Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelly. Welcome to Bloomberg Business Week. Over the next
Speaker 1: couple of hours, we're gonna bring you highlights from our
Speaker 1: daily radio show that's heard weekdays at two p on
Speaker 1: Wall Street Time, right here on Bloomberg Radio, and starting
Speaker 1: on Monday, you can also watch the show on YouTube.
Speaker 1: This week, we're gonna talk about how big tech betrayed
Speaker 1: its founding principles, plus conversations on luxury. We hear from
Speaker 1: the CEOs of Zenith Watches as well as Ducati North America.
Speaker 1: But first, by the end of the century, check this out, Jason.
Speaker 1: A third of the world's population and a greater fraction
Speaker 1: of its young people will be African. It's why many
Speaker 1: investors are eyeing the market not just for its size
Speaker 1: and potential, but also for its growing tech ecosystem. Back
Speaker 1: with us to talk about just that is Jake Bride.
Speaker 1: He's tech Crunch contributor. He's also author of The Next Africa,
Speaker 1: an emerging continent becomes a global powerhouse. He joins us
Speaker 1: back in her Bloomberg Interactive Broker Student, New York. Nice
Speaker 1: to be back with us. Great to be back. You know,
Speaker 1: we do talk a lot about investment, and we talk
Speaker 1: about specifically the raw materials or raw minerals, uh and
Speaker 1: kind of staking your claims to what's to come from Africa.
Speaker 1: You're taking a look specifically at the tech ecosystem. Are
Speaker 1: you talking about kind of the tech community overall? I'm
Speaker 1: assuming it's a growing one in Africa. Yeah, Africa has
Speaker 1: had a boom in UM tech startup growth, VC investment.
Speaker 1: The time span has really been about five to seven years,
Speaker 1: so this is relatively new. It's not shaping up everywhere,
Speaker 1: but there are some tech hubs that are becoming notable
Speaker 1: UM mostly Nigeria and West Africa. These are places are
Speaker 1: becoming centers of startup formation, of entrepreneurs going home of
Speaker 1: VC investments. So it's Nigeria the top hobbs in Nigeria,
Speaker 1: South Africa, Kenya primarily, with some others on the side, Ethiopia, Ghana,
Speaker 1: UM and you know what types of kind of startups
Speaker 1: and you know, I know like I feel like the
Speaker 1: financial industry finds a different way of you know, tackling
Speaker 1: the emerging markets and you can find some interesting things
Speaker 1: in that arena. Well, the big spending has gone on
Speaker 1: in in fintech and e commerce and internet services. But
Speaker 1: what you have right now is is you have these
Speaker 1: formalizing economies in these in these hubs. And even though fintech,
Speaker 1: in e commerce and some obvious UM startups sectors have
Speaker 1: got a lot of money, you basically have this new
Speaker 1: class of young African entrepreneurs that are descending into every
Speaker 1: possible sector you can imagine UM from ride hailing to
Speaker 1: education to multiplying you know, health services on mobile platforms.
Speaker 1: So UM, it's all wide open in every sector is
Speaker 1: open right now in Africa. And so where does the
Speaker 1: funding come from? Where they finding willing venture capitalists? Well,
Speaker 1: this is what's UM. You know. News over the last
Speaker 1: week is that UM primarily a lot of funding has
Speaker 1: come from European and US investors with some African angels.
Speaker 1: But over the last quarter I've tracked this, China has
Speaker 1: come in to invest nearly a quarter of a billion
Speaker 1: dollars a VC in African fintech, almost all entirely in
Speaker 1: companies that are based in Nigeria with outward growth strategies
Speaker 1: from there. And why this is notable is that UM
Speaker 1: that's roughly one fourth of all the venture capital that
Speaker 1: went to startups. And previous to this, China has had
Speaker 1: an elevated engagement with Africa, but it's been mostly related
Speaker 1: to trade in trade, finance and building things and bricks
Speaker 1: and mortar stuff. We've been waiting for China to go
Speaker 1: all in on African digital in full. UH. And these
Speaker 1: last several investment rounds in fintech UM kind of indicate
Speaker 1: that that's happened or happening. Why? Why is this? Is
Speaker 1: it of concern? Is it of interest? How would you
Speaker 1: describe it? Well, it runs a gamut. I should say
Speaker 1: a little bit more about their rounds. So you have
Speaker 1: um On, a group of Africa Chinese investors who the
Speaker 1: biggest round is just recently into Opera, the internet company UM.
Speaker 1: They've started to launch services startups in Nigeria. So they
Speaker 1: have a payment startup called Opae, which a group of
Speaker 1: Chinese investors Sequoia China UM source Code Capital invested a
Speaker 1: D twenty million in Opera's o pay Um just in
Speaker 1: this last month. UM. And what's happening is is you're
Speaker 1: seeing UM this start to expand into other areas. It's
Speaker 1: creating different dynamics with competition on the continent with existing
Speaker 1: players including Opera is gonna expand opay into Kenya, which
Speaker 1: has been Africa's capital for mobile money. When it comes
Speaker 1: to I mean, when it comes to what what's the
Speaker 1: look at here? UM One, there's more competition. Two, there's
Speaker 1: more investment for African startups overall, and that all sounds good.
