WEBVTT - Instacart, Volkswagen, Hostess, and Ad Tech 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven News. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:22.320 --> 0:00:23.840 So that's why we bring man Deep in here because 0:00:23.880 --> 0:00:26.000 he's the tech guy for along with Anna rog Ran 0:00:26.120 --> 0:00:29.720 and the team there Bloomberg Intelligence, a global tech team 0:00:29.840 --> 0:00:33.159 which Mandeep now runs with an iron fist. I am 0:00:33.159 --> 0:00:36.199 told Mandeep talk to us about these IPOs totally two 0:00:36.240 --> 0:00:41.040 different companies, ARM and Instacart. How do you view ARM 0:00:41.080 --> 0:00:42.680 because that's kind of the one I think that's kind 0:00:42.680 --> 0:00:45.080 of got people's attention in the sense of is this 0:00:45.159 --> 0:00:47.319 an AI play or isn't it. 0:00:47.760 --> 0:00:51.120 Well, So ARM clearly has a history in terms of, 0:00:51.240 --> 0:00:55.160 you know, being the core part of how AI has 0:00:55.200 --> 0:00:57.840 evolved and how chips have evolved because they are the 0:00:57.920 --> 0:01:02.400 IP providers when had come to computing and all the 0:01:02.440 --> 0:01:05.600 advancements that we've seen, and what they have told us 0:01:05.720 --> 0:01:09.240 is they have increased the royalty revenue. So basically they 0:01:09.280 --> 0:01:12.319 have increased the prices and everyone is on board in 0:01:12.400 --> 0:01:15.920 terms of paying the higher prices for their technology. So 0:01:15.959 --> 0:01:19.040 that's a good sign ahead of the IPO, and I 0:01:19.120 --> 0:01:21.240 think from what we have gleaned so far, the IPO 0:01:21.240 --> 0:01:25.880 has been oversubscribed. Clearly everyone believes this is a technology 0:01:25.920 --> 0:01:29.400 that's not going away. It can be replaced, and hence, 0:01:29.480 --> 0:01:32.000 even though the growth was slow, the fact that they 0:01:32.000 --> 0:01:34.839 can raise prices like this, it's a good sign ahead 0:01:34.840 --> 0:01:38.959 of the IPO. Instacart, on the other hand, completely different 0:01:39.000 --> 0:01:43.280 ballgame marketplace business. We know all the marketplace businesses haven't 0:01:43.280 --> 0:01:47.400 done very well, including Uber and lived since the IPO, but. 0:01:47.319 --> 0:01:50.800 The marketplace business is Amazon and marketplace business as well. 0:01:50.840 --> 0:01:55.760 Amazon is a two sided marketplace. Instacart is a three 0:01:55.840 --> 0:02:01.080 sided marketplace where you've got all the grocery kind of providers, 0:02:01.360 --> 0:02:04.600 you've got the shoppers, and then you've got the consumers. 0:02:05.120 --> 0:02:07.880 The problem and ride sharing, for example, is a two 0:02:07.880 --> 0:02:12.760 sided marketplace. You only have the consumers and the drivers, 0:02:12.960 --> 0:02:15.320 so it's not a three sided marketplace. The problem in 0:02:15.320 --> 0:02:18.280 a three sided marketplace is your take rates are much 0:02:18.400 --> 0:02:21.240 lower because you have to split your take rates through 0:02:21.560 --> 0:02:24.079 you know two other providers in a two sided marketplace, 0:02:24.520 --> 0:02:29.200 it's a higher take rate. So instakarts business the unit 0:02:29.240 --> 0:02:32.360 economics look a lot better than you know, some of 0:02:32.400 --> 0:02:36.680 the other providers, whether it's storedash or Uber, simply because 0:02:36.720 --> 0:02:40.440 they leer a lot more ADS. For every dollar in 0:02:40.480 --> 0:02:44.079 transaction revenue. They make about thirty cent in ADS. That's 0:02:44.160 --> 0:02:47.720 phenomenal for you know, unit economics. Problem is the top 0:02:47.760 --> 0:02:52.040 line is decelerating. They have flat order growth. Marketplaces are 0:02:52.080 --> 0:02:55.800 scale businesses. Once your top line slows, even if you 0:02:55.919 --> 0:02:58.480 make you know, thirty cents on a dollar for ADS, 0:02:58.720 --> 0:03:01.120 that's not good enough because you our scale isn't growing. 