Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: All Right, everybody, to say that a lot has happened
Speaker 2: since we last checked in with our next guest would
Speaker 2: be an understatement.
Speaker 3: Big time.
Speaker 2: Or Levine last joined us earlier this year, before the
Speaker 2: October seventh Hamas attack on Israel. Or as you know,
Speaker 2: Many is the co founder, of course, of the navigation
Speaker 2: app Ways, which Google bought for more than one point
Speaker 2: one billion dollars. Who's also an investor in move It,
Speaker 2: which then Tim Intel bought for a billion dollars.
Speaker 4: Well I spoke to him because of his new book,
Speaker 4: fall in Love with the Problem, Not the Solution, a
Speaker 4: handbook for entrepreneurs. It details his journey and also his
Speaker 4: unique philosophy on what it takes to be a successful innovator.
Speaker 4: He's a graduate from the Tel Aviv University and served
Speaker 4: in the Israeli Army Special Intelligence Unit. He started both
Speaker 4: Ways and moved companies in Israel, which of course is
Speaker 4: currently at war with Hamas in the Gaza strip or
Speaker 4: good to have you back here in the Bloomberg Interactive
Speaker 4: Brokers studio. How are you doing?
Speaker 5: You know, it's complicated, right, because it's never going to
Speaker 5: be the same. It's never going to be the same.
Speaker 5: That was a devastating attack. That was you know, my
Speaker 5: kids are the age between twenty two and thirty three.
Speaker 5: They could have been at this party, and there were
Speaker 5: many days that that was my main thought of the day,
Speaker 5: that I'm lucky that they weren't. That was devastating. And
Speaker 5: I think that at the end of the day, if
Speaker 5: you look into the future or you realize that they
Speaker 5: might be a solution, but without Hamas being.
Speaker 2: There, Well that's what we think about. We talk a
Speaker 2: lot about the way forward. I've talked to people I
Speaker 2: feel like on both sides, and when I say sides,
Speaker 2: I don't mean on Hamas's side, but I mean on
Speaker 2: the Palestinian point of view, the Israeli point of view,
Speaker 2: about how do we go forward? How do we stop
Speaker 2: that we don't find five years from now, ten years
Speaker 2: we're still talking about conflict in that region. How do
Speaker 2: you think about that?
Speaker 5: So look at the end of the day, if you
Speaker 5: think about the Palestinians and Gaza strip and you ask
Speaker 5: yourself whether or not Tramas was doing any good for them.
Speaker 5: Not really, they were doing very good for themselves, but
Speaker 5: not for the people. And look, Israel left the Gaza
Speaker 5: Striep some seventeen eighteen years ago. There was an opportunity
Speaker 5: to build awesome ness there and Ramas to go over.
Speaker 5: And basically this is a terrorist organization, right They're only
Speaker 5: agenda that they have is to kill us, and that
Speaker 5: doesn't work. We guess what we don't want to be
Speaker 5: to get killed?
Speaker 2: Can I ask you? And I feel like this is
Speaker 2: such a difficult conversation. We've had a lot of times
Speaker 2: in the newsroom. Tim and I've talked a lot of
Speaker 2: times after a show or after a guest. You know
Speaker 2: this concept. I get it of having to fight back,
Speaker 2: but this concept of killing and then more killing, and
Speaker 2: it's just like where does it stop or how does
Speaker 2: it stop? And how do you justify that on both sides?
Speaker 2: I understand.
Speaker 5: I So, number one, you know, I'm not the Prime minister.
Speaker 5: It's not for me that needs to make those decisions.
Speaker 5: But at the end of the day, if you realize
Speaker 5: that if Ramas is being removed from the region, then
Speaker 5: there are opportunities for something else completely different, right, because
Speaker 5: at the end of the day, most people prefair leaving
Speaker 5: over dying, right, And most of the people in the
Speaker 5: Gaza Strip it's the same for them. The challenge is
Speaker 5: that the leadership of the Haramas is the one that
Speaker 5: is basically enjoying the killing on one hand and the
Speaker 5: power in particular that they have. And I think that
Speaker 5: once they are being removed, there is an opportunity and
Speaker 5: I see major role of the US, major role of
Speaker 5: Saudi Arabia helping to recreate something new in the Middle East.
Speaker 4: Well, talk a little bit about that, because that's a
Speaker 4: part of the equation that I'm having trouble seeing here
Speaker 4: the solution and what actually happens. And it sounds like
Speaker 4: you think Hamas can be removed from power. So let's
Speaker 4: say Hamas is successfully removed from power in the Gaza Strip,
Speaker 4: what would you like to see happened?
Speaker 5: So again we have to realize that what I would
Speaker 5: like to see has I have zero influence on that,
Speaker 5: or maybe a little bit of influence, but that's about it.
Speaker 5: But I think that the opportunity here is that really
Speaker 5: recreating something new with the support of the American with
Speaker 5: the support of the Saudis, and basically establishing sort of
Speaker 5: normalizations in the relationship. Right now, if you look at
Speaker 5: the history of Israel, every time there was a major crisis,
Speaker 5: two things happened. Number one as well grew up stronger.
Speaker 5: Number two, we actually figure out a way, a different way, right.
Speaker 5: That's true for the Yong Kipoor War back in the
Speaker 5: seventy three, and after that we had a piece with Egypt, right,
Speaker 5: And that's true for World War Two where the Holocaust happened,
Speaker 5: and after that there was a Jewish statement. And so
Speaker 5: at the end of the day, I think that October
Speaker 5: seventh is such a major crisis that it will lead
Speaker 5: into something else, and you know, hopefully as soon as possible. Right,
Speaker 5: But when is that going to happen?
