Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 2: Guess another FED meeting that went as expected with the
Speaker 2: Central Bank holding firm for now in terms of interest rates,
Speaker 2: but they did tim ratchet down expectations for rate cuts.
Speaker 2: We also had the UN General Assembly in session, coinciding
Speaker 2: with New York City's annual Climate Week summit, and that
Speaker 2: gave us a really great chance to tap into some
Speaker 2: unique leaders on sustainability, including Energy Impact Partners founder Hans
Speaker 2: Koebler and Cisco's Chief People, Policy and Purpose Officer Franksutis.
Speaker 2: We'll hear more from both this hour.
Speaker 3: We mentioned Anga in session this week. That's the UN
Speaker 3: General Assembly. A notable absence was Chinese President Shijin Ping.
Speaker 3: China continues to dominate the headlines in twenty twenty three,
Speaker 3: with concerns about its economy, its outsized contribution to global emissions,
Speaker 3: and those lingering tensions with the us.
Speaker 2: First up on our program legendary short seller and longtime
Speaker 2: China bear Jim Chenos. He is someone who raised concerns
Speaker 2: about China's ghost cities years ago. We were always talking
Speaker 2: to him about it, and even as the country's central
Speaker 2: bank says it has sufficient policy space to support an
Speaker 2: economic recovery, Cheno's remains a bit skeptical.
Speaker 3: Bloomberg, Simone Foxman and I welcome Chenos to our studios
Speaker 3: a bit earlier this month, and we began with his
Speaker 3: apprehension over the world's second largest economy.
Speaker 4: Please to bring in our next guest, Jim Chanos. He's
Speaker 4: the founder of Chenos and Company. Thanks so much for
Speaker 4: joining us. He's in studio or Intero Interactive Broker's studio.
Speaker 4: He says China's on a treadmill to hell and shared
Speaker 4: those concerns with the House of Representative Select Committee on
Speaker 4: the Chinese Communist Party this week. Talk to me about
Speaker 4: the hearing, you know, were you able to kind of
Speaker 4: get a sense of whether or not and I know
Speaker 4: you weren't there physically in person, but you did.
Speaker 5: Offer your insight.
Speaker 4: Were you able to get it a sense on what
Speaker 4: the committee's doing? Are they going to be successful. Are
Speaker 4: they going to do anything?
Speaker 3: In fact that's.
Speaker 6: Above my pay grade? And thanks for having me as
Speaker 6: to the politics in Washington, And I do think that
Speaker 6: the Committee is doing good work in calling attention to
Speaker 6: these issues. And you know, we've been we've been pretty
Speaker 6: negative on China now for a better part of thirteen years.
Speaker 6: And I think that the risks that China poses have
Speaker 6: morphed from purely financial to now beyond that into the
Speaker 6: political realm and the national security realm, and I think
Speaker 6: that makes this a bigger story. And the economic model
Speaker 6: risks as to how China sort of deals with those
Speaker 6: may in fact affect the politics.
Speaker 4: Yeah, does the contagens spread beyond what I think most
Speaker 4: people are expecting at this point.
Speaker 6: The good news is is that the risks to the
Speaker 6: real estate market and the economic model do not have
Speaker 6: a lot of direct contagent risks to Western banks and
Speaker 6: particularly American banks. Where the risks are are in our
Speaker 6: equity and debt investments that various funds hold, pension funds hold,
Speaker 6: retail investors hold, and I think that's the bigger issue
Speaker 6: as opposed to a two thousand and eight type transmission
Speaker 6: from their real estate bubble. Bursting to everyone's real estate
Speaker 6: bubble bursting. They can keep that internal, but it's a
Speaker 6: big problem.
Speaker 3: What are the threats beyond an economic collapse or a
Speaker 3: property collapse in China, I'm talking geopolitical threats, national security threats.
Speaker 3: What's the stuff that keeps you up at night?
Speaker 6: Well, the morphing from spending on the additional high speed
Speaker 6: rail link that's unprofitable, or the next apartment building and
Speaker 6: putting up and basically building another aircraft carrier. You know,
Speaker 6: the classic nineteen thirty scenario where a number of countries
Speaker 6: you know, ramped up their defense spending as a way
Speaker 6: to stimulate and we know how that ended. And so
Speaker 6: I think that that we saw reports even today. I
Speaker 6: mentioned it earlier that Chinese defense spending may be a
Speaker 6: lot greater than we think, you know, as high as
Speaker 6: four percent of GDP. The US is three percent of GDP.
Speaker 6: So they are spending more money. It used to be
Speaker 6: directed internally with internal security systems and that, but increasingly
Speaker 6: now it's hard to miss that it's also external with
Speaker 6: the Blue Water Navy and increased tensions around Taiwan.
Speaker 3: Well, let's talk about that. I mean, how much of
Speaker 3: a concern do you think that is right now, an
Speaker 3: invasion of Taiwan.
Speaker 6: Well, as I said earlier, I think the real risk
Speaker 6: is something something happens, right, an incident, that's that's unexpected, right.
Speaker 6: You have now ships transversing, crossing each other's bios, you
Speaker 6: have a lot of aircraft in the area, and all
Speaker 6: we need is someone you know, a pilot to make
Speaker 6: a mistake or get scared, or you know, a mishap
Speaker 6: of someone, and then you have an you have an
Speaker 6: international incident, and and that's I think as the temperature
Speaker 6: kind of rises in the in South China Sea, I
Speaker 6: think that's the real risk as opposed to a premeditated
Speaker 6: you know, attack on a Western country or Western ally.
Speaker 4: So you want to short China potentially, We've been short.
Speaker 6: We've been short China for for years. You know, paradoxically,
Speaker 6: we're less short China now than we were ten twelve
Speaker 6: years ago because China has gone nowhere. I mean, the
Speaker 6: stock market has basically been flat for twelve years, and
Speaker 6: as every other stock market is.
Speaker 3: Tripled or quadrupled.
Speaker 6: So it's been a very poor place for Western investors
Speaker 6: to part their money for years, not just the last
Speaker 6: twelve years, but really for the last twenty years, and
Speaker 6: I think that's going to continue to be the case.
Speaker 6: Broadly speaking, China does not treat Western capital very well.
Speaker 3: How are you betting against China right now?
Speaker 6: We have some direct shorts in the financial area, We
Speaker 6: have some indirect shorts that depend on China for a
Speaker 6: fair amount of their revenues. But as I said, our
Speaker 6: direct shorts are probably no more than four or five
Speaker 6: six percent of our portfolio. In twenty ten eleven it
Speaker 6: was above twenty percent.
Speaker 3: We've spent a lot of time over the past few
Speaker 3: months talking about the struggles of the Chinese economy and
Speaker 3: the data that we get, or the lack thereof of
Speaker 3: data that we get. Jim, what evidence do you have
Speaker 3: that the Chinese economy is actually worse than what Beijing
Speaker 3: says or what markets already believe.
Speaker 6: The funny thing is is that if you have an
Speaker 6: investment driven economic model, which they do, the GDP is
Speaker 6: actually accurate. I noticed something over the weekend that Michael
Speaker 6: Pettis pointed out that in an investment driven model GDP,
Speaker 6: growth is actually an input, it's not the residual, which
Speaker 6: I think is a really interesting observation. That is I've
Speaker 6: always joked that China's the only major developed economy that
Speaker 6: knows its annual GDP on January one of that year. Yeah,
Speaker 6: and so you know, whatever the numbers needs to be,
Speaker 6: they will put enough stimulus in terms of new investment
Speaker 6: to hit that number, give or take. So I don't
Speaker 6: quibble with the quality with the actual numbers they're putting out,
Speaker 6: but it's the quality of the numbers, if you will,
Speaker 6: that if you never write off bad investments, the actual
Speaker 6: costs to GDP are sitting in your banking system in
Speaker 6: terms of bad deaths, and you have to either inflate
Speaker 6: that away or recapitalize your banking system. And so that's
Speaker 6: the nexus of this economic model with economic growth, and
Speaker 6: it's a banking issue ultimately. And so I think that
Speaker 6: that that's where I worry that as long as the
Speaker 6: bank's never write off the bad debts, that's where the quality,
Speaker 6: if you will, of disclosure is poor.
Speaker 4: The rm IPO your thoughts on the valuation.
Speaker 3: It seems a bit high, are you?
Speaker 4: Are you not convinced by the Aihi?
Speaker 6: I think it's what one hundred and twenty times earnings
Speaker 6: and fifth, I think revenues are two and a half
Speaker 6: billion and went out at a sixty billion.
Speaker 3: Dollar evaluation, and twenty five percent of its revenues come
Speaker 3: from China.
Speaker 6: Yeah, so so twenty five twenty almost twenty five times
Speaker 6: revenue seems a little steep. But what do I know?
Speaker 3: Are you going to shorten it?
Speaker 6: Well, you can't yet, so it's a limited float, but
Speaker 6: I'm sure at some point we'll we'll crack open the perspectus.
Speaker 4: Have you been thinking about shorting in Nvidia? No, no, no,
Speaker 4: don't get in the way of that.
Speaker 6: We have we have things that are that are perceived
Speaker 6: as AI plays, that are that are trading much more
Speaker 6: expensive than in video does so it's so no need
Speaker 6: to go after the OG.
Speaker 4: What kind of opportunities has this opened up? As someone
Speaker 4: who looks at the market with a very critical eye.
Speaker 6: Well, I think anytime we see one of these these
Speaker 6: tectonic shifts in new technology, like the Internet in the nineties,
Speaker 6: people at first embrace everything, everything is going to benefit.
Speaker 6: But what you find out, of course, is that when
Speaker 6: it's truly truly a major shift, is that those technologies
Speaker 6: end up harming as many businesses as they create. And
Speaker 6: so if you think about the companies that were in
Speaker 6: the business of distributing analog physical products that became digitized.
Speaker 6: They went away, Blockbuster Video, Eastern Kodak, I mean, companies
Speaker 6: like that, record stores.
Speaker 5: I mean, and I.
Speaker 6: Suspect that if AI is as big as most people
Speaker 6: think it will be, you will see lots of businesses
Speaker 6: that had moats find out that the motes have been breached.
Speaker 6: So your software as a service, What prevents a corporation
Speaker 6: from having AI design its own software for various different applications, right,
Speaker 6: and and there's lots of things that suddenly you don't
Speaker 6: think about. I kind of joked a little bit a
Speaker 6: few months ago when IBM CEO came out and said
Speaker 6: that that AI might may make some of the IBM
Speaker 6: workforce redundant, and I joked, well, what happens when the
Speaker 6: clients find that same thing out?
Speaker 3: Yeah, I mean, that's that's a really good point. I
Speaker 3: want to shift gears a little bit and talk about
Speaker 3: your strategy around shorting and what you're seeing in the
Speaker 3: market today. I think a lot of people, of course,
Speaker 3: understand your history with being a fraud hunter and going
Speaker 3: after companies like Enron in the past. Wondering if over
Speaker 3: the last few decades with regulatory changes, you've seen fraud
Speaker 3: reduced or are there increased instances of potential fraud out there?
Speaker 6: I've called this the golden Age of fraud. I think
Speaker 6: there's more fraud in the financial markets now than there
Speaker 6: has ever been. Why And I teach a course in
Speaker 6: the history of financial market fraud, So the cycles go
Speaker 6: back to the late seventeenth century.
Speaker 1: I think that.
Speaker 3: It always changes.
Speaker 6: But what really has me bothered now is that a
Speaker 6: lot of it hides in plain sight in the way
Speaker 6: in which companies report their business and their metrics. So
Speaker 6: prior to say, ten years ago, you really had to
Speaker 6: sort of if a company was making unusual changes to
Speaker 6: its earning statements, you know, they would have to explain
Speaker 6: it away. And nowadays, adjusted earnings are basically the norm,
Speaker 6: and companies add back all kinds of things that they
Speaker 6: don't don't really a little expense. Oh it's amazing. Coinbase
Speaker 6: in the fourth quarter of last year, I think share
Speaker 6: based comp was almost eighty percent of revenues, and they
Speaker 6: just added it.
Speaker 3: Back, I mean, and so yeah, we go back to
Speaker 3: the we work. Why we work didn't go public the
Speaker 3: first time community adjusted ebit, Yeah, that was at this
Speaker 3: point it's a joke. But then it wasn't a joke.
Speaker 6: I know, and investors lost a lot of money. And
Speaker 6: the sec you know, promised kind of a crackdown on
Speaker 6: this a number of years ago. They admonished companies as
Speaker 6: are called to not lead with these kinds of results.
Speaker 6: But I mean, you know, for god's sakes, General Electric
Speaker 6: in the first quarter had sixteen pages of adjustments and
Speaker 6: its earnings release. I mean it's really you know, and
Speaker 6: companies that just take restructuring charges annually. Every year they
Speaker 6: take a restructuring charge. Well, if you take it every year,
Speaker 6: it's it's recurring. And I think that that in Silicon
Speaker 6: Valley is in particular, you know, pretty bad at this
Speaker 6: where companies that lose hundred millions of dollars every quarter
Speaker 6: are reporting you know, break even adjusted profits and so
Speaker 6: you just wonder if they're really businesses or are they
Speaker 6: executive enrichment.
Speaker 4: Schemes question mark for you, you know, Although this is
Speaker 4: the gold nag of fraud, activist activity is dropped by
Speaker 4: eighty five percent since it hit a peak in twenty fifteen.
Speaker 4: These are numbers from Direct Market Intelligence. Yeah, answered the
Speaker 4: question I posed just before the break I mean is
Speaker 4: the error of the short seller behind us.
Speaker 6: I think everybody asks that during every bull market, you know,
Speaker 6: nineteen ninety nine and early two thousand and it was
Speaker 6: the same sort of question, you know, will short selling
Speaker 6: ever work? And it's sort of the corollary, does value
Speaker 6: investing ever work? Again? You know, when people pay higher
Speaker 6: and higher prices for questionable corporate assets, and the question
Speaker 6: is is yeah, generally, yeah, it comes back and businesses
Speaker 6: generally find their true value over time. I mean, just
Speaker 6: look at the Meme stock you know, run up and
Speaker 6: now disaster from twenty twenty one to today, and there
Speaker 6: was no price too high to pay for some of
Speaker 6: these stocks because they had a short position, and ultimately
Speaker 6: most of them have come crashing down to earth.
