WEBVTT - Bloomberg Businessweek Weekend: December 15th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg business Week inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.040 --> 0:00:23.680 Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. 0:00:24.360 --> 0:00:27.120 This past week we saw the Federal Reserve hold rates 0:00:27.120 --> 0:00:30.160 in place for a third straight time, with Chairman Jerome 0:00:30.200 --> 0:00:33.120 Powell indicating that policy easing is at least on the 0:00:33.159 --> 0:00:36.800 table as we head into twenty twenty four, with US 0:00:36.800 --> 0:00:39.760 inflation slowly creeping downward. We're going to take a look 0:00:39.760 --> 0:00:41.839 at the health of the American consumer from a few 0:00:41.840 --> 0:00:46.640 different angles, including with PNC's annual Christmas Price Index, mobile 0:00:46.640 --> 0:00:49.920 sports betting, with the CEO of fandual parent flutter, and 0:00:50.080 --> 0:00:54.000 expectations for the newest hotel addition to the Las Vegas Strip. 0:00:54.560 --> 0:00:56.720 All of that to come. We begin with someone who 0:00:56.800 --> 0:01:00.240 loves to gamble on himself, the one and only Elon Musk, 0:01:00.600 --> 0:01:03.920 the world's richest man, and his various companies making news 0:01:04.000 --> 0:01:07.000 on not one, not two, but three fronts this week. 0:01:07.319 --> 0:01:11.240 That includes the biggest ever recall for electric vehicle giant Tesla. 0:01:11.640 --> 0:01:15.360 The National Highway Traffic Safety Administration determined that the driver 0:01:15.480 --> 0:01:20.319 assistance system autopilot that comes standard in Tesla's vehicles doesn't 0:01:20.360 --> 0:01:23.959 do enough to guard against misuse. That prompted a recall 0:01:24.040 --> 0:01:27.680 of more than two million cars. Bloomberg Market Senior editor 0:01:27.720 --> 0:01:29.920 Mike Reagan and I cut up with the Bloomberg Technology 0:01:29.920 --> 0:01:31.920 co host ed Ludlow to find out more. 0:01:32.560 --> 0:01:35.480 It is a recall as a technicality or in the 0:01:35.520 --> 0:01:39.759 technical sense to recall in name only. But what Nitzer found, 0:01:40.280 --> 0:01:43.319 which is the main kind of highway safety regulator, is 0:01:43.360 --> 0:01:46.240 that there aren't enough kind of visual prompts on the 0:01:46.280 --> 0:01:49.680 display screen of a Tesla, on the dash screen as 0:01:49.720 --> 0:01:52.960 well as the main monitor to remind the driver to 0:01:53.080 --> 0:01:54.840 keep their hands on the wheel and their eyes on 0:01:54.880 --> 0:01:57.840 the road. That might seem obvious to you, But it's 0:01:57.880 --> 0:02:00.280 not a hard recall, like Tesla doesn't have to take 0:02:00.360 --> 0:02:03.440 back any of the cars. It has to address Knitz's 0:02:03.520 --> 0:02:06.960 concerns with the with an over the air update, which 0:02:07.000 --> 0:02:10.320 is doing voluntarily with objection based on what nits are 0:02:10.320 --> 0:02:12.799 told it. And it's so important to be absolutely clear 0:02:12.840 --> 0:02:16.200 here we're talking about autopilot which has been standard on 0:02:16.240 --> 0:02:20.359 all Tesla cars since twenty fifteen. We are not talking 0:02:20.400 --> 0:02:23.359 about full self driving beta, which is kind of the 0:02:23.400 --> 0:02:27.119 next level up, something nearer to autonomous driving technology. 0:02:27.720 --> 0:02:29.840 Well, I do wonder, you know when they do a 0:02:30.000 --> 0:02:32.839 recall like this, and it's a great point. I think 0:02:32.880 --> 0:02:36.280 that we're not talking about having the supply parts and labor. 