Speaker 1: That all sounds good, but then it enters this complicated
Speaker 1: part of Africa's involvement in um our. China's involved in Africa,
Speaker 1: which has been somewhat controversial. To be objective, UM the
Speaker 1: conversation around China and Africa runs kind of the The
Speaker 1: extreme would be that it's neo colonialism and that China
Speaker 1: is taking over Africa. UM. On the positive end, Africans
Speaker 1: will often tell you that China is actually meeting us
Speaker 1: where we want to be. They're offering us money, we
Speaker 1: need infrastructure, they're building stuff. They're helping us with bridges,
Speaker 1: and a lot of people bring lecture, but they don't
Speaker 1: bring the funds. But there's concerns about data privacy. We've
Speaker 1: just got about five seconds. This pivot to digital creates
Speaker 1: a whole new topic in China and Africa. When you
Speaker 1: get to the concerns with Huawei. When you get the
Speaker 1: Chinese investors having major stakes and big consumer platforms that
Speaker 1: run a lot of data and and fintech information. Um,
Speaker 1: I think the continent is still getting its hands around
Speaker 1: that now after just grasping the amount of investment and
Speaker 1: who's doing what and where. And that's Tech Crunch contributor
Speaker 1: Jake Bright. If you think about those that have been
Speaker 1: an advocate for better governance and accountability in the private
Speaker 1: sector and in government, this individual definitely comes to mind,
Speaker 1: and not in Maddy's professor of Finance and Economics at
Speaker 1: Stanford Graduate School of Business based in Paladato, California, back
Speaker 1: in our Bloomberg Interactive Broker studio, and you're nice to
Speaker 1: have you back with us. Thank you. So I have
Speaker 1: to ask you, you're we're looking at Jason I reading
Speaker 1: your latest post. You seem to be calling at your
Speaker 1: own profession academia. What's going on? Well, you know, I
Speaker 1: look around, and you know there are a lot of
Speaker 1: problems in this world, and so we have an emphasis
Speaker 1: like you had just now about the private sector, uh
Speaker 1: for profit private private sector being e s G and
Speaker 1: doing good and doing well and all this stuff and
Speaker 1: I'm asking what's the role of my tribe of the
Speaker 1: academics in making a system work, capitalism, democracy, you name it.
Speaker 1: We say, we're very privileged in academia. Let me tell you.
Speaker 1: I mean, we don't make the money that some people
Speaker 1: who come on your show do make. But uh, but
Speaker 1: we're okay, and we have tenure and so, and we
Speaker 1: have expertise. So the question I have, what is it
Speaker 1: that you want? I want academics. So I I live
Speaker 1: in that bubble, and I've lived in that bubble for
Speaker 1: a long time until I came down from that eightie
Speaker 1: floor of the Ivory Tower down to the ground. And
Speaker 1: what I've seen, you know, it was pretty sobering about
Speaker 1: the realities of the kinds of assumptions, especially in my
Speaker 1: tribe of economists make, and so we you know, we
Speaker 1: became the field economics in particular of making assumption that
Speaker 1: every other academic silo of different departments is kind of
Speaker 1: living big gaps between them, and so you've got a
Speaker 1: bunch of siloed academics. Universities basically allow us all you know,
Speaker 1: free market of ideas to do what we want. And
Speaker 1: somehow the assumption is that when all of that the
Speaker 1: invisible hand of that happens the market for ideas for publications.
Speaker 1: However it works in academia that all of that produces
Speaker 1: kind of the best outcome of the world where nonprofit
Speaker 1: institution well, I think I think it does, but I
Speaker 1: think it can do better. I think that in the
Speaker 1: areas that I know about, in particular in business schools
Speaker 1: and in economics and in other areas including tech. I
Speaker 1: was recently involved in you know, even HBO Silicon Valley
Speaker 1: series to kind of as a medium to get through
Speaker 1: to the public we can do better both to uh
Speaker 1: to kind of make sure that you know, powerful people
Speaker 1: are accountable, including in governments, help the government, you know
Speaker 1: the words, the whole idea of private sector doing good.
Speaker 1: As I described last time I was here, we discussed
Speaker 1: my Harvard Business Review piece on on that was that
Speaker 1: governments can't do stuff. And I'm saying, if government can't
Speaker 1: do stuff, then why is that? And did you contribute
Speaker 1: to that in other ways? Did you steal their people?
Speaker 1: Did you know? Did you are you? Are we not
Speaker 1: paying them enough? In other wads? Why is it that
Speaker 1: the governments are failing? I want that problem to be
Speaker 1: more of our collective problem, including in particular academics. Well,
Speaker 1: and I do feel like the last time you were here,
Speaker 1: we were talking about the business roundtable, which came up
Speaker 1: at our last segment as well, and this notion that
Speaker 1: companies are having a moment where they're starting to think
Speaker 1: more holistically about their responsibility to society. And I guess
Speaker 1: what I would ask you is is it just a
Speaker 1: moment or is this a secular change? And and if
Speaker 1: we don't know yet, when will we Now? I think
Speaker 1: there's plenty to do for everybody, So I think it's
Speaker 1: all like welcome and find as far as it can go.
Speaker 1: But you know, we have a society in which we
Speaker 1: don't leave it to people to decide how fast to
Speaker 1: drive on the road. We have speed limited policemen and
Speaker 1: all of that. So my question is what are the rules?
Speaker 1: And you know, just last weekend over Thanksgiving weekends supposed
Speaker 1: to be a happy weekend, butt I happened to go
Speaker 1: watch Dark Waters, what a movie about DuPont and the lawyers.
Speaker 1: So and these are unregulated uh chemicals, And so the
Speaker 1: whole problem, the legal problem with DuPont was that it
Speaker 1: misled people sort of to back go style about the
Speaker 1: harm from those chemicals and people got sick. And this
Speaker 1: one lawyer you know over in this left twenty years
Speaker 1: and they're still here, and the actor producer now Ruffalo
Speaker 1: are are going around, you know, advocating that people should
Speaker 1: be aware of that. Then just to read something very comforting,
Speaker 1: I read a book called Bottle of Lies and Bottle
Speaker 1: of Lines is about the generic manufacturers that are I know,
Speaker 1: I was really like, why am I not reading something
Speaker 1: more cheerful, But it's like, who's going to solve that problem?
Speaker 1: Who's going to make sure that the drugs we take
Speaker 1: that come from India are inspected properly? I thought f
Speaker 1: F and then and then you're reading about Boeing. Okay,
Speaker 1: so f A, F d A, these are the regulations
Speaker 1: that we're supposed to be on. It's interesting is we
Speaker 1: have an administration Medista in the Bloomberg that talked about
Speaker 1: there's a lot more loveyist within the administration exactly. So okay,
Speaker 1: So what fifth risk of Michael lewis right? So what
Speaker 1: role does acadeb A play and kind of bringing to
Speaker 1: light some of this because what's interesting is, and I've
Speaker 1: worked at a business school, you know, you often have
Speaker 1: a lot of professors working with the business community consulting,
Speaker 1: and so there's not a very black and white or
Speaker 1: strong division exactly. So I'm here actually very related to
Speaker 1: this writing, and I just you know, got added in later.
