Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news As it happened Sloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi everyone, Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. This week, inflation number stoked
Speaker 1: fear in the markets. Disney slumped after earning showed streaming
Speaker 1: subscriptions cooling off despite a warning by the CEO back
Speaker 1: in September. And then you had Elon Musk unloading five
Speaker 1: billion dollars in stock after taking a Twitter poll. Yeah,
Speaker 1: five billion. That whole thing. Well, we should note that
Speaker 1: Musk made that move to help satisfy tax withholding obligations
Speaker 1: related to the exercising of stock options. Incidentally, he did
Speaker 1: it against the backdrop of Amazon backed Rive in making
Speaker 1: its public trading debut and becoming the largest I p
Speaker 1: O of the year. Amazing week. Yes, a new entrant
Speaker 1: into the electric vehicle market. On the other hand, one
Speaker 1: of the most iconic names in the history of American industry,
Speaker 1: charting a new path forward. General Electric set to break
Speaker 1: up into three separate companies. The conglomerate seems to be
Speaker 1: dead at this point. Yeah, Well, of industry icons and
Speaker 1: e vs, We're going to catch up with the president
Speaker 1: and CEO of Mercedes Benz USA. We're also going to
Speaker 1: get an up close look at the US housing market.
Speaker 1: We're going to do that with the CEO of Invitation Homes.
Speaker 1: Will also take you inside Zillo's half billion dollar home
Speaker 1: flipping flop and legendary venture campist John Dore, stopping by
Speaker 1: unveiling his action plan for solving a climate crisis. Well,
Speaker 1: all of that to come. We begin though, by welcoming
Speaker 1: the editor of Bloomberg Business Week magazine, Joel Weber. Joel,
Speaker 1: it's good to see you this week. It's the Bloomberg
Speaker 1: New Economy Issue ahead of next week's Bloomberg New Economy Forum.
Speaker 1: It's happening in Singapore. So what do we need to know?
Speaker 1: I'm not going. I wish I were. Uh, Singapore is
Speaker 1: open for business and I think everyone there's is really
Speaker 1: excited for the for the conference. Um, the issue, I
Speaker 1: think we've always thought about it through this problems and
Speaker 1: solution lens and there's the developing world and developed world,
Speaker 1: and there's really been a lack of dialogue almost between
Speaker 1: the two. And I think the New Economy Form is
Speaker 1: really meant to be a place where we learned from
Speaker 1: each other, right and boy, there's like kind of a
Speaker 1: lot of problems in the world right now, So what
Speaker 1: can we learn? And that's sort of how we approached
Speaker 1: all those stories in the issues, like big problems, what
Speaker 1: are some big solutions that that business can help provide?
Speaker 1: And we're gonna talk to Christina Lynblad a little bit
Speaker 1: more about it, who oversaw um that section of the magazine,
Speaker 1: so we'll get to her a little bit later. On reminder,
Speaker 1: you can tune into the live stream of Bloomberg New
Speaker 1: Economy Form from Singapore November seventeenth through nineteenth. That's at
Speaker 1: Bloomberg dot com slash Live slash Stream. Joel We touched
Speaker 1: on it at the top General Electric breaking into three
Speaker 1: separate entities, Richard Cloth and Ryan Bean writing about it
Speaker 1: in the Business section this week, CEO Larry colep bringing
Speaker 1: an end of the company as we've known it for decades. Um,
Speaker 1: what are some implications of this? Well, first of all,
Speaker 1: I just think of g E is sort of the
Speaker 1: quintessential American company, right, and a hundred and thirty plus
Speaker 1: years of innovation, and then you know, it all kind
Speaker 1: of started to unravel in the last twenty years. And
Speaker 1: of course Larry Colp, who we've written about before in
Speaker 1: the magazine, steps in first only outsider CEO to take
Speaker 1: over over the company, right, and he inherits this baggage
Speaker 1: that has been left with him and the legacy of
Speaker 1: Jack Welsh of course, and you know big conglomerate that
Speaker 1: that business model is no longer in vogue. And Larry
Speaker 1: Colp is a very strategic business thinker, came from Dana
Speaker 1: Herb maybe the only other conglomerate style company really in
Speaker 1: America at scale like that, and what he decided to do,
Speaker 1: break it into pieces and potentially, you know, hope to
Speaker 1: unlock some more value for investors. What's wild about this
Speaker 1: is I think about the trajectory and it's not been
Speaker 1: such a long time, Like just a few years ago, right,
Speaker 1: we were still looking at g IS like the company
Speaker 1: that you wanted to know what they were doing because
Speaker 1: they had such a great out you know, global outlook
Speaker 1: on so many different in touch, so many different industries
Speaker 1: and Ultimately, what he did was to sell some things
Speaker 1: off and then boil things down right. And when you
Speaker 1: really distilled it, there were three businesses. There's aviation, healthcare,
Speaker 1: and energy. He's going to remain at the aviation side,
Speaker 1: which probably has the best outlook. Both the energy and
Speaker 1: the healthcare have a little bit more of a challenged
Speaker 1: forecast um, but you know, doesn't mean that somebody can't
Speaker 1: turn this around. One of the things that Jim Ellis
Speaker 1: and I were talking about what we worked on this story,
Speaker 1: was like everyone thought HP was going to have this
Speaker 1: great enterprise business and you know, this printer home printer
Speaker 1: business wasn't going to be such a great one, and
Speaker 1: it turned out to be the exact opposite. There was
Speaker 1: a ton of money in a subscription base model at
Speaker 1: a moment time that everybody started to work from home.
Speaker 1: So you know, I can't pre judge this one, but
Speaker 1: Larry Colp proved to be the person who was willing
Speaker 1: to do something that no one else was willing to do.
Speaker 1: YEA certainly the end of an era and a lot
Speaker 1: of symbolism there as well with what's happening right now Joel.
Speaker 1: In the text section our Patrick Clark takes us inside
Speaker 1: Zilla's home, flipping to Boggle. He's going to join us
Speaker 1: a bit later on. We just want to know, though, Um,
Speaker 1: how did this go so wrong so quickly? Wasn't it
Speaker 1: a cover story just a few years ago? What we
Speaker 1: it was not a cover story that we we talked
Speaker 1: about it in the terms of this is a big, big, big,
Speaker 1: big experiment, and you know, there's a lot of interest
Speaker 1: in like what Zilo was attempting to do. I mean,
Speaker 1: this is a company that really means real estate. If
Speaker 1: you you know, thats the z estimate you pull it
Speaker 1: up on your phone to be like how much is
Speaker 1: my house actually worth? And here they were going into
Speaker 1: areas like Phoenix and buying a lot of homes. One
Speaker 1: of the things that Pat sort of I think gets
Speaker 1: too in this story is that they, you know, this
Speaker 1: outgo idea, this I buying idea, really untested, what could
Speaker 1: go wrong? And it was almost like they turned up
Speaker 1: the volume to do things that were maybe a little
Speaker 1: bit beyond their skis, and that seems to have really backfired. Um.
Speaker 1: The bigger implications here for the housing market becomes, Okay,
Speaker 1: we have a lot of these homes that Zilo has bought,
Speaker 1: they're going to offload them. We've already seen institutional investors
Speaker 1: step into single family homes in a big way. That
Speaker 1: used to go to aspiring homeowners and and now we're
Speaker 1: looking at like you living in rentals for forever, and
Speaker 1: that has big economic implications for for the ability to
Speaker 1: grow wealth, and you know, turns institutional investors into landlords
Speaker 1: even more. You do wonder too, how much the current
Speaker 1: environment or the pandemic environment, all of a sudden, like
Speaker 1: home appreciations were off the chart, how much that just
Speaker 1: kind of messed up the algorithms a little bit. And
Speaker 1: you know, and and it's a it's a big test
Speaker 1: for Zillo is not the only person doing this, and
Speaker 1: it means that there will continue to be you know,
Speaker 1: improvements and algorithms. But that also is the big risk
Speaker 1: as more and more of our life gets basically overrun
Speaker 1: by algorithms and our big thank YouTube Business Week editor
Speaker 1: Joel Webber joining us with a look at this week's
Speaker 1: New Economy issue. More from the magazine in just a
Speaker 1: little bit. Coming up, With the global auto market filling
Speaker 1: the strain of supply chain bottlenecks, we're going to check
Speaker 1: in with the CEO of Mercedes Ben's USA talking to
Speaker 1: us about this work around. Demitrius Delaco's talks pricing power
Speaker 1: and the company's electric future. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick takes Tim Stinovik from Bloomberg Radio.
Speaker 1: He has a global perspective on the auto industry. Tim.
Speaker 1: He has worked for Mercedes Bens for nearly three decades.
