WEBVTT - Bitcoin ETF Race Is Heating Up Despite SEC Oversight: Balchunas 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P M L 0:00:20.840 --> 0:00:27.680 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well, 0:00:27.720 --> 0:00:31.200 the SEC has been having some issues with the idea 0:00:31.360 --> 0:00:33.400 of a bitcoin e t F, and here to talk 0:00:33.400 --> 0:00:36.839 about that is our our own Eric Valtunist. He has 0:00:36.880 --> 0:00:40.720 a senior E t F strategist for us at Bloomberg Intelligence. 0:00:41.159 --> 0:00:43.160 Eric tell us about the latest. What did the SEC 0:00:43.840 --> 0:00:46.519 recently say? They put out a letter last night and 0:00:46.560 --> 0:00:50.920 they had thirty one questions opening to questions about yeah, 0:00:50.920 --> 0:00:54.200 that's it right, um in five sections. It reminds me 0:00:54.240 --> 0:00:56.000 the end of back to school when they're like, we 0:00:56.040 --> 0:00:58.760 have one question, but it's twenty seven parts and he 0:00:58.840 --> 0:01:01.800 spends all day answering it. Um. Look, a lot of 0:01:01.840 --> 0:01:05.640 these questions are answered in the prospectus is it's they're 0:01:05.640 --> 0:01:07.679 asking something like how will then not have be calculated? Well, 0:01:07.760 --> 0:01:10.800 the perspective does address that. I think, really, what's going 0:01:10.840 --> 0:01:12.880 on here. If you want to just kind of like 0:01:13.040 --> 0:01:16.880 be honest about it, the SEC will be honest. I'm 0:01:16.880 --> 0:01:19.679 just gonna be real right now, go ahead, the SEC. 0:01:20.040 --> 0:01:22.839 This is a hot issue. They realize there's investor demand 0:01:22.880 --> 0:01:25.680 for this big time, right, so they won't be sensitive 0:01:25.720 --> 0:01:27.720 to that. At the same time, they're just not comfortable, 0:01:27.959 --> 0:01:30.080 so they want to show everybody that they have been 0:01:30.200 --> 0:01:33.560 very thoughtful about this. They're taking this very seriously. Here's 0:01:33.560 --> 0:01:35.240 what they're concerned with. They want to throw it all 0:01:35.240 --> 0:01:38.240 on the table, and I think that. But the thing 0:01:38.319 --> 0:01:40.480 is a lot of these are already addressed in the prospectus. 0:01:40.880 --> 0:01:42.880 Some of them get really deep, like how are you 0:01:42.880 --> 0:01:44.960 going to protect against the hack? Now, that is a 0:01:45.040 --> 0:01:48.240 question you will never ever probably be able to answer 0:01:49.000 --> 0:01:53.240 with security. So there's always going to be some unanswerability 0:01:53.320 --> 0:01:55.520 to some of these questions. So are you basically saying 0:01:55.520 --> 0:01:59.920 the SEC is basically doing a c y A exercise 0:02:00.160 --> 0:02:03.320 with this list of questions, saying to the public, look, guys, 0:02:03.800 --> 0:02:07.800 we're concerned. We've got general concerned, and so we're not 0:02:07.800 --> 0:02:10.880 going to prove these things yet. Thinking about it, we 0:02:10.919 --> 0:02:14.160 don't know exactly why. We understand everyone wants to buy 0:02:14.160 --> 0:02:16.360 these things. We get it. We're we're sensitive to that. 0:02:16.440 --> 0:02:20.560 But um, I was barrish last night after I read it. 0:02:20.600 --> 0:02:22.839 But I talked to a few issuers, and I don't 0:02:22.919 --> 0:02:24.919 on the prospect on the prospect of a bit quin 0:02:24.960 --> 0:02:26.919 et F launching, say in the next year or two, 0:02:27.440 --> 0:02:29.639 but I don't know. I think issuers are in there, 0:02:29.680 --> 0:02:31.600 They're gonna work with them. I've heard people are like, 0:02:31.639 --> 0:02:33.720 we are definitely going to address these because I was thinking, 0:02:34.080 --> 0:02:35.720 man if I was an insuer and they just came 0:02:35.720 --> 0:02:37.280 out with with all this, I might just be like, oh, 0:02:37.320 --> 0:02:38.720 you know, what, the heck with it, I'll just try 0:02:38.720 --> 0:02:41.320 to launch so much money at stake here. I know 0:02:41.520 --> 0:02:44.519 the first one out gets easily it's a billion dollar product. 