Speaker 1: Uh for this week is in a conference and academic
Speaker 1: clabbing at Colombia tomorrow and Friday. That's why what brought
Speaker 1: me to this city. So this is what needs to
Speaker 1: be done. What I'll tell you what needs to be done.
Speaker 1: The incentives of the academics are not right because their
Speaker 1: incentives coming from the private sector expert witnesses, uh, consulting.
Speaker 1: Now we have a story about Google funding research in
Speaker 1: Wall Street Journal recently, etcetera, etcetera. So the private sector,
Speaker 1: you know, funds pharmaceutical research and you know, you just
Speaker 1: you I was promoting Coca Cola for great e s G.
Speaker 1: But it's it's a sugar, you know, manufacturers that distorted
Speaker 1: nutritional research back then, and that was again academics, uh
Speaker 1: for for sale, uh doing that, but lobbying for the public,
Speaker 1: which is really where the political problem is, where the
Speaker 1: thin political markets is where only conflicted academic conflicted experts
Speaker 1: in general, not academic necessarily are involved in writing accounting
Speaker 1: rules or whatever you know, is the underbelly of the
Speaker 1: of the whole thing. Why don't we as academics do
Speaker 1: not have incentives to do that sort of pro bono work,
Speaker 1: you know, the kind of thing I've been running around
Speaker 1: doing and I'm reflecting and so alone and schools need
Speaker 1: to kind of set encourage that, encourage that to be
Speaker 1: involved with our conflict. R So is it up to
Speaker 1: the university is then to set different rules? Well, we
Speaker 1: we we when we evaluate people for tenure or you know,
Speaker 1: the people who do well in that profession, in the
Speaker 1: academic profession, they publish papers and they teach, uh And
Speaker 1: then what they else they do is usually you know,
Speaker 1: consult If they do that or whatever, they can choose
Speaker 1: a cause, they can become involved in you know, school
Speaker 1: board or whatever else like everybody else on the side.
Speaker 1: But profess, what I think and what I've seen gaps,
Speaker 1: huge gaps in the understanding of policy makers of issues
Speaker 1: that we know about that we have a lot of knowledge.
Speaker 1: And it's our duty, I think, and and responsibility to
Speaker 1: help them and to hold him accountable. And that's a
Speaker 1: not at Muddy, Professor of Finance and Economics, at Stanford's
Speaker 1: Graduate School of Business, the number one business school according
Speaker 1: to Business Week. Let's see, Yeah, let's see what's going
Speaker 1: to happen in twenty when it comes to venture capital
Speaker 1: investing because I feel like Jason, we work, it's failed,
Speaker 1: I p O and it's a ray of governance issues
Speaker 1: and really impacted the conversation around startups private markets, and
Speaker 1: that includes of course venture capital. Let's talk about the
Speaker 1: VC world. David springs with us. He's founder and CEO
Speaker 1: at Runway Growth, based in San Francisco, in our Bloomberg
Speaker 1: Interactive Broker studio here in New York. Nice to see
Speaker 1: you again. You too great to be here, So tell us.
Speaker 1: I do wonder about the last to impact of we
Speaker 1: work on the VC world. Has it changed things dramatically? Yeah,
Speaker 1: it has changed things. I'm not sure how long that's
Speaker 1: gonna last, but it has definitely shifted from you know,
Speaker 1: growth at any cost to like path to profitability. You know,
Speaker 1: that's a that's a big thing. But I do think
Speaker 1: that you know, vcs really build companies so that they
Speaker 1: can be exited. So they're building a company so that
Speaker 1: it will please the buyers, and whether the buyers are
Speaker 1: institutions buying on an I p O which is very
Speaker 1: very rare by the way, that gets all the attention
Speaker 1: from the media. But on average there's only like a
Speaker 1: d I p O s a year for the last
Speaker 1: five years, so it's nothing um. But then on the
Speaker 1: M and A side, they're bought by corporate buyers or
Speaker 1: more and more PE firms are the buyers, and they
Speaker 1: do not want to pick up a big burn. So
Speaker 1: you know, you really that path the profitability thing I
Speaker 1: think is, you know, is here to stay, but there
Speaker 1: will be a growth at a measured or intelligent um
Speaker 1: you know spend if you David Wooden, thing that a
Speaker 1: venture capitalists said to me in the wake of We
Speaker 1: Work was this notion that it has changed and made
Speaker 1: much more sophisticated, maybe much more intense conversations between vcs
Speaker 1: and entrepreneurs around governance that essentially they're now able to
Speaker 1: walk in and say, oh, you don't want to do that,
Speaker 1: you don't want an independent board, you don't want to
Speaker 1: do this. Do you want to end up being we work?
Speaker 1: You know that it's become really almost weaponized to some
Speaker 1: extent in this conversation. Have you seen that, have you
Speaker 1: seen more talk about governance at this point. So, first
Speaker 1: of all, the governance extremes that we saw at we work,
Speaker 1: you know, and they are present in a few other
Speaker 1: really high profile deals that you know, we all know about.
Speaker 1: Those are not the norm in Silicon Valley. So and
Speaker 1: it never has been. You know, it's only the you know,
Speaker 1: the hottest of hot companies with the most aggressive CEO
Speaker 1: is that even ask for those things. So and you know,
Speaker 1: really where I operate is in the you know, the
Speaker 1: sung heroes, you know. And one of the things that
Speaker 1: I want to talk to you guys about is like
Speaker 1: this imbalance in the world of venture capital where there's
Speaker 1: so few exits. We talked about I p o s.
Speaker 1: There's only eighty. There's less than a thousand M and
Speaker 1: A exits, and new companies come into the system every year.
Speaker 1: So we're building up this giant mass and now it's
Speaker 1: up to about twenty five thousand companies that are you know,
Speaker 1: venture backed. They're not exiting and in a lot of
Speaker 1: cases they're outliving the ability of their venture firms to
Speaker 1: support them. And you know, dealing with how to fund
Speaker 1: those companies that for lack of a better word or
Speaker 1: good but not great. Uh, that's what we're all about.
