.520 --> 0:39:24.080 You know, we've talked about earnings and your cancer drugs 0:39:24.080 --> 0:39:26.319 are certainly important in terms of growth. Where do you 0:39:26.560 --> 0:39:29.640 see kind of the most significant growth trends when it 0:39:29.680 --> 0:39:32.000 comes to pharmaceuticals. We've spent the last what is it, Madison, 0:39:32.160 --> 0:39:34.520 the last couple of years talking about the obesity drugs 0:39:34.520 --> 0:39:36.040 and weight loss drugs. 0:39:35.680 --> 0:39:36.719 But where do you see it? 0:39:36.760 --> 0:39:42.680 We talk often about genes and genetic and immunotherapy. 0:39:43.200 --> 0:39:45.080 Where do you see the real growth coming in the 0:39:45.080 --> 0:39:46.640 next I don't know, five to ten years. 0:39:46.719 --> 0:39:48.600 A great question, but it's almost all of the above. 0:39:48.640 --> 0:39:53.560 I mean of course my check managing what I would 0:39:53.600 --> 0:39:57.440 call sat rolo abdominal fat. Because everybody talks about obesity, 0:39:57.480 --> 0:39:59.600 what really matters is how much fat do you have 0:39:59.640 --> 0:40:03.000 in your domains that surrounds you, your liver, your punkreas, 0:40:03.080 --> 0:40:06.719 your heart and creates inflammation and insulin resistance and all 0:40:06.760 --> 0:40:07.960 the consequences. 0:40:08.000 --> 0:40:10.440 We can think about hypertension and others. 0:40:10.960 --> 0:40:14.120 So this is really a big epitieomic globally. We need 0:40:14.160 --> 0:40:17.719 to address that and that's what companies like lilian Over 0:40:17.840 --> 0:40:20.279 are doing today and we are we want to do 0:40:20.320 --> 0:40:24.719 this with all agents. But then you know, we have 0:40:24.800 --> 0:40:30.879 development in antibody drug conjugates, we have developments in by 0:40:30.880 --> 0:40:36.080 specific antibodies for cancer. One of the most exciting new 0:40:36.120 --> 0:40:41.960 technology is cell therapy because cells upy will apply to ematology, cancers, 0:40:42.000 --> 0:40:46.000 but also potentially sold tumors and immune diseases. We have 0:40:46.120 --> 0:40:50.400 no cases, small numbers early days, but small cases that 0:40:50.560 --> 0:40:55.279 young women who suffer from lupus, which is a terrible. 0:40:54.960 --> 0:40:58.360 Disease can be a family member who has can be cured. 0:40:58.800 --> 0:41:02.840 I mean these patient stay, their life is about taking drugs. 0:41:02.880 --> 0:41:07.200 Theories with all the consequences, you can imagine the organs 0:41:07.200 --> 0:41:10.000 are destroyed over time by the disease. They can be cured. 0:41:10.400 --> 0:41:12.760 You have people with my LOOMA that can be cured. 0:41:13.680 --> 0:41:16.520 And so as we progress this technology and make it 0:41:16.640 --> 0:41:21.120 more usable, is more easily usable, and more affordable, it 0:41:21.160 --> 0:41:27.920 can really transform many fields of medicine, pharmacology to imnology. 0:41:28.920 --> 0:41:31.880 I know you've had an amazing tenure at Astra and 0:41:32.320 --> 0:41:34.600 there's sort of an obsession in the UK with your 0:41:34.640 --> 0:41:37.480 succession plans and what comes next. You know, not to 0:41:37.480 --> 0:41:38.480 say that you're leaving anything. 0:41:38.520 --> 0:41:39.080 We don't want you to. 0:41:39.400 --> 0:41:40.120 We don't want you to go. 0:41:40.760 --> 0:41:44.600 What do you want to accomplish before you and your 0:41:44.600 --> 0:41:45.640 tenure at Astra. 0:41:46.800 --> 0:41:49.239 Well, one of the things is that I wanted to 0:41:49.280 --> 0:41:50.719 do is have a great team, and I have a 0:41:50.719 --> 0:41:51.160 great team. 0:41:51.320 --> 0:41:51.719 That's it. 0:41:51.760 --> 0:41:55.080 I have really a fantastic team. And that's why what 0:41:55.239 --> 0:41:58.200 you should worry about my succession. We have a great 0:41:58.239 --> 0:42:01.080 team and people who can succeed me. So that's I 0:42:01.120 --> 0:42:04.520 think one thing, and we need to we constantly try 0:42:04.560 --> 0:42:07.680 to improve the team, not only my direct reports, but 0:42:07.719 --> 0:42:09.759 they are direct reports and the company as a whole. 0:42:10.560 --> 0:42:11.640 Two is the. 0:42:11.600 --> 0:42:17.880 Second piece is almost unachievable because science is never going 0:42:17.960 --> 0:42:22.120 to be stopping. And the more I progress, the get 0:42:22.239 --> 0:42:25.239 the older it gets, the more science get exciting, and 0:42:25.280 --> 0:42:28.359 the more excited you. I mean, there's no better time 0:42:28.400 --> 0:42:31.480 to be in our industry than there's so much innovation, 0:42:32.080 --> 0:42:34.960 so much hope to cure diseases that can't be cured today. 0:42:35.480 --> 0:42:39.760 And the last thing was really to finish our site 0:42:39.800 --> 0:42:43.759 in Cambridge, because I keep joking internality I want to 0:42:43.800 --> 0:42:46.040 have the two Cambridges, one in Cambridge, you care when 0:42:46.080 --> 0:42:47.000 in Cambridge and Boston. 0:42:47.880 --> 0:42:48.719 But that's for the joke. 0:42:48.800 --> 0:42:52.239 But the most exciting really is the science and the 0:42:52.280 --> 0:42:56.160 pursuit of new technologies and new products that will make 0:42:56.200 --> 0:42:59.799 a difference and change the future of medicine. So that's 0:43:00.120 --> 0:43:02.600 how those things I want to add resk. But I 0:43:02.640 --> 0:43:04.960 have to accept that some poe biotoje is going to 0:43:05.000 --> 0:43:05.640 catch up with me. 0:43:05.880 --> 0:43:06.640 And unless you. 0:43:06.600 --> 0:43:09.160 Create a pill that keeps us going, I'm kind of 0:43:09.200 --> 0:43:12.480 even my fingers crosses exactly, gp Ones right, we think 0:43:12.520 --> 0:43:15.600 it's going to be curel Pascal, we really enjoyed this. 0:43:15.680 --> 0:43:17.920 Thank you so much for having for all the time. 0:43:17.960 --> 0:43:20.759 Pascal Sorio he is Astrozenicas chief executive officer, and of 0:43:20.760 --> 0:43:24.120 course Bloomberg us his own health reporter Madison Mueller, always 0:43:24.120 --> 0:43:31.120 a must read on the Bloomberg and at Bloomberg dot Com. 0:43:31.320 --> 0:43:35.319 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:43:35.400 --> 0:43:38.840 live weekday afternoons from two to five pm Eastern. Listen 0:43:38.880 --> 0:43:42.359 on Applecarplay and the Android Auto with the Bloomberg Business app, 0:43:42.600 --> 0:43:44.600 or watch us live on YouTube. 0:43:44.960 --> 0:43:46.919 Plendy ahead in our second hour of the weekend edition 0:43:46.960 --> 0:43:49.960 of Bloomberg Business Week, including the long and winding trip 0:43:50.239 --> 0:43:52.720 to FDA approval for one psychedelic treatment. 0:43:52.960 --> 0:43:55.600 That trip, by the way, it's continuing. 0:43:55.320 --> 0:43:59.160 Plus, while the organization behind Burning Man's Desert Utopia is 0:43:59.200 --> 0:44:01.960 now facing an existential financial. 0:44:01.480 --> 0:44:05.040 Crisis, and jewelry from the Roaring twenties making a comeback, 0:44:05.239 --> 0:44:07.799 giving the new Tesla diner a test drive, and the 0:44:07.840 --> 0:44:10.320 surprising complexity of Hey Keyfob. 0:44:10.920 --> 0:44:13.200 It's all in Bloomberg Pursuits Later on this hour. 0:44:13.480 --> 0:44:16.480 First Up This Hour. A few weeks ago, Robert F. 0:44:16.560 --> 0:44:20.040 Kennedy Junior, the Secretary of Health and Human Services, said 0:44:20.040 --> 0:44:23.440 he could envision approval for psychedelic drugs is treatment for 0:44:23.560 --> 0:44:27.279 depression and trauma. If clinical studies have been conducted, it 0:44:27.320 --> 0:44:30.280 comes as psychedelics are making inroads in deep red states 0:44:30.320 --> 0:44:33.480 like Texas, where former Trump Cabinet secretary and ex Governor 0:44:33.560 --> 0:44:36.440 Rick Perry has thrown his full support behind the effort. 0:44:36.760 --> 0:44:38.640 That may have caught the attention of the team over it. 0:44:38.719 --> 0:44:42.680 They publicly traded small cap psychedelic company Compass Pathways. They're 0:44:42.719 --> 0:44:46.640 in pursuit of FDA approval. Kabirnth is the company's CEO. 0:44:47.000 --> 0:44:50.640 A Compass Pathways where a company in the final stages 0:44:50.800 --> 0:44:55.760 of developing synthetic psilocybin as a potential treatment for treatment 0:44:55.800 --> 0:45:00.000 resistant depression or what we call patients living with persistent depression. 0:45:01.040 --> 0:45:04.520 That's a big problem affecting some three million people in 0:45:04.560 --> 0:45:08.960 the US, and it's debilitating. Many of them are unable 0:45:09.000 --> 0:45:11.880 to work. The majority will have had some sort of 0:45:11.920 --> 0:45:16.239 suicidal thoughts in the course of their depressive illness. So 0:45:16.320 --> 0:45:19.719 we're a leading psychedelic company and potentially the closest to 0:45:19.800 --> 0:45:20.760 regulatory approval. 0:45:20.840 --> 0:45:23.120 You've used the word potential twice. You said it's a 0:45:23.160 --> 0:45:26.240 potential treatment, and you said potentially you're a leading company 0:45:26.280 --> 0:45:29.880 there when it comes to FDA approval. Is it unproven? 