0:02:44.520 --> 0:02:46.239 I mean easily could be a billion dollar product in 0:02:46.240 --> 0:02:48.440 a couple of days. So that is what makes this 0:02:48.520 --> 0:02:51.520 all so exciting, although exhausting for me, because there's this 0:02:51.600 --> 0:02:54.800 is a race, and I'm telling you every other week 0:02:54.840 --> 0:02:57.520 there's some major turn in this race. And then this 0:02:57.560 --> 0:03:00.359 week we had the blockchain ETFs launch, which a lot 0:03:00.400 --> 0:03:02.760 more easier to launch. Right these are tracking equities that 0:03:02.800 --> 0:03:05.320 are involved the blockchain technology. But even there, the sec 0:03:05.400 --> 0:03:08.360 got a little nerve nervousness and made them take blockchain 0:03:08.400 --> 0:03:10.720 out of their name and use something more generic, UM 0:03:10.760 --> 0:03:13.799 like transformational data sharing. So there's a lot of concern 0:03:13.840 --> 0:03:15.480 at the SEC that they are going to be looked 0:03:15.480 --> 0:03:18.440 at as being a little too liberal. Um not not 0:03:18.600 --> 0:03:21.080 not a catchy enough name for you. I'm gonna say that, 0:03:21.320 --> 0:03:24.520 roll off the tongue transformational. Listen him. I got good 0:03:24.520 --> 0:03:27.440 news for you. The tickers block well that that that 0:03:27.480 --> 0:03:29.720 helps small brain here. This is but this is yesterday. 0:03:29.760 --> 0:03:32.359 We had reality shares that are the earlier this week 0:03:33.120 --> 0:03:35.360 on on our show, and he said, he corrected me, 0:03:35.400 --> 0:03:37.240 is that actually that's no longer our name, and that 0:03:37.320 --> 0:03:39.000 was the reason why it is the SEC. There's his 0:03:39.080 --> 0:03:42.080 next gen economy. But would you think of it? I 0:03:42.080 --> 0:03:44.240 don't know anyway, I call him the blockchain ets. The 0:03:44.280 --> 0:03:46.440 tickers speak to that. So they're doing well. They're all 0:03:46.600 --> 0:03:49.440 already both trading a lot, and they're off to good starts, 0:03:49.520 --> 0:03:53.360 especially for indie issuers. I'm gotta ask about this idea 0:03:53.440 --> 0:03:59.320 of turning everything into an exchange traded fund. The one 0:03:59.320 --> 0:04:01.760 of the arguments war exchange traded funds is you get 0:04:01.840 --> 0:04:05.080 daily liquidity. You can trade it like a stock. Oh 0:04:05.160 --> 0:04:07.120 and by the way, it's not going to hit you 0:04:07.160 --> 0:04:10.600 with those tax those onerous tax bills like a mutual fund, 0:04:10.880 --> 0:04:13.720 even if you don't sell the fund. I'm sorry, how 0:04:13.720 --> 0:04:19.479 does that connect with these kinds of offerings? Right? I 0:04:19.480 --> 0:04:22.280 would go back to the originally t F s P Y. 0:04:22.320 --> 0:04:24.680 It really was put out there to be a physically 0:04:24.720 --> 0:04:27.560 backed version of a futures contract. So there is a 0:04:27.560 --> 0:04:29.800 trading element to e t F and there always has been. 0:04:30.279 --> 0:04:32.800 And I would argue, h y G, that's a leasa's 0:04:32.839 --> 0:04:35.400 favorite et F. The HI J and K might be 0:04:35.440 --> 0:04:37.599 your favorite, but it's a it's a it's a who knows. 0:04:38.240 --> 0:04:40.240 I don't even need to talk. People can still in 0:04:40.279 --> 0:04:42.599 the place ahead Eric, What else do I like? But 0:04:42.720 --> 0:04:47.480 these are predominantly these kind of things, Bitcoin, marijuana, junk bonds, 0:04:47.640 --> 0:04:50.560 These are predominantly used by traders looking to get quick 0:04:50.560 --> 0:04:54.440 positions on those. You know, the retail investors are When 0:04:54.480 --> 0:04:56.600 you say quick positions, are you trying to say you 0:04:56.640 --> 0:04:59.200 have traders who are trying to make quick money taking 0:04:59.200 --> 0:05:01.680 advantage of people. No, no, just quick access, but just 0:05:01.680 --> 0:05:03.839 thin get one out. But