Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Steinovic from Bloomberg Radio. Hi, I'm Carol
Speaker 1: Masser and I'm Tim Stenovick of Bloomberg Quicktake. Welcome to
Speaker 1: the weekend edition of Bloomberg Business Week. Alright, Tim, Week
Speaker 1: forty four working from home? Okay, but who's counting, Carol?
Speaker 1: I know, I apparently am. We've been in our studio
Speaker 1: though in New York City, at Bloomberg headquarters. It's a
Speaker 1: week full of anxiety and questions of what's to come.
Speaker 1: We watched virus numbers ticking higher, the vaccine rollout continuing
Speaker 1: to frustrate, and for the first time in history, a
Speaker 1: U S President was impeached for a second time. With
Speaker 1: that in mind, we'll hear from the author of kill Switch,
Speaker 1: The Rise of the Modern Senate and the Crippling of
Speaker 1: American Democracy. Also, its primary motivation was his anger at
Speaker 1: government shutdowns to coronavirus, the US Capital writer that has
Speaker 1: No Regrets. This was among our most read stories this week.
Speaker 1: For me, it was a must read. Yeah, it was
Speaker 1: a fascinating story. And in the meantime the business world,
Speaker 1: Carol it marches on I p O s off and
Speaker 1: running as Petkoe went public again. We've got the CEO,
Speaker 1: but Tim, We're gonna begin with the top story this week,
Speaker 1: big tex social media giants Facebook, Twitter, Google, Amazon banning
Speaker 1: President Trump, Parlor and others in an effort to prevent
Speaker 1: for the riot organizing. We caught up with Bloomberg News
Speaker 1: technology reporter Sarah Fryer, author of No Filter, the inside
Speaker 1: story of Instagram, along with Bloomberg Business Week editor Joe Webber,
Speaker 1: who gotta say, kicked it off with a little levity
Speaker 1: in an already stressful I was looking forward to that
Speaker 1: didn't look anything like I don't think I'll be so lucky.
Speaker 1: Um and and obviously UM with sort of the social
Speaker 1: media platforms UM basically basically you know, not only blocking
Speaker 1: Trump and and perhaps permanently banning him in the case
Speaker 1: of Twitter. But then I think the parlor conversation has
Speaker 1: become the one that's even more interesting because um, both
Speaker 1: the Apple App Store and and Google's play Store have
Speaker 1: taken restrictions there. But then I thought the big move,
Speaker 1: in the one that I was actually most eager to
Speaker 1: talk to Sara about, was sort of the the Amazon
Speaker 1: move awus coming in and basically blocking it. Yeah, but
Speaker 1: it does show you know, like not only are the
Speaker 1: social media companies able to wield a stick, but like
Speaker 1: Amazon's got the biggest stick of all. So so Sarah
Speaker 1: kind of there's this is just a fast moving story.
Speaker 1: But I want to understand, like how you're thinking about
Speaker 1: where this conversation goes from from here. Well, it dove
Speaker 1: tails right in with the tech power conversation that we're
Speaker 1: going to have a lot more of this year as
Speaker 1: these anti trust of battles with Washington rage on, and
Speaker 1: I expect that to continue during the Biden administration. And
Speaker 1: that tech power conversation is both about because the power
Speaker 1: to restrict as as much as it is about the
Speaker 1: power to allow UM. And so the companies are grappling
Speaker 1: with this, allowing Parlor to be on the App Store,
Speaker 1: allowing Parlor to have UM posting by Amazon. That's the
Speaker 1: thing that employees are looking at, Critics are looking at
Speaker 1: and saying, well, why don't you just cut them off?
Speaker 1: You have the power to do that. You're a private company,
Speaker 1: And the companies are saying, you know what, Yeah, we
Speaker 1: don't want to be dealing with this. This We don't
Speaker 1: want this headache and and it's really interesting to see
Speaker 1: that evolution because we've we've talked about it a lot,
Speaker 1: like you said, with the social media companies, UH, it's
Speaker 1: a lot of conservatives are concerned about too much cutting
Speaker 1: off of people who have accounts. A lot of people
Speaker 1: on the democratic side are concerned about the hosting of
Speaker 1: illegal activity and UM people who are inciting violence, and
Speaker 1: in the balance is really what is is UH an
Speaker 1: issue here to look and Valley companies have a reputation
Speaker 1: for being really mission driven, and I think a lot
Speaker 1: of employees have had of a personal reckoning over the
Speaker 1: last few years. Is it ethical to work for Facebook?
Speaker 1: Is it ethical to work for Google if they're working
Speaker 1: with the Defense Department on you know, UM, putting people
Speaker 1: in cases of the border. There have been a lot
Speaker 1: of new debates about what it means if you work
Speaker 1: for a company that has certain suppliers, certain vendors, certain contracts,
Speaker 1: and host certain voices. And so we have seen employees
Speaker 1: the almost the more forceful voice against their leaders and
Speaker 1: even the government because the government can't can't really be
Speaker 1: clear about what they want. Everyone's scrutinizing tech power, but
Speaker 1: they don't necessarily have a clear direction of what would
Speaker 1: be a good resolution. Whereas employees, you know, they're mostly
Speaker 1: they're mostly liberal, they're well educated, and they're saying, hey,
Speaker 1: I don't want to work for a place that supports
Speaker 1: something like this. And we saw an open letter from
Speaker 1: Twitter employees to Jack Dorothy asking for a bigger ban
Speaker 1: on Trumps. They had previously only banned him for twelve hours,
Speaker 1: and now that he's permanently banned. And we've seen we've
Speaker 1: seen Amazon employees right to their employer about parlor, saying,
Speaker 1: why are we hosting parlor? We should we should kick
Speaker 1: them off. And I think that that power should not
Speaker 1: be underestimated because of how hard it is to recruit
Speaker 1: Untilicon Valley the best talent. Well, and what's to stop
Speaker 1: I don't know, Like, I don't know whether there's oranges
Speaker 1: to oranges, apples to apples, but another company from saying
Speaker 1: I don't like Well, I guess companies do that, right
Speaker 1: if they don't want to work with a supplier, or
Speaker 1: if they don't want to work with something, they have
Speaker 1: that opportunity to do it. Sarah, I'm just trying to
Speaker 1: understand the differences or not differences from another company kind
Speaker 1: of banning something, you know, whether they don't sell to
Speaker 1: a certain customer. Um, they do that all the time, right,
Speaker 1: Well sometimes so okay, a few years ago, companies, we're
Speaker 1: happy to just work within the bounds of the law.
Speaker 1: There are sanctions against Iran, we won't sell two around that.
Speaker 1: That was like, you know, if it's illegal, we won't
Speaker 1: do it. Um. And that was how Facebook and Twitter
Speaker 1: thought about content a lot in the early days. You know,
Speaker 1: remove as little as possible, all right, tim safe to
Speaker 1: say social media really rethinking some of its playbook. We
Speaker 1: saw that this week, right, no, no doubt about it. Yeah,
Speaker 1: that's right. I mean I was really surprised to see
Speaker 1: big moves from the biggest tech companies essentially de platform
Speaker 1: in the president. Really remarkable, all right. That was Bloomberg
Speaker 1: News technology reporter Sarah Fiar. She joined us along with
Speaker 1: Bloomberg Business Week editor Joe Weber. Still the come as
Speaker 1: social media band, the president of the U S House
Speaker 1: voted to impeach him for historic second time. We'll hear
Speaker 1: from a top aide to former Democratic Majority Leader Harry
Speaker 1: Reid of Nevada and the author of kill Switch. The
Speaker 1: rise of the Modern Senate and the Crippling of American Democracy,
Speaker 1: timely book. You're listening to Bloomberg Business Week. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol and Bloomberg Quick
Speaker 1: Takes Tim Stinovy from Bloomberg Radio. This past week will
Speaker 1: go down in US history as the U S House
Speaker 1: of Representatives impeach President Trump for a second time, ten
Speaker 1: Republicans voting in favor. Tim. It was kind of a
Speaker 1: reminder of the division and dysfunction we're seeing definitely throughout
Speaker 1: the GOP. Yeah, I mean, only the future will tell
Speaker 1: if this is a splintering. For seven years, Adam Gentlesen
Speaker 1: had an up close view of growing Senate dysfunction as
Speaker 1: a top aid to former Democratic Majority leader Harry Reid
Speaker 1: of Nevada, and writes about it in his new book,
Speaker 1: Kill Switch, The Rise of the Modern Senate and the
Speaker 1: Crippling of American Democracy. Switch It's a great title. Adam
Speaker 1: is public affairs director of Democracy Ford. It's a legal
Speaker 1: advocacy group against corruption in the executive branch and government.
Speaker 1: We began with the news of the last two weeks.
