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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moven News.

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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: So that's why we bring man Deep in here because

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Speaker 1: he's the tech guy for along with Anna rog Ran

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Speaker 1: and the team there Bloomberg Intelligence, a global tech team

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Speaker 1: which Mandeep now runs with an iron fist. I am

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Speaker 1: told Mandeep talk to us about these IPOs totally two

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Speaker 1: different companies, ARM and Instacart. How do you view ARM

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Speaker 1: because that's kind of the one I think that's kind

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Speaker 1: of got people's attention in the sense of is this

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Speaker 1: an AI play or isn't it.

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Speaker 3: Well, So ARM clearly has a history in terms of,

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Speaker 3: you know, being the core part of how AI has

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Speaker 3: evolved and how chips have evolved because they are the

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Speaker 3: IP providers when had come to computing and all the

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Speaker 3: advancements that we've seen, and what they have told us

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Speaker 3: is they have increased the royalty revenue. So basically they

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Speaker 3: have increased the prices and everyone is on board in

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Speaker 3: terms of paying the higher prices for their technology. So

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Speaker 3: that's a good sign ahead of the IPO, and I

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Speaker 3: think from what we have gleaned so far, the IPO

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Speaker 3: has been oversubscribed. Clearly everyone believes this is a technology

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Speaker 3: that's not going away. It can be replaced, and hence,

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Speaker 3: even though the growth was slow, the fact that they

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Speaker 3: can raise prices like this, it's a good sign ahead

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Speaker 3: of the IPO. Instacart, on the other hand, completely different

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Speaker 3: ballgame marketplace business. We know all the marketplace businesses haven't

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Speaker 3: done very well, including Uber and lived since the IPO, but.

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Speaker 2: The marketplace business is Amazon and marketplace business as well.

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Speaker 3: Amazon is a two sided marketplace. Instacart is a three

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Speaker 3: sided marketplace where you've got all the grocery kind of providers,

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Speaker 3: you've got the shoppers, and then you've got the consumers.

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Speaker 3: The problem and ride sharing, for example, is a two

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Speaker 3: sided marketplace. You only have the consumers and the drivers,

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Speaker 3: so it's not a three sided marketplace. The problem in

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Speaker 3: a three sided marketplace is your take rates are much

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Speaker 3: lower because you have to split your take rates through

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Speaker 3: you know two other providers in a two sided marketplace,

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Speaker 3: it's a higher take rate. So instakarts business the unit

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Speaker 3: economics look a lot better than you know, some of

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Speaker 3: the other providers, whether it's storedash or Uber, simply because

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Speaker 3: they leer a lot more ADS. For every dollar in

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Speaker 3: transaction revenue. They make about thirty cent in ADS. That's

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Speaker 3: phenomenal for you know, unit economics. Problem is the top

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Speaker 3: line is decelerating. They have flat order growth. Marketplaces are

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Speaker 3: scale businesses. Once your top line slows, even if you

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Speaker 3: make you know, thirty cents on a dollar for ADS,

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Speaker 3: that's not good enough because you our scale isn't growing.

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Speaker 3: And that is where I think they're pricing the IP

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Speaker 3: appropriately to reflect that.

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Speaker 4: That's a good bet.

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Speaker 2: If you feel like COVID's coming back, Paul, I do

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Speaker 2: not I know, but I'm saying if you do, you know,

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Speaker 2: because that would grow their top line, that would masterfully.

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Speaker 4: That would at least for maybe there was a.

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Speaker 3: Pull forward during the Covid time. I mean, all these

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Speaker 3: companies grew one hundred percent plus triple digit growth.

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Speaker 1: So I guess for Instacart one of the real questions

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Speaker 1: will be valuation. So just walk us through kind of

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Speaker 1: where the thing was valued at its peak, when people

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Speaker 1: were going nuts getting stuff delivered home, maybe where it

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Speaker 1: is now.

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Speaker 3: Yeah, so at its peak it was around thirty nine

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Speaker 3: billion dollar valuation in twenty twenty one. And that's when

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Speaker 3: you know.

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Speaker 1: See this, This is what I say, being in an

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Speaker 1: old you know, old conjure Wall Street guy, that's Silicon

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Speaker 1: Valley valuation. That's the kids you don't want to come

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Speaker 1: to the public markets. Then you got to talk to

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Speaker 1: people like me.

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Speaker 2: That's what happened here.

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Speaker 3: Well, and I think back in you know, twenty nineteen

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Speaker 3: when Lyft went public, they went public at a twenty

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Speaker 3: billion dollar valuation. There is more than two billion in

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Speaker 3: an ipo. Well, clearly things have reset completely now and

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Speaker 3: I think they're.

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Speaker 4: Worth a fifth of that now.

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Speaker 2: No lift is worth a gajillion, I mean no, they're

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Speaker 2: worth a fifth. Yeah, yeah, exactly, I think uber Yeah.

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Speaker 3: So I think that's where instacart. Clearly the valuation is

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Speaker 3: a lot more reasonable now. I can see the IPO

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Speaker 3: pricing maybe revised upward to around ten to twelve billion,

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Speaker 3: based on the initial pricing it's more a to nine billion.

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Speaker 3: I can see it being revised slightly higher because of

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Speaker 3: that ad revenue, and if they can convince investors at

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Speaker 3: the road show that the top line will re accelerate,

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Speaker 3: because right now, as I said, it's flat order growth.

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Speaker 3: That's not good news when you're a growth story. So

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Speaker 3: clearly that top line acceleration is key. But the unit economics,

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Speaker 3: as I said, for instacart to look a lot healthier

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Speaker 3: than all the other marketplaces, including door, dash and Uber.

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Speaker 2: I'll tell you what, Paul, I'd rather get into IPOs

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Speaker 2: in this climate then during the you know, the lift

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Speaker 2: and Rivian, the heady days of massive valuations, because now

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Speaker 2: we're also pessimistic about everything. Right now you have Mande

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Speaker 2: coming on, going, Eh, the top line's not gonna grow

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Speaker 2: very much. They're gonna have to cut what they are

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Speaker 2: actually worth by like four times. And back then it

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Speaker 2: was like, who knows, this guy's the limit? You know,

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Speaker 2: So at least now you can get in without that

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Speaker 2: irrational exuberance.

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Speaker 1: I'd rather be a momentum investor than a value investor

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Speaker 1: any day of the week because I don't have to

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Speaker 1: be right on the names. I just have to jump

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Speaker 1: on the mo here. I gotta pick the name, right,

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Speaker 1: I gotta pick the valuation, right, I gotta be all

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Speaker 1: kinds of right. So is this the beginning?

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Speaker 5: Man?

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Speaker 4: Deep?

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Speaker 1: I mean, this is gonna be a down round, to

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Speaker 1: put it in the parlance of private equity.

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Speaker 2: Inventry for all of them, right, for arm, for Instacar.

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Speaker 1: So does this open up? I kind of feel like

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Speaker 1: there's a stigma. There is a stigma to not doing

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Speaker 1: down rounds. But now we're gonna have a couple of

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Speaker 1: notable names doing down rounds in the public market. Do

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Speaker 1: you think that's gonna have an influence on the other

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Speaker 1: companies to maybe consider IPOs?

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Speaker 3: There will be And look, you're not gonna see a

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Speaker 3: lot more delivery companies come to the scene now. Now

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Speaker 3: the market is consolidating. That's good news for those ones

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Speaker 3: that are left over. So previously you had gopuff and

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Speaker 3: you know every new company coming to the scene trying

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Speaker 3: to figure out delivery. Well, those days are over. I

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Speaker 3: think vcs are quite cautious about investing in this space altogether.

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Speaker 3: And I feel once you have consolidation, which is what

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Speaker 3: we are seeing with Door, Dash, Uber and to an extent, Instacart,

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Speaker 3: that probably will good for the will be good for

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Speaker 3: the unit economics. Of these companies.

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Speaker 1: ARMS said to consider here's Bloomberg story, ARM said to

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Speaker 1: consider raising IPO price range about that that's like dull days.

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Speaker 2: Yeah, but that's because they've already brought it down by

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Speaker 2: so much. You know, they had their own owner by

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Speaker 2: a stake in them that it essentially already owned for

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Speaker 2: far more than what they're doing public for now.

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Speaker 1: So it's just I mean, ARM, is this week right

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Speaker 1: like maybe a Tuesday pricing Tuesday night for Wednesday trade.

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Speaker 1: That'd be really interesting to see how that trades. Silicon

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Speaker 1: Valleant in general? Is it still all AI right now?

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Speaker 1: It's all about generator of AI. This year is the

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Speaker 1: year of generator AI. You can lump in chatbots as well,

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Speaker 1: and just overall large angrid models foundational models, which is

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Speaker 1: why the Apple event. If they don't talk about generator

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Speaker 1: AI at this event, they clearly have a problem.

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Speaker 4: Because really that's what everyone is hoping for.

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Speaker 3: That Apple three trillion dollar company hasn't mentioned generat AAI

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Speaker 3: even once?

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Speaker 6: Is that right?

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Speaker 2: Yes?

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Speaker 1: What's why is that thirty seconds?

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Speaker 3: Well, because they probably haven't built their foundational model yet

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Speaker 3: and they are focused on privacy. When you think about

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Speaker 3: large anglid models. It's built on big data sets. Apple

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Speaker 3: is a company that has always been focused on privacy,

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Speaker 3: and that is what makes them hard to build their

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Speaker 3: own large angrid model like a chat GPT or.

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Speaker 1: We're going to have you again on this one, because

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Speaker 1: I mean, this kind of could be existential for Apple

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Speaker 1: if they don't, at least in the minds of investors.

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Speaker 4: Dude.

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Speaker 2: This morning, Gina Martin Adams on Surveillance was talking about

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Speaker 2: how important generative AI is for a hostess exactly if

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Speaker 2: it's summers to a Twinkie maker.

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Speaker 1: That's what I say. When you hear Tom Keene mentioned

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Speaker 1: Twinkie and AI in the same sentence, you know something's up,

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Speaker 1: all right, Mandy, thanks so much for joining us men

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Speaker 1: deep seeing he's a senior analyst. He runs all of

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Speaker 1: our technology research where you have tech analyss literally all

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Speaker 1: over the globe Europe, North America and of course Asia

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Speaker 1: and Mendeep kind of runs that business for us, and

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Speaker 1: we appreciate that.

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Speaker 7: You're listening to the team. Ken's live program Bloomberg Markets

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Speaker 7: weekdays at ten am Eastern on Bloomberg dot com, the

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Speaker 7: iHeartRadio app, and the Bloomberg Business app, or listen on

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Speaker 7: demand wherever you get your podcasts.

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Speaker 4: We have Rick Caruso with us.

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Speaker 2: He's the founder and executive chairman of Caruso, starting out

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Speaker 2: life as a lawyer and then transition to Kruso affiliated holdings,

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Speaker 2: and they own, among other things, The Grove, which was

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Speaker 2: ranked number two on Fortunes's list of the ten highest

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Speaker 2: sales generating shopping centers across the country.

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Speaker 4: I've always been a fan.

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Speaker 2: Of the mall you haven't, Yeah, I love the Westchester

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Speaker 2: up in White Plains, Jersey.

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Speaker 1: Person nosey, we do malls in New Jersey.

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Speaker 2: Yeah, I'm from the great state of Ohio. Of course,

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Speaker 2: we have traditionally had a big mallsley state. They started

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Speaker 2: I think when I was a kid, so I kind

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Speaker 2: of grew up with them fast times. Ridgemont High was

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Speaker 2: like the story of my middle school. Rick talk to

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Speaker 2: us about the current state of commercial real estate because

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Speaker 2: it had been, you know, kind of the one of

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Speaker 2: the big fears I would say of twenty twenty three.

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Speaker 2: But it seems to be fading a bit as a fear.

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Speaker 8: Well, thank you, I think on the retail site listen,

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Speaker 8: we do outdoor malls, so all of our properties are

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Speaker 8: not covered. I think that's a very different sector. But

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Speaker 8: what we're seeing on our properties consumer is still strong,

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Speaker 8: Consumer spending is still up. Our growth on our properties

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Speaker 8: is double digit in terms of attendance, and our sales

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Speaker 8: per square foot is up. So we're having a very

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Speaker 8: good year. My fear is that with inflation, with rising

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Speaker 8: interest costs, I don't know how long that lasts. But

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Speaker 8: right now we're running at at a really good pace.

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Speaker 1: What's the occupancy of your malls in general today? Maybe

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Speaker 1: relative to pre pre pandemic.

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Speaker 9: We're very unique.

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Speaker 8: So I'm going to tell you this and you won't

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Speaker 8: believe it, but we run at one hundred percent with

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Speaker 8: a waiting list. But our properties are incredibly productive. We

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Speaker 8: have three in the top ten in the United States.

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Speaker 9: We're a different business. Yeah, you know, it's a very.

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Speaker 4: It's not strip malls.

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Speaker 1: Well, what's the term thing?

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Speaker 2: It's like Ridge Hill we have up in Westchester, Polaris.

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Speaker 4: And Columbus is like this. What do you think different

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Speaker 4: in downtown centers?

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Speaker 7: Yeah?

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Speaker 9: Like downtown Okay, So.

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Speaker 4: Well, what makes it different than a covered mall?

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Speaker 8: Because we're creating an environment. Listen, a covered mall is

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Speaker 8: an artificial atmosphere that you're asking somebody to go into.

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Speaker 9: Right, And people always say.

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Speaker 1: Well, we have a good one over in New Jersey,

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Speaker 1: the mall of what's it called the Dream Mall.

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Speaker 4: Well, you and I have never been there. Happens, that's good.

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Speaker 9: That one through a lot of problems.

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Speaker 7: I know, I know, but I.

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Speaker 8: Think the difference is we're creating an environment for people

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Speaker 8: to come and enjoy themselves, relax, have fun, create an

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Speaker 8: environment very very different. We have dwell time. We want

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Speaker 8: people to stay, we want people to just relax, and

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Speaker 8: people respond to it. You know, we're tapping into the

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Speaker 8: consumer experience, which I think is all important.

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Speaker 2: They'll go without even knowing, without even thinking we're going

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Speaker 2: to the mall. They'll go because they want to visit

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Speaker 2: a restaurant. We're not even drive through occasionally.

