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Speaker 1: One of the things we want to get to too
Speaker 1: is a story that we've been keeping an eye on,
Speaker 1: and that has to do with Broadcom and the company
Speaker 1: apparently in talks with a group of lenders to raise
Speaker 1: more than sixty billion dollars in debt from AICHIP financing
Speaker 1: deal that will benefit Anthropic and other companies, according to
Speaker 1: people with knowledge of the matter of this right through,
Speaker 1: let me just see it hit just after the closing
Speaker 1: ball and just real quickly, let me just pull it
Speaker 1: up and see if we've seen, yeah, you see shares
Speaker 1: a broadcome just up about four tens of a percent
Speaker 1: or show here in the aftermarket.
Speaker 3: We should get to it with Ryan Gold.
Speaker 1: He is Bloomberg News Deal reporter and he is in
Speaker 1: the Bloomberg News Washington d CPR Hey busy, busy guy. Uh,
Speaker 1: these deals fast and furious. Tell us about Broadcom, Ryan,
Speaker 1: would you find out?
Speaker 4: Yeah?
Speaker 5: Sure, good to see Carol. As always, I think this
Speaker 5: one is if this, you know, this comes to lie,
Speaker 5: comes to pass, this would be among the largest that
Speaker 5: we've seen of this type of deal. I want to
Speaker 5: just throw us back a little bit to June when
Speaker 5: we saw Broadcom announced that that partnership with Blackstone and Apollo,
Speaker 5: where essentially they were looking to strike an agreement to
Speaker 5: provide sort of twenty gigawats of compute globally for AI deployment.
Speaker 5: I mean, I think you could probably see this as
Speaker 5: some kind of extension of that agreement of sorts. This
Speaker 5: would essentially see Blackstone and Apollo participate again per our
Speaker 5: sourcing and reporting in a deal that could essentially see
Speaker 5: Wallcom lineup as much much is one hundred billion dollars
Speaker 5: in debt. I mean, when you put that together, it's
Speaker 5: sort of thirty billion being provided by Apollo and Blackstone,
Speaker 5: and then Broadcom itself essentially looking at maybe backstopping such
Speaker 5: guaranteeing somewhere in the region of sixty to seventy billion
Speaker 5: dollars per sourcing. So not insignificant. And I think this
Speaker 5: is kind of you know, where the trend is sort
Speaker 5: of heading right now, which is just this insatiable need
Speaker 5: for AI compute to use the job.
Speaker 1: And I will just say the market takes it or
Speaker 1: we'll see, right like, ultimately that's what we continue to
Speaker 1: watch if there's the investor appetite. But as we talked
Speaker 1: earlier at the beginning of our broadcast with Ira Jersey
Speaker 1: and Michael McKenzie, you know, investors are you know, offering
Speaker 1: these corporate offerings for debt are higher than what you're
Speaker 1: seeing maybe in treasuries and potentially crowding out increasingly the
Speaker 1: interest I should say when it comes to treasury demand.
Speaker 6: Yeah, Ran, I mean, do we have an understanding yet
Speaker 6: of like what kind of debt this would take form of?
Speaker 6: I mean, we know that Blackstone and Apollo will be
Speaker 6: leading the financing, but you have to imagine that they're
Speaker 6: going to be several different tranches and they'll be selling
Speaker 6: this to other institutional.
Speaker 5: Investors, right totally. Yeah. So, I mean, in the in
Speaker 5: the story we just put out that just coross a
Speaker 5: short while ago. I mean, I think the best way
Speaker 5: to probably think about this is that the Blackson and
Speaker 5: Apollo piece will be a junior piece and then sort
Speaker 5: of chunk the slug that Broadcom is looking to. You
Speaker 5: know that that sixty billion piece, if you will, is
Speaker 5: going to be you know, senior secured, and they are
Speaker 5: out to two banks among others as part of that group.
Speaker 5: You know that you would have to expect that there
Speaker 5: will be a number of banks here that would be
Speaker 5: looking to help will come with this because I think,
Speaker 5: you know, if you think about the just the sort
Speaker 5: of cost of providing something on this scale, I mean,
Speaker 5: Broadcom is looking to do this as efficiently as possible.
Speaker 5: In Hog ten, the CEO of Broadcom is known for
Speaker 5: this very very intricate kind of financial engineering, and in fact,
Speaker 5: I think Broadcom has become kind of an industry leader
Speaker 5: in this in this part of the sort of chips
Speaker 5: financing space. So I mean, when you say think about
Speaker 5: this in the round, this is kind of unprecedented. But
Speaker 5: for for if anyone's going to pull this something like
Speaker 5: the self, the people will come.
Speaker 6: It definitely just shows right Ryan, like how expensive it
Speaker 6: is for these companies to build out all of the
Speaker 6: AI infrastructure with that prior deal that Blackstone Apollo led.