0:45:30.840 --> 0:45:34.640 We have generated robust evidence now from two studies. The 0:45:34.680 --> 0:45:36.839 first was published a couple of years ago, and then 0:45:37.080 --> 0:45:40.160 just last month we released more data from the first 0:45:40.239 --> 0:45:42.960 of our final stage studies. So what can I tell 0:45:42.960 --> 0:45:46.560 you about that? First safety this we didn't see any 0:45:46.680 --> 0:45:50.440 unexpected safety signals in this treatment of patients living with 0:45:50.520 --> 0:45:55.440 persistent depression. And secondly, after just a single treatment, after 0:45:55.600 --> 0:46:00.080 six weeks, we saw a significant reduction in depressive symptom. 0:46:00.760 --> 0:46:04.120 And just to emphasize that, because you'll be aware of 0:46:04.160 --> 0:46:07.279 the kind of the typical paradigm of antidepressants something you 0:46:07.400 --> 0:46:11.200 take daily, this was a single treatment and with the 0:46:11.200 --> 0:46:15.520 effect measured after six weeks. Now we have already are two 0:46:15.600 --> 0:46:18.799 for two in terms of these trials clinical trials that 0:46:18.840 --> 0:46:23.120 we've conducted, but we're continuing to see more evidence generated 0:46:23.239 --> 0:46:26.760 first in one of these late stage trials, and second 0:46:26.760 --> 0:46:29.560 we have another study ongoing where we're also looking at 0:46:29.600 --> 0:46:31.640 the impact potentially of another treatment. 0:46:31.920 --> 0:46:34.239 We should point out that about a month ago, in 0:46:34.320 --> 0:46:37.760 that study came out, the stock your shares tumbled almost 0:46:37.800 --> 0:46:42.000 fifty percent, hitting a record low. What I guess I 0:46:42.040 --> 0:46:45.120 want to understand, so it was below what Wall Street expected. 0:46:45.440 --> 0:46:48.040 It did meet your goal from what I understand your 0:46:48.080 --> 0:46:52.120 company goal, but Wall Street was very disappointed. Tell us 0:46:52.160 --> 0:46:57.239 how this works. How does one psilocybin treatment kind of 0:46:57.320 --> 0:47:00.000 cure depression, persistent depression. 0:47:01.160 --> 0:47:04.880 Psilocymin you can think of as if you like a key, 0:47:05.520 --> 0:47:08.360 a key that unlocks a door or a set of 0:47:08.440 --> 0:47:12.280 doors in the brain, and while those doors are open, 0:47:12.920 --> 0:47:15.879 that enables the patient to work through some of their 0:47:16.040 --> 0:47:20.360 fixed negative thinking and potentially have relief from their depressive symptoms. 0:47:20.920 --> 0:47:24.239 To do that, there is a profound subjective experience, So 0:47:24.320 --> 0:47:29.000 there is a psychedelic experience that lasts six to eight hours, 0:47:29.440 --> 0:47:31.680 and as I say, during the course of that, the 0:47:31.800 --> 0:47:34.200 drug is working in such a way that it unlocks 0:47:34.239 --> 0:47:38.239 these doors and allows the person, the patient to engage 0:47:38.520 --> 0:47:41.439 with some of those negative thoughts and potentially, as I say, 0:47:41.760 --> 0:47:45.080 get relief from those depressive symptoms. The fact is, as 0:47:45.120 --> 0:47:48.600 I say, we've seen, and what's amazing, that one single 0:47:48.640 --> 0:47:51.879 treatment can show sustained effects at least through to six 0:47:51.920 --> 0:47:56.520 weeks and potentially longer. In our earlier trial, our earlier 0:47:56.560 --> 0:47:59.080 clinical study that we did, we saw that for many 0:47:59.120 --> 0:48:01.360 patients that were suspen out to twelve weeks. 0:48:01.600 --> 0:48:03.960 What's many? How many? Forgive me Tim, like, I'm just 0:48:04.040 --> 0:48:04.759 curious how many. 0:48:04.880 --> 0:48:06.600 So that was a study of around two hundred and 0:48:06.680 --> 0:48:10.319 thirty patients of whom a significant number were on what 0:48:10.400 --> 0:48:13.920 we call the active dose of the medication, and what 0:48:13.960 --> 0:48:17.120 we saw was a quarter of them had from that 0:48:17.239 --> 0:48:20.560 single dose they were actually sustained freer depression out to 0:48:20.600 --> 0:48:23.239 twelve weeks. And in this population of people who have 0:48:23.360 --> 0:48:27.080 typically tried multiple treatments and for whom very little is 0:48:27.080 --> 0:48:29.680 any longer working, that was a remarkable response. 0:48:30.239 --> 0:48:32.480 When patients do take this single dose, what is the 0:48:32.600 --> 0:48:35.360 environment that they're in during that six to eight hours, 0:48:35.400 --> 0:48:38.040 and are they guided in some way by a therapists 0:48:38.080 --> 0:48:38.839 of sorts. 0:48:39.239 --> 0:48:43.759 It's a physically it's a calm, comfortable setting. They have 0:48:44.000 --> 0:48:47.239 the option of ice shades, there's music playing, and there 0:48:47.280 --> 0:48:51.960 are appropriate safety safeguards in place. Psilocybin is a very 0:48:52.160 --> 0:48:56.200 inner directed mechanism, so what actually happens is the patient 0:48:56.239 --> 0:49:00.320 has this profound influence, but where there is some in 0:49:00.360 --> 0:49:04.200 the room, it's largely silent. There is not directed therapy 0:49:04.280 --> 0:49:05.480 in the course of that intervention. 0:49:05.840 --> 0:49:09.000 How do you run an effective clinical trial for a 0:49:09.080 --> 0:49:12.720 drug that the experience is such that the person knows 0:49:13.280 --> 0:49:16.600 they've taken this drug rather than a placebo. Somebody who 0:49:16.640 --> 0:49:19.520 takes a placebo is not going to have a psychedelic 0:49:19.600 --> 0:49:20.920 reaction to the placebo. 0:49:21.840 --> 0:49:24.920 At Compass, we thought about this before we even started 0:49:25.040 --> 0:49:27.960 our studies. So our prior big study, the one I 0:49:28.000 --> 0:49:31.200 reference with two hundred and thirty patients, we designed that 0:49:31.320 --> 0:49:33.799 in such a way that there was the choice of 0:49:34.040 --> 0:49:38.680 three different doses of psilocybin. One was a low dose, 0:49:39.520 --> 0:49:42.480 a second was an intermediate dose. And in patients who've 0:49:42.480 --> 0:49:46.480 never had this experience before, that's truly confounding in terms 0:49:46.480 --> 0:49:48.880 of they cannot tell whether they got a medium dose 0:49:49.080 --> 0:49:52.520 or a high dose of that drug. This is important because, 0:49:52.560 --> 0:49:54.560 as you say, otherwise, it will be very obvious. But 0:49:54.680 --> 0:49:58.120 that design was very effective for that earlier stage study 0:49:58.200 --> 0:50:00.719 we did, and we've replicated that in one of our 0:50:00.800 --> 0:50:01.680 late stage studies. 0:50:01.719 --> 0:50:04.600 We're talking with Kabir Andathi's chief executive officer of Compass 0:50:04.640 --> 0:50:07.719 Pathways here in studio. You keep saying synthetic. What's the 0:50:07.760 --> 0:50:09.960 difference between synthetic and naturally occurring? 0:50:10.480 --> 0:50:14.320 So we are manufacturing a pill to the highest standards 0:50:14.320 --> 0:50:17.440 of purity, no contamination. We know exactly what is in 0:50:17.480 --> 0:50:20.640 the pill. This is a manufactured pill that we are 0:50:20.680 --> 0:50:21.560 treating with, so that. 0:50:21.520 --> 0:50:23.480 You know exactly in terms of dosage. Is that what 0:50:23.480 --> 0:50:26.439 I'm saying, So if naturally occurring is different. 0:50:26.680 --> 0:50:30.120 Potentially it is naturally occurring whereas well as is synthetic. 0:50:30.200 --> 0:50:32.200 So we know exactly what's in it, we know the 0:50:32.280 --> 0:50:32.919 exact pill. 0:50:33.200 --> 0:50:34.000 What will it cost? 0:50:34.960 --> 0:50:37.239 It's primiture to speculate on that at the moment we're 0:50:37.320 --> 0:50:40.400 still conducting these final stages of our studies. 0:50:40.760 --> 0:50:42.319 But expensive and. 0:50:42.280 --> 0:50:44.120 Would it be something I mean, if you get f 0:50:44.160 --> 0:50:47.120 to a approval, is it safe to make the assumption 0:50:47.160 --> 0:50:48.000 that it would be covered. 0:50:49.680 --> 0:50:53.600 The whole premise for founding Compass Pathways was to enable 0:50:53.640 --> 0:50:56.560 that form of broad access. So the reason that the 0:50:56.600 --> 0:51:00.920 company has gone through doing these rigorous, robustical studies so 0:51:01.000 --> 0:51:03.360 that we is exactly so that we can discuss that 0:51:03.360 --> 0:51:07.600 with the FDA potential for regulatory approval, and then if 0:51:07.640 --> 0:51:10.680 we're fortunate enough to get there, the chance to negotiate 0:51:10.719 --> 0:51:15.120 with both commercial insurers and government pairs. Let's remind ourselves 0:51:15.160 --> 0:51:18.279 that these three million people that I referred to, they 0:51:18.320 --> 0:51:22.400 are relying on insurers, commercial insurers and government pairs to 0:51:22.480 --> 0:51:25.239 actually cover their drugs. I believe we will be able 0:51:25.239 --> 0:51:28.839 to demonstrate significant value given how different this is from 0:51:28.880 --> 0:51:31.040 other treatments available today in depression. 