Speaker 1: We're talking about Demitriz de Lachez. He served the company
Speaker 1: in his native Greece and Korea, in Canada and earlier
Speaker 1: this year he was named president in CEO of Mercedes
Speaker 1: Benz USA. He's right now leading it toward what he
Speaker 1: calls an electric vehicle future. I feel like the whole
Speaker 1: week was about e VS in a big way. Well,
Speaker 1: despite supply chain challenges and a tight labor environment, Zelaca says,
Speaker 1: the luxury auto market in North America it's growing. What
Speaker 1: helps a lot in accommodating demand is the flexibility. We
Speaker 1: have enough factories in in accommodating let's say the shortages
Speaker 1: in the best way, so I would say it has
Speaker 1: been challenging but we did the best you could do
Speaker 1: out of it to supply vehicle store customers. So does
Speaker 1: it sound like Tom When we get into twenty two,
Speaker 1: we still might have some supply chain constraints, but as
Speaker 1: you said, stabilizing, so not getting necessarily any worse. This
Speaker 1: is the kind of situation. Yes, Q four is developing
Speaker 1: better than you three, and we see a certain light
Speaker 1: out of the channel. Nevertheless, two, we continue posing challenges
Speaker 1: for all of us in the auto industry. What about
Speaker 1: for workers? And you know that's the other kind of
Speaker 1: flip side of this is that UM companies are competing
Speaker 1: for workers having to pay up. How are you guys
Speaker 1: on the labor front? Certainly for the markets that you
Speaker 1: ever see, I would say we were, well, we have
Speaker 1: a good situation, a stable situation. There were man not
Speaker 1: that flexibly with with our workforce. I'll did. It's also
Speaker 1: on west sides m accommodating the demands also through the
Speaker 1: COVID phase. Who could keep our businesses up and running?
Speaker 1: So all in all, I would say, it's it's manageable.
Speaker 1: It's tough, but it's manageable. We've heard a lot from
Speaker 1: executives around the country who've had to raise prices as
Speaker 1: really as a result to attract and retain talent, or
Speaker 1: to attract and retain talent, how have you had to
Speaker 1: do that? I would say this is this is twofold
Speaker 1: on one on one one hand is adapting to the
Speaker 1: current situation condition. So as you know, have also a
Speaker 1: hybrid working model in the company, and probably in one
Speaker 1: or the other situation, we had yes to to pay
Speaker 1: what the markets is asking. But all in all is falling,
Speaker 1: trends is adjusting, and it's manageable with within our budgets.
Speaker 1: To me, just how are any of this impacting the
Speaker 1: rollout of you guys? You are moving grossly into EVS.
Speaker 1: You've launched your e q S brand already in Europe.
Speaker 1: It's coming from what I understand early two in the
Speaker 1: United States. How does that rollout look? All in all,
Speaker 1: I think we're moving faster into an electric vehicle future
Speaker 1: and muspense is part of this game. You said, quite right.
Speaker 1: So we'll have just long the our first elected vehicle
Speaker 1: in the in the U S, which is the equ S.
Speaker 1: The let's say that the media exports on this product.
Speaker 1: The dealer comments after testing the products are extremely positive.
Speaker 1: So We're looking to a very um positive future for
Speaker 1: for all the vehicles of considered bands. Do you feel
Speaker 1: like you'll be able to meet the demand of the
Speaker 1: new Equs brand of people who want them, who place
Speaker 1: orders here in North America? You'll be able to meet
Speaker 1: that demand in two we have quite a good volume.
Speaker 1: But the issue here is not if we can meet
Speaker 1: the demand. I think the demand is higher than what
Speaker 1: we can all in all produce and deliver. You know,
Speaker 1: Equs is not the product only for the US market.
Speaker 1: It's a product for for for many markets around the world.
Speaker 1: The demand is hide an extraordinary good product. Will happy
Speaker 1: for that, and unfortunately it's going to be some waiting
Speaker 1: line for for this product. So we just tell us
Speaker 1: a bit more about the vision of Mercedes Bands and
Speaker 1: they thoughts about electric vehicles and where it's all going.
Speaker 1: Our vision is very clear. We want to become the
Speaker 1: most desirable electric luxury brands um and this we start
Speaker 1: our error by introducing the q S, an amazing vehicle
Speaker 1: with top technologies, innovations and splendid design. And there is
Speaker 1: much more to come. So we're accelerating our our product
Speaker 1: range towards a carbon neutral let's say a mobility and
Speaker 1: this is by introducing within next year everything. The next
Speaker 1: year the EQUB which is going to be our entry
Speaker 1: suv models, but we continue with the equ Sedan, the
Speaker 1: eq S suv and the equ Suv, which are two
Speaker 1: products which by the way, will be produced in our
Speaker 1: factory in in Alabama. So in the next basically twelve
Speaker 1: to fifteen months, who plan to have a full range
Speaker 1: of five full electric vehicles in the US market? What
Speaker 1: is the price range on these? Because if somebody is
Speaker 1: in the market for an electric vehicle, they're going to
Speaker 1: consider from other companies, and you know, Tesla regardless of
Speaker 1: where it ends up right, UM advertises cars in the
Speaker 1: thirty thousands. I would say at the moment of range,
Speaker 1: what we call the the electric Mercedes, the S class
Speaker 1: of electric which is the EQUS starts at one hundred
Speaker 1: and three thousand dollars, and obviously would the EQUB, which
Speaker 1: is an equivalent to today g LB, will be in
Speaker 1: a much lower range, probably around the sixty thousand dollars.
Speaker 1: So it's it's a lot to come to anticipate a
Speaker 1: time demetrius when we get to a point in the
Speaker 1: United States where the charging network is as ubiquitous, a
Speaker 1: gas station available in every corner. I would not give
Speaker 1: a date for that, but I would say the speed
Speaker 1: of adoption of a mobility is quite impressive in the US.
Speaker 1: That coupled with the let's say the infrastructure subsidies, the
Speaker 1: infrasection subsidies, which are plants, we believe will accelerate the
Speaker 1: rhythm of of of development of charging stations. Don't forget
Speaker 1: also technology helps in this direction since you can basically
Speaker 1: on on on the screen of your vehicle identify h
Speaker 1: which is the closest charging station or plan let's say,
Speaker 1: your your driving route according to two available charging stations.
Speaker 1: So a combination of charging stations and small technology would
Speaker 1: support our customers overcoming the hesitation of the same buying
Speaker 1: or driving an electric vehicle for for for long distances.
Speaker 1: That was Demitrius the laque Sees, the president and CEO
Speaker 1: of Mercedes Bend's USA. I can't wait to get kind
Speaker 1: of into an e Vy. Have you not been in one? Oh?
Speaker 1: I have been in one, but I really haven't driven one.
Speaker 1: And are are you ready for your next card to
Speaker 1: be any? Yes? Okay, all in there you go, And
Speaker 1: I feel like there's more choices. How yeah, well no, no, no,
Speaker 1: because where we park our car, there's no outlet, and
Speaker 1: you know that is the It's gonna be difficult in
Speaker 1: urban environments. I do think about that. I got a
Speaker 1: lot of flak for saying this a few weeks ago
Speaker 1: because people were saying, everybody has garages and they can
Speaker 1: charge in their garages, and I'm saying everybody does not
Speaker 1: have garage exactly. The millions of people like me who
Speaker 1: live in the United States live in apartments and don't
Speaker 1: parking garages. We park on the street and parking lots.
Speaker 1: We don't have access to charging yet, hence the needed
Speaker 1: infrastructure investments to get us up to speed on that. Well,
Speaker 1: it still ahead. On Bloomberg Business Week, we go from
Speaker 1: autos to airplanes and the easing of pandemic travel restrictions.
Speaker 1: It's not the only reason you're seeing more planes in
Speaker 1: the sky. No, that's for sure. Why supply chain chaos
Speaker 1: is fueling demand for freighter aircraft and what the world's
Speaker 1: top two planemakers are doing to meet it. This is
Speaker 1: Bloomberg broadcasting from the financial capital of the world, Bloomberg
Speaker 1: Eleve in Frio in New York to Washington, d C.
Speaker 1: Bloomberg to Boston, Bloomberg one oh six one to San Francisco,
Speaker 1: Bloomberg nine sixty to the Country Sirius XM Jeddo one
Speaker 1: nineteen and around the globe the Bloomberg Business app and
Speaker 1: Bloomberg Radio dot com. This is Bloomberg Business Week. In
Speaker 1: the business section of the magazine. This week, there's a
Speaker 1: story that homes in on big cargo planes. We're talking
Speaker 1: massive planes more in demand than ever because many of
Speaker 1: the goods that used to come to us by sea
Speaker 1: are now being shuttled through the air. These behemoths of
Speaker 1: the sky can quickly transport large amounts of freight while
Speaker 1: bypassing port tie up shortages of ocean containers or rail
Speaker 1: cars and the current shortage of long haul truck drivers.
Speaker 1: This is a story that you and I both learned
Speaker 1: so much. Boeing and Airbus, we know are both developing
Speaker 1: new air freighters that will end up competing for business
Speaker 1: with converted passenger jets. To help explain what that means
Speaker 1: for the world's two dominant planemakers, we turned to Bloomberg
Speaker 1: Business Week editor Joe Weber and Bloomberg News Era Space
Speaker 1: reporter Julie Johnson pre pandemic um more and more. You know,
Speaker 1: uh palettes were being shipped in the bellies of passenger
Speaker 1: aircraft and um so when all those you know, those
Speaker 1: big planes were parked last year, it just created an
Speaker 1: instant shortage right at the point where everybody was, you know,
Speaker 1: heading online to shop and and we were starting to see,
Speaker 1: you know, logistics start to tighten and and you know,
Speaker 1: the situation is just sort of um um snowballed from there.