Speaker 1: And to get your point, Jason, those people have never
Speaker 1: asked for these crazy, interesting, crazy governance uh you know, uh,
Speaker 1: abnormal requests. So among those you said, was it about
Speaker 1: twenty companies, did you say the true back companies in
Speaker 1: existence today? How many of them will ultimately exist in
Speaker 1: five to ten years from now? Because I do feel
Speaker 1: like in the VC world, certainly in the early startup world,
Speaker 1: whether it's angel investing, people throw a lot of money
Speaker 1: at things that never come to fruition. So I do
Speaker 1: wonder if those twenty five thousand that might be struggling
Speaker 1: to get capital that I love capitalism, maybe some of
Speaker 1: them shouldn't be able to exist going forward. I mean,
Speaker 1: that's the system working correct, definitely, So this you know,
Speaker 1: law of nature and survival of the fittest and all
Speaker 1: of that, it definitely works. I'm more talking about the
Speaker 1: people that deserve to survive and are not getting the
Speaker 1: attention because the venture capital business is so geared towards
Speaker 1: hitting home runs, not even home runs Grand Slam. Even
Speaker 1: with all that money that's lashing around, Jason, I constantly
Speaker 1: have conversation about whether it's private equity money, whether it's
Speaker 1: family wealth offices, whether it's you know, institutional money. There's
Speaker 1: so much money that's looking to go in that area.
Speaker 1: You're saying it's not it's not very all want to
Speaker 1: get into the unicorns, you know, the people that you
Speaker 1: guys talk about, that's where they want to invest. And
Speaker 1: there is a ton of money trying to fight their
Speaker 1: way into those deals, but not the guys that are
Speaker 1: doing our twenty or thirty or forty million that deserve
Speaker 1: to survive, but they're never going to be an I
Speaker 1: p O. How do you solve that imbalance? Well, I
Speaker 1: think we're going to have a new class called distressed
Speaker 1: venture where people will raise venture funds to come in
Speaker 1: and capitalize on the opportunity to build these companies and
Speaker 1: take advantage of the weakness of or inability of existing
Speaker 1: investors to continue to support those companies. And then people
Speaker 1: like us that do venture debt, where we lend money
Speaker 1: as an alternative or supplement to equity, we we can
Speaker 1: help those companies. It does seem like we're in for
Speaker 1: some sort of reckoning is probably too strong of a word,
Speaker 1: but across the entire private capital spectrum totally agree and
Speaker 1: that's David Spraying, the CEO of Runway Growth. Don't you
Speaker 1: want to So what if our next guest picked this song,
Speaker 1: We'll get into I about being evil, Um, and it
Speaker 1: speaks to a bigger, broader theme this year, and it's
Speaker 1: been a theme this year, and it's no dabt going
Speaker 1: to be a theme in big tech, the regulation of it,
Speaker 1: what big tech stands for, what they're all about, how
Speaker 1: they're impacting our world. Let's get into it because Vinnie
Speaker 1: Calano is back with us, the chief market strategists at
Speaker 1: Stuyvesant Capital Management, global investment strategists at Dafoux Redmount uh
Speaker 1: And also with us is CNN global economic analyst Rona Faruhar.
Speaker 1: She is also author of the book Don't Be Evil,
Speaker 1: Hence the Evil, How Big Tech betrayed its founding principles
Speaker 1: and all of us. They're both in our Bloomberg Interactive
Speaker 1: Broker Studio. Nice to have you both with us, Um,
Speaker 1: Jason and I talked about this all the time. First
Speaker 1: of all, talk to us a little bit about the
Speaker 1: premise for your book. Well, Um, you know I cover
Speaker 1: the markets and you just look at the numbers and
Speaker 1: you see that basically about eight percent of corporate value
Speaker 1: is living in ten percent of firms and other firms
Speaker 1: that have the most data the most intellectual property. So
Speaker 1: this is sort of a massive shift. That's really the
Speaker 1: industrial revolution of our time. So the economic story is there.
Speaker 1: The political story, I mean, we've been living this now
Speaker 1: for two years. The fact that the model of a
Speaker 1: Google or Facebook in particular is highly targeted advertising. It's
Speaker 1: about targeting us down to the individual. But that split society.
Speaker 1: I mean, it comes with side effects. It comes with
Speaker 1: a lot of great value, but it comes with side effects.
Speaker 1: Then there's the brain science, the social issues, and you know,
Speaker 1: to be honest, I got into this topic in some
Speaker 1: ways for a personal reason. I came home one day,
Speaker 1: I was looking at a credit card bill and there
Speaker 1: were all these tiny charges dollar ninety three dollars and
Speaker 1: I thought, my god, I've been hacked. And then I
Speaker 1: realized my ten year old son has my passwords. Turns
Speaker 1: out he had racked up nine dollars in a supposedly
Speaker 1: free online soccer game that was tracking him and selling
Speaker 1: him in app purchases. And I thought, you know, as
Speaker 1: a mother, I was horrified, but as a as a
Speaker 1: business journalist, I thought, I want to know everything about this,
Speaker 1: So Benny, come on in here, because, as Ronna so
Speaker 1: wisely noted at the top, I mean, there's a business
Speaker 1: story front and center, and for investors, what's not to
Speaker 1: love about tech? I mean, Carol just went through the
Speaker 1: numbers at the close of how well these big tech
Speaker 1: stocks have done. Investors have made a ton of money here.
Speaker 1: Fair missing out too if you don't chep on the
Speaker 1: on the investment training here. Sure, absolutely, I think I
Speaker 1: think the listeners investors should know that there is an
Speaker 1: investment paradigm here, uh, that they need to dig a
Speaker 1: little bit deeper into and understand. Ronna talks about it
Speaker 1: with the the targeted ads and the revenue streams that
Speaker 1: are coming from from this surveillance capitalism system that is
Speaker 1: going on. Uh. And it's interesting when Ronna mentions about
Speaker 1: that she was hacked, she thought she might have been hacked,
Speaker 1: And as I began to explore this area thanks to Rna,
Speaker 1: that I realized that, yeah, we're being hacked, but we're
Speaker 1: not being hacked in the manner of you know, you
Speaker 1: would ordinarily think about it the drill down into our behavior. Yeah, well,
Speaker 1: so you really need to understand that it on on
Speaker 1: a whole range of level. Well, we talked about the
Speaker 1: business we cover this week about Google and the generals
Speaker 1: at Google. Right. You know, for a long time, Silicon
Speaker 1: Valley wars a badge of honor, kind of Washington hating them,
Speaker 1: and now all of a sudden that their middle age.