0:51:31.440 --> 0:51:34.600 Kaviir Carol mentioned that the Associated Press reported earlier this 0:51:34.719 --> 0:51:38.359 month that RFK Junior recently talked to members of Congress 0:51:38.400 --> 0:51:42.560 about psychedelic therapy for depression and trauma. Apart from that, 0:51:42.760 --> 0:51:45.520 have you seen any real signs of support for the 0:51:45.560 --> 0:51:49.000 administration for this new class of drugs or type of 0:51:49.040 --> 0:51:49.760 type of treatment. 0:51:51.160 --> 0:51:54.480 We have had support from the FDA throughout our development process. 0:51:54.520 --> 0:51:56.080 We have breakthrough designation. 0:51:56.480 --> 0:51:57.360 Before Robert F. 0:51:57.440 --> 0:51:59.720 Kennedy Junior took over as HJ, we have had. 0:51:59.600 --> 0:52:03.320 A mot cbated and engaged agency. We're excited to see 0:52:03.560 --> 0:52:08.840 the voices from HHS from Veterans Affairs today suggesting that 0:52:08.880 --> 0:52:11.680 they also see the potential for this class, and we're 0:52:11.800 --> 0:52:14.600 very happy to work to see how we could potentially 0:52:14.760 --> 0:52:17.719 accelerate access while at the same time ensuring that we 0:52:17.760 --> 0:52:21.319 continue to generate really good, robust, good evidence that these 0:52:21.360 --> 0:52:22.320 are safe and effective. 0:52:22.960 --> 0:52:25.799 Talk to us about timeline, though, is it I feel 0:52:25.800 --> 0:52:27.719 like we've been I know Blimberg has been reporting on 0:52:28.239 --> 0:52:31.080 this class of drugs and treatments, and I think we've 0:52:31.080 --> 0:52:34.000 all seen pieces that's right for a long time that 0:52:34.160 --> 0:52:36.600 for people who or other treatments don't seem to be 0:52:36.640 --> 0:52:39.400 making a change for them. 0:52:40.000 --> 0:52:41.319 So I don't know. 0:52:41.600 --> 0:52:44.120 Is it another few years, is it the end of 0:52:44.160 --> 0:52:45.839 this year, is it the end of next year? 0:52:46.719 --> 0:52:48.399 And is it that the. 0:52:48.600 --> 0:52:52.400 Trump administration could somehow shuttle this through much more quickly. 0:52:53.719 --> 0:52:56.719 I think there are clearly people in the current administration who, 0:52:56.719 --> 0:52:59.200 as I say, see the potential of this. Well, we 0:52:59.239 --> 0:53:00.879 want to make sure what we do this right as well, 0:53:01.000 --> 0:53:02.319 so we want to make sure we do that in 0:53:02.320 --> 0:53:04.040 the right way, with the right rigor and so on. 0:53:05.040 --> 0:53:09.120 We are conducting, as I say, the final stages of studies. 0:53:09.120 --> 0:53:11.520 We have two ongoing of which the second will wrap 0:53:11.600 --> 0:53:14.440 up in the second half of next year. The data 0:53:14.480 --> 0:53:17.040 we released last month, though it hasn't yet been reviewed 0:53:17.040 --> 0:53:19.120 by the FDA, we have a meeting planned with them 0:53:19.120 --> 0:53:21.960 where we'll discuss with them and we'll discuss the potential 0:53:22.000 --> 0:53:24.800 for any acceleration of a filing and a regulatory process. 0:53:25.040 --> 0:53:28.319 Do you also think about other usages, whether it's PTSD 0:53:29.520 --> 0:53:32.680 and other applications, And I'm just curious where what you 0:53:32.760 --> 0:53:34.600 might be exploring in that world. 0:53:34.760 --> 0:53:39.400 Our next priority, beyond persistent depression is indeed PTSD. That 0:53:39.560 --> 0:53:42.719 is something with very high prevalence, some thirteen million in 0:53:42.760 --> 0:53:45.399 the US, for which there are only two very old 0:53:45.440 --> 0:53:48.920 drugs approved, and unfortunately recently there have been two advisory 0:53:48.920 --> 0:53:52.879 committees recommending against new drugs in that space. So yes, 0:53:52.960 --> 0:53:55.759 we see PTSD as a key area. We generated some 0:53:55.960 --> 0:53:58.600 data last year and we will be announcing the design 0:53:58.680 --> 0:54:00.920 of another late stage trial for PTSD. 0:54:01.040 --> 0:54:04.239 I know the US FDA is the gold standard for 0:54:04.320 --> 0:54:07.360 going through the regulatory process to be viewed by the 0:54:07.400 --> 0:54:12.239 world as a credible treatment for something, but these days 0:54:12.320 --> 0:54:16.480 is it worth going after approval in another country to 0:54:16.520 --> 0:54:18.759 try to do this on a smaller scale to prove 0:54:18.840 --> 0:54:20.359 that yes, it indeed works. 0:54:21.120 --> 0:54:24.360 We will be exploring approval in a range of countries. 0:54:24.560 --> 0:54:30.080 So our studies have been international, US, Canada, Europe as well. 0:54:30.560 --> 0:54:33.080 We have taken advice over the years from the European 0:54:33.120 --> 0:54:36.520 regulatory authorities. We're a UK based company as well, so 0:54:36.560 --> 0:54:39.239 we've been speaking to the MHRA, the regulatory authority in 0:54:39.239 --> 0:54:42.160 the UK. So yes, this is a problem, sadly for 0:54:42.239 --> 0:54:44.800 patients across the world, and we would look to exploit 0:54:44.840 --> 0:54:45.440 it where we can. 0:54:45.680 --> 0:54:47.960 I'm just curious in terms of big Farmer, have you 0:54:48.000 --> 0:54:53.120 had any preliminary discussions with larger, larger pharmaceutical partners interested 0:54:53.160 --> 0:54:56.960 in commercialization, co commercialization or distribution. 0:54:57.520 --> 0:54:59.560 What I know is the Big Farmer is tracking this 0:54:59.640 --> 0:55:02.319 space closely. And what's been great is to see the 0:55:02.360 --> 0:55:05.560 re entry of some big fama back into psychiatry over 0:55:05.600 --> 0:55:08.520 the last couple of years. So I know they watched 0:55:08.560 --> 0:55:11.759 this space. But we at Compass are determined that we 0:55:11.840 --> 0:55:14.800 can do this ourselves and are excited about the opportunity 0:55:14.880 --> 0:55:17.360 to bring this potential new treatment to patients who so 0:55:17.400 --> 0:55:17.959 clearly needed. 0:55:18.080 --> 0:55:20.560 So no strategic alignment that you would consider. You plan 0:55:20.640 --> 0:55:21.640 on doing this alone. 0:55:21.719 --> 0:55:22.440 That's our planted. 0:55:22.680 --> 0:55:24.560 Okay, great staff, stay in touch. 0:55:24.880 --> 0:55:25.120 Thank you. 0:55:25.160 --> 0:55:27.680 Let us sta how things are going. I really appreciate it. 0:55:28.160 --> 0:55:30.800 Kiber be well. Kabir Kath, He's chief executive officer of 0:55:30.880 --> 0:55:33.759 Compass Pathways, joining us right here in studio. 0:55:35.400 --> 0:55:39.279 This is the Bloomberg Business Week Daily Podcast. Listen live 0:55:39.360 --> 0:55:42.239 each weekday starting at two pm Eastern on Apple car 0:55:42.360 --> 0:55:45.160 Play and the Android Auto with the Bloomberg Business app. 0:55:45.239 --> 0:55:48.040 You can also listen live on Amazon Alexa from our 0:55:48.040 --> 0:55:52.120 flagship New York station, just Say Alexa played Bloomberg eleven. 0:55:51.880 --> 0:55:55.839 Thirty, Well, Larry Page, Sergei Brin, Eric Schmid are all 0:55:55.920 --> 0:55:59.960 so called burners. Mark Zuckerberg is gone, as has Elon Musk. 0:56:00.680 --> 0:56:04.080 Sam Altman called the festival quote the most beautiful man 0:56:04.160 --> 0:56:06.799 made thing I've ever seen, and suggested it was what 0:56:06.920 --> 0:56:13.440 a post agi world can look like, like poetry. It's something. 0:56:13.440 --> 0:56:15.040 Apparently there are a lot of drugs there too. I'm 0:56:15.120 --> 0:56:17.319 just I'm just gonna say that we're talking about Burning Man, 0:56:17.440 --> 0:56:19.480 and as I've been told by friends who've gone, I 0:56:19.480 --> 0:56:21.480 wouldn't get it and I wouldn't like it. 0:56:22.040 --> 0:56:23.400 Friends you've gone, you've never gone. 0:56:23.440 --> 0:56:24.320 Oh I've never gone. 0:56:24.320 --> 0:56:24.400 No. 0:56:25.200 --> 0:56:26.120 Did your friends like it? 0:56:26.520 --> 0:56:26.800 Yeah? 0:56:26.800 --> 0:56:29.680 But he was like, he's like yeah, He's like, you 0:56:30.200 --> 0:56:31.719 would hate it. You got to let go, and I 0:56:31.760 --> 0:56:32.600 don't let go of anything. 0:56:32.600 --> 0:56:33.120 You didn't like it. 0:56:33.160 --> 0:56:35.080 Anyway, that's enough about me. I want to talk to 0:56:35.120 --> 0:56:38.200 Ted Alcore and he's a Bloomberg BusinessWeek freelance contributor. He 0:56:38.200 --> 0:56:42.279 wrote about the magazine for the magazine about Burning Man's crisis. 0:56:42.520 --> 0:56:46.080 He joins us from New Mexico, it's an existential financial 0:56:46.120 --> 0:56:48.560 crisis that the organization is facing. Ted, we're going to 0:56:48.600 --> 0:56:51.280 talk about that in a minute, But have you first 0:56:51.560 --> 0:56:54.279 have you been to the Burning Man event in the 0:56:54.320 --> 0:56:55.160 Black Rock Desert? 0:56:56.640 --> 0:56:57.000 I have. 0:56:57.280 --> 0:56:59.719 I feel like you know, I'm a big believer in 0:57:00.640 --> 0:57:03.000 getting a taste of what you're going to report on 0:57:03.080 --> 0:57:05.080 knowing a little bit of what you're writing about. 