0:03:01.200 --> 0:03:04.280 And that is where I think they're pricing the IP 0:03:04.520 --> 0:03:06.480 appropriately to reflect that. 0:03:06.480 --> 0:03:07.400 That's a good bet. 0:03:07.440 --> 0:03:09.480 If you feel like COVID's coming back, Paul, I do 0:03:09.560 --> 0:03:11.800 not I know, but I'm saying if you do, you know, 0:03:12.560 --> 0:03:15.400 because that would grow their top line, that would masterfully. 0:03:15.440 --> 0:03:17.440 That would at least for maybe there was a. 0:03:17.360 --> 0:03:19.639 Pull forward during the Covid time. I mean, all these 0:03:19.639 --> 0:03:22.680 companies grew one hundred percent plus triple digit growth. 0:03:22.720 --> 0:03:24.880 So I guess for Instacart one of the real questions 0:03:24.919 --> 0:03:27.840 will be valuation. So just walk us through kind of 0:03:28.120 --> 0:03:30.320 where the thing was valued at its peak, when people 0:03:30.320 --> 0:03:32.880 were going nuts getting stuff delivered home, maybe where it 0:03:32.919 --> 0:03:33.239 is now. 0:03:33.480 --> 0:03:36.320 Yeah, so at its peak it was around thirty nine 0:03:36.360 --> 0:03:39.680 billion dollar valuation in twenty twenty one. And that's when 0:03:39.760 --> 0:03:40.080 you know. 0:03:40.240 --> 0:03:41.720 See this, This is what I say, being in an 0:03:41.760 --> 0:03:45.000 old you know, old conjure Wall Street guy, that's Silicon 0:03:45.080 --> 0:03:47.520 Valley valuation. That's the kids you don't want to come 0:03:47.560 --> 0:03:49.240 to the public markets. Then you got to talk to 0:03:49.280 --> 0:03:49.840 people like me. 0:03:50.880 --> 0:03:51.840 That's what happened here. 0:03:52.640 --> 0:03:56.440 Well, and I think back in you know, twenty nineteen 0:03:56.440 --> 0:03:59.720 when Lyft went public, they went public at a twenty 0:03:59.760 --> 0:04:02.800 billion dollar valuation. There is more than two billion in 0:04:02.840 --> 0:04:07.640 an ipo. Well, clearly things have reset completely now and 0:04:07.720 --> 0:04:08.800 I think they're. 0:04:08.600 --> 0:04:09.640 Worth a fifth of that now. 0:04:10.440 --> 0:04:12.800 No lift is worth a gajillion, I mean no, they're 0:04:12.800 --> 0:04:16.360 worth a fifth. Yeah, yeah, exactly, I think uber Yeah. 0:04:16.720 --> 0:04:21.280 So I think that's where instacart. Clearly the valuation is 0:04:21.320 --> 0:04:24.200 a lot more reasonable now. I can see the IPO 0:04:24.279 --> 0:04:27.599 pricing maybe revised upward to around ten to twelve billion, 0:04:27.960 --> 0:04:30.880 based on the initial pricing it's more a to nine billion. 0:04:30.960 --> 0:04:34.120 I can see it being revised slightly higher because of 0:04:34.120 --> 0:04:37.320 that ad revenue, and if they can convince investors at 0:04:37.320 --> 0:04:39.839 the road show that the top line will re accelerate, 0:04:40.120 --> 0:04:42.279 because right now, as I said, it's flat order growth. 0:04:42.320 --> 0:04:46.640 That's not good news when you're a growth story. So 0:04:46.960 --> 0:04:50.280 clearly that top line acceleration is key. But the unit economics, 0:04:50.279 --> 0:04:53.239 as I said, for instacart to look a lot healthier 0:04:53.279 --> 0:04:56.200 than all the other marketplaces, including door, dash and Uber. 0:04:56.560 --> 0:04:59.200 I'll tell you what, Paul, I'd rather get into IPOs 0:04:59.800 --> 0:05:04.440 in this climate then during the you know, the lift 0:05:04.560 --> 0:05:08.839 and Rivian, the heady days of massive valuations, because now 0:05:09.040 --> 0:05:12.320 we're also pessimistic about everything. Right now you have Mande 0:05:12.440 --> 0:05:14.960 coming on, going, Eh, the top line's not gonna grow 0:05:15.080 --> 0:05:17.360 very much. They're gonna have to cut what they are 0:05:17.400 --> 0:05:20.960 actually worth by like four times. And back then it 0:05:21.040 --> 0:05:23.560 was like, who knows, this guy's the limit? You know, 0:05:23.880 --> 0:05:26.000 So at least now you can get in without that 0:05:26.040 --> 0:05:27.280 irrational exuberance. 