Speaker 1: So yeah, so it's crazy. So we're um, just about
Speaker 1: every aging freighter that's air worthy I've heard is back
Speaker 1: in the air right now. Um, like some some museum
Speaker 1: pieces have been brought out of the desert and put
Speaker 1: back um. And and there's also just a flood of
Speaker 1: money coming in to convert um older path cinder jets
Speaker 1: into freighters. And these are going to start to come
Speaker 1: online mid decade, right around the point that the passenger
Speaker 1: jets will be flying again, and Airbus first, and then
Speaker 1: we think a couple of years later Boeing will have
Speaker 1: their new jets out and then we'll have a glut
Speaker 1: right so suppled de mand there it is at work alright,
Speaker 1: better a better start adding windows to the cargo planes
Speaker 1: and getting the passengers seats back in there exactly right.
Speaker 1: I mean, is this just a temporary problem because of
Speaker 1: the supply chain loose or what. No, they think this
Speaker 1: is a fundamental shift that the market, the market, you know,
Speaker 1: shipping is always going to be there and it's always
Speaker 1: going to dominate. But with e commerce, UM, you're seeing
Speaker 1: you know what used to this this whole what was
Speaker 1: described to me as fragmentation. So instead of the ships
Speaker 1: coming in these steady waves that you could you know,
Speaker 1: set your watch by from from China so that the
Speaker 1: goods would be on the shelves for Halloween and Christmas, UM,
Speaker 1: we're seeing more and more of that move to palletts
Speaker 1: UM in cargo ships and then also into packages um
Speaker 1: that also traveled by air and maybe in smaller airplanes,
Speaker 1: you know, for Amazon and its counterparts. So I I
Speaker 1: you know, post COVID, I don't think that trend is reversing. UM.
Speaker 1: So there is going to be demand, but there's just
Speaker 1: a crazy amount of of supply being created to meet
Speaker 1: that demand. Okay, there's supply, there's man and then there's
Speaker 1: just good old fashioned rivalries and like Boeing air Bus
Speaker 1: that is like one of the one of the best ones,
Speaker 1: who's got the upper hand in the in the revelry,
Speaker 1: at least in this chapter of it. Boeing. This this
Speaker 1: is Boeing's world. I mean, um, so about of the
Speaker 1: world's air cargo right now travels on Boeing or McDonald Douglas,
Speaker 1: which Boeing bo jets and um and I think Airbus
Speaker 1: has woken up to the fact that Boeing this year
Speaker 1: has been selling a lot of freighters. Airbus really doesn't
Speaker 1: have anything in the market, and so they're going to
Speaker 1: try and crack you know, yet another part of the
Speaker 1: market the Boeing is dominated. Well, I do wonder what
Speaker 1: the play is Julie. Here is it? You know, the
Speaker 1: planes from Airbus and Boeing, the brand new ones or
Speaker 1: I love this line your story. Um uh that talks
Speaker 1: about I guess a big jet a seven seven seven,
Speaker 1: a triple seven three er could cost upwards of a
Speaker 1: hundred fifty million dollars. Knew a decade ago. Now you
Speaker 1: can pick it up for a mere twenty million dollars.
Speaker 1: Sounds like a bargain and then you retrofit it. So
Speaker 1: is it those who are leasing old planes that are
Speaker 1: kind of the investment play here potentially. Yeah, well this
Speaker 1: is we could go on and on, but part of
Speaker 1: the issue is that Boeing and Airbus UM kind of
Speaker 1: got greedy a decade ago and and pushed pumped an
Speaker 1: enormous number of these huge wide bodies out into the
Speaker 1: market and UM, so that market is glutted, prices have
Speaker 1: collapsed and really new you know, in airplane terms, jets
Speaker 1: are being sidelined and either scrapped or um. You know,
Speaker 1: another way to get money out of that airframe is
Speaker 1: to turn it into a freighter. That's Bloomberg News aerospace
Speaker 1: reporter Julie Johnson along with the editor of Business Week magazine,
Speaker 1: Joe Webber. You're listening to Bloomberg business Week up next.
Speaker 1: He backed Jeff Bezos, says he was creating Amazon and
Speaker 1: Larry Page, Sir Gay Brand and Eric Schmidt as they
Speaker 1: were building Google. Now he's setting his sights even higher.
Speaker 1: I couldn't wait to talk to this guy. Legendary venture
Speaker 1: capitalist John dor laying out an action plan to solve
Speaker 1: what maybe the biggest crisis of our lifetime that's coming up.
Speaker 1: This is Bloomberg. Your listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio.
Speaker 1: So when you think about the venture capital world and
Speaker 1: those that supported the entrepreneurs that helped build today's high
Speaker 1: tech society and really the world's most influential tech companies,
Speaker 1: then you've got to think of our next guest. John
Speaker 1: Dora went to work for Kleiner Perkins all the way
Speaker 1: back in It's a company where he now serves as chairman.
Speaker 1: He was an original investor in board member at a
Speaker 1: small company called Amazon, another small company called Google. It
Speaker 1: back in the likes of Larry Page, Serge Bryn, Jeff Bezos,
Speaker 1: and many more. He really had a front seat to
Speaker 1: so much that is so substantial in our world today.
Speaker 1: He has seen innovation and disruption up close and personal.
Speaker 1: Now he hopes that same mentality can help us address
Speaker 1: and fix the climate crisis. Door leays it all out
Speaker 1: in his new book, Speed and Scale, An Action Plan
Speaker 1: for Solving Our Climate Crisis Now. He told Carol and
Speaker 1: Bloomberg News cross Asset reporter Katie Greifeld that he set
Speaker 1: out to create this framework way back in two thousand
Speaker 1: six after seeing the documentary An Inconvenient Truth with his
Speaker 1: then teenage daughter Mary. I had gone with some friends
Speaker 1: in her to see Al Gore's epic movie. But that
Speaker 1: put really the climate crisis. I think in the global conversation.
Speaker 1: Eight million people saw that movie. But at at dinner,
Speaker 1: we went around the table and I had a number
Speaker 1: of my Republicans friends there and we talked about, well,
Speaker 1: is is the world getting warmer? Yes? Is it man
Speaker 1: made or not? There we had some disagreement over that
Speaker 1: at the time, uh, but then we asked people what
Speaker 1: they thought, and when it came to Mary, she turned
Speaker 1: to me and she said, Dad, your generation created this problem.
Speaker 1: You better fix it. And I had no idea what
Speaker 1: to say or what to do. I was I was speechless.
Speaker 1: She said, I'm scared and I'm angry. And so I
Speaker 1: set out with my partners to understand climate technologies, the markets,
Speaker 1: the innovation, the forces at work. And over time we
Speaker 1: devoted over three of our venture funds a billion dollars
Speaker 1: to about seventy climate tech startups. And it was hard.
Speaker 1: It looked for a while like the portfolio would fail,
Speaker 1: but we stood by these entrepreneurs and today that that
Speaker 1: billion dollars is worth three billion dollars and companies like
Speaker 1: Beyond Meat and Bays and and other investments. So what
Speaker 1: I learned from that is it takes guts and courage
Speaker 1: and staying power and it's hard. But that was then
Speaker 1: and this is now. And you know, Testless what the
Speaker 1: seventh most valuable company in the world, and innovations and
Speaker 1: clean the transition to a clean energy economy. This is
Speaker 1: the biggest opportunity of our lives. I'm convinced. And John,
Speaker 1: I want to hear more about the action plan that
Speaker 1: you lay out in the book. I mean, what steps
Speaker 1: do you view are needed to take now to address
Speaker 1: this climate crisis. Well, uh, one thing your listeners can
Speaker 1: do is they can go to speed and Scale dot
Speaker 1: com and get the plan for free. So it it's
Speaker 1: ten great big objectives. The first six of those are solutions.
Speaker 1: In the latter four speed ups. I'll just go through
Speaker 1: the solutions issue with you. If we electrify transportation, which
Speaker 1: means stop using gasoline and diesel for our vehicles, then
Speaker 1: number two, de carbonize the grid by shifting to wind
Speaker 1: and solar and safe nuclear. And then number three fix
Speaker 1: our food systems, which means eating less meat and dairy,
Speaker 1: not stopping, but less while improving how we grow our
Speaker 1: crops and reducing food waste. And if we do that,
Speaker 1: while number four we protect nature which is to stop deforestation,
Speaker 1: protect our oceans, and five clean up industry, especially the
Speaker 1: making of steel and cement is a very dirty carbon
Speaker 1: generating process. We can innovate around that. And then finally,
Speaker 1: as hard as we work at this, we're never going
Speaker 1: to eliminate all carbon emissions. So the I p c C,
Speaker 1: the U N. Scientific body says, we've got to find
Speaker 1: ways to remove carbon that's being admitted on an ongoing basis,
Speaker 1: are already in the air. That's the sixth big goal.