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Speaker 8: We're not designing it with the idea that we want

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Speaker 8: people to shop. We're designing it with the idea that

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Speaker 8: we want people to enjoy themselves, and then they're going

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Speaker 8: to go shop because they're there.

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Speaker 2: Why do you think though the grove is so popular?

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Speaker 4: I mean, where is.

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Speaker 9: The grove in Los Angeles? Los Angeles?

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Speaker 8: Okay, it's it's popular because it just it makes people

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Speaker 8: feel better. It sounds corny, but it enriches your life.

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Speaker 9: And you can go.

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Speaker 8: There and hang out and have a cup of coffee

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Speaker 8: and read the paper and really not spend a dime.

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Speaker 8: Or you can go there and spend the day and

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Speaker 8: spend a lot of money. But it's the trees, it's

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Speaker 8: the fountain, it's the lawn, it's the flowers, it's everything.

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Speaker 8: And the shopping is incidental to it in the restaurants,

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Speaker 8: and it's curated with the best retailers and restaurants in

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Speaker 8: the business.

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Speaker 1: Are you adding new malls? Are you taking over existing malls?

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Speaker 8: How we've got we've got a pipeline of new projects

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Speaker 8: that we're doing, all in the format of outdoor centers,

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Speaker 8: and we're going strong with it.

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Speaker 1: Are you putting them all in the Austin Texas of

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Speaker 1: the world, the nationals and where.

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Speaker 8: We're now We're we're growing in southern California and we're

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Speaker 8: going to continue to do that.

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Speaker 9: Now.

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Speaker 8: Listen, we're looking in Florida, and we're looking in other areas.

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Speaker 1: There are your primarily in southern California?

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Speaker 9: Yeah?

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Speaker 1: Gotcha? Okay, So I mean, so give us a sense

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Speaker 1: of how southern California. Is you got strikes all across

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Speaker 1: Los Angeles and all that type of thing. Give us

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Speaker 1: a sense of to southern California general, because we have

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Speaker 1: someone here at Bloomberg in our editorial who's very bullish

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Speaker 1: on California.

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Speaker 4: H Matt Winkler, the guy who founded Blooo News.

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Speaker 1: He found a Bloomberg News and he's written a number

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Speaker 1: of editorials extolling the virtues of not only Los Angeles,

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Speaker 1: but you.

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Speaker 2: Can strength of the California economy essentially exactly exactly.

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Speaker 8: I think the California economy, listen, is strong. It's a

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Speaker 8: massive economy right globally, but the reality is we have

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Speaker 8: enormous challenges in California.

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Speaker 2: I have a viewer writing in for a question with

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Speaker 2: a question for Rick, and essentially it comes down to

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Speaker 2: the same thing.

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Speaker 4: It's about the economy.

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Speaker 2: Viewer, listener, we have you know, we're a radio, but

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Speaker 2: we're also streaming on YouTube. He asked, is do you

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Speaker 2: anticipate hiring to slow on your properties as the economy slows,

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Speaker 2: or as inflation remains higher, or as the consumer weekends.

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Speaker 2: Are you looking forward with concern to any of those things?

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Speaker 8: Well, I'm concerned about the consumer weekening. The consumer has

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Speaker 8: to weaken, right, I mean, you've got rising interest rate

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Speaker 8: and you still have inflation, and prices are high, and

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Speaker 8: savings are getting lower, and the default rates on credit

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Speaker 8: cards are coming up, which we've seen that data.

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Speaker 9: So it has to happen. It's just a question of time.

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Speaker 8: But I think all of us have to reorganize our

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Speaker 8: companies around the fact that we've got a higher tenure

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Speaker 8: and it's probably going to remain high for a while,

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Speaker 8: and it's chewing into free cash flow of every company,

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Speaker 8: and so we have to be smarter about how we

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Speaker 8: spend our money, which may mean slowering our hiring and

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Speaker 8: slowering growth and slowering cap X. I mean, it's going

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Speaker 8: to have an impact, which I worry about.

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Speaker 1: Theft is something that I've heard more from retailers earnings calls,

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Speaker 1: and they call it shrink. It's just been extraordinary and

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Speaker 1: it looks organized.

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Speaker 9: It's insane.

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Speaker 1: So can you give us a sense kind of from

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Speaker 1: your perspective what this means for the industry.

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Speaker 8: Well, here's a problem. In Los Angeles County. We have

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Speaker 8: a no bail system, so you can get arrested and

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Speaker 8: you're out within an hour, even if it's a felony.

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Speaker 8: If you steal under nine hundred and fifty dollars plus

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Speaker 8: or minus, it's a misdemeanor. And these theft rings are organized.

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Speaker 8: I mean, it's organized crime, and they're mobs, and we've

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Speaker 8: got to change the rules, and we've got to get

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Speaker 8: elected officials that actually have some backbone and say we're

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Speaker 8: not going to allow this to happen anymore. And let's

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Speaker 8: hold criminals accountable. They need to be incarcerated if they're

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Speaker 8: a ring and they're repeat offenders. And then of course

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Speaker 8: we've got to give people a chance for you know,

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Speaker 8: rebuild their lives and whatnot. But what's happening in southern

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Speaker 8: California right now with the smash and grabs are in

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Speaker 8: San Francisco. You can't tolerate that.

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Speaker 9: In business, do you?

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Speaker 8: I mean, and it's killing small business, big business.

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Speaker 2: If you if you own you know, you know, essentially

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Speaker 2: an outdoor shopping community like the grove, do you bring

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Speaker 2: in an extra you know, police force, auxiliary cops. Do

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Speaker 2: you try and you know, get the employees to do

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Speaker 2: something about it?

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Speaker 4: I mean, how do you how do you We don't.

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Speaker 8: Want we don't want employees to engage. But what we

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Speaker 8: do on all of our properties, we have armed security

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Speaker 8: and we have extensive camera systems. We have equipment that

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Speaker 8: can actually identify people, and so we're very sophisticated in

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Speaker 8: our properties. But the problem is ninety percent of the

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Speaker 8: businesses in LA are small businesses. They can't afford to

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Speaker 8: do that, and they get one smash and grab that

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Speaker 8: could be their monthly profit. So what's happening I think

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Speaker 8: in Southern California LA is the responsibility to keep people

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Speaker 8: safe is getting pushed to the private sector because we

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Speaker 8: have a shortage of cops and we have a shortage

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Speaker 8: of again, elected officials. I think that are actually dedicated

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Speaker 8: to making sure that our communities are safe, and we're

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Speaker 8: picking that up, and that's not good business.

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Speaker 9: We're smart for the community long term.

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Speaker 1: Is that one of the biggest challenges for Southern California

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Speaker 1: in general? Do you think?

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Speaker 8: I think so. I think it's a big challenge for

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Speaker 8: California in general.

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Speaker 2: For New York right even though we have an ex

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Speaker 2: cop here in office, and I think a lot of

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Speaker 2: people expected the crime to change on the day he

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Speaker 2: came in and it hasn't.

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Speaker 8: Yeah, and you have a big police force, which we

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Speaker 8: don't have in LA Is that right? Yeah, I mean

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Speaker 8: you have almost five times as many cops as we

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Speaker 8: do in Los Angeles.

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Speaker 1: Really I didn't know that. Okay, very interesting stuff there, Ricrusia,

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Speaker 1: thanks so much for taking the time to join us

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Speaker 1: here today. Really fascinating discussion.

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Speaker 4: We ought to do the show from the growth. We

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Speaker 4: should do that.

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Speaker 2: Let's go, let's go get out, get out to the

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Speaker 2: west coast and really dive into the economics and businesses

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Speaker 2: of California.

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Speaker 1: I think we can do that and get some support.

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Speaker 4: I would like to do that.

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Speaker 7: We hope they have you all right, Rick.

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Speaker 1: Thanks so much for joining us. Ricruso is a founder

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Speaker 1: and executive chairman of Cruser talking about the retail business

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Speaker 1: and the retail business on the outdoor malls, if you will,

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Speaker 1: quite vibrant relative to kind of what you hear from

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Speaker 1: other parts of some of the retail. But retail in

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Speaker 1: general has been good, the consumer has been good. The

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Speaker 1: question now is just kind of going forward with the

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Speaker 1: higher rates and all that type of thing.

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Speaker 7: You're listening to The tape cats are live program Bloomberg

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Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 7: You can also listen live on Amazon Alexa from our

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Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: Big Takes story right down Matt's alley. Here, Monica Raymlandt

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Speaker 1: joins this. She's the auto industry disruption reporter. How about

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Speaker 1: that with Bloomberg News. She's got the story out there

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Speaker 1: entitled Germany Frets Volkswagen is heading down the wrong or

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Speaker 1: down the road to nowhere. Yeah, so, Monica, thanks much

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Speaker 1: for joining us via zoom her. What's kind of the

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Speaker 1: thesis thesis of your story? I thought v Volkswagen's going

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Speaker 1: all in EV.

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Speaker 10: Oh, definitely. I wouldn't say that they're not focused on

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Speaker 10: their EV strategy. But really, what the concern is is

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Speaker 10: that Volkswagen is sort of atrophying market share in China

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Speaker 10: when it comes to EV's, when it comes to competing

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Speaker 10: with Tesla, when it comes to competing with BYD, and

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Speaker 10: basically the company needs to sort of catch up and

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Speaker 10: redo their strategy and figure out how to deliver to

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Speaker 10: the Chinese market what the Chinese have come to expect

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Speaker 10: it's a unique situation because basically during the pandemic, when

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Speaker 10: everyone was sort of triaging their own issues back at home,

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Speaker 10: China really went all in with EV's, with their infrastructure,

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Speaker 10: with supporting their their startups there, and the scene completely changed.

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Speaker 10: They made leaps and bounds when it came to software technology,

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Speaker 10: when it came to infotainment, when it came to in

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Speaker 10: car experiences, and now Volkswagen and other legacy carmakers are

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Speaker 10: looking at the market and realizing, you know, the Chinese

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Speaker 10: are doing it really, really well when it comes to

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Speaker 10: when it comes to EV's, and they have to sort

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Speaker 10: of find a way to catch up. And the bigger

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Speaker 10: picture is that this is a big concern for Germany

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Speaker 10: because the auto industry plays such a huge role in

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Speaker 10: the macro environment, in the economy, and you know, if

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Speaker 10: Folkswagen fails to get this right, it's going to have

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Speaker 10: an impact on, you know, on their domestic situation, on

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Speaker 10: the domestic.

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Speaker 2: I mean, I think it's an amazing story on so

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Speaker 2: many levels, Monica. The first thing that I that I

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Speaker 2: was wondering about is did Deese, Herbert Deese leave Folkswagen

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Speaker 2: in the situation, or is Bluema, you know, not executing

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Speaker 2: on the d strategy well enough. Then I also thought about,

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Speaker 2: you know, if this is a security issue for Germany

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Speaker 2: as well as an economic issue, how much ConTroll does

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Speaker 2: the state feel like it can take over this behemoth?

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Speaker 2: Because if things go wrong, it's not just for the

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Speaker 2: Porsche piche family a problem, It's a problem for the

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Speaker 2: entire country and economy. So I think there's so many

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Speaker 2: different threads that are fascinating. What happened to the tens

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Speaker 2: of billions of dollars that Deese was investing in becoming

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Speaker 2: an EV maker, becoming a software company. I remember headlines

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Speaker 2: out from Rauvoald that were like thirty billion dollars or

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Speaker 2: fifty billion dollars? Are they spending that money? Is it

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Speaker 2: getting them anywhere?

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Speaker 3: Yeah?

440
00:20:42,080 --> 00:20:45,840
Speaker 10: Absolutely great questions all around on the investment question.

441
00:20:46,040 --> 00:20:48,919
Speaker 2: Sorry, I just thought the story moved me. Honestly, I

442
00:20:48,960 --> 00:20:52,600
Speaker 2: really really think it's fantastic. I recommend to our listeners

443
00:20:52,600 --> 00:20:55,040
Speaker 2: and viewers to check it out. I just it blew

444
00:20:55,080 --> 00:20:57,000
Speaker 2: me away this morning, So I should have read it

445
00:20:57,080 --> 00:20:58,600
Speaker 2: last night. I wouldn't have been able to sleep if

446
00:20:58,600 --> 00:20:58,880
Speaker 2: I did.

447
00:20:58,920 --> 00:20:59,520
Speaker 4: All right, So the.

448
00:20:59,440 --> 00:21:03,560
Speaker 10: Money right, So on the money part No, and the

449
00:21:03,640 --> 00:21:07,000
Speaker 10: investment is money is still there. Volkswagen is an investing

450
00:21:07,119 --> 00:21:08,919
Speaker 10: I think total over the next five years something like

451
00:21:08,920 --> 00:21:11,080
Speaker 10: one hundred and eighty billion, and two thirds of that

452
00:21:11,160 --> 00:21:12,879
Speaker 10: is going to evs. Don't quote me on that, I

453
00:21:12,920 --> 00:21:14,399
Speaker 10: have to The numbers are a bit fuzzy.

454
00:21:14,400 --> 00:21:15,360
Speaker 4: In my head, it's a lot, but.

455
00:21:15,280 --> 00:21:19,080
Speaker 10: They're still it's a lot. Yeah, and you're absolutely right.