0:02:36.400 --> 0:02:40.840 Really it's some software code update. Does this still cost 0:02:40.919 --> 0:02:44.160 Tesla anything material you know to do this or is 0:02:44.200 --> 0:02:46.399 it just tweak a few lines of code and they're 0:02:46.400 --> 0:02:46.880 done with it. 0:02:48.360 --> 0:02:51.520 Can you assign a value to the pr behind it? Yeah, 0:02:51.560 --> 0:02:54.640 I mean you know that it is a recall on 0:02:54.680 --> 0:02:59.160 a technical basis. And today the headlines where two million 0:02:59.240 --> 0:03:04.600 vehicles recall the biggest US recall recall for Tesla. Ever, 0:03:04.800 --> 0:03:07.120 there are only two million Teslas on the road anyway, 0:03:07.240 --> 0:03:10.680 so it's basically all of them. And as Tim pointed 0:03:10.720 --> 0:03:13.880 out before the start of the segment, the stock did recover, 0:03:13.960 --> 0:03:15.760 but at a session low. I think we were down 0:03:16.200 --> 0:03:19.399 three percent, and so there's that impact. But in terms 0:03:19.480 --> 0:03:23.040 of the cost of addressing or fixing the issue, it's negligible. 0:03:23.360 --> 0:03:25.640 That said, the experience of lots of Tesla owners that 0:03:25.639 --> 0:03:28.240 I've spoken to today hasn't been that smooth. It is 0:03:28.240 --> 0:03:31.560 supposed to be as simple as pressing the touchscreen running 0:03:31.560 --> 0:03:34.680 the update, but sometimes that can be problematic for a 0:03:34.720 --> 0:03:36.440 small part of the customer base. 0:03:36.680 --> 0:03:38.480 And there are a few certain things in life that 0:03:38.520 --> 0:03:41.120 we just can count on each and every lifetime, or 0:03:41.120 --> 0:03:43.760 each and every year. One of them is death fed meetings, 0:03:43.880 --> 0:03:48.200 fed meetings, taxes, and that full self driving is going 0:03:48.280 --> 0:03:51.480 to come this year. Right, That's something that Elon Musk 0:03:51.560 --> 0:03:54.200 says every single year, and he's been saying it every 0:03:54.200 --> 0:03:56.400 single year. And here we are, right in twenty twenty 0:03:56.440 --> 0:03:59.600 three years after he first said it without a fleet 0:03:59.600 --> 0:04:02.160 of rubber taxis when as I walk out in seven 0:04:02.200 --> 0:04:06.280 thirty one Mixington Aft this evening, right, how does this 0:04:06.520 --> 0:04:09.480 play into the idea that, you know, the world that 0:04:09.520 --> 0:04:12.960 Elon Musk wants is one where we're not actually behind 0:04:12.960 --> 0:04:16.080 the wheel in the sense of driving a tesla. 0:04:16.560 --> 0:04:19.720 I apologize profusely for interrupting, because your credit it's just 0:04:19.800 --> 0:04:23.640 spot on that every year, every month, Elon Musk makes 0:04:23.720 --> 0:04:27.200 prediction that that often does come true, just not on 0:04:27.240 --> 0:04:30.679 the timeline that he sets out. So the recall today 0:04:30.800 --> 0:04:32.880 was not to do with full self driving Beta. It 0:04:32.920 --> 0:04:35.760 was to do with the most basic driver assistance tool, 0:04:35.960 --> 0:04:38.440 But we do care about full self driving Beta, which 0:04:38.520 --> 0:04:41.160 is a software suite that allows the car to drive 0:04:41.200 --> 0:04:45.880 itself to all intents and purposes. But legally speaking, if 0:04:45.920 --> 0:04:49.000 you read the small print on Tesla's website, it says 0:04:49.080 --> 0:04:52.239 the car is not capable of driving itself. It still 0:04:52.279 --> 0:04:54.840 requires the driver to have their hands on the wheel 0:04:54.880 --> 0:04:56.880 and their eyes on the road, because those are the 0:04:56.960 --> 0:04:59.279 laws of the land, at least in this nation and 0:04:59.320 --> 0:05:04.080 in many other jurisdictions. The future is one where Tesla 0:05:04.120 --> 0:05:07.240 plans to sell a much lower price point, mass market 0:05:07.360 --> 0:05:10.159 vehicle to build up the number of Teslas around the 0:05:10.200 --> 0:05:13.400 world in that time based on the Tesla vehicles on 0:05:13.440 --> 0:05:16.640 the roads today and that future model which will grow 0:05:16.720 --> 0:05:20.080 the volume of Teslas out there. They're using the software 0:05:20.360 --> 0:05:24.360 to gather data to train the neural nets behind their 0:05:24.360 --> 0:05:28.440 autonomous technology, with the end goal being and everyone forgets this, 0:05:28.600 --> 0:05:31.640 but MUSC has spoken about it so many times. The 0:05:31.800 --> 0:05:35.000 end goal is where Tesla operates a fleet of vehicles 0:05:35.880 --> 0:05:39.839 that drive themselves right and takes back ownership of those 0:05:39.880 --> 0:05:42.719 models in the future. But that what I just outlined 0:05:42.760 --> 0:05:44.800 is the arc of what Tesla plans to do to 0:05:44.839 --> 0:05:47.400 get there. The problem is that that is real world 0:05:47.440 --> 0:05:51.039 testing on roads with other traffic and other road users, 0:05:51.320 --> 0:05:54.560 and that is the risk that the regulators are concerned about. 