Speaker 6: We don't know, do you believe?
Speaker 2: I mean, you work with individuals in Palestine or in
Speaker 2: the Strip, in.
Speaker 5: God Strip, not specifically, but with you know, otter nations
Speaker 5: in the region.
Speaker 2: Yes, What I guess what I'm curious about is why
Speaker 2: we haven't been able to figure out a two state
Speaker 2: solution up to this point.
Speaker 5: I would say that you have to ask the leadership
Speaker 5: that I think that at the end of the day.
Speaker 2: But is that a solution? You're smart man, you actually
Speaker 2: think out of the box.
Speaker 5: Obviously it is right at the end of the day. Well,
Speaker 5: Hamas really created severe porn poor people in the Gaza
Speaker 5: strip right now, when you are poor and you have
Speaker 5: no hope, you have nothing to lose, right if you
Speaker 5: create something else, If people have something to lose, then
Speaker 5: they would prefer peace over war time after time in
Speaker 5: the history. When people have something to lose, then they
Speaker 5: actually prefer the stability rather than the instability. And in
Speaker 5: many cases this is you know, the craziness of the
Speaker 5: leadership that leads into acts of war. Right, so we
Speaker 5: can see the same thing with Russia and Ukraine, and
Speaker 5: we have seen that throughout many cases in Europe, in
Speaker 5: the Middle East, in other places.
Speaker 2: So what do you think of when people will say
Speaker 2: you talk about Russian and Ukraine and tim and I.
Speaker 2: You know, we've had a lot of discussions with individuals
Speaker 2: this idea that we are so opposed to the Russian
Speaker 2: occupation of Ukraine, and then people say, well, why aren't
Speaker 2: you similarly upset about the Israel Israeli occupation of Gaza.
Speaker 5: Israelis not occupying Gaza, and Gazza is a free place
Speaker 5: for the last Israel withdrawn from Gaza strip some seventeen
Speaker 5: or eighteen years ago.
Speaker 6: We are not occupying Gaza. Kamasi is occupying Gaza.
Speaker 4: What would you say is the prevailing view within your
Speaker 4: social circle about the way this ends?
Speaker 6: Sorry? Can you repeople?
Speaker 4: Yeah, what's the conversation that you're having with your fellow entrepreneurs,
Speaker 4: with your friends, with your family right now about the
Speaker 4: way this ends?
Speaker 5: So, in general, I would say tough time creates stronger people.
Speaker 5: Stronger people then creates better times, right than ISRAELI is
Speaker 5: in under tough time right now. Entrepreneurs are going to
Speaker 5: be the first one to recover and they will be
Speaker 5: recovering strongly and better after that, because what happened during
Speaker 5: war is that the forget all the horror things that happens.
Speaker 6: In the war. After the war, people are way.
Speaker 5: Stronger and they realize that there is a defense choice
Speaker 5: for them, which is leaving, and they realize that now
Speaker 5: if they survive, that they can survive anything.
Speaker 4: We're pleased to add back with us Ory Levine to
Speaker 4: continue our conversation as many of you know. He's the
Speaker 4: co founder of the navigation app Ways. Google bought it
Speaker 4: for more than at one point one billion dollars more
Speaker 4: than a decade ago at this point, also an investor
Speaker 4: and move It, which Intel bought for a billion dollars.
Speaker 4: We're going to get to how he's thinking about startups
Speaker 4: right now, especially in Israel where he built these two companies,
Speaker 4: in just a second. But I do want to continue
Speaker 4: the conversation that we're having earlier about the environment there.
Speaker 4: Right now, in the wake of the October seventh attack
Speaker 4: from Hamas, I want to talk economy a little bit
Speaker 4: because I don't think people understand that when people get
Speaker 4: called back to the military, they leave their jobs to
Speaker 4: go back to the Israeli military. So there's a whole
Speaker 4: element of the Israeli economy that's not working the way
Speaker 4: that it should right now.
Speaker 6: Are you seeing the.
Speaker 4: Effects of that day to day that there is a
Speaker 4: shortage of workers, that there are a lot of people
Speaker 4: who I mean, I have friends on Facebook who've posted
Speaker 4: Israelis who've said, you know, my husband is away fighting
Speaker 4: right now because he got called back. She's a tour
Speaker 4: operator who does restaurant tours, for tourists. There's no tourists
Speaker 4: there right now, so she literally they literally have no
Speaker 4: income coming in right now as a result of this.
Speaker 5: So not exactly, because when you're doing your military or reserve,
Speaker 5: you do get from the Social security the same pay
Speaker 5: at you what gotlin if you were working. But if
Speaker 5: you look at the impact of them war on the economy,
Speaker 5: then I would say, for a second, obviously budget for
Speaker 5: security and is going to go up dramatic. Then that's
Speaker 5: we all realize the war costs money some markets, some
Speaker 5: industries are completely suffering from that, right like tourism right
Speaker 5: there is there there are no tourists going to Israel,
Speaker 5: right And I don't blame them, right they shouldn't. It's
Speaker 5: there is a war there and they don't feel safe.
Speaker 6: And that's all.
Speaker 5: High tech industry is actually getting stronger because what we
Speaker 5: are realizing is that the people that are still there,
Speaker 5: they are carrying the load for all the people that
Speaker 5: are going on the military or reserve and so forth.
Speaker 5: And what we have seen is that the productivity increased dramatically.
Speaker 5: And when people that will be coming back from the
Speaker 5: military reserve, then we are likely to see.
Speaker 6: Huge growth in the high tech.
Speaker 5: In general, the challenge right now for the high time,
Speaker 5: the Israeli high tech, that it's harder to raise capital, right,
Speaker 5: so most of the investors will prefer to be.