Speaker 4: Well we'll get back to that specific one in a second,
Speaker 4: but first I want to ask about the I guess
Speaker 4: rising short seller in the market right now, Nate Anderson
Speaker 4: and Hindenburg. He's been big bets against a Donnie or
Speaker 4: rather he's said very public negative things about a Donnie
Speaker 4: Icon enterprises. You know, do you see eye to eye
Speaker 4: with some of the calls that he's made.
Speaker 6: Look, I think Nate and Hindenberg have done great work
Speaker 6: on a number of names, Nicola and others, and you'd
Speaker 6: be wise to at least hear what they have to say,
Speaker 6: even if you don't agree with it, if it's well
Speaker 6: researched and like anything, you know, stock prices are are
Speaker 6: opinions based on facts, and so at the end of
Speaker 6: the day, it's essential for a marketplace, whether they're positive facts.
Speaker 3: Or negative facts.
Speaker 6: And if you're a good investor, you know it behooves
Speaker 6: you to to basically hear both sides of any story.
Speaker 3: We'd be remiss if I didn't ask for an update
Speaker 3: from you on Tesla shares up one hundred and twenty
Speaker 3: four percent this year.
Speaker 6: Yeah, we are short Tesla. We remained short. It's one
Speaker 6: of our one of our forty four positions that we
Speaker 6: have look Tesla is in many ways, I think epitomizes
Speaker 6: this bull market. It's a hopes and dream stock. It's
Speaker 6: trading at seventy five times earnings, which aren't growing anymore.
Speaker 6: It looks like revenues are going to be challenged in
Speaker 6: terms of growth. So it's now again an AI story
Speaker 6: or Robotaxi story, or a battery story, or a robotics story.
Speaker 6: It's it's whatever you want it to be, and it
Speaker 6: reminds me a lot of Cisco back in nineteen ninety
Speaker 6: nine and two thousand, where Cisco was a networking company.
Speaker 6: Tesla is a car company, but Cisco was going to
Speaker 6: get into everything else that had anything to do with
Speaker 6: the Internet, and people put a higher and hire multiple
Speaker 6: on it, and ultimately Cisco did okay, but the stock
Speaker 6: price dropped ninety percent.
Speaker 4: I'm going to do a quick lightning round of some
Speaker 4: stuff that has been reported that you are are have
Speaker 4: been short recently. Just have me yes or nos. If
Speaker 4: you're still short digital realty Trust, we are short the
Speaker 4: data centers sl Green real.
Speaker 6: Too, sl Green is. We are short commercial real estate.
Speaker 4: Okay, Tesla, you said Sun Run, you said the.
Speaker 6: Solar leasing companies. I've called them science projects. They're absolutely hysterical.
Speaker 6: They lose hundreds of millions of dollars, huge negative free
Speaker 6: cash flow. And getting back to our early conversation about metrics,
Speaker 6: they report rather than on a regular P and L,
Speaker 6: which would be embarrassing, they report these net present value
Speaker 6: calculations based on the panels they put up on people's
Speaker 6: roofs and It's absolutely hilarious the way they do it,
Speaker 6: and I think investors are going to, you know, find
Speaker 6: out the hard way about it.
Speaker 3: All right, Jim, We're gonna spend the last forty seconds
Speaker 3: with you getting your thoughts on what you're watching, what
Speaker 3: you're streaming, what you're doing, and what you're seeing at
Speaker 3: the movie theater. New movie out, Dumb Money. It's got
Speaker 3: me Davidson in it, It's got Seth.
Speaker 1: Rogan in it.
Speaker 3: Are you going to see it? Have you seen it?
Speaker 3: It's all about memestocks.
Speaker 6: I told one of your colleagues earlier, I don't see
Speaker 6: the need since I lived done money five days a
Speaker 6: week in the marketplace. So at some point I'm sure
Speaker 6: I'll see it. I you know, I think it celebrates
Speaker 6: the memestock investors winning over you know, Wall Street and
Speaker 6: the evil hedge funds. The sad thing is is that
Speaker 6: most of those memestock investors have lost large amounts of money,
Speaker 6: you know, chasing these ideas, because, as we pointed out,
Speaker 6: a lot of these companies came crashing down to earth
Speaker 6: and in some cases have already gone bankrupt.
Speaker 3: Hey, Jim, really appreciate you taking the time and joining us,
Speaker 3: especially for such a long period of time. Jim Chanos,
Speaker 3: the founder of Chenos and Company, legendary short seller. Here
Speaker 3: in our Bloomberg Interactive Broker Studio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: You and Week Climate Week Global Citizen coming up this weekend.
Speaker 2: There is a lot going on in and around New
Speaker 2: York City right now. There's a lot going on for
Speaker 2: companies too, which with the un and all of this,
Speaker 2: though here in New York City specifically, it means a
Speaker 2: lot of global leaders come here and we get to
Speaker 2: check in with them. Among them Franco Sudas. She's executive
Speaker 2: vice president and chief People Policy Purpose Officer at Cisco Systems.
Speaker 2: Delighted to have her back here in our Bloomberg Interactive
Speaker 2: Broker Studio. Hello, how are you good?
Speaker 7: It's great to be with you again.
Speaker 2: It's great to have you here. We have a nice
Speaker 2: tonk of time. But I want to start with because
Speaker 2: I always like to do, because you are, you know,
Speaker 2: front seat with what's going on at the company, and
Speaker 2: what's going on in the environment. How would you describe
Speaker 2: You've seen what you've been at Cisco twenty seven years.
Speaker 2: That's correct, Yeah, it's amazing. You've seen a lot of
Speaker 2: different business cycles, and you've seen the technology world change
Speaker 2: in different cycles there. How would you describe today's environment?
Speaker 7: I would say it's incredibly dynamic. I think that our
Speaker 7: customers view technology a little differently than they did I
Speaker 7: would say even three or four years ago. I think
Speaker 7: there's an understanding that digitization and technology is an enabler
Speaker 7: for their success, and as a result of that, I
Speaker 7: think it changes a lot of the conversations that we're
Speaker 7: having with our customers. Even a good example of that
Speaker 7: is on the sustainability front. Whereas I think I would
Speaker 7: say five years ago, our customers were looking at the
Speaker 7: checklist like what do they need to do from a
Speaker 7: regulation perspective and what they believed was coming, I think
Speaker 7: now there's some really good discussions around how to sustainability
Speaker 7: intersect either with their business, their technology, what they're doing,
Speaker 7: what is the opportunity in that? And I think as
Speaker 7: a result of that, a lot of the conversations that
Speaker 7: we're having about whether it's modernizing infrastructure or security, has
Speaker 7: a little bit of a longer tail than it did
Speaker 7: once before.
Speaker 2: That's interesting. Is it a good business environment?
Speaker 8: Though? I think it.
Speaker 2: What's the right word, what's the right adjective to use?
Speaker 7: I think dynamic to be honest, I think.
Speaker 2: What is dynamicase dynamics to me sounds upbeat.
Speaker 7: Yeah, you know, I think it is upbeat in that
Speaker 7: technology is front and center. I think our customers are
Speaker 7: coming to us and we're coming to them to figure
Speaker 7: out solutions, and I think as long as we're having
Speaker 7: those conversations, it makes us better. I think there are
Speaker 7: a lot of dynamics that businesses are responding to that
Speaker 7: I wouldn't put in the positive category.
Speaker 3: What are some of those?
Speaker 8: So?
Speaker 7: I mean, it's everything from the fact that we still
Speaker 7: have a war on the ground in Europe. I think
Speaker 7: leaders are still trying to figure out how they want
Speaker 7: to work. In a meeting earlier today, and I will
Speaker 7: tell you there was not a lot of love for
Speaker 7: what I would consider hybrid work. I think leaders are
Speaker 7: trying to figure out what's the right way to work.
Speaker 7: My people want something a little bit different than I do.
Speaker 7: That's an interesting dynamic as well.
Speaker 3: Describe that when you say there's not a lot of
Speaker 3: love and what were you hearing?
Speaker 7: I think what I hear, and it's understandable is that
Speaker 7: in some cases, I think leaders want to go back
Speaker 7: to something that was a bit more predictable. Right, so
Speaker 7: you know we would all come in three or four
Speaker 7: days a week, and you know we would do our
Speaker 7: jobs five.
Speaker 3: Or six days absolute twenty nineteen's.
Speaker 7: And what's interesting is that I think from a business perspective,
Speaker 7: it would be so much easier if there was a
Speaker 7: one size fits all. But the truth of the matter
Speaker 7: with work is that depending on your job, depending on
Speaker 7: where you work, who you work with, there's so many
Speaker 7: different flavors. And I think that's an example of a
Speaker 7: dynamic that leaders are having to deal with and really
Speaker 7: think through what makes the most sense.
Speaker 2: What would you tell leaders because and correct me if
Speaker 2: I'm wrong, but Cisco has been doing hybrid and make
Speaker 2: depend you know, people have a lot of flexibility for
Speaker 2: pre pandemic for years. So what would you tell leaders
Speaker 2: about what works, what doesn't, why it makes sense?
Speaker 5: Why?
Speaker 8: What?
Speaker 2: What would you say?
Speaker 7: I would tell leaders to focus on the work, because
Speaker 7: I think work will guide on how we need to
Speaker 7: come together. But I would also tell leaders that I
Speaker 7: think all of us are now event planners because I
Speaker 7: think we have to think about the events that bring
Speaker 7: our teams together, that build the culture that we need
Speaker 7: to have to ensure that we have the connections that
Speaker 7: we need. But I don't think it's a one size
Speaker 7: fits all. I actually don't think that whatever we create
Speaker 7: this month may be applicable next month. I think there's
Speaker 7: just a tad bit more agility in how we work,
Speaker 7: and as leaders, I think we have to work hard
Speaker 7: to really understand what does success look like? And do
Speaker 7: I have key measures that allow me to understand whether
Speaker 7: or not my teams are doing what we need them
Speaker 7: to do.
Speaker 2: Has it helped you in terms of finding work? And
Speaker 2: I'm very curious what you have to say about the
Speaker 2: labor market. We're seeing signs of some softening. But I'm
Speaker 2: just curious how being flexible helps you and then what
Speaker 2: you are seeing overall in terms of labor market.
Speaker 7: It can help you, but you have to be really
Speaker 7: deliberate with what you want that team environment to look like.
Speaker 7: So as an example, there are some of our areas
Speaker 7: from a technology perspective where we want the best of
Speaker 7: the best, and we're happy with wherever they are in
Speaker 7: the world, and we have the technology for them to
Speaker 7: join us via video, and so we don't worry about
Speaker 7: the fact that they may be remote from other members
Speaker 7: of the team. But that's a deliberate choice. But I
Speaker 7: think when you have a level of flexibility, it's just
Speaker 7: going to allow you to cast a wider net on
Speaker 7: who you bring into the company.
Speaker 3: How do you create those spontaneous moments that you know,
Speaker 3: those water cooler moments here at Bloomberg, those pantry moments.
Speaker 3: I mean, Joe Weber, editor at Bloomberg BusinessWeek, tells us
Speaker 3: every week that some article, even a cover story, is
Speaker 3: the result of just bumping into one of the reporters
Speaker 3: of the pantry, rolling over to somebody's desk exactly.
Speaker 7: I think it takes work remotely. And this is the
Speaker 7: rub I will tell you, like this was a long
Speaker 7: time ago. I'm gonna say like fifteen or twenty years ago.
Speaker 7: I remember I created something called the virtual Hallway conversation
Speaker 7: because I had a team that was all over the
Speaker 7: world and we would schedule this ten minute quick sync
Speaker 7: and the only rule was we couldn't talk about work
Speaker 7: for the first few minutes because sometimes we bumping should
Speaker 7: in the hallway, we just talk about like how your kids.
Speaker 9: What are you doing?
Speaker 7: So I guess what I would say is we do
Speaker 7: have to work hard to create that when you have
Speaker 7: flex it doesn't mean that you don't come in. I
Speaker 7: think you just have to be really thoughtful when people
Speaker 7: come in.
Speaker 8: What is the best use of our time?
Speaker 2: Would you say there's a little softening of the labor market, you.
Speaker 7: Know, it's interesting I would say that despite the fact
Speaker 7: that there is some softening, boy, the talent market is
Speaker 7: still hot in many many areas, and I look at
Speaker 7: an area like security as an example. Globally, the belief
Speaker 7: is still that there are four million security roles that
Speaker 7: are still open and that we can't find the talent
Speaker 7: for those roles. The other thing that we understand is
Speaker 7: about you.
Speaker 2: Those Would you say you have roles that are open
Speaker 2: that you.
Speaker 7: I would say that we're always looking for amazing talent.
Speaker 7: But I think around the world there's some struggle getting
Speaker 7: to people that have some of the skills. On the
Speaker 7: security side, About half of those roles are more entry level,
Speaker 7: and so for us, what that means is there's such
Speaker 7: an opportunity to train up talent and really help them
Speaker 7: get the skills that get them started.
Speaker 3: How do you start? How do you train up that
Speaker 3: talent earlier in their careers, earlier in their lives? I mean,
Speaker 3: where does this start within our education system?
Speaker 7: You know, it's interesting because if you look at the
Speaker 7: US President Biden, I think about nine months ago, convened
Speaker 7: a group of leaders together against the backdrop of security.
Speaker 7: And the approach that the team was taking was to
Speaker 7: look at what are the security skills that everyone needs
Speaker 7: to have? What are the security skills that own many
Speaker 7: need to have? And then a few, right, And so
Speaker 7: when you get to the few, you are talking about
Speaker 7: your chief security officers, the top of the top. But
Speaker 7: for all, what you're talking about is maybe we need
Speaker 7: to start to teach our students in elementary school about
Speaker 7: passwords and how to be secure, and so absolutely start
Speaker 7: really early, to be honest. And then I think the
Speaker 7: other thing that I would say is when I look
Speaker 7: at Cisco and other tech companies, we used to spend
Speaker 7: a lot of time at high schools and now we're
Speaker 7: taking that down to elementary school as well. So I
Speaker 7: do think we need to start earlier and earlier, and
Speaker 7: especially for girls.