0:05:27.600 --> 0:05:30.480 I'd rather be a momentum investor than a value investor 0:05:30.600 --> 0:05:32.039 any day of the week because I don't have to 0:05:32.040 --> 0:05:33.520 be right on the names. I just have to jump 0:05:33.520 --> 0:05:36.680 on the mo here. I gotta pick the name, right, 0:05:36.680 --> 0:05:38.480 I gotta pick the valuation, right, I gotta be all 0:05:38.560 --> 0:05:40.560 kinds of right. So is this the beginning? 0:05:40.800 --> 0:05:40.960 Man? 0:05:41.000 --> 0:05:41.320 Deep? 0:05:41.400 --> 0:05:43.440 I mean, this is gonna be a down round, to 0:05:43.480 --> 0:05:46.200 put it in the parlance of private equity. 0:05:45.920 --> 0:05:47.960 Inventry for all of them, right, for arm, for Instacar. 0:05:48.560 --> 0:05:50.160 So does this open up? I kind of feel like 0:05:50.200 --> 0:05:52.839 there's a stigma. There is a stigma to not doing 0:05:52.880 --> 0:05:54.520 down rounds. But now we're gonna have a couple of 0:05:54.720 --> 0:05:57.200 notable names doing down rounds in the public market. Do 0:05:57.200 --> 0:05:59.840 you think that's gonna have an influence on the other 0:06:00.000 --> 0:06:01.760 companies to maybe consider IPOs? 0:06:02.160 --> 0:06:04.680 There will be And look, you're not gonna see a 0:06:04.720 --> 0:06:07.760 lot more delivery companies come to the scene now. Now 0:06:07.800 --> 0:06:11.400 the market is consolidating. That's good news for those ones 0:06:11.440 --> 0:06:14.719 that are left over. So previously you had gopuff and 0:06:14.880 --> 0:06:19.119 you know every new company coming to the scene trying 0:06:19.160 --> 0:06:22.000 to figure out delivery. Well, those days are over. I 0:06:22.000 --> 0:06:25.800 think vcs are quite cautious about investing in this space altogether. 0:06:26.320 --> 0:06:29.440 And I feel once you have consolidation, which is what 0:06:29.520 --> 0:06:33.000 we are seeing with Door, Dash, Uber and to an extent, Instacart, 0:06:33.400 --> 0:06:35.880 that probably will good for the will be good for 0:06:35.960 --> 0:06:38.600 the unit economics. Of these companies. 0:06:38.600 --> 0:06:40.760 ARMS said to consider here's Bloomberg story, ARM said to 0:06:40.800 --> 0:06:44.480 consider raising IPO price range about that that's like dull days. 0:06:44.800 --> 0:06:47.320 Yeah, but that's because they've already brought it down by 0:06:47.360 --> 0:06:50.920 so much. You know, they had their own owner by 0:06:50.960 --> 0:06:54.320 a stake in them that it essentially already owned for 0:06:54.440 --> 0:06:56.799 far more than what they're doing public for now. 0:06:57.120 --> 0:06:58.960 So it's just I mean, ARM, is this week right 0:06:59.120 --> 0:07:02.760 like maybe a Tuesday pricing Tuesday night for Wednesday trade. 0:07:02.839 --> 0:07:06.320 That'd be really interesting to see how that trades. Silicon 0:07:06.400 --> 0:07:10.120 Valleant in general? Is it still all AI right now? 0:07:10.200 --> 0:07:13.240 It's all about generator of AI. This year is the 0:07:13.360 --> 0:07:16.680 year of generator AI. You can lump in chatbots as well, 0:07:16.760 --> 0:07:20.040 and just overall large angrid models foundational models, which is 0:07:20.040 --> 0:07:22.960 why the Apple event. If they don't talk about generator 0:07:23.000 --> 0:07:26.400 AI at this event, they clearly have a problem. 