0:05:55.600 --> 0:05:58.960 And it's very early days for the cyber truck. But 0:05:59.000 --> 0:06:02.159 I wonder what you're hearing, is is it going well 0:06:02.440 --> 0:06:05.440 or is it being received well by the first batch 0:06:05.440 --> 0:06:07.120 of customers to receive one? 0:06:07.640 --> 0:06:09.320 Yeah you know, yeah, yeah. 0:06:09.640 --> 0:06:11.200 I mean from the customers that received one that I 0:06:11.200 --> 0:06:14.200 was spoking to, they're absolutely delighted. But those customers are 0:06:14.440 --> 0:06:17.840 part of a very clear demographic of high network individuals 0:06:17.839 --> 0:06:21.479 who have very high spec versions, and we're talking just 0:06:21.520 --> 0:06:24.359 a handful at this stage. The big shock was that 0:06:24.400 --> 0:06:26.640 when they did the big unveil last week or the 0:06:26.680 --> 0:06:30.080 week before, the lowest price point cyber truck was sixty 0:06:30.120 --> 0:06:33.720 one thousand dollars twenty thousand dollars more expensive than when 0:06:33.760 --> 0:06:37.400 they first announced it in twenty nineteen, and that lowest 0:06:37.400 --> 0:06:39.760 cost variant is not going to be available until twenty 0:06:39.839 --> 0:06:43.800 twenty five. So it's very much targeting the early adopter 0:06:43.960 --> 0:06:47.520 or first adopter market right now. It's an incredibly expensive product, 0:06:47.720 --> 0:06:49.800 and we expect the ramp of their output to be 0:06:49.880 --> 0:06:50.720 really slow. 0:06:51.040 --> 0:06:52.680 And I said, there's a few stuff that a few 0:06:52.680 --> 0:06:54.080 things that I want to get to. We got a 0:06:54.120 --> 0:06:56.920 couple more. One is this story that crossed by Sophie 0:06:56.920 --> 0:07:00.479 Alexander and Dana Hall about Ewon Musk planning and new 0:07:00.560 --> 0:07:02.960 university in Austin with one hundred million dollar gifts. So 0:07:02.960 --> 0:07:05.400 he's got Neuralink, he's got x, he's got x dot AI, 0:07:05.480 --> 0:07:09.360 he's got the Boring Company, he's got Tesla, he's got 0:07:09.400 --> 0:07:11.240 space X and now he's got a university too. 0:07:11.920 --> 0:07:14.880 Yes, and this is a philanthropic effort, so it's different 0:07:14.920 --> 0:07:18.800 from his business lines. Dana Hole and Sophie Alexander reported 0:07:18.840 --> 0:07:24.040 this because they got hold of the irs application that 0:07:24.160 --> 0:07:27.440 Musk had made for tax exemption. So he plans to 0:07:27.440 --> 0:07:29.680 make a one hundred million dollar gift to set up 0:07:29.680 --> 0:07:32.560 a university in Austin in competition to all the other 0:07:32.800 --> 0:07:36.040 universities that are popping up in Austin right now, initially 0:07:36.080 --> 0:07:39.760 focused on STEM subjects, but then broadening it out. And 0:07:40.120 --> 0:07:45.520 you know, Elon Musk does regularly conduct philanthropic donations and exercises. 0:07:45.840 --> 0:07:48.040 He has previously set up a school which in the 0:07:48.040 --> 0:07:51.480 first instance many years ago was for his children. It 0:07:51.640 --> 0:07:55.160 kind of k through whatever level, and now he wants 0:07:55.200 --> 0:07:59.200 to focus on academia and the highest level of education. 0:08:00.000 --> 0:08:02.320 It's a fantastic report by my colleagues. 0:08:02.600 --> 0:08:04.600 You know, ed, I feel like whenever the name Elon 0:08:04.680 --> 0:08:07.840 Musk comes up, there's about twelve different stories floating around. 