1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,600 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:27,280 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. A 7 00:00:27,360 --> 00:00:31,000 Speaker 1: big question, especially as the big tech giants sell off 8 00:00:31,040 --> 00:00:34,120 Speaker 1: today and exert an incredible amount of control over markets, 9 00:00:34,479 --> 00:00:37,760 Speaker 1: is how much control should they have over the tech space? 10 00:00:37,800 --> 00:00:40,280 Speaker 1: How big should they be allowed to get? And weighing 11 00:00:40,320 --> 00:00:42,520 Speaker 1: in on that as Tim Woo, Professor Law of Law 12 00:00:42,720 --> 00:00:45,760 Speaker 1: at Columbia Law School, also a contributing opinion writer at 13 00:00:45,840 --> 00:00:48,199 Speaker 1: The New York Times, author of a new book, The 14 00:00:48,240 --> 00:00:51,159 Speaker 1: Curse of bigness Antitrust in the New Gilded Age, And 15 00:00:51,200 --> 00:00:53,760 Speaker 1: just if people don't know who you are, your background 16 00:00:53,800 --> 00:00:55,760 Speaker 1: is tremendous. You've worked in the White House, You've worked 17 00:00:55,760 --> 00:00:58,480 Speaker 1: at the Federal Trade Commission, You've been a law clerk 18 00:00:58,520 --> 00:01:02,040 Speaker 1: for Judge Postner and Justice Brier. So can we just 19 00:01:02,240 --> 00:01:06,680 Speaker 1: start with why did you write this book? Now? I 20 00:01:06,720 --> 00:01:10,560 Speaker 1: think the time has come to start really engaging with 21 00:01:10,600 --> 00:01:13,760 Speaker 1: these questions again, age old questions about how the US 22 00:01:13,800 --> 00:01:19,160 Speaker 1: economy is structured and how much monopoly and oligopoly we allow. 23 00:01:19,400 --> 00:01:22,280 Speaker 1: We face these questions before hundred years ago. I think 24 00:01:22,280 --> 00:01:25,400 Speaker 1: it's time to face them once again. Is there a 25 00:01:25,440 --> 00:01:30,000 Speaker 1: difference between a consumer and a citizen? Uh? Well, they're 26 00:01:30,040 --> 00:01:32,240 Speaker 1: you know, technically the same people. But I think that 27 00:01:32,319 --> 00:01:36,000 Speaker 1: we have more interests than just our identities as as 28 00:01:36,080 --> 00:01:38,200 Speaker 1: as consumers. In other words, I think some of the 29 00:01:38,240 --> 00:01:42,080 Speaker 1: reasons you might want anti trust enforcement our citizen interests. 30 00:01:42,400 --> 00:01:45,679 Speaker 1: That the political stakes of too much private control over 31 00:01:45,720 --> 00:01:48,120 Speaker 1: political outcomes. Well, yeah, that was one thing. You sort 32 00:01:48,120 --> 00:01:52,600 Speaker 1: of drew a parallel between monopolies and fascism and that 33 00:01:52,680 --> 00:01:56,880 Speaker 1: basically democracy depends on a certain sort of equality of businesses. 34 00:01:56,880 --> 00:01:58,680 Speaker 1: Can you explain. Yeah, sure, Now, I mean this is 35 00:01:58,720 --> 00:02:02,440 Speaker 1: a historic and they every monopolies a fascist enterprise. But 36 00:02:02,720 --> 00:02:05,920 Speaker 1: there there is this there's this dark history I think 37 00:02:05,960 --> 00:02:11,600 Speaker 1: where countries allow too much domination of the economy by monopolies, 38 00:02:11,919 --> 00:02:15,320 Speaker 1: too much power centralized in private companies, have shown themselves 39 00:02:15,400 --> 00:02:19,000 Speaker 1: vulnerable to to to to dictatorship. Um. You know, the 40 00:02:19,000 --> 00:02:22,720 Speaker 1: most strong examples were Italy in Germany in the nineteen thirties, 41 00:02:23,080 --> 00:02:24,840 Speaker 1: and I think when people could really angry, if if, 42 00:02:25,000 --> 00:02:27,320 Speaker 1: if their needs aren't meant, they feel that the economic 43 00:02:27,360 --> 00:02:31,280 Speaker 1: system is completely unaccountable, they start turning to stronger, uh 44 00:02:31,280 --> 00:02:34,239 Speaker 1: and more radical leaders. And I'm very worried about the 45 00:02:34,280 --> 00:02:36,960 Speaker 1: politics of our time going in the same direction that 46 00:02:37,080 --> 00:02:39,320 Speaker 1: we saw in the twenty century. Do you see a 47 00:02:39,400 --> 00:02:42,560 Speaker 1: time when there will be government action to break up 48 00:02:42,760 --> 00:02:47,520 Speaker 1: companies such as Google and Facebook? I think we're do um. 49 00:02:47,880 --> 00:02:51,000 Speaker 1: There hasn't been a major case in more than twenty years. 50 00:02:51,400 --> 00:02:54,840 Speaker 1: And it was once an American tradition that when you 51 00:02:54,880 --> 00:02:59,120 Speaker 1: have a dominant monopolist of company that dominates an industry 52 00:02:59,200 --> 00:03:03,560 Speaker 1: like Microsoft, off A T and T al Cola standard oil, 53 00:03:03,639 --> 00:03:05,959 Speaker 1: you go back that the adjustice Department would take a 54 00:03:06,040 --> 00:03:08,280 Speaker 1: run at them. Uh. They didn't always win, but they 55 00:03:08,320 --> 00:03:10,520 Speaker 1: broke up a lot. So I would imagine we are 56 00:03:10,639 --> 00:03:13,720 Speaker 1: do So I just want to push back a little 57 00:03:13,720 --> 00:03:17,320 Speaker 1: bit because you talked about how big corporations can kind 58 00:03:17,360 --> 00:03:20,120 Speaker 1: of exert their power over the political scenario in a 59 00:03:20,120 --> 00:03:24,440 Speaker 1: disproportionate way. Someone could argue that actually they could also 60 00:03:24,520 --> 00:03:27,240 Speaker 1: exert their power, uh, you know, in ways that go 61 00:03:27,320 --> 00:03:29,480 Speaker 1: against the political establishment and have a lot of power, 62 00:03:29,520 --> 00:03:33,200 Speaker 1: whether it's uh, you know, reducing greenhouse emissions, which is 63 00:03:33,240 --> 00:03:36,880 Speaker 1: what we're seeing, or whether it's increasing diversity among staff. 64 00:03:37,000 --> 00:03:39,760 Speaker 1: So I mean there's a flip side of that too. No, yeah, no, 65 00:03:39,880 --> 00:03:41,680 Speaker 1: I hear you. It just depends on what kind of 66 00:03:41,680 --> 00:03:44,240 Speaker 1: government you believe in, you know, whether you think that 67 00:03:44,880 --> 00:03:47,920 Speaker 1: the decisions should mainly be made by private industry, which 68 00:03:47,960 --> 00:03:49,800 Speaker 1: even if they make good decisions, you still have to 69 00:03:49,800 --> 00:03:52,480 Speaker 1: wonder why is that their decision? Or if you essentially 70 00:03:52,560 --> 00:03:55,240 Speaker 1: believe in democracy, which is more to do with with 71 00:03:55,680 --> 00:03:58,360 Speaker 1: obviously with representatives making those decisions. So how do we 72 00:03:58,400 --> 00:04:01,720 Speaker 1: get here? And how do of a regulator or a 73 00:04:01,800 --> 00:04:05,400 Speaker 1: judge determine when a business has gotten too big? Yeah? 74 00:04:05,440 --> 00:04:07,240 Speaker 1: So I think we're in a There's been a forty 75 00:04:07,360 --> 00:04:12,320 Speaker 1: year campaign to weaken and feeble that the antitrust laws. 76 00:04:12,560 --> 00:04:15,960 Speaker 1: Um it has more success with the Republican Party, but 77 00:04:16,040 --> 00:04:18,800 Speaker 1: has sort of spread to some degree to both parties. 