it's got to be a 0:05:03.839 --> 0:05:06.560 buyer and a seller. Well, someone's gonna lose money. If 0:05:06.560 --> 0:05:09.000 someone's gonna make money, who's gonna be the loser. That's 0:05:09.000 --> 0:05:10.760 the way the bond and stock market work anyway. I 0:05:10.760 --> 0:05:13.240 mean there's traders and people trading those all the time 0:05:13.320 --> 0:05:15.840 to actually things behind them. Well, and this is the key. 0:05:15.920 --> 0:05:18.200 Hold on a second, Well they do they do? You 0:05:18.200 --> 0:05:20.000 know any t F? Again, I always tell people that 0:05:20.279 --> 0:05:22.400 it is uh, it is a mutual fund. It holds 0:05:22.400 --> 0:05:25.200 the stocks in it with a custodian and the or 0:05:25.240 --> 0:05:29.040 the bonds. All right, so you know here's the thing. 0:05:29.279 --> 0:05:32.159 I think this is the issue is you know, with 0:05:32.160 --> 0:05:35.000 with jump bonds, with stocks, there is something that is 0:05:35.040 --> 0:05:37.440 a security that is backing these e t f s. 0:05:38.040 --> 0:05:42.880 With bitcoin, I mean Morgan Stanley and Goldman Sacks have 0:05:42.920 --> 0:05:45.240 laid out issues with how do you act as a 0:05:45.240 --> 0:05:48.479 custodian of bitcoin? I mean what is bitcoin? How do 0:05:48.480 --> 0:05:50.640 you store? Who's going to make sure that you know 0:05:51.120 --> 0:05:52.800 that hackers aren't going to get in? I mean we've 0:05:52.880 --> 0:05:56.080 we recently had a story about how hacking bitcoin is 0:05:56.160 --> 0:05:59.840 a massive industry. I mean, these are some major issues 0:06:00.000 --> 0:06:03.040 are and when you approve an e t F, you're 0:06:03.040 --> 0:06:05.039 basically saying it's ready for prime time. So that's what 0:06:05.080 --> 0:06:07.280 the SEC. This is. You know, Middle America can then 0:06:07.320 --> 0:06:10.040 go to their brokerage account and buy this thing. That's 0:06:10.080 --> 0:06:13.000 what the SEC is concerned with. However, there's a product 0:06:13.000 --> 0:06:15.200 on the market GBTC, which is an over the counter 0:06:15.279 --> 0:06:18.800 traded trust trades it huge premiums and I've heard some 0:06:18.839 --> 0:06:21.520 discount brokerages classifying as an e t F. So I 0:06:21.560 --> 0:06:25.720 would somewhat you use the alternative argument, which there's other 0:06:25.760 --> 0:06:28.760 products out there that are more dangerous. At least with 0:06:28.800 --> 0:06:30.680 an e t F, you'd bring in the nation's richest 0:06:30.720 --> 0:06:33.400 market makers doing the tightest arbitrage. You'd bring in a 0:06:33.480 --> 0:06:36.440 lot of liquidity, and you'd get as close to the 0:06:36.480 --> 0:06:39.640 best possible deal. It's the best structure for something that 0:06:39.800 --> 0:06:42.160 is as archaic or or not archaic, but as uh 0:06:42.920 --> 0:06:45.200 new as bitcoin. I've seen it done with China A 0:06:45.240 --> 0:06:48.520 shares they had Chinas before the government even allowed as shares. 0:06:48.520 --> 0:06:50.200 They had to use quota from people in Hong Kong. 0:06:50.440 --> 0:06:51.960 A t f s have this sort of history of 0:06:51.960 --> 0:06:55.000 like nudging their way into an area, maybe even before 0:06:55.040 --> 0:06:56.560 it's ready, and then you figure out later, oh it 0:06:56.720 --> 0:06:59.279 is fine. But I would say bitcoin is a special case, 0:06:59.640 --> 0:07:02.080 it's not fine. Yeah, And look at the end of 0:07:02.080 --> 0:07:05.400 the day, though these are investment vehicles, investments do they 0:07:05.400 --> 0:07:07.960 go down. But the question on bitcoin, though, is unlike 0:07:08.040 --> 0:07:10.240 g l D, where I guess you're you're your feel 0:07:10.280 --> 0:07:11.880 secure that the gold bars are in a vault with 0:07:11.960 --> 0:07:14.560 guys with machine guns guarding it. Here you're like, yes, 0:07:14.640 --> 0:07:17.360 someone could hack it. What would happen? Um, Although I 0:07:17.360 --> 0:07:18.960 will say there are e t N s in the world. 