Speaker 6: On the fence.
Speaker 5: And and you know, way to see that the war
Speaker 5: is over, right, investing in a war zone people afraid,
Speaker 5: and they rightly.
Speaker 4: So that's interesting to hear because you've also got a
Speaker 4: group of very vocal Americans who are happy to give
Speaker 4: to Israeli causes. And I would think that some of
Speaker 4: those would be supportive of a venture capital. Of course,
Speaker 4: they in the country, they to kind of help prop
Speaker 4: it up the time.
Speaker 6: They do, and they will.
Speaker 5: But in general, if you look at the you know,
Speaker 5: non Jewish investors or non engaged investors, then they have
Speaker 5: more challenging time, not all of.
Speaker 6: Them, but a lot.
Speaker 2: Or is there anything you've put on hold because that's
Speaker 2: home base for you, correct Israel?
Speaker 5: Or so why you know I keep on building. Look,
Speaker 5: I have a very simple life. I have a mission,
Speaker 5: I have a destiny, I have a purpose and this
Speaker 5: is about value creation, right, and then I can create
Speaker 5: value through multiple ways, through you know, building startups that
Speaker 5: help people, through you know, coaching and mentoring, a group
Speaker 5: of CEOs that of my startups through teaching and through
Speaker 5: you know, the ultimate way of teaching is the book itself.
Speaker 5: They're falling up with the problem, not the solution. Book
Speaker 5: is by and large it This is sharing my know
Speaker 5: how with people and hopefully make them more successful.
Speaker 4: What's the problem that you see right now that needs
Speaker 4: to be working.
Speaker 6: Exactly? Take a pick.
Speaker 5: So the good news is that there are a lot
Speaker 5: of problems. The bad news is that there are a
Speaker 5: lot of problems right end of the day, there are
Speaker 5: a lot of problems. One of the you know, major
Speaker 5: problems that we are addressing recently is actually in the
Speaker 5: US the realization that most people will not have enough
Speaker 5: saving for retirement. And so Pontera is one of the
Speaker 5: companies that is helping that in the US help people
Speaker 5: to eventually retire richer. And so this is and this
Speaker 5: is a big problem at the end of the day
Speaker 5: when people get old and they don't have enough money.
Speaker 5: This is a big problem. So this is one of
Speaker 5: the things that I'm trying to do with my startups.
Speaker 5: And you know, dealing with parking. Parking is a major
Speaker 5: problem right now in generally you would say wait a minute,
Speaker 5: in the US, it's less of a problem because most
Speaker 5: people live in a single family house and they have
Speaker 5: a driveway and they have parking garage. But the rest
Speaker 5: of the world, most people live in multi family houses,
Speaker 5: multi story houses, and they don't have parking garage, and
Speaker 5: then looking for parking at the end of the day,
Speaker 5: it's a nightmare. And this is you know, my most
Speaker 5: recent startup that we started that a couple of years
Speaker 5: ago and and it's staling is well and hopefully it
Speaker 5: will grow to address that because parking.
Speaker 6: Is a major problem. Yeah, we could use that in Brooklyn,
Speaker 6: I know. Okay, Well, is something.
Speaker 2: I wonder, you know, when I think about so much.
Speaker 2: This year, we've talked about artificial intelligence and generative AI,
Speaker 2: and some are concerned that it's going to take jobs
Speaker 2: away from people. I see it more as complementary. But
Speaker 2: having said that, I do think about job creation in
Speaker 2: the future because economies, whether it's the Gaza strip, if
Speaker 2: people have a way to make a living and build
Speaker 2: a much more productive life, or whether it's in Israel
Speaker 2: or whether it's in other developing markets, if you can
Speaker 2: create a better life for yourself, it's just a better,
Speaker 2: more peaceful place, right even create an economy. So are
Speaker 2: there I don't know. Are we moving increasingly towards a
Speaker 2: world though, where technology is replacing jobs at a faster
Speaker 2: pace than we can make them Unless you're coder, you know.
Speaker 6: I think that I hear that for the last fifty years.
Speaker 1: Right, So.
Speaker 5: Even if you think of the revolution of agriculture, that
Speaker 5: we started to have tractors and combine the defferent machinery,
Speaker 5: and everyone say it, oh, this is going to take
Speaker 5: away the work of the farmers, and guess what, it didn't.
Speaker 5: So every time that there is an innovation, we tell ourselves, oh,
Speaker 5: this is going to take away all the jobs, and
Speaker 5: then you look at the unemployment rate and it doesn't change,
Speaker 5: or maybe it's becoming better, because what happened is that
Speaker 5: that technology by and large increased productivity. And when it
Speaker 5: increased productivity, then we can create more. And when we
Speaker 5: create more, then more people actually have a better life.
Speaker 2: So not worried about AI in the end of.
Speaker 6: Us all, not at all.
Speaker 5: What I think that we might find out that there
Speaker 5: are some areas that we will need to establish regulation.
Speaker 5: So if I'm speaking with a person, then that's one thing.
Speaker 5: But if I don't know that I'm speaking to a
Speaker 5: machine might be a different thing. So maybe the machine
Speaker 5: will need to identify itself and tells me I'm a
Speaker 5: machine and clear about it. And this is something that
Speaker 5: I think that eventually we will need to have.
Speaker 4: Do you think that AI is close, as Elon Musk
Speaker 4: believes two becoming smarter than humans?
Speaker 2: Wow, that's a big thing.