0:08:08.000 --> 0:08:10.720 He's moving in so many different directions. But obviously the 0:08:10.760 --> 0:08:15.200 other big one lately is SpaceX and this opportunity for 0:08:15.520 --> 0:08:19.480 insiders to sell some of their equity in the company. 0:08:19.960 --> 0:08:21.880 Talk us through how that's going, what we know about it. 0:08:22.520 --> 0:08:25.040 Yes, the latest that I reported last night with my 0:08:25.080 --> 0:08:28.720 colleagues Katie Ruth and Lauren Graush is that there was 0:08:28.760 --> 0:08:32.000 so much demand to buy shares in this tender that 0:08:32.040 --> 0:08:34.320 they actually up the price a little bit. So when 0:08:34.360 --> 0:08:36.839 we reported it last week, it was ninety five dollars 0:08:36.880 --> 0:08:41.040 a share. These are employees selling their shares to outside investors, 0:08:41.559 --> 0:08:44.720 and the price has now been uped by just two 0:08:44.760 --> 0:08:47.800 dollars to ninety seven dollars per share. But based on 0:08:47.840 --> 0:08:50.160 the volume of shares they pan to sell around five 0:08:50.240 --> 0:08:52.840 hundred to seven hundred and fifty million dollars. That would 0:08:52.840 --> 0:08:56.360 give SpaceX evaluation of about one hundred and eighty billion. 0:08:56.760 --> 0:08:58.959 The last round that it did in the summer valued 0:08:58.960 --> 0:09:01.199 it at one hundred and fifty billion, So this is 0:09:01.240 --> 0:09:05.000 a big jump. You know, SpaceX is the clear most 0:09:05.120 --> 0:09:08.840 valuable US startup. It's the second most valuable private company 0:09:08.920 --> 0:09:12.640 globally behind byte Dance. And these are big numbers for 0:09:13.000 --> 0:09:15.880 a company that I've reported is on track for revenues 0:09:15.920 --> 0:09:18.720 of between nine and ten billion dollars this year, maybe 0:09:18.720 --> 0:09:22.200 fifteen billion dollars next year. But the valuations I watering 0:09:22.800 --> 0:09:25.240 and investors are just clamoring to find a way to 0:09:25.360 --> 0:09:27.720 invest in SpaceX. 0:09:27.320 --> 0:09:29.880 And give us the details said about a potential IPO, 0:09:30.040 --> 0:09:32.560 not just of SpaceX as a whole, but potentially spinning 0:09:32.559 --> 0:09:34.560 off Starlink as an IPO in the last minute that 0:09:34.600 --> 0:09:35.120 we have with you. 0:09:35.480 --> 0:09:37.560 Yeah, this is part of the logic, right, So it's important. 0:09:37.559 --> 0:09:39.840 These are employees selling shares. They work there a long time, 0:09:39.920 --> 0:09:42.240 they want some liquidity for the reward of working free 0:09:42.280 --> 0:09:45.520 long musk. But the opportunity for investors is to get 0:09:45.559 --> 0:09:48.520 in before it's too late. Because we've reported at the 0:09:48.640 --> 0:09:51.160 end of twenty twenty four, beginning of twenty twenty five, 0:09:51.280 --> 0:09:53.960 must says more like twenty twenty six, they could spin 0:09:54.000 --> 0:09:56.520 off Starlink in an IPO, which would be a big 0:09:56.559 --> 0:09:59.120 market and investor event. And if you're already sitting on 0:09:59.120 --> 0:10:02.120 the cat table, then you're well positioned for that big moment, 0:10:02.960 --> 0:10:04.040 if and when it comes. 0:10:04.240 --> 0:10:07.319 So make a prediction what happens first, full self driving 0:10:07.559 --> 0:10:08.920 or a SPACEXIPO. 0:10:10.240 --> 0:10:12.520 I am not in the market of predictions, but based 0:10:12.559 --> 0:10:14.880 on what Elon Musk has said slash what we've reported, 0:10:14.920 --> 0:10:16.640 I think a Starling spinoffs more likely. 0:10:17.200 --> 0:10:20.280 That was Bloomberg Technology co host at Ludlow, Mike Reagan. 