456
00:21:19,160 --> 00:21:23,760
Speaker 10: Deese was, in my mind and in my assessment, totally

457
00:21:23,800 --> 00:21:26,960
Speaker 10: the innovator. He had the long term vision for where

458
00:21:27,000 --> 00:21:28,959
Speaker 10: the where the car industry was going and where it

459
00:21:29,000 --> 00:21:31,080
Speaker 10: needed to go, where Volkswagen needed to go if it

460
00:21:31,160 --> 00:21:34,680
Speaker 10: really wanted to compete with Tesla and you know, eventually

461
00:21:34,680 --> 00:21:38,360
Speaker 10: the Chinese and one of his big you know, one

462
00:21:38,400 --> 00:21:42,359
Speaker 10: of his big strategic plans or moves, was this idea

463
00:21:42,400 --> 00:21:44,560
Speaker 10: of vertical integration. We got to get control of the

464
00:21:44,560 --> 00:21:47,000
Speaker 10: battery supply chain and that was you know why he

465
00:21:47,240 --> 00:21:49,320
Speaker 10: really went all in with Power Code, creating their own

466
00:21:49,440 --> 00:21:52,399
Speaker 10: battery company. He thought, you know, we have to go

467
00:21:52,440 --> 00:21:54,399
Speaker 10: in all in on software. We have to create our

468
00:21:54,440 --> 00:21:57,359
Speaker 10: own software unit. We have to control that as well,

469
00:21:57,400 --> 00:21:59,920
Speaker 10: in order to control the profit pools that subsequently come

470
00:22:00,280 --> 00:22:02,720
Speaker 10: from in car entertainment, and so he was all about

471
00:22:03,000 --> 00:22:05,680
Speaker 10: sort of focusing on what Volkswagen could do on its own,

472
00:22:05,920 --> 00:22:08,560
Speaker 10: making Volkswagen into sort of more of a tech company.

473
00:22:08,640 --> 00:22:12,880
Speaker 10: As you know, the car becomes more of a sort

474
00:22:12,880 --> 00:22:14,760
Speaker 10: of a living room on wheels or sort of more

475
00:22:14,800 --> 00:22:18,159
Speaker 10: like a mobile phone on wheels. That people's expectations, customer

476
00:22:18,160 --> 00:22:21,200
Speaker 10: expectations have sort of moved in the direction of smartphone

477
00:22:21,280 --> 00:22:23,879
Speaker 10: apps and services, and you needed to be able to

478
00:22:23,920 --> 00:22:27,159
Speaker 10: offer that in car. And so his strategy was, well,

479
00:22:27,240 --> 00:22:28,960
Speaker 10: let's do it on our own so we can control

480
00:22:29,000 --> 00:22:32,520
Speaker 10: more of the more of the profit pools. And that

481
00:22:32,760 --> 00:22:35,359
Speaker 10: maybe turned out to be sort of the Achilles Heel

482
00:22:36,320 --> 00:22:39,240
Speaker 10: of Deese in addition to his his management style. That

483
00:22:39,400 --> 00:22:41,600
Speaker 10: I would say, there's a big difference. There's a difference

484
00:22:41,640 --> 00:22:44,399
Speaker 10: between Dsee and Bluma, and that Dees, You're right. Deese

485
00:22:44,400 --> 00:22:48,000
Speaker 10: did bring a lot of these innovative projects into the

486
00:22:48,000 --> 00:22:50,960
Speaker 10: company and Bluma is now sort of carrying those forward

487
00:22:51,000 --> 00:22:54,720
Speaker 10: and bringing those along. And I would say, you know,

488
00:22:54,760 --> 00:22:59,199
Speaker 10: Bluma has totally Oliver Blooma, the new CEO, who is

489
00:22:59,240 --> 00:23:05,320
Speaker 10: also currently the CEO of Porsha, he is really he's

490
00:23:05,480 --> 00:23:07,760
Speaker 10: he's going all in with the battery strategy. He's still

491
00:23:07,800 --> 00:23:11,119
Speaker 10: supporting Carriot the software unit and saying we're still gonna,

492
00:23:11,520 --> 00:23:14,040
Speaker 10: you know, back carry it's efforts one hundred percent to

493
00:23:14,480 --> 00:23:17,440
Speaker 10: to create the premium platform for the Audi and Porsha vehicles,

494
00:23:17,480 --> 00:23:22,280
Speaker 10: for the Emacon, for the Q six Etron, and then

495
00:23:22,400 --> 00:23:25,760
Speaker 10: you know, using the company's resources to to you know,

496
00:23:25,960 --> 00:23:29,360
Speaker 10: broaden their their offering for electric electric vehicles.

497
00:23:29,400 --> 00:23:33,040
Speaker 2: I feel like that just they're they're slow to catch

498
00:23:33,119 --> 00:23:35,560
Speaker 2: up and they can't really knock the ball out of

499
00:23:35,600 --> 00:23:39,600
Speaker 2: the park when it comes to you know, range, they

500
00:23:39,640 --> 00:23:42,719
Speaker 2: don't do as well as GM has four hundred and

501
00:23:42,760 --> 00:23:46,119
Speaker 2: fifty miles of range in their EV pickup trucks. Now

502
00:23:46,160 --> 00:23:48,639
Speaker 2: they have gigantic batteries to support that two hundred ten

503
00:23:48,720 --> 00:23:52,760
Speaker 2: kilowatt packs, but still they have it right, And.

504
00:23:54,160 --> 00:23:56,760
Speaker 4: It doesn't seem like, uh.

505
00:23:56,840 --> 00:23:59,959
Speaker 2: Porscha should only have one EV model out at this

506
00:24:00,080 --> 00:24:02,199
Speaker 2: stage in the game. Why don't they already have an

507
00:24:02,240 --> 00:24:05,080
Speaker 2: EMA Coon, Why don't they already have an E version

508
00:24:05,119 --> 00:24:05,959
Speaker 2: of the nine to eleven?

509
00:24:06,080 --> 00:24:06,159
Speaker 11: Like?

510
00:24:06,200 --> 00:24:07,720
Speaker 4: What is taking them so long?

511
00:24:08,720 --> 00:24:13,040
Speaker 10: Yeah, it's definitely the software issue. So by creating, you know,

512
00:24:13,119 --> 00:24:15,720
Speaker 10: by having a legacy car maker that really knows German

513
00:24:15,760 --> 00:24:19,280
Speaker 10: engine engineering really well. To have them pivot and suddenly

514
00:24:19,359 --> 00:24:21,919
Speaker 10: start doing software, it's a completely different process. It's a

515
00:24:21,920 --> 00:24:25,520
Speaker 10: completely different ballgame, it's a completely different sport, and they

516
00:24:25,560 --> 00:24:28,639
Speaker 10: had to sort of learn from zero how to do it,

517
00:24:28,680 --> 00:24:32,080
Speaker 10: how the processes work, how you develop software, and that

518
00:24:32,200 --> 00:24:35,720
Speaker 10: led to, you know, delays when it came to the

519
00:24:36,200 --> 00:24:40,639
Speaker 10: launch of the platform that the EMA coon is going

520
00:24:40,680 --> 00:24:42,480
Speaker 10: to be based on. It was supposed to be out

521
00:24:42,520 --> 00:24:45,199
Speaker 10: I think about two years ago already, and that was

522
00:24:45,320 --> 00:24:47,680
Speaker 10: that was one of the things ai Audi and Pousha.

523
00:24:47,880 --> 00:24:51,520
Speaker 10: These models that are coming out for Audi and Posha,

524
00:24:52,200 --> 00:24:54,560
Speaker 10: these electric models, the models that are going to come

525
00:24:54,560 --> 00:24:57,240
Speaker 10: from between twenty twenty four and twenty twenty eight, are

526
00:24:57,280 --> 00:25:00,320
Speaker 10: supposed to make up about fifty percent of folks swagging

527
00:25:00,359 --> 00:25:04,080
Speaker 10: revenues in that time period. So there, you know, if

528
00:25:04,080 --> 00:25:05,520
Speaker 10: they don't do that premium.

529
00:25:05,280 --> 00:25:07,440
Speaker 4: Platform, eleven or twelve brands.

530
00:25:07,119 --> 00:25:10,199
Speaker 10: Right, yeah, exactly. No, I mean Audi and Pousha are

531
00:25:10,240 --> 00:25:12,560
Speaker 10: really the you know, the big money makers. I mean,

532
00:25:12,600 --> 00:25:15,359
Speaker 10: Poorsha is no longer technically a cash cow since the

533
00:25:15,400 --> 00:25:18,240
Speaker 10: I p O they're no longer sharing their profits with Volkswagen.

534
00:25:18,480 --> 00:25:21,240
Speaker 10: But for Audi it's really key, it's really critical that

535
00:25:21,240 --> 00:25:25,280
Speaker 10: they get this this platform, this uh premium platform from

536
00:25:25,320 --> 00:25:29,440
Speaker 10: carry it out to build their their their model lineup,

537
00:25:29,880 --> 00:25:31,320
Speaker 10: and they haven't been able to do that because of

538
00:25:31,320 --> 00:25:33,639
Speaker 10: the delays. Basically it was it was a struggle for

539
00:25:33,680 --> 00:25:37,240
Speaker 10: carry it for the software unit because they've they've had

540
00:25:37,240 --> 00:25:40,639
Speaker 10: to do one one software platform for the Volkswagen, this

541
00:25:40,720 --> 00:25:43,760
Speaker 10: other premium platform for for Audi and Pousha, and then

542
00:25:43,800 --> 00:25:47,280
Speaker 10: they also had this SSP platform, this scalable unified platform

543
00:25:47,320 --> 00:25:49,680
Speaker 10: for all the brands. That's sort of the longtime vision

544
00:25:49,720 --> 00:25:52,520
Speaker 10: that Deese had and that's you know, sort of up

545
00:25:52,560 --> 00:25:54,520
Speaker 10: in the air at this point about if and when

546
00:25:54,560 --> 00:25:55,879
Speaker 10: that's that's going to come to Fruition.

547
00:25:56,200 --> 00:25:58,159
Speaker 1: Hey, Monica, thanks so much for joining us. Really appreciate

548
00:25:58,200 --> 00:26:00,959
Speaker 1: getting some of your time. Is Matt med a fantastic

549
00:26:01,720 --> 00:26:04,879
Speaker 1: piece of work there, Monica Raymond, Auto's industry disruption reporter

550
00:26:04,920 --> 00:26:09,000
Speaker 1: for Bloomberg News. Out the Big Take story today on

551
00:26:09,040 --> 00:26:13,320
Speaker 1: the Bloomberg terminal entitled Germany Fretz Volkswagen is heading down

552
00:26:13,440 --> 00:26:15,399
Speaker 1: the road to nowhere. So check that out on the

553
00:26:15,480 --> 00:26:19,480
Speaker 1: terminal or Bloomberg dot com slash Big Take. Those are

554
00:26:19,720 --> 00:26:23,359
Speaker 1: really deeply reported stories, great stuff. Highly recommend it.

555
00:26:24,240 --> 00:26:28,120
Speaker 7: You're listening to the Team Can't Live program Bloomberg Markets

556
00:26:28,119 --> 00:26:31,240
Speaker 7: weekdays at ten am Eastern on Bloomberg dot com, the

557
00:26:31,320 --> 00:26:34,439
Speaker 7: iHeartRadio app and the Bloomberg Business app, or listen on

558
00:26:34,520 --> 00:26:36,600
Speaker 7: demand wherever you get your podcasts.

559
00:26:39,119 --> 00:26:43,159
Speaker 1: There are old sky divers and Bold skyde divers, but

560
00:26:43,240 --> 00:26:47,120
Speaker 1: there are no old Bold skydivers. That's a good one.

561
00:26:47,720 --> 00:26:50,439
Speaker 1: I guess you can apply that to investing as a certainly.

562
00:26:50,440 --> 00:26:53,399
Speaker 1: Our next guest does that very well. Jessica Rabe joins us.

563
00:26:53,400 --> 00:26:55,520
Speaker 1: She's a founder of Data Trek Research. We love the

564
00:26:55,560 --> 00:26:57,960
Speaker 1: folks at Data Trek. Lots of really smart research comes

565
00:26:58,000 --> 00:26:58,480
Speaker 1: out of there.

566
00:26:58,600 --> 00:27:00,959
Speaker 2: Now, you said Rabe, think it's Raba.

567
00:27:02,520 --> 00:27:06,560
Speaker 1: Let's hear Jesse here. Let's say you Jessica Rade.

568
00:27:06,560 --> 00:27:08,920
Speaker 5: You are correct. Thank you so much for having me, Matt.

569
00:27:09,160 --> 00:27:10,320
Speaker 5: I'm very excited to be.

570
00:27:10,320 --> 00:27:12,879
Speaker 1: On all right, Jessica. I like how you kind of

571
00:27:12,920 --> 00:27:15,159
Speaker 1: bring together the skydiving thing, which, by the way, we

572
00:27:15,200 --> 00:27:16,920
Speaker 1: have to talk about that at some point. Who does

573
00:27:16,960 --> 00:27:20,280
Speaker 1: that willingly end investing? So how do you bring the

574
00:27:20,320 --> 00:27:20,800
Speaker 1: two together?

575
00:27:22,200 --> 00:27:25,359
Speaker 11: Sure? Yeah, so to me, skydiving is an amplified version

576
00:27:25,480 --> 00:27:27,600
Speaker 11: of life and even investing in that.

577
00:27:27,680 --> 00:27:29,960
Speaker 5: It's a masterclass in risk management.

578
00:27:30,280 --> 00:27:33,280
Speaker 11: So, like you said at the top, they saying they're

579
00:27:33,359 --> 00:27:36,240
Speaker 11: in skydiving is very common. One. There are old skydivers

580
00:27:36,280 --> 00:27:40,000
Speaker 11: and bold skydivers, but there are no old bold skydivers.

581
00:27:40,160 --> 00:27:44,240
Speaker 11: So no matter anyone's experience, both skydiving and investing are processed,

582
00:27:44,280 --> 00:27:46,320
Speaker 11: driven disciplines with small.

583
00:27:46,040 --> 00:27:48,680
Speaker 5: Margins for air for error.

584
00:27:49,040 --> 00:27:52,200
Speaker 11: So ultimately it helps helps teach you how to confront

585
00:27:52,280 --> 00:27:56,359
Speaker 11: natural human fear and overcome it by sticking to a process,

586
00:27:56,720 --> 00:28:00,600
Speaker 11: staying president and it's very important to remain calm and

587
00:28:00,680 --> 00:28:03,160
Speaker 11: high pressure pressure situations.

588
00:28:03,840 --> 00:28:05,960
Speaker 2: All Right, So I have to say that I love

589
00:28:06,480 --> 00:28:09,520
Speaker 2: now you skydiving, but I'm not licensed, so I still

590
00:28:09,560 --> 00:28:12,240
Speaker 2: have to get strapped to a big man's back or

591
00:28:12,520 --> 00:28:17,719
Speaker 2: to his chest, unlike Jessica, because I've gone seven times

592
00:28:18,280 --> 00:28:23,320
Speaker 2: and uh, Jessica, I'm guessing you've done more. Uh.