Speaker 5: No, No, I think that we hear that for the
Speaker 5: last fifty years or computers are going to be smarter
Speaker 5: than people. Oh, we don't need people, We don't need
Speaker 5: the human brain. The human brain something that video fifty
Speaker 5: years ago, right, But then you know, end of the day,
Speaker 5: I think that the creativity and the adaptability is something
Speaker 5: that only humans would have and at the end of
Speaker 5: the day, that part is not going to be taking away. Now,
Speaker 5: whether or not you can scan way more information in
Speaker 5: a fraction of the sick and absolutely yes, Whether or
Speaker 5: not you can process some of the things way faster, yes,
Speaker 5: but not the same order of magnitude what the human
Speaker 5: mind can do.
Speaker 2: Thirty seconds left. We've talked about a lot, and obviously
Speaker 2: it's a very stressful world right now. Final thoughts that
Speaker 2: you want to leave our audience as we get ready
Speaker 2: for a new year.
Speaker 5: So I think that in just about thirty seconds.
Speaker 6: Sorry.
Speaker 5: Value creation, right, value creation when you create value and
Speaker 5: evaluate the way you create for otters, not for yourself.
Speaker 5: If we think about value creation, then we end up
Speaker 5: with a purpose to a life. And when we end
Speaker 5: up with a purpose to a life, we're going to
Speaker 5: be happier and leave wrong here and the war is
Speaker 5: going to be a better place.
Speaker 2: Thank you so much, thank happy new year. To the
Speaker 2: new year is a calmer one, more peaceful one.
Speaker 6: And better one way it will be.
Speaker 2: Okay or OLIVI, thank you so much. Always appreciate it.
Speaker 2: Con founder of Ways and so much more. As we
Speaker 2: talk about we've talked about his book fall in Love
Speaker 2: with the Problem, not the Solution of handbook for entrepreneurs.
Speaker 2: He has it on his T shirt. For those who
Speaker 2: are watching.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: I mean to the moon.
Speaker 1: Let me play up there with those stars.
Speaker 2: Blue eyes, you know what we're talking about. Space in
Speaker 2: the Moon.
Speaker 4: I do because it's the next frontier.
Speaker 2: For drug manufacturing.
Speaker 4: Yeah, it's really interesting. This story is in the forthcoming
Speaker 4: issue of Bloomberg BusinessWeek magazine. I want to read a
Speaker 4: little bit from it because it's so good. Red Night
Speaker 4: is pigmentosa is a genetic cause of blindness. Some people
Speaker 4: know it as RP. There's no cure or treatment for
Speaker 4: it right now, but there's a startup that's working on it,
Speaker 4: and it has big plans to develop the world's first
Speaker 4: protein based artificial retina, which could help patients who have RP.
Speaker 4: Here's the thing. Manufacturing the retina involves depositing two hundred
Speaker 4: paper thin layers of a light sensitive protein in a
Speaker 4: polymer mesh. Sounds pretty difficult, right, Yeah, Well, it turns
Speaker 4: out the protein layers must be perfectly even for the
Speaker 4: retina to work properly, and that's really difficult to do
Speaker 4: here on planet Earth.
Speaker 2: Right, So the company has turned to the International Space
Speaker 2: Station in the hopes that micro gravity there could help.
Speaker 2: Incredible story. Robert Langreth is healthcare reporter for Bloomberg News,
Speaker 2: and in the forthcoming issue of Bloomberg Business Week, he
Speaker 2: writes about drug companies that are exploring making the most
Speaker 2: lucrative drugs in space. You can read his story now
Speaker 2: on the Bloomberg and at bloomberg dot com Slash business Week.
Speaker 2: Also here with us the editor of Bloomberg BusinessWeek, Jill
Speaker 2: Weber here in our Bloomberg Interactive Broker studio. Tim and
Speaker 2: I read this and we're like, Bob gets to do
Speaker 2: the coolest stories.
Speaker 6: It's always one of those studies.
Speaker 5: We're like, oh my god.
Speaker 4: Although Joel, I don't think he got to go on
Speaker 4: the ISS to do this.
Speaker 3: I mean, you know, it's kind of in a precarious situation,
Speaker 3: this thing with the US and Russia. Anyway, the just
Speaker 3: go to I could send him there bomb you heard
Speaker 3: it from these guys, you have permission so to ask
Speaker 3: at least. So we're started to do a little space package.
Speaker 3: There's a lot happening up there, it turns out, and
Speaker 3: there are some expected things like what SpaceX is up
Speaker 3: to you and the race to catch them, but there's
Speaker 3: also I thought some more interesting things of like applications
Speaker 3: that you've probably never heard of. And it turns out
Speaker 3: that you know, you mentioned micro gravity. There there are
Speaker 3: some novel use cases for what can be accomplished in space.
Speaker 3: So so Bob walk us through it. What is uh,
Speaker 3: what can we do in space that we can't do
Speaker 3: as well here on Earth.
Speaker 7: Yeah, So it turns out, you know, a lot of
Speaker 7: the drugs that drug makers are making these days are
Speaker 7: proteins or things like monocle and antibiodies or cancer drugs,
Speaker 7: and these are that are that are infused. And these
Speaker 7: are you know, complicated, finicky molecules and notoriously difficult to
Speaker 7: produce on Earth in their crystal form. So it turns
Speaker 7: out that without gravity, or without much gravity, you know,
Speaker 7: it becomes much it's much easier to form like a large,
Speaker 7: large and very uniform crystals. And that is it turns out,
Speaker 7: can enhance formulations and even potentially some existing drugs. So
Speaker 7: drug maker merk it's working. It's worked on a new
Speaker 7: formulation of it's just blockbuster cancer drug k Truda. Now
Speaker 7: that's the cancer drug that Jimmy Carter got. It's for
Speaker 7: the melanoman all sorts of other ones, but right now
Speaker 7: it must be infused, like you have to go to
Speaker 7: the doctor's office and infused there over a couple hours.