Speaker 6: It was thirty five billion dollars, but it was only
Speaker 6: to build out capacity for one gigawat you know, of compute.
Speaker 6: And in your story here, you know, we're talking about
Speaker 6: a partnership that could eventually reach twenty gigawatts of compute.
Speaker 6: So there's gonna be a lot more of these, right.
Speaker 5: Yeah, I mean this is I think this is kind
Speaker 5: of the tip of the iceberg, and I think you
Speaker 5: have to wonder. You know, we sort of single out
Speaker 5: Onthropic at the top of that story on the Bloomberg,
Speaker 5: but you know, there are also going to be other
Speaker 5: companies and the beneficiaries of this deal, and this will
Speaker 5: come out in the wash. But I think if you're
Speaker 5: if you're looking on now, I mean, do you think
Speaker 5: about the agreements of woll compas with other companies including Apple.
Speaker 5: We saw that out there. They have their cord that
Speaker 5: they announced earlier this year. I don't want to throw
Speaker 5: it back there, but I will go there. I mean,
Speaker 5: you know, do we start to talk about the circular
Speaker 5: financing things?
Speaker 1: Yeah?
Speaker 5: And I don't know, perhaps.
Speaker 1: I don't know, but here we are, you know, and
Speaker 1: I think this is something we have to watch, right Ryan,
Speaker 1: I've just I go back to the interest. I mean,
Speaker 1: as long as investors are willing to support it, why
Speaker 1: wouldn't you tap the credit markets or the debt markets
Speaker 1: and continue with the fundraise. I will say when we
Speaker 1: talk to Ourmandy seeing a Bloomberg intelligence who looks at
Speaker 1: the AI spend as a whole, I mean, a lot
Speaker 1: of the fundamentals seem to continue to be there in
Speaker 1: terms of backlogs and demand. We saw that on the
Speaker 1: recent earnings, and a lot of folks anticipate who are
Speaker 1: in this sector, mind you, they might be talking their
Speaker 1: book expect us to continue for a couple more years.
Speaker 5: Yeah, and I think that's probably true. I think you
Speaker 5: also have to think about this in the context of
Speaker 5: the Nvidia transaction that we saw. You know, those that
Speaker 5: group of CEOs Goldman, I mean, David Solomon was there,
Speaker 5: Larry Think was involved, that group of that group of
Speaker 5: financing partners sort of coming together for one provider. I mean,
Speaker 5: now you have a sense to where I think more
Speaker 5: Come is probably going more down the private capital route.
Speaker 5: I think it's just it's it's different, right, I think
Speaker 5: it's two sides of the same coin in a way.
Speaker 5: I think investors will clearly take a view on sort
Speaker 5: of the securitization of all of this. I think the
Speaker 5: in Video agreement itself still has a little bit of uh,
Speaker 5: you know, there are a few details there that still
Speaker 5: need to be sort of fleshed out as far as
Speaker 5: how you actually securitize those chips as a financing class
Speaker 5: and that's a class. Sorry, but you know that itself
Speaker 5: was entirely novel. This is this is also novel. I
Speaker 5: think that in Video deal did obviously unnerve a few people,
Speaker 5: but this is just I think people having to think
Speaker 5: on the fly here as far as the SAI financing
Speaker 5: rollout is concerned, right.
Speaker 1: And maybe it's just a case of it's just so
Speaker 1: massive that we've got to be innovative disrupt a little bit.
Speaker 1: Or when you start to innovate or disrupt too much,
Speaker 1: is it a sign that maybe something's not quite right?
Speaker 1: And this is what we're all trying to figure out here.
Speaker 1: But the cap RaSE is still happening. Ryan, thanks so
Speaker 1: much for jumping on. This is obviously a big story
Speaker 1: for us continuously, so good to get your view on that.
Speaker 3: Of course. Is are Ryan Gould. He's Bloomberg News Deals reporter,
Speaker 3: out there in DC. Stay with us.
Speaker 1: More from Bloomberg Business Weekdaily coming up after this.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: Live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch US Live on YouTube.
Speaker 1: Hey, Wells Fargo today out publishing its first GLP one report.
Speaker 6: There's so much money invested in these GLP one so
Speaker 6: the banks have to get involved.
Speaker 3: They all know well they do, right.
Speaker 1: And what's interesting is I feel like the last three
Speaker 1: years it's been AI and GLP one and there's been
Speaker 1: certainly ups and downs in the narrative has changed. Specifically
Speaker 1: this report, it is their first of its kind from
Speaker 1: Wells Fargo. It's about how GLP ones are reshaping America's
Speaker 1: health spending, habits and healthcare system.
Speaker 6: Emily, I thought this was a very interesting perspective because
Speaker 6: you hear a lot about how these weight loss drugs
Speaker 6: are impacting like what people are eating and like snack
Speaker 6: companies bose if they're losing weight exactly. But this is
Speaker 6: specifically on the healthcare system. So let's get into it.