Speaker 2: That is fascinating. Hey, listen, we've got about a minute
Speaker 2: and a half left here. You guys at Cisco, you've
Speaker 2: had ESG initiatives and missions and goals for a long time.
Speaker 2: Remind us a little bit about the impact that that
Speaker 2: has had on the company financially and just overall in
Speaker 2: terms of the cultural environment.
Speaker 7: The impact is significant. So it was about three years
Speaker 7: ago that we created our new purpose to power Inclusive
Speaker 7: Future for All, and that really started to guide everything
Speaker 7: that we do across the company from a sustainability perspective.
Speaker 7: We launched about a year ago our net zero goals
Speaker 7: for Scope one and Scope two, which is twenty twenty five,
Speaker 7: Scope three which is twenty forty. We now have an
Speaker 7: SPTI approved plan, which basically means that we have a
Speaker 7: scientific plan that has been reviewed and approved. I say
Speaker 7: all of this because I think that inclusive future means
Speaker 7: we need to have a livable planet. That inclusive future
Speaker 7: means we need to have really good people practices within
Speaker 7: the company and to influence communities more broadly, and that
Speaker 7: we're doing everything we can from a digital divide perspective,
Speaker 7: I do think, Carol, that how we focus on sustainability
Speaker 7: will be an amazing business for Cisco.
Speaker 8: Two.
Speaker 7: So as an example, some of our technology now is
Speaker 7: so much more energy efficient with higher bandwidth, like our
Speaker 7: Silicon one products, and that's a great growth business for us.
Speaker 7: But it's going to save our customers a ton of
Speaker 7: energy on the other side, and that's the opportunity.
Speaker 6: Well.
Speaker 2: And I do think about when you've got the hottest
Speaker 2: year on record, like how that kind of shapes and
Speaker 2: whether that makes companies like yourself even rethink, you know,
Speaker 2: is it sooner that you try to do this against
Speaker 2: do you think about maybe trying to get there even sooner?
Speaker 7: We have to, and I think the technology and our
Speaker 7: people will push us to do that, which is great.
Speaker 2: I know you're going to be involved in Global citizen
Speaker 2: you guys always are. I'm so grateful for you finding
Speaker 2: time for us. Thank you, Thank you. Frank Asudas. She's
Speaker 2: executive EP, Chief People Policy Purpose Officer at Cisco Systems.
Speaker 1: Here in studio, you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Easter
Speaker 1: on Bloomberg Radio. The Bloomberg business app and YouTube. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station. Just say Alexa, play Bloomberg eleven.
Speaker 2: Thirty Climate Week in New York against the backdrop of
Speaker 2: the seventy eighth session of the General Assembly. You know
Speaker 2: that we've been talking about it.
Speaker 5: They have.
Speaker 2: The UN has identified seventeen specific SDG sustainable Development goals,
Speaker 2: including building out resilient technology infrastructure, and to get there
Speaker 2: and reach some of those seventeen SDGs, the UN has
Speaker 2: highlighted high impact initiatives, among them unlocking the Data Dividend,
Speaker 2: which our next guests participated in an event that happened
Speaker 2: here this week with us is Johannes Ulting, Executive head
Speaker 2: of the Partnership in Statistics for Development in the twenty
Speaker 2: first Century. The acronym is Paris twenty one, which is
Speaker 2: hosted by the OSD in Paris. I have to say
Speaker 2: that Johanna's former member of the UN Secretary General's Expert
Speaker 2: Group on the Data Revolution. He's a development economist, expertise
Speaker 2: and employment, social protection, healthcare, financing and gender. He's looked
Speaker 2: at the world in a lot of different ways and
Speaker 2: we were delighted to have him here in our Bloomberg
Speaker 2: Interactive Broker's studio.
Speaker 5: Welcome, Welcome, Thank you very much for inviting me.
Speaker 2: Well, thank you. And I've learned about PARIS twenty one
Speaker 2: because my daughter has done an internship with you all
Speaker 2: this summer. So full transparency, but I've learned a lot.
Speaker 2: Tell us though, in your words, your mission and your goals,
Speaker 2: what you guys are all about.
Speaker 10: PARIS twenty one stands for Partnership in Statistics in Development
Speaker 10: for the twenty first century. We basically do three things.
Speaker 10: We help countries with technical capacity development National statistical offices,
Speaker 10: so we help training of managers in statistical offices in
Speaker 10: poor countries like Wanda and others, so we organize trainings.
Speaker 10: We help with coordination in many parts of when you
Speaker 10: produce data, there are many ministries involved, there are development
Speaker 10: agencies involved, and we help them with to get coordinated.
Speaker 5: And last, but not least, we do advocacy.
Speaker 10: And you just mentioned the UNGA week, the SDG summit,
Speaker 10: and we do advocacy for more and better funding for
Speaker 10: data and statistics.
Speaker 2: Well, what's interesting in a world that's overrun with data,
Speaker 2: we just assume it's good. Well, we don't stand it's good.
Speaker 2: We talk about bias data and kind of dirty data,
Speaker 2: not great data. But not all data is good, not
Speaker 2: all data is productive or useful, right, And so you
Speaker 2: guys are involved in that in helping countries develop infrastructure
Speaker 2: so that they can actually accumulate their own data sets.
Speaker 5: Correct is absolutely correct.
Speaker 10: I think what is a bit difficult sometimes to understand
Speaker 10: is on the one hand we have a data tsunami.
Speaker 10: We have all these data digital data, which is very good,
Speaker 10: which is feeding artificial intelligence and innovation. On the other hand,
Speaker 10: we have and on the other hand we have data gaps,
Speaker 10: terrible data gaps, and in some countries we don't even
Speaker 10: know of how many people in a country are living.
Speaker 10: We have difficulties to measure burst rates and to register
Speaker 10: those people. We have a lot of data gaps in
Speaker 10: the SDGs. We in particular on climate change or gender equality,
Speaker 10: we are literally flying blind. So we are supporting as
Speaker 10: paras twenty one with our partners to close those data gaps,
Speaker 10: to be able to do better decisions, but also to
Speaker 10: hold oh our government's accountable. I think that's also a
Speaker 10: very important aspect of this. So that if you say
Speaker 10: you want to reduce poverty in a given country by
Speaker 10: six percent. You want to have the start point and
Speaker 10: the endpoint, and you want to see if this is
Speaker 10: on track.
Speaker 3: We've talked a lot this year about AI and the
Speaker 3: impact that AI is having on companies whose stocks are
Speaker 3: publicly traded. What about when it comes to your work
Speaker 3: and how you can use AI to make sense of
Speaker 3: this data and help these poorer countries actually make positive change?
Speaker 3: Are you using it?
Speaker 5: An excellent question.
Speaker 10: I mean, what we see is that there are two
Speaker 10: I mean we often talk about silos, right, I mean,
Speaker 10: and this is a real sile of On the one hand,
Speaker 10: we have people talking about the data that you were
Speaker 10: just mentioning, feeding into the algorithms and that supporting these
Speaker 10: AI driven innovation, and on the other hand, we have
Speaker 10: data for development, which is an owned space by itself,
Speaker 10: and there's not enough crossover. If you look at the
Speaker 10: G twenty statement at the last one, there is a
Speaker 10: working group on Data for development and there's a working
Speaker 10: group on digital data.
Speaker 5: So there is yet not enough overlap. I think it's
Speaker 5: it's about to close.
Speaker 10: And artificial intelligent for the public good is of course
Speaker 10: very important, but also the quality of the data that
Speaker 10: you feed into it is essential, garbage in, garbage out exactly.
Speaker 10: So the quality of the data to help countries produce
Speaker 10: verified quality statistics even is very essential and often unfortunately
Speaker 10: not in the spotlight.
Speaker 2: Well, you can't have transformative I'm stealing words from you
Speaker 2: guys by transformative policy without transformative data.
Speaker 5: Correct, absolutely correct. Yeah, Well, and I'm.
Speaker 2: Curious about you know, in a world where there's lots
Speaker 2: of stress points, I'm thinking, you know, the hottest world,
Speaker 2: You're right, hottest temperatures on record, So there's a lot
Speaker 2: going you know, a lot of focus on climate, but
Speaker 2: investment in infrastructure systems so that the data collection is better.
Speaker 5: How tough is that?
Speaker 2: To get the money going where it needs to go?
Speaker 10: That's, unfortunately, is a very very difficult exercise. So we
Speaker 10: currently spend around six seven hundred million on data insteadistics
Speaker 10: from Official Development aid ODA AID and this is less
Speaker 10: than a percentage point since here. So we would need
Speaker 10: to ramp up significantly the international support for data and statistics.
Speaker 10: But we also need to convince countries to invest part
Speaker 10: of their taxpayers' money, domestic resources into it and the payoff.
Speaker 10: I mean, the thing is if I invest into a hospital,
Speaker 10: if you're a minister, what would you do? Would you
Speaker 10: invest in a hospital, or in vaccination or education, or
Speaker 10: would you invest in a national statistical office? We're probably
Speaker 10: the first, Yeah, because then you can show after two
Speaker 10: three years is done. These benefits for investment in national
Speaker 10: statistical systems will only take time. The benefit will take
Speaker 10: time ten fifteen years later. They feed into everything else.
Speaker 11: Sell us on it.
Speaker 3: You know, if you're trying to sell a minister on
Speaker 3: making this investment.
Speaker 4: How do you do it?
Speaker 2: What's the cost by not making those investments?
Speaker 10: What we say is if you want to have I mean,
Speaker 10: for instance, economic growth, I mean it's very critical to
Speaker 10: have very good understanding about key economic indicators right, and
Speaker 10: if those are not sort of measured in your country,
Speaker 10: you will not be able to, first off all, to
Speaker 10: make very good decisions. You will not invest your public
Speaker 10: resources very efficiently. You are not even able to tell
Speaker 10: you if you do it or not. So in that sense,
Speaker 10: we are not asking for a lot of money. It's
Speaker 10: it's pe nuts. It's literally pe nuts, and there are
Speaker 10: a lot of we have a lot of good tools
Speaker 10: attend to help. So I think for a minister, and
Speaker 10: many planning ministers actually know this and they are behind this.
Speaker 10: It's sometimes just the politics behind which is a bit difficult.
Speaker 2: No politics, But what's interesting but the amount of investment
Speaker 2: decisions that are made up of like all of the
Speaker 2: US economic statistics or global statistics right in the developed world.
Speaker 2: We've got about a minute and a half left, Johanna's
Speaker 2: you know.
Speaker 3: A lot of times a little more.
Speaker 2: Sorry, Okay, you know, it's been that kind of crazy day.
Speaker 2: So I think about, like our audience who's listening, a
Speaker 2: smart financial investment audience, what is it that they need
Speaker 2: to understand about again the importance of it and potentially
Speaker 2: the payoff. What's being missed by not accurately having data
Speaker 2: on a lot of different countries.
Speaker 10: I think we have to talk about the opportunities and
Speaker 10: the investment opportunities we will have next year in Meddelin
Speaker 10: or World Data Forum. So all your listeners, your community
Speaker 10: is quarterly invited because we are working more and more
Speaker 10: with the private sector, of course with the big companies
Speaker 10: that have a lot of data that make those data. Also,
Speaker 10: because we were asking about AI, I will later today
Speaker 10: attend by Google and I for Public Good. There are
Speaker 10: many other companies who are actively engaging I think they
Speaker 10: could do a little bit more though, and also sees
Speaker 10: it as a public good. So I think for the
Speaker 10: many of our colleagues and partners from the private sector,
Speaker 10: I interested. So are civil society organizations, by the way,
Speaker 10: and to bring them together in multi partnership, that's the
Speaker 10: partnership part is very important.
Speaker 3: How can we make the data collection easier from the
Speaker 3: perspective of these countries, And I'm thinking about public private
Speaker 3: partnership specifically. I mean, think about the data that a
Speaker 3: mobile phone company has about what somebody does on their
Speaker 3: phone transactions that they make. I mean, you can get
Speaker 3: really granular information that can tell stories about an economy.
Speaker 3: What's the role of a private company and in working
Speaker 3: with the government to provide that data because there are
Speaker 3: some privacy concerns too.
Speaker 10: It's on point exactly how you say. On the one hand,
Speaker 10: I mean this we call this public private partnership, and
Speaker 10: there are some really very nice public private partnership out
Speaker 10: there where telephone companies share confidentially and secured the data.
Speaker 10: But of course it's a business risk as well. I mean,
Speaker 10: and you have to see what has happened to this
Speaker 10: data and so on and so forth. But there are
Speaker 10: some very good, promising examples of how what we call
Speaker 10: big data, specifically on geospatial data is used, for instance,
Speaker 10: on poverty mapping, day and night satellite imagery. So you
Speaker 10: can look at a given country and you can compare
Speaker 10: the light nights, and you can compare it with a day,
Speaker 10: and then you can make a sort of calculation do
Speaker 10: these people.
Speaker 5: Have light electricity or not?
Speaker 10: And from this with other data, you can estimate how
Speaker 10: poor people are and you also know for your investors
Speaker 10: where maybe you can put some infrastructure to solve this problem.
Speaker 2: And that's what I was thinking about. It was interesting.
Speaker 2: I was over at the earth Shot Prize Bloomberg Philanthropy's event,
Speaker 2: and we talked with some of the finalists of the
Speaker 2: earth Shot Prize, and they've come up with different ways
Speaker 2: to decarbonize the world. And one of the things, let's
Speaker 2: talk about what you're doing, But then it's like, what's
Speaker 2: the impact. Talk to us about some of either the
Speaker 2: data sets that you have helped accumulate and what it
Speaker 2: has led to if you give us some examples.