593
00:28:23,400 --> 00:28:25,400
Speaker 11: Yes, I'm still a baby in the sport, but I've

594
00:28:25,400 --> 00:28:28,639
Speaker 11: done one hundred and fourteen solo skydis at this point.

595
00:28:29,480 --> 00:28:31,479
Speaker 2: Wow, and do you pack your own shoot or how

596
00:28:31,480 --> 00:28:32,240
Speaker 2: does that all work?

597
00:28:32,240 --> 00:28:32,800
Speaker 4: I'm wondering.

598
00:28:33,800 --> 00:28:36,520
Speaker 11: Yep, that's part of getting licensed. You have to know

599
00:28:36,680 --> 00:28:39,360
Speaker 11: how to how to pack pack your own parachuting and

600
00:28:39,720 --> 00:28:41,440
Speaker 11: quite frankly, you want to you want to know your

601
00:28:41,440 --> 00:28:44,600
Speaker 11: own equipment, and uh, you want to know how to pack,

602
00:28:44,680 --> 00:28:46,880
Speaker 11: because then you're the way that your can it be

603
00:28:46,960 --> 00:28:48,920
Speaker 11: opened is more reliable.

604
00:28:50,640 --> 00:28:51,240
Speaker 1: I was strung.

605
00:28:51,520 --> 00:28:53,400
Speaker 2: I read your note as soon as I saw it

606
00:28:53,480 --> 00:28:54,560
Speaker 2: hit my inbox, and I.

607
00:28:54,480 --> 00:28:55,760
Speaker 4: Thought it was really cool.

608
00:28:55,840 --> 00:28:59,600
Speaker 2: The parallels between investing in skydiving that I'd never thought of.

609
00:29:01,000 --> 00:29:04,000
Speaker 2: The only difference for me and probably for most people

610
00:29:04,040 --> 00:29:07,640
Speaker 2: listening in terms of retail investing is I don't pack

611
00:29:07,720 --> 00:29:10,720
Speaker 2: my own shoot in the markets, right. I don't even

612
00:29:10,720 --> 00:29:13,080
Speaker 2: have the ability to know how to do that. I

613
00:29:13,120 --> 00:29:15,760
Speaker 2: need to leave it to people like you and Nick

614
00:29:15,920 --> 00:29:17,760
Speaker 2: to pack my shoot for me because I just don't

615
00:29:17,760 --> 00:29:19,760
Speaker 2: have the time to do the research, if you know

616
00:29:19,760 --> 00:29:20,120
Speaker 2: what I mean.

617
00:29:21,520 --> 00:29:25,160
Speaker 5: Yeah, sure, absolutely, and yeah I mean so, there's.

618
00:29:24,760 --> 00:29:29,360
Speaker 11: So many parallels between investing in skydiving for and for

619
00:29:29,560 --> 00:29:31,320
Speaker 11: really all levels of experience.

620
00:29:31,800 --> 00:29:34,400
Speaker 5: So you know, one of those is just sticking to

621
00:29:34,720 --> 00:29:35,560
Speaker 5: a process.

622
00:29:35,760 --> 00:29:38,760
Speaker 11: There are fundamentals in skydiving that that keep you safe,

623
00:29:38,800 --> 00:29:41,880
Speaker 11: whether it be checking your gear, remaining altitude a wear,

624
00:29:42,280 --> 00:29:45,840
Speaker 11: or knowing how to fly in and land in different

625
00:29:45,840 --> 00:29:48,800
Speaker 11: conditions so you can do most of the skydive right

626
00:29:49,040 --> 00:29:51,680
Speaker 11: but make one wrong move in the last two hundred

627
00:29:51,920 --> 00:29:55,280
Speaker 11: feet or so and face serious consequences. The same as

628
00:29:55,800 --> 00:29:58,840
Speaker 11: when it comes to investing straight from core guidelines for

629
00:29:58,960 --> 00:30:02,960
Speaker 11: idea generation to taking profits or losses, and any type

630
00:30:02,960 --> 00:30:05,920
Speaker 11: of investor from a novice to a twenty year year

631
00:30:06,040 --> 00:30:07,640
Speaker 11: veteran can can pay the price.

632
00:30:08,680 --> 00:30:12,240
Speaker 1: All right, So I like this one. Anticipate other participants.

633
00:30:12,600 --> 00:30:14,240
Speaker 1: So I guess in skydiving you're going to be have

634
00:30:14,320 --> 00:30:17,080
Speaker 1: that situational awareness of no what's around you. But I

635
00:30:17,120 --> 00:30:19,040
Speaker 1: guess that kind of makes sense in investing as well.

636
00:30:20,240 --> 00:30:23,200
Speaker 11: Oh yeah, so I can do everything right on a jump,

637
00:30:24,200 --> 00:30:27,200
Speaker 11: but get hurt by another skydiver, whether that be colliding

638
00:30:27,280 --> 00:30:30,080
Speaker 11: under free fall or under canopy. So you really have

639
00:30:30,200 --> 00:30:33,720
Speaker 11: to prepare, not just for yourself, but you have to

640
00:30:33,720 --> 00:30:37,800
Speaker 11: anticipate other people. It's it's just like riding a motorcycle,

641
00:30:37,840 --> 00:30:40,400
Speaker 11: which I also do. You constantly have to have your

642
00:30:40,440 --> 00:30:43,479
Speaker 11: head on a swivel. And that's much of investing, too,

643
00:30:43,640 --> 00:30:47,080
Speaker 11: is anticipating not just what you're gonna do, but what

644
00:30:47,160 --> 00:30:51,080
Speaker 11: other markets participants are going to do, especially when it

645
00:30:51,120 --> 00:30:54,680
Speaker 11: comes to how they respond ering crises. That's how a

646
00:30:54,720 --> 00:30:58,960
Speaker 11: lot of volatility is created. Is by other market participants

647
00:30:59,000 --> 00:31:00,880
Speaker 11: and how they respond under pressure.

648
00:31:01,480 --> 00:31:05,520
Speaker 2: Yeah, I would argue in motorcycling, especially I mean motorcycling

649
00:31:05,520 --> 00:31:08,760
Speaker 2: on the highway or in you know, public roads, paying

650
00:31:08,760 --> 00:31:11,920
Speaker 2: attention to what other people are doing is far more

651
00:31:11,960 --> 00:31:15,000
Speaker 2: important than paying attention to you know, I'm not going

652
00:31:15,080 --> 00:31:17,719
Speaker 2: to make many mistakes. The motorcycle stays up by itself

653
00:31:17,760 --> 00:31:20,200
Speaker 2: as long as you know, I'm putting in the right inputs.

654
00:31:20,400 --> 00:31:22,040
Speaker 2: So the most important thing is.

655
00:31:22,360 --> 00:31:24,280
Speaker 1: Watch out for that car ture, one of those crazy

656
00:31:24,280 --> 00:31:26,640
Speaker 1: people in the Garden State Parkway that zoom in and

657
00:31:26,680 --> 00:31:29,240
Speaker 1: out of cars doing like one hundred twenty miles an hour.

658
00:31:29,480 --> 00:31:30,400
Speaker 4: I try not to.

659
00:31:31,960 --> 00:31:33,320
Speaker 1: Jessica is laughing over there.

660
00:31:33,480 --> 00:31:35,800
Speaker 2: That's like a bold skydiver, right, Those people don't last

661
00:31:35,920 --> 00:31:36,560
Speaker 2: very Yeah.

662
00:31:36,400 --> 00:31:38,480
Speaker 5: That's yeah. You don't want to you don't want to

663
00:31:38,520 --> 00:31:39,200
Speaker 5: be too bold.

664
00:31:39,560 --> 00:31:42,280
Speaker 11: And that's why I mean the motorcycle riding too, is

665
00:31:42,280 --> 00:31:45,800
Speaker 11: a perfect example. Whether it be skydiving or motorcycle riding

666
00:31:45,880 --> 00:31:47,720
Speaker 11: or investing, is you just you have to plan for

667
00:31:47,760 --> 00:31:50,640
Speaker 11: diverse events. There are certain forces out of our control,

668
00:31:50,680 --> 00:31:54,480
Speaker 11: whether it be weather or other skydivers and skydiving, or

669
00:31:54,520 --> 00:31:58,040
Speaker 11: economic and geopolitical shocks and investing the best we can

670
00:31:58,080 --> 00:32:00,840
Speaker 11: do is stay aware of the risks plan for them.

671
00:32:01,040 --> 00:32:04,960
Speaker 11: I see skydivers with thousands of jumps, still practicing their

672
00:32:04,960 --> 00:32:08,840
Speaker 11: emergency procedures and the plane ride up to altitude so

673
00:32:08,920 --> 00:32:11,920
Speaker 11: that way muscle memory kicks, and should they need to

674
00:32:13,120 --> 00:32:17,920
Speaker 11: cut away their main parachute and deploy their their reserve parachute.

675
00:32:17,360 --> 00:32:20,840
Speaker 5: In the event of an equipment malfunction. And the same

676
00:32:20,880 --> 00:32:21,560
Speaker 5: with investing.

677
00:32:22,200 --> 00:32:24,680
Speaker 11: People know at data Track we have a long standing

678
00:32:24,720 --> 00:32:27,920
Speaker 11: recommendation to add risk exposure when the VIX gets to

679
00:32:28,000 --> 00:32:31,600
Speaker 11: twenty eight, thirty six, and forty four because these are one,

680
00:32:31,640 --> 00:32:34,400
Speaker 11: two and three standard deviations above the long run mean

681
00:32:35,160 --> 00:32:36,240
Speaker 11: and therefore.

682
00:32:36,000 --> 00:32:37,840
Speaker 5: Signal excessive investor fear.

683
00:32:38,000 --> 00:32:41,520
Speaker 11: So yeah, investing, skydiving, motorcycle riding, you always have to

684
00:32:41,800 --> 00:32:44,720
Speaker 11: have to be on your toes and be ready for.

685
00:32:45,200 --> 00:32:47,080
Speaker 1: Anything, all right. So I'm looking at some of the

686
00:32:47,080 --> 00:32:49,240
Speaker 1: photographs use attached to your note here, and they're making

687
00:32:49,240 --> 00:32:52,320
Speaker 1: my stomach literally queasy as I look at them. What's

688
00:32:52,360 --> 00:32:54,920
Speaker 1: the highest altitude that you've done a jump from?

689
00:32:56,320 --> 00:32:58,400
Speaker 5: So I jump at Skydives Sussex.

690
00:32:58,520 --> 00:33:00,880
Speaker 11: And the nice thing about that drop soon is they

691
00:33:00,920 --> 00:33:04,040
Speaker 11: go all the way up to fourteen five hundred feet.

692
00:33:05,080 --> 00:33:07,640
Speaker 1: Yeah, is that you hanging off like a helicopter or

693
00:33:07,680 --> 00:33:08,880
Speaker 1: a plane or something like that.

694
00:33:09,920 --> 00:33:10,760
Speaker 5: Yeah.

695
00:33:10,840 --> 00:33:13,480
Speaker 11: Yeah, I did my first few helicopter jumps a few

696
00:33:13,480 --> 00:33:15,680
Speaker 11: weeks ago, so that was certainly.

697
00:33:15,360 --> 00:33:16,160
Speaker 5: Very very fun.

698
00:33:16,760 --> 00:33:19,520
Speaker 11: That is because the jumping out of a helicopter is

699
00:33:19,520 --> 00:33:21,360
Speaker 11: different than a plane. With a plane, you have all

700
00:33:21,360 --> 00:33:24,000
Speaker 11: the relative wind coming at you. With a helicopter, you

701
00:33:24,080 --> 00:33:25,160
Speaker 11: jump into the dead air.

702
00:33:26,080 --> 00:33:27,800
Speaker 4: Jesus, that sounds like fun.

703
00:33:28,160 --> 00:33:31,680
Speaker 2: Yeah, now this I mean I was wondering if if

704
00:33:31,720 --> 00:33:36,040
Speaker 2: you make these parallels. You know, with skydiving you want

705
00:33:36,040 --> 00:33:39,640
Speaker 2: to be pretty conservative, and in investing you do have

706
00:33:39,720 --> 00:33:43,000
Speaker 2: a little bit of a risk tolerance, right, So how

707
00:33:43,040 --> 00:33:45,640
Speaker 2: do you limit yourself or how do you stop yourself

708
00:33:45,680 --> 00:33:47,840
Speaker 2: from just buying ten year treasuries right now?

709
00:33:49,640 --> 00:33:50,880
Speaker 5: Yeah?

710
00:33:51,440 --> 00:33:55,000
Speaker 11: I would say that you have to inscat both skydiving

711
00:33:55,040 --> 00:33:59,800
Speaker 11: and investing. You have to assess your abilities honestly. So

712
00:34:00,240 --> 00:34:03,080
Speaker 11: in skydiving it's very important to know your skill level

713
00:34:03,320 --> 00:34:06,360
Speaker 11: and also stay within your personal risk tolerance. So that

714
00:34:06,440 --> 00:34:10,920
Speaker 11: means only jumping in wins or or or or joining

715
00:34:11,120 --> 00:34:16,440
Speaker 11: group formation skydives that you believe that you're confident enough

716
00:34:16,520 --> 00:34:19,840
Speaker 11: to be able to land safely, or also confident in

717
00:34:19,880 --> 00:34:24,040
Speaker 11: others abilities that you can actually execute the skydiving plan

718
00:34:24,440 --> 00:34:28,120
Speaker 11: plans safely. There's a saying in skydiving it's better to

719
00:34:28,160 --> 00:34:30,239
Speaker 11: be on the ground wishing you're in the sky than

720
00:34:30,320 --> 00:34:31,160
Speaker 11: be in the sky.

721
00:34:31,040 --> 00:34:32,240
Speaker 5: Wishing you're on the ground.

722
00:34:32,680 --> 00:34:34,719
Speaker 11: That's been part of a part of the job for

723
00:34:34,800 --> 00:34:38,160
Speaker 11: investors or financial advisors is just doing what will keep

724
00:34:38,200 --> 00:34:41,640
Speaker 11: your clients in the game by knowing your own limits

725
00:34:41,719 --> 00:34:43,120
Speaker 11: or your client's limits.