Speaker 6: We're joined now by Robin Wenzel, head of Wells Fargo
Speaker 6: Industry Insights with us from Minneapolis. Robin, great to see you,
Speaker 6: Thanks for joining us. Tell us about this report and
Speaker 6: why now, why look into this trend right now?
Speaker 7: Thanks so much for having me. It's great to be here.
Speaker 7: You know.
Speaker 8: One of the reasons why is we have a large
Speaker 8: healthcare practice, a dedicated team that specializes in and we
Speaker 8: like to make sure we stay ahead of a lot
Speaker 8: of the topics and conversations that impact those businesses. So
Speaker 8: for us looking at jop ones, we've all certainly seen
Speaker 8: a lot of conversation around how it impacts consumer purchasing
Speaker 8: and grocery stores sales, but we really wanted to dig
Speaker 8: in and understand the implication for the healthcare industry, and
Speaker 8: many of the things that we found were quite surprising
Speaker 8: to us, Like what you know, I'll start with bariatric surgeries.
Speaker 8: If we look at the rate of bariatric surgeries between
Speaker 8: twenty twenty two and twenty twenty four, we saw them
Speaker 8: declined by over thirty percent, and that was at a
Speaker 8: time where we saw GLP usage rise by about one
Speaker 8: hundred and twenty percent. So veriatric surgery has really been
Speaker 8: a go to for managing late stage obesity and helping
Speaker 8: to bring.
Speaker 7: That weight down.
Speaker 8: And when we look at the impact of GLP ones,
Speaker 8: really a game changer in terms of results and being
Speaker 8: able to help people get that weight off in a
Speaker 8: very effective manner. So being able to use that pharmaceutical
Speaker 8: off ramp to avoid surgery is certainly a nice outcome
Speaker 8: for many people. Conversely, though, on the other side, we
Speaker 8: do see people that we're not able to get the
Speaker 8: veriatric surgery, but the GLP ones are allowing them to
Speaker 8: get to a healthier weight that allows that surgery to
Speaker 8: be possible.
Speaker 1: So great for people, right, But you know, when I
Speaker 1: think about healthcare, great for people and great and probably
Speaker 1: extending their lives in so.
Speaker 3: Many different ways.
Speaker 1: But I do think about the impact too on like
Speaker 1: healthcare systems and hospital systems. Right that they're doing less surgeries.
Speaker 7: Absolutely, and I think what we have to look at.
Speaker 8: Is understand that this is a long term solution to obesity,
Speaker 8: So it can take time for these drugs to take
Speaker 8: effect to have impacts, So certainly a lot of the
Speaker 8: care that these patients receive will be ongoing. It's going
Speaker 8: to be a slow off ramp for them. But it's
Speaker 8: also nice to be able to have some other solutions
Speaker 8: and open the doors for others who have been battling
Speaker 8: obesity and some of the complications with it. I think
Speaker 8: for hospitals it's an opportunity to really change the game
Speaker 8: and maybe the profit centers for helping these patients so
Speaker 8: it can become more about outpatient services, medication management, management
Speaker 8: of side effects, and really you're on these weight loss
Speaker 8: drugs for life, so the ongoing help and support to patients.
Speaker 6: How are the drugs reshaping what pharmaceutical companies choose to
Speaker 6: pursue and do research on.
Speaker 7: You know, that's a great question, and it's an interesting one.
Speaker 7: We can see that the late.
Speaker 8: State pipeline of pharmaceutical R and D is heavily weighted
Speaker 8: towards GLP ones and it's not necessarily just for obesity.
Speaker 8: We are seeing other opportunities coming out of these drugs
Speaker 8: and potential opportunities. One is the treatment of substance abuse,
Speaker 8: specifically alcohol abuse, and so we've seen some research going
Speaker 8: into that. We've certainly heard about maybe some positive results
Speaker 8: around Parkinson's disease and dementia. So I think expanding and
Speaker 8: understanding these drugs and how they can help with other
Speaker 8: disorders is really a focus for some of these manufacturers.
Speaker 1: Kay, I feel like Robin, I'm the Debbie Downer here.
Speaker 1: I'm just going to go there. No, I've kitted with
Speaker 1: our reporter Madison Muller, who has covered this space extensively
Speaker 1: and so smartly, But it does feel like this is
Speaker 1: the drug that can cure so much that ails us.
Speaker 1: Having said that, it's also a reminder that having extra
Speaker 1: weight or being obese is a problem for your health.
Speaker 1: It's a reality and I don't want to get into
Speaker 1: how that can get you know, people uncomfortable about criticizing that,
Speaker 1: but it's just a fact of life right in terms
Speaker 1: of your health. But the other thing what I'm thinking
Speaker 1: about is how does the emphasis and stress a GLP
Speaker 1: wants maybe crowd out R and D spending on other
Speaker 1: drugs that also need to be discovered.