Speaker 1: A lot of these big tech companies, especially something like
Speaker 1: a Google, you know, they want to be involved in
Speaker 1: those big government contracts and and they're doing so, but
Speaker 1: they've got a lot of their employees not happy about it.
Speaker 1: This whole idea of you know, not doing evil like
Speaker 1: this was something that they held as part of their
Speaker 1: corporate culture and now things are changing. Yeah, and it
Speaker 1: was always baked into the business model. Frankly, I mean
Speaker 1: evil was was part of the business model. If you
Speaker 1: think the term day one. From day one, I mean
Speaker 1: you go back to the very first paper that Larry
Speaker 1: Page and Serge Brand, founders of Google, wrote. Um. It
Speaker 1: had a section at the bottom that said, if you
Speaker 1: monetize a big search engine with targeted advertising, the interests
Speaker 1: of the users and those of the advertisers are going
Speaker 1: to come into conflict at some point. And so they
Speaker 1: actually advocated for an open search engine, maybe something in
Speaker 1: the academic sphere. But you know, it's interesting that he's
Speaker 1: making a fascinating point because this disruption is not just
Speaker 1: about the four or five Silicon Valley giants. It's coming
Speaker 1: to every business model. So one of the things that
Speaker 1: I find so fascinating you just look at the insurance industry.
Speaker 1: For example, you can now have sensors in your house,
Speaker 1: in your car that will give you a discount if
Speaker 1: you know, if you're taking care of your plumbing um
Speaker 1: or you're stopping quickly, but you might get a black
Speaker 1: mark if your kid is smoking weed in the bedroom.
Speaker 1: What does that do? That disrupts the entire insurance business
Speaker 1: model of pulled risk. Think about that, that's coming to
Speaker 1: every industry. That the implications are really profound. And so
Speaker 1: we've only got about a minute left in this first segment.
Speaker 1: We're gonna keep you around for another what's the biggest
Speaker 1: surprise to you writing this book? What jumped out? You know,
Speaker 1: in some ways the fact that it would always there
Speaker 1: was hiding in plain sight. You know that that paper
Speaker 1: And frankly, this goes to my point. I mean, one
Speaker 1: of the side and one of the social side effects
Speaker 1: of this high speed media landscape that we're in is
Speaker 1: that people don't read as much. And I gotta think
Speaker 1: that nobody read the initial paper because we kind of
Speaker 1: would have known where we were going to be. And
Speaker 1: we want to continue our conversation. Still with us, as
Speaker 1: Vinny Catalano, chief market strategist of it, stuff Isn't Capital
Speaker 1: Management Global investment strategies to faux Red Mount. And also
Speaker 1: still with us is ron book is Don't Be Evil,
Speaker 1: how Big Tech betrayed its founding principles and all of us.
Speaker 1: This is great for your stocking stuffers this holiday season
Speaker 1: because that's okay, there's like this is like a must
Speaker 1: read because it does um it is the story of
Speaker 1: O and it impact no matter what industry you said
Speaker 1: before the break. You know, one of the things we
Speaker 1: need to get into is China's role in all of this.
Speaker 1: Tell us a little bit about that where you see
Speaker 1: how that plays in right Well, this is the story,
Speaker 1: the the economy story right now, tech trade wars. This
Speaker 1: is really about China and the US going different ways
Speaker 1: in terms of how the Internet is going to be
Speaker 1: governed in terms of strategic technologies. I keep hearing from
Speaker 1: a lot of Chinese investors that they believe they're going
Speaker 1: to have their own ecosystem. They've already got their own
Speaker 1: big tech players Ali Baba Tencent. But I do all those,
Speaker 1: but that they are going to actually have their their
Speaker 1: own supply chains, their own consumer brands. I mean, a
Speaker 1: company like show Me is already doing better in some
Speaker 1: in some areas than Apple in China. So this is
Speaker 1: a big split coming, and it's really interesting. It's provoking
Speaker 1: some fascinating, um uh, strange bedfellows in the US. You know,
Speaker 1: you see a company like Google saying, well, you know,
Speaker 1: maybe we should be a national champion here, um, you know,
Speaker 1: teaming up with a defense department, uh, thinking about how
Speaker 1: to kind of ring fence the the ecosystem in the
Speaker 1: US saying again with Amazon, they've tried to ring fence
Speaker 1: government purchasing. My worry is the overall ecosystem, though. I
Speaker 1: worry that you're you're gonna end up with a scenario
Speaker 1: where four or five big players have the entire pie,
Speaker 1: and that doesn't work. We've got to make room for
Speaker 1: other other companies. Really, so four or five players sort
Speaker 1: of con notes that there would be a monopoly. Yeah,
Speaker 1: and yet we seem to need a new definition for monopoly, right,
Speaker 1: because monopoly pertains to price increases generally as a rule
Speaker 1: in an industrial economy, but in this kind of surveillance,
Speaker 1: capitalistic information economy, that's really not the case. Yeah, and
Speaker 1: you know that the point about price is so profound
Speaker 1: because you're absolutely right that the whole Chicago school, you know,
Speaker 1: as long as prices are going down, everything's fine, doesn't
Speaker 1: fit when you're you're not doing a transaction in dollars,
Speaker 1: You're doing it in data. It's a barter transaction. So
Speaker 1: that's not a that that's a very opaque market, and
Speaker 1: that's why you have this asymmetry and this kind of
Speaker 1: superstar effect with an Amazon or Google. They've got all
Speaker 1: the information. You don't have any information. So I think
Speaker 1: we are going to need some regulatory ships to deal
Speaker 1: with that. So as you sort of finished reporting and
Speaker 1: writing this, and as you go out and talk to people,
Speaker 1: I mean, as we've been saying, we're not just saying
Speaker 1: it because you're I mean, it is the story of
Speaker 1: our time. It's in credibly timely. Are you more optimistic
Speaker 1: less optimistic? Have you changed your own sort of behavior
Speaker 1: or your thoughts about this through the process. Well, I
Speaker 1: I absolutely have. I mean I've done a digital detox.