Speaker 5: Uh.
Speaker 7: And the dry it would really like to put that
Speaker 7: in injectable forms, you could do just a self administered injection,
Speaker 7: potentially even at home. But to do that, it needs
Speaker 7: to be able to concentrate that con true to much
Speaker 7: more to be concentrated now, and if you did it
Speaker 7: with the current formulation, to be get like molasses. So
Speaker 7: it turns out they did some experiments in space and
Speaker 7: the International Space Station and they came up with a
Speaker 7: way to concentrate it much more and keep it fast flowing,
Speaker 7: and that was experiment using microgravity.
Speaker 2: It's a little bit of freezing. We're we're trying to
Speaker 2: freeze them and then bring Bob back.
Speaker 4: It's like you're joining us from the International Space Station.
Speaker 4: You actual you know, please pause for we wanted to
Speaker 4: be realistic.
Speaker 1: Job.
Speaker 4: I'm sorry, continue about taking about keep I'm sorry.
Speaker 7: I got a thing saying my internet connection was unstable.
Speaker 7: I haven't gotten that all day until I.
Speaker 3: Remember that's how I remember the pandemic.
Speaker 7: Yeah, yeahs, no problem, that's the first time.
Speaker 8: Yeah.
Speaker 7: So Mark is working on a new formulation of cap
Speaker 7: Truda's it's big selling drug that was kind of first
Speaker 7: the concept for was first device in space, and the
Speaker 7: fact that they might go into clinical trials is something
Speaker 7: that was the first you know devised in space that's
Speaker 7: excited a lot of gotten a lot of interest in
Speaker 7: you know, space based drug development.
Speaker 1: Uh.
Speaker 7: And other companies like Eli Lilly is up there with
Speaker 7: some experiments now and you even now have startups that
Speaker 7: once the International Space Station is decommissioned, you know, sometime
Speaker 7: after twenty thirty that are working on developing you know,
Speaker 7: automated kind of drug formulation laboratories in space. It'd send
Speaker 7: some experiment up and then it come back down and
Speaker 7: drug companies could work on it.
Speaker 3: Okay, so when does this happen? Why don't we have
Speaker 3: this already? Bob?
Speaker 7: Well, you know, these are all kind of like, you know,
Speaker 7: I'd like to say, these are all kind of like
Speaker 7: early experiments. So say they're drug companies and setting up
Speaker 7: experiments by the way out into space for really for
Speaker 7: decades and there their first experiments were kind of like
Speaker 7: early stage aimed at like early stage drug crystallization, where
Speaker 7: to crystallize GOT disease, promote promoting proteins so they could
Speaker 7: design better drugs. And in fact, a unit of a
Speaker 7: Suka Holdings that's a Japanese company, they have a drug
Speaker 7: in final stage trials in Japan for muscular dystrophe. There
Speaker 7: was was base and some very early work you know,
Speaker 7: done early in the early days of International space study
Speaker 7: space station crystallizing a muscular dystrophy associated protein. But what's
Speaker 7: happening now is there actually Americans and others are showing
Speaker 7: you could actually devise you know, better formulations on existing
Speaker 7: blockbuster drugs. And that's really driven the attention to like
Speaker 7: maybe you know space is like, you know, could really
Speaker 7: like help us get some new patents and make a
Speaker 7: lot of money. So that's really driven interest.
Speaker 3: So whose job is it to figure out how to
Speaker 3: do this in space? Like, you know, Tim, Tim, if
Speaker 3: you're gonna make you know, car breaks in space, I'm
Speaker 3: sure you can figure that out. But Bob, what about it?
Speaker 4: You don't want to see how far I made it
Speaker 4: the math but in college?
Speaker 3: But uh, but within pharmat like, whose job is it
Speaker 3: to figure out space manufacturing?
Speaker 7: Yeah, so at the big you know, drug makers, there's
Speaker 7: relatively you know, small numbers of people like working on it,
Speaker 7: so it's still a niche field. I'd say, you know,
Speaker 7: if you go to a big drugmaker, I would imagine
Speaker 7: there's probably a lot more people working on AI than space,
Speaker 7: but you know, you know, space is like you know,
Speaker 7: garnering interest. Some of the people I talked to, their
Speaker 7: titles are like, you know, director of formulations, development titles
Speaker 7: like that. But these experiments are are hard. You know,
Speaker 7: you you sent something up to the space station and
Speaker 7: you know you get it back down a few months later,
Speaker 7: and if you like screwed up in the design and experiment,
Speaker 7: you know your next shot or the next experiment maybe
Speaker 7: you know six months later. So you gotta got you
Speaker 7: gotta do it. Be very careful with experimental design. You can't,
Speaker 7: like it's hard to call an astro and say, hey,
Speaker 7: I want to change everything midstream once is up there.
Speaker 7: So there's even a whole set of like companies that
Speaker 7: help drug makers like have like self enclosed experiments that
Speaker 7: can send up that are like.
Speaker 1: All ready to go.
Speaker 7: The astront presses a couple buttons to turn it on
Speaker 7: and then presses a couple buttons to turn it off.
Speaker 7: You know, you can't. It's hard to adjust the audition
Speaker 7: midstream once you're up in space.
Speaker 4: The button pressing job it doesn't sound bad. So Bob,
Speaker 4: I want to get to this idea of scaling and
Speaker 4: make sure I understand what's actually happening in space. I
Speaker 4: want to go back to the company that you used
Speaker 4: in the lead here, LAMB Division, who's working on the
Speaker 4: world's first protein based artificial retina for patients with retinitis pigmentosa. So,
Speaker 4: if it's so hard to actually create these two hundred
Speaker 4: paper thin layers of light sensitive protein in on Earth,
Speaker 4: does that mean that they won't be able to scale
Speaker 4: it in an environment that's not zero gravity.