0:07:26.080 --> 0:07:28.840 Because really that's what everyone is hoping for. 0:07:28.960 --> 0:07:33.200 That Apple three trillion dollar company hasn't mentioned generat AAI 0:07:33.320 --> 0:07:33.960 even once? 0:07:34.400 --> 0:07:34.920 Is that right? 0:07:35.280 --> 0:07:35.480 Yes? 0:07:35.960 --> 0:07:37.800 What's why is that thirty seconds? 0:07:38.160 --> 0:07:42.960 Well, because they probably haven't built their foundational model yet 0:07:42.960 --> 0:07:45.480 and they are focused on privacy. When you think about 0:07:45.520 --> 0:07:48.800 large anglid models. It's built on big data sets. Apple 0:07:48.880 --> 0:07:51.440 is a company that has always been focused on privacy, 0:07:51.640 --> 0:07:53.920 and that is what makes them hard to build their 0:07:53.920 --> 0:07:56.240 own large angrid model like a chat GPT or. 0:07:56.640 --> 0:07:58.680 We're going to have you again on this one, because 0:07:58.720 --> 0:08:01.040 I mean, this kind of could be existential for Apple 0:08:01.080 --> 0:08:03.360 if they don't, at least in the minds of investors. 0:08:03.600 --> 0:08:03.960 Dude. 0:08:04.040 --> 0:08:06.560 This morning, Gina Martin Adams on Surveillance was talking about 0:08:06.560 --> 0:08:11.080 how important generative AI is for a hostess exactly if 0:08:11.080 --> 0:08:12.520 it's summers to a Twinkie maker. 0:08:12.640 --> 0:08:14.520 That's what I say. When you hear Tom Keene mentioned 0:08:14.560 --> 0:08:17.400 Twinkie and AI in the same sentence, you know something's up, 0:08:17.440 --> 0:08:19.240 all right, Mandy, thanks so much for joining us men 0:08:19.240 --> 0:08:21.080 deep seeing he's a senior analyst. He runs all of 0:08:21.120 --> 0:08:24.400 our technology research where you have tech analyss literally all 0:08:24.440 --> 0:08:27.720 over the globe Europe, North America and of course Asia 0:08:28.000 --> 0:08:29.800 and Mendeep kind of runs that business for us, and 0:08:29.800 --> 0:08:30.680 we appreciate that. 0:08:31.480 --> 0:08:35.319 You're listening to the team. Ken's live program Bloomberg Markets 0:08:35.360 --> 0:08:38.480 weekdays at ten am Eastern on Bloomberg dot com, the 0:08:38.520 --> 0:08:41.680 iHeartRadio app, and the Bloomberg Business app, or listen on 0:08:41.720 --> 0:08:43.720 demand wherever you get your podcasts. 0:08:45.320 --> 0:08:47.040 We have Rick Caruso with us. 0:08:47.040 --> 0:08:50.760 He's the founder and executive chairman of Caruso, starting out 0:08:50.760 --> 0:08:55.160 life as a lawyer and then transition to Kruso affiliated holdings, 0:08:55.160 --> 0:08:59.000 and they own, among other things, The Grove, which was 0:08:59.080 --> 0:09:02.000 ranked number two on Fortunes's list of the ten highest 0:09:02.120 --> 0:09:05.200 sales generating shopping centers across the country. 0:09:05.240 --> 0:09:06.600 I've always been a fan. 0:09:06.800 --> 0:09:09.880 Of the mall you haven't, Yeah, I love the Westchester 0:09:10.120 --> 0:09:11.560 up in White Plains, Jersey. 0:09:11.559 --> 0:09:13.400 Person nosey, we do malls in New Jersey. 0:09:13.520 --> 0:09:15.640 Yeah, I'm from the great state of Ohio. Of course, 0:09:15.679 --> 0:09:18.679 we have traditionally had a big mallsley state. They started 0:09:18.720 --> 0:09:20.480 I think when I was a kid, so I kind 0:09:20.480 --> 0:09:22.640 of grew up with them fast times. Ridgemont High was 0:09:22.679 --> 0:09:27.000 like the story of my middle school. Rick talk to 0:09:27.080 --> 0:09:30.679 us about the current state of commercial real estate because 0:09:30.840 --> 0:09:34.840 it had been, you know, kind of the one of 0:09:34.840 --> 0:09:37.760 the big fears I would say of twenty twenty three. 