Speaker 1: It was kind of actually by force that I Um,
Speaker 1: last Christmas, I dropped my cell phone on Christmas Eve
Speaker 1: was a company issued phone, and I couldn't get a replacement,
Speaker 1: and it was like, you know, going off cigarettes or something.
Speaker 1: For forty eight hours, I was twitchy. I kept reaching
Speaker 1: in my pocket. So, um, I do that regularly now.
Speaker 1: And I've actually cut down the amount of times that
Speaker 1: I check email, which, by the way, it takes you
Speaker 1: five minutes to reset every time you interrupt. So your productivity,
Speaker 1: I mean, that's a whole another topic. Lost product The
Speaker 1: productivity conundrum probably has something to do with technology and
Speaker 1: the effects of these firsts. No, I think that's a
Speaker 1: really good point, and you see more and more advising
Speaker 1: you know, check your email certainly you know a certain
Speaker 1: amount of times to day not constantly letting it kind
Speaker 1: of interrupt your workflow. I do wonder though, in terms
Speaker 1: of regulatory oversight, where it's all headache. Yeah, Well, there's
Speaker 1: there's two big schools of OOT. I mean, one is that, look,
Speaker 1: we can work within the existing system and just make
Speaker 1: some small tweaks. The other thought, and this is more
Speaker 1: of how the Europeans are going is we're going to
Speaker 1: need a really profound reshaping. I mean, the Europeans are
Speaker 1: talking about public data banks, you know, where you would
Speaker 1: be the public sector would own this this data. But
Speaker 1: on the other hand, you've got California coming in saying, hey,
Speaker 1: maybe we need a digital Sovereign Wealth Fund, because at
Speaker 1: the end of the day, if data is the new oil,
Speaker 1: you have to make sure that that value can be shared. Well,
Speaker 1: you can I just date something that run a set
Speaker 1: earlier in regards to uh, the the capture of information
Speaker 1: and the and the anticipation of what is about to
Speaker 1: occur and you know, dropping the phone things of that.
Speaker 1: So one of the concerns that's been expressed has been
Speaker 1: whether or not the machine learning will have accomplished so
Speaker 1: much that it knows what you're going to do and
Speaker 1: anticipation of and therefore it isn't you have free will
Speaker 1: you don't? It really does come down to that, it
Speaker 1: really has It has a definitely Yeah that's correct as
Speaker 1: a matrix feel to it, for sure. Yeah, that's a
Speaker 1: whole other level, and that's Benny Catalano, chief market strategist
Speaker 1: at Stuyvesant Capital Management and see ann global economic analyst
Speaker 1: Rana Faruhar, some Peking building, and perhaps some conversations we've
Speaker 1: had as of late around this table in our Blueberg
Speaker 1: and Director Broker studio. UM. I want to get to
Speaker 1: our next guest, because he has noted how dangerously disconnected
Speaker 1: the public is from our financial system. It is the
Speaker 1: subject of his new book. Joining us on the phone
Speaker 1: is Chris Farrell as he's co founder of Riverwood Capital
Speaker 1: his book How Money Became Dangerous, The Inside Story of
Speaker 1: our Turbulent Relationship with Modern Finance. He joins us on
Speaker 1: the phone from Menlo Park, California. Hey, Chris, nice to
Speaker 1: have you here with Jason and myself. UM, tell us
Speaker 1: a little bit about I mean, you have an interesting background.
Speaker 1: You understand the financial world. Yeah, Hi, Carol, thanks thanks
Speaker 1: for having me on. You has been thirty five years
Speaker 1: in the industry and has traversed many of the sectors
Speaker 1: within the finance the world commercial banking, sales and trading,
Speaker 1: investment banking, m and a private equity and uh, yeah,
Speaker 1: I've had a long, long career and been fortunate to
Speaker 1: work on some of the more interesting transactions in Wall
Speaker 1: Street history. What's changed about maybe when you started on
Speaker 1: Wall Street and kind of where the financial community financial
Speaker 1: system is today, Well, so much has changed, you know,
Speaker 1: in just one generation. I like to say, my parents
Speaker 1: only cared about two numbers, right, They cared and they
Speaker 1: were both years. They cared about the year they paid
Speaker 1: off their mortgage, in the year they qualified for their pension.
Speaker 1: And since then, you know, so much has happened. The
Speaker 1: complexity of the of the financial system has ground dramatically
Speaker 1: and so many different ways as we pushed for scale,
Speaker 1: scope and a see at the expense of the you know,
Speaker 1: the personal, of the interaction of the of the knowing,
Speaker 1: the person, of of knowing who we're interacting with, even
Speaker 1: having a person on the other side of that, and
Speaker 1: the complexity of this of the system has grown so much,
Speaker 1: while our understanding of it really has gone in many
Speaker 1: cases down. I think a lot of people have said,
Speaker 1: you know, I can't possibly understand this, so I'm just
Speaker 1: going to step back and sort of you know, disingage
Speaker 1: me completely well. And I do wonder what the financial
Speaker 1: crisis did to either reinforce that or to maybe change
Speaker 1: the direction. What what impact ultimately did the crisis have
Speaker 1: on consumers and on behavior. Yeah, you know, it's a
Speaker 1: great question, um, And we think about this a lot.
Speaker 1: So it initially inspired this sort of rage, right the
Speaker 1: Occupy Wallstreet movement. What people are like, this is not acceptable,
Speaker 1: we can't have this. We need to do something. But
Speaker 1: because people couldn't articulate challenge and the problem, and therefore
Speaker 1: if you can't particulate the challenge, you're not gonna come
Speaker 1: up with solutions. And then it's sort of stated as
Speaker 1: most you know, typically financial crisis do, and then you
Speaker 1: sort of said, Okay, I'm just gonna walk away. And
Speaker 1: in a sense it almost turned people more off and
Speaker 1: more distant from it because I said, oh, this is
Speaker 1: just one of those scary things I just don't want
Speaker 1: to like, tankle with. And now we see, we see
Speaker 1: that in all kinds of behaviors, you know, we see
Speaker 1: you know, we see millennials wanting to trade off an
Speaker 1: algorithm when you know, not even deal with people because
Speaker 1: the trust level is so low they'd rather trust an
Speaker 1: algorithm than than a person. And you know that the
Speaker 1: manifests itself in so many ways. I have to say,
Speaker 1: I think about the market all the time that how
Speaker 1: much of it is now, you know, driven by computers,
Speaker 1: and what that means for the retail investor. UM. You know,
Speaker 1: sometimes good when everything is going up, but you know,
Speaker 1: I do wonder when we get to a downturn, which
Speaker 1: ultimately we will at some point, but I do wonder
Speaker 1: about the impact on it. What are your biggest concerns here? Well,
Speaker 1: my biggest cerns are we have a we have a
Speaker 1: sort of antiquated system. You know, at all levels we're
Speaker 1: talking about how money has managed um and then we
Speaker 1: have um, you know, people and complexity that that aren't
Speaker 1: keeping the systems can't manage and we most do that,
Speaker 1: I think in the in the pension system for example.