Speaker 1: Yeah.
Speaker 7: So they're one of the few companies that's right now
Speaker 7: is talking about actually, as I understand it, manufacturing finished product,
Speaker 7: you know, in space. And if you think about their product,
Speaker 7: it's like literally it's a size of a whole punch,
Speaker 7: like a paper whole punch. That's like, you know, so
Speaker 7: you get I guess you get one or two of
Speaker 7: these if you're a patient. So they don't need that
Speaker 7: much finished product. You know, it's a relatively small market.
Speaker 7: I mean, this is not like an infused drug where
Speaker 7: you're going to be giving you know, two hundred millilters
Speaker 7: every two weeks for the rest of your life. That's
Speaker 7: more like merks K true to the they make it,
Speaker 7: Mark and K true to their cancer drug. They make
Speaker 7: it like by the ton on Earth and their experiments
Speaker 7: in space. So far, I've made like one dose at
Speaker 7: a time, so you can see that it's not right
Speaker 7: now practical wouldn't be even if there are even though
Speaker 7: there are technical advantages, it would not be practical for
Speaker 7: them to make the finished product in space. But for
Speaker 7: something like this artificial retina, where the total quantities needed
Speaker 7: are very very small, and I imagine if they ever
Speaker 7: get this to market, it's going to be sold for
Speaker 7: a very high price. You know, you can imagine that's
Speaker 7: an actual like possibility to actually make that in space.
Speaker 3: Would you take the one that's been made in space,
Speaker 3: knowing that there's massive quantities on Earth, it's practically the
Speaker 3: same thing. It's just been made in space. Like, why
Speaker 3: wouldn't Why wouldn't I do it?
Speaker 6: Why not?
Speaker 3: I don't know.
Speaker 7: That the regulatory question no one's even gotten to, Like,
Speaker 7: you know, if something actually were made in space, or
Speaker 7: even if like there's another idea they're talking about. It's
Speaker 7: making like a seed crystal in space, use the better
Speaker 7: conditions of space to make like little seed crystals that
Speaker 7: they could then be used sort of like a sour
Speaker 7: to start being brought down to Earth and able to
Speaker 7: grow bigger quantities on Earth. But even there, like the FDA,
Speaker 7: how would the FDA regulate that, there's a whole I
Speaker 7: guess said of unknown like questions there.
Speaker 2: Yeah, FDA is not having any problems with oversight. We
Speaker 2: did that story actually earlier today. Having said that, how
Speaker 2: easy is did you duplicate the process of space drug
Speaker 2: or manufacturing drugs in space on Earth? Can we create that?
Speaker 2: Recreate that?
Speaker 1: Yeah?
Speaker 7: So the way to think of it with some of
Speaker 7: these drug formulations are trying to make better like easier
Speaker 7: to use injectable drug formulations, And the way to think
Speaker 7: about that is that there's just like you know, there's
Speaker 7: a million conditions you can put in to get something
Speaker 7: to crystallize. The temperature, the pressure, you know, the concentrations, many,
Speaker 7: many conditions you can try almost an infinite number, and
Speaker 7: just things form a little without the microgravity because crystals
Speaker 7: are these kind of slow forming, finicky things, and without
Speaker 7: the convection is one of the things that goes away
Speaker 7: the fluid convections, so and that's reduced and that gets better,
Speaker 7: just gets better quality crystals in many cases. And so
Speaker 7: the way to think about it is they get an
Speaker 7: idea in space like in these better conditions, and then
Speaker 7: once they know what they're looking for, they then find
Speaker 7: you find a way to duplicate that back at the
Speaker 7: factory here on Earth. And that's what Merk did with
Speaker 7: this new formulation of k truda that may go into
Speaker 7: clinical trials.
Speaker 3: Okay, So so Merk seems to be all over this.
Speaker 3: What about other drug manufacturers are you know, is there
Speaker 3: really a race like as often is the case in
Speaker 3: space space for drug or or is everybody else.
Speaker 7: Under space race? Mark has a competitor in cancer drugs,
Speaker 7: and that's Bristol Myers Squid and they make a rival
Speaker 7: to k truda called Updivo, and they indeed are putting
Speaker 7: experiments up into space like you're looking at protein crystallation,
Speaker 7: you know, and uh, you know, they they do say
Speaker 7: it includes cancer, but they won't to say which drugs
Speaker 7: and are involved. But all I can say is they
Speaker 7: do make a direct rival to k truda. So, you know,
Speaker 7: drug companies, you know, historically, you know, once one company
Speaker 7: does something, you know the others want to try it out.
Speaker 2: Wait, not like a dry diet drug or anything.
Speaker 7: Well, so far I've not heard of any diet drugs
Speaker 7: you know that maide in space. But uh, you know,
Speaker 7: I'll keep reporting.
Speaker 3: We should make journalism in space just just.
Speaker 4: Just volunteering together.
Speaker 3: I mean, you know, Bob, Bob was already going to
Speaker 3: go check it out most cost effectively, Bob.
Speaker 4: See if that corporate card will cover that SpaceX trip.
Speaker 2: Okay, Hey, listen, I hate to be a bummer on
Speaker 2: all of this, but isn't the International Space Station at
Speaker 2: risk of being decommissioned after twenty thirty? So, like does
Speaker 2: that put kind of a damp run all on this?
Speaker 7: Well, there's companies like, you know, there's like private startups
Speaker 7: and companies like are working on like what's after the
Speaker 7: space station. There's one small one, you know, startup that
Speaker 7: actually has like a little satellite that's like a little
Speaker 7: drug production lab. They hope it's gonna be a little
Speaker 7: automated drug formulation production lab up there. Now for their
Speaker 7: first mission, they've had some problems getting the reentry capsule
Speaker 7: back down because they need FAA Federal Aviation Administration permission.