Speaker 1: Now we don't just have to do these six things
Speaker 1: and do them all at once. It's going to be
Speaker 1: a tall, tall order. We got to do them fast.
Speaker 1: So the big objective, the big objective is to get
Speaker 1: this done to net zero by you mentioned Tesla. You
Speaker 1: know what are the companies who are the innovators that
Speaker 1: you really are falling there saying they're making a difference.
Speaker 1: These are the companies that are going to be around
Speaker 1: for the long term because they get it when it
Speaker 1: comes to climate change. There's so many companies test for
Speaker 1: sure is one. The transportation sector is a huge area
Speaker 1: for innovation, so companies that are making better batteries. For example,
Speaker 1: it's estimated that the market to electrify all transportation is
Speaker 1: four hundred billion dollars of batteries per year. That's five
Speaker 1: times bigger than the US online advertising market that my
Speaker 1: friends at at Google and Facebook are fighting over. So
Speaker 1: nd phase energy, quantum escape uh Larry Fink has said
Speaker 1: he thinks there will be a thousand unicorns. That's a
Speaker 1: thousand companies worth a billion dollars or more in this
Speaker 1: climate tech sector. The E s G money, does it
Speaker 1: make sense because there's a lot of people are saying,
Speaker 1: you know, at E s G Money, there's not really
Speaker 1: great metrics for measuring. Do you think it's being as
Speaker 1: productive as it could be? When it comes to climate
Speaker 1: change initiatives, the data shows that investments and sustainability outperform
Speaker 1: those that don't. So my answer is yes, do we
Speaker 1: have until to get a lot of this done? This
Speaker 1: is the decisive decade You're on an important point. We
Speaker 1: have to cut emissions in half by the end of
Speaker 1: this decade to have a reasonable chance of having a
Speaker 1: habitable planet in so, no, we have to reduce emissions.
Speaker 1: That's eight percent next year and eight percent the year
Speaker 1: after that and after that. We have not reduced emissions
Speaker 1: in the history of civilization except briefly during the pandemic.
Speaker 1: We've got work to do well when it comes to,
Speaker 1: you know, cutting emissions, doing this work, turning this into
Speaker 1: code read actions. I mean, who is at the forefront here,
Speaker 1: who's responsible for that? Does that fall more on corporations
Speaker 1: or governments to really take a leadership role there. We
Speaker 1: need corporations, we need governments, we need leaders, we need uh, nonprofits,
Speaker 1: we need entrepreneurs. Of all these parties, the one that
Speaker 1: are lagging in my estimation are the governments of the world.
Speaker 1: They're responsive to their political forces, and we have not
Speaker 1: made climate a top two voting issue in the twenty
Speaker 1: largest emitters. It is in Europe now, it's not in
Speaker 1: the US, it's not in China, it's not in India.
Speaker 1: We have work to do to win the politics and
Speaker 1: the policy to elect government officials who make this a
Speaker 1: top priority. Hey, John, one thing I wonder about, and
Speaker 1: you're someone who understands capital flows and going into innovation, right,
Speaker 1: what I wonder is, as we track the k Katie
Speaker 1: and I tracked the public markets and everybody here at
Speaker 1: Bloomberg day in and day out, how is it that
Speaker 1: companies will move aggressively enough unless there are some kind
Speaker 1: of measurements or metrics or penalties. So when they report earnings,
Speaker 1: for instance, shouldn't there be a climate metric that you
Speaker 1: get penalized on if you're not being aggressive enough? Like,
Speaker 1: how do we need something like that in order to
Speaker 1: really make certainly the corporate sector move fast enough. We do,
Speaker 1: and it's happening. There's the Net Zero Investor Alliance, which
Speaker 1: has a hundred and fifty trillion dollars of investor capital
Speaker 1: committed to UH invest in companies that have made and
Speaker 1: declared and report on pledges to achieve net zero. I'm
Speaker 1: really pleased by the movement underway in the investment community.
Speaker 1: I'm really pleased. Are our goal is to have a
Speaker 1: hundred percent of Fortune Global five hundred companies commit to
Speaker 1: net zero by Walmart has committed they're going to do that.
Speaker 1: Amazon's leading a coalition of companies that are doing the
Speaker 1: same things. So UH investors demanded employees insist on it.
Speaker 1: It's the right thing to do. And I mean you
Speaker 1: definitely have seen that demand if you look at the
Speaker 1: flows into some of these e s G funds and
Speaker 1: e s G investments. But I mean, in the past year,
Speaker 1: I've really seen a lot of concerns about greenwashing come
Speaker 1: to the forefront. I mean, I'm curious your thoughts on that.
Speaker 1: How much of an issue you think it is? And
Speaker 1: I mean, how can investors discern that they're actually putting
Speaker 1: their money behind sustainable causes? Well, we need audits, we
Speaker 1: need reporting, we need standards for higher quality what are
Speaker 1: called offsets. But more than anything else, we need to
Speaker 1: cut the fifty nine giga tons of emissions we have
Speaker 1: every year to net zero. We've got to reduce emissions,
Speaker 1: then conserve energy and at the same time remove some
Speaker 1: of the stubborn carbon that's that's still out there. What
Speaker 1: is it that worries you so much when you hear
Speaker 1: statistics about the climate change or about climate change? Is
Speaker 1: a deforestation or what deforestation stopping it? Which is one
Speaker 1: of the outcomes of the of the cop process is
Speaker 1: uh is an encourage pledge. There was a pledge to
Speaker 1: reduce methane emissions by that's a fast acting improvement, but
Speaker 1: the pledges are one thing. It's the action that follows
Speaker 1: that we need to track. That's John dor chairman of
Speaker 1: Kleiner Perkins, with me and Katie Greifeld. Just new book
Speaker 1: by the way out this week. It's called Speed and Scale,
Speaker 1: An Action Plan for Solving Our Climate Crisis. Now a
Speaker 1: very timely conversation considering CUP twenty six Sumit just finishing
Speaker 1: up in Glasgow on Friday. That wraps up the first
Speaker 1: hour of the weekend edition of Bloomberg Business Week from
Speaker 1: Bloomberg Radio. I'm Tim Stanovic and I'm Carol mass Or.
Speaker 1: Head in our next hour a deeper dive into this
Speaker 1: week's special New Economy issue. We're talking about the struggles
Speaker 1: facing a key demographic in the global labor force. Also
Speaker 1: Google satellite Imagery, Treasure Trove, and yes, Tim, we're talking
Speaker 1: about colonizing Mores. We're going there, and we're going there.
Speaker 1: We well, we might not have a choice if the
Speaker 1: housing market keeps going like it is. Now. We're going
Speaker 1: to talk to the CEO of Invitation Homes Dallas Tanner.
Speaker 1: Will also get a closer look at Zillo, the real
Speaker 1: estate platform hit hard after its home valuation algorithm leads
Speaker 1: to a loss of more than five million dollars to Storty,
Speaker 1: Amazing and coming up next every chorus, Mark Mahaney reveals
Speaker 1: his ten proven rules for succeeding as a long term
Speaker 1: tech stock investor. They're all in his new book, Nothing
Speaker 1: But Net. This is Bloomberg. This is Bloomberg Business Week
Speaker 1: Inside from the reporters and editors who bring you America's
Speaker 1: most trusted business magazine, plus global business finance and tech
Speaker 1: news As it happened, Sloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinevik on Bloomberg Radio. Hi
Speaker 1: Am Carol Masser and Tim Stanobek Plinny ahead in our
Speaker 1: second hour of the weekend edition of Bloomberg Business Week,
Speaker 1: including Zillo's home flipping Flop how a home valuation algorithm
Speaker 1: turned America's best known real estate company on it's ear.
Speaker 1: We'll also here from the CEO of Invitation Homes. It's
Speaker 1: the largest owner of single family rental homes in the US.
Speaker 1: They've got eighty thousand and counting. Talking a lot about
Speaker 1: housing this week, plus our cover story, It's a special
Speaker 1: New Economy takeover ahead of the upcoming Bloomberg New Economy
Speaker 1: Forum in Singapore. We've got some important stories from our
Speaker 1: Business Week team about the challenges facing us here on
Speaker 1: Earth and uh yeah beyond. Yeah, we're seriously talking about
Speaker 1: colonizing Mars. You're gonna want to stick around for that one,
Speaker 1: because there are some serious challenges when it comes to
Speaker 1: colonizing Mars. Well, first up this hour, the Right Way
Speaker 1: to invest in tech companies. Mark Mahaney is the Managing director,
Speaker 1: head of Internet Research at Evercore I s I. He's
Speaker 1: got a new book out this week. It's called Nothing
Speaker 1: But net ten Timeless stock picking lessons from one of
Speaker 1: Wall Street's top tech analysts. Mark joined us to break
Speaker 1: down the keys to building a solid tech portfolio for
Speaker 1: the long run. Well, I'm going to start off with
Speaker 1: one one warning and then one good piece of news.
Speaker 1: So the one warning is again, these markets a hories
Speaker 1: falto and even the best stocks, even the best franchises,
Speaker 1: can underperform for periods of time. They will get dislocated.