726
00:34:43,160 --> 00:34:45,200
Speaker 5: Just because you can doesn't mean you should.

727
00:34:45,880 --> 00:34:49,040
Speaker 11: And virtual currencies are are a great example that many

728
00:34:49,120 --> 00:34:51,239
Speaker 11: many people are in that heart lesson over the past

729
00:34:51,320 --> 00:34:51,880
Speaker 11: two years.

730
00:34:52,960 --> 00:34:54,440
Speaker 4: So virtual currencies.

731
00:34:54,840 --> 00:34:57,239
Speaker 1: So what's the like, what's the next step for you

732
00:34:57,360 --> 00:34:58,759
Speaker 1: in terms of skydiving.

733
00:35:00,760 --> 00:35:04,640
Speaker 11: Uh, there's there's so many disciplines in the sport, so

734
00:35:04,880 --> 00:35:10,600
Speaker 11: there's just always ways to constantly to constantly improve.

735
00:35:10,400 --> 00:35:12,640
Speaker 5: And uh and and learn something new.

736
00:35:13,000 --> 00:35:15,800
Speaker 11: So yet people a lot of people wonder they think

737
00:35:15,960 --> 00:35:17,920
Speaker 11: they see they think skydiving is crazy.

738
00:35:18,000 --> 00:35:19,360
Speaker 5: You know what, what's the appeal?

739
00:35:19,680 --> 00:35:22,920
Speaker 11: And I'd say they're There are three main appeals to skydiving,

740
00:35:22,960 --> 00:35:24,240
Speaker 11: at least for myself.

741
00:35:24,920 --> 00:35:25,680
Speaker 5: Number one, I like.

742
00:35:25,680 --> 00:35:31,239
Speaker 11: Pastimes that push limits and require mental focus. So skydiving

743
00:35:31,280 --> 00:35:35,280
Speaker 11: obviously fits that description, as does motorcycle riding. As we discussed,

744
00:35:36,400 --> 00:35:39,839
Speaker 11: the other thing about skydiving is it's a really wonderful.

745
00:35:39,520 --> 00:35:42,760
Speaker 5: Diverse and welcoming community. I have friends in the sport

746
00:35:43,200 --> 00:35:44,279
Speaker 5: from all walks of life.

747
00:35:44,360 --> 00:35:49,959
Speaker 11: One's a famous rapper the the helicopter jump that.

748
00:35:48,600 --> 00:35:49,560
Speaker 5: That you referenced.

749
00:35:49,560 --> 00:35:52,440
Speaker 11: I did my first helicopter jump with the rapper Redman,

750
00:35:52,800 --> 00:35:56,759
Speaker 11: so that was super fun. Other people are yeah, other

751
00:35:56,800 --> 00:36:00,520
Speaker 11: people are computer coders to helicopter pilots.

752
00:36:00,600 --> 00:36:02,480
Speaker 5: I've met a bunch of women in the sport and

753
00:36:02,520 --> 00:36:03,680
Speaker 5: we all connect.

754
00:36:03,560 --> 00:36:07,319
Speaker 11: Around a common passion, all right. Well, and thirdly, it

755
00:36:07,480 --> 00:36:09,440
Speaker 11: just it allows me to be present and take a

756
00:36:09,480 --> 00:36:12,160
Speaker 11: fun break from the grind of Watch Street as much

757
00:36:12,160 --> 00:36:15,640
Speaker 11: as I love it. So in portfolio construction terms, I'd

758
00:36:15,640 --> 00:36:18,640
Speaker 11: say it's my uncrrelated asset with high returns on invest

759
00:36:18,880 --> 00:36:19,520
Speaker 11: Very nice.

760
00:36:19,920 --> 00:36:21,920
Speaker 1: I'll let you go with that. Jessica Ray found our

761
00:36:22,000 --> 00:36:24,680
Speaker 1: data track research. Appreciate getting some of your time you're.

762
00:36:24,520 --> 00:36:27,880
Speaker 7: Listening to the tape cans are live program Bloomberg Markets

763
00:36:27,960 --> 00:36:31,359
Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, the tune

764
00:36:31,400 --> 00:36:34,359
Speaker 7: in app, Bloomberg dot Com, and the Bloomberg Business app.

765
00:36:34,400 --> 00:36:37,200
Speaker 7: You can also listen live on Amazon Alexa from our

766
00:36:37,239 --> 00:36:42,200
Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

767
00:36:43,400 --> 00:36:46,319
Speaker 1: Let's talk hole man. We talk a lot about you know,

768
00:36:46,880 --> 00:36:49,320
Speaker 1: eco kind of green energy. We want to talk a

769
00:36:49,360 --> 00:36:51,960
Speaker 1: lot about Cole. It gotta be tough to be in

770
00:36:52,000 --> 00:36:54,120
Speaker 1: a cold business in a world that's going green. But

771
00:36:54,160 --> 00:36:57,160
Speaker 1: we have found someone who does that very well, Randall Atkins.

772
00:36:57,320 --> 00:37:02,160
Speaker 1: He's the CEO of Romanco Aramaco Ramica Resources trades on

773
00:37:02,160 --> 00:37:05,280
Speaker 1: the Nasdaq, etc. I get it, I get the ticker

774
00:37:05,360 --> 00:37:08,120
Speaker 1: met Cole. He joined his live here in our Bloomberg

775
00:37:08,160 --> 00:37:10,439
Speaker 1: Interactive Brokers studio. Of course the highlight of his career

776
00:37:10,520 --> 00:37:13,839
Speaker 1: obviously graduated of the Duke University. But I finally found

777
00:37:13,840 --> 00:37:16,920
Speaker 1: somebody who did it before I did. I mean so not,

778
00:37:17,360 --> 00:37:18,319
Speaker 1: you know, just landed there.

779
00:37:18,520 --> 00:37:18,840
Speaker 4: Randall.

780
00:37:19,320 --> 00:37:21,319
Speaker 1: I'm looking at your background. It's not like you're one

781
00:37:21,320 --> 00:37:22,920
Speaker 1: of these people that came up in the coal business.

782
00:37:22,920 --> 00:37:24,759
Speaker 1: In your entire life, a lot of banking, a lot

783
00:37:24,800 --> 00:37:27,960
Speaker 1: of investments, a lot of finance. Why did you get

784
00:37:28,000 --> 00:37:28,800
Speaker 1: into the coal business.

785
00:37:29,880 --> 00:37:31,920
Speaker 12: Got into the coal business because it was sort of

786
00:37:31,960 --> 00:37:32,920
Speaker 12: a distressed business.

787
00:37:33,160 --> 00:37:34,000
Speaker 4: It was to play that.

788
00:37:34,480 --> 00:37:37,960
Speaker 12: Frankly, we stepped back. Even five years ago, most of

789
00:37:38,000 --> 00:37:40,719
Speaker 12: the public companies were all in bankruptcy. So if you

790
00:37:40,760 --> 00:37:44,400
Speaker 12: could start one from scratch, kind of reverse engineer it

791
00:37:44,719 --> 00:37:49,240
Speaker 12: correctly with little debt and sort of maximize the asset quality.

792
00:37:50,400 --> 00:37:52,560
Speaker 12: You know, we have proven that you can make a

793
00:37:52,680 --> 00:37:56,239
Speaker 12: very good go in this business. And it's our expression

794
00:37:56,360 --> 00:37:58,920
Speaker 12: is we view coal in a manner which coal is

795
00:37:58,960 --> 00:38:01,919
Speaker 12: too valuable to burn, so we approach it a little

796
00:38:01,920 --> 00:38:02,680
Speaker 12: differently than most.

797
00:38:03,400 --> 00:38:08,960
Speaker 2: So how do you address what I assume must be

798
00:38:09,040 --> 00:38:09,920
Speaker 2: a shrinking market?

799
00:38:10,080 --> 00:38:12,440
Speaker 4: Is it in this country? Do we use less and

800
00:38:12,480 --> 00:38:13,319
Speaker 4: less coal every year?

801
00:38:15,080 --> 00:38:18,640
Speaker 12: Split the market into two different pots, one is thermal coal,

802
00:38:18,920 --> 00:38:21,680
Speaker 12: And that answer to your question is yes, it's probably

803
00:38:21,719 --> 00:38:24,960
Speaker 12: a declining market. Met coal, which is what we focus on,

804
00:38:25,520 --> 00:38:28,720
Speaker 12: is basically a precursor to make steel, so that business

805
00:38:28,840 --> 00:38:29,719
Speaker 12: is not declining.

806
00:38:29,840 --> 00:38:31,840
Speaker 4: And indeed, internationally, where.

807
00:38:31,640 --> 00:38:34,680
Speaker 12: We probably placed upwards of two thirds of our market

808
00:38:35,480 --> 00:38:39,680
Speaker 12: is growing. Obviously the Asian market is the principal growth factor.

809
00:38:40,160 --> 00:38:42,800
Speaker 1: So okay, So two thirds of your businesses outside the

810
00:38:42,920 --> 00:38:43,560
Speaker 1: US correct?

811
00:38:43,680 --> 00:38:44,880
Speaker 4: Okay, So.

812
00:38:46,680 --> 00:38:48,719
Speaker 1: Just about just the competitive landscape, I can't even think

813
00:38:48,719 --> 00:38:52,920
Speaker 1: of other coal companies out there. Who else is out

814
00:38:52,920 --> 00:38:56,640
Speaker 1: there that you compete with like who is the competitive marketplace?

815
00:38:56,760 --> 00:38:58,399
Speaker 4: Is it other US bulletin? Yeah?

816
00:38:58,680 --> 00:39:00,520
Speaker 1: I guess yeah, So what's competitive LAK.

817
00:39:00,520 --> 00:39:03,280
Speaker 12: They wouldn't compete so much in the in the Australian market,

818
00:39:03,320 --> 00:39:05,080
Speaker 12: which is pretty much got a lock on a lot

819
00:39:05,120 --> 00:39:07,880
Speaker 12: of the Asians just because of the proximity of logistics.

820
00:39:08,239 --> 00:39:11,920
Speaker 12: But domestically we would compete with companies like Alpha Arch

821
00:39:12,640 --> 00:39:15,480
Speaker 12: to a lesser extent, Peabody Warrior, those would be some

822
00:39:15,560 --> 00:39:16,040
Speaker 12: of the names.

823
00:39:17,120 --> 00:39:23,160
Speaker 2: So met coal, cocin coal still desperately needed to create

824
00:39:23,400 --> 00:39:25,960
Speaker 2: to produce all the steel that we need. What does

825
00:39:26,000 --> 00:39:27,279
Speaker 2: the growth in that industry look like?

826
00:39:27,960 --> 00:39:30,879
Speaker 12: The growth in that industry is basically I always say

827
00:39:31,280 --> 00:39:33,560
Speaker 12: met coal is a proxy for steel. Steel is a

828
00:39:33,600 --> 00:39:36,920
Speaker 12: proxy for GDP. So if you look at basically general

829
00:39:36,960 --> 00:39:40,440
Speaker 12: economic trends, whether it's in the US or overseas, it

830
00:39:40,560 --> 00:39:43,759
Speaker 12: pretty well ties to medical ties to the growth in

831
00:39:43,840 --> 00:39:47,200
Speaker 12: the generally economic situation most of the countries.

832
00:39:47,800 --> 00:39:50,600
Speaker 1: All right, So I'm looking at your financials here on

833
00:39:50,680 --> 00:39:52,879
Speaker 1: the FA function on the Bloomberg terminal. I got top

834
00:39:52,960 --> 00:39:56,799
Speaker 1: line going kind of mid single digits ibadam margins mid

835
00:39:56,920 --> 00:40:02,080
Speaker 1: mid twenties, free cash a positive. What's the growth driver

836
00:40:02,200 --> 00:40:06,480
Speaker 1: for your business, you acquire additional minds, do you develop

837
00:40:06,760 --> 00:40:09,400
Speaker 1: further what you've got? How do you grow your business?

838
00:40:09,440 --> 00:40:09,600
Speaker 11: Sure?

839
00:40:09,719 --> 00:40:13,800
Speaker 12: Well, we're actually the only domestic coal company that's projecting

840
00:40:13,880 --> 00:40:16,239
Speaker 12: the doublin size from where we sit right now.

841
00:40:16,719 --> 00:40:17,480
Speaker 10: So we have.

842
00:40:17,560 --> 00:40:23,480
Speaker 12: Decided to grow organically without buying existing minds. We basically

843
00:40:23,600 --> 00:40:26,680
Speaker 12: have taken properties where we're in essence by the reserve

844
00:40:27,160 --> 00:40:29,560
Speaker 12: and developed that planet and then.

845
00:40:29,680 --> 00:40:30,520
Speaker 4: Market it from there.

846
00:40:30,760 --> 00:40:33,640
Speaker 12: So we will jump from about two and a half

847
00:40:33,719 --> 00:40:36,040
Speaker 12: million tons last year to about three and a half

848
00:40:36,040 --> 00:40:38,879
Speaker 12: million tons of production this year, ultimately to about six

849
00:40:39,280 --> 00:40:40,520
Speaker 12: six to seven million tons.

850
00:40:41,440 --> 00:40:42,560
Speaker 4: What do you I mean?

851
00:40:42,600 --> 00:40:44,600
Speaker 2: I look at the stock price and I wonder what

852
00:40:44,760 --> 00:40:47,440
Speaker 2: happened two years ago? You know, all of a sudden,

853
00:40:47,520 --> 00:40:52,480
Speaker 2: it just goes boom on the rise at the August

854
00:40:52,520 --> 00:40:54,520
Speaker 2: September twenty twenty one part of the chart.

855
00:40:54,760 --> 00:40:57,120
Speaker 4: What happened there? Basically after that.

856
00:40:57,239 --> 00:41:01,319
Speaker 12: You had sort of an economically decline you had after

857
00:41:01,360 --> 00:41:05,360
Speaker 12: effects of COVID, You had a different market situation. Basically

858
00:41:05,600 --> 00:41:08,680
Speaker 12: in the August and September periods is when you find

859
00:41:09,160 --> 00:41:12,560
Speaker 12: almost one hundred percent of the domestic sales occur in

860
00:41:12,640 --> 00:41:16,400
Speaker 12: the US. So that was a tough period in domestic sales.