Speaker 7: They haven't been able to get it yet. So it
Speaker 7: illustrates some of like, you know, the potential snags involved
Speaker 7: in space based production.
Speaker 3: Yeah, okay, well we know where Big Farmer is, which
Speaker 3: is the final frontier. You know, I'm curious to see
Speaker 3: if if this is for real though, I mean, like, sure,
Speaker 3: you can make a couple applications, but scale seems maybe
Speaker 3: not easy to get there. Tim's going to try break
Speaker 3: pads and report back.
Speaker 4: But the payoff is potentially huge here. I mean, if
Speaker 4: you can cure blindness with artificial retinas, Like even though
Speaker 4: Bob says it's a relatively small number of people, I mean,
Speaker 4: people would pay so much for that.
Speaker 3: You you need, you know, some microgravity, what's that? That's
Speaker 3: why it's there for you.
Speaker 7: I think the key word we use in the headline
Speaker 7: is that the drug companies are exploring this, you know, yeah, right,
Speaker 7: not a deal, and you know, I think the way
Speaker 7: to think of it, they're doing experiments up there that
Speaker 7: are going to help help them, you know, devise new
Speaker 7: formulations and new versions of their drugs. But it doesn't
Speaker 7: necessarily I mean those are actually those final drugs are
Speaker 7: actually going to be produced in space.
Speaker 3: I think we call that the to be sure graph
Speaker 3: implement or the third word in the headline.
Speaker 2: Well, I'm just going to say thank you, Bob, because
Speaker 2: I've been just saying drugs in space.
Speaker 3: It sounds really cool.
Speaker 2: It does sound really cool. I'm very interesting in terms
Speaker 2: of maybe we could see down the road. Bub Landgreth,
Speaker 2: thank you so much. Everything you do is just, uh,
Speaker 2: we learned something and it's a fun read and interesting read.
Speaker 2: Healthcare reporter here at Bloomberg News on zoom in San Francisco.
Speaker 2: He is not on the International Space Dage.
Speaker 4: So as far as we know, despite the fact that
Speaker 4: there were some Internet connectivity issues. But yeah, you never know,
Speaker 4: really really interesting stuff. I'll be the guy who presses
Speaker 4: the button stroll that sounds like we can.
Speaker 3: Fight over it.
Speaker 2: Exactly what he has Joe Webber, of course, the editor
Speaker 2: of Bloomberg Business We check this out in the upcoming
Speaker 2: new issue of Bloomberg Business Week.
Speaker 5: It's also online.
Speaker 2: M MAC.
Speaker 5: The journal. Now about you let me drive?
Speaker 1: No, no, no, honey, please, I'll.
Speaker 6: Wait.
Speaker 3: I want to drive.
Speaker 5: It's a question.
Speaker 1: This is the drive to the globe. We'll buy around
Speaker 1: each other down on Bloomberg Radio.
Speaker 2: All right, everybody, just about seventeen minutes left in today's
Speaker 2: trading session. Right here on Bloomberg BusinessWeek, Carol Master, along
Speaker 2: with Tim Stanovick, Hey Tim, among our most read on
Speaker 2: the Bloomberg. It's one about the message coming from Wall
Speaker 2: Street about investor optimism running dangerously high. It points about
Speaker 2: our points to overstretched technicals and the belief that the
Speaker 2: Fed will not cut interest traits as quickly as markets expect,
Speaker 2: are behind a pessimistic turn from equity specialists over JP Morgan, Chase,
Speaker 2: Morgan Stanley. I mean people who just kind of saying,
Speaker 2: flow your role a little bit.
Speaker 4: I mean, it's been a kind of a wild five
Speaker 4: or six weeks, hasn't it. As Golden Sachs the point right, Yeah.
Speaker 4: Managing director Scott Rubner put it in a report there
Speaker 4: a quote no longer any bears left.
Speaker 2: It's pretty amazing. Let's see what our driver to the
Speaker 2: closed guest has to say about that. With us back
Speaker 2: with us as Aaron Kennon, CEO over at Clear Harbor
Speaker 2: Asset Management. He's co founder of the firm. They've got
Speaker 2: about a billion in assets under management. He joins us
Speaker 2: on Zoom from Stanford, Connecticut. Aaron, good to have you
Speaker 2: back with us. Are there any bears left?
Speaker 8: Well, that's a great question. If you look at the
Speaker 8: underbelly of the market, Carroll and Tim, I mean, certainly
Speaker 8: there's a lot of caution. I think that that can
Speaker 8: be seen. You know, look at the four or ninety
Speaker 8: three stocks outside the S and P five hundreds, Magnificent seven.
Speaker 8: They're only up a few percentage points on a year
Speaker 8: to date basis, and those seven stocks are up about
Speaker 8: ninety seven percent. So I think there's a tale of
Speaker 8: two stories going on across the market. Even global indices.
Speaker 3: For that matter.
Speaker 8: You look at the All World Index and it's about
Speaker 8: eighteen percent allocated to the Magnificent seven, and so pe
Speaker 8: multiples on those four hundred ninety three stocks are trading
Speaker 8: at about sixteen times or so, and the Magnificent seven
Speaker 8: are trading trailing at about fifty times. And so maybe
Speaker 8: that's the glass half full point that, you know, the
Speaker 8: rest of the market, even though we haven't seen much
Speaker 8: of a move higher from a performance perspective, this year,
Speaker 8: could have could have some legs in twenty twenty four
Speaker 8: if the economic picture is relatively okay.