Speaker 1: So we have this, you know, we've have debt being
Speaker 1: raised to fund you know, two fund pension deficits or
Speaker 1: any actions that are taken, and the system is focused
Speaker 1: on this, okay, this annual budget challenge of how do
Speaker 1: I pay employees? And you know, look, let's see, like
Speaker 1: I can't meet my cash shortfall, I can't give them
Speaker 1: a race. So you know, let's let's sort of promise
Speaker 1: more more benefits in the future that I won't have
Speaker 1: to worry about because it's beyond my term of office
Speaker 1: and so as a result, we have you know, people
Speaker 1: disconnected where they're like, who's holding that system accountable for
Speaker 1: a mismatch and send the system where I can sort
Speaker 1: of make promises that I'm not going to have to
Speaker 1: be responsible for being you know, being there when it happens.
Speaker 1: But I think that's one Another example is you know,
Speaker 1: I think we have the twenty anniversary of the e
Speaker 1: T S, which a wonderful mechanism to democratize access to
Speaker 1: market returns on a very efficient cost based system. And
Speaker 1: you know, that's been a wonderful development and a positive.
Speaker 1: But when you have fifty plus percent of the market
Speaker 1: who's completely you know, passively involved and doesn't doesn't actually
Speaker 1: engage or care really you know what's going on in
Speaker 1: that system, you know, that does create the potential for
Speaker 1: you know what happens when liquidity drives up and you
Speaker 1: know no one's really that invested in any particular ownerships there.
Speaker 1: You know that there's there's it's pervasive throughout the system,
Speaker 1: this challenge and that's that's the direction we're going. We're
Speaker 1: going towards this efficiency scale, passive, this connective combination that
Speaker 1: you know that that just creates challenges histomic challenges that
Speaker 1: we haven't seen. And that's Chris Pharrell as he is
Speaker 1: the co founder of Riverwood Capital. So, Carol, couple of
Speaker 1: stats for you that really surprised me. The worldwide market
Speaker 1: size for type two diabetes seven billion dollars. One in
Speaker 1: eight healthcare dollars just blew me away are spent on diabetes.
Speaker 1: That's unbelievable. It's a problem. It's a huge problem, and
Speaker 1: a lot of people, smart people trying to attack it
Speaker 1: in terms of treatments and medicines and whatnot. Nadav K
Speaker 1: drone is here with us. He is one of those people.
Speaker 1: He's the CEO of or Med Pharmaceuticals based here in
Speaker 1: New York City. Great to see you, Thank you to
Speaker 1: be here. All right, this feels like a big deal.
Speaker 1: This feels like a big breakthrough. We're talking about a
Speaker 1: new treatment for type two diabetes. Tell us about it. Absolutely,
Speaker 1: from two thousand and five to today, there was no
Speaker 1: major breakthrough in the way we treat diabetes. Now. What
Speaker 1: we do in Aura Med is we take the insulin
Speaker 1: which currently can only be administered as an injection, and
Speaker 1: we have a technology to deliver it orally so imagine
Speaker 1: that the diabetics population can take insulin orally, which is
Speaker 1: better from compliance and just physiologically a much better way
Speaker 1: to do it. So is it as effective? Where are
Speaker 1: you in that process? So we just finished a phase
Speaker 1: to be so basically with successful safe and efficacy was
Speaker 1: great and we're now moving into phase three and then
Speaker 1: register it as a drug on the FDA. So what
Speaker 1: have you seen though so far? Is it apples to
Speaker 1: apples in terms of injections. So it's a little bit
Speaker 1: of a different way of looking at it. The idea
Speaker 1: is that with oral insulin, the patients are going to
Speaker 1: start the administration of the oral insulin much earlier on
Speaker 1: and by doing so, you'll have the much better control
Speaker 1: of the diabetes. So if you're putting me much earlier,
Speaker 1: you mean in terms of having the disease, that they'll
Speaker 1: they'll start on insulin earlier, so they'll start with the
Speaker 1: oral insult. Let's look how it works today. Okay, So
Speaker 1: today you go to your doctor and tells you listen,
Speaker 1: I'm sorry to tell you your sugar level is too high.
Speaker 1: You start with diet and exercise. I'm talking about type
Speaker 1: two diet and exercise. Then you move into different oral
Speaker 1: agents that are not insulin, and eventually the last resort
Speaker 1: is that you need to inject. We're going to change
Speaker 1: the whole thing. We're gonna come and say, okay, forget it.
Speaker 1: Start with a diet and exercise for sure, best drug ever.
Speaker 1: But then take Orment's oral insulin. Okay, and then you're
Speaker 1: gonna be in a much better control for so many
Speaker 1: more years and you will benefit. And how do we
Speaker 1: know that because I've known a fair amount of people
Speaker 1: have had diabetes, and I mean, yeah, the insulin is
Speaker 1: not nobody looks forward to that. That's kind of considered
Speaker 1: the last step of having to do that. So if
Speaker 1: you can manage it up to that point. So my
Speaker 1: concern is if you start with insulin early, how is
Speaker 1: that a good thing? So even today would be a
Speaker 1: good thing, but many people are afraid of the needle.