Speaker 1: There was a lot of it. We talked about the
Speaker 1: capital ride and the second impeachment of President Trump. I
Speaker 1: hate to say it, but I'm not surprised. I think
Speaker 1: this is the logical result of what the president has
Speaker 1: been soaking for the last four years. Um, And you
Speaker 1: know something I talked about in the book. I mean,
Speaker 1: you know, the rise of these forces predates him. Um.
Speaker 1: He took over the GOP in terms of assuming its leadership,
Speaker 1: but a lot of the forces that propelled him to
Speaker 1: office existed before he even stepped into the political arena.
Speaker 1: So I think that it's horrible to see what we've
Speaker 1: been seeing over the last week, but it is sort
Speaker 1: of sadly the culmination of a lot of trends of
Speaker 1: extreme partisanship that have been building for decades now. So
Speaker 1: explain your title to kill switch. What do you mean? So?
Speaker 1: When I worked in the Senate, one of the things
Speaker 1: you hear a lot is that the Senate that's supposed
Speaker 1: to act as a cooling saucer. Uh. This is dates
Speaker 1: back to an apocryphal story about George Washington explaining to
Speaker 1: Thomas Jefferson as they were drinking some tea, that the
Speaker 1: Senate was supposed to act like the saucer under Jefferson's tea.
Speaker 1: He would splash out of the saucer, cool on the
Speaker 1: splash off the cup, and cool on the saucer before
Speaker 1: I was ready to drink. Uh what that was true
Speaker 1: at a time? Um The founders created the Senate to
Speaker 1: be a liberative and thoughtful. They also created it to
Speaker 1: not have a filibuster and to not have a supermajority
Speaker 1: threshold for passing legislation. They created it as a majority
Speaker 1: rule institution. It was designed to be thoughtful, but also
Speaker 1: to get things done and for debate to be thorough
Speaker 1: but limited. What we see today in the modern center
Speaker 1: is a body that allows the party that's out of
Speaker 1: power to use the rules of they as they have
Speaker 1: come to evolve, to stop everything that comes before the chamber.
Speaker 1: This combines with the forces of partisanship that are dominating
Speaker 1: our politics today to turn the Senate from what was
Speaker 1: once a cooling saucer now into a kill switch that
Speaker 1: shuts down everything that the federal government tries to do.
Speaker 1: And a big reason for that is in something that
Speaker 1: you really dig deeply into in your book is the filibuster.
Speaker 1: That's right, and so the book explains the historical evolution
Speaker 1: of the filibuster. Um. This is something that you know,
Speaker 1: if folks know anything about the Senate, they tend to
Speaker 1: know about the filibuster. And when they think of it,
Speaker 1: I tend to think of Jimmy Stewart in Mr Smith
Speaker 1: cost to Washington, right, holding the floor, talking at length, uh,
Speaker 1: sort of using it as an underdog against the forces
Speaker 1: of corruption and entrenched power. Um. The thing is, this
Speaker 1: is not really what the filibuster has ever truly been
Speaker 1: in practice. UH. And even though it is directly associated
Speaker 1: with the Senate in the popular imagination, it was not
Speaker 1: part of the Senate and was not meant to be
Speaker 1: part of the Senate. Um. When the Framers created the Senate,
Speaker 1: they did not include the filibuster. And not only did
Speaker 1: they not include it, they argued against ever creating something
Speaker 1: like it. They were writing the Constitution in the shadow
Speaker 1: of the Articles of Confederation, which had established a super
Speaker 1: majority threshold for most bills to pass Congress. The Framers
Speaker 1: saw that that was a disaster, and they argued very
Speaker 1: clearly in the Federalist Papers and other writings that establishing
Speaker 1: a supermajority threshold would have the direct effect of giving
Speaker 1: what they called a pertinacious minority, the ability to bring
Speaker 1: everything to a halt for the sole purpose of embarrassing
Speaker 1: the majority. You know, they were realists. They understood this
Speaker 1: essential fact of politics that you give the party that's
Speaker 1: out of power of this ability to throw a monkey
Speaker 1: engine in the system, they're going to use it. It
Speaker 1: took basically two centuries for that power to evolve in
Speaker 1: the way that it has today. But that is what
Speaker 1: we've come to scene. That's what we've come to see
Speaker 1: happen in the Senate is the minority use that power
Speaker 1: and that monkey wrench, and exactly the way that the
Speaker 1: Framers warned us they would. One thing I want to
Speaker 1: ask you, um, take us back to the first time
Speaker 1: you got to the Senate. What was it like? What
Speaker 1: was your first experience of it? The first start I
Speaker 1: got to the Senate, I was I was brought up
Speaker 1: to meet my boss, Senator Harry Reid. And it's an
Speaker 1: incredibly ornate building. I mean, unfortunately, a lot of scenes
Speaker 1: are on display this last week of the inside of
Speaker 1: the Capital for the wrong reasons, But when you're there
Speaker 1: and able to appreciate it, it is incredibly dramatic. You've
Speaker 1: got painted walls, you've got arched ceilings, you've got giant chandeliers,
Speaker 1: you've got historic portraits everywhere. It's overwhelming. Uh. It feels
Speaker 1: a little bit like vers I uh in a little
Speaker 1: bit uh, a little fancy for a democracy, more than
Speaker 1: you might expect. Um. But it's an incredibly intimidating place. Uh.
Speaker 1: And then the leader's office is they they nicknamed at
Speaker 1: the taj Mahal for a good reason. It's got these
Speaker 1: huge views of them all, dramatic feelings, huge fireplaces. It's
Speaker 1: it's a lot to take in is as a young staffer. Um. Yeah,
Speaker 1: And I think it's interesting when we read about, right,
Speaker 1: we grew up reading about history. We read about the capital,
Speaker 1: and it is something. It's got it. It must have
Speaker 1: just been something to actually be kind of part of it.
Speaker 1: Then Uh, and didn't live up to your expectations? Did it?
Speaker 1: Did it go beyond your expectations or did it start
Speaker 1: to disappoint how quick? My big yeah, pretty quickly. My
Speaker 1: big takeaway was the big, massive gap between what you
Speaker 1: expect from such a grand institution and what it was
Speaker 1: able to produce. Uh. You know, I was there during
Speaker 1: a period of historic gridla one of the defining experiences
Speaker 1: for me. I talked about us in the book was
Speaker 1: after the murder of twenty first creators in Newtown, Connecticut. Uh.
Speaker 1: The absolute failure of the Senate to pass any kind
Speaker 1: of policy solution, even in the middle of the road. Uh.
Speaker 1: Some might argue, not even not even strong enough policy
Speaker 1: like background checks. Um it. It is stunning. You know,
Speaker 1: this institution that has a reputation for being slow and
Speaker 1: has a reputation for working in a deliberative fashion. But
Speaker 1: I think that in many ways has been used as
Speaker 1: an excuse for it to simply do nothing. And I
Speaker 1: think that's the problem that we're seeing today. We as
Speaker 1: we as a federal government are simply unable to operate
Speaker 1: in an intelligent way to meet the policy challenges that
Speaker 1: we face. And and part of what I argue in
Speaker 1: the book is that we need to find ways to
Speaker 1: restore the Senate, to keep what's good about it, to
Speaker 1: can let it continue to be a deliberative body, but
Speaker 1: actually make it be a place where good ideas don't
Speaker 1: just go to die. Good ideas go there to be
Speaker 1: developed and perfected and then actually passed. No one has
Speaker 1: done more to increase good luck in dysfunction in Congress
Speaker 1: than it's tunnel. When he took over as leader, there
Speaker 1: was a historic rise in the use of the filibuster
Speaker 1: under his watch and at his direction. I should be
Speaker 1: clear about that. Um. It was explicitly a strategy of his.
Speaker 1: Adam Gentlesen, author of kill Switch, The Rise of the
Speaker 1: Modern Senate and the Crippling of American Democracy, also a
Speaker 1: former deputy chief of staff to Senate Democratic Leader Harry Reid.
Speaker 1: Kind of hard to believe all the political news we've
Speaker 1: already had this week. You thought was full of action, right, Yeah, exactly.
Speaker 1: Get ready, everybody check out to a story about the
Speaker 1: book by Bloomberg Business Week National correspondent Josh Green, someone
Speaker 1: we love to talk to about all things politics. Find
Speaker 1: that on the Bloomberg and Bloomberg dot Com. Still ahead,
Speaker 1: a story that was among the most read on the
Speaker 1: Bloomberg tim this week. Yeah, it was about the Capitol
Speaker 1: Hill rioter that isn't actually sorry about what he did.
Speaker 1: That's coming up on Bloomberg Business Week. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol and Bloomberg Quick Takes.