0:10:20.360 --> 0:10:22.680 We'll be back with us later this hour and for 0:10:22.760 --> 0:10:25.560 more on the latest goings on with Elon Musk, check 0:10:25.559 --> 0:10:29.840 out our newest Bloomberg podcast series, Elon Inc. Coming up, 0:10:29.880 --> 0:10:32.960 our magazine team explains why one of Sam Bankman Freed's 0:10:33.000 --> 0:10:37.199 high profile lawyers says the jailed cryptomogul was the worst 0:10:37.280 --> 0:10:41.000 witness he's ever put on the stand, a key element 0:10:41.080 --> 0:10:43.719 you may have missed from the FTX trial. Next, you're 0:10:43.760 --> 0:10:46.839 listening to Bloomberg BusinessWeek. This is Bloomberg. 0:10:47.120 --> 0:10:50.679 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:50.720 --> 0:10:54.160 live weekday afternoons from three to six Eastern listen. 0:10:53.960 --> 0:10:56.880 On Bloomberg dot com, the iHeartRadio app. 0:10:56.679 --> 0:11:00.720 And the Bloomberg Business app, or watch us live on YouTube. 0:11:01.520 --> 0:11:04.720 The fallen crypto mogul Sam Bankman Fried right now is 0:11:04.720 --> 0:11:08.800 in Brooklyn's Metropolitan Attention Center, where he's awaiting sentencing this 0:11:08.920 --> 0:11:11.720 coming March. This after a jury last month found him 0:11:11.720 --> 0:11:15.680 guilty of stealing billions of dollars from FTX customers. Much 0:11:15.679 --> 0:11:19.000 of the coverage of his trial focused on the main characters, SBF, 0:11:19.040 --> 0:11:23.600 of course, and then three powerful prosecution witnesses, Alameda CEO 0:11:23.800 --> 0:11:28.160 Caroline Ellison, FTX co founder Gary Wong, and FTX engineering 0:11:28.240 --> 0:11:32.600 chief Nishad Singh Reminder. All three testified that bankmin Freed 0:11:32.760 --> 0:11:37.320 directed them to commit fraud. But what about SBF's lawyers, who, 0:11:37.360 --> 0:11:40.000 behind the scenes worked to represent him even if he 0:11:40.200 --> 0:11:43.520 wasn't exactly a model defendant. One of those lawyers is 0:11:43.559 --> 0:11:46.880 Stanford Law professor David Mills. He led the defense as 0:11:46.880 --> 0:11:49.840 a favor to SBF's parents, who are fellow professors at 0:11:49.840 --> 0:11:53.200 Stanford Law and at one time close friends of Mills. 0:11:53.840 --> 0:11:57.080 Bloomberg News legal reporter Ava Benny Morrison writes about the 0:11:57.120 --> 0:11:59.480 defense attorney and the finance section of the new issue 0:11:59.480 --> 0:12:02.560 of Bloomberg Business Week. It's on newstands now, online at 0:12:02.600 --> 0:12:05.280 Bloomberg dot com, slash BusinessWeek, and of course on the 0:12:05.280 --> 0:12:07.959 Bloomberg terminal. And to help us understand the fallout of 0:12:08.000 --> 0:12:10.880 a highly successful and wealthy lawyer taking on a case 0:12:11.200 --> 0:12:14.360 that he deemed unwinnable, Bloomberg News cross ass at reporter 0:12:14.400 --> 0:12:17.640 Emily GRIFFEO and I welcome Eva along with Bloomberg BusinessWeek 0:12:17.720 --> 0:12:18.760 editor Joel Weber. 0:12:19.400 --> 0:12:22.439 David Mills was not a name that I was familiar with, 0:12:22.520 --> 0:12:25.520 never heard of it. We worked, you know, all over 0:12:25.559 --> 0:12:27.520 this trial. We all of us were glued to it, 0:12:27.559 --> 0:12:30.680 trying to you know, understand every turn of the screw. 0:12:30.880 --> 0:12:34.840 Mark Cohen, Christian Everdeale. Those were the two people who 0:12:34.880 --> 0:12:41.080 were basically on the stand defending SBF. So when the 0:12:41.200 --> 0:12:43.599 legal team reached out and said, hey, Ava's got this 0:12:43.640 --> 0:12:47.240 story about David Mills, who actually led the sort of 0:12:47.240 --> 0:12:50.840 the strategy for defending SBF, I was like, who tell 0:12:50.840 --> 0:12:53.000 me everything? And it turned out she had a lot 0:12:53.040 --> 0:12:55.960 to say. How did this story find you? Ava? 0:12:56.640 --> 0:12:59.280 The similar questions were being asked in the courtroom. To 0:12:59.320 --> 0:13:02.880 be honest, during his trial, David Mills would sort of 0:13:02.880 --> 0:13:04.600 come into the back of the room and sit down 0:13:04.679 --> 0:13:09.480 with the family and not next to SBF, not next 0:13:09.520 --> 0:13:13.600 to SBN. No, he's next to parents, yes exactly, And 0:13:13.760 --> 0:13:15.840 reporters would point at him and say, who is that guy? 0:13:16.080 --> 0:13:18.360 What is he doing? He's talking to the parents all 0:13:18.360 --> 0:13:23.240 the time. He's sort of sauntering up to the trial attorneys. 