0:57:05.120 --> 0:57:07.839 Okay, so describe it. Just describe it for people who 0:57:07.880 --> 0:57:08.319 haven't been. 0:57:08.840 --> 0:57:11.000 It's hard to put into words, admittedly, and I don't 0:57:11.000 --> 0:57:14.840 mean that as hyperbole. It's a very strange, unusual environment 0:57:15.520 --> 0:57:20.240 visually and socially. You know, eighty thousand people in the 0:57:20.280 --> 0:57:23.720 desert with a lot of lights, a lot of noise. 0:57:25.000 --> 0:57:28.520 I've heard rumored there are some substances there and certainly 0:57:28.640 --> 0:57:32.840 very few rules, but you know, interesting things occur out 0:57:32.840 --> 0:57:36.480 of it, and you know, obnoxious things too, but it's 0:57:36.480 --> 0:57:38.920 certainly something that keeps people going back here after year. 0:57:39.200 --> 0:57:42.919 One of the very few rules, though, is that there's 0:57:43.000 --> 0:57:45.880 no money exchanged at the event, apart from the ticket 0:57:45.880 --> 0:57:47.920 that you buy ahead of time. And that is the 0:57:48.360 --> 0:57:51.600 core fundamental tension that you write about. It has to 0:57:51.640 --> 0:57:54.080 do with commerce and money. That's really at the root 0:57:54.120 --> 0:57:58.160 of Burning Man's financial woes. It just can't do money 0:57:58.560 --> 0:57:59.520 explain what's going on. 0:58:00.720 --> 0:58:04.080 Yeah, I mean, basically it's bound to these principles that 0:58:04.160 --> 0:58:07.360 kind of emerged from this sort of utopian project of 0:58:07.720 --> 0:58:11.720 you know, getting away from the traditional capitalist economy, decommodifying 0:58:11.760 --> 0:58:15.520 the event. Everything there is based on gifting. You know, 0:58:15.560 --> 0:58:17.920 for nine days, people get by on what they what 0:58:17.960 --> 0:58:21.360 they brought, and what other people give them. But the organization, 0:58:21.520 --> 0:58:24.360 the nonprofit that runs this, of course, has to operate 0:58:24.400 --> 0:58:27.760 in the real world where det collectors do come for 0:58:27.840 --> 0:58:30.919 your bills. And you know, for a period of time 0:58:30.960 --> 0:58:33.760 the event was growing and there was a ton of 0:58:33.760 --> 0:58:36.960 interest and ticket sales were covering the costs. But in 0:58:36.960 --> 0:58:40.880 the last few years, costs have increased a lot, you know, 0:58:41.120 --> 0:58:44.840 economic the inflation, but also you know in terms of 0:58:44.920 --> 0:58:49.240 labor and other costs for events like this, and the 0:58:49.240 --> 0:58:51.560 ticket prices just haven't kept up, and so the sort 0:58:51.560 --> 0:58:54.240 of the business model of bringing this group together is 0:58:54.560 --> 0:58:57.760 increasingly in doubt. And it kind of caught up to 0:58:57.800 --> 0:59:01.640 them this last year when tickets actually didn't sell out completely, 0:59:01.920 --> 0:59:04.880 particularly this higher price trant or tickets, and all of 0:59:04.920 --> 0:59:06.960 a sudden the organization came out of the desert and 0:59:07.040 --> 0:59:09.160 was basically twenty million dollars in the hole. 0:59:09.280 --> 0:59:10.439 Wow, that's a lot of money. 0:59:11.000 --> 0:59:14.200 You write in the story that back in nineteen ninety 0:59:14.360 --> 0:59:17.160 anything close to when they sold anything close to a 0:59:17.200 --> 0:59:20.280 ticket or what you could call it was actually a 0:59:20.280 --> 0:59:24.040 suggestion of ten dollars in donations and price tickets or 0:59:24.040 --> 0:59:26.919 the price of tickets kind of stayed around. I guess 0:59:27.000 --> 0:59:30.040 that level for a while. What does it cost today 0:59:30.280 --> 0:59:34.080 and why aren't people maybe as interested? Because I feel 0:59:34.120 --> 0:59:36.320 like we used to talk about it a lot here, 0:59:36.400 --> 0:59:39.280 because a lot of business folks, certainly in the tech community, 0:59:39.760 --> 0:59:42.240 used to show up there. So talk to us about 0:59:42.240 --> 0:59:44.640 what it costs today, and maybe why interest is waning? 0:59:45.920 --> 0:59:48.120 Yeah, I mean, well, when it started, it was just 0:59:48.160 --> 0:59:50.120 a bunch of people driving out into the desert, So 0:59:50.200 --> 0:59:52.440 I don't think feel people felt compelled to sort of 0:59:52.440 --> 0:59:54.520 make a donation. I dug up this flyer from the 0:59:54.520 --> 0:59:57.200 first time that the event was held in Nevada with 0:59:57.320 --> 1:00:01.040 as you said, it suggested ten dollars donation. Yeah, last year, 1:00:01.240 --> 1:00:03.960 the standard price ticket was five hundred and seventy five dollars. 1:00:04.000 --> 1:00:06.360 This year it's seven hundred and forty nine dollars. So 1:00:06.400 --> 1:00:10.080 it's a big difference. And admittedly the event has gotten 1:00:10.120 --> 1:00:13.960 a lot more formalized A lot more, you know, law abiding, 1:00:14.080 --> 1:00:17.520 I guess, and believe me, there's plenty of debates over 1:00:17.560 --> 1:00:19.920 whether which of those costs are necessary. But if you 1:00:19.960 --> 1:00:22.840 have to spend three point two million dollars on porta potties, 1:00:23.000 --> 1:00:25.240 which is how much they spent last year, you can 1:00:25.320 --> 1:00:27.640 imagine the sort of scale of public services that the 1:00:28.160 --> 1:00:30.960 that the organization has to has to offer these days. 1:00:32.160 --> 1:00:35.080 And that gives into a lot of tension within sort 1:00:35.080 --> 1:00:38.840 of the Burner burning Man community, because, as you said, 1:00:38.920 --> 1:00:42.760 there's there's been this diminution in the number of people 1:00:42.760 --> 1:00:45.880 that went to Nevada for the event last year, and 1:00:45.920 --> 1:00:48.200 it's caused a lot of people to wonder has Burning 1:00:48.200 --> 1:00:51.680 Man jumped the shark or was it you know, they 1:00:51.680 --> 1:00:54.520 had an off year. There was a very well publicized 1:00:54.560 --> 1:00:57.880 monsoon that led a lot of people sort of stranded 1:00:57.920 --> 1:01:01.880 in mud the year before. You know, is this just 1:01:01.920 --> 1:01:04.160 sort of like a temporary thing or a secular trend? 1:01:04.240 --> 1:01:06.600 And as I also went on to report, a lot 1:01:06.640 --> 1:01:09.920 of people who are who sort of identify as Burners 1:01:10.000 --> 1:01:12.920 or Burning Man people aren't going to Nevada anymore. They're 1:01:12.960 --> 1:01:16.400 actually going to regional events that have proliferated it around 1:01:16.400 --> 1:01:18.360 the world, and now there's around one hundred of them, 1:01:18.560 --> 1:01:19.280 and in fact. 1:01:19.160 --> 1:01:21.560 Then they pay and they pay a franchise fee. 1:01:21.640 --> 1:01:25.680 Right, No, you know, these events basically if they meet 1:01:25.720 --> 1:01:28.840 the goals of Burning Man, they sick to the principles 1:01:28.840 --> 1:01:32.120 that provide some monicam of safety. They can use that, 1:01:32.400 --> 1:01:35.280 they can get sanctioned and they can exist, and they're offered, 1:01:35.280 --> 1:01:37.640 they're asked to give a suggested donation of the organization, 1:01:37.720 --> 1:01:41.000 but they don't tie basically the mothership and more people 1:01:41.080 --> 1:01:45.200 now are experiencing Burning Man in those places than in 1:01:45.560 --> 1:01:46.800 Nevada in Black Rock City. 1:01:46.920 --> 1:01:50.760 Okay, Well, speaking of donations, Carol mentioned twenty million dollars 1:01:51.480 --> 1:01:53.840 was a lot of money, and for an organization nonprofit 1:01:53.880 --> 1:01:57.360 being short, twenty million dollars certainly is. But to somebody 1:01:58.120 --> 1:02:00.600 who's one of the wealthiest people in the world, indeed 1:02:00.600 --> 1:02:02.600 the wealthiest person in the world. The names of people 1:02:02.600 --> 1:02:06.320 who are Burning Men supporters, Larry Page, Sergei Brin, Eric Schmidt, 1:02:06.320 --> 1:02:08.880 they're all billionaires. Mark Zuckerberg one of the wealthiest people 1:02:08.880 --> 1:02:11.640 in the world. Elon Musk is the wealthiest person in 1:02:11.680 --> 1:02:15.080 the world. Twenty million dollars would be nothing for some 1:02:15.200 --> 1:02:19.280 of these billionaires. What did the CEO of the organization 1:02:19.360 --> 1:02:23.760 tell you about her relationship with the wealthiest people in 1:02:23.760 --> 1:02:25.960 the world and who have been supporters of Burning Men, 1:02:26.200 --> 1:02:28.520 and how they could or could not help fill the 1:02:28.560 --> 1:02:29.000 gap here. 1:02:30.760 --> 1:02:34.160 I think it's pretty popularly understood that sort of Silicon 1:02:34.240 --> 1:02:39.120 Valley's elites have, you know, are very connected with Burning Man. 1:02:39.200 --> 1:02:42.800 But even to me, I was surprised to learn how 1:02:42.880 --> 1:02:46.360 fundamental a very small number of those uber wealthy people 1:02:46.360 --> 1:02:50.640 have been to the organization. It was