Speaker 10: Of course, I mean we have been we do a
Speaker 10: lot of country work, and in specific the one area
Speaker 10: which is very important it's on gender. So in some
Speaker 10: parts of this world, I mean through our support in
Speaker 10: the MALIDIVS in Colombia, in Africa, in many countries we
Speaker 10: have no more sex disaggregated data, which is fantastic for
Speaker 10: many different purposes.
Speaker 5: I mean this feels so basic, right, yeah, absolutely, I.
Speaker 10: Mean to sort of to know of how many men
Speaker 10: and women there are children. So we have quite a
Speaker 10: couple of countries where we can show success, where we
Speaker 10: can show impact, and this impact is leading governments also
Speaker 10: to invest more into data and statistics.
Speaker 5: So you can say the glass is maybe more half
Speaker 5: full than half empty in our area.
Speaker 10: But through these events like what we have here at
Speaker 10: the highest level that we had the DSG, I mean
Speaker 10: A Mohamed was opening the High Impact Initiative. We had
Speaker 10: another event just a breakfast on seven am in the morning,
Speaker 10: full room.
Speaker 5: Very very important people. So there is more consideration for
Speaker 5: the topic.
Speaker 10: And I'm rather optimistic than for the next eight years
Speaker 10: that we can give it a big push and we
Speaker 10: will be able to convince more people that this is
Speaker 10: an important part of the development nexus.
Speaker 2: Johannas you talked about Google and Like or the media,
Speaker 2: you're going that you've had or the conversations you've had,
Speaker 2: and I do wonder about how much increasingly the private
Speaker 2: sector complain all of this. It's interesting. We had a
Speaker 2: guest yesterday and we talked about the Roaring twenties and
Speaker 2: the crash and FDR, and we talked about who were
Speaker 2: the power brokers back then, and it was you know,
Speaker 2: the Carnegie and you know those kind of folks who
Speaker 2: are industrialists. Today's power brokers are the data CEOs and
Speaker 2: the data companies. What you are trying to do, does
Speaker 2: it increasingly have to come from the private sector or
Speaker 2: does that not necessarily give you the purest data that
Speaker 2: you want.
Speaker 10: I try, it's a very very important question. They have
Speaker 10: so much they have so much data, but of course
Speaker 10: data is also linked to power, and it has lots
Speaker 10: of questions about confidentiality. It's about the use to safe
Speaker 10: use of the data. And of course these companies want
Speaker 10: to make business. What we are talking here is about
Speaker 10: a public good. So if you talk specifically about a
Speaker 10: specific subcutory like official statistics, I would say this should
Speaker 10: stay in the hand of governments. There are certain criteria,
Speaker 10: we have principles for how to produce those things.
Speaker 5: Is a public good.
Speaker 10: We don't know what happens to those data, but I
Speaker 10: think some of these data is just essential for the government,
Speaker 10: for private sector, for civil society as well, to see
Speaker 10: where a country stands, how is it about the education system.
Speaker 10: So to leave this to the private sector, I don't
Speaker 10: think it's a good idea to have the private sector
Speaker 10: feed into those official statistics. That's a very different question.
Speaker 10: We need to be on the same level playing field.
Speaker 10: And we just talked about the numbers. If you look
Speaker 10: at the budget of an official statistical office in a
Speaker 10: poor country and you compare it with any other private
Speaker 10: sector of funding, it's very.
Speaker 5: Clear where the power relate, how the power relationship is.
Speaker 2: We'll invest your money, not flow in if you don't
Speaker 2: have those data sets well, to some make sense, that'ship.
Speaker 5: Absolutely, I mean it's flowing in.
Speaker 10: But then we make in some countries where we this
Speaker 10: birth registration that I mentioned be registration.
Speaker 5: This is terrible.
Speaker 10: Mistakes are possible, and and also sort of investments that
Speaker 10: are not sort of leading to the estimated results. I
Speaker 10: mean the middle class for instance, you want to know
Speaker 10: as a as an investor, the middle class in India
Speaker 10: is it is it five hundred million.
Speaker 5: Now how big is it actually?
Speaker 3: Do you always trust the data?
Speaker 1: No?
Speaker 5: No, not at all. I mean there is, I mean
Speaker 5: there were no, but there is.
Speaker 3: Calling out individual countries specifically or feel free.
Speaker 5: To Yeah, I mean that there are.
Speaker 2: Can they can talk about the past even the developed markets, right,
Speaker 2: we questioned some of the There.
Speaker 10: Are two examples that very well known and it's Greece
Speaker 10: and also Argentina at some point in the past, and
Speaker 10: there was about the inflation CPI, which is very well documented.
Speaker 10: So the the good thing is that there is a
Speaker 10: trusted community that would call out those misbehavior.
Speaker 5: There's also a misunderstanding sometimes there is not one choose
Speaker 5: in the data that is not It's not chous. It's
Speaker 5: what's important is.
Speaker 10: You make it very clear that you buy to statistical
Speaker 10: standards and that the data is sort of produced with
Speaker 10: a certain quality standards, and you make it very open
Speaker 10: and then you can start a debate about it, which
Speaker 10: is really more fascinating than you sometimes tend to believe.
Speaker 2: I know, for my daughter christ you don't work with
Speaker 2: you guys in gender? Why gender versus healthcare versus employment
Speaker 2: versus financing or how do you choose where you want
Speaker 2: to focus on how does that or is that determined
Speaker 2: by the money that comes in in somebody's interest, or
Speaker 2: how do you figure because there's so many probably different ways.
Speaker 12: You could go.
Speaker 10: Absolutely, I mean the demand is immense. I think many
Speaker 10: of the questions around gender are underpinning every other sector.
Speaker 10: If you look at development, we look often at sectors,
Speaker 10: we look at agriculture, we look at health, we look
Speaker 10: at education. If you try to improve all those sectors,
Speaker 10: and the SDGs have seventeen different quote unquote sectors, gender
Speaker 10: is underpinning everything. I mean in terms of if you
Speaker 10: invest in good investment in gender statists, which could be
Speaker 10: I mean sex disaggregated data, but also access to gender
Speaker 10: based violence, which is important to document as well.
Speaker 5: So it's underpinning all other sectors.
Speaker 10: And what you ought to probably have talked about quite
Speaker 10: a lot in the show is about the economic benefit
Speaker 10: to use the potential of women's empowerment, in particular for instance,
Speaker 10: to access to ownership rights of resources, land, credit, insurance.
Speaker 10: So once you unlock this potential, once you have an
Speaker 10: opportunity and you know how many women have access to
Speaker 10: land and what kind of land and credit and education,
Speaker 10: this will help you to make targeted investment and which
Speaker 10: helps for all other sectors. So it's a huge multiplier effect.
Speaker 10: Next to there's an intrinsic value that women and men
Speaker 10: should be treated equally.
Speaker 3: Okay, what about when it comes to data collection and
Speaker 3: how different countries are collecting data? Are you seeing you know,
Speaker 3: in terms of developing countries where they don't necessarily have
Speaker 3: the infrastructure built in. Are you seeing them in technologies
Speaker 3: that are so called lead frogging technologies that allow them
Speaker 3: to sort of bypass the big infrastructure investments that were
Speaker 3: made in the past. And I'm thinking, like, you know,
Speaker 3: ways to provide internet to folks without wireline broadband, you know,
Speaker 3: without actually digging holes, using satellites, being able to use
Speaker 3: data collection instead of launching satellites, use drones for example.
Speaker 10: This is happening and I'm personally I collected myself when
Speaker 10: I did my master's thesis. I went to a couple
Speaker 10: of countries and collected data from my own seasons. So
Speaker 10: I was working with national statistical offices and we had
Speaker 10: these paper forms. So you went with a paper form
Speaker 10: with a questionnaire and you asked all these questions and.
Speaker 5: Then you went back and then you had to type
Speaker 5: it in. I have seen statistical office packed with lots
Speaker 5: of paper and it looks like in your office. Moreness anyway, So.
Speaker 10: This is changing now using mobile phones and copies and
Speaker 10: and and different forms of basically collecting the data electronic.
Speaker 10: And this is happening even in poor countries, so there
Speaker 10: are technolog You said it very nicely.
Speaker 5: You said, this leap frogging is happening. I mean we
Speaker 5: are not seeing.
Speaker 10: We also work at the OECD with of course rich
Speaker 10: country statistical offices, and you can really see the difference
Speaker 10: of how national Statistical office in particular in these middle
Speaker 10: income categories like Philippines eventually Ghana, Columbia, how they jump
Speaker 10: over this and how they change the infrastructure and through
Speaker 10: very different forms of using modern technologies.
Speaker 5: And this is really how very very nice to see.
Speaker 2: Well, I know in our prop call I said, you're
Speaker 2: kind of open able window is something that we are
Speaker 2: not necessarily aware of and we just take for granted
Speaker 2: that there's so much data everywhere. So this was really enlightening.
Speaker 5: Thank you so much, Thank you so much.
Speaker 2: Safe time to be here, so enjoyed it. Johannes Shutin,
Speaker 2: his executive head of the partnership in Statistics for Development
Speaker 2: in the twenty first century aka Paris twenty one. This
Speaker 2: is start.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three six Eastern Listen on Bloomberg
Speaker 1: dot com, the iHeartRadio app and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 2: This next voice is going to sound familiar because we
Speaker 2: caught up with him at the Milkin Institute Global Conference
Speaker 2: earlier this year. So great to have back with us
Speaker 2: in studio. Hans Kobler. He's found her managing partner of
Speaker 2: Energy Impact Partners. They have about three billion in assets
Speaker 2: under management. They invest in clean energy technologies and they
Speaker 2: help deploy them through partnerships with companies trying to decarbonize.
Speaker 2: He is in town for Climate Week, and as I said,
Speaker 2: he's here in our Bloomberg Interactive Broker Student and I
Speaker 2: have you here with him and myself.
Speaker 13: Great being here.
Speaker 2: Welcome back. Come on close to the mic because you
Speaker 2: want to make sure we can hear you the energy transition.
Speaker 2: Let's start basic. How's it going.
Speaker 13: It's going well, it's picking up momentum. We had the
Speaker 13: first year in history that more money will spent on
Speaker 13: the energy transition than on traditional energy one point one trillion.
Speaker 13: So the momentum misbuilding.
Speaker 2: A tipping point.
Speaker 13: It's a tipping point, it's but it's the beginning. It's
Speaker 13: the first inning of a long, long race. You know,
Speaker 13: if you believe McKay and some forecast, we will need
Speaker 13: eight nine trillion dollars a year one hundred and fifty trillion.
Speaker 13: That's fifteen internets or one and a half times a
Speaker 13: global economy. Spend there in the next few decades a lot.
Speaker 13: That's a lot, and we may or we may not
Speaker 13: get there, but we are taking it serious. So it's
Speaker 13: picking up momentum.
Speaker 3: Well, one thing that I think about when it comes
Speaker 3: to the energy transition is the role of nuclear power.
Speaker 3: And here in the US it's a really checkered history.
Speaker 3: It's a really checkered past. It's very expensive for US
Speaker 3: to build nuclear power plants. They're always cost overruns, and
Speaker 3: then you have the legacy of Fukushima, three Mile Island
Speaker 3: in Chernobyl.
Speaker 13: What are your thoughts on nuclear I think so we
Speaker 13: have a lot of corporate partners in our investor group.
Speaker 13: The Southern Company was the last one here to try
Speaker 13: to build a nuclear pend that finally got them all online.
Speaker 1: Which is great.
Speaker 13: We have edf as an investor that had fifty five
Speaker 13: in the country running and half of them didn't work.
Speaker 13: They when they shut down the Russian gas and Tepko
Speaker 13: was an investor too, so nuclear. You know, the clean
Speaker 13: energy transition is amazing and a lot will be winded solar,
Speaker 13: but you need the baseload and nuclear is still the
Speaker 13: best way to get to the baseload. So I think
Speaker 13: it's critical to keep that in the arsenal. I'm from
Speaker 13: Germany originally. I think you can tell tell the accent.
Speaker 13: You know, the probably the greenest country that has most
Speaker 13: ambitions to go clean. They spend a tonne and they
Speaker 13: shut down there, which is.
Speaker 3: A stupid thing to do. It's I mean, is this reversible?
Speaker 5: Yeah, but it's hard.
Speaker 3: It's hard.
Speaker 13: Once you shut down an industry, you have to build
Speaker 13: up the talent to build new to build new nuclear plants.
Speaker 3: You can, but I guess, can we transition to net
Speaker 3: zero without nuclear?
Speaker 8: Right?
Speaker 5: How crucial?
Speaker 11: Is it hard?
Speaker 13: The transition to net zero is not only converting what
Speaker 13: we have today, but to deal with the demand that
Speaker 13: we are facing. We have had a flat demand curve
Speaker 13: in this country for twenty years. We are now electrifying transportation.
Speaker 13: We're building data centers running on AI where one Google search,
Speaker 13: where one AI search is taking about fifty two hundred
Speaker 13: times more power than a Google search. So you're talking
Speaker 13: about doubling the infrastructure that we've built over one hundred years.
Speaker 13: You know, Musk is out there saying no, no, no,
Speaker 13: whatever you are calculated, it's going to be tripled.
Speaker 1: So you need a lot of.
Speaker 13: Electrons and so there is not one solution for that.
Speaker 13: That means we have to use different tools in the
Speaker 13: toolkit to get there and get there a lot faster
Speaker 13: than we have been.
Speaker 2: But can we do it this energy transformation without nuclear?
Speaker 13: Yes, but I think it would be a lot cheaper
Speaker 13: if we did it with nuclear. And at the end
Speaker 13: of the day, you know, we have to address something
Speaker 13: that we call in the industry trial emma. Everyone wants
Speaker 13: to go clean, but but when you face not having
Speaker 13: power at all, security reliability gets on the on the horizon.
Speaker 13: And when the Germans pay twelve times more for natural
Speaker 13: gas than the Americans and four times more for electricity,
Speaker 13: then affordability comes in right. So that's an equation. This
Speaker 13: trilemma is an equation very difficult.
Speaker 3: But also motivation perhaps to invest in renewable sources that
Speaker 3: in the long run are less expensive.