Speaker 8: You know, So they're taking up a bigger share of
Speaker 8: the late stage R and D pipeline, that doesn't necessarily
Speaker 8: mean that they're taking out dollars. So we can see
Speaker 8: that GLP brouds have outpaced onpology, you know, as a
Speaker 8: percentage of R and D spend, But that doesn't mean
Speaker 8: that those dollars towards oncology have diminished. In fact, they haven't.
Speaker 8: So I think what we're seeing is that we have
Speaker 8: a very widespread problem, specifically here in the US, with
Speaker 8: forty percent of US adults classified as obese. It's a
Speaker 8: medical diagnosis and so finding treatment for this population. As
Speaker 8: you said, it's all aspects of their health. So there's
Speaker 8: a cardiovascular element to this too, So it's really not
Speaker 8: just a weight loss drug. It's a cardio metabolic drug,
Speaker 8: and so it can be a game changer towards the
Speaker 8: health and prevention for many many people, impacting several that
Speaker 8: can benefit from this drug and enjoy a much healthier life.
Speaker 1: I've seen it directly, like impact people and just they
Speaker 1: are so much healthier, and it's just their their outlook
Speaker 1: and situation is so much better.
Speaker 6: Yeah, I mean, Robin, what are the This is pivoting
Speaker 6: a little bit, but I do want to ask what
Speaker 6: are the investment implications from this report? What do investors
Speaker 6: need to know.
Speaker 8: You know, who are looking at a situation where it's
Speaker 8: heavily weighted towards these drugs, and so any sort of
Speaker 8: disruption that could happen supply constraints, those would ripple through
Speaker 8: and they would have an impact, maybe broader than most
Speaker 8: people would expect. I do think there's a lot of
Speaker 8: research still to be done, and so the fact that
Speaker 8: there's money and capital going into it is a good thing.
Speaker 8: The other good thing is we are seeing the results
Speaker 8: and so it is very promising in many areas. I'm
Speaker 8: encouraged by the investment, but I would just caution that
Speaker 8: it could have some larger impact.
Speaker 7: So do any hiccups happen along the way?
Speaker 5: You know?
Speaker 1: One of the things I wanted to ask you, like
Speaker 1: orthopedics or something like that, where losing weight or being
Speaker 1: slummer can be better on your joints. It's not so
Speaker 1: much stress and so on and so forth. So maybe
Speaker 1: there's less demand for surgeries or so on.
Speaker 3: But at the same time.
Speaker 1: If GLP ones, which is a good thing, is enabling
Speaker 1: folks to live longer and being a drug that's so
Speaker 1: productive in helping a lot of different things, that certainly
Speaker 1: an individual that might orthopedics benefit because we're just around longer,
Speaker 1: we're going to all need kind of an overhaul.
Speaker 8: Yeah, I think it's an excellent point, and I don't
Speaker 8: think the data has settled on it yet. So you know,
Speaker 8: on one hand, one of the side effects of long
Speaker 8: term obesity.
Speaker 7: Is that wear and tear on the joints. It's the
Speaker 7: heap replacement of the hip replacements.
Speaker 8: If we're able to prevent the weight and keep the
Speaker 8: weight off, that could in theory reduce the need for
Speaker 8: those extra interventions. However, you know, as you point out,
Speaker 8: if you become healthier, you lose weight, you can become
Speaker 8: more active. You know, we can see a whole new
Speaker 8: slew of runners out there right and people embracing exercise.
Speaker 7: So it's a mixed bag.
Speaker 8: And I'll go back to to the the opportunity that
Speaker 8: that weight loss presents again, people who wouldn't otherwise qualify
Speaker 8: for the surgery, now it opens the doors for them
Speaker 8: as well by allowing them to lose weight and get
Speaker 8: a little healthier.
Speaker 1: Yeah, now, I love this. I love this deep dive.
Speaker 1: Thank you so much, really really appreciate it. Robin Wendel
Speaker 1: joining us. She is head of Wells Fargo Industry Insights.
Speaker 3: Joining us from Minneapolis.
Speaker 1: Their new report about how jlp ones are reshaping the
Speaker 1: business of healthcare.
Speaker 2: You're listening to the Bloomberg Business Weekdaily podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and the Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 1: We're going to head out to our West coast, San
Speaker 1: Francisco and Laura Blushe is senior editor for Bloomberg Business Week.
Speaker 3: Hey, Laura, good to have you here with us. A
Speaker 3: lot going on.
Speaker 1: Tell us, I feel like we were talking earlier a
Speaker 1: little bit about climate change, heating temperatures, landfills though have
Speaker 1: been a problem for a while.
Speaker 3: What's going on and what did you guys pick up on?