Speaker 1: You know, I think about these wonderful full names that
Speaker 1: combined for this acronym called fang, Facebook, games on Netflix,
Speaker 1: and Google. You look at those stocks, they've each had
Speaker 1: twenty to thirty, even as much as forty corrections over
Speaker 1: the last two, five and ten years despite being dramatic
Speaker 1: market performers, so kind of lessen number one warning to
Speaker 1: us all. You know, we've had a pretty robust equity
Speaker 1: market for the last decade or so, so I just
Speaker 1: want to make sure we highlight the risks. But now
Speaker 1: let me highlight the reward. If there's one acronym, if
Speaker 1: there's one thing I want people to get from the book,
Speaker 1: it's the acronym d h Q. Now not dairy queen
Speaker 1: d Q, but d h Q, which stands for dislocated
Speaker 1: high quality companies. If you're investing in the market, you
Speaker 1: want to do two things. You want to mitigate valuation
Speaker 1: with risk and you want to mitigate fundamentals risk. Valuation
Speaker 1: risk is, you know, buying a stock news multiple is
Speaker 1: too high, and fundamentals risk is buying a company and
Speaker 1: then watching it blow up a revenue growth sharply to
Speaker 1: accelerate margins, collapse, etcetera. The way to hedge that second risk,
Speaker 1: that fundamental's risk, is to focus on high quality names.
Speaker 1: So I spent a fair amount of time looking at
Speaker 1: things like Total adjustable markets Management SKILLE especially products, successful
Speaker 1: product innovation, and really strong customer value props or propositions.
Speaker 1: You put that package together those four things that will
Speaker 1: create a high quality company in which you want to
Speaker 1: do and imedging both of those risks. Identify the high
Speaker 1: quality companies and then wait for that dislocation, wait for
Speaker 1: them to trade out twenty and then buy or add
Speaker 1: the positions being a question for you, Yeah, Mark, you
Speaker 1: start out your book by writing that you're the oldest
Speaker 1: and longest lasting Internet analyst on Wall Street. What has
Speaker 1: kept you in the job for this amount of time
Speaker 1: because you've certainly could have gone and worked a lot
Speaker 1: of places. Well, I I enjoy the work and uh
Speaker 1: and I'm lucky to be covering a sector that's extremely dynamic.
Speaker 1: If you're going to spend the last twenty five years
Speaker 1: working on Wall Street, you know you would want to
Speaker 1: to have either covered Internet stocks, invested in Internet stocks,
Speaker 1: maybe software. Those are the kind of the two areas
Speaker 1: that have been the most knownst dynamic in terms of
Speaker 1: also new companies coming in. I mean, the Internet created
Speaker 1: three of the largest world you know cap companies in
Speaker 1: the world, Amazon, Facebook and Google and by the way,
Speaker 1: Microsoft and Apple. The reason that they are where they
Speaker 1: are is because they've created wonderful services, product devices for
Speaker 1: accessing and utilizing the Internet. So it's really been I've
Speaker 1: been lucky to kind of stumble. It was a timing thing.
Speaker 1: I got lucky and stumbled into the Internet. Not at
Speaker 1: the very beginning. I wasn't as smart as out gore,
Speaker 1: but I got in there a really kind of it
Speaker 1: near the beginning of the commercial Internet, and it's been
Speaker 1: just phenomenal and fascinating to watch these companies grow. Is
Speaker 1: the metaverse the next step of the Internet in some way?
Speaker 1: I don't know, but I absolutely think that, Uh, you
Speaker 1: want to be long and name like Facebook because of
Speaker 1: its core business, but because it's also building what's likely
Speaker 1: option value. No, it is option value in terms of
Speaker 1: its investment in the metaverse. Uh you know, Like I
Speaker 1: like to see large platforms have these kind of long
Speaker 1: term bets, like Google with autonomous vehicles and weymo. This
Speaker 1: is Facebook's long term bet. Given the amount of money
Speaker 1: that they're putting into it and the resources. My guess
Speaker 1: is that there's a there there and investors are going
Speaker 1: to appreciate it five years down the road. So mark
Speaker 1: one thing I wanted to ask you. Um, in your book,
Speaker 1: you talk about importance of management, You talk about you know,
Speaker 1: having a product, You talk about revenues over earnings. Like,
Speaker 1: how do we need to think about some of these
Speaker 1: companies that are starting out? We look at Rivan that
Speaker 1: I p o UM is it a car company? Is
Speaker 1: it a tech company? It's not expected to be profitable
Speaker 1: for some time or really ampa production for some time. UM,
Speaker 1: how do we need to look at these How do
Speaker 1: you look at companies like that? I know it's not
Speaker 1: an internet company, but that's right. So I what I
Speaker 1: tried to do, Carol, is I really try to focus
Speaker 1: on this framework. You know, there's three or four five
Speaker 1: things I'm really looking for in the company. You now,
Speaker 1: there can be plenty of trading opportunities, but to really
Speaker 1: be kind of a good low core long term investment
Speaker 1: that takes something else. And you know, by the way,
Speaker 1: even these great assets like Amazon today, I don't think
Speaker 1: that was a good core long term investments until something
Speaker 1: like two thousand and six, two thousand and seven, when
Speaker 1: they they could innovate in multiple areas, go from being
Speaker 1: an online book retailer to generating or building or really
Speaker 1: almost inventing could the commercial cloud industry and then rolling
Speaker 1: out these kindle products. You look for those kind of
Speaker 1: proof points. But you know, if I if I check
Speaker 1: off the list, it's one look for companies that are
Speaker 1: facing large TAM's total addressable markets. Uh. Secondly, you look
Speaker 1: for companies with just great management teams. I know that's
Speaker 1: a easy statement to say, so what does it really mean.
Speaker 1: You're looking for companies with great vision like read Hastings
Speaker 1: into launching this company called Netflix, which kind of conjures
Speaker 1: up streaming over the Internet, except you couldn't have streamed
Speaker 1: anything over the internet at least it would have taken
Speaker 1: you hours to download the first five minutes of Terminator
Speaker 1: back then. But he had the vision to know that
Speaker 1: ten years from then, you know, the business would go streaming.
Speaker 1: People would stream video over the Internet. So you look
Speaker 1: for that kind of industry of that vision. That's Marc Mhaney,
Speaker 1: Senior Managing Director, head of Internet Research over at Evercore.
Speaker 1: I s I check out his book Nothing but Net
Speaker 1: Tend to unless stockpicking lessons from one of Wall Street's
Speaker 1: top tech Alice. It's out this week, still ahead. What
Speaker 1: in the world is going on over at Zello how
Speaker 1: an algorithm costs the company hundreds of millions of dollars.
Speaker 1: I may have said, maybe should just have stuck to
Speaker 1: these estimate. Maybe this estimate is the issue. Maybe this estimate.
Speaker 1: You're right, nicely done. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stenovik from Bloomberg Radio. Alright,
Speaker 1: everybody first came this estimate. We're all obsessed with it, right,
Speaker 1: you know, you've gone down a rabbit hole just checking
Speaker 1: out the values of homes in your neighborhood and beyond.
Speaker 1: Then there were z prices, then the eye buying, then
Speaker 1: the damage and fallout from an algorithm that led Zillo
Speaker 1: down a dangerous path. The subject of a story in
Speaker 1: this week's Technology section from Bloomberg News real estate reporter
Speaker 1: Patrick Clark, it's all about the company's algo fueled buying
Speaker 1: spree ended up seeking its home flipping experiment. Patrick joined
Speaker 1: Carroll and Bloomberg News cross asset reporter Katie Greifeld and
Speaker 1: Business Week editor Joel Webber this past week to explain
Speaker 1: why the real estate platform's plan went south. They did
Speaker 1: it poorly. They said, it's you're exactly right. We we
Speaker 1: did a long Business Week story on Zillo, which is, uh,
Speaker 1: you know, best known for one publishing homeless ins what
Speaker 1: you can then go in Browns and too publishing what
Speaker 1: they called estimates, which is a you know, an attempt
Speaker 1: to approximate the value of just about every home or
Speaker 1: I don't know, I think it's more than a hundred
Speaker 1: million homes in America for first sport. Basically, at some point,
Speaker 1: I guess in two thousand eighteen, they decided to take
Speaker 1: all the people and technology that they used for those
Speaker 1: first two things and apply them to flipping houses, which
Speaker 1: is a you know, I would say, a notoriously sort
Speaker 1: of risky business. It's it's it's it's not the first
Speaker 1: time that a company or you know, offen an individual
Speaker 1: has gotten the business of buying and selling and had
Speaker 1: home prices move on them in the interim period and
Speaker 1: gotten burned and so pout. You write that this is
Speaker 1: a five hundred sixty million dollar cautionary tail. I'm curious
Speaker 1: what are the takeaways that Zillo is going to take
Speaker 1: from this. I mean, obviously they've paused the home flipping experiment.
Speaker 1: Do you expect this to bleed into some of the
Speaker 1: other ways that they operate. I think that their old
Speaker 1: business should be fine. Um, people are still going to
Speaker 1: go to Zillow's websites and apps and look at houses,
Speaker 1: and that's still going to be a great place for
Speaker 1: a real estate agent to get in front of, you know,
Speaker 1: house enters. Basically, they shouldn't have trouble making money that way.