0:07:19.360 --> 0:07:21.680 E t N s have credit risk. Lehman had an 0:07:21.680 --> 0:07:23.440 e t N People do not get their money back, 0:07:23.440 --> 0:07:25.640 so there are products. That's why I think bitcoin, if 0:07:25.680 --> 0:07:26.840 I were out there, I would do it an e 0:07:26.880 --> 0:07:29.040 t N wrapper because people already go in knowing there's 0:07:29.040 --> 0:07:31.200 credit risk. So I think E t N might be 0:07:31.240 --> 0:07:33.720 a better vehicle for bitcoin. But no one's launched one 0:07:33.760 --> 0:07:36.640 for whatever reason. We're filed for one. Why why do 0:07:36.680 --> 0:07:38.880 you believe that to be so? I think right now 0:07:39.120 --> 0:07:42.160 big banks are less willing to have anything on their 0:07:42.160 --> 0:07:45.000 balance sheet because of regulations, so they've scaled back on 0:07:45.040 --> 0:07:47.280 their E t N s. But if one of them 0:07:47.280 --> 0:07:49.080 would just step up and say, you know, this is 0:07:49.120 --> 0:07:52.560 actually a great opportunity for us. We're Okay, having this, uh, 0:07:52.600 --> 0:07:54.520 I think it could be a really big hit product. 0:07:54.520 --> 0:07:56.200 And if that gets liquidity and an e t F 0:07:56.280 --> 0:07:58.160 launches after, no one will care. They'll still use the 0:07:58.160 --> 0:08:01.080 e t N mostly. Okay, not to change the subject 0:08:01.160 --> 0:08:03.960 too much, but you sit there reading the t leaves 0:08:04.000 --> 0:08:05.520 of E t F world, and I just want to 0:08:05.560 --> 0:08:08.000 get your sense what should we be paying attention to. 0:08:08.080 --> 0:08:11.040 Are there any shifts in flows that are really notable 0:08:11.160 --> 0:08:14.640 that you think are representative of shifts in a market sentiment? Yeah? 0:08:14.680 --> 0:08:16.800 Two things I'll give you real quick is one, I 0:08:16.840 --> 0:08:21.440 find people are hot about industrials and aerospace and defense. Yeah, 0:08:21.480 --> 0:08:23.880 this is the Trump trade. But I will say those 0:08:24.400 --> 0:08:27.160 those e t F s kicked back in after tax reform, 0:08:27.200 --> 0:08:28.760 so I felt there was a little kick to the 0:08:28.760 --> 0:08:31.400 Trump trade after tax reform. People thought it might have 0:08:31.520 --> 0:08:33.440 might not have the legs it does, but it does 0:08:33.520 --> 0:08:35.839 apparently so X L I, I T A have seen 0:08:35.880 --> 0:08:37.640 a lot of inflows in the past couple of weeks. 0:08:37.880 --> 0:08:40.080 And another one you're again back to your favorite topic, 0:08:40.160 --> 0:08:43.320 is high YOU'LD debt. We've seen this interesting shift into 0:08:43.400 --> 0:08:45.800 interest rate hedge gtfs. They haven't taken a lot, but 0:08:45.840 --> 0:08:47.640 it's like a swell out. There could be a big 0:08:47.679 --> 0:08:50.120 wave soon, and that is h y g H. These 0:08:50.120 --> 0:08:52.720 are e t f s that basically take like the 0:08:52.800 --> 0:08:55.200 high you'ld debt or investment grade debt and then they 0:08:55.280 --> 0:08:57.840 short treasury futures in order to have no rate risk. 0:08:58.320 --> 0:08:59.960 What you're going to find is they're starting to out 0:09:00.040 --> 0:09:03.120 perform h y G. So h y g H has 0:09:03.160 --> 0:09:05.720 outperformed h y G by a good degree since rates 0:09:05.720 --> 0:09:08.200 have quietly started rising over the last four months, and 0:09:08.240 --> 0:09:10.520 we've seen flows into this. This thing is a basically 0:09:10.559 --> 0:09:13.160 doubled size in the past couple of weeks. Watch for 0:09:13.200 --> 0:09:15.760 people rotating out of h y G into h y 0:09:15.760 --> 0:09:17.679 g H, out of l q D into l q 0:09:17.880 --> 0:09:20.319 d H. It reminds me of currency hedge dtfs a 0:09:20.360 --> 0:09:22.960 couple of years ago, where it says I want this, 0:09:23.040 --> 0:09:24.920 but I don't want this. It's sort of a package trade. 