0:13:23.600 --> 0:13:25.640 So I was interested in getting to know a bit 0:13:25.679 --> 0:13:28.200 more about him, And turns out he has had a 0:13:28.320 --> 0:13:31.200 very full and colorful life. He has been a white 0:13:31.200 --> 0:13:34.840 collar lawyer for a very long time decades. He's represented 0:13:34.880 --> 0:13:38.080 some really big characters on Wall Street and in Silicon Valley. 0:13:38.360 --> 0:13:43.000 But he's also a very successful investor. He works as 0:13:43.040 --> 0:13:46.319 a managing director at Fortress a bunch of other things, 0:13:46.840 --> 0:13:49.719 and you can tell from his interview he's also very 0:13:49.800 --> 0:13:51.800 very candid, which is unusual for a lawyer. 0:13:51.880 --> 0:13:55.080 He's got a plan, he does. Yes, that was I 0:13:55.120 --> 0:13:56.839 was like, oh, just fly your own jet to the 0:13:56.880 --> 0:13:59.400 Bahamas to see SPF, which he. 0:13:59.360 --> 0:14:01.679 Did right, yes, exactly when he went down there and 0:14:01.920 --> 0:14:04.319 agreed to represent him. And he wasn't willing to put 0:14:04.320 --> 0:14:06.600 a dollar figure on how much he's worth. But I 0:14:06.640 --> 0:14:08.640 think the jet, for example, gives you a little bit 0:14:08.679 --> 0:14:09.960 of an indication of what. 0:14:09.920 --> 0:14:12.160 He is worth. So there's this photograph of him with 0:14:12.240 --> 0:14:15.080 a baseball hat. Three four hundred and nineteen is on 0:14:15.120 --> 0:14:16.679 the hat. What is that? 0:14:16.679 --> 0:14:19.160 That is the number of people he has helped get 0:14:19.200 --> 0:14:23.560 out of prison. So he was instrumental in changing the 0:14:24.480 --> 0:14:27.760 three strikes law in California, which is quite controversial, had 0:14:27.800 --> 0:14:31.440 people doing life sentences on their third conviction, no matter 0:14:31.480 --> 0:14:33.760 how small the last conviction was. And he was really 0:14:34.000 --> 0:14:37.240 instrumental in being helping change that and getting a lot 0:14:37.280 --> 0:14:38.000 of people out of prison. 0:14:38.040 --> 0:14:40.720 Emily, do you know how many Tima has on his 0:14:40.760 --> 0:14:41.360 baseball hat. 0:14:42.880 --> 0:14:44.120 He's got a humble ten. 0:14:45.080 --> 0:14:48.840 Okay, So awa like this did not go down probably 0:14:49.160 --> 0:14:53.440 as mister Mills would have wanted. I guess, like I mean, 0:14:53.480 --> 0:14:55.000 if he's so good at getting people up, this is 0:14:55.040 --> 0:14:57.080 one guy who did not get off. What does he 0:14:57.120 --> 0:14:59.120 have to say about the client? 0:15:00.000 --> 0:15:03.960 He said he was very difficult and a very challenging client, 0:15:04.160 --> 0:15:06.520 and we could sort of tell that he would be 0:15:06.680 --> 0:15:10.360 like that. After his indictment. He was speaking really publicly 0:15:10.400 --> 0:15:14.640 about the case after the bankruptcy, which any lawyer would 0:15:14.680 --> 0:15:18.880 tell his client not to do. He said that bankman 0:15:18.960 --> 0:15:22.360 Fred went off script essentially when he got on the 0:15:22.360 --> 0:15:27.080 witness stand, and it was Mills's idea to have this 0:15:27.160 --> 0:15:29.880 strategy where he would get up and say, yes, I 0:15:29.920 --> 0:15:32.360 said all these things that the prosecution is saying that 0:15:32.440 --> 0:15:35.520 I did, but I didn't mean to do anything wrong. 