78 00:04:19,440 --> 00:04:22,240 Speaker 1: And you know, it was on the road the back. 79 00:04:22,920 --> 00:04:26,840 Speaker 1: It's associated with Robert Borke, the famous almost justice of 80 00:04:26,880 --> 00:04:31,520 Speaker 1: the Supreme Court. Yes, it was borked, but his actually 81 00:04:31,600 --> 00:04:36,160 Speaker 1: his effect was stronger than many actual justices because so 82 00:04:36,400 --> 00:04:39,560 Speaker 1: he said he kind of rode the coattails of a 83 00:04:39,600 --> 00:04:41,840 Speaker 1: movement that said the judiciary is out of control, and 84 00:04:42,200 --> 00:04:45,480 Speaker 1: you know, VI Opposition Roe v. Wade, a lot of 85 00:04:45,520 --> 00:04:48,080 Speaker 1: other things, and said, we need to uh. And I 86 00:04:48,120 --> 00:04:50,720 Speaker 1: think what we've done is destroy something that was once 87 00:04:50,800 --> 00:04:53,240 Speaker 1: very important to the U. S. Economy, which is a 88 00:04:53,400 --> 00:04:58,440 Speaker 1: supervision of excessively sized companies and and and breakups were necessary. 89 00:04:59,080 --> 00:05:03,080 Speaker 1: As part of the theme of your book, The Curse 90 00:05:03,160 --> 00:05:07,640 Speaker 1: of bigness Antitrust in the New Gilded Age. You right 91 00:05:08,320 --> 00:05:13,719 Speaker 1: in a way about Louis Lewis Brandeis, former Justice on 92 00:05:13,760 --> 00:05:16,160 Speaker 1: the Supreme Court. I'm wondering if you could just tell 93 00:05:16,200 --> 00:05:19,240 Speaker 1: people who he was briefly and why you brought him 94 00:05:19,240 --> 00:05:23,960 Speaker 1: into this discussion. Yes, so, Lewis Brandeis is probably most 95 00:05:24,000 --> 00:05:27,400 Speaker 1: famous as Justice Supreme Court. He was also a key 96 00:05:27,440 --> 00:05:31,120 Speaker 1: advisor to Woodrow Wilson the nineteen twelve campaign. And I 97 00:05:31,120 --> 00:05:34,159 Speaker 1: think he is important for his vision of what the 98 00:05:34,200 --> 00:05:39,200 Speaker 1: economy could or should be. Uh. He saw the economy 99 00:05:39,320 --> 00:05:42,000 Speaker 1: in in deeper terms. He thought the point of a 100 00:05:42,080 --> 00:05:47,000 Speaker 1: democracy was flourishing of its citizens and human flourishing more generally. 101 00:05:47,360 --> 00:05:48,839 Speaker 1: And so he said, you know, we really have to 102 00:05:48,960 --> 00:05:51,799 Speaker 1: realize the economy is the biggest factor in most people's lives, 103 00:05:52,120 --> 00:05:55,960 Speaker 1: and they need the economic liberties economic securities before this 104 00:05:56,000 --> 00:05:57,640 Speaker 1: will be a place that people really want to live. 105 00:05:57,960 --> 00:05:59,440 Speaker 1: And sometimes I think we've lost sight of that. We're 106 00:05:59,480 --> 00:06:01,800 Speaker 1: sort of upset with numbers and you know, did the 107 00:06:01,880 --> 00:06:04,000 Speaker 1: Dow go up today or down? And you know what 108 00:06:04,120 --> 00:06:06,240 Speaker 1: about what the economy does for what it means to 109 00:06:06,240 --> 00:06:08,360 Speaker 1: be a citizen of this country. So which mega mergers 110 00:06:08,400 --> 00:06:11,000 Speaker 1: do you see as being the most dangerous currently? That's 111 00:06:11,000 --> 00:06:13,040 Speaker 1: a great question. I think there's a lot of mergers 112 00:06:13,040 --> 00:06:15,560 Speaker 1: we shouldn't have let happen. I take the airline industry 113 00:06:15,600 --> 00:06:19,280 Speaker 1: as a good example. I don't think other than shareholders 114 00:06:19,279 --> 00:06:22,200 Speaker 1: of airlines that that that's particularly good for passengers. Just 115 00:06:22,240 --> 00:06:25,960 Speaker 1: have three major airlines. A huge number of hospital and 116 00:06:26,160 --> 00:06:29,360 Speaker 1: pharmaceutical mergers I think have led to higher prices, worst 117 00:06:29,440 --> 00:06:32,120 Speaker 1: care UM. In the tech sector, I don't think we 118 00:06:32,160 --> 00:06:34,960 Speaker 1: should have let Facebook buy all its competitors. I think 119 00:06:35,000 --> 00:06:39,000 Speaker 1: we've seen the fallout from that politically, security wise, from 120 00:06:39,040 --> 00:06:44,000 Speaker 1: having one company with so much domination over social networking. UM. 121 00:06:44,440 --> 00:06:46,640 Speaker 1: You know, every day there's a new scandal. So I 122 00:06:46,640 --> 00:06:49,479 Speaker 1: think we see the curse of business across the economy. 123 00:06:49,520 --> 00:06:51,320 Speaker 1: And you know, I'm not saying something radical. I want 124 00:06:51,360 --> 00:06:54,400 Speaker 1: to return to sort of the American tradition of of 125 00:06:54,520 --> 00:06:59,560 Speaker 1: competition being our guiding light and decentralized power being how 126 00:06:59,560 --> 00:07:03,279 Speaker 1: we run the country. Just to stick to a couple 127 00:07:03,320 --> 00:07:06,279 Speaker 1: of luminaries, perhaps just so that we get a little 128 00:07:06,320 --> 00:07:10,400 Speaker 1: bit of detail about how you kind of frame the book. Um, 129 00:07:10,520 --> 00:07:15,520 Speaker 1: John Perry Barlow, Yes, people may not remember him, but 130 00:07:15,560 --> 00:07:18,720 Speaker 1: I've got the gray hair to prove it. Um. He 131 00:07:18,880 --> 00:07:21,600 Speaker 1: really described a lot of these situations back in the 132 00:07:21,680 --> 00:07:25,760 Speaker 1: nineteen nineties. Well, John Perry Barlow was a figure embellic 133 00:07:25,880 --> 00:07:28,920 Speaker 1: of you know, sort of symbolized the nine nineties where 134 00:07:28,920 --> 00:07:32,640 Speaker 1: everyone assumed that since tech was so different that we 135 00:07:32,680 --> 00:07:34,960 Speaker 1: didn't need the old rules. You could never really have 136 00:07:35,000 --> 00:07:39,000 Speaker 1: a tech monopoly. Everything was kind of in cyberspace, and 137 00:07:39,040 --> 00:07:40,920 Speaker 1: you know, we need to throw everything out the window. 