0:09:25.280 --> 0:09:27.319 That's what these rate hedge dtf do. And I think 0:09:27.320 --> 0:09:30.640 they could have some uh, they could see some flows. Eric. 0:09:31.200 --> 0:09:35.280 When you talk about that perhaps transition from let's say 0:09:35.920 --> 0:09:39.160 h y G to h y g H in order 0:09:39.200 --> 0:09:44.000 to take advantage of that hedging capability, does that sale 0:09:44.320 --> 0:09:47.640 of h y g doesn't that affect the value of 0:09:47.679 --> 0:09:51.680 the underlying asset. Right, So if people sell h y 0:09:51.760 --> 0:09:54.880 G and there's a lot of selling pressure, yes, uh, 0:09:54.920 --> 0:09:56.920 somebody will take the h y G and do a redemption. 0:09:57.080 --> 0:09:59.360 That would put selling pressure on the bond. So the 0:09:59.400 --> 0:10:02.360 e t F would Uh, if people were selling h 0:10:02.480 --> 0:10:04.800 y G, it would put selling pressure on the bonds ultimately. 0:10:05.360 --> 0:10:08.600 But again that's probably gonna happen in concert with people 0:10:08.640 --> 0:10:12.840 selling bonds. That It's not like somebody Yeah, but if 0:10:12.840 --> 0:10:14.840 you're in a rapper that says, oh no, don't worry 0:10:14.880 --> 0:10:18.480 about it because we're gonna hedge out the risk for you. Uh, 0:10:18.640 --> 0:10:21.720 that might give you that false sense of security. Well again, 0:10:21.800 --> 0:10:25.280 it still does whole own high yield debt, right, and 0:10:25.320 --> 0:10:27.439 then it also is gonna short trauge. In other words, 0:10:27.720 --> 0:10:29.520 it's not just saying we're gonna do this and then 0:10:29.520 --> 0:10:32.000 we're gonna do whatever with the money. It actually does 0:10:32.000 --> 0:10:34.800 it with the money. I'd almost equate this to the way, 0:10:35.520 --> 0:10:37.640 you know, if an institution has a prime broker and 0:10:37.679 --> 0:10:40.120 you want to put that trade on, that's what they do. 0:10:40.679 --> 0:10:43.320 E t F have democratized everything, and like you said, 0:10:43.440 --> 0:10:45.600 does everything need to be democratized? That's a big debate. 0:10:45.880 --> 0:10:49.079 But package trades getting a currency hedge exposure or high 0:10:49.120 --> 0:10:52.160 yield debt exposure, that is ultimately what's happening here. We 0:10:52.240 --> 0:10:53.800 gotta leave it there. I want to thank you very 0:10:53.880 --> 0:10:56.440 much Eric Valcunus, he is our senior E T F 0:10:56.480 --> 0:11:04.280 analyst for Bloomberg Intelligence. Well, the world of fashion has 0:11:04.360 --> 0:11:08.040 changed dramatically, mainly in the way that it is being 0:11:08.240 --> 0:11:12.240 marketed and distributed. Here to talk about that is Rebecca 0:11:12.400 --> 0:11:17.720 and Ory Minkoff. They are co founders of the Rebecca 0:11:17.760 --> 0:11:20.280 Minkoff and Ury Minkoff brands, and they joined us here 0:11:20.280 --> 0:11:22.720 in our Bloomberg eleven three oh studios. Thank you both 0:11:22.800 --> 0:11:25.240 for for being with us. Rebecca, I want to start 0:11:25.280 --> 0:11:28.439 with you, and I want to ask you specifically about 0:11:28.520 --> 0:11:32.040 how you have changed your use of social media over 0:11:32.120 --> 0:11:36.719 the past few years to more directly target your customers 0:11:37.040 --> 0:11:40.880 and frankly bypass big advertisers. I think what's really key, 0:11:40.880 --> 0:11:43.599 and it's something you know started before social media is 0:11:43.640 --> 0:11:46.480 it's always been about my conversation with the consumers. So 0:11:46.480 --> 0:11:49.440 social media has allowed us to continue to have a 0:11:49.480 --> 0:11:52.160 dialogue with her directly. We didn't have to have any 0:11:52.160 --> 0:11:54.920 middleman and so social media is that tool that we use, 0:11:54.960 --> 0:11:57.600 whether it's Instagram or Twitter or Facebook to really just 0:11:57.679 --> 0:12:00.680 talk to her. And uh, you don't to advertise her 0:12:00.720 --> 0:12:02.640 because she's not looking for that anyway. She just wants 0:12:02.679 --> 0:12:05.480 an authentic connection and if I can be that for her, 0:12:05.559 --> 0:12:07.720 then then she's happy and so am I. But have 0:12:07.840 --> 0:12:11.200 you actually cut back on more traditional means of advertising 0:12:11.520 --> 0:12:14.480 as you more directly connect with her. We've actually never 0:12:14.520 --> 0:12:17.040 had to do the traditional advertising route because we had 0:12:17.080 --> 0:12:19.640 that connection early on, so we didn't have to invest, 0:12:20.040 --> 0:12:22.880 you know, hundreds of thousands of ad dollars in glossy magazines. 