0:09:37.800 --> 0:09:40.160 But it seems to be fading a bit as a fear. 0:09:41.040 --> 0:09:42.959 Well, thank you, I think on the retail site listen, 0:09:43.000 --> 0:09:46.000 we do outdoor malls, so all of our properties are 0:09:46.000 --> 0:09:49.040 not covered. I think that's a very different sector. But 0:09:49.080 --> 0:09:52.040 what we're seeing on our properties consumer is still strong, 0:09:52.520 --> 0:09:56.120 Consumer spending is still up. Our growth on our properties 0:09:56.200 --> 0:09:59.320 is double digit in terms of attendance, and our sales 0:09:59.320 --> 0:10:01.679 per square foot is up. So we're having a very 0:10:01.720 --> 0:10:07.360 good year. My fear is that with inflation, with rising 0:10:07.440 --> 0:10:09.760 interest costs, I don't know how long that lasts. But 0:10:09.880 --> 0:10:12.880 right now we're running at at a really good pace. 0:10:13.040 --> 0:10:16.200 What's the occupancy of your malls in general today? Maybe 0:10:17.000 --> 0:10:18.479 relative to pre pre pandemic. 0:10:18.800 --> 0:10:20.080 We're very unique. 0:10:20.240 --> 0:10:21.560 So I'm going to tell you this and you won't 0:10:21.559 --> 0:10:23.400 believe it, but we run at one hundred percent with 0:10:23.400 --> 0:10:26.640 a waiting list. But our properties are incredibly productive. We 0:10:26.720 --> 0:10:30.640 have three in the top ten in the United States. 0:10:31.000 --> 0:10:33.400 We're a different business. Yeah, you know, it's a very. 0:10:33.320 --> 0:10:34.880 It's not strip malls. 0:10:35.000 --> 0:10:35.880 Well, what's the term thing? 0:10:36.200 --> 0:10:39.880 It's like Ridge Hill we have up in Westchester, Polaris. 0:10:39.440 --> 0:10:41.680 And Columbus is like this. What do you think different 0:10:41.679 --> 0:10:42.800 in downtown centers? 0:10:42.920 --> 0:10:43.160 Yeah? 0:10:43.200 --> 0:10:44.360 Like downtown Okay, So. 0:10:44.320 --> 0:10:46.800 Well, what makes it different than a covered mall? 0:10:47.160 --> 0:10:50.280 Because we're creating an environment. Listen, a covered mall is 0:10:50.480 --> 0:10:53.440 an artificial atmosphere that you're asking somebody to go into. 0:10:53.640 --> 0:10:55.080 Right, And people always say. 0:10:54.960 --> 0:10:56.480 Well, we have a good one over in New Jersey, 0:10:56.559 --> 0:10:58.360 the mall of what's it called the Dream Mall. 0:10:58.520 --> 0:11:01.000 Well, you and I have never been there. Happens, that's good. 0:11:01.160 --> 0:11:02.960 That one through a lot of problems. 0:11:03.000 --> 0:11:05.199 I know, I know, but I. 0:11:05.160 --> 0:11:07.840 Think the difference is we're creating an environment for people 0:11:07.920 --> 0:11:11.400 to come and enjoy themselves, relax, have fun, create an 0:11:11.520 --> 0:11:15.200 environment very very different. We have dwell time. We want 0:11:15.200 --> 0:11:18.199 people to stay, we want people to just relax, and 0:11:18.559 --> 0:11:20.800 people respond to it. You know, we're tapping into the 0:11:20.800 --> 0:11:23.040 consumer experience, which I think is all important. 0:11:23.040 --> 0:11:25.600 They'll go without even knowing, without even thinking we're going 0:11:25.600 --> 0:11:27.880 to the mall. They'll go because they want to visit 0:11:27.960 --> 0:11:30.040 a restaurant. We're not even drive through occasionally. 0:11:30.160 --> 0:11:31.959 We're not designing it with the idea that we want 0:11:32.000 --> 0:11:34.400 people to shop. We're designing it with the idea that 0:11:34.440 --> 0:11:37.040 we want people to enjoy themselves, and then they're going 0:11:37.120 --> 0:11:38.360 to go shop because they're there. 0:11:38.559 --> 0:11:40.720 Why do you think though the grove is so popular? 0:11:40.920 --> 0:11:42.320 I mean, where is. 0:11:42.320 --> 0:11:44.200 The grove in Los Angeles? Los Angeles? 