Speaker 4: Yeah, thank you so much for having me. I mean,
Speaker 4: just to set the stage a little bit. You know,
Speaker 4: every one of us, we all generate waste, we're all
Speaker 4: interacting with it every single day, and yet I think
Speaker 4: so many of us have the privilege of not thinking
Speaker 4: very much about what happens to it when it leaves
Speaker 4: our hand or the curb side barrel. But this story
Speaker 4: and kind of this reporting project that my colleague Rachel
Speaker 4: and I have been working on for the last year
Speaker 4: plus really looks at you know, where does it go
Speaker 4: and what are some of the kind of unexpected consequences.
Speaker 4: And so the more wastes that we're generating, the bigger
Speaker 4: landfills are getting and one of the kind of downstream
Speaker 4: consequences of that are these overheating landfills. And so in
Speaker 4: our most recent story which published this morning, which was
Speaker 4: a fall up to a big investigation we did last year,
Speaker 4: we looked at public records from about one hundred landfills
Speaker 4: in twenty different states and found that many of them
Speaker 4: are reaching much much hotter temperatures than you know, federal
Speaker 4: regulations want them to be reaching, and in some cases
Speaker 4: this is generating really significant problems for the communities nearby.
Speaker 4: As one example, the images you're seeing right now if
Speaker 4: you're watching, are from Shoesmith Landfill, which is outside Richmond, Virginia,
Speaker 4: where super hot temperatures this is like almost two hundred
Speaker 4: degrees fahrenheit inside the waste in the landfill are causing
Speaker 4: problems like millions of gallons of leech eate, which is
Speaker 4: essentially trash juice to kind of be pouring out of
Speaker 4: the landfill, which is getting into yeah, some of which
Speaker 4: has been found getting into local waterways. Hot landfills can
Speaker 4: also be incredibly odorous. They can release toxic emissions, you know,
Speaker 4: neighbors and another one of these sites in LA you know,
Speaker 4: have said they've been sickened with things like headaches and
Speaker 4: nausea and even more serious health problems like cancer, which
Speaker 4: public health officials have been looking into. And so this
Speaker 4: current story really looked at how are operators, the landfill companies,
Speaker 4: as well as regulators responsible for protecting public health environmental
Speaker 4: health responding to you know, elevated temperatures when they're getting
Speaker 4: reports that this is happening. And what we're finding is
Speaker 4: that they're really not taking the steps to intervene that
Speaker 4: experts say are needed to prevent these situations from getting
Speaker 4: much worse.
Speaker 6: Okay, I want to talk more about that, but just first,
Speaker 6: can you remind us how does a landfill overheat? Why
Speaker 6: would that happen?
Speaker 4: Yeah, it's a really good question, and this is actually
Speaker 4: a surprisingly contentious question. I mean, so just at a
Speaker 4: kind of baseline, this is a little bit chemistry one
Speaker 4: on one. Right, you know, landfills naturally generate some heat, right,
Speaker 4: waste is breaking down. It's supposed to be an anaerobic process,
Speaker 4: which means no oxygen in the waste. It's decomposing it's
Speaker 4: releasing you know, methane. That's probably what you've heard the
Speaker 4: most about when you think about landfill landfill problems and
Speaker 4: kind of their environmental impact. But sometimes these landfills can
Speaker 4: get much much hotter than they're supposed to be. And
Speaker 4: why that is can be for a number of reasons.
Speaker 4: The landfill industry, the waste industry, you know, in response
Speaker 4: to reporting like mine, says, you know, there's no fire here.
Speaker 4: What these elevated temperature landfills are the results of are
Speaker 4: like chemical properties of the waste. It's it's nothing to
Speaker 4: do with fire. Regulators disagree in some cases and say, no, actually,
Speaker 4: we have evidence that there's actually oxygen getting in and
Speaker 4: that's like blowing air on a fire, and you're actually
Speaker 4: you're actually you know, seeing the potential result of like
Speaker 4: a subsurface fire. So there's actually debate on exactly what
Speaker 4: is happening here. But what we do know is that
Speaker 4: these temperatures are going up, you know, to much higher
Speaker 4: levels than they're supposed to be. Other things like carbon
Speaker 4: monoxide also reaching much much higher levels, and one way
Speaker 4: or the other, whether it's a fire or something else.
Speaker 4: You know, the technical experts that we've been talking to
Speaker 4: are saying, you know, what is being done is really
Speaker 4: not enough to prevent these reactions from spreading and from
Speaker 4: creating the kinds of problems I mentioned earlier.
Speaker 1: Laura, as you go through this, I mean, there's so
Speaker 1: much in this, this investigative piece that you guys have done,
Speaker 1: second investigative piece. You know, we're talking about costs, right,
Speaker 1: and there's certainly cost on individuals and their lives, there's
Speaker 1: the impact on the climate. But you also, you know,
Speaker 1: we are into numbers here at Bloomberg, and you talk
Speaker 1: about for the Shoe Smith landfill, the cost of long
Speaker 1: term cleanup, including keeping the trash juice from leaking into
Speaker 1: the creek, a possibility officials have called catastrophic, estimated one
Speaker 1: hundred and seventy three million dollars. And you point out Virginia,
Speaker 1: tex taxpayers might have to pay that price because shoe
Speaker 1: Smith Brothers, which has had a history, as you point out,
Speaker 1: of environmental violations, has declared bankruptcy and abandoned the site.