Speaker 1: The question is, you know, number one, how are they
Speaker 1: going to build the sort of hole in their strategic
Speaker 1: purpose that that ending this Dellow offers program created? And
Speaker 1: then too, you know, I mean, I think there is
Speaker 1: a big push just Dillow wasn't just blow doing this.
Speaker 1: There there are other companies in the same I buying
Speaker 1: sort of tech power flipping business as they are. And
Speaker 1: then there are other companies that are are biding off
Speaker 1: different pieces of the housing transaction. Uh it seems fairly
Speaker 1: likely to me that some of them will succeed in
Speaker 1: some form, and we won't, you know, we're not tied
Speaker 1: to this sort of hundred year old method of buying
Speaker 1: or sell in house. So not only did Zilo you know,
Speaker 1: sort of flush the money down the drain. But they
Speaker 1: also they also wasted time that they could have been
Speaker 1: using to, you know, figure out what the big opportunity
Speaker 1: is well. And I feel like until weeber come on
Speaker 1: in of course, the editor Bloomberg Business Week, I felt like, algorithms,
Speaker 1: can't we trust them? Like, don't they know? All right? Yeah? Totally? Um,
Speaker 1: And now that that was sort of I think, Um,
Speaker 1: you know what what sort of inticated Pat wanting I
Speaker 1: wanted to write this story for the for the magazine
Speaker 1: was like, look, as a society, like we've come to
Speaker 1: put a lot of faith in algorithms, and entire business
Speaker 1: models will rest on it. And in this case, the
Speaker 1: sort of a few or of Zello is sort of
Speaker 1: intrinsically tied to this algo and Pat, you know, just curious, like,
Speaker 1: what do we know changed? Did they? Did they juice it?
Speaker 1: Did they did they try and get more than than
Speaker 1: might have they might have wanted? In hindsight, my best
Speaker 1: understanding is, uh, this was more human failure that a
Speaker 1: technology failure. I mean they you know, on the individual um,
Speaker 1: on the level of an individual home. Uh, it's you know,
Speaker 1: it's a computer program telling Zello. Here's how much we
Speaker 1: think it's worth. But number one, when they first started
Speaker 1: doing this, they had human eyeballs on every offer and
Speaker 1: multiple touchpoints where a person was saying that this makes sense.
Speaker 1: And you know, as they did it more, they got
Speaker 1: more confident in their ability to get pricing right. And
Speaker 1: uh so that's that's number one. Um, if they sort
Speaker 1: of took away all of the the human touch ones.
Speaker 1: But the other thing is they were sort of lagging
Speaker 1: their competition. And you know, there there's open door technologies,
Speaker 1: which is the biggest of these eyebuyers were buying way
Speaker 1: more homes than pillows and very ambitious plans to catch up.
Speaker 1: And uh, you know, they they was very clear to
Speaker 1: them that if they made more aggressive offers, they would
Speaker 1: be able to buy more homes and and and they
Speaker 1: believed they had to buy an awful lot of homes,
Speaker 1: you know, in order to make the business work, and
Speaker 1: and and so they basically just started beating, uh, you know,
Speaker 1: to the best of my knowledge, started just feeding the
Speaker 1: algorithms more aggressive assumptions of home price appreciation. You know,
Speaker 1: so if if if, for instance, like they had been
Speaker 1: assuming that home prices were going to grow twelve per
Speaker 1: said year over year, you know, they said, well, let's
Speaker 1: let's let's see what happens to fortune percent. And I'm
Speaker 1: sure enough they bought a lot of homes. Um, you know,
Speaker 1: the home prices appreciation, it's home home prices are still growing,
Speaker 1: but at a slightly slower pace than they were earlier
Speaker 1: in the year. And Zillow executives have said, is the
Speaker 1: the sort of slowdown was outside the sort of range
Speaker 1: of outcomes they thought more likely. But you know that's
Speaker 1: why when people when they got into this business, people said, well,
Speaker 1: you're exposing yourself to a lot of market risks. So
Speaker 1: you've got a lot of houses that are suddenly on
Speaker 1: the market, Um, that that Zelo would bought. Do we
Speaker 1: have any since yet, who's going to buy these? Um? Yeah,
Speaker 1: we'll see. I mean they've they've sent you know, information
Speaker 1: on you know, something like seven thousand homes the large
Speaker 1: single family landlords. Um. And that's right. I mean, there's
Speaker 1: so much money that has gone into this from an
Speaker 1: institutional standpoint, right, there's been an enormous amount of money
Speaker 1: that's come into that business. Um during the pandemic in particular,
Speaker 1: very appealing way to invest behind like millennial household formation,
Speaker 1: you know, migration to the south and southwest. And also
Speaker 1: just like you gotta put you know, if you're if
Speaker 1: you're at pension, but you gotta put your money somewhere
Speaker 1: in rental houses. Uh is a hot idea right now.
Speaker 1: I think that you know, there's so much demand and
Speaker 1: if it's not clear yet, you know, agree to which
Speaker 1: Zillo launts to transact you know, at a at a
Speaker 1: bulk scale. But you know, people have been telling me
Speaker 1: that if if you could buy um, if you could
Speaker 1: buy two thousand homes, and you know, it's a snap
Speaker 1: of the fingers, and it's not a snap of the fingers, right,
Speaker 1: It's a lot of due diligence in time. But you
Speaker 1: would you might not have to pay, you might not
Speaker 1: get a discount. Right there's like a there's a premium
Speaker 1: you get for being able to deliver bulk to an investor.
Speaker 1: Right now, you will will be able to tap into that.
Speaker 1: That's Bloomberg News real estate reporter Patrick Clark, along with
Speaker 1: Business Week editor Joe Webber at Bloomberg News cross as
Speaker 1: At reporter Katie gray Felt and the day after Patrick's
Speaker 1: story hit, the terminal, Zilla reached an agreement to sell
Speaker 1: about two thousand properties to New York based investment firm
Speaker 1: Pretty and Partners. That's America's second largest single family landlord,
Speaker 1: with more than seventy thousand rental houses in its portfolio.
Speaker 1: All right, so they're the second largest. Who's the largest,
Speaker 1: you might ask, Well, that would be publicly traded Invitation Homes.
Speaker 1: Coming up next, we'll talk with the company's president and CEO.
Speaker 1: Dallas Tanner stops by to talk earnings, expansion and why
Speaker 1: the Zillo fiasco is no reason to doubt the strength
Speaker 1: of America's housing market. This is Bloomberg broadcasting from the
Speaker 1: financial capital of the world Bloomberg eleven Frio in New
Speaker 1: York to Washington, d C. Bloomberg to Boston, Bloomberg one
Speaker 1: oh six one, to San Francisco, Bloomberg nine sixty to
Speaker 1: the country Sirius XM Chado one nine team, and around
Speaker 1: the globe the Bloomberg Business app and Bloomberg Radio dot Com.
Speaker 1: This is Bloomberg Business Week. Invitation Homes is the largest
Speaker 1: owner of single family rental homes in America. It offers
Speaker 1: a variety of services for the more than eighty thousand
Speaker 1: properties in its portfolio, and the company isn't seeing any
Speaker 1: let up in demand or in its ability to increase rents.
Speaker 1: It recently announced its plan to boost rates by an
Speaker 1: average of eleven percent on the heels of a third
Speaker 1: quarter revenue. Be Invitation Homes president and CEO Dallas Tanner
Speaker 1: joined me and Bloomberg News cross asset reporter Katie Greifeld.
Speaker 1: We talked earning supply chains, also his reaction to Zillow's
Speaker 1: abrupt exit from the home flipping business. You know, candidly,
Speaker 1: I was surprised, um given the fact that the I
Speaker 1: buyer space has continued to get more and more robust
Speaker 1: over time. Uh, you know, some other competitors I think
Speaker 1: have done a really nice job managing inventory and the like. Now,
Speaker 1: with that being said, I couldn't tell you. We don't
Speaker 1: know all the details as to what happened, And Zello
Speaker 1: has a pretty diverse business right in terms of some
Speaker 1: of the other services that they offer. So my guess
Speaker 1: is strategically internally, they're probably looking at, you know, where
Speaker 1: their strengths and weaknesses were and ultimately made the call
Speaker 1: that they did. But with that being said, the housing market,
Speaker 1: it's fundamentals, uh, you know, the supply chain right now
Speaker 1: that the imbalance of supply that we have quite frankly
Speaker 1: relative to demand, are all lending itself to you know,
Speaker 1: a market that feels really strong, and I think they
Speaker 1: said as much even in their in theirs called So
Speaker 1: you didn't see the Zillo news and you're, according to
Speaker 1: your own metrics and internal metrics that you see as
Speaker 1: any sort of canary in the coal mined about the
Speaker 1: housing market in the US. No, not for US. I
Speaker 1: mean you got to think about the volume. I I
Speaker 1: don't know their exact numbers in terms of how many
Speaker 1: of the homes they had on balance sheet. I'm sure
Speaker 1: somewhere between ten and twelve thousand or something like that.