0:11:44.240 --> 0:11:47.840 Okay, it's it's popular because it just it makes people 0:11:47.880 --> 0:11:51.360 feel better. It sounds corny, but it enriches your life. 0:11:51.400 --> 0:11:52.120 And you can go. 0:11:52.040 --> 0:11:53.680 There and hang out and have a cup of coffee 0:11:53.679 --> 0:11:56.320 and read the paper and really not spend a dime. 0:11:56.440 --> 0:11:58.080 Or you can go there and spend the day and 0:11:58.120 --> 0:12:01.480 spend a lot of money. But it's the trees, it's 0:12:01.520 --> 0:12:04.600 the fountain, it's the lawn, it's the flowers, it's everything. 0:12:04.640 --> 0:12:07.359 And the shopping is incidental to it in the restaurants, 0:12:07.760 --> 0:12:10.520 and it's curated with the best retailers and restaurants in 0:12:10.559 --> 0:12:11.040 the business. 0:12:11.240 --> 0:12:14.560 Are you adding new malls? Are you taking over existing malls? 0:12:14.600 --> 0:12:17.880 How we've got we've got a pipeline of new projects 0:12:17.920 --> 0:12:20.800 that we're doing, all in the format of outdoor centers, 0:12:21.440 --> 0:12:23.680 and we're going strong with it. 0:12:23.760 --> 0:12:25.920 Are you putting them all in the Austin Texas of 0:12:25.920 --> 0:12:27.880 the world, the nationals and where. 0:12:27.720 --> 0:12:31.679 We're now We're we're growing in southern California and we're 0:12:31.720 --> 0:12:32.720 going to continue to do that. 0:12:32.800 --> 0:12:32.959 Now. 0:12:33.000 --> 0:12:36.280 Listen, we're looking in Florida, and we're looking in other areas. 0:12:36.320 --> 0:12:37.880 There are your primarily in southern California? 0:12:37.920 --> 0:12:38.079 Yeah? 0:12:38.120 --> 0:12:41.120 Gotcha? Okay, So I mean, so give us a sense 0:12:41.120 --> 0:12:44.240 of how southern California. Is you got strikes all across 0:12:44.360 --> 0:12:46.160 Los Angeles and all that type of thing. Give us 0:12:46.160 --> 0:12:48.200 a sense of to southern California general, because we have 0:12:48.520 --> 0:12:52.040 someone here at Bloomberg in our editorial who's very bullish 0:12:52.120 --> 0:12:53.040 on California. 0:12:53.200 --> 0:12:55.320 H Matt Winkler, the guy who founded Blooo News. 0:12:55.720 --> 0:12:57.600 He found a Bloomberg News and he's written a number 0:12:57.600 --> 0:13:03.040 of editorials extolling the virtues of not only Los Angeles, 0:13:03.080 --> 0:13:03.360 but you. 0:13:03.360 --> 0:13:06.400 Can strength of the California economy essentially exactly exactly. 0:13:06.160 --> 0:13:08.400 I think the California economy, listen, is strong. It's a 0:13:08.400 --> 0:13:12.120 massive economy right globally, but the reality is we have 0:13:12.240 --> 0:13:13.840 enormous challenges in California. 0:13:13.960 --> 0:13:16.920 I have a viewer writing in for a question with 0:13:16.920 --> 0:13:20.160 a question for Rick, and essentially it comes down to 0:13:20.200 --> 0:13:20.679 the same thing. 0:13:20.720 --> 0:13:21.800 It's about the economy. 0:13:22.720 --> 0:13:25.560 Viewer, listener, we have you know, we're a radio, but 0:13:25.559 --> 0:13:29.200 we're also streaming on YouTube. He asked, is do you 0:13:29.240 --> 0:13:33.559 anticipate hiring to slow on your properties as the economy slows, 0:13:33.640 --> 0:13:37.120 or as inflation remains higher, or as the consumer weekends. 0:13:37.160 --> 0:13:40.559 Are you looking forward with concern to any of those things? 0:13:41.120 --> 0:13:44.199 Well, I'm concerned about the consumer weekening. The consumer has 0:13:44.240 --> 0:13:47.480 to weaken, right, I mean, you've got rising interest rate 0:13:47.960 --> 0:13:50.600 and you still have inflation, and prices are high, and 0:13:50.679 --> 0:13:53.960 savings are getting lower, and the default rates on credit 0:13:53.960 --> 0:13:55.959 cards are coming up, which we've seen that data. 0:13:56.840 --> 0:13:59.480 So it has to happen. It's just a question of time. 0:14:00.080 --> 0:14:02.040 But I think all of us have to reorganize our 0:14:02.080 --> 0:14:04.679 companies around the fact that we've got a higher tenure 0:14:05.200 --> 0:14:07.400 and it's probably going to remain high for a while, 0:14:07.760 --> 0:14:12.320 and it's chewing into free cash flow of every company, 0:14:12.360 --> 0:14:14.040 and so we have to be smarter about how we 0:14:14.080 --> 0:14:17.600 spend our money, which may mean slowering our hiring and 0:14:17.679 --> 0:14:20.480 slowering growth and slowering cap X. I mean, it's going 0:14:20.520 --> 0:14:22.200 to have an impact, which I worry about. 