Speaker 1: Tim Stinovik from Bloomberg Radio. This story gotta say many
Speaker 1: of us were drawn to I was because I believe
Speaker 1: that in kind of figuring out what was wrong at
Speaker 1: the capital this year, what happened the riots and the
Speaker 1: breaching of the US capital, we need to understand those
Speaker 1: who did it, ask why, and we need to talk
Speaker 1: to them. And I think that's why this next story
Speaker 1: resonated with so many people. It was among the most
Speaker 1: popular on the Bloomberg this week. It's exactly what our
Speaker 1: own William Turton did. He's a Bloomberg News cybersecurity reporter,
Speaker 1: and his story among the most read on the terminal
Speaker 1: right about the Capitol rioter telling his story from the
Speaker 1: inside that rider. By the way, he's got a name.
Speaker 1: Brendan Fellows is a twenty six year old from upstate
Speaker 1: New York who decided to go to the Trump rally
Speaker 1: when he saw a tweet from President Trump in December
Speaker 1: he said there's going to be a big rally on
Speaker 1: the sixth and DC. He said, to be there. It
Speaker 1: will be wild. So when when Fellows saw that tweet,
Speaker 1: he decided to go to DC. And you know, something
Speaker 1: really revealing that he told me is that, you know,
Speaker 1: while he does believe the election was rigged, and he
Speaker 1: has been you know, consuming a lot of said about
Speaker 1: electand fraud. His primary motivation was his anger at government
Speaker 1: shutdowns due to due to coronavirus, which I thought was
Speaker 1: really kind of fascinating. Yeah, that part was really interesting, William.
Speaker 1: And I wonder to what it says about the idea
Speaker 1: of you know, there's so much psychology here right, like
Speaker 1: why were these people who many of whom are now apologizing,
Speaker 1: What what sort of sparked them to to actually make
Speaker 1: this move to to do something? Um? And and what
Speaker 1: did he tell you about that? Well, something fascinating about
Speaker 1: Brandon iss that, um, he had never been to a
Speaker 1: Trump rally before, and when he came to this U rally,
Speaker 1: he didn't even know that there was a march. He
Speaker 1: simply came to see see Trump speak. So he quite
Speaker 1: literally got swept up into the mob um when he
Speaker 1: joined this march. And by the time he had already
Speaker 1: reached the Capitol, the outside perimeter had been breached. So
Speaker 1: you know, he walked onto the Capital law and scaled
Speaker 1: a wall and eventually climbed through a window to get
Speaker 1: into the Senate, And once inside, he got into the
Speaker 1: office of Senator Murkley at Democrats Oregon Um where he
Speaker 1: put his feet up on the table and smoked to joint.
Speaker 1: Why did he did he understand he was breaking the
Speaker 1: law by doing that? You know, it's it's hard to know.
Speaker 1: He claims that because he wasn't being arrested while inside
Speaker 1: and in fact, the police officer gave him directions to
Speaker 1: the statue hall inside the capitol, that you know, he
Speaker 1: was under the assumption he wasn't doing anything wrong. Um,
Speaker 1: you know, of course the kind of it's difficult to believe,
Speaker 1: but but you know, I think it's revealing he he
Speaker 1: did not think that he was going to get in
Speaker 1: trouble for for doing this based on the reaction of
Speaker 1: the police officers. You know. You you talk about in
Speaker 1: the piece that he's had some friction with his family
Speaker 1: over this and over his beliefs. Like yeah, and I
Speaker 1: think it's it's it's probably something that we're a lot
Speaker 1: of us can relate to with the way that disagreements
Speaker 1: politically are are happening right now. Um, I'm wondering, after
Speaker 1: talking to him, UM, take us through like what he's
Speaker 1: planning to do moving forward? I mean, how do how
Speaker 1: does one move past an inflection point like this, Well,
Speaker 1: you know, I'm not sure in speaking to him if
Speaker 1: he's actually grappled with the fact that he's done something wrong. Um.
Speaker 1: You know, and and you know, one of the reasons
Speaker 1: we know that is because he's planning actually to return
Speaker 1: to d C for for more events on the twenties
Speaker 1: surrounding the inauguration. You know, some people will say that
Speaker 1: that we shouldn't listen to people and and that by
Speaker 1: talking to them is platforming them. But I think they're wrong.
Speaker 1: It's actually really important to understand the psychology and motivations
Speaker 1: of these people. And there's a really good example of that.
Speaker 1: I mean, these folks said that they planned to storm
Speaker 1: the capital on the sixth, no one listened to them,
Speaker 1: no one took them seriously, and then they actually did it. Um.
Speaker 1: So you know, I think just in general, we need
Speaker 1: to we need to actually listen to what these people
Speaker 1: are saying. I mean, you tell his story. He lives
Speaker 1: in a converted school bus, he stopped working last spring
Speaker 1: because if fears of COVID nineteen um, and you said,
Speaker 1: you know, he became a disillusioned when New York State
Speaker 1: denied him unemployment benefits. I mean, we have we talked
Speaker 1: about the opioid epidemic in the past, that people who
Speaker 1: were just kind of lost in society. I mean, we
Speaker 1: really need to understand these stories in these individuals who
Speaker 1: feel like there is no voice for them, and this
Speaker 1: is where the President in many large ways, you know,
Speaker 1: did speak to them, right. But I think it's also
Speaker 1: important to understand that these people are becoming radicalized by
Speaker 1: the Internet. I mean, he told me that he gets
Speaker 1: the majority of his news from YouTube. He pointed out
Speaker 1: Ben Shapiro and Stephen Crowder. He also said he's recently
Speaker 1: started watching news Max and One American News, which have
Speaker 1: both promoted false claims of a rigged election. So, you know,
Speaker 1: the culpability of platforms like YouTube and Facebook, um and
Speaker 1: Twitter are are a parent in this In this riot,
Speaker 1: it's no different than forgive me because I'm hearing radicalized
Speaker 1: by the Internet. It's no different than we talked about terrorists. Right,
Speaker 1: we think about nine eleven and after nine eleven that
Speaker 1: individual who being radicalized by the internet, we saw that
Speaker 1: as a bad thing. Yes, I mean a lot of
Speaker 1: folks who ended up joining the Islamic State were radicalized
Speaker 1: by YouTube. Well, social platforms certainly playing a big role
Speaker 1: in the organization of the rallies that we've seen recently.
Speaker 1: And I love that William really talked about YouTube there,
Speaker 1: because it's Facebook, it's Instagram, it's Twitter that I've gotten
Speaker 1: so much for the attention parlor too. But YouTube has
Speaker 1: a big role in this, right exactly. And I don't
Speaker 1: think we thought about that instantly, but you're right to
Speaker 1: point that out. That was William Turton, Bloomberg News Cybersecurity reporter.
Speaker 1: All Right, you're listening to Bloomberg Business Week. Even though
Speaker 1: it felt that way, this week was not just about
Speaker 1: news out of the nation's capital. That's right. The I
Speaker 1: p O market also often running with a couple of
Speaker 1: new issues this week, including one that was a reminder
Speaker 1: that pets are big business. You talked to Petco CEO.
Speaker 1: We did. Indeed, that's coming up next. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio. We're gonna go
Speaker 1: switch gears. We got to talk about some of the
Speaker 1: market activity that we're already seeing this new year, including
Speaker 1: once again an active market to take companies public amazing.
Speaker 1: Just a couple of weeks in right tim I p
Speaker 1: O market often running, we caught up with Bloomberg News
Speaker 1: deals reporter Crystal Seed here about the activity. We we
Speaker 1: really are selling the year UM with very, very sizeable
Speaker 1: and hype profile I p o s. Just this week
Speaker 1: we have seen at least six companies when public in
Speaker 1: New York and that includes Petco and that includes a
Speaker 1: firm posh Mark. A lot of them are consumer facing companies.
Speaker 1: We have seen a bunch of technology companies when public
Speaker 1: laid in the quarter, but let it be consumer or
Speaker 1: a tech is going to be a year of another
Speaker 1: record year potentially for I p o s. We already
Speaker 1: have seen, you know, certain companies come out and say
Speaker 1: that they have either confidentially filed or engaging advisors on listenings.
Speaker 1: So not only that, we are potentially going to see
Speaker 1: more direct listing given they are now able to raise
Speaker 1: the companies I would raise UH proceeds from from these transactions.
Speaker 1: So all know it's going to be a big year
Speaker 1: for a CN for capital markets and UM it's it's
Speaker 1: the best, it's one of the best starts in the
Speaker 1: year that we've seen. UM so yeah, pet Petco and
Speaker 1: the adoption really helped them in terms of growth. And
Speaker 1: it's not just a short term um a short term
Speaker 1: um boosting revenue or in business that they're going to see.