in a fundraising 1:02:50.680 --> 1:02:53.000 prospectus that was sort of an internal document that I 1:02:53.080 --> 1:02:56.720 learned that just five individuals have provided the organization two 1:02:56.800 --> 1:02:59.400 thirds of its philanthropic funding in the last ten years, 1:02:59.520 --> 1:03:03.120 over million dollars. They wouldn't tell me the exact names, 1:03:03.120 --> 1:03:08.520 but I think you've mentioned a few most likely, And 1:03:08.600 --> 1:03:11.200 as the fundraisers for the organization told me Britch, people 1:03:11.480 --> 1:03:15.160 are weird about money, and folks who are willing to 1:03:15.160 --> 1:03:17.120 go or in fact eager to go out into the 1:03:17.160 --> 1:03:19.880 desert spend a lot of money on a flame belching 1:03:20.000 --> 1:03:22.880 vehicle to drive around, or as one I spoke with, 1:03:23.760 --> 1:03:25.920 you know runs a big camp for all this extended 1:03:25.920 --> 1:03:28.480 family and friends they give out. They gave out a 1:03:28.520 --> 1:03:32.480 kilo of high grade Iranian saffron, you know, which has 1:03:32.480 --> 1:03:36.800 some hallucinogenic properties. You know, people are very willing to 1:03:36.800 --> 1:03:39.200 make those sort of private contributions, but they're a lot 1:03:39.240 --> 1:03:42.960 more reticent to support the organization, and so they're trying 1:03:43.000 --> 1:03:46.800 to pivot. Basically, the organization, the Burning Man Organization's point 1:03:46.840 --> 1:03:50.000 of view is we're like another arts organization. We're like 1:03:50.040 --> 1:03:53.960 the met Opera, you know, or American Ballet Theater. We 1:03:54.040 --> 1:03:56.760 need people to support us because ticket revenues are alone 1:03:56.760 --> 1:04:00.000 aren't going to pay the bills, but get it can 1:04:00.080 --> 1:04:02.960 Mincing wealthy donors to sort of pitch in for the 1:04:02.960 --> 1:04:05.520 more humdrum kind of costs of putting on the event 1:04:05.800 --> 1:04:08.400 has been a challenge, and they fell very short of 1:04:08.440 --> 1:04:11.320 their twenty million dollar fundraising goal this last year. Last 1:04:11.320 --> 1:04:12.880 I heard they'd raised seven million dollars. 1:04:13.040 --> 1:04:15.960 So fundraising not going so well. 1:04:16.200 --> 1:04:18.840 So everything hangs in the balance here For the sales 1:04:18.880 --> 1:04:21.800 this year, I think, you know, they've tried to be 1:04:21.960 --> 1:04:25.040 more firm about asking a higher ticket price and sort 1:04:25.080 --> 1:04:27.640 of coaxing people to pitch in what they say is 1:04:27.680 --> 1:04:31.080 the true cost. But they're between a little bit of 1:04:31.120 --> 1:04:32.760 a rock and a hard place, because the higher they 1:04:32.840 --> 1:04:37.240 raise prices, they're losing their lower income adherents, some long 1:04:37.320 --> 1:04:40.160 time members of their community who kind of make the event, 1:04:40.200 --> 1:04:42.640 who build the event. And so if they raise prices 1:04:42.680 --> 1:04:45.560 too much, they're going to lose the things that make 1:04:45.640 --> 1:04:47.320 that whole event what it is. 1:04:47.800 --> 1:04:52.360 We cover the US Open and it's lots of sponsorships, 1:04:52.560 --> 1:04:57.240 big well known companies, any companies interested in sponsoring this event. 1:04:58.680 --> 1:05:01.920 Well, you know that Burning Man organization has tried to, 1:05:02.120 --> 1:05:05.680 i think adapt to new times. They're trying to interest 1:05:05.760 --> 1:05:09.480 a new generation, right of the gen zers who haven't 1:05:10.120 --> 1:05:11.920 who have not been attending, who don't know how to 1:05:11.920 --> 1:05:14.400 get a ticket or pay a price. They've embraced some 1:05:14.560 --> 1:05:16.680 kinds of social media trying to put the word out 1:05:16.720 --> 1:05:19.280 about their tickets. But they're really hedged in by again 1:05:19.360 --> 1:05:22.760 those principles that they're philosophical principles, because if they step 1:05:23.280 --> 1:05:25.800 into a realm where it looks like they're commodifying what 1:05:25.840 --> 1:05:29.600 they're doing, they get so much blowback from this pretty 1:05:29.640 --> 1:05:34.800 intense community. They reposted a TikTok with you know, some 1:05:34.880 --> 1:05:39.000 folks kind of like doing shot skis and like trampolining 1:05:39.360 --> 1:05:42.520 in baby oil, and people lost their minds on Reddit 1:05:43.160 --> 1:05:46.320 and so yeah, to bring in companies, private companies, or 1:05:46.320 --> 1:05:48.640 to seek other sources of revenue, I think is really 1:05:49.000 --> 1:05:52.960 anathema to who they are. But you know that limits 1:05:52.960 --> 1:05:55.880 their options about how to monetize monetize what they do. 1:05:56.040 --> 1:05:58.560 I don't want to give away the whole story. It's 1:05:58.600 --> 1:06:01.160 worth the read. It has been among the top red 1:06:01.200 --> 1:06:04.400 stories on the Bloomberg terminal since this came out, and 1:06:04.840 --> 1:06:06.760 I've had people text me about it. Actually, my dad 1:06:06.800 --> 1:06:10.680 loved this story. He's like a I guess you. 1:06:10.600 --> 1:06:12.320 Could say, does the where she had gone? 1:06:12.480 --> 1:06:16.320 No observer a distant observer of burning Man. I think 1:06:16.320 --> 1:06:18.240 it's fair to say, I don't want to give the 1:06:18.280 --> 1:06:19.880 whole thing away, but can you just tell us a 1:06:19.960 --> 1:06:23.640 little bit about a potential solution here? This voluntary burning 1:06:23.680 --> 1:06:24.520 Man wealth tax? 1:06:25.080 --> 1:06:27.800 Yeah, got to go there. Well. One of the board 1:06:27.840 --> 1:06:33.280 members of the burning Man project who is has told me, 1:06:33.400 --> 1:06:37.600 is one of the major donors that supported it farhad Mohet, 1:06:37.640 --> 1:06:41.560 who's shold Shopzilla for over a half billion dollars twenty 1:06:41.680 --> 1:06:44.920 years ago and has had some other very successful ventures since. 1:06:45.840 --> 1:06:48.240 You know, he's all in on a more ambitious vision 1:06:48.400 --> 1:06:52.000 for burning Man and His view is that wealthy people 1:06:52.240 --> 1:06:55.040 like himself should pay a bigger share, and he made 1:06:55.080 --> 1:06:58.960 this amazing website which he calls the Burning Man Principal 1:06:59.040 --> 1:07:02.200 Pause Calculate, which is essentially he says, if you go 1:07:02.240 --> 1:07:04.720 to Burning Man for nine days and you know, don't 1:07:04.760 --> 1:07:07.400 work and you just play your capital, your money should 1:07:07.440 --> 1:07:10.560 go with you. It shouldn't go with you, it should 1:07:10.600 --> 1:07:13.200 actually take that time off. And so the interest that 1:07:13.240 --> 1:07:16.040 your wealth generates in that nine days, you should contribute 1:07:16.160 --> 1:07:18.360 to the Burning Man organization. And if you put in 1:07:18.400 --> 1:07:22.080 your wealth and his calculator and you're like me, freelance 1:07:22.160 --> 1:07:25.800 journalists income, you find wow, based on my income or 1:07:25.800 --> 1:07:28.280 my wealth, I don't know anything. But he put in 1:07:28.320 --> 1:07:30.560 for me, you know, okay, well you got one billion dollars. 1:07:30.560 --> 1:07:32.280 Oh you have ten bills, Oh you have one hundred 1:07:32.280 --> 1:07:35.360 and fifty billion dollars. And he's thinking about somebody specific, 1:07:35.400 --> 1:07:37.800 and he says like, this guy needs to give one 1:07:37.840 --> 1:07:41.000 point three billion dollars to the Burning Man organization. And 1:07:41.480 --> 1:07:44.480 I was like, well, that exceeds their expenses. What are 1:07:44.520 --> 1:07:46.360 you going to do the rest? And he said, we'll 1:07:46.360 --> 1:07:48.840 flip it on its head. We'll give the money out 1:07:48.920 --> 1:07:52.680 to all the burners as a universal burner income, you know, 1:07:52.760 --> 1:07:56.280 and then we're really living our values and so you know, 1:07:56.480 --> 1:08:00.440 apparently a few people he's spoken with about are enthusiastic scores. 1:08:00.480 --> 1:08:03.360 This is a voluntary I would kind of describe it 1:08:03.360 --> 1:08:06.480 as a wealth tax, but it's suggested donation going back 1:08:06.480 --> 1:08:08.880 to their roots and we'll see if it takes hold. 1:08:09.080 --> 1:08:13.320 What was he smoking? Oh sorry, no, I'm just saying this, Saffron. 1:08:13.360 --> 1:08:13.600 I think. 1:08:14.360 --> 1:08:15.640 I don't know. I don't know it was it. Read 1:08:15.680 --> 1:08:16.719 the story, reading the story. 1:08:16.720 --> 1:08:18.800 I don't know anyway, unbelievable read. 1:08:18.920 --> 1:08:21.240 As Tim mentioned, it has been among the most read 1:08:21.280 --> 1:08:24.920 stories throughout the week. Ted Alcorn, He's contributor at Bloomberg 1:08:24.960 --> 1:08:27.599 business Week. Check out a story about burning Man Festival 1:08:27.680 --> 1:08:30.759 facing its extential existential financial crisis. 