Speaker 3: But somebody's going to have to clean it up.
Speaker 4: Yeah. It's a really really situation outside of Richmond that
Speaker 4: I think locals are in some ways just waking up
Speaker 4: to that. You know, the state is just sort of
Speaker 4: waking up to the kind of implications of and you know,
Speaker 4: I think it's it's in some ways an outlier because yes,
Speaker 4: this company has declared bankruptcy and that is creating this
Speaker 4: huge kind of question mark around who pays the price.
Speaker 4: But yeah, I mean the cleanup associated with these sites
Speaker 4: is really significant. You know, I don't have the number
Speaker 4: off the top of my head, but Shiquita Canyon in
Speaker 4: La County, right, that is, that has been a multi
Speaker 4: million dollar cleanup effort that the operator Waste Connections has
Speaker 4: had to undertake. And so yeah, this is this is
Speaker 4: becoming like an ongoing challenge that you know, these operators
Speaker 4: bike waste management, waste Connections public services like are aware of.
Speaker 3: And yeah, I mean where's the regulators? Where's the inspections?
Speaker 3: Like help me out here?
Speaker 1: I mean if it was my backyard, I certainly would
Speaker 1: be knocking on a regulator's door. But I know sometimes
Speaker 1: these landfills are in places maybe not so close to folks,
Speaker 1: But where are they?
Speaker 3: Where are the inspections?
Speaker 4: Yeah? Well, so actually, you know, they they are near
Speaker 4: a lot of people. We found that, you know, in
Speaker 4: our analysis of one hundred landfills, the twenty hottest you know,
Speaker 4: which have surpassed these levels that the EPA says don't
Speaker 4: go past them because it might mean a fire or
Speaker 4: another problem. Over a million people live near these sites,
Speaker 4: so they're not all as kind of rule as you
Speaker 4: might expect. Yeah, I mean, what are people sort of
Speaker 4: doing about it? You know, there's been I think significant uproar,
Speaker 4: certainly with the one in La County and Virginia. Landfills
Speaker 4: in Ohio Missouri have again all sort of you know,
Speaker 4: led to community efforts to draw attention and in some
Speaker 4: cases that you know that is leading to change. In California,
Speaker 4: after our story was published last year, the state did
Speaker 4: update its regulations addressing a number of the issues that
Speaker 4: we'd uncovered with this story. So you ask where the
Speaker 4: regulators are, you know, they're just often taking kind of
Speaker 4: the what the operators are telling them that there's no
Speaker 4: fire here, there's no problem here, We've got these temperatures
Speaker 4: under control, largely at face value, and you know, kind
Speaker 4: of signing off on higher and higher temperatures. Actually, in
Speaker 4: the course of reporting this, this story which published this morning,
Speaker 4: we found that two states, Oregon and Pennsylvania, actually did
Speaker 4: start to ask harder questions after our outreach for comment.
Speaker 4: Virginia and Ohio are also in the process of you know,
Speaker 4: updating their guidance or regulations, so increasing scrutiny of this
Speaker 4: of the waste industry. So so states are becoming aware
Speaker 4: that this is an issue that they need to be across.
Speaker 4: But I think part of the story here, right, is
Speaker 4: that you know, many a lot of the regulation enforcement
Speaker 4: of this issue happens at the state level. You know,
Speaker 4: these are agencies that have lost significant staffing you know,
Speaker 4: in recent years and resources. So in some places, like
Speaker 4: you only have a couple inspectors you know, for the
Speaker 4: entire state dealing with lots of different issues. And certainly
Speaker 4: at the federal level, right, the federal EPA, which is
Speaker 4: also you know, in charge of the regulations here, like,
Speaker 4: has seen like a twenty five percent you know, staffing
Speaker 4: cut in the last year and a half. So so
Speaker 4: this is I think in part a question of kind
Speaker 4: of resources and just training.
Speaker 3: No, that's a fair point. That's a fair point.
Speaker 1: As we said, a lot of reporting, as you said,
Speaker 1: working on it for over a year or about a year,
Speaker 1: and this is part of a really a second story
Speaker 1: and a follow up. Highly recommend everybody check it out more.
Speaker 1: Thank you really glad you join us. Yeah, Laura Bliss,
Speaker 1: Senior editor at Bloomberg Business Week out there in our
Speaker 1: San Francisco bureau.
Speaker 3: Stay with us. More from Bloomberg Business Weekdaily coming up
Speaker 3: after this.