0:14:22.720 --> 0:14:27.160 Theft is something that I've heard more from retailers earnings calls, 0:14:27.160 --> 0:14:31.200 and they call it shrink. It's just been extraordinary and 0:14:31.240 --> 0:14:32.320 it looks organized. 0:14:32.320 --> 0:14:33.000 It's insane. 0:14:33.040 --> 0:14:34.920 So can you give us a sense kind of from 0:14:34.960 --> 0:14:36.760 your perspective what this means for the industry. 0:14:37.200 --> 0:14:40.400 Well, here's a problem. In Los Angeles County. We have 0:14:40.440 --> 0:14:43.440 a no bail system, so you can get arrested and 0:14:43.480 --> 0:14:46.800 you're out within an hour, even if it's a felony. 0:14:47.280 --> 0:14:49.840 If you steal under nine hundred and fifty dollars plus 0:14:49.880 --> 0:14:55.520 or minus, it's a misdemeanor. And these theft rings are organized. 0:14:55.520 --> 0:14:58.760 I mean, it's organized crime, and they're mobs, and we've 0:14:58.760 --> 0:15:00.440 got to change the rules, and we've got to get 0:15:00.440 --> 0:15:03.720 elected officials that actually have some backbone and say we're 0:15:03.760 --> 0:15:06.320 not going to allow this to happen anymore. And let's 0:15:06.320 --> 0:15:10.200 hold criminals accountable. They need to be incarcerated if they're 0:15:10.240 --> 0:15:13.280 a ring and they're repeat offenders. And then of course 0:15:13.320 --> 0:15:15.600 we've got to give people a chance for you know, 0:15:15.920 --> 0:15:19.040 rebuild their lives and whatnot. But what's happening in southern 0:15:19.040 --> 0:15:21.600 California right now with the smash and grabs are in 0:15:21.640 --> 0:15:23.920 San Francisco. You can't tolerate that. 0:15:23.840 --> 0:15:24.840 In business, do you? 0:15:25.040 --> 0:15:28.160 I mean, and it's killing small business, big business. 0:15:28.280 --> 0:15:32.400 If you if you own you know, you know, essentially 0:15:32.400 --> 0:15:35.760 an outdoor shopping community like the grove, do you bring 0:15:35.760 --> 0:15:39.080 in an extra you know, police force, auxiliary cops. Do 0:15:39.120 --> 0:15:43.880 you try and you know, get the employees to do 0:15:43.920 --> 0:15:44.600 something about it? 0:15:44.640 --> 0:15:46.560 I mean, how do you how do you We don't. 0:15:46.400 --> 0:15:48.360 Want we don't want employees to engage. But what we 0:15:48.440 --> 0:15:51.240 do on all of our properties, we have armed security 0:15:51.560 --> 0:15:55.280 and we have extensive camera systems. We have equipment that 0:15:55.360 --> 0:15:58.960 can actually identify people, and so we're very sophisticated in 0:15:58.960 --> 0:16:01.920 our properties. But the problem is ninety percent of the 0:16:02.000 --> 0:16:05.360 businesses in LA are small businesses. They can't afford to 0:16:05.360 --> 0:16:07.720 do that, and they get one smash and grab that 0:16:07.720 --> 0:16:11.560 could be their monthly profit. So what's happening I think 0:16:11.600 --> 0:16:15.680 in Southern California LA is the responsibility to keep people 0:16:15.720 --> 0:16:18.640 safe is getting pushed to the private sector because we 0:16:18.680 --> 0:16:20.760 have a shortage of cops and we have a shortage 0:16:20.760 --> 0:16:24.280 of again, elected officials. I think that are actually dedicated 0:16:24.360 --> 0:16:27.440 to making sure that our communities are safe, and we're 0:16:27.480 --> 0:16:30.040 picking that up, and that's not good business. 