Speaker 1: People who adopt during the pandemic are going to have
Speaker 1: the pet for the next decade or so, and that
Speaker 1: really helped them. And it's the same trend that they
Speaker 1: see in suburbs and in cities. UM So in terms
Speaker 1: of expansion, UM millennial is getting pets and COVID definitely
Speaker 1: have been a driver. Peco a name that's going public
Speaker 1: for a second time and with a great ticker. We're
Speaker 1: talking about Petco Health and Wellness, which follows the pop
Speaker 1: prints of Chewi, which went public last year and Bark
Speaker 1: expected this year via Spack. Let's not forget that Chewi
Speaker 1: was a cover story at Bloomberg Business Week. I mean,
Speaker 1: it's all about everybody's pets. I do want to say though,
Speaker 1: that the owner of the animal supply chain store Petco
Speaker 1: man they raised eight D sixty four million in that
Speaker 1: I p o Yeah a lot, right, and it returned
Speaker 1: the retailer to the public market fifteen years after it
Speaker 1: was taken private. The company which is changing its name
Speaker 1: to Petco Health and Wellness Company. In conjunction with the listing,
Speaker 1: sold forty eight million shares for eighteen dollars each. Now
Speaker 1: after the I p O, Petco will continue to be
Speaker 1: controlled by its current owners that include CBC Capital Partners
Speaker 1: and Canada Pension Plan Investment Board. They acquired Petco four
Speaker 1: four point six billion from TPG and Leonard Green in
Speaker 1: two sixteen, a decade after those two firms took Petco private.
Speaker 1: It's one of those Harvard businistical scale studies. I gotta say, yeah,
Speaker 1: absolutely is. It also speaks to the cycle of this
Speaker 1: stuff right, public private, private, public, right, which we see
Speaker 1: a lot and in the process, everybody's making a lot
Speaker 1: of money. Along the way, we caught up with Petco CEO,
Speaker 1: Ron Coglin and oh that ticker by the way, let's
Speaker 1: get back to that. It's w O O F. Let
Speaker 1: me start with what hasn't changed. What hasn't changed is
Speaker 1: the mission of the company to really improve the lives
Speaker 1: of pets pet parents has always been in the hearts
Speaker 1: of the folks who work at PETC. But what's changed
Speaker 1: is we've really retooled the business um. Instead of being
Speaker 1: a big bag of dog foot in a cart type company.
Speaker 1: Were really become a complete partner for the health and
Speaker 1: wellness of a pet parent. We're really the only ones
Speaker 1: that can do that because we're the only ones who
Speaker 1: have a veterinary hospitals, training grooming that the online and
Speaker 1: the mass players don't have. We have the highest end food.
Speaker 1: We're only retailers said, we're getting rid of artificial ingredients,
Speaker 1: getting rid of shot callers. And then we have strong
Speaker 1: e commerce and our stores which are now called pet
Speaker 1: care centers that more and more are working together. So
Speaker 1: here's an amazing fact for you eight. We're e commerce
Speaker 1: orders are getting fulfilled through our pet care centers, which
Speaker 1: just gives us faster to the customer and lower cost
Speaker 1: versus competition. Right, so you don't have to have these huge,
Speaker 1: massive distribution centers. Yeah, we call it that's right. We
Speaker 1: call these micro distribution centers, and it really gives us
Speaker 1: a competitive advantage. We talked about it as forward deployed inventory. Ron.
Speaker 1: I gotta say I love dogs. Got my dog Scout.
Speaker 1: She's quite the spoiled little critter um. But what's interesting
Speaker 1: is that I've talked with the CEO of Chewy follow
Speaker 1: this sector because it has really exploded. We have definitely
Speaker 1: seen it take off. Where's the most growth? Is it
Speaker 1: the health care side of it and the pet care centers?
Speaker 1: Is that it? Is it merchandise? What is it? Yeah,
Speaker 1: So you're seeing explosive growth and services. So that's where
Speaker 1: we're putting a lot of effort. We're building out the
Speaker 1: fastest vet network build out in history, really focused on
Speaker 1: the affordable vet care. Don't get the care they need
Speaker 1: because of affordability, So we're rolling out seventy um that
Speaker 1: hospitals a year. So that's a big growth area. And
Speaker 1: the other growth area is around digital and that's where
Speaker 1: you know, we were growing before covid and we're growing
Speaker 1: last quarter and our digital offerings, so you're seeing that
Speaker 1: competitive competitive advantage come through. Listen, we know the pandemic.
Speaker 1: I'm sure you've asked me, asked this question a million times,
Speaker 1: so forgive me. The pandemic led to people adopting a
Speaker 1: lot of pets. I know, as I walked my dog
Speaker 1: over the last year, the streets were kind of littered
Speaker 1: with you could see the various you know, pet retailers,
Speaker 1: E tailers, boxes. Everybody was buying things for their pets,
Speaker 1: argue at all concerned that as we all eventually get
Speaker 1: back to work that maybe that focus on our pets changes. Yeah. So, so, first,
Speaker 1: we have three points three million new pets in America
Speaker 1: today based upon what happened in COVID and people needing
Speaker 1: a little more joy in their lives, and those adoptions
Speaker 1: and those need to be said, they need to be groomed,
Speaker 1: they need to be trained, and then they need to
Speaker 1: be vaccinated. So that provides a lift to the entire
Speaker 1: category in terms of change of behavior. The good news
Speaker 1: is more and more companies and plays are talking about
Speaker 1: working from home, so that should be good. And more
Speaker 1: and more employers are becoming dog friendly. So we don't anticipate.
Speaker 1: And his history says there's not a lot of you know,
Speaker 1: returns if you will with live pets. Um so, and
Speaker 1: if if you know, we're we actively try to make
Speaker 1: sure that pets are put in homes or Petco Foundation
Speaker 1: saves four hundred thousand thousand lives a year from euthanasia,
Speaker 1: and we're dedicated trying to eliminate euthan asia. So um,
Speaker 1: we're going to be a catalyst for making sure that
Speaker 1: nothing bad happens on the back side of responsible pet ownership.
Speaker 1: That's the thing that I think, you know, everybody needs
Speaker 1: to know about because, um, that is going to help
Speaker 1: you in your cause. There. Hey, brick and mortar, how
Speaker 1: important is that? Like I do, do you guys think
Speaker 1: about that? You need to have to some extent, some
Speaker 1: saturation almost like a Starbucks where people if they're moving around,
Speaker 1: they need something for the pets that they see pet
Speaker 1: cos everywhere. How important is that to the business story
Speaker 1: for you guys? You know, we're comfortable with our footprint,
Speaker 1: but what I will tell you is our brick and
Speaker 1: mortar pet care centers are absolutely sources of competitive advantage.
Speaker 1: You think about it, right, they are the salons for pets,
Speaker 1: they're the hospital for pets, or even the schools for pets. Um.
Speaker 1: So our services make you know, we get much more
Speaker 1: utilization than your traditional retailer. But secondly, now their micro
Speaker 1: distribution centers and they are providing competitive advantage for e commerce.
Speaker 1: So you know, people think of us in the past
Speaker 1: as a traditional retailer, but that's not where we are.
Speaker 1: We're services center and we're an eCOM fulfillment center. So
Speaker 1: they are providing strategic advantage for us. Just got about
Speaker 1: fifty seconds left here. Investors paid up big here a
Speaker 1: lot of enthusiasm. Um ron, let me ask you. You
Speaker 1: guys had a net loss of twenty five million on
Speaker 1: sales of about three point six billion for the thirty
Speaker 1: nine week period ending October filings. When what's the problem?
Speaker 1: What's the path of profitability? And when does it happen? Yeah? So, first,
Speaker 1: it's already happened. We grew net income the last two quarters. Uh.
Speaker 1: And the great thing is that all the proceeds are
Speaker 1: going to use to be used to pay down debt,
Speaker 1: which means our debt payments are going to get cut
Speaker 1: in half. So um, we were profitable in the last
Speaker 1: two quarters. And you know this will put us in
Speaker 1: even a better position. Okay, what kind of dog or
Speaker 1: cut do you have? Or what do you got? Yummy
Speaker 1: was at the ringing the bell today. He's a yellow
Speaker 1: lab twelve years old, the love of our family. And
Speaker 1: so he's actually sitting by my by my feet right now,
Speaker 1: patiently saying when are we going home? Dad? Because we've
Speaker 1: been here doing the uh, the New York City quarantine.
Speaker 1: So we've been here for a while. I gotta say yummy,
Speaker 1: my scout and the rest of us can't wait to
Speaker 1: get out of warrantine. Put go CEO Ron Coglin, that
Speaker 1: company going public just this past week. That wraps up
Speaker 1: the first hour of the weekend edition of Bloomberg Business
Speaker 1: Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovik.
Speaker 1: Still to come in our next hour more on social
Speaker 1: media clamping down on thousands of accounts. We'll talk to
Speaker 1: a social media toxicity tracker, the CEO of Writer plus
Speaker 1: the keeper of more than a thousand patents partnering up
Speaker 1: with household names. We've got the co head of the
Speaker 1: Family Office, Nottingham's Spurk on the intersection of innovation and investment.
Speaker 1: And this week's cover story, it is a good one.