138 00:07:41,520 --> 00:07:44,280 Speaker 1: And I think that approach led us to ignore some 139 00:07:44,440 --> 00:07:48,400 Speaker 1: of the more obvious anti competitive harms that we're starting 140 00:07:48,400 --> 00:07:52,080 Speaker 1: to appear allow allowed. We basically let the tech companies 141 00:07:52,120 --> 00:07:55,040 Speaker 1: have something of an immunity to the antitrust laws for 142 00:07:55,280 --> 00:07:58,200 Speaker 1: uh for a decade. And I think now we're reaching 143 00:07:58,200 --> 00:08:01,760 Speaker 1: a time of reckoning. So I have to wonder, you know, 144 00:08:01,880 --> 00:08:05,320 Speaker 1: at what point is bigness? Okay, right, so how do 145 00:08:05,320 --> 00:08:10,000 Speaker 1: you determine whether something is uh not too big or 146 00:08:10,240 --> 00:08:11,640 Speaker 1: too I mean, it's sort of it is it is. 147 00:08:11,680 --> 00:08:14,400 Speaker 1: It's an important point, especially in a global world, albeit 148 00:08:14,520 --> 00:08:17,880 Speaker 1: perhaps less so uh now than it was a year ago. Uh. 149 00:08:17,920 --> 00:08:20,560 Speaker 1: And and they're big companies globally that are going to 150 00:08:20,760 --> 00:08:23,880 Speaker 1: potentially knock others out of the out of the water 151 00:08:24,000 --> 00:08:26,360 Speaker 1: if they're not big enough and have economies of scale. Yeah. No, 152 00:08:26,440 --> 00:08:29,040 Speaker 1: I think that is definitely one of the hardest question. 153 00:08:29,160 --> 00:08:30,760 Speaker 1: And I don't think it's right to just say, well, 154 00:08:30,760 --> 00:08:32,840 Speaker 1: this company got big, so we better break them up 155 00:08:32,880 --> 00:08:35,360 Speaker 1: because they're they're big, even though I called the even 156 00:08:35,400 --> 00:08:37,960 Speaker 1: though I called the book the Curse of Bigness. On 157 00:08:38,040 --> 00:08:40,960 Speaker 1: the other hand, I think with the benefit of retrospect, 158 00:08:41,360 --> 00:08:43,640 Speaker 1: of retrospect, if you can see how important it is 159 00:08:44,120 --> 00:08:47,760 Speaker 1: to challenge companies that are no longer able even though 160 00:08:47,760 --> 00:08:49,960 Speaker 1: they're big, to compete on the merits, but have resorted 161 00:08:50,000 --> 00:08:55,800 Speaker 1: to increasing numbers of abusive anti competitive measures. Um. You know, 162 00:08:56,200 --> 00:08:58,079 Speaker 1: take IBM in the seventies, A T and T in 163 00:08:58,120 --> 00:09:01,000 Speaker 1: the eighties, there were huge companies, and thank goodness, I 164 00:09:01,040 --> 00:09:03,120 Speaker 1: think we challenged them and broke up a T and 165 00:09:03,160 --> 00:09:08,839 Speaker 1: T because they had become almost like a parasite on 166 00:09:08,880 --> 00:09:10,600 Speaker 1: the you know, they had started to block and control 167 00:09:10,679 --> 00:09:13,760 Speaker 1: so many lines of conduct that no entrepreneur could get started. 168 00:09:13,800 --> 00:09:16,440 Speaker 1: So when you have a part of the economy you 169 00:09:16,440 --> 00:09:20,000 Speaker 1: know that just has started to stagnate because of you 170 00:09:20,040 --> 00:09:24,520 Speaker 1: suspect a company that is immune to competition and has 171 00:09:24,600 --> 00:09:26,800 Speaker 1: began to suppress all its competitors. That's when it's time 172 00:09:26,840 --> 00:09:29,080 Speaker 1: for antitrust take action. How close do you think we 173 00:09:29,120 --> 00:09:33,520 Speaker 1: are to a dangerous tipping point with respect to how 174 00:09:33,559 --> 00:09:36,680 Speaker 1: big the biggest companies have gotten. I think we're there. 175 00:09:36,720 --> 00:09:39,480 Speaker 1: I think that we are in an unprecedented level of 176 00:09:39,520 --> 00:09:42,120 Speaker 1: concentration in the U. S. Economy. I think we've had 177 00:09:42,120 --> 00:09:44,959 Speaker 1: a decline in entrepreneurship and innovation, and I think we're 178 00:09:44,960 --> 00:09:49,480 Speaker 1: gonna begin to suffer seriously um from all kinds of 179 00:09:49,480 --> 00:09:52,120 Speaker 1: sectors becoming places that new companies just can't get started, 180 00:09:52,280 --> 00:09:55,000 Speaker 1: not to mention the effects on employees and suppressed wages. 181 00:09:55,480 --> 00:09:58,360 Speaker 1: So I think we're there. That's why I think there. 182 00:09:58,400 --> 00:10:00,840 Speaker 1: I think some of the populist political movements are actually 183 00:10:01,520 --> 00:10:04,920 Speaker 1: reflecting the concentration of the economy, reflecting a sense of 184 00:10:04,960 --> 00:10:09,520 Speaker 1: powerlessness among the middle classes, and um. The historic trends 185 00:10:09,559 --> 00:10:12,679 Speaker 1: all suggest that the moment has come to question whether 186 00:10:12,720 --> 00:10:17,480 Speaker 1: we've let the private sector become too concentrated and too unaccountable. 187 00:10:17,840 --> 00:10:19,760 Speaker 1: Thank you very much for being with us. Tim Wu 188 00:10:19,880 --> 00:10:24,080 Speaker 1: was professor of Law, Columbia Law School. He is also 189 00:10:24,120 --> 00:10:27,040 Speaker 1: the author of the new book entitled The Curse of 190 00:10:27,200 --> 00:10:32,760 Speaker 1: bigness Antitrust in the New guilded Age, And whatever your perspective, 191 00:10:33,040 --> 00:10:36,400 Speaker 1: it is worth reading because it enjoins the debate that 192 00:10:36,480 --> 00:10:40,400 Speaker 1: affects everybody's life and business. Tim will thank you very 193 00:10:40,440 --> 00:10:45,840 Speaker 1: much for being here Long Island City as one of 194 00:10:46,000 --> 00:10:49,679 Speaker 1: two new headquarters. And the big question has been how 195 00:10:49,760 --> 00:10:52,640 Speaker 1: much will this impact the commercial real estate market in 196 00:10:52,679 --> 00:10:55,400 Speaker 1: New York? Joining us now Leslie Wallman Himmel Co, Managing 197 00:10:55,440 --> 00:10:59,120 Speaker 1: partner of Himmel and marrying off properties focused on New 198 00:10:59,240 --> 00:11:02,000 Speaker 1: York realists eight. Thank you so much for being with us. 199 00:11:02,160 --> 00:11:04,400 Speaker 1: So let's just start there. I mean, do you think 200 00:11:04,440 --> 00:11:07,600 Speaker 1: that this is going to have a material positive impact 201 00:11:07,760 --> 00:11:10,200 Speaker 1: on commercial real estate prices both in Long Island City 202 00:11:10,200 --> 00:11:13,319 Speaker 1: as well as elsewhere in this in New York. First, well, 203 00:11:13,320 --> 00:11:16,280 Speaker 1: thank you for having me here. UM him all americoth 204 00:11:16,320 --> 00:11:20,560 Speaker 1: properties that we buy office buildings in Manhattan and the boroughs, 205 00:11:20,920 --> 00:11:23,400 Speaker 1: and we've had a partnership for thirty four years. We 206 00:11:23,520 --> 00:11:28,120 Speaker 1: purchased a full square block in and with the theory 207 00:11:28,200 --> 00:11:31,160 Speaker 1: being buying in emerging neighborhoods. People in this last week 208 00:11:31,360 --> 00:11:33,920 Speaker 1: have been saying, you were so smart. That's a long 209 00:11:33,960 --> 00:11:38,240 Speaker 1: time ago. Thirty Yes, it's it's a building at thirty 210 00:11:38,240 --> 00:11:41,320 Speaker 1: four two Queens Boulevard. And UM, I can't tell you 211 00:11:41,320 --> 00:11:43,280 Speaker 1: how many phone calls we've gotten saying you're just such 212 00:11:43,280 --> 00:11:46,720 Speaker 1: a you know how to buy an emerging neighborhood. Well, Amazon, 213 00:11:46,880 --> 00:11:49,920 Speaker 1: the Amazon effect is going to be a multiplier effect. 