0:12:22.920 --> 0:12:25.320 I think it was about I know you, you know me, 0:12:25.440 --> 0:12:26.960 and we're going to talk and it's going to be 0:12:27.040 --> 0:12:30.240 authentic and that's more real. Or I want to bring 0:12:30.280 --> 0:12:32.680 you in and just to talk about the actual business 0:12:32.880 --> 0:12:37.640 of fashion. Because in reading a recent issue of Women's 0:12:37.679 --> 0:12:40.920 Where Daily, Uh, there was an issue with one of 0:12:40.960 --> 0:12:44.440 your distribution and supply chain partners, and I thought it 0:12:44.520 --> 0:12:47.360 was interesting the way you handled it was to go 0:12:47.480 --> 0:12:50.920 directly to Facebook and use that as a medium to 0:12:51.040 --> 0:12:54.560 communicate obviously not only with your other business partners, but 0:12:54.960 --> 0:12:58.080 really with your customer base. Yeah, you know in this 0:12:58.160 --> 0:13:01.360 day and age, community is so portant and our customer 0:13:01.440 --> 0:13:04.960 bases is so important to us. UM. We moved to 0:13:05.240 --> 0:13:08.920 a new warehouse, third party logistics warehouse right before the 0:13:08.920 --> 0:13:11.760 holiday season. We also moved to a new web platform 0:13:12.440 --> 0:13:15.240 really to optimize around long term growth UH. And the 0:13:15.280 --> 0:13:18.000 demand for our product was so great that they just 0:13:18.000 --> 0:13:20.040 couldn't keep up with it during the holiday season, and 0:13:20.080 --> 0:13:24.200 so we had some some shipping delays because the expectations 0:13:24.280 --> 0:13:27.360 just we're not there with it was just far outceded 0:13:27.440 --> 0:13:30.280 expectations UM. And it's not a bad problem to have, 0:13:30.520 --> 0:13:32.280 not a bad problem to have, but you know, our 0:13:32.320 --> 0:13:35.280 community is so close to Rebecca and they're so embracive 0:13:35.280 --> 0:13:37.160 of her in the brand UM, and some of them 0:13:37.200 --> 0:13:39.680 felt disappointed. So it's important for Rebecca to God and 0:13:39.679 --> 0:13:42.120 make a statement to them directly and to really sit 0:13:42.160 --> 0:13:44.160 there and answer their questions. And it's something that will 0:13:44.320 --> 0:13:48.200 be continuing to refine. Rebecca. I also ask you about 0:13:48.240 --> 0:13:51.920 the Women's March. I know you have an initiative where 0:13:52.280 --> 0:13:55.840 you are outfitting some of the leaders in the Women's 0:13:55.880 --> 0:13:59.560 March Committee and then in photographs you can click on 0:13:59.600 --> 0:14:01.560 the different things that they're wearing, and it shows you 0:14:01.640 --> 0:14:03.920 how much they are and how you can buy them. 0:14:03.960 --> 0:14:07.200 And I'm just wondering about if this is the first 0:14:07.520 --> 0:14:10.760 sort of cause that you've associated yourself with, how you 0:14:10.880 --> 0:14:15.559 choose causes, and how you do that while not alienating 0:14:15.679 --> 0:14:18.640 any of your customers who might not agree with your cause. 