861
00:41:16,719 --> 00:41:18,920
Speaker 4: A lot of the coal companies dropped in that same time. No,

862
00:41:19,040 --> 00:41:20,320
Speaker 4: but you jumped. I'm looking.

863
00:41:20,480 --> 00:41:25,400
Speaker 2: So twenty twenty one, your stock went from two fifty

864
00:41:26,440 --> 00:41:30,000
Speaker 2: to I'm going to say twelve at the end of

865
00:41:30,040 --> 00:41:34,919
Speaker 2: the year. It was the end of the pandemic, which

866
00:41:34,960 --> 00:41:36,839
Speaker 2: is why I think it's so interesting. Usually you see

867
00:41:36,880 --> 00:41:40,400
Speaker 2: these stock moves right around twenty twenty, depending on what

868
00:41:40,520 --> 00:41:45,000
Speaker 2: the company is. But you climbed high into twenty twenty one,

869
00:41:45,120 --> 00:41:47,480
Speaker 2: twenty twenty two, and now you're holding it about eight

870
00:41:47,560 --> 00:41:48,440
Speaker 2: dollars right.

871
00:41:49,040 --> 00:41:53,680
Speaker 12: Our jump was primarily based on a market recognition that

872
00:41:53,840 --> 00:41:56,560
Speaker 12: we had gone from being sort of a small time

873
00:41:56,640 --> 00:42:00,920
Speaker 12: producer into coming into the ranks of a larger When

874
00:42:00,960 --> 00:42:03,160
Speaker 12: we get to the six to seven million ton size,

875
00:42:03,520 --> 00:42:06,200
Speaker 12: we will be almost an equal size in terms of

876
00:42:06,239 --> 00:42:09,040
Speaker 12: the met coal production with most of the major coal companies,

877
00:42:09,200 --> 00:42:12,920
Speaker 12: which frankly still have got a predominant thermal mix. And

878
00:42:13,040 --> 00:42:16,200
Speaker 12: that's frankly, the drag on most coal stocks is that

879
00:42:16,600 --> 00:42:19,680
Speaker 12: there's not a market differentiation between thermal and met.

880
00:42:19,920 --> 00:42:22,600
Speaker 1: So what's the future of coal in this country?

881
00:42:22,719 --> 00:42:23,400
Speaker 4: This energy?

882
00:42:24,880 --> 00:42:25,000
Speaker 11: You know?

883
00:42:25,120 --> 00:42:26,919
Speaker 1: I mean, is there always going to be a place

884
00:42:27,000 --> 00:42:29,000
Speaker 1: for coal, or it just seems like, you know, if

885
00:42:29,040 --> 00:42:30,919
Speaker 1: you talk to some of the more cleaner energy folks,

886
00:42:30,920 --> 00:42:32,160
Speaker 1: they would like to see that go to zero.

887
00:42:32,320 --> 00:42:32,520
Speaker 4: Yeah.

888
00:42:32,920 --> 00:42:36,239
Speaker 12: So I have been a proponent for about ten years that,

889
00:42:36,360 --> 00:42:38,919
Speaker 12: as I said, there's a higher and better use for coal.

890
00:42:39,960 --> 00:42:42,560
Speaker 12: Coal is too valuable to burn. I go back to

891
00:42:43,160 --> 00:42:46,040
Speaker 12: really one hundred years ago when coal was used for

892
00:42:46,080 --> 00:42:48,680
Speaker 12: a variety of things that had more of a chemical nature.

893
00:42:49,080 --> 00:42:51,600
Speaker 12: So we have been working with the Department of Energy

894
00:42:51,640 --> 00:42:54,280
Speaker 12: in some of the national labs in creating new uses

895
00:42:54,320 --> 00:42:56,600
Speaker 12: for coal where you can convert it into things like

896
00:42:56,680 --> 00:43:01,360
Speaker 12: synthetic graph fight and graphenes, carbon fiber, and frankly, that

897
00:43:01,480 --> 00:43:04,680
Speaker 12: took us into the rare earth business, where you know,

898
00:43:04,880 --> 00:43:07,160
Speaker 12: ten years ago, I didn't know the difference between rare current,

899
00:43:07,520 --> 00:43:10,759
Speaker 12: rare coins, and rare earth, but we have found that

900
00:43:11,640 --> 00:43:14,640
Speaker 12: connected to coal seams. So the future of coal I

901
00:43:14,760 --> 00:43:17,800
Speaker 12: see as having three legs of the stool, one for

902
00:43:17,920 --> 00:43:22,480
Speaker 12: thermal production for combustion, one for steel production, and the

903
00:43:22,560 --> 00:43:25,440
Speaker 12: third leg of the stool will be higher tech uses

904
00:43:25,600 --> 00:43:27,960
Speaker 12: for alternative carbon products.

905
00:43:28,080 --> 00:43:30,279
Speaker 2: What are the rare earths that you're finding and how

906
00:43:30,320 --> 00:43:31,600
Speaker 2: are you doing it? Getting them out.

907
00:43:33,080 --> 00:43:37,720
Speaker 12: We have found a spectrum of about fourteen different rare earths,

908
00:43:37,920 --> 00:43:41,319
Speaker 12: and frankly, thirty percent of what we found are concentrated

909
00:43:41,400 --> 00:43:44,840
Speaker 12: in the heavier magnetic rare earths, which are frankly the

910
00:43:44,960 --> 00:43:49,560
Speaker 12: more valuable ones. Rare earths are measured in parts per million,

911
00:43:50,480 --> 00:43:53,480
Speaker 12: so it's you know, it's unlike the bulk coal business.

912
00:43:54,200 --> 00:43:57,879
Speaker 12: It's more like you're looking for diamonds almost, and it's

913
00:43:58,000 --> 00:44:00,960
Speaker 12: more of an industrial chemical business than that's a mining business.

914
00:44:01,200 --> 00:44:04,080
Speaker 12: Because once you find it, that's only half the battle.

915
00:44:04,200 --> 00:44:09,120
Speaker 12: The trick is to separate the rarer and get them

916
00:44:09,520 --> 00:44:12,200
Speaker 12: processed in a way that they then become commercially usable.

917
00:44:12,520 --> 00:44:14,480
Speaker 1: Hey, Randal, thanks so much for joining us. Really appreciate

918
00:44:14,480 --> 00:44:16,640
Speaker 1: you coming in here. We don't talk about cole that office,

919
00:44:16,680 --> 00:44:19,759
Speaker 1: so it's fascinating discussion. Randall Atkins, he's the CEO of

920
00:44:19,920 --> 00:44:24,440
Speaker 1: Romanco Resource Ramico Resources. Thank you, Symble, M E. T.

921
00:44:24,640 --> 00:44:28,480
Speaker 7: Seed. You're listening to the tape kent'sur live program Bloomberg

922
00:44:28,600 --> 00:44:32,160
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

923
00:44:32,239 --> 00:44:35,439
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business app.

924
00:44:35,520 --> 00:44:38,279
Speaker 7: You can also listen live on Amazon Alexa from our

925
00:44:38,360 --> 00:44:42,320
Speaker 7: flagship New York station, Just say Alexa Play Bloomberg eleven

926
00:44:42,440 --> 00:44:45,200
Speaker 7: thirty JM.

927
00:44:45,320 --> 00:44:48,640
Speaker 1: Smucker agreed to acquire Twinkies maker Hostess Brands for about

928
00:44:48,680 --> 00:44:52,319
Speaker 1: five point six billion dollars, furthering a growing consolidation trend

929
00:44:52,360 --> 00:44:56,080
Speaker 1: among the companies that stock the shelf stable aisles at

930
00:44:56,120 --> 00:44:58,239
Speaker 1: the heart of supermarkets. Do we have an expert on

931
00:44:58,600 --> 00:45:02,840
Speaker 1: this business? We appsolutely do, Diana rossettopenya. She's an equity

932
00:45:02,880 --> 00:45:06,720
Speaker 1: research channels follow all the consumer space for Blueberg Intelligence. Diana,

933
00:45:06,760 --> 00:45:09,880
Speaker 1: you're like one of our first bianos. You're like an

934
00:45:09,920 --> 00:45:13,600
Speaker 1: original original. You're aging me absolutely. I mean you're there

935
00:45:13,640 --> 00:45:16,680
Speaker 1: from just the get go, and she's just become one

936
00:45:16,719 --> 00:45:19,360
Speaker 1: of the top annos out there covering the consumer space. Diana,

937
00:45:19,400 --> 00:45:22,200
Speaker 1: What do you make of this deal? Smucker's buying Hostess.

938
00:45:22,200 --> 00:45:23,520
Speaker 1: What's going on here? Strategically?

939
00:45:24,200 --> 00:45:28,680
Speaker 6: Yeah, Well, strategically for Smucker, this will be a more

940
00:45:29,040 --> 00:45:34,200
Speaker 6: of a mixed deal for Smucker in terms of on

941
00:45:34,320 --> 00:45:38,840
Speaker 6: the cells side, it's definitely positive. It's a company that

942
00:45:39,040 --> 00:45:42,560
Speaker 6: is growing in the mid single digits compared to consumer foods.

943
00:45:42,600 --> 00:45:46,360
Speaker 6: The consumer foods segment for Smucker, which is growing in

944
00:45:46,480 --> 00:45:49,560
Speaker 6: the low single digits, So definitely on the cell side

945
00:45:49,680 --> 00:45:51,840
Speaker 6: is going to be a positive. Now if you go

946
00:45:52,080 --> 00:45:54,640
Speaker 6: down the P and L, that's probably going to be

947
00:45:54,680 --> 00:45:55,880
Speaker 6: a little bit more complicated.

948
00:45:56,160 --> 00:45:56,560
Speaker 1: Why is that.

949
00:45:57,040 --> 00:46:03,040
Speaker 6: Because Ebida margins are not necessarily going to be as

950
00:46:03,400 --> 00:46:07,520
Speaker 6: as as positive as the company is stating in our

951
00:46:07,600 --> 00:46:12,759
Speaker 6: view the company, the company's call these mornings said that

952
00:46:13,000 --> 00:46:16,320
Speaker 6: they host this had a twenty three percent of that margin,

953
00:46:16,440 --> 00:46:20,359
Speaker 6: which is going to probably be about uh the same

954
00:46:20,480 --> 00:46:24,560
Speaker 6: as the consumer food segment for the company going forward,

955
00:46:24,719 --> 00:46:28,640
Speaker 6: So we don't necessarily see a lot of accretion on

956
00:46:28,719 --> 00:46:29,080
Speaker 6: that end.

957
00:46:29,520 --> 00:46:33,000
Speaker 2: I feel like there's a there's room for real improvement

958
00:46:33,120 --> 00:46:36,600
Speaker 2: on execution of Hostess product sales.

959
00:46:37,080 --> 00:46:37,239
Speaker 11: You know.

960
00:46:37,480 --> 00:46:40,880
Speaker 4: I we have interviewed the CEO Hosts a couple.

961
00:46:40,719 --> 00:46:42,400
Speaker 2: Of times, and as a result, I always go out

962
00:46:42,440 --> 00:46:44,839
Speaker 2: and look for their products and stores and I see

963
00:46:44,920 --> 00:46:51,040
Speaker 2: that they do have like sometimes separate areas or specific displays,

964
00:46:51,320 --> 00:46:54,880
Speaker 2: but the products aren't stocked very well and there's just

965
00:46:54,960 --> 00:46:58,040
Speaker 2: not enough attention drawn to them in the in the

966
00:46:58,239 --> 00:46:59,360
Speaker 2: in the points of purchase.

967
00:46:59,520 --> 00:47:00,759
Speaker 4: Couldn't they improve that?

968
00:47:01,360 --> 00:47:05,520
Speaker 6: I think that is something that attracted smockery. It seems

969
00:47:05,600 --> 00:47:11,080
Speaker 6: that Hostess has been increasing innovation and points of sale,

970
00:47:11,280 --> 00:47:15,000
Speaker 6: as you mentioned, and I think they're probably going to

971
00:47:15,080 --> 00:47:20,320
Speaker 6: benefit from the supply chain leverage that Smucker has. And

972
00:47:20,480 --> 00:47:23,200
Speaker 6: it's also in terms of Smocker, you will give them

973
00:47:23,320 --> 00:47:27,799
Speaker 6: a little bit more exposure on the convenience side, which

974
00:47:27,880 --> 00:47:30,400
Speaker 6: is about forty percent of Hostess sales.

975
00:47:31,080 --> 00:47:34,400
Speaker 1: So I'm a big fan of the Hostess brands. But

976
00:47:34,600 --> 00:47:37,440
Speaker 1: there's some people out there that maybe even during the pandemic,

977
00:47:37,480 --> 00:47:39,279
Speaker 1: I don't know, maybe they went to more of those

978
00:47:40,080 --> 00:47:42,840
Speaker 1: you know, ringings and all that kind of good stuff

979
00:47:42,880 --> 00:47:45,080
Speaker 1: that we all love, but maybe now they're coming back

980
00:47:45,120 --> 00:47:47,360
Speaker 1: and going back to more healthier food. What are the

981
00:47:47,400 --> 00:47:48,319
Speaker 1: trends you're seeing out there?

982
00:47:48,800 --> 00:47:53,080
Speaker 6: So basically it's consumers in the United States. They say

983
00:47:53,120 --> 00:47:58,799
Speaker 6: they want one thing and they actually do another. So, yes,

984
00:47:59,000 --> 00:48:02,440
Speaker 6: you're right, people want to be healthier. And definitely the

985
00:48:02,520 --> 00:48:07,680
Speaker 6: pandemic was a big catalyst for people going and purchase

986
00:48:07,840 --> 00:48:12,320
Speaker 6: more of the indulgence snacks. I think there's still a

987
00:48:12,360 --> 00:48:15,400
Speaker 6: little bit of growth on that aspect. People seem to

988
00:48:15,520 --> 00:48:20,000
Speaker 6: be a little bit more permissible in the indulgence side,

989
00:48:20,600 --> 00:48:24,040
Speaker 6: and I think that is probably going to fuel growth

990
00:48:24,160 --> 00:48:24,800
Speaker 6: going forward.