214 00:11:49,960 --> 00:11:53,920 Speaker 1: It's fantastic that they're gonna add jobs. And they picked 215 00:11:54,000 --> 00:11:56,800 Speaker 1: Long Island City. We've been thinking for the last three 216 00:11:56,800 --> 00:12:01,040 Speaker 1: decades as we've watched the area emerge but very slowly 217 00:12:01,080 --> 00:12:06,080 Speaker 1: compared to Jersey City, Hoboken, Brooklyn, that it should be developed. 218 00:12:06,160 --> 00:12:08,040 Speaker 1: Is so close to Manhattan. You go right across the 219 00:12:08,040 --> 00:12:11,240 Speaker 1: fifty Night Street Bridge, you go right through the tunnel. Um. 220 00:12:11,360 --> 00:12:14,200 Speaker 1: The big story here as you watch tech stocks are 221 00:12:14,280 --> 00:12:17,800 Speaker 1: going down, but the tech companies are expanding in New York. 222 00:12:17,880 --> 00:12:20,040 Speaker 1: New York is the greatest city in the world to 223 00:12:20,080 --> 00:12:24,760 Speaker 1: help build careers. Amazon, Google, Facebook, they're all growing in 224 00:12:24,760 --> 00:12:27,760 Speaker 1: New York. And it's definitely going to increase values in 225 00:12:27,800 --> 00:12:30,400 Speaker 1: Long Island City. But that's it should have happened a 226 00:12:30,480 --> 00:12:33,800 Speaker 1: long time ago. Now you have been part of I 227 00:12:33,800 --> 00:12:36,920 Speaker 1: don't know how it maybe fifty a hundred transactions at 228 00:12:37,000 --> 00:12:41,160 Speaker 1: least in New York, and I mean value over two 229 00:12:41,200 --> 00:12:46,600 Speaker 1: billion dollars. What are the rents gonna do in Long 230 00:12:46,640 --> 00:12:49,319 Speaker 1: Island City? Because I was looking at a report having 231 00:12:49,360 --> 00:12:51,760 Speaker 1: to do with rents in Seattle right to kind of 232 00:12:51,800 --> 00:12:57,280 Speaker 1: measure another city that is obviously went through the Amazon transformation. Uh, 233 00:12:57,520 --> 00:13:01,400 Speaker 1: last year, rents in downtown Sea, Seattle, we're about forty 234 00:13:01,480 --> 00:13:05,400 Speaker 1: two dollars per square foot. Now, if you go back 235 00:13:05,440 --> 00:13:08,920 Speaker 1: to two thousand and nine, I understand there's regular inflation 236 00:13:08,960 --> 00:13:12,960 Speaker 1: and so on, they were thirty one. So we've got about, 237 00:13:13,040 --> 00:13:16,480 Speaker 1: you know, a ten dollar increase per square foot. Do 238 00:13:16,559 --> 00:13:19,800 Speaker 1: you see that same magnitude of change coming to Long 239 00:13:19,840 --> 00:13:23,720 Speaker 1: Island City and indeed even to Crystal City in Washington 240 00:13:24,320 --> 00:13:27,040 Speaker 1: across the Potomac from Washington, where they're gonna put their 241 00:13:27,040 --> 00:13:31,360 Speaker 1: Northern Virginia headquarters. The simple answer is yes. This is 242 00:13:31,400 --> 00:13:35,360 Speaker 1: a simple supply and demand UH equation. When you have 243 00:13:35,840 --> 00:13:40,280 Speaker 1: an expansion of twenty five thousand workers and many residents 244 00:13:40,280 --> 00:13:42,520 Speaker 1: that are gonna be living there, you have the multiplier 245 00:13:42,559 --> 00:13:45,160 Speaker 1: effect that you're gonna have more people living there, more 246 00:13:45,200 --> 00:13:48,600 Speaker 1: people working there. UM we needed that. If you look 247 00:13:48,640 --> 00:13:51,760 Speaker 1: at the buildings I d C and Y Factory Felci 248 00:13:51,880 --> 00:13:55,920 Speaker 1: UH related has to properties Paragon Blanchard. It's been a 249 00:13:55,960 --> 00:13:58,920 Speaker 1: little quiet in the office market in the last eighteen months. 250 00:13:59,080 --> 00:14:03,520 Speaker 1: People bought an anticipation of being able to attract the 251 00:14:03,559 --> 00:14:08,199 Speaker 1: tammy tenants UM paying mid to high forties. That hasn't 252 00:14:08,280 --> 00:14:11,680 Speaker 1: really happened. Amazon coming to Long Island City is going 253 00:14:11,720 --> 00:14:14,839 Speaker 1: to help attract many other offices. UM. We bought a 254 00:14:14,920 --> 00:14:17,839 Speaker 1: property just to be granular a year ago in Long 255 00:14:17,880 --> 00:14:20,640 Speaker 1: Island City on the right over the bridge, thinking we 256 00:14:20,640 --> 00:14:23,360 Speaker 1: were going to make it into again a tammy you know, 257 00:14:23,440 --> 00:14:27,080 Speaker 1: tech advertising, media and internet building, and we decided it 258 00:14:27,120 --> 00:14:30,320 Speaker 1: was better to keep it as a hybrid between industrial 259 00:14:30,680 --> 00:14:34,600 Speaker 1: and office. UM. Reality is that's another emerging area that 260 00:14:34,760 --> 00:14:39,680 Speaker 1: last mild distribution. Many companies that no longer are retailing 261 00:14:39,800 --> 00:14:42,520 Speaker 1: or actually selling online, So that's going to be expansion 262 00:14:42,520 --> 00:14:44,800 Speaker 1: in the boroughs are going to be for sure fraught 263 00:14:44,800 --> 00:14:48,000 Speaker 1: with expansion in that narrow market as well. So when 264 00:14:48,040 --> 00:14:50,280 Speaker 1: I take the seven train out to Queens and I 265 00:14:50,360 --> 00:14:53,400 Speaker 1: go past this area, one thing that I see is 266 00:14:53,480 --> 00:14:57,560 Speaker 1: just cranes everywhere and lots of buildings going up. And 267 00:14:57,920 --> 00:14:59,640 Speaker 1: you know a lot of people have said that there 268 00:14:59,640 --> 00:15:03,040 Speaker 1: has been an overbuilding. Uh to a certain degree. Does 269 00:15:03,080 --> 00:15:06,840 Speaker 1: this even it out? Oh? For sure? Um, I think 270 00:15:07,320 --> 00:15:09,840 Speaker 1: you know, not only on the residential You saw the 271 00:15:09,840 --> 00:15:12,840 Speaker 1: building is going up like mushrooms that we're just expanding, 272 00:15:13,280 --> 00:15:16,480 Speaker 1: and I think a lot of people got awful, awfully lucky. Um. 273 00:15:16,520 --> 00:15:19,280 Speaker 1: Although I do think that T. F. Cornerstone, who's going 274 00:15:19,320 --> 00:15:22,400 Speaker 1: to be developing a lot of the Amazon, they were 275 00:15:22,440 --> 00:15:26,080 Speaker 1: pioneers in buying all along the waterfront like fifteen years 276 00:15:26,120 --> 00:15:30,080 Speaker 1: ago and worked with the city to um develop it. Okay, 277 00:15:30,080 --> 00:15:32,800 Speaker 1: one other thing, infrastructure, right, I mean, how important is 278 00:15:32,840 --> 00:15:36,680 Speaker 1: it to improve the infrastructure, whether it's the subways, whether 279 00:15:36,720 --> 00:15:38,640 Speaker 1: their parks. I mean there really aren't that many parks 280 00:15:38,640 --> 00:15:40,920 Speaker 1: in Long Island City. There's the waterfront that's