Speaker 1: Elon Musk loves China and China loves him back. For now,
Speaker 1: time will tell of that one and try January. Yep,
Speaker 1: it's a thing, I'm doing it. I know you are
Speaker 1: the CEO and co founder of Athletic Brewing gets real
Speaker 1: and breaks news with us. You brought him to our attention. Tip. Yeah,
Speaker 1: I've been drinking this stuff, not just in January, but
Speaker 1: it actually tastes pretty good and non alcoholic beer. It
Speaker 1: has a bad rap, but it's pretty hot right now, Carol. Yeah,
Speaker 1: it helps with those morning schedules, right, It certainly does.
Speaker 1: I need all the help I can get, all right,
Speaker 1: So grab a non alcoholic beer, a coffee, or whatever
Speaker 1: your beverages of choice. More to come on Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio.
Speaker 1: Hi'm Carol Masser and I'm Tim Stanovka Bloomberg Quick Take
Speaker 1: plenty ahead in our second hour of the weekend edition
Speaker 1: of Bloomberg Business Week, including John Nottingham on how his
Speaker 1: family office is taking disruptive innovation and partnering with companies
Speaker 1: to create new businesses and investment returns. Let's Tim, We've
Speaker 1: got this week's cover story. China has really given Tesla
Speaker 1: just an amazing amount of autonomy that most Western companies
Speaker 1: don't enjoy. The love affair between China and Elon Musk.
Speaker 1: So far, so good, so far. Andrew g Anuary, it
Speaker 1: is a thing. The CEO of Athletic Brewing on that
Speaker 1: and breaking some news with us as well on his
Speaker 1: investors and his plans moving forward. Let's kick things off
Speaker 1: this hour with may have Be, former vice president of Mubadala,
Speaker 1: one of the world's largest sovereign wealth funds. As we
Speaker 1: mentioned earlier, one of our big stories this week social
Speaker 1: media and big text shutting down and blocking the accounts
Speaker 1: of President Trump and others. May's co founder and CEO
Speaker 1: of Writer, which tracks toxicity on social media. A really
Speaker 1: timely conversation as President Trump's words and actions are behind
Speaker 1: this week's historic second impeachment. The conversation started off with
Speaker 1: more on what Writer does. We are an a I
Speaker 1: writing assistant, so we help correct language and in addition
Speaker 1: to stylistic and grammar type corrections, um, we will also
Speaker 1: correct on what we call healthy communication. And that's a
Speaker 1: lot of you know, uh, stripping out paths of aggressive
Speaker 1: language and toxic language, mainly for a a workplace use case.
Speaker 1: So if our company has got a website right and
Speaker 1: is doing things that that's what you're that's what you're
Speaker 1: going through. You're making sure that their message comes across
Speaker 1: in a you know, non toxic way. Yes, in addition
Speaker 1: to emails they may find their customers or chats in between, colleague,
Speaker 1: but we basically kind of pointed this very powerful technology
Speaker 1: at the Twitter stream to some interesting results. Yeah. And
Speaker 1: one thing that's really fascinating about this is you've been
Speaker 1: analyzing tweets since the election this fall, including the tweets
Speaker 1: from President Trump, from President Obama, and from President elect
Speaker 1: Joe Biden. And I was surprised to see UM that
Speaker 1: Obama's tweets, even though they have been relatively muted, they've
Speaker 1: come out strongly against the events on Capitol Hill. You
Speaker 1: said that his tweets were classified as toxic between compared
Speaker 1: to us a daily average of less than ten percent.
Speaker 1: I was surprised to see that because I don't I
Speaker 1: don't I wouldn't think of the President Obamas tweets as toxic. Explain, Yeah, absolutely,
Speaker 1: I mean what we tried to build was a data
Speaker 1: set where UM, inflammatory language on both sides of a
Speaker 1: debate is flagged, and you know, aggressive posturing, aggressive language
Speaker 1: is what gets UH flagged. And uh, you know, President
Speaker 1: Obama was absolutely very forceful in his condemnation and that's
Speaker 1: what we picked up on UM. And uh, you know,
Speaker 1: even even if you compare it to the ways in
Speaker 1: which uh biben condemned um. There was you know, different
Speaker 1: different words chosen. UM. Now, of course that makes sense
Speaker 1: politically right. One is a former president, one is an
Speaker 1: incoming president UM for whom UM Uniting both sides of
Speaker 1: the country is something that he's wanted to do, but
Speaker 1: and both are in stark contrast to the language that
Speaker 1: you know. Trump is a regular But I want to
Speaker 1: ask you about that. But what makes something toxic? Is
Speaker 1: it using caps? Is it using exclamation points? What you
Speaker 1: know makes something to toxic? Absolutely all of the above, Carol.
Speaker 1: So our models taken to account punctuations, addiction, since paths, UM,
Speaker 1: and then the actual words so UM, you know, stolen
Speaker 1: if it is in all caps, riggs regardless of how
Speaker 1: you write it, fite regardless of how you write it, UM.
Speaker 1: And then things that are you know, verifiably um, untrue,
Speaker 1: UM you know are also part of UM. Like it's
Speaker 1: flagged as as toxic. So what do you find when
Speaker 1: you tracted our you know, tracked what President Trump has
Speaker 1: put out there? So there were there were some interesting findings.
Speaker 1: The first overall, on January six, all of Twitter was
Speaker 1: quite toxic UM. So thirty two percent of all of
Speaker 1: Twitter um was contained inflammatory of all tweets contains inflammatory
Speaker 1: um language. It was really interesting is Trump's contribution to that.
Speaker 1: I remember he had eighty eight million followers, and and
Speaker 1: beyond just kind of his immediate reach, things were ample.
Speaker 1: Things that Trump tweeted were amplified by virtue of just
Speaker 1: the degree to which he gets liked in and retweeted UM,
Speaker 1: and so by by virtual those eight million followers. What
Speaker 1: we found was language amplified by him, which includes you know, steal,
Speaker 1: the steal, the word fight, the word rigged, um, we're
Speaker 1: actually president. And almost half of all toxic tweets on
Speaker 1: the six across the entire Twitter stream UM, which is
Speaker 1: which is really astounding. I mean, you know, there are
Speaker 1: a lot of ways that people are looking at his
Speaker 1: band from Twitter and and uh you knows being called
Speaker 1: his d platform ization across all of tech um, and
Speaker 1: the reckoning for a Silicon valley, and the First Amendment
Speaker 1: is is really just beginning, all right, that increasing level
Speaker 1: of toxicity. I think, tim, this is gonna be a
Speaker 1: problem that's gonna stick around for a while. And I
Speaker 1: think big big tech social media gonna figure it out. Yeah,
Speaker 1: and and terribly do think that after talking to May
Speaker 1: it's it's clear that this type of language is seeping
Speaker 1: into places that aren't just online. Right. I was kind
Speaker 1: of surprised by some of the numbers, she said, even
Speaker 1: among people that we thought would not have toxic tweets.
Speaker 1: But it's considered it once you do some analysis. Yeah,
Speaker 1: it's all about that natural language processing. I know exactly
Speaker 1: n LP. Is that what they call it? Uh an LP? Yeah,
Speaker 1: I had to do it in my head there all right.
Speaker 1: That was writer, co founder and CEO may have been.
Speaker 1: You can hear that full conversation on our podcast feed.
Speaker 1: You're listening to Bloomberg Business Week coming up. There's a
Speaker 1: big boom in home product We catch up with Nottingham Sparks,
Speaker 1: co president on business innovation and product design. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovich from Bloomberg Radio. We definitely said
Speaker 1: it a lot on air over the past twelve months,
Speaker 1: how disruption in times of stress and strain definitely lead
Speaker 1: to innovation. Yeah, I like the silver lining to what's
Speaker 1: happening now here And one of our guests knows all
Speaker 1: about that. He his family office hold over patents of
Speaker 1: which have been commercialized, including the Crestspin toothbrush and Swiffer
Speaker 1: sweeper vac. Come on, that's like a mainstain in everybody's
Speaker 1: homes or anything, especially during the pandemic when we're in
Speaker 1: our homes more than ever before. So we got up
Speaker 1: with John Nottingham. He's co president of the family office
Speaker 1: that specializes in innovation. It's called Nottingham Spurke. John also
Speaker 1: serves on the boards of the Cleveland Clinic Board of Trustees,
Speaker 1: Case Western Reserve University Technology Commercialization Board, and a lot more.
Speaker 1: He's a busy man. This past year though, to him tough,
Speaker 1: but as we heard from John, it also opened up
Speaker 1: doors for innovation. You look at the current events and
Speaker 1: you look at you look at the world at face value,
Speaker 1: and you say, look, how does that affect me? How
Speaker 1: does that affect my my partners, clients and and UH
Speaker 1: co workers, and and you look at you look past
Speaker 1: the noise, and you look for for opportunity, and you
Speaker 1: know there is opportunity and disruption. So that's what we're
Speaker 1: focused on. Well, tell me in terms of the disruption
Speaker 1: you're seeing and where that has led you in terms
Speaker 1: of innovation and opportunities. Well, you know, we have the
Speaker 1: core of our firm here is a product innovation firm.