0:14:19.240 --> 0:14:22.160 This is definitely not the first time I've been working 0:14:22.200 --> 0:14:24.160 with a cause. I think, you know, when we had 0:14:24.160 --> 0:14:26.880 our first Sea By Wear in the streets on Green Street, 0:14:27.240 --> 0:14:29.880 there was a lot of social unrest at the time, 0:14:29.960 --> 0:14:31.680 a lot of bombings had just occurred, and I said, 0:14:31.680 --> 0:14:33.880 I can't just have a fashion show, you know, So 0:14:33.920 --> 0:14:36.400 we worked with Not on our Watch. We had as 0:14:36.520 --> 0:14:40.040 incredible graffiti artist do some art on on the back 0:14:40.040 --> 0:14:42.040 of these jackets, and the proceeds went to Not on 0:14:42.040 --> 0:14:45.360 Our Watch. And then last February in our fashion show, 0:14:45.360 --> 0:14:48.480 we worked with UM Girl Rising, so empowering girls in 0:14:48.480 --> 0:14:51.280 different communities. Again worked with an artist and the proceeds 0:14:51.320 --> 0:14:54.920 went to these organizations and UM. My relationship with the 0:14:54.920 --> 0:14:57.360 Women's March actually started last year when they reached out, 0:14:57.400 --> 0:14:59.960 they said, we want a uniform. Is there any way 0:15:00.160 --> 0:15:02.240 you know, it's like two days before the march. Do 0:15:02.280 --> 0:15:04.200 you have any shoes or bags that could make us 0:15:04.240 --> 0:15:07.080 all look the same. And I said, hell, yes, um, 0:15:07.440 --> 0:15:10.920 you're like, absolutely, I do my wardrobes done someone to 0:15:10.960 --> 0:15:14.280 the warehouse, Um, and you know, I was really proud 0:15:14.280 --> 0:15:16.360 that I was able to support them with something small 0:15:17.120 --> 0:15:19.520 that you know, made them feel really empowered that day. 0:15:19.560 --> 0:15:21.720 So you know, this year in Louis of a fashion show, 0:15:21.720 --> 0:15:24.720 because I am due during fashion week with my third child, 0:15:25.160 --> 0:15:27.760 I said, how can I really do something that's impactful again? 0:15:28.400 --> 0:15:30.520 And I reached out to the organizers said I would 0:15:30.520 --> 0:15:33.280 love to profile tell your stories and for me, it's 0:15:33.320 --> 0:15:35.840 about female equality and empowerment and if someone has an 0:15:35.840 --> 0:15:37.880 issue with that, then I don't frankly want them to 0:15:37.920 --> 0:15:40.640 be my customer. Well, I guess with the issue being 0:15:40.640 --> 0:15:44.560 that sometimes you know, it's increasingly taken a more political totally, 0:15:45.040 --> 0:15:48.040 so perhaps the insinuation there is what people would object to, 0:15:48.080 --> 0:15:51.280 not necessarily women's empowerment totally. And um. We also made 0:15:51.280 --> 0:15:54.880 a significant donation to support their book launch and the 0:15:54.880 --> 0:15:57.680 Women's March. In general, speak if you can about the 0:15:57.760 --> 0:16:01.880 influencers that exist on line in the world of social media, 0:16:01.960 --> 0:16:04.720 because that is also changing the whole way in which 0:16:04.920 --> 0:16:10.720 buyers interact with you as the creative element, because not 0:16:10.880 --> 0:16:13.960 necessarily to go to a runway show, for example, if 0:16:13.960 --> 0:16:16.280 you have the right influencers or people that are able 0:16:16.280 --> 0:16:19.160 to put up the photographs or their comments on Instagram 0:16:19.240 --> 0:16:22.640 or Facebook, have you found that that is better in 0:16:22.680 --> 0:16:26.400 many ways? You know, Ori and I started working with influencers. 0:16:26.440 --> 0:16:29.480 In the very beginning, we had interventions, people telling us 0:16:29.600 --> 0:16:32.120 you're working with Cless celebrities, You're going to ruin your 0:16:32.160 --> 0:16:35.200 brand with these people, and we really decided to be 0:16:35.240 --> 0:16:37.760 fearless and not listen to them. And I think it 0:16:37.880 --> 0:16:40.120 was about, again, how do you get these people that 0:16:40.200 --> 0:16:43.960 have great communities, great people that follow them and and 0:16:44.080 --> 0:16:47.320 have it again a genuine connection. So I think we 0:16:47.360 --> 0:16:50.800 talked about the influencers that you know, convert to sales, 0:16:50.880 --> 0:16:53.320 the some that also just get you brand recognition, but 0:16:53.400 --> 0:16:55.040 it still has to be authentic at the end of 0:16:55.040 --> 0:16:59.160 the day. It's so powerful today the relationship between you know, 0:16:59.200 --> 0:17:01.960 the influencers and their consumers and their followers and