Speaker 1: But that's such a small percentage of the six and
Speaker 1: a half million resales that we see every year, uh
Speaker 1: in US single families. So no, I wouldn't look at
Speaker 1: it as a barometer of something that's going on in the
Speaker 1: the marketplace. In fact, I kind of think the opposite.
Speaker 1: If you look at, you know, some of their competitors,
Speaker 1: If you look at our business, you could look at
Speaker 1: anyone really in single family if you're a homebuilder or
Speaker 1: a SFR operator like we are, or we're having record
Speaker 1: occupancy percent occupancy record revenue growth because rents are so
Speaker 1: um in demand right now in terms of having that
Speaker 1: flexibility of lease, and so we're actually seeing the opposite
Speaker 1: in our business and Dallas the company said that back
Speaker 1: in februe Worry that it planned to spend at least
Speaker 1: one billion dollars buying properties this year. And you, I
Speaker 1: mean you touched on it that just if you look
Speaker 1: at the housing market, uh, the supply of homes, Uh,
Speaker 1: it's it feels like it's really dwindled. And the housing
Speaker 1: market has just been on fire. So in terms of
Speaker 1: spending that one billion dollars, has that been difficult to
Speaker 1: even find houses to buy? In terms for our business
Speaker 1: invitation homes, you know, it's been interesting. We actually updated
Speaker 1: guidance this last quarter. We're gonna be somewhere between a
Speaker 1: billion seven and a billion eight this year in terms
Speaker 1: of new acquisitions, So we've actually outperformed what was our
Speaker 1: initial you know, kind of targets. Now, with that being said, yes,
Speaker 1: the market has some supply challenges, there's no doubt about it.
Speaker 1: Although we are seeing supply creep back into the resale
Speaker 1: market um at a little bit better clip than we've
Speaker 1: seen historically With that being said, it's still at an
Speaker 1: all time low. You have interest rates that are still
Speaker 1: I think I saw the day of the thirty year
Speaker 1: is that just north of three percent. That's still really
Speaker 1: cheap money, cheap availability of finance for those that can
Speaker 1: qualified for mortgage. So it's actually I think keeping the
Speaker 1: supply pretty tight because homebuyers, again, those six and a
Speaker 1: half million resales we talked about, those are still going.
Speaker 1: Those two end users would be my guests at the
Speaker 1: end of the day. So we pick our spots. Were
Speaker 1: very deliberate about where we invest capital and why we
Speaker 1: have partners with a number of different homebuilders we're helping
Speaker 1: bring new supply to the marketplace. So we've we've definitely
Speaker 1: kind of had to you know, be deliberate and really
Speaker 1: anchoring on our different channels for acquiring product. But we've
Speaker 1: been able to do it, albeit it is a tough
Speaker 1: environment and we have to be you know, consistent in
Speaker 1: terms of our approach. Dallas, is there a time or
Speaker 1: a price where you see homes in the United States
Speaker 1: on a whole becoming so expensive that you're no longer
Speaker 1: in an acquiring mode. Well, there's always cycles, right, so
Speaker 1: you could certainly. See. Uh, you know, at some point
Speaker 1: there could be a cycle where homes get to price
Speaker 1: based on your investment criteria of where you want to
Speaker 1: invest capital, And why doesn't feel like that? Right now?
Speaker 1: We can still buy homes at a really attractive you know,
Speaker 1: what we do as our own cost the capital relative
Speaker 1: to the types of yields and things that we can
Speaker 1: find in the marketplace. Now will that last forever? Time
Speaker 1: will tell. Trees don't typically grow to the sky. But
Speaker 1: I think the difference in our business it's very different
Speaker 1: from an eye buyer from somebody else, is that you know,
Speaker 1: our customer staves us for three plus years right now,
Speaker 1: they renew two or three times there at least with
Speaker 1: our with our business, and they actually love the service.
Speaker 1: They want to renew because they like the flexibility of
Speaker 1: a least totally different than a home flipper or somebody
Speaker 1: that's just in and out of a marketplace really quickly.
Speaker 1: That's not our model. We're long term investors. We're making
Speaker 1: decisions for five to fifteen year horizons, and we want
Speaker 1: to make sure that we're offering a product that's sustainable.
Speaker 1: So the approach of the different business models are very different.
Speaker 1: That's Dallas tan Or, the president and CEO of Invitation Homes,
Speaker 1: talking with Katie Greifeld and me following the company's third
Speaker 1: quarter earnings release. We get his thoughts on Zillo as well.
Speaker 1: You're listening to Bloomberg Business Week. Coming up, we'll wrap
Speaker 1: up our broadcast with a deep dive into the New
Speaker 1: Economy magazine takeover. We're gonna share some stories at spotlight
Speaker 1: the most pressing issues facing human kind ahead of the
Speaker 1: Bloomberg New Economy Form from Singapore, What world leaders have
Speaker 1: on their agenda at a moment of unprecedented crisis, and
Speaker 1: how you can get involved. This is Bloomberg. You're listening
Speaker 1: to Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovich from Bloomberg Radio. The Bloomberg New Economy Form.
Speaker 1: It's back in full force here in one that after
Speaker 1: going fully virtual last year during the height of the
Speaker 1: COVID nineteen pandemic, leaders from across the globe will be
Speaker 1: in person at this year's installment of the Global Town Hall,
Speaker 1: discussing the most pressing issues facing modern economies and societies
Speaker 1: and so the cover of this week's issue of Bloomberg
Speaker 1: Business Week. It's dedicated to these issues, as is an
Speaker 1: entire section of the magazine. It's at any f takeover
Speaker 1: and help us break it down. We turned to Bloomberg
Speaker 1: Business Week Economics editor Christina Lindblatt. Christine, I love New
Speaker 1: Economy Forum. I love the topics they cover. I love
Speaker 1: that you guys are devoting a section of the magazine
Speaker 1: to it. So let's start with one of the stories
Speaker 1: and the current and company providing some startling numbers from
Speaker 1: the youngest members of the global workforce. We're talking about
Speaker 1: youth unemployment. Employment for young people, and we're talking people
Speaker 1: fifteen to twenty four, which is the i LO definition,
Speaker 1: UM dropped by almost nine percent, and adults it was
Speaker 1: less than four And you know another we've seen another
Speaker 1: recessions in developed countries. You know, kids go back to school,
Speaker 1: going training. You know, they're sort of you know, skilling
Speaker 1: up during that time. But that's not happening in developing countries.
Speaker 1: There's another measure called NEAT, which is like, I didn't
Speaker 1: know that. I know, it's actually I didn't know about
Speaker 1: it either, and it's one of the un development goals
Speaker 1: actually is to reduce NEAT which is sort of not unemployment,
Speaker 1: education or training. So the neat rates also popped up
Speaker 1: and they haven't really been coming down fast enough compared
Speaker 1: to what you're seeing for other age cohorts. Do you
Speaker 1: profile a handful of young people from around the world,
Speaker 1: including countries like the Philippines, Ghana, India, China, South Africa,
Speaker 1: and the story spans the globe, involves trips to different
Speaker 1: countries and trips to the United States and Georgia, for example.
Speaker 1: What is the common thread that ties these stories together.
Speaker 1: I think the worry is that, you know, when you
Speaker 1: get knocked off your path that early on, how are
Speaker 1: you going to make up that time? And it was
Speaker 1: kind of heartbreaking. We talked to some young people who
Speaker 1: had really sort of carefully started laying like the stones. Right.
Speaker 1: There was the woman in the Philippines who had graduated
Speaker 1: from a culinary program and had found a job in
Speaker 1: the in the US kitchen and she was forced to
Speaker 1: go back with the lockdowns and now it's really sort
Speaker 1: of talking about how she feels depressed. Right. Um. And
Speaker 1: in India, this kid who who was wanted to become
Speaker 1: a a UM, you know, a trainer, UM, a coach
Speaker 1: in basketball and now he too seems you know, it's
Speaker 1: it looks like it might be hard for him to
Speaker 1: sort of, you know, get back on that path um.
Speaker 1: And I think this is a problem well that existed
Speaker 1: before COVID and that governments really need to get a
Speaker 1: handle on. And it might in some countries involved having
Speaker 1: job creation programs that are just targeted at young people,
Speaker 1: and China has been making some moves in that direction,
Speaker 1: saying that you know, they want to have like more
Speaker 1: venture capital for startups funded by young people, maybe get
Speaker 1: like help them get more interested in manufacturing jobs in
Speaker 1: certain parts of the country, and I think also trying
Speaker 1: to kind of, you know, where there are places where
Speaker 1: there may be labor shortages, try to get young people
Speaker 1: into those parts of the country. One of the things
Speaker 1: that's interesting, Christine, I thought about this when I was
Speaker 1: reading it and going back to the developed world even
Speaker 1: and then the financial crisis, that there were a whole
Speaker 1: young population that kind of got put aside either they
Speaker 1: were graduating and graduating into an environment where there were
Speaker 1: no jobs for them. And this really gets into for
Speaker 1: the developing world. I feel like it's even harsher right
Speaker 1: because these individuals are losing out and and it's going
Speaker 1: to impact their trajectory for years to come potentially. And
Speaker 1: there's demographic factors in some of these countries that we
Speaker 1: don't face in the US. You know, in India, one
Speaker 1: million people enter the workforce each month. That's a mind
Speaker 1: boggling number. It is. In China, there's something like eleven
Speaker 1: million jobs need to be created each year to accommodate
Speaker 1: just um college grads. So, I mean, actually there was
Speaker 1: the woman that we interviewed in China said something that
Speaker 1: I remember we talked about in the US after financial crisis,
Speaker 1: which is I'm having to compete for work with new
Speaker 1: graduates from the most recent you know year where I
Speaker 1: graduate two years ago. You know, that was so that
Speaker 1: was a problem here to her story. I thought that
Speaker 1: was interesting too, because she graduated from a really prestigious university.