0:16:30.320 --> 0:16:32.560 We're smart for the community long term. 0:16:32.600 --> 0:16:35.200 Is that one of the biggest challenges for Southern California 0:16:35.200 --> 0:16:36.000 in general? Do you think? 0:16:36.120 --> 0:16:37.840 I think so. I think it's a big challenge for 0:16:37.880 --> 0:16:38.840 California in general. 0:16:39.720 --> 0:16:41.960 For New York right even though we have an ex 0:16:42.040 --> 0:16:43.600 cop here in office, and I think a lot of 0:16:43.600 --> 0:16:45.720 people expected the crime to change on the day he 0:16:45.800 --> 0:16:47.440 came in and it hasn't. 0:16:47.800 --> 0:16:50.000 Yeah, and you have a big police force, which we 0:16:50.040 --> 0:16:52.560 don't have in LA Is that right? Yeah, I mean 0:16:52.600 --> 0:16:55.040 you have almost five times as many cops as we 0:16:55.080 --> 0:16:56.080 do in Los Angeles. 0:16:56.600 --> 0:17:00.520 Really I didn't know that. Okay, very interesting stuff there, Ricrusia, 0:17:00.560 --> 0:17:02.560 thanks so much for taking the time to join us 0:17:02.600 --> 0:17:04.359 here today. Really fascinating discussion. 0:17:04.520 --> 0:17:07.040 We ought to do the show from the growth. We 0:17:07.040 --> 0:17:07.480 should do that. 0:17:07.680 --> 0:17:09.600 Let's go, let's go get out, get out to the 0:17:09.600 --> 0:17:13.240 west coast and really dive into the economics and businesses 0:17:13.240 --> 0:17:13.919 of California. 0:17:13.960 --> 0:17:15.399 I think we can do that and get some support. 0:17:15.440 --> 0:17:16.119 I would like to do that. 0:17:16.160 --> 0:17:17.480 We hope they have you all right, Rick. 0:17:17.359 --> 0:17:19.200 Thanks so much for joining us. Ricruso is a founder 0:17:19.200 --> 0:17:22.840 and executive chairman of Cruser talking about the retail business 0:17:22.880 --> 0:17:25.720 and the retail business on the outdoor malls, if you will, 0:17:26.400 --> 0:17:28.640 quite vibrant relative to kind of what you hear from 0:17:28.640 --> 0:17:30.760 other parts of some of the retail. But retail in 0:17:30.840 --> 0:17:33.440 general has been good, the consumer has been good. The 0:17:33.520 --> 0:17:35.920 question now is just kind of going forward with the 0:17:35.960 --> 0:17:37.200 higher rates and all that type of thing. 0:17:38.000 --> 0:17:41.119 You're listening to The tape cats are live program Bloomberg 0:17:41.200 --> 0:17:44.760 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:44.840 --> 0:17:48.080 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:48.080 --> 0:17:50.920 You can also listen live on Amazon Alexa from our 0:17:50.920 --> 0:17:56.800 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:17:56.560 --> 0:18:00.840 Big Takes story right down Matt's alley. Here, Monica Raymlandt 0:18:00.880 --> 0:18:04.840 joins this. She's the auto industry disruption reporter. How about 0:18:04.840 --> 0:18:07.160 that with Bloomberg News. She's got the story out there 0:18:07.280 --> 0:18:11.639 entitled Germany Frets Volkswagen is heading down the wrong or 0:18:11.720 --> 0:18:14.920 down the road to nowhere. Yeah, so, Monica, thanks much 0:18:14.920 --> 0:18:17.560 for joining us via zoom her. What's kind of the 0:18:17.560 --> 0:18:20.920 thesis thesis of your story? I thought v Volkswagen's going 0:18:21.080 --> 0:18:21.800 all in EV. 0:18:23.160 --> 0:18:27.239 Oh, definitely. I wouldn't say that they're not focused on 0:18:27.280 --> 0:18:30.359 their EV strategy. But really, what the concern is is 0:18:30.400 --> 0:18:35.080 that Volkswagen is sort of atrophying market share in China 0:18:35.119 --> 0:18:37.160 when it comes to EV's, when it comes to competing 0:18:37.160 --> 0:18:39.960