1:08:30.760 --> 1:08:32.280 It's an incredible read. 1:08:33.080 --> 1:08:37.080 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 1:08:37.160 --> 1:08:40.639 live weekday afternoons from two to five pm Eastern Listen 1:08:40.640 --> 1:08:44.160 on Applecarplay and the Android Auto with the Bloomberg Business app, 1:08:44.360 --> 1:08:46.720 or watch us live on YouTube. 1:08:47.360 --> 1:08:48.799 It's not for Bloomberg Pursuits. 1:08:48.800 --> 1:08:51.479 And this week it's the Jewelry special featured in the 1:08:51.520 --> 1:08:54.879 magazine out on newstands later this month and already available 1:08:54.920 --> 1:08:57.840 online on the Bloomberg and at bloomberg dot Com and 1:08:57.920 --> 1:09:01.240 tim It's all about the one hundred years of Art 1:09:01.280 --> 1:09:03.840 Deco influence. I love the history that we find out 1:09:04.040 --> 1:09:05.920 about kind of how it all came to be, and 1:09:05.960 --> 1:09:08.120 so we're going to get into that jewelry that's over 1:09:08.160 --> 1:09:10.759 a century old, that worth millions of dollars. 1:09:11.000 --> 1:09:13.920 Here with more is Bloomberg contributing a jewelry rider and 1:09:13.960 --> 1:09:18.280 founder of La Patiala, the luxury encyclopedia, Kristin Shirley. Back 1:09:18.320 --> 1:09:20.400 with us. Kristin, I want to start with some history 1:09:20.439 --> 1:09:23.599 and definitions here. What is art Deco and just give 1:09:23.680 --> 1:09:24.440 us some background? 1:09:24.920 --> 1:09:27.639 Sure, So the Art Deco period started in the early 1:09:27.720 --> 1:09:31.400 nineteen hundreds and really crystallized in nineteen twenty five at 1:09:31.400 --> 1:09:34.880 the big exhibition in Paris for Art Deco jewelry. There 1:09:34.920 --> 1:09:37.240 are a lot of different styles, but what they share 1:09:37.479 --> 1:09:42.800 is graphic, linear design, few colors, but bold colors when 1:09:42.800 --> 1:09:46.920 they're used, and the use of diamonds, black enamel and honor. 1:09:47.320 --> 1:09:48.240 What did it come to be? 1:09:48.400 --> 1:09:50.719 Like? I always think about, you know, trends and waves 1:09:51.120 --> 1:09:53.960 fashion art jewelry, Like what is it like, take us 1:09:53.960 --> 1:09:55.479 back to nineteen twenty five. 1:09:56.520 --> 1:10:01.040 Sure, so this was a reaction to the very floral, 1:10:01.840 --> 1:10:07.320 swirlly motifs of the period that the late eighteen hundreds. 1:10:07.439 --> 1:10:10.759 So these new geometric motifs were sort of the opposite 1:10:10.800 --> 1:10:14.080 of that. These designers were looking at modernity, and modernity 1:10:14.120 --> 1:10:17.360 to them was strict geometric lines. We were entering the 1:10:17.439 --> 1:10:24.080 industrial era with you know, Ford assembly lines and new 1:10:24.120 --> 1:10:27.360 buildings and tanks. And unfortunately, World War One came in 1:10:27.400 --> 1:10:30.679 and sort of put a stop to this design period, 1:10:30.840 --> 1:10:32.760 and then it picked it up at the back of 1:10:33.120 --> 1:10:37.080 the war, and then the exhibition happened in nineteen twenty five, 1:10:37.240 --> 1:10:39.280 once the europe had had a chance to recover. 1:10:39.640 --> 1:10:41.439 I think a lot of people are really familiar with 1:10:41.439 --> 1:10:44.000 our Deco buildings, especially here in New York, maybe the 1:10:44.080 --> 1:10:48.120 Chrysler Building or the Empire State Building. But jewelry before 1:10:48.200 --> 1:10:50.519 reading your piece was kind of new to me. It 1:10:50.560 --> 1:10:53.280 didn't occur to me that the Art Deco movement extended 1:10:53.320 --> 1:10:54.080 toward jewelry. 1:10:55.400 --> 1:10:57.799 Yes, our Deco jewelry is actually one of the most 1:10:57.920 --> 1:11:01.160 enduring and timeless jewelry trends that they there is no 1:11:01.160 --> 1:11:04.519 matter what year the pieces are from They really have 1:11:04.680 --> 1:11:08.200 this ultra modern look. So in our story, we combined 1:11:08.320 --> 1:11:11.840 vintage pieces from the early nineteen hundreds with pieces that 1:11:11.880 --> 1:11:14.240 were made this year, and I think looking at them, 1:11:14.439 --> 1:11:17.599 you can't really tell what's vintage and what's new because 1:11:17.600 --> 1:11:19.599 it still looks so fresh. And it's one of the 1:11:19.760 --> 1:11:21.719 very few periods that you can say that about. 1:11:21.880 --> 1:11:22.840 That is so true. 1:11:23.040 --> 1:11:25.040 And it's funny because I had to go back and forth. 1:11:25.080 --> 1:11:29.599 I'm like, Oh, that's new stuff, which is fascinating. Christin 1:11:29.640 --> 1:11:32.080 take us back though, to November that auction at Christie's, 1:11:32.080 --> 1:11:35.120 because I'm always curious about too. Why you guys decide 1:11:35.240 --> 1:11:37.479 to talk about this right now? It sounds like all 1:11:37.479 --> 1:11:39.479 of a sudden pieces have been coming up for auction 1:11:39.600 --> 1:11:42.920 and investors, buyers, they're really interested in them. 1:11:44.080 --> 1:11:47.840 Yes, I think Art deco is always enduring. But there 1:11:47.920 --> 1:11:51.200 was a huge collection of a private family collection of 1:11:51.320 --> 1:11:53.960 jewelry that came up for auction and Christie's in November, 1:11:54.360 --> 1:11:58.120 and the piece is sold for exceptional sums, you know, 1:11:58.200 --> 1:12:02.559 two to three times and many amounts, and that's because 1:12:02.680 --> 1:12:05.200 the provenance was secure. It had been in the same 1:12:05.240 --> 1:12:07.759 family ever since it was commissioned, since the nineteen twenties, 1:12:07.800 --> 1:12:11.040 which is very rare and have massive, massive gemstones that 1:12:11.120 --> 1:12:14.360 you sometimes can't find today because the mines have then depleted. 1:12:15.080 --> 1:12:18.320 So when we were looking at the jewelry world this year, 1:12:18.360 --> 1:12:20.320 we said, what is the biggest story, And for me, 1:12:21.080 --> 1:12:23.639 it was that art Deco started one hundred years ago 1:12:23.720 --> 1:12:27.120 really and is still as desirable today. Someone spent four 1:12:27.120 --> 1:12:31.040 point four million francs on a single necklace. That's pretty wild. 1:12:31.200 --> 1:12:32.759 Well, all right, what was that necklace? 1:12:35.280 --> 1:12:38.840 It was a beautiful Cartier necklace and it had about 1:12:38.840 --> 1:12:41.680 one hundred and thirty carrots of diamonds and it was 1:12:41.800 --> 1:12:46.320 just very strict geometric, absolutely stunning, a perfect example of 1:12:46.439 --> 1:12:47.240 Art Deco style. 1:12:47.520 --> 1:12:50.040 I think I have a version of that in rhinestones. 1:12:50.880 --> 1:12:52.120 We're just not the same thing. 1:12:52.360 --> 1:12:54.400 No, but it's really just I mean, you look at 1:12:54.439 --> 1:12:57.479 something like that, it's timeless. I also love I mean 1:12:57.479 --> 1:12:59.360 walk us through some of the other pieces and also 1:13:00.080 --> 1:13:04.200 kind of go back to some old Hollywood icons many 1:13:04.240 --> 1:13:08.759 decades ago, who also kind of show show case pieces. 1:13:09.000 --> 1:13:11.920 Yes, if we're looking at Hollywood in the nineteen twenties 1:13:11.920 --> 1:13:14.600 and nineteen thirties, these starlets were saying, I want to 1:13:14.600 --> 1:13:17.040 wear art Deco jewelry. I don't care what era of 1:13:17.080 --> 1:13:19.640 the movie is taking place, And so we see it 1:13:19.680 --> 1:13:24.160 in a Cleopatra movie, which the Costume Archives at Paramount 1:13:24.200 --> 1:13:26.519 described as the most Art Deco movie of all time. 1:13:26.960 --> 1:13:29.799 You wouldn't think Cleopatra would be wearing Art Deco jewelry 1:13:29.800 --> 1:13:32.880 and clothing, but it was just so avant garde and 1:13:32.920 --> 1:13:35.360 of the moment that that's how they dressed her. And 1:13:35.400 --> 1:13:38.720 it's really an interesting thing to see. Then if we're 1:13:38.760 --> 1:13:40.880 looking at the actual pieces that we shot. We shot 1:13:40.880 --> 1:13:44.360 a mix of vintage from the nineteen twenties and nineteen 1:13:44.400 --> 1:13:49.600 thirties from makers including Chomet and Bulgarie, and then we 1:13:49.680 --> 1:13:54.920 shot modern pieces from independent designers like Passen, Adam Neely 1:13:55.000 --> 1:13:58.120 and Jessica McCormack, and the top houses of the day 1:13:58.360 --> 1:14:01.759 like being Cleifan, Ourpels, Buchmarl and Cartier. 1:14:02.439 --> 1:14:05.840 What about now in sort of everyday jewelry and the 1:14:05.880 --> 1:14:10.320 influence of Art Deco one hundred years ago on designers today. 1:14:11.360 --> 1:14:13.479 Well, I think people would be surprised that a lot 1:14:13.520 --> 1:14:16.960 of the jewelry they're wearing is Art Deco inspired. If 1:14:16.960 --> 1:14:20.680 you're wearing something that's geometric, it's got white diamonds and 1:14:20.800 --> 1:14:25.840 black enamel. That is quintessential art Deco right there. Anything 1:14:25.920 --> 1:14:29.280 with like a cavish and gemstone inside a geometric setting 1:14:29.439 --> 1:14:33.920 also buried art Deco. And we see these designers pulling 1:14:33.960 --> 1:14:37.439 inspiration from all sorts of Art Deco pieces. For example, 1:14:37.479 --> 1:14:41.639 Fernando Storage that we featured in the story, his pieces 1:14:41.640 --> 1:14:44.400 were inspired by the Chrysler Building and New York City's 1:14:44.600 --> 1:14:48.040 iconic Art Deco buildings. So designers are bringing in Art 1:14:48.080 --> 1:14:50.639 Deco influences from outside of the jewelry world too. 1:14:50.840 --> 1:14:52.280 I have to say, the airrings are amazing. 