Speaker 1: So we are vertically integrated to have you know, insights
Speaker 1: and design and engineers and prototypers all at one location
Speaker 1: in Cleveland, Ohio. And when we see an opportunity, we
Speaker 1: grab it. So give me. I'll give you an example.
Speaker 1: As soon as as soon as the pandemic hit, we said, okay, uh,
Speaker 1: where's the where's the demand for product? We saw a
Speaker 1: hand sanitizer. Well, great, hand sanitizer is great, but but
Speaker 1: one of the one of the problems is you have
Speaker 1: to touch it to dispense the product, so you know
Speaker 1: who has touched it before that. So what we did
Speaker 1: is we fast tracked a product into the marketplace that's
Speaker 1: hand sanitizer, but you don't have to touch it. It
Speaker 1: just dispenses it right in your hand. That's pretty amazing
Speaker 1: how we were able to quickly do that. Well, we
Speaker 1: because we're vertically integrated, we have all the we have
Speaker 1: all the engineers and designers and people, and we can
Speaker 1: just fast track it. We we grab a factory, we
Speaker 1: we get we get a launch partner and we just
Speaker 1: launched it. So if you go into Lows right now
Speaker 1: as an example, we we we launched it Lows. They
Speaker 1: bought everything that we could we could uh produce and
Speaker 1: uh you know the stack to the ceiling at Lows
Speaker 1: and then we're going to roll it out to other
Speaker 1: retailers as soon as we can. We can catch up
Speaker 1: with the band. But we've sold million we've made. This
Speaker 1: didn't exist in March, and we're making millions of product
Speaker 1: right today. Yeah, it's pretty fascinating because you know, we
Speaker 1: focus so much. You know, we've been talking a lot
Speaker 1: about t vs and a ton of his vehicles. Like
Speaker 1: it's innovation often leads you to very very high tech stuff,
Speaker 1: but sometimes it's just some very simple solutions like what
Speaker 1: you guys are working on. Oh, it could be low tech.
Speaker 1: For instance, we work with a number of portfolio companies
Speaker 1: that have product and you know they have they have
Speaker 1: margin issues. Well, we could go in and pick a
Speaker 1: look at that product, tear it apart and put it
Speaker 1: back together and uh delivered twice the margin they had before.
Speaker 1: Keep the price, but the margins multiplied. And so those
Speaker 1: are the kind of we have to react, we have
Speaker 1: to pivot we have to be nimble and we just
Speaker 1: have to react to the market as we see it
Speaker 1: today dot not not as we saw it yesterday. Your
Speaker 1: customer today is different today. They're they're thinking different, they
Speaker 1: have different pain points, and if we can react to
Speaker 1: that before anybody else, we win. You know what has
Speaker 1: changed about the consumer in the last year that you
Speaker 1: think really stays with us longer term? Oh my goodness,
Speaker 1: I mean yeah, we're I mean, first of all, that
Speaker 1: we're everybody's at home, all right. Guess what? There is
Speaker 1: a boom in home products. I can tell you specific Uh,
Speaker 1: there's a big booming home products, believing John Nottingham, President
Speaker 1: of Nottingham Spurk. It is a family office. It specializes
Speaker 1: in innovation. John still with us on the phone from Cleveland, Ohio.
Speaker 1: It is really fascinating to read about kind of what
Speaker 1: you're doing. John, and I think, you know, we think
Speaker 1: about investing in so many different ways. You know, obviously
Speaker 1: directly through the market you can go into a venture
Speaker 1: fund and angel fund. But you guys really are there,
Speaker 1: you know, in the thick of it creating the innovation.
Speaker 1: How does it all work? How long does it take
Speaker 1: for you to create something that ultimately a P and
Speaker 1: G or you know, another big company you know, sees
Speaker 1: it and says, okay, we want to run with it.
Speaker 1: There's a product here for us. Um how does it work? Well,
Speaker 1: you know, it all starts with a customer. You know,
Speaker 1: you look at you look at the customer and like
Speaker 1: we said, today's customers is thinking totally different than than
Speaker 1: than that customer was a year ago or six months ago.
Speaker 1: And you've got to sort of tap in. So we
Speaker 1: bring customers into our innovation hub, into our center. We
Speaker 1: have a focus group. We watch them through a two
Speaker 1: way mirror today and we say, what what is their
Speaker 1: pain points? What are they thinking about? What? What do
Speaker 1: they want? And then and then we have our engineers
Speaker 1: and designers watching them, what seeing the twiggle in their eyes,
Speaker 1: seeing their their body language. And then we run downstairs
Speaker 1: and we build it. We we you know, we design it,
Speaker 1: we build it, we put it together, we fast track
Speaker 1: it through a factory, and we get it in that
Speaker 1: customer's hands as quickly as possible. You've got to strike
Speaker 1: while that iron is hot and be the first one
Speaker 1: out there. I have to say, there's a listener who's
Speaker 1: hearing our conversation, said kind to ask him about Polar Delight. Um,
Speaker 1: I mean this is another thing that you guys were
Speaker 1: involved incorrect. Oh, yeah, so we've invented we've invented a
Speaker 1: new way to consume premium ice cream. Okay, it's not
Speaker 1: out there yet. We're working on it. We're fast tracking it,
Speaker 1: and it is going to change the way people think
Speaker 1: about ice cream the same way that carrig and espresso
Speaker 1: change changed the way people think about coffee. Just think
Speaker 1: about it is something we'll have in our homes potentially. Uh,
Speaker 1: you know, probably it's gonna it's gonna it's gonna go
Speaker 1: out for two convenience stores first. But it's a technology.
Speaker 1: It's a platform technology, and platform technologies you can just
Speaker 1: grow and grow and grow. It's fascinating. Another listeners saying, Okay,
Speaker 1: so are you guys manufacturing in the United States? Like,
Speaker 1: how do you kind of get your hands around some
Speaker 1: of the discussions we've had this year, whether it's supply chains,
Speaker 1: whether it's a thinking about kind of developing industries here,
Speaker 1: and you guys are obviously working on a global scale,
Speaker 1: but uh, the need for sustainability, the impact on climate,
Speaker 1: Like how does that affect some of your innovation that
Speaker 1: you're doing. And obviously it sounds like, you know, you're
Speaker 1: looking at the consumer who now wants things like directly,
Speaker 1: maybe we want to cut out you know, e commerce
Speaker 1: just got kind of a kick in the pants over
Speaker 1: the last twelve months specifically, So how do you kind
Speaker 1: of work all of that in as well? Oh see
Speaker 1: if that see, that's what excites us. I mean, it's
Speaker 1: all about opportunity, right and so, uh so what we
Speaker 1: do is, you know, we have this partnership with Ernston Young. Look,
Speaker 1: I think it makes sense that they see themselves as
Speaker 1: sort of Albert Einstein like in in what they're doing.
Speaker 1: That's Nottingham Spirit co President of the Family Office, John Nottingham.
Speaker 1: Very cool the work that they're doing coming up someone
Speaker 1: who knows also a lot about innovation and apparently tim
Speaker 1: how to get things done in China. Well, that's because
Speaker 1: the world's largest market for electric vehicles loves elon Musk
Speaker 1: at least for now. TikTok. I'm just going to say
Speaker 1: that story coming up next, that's our cover story. This
Speaker 1: is Bloomberg. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick takes Tim Stinovich from Bloomberg Radio. So Tim,
Speaker 1: this week's cover story. It's a smart one. It was
Speaker 1: a team effort. It's about the love affair between Elon
Speaker 1: Musk and China, and so far, so good, and yet
Speaker 1: we got more from one of the editors of this story,
Speaker 1: Bloomberg business Week Features editor Max Chafkin, who joined us
Speaker 1: along with Bloomberg business Week editor Joel Weber. Like many
Speaker 1: stories at Bloomberg, Carroll, you mentioned this, there were a
Speaker 1: lot of people involved to make it happen. The story
Speaker 1: is a real repeating, a real reporting, UM feat and
Speaker 1: the story is ultimately about how Tesla, UM and China
Speaker 1: find themselves in this little love affair. And UM hints
Speaker 1: why our cover line is China's favorite capitalist and that
Speaker 1: refers to Elon Musk and China has really given Tesla
Speaker 1: just an amazing amount of autonomy that most Western companies
Speaker 1: don't enjoy UM when they do business in China. And
Speaker 1: it's been rewarded UM by being able to have this autonomy.
Speaker 1: And Tesla's behaved basically by by having its own Tesla
Speaker 1: Chinese operation basically become all autonomous within UM, within Tesla itself.
Speaker 1: UM but you know what what this really comes down
Speaker 1: to is, you know what's in it for China here
Speaker 1: and we'll bring Max in on that note. You know,
Speaker 1: one of the things that China has been able to
Speaker 1: accomplish here is to almost use Tesla as uh, you know,
Speaker 1: like almost like a whipping agent that it can kind
Speaker 1: of kick the rest of its ev aspirations into ligne
Speaker 1: with Max. What what is the in game, um, both
Speaker 1: for for Elon and for China, do you think so?