Speaker 4: Do you think the economic picture is going to be
Speaker 4: relatively okay next year?
Speaker 8: Well, I think a lot hinges Tim on employment. You know,
Speaker 8: we saw the jolts data today weaker than expective, but
Speaker 8: you know, certainly still relatively strong. Jobless claims have trended
Speaker 8: downward on a trend line basis, but still relatively strong.
Speaker 8: And we'll have a read through on the job's data too,
Speaker 8: and so on the jobless non farm payrolls data too
Speaker 8: later on so in the week. So I think a
Speaker 8: lot will hinge on the employment picture if the GDP
Speaker 8: and economic data set more generally rolls over and we
Speaker 8: go into a more recessionary like period in twenty twenty
Speaker 8: four from multiple quarters. Even if we have a disinflationary
Speaker 8: continuation with the FED cutting rates, I think that's probably
Speaker 8: bad for equities, But I think that there's a scenario
Speaker 8: that could very well play out where growth remains positive,
Speaker 8: maybe trends lower, but positive, and disinflation continues. That could
Speaker 8: be very bullish for both bonds and potentially equities where
Speaker 8: that correlation remains positive in twenty four.
Speaker 3: Is that likely?
Speaker 2: Might it happen? Where would you place your bet in
Speaker 2: terms of the scenario for next year or do you
Speaker 2: feel like it's kind of up for grabs right now?
Speaker 8: I mean, I think it's somewhat up for grabs. But
Speaker 8: I just point of caution is employment is the last
Speaker 8: leg of the stool that tends to break as we
Speaker 8: enter a recessionary period, and that has just started to
Speaker 8: soften on the margin here, while other data sets carol
Speaker 8: like manufacturing and some indications on the consumer, whether it's
Speaker 8: credit card lines, I mean just the student loan repayments
Speaker 8: just restarted at the end of October, and so I
Speaker 8: think there's still some negative headwinds that are going to
Speaker 8: work through the pipeline as we enter twenty twenty four,
Speaker 8: which is also why I think we should expect at
Speaker 8: least a deceleration in GDP.
Speaker 4: What are some other reasons, other reasons for yeah, for
Speaker 4: a deceleration and GDP.
Speaker 8: Well, I mean you look at China, Tim Good Good example,
Speaker 8: this year, as we waded into twenty twenty three, everyone thought, well,
Speaker 8: China's going to reopen, and the back half of twenty
Speaker 8: twenty three is going to be all about China exporting
Speaker 8: inflation and exporting growth in economic activity. I think that's
Speaker 8: a big question mark for the overall global economy. Frankly,
Speaker 8: my sense is just looking at the data set there
Speaker 8: that things are quite weak. You look at personal bankruptcy
Speaker 8: data in China is skyrocketing. You look at the real
Speaker 8: estate picture on the commercial side in China and the
Speaker 8: delinquencies and defaults happening there, it's a rather significant problem.
Speaker 8: They tried to transition their economy from an export driven
Speaker 8: economy to a consumer growth, domestic growth driven economy, and
Speaker 8: clearly that has proven very problematic in twenty twenty three,
Speaker 8: and so that'll be a huge question mark as we
Speaker 8: go into twenty twenty four.
Speaker 1: How much.
Speaker 2: In terms of portfolio allocation? And I'm assuming you know, Aaron,
Speaker 2: we've talked, you know, for a long time. You know,
Speaker 2: you set things, and I'm assuming for a lot of
Speaker 2: your clients it stays pretty consistent. But having said that,
Speaker 2: I'm sure there are tweaks. Is there a tweak to
Speaker 2: be made right now as we get ready to enter
Speaker 2: a new year in your investment strategies?
Speaker 8: Yeah, that's a good question, Carol. I mean, you're right,
Speaker 8: we do care deeply about acid allocation, and thinking though
Speaker 8: about the fundamentals of each ascid class does inform us
Speaker 8: as to when we think a tilting may be warranted,
Speaker 8: or even within an acid class an adjustment may be warranted.
Speaker 8: So for example, even in fixed income, we went into
Speaker 8: twenty twenty three and it looked like very short maturity
Speaker 8: high yield was worth allocating to, even though the correlation
Speaker 8: is high to the equity market and so on, the
Speaker 8: margin became a little more constructive on how yield in
Speaker 8: twenty three. In twenty four we have a similar posture
Speaker 8: on that particular point because we don't see high yield
Speaker 8: issuance for refinance occurring really into until twenty twenty five
Speaker 8: and twenty six. Right about eight one point eight trillion
Speaker 8: dollars of refise happening in high yield over the next
Speaker 8: three years, but it's captured on the back end. But
Speaker 8: maybe the most important point is ensuring that there is
Speaker 8: ballast in the portfolio, particularly if economic growth declines and
Speaker 8: disinflation continues. You want to ensure that you not only
Speaker 8: have the treasuries and agency mortgage backed securities in our opinion,
Speaker 8: but you want to make sure you have a sufficient
Speaker 8: amount of duration to counteract what could be a weaker
Speaker 8: equity market environment. And so you know, those slight adjustments
Speaker 8: we're always thinking about making, obviously in conjunction with conversations
Speaker 8: with clients and their liquidity needs.
Speaker 6: And that sort of thing.
Speaker 2: Well, certainly helpful as we get ready to close out
Speaker 2: the year. Not sure we'll see before the end of
Speaker 2: the year, but if we don't, happy holidays and happy
Speaker 2: New Year. Aaron so appreciate it. Aaron Kennon, CEO and
Speaker 2: co founder a Clear Harbor Asset Management, joining us on
Speaker 2: Zoom from Stanford, Connecticut.
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