it. I mean, 281 00:15:40,960 --> 00:15:43,560 Speaker 1: how important are sort of these aspects that perhaps the 282 00:15:43,600 --> 00:15:45,360 Speaker 1: city won't have that much more money to pay for 283 00:15:45,480 --> 00:15:47,480 Speaker 1: because Amazon isn't paying them that because they're gonna a 284 00:15:47,560 --> 00:15:50,600 Speaker 1: tax break. Well, there's always the ferries. That would be 285 00:15:50,640 --> 00:15:53,760 Speaker 1: a great right across the right, but it hasn't necessarily 286 00:15:53,760 --> 00:15:55,600 Speaker 1: evolved yet to the point where it's as easy as 287 00:15:55,600 --> 00:15:58,080 Speaker 1: a subway. So what so how? I mean, how much 288 00:15:58,120 --> 00:15:59,800 Speaker 1: do they have to develop that and who's gonna pay? 289 00:16:00,360 --> 00:16:03,240 Speaker 1: For sure? The infrastructure needs to be improved. Um, I 290 00:16:03,320 --> 00:16:06,040 Speaker 1: think though with all the residential buildings that are there, 291 00:16:06,040 --> 00:16:07,480 Speaker 1: you may have a lot of people who prefer to 292 00:16:07,520 --> 00:16:09,520 Speaker 1: walk to work. Um, those who are going to come 293 00:16:09,520 --> 00:16:12,680 Speaker 1: from Manhattan. You do have great subway access, and um, 294 00:16:12,760 --> 00:16:16,520 Speaker 1: you know, there's always uber. You bring up an interesting 295 00:16:16,560 --> 00:16:18,720 Speaker 1: point because there are going to be so many other 296 00:16:19,160 --> 00:16:25,160 Speaker 1: businesses that profit from having such a huge anchor in 297 00:16:25,240 --> 00:16:28,320 Speaker 1: the neighborhood. Right. We used to think of anchors as 298 00:16:28,360 --> 00:16:32,280 Speaker 1: being big department stores in malls, But now you're gonna 299 00:16:32,320 --> 00:16:36,680 Speaker 1: have all the ancillary services and products and companies that 300 00:16:36,720 --> 00:16:39,760 Speaker 1: are going to be supplying not only Amazon but the 301 00:16:39,840 --> 00:16:43,400 Speaker 1: people that work at Amazon. Does that mean that this 302 00:16:43,520 --> 00:16:47,120 Speaker 1: is going to be a much longer kind of increase 303 00:16:47,160 --> 00:16:50,720 Speaker 1: in real estate value? Well, clearly, if you walk around 304 00:16:50,720 --> 00:16:55,040 Speaker 1: Long Island City, there's very little retail, very little street retail. Um. 305 00:16:56,160 --> 00:17:00,360 Speaker 1: I've spent a lot of time actually on weekends walking neighborhoods. 306 00:17:00,400 --> 00:17:05,240 Speaker 1: Surprisingly few restaurants, surprisingly few venues there. They're starting to 307 00:17:05,320 --> 00:17:08,679 Speaker 1: be that um more retails stores and you're gonna have 308 00:17:08,800 --> 00:17:12,959 Speaker 1: for sure restaurants, coffee shops, etcetera, all growing. It's like 309 00:17:13,119 --> 00:17:15,560 Speaker 1: you have in Brooklyn. So how much will the trickle 310 00:17:15,560 --> 00:17:18,240 Speaker 1: out effect be away from Long Island City to other 311 00:17:18,320 --> 00:17:23,720 Speaker 1: parts of the boroughs in Manhattan really wants to know 312 00:17:23,800 --> 00:17:27,000 Speaker 1: what's next, what's the next area that no one's discussed. 313 00:17:27,000 --> 00:17:29,240 Speaker 1: That's great, what's next, but also, you know, does this 314 00:17:29,320 --> 00:17:31,920 Speaker 1: sort of boost the whole market? I think the Bronx 315 00:17:32,000 --> 00:17:34,760 Speaker 1: is next sat An Island for last mile industrial, a 316 00:17:34,800 --> 00:17:40,120 Speaker 1: lot of companies that need online if you will, distribution centers. 317 00:17:40,359 --> 00:17:42,600 Speaker 1: That's going to be a huge expansion. And I think 318 00:17:42,640 --> 00:17:44,560 Speaker 1: I said the last time you guys interviewed me that 319 00:17:44,680 --> 00:17:47,960 Speaker 1: I think Midtown East is next. It's so out it's 320 00:17:48,000 --> 00:17:54,080 Speaker 1: got to come back in happen disclosure, So we're out. 321 00:17:55,920 --> 00:18:00,760 Speaker 1: It's just about the perspective. Anything you want to offer 322 00:18:00,800 --> 00:18:03,040 Speaker 1: us in terms of Amazon anything. We should that real 323 00:18:03,160 --> 00:18:06,200 Speaker 1: estate investors should not get ahead of themselves when they 324 00:18:06,240 --> 00:18:09,399 Speaker 1: hear Amazon's going there. I think it's all good news 325 00:18:09,400 --> 00:18:12,480 Speaker 1: for New York. Um. And you know, we we all 326 00:18:12,480 --> 00:18:15,280 Speaker 1: have to be mindful though, not to get to euphoric 327 00:18:15,680 --> 00:18:19,800 Speaker 1: on news like this, because reality of numbers are numbers. Um. 328 00:18:19,920 --> 00:18:22,600 Speaker 1: You know New York City's interest rates are going up 329 00:18:22,600 --> 00:18:25,120 Speaker 1: and vacancy is around tem per cent here, So let's 330 00:18:25,160 --> 00:18:28,119 Speaker 1: not get ahead of ourselves. Um. The interest rates, I 331 00:18:28,160 --> 00:18:30,720 Speaker 1: know you did a story and that before, have a 332 00:18:30,840 --> 00:18:33,840 Speaker 1: huge impact on pricing. And uh, we're lucky. We we 333 00:18:33,920 --> 00:18:36,840 Speaker 1: financed all of our properties in the last few yearsentary 334 00:18:36,840 --> 00:18:38,879 Speaker 1: and a half percent rates and now we're looking at 335 00:18:38,880 --> 00:18:41,840 Speaker 1: five percent rates. So well wait until the check clearance. 336 00:18:41,920 --> 00:18:45,760 Speaker 1: I guess is a good A good motto. Leslie Wollman Himmel, 337 00:18:45,960 --> 00:18:49,439 Speaker 1: thank you very much, co managing partner Himmel and Marong 338 00:18:49,480 --> 00:18:54,399 Speaker 1: Golf Properties. Talking about Amazon dot Com they're coming to 339 00:18:55,119 --> 00:19:01,320 Speaker 1: New York. Well, we want to learn more about the 340 00:19:01,400 --> 00:19:05,199 Speaker 1: decline in value of cryptocurrencies, and here to help us 341 00:19:05,240 --> 00:19:09,520 Speaker 1: do so is Leonel Laurent. He is our Bloomberg opinion columnist, 342 00:19:09,640 --> 00:19:12,560 Speaker 1: and he could knows everything about the world of bitcoin 343 00:19:12,680 --> 00:19:17,480 Speaker 1: and cryptocurrencies. Are joining us from our London bureau, and 344 00:19:17,520 --> 00:19:21,520 Speaker 1: of course you can follow Leonel on Twitter at Leonel R. A. 345 00:19:21,920 --> 00:19:28,480 Speaker 1: Laurent Alright, why is bitcoin below five thousand dollars right now? 346 00:19:28,480 --> 00:19:33,920 Speaker 1: It's down about three And this decline in cryptocurrency started 347 00:19:34,000 --> 00:19:39,919 Speaker 1: last week and it's continuing. It's like a thirteen month low. Why, well, hello, 348 00:19:39,960 --> 00:19:41,600 Speaker 1: and thank you for the intro. We said I knew 349 00:19:41,640 --> 00:19:44,959 Speaker 1: everything about bitcoin. I actually don't know it's it's it's value, 350 00:19:45,160 --> 00:19:48,200 Speaker 1: it's price. No one does. And you say the set 351 00:19:48,200 --> 00:19:50,880 Speaker 1: off began last week, maybe the most recent one did, 352 00:19:50,960 --> 00:19:53,840 Speaker 1: But the bigger picture is it began this whole set 353 00:19:53,880 --> 00:19:56,360 Speaker 1: off at the end of last year. This whole year 354 00:19:56,480 --> 00:19:59,919 Speaker 1: has just been one long, massive decline. And to an 355 00:20:00,040 --> 00:20:02,399 Speaker 1: understand why, we have to understand why it blew up 356 00:20:02,400 --> 00:20:05,400 Speaker 1: in the first place. And it blew up because essentially 357 00:20:05,480 --> 00:20:10,200 Speaker 1: it was sold as a new, great utopian, disruptive investment 358 00:20:10,200 --> 00:20:12,640 Speaker 1: that would take over the world of payments. It would 359 00:20:12,680 --> 00:20:15,880 Speaker 1: become the new gold. It would essentially you know, make 360 00:20:15,920 --> 00:20:19,600 Speaker 1: everybody rich, uh, and it would be you know, there 361 00:20:19,640 --> 00:20:22,159 Speaker 1: for the taking for a retail crowd. While all the 362 00:20:22,200 --> 00:20:24,399 Speaker 1: sort of fiddy duddy bankers would sit back and not 363 00:20:24,480 --> 00:20:29,679 Speaker 1: get it. And like most dreams, you know, myths, you know, 364 00:20:29,760 --> 00:20:33,960 Speaker 1: sales pitches, it hasn't come true, and it stopped coming true. 365 00:20:34,160 --> 00:20:35,879 Speaker 1: And that's what we're seeing right now. I'm happy to 366 00:20:35,920 --> 00:20:37,800 Speaker 1: go into all the various things that have happened recently, 367 00:20:37,800 --> 00:20:40,119 Speaker 1: all the news, the hard fork, the regulation, but for me, 368 00:20:40,200 --> 00:20:43,040 Speaker 1: the bigger picture is it was it was a loser, 369 00:20:43,320 --> 00:20:45,760 Speaker 1: a losing strategy to begin with. Well, let's dig in 370 00:20:45,840 --> 00:20:48,680 Speaker 1: a little bit to the regulatory or i should say, 371 00:20:49,280 --> 00:20:52,520 Speaker 1: the Justice Department probe into bitcoin in a number of 372 00:20:52,680 --> 00:20:55,960 Speaker 1: the cryptocurrencies. There was a story today talking about how 373 00:20:56,359 --> 00:21:00,600 Speaker 1: prosecutors are homing in on a clutch of crypto currencies 374 00:21:00,920 --> 00:21:05,680 Speaker 1: that potentially they may be alleging work together to manipulate prices. 375 00:21:06,160 --> 00:21:09,119 Speaker 1: Last year a bit the incredible rally. How much is 376 00:21:09,119 --> 00:21:13,800 Speaker 1: that contributing to what we're seeing today. Well, honestly, I'm 377 00:21:13,840 --> 00:21:16,640 Speaker 1: not sure it should be, because this was again obvious 378 00:21:16,720 --> 00:21:19,880 Speaker 1: to us a year ago. It was obvious to us 379 00:21:19,920 --> 00:21:24,520 Speaker 1: earlier this year when cryptocurrencies like Ripple would be you know, 380 00:21:24,600 --> 00:21:27,320 Speaker 1: suddenly up you know, an incredible amount one day and 381 00:21:27,320 --> 00:21:29,119 Speaker 1: then quickly sold off the next when we saw there 382 00:21:29,160 --> 00:21:32,040 Speaker 1: were chat rooms where people would pump and dump small 383 00:21:32,119 --> 00:21:34,560 Speaker 1: and new tokens um. You know, the news is that 384 00:21:34,600 --> 00:21:37,280 Speaker 1: the regulators are actually waking up to this and getting involved, right, 385 00:21:37,320 --> 00:21:39,240 Speaker 1: So the news is they're actually going to spend resources 386 00:21:39,280 --> 00:21:42,080 Speaker 1: trying to work out what's happened. I think, you know 387 00:21:42,119 --> 00:21:45,200 Speaker 1: the fact that I'm looking at Tether, this kind of um, 388 00:21:45,240 --> 00:21:48,440 Speaker 1: you know, coin that was supposedly redeemable for one real 389 00:21:48,840 --> 00:21:52,600 Speaker 1: dollar um and was therefore used as a dollar proxy 390 00:21:52,640 --> 00:21:56,560 Speaker 1: on markets to buy bitcoin. I mean, Tether still exist today, right, 391 00:21:56,640 --> 00:21:59,440 Speaker 1: so perhaps what comes out of this has yet more 392 00:21:59,520 --> 00:22:02,800 Speaker 1: impact on today's market. But you know, as as a picture, 393 00:22:02,880 --> 00:22:04,640 Speaker 1: I mean again, you know, don't don't want to keep 394 00:22:04,640 --> 00:22:07,320 Speaker 1: on playing the same music. But you know, we we 395 00:22:07,520 --> 00:22:09,840 Speaker 1: who sort of were skeptical year ago that these were 396 00:22:09,920 --> 00:22:13,600 Speaker 1: real markets with real price discovery and with you know 397 00:22:14,240 --> 00:22:18,400 Speaker 1: how kind of put itself regulation being proven right, Well, 398 00:22:18,400 --> 00:22:21,160 Speaker 1: you can play the same music, just use a different instrumentally. 399 00:22:21,160 --> 00:22:25,639 Speaker 1: And all the question I have is that whenever I 400 00:22:25,680 --> 00:22:29,520 Speaker 1: asked someone to describe to me in detail, okay, what 401 00:22:29,800 --> 00:22:34,080 Speaker 1: is bitcoin and show me how it works somehow or other. 402 00:22:34,160 --> 00:22:37,120 Speaker 1: And within the first let's say thirty seconds of an answer, 403 00:22:37,400 --> 00:22:42,920 Speaker 1: the conversation pivots to blockchain, as if somehow, because they're 404 00:22:42,920 --> 00:22:47,240 Speaker 1: in favor of blockchain, they can kind of downplay the 405 00:22:47,320 --> 00:22:51,680 Speaker 1: connection to bitcoin. Have you found that as well, So 406 00:22:51,800 --> 00:22:54,720 Speaker 1: again we have to think about this in terms of marketing. Um, 407 00:22:54,920 --> 00:22:58,800 Speaker 1: you know, when when bitcoin was going through, because bitcoin 408 00:22:58,840 --> 00:23:00,560 Speaker 1: has been around for a while, we we forget it's 409 00:23:00,600 --> 00:23:03,360 Speaker 1: been around for basically ten years. Um, you know, bitcoin 410 00:23:03,400 --> 00:23:06,520 Speaker 1: has had these booms and bus before, and when corporations 411 00:23:06,560 --> 00:23:08,800 Speaker 1: realized that it was not going to be possible to 412 00:23:09,240 --> 00:23:12,240 Speaker 1: you know, get banks and regulated entities to deal with it, 413 00:23:12,240 --> 00:23:14,920 Speaker 1: they began to sell the idea of blockchain without bitcoin, 414 00:23:15,000 --> 00:23:17,520 Speaker 1: this idea that underneath it all there is a totally 415 00:23:17,600 --> 00:23:20,520 Speaker 1: useful use case which is um, you know, I'm not 416 00:23:20,520 --> 00:23:22,720 Speaker 1: going to boy with the details, but essentially lots of 417 00:23:22,720 --> 00:23:26,280 Speaker 1: interconnected databases that would you know, work in concerts and 418 00:23:26,320 --> 00:23:29,280 Speaker 1: be Tampa proof, which again sounds like a great idea 419 00:23:29,320 --> 00:23:31,680 Speaker 1: in theory until companies sat down and tried to actually 420 00:23:31,680 --> 00:23:34,439 Speaker 1: implement it. And if it sounds messy enough to have 421 00:23:34,760 --> 00:23:38,080 Speaker 1: you know, a dozen databases trying to work in concert 422 00:23:38,680 --> 00:23:40,840 Speaker 1: at a company that is just trying to you know, 423 00:23:40,880 --> 00:23:44,160 Speaker 1: sell a car from from A to B. Then you know, yeah, 424 00:23:44,200 --> 00:23:48,000 Speaker 1: the reality was it was super complicated. So, you know, 425 00:23:48,320 --> 00:23:51,639 Speaker 1: Bitcoin is the original blockchain, and it is one vision 426 00:23:51,640 --> 00:23:54,160 Speaker 1: of a blockchain. But you know, we have seen many, 427 00:23:54,200 --> 00:23:58,120 Speaker 1: many reasons why this particular blockchain is not at all 428 00:23:58,440 --> 00:24:00,440 Speaker 1: what it pitched itself to be, which was a kind 429 00:24:00,440 --> 00:24:05,600 Speaker 1: of perfect decentralized, you know, Tampa proof kind of utopian 430 00:24:06,080 --> 00:24:10,440 Speaker 1: mechanism for essentially handling payments. Well, it definitely doesn't seem 431 00:24:10,480 --> 00:24:14,200 Speaker 1: utopian today as it continues it's plunge Leonell Laurent Bloomberg 432 00:24:14,280 --> 00:24:17,239 Speaker 1: opinion calumnists, thank you so much for being with us. 433 00:24:17,680 --> 00:24:20,240 Speaker 1: Definitely been quite a swoon. It'll be interesting to see 434 00:24:20,320 --> 00:24:22,760 Speaker 1: with some of those bitcoin hedge fund returns, will be 435 00:24:22,800 --> 00:24:28,760 Speaker 1: considering that maybe what if they were leveraged. One concern 436 00:24:28,840 --> 00:24:31,800 Speaker 1: that has been weighing down on these big tech shares 437 00:24:32,000 --> 00:24:34,040 Speaker 1: has been the trade tensions with China, right, I mean, 438 00:24:34,040 --> 00:24:35,920 Speaker 1: that's been one of the big issues, and that sort 439 00:24:35,920 --> 00:24:39,160 Speaker 1: of brings us to the next topic, which is mergers 440 00:24:39,160 --> 00:24:43,400 Speaker 1: and acquisitions. Cross boarder US companies looking to acquire Chinese 441 00:24:43,400 --> 00:24:46,920 Speaker 1: companies or uh or vice versa. David Willard joins is 442 00:24:46,960 --> 00:24:49,879 Speaker 1: now founder and chief executive and managing partner of fifty 443 00:24:49,880 --> 00:24:54,240 Speaker 1: two Capital Partners based in San Francisco and New York. David, 444 00:24:54,320 --> 00:24:56,320 Speaker 1: you have a lot of experience both the mergeras and 445 00:24:56,320 --> 00:24:59,800 Speaker 1: acquisitions and com Sacks and Cravat Swaine, but also uh 446 00:25:00,040 --> 00:25:03,720 Speaker 1: with advising with China relations. And what do you see 447 00:25:03,840 --> 00:25:06,240 Speaker 1: right now? How many calls are you getting from clients 448 00:25:06,800 --> 00:25:08,880 Speaker 1: concerned that they will never be able to do another 449 00:25:08,880 --> 00:25:13,240 Speaker 1: cross border transaction? Again, those calls happen with greater frequency 450 00:25:13,280 --> 00:25:15,640 Speaker 1: in this market at LISTA. It is a tense environment 451 00:25:15,720 --> 00:25:18,960 Speaker 1: right now, the tariffs, the economic sanctions between the United 452 00:25:18,960 --> 00:25:22,040 Speaker 1: States and China, It's unprecedented. We are in a new normal. 453 00:25:22,160 --> 00:25:25,199 Speaker 1: I tell our clients the appetite for our services is 454 00:25:25,320 --> 00:25:29,880 Speaker 1: interestingly increasing in this tense environment. Clients have a great 455 00:25:29,920 --> 00:25:32,520 Speaker 1: amount of uncertainty about the market in China. The domestic 456 00:25:32,560 --> 00:25:37,439 Speaker 1: regulations in China are more onerous for US multinationals and 457 00:25:37,480 --> 00:25:40,840 Speaker 1: private investment firms that are looking to deploy capital into China, 458 00:25:41,000 --> 00:25:43,760 Speaker 1: and with that there's greater uncertainty. But that being said, 459 00:25:43,760 --> 00:25:46,200 Speaker 1: we're seeing a lot of clients, a lot of US 460 00:25:46,280 --> 00:25:50,720 Speaker 1: businesses building a ground game right now. There is optimism 461 00:25:50,760 --> 00:25:53,480 Speaker 1: that there will be a good probability of a rebound 462 00:25:53,480 --> 00:25:55,879 Speaker 1: in M and A in t SO, M and A 463 00:25:55,960 --> 00:25:59,760 Speaker 1: clients now are building a ground game in anticipation that 464 00:25:59,840 --> 00:26:03,280 Speaker 1: the regulatory environment will improve. That's a really interesting development 465 00:26:03,320 --> 00:26:05,320 Speaker 1: we're seeing. What does that mean when you say they're 466 00:26:05,359 --> 00:26:08,080 Speaker 1: building a ground game, Does that mean they're hiring lots 467 00:26:08,119 --> 00:26:12,200 Speaker 1: of lawyers among that? Uh pam. It's a great point 468 00:26:12,240 --> 00:26:16,200 Speaker 1: among that a lot of American businesses now in building 469 00:26:16,240 --> 00:26:19,720 Speaker 1: a ground game or conducting massive amounts of what I 470 00:26:19,800 --> 00:26:23,680 Speaker 1: call front end due diligence. Front End due diligence consists 471 00:26:23,680 --> 00:26:28,480 Speaker 1: of conducting major reviews of the regulatory situation. In China, 472 00:26:28,720 --> 00:26:33,280 Speaker 1: deals that haven't been you know, fully commenced are basically 473 00:26:33,359 --> 00:26:37,960 Speaker 1: necessitating a lot of front end review and diligence by lawyers, 474 00:26:38,359 --> 00:26:42,879 Speaker 1: M and A advisors and corporates. That's a major change 475 00:26:42,880 --> 00:26:45,720 Speaker 1: in the market from three or four years ago, when 476 00:26:45,920 --> 00:26:49,480 Speaker 1: regulations in China were far less ownerous um. As a result, 477 00:26:49,800 --> 00:26:52,360 Speaker 1: it goes without saying M and A deals now are 478 00:26:52,400 --> 00:26:55,640 Speaker 1: more expensive. There's a longer lead time to putting deals 479 00:26:55,680 --> 00:26:58,639 Speaker 1: in place, and with that, the costs of doing business 480 00:26:58,680 --> 00:27:01,879 Speaker 1: in China and doing M and A have gone up. Okay, 481 00:27:01,960 --> 00:27:03,680 Speaker 1: So can you just give us a state of play 482 00:27:03,760 --> 00:27:06,720 Speaker 1: as far as how much M and A you're expecting 483 00:27:06,760 --> 00:27:10,800 Speaker 1: cross border between with the US companies buying Chinese companies 484 00:27:11,040 --> 00:27:12,600 Speaker 1: and how that compares to the past many are we 485 00:27:12,600 --> 00:27:15,040 Speaker 1: seeing a material slowdown and do you expect that to continue. 