our 0:17:02.000 --> 0:17:05.040 relationship with them, um and that's how you build community 0:17:05.040 --> 0:17:08.080 in this new digital day and age. And those influencers 0:17:08.119 --> 0:17:11.840 don't necessarily have to beat celebrities in a more traditional 0:17:12.359 --> 0:17:15.680 sense of the word even better if they're not really Yeah, 0:17:15.800 --> 0:17:19.320 I think, I think, you know, there's there's this authenticity, 0:17:19.600 --> 0:17:22.159 there's this you know, growing up, you always had you know, 0:17:22.200 --> 0:17:24.240 the person next door that looked great, right, Well, not 0:17:24.359 --> 0:17:27.520 that person next door has millions of people following them, 0:17:27.520 --> 0:17:29.520 and they're known for their style and their discovery and 0:17:29.520 --> 0:17:32.480 how they go through their life. And people are reacting 0:17:32.520 --> 0:17:35.440 against the glossy everything is perfect. They want to know, 0:17:36.040 --> 0:17:38.000 you know, what that person's life is like and their 0:17:38.040 --> 0:17:40.080 ups and their downs, and these people are are sharing them. 0:17:40.119 --> 0:17:43.720 So it's this live reality TV version of of really 0:17:43.720 --> 0:17:47.800 cool people online. And these communities leverage in the millions 0:17:48.000 --> 0:17:50.720 and so and even now we're seeing a trend even 0:17:50.760 --> 0:17:53.240 away from macro influencers towards micro influencers, where you have 0:17:53.320 --> 0:17:55.840 people that have followings of five or ten thousand, and 0:17:55.880 --> 0:17:58.639 their communities are so engaged that they'll literally follow them 0:17:58.640 --> 0:18:01.399 to the ends of the earth. So we run campaigns 0:18:01.400 --> 0:18:05.399 and work with influences, you know, macro micro all the time, 0:18:05.480 --> 0:18:07.959 and and and when we find an influencer that has 0:18:07.960 --> 0:18:11.479 an authentic connection to the brand, an authentic community, we 0:18:11.520 --> 0:18:13.560 all just grow together. I love this idea of many 0:18:13.640 --> 0:18:17.320 cults kind of propping up on different social media platforms. 0:18:17.320 --> 0:18:19.719 And we noticed that one of your bags has a 0:18:19.840 --> 0:18:23.800 sponsored icon next to it on Amazon, and it raises 0:18:23.800 --> 0:18:27.640 this question of how you use Amazon? Does that mean 0:18:27.880 --> 0:18:32.960 that you can pay them for better placement? Um? How 0:18:32.960 --> 0:18:35.720 has it kind of changed the way you go about things? 0:18:36.560 --> 0:18:40.919 So we do not sell directly to Amazon our bags. 0:18:41.080 --> 0:18:44.199 Um we did in the past. Uh. And we we 0:18:44.359 --> 0:18:49.680 decided to not work with them directly. Uh simply because, um, 0:18:49.720 --> 0:18:51.480 you know, there's a lot of discounting and so forth, 0:18:51.520 --> 0:18:53.560 and it was important to us to keep the integrity 0:18:54.440 --> 0:18:57.920 of respecting the full price window is the full price window. Um, 0:18:58.000 --> 0:19:01.920 So we opted out of that direct relationship Amazon does. 0:19:02.200 --> 0:19:03.880 Just to be real clear there. So in other words, 0:19:03.880 --> 0:19:07.240 you were saying that they wanted you to discount your 0:19:07.240 --> 0:19:10.720 bag in order to give them part of the profit, 0:19:10.800 --> 0:19:13.119 or because they thought that it would be in the 0:19:13.160 --> 0:19:16.080 past successful. In the past, we had a wholesale retail 0:19:16.119 --> 0:19:19.040 relationship with them. But obviously they could they could set 0:19:19.040 --> 0:19:22.680 their pricing. It's it's illegal in the US to dictate pricing. Um. 0:19:22.800 --> 0:19:24.960 And but we found that but you could choose not 0:19:25.040 --> 0:19:27.800 to sell to somebody um and we found that we 0:19:27.800 --> 0:19:31.439 couldn't get them to respect our pricing windows um and 0:19:31.440 --> 0:19:34.120 and and with that regard, we chose to not continue 0:19:34.119 --> 0:19:37.920