0:15:35.600 --> 0:15:38.280 And I was trying to save people's money and I 0:15:38.320 --> 0:15:40.880 was looking out for clients. But he certainly didn't do that. 0:15:41.440 --> 0:15:44.800 I thought it was interesting that when SBR first reached 0:15:44.800 --> 0:15:48.000 out to Mills, it actually wasn't for legal advice. Can 0:15:48.040 --> 0:15:50.960 you talk a little bit about that phone call. Yes. 0:15:51.040 --> 0:15:55.000 So, Mills and Sam's father, Joe Bankman, who's also a 0:15:55.280 --> 0:15:58.680 Stanford law professor, are very good mates. And when there 0:15:58.960 --> 0:16:04.520 was trouble for FTX and Alameda Research the Associated Crypto 0:16:04.560 --> 0:16:07.840 Fund in early November last year, Joe called him and said, 0:16:08.000 --> 0:16:09.920 we're having a run on the bank. You know what 0:16:09.960 --> 0:16:12.320 can I do? And Mills gave him a list of 0:16:12.360 --> 0:16:14.960 potential people who could call to try and fundraise to 0:16:15.000 --> 0:16:17.560 try and get FTX and Alimeter out of this hole. 0:16:18.600 --> 0:16:21.760 Okay, so the parents were the ones that went to 0:16:21.840 --> 0:16:25.480 Mills and recruited his services in the first place. Where 0:16:25.520 --> 0:16:29.240 does that relationship stand now? On the other side of 0:16:28.960 --> 0:16:34.960 the trial, which obviously ended with FBF fairly discreceed. 0:16:35.800 --> 0:16:39.480 Mills was pretty open in saying that there is a 0:16:39.480 --> 0:16:42.920 bit of tension there between him and his longtime friends 0:16:43.000 --> 0:16:47.760 Joe and Barbara. He said that he's concerned parents who 0:16:47.800 --> 0:16:51.840 don't believe that their child is guilty will look for 0:16:51.880 --> 0:16:54.480 someone to blame after a guilty verdict, and he is 0:16:54.920 --> 0:16:57.480 in their direct line of sight. We went to Joe 0:16:57.520 --> 0:17:00.200 and Barbara actually and asked them what they thought of 0:17:00.200 --> 0:17:03.040 this characterization, and they said, we love David Mills. We're 0:17:03.080 --> 0:17:05.480 so grateful for what he's done for us as well. 0:17:06.600 --> 0:17:08.640 That really struck me that statement that you got from 0:17:08.680 --> 0:17:10.960 his parents, because it ran kind of counter to his 0:17:11.040 --> 0:17:14.000 own feelings. It was almost like, you know, he was 0:17:14.040 --> 0:17:16.520 concerned about the worst case scenario, and they kind of 0:17:16.560 --> 0:17:19.679 came out looking like, we understand that he, you know, 0:17:19.920 --> 0:17:22.679 did his best, and he was kind of dealt the 0:17:22.720 --> 0:17:26.160 cards that he was dealt with our son exactly. 0:17:26.200 --> 0:17:28.640 I think I think Mills came across to me as 0:17:28.680 --> 0:17:31.200 a very open and honest person. And when I asked him, 0:17:31.400 --> 0:17:34.240 you know, do you feel like Barbara and Joe blame 0:17:34.359 --> 0:17:36.399 you for the outcome of this given you were steering 0:17:36.400 --> 0:17:39.520 the legal strategy. He did say, like, I don't know 0:17:39.560 --> 0:17:41.840 if our friendship will survive this, and it would be 0:17:41.840 --> 0:17:45.879 an incredible stressful experience for any friendship to go through. 0:17:47.320 --> 0:17:51.639 Okay, so what's next for him back to the private jet, Well, he. 0:17:51.520 --> 0:17:52.920 Has said that he doesn't want to do a criminal 0:17:53.000 --> 0:17:55.360 law anymore. After Sam bankman Fried's. 0:17:55.880 --> 0:17:58.399 Is permanently stuck at three four hundred and eighteen. 0:17:59.560 --> 0:18:02.520 Well that was the last count from last year, he 0:18:02.560 --> 0:18:05.560 tells me on the anniversary of the project. But I 0:18:05.560 --> 0:18:08.280 think he's still pretty focused on the nonprofit side of things, 0:18:08.320 --> 0:18:14.080 and he also works with Johnny Ive, the Apple chief designer, 0:18:14.520 --> 0:18:17.560 at his new design firm. 0:18:18.119 --> 0:18:21.359 It's a really remarkable story. Again, Joel, a person whose 0:18:21.440 --> 0:18:23.160 name had not at all been on my radar, even 0:18:23.160 --> 0:18:23.880 though I followed the. 0:18:23.800 --> 0:18:26.439 Case, and not exactly like a typical way that you 0:18:26.560 --> 0:18:29.000 hear an attorney, you know, kind of say like what 0:18:29.080 --> 0:18:30.840 he was dealing with, right, and it's like, you know, 0:18:30.920 --> 0:18:33.800 usually this is just like stoneface. But I think it's 0:18:33.840 --> 0:18:36.920 an interesting and look, it's an interesting tell. And look 0:18:37.000 --> 0:18:38.800 like you watched that trail, you knew this was a 0:18:38.840 --> 0:18:42.920 complicated defendant. And boy, there was some drummer there. 