Speaker 13: Absolutely, but in a way in our view, the only
Speaker 13: way to solve that equation of this trilemma is to
Speaker 13: really to apply innovation. That means you need new technologies,
Speaker 13: great technologies, and you need to collaborate. You need to
Speaker 13: involve the incumbents. The existing infrastructure sits on, sit on
Speaker 13: trillions of dollars of investments that we have to help
Speaker 13: them get there faster. That's, by the way, it's a
Speaker 13: business model that we have where we team up with
Speaker 13: corporates and bring them together in a room with the
Speaker 13: innovators and the capital to forge those alliances to accelerate
Speaker 13: that transition. It's look, everybody wants to see the rosy sky,
Speaker 13: but you've got to be pragmatic about it. And that
Speaker 13: means that means we got to work together and work
Speaker 13: fast and harder than.
Speaker 1: We have in the past.
Speaker 2: So when you have those conversations and those collaborations, what
Speaker 2: is it that you speak most about. Tim brought up
Speaker 2: nuclear right, and we feel like it has become such
Speaker 2: a no no is it nuclear, is it hydro, is
Speaker 2: it solar?
Speaker 14: Is it?
Speaker 15: Like?
Speaker 2: What is it that you guys spend a lot of
Speaker 2: time talking about with your partners?
Speaker 13: Yeah, yes, yeah, yeah, yes. So it is a complex undertaking.
Speaker 13: We need to decarbonize supply, We need to create a
Speaker 13: lot more supplies. So that's one Folcus there. The second
Speaker 13: one is we need to create sustainable demand. That means
Speaker 13: electrifying a lot of the industries, from transportation to home heating,
Speaker 13: to the data centers, indoor agriculture. And then you have
Speaker 13: to deal with the high intermittency you create. So I
Speaker 13: was just telling you it's two to three times more
Speaker 13: power that we need, but at its peak it could
Speaker 13: be five times as much. You know, it's like building
Speaker 13: a church for Easter Sunday, and we've got to somehow
Speaker 13: we have to balance that, and that means you have
Speaker 13: to invest in transmission distribution, which is very difficult.
Speaker 1: Right.
Speaker 13: It took fifteen years to get the clean electrons from
Speaker 13: Canada through two of the greenest states to New York.
Speaker 13: Because nobody wants to build anything in their backyard. You
Speaker 13: build storage and great technologies are coming up. You an
Speaker 13: investor in form you investor in power and so, but
Speaker 13: that's a lot of space that is needed. Takes some time,
Speaker 13: or you digitize the communication between the customer and the
Speaker 13: supply and you tell them, look, don't charge your car
Speaker 13: at six o'clock to it at midnight. It turned down.
Speaker 13: It's nice.
Speaker 1: Years.
Speaker 13: Just don't cool right now because everybody's cooling.
Speaker 2: Can I ask you, is only about thirty seconds left here?
Speaker 2: Would you invest in a fossil fuel energy company? No,
Speaker 2: oil and gas company? No, you wouldn't anymore.
Speaker 5: No, even though there's going to be doing for some people.
Speaker 13: You know, look, we need certainly natural gas form.
Speaker 2: I know you're kind of talking your book because that's
Speaker 2: the way we.
Speaker 13: Need natural gas for a long long time. But we
Speaker 13: personally would not invest. We are fun focused on you know.
Speaker 13: We are an Article nine fund. We invest in things
Speaker 13: that decarbonize the globally.
Speaker 2: But if you weren't, would you, if.
Speaker 13: I was a financial investor, would Okay?
Speaker 2: All right, love having you come here, always provocative. I
Speaker 2: always learned something.
Speaker 5: Come back soon, yeah, well do Hans.
Speaker 2: Kobler, he's founding Do you took a founder of managing
Speaker 2: partner Energy Impact Partners? Here in our studio, you're.
Speaker 1: Listening to the Bloomberg Business Week Podcast. Catch us live
Speaker 1: weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and you too. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Get all right, Well, there is definitely working in a
Speaker 2: coal mine, and if you think about our history, right,
Speaker 2: not good conditions.
Speaker 3: Yeah, and there's also working low wag low wage retail
Speaker 3: jobs here in the United States in twenty twenty.
Speaker 2: Three, Carol mean, like at a dollar General.
Speaker 3: That's exactly what I'm talking about.
Speaker 2: Yeah, maybe not exactly like working in a coal mine.
Speaker 2: But yeah, wait until we get into the story. Because
Speaker 2: ck based on this week's Bloomberg Business Week cover story,
Speaker 2: it also happens to be today's Bloomberg Big Take. You
Speaker 2: will find things like rat infestations, blocked fire exits, expired
Speaker 2: kids food, macheti wielding, and watermelon throwing shoppers. It sounds funny,
Speaker 2: but it's really not a lot of nightmares at the
Speaker 2: biggest dollar chained tim in the United States.
Speaker 3: With more on the story, which is reported out by Bloomberg,
Speaker 3: Josh Eedelson, and Brendan Case. Let's bring in Brandon, Bloomberg
Speaker 3: News US retail reporter joining us on zoom in our
Speaker 3: Dallas bureau along with the editor of Bloomberg Business Week,
Speaker 3: Joel Weber here in our Bloomberg Interactive Broker's studio. The story,
Speaker 3: by the way, it is in the new issue of
Speaker 3: Bloomberg Business a week. It's available on newstands tomorrow. You
Speaker 3: can already read it though on the Bloomberg Terminal and
Speaker 3: at Bloomberg dot com Slash BusinessWeek one of the most
Speaker 3: read stories on the Bloomberg terminal today. Joel, this is
Speaker 3: a deeply reported story with disturbing anecdote after disturbing anecdote.
Speaker 3: How does something like this come together?
Speaker 11: Who knew that a story, a story like this that
Speaker 11: has really changed a lot of American shop I think
Speaker 11: I had this signed to it, and so one of
Speaker 11: the things that struck me about it is that we've
Speaker 11: talked I think for generation now about you know, how
Speaker 11: big of a presence Walmart has had in America, and
Speaker 11: it actually is like the story that Walmart sort of
Speaker 11: I think, you know, propelled into America for like these
Speaker 11: big box stores and changing small town America Dollar General
Speaker 11: has actually taken a lot of that farther now. The
Speaker 11: stores have a much, much, much smaller footprint, which we
Speaker 11: described in the store in the story. The price points
Speaker 11: are amazingly affordable and seemingly inflation proof. As we also
Speaker 11: point out in the story. The cost of all of this, though,
Speaker 11: is that it turns out to be a really troubling
Speaker 11: place to work and the people who actually work in
Speaker 11: the stores a retail job. Wow, the stuff that they've
Speaker 11: gone through. So Brendan Josh Unilson, but was the lead
Speaker 11: writer on this Brendan case also intimately familiar with it. Brendan,
Speaker 11: what was the what was the reporting tidbit that made
Speaker 11: you made you and Josh just really want to dig
Speaker 11: into this.
Speaker 9: There were a couple of things, and one of them
Speaker 9: was what we say at the very beginning of the story,
Speaker 9: which was that if you look at a lot of
Speaker 9: the fines that the Labor Department, through OSHA, has levied
Speaker 9: against Dollar General, one of the things that keeps coming
Speaker 9: up over and over again is blocked exits, which obviously
Speaker 9: matters a lot to OSHA. It harks back to the
Speaker 9: Triangle shirtwaist factory fire in New York the thing that.
Speaker 9: One thing that surprised us was talking with an employee
Speaker 9: in New Orleans who said that in his case, the
Speaker 9: blocked exits were no accident. In fact, a manager had
Speaker 9: told him to purposely block exits to try to cut
Speaker 9: down on shoplifting make it harder to get out of
Speaker 9: the store.
Speaker 1: That was one thing.
Speaker 9: Another thing that jumped out was just the lack of
Speaker 9: you know, heating and air conditioning. And we talked with
Speaker 9: people who had put ice packs down their pants when
Speaker 9: it got hot, wore you know, multiple coats and layers
Speaker 9: when it got cold, and one regional manager who you know,
Speaker 9: was fairly high up in the company who told us
Speaker 9: that she was just really shocked by how difficult it
Speaker 9: was to get to get funding for basic maintenance, basic upkeep.
Speaker 11: On top of all that, there's this sense that Dollar
Speaker 11: General has just been in this incredible growth strategy. So
Speaker 11: talk about how it's kind of swept the country a
Speaker 11: little bit.
Speaker 9: Brendan, Yeah, and it's really it's really amazing how fast
Speaker 9: it's grown. To your point, it's a little bit sort
Speaker 9: of a creature of the Walmart era. You know, Walmart
Speaker 9: comes in and it wipes out a lot of retailers
Speaker 9: across the country and leaves a landscape that if you're
Speaker 9: not close to a Walmart or have a easy access
Speaker 9: to a car, you might not have as many retailers
Speaker 9: that you know as you had before. And so in
Speaker 9: Swoop Dollar General and many of its rivals, and you know,
Speaker 9: opens up stores to the tune of typically you know,
Speaker 9: one thousand a year, and so you know, they've got
Speaker 9: more than nineteen thousand locations around the country right now.
Speaker 9: You compare that with a little more than five thousand
Speaker 9: for Walmart, including the Sam's Club locations, and you start
Speaker 9: to get a sense of how ubiqulus it is, especially
Speaker 9: in smaller towns. About about eighty percent of its stores
Speaker 9: are in towns of twenty thousand people or fewer. And
Speaker 9: you know, if you if you drive through you know,
Speaker 9: through the countryside in many states, particularly the Southeast, but
Speaker 9: in many other parts of the country as well, you'll see,
Speaker 9: you know, store after store.
Speaker 11: We talked about the block fire exits. Can we also
Speaker 11: talk about the Bagwana because there's some of that in
Speaker 11: the story, Brendan.
Speaker 5: Saying since he came in the state House.
Speaker 11: I was waiting to do that transition there. How crazy
Speaker 11: are some of the reporting details that you found.
Speaker 9: Yeah, you know, the the issue of animals getting into
Speaker 9: the stores and befouling the merchandise is something that also
Speaker 9: came up over and over again. You know, there was
Speaker 9: one there was one case in Oklahoma where birds got
Speaker 9: in and you know, used sections of the store as
Speaker 9: you know, as a as a bathroom. And the store
Speaker 9: manager there told us that he was told to just
Speaker 9: take the merchandise home, wash it in your washing machine
Speaker 9: if you have to, and bring it back and put
Speaker 9: it back on the shelves.
Speaker 1: You know.
Speaker 9: There was another another instance in which there was an
Speaker 9: Iowa store there was a worry about asbestos, but after inspection,
Speaker 9: you know, some state inspectors found out that it wasn't asbestos.
Speaker 9: That was the good news. The bad news was that
Speaker 9: it was stained from bad feces. I mean, this is
Speaker 9: all over a wall.
Speaker 3: It's pages and pages of disturbing anecdotes, but disturbing experiences
Speaker 3: that employees have had. I mean, one thing that really
Speaker 3: stuck out to me was the employee who you know,
Speaker 3: there's one employee in the store. The employee asking a
Speaker 3: customer to watch the store, well, he or she went
Speaker 3: to the bathroom I mean, the thing that I was
Speaker 3: thinking through throughout this piece is is that this is
Speaker 3: working for Dollar General. They're making a calculation that they
Speaker 3: can allow their stores to reach this condition, pay their
Speaker 3: employees this wage, have this few of employees in a
Speaker 3: single store because it's worked, especially over the past five years.
Speaker 9: Yeah, it's really worked for a long time, and they've had,
Speaker 9: you know, from a financial standpoint, a really strong record
Speaker 9: of sales increases and profit increases. One thing they're good
Speaker 9: at doing this is not true of all retailers, is
Speaker 9: opening new stores and fairly immediately having them contribute to
Speaker 9: the to the bottom line. This year has been a
Speaker 9: different story for for for Dollar General, at least from
Speaker 9: a stock market perspective, where the shares have come way down.
Speaker 9: They've cut the profit forecast a couple of times. One
Speaker 9: of the big problems, obviously, is just the financial precors
Speaker 9: on on their customer base, which skews towards the lower
Speaker 9: income UH end of the spectrum. They have said, however,
Speaker 9: that they're going to spend more on labor UH and
Speaker 9: and that's at least, you know, that's that's certainly an
Speaker 9: acknowledgment that the store conditions are not where they want them, uh,
Speaker 9: and that they're they're they're they're not to spend money
Speaker 9: to try to improve things this year. Another thing that's
Speaker 9: driving that I think is just a stepped up competitive threat.
Speaker 9: For years, Dollar General was known as, you know, the
Speaker 9: big successful dollar store chain. Dollar Tree, its closest rival,
Speaker 9: was sort of an also ran. That company is in
Speaker 9: the middle of a turnaround and so you know, seems
Speaker 9: to be becoming a stronger competitor. And then you've got Walmart,
Speaker 9: which lost some ground to the dollar stores in the
Speaker 9: wake of the Great Recession. Really doesn't want that to
Speaker 9: happen again if the economy slows down and is rolling
Speaker 9: out a lot of initiatives, whether it's you know, pricing
Speaker 9: or delivery services that are designed to sort of counter
Speaker 9: competition on the lower end.
Speaker 2: Hey, Brendan, and the stock, as you said, down more
Speaker 2: than fifty percent this year, you know, trading at a
Speaker 2: fifty two week low. What does the company say about.
Speaker 1: All of this.
Speaker 9: They reported earnings a couple weeks ago and you know,
Speaker 9: again cut their profit forecast. And interestingly, they had initially
Speaker 9: said that we're going to spend an extra one hundred
Speaker 9: million dollars on labor this year. They moved that number
Speaker 9: up to one hundred and fifty million last month, so
Speaker 9: clearly engaging with the idea that for their own customers,
Speaker 9: their own workers. You know, there are some things that
Speaker 9: are falling short right now. Whether that's enough remains a
Speaker 9: big question mark.