Speaker 1: On the China side, Uh, there are there are a
Speaker 1: few things. So so one, as you said, Chinese government
Speaker 1: is very committed to electric vehicles. So so that means
Speaker 1: that you know, there are a zillion sort of incentive
Speaker 1: for purchases of electric cars as well as sort of
Speaker 1: disincentive taxes and that sort of thing on those who
Speaker 1: want to purchase um, you know, conventional vehicles, gas power vehicles.
Speaker 1: So so China's got this I yeah, you know, this
Speaker 1: is just part of it. The sort of grand plan
Speaker 1: is is to create this gigantic um electric car industry.
Speaker 1: And you know, from the sort of Chinese economic policy
Speaker 1: maker point of view, having Tesla in this country especially
Speaker 1: and especially having a test of factory in the country,
Speaker 1: and that's that's one of the ways in which they
Speaker 1: really helped Tesla. You know, is a boon too to
Speaker 1: China because um, you know, it's it's not just the factory,
Speaker 1: it's the supply chain. So on one hand, like Tesla
Speaker 1: brings added competition, maybe that gives a sort of kick
Speaker 1: to the other Chinese electric car makers, but it also
Speaker 1: creates this supply chain where you have the people who
Speaker 1: supply batteries and people who supply breaks you know, uh,
Speaker 1: software whatever, like all of that gets set into this
Speaker 1: this factory in China, and that helps the local economy. Um.
Speaker 1: You know. On the Tesla side, it's kind of the
Speaker 1: same thing, which is that this is a big uh,
Speaker 1: this is a growth market. It's it's arguably, um, you know,
Speaker 1: the most important electric vehicle market. It's it's where right
Speaker 1: now at least you know, Tesla's growth is going to
Speaker 1: come from. And uh, what sort of makes this interesting
Speaker 1: is that, you know, Elon Musk has been able to
Speaker 1: really underappreciated. Part of about Elon Musk is that he's
Speaker 1: he's very good at politics. Um, you know, at a
Speaker 1: time when you know, there's been this trade war, when
Speaker 1: when lots of other companies have have struggled with China.
Speaker 1: He's been able to kind of figure out a way
Speaker 1: to work it so that he's able to to open
Speaker 1: this factory, make Beijing happy, uh, and and sort of
Speaker 1: do do a lot of business. That The risk, of course,
Speaker 1: is that really at any time, you know that the
Speaker 1: scales could change and China could create additional restrictions or
Speaker 1: do all sorts of stuff that would make Tesla's life
Speaker 1: not so great. Could do other companies? Can other companies
Speaker 1: learn from what Elon Musk has has done in China?
Speaker 1: How Elon Musk has been able to succeed in a
Speaker 1: place where so many American companies haven't been able to
Speaker 1: because they have to be so jealous Max, because it's
Speaker 1: been so hard for everybody else and it's taken a
Speaker 1: long time to kind of get any kind of foothold there. Yeah,
Speaker 1: I mean, I think that you know, Tesla had certain
Speaker 1: things going for it that that Ellen was able to
Speaker 1: take advantage of it. I don't know that this is
Speaker 1: I'm not sure there's a sort of like a how
Speaker 1: to lesson here, to be honest, because um, Joel kind
Speaker 1: of hinted at this, but having Elon Musk open a
Speaker 1: factory in China has not just economic value to UH,
Speaker 1: to Beijing, it has kind of propaganda value, you know,
Speaker 1: at a time when you know, when sort of American
Speaker 1: companies are dealing with you know, lots of hostility. When
Speaker 1: when when there's this trade war going on with Trump,
Speaker 1: um Elon Musk is able to sort of figure that
Speaker 1: out right. He was able to ask for more than
Speaker 1: pretty much anyone could ask for, and he he got
Speaker 1: something that no other car company had gotten, you know
Speaker 1: to date, which is trying to change the rules on
Speaker 1: sort of foreign ownership. UH and and Tesla use that
Speaker 1: to allow to to have a hundred percent ownership of
Speaker 1: it of its joint sensure. So I don't think this
Speaker 1: is a case of of of must doing something that
Speaker 1: you know, other companies that could could emulate. It's it's
Speaker 1: more a case of must having things that China wanted.
Speaker 1: That's our cover story, And as we heard several reporters
Speaker 1: on the story, including Hayes Fan, a member of Bloomberg
Speaker 1: News is Beijing bureau who contributed to this article before
Speaker 1: being detained by Chinese authorities in December. You're listening to
Speaker 1: Bloomberg Business Week. A new year often means new resolutions,
Speaker 1: like giving up alcohol. We'll hear from the CEO of
Speaker 1: Athletic Brewing on celebrating dry January. You gotta say, Tim,
Speaker 1: he got real with Us Brooks. Some news in fact,
Speaker 1: that story coming up next. This is Bloomberg. This is
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic from Bloomberg Radio. So, Tim, we're gonna end
Speaker 1: our second weekend show together on a lighter note. Did
Speaker 1: you know I'm guessing you did dry January. It's a thing. Yeah.
Speaker 1: I mean I've heard about it over the last years,
Speaker 1: and it's getting more and more popular. It makes sense
Speaker 1: happening after the holidays when we tend to, how do
Speaker 1: you say, indulge a little bit, just a little bit,
Speaker 1: especially this year, this pandemic year. I feel like one
Speaker 1: of the big stories has just been about, you know,
Speaker 1: everybody kind of tapping into their favorite beverage. Yeah, I
Speaker 1: did it more alcoholic. Yes, at the beginning of the pandemic,
Speaker 1: there was a lot of wine consumed in our household.
Speaker 1: We've cut that quite a bit, though, And I gotta
Speaker 1: say we got to catch up with Athletic Brewing co
Speaker 1: founder and CEO Bill Schuefeld. This was somebody you brought
Speaker 1: to our attention, and he saw opportunity in the non
Speaker 1: alcoholic beer market and the timing is particularly right for
Speaker 1: his company. Check it out. Going into the new year
Speaker 1: such a great time for people to kind of hit
Speaker 1: pause gold and thinking about what they want to achieve
Speaker 1: in the year ahead. That could be professionally, it could
Speaker 1: be with their diet, it could be workouts, it could
Speaker 1: be sleep, mindfulness, relationships, anything. And there's one pretty consistent variable.
Speaker 1: If you pull alcohol and some unhealthy eating out of that,
Speaker 1: it makes it really easy to focus on what your
Speaker 1: goals are and like really kick start the year in
Speaker 1: a productive way. And it's a trend that's been increasingly popular,
Speaker 1: like exponentially so over the past few years. UM over
Speaker 1: US adults participated in dry January last year, and anecdotally
Speaker 1: it feels much higher this year. Bill. I know the
Speaker 1: company's in in sort of growth mode right now. Um
Speaker 1: do you see a big uptick in sales in January?
Speaker 1: Typically we do, um YEA. So the average uptick month
Speaker 1: over month from January to December the past two years
Speaker 1: has been about UM. I will say this year, our
Speaker 1: website traffic is up about month month over months even Wow.
Speaker 1: So what does that mean in real numbers? Um? Yeah,
Speaker 1: So in terms of so it's estimated that over fifty million,
Speaker 1: over fifty million Americans specifically participate in dry January. But
Speaker 1: in the broader population three percent of US adults have
Speaker 1: point one drinks or less per week. So there's a
Speaker 1: big misconception about the like the pool of adults who
Speaker 1: don't drink on any given week, UM, where non alcoholic
Speaker 1: beverages has always been thought about these really small penalty
Speaker 1: box markets like people in recovery, people who are currently
Speaker 1: not drinking for very specific medical reason, where really it's
Speaker 1: actually the majority of adults and the majority of the
Speaker 1: days of the week where not drinking may make sense.
Speaker 1: And then at the beginning of the year almost more
Speaker 1: south where like those markets triple basically UM in terms
Speaker 1: of the category growth for non alcoholic beer, non alcoholic
Speaker 1: gear as a whole, including all the big macro brands
Speaker 1: that have been up forever UM it for so Athletic
Speaker 1: Bring launched in two thousand eighteen. UM non alcoholic beer
Speaker 1: group six percent in two thousand in two thousand nine,
Speaker 1: and in it grew over across the country. UM. We're
Speaker 1: but like as our company grows, wrapping a bigger and
Speaker 1: bigger impact on those numbers. UM. The craft segments specifically
Speaker 1: grew three and nine percent last year, and craft non
Speaker 1: alcoholic beer an athletic kind of share of that market. Tim,
Speaker 1: you're a non alcoholic I am, and it's interesting. I'm
Speaker 1: not exclusively a non alcoholic beer drinker. But that's the
Speaker 1: reason why I wanted to get Bill on our show
Speaker 1: is because the way that my own habits have changed
Speaker 1: during the pandemic and also with with starting this new job,
Speaker 1: which requires me to get up so much earlier. So
Speaker 1: what I've decided to do is actually not drink alcohol
Speaker 1: during the week. A friend of mine made the recommendation
Speaker 1: to me, who hosts radio very early in the morning,
Speaker 1: and he said, that is the key to a good
Speaker 1: night's sleep. UM, and I actually drink. I do drink
Speaker 1: athletic athletic brewing beer. UM. But it's also interesting because
Speaker 1: I've noticed that the marketing is not traditional beer marketing, right.