Speaker 2: You are listening to the Bloomberg Business Weekdaily podcast. Catch
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Speaker 1: Our next guest, though, has a really vantage point, unique
Speaker 1: vantage point when it comes to retail. We're talking about Masonet,
Speaker 1: which is launching something called Neon Rebels, an online platform
Speaker 1: specifically for the tween age group. They're known for their
Speaker 1: clothing and items for a younger set, but they're certainly
Speaker 1: branching out. So let's find out exactly why they're doing
Speaker 1: it and why. Now we welcome aj Nichols, she's president
Speaker 1: of Mazonet, joining us here in our Bloomberg Interactive Broker studio.
Speaker 9: Welcome, Welcome, thank you, it's great to be here.
Speaker 3: It's great to have you here.
Speaker 1: You guys have been doing this since twenty seventeen, tell
Speaker 1: us first of all, before we get into the news
Speaker 1: and the announcement and the launch, tell us about the
Speaker 1: retail sector. I know you've got kind of a unique
Speaker 1: also perhaps or demographic in terms of buyers, but tell
Speaker 1: us what you guys have been seeing.
Speaker 9: Yeah, so, I think thus far twenty twenty six has
Speaker 9: been a really strong year for retail and rebounding from
Speaker 9: some historically tougher years. I think Mason we launched in
Speaker 9: twenty seventeen, We've been around for a long time, and
Speaker 9: we are a marketplace for those who don't know for
Speaker 9: all things children, apparel, accessories, toys, home year and historically
Speaker 9: we've really served the zero to six age range, and
Speaker 9: what we've seen is a very strong appetite from our
Speaker 9: customers for that older kids segment ages seven to fourteen.
Speaker 9: And so what we've announced this week is a new
Speaker 9: marketplace that will live also on mazonet dot com called
Speaker 9: Neon Rebels to serve that demographic, which is hard in
Speaker 9: the retail space because super competitive, it's competitive, faical, and
Speaker 9: kids are fickle at that age. You really see that
Speaker 9: growing out of wanting to be dressed by their parents
Speaker 9: and wanting to start to exert some independence and autonomy
Speaker 9: and really have a say over their style, whether it's
Speaker 9: what they were to school or what they have in
Speaker 9: their bedroom. And so the marketplace that we're creating is
Speaker 9: really meant to serve that customer with this co shopping
Speaker 9: in mind, because at the end of the day, the
Speaker 9: parent is still the one spending the money and you know,
Speaker 9: getting out their credit card and they want to make
Speaker 9: sure that their kid is actually going to wear it
Speaker 9: and it's not just going to sit in a closet.
Speaker 9: And so that's we've tried to take that work out
Speaker 9: of parents. So we have one hundred brands on Neon Rebels,
Speaker 9: everything from apparel, accessories, beauty, which is very hard to
Speaker 9: shop for in that age, range, home electronics to really
Speaker 9: cater to that market and take the work out of
Speaker 9: what parents go through, which is typically having you know,
Speaker 9: twenty tabs open on your screen, and so we're curating
Speaker 9: that for them.
Speaker 6: Okay, so who's using the website. Then it's the both
Speaker 6: logging on or it's both both.
Speaker 9: Yes, I think teens at that age, you know, when
Speaker 9: you start to hit eight plus, they know what they
Speaker 9: want and they want to have a say, and so
Speaker 9: We've created an experience where they can shop and a
Speaker 9: brand that feels on brand for them. And that was
Speaker 9: important to us because Mason at our core business has
Speaker 9: typically catered to zero to six. Why now, Well, what's
Speaker 9: been interesting for us is so we launched in twenty seventeen,
Speaker 9: and so we've been around for nine years, and we
Speaker 9: started to see, you know, over twenty percent of our
Speaker 9: customers have kids over the age of seven. The twain
Speaker 9: market for US has grown thirty percent over the past
Speaker 9: several years, and so that demand was really organic to
Speaker 9: our customer base. And I think when you look in
Speaker 9: the market, you know, the children's global market is a
Speaker 9: two hundred and twenty five billion dollar business. Age ten
Speaker 9: plus is the fastest growing within that segment, and so
Speaker 9: there's a huge market opportunity.
Speaker 1: Eight million of it on my own. Yeah, one daughter,
Speaker 1: he's not twenty three, but I feel you.
Speaker 9: Yeah, you've been through it.
Speaker 3: Yeah, but anyway, go ahead.
Speaker 9: And so yeah, and I think, you know, most of
Speaker 9: our customers are millennials who when we were kids, there
Speaker 9: was the Delia's catalog, there was limited too, and there's
Speaker 9: this nostalgia I think for the millennial parent who wants
Speaker 9: to have that further her kids, but that doesn't really exist.
Speaker 9: And that's what Neon Rebels is solving.