991
00:48:25,360 --> 00:48:29,400
Speaker 2: I mean Twinkies obviously, and then the cupcakes. I like

992
00:48:29,800 --> 00:48:33,360
Speaker 2: the orange ones, but they have the chocolate and the

993
00:48:33,480 --> 00:48:38,120
Speaker 2: ding Dongs are a classic. The ho hosp can't forget

994
00:48:38,160 --> 00:48:40,680
Speaker 2: about those. I have always been a fan of the

995
00:48:40,760 --> 00:48:45,040
Speaker 2: chocolate dial, which is a twinkie essentially dipped in chocolate.

996
00:48:46,280 --> 00:48:49,759
Speaker 2: I've never really liked the snowballs, but they're there, the

997
00:48:49,920 --> 00:48:55,880
Speaker 2: Zingers and then I mean they're just like classic brands.

998
00:48:55,920 --> 00:48:58,960
Speaker 2: I feel like instead of just selling them at you know,

999
00:48:59,040 --> 00:49:01,920
Speaker 2: the seven eleven or the Dwayne Reid, they should be

1000
00:49:02,560 --> 00:49:07,600
Speaker 2: sold in you know, these trendy like urban outfitters should

1001
00:49:07,640 --> 00:49:09,560
Speaker 2: sell these things, right because.

1002
00:49:09,600 --> 00:49:11,800
Speaker 6: But you can't fit on their clothes though, so that

1003
00:49:11,880 --> 00:49:14,040
Speaker 6: would be a little bit of lack of synergy.

1004
00:49:14,280 --> 00:49:16,640
Speaker 1: Why is James muckerstock down six percent today?

1005
00:49:16,840 --> 00:49:21,040
Speaker 6: Well, obviously it has, as you know, there's also the

1006
00:49:21,280 --> 00:49:25,400
Speaker 6: acquirer curves playing into that. But like I said, I

1007
00:49:25,520 --> 00:49:29,399
Speaker 6: think it's more of investors try it and I don't

1008
00:49:29,440 --> 00:49:31,640
Speaker 6: want to say not believing, but being a little bit

1009
00:49:31,719 --> 00:49:35,799
Speaker 6: wary about the bottom line for this acquisition and how

1010
00:49:35,880 --> 00:49:38,560
Speaker 6: accreative is going to be on the epidem margin.

1011
00:49:38,520 --> 00:49:41,880
Speaker 1: Are we are we seeing more consolidation in the I

1012
00:49:41,920 --> 00:49:45,880
Speaker 1: don't know, the grocery space, If so why or what's

1013
00:49:45,920 --> 00:49:46,600
Speaker 1: happening out there?

1014
00:49:46,840 --> 00:49:50,400
Speaker 6: Well, we actually, I mean I have been fairly active

1015
00:49:50,480 --> 00:49:53,880
Speaker 6: in terms of writing because Campbell's SUPA a few weeks

1016
00:49:53,920 --> 00:49:57,520
Speaker 6: ago bought Solos, So that is right, that's right. Yeah,

1017
00:49:57,600 --> 00:50:00,640
Speaker 6: So that is definitely it seems that because decisions seem

1018
00:50:00,719 --> 00:50:03,680
Speaker 6: to be ramping up in the second half of the year.

1019
00:50:05,000 --> 00:50:10,600
Speaker 6: It really is in terms of it's not unusual. I

1020
00:50:10,680 --> 00:50:14,239
Speaker 6: think we're going back to patterns compared to before the pandemic,

1021
00:50:14,520 --> 00:50:17,640
Speaker 6: that all of these big companies are looking for growth

1022
00:50:17,800 --> 00:50:21,960
Speaker 6: and they're paying a pretty high price for it.

1023
00:50:22,800 --> 00:50:26,520
Speaker 1: How can host this, I mean going to bankruptcy not

1024
00:50:26,680 --> 00:50:28,240
Speaker 1: just once but twice?

1025
00:50:28,480 --> 00:50:28,800
Speaker 10: Was that just?

1026
00:50:29,360 --> 00:50:30,719
Speaker 4: I mean who can sell?

1027
00:50:31,000 --> 00:50:32,120
Speaker 1: Yeah, who can sell twinkies?

1028
00:50:32,160 --> 00:50:32,640
Speaker 4: What happened?

1029
00:50:32,719 --> 00:50:35,040
Speaker 1: I mean there's maybe before your time, but was it

1030
00:50:35,160 --> 00:50:37,520
Speaker 1: just again it's mass suggested maybe just some bad management there.

1031
00:50:37,920 --> 00:50:41,400
Speaker 6: Yeah, it was a commination of bad management. And at

1032
00:50:41,440 --> 00:50:45,120
Speaker 6: the same time, you know, it was lack of innovation.

1033
00:50:45,600 --> 00:50:49,200
Speaker 6: The brands were falling out of flavor. And I think

1034
00:50:50,280 --> 00:50:53,120
Speaker 6: you know, now with more innovation and with the strong

1035
00:50:53,520 --> 00:50:56,800
Speaker 6: supply chain leverage, I think that they're probably going to

1036
00:50:56,920 --> 00:50:59,000
Speaker 6: be expanding into that.

1037
00:50:59,280 --> 00:51:01,400
Speaker 1: You expect more or m and a going forward in

1038
00:51:01,480 --> 00:51:02,160
Speaker 1: this space.

1039
00:51:02,239 --> 00:51:02,839
Speaker 4: I think.

1040
00:51:02,920 --> 00:51:06,120
Speaker 6: So I'm a little worried about the premiums that we're

1041
00:51:06,160 --> 00:51:12,200
Speaker 6: seeing and the leverage expansion. Obviously, Smucker it's their balance

1042
00:51:12,239 --> 00:51:15,279
Speaker 6: sheet is going that net leverage is going to be

1043
00:51:15,680 --> 00:51:18,640
Speaker 6: four point four after four point four times, that seems high.

1044
00:51:18,719 --> 00:51:21,240
Speaker 1: After yeah, it's fine from my industry, the media industry,

1045
00:51:21,280 --> 00:51:23,400
Speaker 1: because we grow our EBITDA fifteen to twenty percent. You

1046
00:51:23,440 --> 00:51:25,600
Speaker 1: guys don't grow your IBITAD that fast exactly.

1047
00:51:25,960 --> 00:51:30,200
Speaker 6: And usually we should be able to see leverage in

1048
00:51:30,320 --> 00:51:34,200
Speaker 6: the three times. But now when we're looking at deals

1049
00:51:34,239 --> 00:51:37,320
Speaker 6: that are expanding into four times, it makes people a

1050
00:51:37,360 --> 00:51:38,000
Speaker 6: little nervous.

1051
00:51:38,320 --> 00:51:40,239
Speaker 4: I wonder, what the what are the other brands out

1052
00:51:40,280 --> 00:51:42,120
Speaker 4: there that are on the block. Do we know Hostess

1053
00:51:42,239 --> 00:51:44,160
Speaker 4: was on the block? Do we know? Or was this

1054
00:51:44,239 --> 00:51:44,760
Speaker 4: a surprise?

1055
00:51:45,239 --> 00:51:49,680
Speaker 6: Well, apparently according to Smocker management, the acquisition was a surprise.

1056
00:51:50,840 --> 00:51:55,000
Speaker 6: There they themselves actually divested some of the food brands

1057
00:51:55,080 --> 00:51:59,800
Speaker 6: for pet so divestitors seem to be also be on

1058
00:51:59,880 --> 00:52:00,400
Speaker 6: the blog.

1059
00:52:00,920 --> 00:52:05,560
Speaker 2: Smuckers has coffee, right, They make Duncan coffee for sale.

1060
00:52:05,600 --> 00:52:09,200
Speaker 2: They have folders, They obviously do Jeff peanut butter, and

1061
00:52:09,280 --> 00:52:10,120
Speaker 2: the and the jelly.

1062
00:52:10,360 --> 00:52:10,960
Speaker 1: You're a Jiff guy.

1063
00:52:11,239 --> 00:52:14,200
Speaker 2: I love I will eat gift peanut butter straight out

1064
00:52:14,200 --> 00:52:16,640
Speaker 2: of the jar in a spoon. I'm a jiff Wow.

1065
00:52:17,160 --> 00:52:21,160
Speaker 2: So you the tie and Crunchy, but Smuckers also does

1066
00:52:21,680 --> 00:52:23,200
Speaker 2: meow mix and milk bone.

1067
00:52:23,480 --> 00:52:26,320
Speaker 4: Right, Are they getting out of that the pet food business.

1068
00:52:26,800 --> 00:52:27,520
Speaker 2: Yes, they are.

1069
00:52:27,760 --> 00:52:32,759
Speaker 6: Actually they're concentrating on the pet snacks category, which is paperoni,

1070
00:52:33,239 --> 00:52:39,279
Speaker 6: yes exactly, yes, milk bone. So, but that is I

1071
00:52:39,360 --> 00:52:42,160
Speaker 6: think one of the arguments against the deal is that

1072
00:52:42,800 --> 00:52:45,239
Speaker 6: is this going to be a big heart pet brand?

1073
00:52:45,400 --> 00:52:48,560
Speaker 6: A two point zero Back in twenty fifteen, the company

1074
00:52:49,120 --> 00:52:55,000
Speaker 6: acquired these company pig big Heart brands for five point

1075
00:52:55,120 --> 00:52:59,400
Speaker 6: something billion dollars. Leverage was also four four times ABDA,

1076
00:52:59,600 --> 00:53:02,960
Speaker 6: so it and now they're divesting a lot of brands

1077
00:53:03,000 --> 00:53:05,560
Speaker 6: of it. So you know, people are concerned about that.

1078
00:53:06,880 --> 00:53:08,799
Speaker 1: What's what's your thoughts on Chewi We'll get about twenty

1079
00:53:08,800 --> 00:53:10,280
Speaker 1: twenty seconds Chewy.

1080
00:53:10,760 --> 00:53:15,440
Speaker 6: They're growing on their nut cells per active consumers and

1081
00:53:16,040 --> 00:53:18,440
Speaker 6: active consumers seems to be a painful point for them

1082
00:53:18,520 --> 00:53:18,799
Speaker 6: so far.

1083
00:53:19,120 --> 00:53:21,759
Speaker 1: All right, good stuff. A reader just kind of writes

1084
00:53:21,800 --> 00:53:24,959
Speaker 1: in Peter Pan peanut butter is word's.

1085
00:53:24,640 --> 00:53:27,719
Speaker 2: At That's not the case that a strong well, you

1086
00:53:27,760 --> 00:53:28,359
Speaker 2: know what, I don't.

1087
00:53:28,360 --> 00:53:29,440
Speaker 4: Actually, it's spent a long time.

1088
00:53:29,480 --> 00:53:31,920
Speaker 2: I'll go I'm gonna go out right now because I'm leaving, okay,

1089
00:53:32,160 --> 00:53:36,399
Speaker 2: and I'm going to go get a jar of Peter Pan.

1090
00:53:36,760 --> 00:53:38,600
Speaker 2: I'll go over to the d Wayne Read and pick

1091
00:53:38,600 --> 00:53:40,640
Speaker 2: one up and see. I think Jeff is still the

1092
00:53:40,719 --> 00:53:41,200
Speaker 2: raining champ.

1093
00:53:41,320 --> 00:53:45,080
Speaker 1: All right, Dan sat Open Equity Research channels for Bloomberg Intellent,

1094
00:53:45,200 --> 00:53:46,239
Speaker 1: just breaking down this deal.

1095
00:53:46,560 --> 00:53:49,600
Speaker 7: You're listening to the tape Cat's are live program Bloomberg

1096
00:53:49,719 --> 00:53:53,279
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

1097
00:53:53,360 --> 00:53:56,560
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business app.

1098
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Speaker 7: You can also listen live on Amazon Alexa from our

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00:53:59,480 --> 00:54:03,840
Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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00:54:05,960 --> 00:54:10,160
Speaker 1: Let's talk about ad tech, digital advertising, all that fun stuff,

1101
00:54:10,160 --> 00:54:12,759
Speaker 1: the part of the advertising pie that continues to put

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00:54:12,840 --> 00:54:15,520
Speaker 1: up some really solid numbers. And you think about the

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00:54:15,560 --> 00:54:18,520
Speaker 1: digital advertising, the you know, the facebooks, the Googles, I

1104
00:54:18,680 --> 00:54:22,080
Speaker 1: use it the old school words, not meta or whatever

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00:54:22,120 --> 00:54:25,480
Speaker 1: the other one is. But there's technology behind that, and

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00:54:25,880 --> 00:54:27,920
Speaker 1: that is a fascinating part of the business. Our next

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00:54:27,960 --> 00:54:30,640
Speaker 1: guest is all over that stuff. Megan Clarkin joins us.

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00:54:30,880 --> 00:54:35,319
Speaker 1: She's the CEO of Crytao or Critio Critia Critio. It's

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00:54:35,320 --> 00:54:38,640
Speaker 1: a Nasdaq traded company. C rt O is the ticker

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00:54:38,680 --> 00:54:41,600
Speaker 1: to put into your Bloomberg terminal. It's a French company

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00:54:41,640 --> 00:54:43,520
Speaker 1: based in Paris. Megan, thanks so much for joining us

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00:54:43,920 --> 00:54:45,760
Speaker 1: here in a Bloomberg interactive broker studio.

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00:54:45,920 --> 00:54:46,640
Speaker 4: What do you guys do it?

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00:54:46,840 --> 00:54:49,400
Speaker 13: Critio we're in at tech company. As you said, we

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00:54:49,520 --> 00:54:51,960
Speaker 13: focus in on commerce media, retail.

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00:54:51,719 --> 00:54:52,839
Speaker 1: Media, retail media.

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00:54:53,080 --> 00:54:55,640
Speaker 13: What is retail media, Well, retail media is the lighting

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00:54:55,719 --> 00:54:59,640
Speaker 13: up of advertising on retailer sites or even broader commerce

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00:54:59,680 --> 00:55:04,440
Speaker 13: sites like Uber. They're now selling advertising and it's incredibly successful.