486 00:27:15,119 --> 00:27:17,879 Speaker 1: It's a great point, and the data is really interesting, Lisa, 487 00:27:17,920 --> 00:27:20,399 Speaker 1: and I want to mention one point, which is this 488 00:27:20,720 --> 00:27:23,000 Speaker 1: there is a massive reduction across border M and A 489 00:27:23,040 --> 00:27:25,520 Speaker 1: which with China this year. The data bears that out 490 00:27:26,040 --> 00:27:30,600 Speaker 1: interesting however, today there's been about eighty billion US in 491 00:27:30,840 --> 00:27:34,119 Speaker 1: M and A with China. That is a massive reduction 492 00:27:34,640 --> 00:27:38,440 Speaker 1: from twenty sixteen. But interestingly, the amount of M and 493 00:27:38,480 --> 00:27:42,360 Speaker 1: A eighteen surpasses the M and A levels and volumes 494 00:27:42,359 --> 00:27:45,080 Speaker 1: of fifteen in preceding years. So while there's been a 495 00:27:45,080 --> 00:27:49,000 Speaker 1: massive reduction prior to the two preceding years, on a 496 00:27:49,119 --> 00:27:53,480 Speaker 1: long term historical basis, eighteen has actually been quite robust. 497 00:27:53,880 --> 00:27:57,480 Speaker 1: And so notwithstanding the tariffs, the economic sanctions, the rhetoric, 498 00:27:57,840 --> 00:28:01,159 Speaker 1: there's still is good appetite to find good deals and 499 00:28:01,200 --> 00:28:03,240 Speaker 1: to get them across the finish line. And that's a 500 00:28:03,320 --> 00:28:06,400 Speaker 1: really interesting point. I want to mention if someone came 501 00:28:06,400 --> 00:28:08,920 Speaker 1: to you and said, I'm looking to do a technology deal, 502 00:28:09,000 --> 00:28:13,440 Speaker 1: particularly in either artificial intelligence or some kind of cyber 503 00:28:13,560 --> 00:28:18,919 Speaker 1: security industry in China, would you say take a number, 504 00:28:19,240 --> 00:28:21,320 Speaker 1: come back in six months and then we'll talk, or 505 00:28:21,320 --> 00:28:23,960 Speaker 1: we'll just start doing something now. I would start doing 506 00:28:24,000 --> 00:28:26,439 Speaker 1: something now. It's a great point. We we deal with 507 00:28:26,440 --> 00:28:28,800 Speaker 1: this situation all the time in my firm, and it 508 00:28:28,840 --> 00:28:31,000 Speaker 1: goes to the point about building a ground game. We 509 00:28:31,040 --> 00:28:33,840 Speaker 1: don't know when the regulatory environment and China will change. 510 00:28:34,000 --> 00:28:37,399 Speaker 1: There is a decent probability will see in t a 511 00:28:37,520 --> 00:28:41,280 Speaker 1: software environment, but that's a question mark. It's important for 512 00:28:41,440 --> 00:28:44,120 Speaker 1: businesses in America who are sizing up the m and 513 00:28:44,160 --> 00:28:47,800 Speaker 1: A landscape in China to conduct due diligence now to 514 00:28:47,920 --> 00:28:51,280 Speaker 1: understand what the risk is that mofcom or major regulatory 515 00:28:51,320 --> 00:28:54,840 Speaker 1: agencies in China will step into block major deals. That's 516 00:28:54,840 --> 00:28:58,280 Speaker 1: a really important component for dealmaking today in China, and 517 00:28:58,280 --> 00:29:01,320 Speaker 1: it's important to start that ground game now. So where 518 00:29:01,600 --> 00:29:04,800 Speaker 1: which industries are you seeing the most interest in terms 519 00:29:04,800 --> 00:29:07,920 Speaker 1: of u as companies looking to acquire Chinese ones. It's 520 00:29:07,920 --> 00:29:13,080 Speaker 1: a great point. Software technology still remain robust. Verticals notwithstanding 521 00:29:13,080 --> 00:29:18,000 Speaker 1: the concerns around intellectual property, theft, data privacy, force, technology transfers. 522 00:29:18,280 --> 00:29:21,200 Speaker 1: We see the headlines, that is still a concern UM, 523 00:29:21,320 --> 00:29:24,120 Speaker 1: so that remains a robust part of M and A. 524 00:29:24,760 --> 00:29:26,920 Speaker 1: In addition to that, we're seeing a lot of activity 525 00:29:27,000 --> 00:29:33,520 Speaker 1: in non technology verticals, industrials, sustainability related verticals. Those are 526 00:29:33,520 --> 00:29:36,560 Speaker 1: getting a lot of attention in China. UM. Those have 527 00:29:36,920 --> 00:29:41,240 Speaker 1: less of a sort of regulatory burden in China for 528 00:29:41,280 --> 00:29:44,040 Speaker 1: the most part, and as a result, US businesses see 529 00:29:44,040 --> 00:29:48,400 Speaker 1: those non technology verticals, particularly in industrials, is really attractive 530 00:29:48,480 --> 00:29:52,600 Speaker 1: from evaluation standpoint to those industrials. Businesses in China are 531 00:29:52,640 --> 00:29:56,040 Speaker 1: comparatively more attractive in this environment. And with that, private 532 00:29:56,040 --> 00:29:59,280 Speaker 1: equity firms in the U s are dialed into identifying 533 00:29:59,280 --> 00:30:02,600 Speaker 1: opportunities in those areas. Just quickly, give you twenty seconds. 534 00:30:02,760 --> 00:30:05,240 Speaker 1: Do you still have to know someone in the Chinese 535 00:30:05,240 --> 00:30:08,200 Speaker 1: government in order to get a deal done? It's a 536 00:30:08,240 --> 00:30:11,840 Speaker 1: great question. The short answer is no. UM. I believe 537 00:30:11,880 --> 00:30:15,920 Speaker 1: it's important to have sound advisors in both the US 538 00:30:16,440 --> 00:30:20,440 Speaker 1: and China in identifying ways to get great deals across 539 00:30:20,480 --> 00:30:25,200 Speaker 1: the finish line in China. UM. Clearly, the regulatory situation 540 00:30:25,200 --> 00:30:29,680 Speaker 1: in China is fascinating, but uh, not necessary from my standpoint. 541 00:30:29,680 --> 00:30:32,000 Speaker 1: But great question, Pim, Well done, Thanks very much for 542 00:30:32,040 --> 00:30:35,040 Speaker 1: being with us and sharing this information. David Willard is 543 00:30:35,080 --> 00:30:38,480 Speaker 1: the founder and the chief executive and the managing partner 544 00:30:38,880 --> 00:30:44,200 Speaker 1: of fifty two Capital Partners. They're based in Silicon Valley 545 00:30:44,280 --> 00:30:46,840 Speaker 1: and they also have operations in New York. Thanks for 546 00:30:46,880 --> 00:30:49,880 Speaker 1: being here and thanks for listening. I'm Pim Fox along 547 00:30:49,920 --> 00:30:54,320 Speaker 1: with Lisa Abramowitz. This is Bloomberg. Thanks for listening to 548 00:30:54,320 --> 00:30:57,200 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 549 00:30:57,280 --> 00:31:00,720 Speaker 1: listen to interviews at Apple Podcasts, sound Out, or whatever 550 00:31:00,800 --> 00:31:04,280 Speaker 1: podcast platform you prefer. I'm Pim Fox. I'm on Twitter 551 00:31:04,560 --> 00:31:08,320 Speaker 1: at Pim Fox. I'm on Twitter at Lisa Abramo wits one. 552 00:31:08,520 --> 00:31:11,240 Speaker 1: Before the podcast, you can always catch us worldwide on 553 00:31:11,280 --> 00:31:12,120 Speaker 1: Bloomberg Radio.