Speaker 6: What tell us about the beauty segment and how is
Speaker 6: that specifically driving growth? Because I think some people hear
Speaker 6: beauty and they think a you know, sector that's more
Speaker 6: for an adult.
Speaker 2: Yeah.
Speaker 9: I think I think with social media, younger girls want
Speaker 9: to start experimenting, but they don't know how, you know,
Speaker 9: they see YouTube videos, et cetera, and parents.
Speaker 3: They don't really need to contour, no.
Speaker 9: And parents don't want to spend time looking at ingredients
Speaker 9: of what's in a product. And so we've also taken
Speaker 9: that work away from parents having to do it themselves.
Speaker 9: So we have Yesterday, we have JB Scrub. We have
Speaker 9: these brands that are completely geared towards that demographic that
Speaker 9: don't have the ingredients that you wouldn't want a ten
Speaker 9: year old putting on their face.
Speaker 3: You know, It's interesting.
Speaker 1: We had someone I work with her nine year old
Speaker 1: daughter was in recently and I said to her, and
Speaker 1: she's beautiful and gorgeous skin and just you know, charming as.
Speaker 3: Eight nine year olds can be. And I'm like, do
Speaker 3: you want to go to the makeup room and she's like, yes.
Speaker 1: Yeah, and didn't hesitate, wasn't She was just lovely and
Speaker 1: fun and I think I think they didn't even put
Speaker 1: enough on because she was having you know.
Speaker 3: But it was just so much fun.
Speaker 1: I am curious though, about the role of social media,
Speaker 1: because I saw my daughter transition from where I would
Speaker 1: be involved and we do things and step to all
Speaker 1: of a sudden, she's like, Mom, it's here. I've never
Speaker 1: heard of the brand, and that's what I want. So
Speaker 1: I'm just curious, like, how do you kind of incorporate
Speaker 1: that in and keep that as a part of it.
Speaker 9: Yeah, it's interesting how this demographic discovers brands and trends totally.
Speaker 9: And we spent a lot of time as a team
Speaker 9: talking about that from a marketing perspective because it is
Speaker 9: sensitive for that demographic, and I think our point of view,
Speaker 9: especially as a company we have so many employees to
Speaker 9: our parents, we very intentionally said we don't want to
Speaker 9: market to that age range on social media, and so
Speaker 9: we're going to use catalogs. We're going to have in
Speaker 9: person events for them where they can do arts and
Speaker 9: crafts and do more tactile things so that.
Speaker 3: We're not's not teenagers, right.
Speaker 4: It's both.
Speaker 9: Fourteen is sort of the age range that we're going
Speaker 9: up to, and so of course there's then the legal
Speaker 9: sensitivities as well of how you can market to that
Speaker 9: age range.
Speaker 3: So we will of.
Speaker 9: Course market to parents and you know, the millennial parent
Speaker 9: on social media, which is a big part of our
Speaker 9: marketing strategy. But for the child themselves, I think creating
Speaker 9: us as a more analog brand for them to discover
Speaker 9: the one hundred different brands we'll have on our platform
Speaker 9: is really important.
Speaker 6: So you said catalog, you have a physical catalog too.
Speaker 9: We will have a physical quality.
Speaker 3: Catalog because I'm overwhelmed.
Speaker 1: I get on a website and it's just like too
Speaker 1: much many categories and how do I and like just
Speaker 1: filter it for me, like I really.
Speaker 9: Yah, And kids love to flip through that and tag
Speaker 9: pages and circle items that they want. The holidays are
Speaker 9: a huge time for us, so Halloween for that younger
Speaker 9: age segment zero to six, and so the college with
Speaker 9: costumes and then into holiday as well. So we'll have
Speaker 9: a catalog to capture all of.
Speaker 3: That really cool stuff.
Speaker 1: So supply chains and tariffs, it's not things that do
Speaker 1: worry too much about in terms of pricing, just real quickly.
Speaker 9: Well, you know, the great thing about a marketplace is
Speaker 9: we can shift into things. And so our international business,
Speaker 9: which is an important piece of our business, they are
Speaker 9: facing more headwinds than the domestic business because of tariffs
Speaker 9: and margin compression and pricing, and so we've seen deceleration
Speaker 9: in that segment and so we've pushed into the domestic
Speaker 9: market with those vendors a little bit. So it's something
Speaker 9: that I think all retail businesses are seeing. But luckily,
Speaker 9: as a marketplace, we can address it in the right way.
Speaker 6: Great Statian costume of the year, we'll see.
Speaker 9: We've just launchtar Halloween Shop yesterday, ok to early check
Speaker 9: it out. Check it out.
Speaker 1: Halloween is so much fun, especially when you've got a
Speaker 1: little one and you get to like, yeah, it's so
Speaker 1: much fun. Come back stand touch. Yes, I'd love to
Speaker 1: know how things are going. Aj Nichols. She's president of
Speaker 1: Mason at Joining Us.
Speaker 3: Right here.
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