Speaker 1: You would have thought maybe she was in a better position,
Speaker 1: but she wasn't. She was trying to In Brazil, we're
Speaker 1: hearing some of the same stori as people who are
Speaker 1: highly qualified who can't find work there. Well, let's shift
Speaker 1: gears and talk about the technology of the new economy.
Speaker 1: Leslie Coffin has a piece on a little known arm
Speaker 1: of Google that's working closely with environmental advocates around the
Speaker 1: world to tackle issues. Those issues range from finding water
Speaker 1: for cattle herds in Africa to planting trees to help
Speaker 1: cool off Los Angeles. Google Earth they're taking over this
Speaker 1: is and this is this is called Earth Engine. So
Speaker 1: what do we need to know about it? It's a
Speaker 1: really cool arm actually, um. So basically what they did
Speaker 1: is they took all this satellite imagery that mostly belongs
Speaker 1: to US and European agencies, um, and they put it
Speaker 1: on the cloud. That was the first step, because this
Speaker 1: was sitting on magnetic tape in vaults right. And then
Speaker 1: and then the very important thing is that they created
Speaker 1: the tools to sort of wrangle the data, right because
Speaker 1: you know that takes really skilled data like I mean
Speaker 1: skilled people and data science. And so what they've been
Speaker 1: doing is basically pro bono work working with NGOs and
Speaker 1: some government agencies and you know and environmental groups, you know,
Speaker 1: to give them the tools to do monitoring. Most a
Speaker 1: lot of it is monitoring. So you know what, Well,
Speaker 1: for example, they have this tool called open et that
Speaker 1: allows you to visualize transporation of water from fields and
Speaker 1: so water management. You know, people who are in water
Speaker 1: management and farmers are saying this is really useful because
Speaker 1: you know, I can measure how much water is going
Speaker 1: into my field, but I may be over watering and
Speaker 1: I won't know that until I see the rate of
Speaker 1: transporation because it means that if I'm overwatering, and you know,
Speaker 1: they have this u I and you can see it
Speaker 1: because it like lights up in different colors right fields,
Speaker 1: depending on the rate of transporation, and that will sort
Speaker 1: of tell you it's like maybe I'm overwatering this, you know.
Speaker 1: And it's important for for municipalities and governments um to
Speaker 1: be able to also you know, monitor this because yeah,
Speaker 1: it's part of being able to manage water rights well.
Speaker 1: And what's interesting too is they've been, as you said,
Speaker 1: working with NGOs UM, but they're also now thinking, okay,
Speaker 1: that's a lot of data, a lot of useful data,
Speaker 1: and now they're trying to figure out how to commercialize
Speaker 1: it right, right, And there's lots of companies that have
Speaker 1: their own pledges and goals that they're trying to meet
Speaker 1: in this space, right So, you know, a lever, for example,
Speaker 1: wants to monitor deforestation in palm oil. You know, because
Speaker 1: that is something that often goes hand in hand. What's interesting, too,
Speaker 1: is this story is about what Google is doing, but
Speaker 1: I also felt like it was as much about the
Speaker 1: individual running it. And that's Rebecca Moore, who is an
Speaker 1: activist at heart, and it kind of makes my heart
Speaker 1: warm to think that she's kind of overseeing this use
Speaker 1: of data potentially. Yeah, she's pretty inspiring. She's somebody who
Speaker 1: came to this field out of a personal interest, trying
Speaker 1: to fight a project near her home in California, which
Speaker 1: is a local utility was going to clear cut this land,
Speaker 1: and she used another tool that used satellite imagery to
Speaker 1: show them that they were going to be impacting you know, um,
Speaker 1: this water, this wetlands. Um. And so when Google bought
Speaker 1: this company, a smaller company, that company said you have
Speaker 1: to bring her on because when she worked with our program,
Speaker 1: she sent us so many, like, you know, good ideas
Speaker 1: about how to improve it. So she's an engineer herself.
Speaker 1: So um, yeah, it's it's really interesting. Can we go
Speaker 1: to Mars? Now? Yeah, let's go from Earth to Mars.
Speaker 1: We do know that our greatest innovators see possibilities that well,
Speaker 1: I think a lot of us cannot. Sarah Holder wrights
Speaker 1: that some serious thinkers are now looking into how we
Speaker 1: might one day colonize Mars. Some serious serious challenges though.
Speaker 1: I mean, it takes six months to get there, you
Speaker 1: need fuel to get back. Hello that radiation and only
Speaker 1: thirty eight percent of gravity force. Um, you know that'll
Speaker 1: be easier to lift stuff. But you know, I noticed.
Speaker 1: It's funny because Sarah and I sort of came at
Speaker 1: this from different ends, because I just skips thinking, oh,
Speaker 1: there's so much interest in Mars, you know, like it
Speaker 1: was because of the you know, three countries you know,
Speaker 1: sent probes at last year, I mean this year some
Speaker 1: of it, and and and I thought like and then
Speaker 1: I had seen all these renderings, and I thought, you know,
Speaker 1: there's kind of a pr thing almost going on. It's
Speaker 1: a science thing one on one hand, but it's also like,
Speaker 1: you know, how does the money float something? It's also
Speaker 1: putting images and starting to construct stories about what life
Speaker 1: would be like in this place helps that effort to
Speaker 1: right um. And so you know there's some like a
Speaker 1: lot of design work that's been going in, you know.
Speaker 1: And then when I saw Bark at Ingles, you know,
Speaker 1: who's a Stark attect. I'm sure he hates being called that.
Speaker 1: Um was it was part of one of these demonstration
Speaker 1: projects with three D printing for like a Mars you know.
Speaker 1: Habita I thought, wow, this is like, this is a
Speaker 1: time to do it well. And I think some of
Speaker 1: it it's interesting because you know some of the struggles
Speaker 1: that are here on Earth right now, whether it's building
Speaker 1: cross you know, growing crops in certain areas that maybe
Speaker 1: aren't going to be so hospitable to it. I do
Speaker 1: feel like that there's things being worked on for Mars
Speaker 1: that we could use on Earth. And I think the
Speaker 1: community of people working on this are that they want
Speaker 1: to emphasize that if they don't, you know, they don't
Speaker 1: want to be seen as like, oh, we're just going
Speaker 1: to bail on Earth because we've destroyed it. Um that
Speaker 1: whatever we're learning about how we might live on Mars
Speaker 1: could definitely have applications on planet ready ready to go
Speaker 1: to Mars. No. I mean there was some kind of
Speaker 1: scary parts about this, like oh do we imprison people
Speaker 1: on Mars? That was one of the questions that was raised.
Speaker 1: I'm like, oh, we'll send them back to Earth, right.
Speaker 1: Christina Limb bled, thank you, so much. We really appreciate
Speaker 1: a Bloomberg Business Week Economics editor Christina Limblad with a
Speaker 1: look at the New Economy issue of the magazine. Also
Speaker 1: a reminder that you can tune into the live stream
Speaker 1: of Bloomberg New Economy Forum from Singapore. It's November seventeen
Speaker 1: through the nineteen. We're bringing together world leaders at a
Speaker 1: moment of unprecedented crisis. It's going to help us define
Speaker 1: the challenges that face the global economy and help draft
Speaker 1: solutions together. Watch it at Bloomberg dot com Live slash stream.
Speaker 1: And that wraps up the weekend edition of Bloomberg Business
Speaker 1: Week from Bloomberg Radio. Thanks so much for joining us.
Speaker 1: I'm Carol Mass and I'm Tim Stanovk. Be sure to
Speaker 1: tune into Bloomberg Business Week Radio. It's Monday through Friday.
Speaker 1: It starts at two pm Wall Street Time on Bloomberg Radio.
Speaker 1: You can also watch our daily broadcast. It's on YouTube.
Speaker 1: Just search Bloomberg Global News. Also check out our Bloomberg
Speaker 1: Business Week podcast. You can find it at Bloomberg dot com, Apple,
Speaker 1: or wherever you get your podcasts. Bloomberg Business Week It's
Speaker 1: available on newsstands now at bloomberg dot com, business Week
Speaker 1: dot com, and on the Bloomberg terminal. You can also
Speaker 1: see me on Bloomberg Quickdake. It's available at bloomberg dot com,
Speaker 1: slash qt, and streaming platforms like Roku, Apple TV, Samsung
Speaker 1: TV and more. Have a great weekend. Let's go to Mars.
Speaker 1: This is Bloomberg.