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00:55:04,480 --> 00:55:08,440
Speaker 13: It's the fastest growing area of digital advertising. What Critio

1121
00:55:08,560 --> 00:55:11,040
Speaker 13: does is we enable all of that for them. We

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00:55:11,160 --> 00:55:12,960
Speaker 13: make sure that the right ads gets to the right

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00:55:13,000 --> 00:55:15,400
Speaker 13: person on the right side at the right time, and

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00:55:15,520 --> 00:55:18,480
Speaker 13: we also make sure that their inventory is shown up

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00:55:18,880 --> 00:55:22,400
Speaker 13: for the demand side, or the advertisers and the agencies

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00:55:22,440 --> 00:55:25,920
Speaker 13: who are looking to spend their advertising dollars across sites.

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00:55:26,360 --> 00:55:31,160
Speaker 13: So it's competing, if you like, with traditional traditional media

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00:55:31,280 --> 00:55:34,560
Speaker 13: and advertising. It's competing with Google it's completely copeeding with search.

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00:55:34,760 --> 00:55:37,680
Speaker 13: It is the new wave of advertising across retailers.

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00:55:37,840 --> 00:55:42,240
Speaker 1: What's a typical advertiser in that part of the marketplace.

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00:55:42,360 --> 00:55:45,200
Speaker 1: Is it a Coca Cola trying to do some brand advertising.

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00:55:45,360 --> 00:55:47,160
Speaker 1: Is it a car agency trying to get me to

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00:55:47,200 --> 00:55:48,640
Speaker 1: go out and buy something tomorrow.

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00:55:48,960 --> 00:55:49,719
Speaker 4: Yeah, it's all of that.

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00:55:50,440 --> 00:55:53,359
Speaker 13: So they now see a real opportunity getting in front

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00:55:53,400 --> 00:55:54,839
Speaker 13: of audiences.

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00:55:54,320 --> 00:55:55,640
Speaker 1: Who are actually shoppers.

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00:55:55,719 --> 00:55:56,360
Speaker 4: They're actually on.

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00:55:56,440 --> 00:55:58,800
Speaker 13: Their buy a journey, and they're really close to the

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00:55:58,920 --> 00:56:03,960
Speaker 13: point of sale posed to on a social site where

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00:56:03,960 --> 00:56:07,440
Speaker 13: it's a conversation that's happened, and they might happen to

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00:56:07,480 --> 00:56:10,600
Speaker 13: see the pepsi ad and it might spark a sort

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00:56:10,640 --> 00:56:13,680
Speaker 13: of thought to go. If you're actually on Costco and

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00:56:13,760 --> 00:56:16,200
Speaker 13: you're getting a pepsi ad and they stop Costco, you're

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00:56:16,360 --> 00:56:18,480
Speaker 13: very close to that point of sale. So it's a

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00:56:18,760 --> 00:56:22,040
Speaker 13: very viable advertising channel for all of those brands.

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00:56:22,200 --> 00:56:25,440
Speaker 1: So your clients are the Costcos of the world as

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00:56:25,480 --> 00:56:26,879
Speaker 1: opposed to the Pepsis of the world.

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00:56:27,000 --> 00:56:30,600
Speaker 13: Well, we service both because we light up the advertising

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00:56:30,680 --> 00:56:34,200
Speaker 13: for Costco, for Macy's, for Best Buy, for half of

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00:56:34,239 --> 00:56:37,400
Speaker 13: the biggest retailers in the US. We power that advertising,

1152
00:56:37,800 --> 00:56:41,719
Speaker 13: but we also make that advertising inventry available to the Pepsis,

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00:56:41,880 --> 00:56:44,400
Speaker 13: to the Cokes, to all of We have twenty six

1154
00:56:44,520 --> 00:56:47,200
Speaker 13: hundred brands that we support to try to bring their

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00:56:47,280 --> 00:56:49,720
Speaker 13: dollars into that retail media space.

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00:56:49,960 --> 00:56:52,360
Speaker 1: All right, how has that market that's been When you

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00:56:52,400 --> 00:56:54,320
Speaker 1: think about the global advertising pie, and you take the

1158
00:56:54,600 --> 00:56:58,200
Speaker 1: traditional media not growing, declining depending upon what you're looking at,

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00:56:58,320 --> 00:57:00,919
Speaker 1: and you look at the digital piece continues to grow

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00:57:01,320 --> 00:57:03,640
Speaker 1: and that was when I used to cover this four

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00:57:03,719 --> 00:57:06,600
Speaker 1: or five years ago, still growing at twenty percent. Where

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00:57:06,680 --> 00:57:09,839
Speaker 1: is a digital dollar spend growth rate kind of over

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00:57:09,840 --> 00:57:10,720
Speaker 1: the next several years.

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00:57:10,520 --> 00:57:13,280
Speaker 13: From your Well, if we think about retail media, retail

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00:57:13,400 --> 00:57:17,880
Speaker 13: media marketplace is by twenty twenty five going to be

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00:57:17,920 --> 00:57:20,920
Speaker 13: worth about one hundred and ten billion dollars. Now, if

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00:57:20,960 --> 00:57:23,120
Speaker 13: you think on top of that, there's a star player

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00:57:23,160 --> 00:57:26,480
Speaker 13: in there right now, which is Amazon. And Amazon's been

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00:57:26,520 --> 00:57:30,840
Speaker 13: doing this for six to ten years now. Amazon have

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00:57:31,440 --> 00:57:34,440
Speaker 13: last quarter posted about it eleven billion dollars worth of

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00:57:34,520 --> 00:57:37,840
Speaker 13: advertising and have a run rate to about forty billion

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00:57:37,880 --> 00:57:39,400
Speaker 13: dollars by the end of the year. And if you

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00:57:39,480 --> 00:57:43,800
Speaker 13: think of traditional TV over all of the TV players,

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00:57:44,000 --> 00:57:47,040
Speaker 13: that's a sixty six billion dollar market. So Amazon in

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00:57:47,080 --> 00:57:50,480
Speaker 13: the retail space forty billion. All of TV over all

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00:57:50,520 --> 00:57:53,120
Speaker 13: of the years that it's been playing about sixty six.

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00:57:53,280 --> 00:57:57,120
Speaker 13: Is this real opportunity in retail media that's just exploding.

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00:57:57,360 --> 00:58:00,560
Speaker 1: How are retailers in general, how are they as clients

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00:58:00,720 --> 00:58:05,880
Speaker 1: adapting to this whole concept of you can monetize your

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00:58:06,120 --> 00:58:09,320
Speaker 1: kind of your user base, that whole concept through advertising.

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00:58:09,360 --> 00:58:12,600
Speaker 13: Another thing, Well, it's interesting because they're not media players.

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00:58:12,800 --> 00:58:15,200
Speaker 13: You know, there are retailers, but they look at Amazon,

1183
00:58:15,280 --> 00:58:18,000
Speaker 13: and they look at Walmart, they look at instacart, and

1184
00:58:18,080 --> 00:58:21,120
Speaker 13: they look at how valuable this proposition is. And this

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00:58:21,240 --> 00:58:24,000
Speaker 13: is where critio comes in because we come into them

1186
00:58:24,040 --> 00:58:27,240
Speaker 13: and say, hey, we've got this platform, we will represent you,

1187
00:58:27,440 --> 00:58:29,280
Speaker 13: we'll make sure that the ad tech works for you,

1188
00:58:29,440 --> 00:58:31,760
Speaker 13: and we'll make sure that you're seen as compared to

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00:58:31,840 --> 00:58:35,960
Speaker 13: others for all of the advertisers that we represent and

1190
00:58:36,080 --> 00:58:39,040
Speaker 13: all of the agencies, the five big holding companies that

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00:58:39,440 --> 00:58:43,000
Speaker 13: we represent. So we create an ecosystem around retail media

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00:58:43,320 --> 00:58:45,040
Speaker 13: and they love that because they don't have to think

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00:58:45,080 --> 00:58:46,040
Speaker 13: this through themselves.

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00:58:46,120 --> 00:58:49,920
Speaker 1: Right, how do the agencies think about retail media. It's

1195
00:58:49,960 --> 00:58:52,160
Speaker 1: not going to ABC and buying a thirty second spot

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00:58:52,200 --> 00:58:54,160
Speaker 1: on the Super Bowl or whatever. So it's a different

1197
00:58:54,240 --> 00:58:56,200
Speaker 1: type of channel. How do they view it?

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00:58:56,480 --> 00:58:57,080
Speaker 4: Yeah, it's different.

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00:58:57,120 --> 00:58:59,440
Speaker 13: These are all tactics. So if you think of an agency,

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00:58:59,480 --> 00:59:01,840
Speaker 13: their job is to make money for their brand. And

1201
00:59:01,960 --> 00:59:03,919
Speaker 13: so depending on what the brand is and what they're

1202
00:59:03,920 --> 00:59:07,840
Speaker 13: objective is, they'll either go to broad based advertising, brand

1203
00:59:07,920 --> 00:59:11,560
Speaker 13: advertising across traditional TV, or they'll go into a big

1204
00:59:11,640 --> 00:59:14,480
Speaker 13: audience on a social environment or a search environment, or

1205
00:59:14,520 --> 00:59:17,600
Speaker 13: they'll go to a precision a point of sale across retailers.

1206
00:59:17,960 --> 00:59:19,920
Speaker 13: And so they think about that as a new way

1207
00:59:20,080 --> 00:59:23,280
Speaker 13: to get a return on investment for those brands, for

1208
00:59:23,360 --> 00:59:24,200
Speaker 13: those advertisers.

1209
00:59:24,480 --> 00:59:27,520
Speaker 1: So we think about retail, I think you know Amazon

1210
00:59:27,640 --> 00:59:31,960
Speaker 1: or Walmart, but there are adjacent retail industry, travel, hotels,

1211
00:59:31,960 --> 00:59:34,600
Speaker 1: all that kind of stuff. How's that business evolving because

1212
00:59:34,600 --> 00:59:36,280
Speaker 1: people are spending a lot of time on.

1213
00:59:36,280 --> 00:59:39,200
Speaker 13: This exis well definitely, So we see retail media as

1214
00:59:39,240 --> 00:59:41,120
Speaker 13: sort of the core of this, and then there's this

1215
00:59:41,560 --> 00:59:45,400
Speaker 13: broader opportunity called commerce media. And that's exactly what you're

1216
00:59:45,800 --> 00:59:48,800
Speaker 13: talking about. So Uber was a client that we signed

1217
00:59:48,880 --> 00:59:51,520
Speaker 13: last quarter. And if you go to uber eats, you

1218
00:59:51,760 --> 00:59:54,920
Speaker 13: see critio and action, you see the sponsored ads appearing

1219
00:59:55,040 --> 00:59:57,920
Speaker 13: when you're searching for a product. You see their display advertising,

1220
00:59:57,960 --> 01:00:01,120
Speaker 13: their video advertising, and they look for all intensive center

1221
01:00:01,240 --> 01:00:03,720
Speaker 13: person purposes like Amazon.

1222
01:00:03,400 --> 01:00:04,040
Speaker 9: When you go there.

1223
01:00:04,080 --> 01:00:06,680
Speaker 13: So it's really interesting to see how that's going to unfold.

1224
01:00:07,000 --> 01:00:11,360
Speaker 1: It's interesting we see this a lot companies, platforms have

1225
01:00:11,560 --> 01:00:14,840
Speaker 1: this audience, this unique audience, and the question is how

1226
01:00:14,840 --> 01:00:17,480
Speaker 1: do you monetize it. The current example I have, and

1227
01:00:17,560 --> 01:00:20,240
Speaker 1: I've mentioned this to the company is Peloton. They're searching

1228
01:00:20,360 --> 01:00:22,720
Speaker 1: for revenue, and I'm like, you've got X number of

1229
01:00:22,800 --> 01:00:26,200
Speaker 1: millions of people and they're crazy people. Because I am

1230
01:00:26,240 --> 01:00:29,960
Speaker 1: one of them and as is my household. There's no

1231
01:00:31,160 --> 01:00:32,680
Speaker 1: you need to go down to Peloton people and start

1232
01:00:32,720 --> 01:00:35,280
Speaker 1: pitching them to monetize starts putting some ads on there.

1233
01:00:35,360 --> 01:00:36,160
Speaker 4: But it's so true.

1234
01:00:36,440 --> 01:00:39,439
Speaker 13: I mean, they're a valuable audience and they're if their

1235
01:00:39,520 --> 01:00:42,360
Speaker 13: shoppers or they're in that mindset, go sell me fire

1236
01:00:42,480 --> 01:00:46,400
Speaker 13: product related to physical fitness, and their prime candidate that.

1237
01:00:46,600 --> 01:00:48,320
Speaker 1: Is that That is kind of kind of what you

1238
01:00:48,440 --> 01:00:50,360
Speaker 1: guys do and kind of what a lot of smart

1239
01:00:50,360 --> 01:00:52,640
Speaker 1: people in the ad tech space are trying to enable.

1240
01:00:53,120 --> 01:00:56,080
Speaker 1: Is the for folks to monetize their audience. Megan Clark

1241
01:00:56,120 --> 01:00:57,800
Speaker 1: and thanks so much for joining us. Megan is the

1242
01:00:57,920 --> 01:01:01,440
Speaker 1: CEO of Cridio again Ada traded stock. You know, I

1243
01:01:01,640 --> 01:01:03,920
Speaker 1: like to flip these things around all the time. Crt

1244
01:01:04,160 --> 01:01:08,120
Speaker 1: OH is the ticker seven buys six holds on the

1245
01:01:08,160 --> 01:01:10,760
Speaker 1: stock and oneself, so a little bit divided street there.

1246
01:01:11,080 --> 01:01:14,160
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

1247
01:01:14,200 --> 01:01:17,960
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1248
01:01:18,080 --> 01:01:21,720
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1249
01:01:22,000 --> 01:01:23,880
Speaker 2: at Matt Miller nineteen seventy three.

1250
01:01:24,360 --> 01:01:26,760
Speaker 1: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.

1251
01:01:26,880 --> 01:01:29,520
Speaker 1: Before the podcast, you can always catch us worldwide at

1252
01:01:29,560 --> 01:01:30,320
Speaker 1: Bloomberg Radio