1:14:52.320 --> 1:14:54.160 Folks should go online and check it out or go 1:14:54.160 --> 1:14:57.120 to the Bloomberg And my understanding on all of this 1:14:57.280 --> 1:14:59.759 or a lot of those prices are upon request unless 1:14:59.800 --> 1:15:02.479 news and there are a lot of prices upon request, 1:15:02.600 --> 1:15:04.519 So as my mom used to say, if you have 1:15:04.560 --> 1:15:08.919 to ask. Kristin, thanks so much. It's an incredible spread. 1:15:09.040 --> 1:15:13.200 And read the jewelry special here in pursuits. Kristin Shirley, 1:15:13.240 --> 1:15:16.439 thank you so much. Bloomberg's contributing jewelry writer and founder 1:15:16.479 --> 1:15:20.479 of Patilla joining us here. All right, art Deco matters, 1:15:20.520 --> 1:15:24.640 We got that, and so too, it seems Tim keyfobs, 1:15:24.680 --> 1:15:26.599 especially when you take into account what goes into them. 1:15:26.680 --> 1:15:28.200 Yeah, I learned that the hard way. A couple of 1:15:28.240 --> 1:15:31.120 years ago. I lost the humble key fob for my 1:15:31.560 --> 1:15:36.559 twenty eighteen subrew outback and it was many, many, many 1:15:36.640 --> 1:15:38.800 hundreds of dollars to replace it. I was like, this 1:15:38.880 --> 1:15:39.560 is insane. 1:15:39.920 --> 1:15:40.599 It's insane. 1:15:40.680 --> 1:15:44.559 I actually think it was like, not cool, cool, it's 1:15:44.600 --> 1:15:44.960 not cool. 1:15:45.040 --> 1:15:47.240 No, they're crazy. We're always like in our house, don't 1:15:47.320 --> 1:15:48.280 lose the keyfob. 1:15:48.640 --> 1:15:49.280 With more on that. 1:15:49.400 --> 1:15:50.680 I got a guy though, Now you. 1:15:50.720 --> 1:15:51.160 Got a guy? 1:15:51.240 --> 1:15:51.559 A guy? 1:15:51.640 --> 1:15:53.559 Yeah, Timmy's like, you have a guy for every Yeah, 1:15:53.600 --> 1:15:55.120 I didn't. Let's just say I didn't go with the 1:15:55.160 --> 1:15:57.519 official subreu one. I got a guy. He showed up. 1:15:57.600 --> 1:15:59.600 You maybe from California, but you have definitely become a 1:15:59.640 --> 1:16:02.559 New York. All right, let's get to it, and we're 1:16:02.560 --> 1:16:03.800 al just going to get a little bit into her 1:16:03.800 --> 1:16:08.320 recent drive by with the Tesla Diner. Bloombergotto columnist Hannah 1:16:08.320 --> 1:16:10.960 Elliott joining us. Now, Hannah, good to have you here. 1:16:11.040 --> 1:16:13.519 Let's talk key fobs first of all, because I think 1:16:13.600 --> 1:16:16.520 we just think they're this silly little thing, but apparently 1:16:16.560 --> 1:16:19.280 there's a lot that goes into them, especially for a 1:16:19.800 --> 1:16:21.280 luxury car or higher end car. 1:16:21.800 --> 1:16:24.120 Hi, guys, that's exactly right. And Tim, that was so 1:16:24.280 --> 1:16:27.680 not cool. I'm very upset by your tale of your 1:16:27.720 --> 1:16:28.559 lost key fob. 1:16:28.720 --> 1:16:30.720 Well, I called the super dealer and I think they 1:16:30.720 --> 1:16:32.640 were said like it'd be in the many hundreds of 1:16:32.680 --> 1:16:34.960 dollars to replace it. So I looked at Reddit and 1:16:35.000 --> 1:16:37.880 I found that you can actually call a like a 1:16:37.880 --> 1:16:40.080 special type of locksmith and they can bring you an 1:16:40.080 --> 1:16:42.680 aftermarket one that works just as well. That was like, 1:16:42.720 --> 1:16:44.400 it was like one hundred and fifty two hundred bucks. 1:16:44.439 --> 1:16:46.400 That's a great hack. We should all take a queue. 1:16:46.479 --> 1:16:49.720 That's a great hack. And Carol to your point, Yeah, 1:16:49.840 --> 1:16:53.000 key fobs are something that we don't really think about 1:16:53.120 --> 1:16:55.880 until we have to, like if we lose it. But 1:16:56.160 --> 1:17:00.200 actually it is kind of a calling card for your 1:17:00.320 --> 1:17:03.840 car because it is the first and primary way that 1:17:03.920 --> 1:17:07.240 you are going to interact with the vehicle. Actually, and 1:17:07.479 --> 1:17:11.160 automakers do know this. They've kind of come to embrace it, 1:17:11.680 --> 1:17:16.200 embrace it in recent years, especially the higher end, like 1:17:16.240 --> 1:17:18.959 I'm thinking of Bentley for instance, which has this amazing, 1:17:19.680 --> 1:17:23.680 pretty heavy sort of ovoid key fob that has this 1:17:23.800 --> 1:17:27.040 really cool burling on it and this Bentley b on 1:17:27.080 --> 1:17:29.160 the top and that it that is on the top 1:17:29.280 --> 1:17:32.000 specifically so that when you leave the key like on 1:17:32.120 --> 1:17:34.200 a bar or on a table in a restaurant, it's 1:17:34.240 --> 1:17:36.400 sort of a low key, humble brag that, oh I've 1:17:36.439 --> 1:17:37.480 got a Bentley. 1:17:37.360 --> 1:17:39.720 Which really low key. 1:17:39.920 --> 1:17:40.559 Maybe not that. 1:17:40.560 --> 1:17:41.559 Low y, maybe not that. 1:17:43.080 --> 1:17:45.559 The other thing that was interesting to like some people, 1:17:45.720 --> 1:17:48.960 I love what you talk about the BMW key fob 1:17:49.000 --> 1:17:50.559 that like kind of went maybe too far. 1:17:51.080 --> 1:17:55.040 Yeah, you know again, this is sort of a new 1:17:55.200 --> 1:17:59.880 era of exploration in the key fob segment, and we 1:18:00.080 --> 1:18:02.800 got a credit BMW. They really they shot for the 1:18:02.800 --> 1:18:05.880 moon on this. In about twenty fifteen, they developed this 1:18:06.040 --> 1:18:11.840 display key, which was this really big, oversized fob with 1:18:11.920 --> 1:18:15.360 a screen on it and it had a ton of function. 1:18:15.760 --> 1:18:18.519 Is literally kind of like an iPhone, a small iPhone. 1:18:18.520 --> 1:18:21.920 But it was a six hundred and seventy dollars option 1:18:22.800 --> 1:18:26.240 and it is no longer offered. It was discontinued in 1:18:26.280 --> 1:18:31.000 twenty twenty two because of low consumer interest. So that 1:18:31.080 --> 1:18:32.040 was a no. That was a no. 1:18:32.520 --> 1:18:36.920 How did Cadillac and General Motors kind of mess up 1:18:37.000 --> 1:18:40.439 with their high end competitor. 1:18:40.080 --> 1:18:42.599 This is an interesting thing too. This is a this 1:18:42.640 --> 1:18:48.640 is a miss. And we recently drove the Cadillac Celestic, 1:18:48.720 --> 1:18:51.559 which is their Rolls Royce competitor, and I actually did 1:18:51.680 --> 1:18:54.280 like that vehicle. But the one thing that was a 1:18:54.280 --> 1:18:58.640 big miss is the key was not special. It was 1:18:58.800 --> 1:19:02.880 a plastic key, a thick leather sheath that was the 1:19:02.920 --> 1:19:06.480 same key that you would get in any other Cadillac, 1:19:06.680 --> 1:19:09.719 And for a car that is supposed to be going 1:19:09.800 --> 1:19:14.599 up against, for instance, a Rolls Royce, the key just 1:19:14.640 --> 1:19:17.280 felt like a total flop. It did not have any 1:19:17.360 --> 1:19:23.400 of the signature or subtle details and just touch points 1:19:23.400 --> 1:19:26.120 that the car itself had. It just was a plastic fob. 1:19:26.360 --> 1:19:30.040 It was kind of a dud wo. Yeah, it's exactly 1:19:30.600 --> 1:19:33.240 so these things do matter. On the other side of things, 1:19:33.320 --> 1:19:37.280 Lotus with their electric suv that Eleetre has developed this 1:19:37.320 --> 1:19:39.640 thing they're calling the pebble, which is a fob, but 1:19:39.720 --> 1:19:43.000 it's shaped kind of like a guitar pick, and it's small, 1:19:43.160 --> 1:19:46.960 it's light, it's very simple. They told me that they 1:19:46.960 --> 1:19:48.880 developed it so that if you have it in your pocket, 1:19:48.920 --> 1:19:50.920 it's not going to ruin the line of your clothing 1:19:51.000 --> 1:19:52.920 or your suit, which I thought was really cool. 1:19:53.320 --> 1:19:58.120 So you know, is it in some looking forward, is 1:19:58.120 --> 1:19:59.080 there a point where it's just. 1:19:59.040 --> 1:20:01.520 Not going to matter because we're not going to need anything. 1:20:01.920 --> 1:20:04.400 Honestly, I think we are going in that direction. Of 1:20:04.439 --> 1:20:07.400 course we can't, you know. Of course, for instance, Tesla 1:20:07.439 --> 1:20:11.000 and Rivian have like credit card sized quote unquote keys 1:20:11.120 --> 1:20:14.479 that you can use to unlock the vehicle. Also, of 1:20:14.600 --> 1:20:18.400 course we have apps that now basically can control a 1:20:18.439 --> 1:20:22.040 lot of vehicles from starting, limp to control and climate, audio, 1:20:22.520 --> 1:20:26.080 windows settings, everything that is great. I mean it's not 1:20:26.120 --> 1:20:29.360 great if you if you lose your phone, or your 1:20:29.400 --> 1:20:32.000 phone's dead, or you break your phone, so there's it's 1:20:32.040 --> 1:20:34.760 not perfect. But to your point, Carol, I think we 1:20:34.800 --> 1:20:35.880 are moving in that direction. 