Speaker 2: But what I mean, but what I mean about all
Speaker 2: these specific things, I mean, this is pretty gross for
Speaker 2: workers and unsafe for workers. And you know, we talked
Speaker 2: about the New Orleans worker who were blocking you know,
Speaker 2: the fire exits, and there was a fire. Unfortunately nobody
Speaker 2: was there. But this stuff continues, and I'm curious that
Speaker 2: the company addressed any of these specifics.
Speaker 9: The company told us in a pretty we we sent
Speaker 9: them a very detailed inquiry. They got back to us
Speaker 9: with with with a significant reply that that, you know,
Speaker 9: repeated things they've said in the past which have to
Speaker 9: do with them saying that they want to provide stores
Speaker 9: that are safe to work in, they want to provide
Speaker 9: opportunity for their workers. I think that a lot of
Speaker 9: the details and the story show the ways in which
Speaker 9: they've come up short in those those goals. The extra
Speaker 9: investment they're making suggests that you know, they they they
Speaker 9: you know, they're sort of acknowledging some of the shortcomings,
Speaker 9: but again, you know, like whether that turns out to
Speaker 9: be enough to really kind of turn things around. I
Speaker 9: think the proof will be in the putting and this is.
Speaker 11: In the story, but it really does kind of culminate
Speaker 11: with a shareholder meeting where employees really did get their attention.
Speaker 11: So we'll see where that leads. I do think, you know, Brendan,
Speaker 11: when you just look at the incredible performance that the
Speaker 11: company has had on the stock market really until this year,
Speaker 11: what's happened? Because you would think, like, with the economy
Speaker 11: being where it is, inflation being where it is, this
Speaker 11: looks like a pretty good value proposition to an American consumer.
Speaker 11: And yet you know, you look at that share price
Speaker 11: and it's like, you know, the ceiling of bat Iguano
Speaker 11: fell apart and everything fell apart. What's happened?
Speaker 9: I pointed to say. And one of them is tougher competition.
Speaker 9: I think Dollar Tree, you know, Dollar Tree brought in
Speaker 9: a former CEO of Dollar General with backing from an
Speaker 9: activist investor, Mental Ridge. They're comparable sales numbers suggest that
Speaker 9: they're getting some traction there that people, you know, consumers
Speaker 9: out there are noticing improvements and responding. That's one thing.
Speaker 9: Another thing is the holy issue of trade down. You
Speaker 9: you know, in the wake of the financial crisis, you
Speaker 9: had a lot of trade down from middle income, higher
Speaker 9: income people doing just what you say, saying, you know, look,
Speaker 9: that's going to be a great bargain. I'm going to
Speaker 9: buy more stuff at Dollar General or Dollar Tree or
Speaker 9: other dollar stores. I think you're seeing a lot less
Speaker 9: of that right now, and where you're seeing it is
Speaker 9: in Walmart. And so I think that whether it's competition
Speaker 9: from small box stores like other dollar stores, or competition
Speaker 9: from the really big ones out there, I think Dollar
Speaker 9: General is under a lot more pressure than it used
Speaker 9: to be now. At the same time, you know, by
Speaker 9: its own admission, it has this issue with store conditions.
Speaker 9: You know, can it fix the store conditions. It's fixing
Speaker 9: the store condition is going to be good enough to
Speaker 9: get back some of that business and get back onto
Speaker 9: a growth path in terms of comparable sales store by store.
Speaker 9: I mean, that's an open question.
Speaker 2: I just think about too, that these stores do play
Speaker 2: a role. That there are small communities around the country
Speaker 2: right that don't.
Speaker 11: Have anything, don't and as the story also documents like
Speaker 11: some of these communities have actually resisted having Dollar General
Speaker 11: come in, have lost some of those battles, So there's
Speaker 11: this tension there. I also just think the moment that
Speaker 11: we seem to be at with labor in this country, with.
Speaker 3: UAW doing what it's doing, Hollywood doing what it's doing.
Speaker 11: Just to look at retail for a second and be like, oh, yeah,
Speaker 11: there's this world that I don't think we talk about
Speaker 11: enough Business Week, but this is, you know, a landscape
Speaker 11: of what America really looks like, and the people who
Speaker 11: are in the front lines actually dealing with some of
Speaker 11: these issues that you know, you don't expect to have
Speaker 11: to deal with a machete wielding customer, and yet at
Speaker 11: Dollar General, that's part of your job description.
Speaker 3: Even if you don't get training for it.
Speaker 5: It's not in the training.
Speaker 8: No, it's not.
Speaker 2: It mean that point we laugh, but it's disturbing and
Speaker 2: it's real for some folks. Incredible cover story Brendan Case,
Speaker 2: Bloomberg News US retail repert. Of course, the editor of
Speaker 2: Bloomberg Business Week magazine, Joel Weber, this is the cover story.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 8: Ah.
Speaker 2: Yes, indeed we did write about real things. But he
Speaker 2: also told some great tales.
Speaker 3: Yeah he sure he sure did. We'll talk about Yeah.
Speaker 2: A contrarian conversationalist and an iconic writer controversialist too. Yes,
Speaker 2: focused on status it's dark side humiliation is. Nonfiction works
Speaker 2: included tales of psychedelic dropping hippies, such as the electric
Speaker 2: kool Aid acid test. You talked about that, reading it
Speaker 2: in high.
Speaker 3: School, college college.
Speaker 1: Yeah.
Speaker 3: Class on the sixth dies pretty cool.
Speaker 2: Class, risk taking astronauts the right stuff, which was made
Speaker 2: into an incredible movie. We're at the forefront of new journalism,
Speaker 2: blending literary flair with immersive reporting.
Speaker 3: His portrait of the Downfall of Entitled bond Trader Sherman
Speaker 3: McCoy and the Bonfire of the Vanities, his first novel,
Speaker 3: came to define an entire era, so writes our next guest,
Speaker 3: Joe Mysak, editor of Bloomberg Brief Municipal Market. Joe over
Speaker 3: the last year spent many hours digging through the two
Speaker 3: hundred and thirty six boxes stacked in the vaults of
Speaker 3: the New York Public Library's main building, Carol in Manhattan,
Speaker 3: the archives of Tom Wolfe.
Speaker 2: His story about what he found is featured in the
Speaker 2: Remark section of the upcoming issue of Bloomberg Business Magazine.
Speaker 2: Kind of reads like its own literary tale. You can
Speaker 2: read it now at the Bloomberg Terminal, of course, in
Speaker 2: at Bloomberg dot com slash BusinessWeek. Joe is here in
Speaker 2: our Bloomberg Interactive Brokers studio, So talk to us. First
Speaker 2: of all, I'm just curious, what was the pitch meeting
Speaker 2: to Joel in doing this, or did Joel come to
Speaker 2: you and say, Joe, you got to do this? Or
Speaker 2: how did this come about?
Speaker 12: No, I discovered this, you know, this little episode of
Speaker 12: literary history. I found a letter in the archives from
Speaker 12: Tom Wolfe's. Tom wolf had been a trustee at Saint
Speaker 12: Christopher's School in Richmond, had gone there, graduated nights at
Speaker 12: forty seven, and there's a letter from the headmaster there saying,
Speaker 12: you know, I wish you'd give this guy, Kirk Maturn
Speaker 12: a call. He gave us a very nice bequest, and
Speaker 12: as you know, we're starting up our ramping up our
Speaker 12: endowment campaign. Okay, so you know, the archives are spread
Speaker 12: out in a lot of different boxes, so that's not
Speaker 12: perfectly chronological. So you're going through them and saying, ah,
Speaker 12: here here, then this must be connected here and and
Speaker 12: just like all of a sudden, you know, when I
Speaker 12: saw this guy's response back to you know, Tom Wolf
Speaker 12: writes him and says, thank you for this. This is wonderful.
Speaker 12: As you know, we're starting up our endowment. Maturn gets
Speaker 12: back to him and on his lazard fare stationery says, wow,
Speaker 12: you know, thank you so much for your nice letter.
Speaker 12: And you know, why don't we have lunch sometime And
Speaker 12: you know, not just us, but I have some friends
Speaker 12: on the street who'd like to meet you too, And
Speaker 12: I'm not going to put you on a podium. Let's
Speaker 12: just have an informal lunch. And he sets up this
Speaker 12: lunch at the twenty one club now shuddered unfortunately, and
Speaker 12: you know there's a separate for that. And you know,
Speaker 12: then on one of the other letters, Tom writes or
Speaker 12: you know, starts drafting a reply saying, you know, your
Speaker 12: your friends were fascinating and they clued me into this
Speaker 12: world that I knew nothing about. So I put all
Speaker 12: this together and I said, wait a minute. This guy,
Speaker 12: Kirk Mattern, is the guy who was responsible for Sherman McCoy,
Speaker 12: the protagonist of Bonfire the Vanities, becoming a Wall Street trader.
Speaker 12: He had been in the Rolling Stone series and it
Speaker 12: went I think for about twenty seven.
Speaker 3: The serialized version of serialized version of Bonfire.
Speaker 12: Tom was writing it against deadline all the time he
Speaker 12: had been a writer. And the title of his book,
Speaker 12: and it was never quite defined what it was, was
Speaker 12: called A Man in Slices, which, of course is funny
Speaker 12: because Tom Wolf's third novel is called A Man in
Speaker 12: full So.
Speaker 3: Joe, you call him Tom, Yeah, like you know him? Well,
Speaker 3: you know, how did you find yourself at the New
Speaker 3: York Public Library looking through Tom Wolf's mail Tom wolves
Speaker 3: mail over the last year and tell us how you
Speaker 3: came to know him over your career and over over his.
Speaker 12: Well, okay, I was I was in search of There's
Speaker 12: a there's a couple of lines of Bonfire where Sherman
Speaker 12: McCoy's daughter asks him, and this is in the published
Speaker 12: version of the book. Book says, Daddy, what do you do?
Speaker 12: What do you do, daddy, what do you do all day?
Speaker 12: And Sherman McCoy starts to fumble around, and finally his wife,
Speaker 12: Judy says, and I got this, and she says, what
Speaker 12: daddy does is he slices the cake and he hands
Speaker 12: out slices and Daddy gets to keep the crumbs. And
Speaker 12: so Sharon recoiled. You know, I was completely humiliated by
Speaker 12: this and like thinking, like, wow, the crumbs and at that,
Speaker 12: you know they're out in Southampton right then? And uh
Speaker 12: so I remember I asked Tom one night we're having
Speaker 12: dinner at Ben Benson's, also now closed. I asked him,
Speaker 12: I said, who came up with that?
Speaker 1: Did you come up with that?
Speaker 12: And he goes, no, Desmond Fitzgerald? And I remember the
Speaker 12: name Desmond Fitzgerald. But you know, I, you know, last
Speaker 12: summer I said, wow, remember that. I bet that'd be
Speaker 12: a nice column. Let me go to his papers and
Speaker 12: see if I could find that. Sure, how difficult could
Speaker 12: it be? Well? Very difficult, because jos I said, two
Speaker 12: hundred and thirty six boxes. And you know you don't
Speaker 12: you're not just faced with him. You have to request
Speaker 12: different boxes, and you know, so it's the whole process
Speaker 12: so I'm I'm looking, I'm looking, and I didn't find that,
Speaker 12: but I found Kirk Maturn. And so then Kirk Macturn's
Speaker 12: son works on Wall Street. And I said, well, wait
Speaker 12: a minute, this can't be that Kirk Maturn, this is
Speaker 12: the Sun. So I emailed him cautiously and I said,
Speaker 12: you know, I don't know if your father is still alive,
Speaker 12: but I'm looking to find out this information and chat
Speaker 12: with him bit. And he goes, oh, sure, let me
Speaker 12: find out if you know, if you'd like to chat
Speaker 12: he's retired for him, And he got back to me
Speaker 12: and said, yeah, here's his email address. So then I
Speaker 12: got to calm him up. And you know, I just like, basically,
Speaker 12: you're the guy. You were the guy who changed the
Speaker 12: course of literary history, really, because if you think about it,
Speaker 12: on the one hand, if you have you know, here's
Speaker 12: a novel about a writer of a man in slices,
Speaker 12: or this entire chaotic scene of what did he put
Speaker 12: men baying for money on, you know, the floor of
Speaker 12: this Wall Street securities firm? And of course you know,
Speaker 12: Bonfire was not a particularly good movie, but the Wall
Speaker 12: Street scenes really captured people's imagination because all of a sudden,
Speaker 12: it's like this whole world is shown to you, and
Speaker 12: you know, one of the parts of this you know project.
Speaker 12: As I was doing it, Kirk Maturn set up a
Speaker 12: meeting at to go to Solomon Brothers during the Treasury
Speaker 12: Bond auction so that Tom could just watch it and
Speaker 12: witness it. And of course, you know, it was this
Speaker 12: wild thing. And it happened that Michael Lewis, was working
Speaker 12: at Solomon Brothers at that time, had not yet written
Speaker 12: Liarus Poker obviously. Uh So that's you know, that was
Speaker 12: why I was searching through the papers. And as I
Speaker 12: was searching through the papers, I mean, I became sort
Speaker 12: of a because you know.
Speaker 11: You go through every box.
Speaker 12: Yeah, in every box, there's there's a little surprise, like
Speaker 12: a little presence ie, you know, like Okay, for example,
Speaker 12: for example, Carol, it's Tom did this anthology called The
Speaker 12: New Journalism. And there's an introduction basically made up of
Speaker 12: a couple of pieces he wrote for New York Magazine
Speaker 12: and for Esquire. But there's all you know, And and
Speaker 12: what happened was I thought he just took those three
Speaker 12: parts and cobbled them together. No, Instead, there's this manuscript
Speaker 12: hundreds of pages, probably maybe even thousands of pages because
Speaker 12: the Tom Wolf writing was rewriting. Uh, and it includes
Speaker 12: this entire maybe two hundred pages of all about his
Speaker 12: time at Yale in graduate school, which he has never
Speaker 12: written about before. But there it is in the boxes
Speaker 12: at the New York Public Library. Tom did not like
Speaker 12: graduate school.
Speaker 2: Yea, I just said this picture of Joe just like
Speaker 2: surrounded by all this stuff. I don't know, maybe some
Speaker 2: coffee on the ground.