0:18:43.080 --> 0:18:46.160 That was Bloomberg News Legal reporter Ava Benny Morrison. Joe 0:18:46.240 --> 0:18:48.439 Weber is sticking around for our next segment, and Emily 0:18:48.440 --> 0:18:50.720 Grafeo was going to rejoin us in the next hour. 0:18:51.200 --> 0:18:53.720 Still ahead on Bloomberg Business Week, it's a clash of 0:18:53.760 --> 0:18:57.600 the ETF titans, as global leader Black rocks slowly but 0:18:57.720 --> 0:19:01.280 surely losing ground to its less flat she competitor. 0:19:01.119 --> 0:19:05.320 Vanguard enjoys a very very loyal investor base. You think 0:19:05.320 --> 0:19:09.640 about who they appeal to. It's financial advisors, it's retail investors, 0:19:09.680 --> 0:19:13.680 not yolo retail investors, but actual mom and pop as 0:19:14.000 --> 0:19:18.080 bogel Head, Yes, exactly, and those are very sticky assets, 0:19:18.480 --> 0:19:20.760 and that type of investor base, it tends to shovel 0:19:20.760 --> 0:19:23.640 in money to these funds in almost every market cycle. 0:19:23.840 --> 0:19:27.080 Actually, when things get worse, they pile in exactly, Oh, 0:19:27.119 --> 0:19:28.240 great buying opportunity. 0:19:28.240 --> 0:19:31.640 We're in Wi FI conscious advisors and retail investors are 0:19:31.720 --> 0:19:34.840 poised to crown in new ETF king. That story is next. 0:19:35.119 --> 0:19:36.440 This is Bloomberg. 0:19:37.640 --> 0:19:41.199 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:41.240 --> 0:19:45.360 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:19:45.440 --> 0:19:48.720 the Bloomberg Business App, and YouTube. You can also listen 0:19:48.840 --> 0:19:51.920 live on Amazon Alexa from our flagship New York station. 0:19:52.400 --> 0:19:55.160 Just say Alexa Play Bloomberg eleven thirty. 0:19:57.000 --> 0:19:59.119 Back to the finance section of the magazine, we go 0:19:59.280 --> 0:20:01.840 for a headline that it may surprise you, the reign 0:20:01.880 --> 0:20:05.000 of Blackrock is coming to an end, at least when 0:20:05.000 --> 0:20:07.320 it comes to the seven point eight trillion dollar market 0:20:07.359 --> 0:20:11.760 for US ETFs, which Blackrock has dominated for decades. To 0:20:11.760 --> 0:20:14.080 help us understand it, this surprising turn of events, and 0:20:14.440 --> 0:20:17.200 which rival is poised to unseat the world's largest dasset 0:20:17.240 --> 0:20:20.080 manager in the ETF arena, Mike Reagan and I spoke 0:20:20.080 --> 0:20:23.240 with Bloomberg News senior markets reporter Katie Greifeld and once 0:20:23.280 --> 0:20:26.159 again editor of Bloomberg Business Week, Joel Weber. 0:20:26.640 --> 0:20:30.359 If you look at the trend line of how Vanguard 0:20:30.440 --> 0:20:36.360 has slowly, slowly, slowly risen and how Blackrock has slowly, 0:20:36.440 --> 0:20:40.040 slowly fallen, there will be an infection moment not too 0:20:40.119 --> 0:20:42.840 far away, right, Katie. We don't know when, we. 0:20:42.840 --> 0:20:43.280 Don't know what. 0:20:43.480 --> 0:20:46.840 It will probably happen, probably. 0:20:46.560 --> 0:20:48.719 In the next eighteen to twenty four months. There are 0:20:48.760 --> 0:20:51.119 some nuances there which I'm sure we'll get into. But 0:20:51.320 --> 0:20:53.720 I mean, like Joel said, this is something that the 0:20:53.800 --> 0:20:57.679 industry has been watching and waiting for for probably a 0:20:57.720 --> 0:20:59.239 decade at this point. If you take a look at 0:20:59.240 --> 0:21:02.560 the chart of a lot of popcorn, a lot of popcorn, 0:21:03.040 --> 0:21:05.639 of popcorn, Yeah, we've been waiting for this one. But 0:21:06.359 --> 0:21:10.240 Vanguard has been increasing its share of the US ETF 0:21:10.280 --> 0:21:14.720