1:20:36.000 --> 1:20:36.320 All right. 1:20:36.320 --> 1:20:38.040 Well I only said that because you said that in 1:20:38.040 --> 1:20:39.240 your story, and that's how you can do. 1:20:40.960 --> 1:20:41.880 All right, tam go. 1:20:42.880 --> 1:20:45.720 Let's move in the direction of food, because Hannah, you 1:20:45.840 --> 1:20:49.400 usually get to write about cars, but sometimes you get 1:20:49.400 --> 1:20:52.880 to write about burgers and grilled cheeses and chili fries. 1:20:53.360 --> 1:20:55.680 And you went to the recent Tesla diner and know 1:20:56.320 --> 1:20:59.080 you were not allowed to park your own rolls Royce 1:21:00.040 --> 1:21:00.760 the Tesla. 1:21:00.479 --> 1:21:05.760 Diner Tesla parking only they do. They do have eighty superchargers, 1:21:05.880 --> 1:21:09.320 which is one of the highest concentrations of superchargers in 1:21:09.360 --> 1:21:12.280 the country. There are a few that are bigger, like 1:21:12.320 --> 1:21:14.360 out in the desert on the way to Vegas I've seen. 1:21:14.680 --> 1:21:17.760 But yeah, this is Tesla parking only, although they will 1:21:17.840 --> 1:21:20.439 valet your car or you can street park like I did. 1:21:21.280 --> 1:21:26.840 So how was it, Well, it was really an experience. 1:21:27.000 --> 1:21:30.360 Let me tell you. If you are a Tesla owner 1:21:30.479 --> 1:21:33.599 or a Tesla fan, I think you will find it 1:21:33.680 --> 1:21:40.760 to be really fun. It was really different. I win 1:21:40.840 --> 1:21:43.360 in not knowing what to expect. I will say I 1:21:43.400 --> 1:21:46.479 have driven by many times in the past few days 1:21:46.520 --> 1:21:49.400 and seen a line of people around the block, so 1:21:49.439 --> 1:21:52.880 there is a lot of excitement about this. The diner 1:21:52.960 --> 1:21:58.879 itself looks very jetson zy. It's round, it has neon lights. 1:21:59.200 --> 1:22:02.120 They're playing you know, movies on big screens. It's like 1:22:02.160 --> 1:22:06.200 a drive in actually, so there's a lot to see. 1:22:06.840 --> 1:22:10.320 The food itself was better than I expected. It was 1:22:10.360 --> 1:22:14.559 developed by Eric Greenspan, who was a Cordon Blue trained chef. 1:22:14.840 --> 1:22:18.879 He's had many successful restaurants here in La. He's developed 1:22:18.880 --> 1:22:22.479 his own style of New American cheese, so he is 1:22:22.600 --> 1:22:25.559 really well respected, and I actually ran into him at 1:22:25.560 --> 1:22:30.000 the diner. He was really nice enough to order for me. 1:22:30.320 --> 1:22:34.559 We got an array of sandwiches, including a tunamel, a 1:22:34.600 --> 1:22:39.360 grilled cheese, a hamburger, some chili cheese fries, a coffee, 1:22:40.280 --> 1:22:42.960 and the food was good. Now, I admit I don't 1:22:43.040 --> 1:22:49.440 often eat chili cheese fries, but Eric developed this particular 1:22:49.560 --> 1:22:53.519 Wagu beef style chili cheese fry that he told me 1:22:53.920 --> 1:22:56.160 reminded him of when he was in high school and 1:22:56.200 --> 1:22:58.040 he would have a cheat day on his diet and 1:22:58.080 --> 1:23:01.160 he would always eat cheese fries chili cheese fries. So 1:23:02.080 --> 1:23:03.640 which was and they were good. They were good. They 1:23:03.640 --> 1:23:06.400 were very like down home comfort. No sell it on 1:23:06.439 --> 1:23:09.559 the menu, you know, I might have missed that, but 1:23:09.880 --> 1:23:13.120 none that I saw. The whole idea here is it's 1:23:13.160 --> 1:23:15.800 an American drive and diner, like the kind you saw 1:23:15.840 --> 1:23:16.879 in the fifties and sixties. 1:23:16.960 --> 1:23:18.400 Is it gonna make people buy a Tesla? 1:23:18.600 --> 1:23:21.280 Oh, that's a good question. I don't think so. I 1:23:21.280 --> 1:23:24.639 don't think so. This feels to me more like Tesla 1:23:24.760 --> 1:23:27.559 is celebrating the people who are already in love with 1:23:27.600 --> 1:23:30.400 the brand, and I do think that is really admirable. 1:23:31.680 --> 1:23:34.200 I you know, I love the idea of an automotive 1:23:34.200 --> 1:23:36.840 brand spending a lot of money and resources and time 1:23:36.920 --> 1:23:41.479 to celebrate its owners. And Tesla has extremely dedicated owners, 1:23:41.760 --> 1:23:44.760 especially considering everything that the company itself has been through 1:23:44.760 --> 1:23:47.880 in recent months. You know, it's really suffered in terms 1:23:47.920 --> 1:23:50.400 of sales and revenue and profits and earnings and all that. 1:23:51.120 --> 1:23:55.080 So it's great for people who lef Tesla. And honestly, 1:23:55.640 --> 1:23:57.600 I would go back and get a burger if the 1:23:57.640 --> 1:23:59.240 line was if I didn't have to wait in line. 1:23:59.360 --> 1:24:02.040 That's really the The line now is really long. 1:24:02.240 --> 1:24:04.960 What about the Optimist robot? Isn't that supposed to make 1:24:05.000 --> 1:24:06.120 things move more smoothly? 1:24:06.479 --> 1:24:10.479 Yeah, well, Optimism was not present my friends and I 1:24:10.600 --> 1:24:14.960 did ask, and I was told that, uh, optimis is 1:24:15.000 --> 1:24:15.559 on a break. 1:24:16.080 --> 1:24:17.600 I thought those a whole point of robots is they 1:24:17.600 --> 1:24:19.439 didn't need to take breaks. You don't need to pay them, 1:24:19.439 --> 1:24:21.160 they don't need to sleep. Come on, I know. 1:24:21.280 --> 1:24:24.680 And I did also ask, now was somebody else operating 1:24:24.800 --> 1:24:29.679 optimists you know remotely? And I got a no comment, 1:24:29.920 --> 1:24:32.760 So you know that that might have been brought out 1:24:32.760 --> 1:24:35.200 to sort of generate some buzz at the start of 1:24:35.240 --> 1:24:39.960 the at the opening, but no, unfortunately Optimist was not there. 1:24:40.439 --> 1:24:42.439 H yeah, I can't. 1:24:42.479 --> 1:24:45.640 Yeah, but I would say, honestly, the sleeper hit of 1:24:45.760 --> 1:24:50.200 the diner menu is the tuna melt. I yeah, like, 1:24:50.760 --> 1:24:54.400 not something I would normally go for, but it was great. 1:24:54.479 --> 1:24:56.559 We're heading to the West Coast for a work trip 1:24:56.600 --> 1:25:00.240 in the falls. Maybe yeah, maybe take a week? Wait, 1:25:00.240 --> 1:25:02.759 can we take away Mode diner? 1:25:03.000 --> 1:25:04.000 That's a great idea. 1:25:04.360 --> 1:25:07.200 I love that they would not. As long as Elon 1:25:07.240 --> 1:25:09.680 doesn't see you, I think you'd be okay, limeblt you 1:25:09.680 --> 1:25:10.320 did ask? 1:25:10.479 --> 1:25:12.720 I did ask Eric, has Elon been by it? And 1:25:12.760 --> 1:25:15.040 he said that he had been, But I feel like 1:25:15.080 --> 1:25:17.200 we would have heard about it, so maybe he went 1:25:17.600 --> 1:25:18.479 by before it open. 1:25:18.600 --> 1:25:19.000 I don't know. 1:25:20.080 --> 1:25:22.599 Yeah, we'll keep an eye on it right Oh. 1:25:22.680 --> 1:25:26.280 Thanks to Hannah Elliott, a Bloomberg News auto columnist, also 1:25:26.720 --> 1:25:29.759 diner expert and knows everything about Keith Fobs. 1:25:29.800 --> 1:25:31.720 Got to say that story. Both those stories are fun, 1:25:31.800 --> 1:25:32.360 fun reads. 1:25:32.640 --> 1:25:35.000 That wraps up our weekend edition of Bloomberg Business Week 1:25:35.000 --> 1:25:35.760 from Bloomberg Radio. 1:25:35.800 --> 1:25:36.880 Thank you so much for joining us. 1:25:37.040 --> 1:25:39.599 Be sure to tune into Bloomberg Business Week daily Monday 1:25:39.600 --> 1:25:41.880 through Friday, starting at two pm Wall Street Time on 1:25:41.880 --> 1:25:45.280 Bloomberg TV, Bloomberg Radio, and on Sirius XM Channel one 1:25:45.320 --> 1:25:47.679 twenty one. You can also listen to us on Apple 1:25:47.720 --> 1:25:50.280 car Play and Android Auto Free in the Apple app 1:25:50.320 --> 1:25:51.679 Store or on Google Play. 1:25:51.760 --> 1:25:53.880 You can also watch our daily broadcast on YouTube. Just 1:25:53.920 --> 1:25:57.080 search Bloomberg Podcasts and We're Summa cast on Bloomberg Originals, 1:25:57.280 --> 1:26:00.400 available at Bloomberg dot com, Slash Originals, and streaming patforms 1:26:00.400 --> 1:26:03.800 including Roku, Amazon, fireTV, SEMs On TV Plus and more. 1:26:04.080 --> 1:26:06.000 I'm Tim Stunnoberk and I'm Carol Masser. 1:26:06.080 --> 1:26:08.160 Have a great and safe weekend. Everyone. 1:26:08.680 --> 1:26:14.080 This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, 1:26:14.160 --> 1:26:17.920 and anywhere else you get your podcasts. Listen live weekday 1:26:17.920 --> 1:26:21.959 afternoons from two to five pm Eastern on Bloomberg dot Com, 1:26:22.000 --> 1:26:25.920 the iHeartRadio app, tune In, and the Bloomberg Business App. 1:26:26.120 --> 1:26:29.040 You can also watch us live every weekday on YouTube 1:26:29.120 --> 1:26:31.240 and always on the Bloomberg terminal