Speaker 12: Listen and public library.
Speaker 2: Very we're talking with Joe Maysak. Also of course in
Speaker 2: our studios Joe Webber, editor of Bloomberg Business WEEKND you know, Joe,
Speaker 2: We're just listening to Joe just unfold this tale of
Speaker 2: what he found out, uh and uh how it led
Speaker 2: to this most famous fictional bond trader, right that was
Speaker 2: in Bonfire of the Vanities.
Speaker 5: Do you need me?
Speaker 11: Because he was he was great.
Speaker 2: We always thinking about like when this was inspiring and
Speaker 2: just telling you the story and just I mean what
Speaker 2: you like.
Speaker 3: We weren't there for Bloomberg BusinessWeek, Joe, right, like, this
Speaker 3: is the piece that you wrote is a is a
Speaker 3: product of you being there, the research that you did.
Speaker 3: But Joel tell us how it came together.
Speaker 11: Joe wrote this story. I was like, why why do
Speaker 11: we need to know about Tom Wolf now, like, didn't
Speaker 11: he die? And then I'll wait a minute years documentary. Yeah,
Speaker 11: And and the documentary was the reason that I was like,
Speaker 11: you know, there's a reason that this matters now, right,
Speaker 11: And it's because Michael Lewis went to the same archive
Speaker 11: and wrote this story and he happened to write it
Speaker 11: before Tom Wolf died, And at the premiere on Friday,
Speaker 11: he actually said that he wanted to write it so
Speaker 11: that he could like see Tom's reaction to the story.
Speaker 11: We didn't get that that luxury, so we had to
Speaker 11: deal with that afterward. But I think because Joe had
Speaker 11: written the story and spent so much time in the
Speaker 11: archive and and look, in this world, in the Bloomberg world,
Speaker 11: Bonfire of the Vanities is a big deal, like that
Speaker 11: is it still feels like a foundational thing. And so
Speaker 11: the fact that Joe like found this little nugget that
Speaker 11: like first draft wasn't even really about the bond market,
Speaker 11: I was like, that is awesome, So that's that's what matters.
Speaker 11: It just felt like there's a little bit of history
Speaker 11: that we were able to to do to you know,
Speaker 11: provide a significant insight on and that was one hundred
Speaker 11: and fifty percent.
Speaker 3: Joe, what other archives are you questing to spend time?
Speaker 2: Well, you know about Jackie.
Speaker 12: I heard that Gay Talise has quite an archive in
Speaker 12: the bottom of his house.
Speaker 1: Yeah, so that's.
Speaker 11: Going to the New York City Pilot Public viboraries, so
Speaker 11: you can get to it right right.
Speaker 2: What else did you find out about tum Wulf Because
Speaker 2: you did find out more about Oh, he became almost
Speaker 2: one of the characters that he has written about.
Speaker 12: You know, there's so much in in the the archive
Speaker 12: that you it's it's really it's it's an education in
Speaker 12: certainly journalism history. You know, for example, I came across
Speaker 12: this piece that he wrote first of that he pitched
Speaker 12: he set like a twenty seven page pitch letter to
Speaker 12: the Saturday Evening Post, which in nineteen sixty two was
Speaker 12: quite a legitimate magazine, and he included this, you know,
Speaker 12: a pitch for an article about a status life in Washington,
Speaker 12: d c. Because at that point he was working for
Speaker 12: the Washington Post. And you know, he sends this pitch
Speaker 12: letter and then apparently later on sends the completed story,
Speaker 12: and there's a thirty five forty page article about status
Speaker 12: life in Washington and the Kennedy administration. And I was
Speaker 12: never run the Saturday Evening Post. It's never run anywhere.
Speaker 12: So you just keep coming across these little presence and
Speaker 12: you know, this wasn't published, This wasn't published.
Speaker 15: Isn't this something unbelievable?
Speaker 3: I mean, is there going to be just opportunity for
Speaker 3: a book of the unpublished works of Tom Wolfe?
Speaker 12: Oh? I think you know, not only the unpublished, the
Speaker 12: un kind of unpublished work, but the uncollected work. So
Speaker 12: many of his book reviews are really insightful where he
Speaker 12: you know, he really tells you what he's thinking, including
Speaker 12: this entire evisceration of Norn Mailer. Incredible.
Speaker 11: That was an interesting part of just how much tension
Speaker 11: there was. And you know, if you're interested at all
Speaker 11: in this, it's worth checking out this documentary, which in
Speaker 11: New York is that i f C called.
Speaker 2: Radical wolf great stuff.
Speaker 11: You could go on and on.
Speaker 2: This story sounds like you need to write a book.
Speaker 2: I'm just telling you you've got nothing to do. I mean,
Speaker 2: if t has been in the archives, just go write
Speaker 2: the book. Joe my sack, of course, and Joel Weber.
Speaker 2: Check this out remark section of the upcoming new magazine.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa, Play Bloomberg eleven thirty.
Speaker 3: Well, her next guest is an author of many books,
Speaker 3: including the New York Times bestseller The Wizard of Lies,
Speaker 3: Bernie Madoff, and the Death of Trust. That book made
Speaker 3: into an HBO film. It starred Robert de Niro and
Speaker 3: Michelle Pfeiffer. She also spent more than twenty years at
Speaker 3: The New York Times, where she was a finalist for
Speaker 3: the Pulitzer.
Speaker 5: Per Can I tell you?
Speaker 2: Robert de Niro for years leading up to with Tribeca,
Speaker 2: kept asking him when are you going to do maidof
Speaker 2: When are you going to do Meido?
Speaker 3: And then he did it, and then he did it.
Speaker 2: Anyway, go ahead.
Speaker 3: She got him to do Madoff.
Speaker 8: She did.
Speaker 3: Her most recent book is Taming the Street, The Old Guard,
Speaker 3: The New Deal, and FDR's Fight to regulate capitalism. It
Speaker 3: came out last week. It's an exploration of financial regulation
Speaker 3: during the New Deal, a period of time that included
Speaker 3: the creation of the SEC. The Financial Times called the
Speaker 3: book quote riveting and timely, and I've got to agree.
Speaker 3: We're very pleased to have with us. Diana B. Henriquez
Speaker 3: here in our Bloomberg Interact broker's studio. Full disclosure, Diana
Speaker 3: did give me my first job in business journalism when
Speaker 3: I was a research assistant on The Wizard of Lies
Speaker 3: back in graduate school. Diana, welcome, It's good.
Speaker 2: To see you in doors. You can I just say
Speaker 2: thank you.
Speaker 8: You've turned out pretty well. I think my judgment was
Speaker 8: pretty great.
Speaker 3: Well, thanks so much so. Carol and I were talking
Speaker 3: about this just because in the last three hours, basically
Speaker 3: like everything we see today reminds us of the Roaring
Speaker 3: twenties and what was happening.
Speaker 8: Isn't it remarkable? It is remarkable deja boo all over again,
Speaker 8: as the old joke does. But you know, these are
Speaker 8: our roaring twenties and the press to deregulate, to reduce
Speaker 8: the fetters on unfedtered capitalism. Some of the arguments that
Speaker 8: I see in the press today were lifted from Calvin Coolidge,
Speaker 8: almost word for word, Comma for comma. It's amazing how
Speaker 8: the arguments, the defenses against regulation that emerged in the
Speaker 8: twenties and thirties are have resurfaced today.
Speaker 3: But it's not just the arguments against regulation. It's also
Speaker 3: the concentration of wealth that we're seeing.
Speaker 8: That's what I thought was concentration of wealth, the disparity
Speaker 8: of wealth, the amount of income growth it is going
Speaker 8: to the top one percent, the stagnation of average and
Speaker 8: ordinary workers' incomes. All of that is straight out of
Speaker 8: the nineteen twenties. We're seeing technologies disrupting major industry. Same
Speaker 8: in the nineteen twenties. Major changes in manufacturing wiped out
Speaker 8: three million jobs at the beginning of the twenties, and
Speaker 8: a million of them never came back.
Speaker 2: So, Dana, does it make you because it's interesting because
Speaker 2: we just talked a lot about AI today and the
Speaker 2: disruption there again. I mean, it's kind of a constant narrative.
Speaker 2: But does it make you say, listen, the world, the economy,
Speaker 2: the market, business, it's cyclical, we go through these changes
Speaker 2: or does it know?
Speaker 8: How do you think about I think the market is
Speaker 8: always going to be a very sensitive barometer of a
Speaker 8: disruptive change. And whether that disruptive change is radio as
Speaker 8: it was in the nineteen twenties, which was changing the
Speaker 8: way newspapers operated, changing the whole landscape of mass communication,
Speaker 8: but whether it's AI arriving at a time when finance
Speaker 8: is already highly automated. But the reliance of the market
Speaker 8: on the status quo, considering that it makes its money
Speaker 8: because things change, right, It is amazing to me that
Speaker 8: everyone thinks it's going to stay the same. And indeed
Speaker 8: they did in nineteen twenty eight twenty nine, right up
Speaker 8: until October of nineteen twenty nine, they said, oh this
Speaker 8: is this is a perfect world. And for the pudocrats,
Speaker 8: it was a perfect world. And it's always going to
Speaker 8: change in within the next decade. As I detail in
Speaker 8: that that's the stretch of time I cover in Taming
Speaker 8: the Street nineteen twenty nine to nineteen thirty nine, The
Speaker 8: world turned upside down?
Speaker 2: Can I ask how you got there?
Speaker 9: Like, how did you say?
Speaker 2: You obviously could write about probably anything in every thing.
Speaker 2: So what is it that said I got to do this?
Speaker 8: Oh? You know, I fell in love with the story
Speaker 8: of Richard Whitney the Fall of the Great New York
Speaker 8: Stock Exchange President when I first started covering Wall Street,
Speaker 8: you know, back in the Pleistocene era, stopped and I said, gosh,
Speaker 8: what a tale. And it had been included in a
Speaker 8: kind of episodic anecdotal book called Once in Gaulconda by
Speaker 8: John Brooks, which I loved, and I ducked it away,
Speaker 8: tucked it away, and always thought that that period of
Speaker 8: creation of market regulation would have been fascinating to live through.
Speaker 8: But what really peaked my interest, Caroline, was the two
Speaker 8: thousand and eight meltdown.
Speaker 14: You know.
Speaker 8: I was going to work at the New York Times
Speaker 8: every day in the fall of two thousand and eight
Speaker 8: after Lehman Brothers closed, wondering if that would be the
Speaker 8: day the ATMs went dark. And I was aware, as
Speaker 8: an amateur financial historian, that I was living through history.
Speaker 8: I was living through events that would be his historic
Speaker 8: in the financial history of the country. And I said,
Speaker 8: you know, people going through nineteen twenty nine felt this way,
Speaker 8: what an incredible experience they had. So but that kind
Speaker 8: of began to crystallize what I wanted to do. Then,
Speaker 8: of course, Bernie Madoff happened in two thousand and eight,
Speaker 8: and my life went off in a different path. And
Speaker 8: then the thirtieth anniversary of the nineteen eighty seven crash came, well,
Speaker 8: that got me closer to twenty nine, because, of course,
Speaker 8: the eighty seven crash was the worst day in Wall
Speaker 8: Street history, eclipsing the worst days of nineteen twenty nine.
Speaker 8: And finally, when that book was done, I said, I
Speaker 8: think it's time. So I started work on this book
Speaker 8: about five years ago, when no one ever mentioned the
Speaker 8: New Deal, when it was as if Roosevelt had never existed.
Speaker 8: But I'm digging, digging into the story and seeing more
Speaker 8: and more parallels.
Speaker 2: And then as the last five years.
Speaker 8: Have unfolded, it is as if the puzzle pieces that
Speaker 8: matched the nineteen twenties and thirties just dropped into place.
Speaker 2: It's pretty so it was amazing.
Speaker 3: Yeah, Well, let's talk about the political environment here in
Speaker 3: which FDR came into office, because you note in the
Speaker 3: book that it's quote alarming political discontent erupting from the
Speaker 3: extreme left and the radical right. I thought to myself
Speaker 3: when I read that sounds familiar. Are you talking about
Speaker 3: twenty twenty one? Are you talking about twenty twenty.
Speaker 8: No, I'm talking about nineteen twenty eight, twenty nine, thirty
Speaker 8: thirty one, thirty two. The right, the suffering in this country. First,
Speaker 8: we can't even take it in today, but twenty five
Speaker 8: percent of the workforce was out of work in those days.
Speaker 8: That was thirteen million people. But imagine that one out
Speaker 8: of every four people you know doesn't have a job.
Speaker 8: Many of them haven't had a job in years. People
Speaker 8: are living in caves in Central Park, there are scavenging landfields, fields,
Speaker 8: The degree of suffering in the country is reaching such
Speaker 8: a point that it's at powder keg waiting to explode.
Speaker 8: From the left, you have increasingly militant communist interests that
Speaker 8: are eager to harness this worker anger and outrage to
Speaker 8: make gains in the political system. And that, of course
Speaker 8: alarms the industrialists and captains of capitalism on the right,
Speaker 8: who are fearful of labor uniting with communists. And they
Speaker 8: start looking longingly at Italy and Germany, which have been
Speaker 8: under fascist control in Italy's case for more than a decade,
Speaker 8: and they say, hmm, they've got some pretty good ideas
Speaker 8: over there. Look how they're getting their economy going. Look
Speaker 8: how they're managing their labor unions, locking them up. But
Speaker 8: so you've got these two tensions, and you've got a
Speaker 8: man who steps in FDR and says, if democracy can't
Speaker 8: fix this, people are going to give up on democracy.
Speaker 8: And so this is one last chance for democracy to
Speaker 8: relieve this suffering and give people hope. And that's what
Speaker 8: carried him into office.
Speaker 2: The ties between capitalism democracy like it's tortured. It's important.
Speaker 8: It's actually so simple as FDR saw it. And I
Speaker 8: didn't see it this way until I read speeches of his.
Speaker 8: When he signed the bill creating the sec he said.
Speaker 2: Wait, said it again, the bill creating the SEC An
Speaker 2: institution we take for granted. Yeah, well, and we.