Speaker 1: This is a company that that seems to embrace the
Speaker 1: idea of UM. It's sort of like you know, Bill,
Speaker 1: I think of out Agonia like the company Patagonia. When
Speaker 1: I see your marketing, it's very focused on like the
Speaker 1: outdoors and skiing and mountain biking. Um, what the environment
Speaker 1: tied to the environment. What is the message that you're
Speaker 1: going for, because, as you mentioned, it does seem like
Speaker 1: non alcoholic beer has has gotten a really bad rap
Speaker 1: because in the past, bad taste has been associated with it. Yeah,
Speaker 1: it's so funny, and it's like what the company was
Speaker 1: born out of. It's exactly the occasion set that you're
Speaker 1: talking about. I was a huge foodie, craft beer guy.
Speaker 1: I loved alforts of social family, every like all sorts
Speaker 1: of normal occasions. But I also had this very serious
Speaker 1: stage job at a large hedge fund. I loved waking
Speaker 1: up at five o'clock, working out, being on point all day.
Speaker 1: I was starting to run ultra marathons on the weekend
Speaker 1: and really in that alcohol had a smaller and smaller place,
Speaker 1: But I still wanted a great beer I could have
Speaker 1: during the week and wake up at five o'clock. And
Speaker 1: I quickly realized in cutting back on alcohol, I was
Speaker 1: sleeping right through the night for the first time in years.
Speaker 1: I was on point all day, my workouts were great
Speaker 1: and it was like the best life pack I'd ever uncovered.
Speaker 1: And so like my very normal modern adult lifestyle led
Speaker 1: us in this direction to discover non alcoholic beer. And
Speaker 1: then when I got there, I found out non alcoholic beer,
Speaker 1: if you take out the alcohol, which is a diuretic
Speaker 1: and super dehydrating, non alcoholic beer is actually full of electrolytes,
Speaker 1: it's anti inflammatory, it's super low in calories. Our flagship
Speaker 1: Goldenhil's fifty calories and removed um, so you can kind
Speaker 1: of have your cake and eat it too and get
Speaker 1: a great night sleep, not of all the calories in
Speaker 1: the weekend and stuff um. In terms of the brand
Speaker 1: ethos um, we really wanted to make non alcoholic beer
Speaker 1: positive and aspirational for the first time, and we're all about.
Speaker 1: The thing that made me go from like even considering
Speaker 1: quitting a very stable financial job was the positive impact
Speaker 1: we could have. And that's all positive impact on our stomers, health, activity, fitness,
Speaker 1: and ultimately then their communities in the environment. And yeah,
Speaker 1: we've donate two percent of all sales the trail and
Speaker 1: park cleanups, and it's like in terms of being all
Speaker 1: about being healthy active, outdoors and inclusive. Um, we only
Speaker 1: get one chance at this environment, and we are making
Speaker 1: a huge den as a company having it hard coded
Speaker 1: in our ethos from the start, and we'd really like
Speaker 1: to see more companies do that, honestly, Like two of
Speaker 1: sales isn't the biggest number in the world, but it
Speaker 1: makes a huge den But if you get enough people
Speaker 1: doing it, that two percent becomes something significant and impactful. Hey,
Speaker 1: But one thing I want to ask you. When I said, like,
Speaker 1: give me some more of the numbers, you said website
Speaker 1: traffic up month over month. So are you guys profitable?
Speaker 1: And I'm trying to just get an idea because the
Speaker 1: non alcoholic beverage market, um, whether it's beers in spirits
Speaker 1: and things like that or just water and juice is
Speaker 1: I mean, it's massive. We have so many choices now
Speaker 1: a day. So I'm just trying to get an idea
Speaker 1: of the financials for you. I'm thinking about our audience
Speaker 1: who are like certainly into this and they're looking for
Speaker 1: alternatives and disruptions, certainly in the beverage market. So give
Speaker 1: me an idea. Are you profitable? What kind of sales
Speaker 1: are you seeing, um, and where are you selling yeah, Um,
Speaker 1: so we are nationwise on our website. Um, we're pretty
Speaker 1: much the only true e commerce care platform there is
Speaker 1: because non alcoholic beer, we can ship direct the customer
Speaker 1: nationwide off our website, which is a huge advantage. And
Speaker 1: that's been soaring during covid UM and with everyone shopping
Speaker 1: from home in we grew over despite having pretty much
Speaker 1: of our marketing ideas taken off the table. Um. And yeah,
Speaker 1: we finished in the mid double digit millions in revenue
Speaker 1: UM and we're planning to do over three times that
Speaker 1: near ahead. UM. Yeah, so we're super excited that we're
Speaker 1: basically able to exceed our goals for the year, even
Speaker 1: even with the environment we're currently and and in terms
Speaker 1: of profitability, we weren't profitable last year, but a big
Speaker 1: part of that is we purchased a big facility in
Speaker 1: southern California where we could connect our production and really
Speaker 1: go national. Well let's talk about this production. UM, what
Speaker 1: are the what is the product lineup that you have
Speaker 1: right now? And how are you thinking about expansion? Yeah,
Speaker 1: so we have two flag three flagships that have won
Speaker 1: awards all over the US and internationally, UM, World Beer Awards,
Speaker 1: International Beer challenge. Our flagship Run Wild ip A just
Speaker 1: won the gold in the US Beer Championship. They're all
Speaker 1: very approachable. UM are so our upside don golden nails,
Speaker 1: fifty calories crafted to remove gluten. It's incredibly like drinking
Speaker 1: slightly hotty Pilsing are basically UM a great crisp beer
Speaker 1: for any occasion. Our run Wild i p A is
Speaker 1: a super approachable West Coast ip A, seventy calories crafted
Speaker 1: UM made with all organic grains. UM and that's probably
Speaker 1: our top selling beer. And then UM, probably our hardest
Speaker 1: to get beer is our Freeway Hazy i p A,
Speaker 1: which is now year round as well. UM that's available
Speaker 1: for subscription on our website. Capacity always was our biggest problem,
Speaker 1: especially in two that nineteen UM and through read that
Speaker 1: limited releases where they sell out online in thirty seconds
Speaker 1: and people would be extremely frustrated by that. Yeah, it's good.
Speaker 1: It's kind of a good problem to have. I think
Speaker 1: it's good, but it's super frustrating. Well, it's certainly something
Speaker 1: those big name investors want to hear, especially if and
Speaker 1: when the company moves forward with an I p O.
Speaker 1: I was surprised Carell to hear that I p O
Speaker 1: is the direction that he wants to go. You don't
Speaker 1: see a lot of independent beverage companies going public. There
Speaker 1: are examples, but oftentimes they're scooped up by the by
Speaker 1: the big guys. It's so hard because the network that's
Speaker 1: out there that's already established from the big play or
Speaker 1: is like they just dominate the world, and so it
Speaker 1: is tougher for the smaller guys. That's Athletic Brewing co
Speaker 1: founder and CEO Bill shoe Felt. You can hear that
Speaker 1: full conversation in our Bloomberg Business Week Extra podcast, and
Speaker 1: that wraps up the weekend edition of Bloomberg Business Week
Speaker 1: from Bloomberg Radio. Thanks so much for joining us. I'm
Speaker 1: Carol Masser and I'm Tim Stanovk. Be sure to tune
Speaker 1: into the daily show Monday through Friday starting at two
Speaker 1: pm Wall Street Time, and be sure to check out
Speaker 1: our Bloomberg Business Week podcast feed wherever you get your podcast.
Speaker 1: You'll find other conversations from the week, including one with
Speaker 1: the Panasonic Corporation of North America Chairman and CEO Michael Moskowitz,
Speaker 1: who talked about some of the trends the biggest tech
Speaker 1: moments of the year, and don't forget. Bloomberg Business Week
Speaker 1: is also on YouTube. Just search Bloomberg Global News and
Speaker 1: you can also see me on Bloomberg Quick Take available
Speaker 1: on Bloomberg dot com, slash Qt and streaming platforms like Roku,
Speaker 1: Apple TV, Samsung TV, and more. And you catch tim
Speaker 1: at nine and twelve noon Wall Street Time Bloomberg Business Week.
Speaker 1: We're available on newstands, on the Bloomberg and at bloomberg
Speaker 1: dot com. Stay safe everyone, This is Bloomberg