Speaker 8: Take the FDIC for granted. That didn't exist before we
Speaker 8: had lived our entire lives hell protection. Yes, right. So
Speaker 8: he saw that a healthy democracy required well regulated markets
Speaker 8: that seemed fair. He believed that if the average American
Speaker 8: didn't feel he could get a fair shake in the economy,
Speaker 8: he would not support the democracy. And so to him,
Speaker 8: the two were completely wetted. And so if I say,
Speaker 8: a lot of people are saying you with democracies on
Speaker 8: the ballot in twenty twenty four. I'm saying, yeah, financial
Speaker 8: regulation is on the ballot in twenty twenty four to
Speaker 8: two because they are inextricably linked. The fairness of the economy,
Speaker 8: in the eyes of the average American is what sustains
Speaker 8: support for this democratic experiment, and Roosevelt saw that almost break.
Speaker 8: There's an anecdote which I love. It's perhaps apocryphal, but
Speaker 8: I love it anyway. A visitor of the White House
Speaker 8: right after Roosevelt was sworn in at the depths of
Speaker 8: the depression, said well, you know, if you can cure
Speaker 8: this depression, mister president, you'll be our greatest president. But
Speaker 8: if you fail, you'll be our worst president. And Roosevelt
Speaker 8: corrected it and me said, no, if I fail, I'll
Speaker 8: be our last president. To the perspective of the people
Speaker 8: at the time, it was that desperate.
Speaker 3: That's journalist and author Diana Beinry. Her latest book is
Speaker 3: out now. It's called Taming the Street, The Old Guard,
Speaker 3: the New Deal, and FDR's fight to regulate American capitalism.
Speaker 2: You're listening to Bloomberg Business Week. We just talked regulation
Speaker 2: on Wall Street, while coming up next we'll turn to
Speaker 2: another hot button policy issue, controlling our Southern border.
Speaker 3: Chef John Fraser discusses what immigration flows mean for America's
Speaker 3: hospitality labor force. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 3: Well, Jess, I'd love having restaurant tours on our program
Speaker 3: because well, I love food, and sometimes if you're here
Speaker 3: in person, they bring us foods. It's really fun. But
Speaker 3: also I love speaking to them about the business, how
Speaker 3: much food costs, how tough or how easy it is
Speaker 3: to get employees, and of course customer demand. It can
Speaker 3: tell us just a lot about how the economy is
Speaker 3: doing in different parts of the country. Very please to
Speaker 3: ab with us this afternoon, John Fraser. He's a restaurant
Speaker 3: tour of Michelin starred chef. He's the founder of JF Restaurants.
Speaker 3: They've got fifteen restaurants with more than four hundred employees
Speaker 3: around New York City, Long Island, during California, in LA.
Speaker 3: They've got places in Florida as well. He's also got
Speaker 3: a YouTube series called Silent Chef, which we're going to
Speaker 3: talk about as well. Chef John Fraser joins us on
Speaker 3: a zoom from New York City. Chef, how are you great?
Speaker 15: Thank you, thanks for having me.
Speaker 3: Yeah, it's really good to have you with us. First,
Speaker 3: just give us an update on the state of the business.
Speaker 3: What are you seeing right now across your different restaurants
Speaker 3: and concepts.
Speaker 14: Yeah, you know, it's really city by city. New York City,
Speaker 14: as everyone knows, kind of is a really seasonal business.
Speaker 14: Our New York City restaurants who were up from last
Speaker 14: summer for sure. We'll know in a couple of days
Speaker 14: kind of how much. But we do see a bit
Speaker 14: of a little always in the second heading into the
Speaker 14: third quarter, and then we ramp up into the fourth,
Speaker 14: which is by far our best around Florida. Also, seasonal
Speaker 14: dips happen in the summertime, and we're really really strong
Speaker 14: demand across the hotel properties out in Long Island, as
Speaker 14: you know, that's that's where it all happens in the summertime.
Speaker 14: It's a seasonal business, and we've been rocking. We'll probably
Speaker 14: go until around the end of October and then we'll
Speaker 14: settle into the winter months.
Speaker 3: Well, what about getting employees. If we were to speak
Speaker 3: to you two years ago, I know you would have
Speaker 3: said it's tough to find employees to uh, to work
Speaker 3: in the restaurants. Tell us about how tough it is
Speaker 3: to get those employees, and then also tell us about
Speaker 3: food costs and if they're going down.
Speaker 14: Yeah, Starting with food costs, I mean, we have seen
Speaker 14: a drastic decrease in our food cost as supply chain
Speaker 14: has gotten better. You know, thankfully we're able to pass
Speaker 14: that along to our guests, and we're seeing that across
Speaker 14: all of our restaurants in all of our markets. The
Speaker 14: food hike, the food cost hikes were kind of universal.
Speaker 14: It didn't matter market to market. Eggs we're still, you know,
Speaker 14: wildly expensive. Gas was wildly expensive. That was all passed
Speaker 14: on to us and there for our guests. So from
Speaker 14: a food cost perspective, we're seeing things drastically reduced. There
Speaker 14: still are some pockets, I would say, a lot of
Speaker 14: proteins like beef I still very very high. I'm not
Speaker 14: sure that's ever going to get better. To be honest
Speaker 14: with you, it may just be a change in the
Speaker 14: way that we construct our menus in the way that
Speaker 14: our guests actually eat.
Speaker 15: From a labor perspective, we are starting to see some uptick.
Speaker 14: We've we've hired on let's call re hired a lot
Speaker 14: of people that were pre pandemic hospitality employees. So in
Speaker 14: other words, we're bringing folks in that who have had
Speaker 14: experience in the past, whereas I would send in the
Speaker 14: last couple of years we were training from zero, which
Speaker 14: is fantastic for us, and I think that that guest
Speaker 14: experience is drastically improved in that way.
Speaker 15: I still think that we.
Speaker 14: You know, hot topic, you know, when we figure out
Speaker 14: a sensible kind of reaction to our borders, that will
Speaker 14: be kind of the last domino for us to fall
Speaker 14: in order to equalize and be able to pass as
Speaker 14: savings on to our guests.
Speaker 2: So in your view, do you really think the economy
Speaker 2: is slowing?
Speaker 14: In my view, well, compared to what right, compared to
Speaker 14: a year ago, we're drastically up from last year compared
Speaker 14: to two years ago. Obviously, what I would say is
Speaker 14: what we're seeing is the sort of bifurcation of spending.
Speaker 14: We'll have some folks that join us who, let's say,
Speaker 14: are not big spenders. They're out for an experience, and
Speaker 14: then we'll have some folks who are clearly out to
Speaker 14: party and have a great time and who will have
Speaker 14: a drastic spend. So what I would say is, I'm
Speaker 14: starting to see a split of sort of people that
Speaker 14: are willing to kind of separate with those those dollars
Speaker 14: and people that are remaining sort of tight. But we
Speaker 14: have not seen a drop in reservations, which for us
Speaker 14: is kind of the tell.
Speaker 3: Hey, go back to chef what you were saying about
Speaker 3: immigration and border policy here and connect that to what
Speaker 3: you see at restaurant.
Speaker 14: At the restaurants, well, you know, I can only speak
Speaker 14: from my experience, and it's anecdotal, right, I don't I'm
Speaker 14: not coming from a place of data. But I can
Speaker 14: tell you who our applicants are, and I can tell
Speaker 14: you where they're from. What we used to have is
Speaker 14: quite a bit of Latino applicants, especially in the back
Speaker 14: of the house, and that has changed. We are now
Speaker 14: not as not employing as many, and a lot of
Speaker 14: those that we are employing our first time hospitality employees.
Speaker 14: So I'm not sure if there was a move around
Speaker 14: the United States and move back home to their home countries.
Speaker 14: But I can tell you that the hospitality workforce is
Speaker 14: severely understaffed and that would make a.
Speaker 15: Huge chunk for us.
Speaker 14: It has to be sensible, but it has to be soon,
Speaker 14: and that would probably mark a drastic change in your
Speaker 14: guest experience, its being better and the price that we
Speaker 14: have to charge.
Speaker 3: That's so interesting to hear, and because I think that
Speaker 3: part of the conversation often gets lost when we talk
Speaker 3: about immigration policy, because it's so polarizing when you have
Speaker 3: Democrats and Republicans fighting about it, and it actually sounds
Speaker 3: very clear from you. I'm wondering if you do any
Speaker 3: work in telling your local legislator about this, if you've
Speaker 3: partnered with any other restaurants to talk about this, because
Speaker 3: there are serious economic implications here.
Speaker 14: It is, it is polarizing, and I think that you know,
Speaker 14: I'm a small business owner and I'm I'm I'm not
Speaker 14: coming at it from a political point of view. It's
Speaker 14: simply spaces that we need filled. We do some work
Speaker 14: with our local folks in each one of our markets.
Speaker 14: We do a lot of work also in some of
Speaker 14: the training and onboarding of folks. You know, unfortunately, you know,
Speaker 14: the hospitality industry is one it is the largest employer
Speaker 14: in America. But our voice is not quite as unified
Speaker 14: as I think it probably could be nationally. And that
Speaker 14: could just be you know, a difference between states and
Speaker 14: and and also the competition in between.
Speaker 15: You know, small businesses.
Speaker 2: Talk to us about your YouTube series thank you.
Speaker 14: So, you know, during COVID, for the first time I
Speaker 14: had some some some some free time in probably twenty years,
Speaker 14: and I was looking around the media landscape of on
Speaker 14: the food scene, what's happening. And what I was finding
Speaker 14: is a lot of what was out there didn't speak
Speaker 14: to me. It was a lot of sort of how to,
Speaker 14: a lot of you know, a lack of why, a
Speaker 14: lack of why cook this way? Or why why this produce?
Speaker 14: And and I felt like that storytelling it's inside of me.
Speaker 14: It's how we weren't our restaurants. It's how we construct
Speaker 14: our menus and our concepts. But I didn't see it
Speaker 14: in the media. And so I wrote some short stories
Speaker 14: and I was lucky enough to get linked up with
Speaker 14: Jose Andres Media who who was a co producer and
Speaker 14: produced these.
Speaker 15: These pieces. You know, it's.
Speaker 14: Storytelling in the very simplest way. There's no talking, there's
Speaker 14: some music and ambient and it's sort of the chef's journey.
Speaker 14: The chef's journeys is about community, and it's about bringing
Speaker 14: people around a table. And I'm lucky enough to be
Speaker 14: able to be connected with these incredible farmers and fishers
Speaker 14: and wine makers and cheesemongers, and I really wanted to
Speaker 14: tell their story but in a way that was perhaps
Speaker 14: not loud and imbasticking in your face, but a little
Speaker 14: bit more subdued. Is about connectivity and mindfulness.
Speaker 3: How do you do this in a way that without talking?
Speaker 15: I think the visual is is quite impactful.
Speaker 14: We really spent a lot of time thinking about the
Speaker 14: best way to tell a story without words, and hopefully
Speaker 14: what that does is it brings a viewer in and
Speaker 14: they fill in the story. I mean, I would throw
Speaker 14: the question back to you, have you ever made a
Speaker 14: recipe off.
Speaker 15: Of something that you saw on television?
Speaker 3: I have, yeah, but it always requires me to go
Speaker 3: back and like google it because it's just the way
Speaker 3: my brain works, like inspired by it, you.
Speaker 6: Know, right?
Speaker 14: And I think that that's kind of what this series
Speaker 14: is supposed to do. It's supposed to inspire you to
Speaker 14: lean into where did those tomatoes come? From and how
Speaker 14: are they being used. Not necessarily how to treat the
Speaker 14: tomato and cut one inch and that sort of thing,
Speaker 14: because I frankly quite boring. I want to know where
Speaker 14: it come from and what was the life cycle of
Speaker 14: the tomato, not necessarily one inch or two inches. I
Speaker 14: find that actually most people would would say no to
Speaker 14: that answer that they don't cook from what they see
Speaker 14: on television. It's entertainment, and the style of entertainment that
Speaker 14: we're hoping to bring here with our partnership with Calm
Speaker 14: is one of mindfulness and connectivity.
Speaker 11: Yeah, once I get my cooking back calfs back on,
Speaker 11: I will definitely be doing this.
Speaker 2: I'm curious how you pick a particular food for each segment.
Speaker 14: Right, So what this series does is it focuses on
Speaker 14: a very small radius of locality. So within a couple
Speaker 14: of miles in Long Island, there's a small town called Southold,
Speaker 14: and inside of that there's a biodynamic farm called KK
Speaker 14: there is an oyster fishery called Little Ram and there's
Speaker 14: a cheesemonger called Coptapano.
Speaker 15: And what I really wanted to do is sort of
Speaker 15: bring you into this place.
Speaker 14: It's very special and dear to me and show you
Speaker 14: kind of what happens within a very small radius and
Speaker 14: a very intense kind of time as well. Summer of
Speaker 14: one year ago, basically summer of twenty twenty two.
Speaker 3: Hey, John, before we let you go, I am not
Speaker 3: very good in the kitchen. I gotta be honest. However,
Speaker 3: I loved the Bear, and I'm wondering if the popularity
Speaker 3: around the FX series The Bear has led to an
Speaker 3: increase in people just like wondering what happens in the kitchen,
Speaker 3: you know.
Speaker 14: I think I think there's a lot of conversation around
Speaker 14: also not only sort of the personality of a cook
Speaker 14: or what happens during a service. Yeah, so it's beyond
Speaker 14: the kind of recipes and sort of the action, but
Speaker 14: also the kind of the people that are producing those
Speaker 14: things and the kind of pressures that they're in. I'm
Speaker 14: thankful for that story to be out there because I
Speaker 14: think it's one that's it needed to be told.
Speaker 15: But also when you've got like a good looking dude
Speaker 15: cooking and.
Speaker 14: Screaming and yelling, there's like great inspiration that hopefully will
Speaker 14: come to more folks joining us.
Speaker 3: John Fraser, a restaurant ur and chef. He's the founder.
Speaker 3: If you have restaurants, we love it when you join us.
Speaker 3: Thanks so much.
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