Speaker 1: The reason that it's a good thing is because if
Speaker 1: you think about it, how our body works. Let's go
Speaker 1: back to our biology class from third grade. We have
Speaker 1: the pancreas making the insultly into the liver. The liver
Speaker 1: takes it into the blood stream. When we give it orally,
Speaker 1: it goes into the liver, so we mimic the physiological
Speaker 1: way that the body works, unlike the injection that goes
Speaker 1: directly into the blood stream. That's why it's much more
Speaker 1: ad pretentious for us to use the oral insulin versus
Speaker 1: the injection in most cases. So you mentioned that there
Speaker 1: has been no big breakthrough and almost fifteen years why
Speaker 1: did this takes a Well, welcome to the world of
Speaker 1: the f d A. So even us that ornament that
Speaker 1: we're making, we're taking the same insulin that was discovered
Speaker 1: almost a hundred years ago, and we just have a
Speaker 1: safe technology to deliver it. Orally, we still have to
Speaker 1: go through phase one, phase two, phase three, almost as
Speaker 1: long as developing a new drug. And so why, I
Speaker 1: guess I'll ask the same question in a slightly different way,
Speaker 1: why did someone come up with this sooner? Because I mean,
Speaker 1: like Carol and on a lot people had good friends
Speaker 1: in college, you know who as teenagers you know, had
Speaker 1: to inject themselves with insulin. It's really a very difficult
Speaker 1: thing to do. Uh, why didn't this breakthrough happen decades ago?
Speaker 1: So you should ask yourself. There's so many injections currently
Speaker 1: that we take as an injection wouldn't you rather take
Speaker 1: them as appeal. So the answer is that many times
Speaker 1: when you take a small peptide, which is a protein,
Speaker 1: if you're gonna swallow, If I will take the insultin
Speaker 1: now without uraments technology and I will try to swallow,
Speaker 1: it will just break down. So we have a technology
Speaker 1: that knows how to protect it and how to come
Speaker 1: of the issue of the size of of the got
Speaker 1: wall in order to deliver it into the into the liver.
Speaker 1: This is a delivery that you're you're essentially solving the
Speaker 1: delivery problem exactly. And I can use it for many
Speaker 1: other things. I can use it for insulin, for flu vaccine,
Speaker 1: for many other things. But instutent is the holy grade.
Speaker 1: You need the same dosage because I know some of
Speaker 1: the concerns have been that if it's going to some
Speaker 1: extent through your digestive system, that you kind of pull
Speaker 1: out some of the insulin so that you're gon ultimately
Speaker 1: need to to take more for it to be effective.
Speaker 1: So where are we on that? So we absolutely need
Speaker 1: to take more than an injection. But the most fascinating
Speaker 1: thing that we see over this the recent crown that
Speaker 1: we did less is more, meaning when we gave less insulin,
Speaker 1: it was even more effective than when we gave more insulin.
Speaker 1: How is that? So? How do you explain that? We
Speaker 1: believe that what happens is the liver does an amazing job.
Speaker 1: It regulates the secretion of the insulin and regulates the
Speaker 1: secretion of the glucos. By getting insulin directly into the liver,
Speaker 1: we signal to the liver, hey, here is insulin. So
Speaker 1: it stops the excessive production of glucos by the lever.
Speaker 1: Hence the magic that with a small amount of insulin orally,
Speaker 1: you can reduce the glucose level drastically. So we talk
Speaker 1: a lot about sort of the health and well being,
Speaker 1: especially here in the United States, and you know obesity
Speaker 1: rates going up and and diabetes obviously is always tied
Speaker 1: into the sort of broader health and you alluded to
Speaker 1: this earlier. What else is being done? Do you feel
Speaker 1: like sort of more holistically literally and figuratively to combat
Speaker 1: diabetes at this point? So let me start with the negative.
Speaker 1: I think we're just not doing enough to have a
Speaker 1: holistic picture and to see how is the society We're
Speaker 1: spending almost a trillion dollars a year on diabetes okay,
Speaker 1: but it's easier for the payers to get their money,
Speaker 1: it's easier for for for the doctors to subscribe rade drugs.
Speaker 1: What do we do as a society to look at
Speaker 1: the holistic picture and to make sure that we can
Speaker 1: have more healthier and a little bit less cost for
Speaker 1: hans to keep ourselves as a healthy society. So let
Speaker 1: me follow up on that, because it's it's a really
Speaker 1: important point. I feel like we talked about it a lot. Uh.
Speaker 1: Is this just that the economics are, for lack of
Speaker 1: better terms, sort of perverted across the healthcare spectrum that
Speaker 1: it's easier to essentially get everything paid for when it's
Speaker 1: a treatment rather than if it's preventative. So I think
Speaker 1: it's a few things. I think number one, it's it's
Speaker 1: each one looks. It's a don't perspective it. So if
Speaker 1: you were the insurance company, you want to make your
Speaker 1: money the way you make it, and that's it. If
Speaker 1: you were the doctor and you were the patient, and
Speaker 1: each one looks at his own way, the government doesn't come.
Speaker 1: Nobody comes and say, wait, wait, wait a second, the
Speaker 1: whole thing doesn't make sense. I'll give you what one
Speaker 1: quick example from South Africa a few years ago, and
Speaker 1: I think it's coming to America as well. A guy
Speaker 1: who started an insurance company in South Africa and you
Speaker 1: basically said, if you can exercise, which is the best
Speaker 1: drug ever invented in the world, you know your insurance
Speaker 1: coasts are going to cost less. So simple things like
Speaker 1: that will encourage people to keep them myself in a
Speaker 1: much healthier position. So realistically, when do you anticipate that
Speaker 1: this would actually be approved and on the market next year?
Speaker 1: Early next year, we're going to meet with the f
Speaker 1: D a start the phase three. Phase three should take
Speaker 1: two years or so, another year of registration and then
Speaker 1: we should have it in the market. Here, I should
Speaker 1: say that we already have the partner in China and
Speaker 1: it's probably gonna get registered in China before the United States.
Speaker 1: The oral instulent we reached China first, and that's Nadav
Speaker 1: kid Drawn. He is the CEO of Uramed Pharmaceuticals. Talk
Speaker 1: a little Startups BC and interestingly, king off something we
Speaker 1: talked about earlier, healthcare and what maybe underneath some of
Speaker 1: the startups that we're seeing on the scene. Vanessa lu
Speaker 1: is here with us. She's vice president at SAP and
Speaker 1: the head of SAP Startup Accelerator. You may know it
Speaker 1: as SAP dot io. She's here with the Snart Bloomberger
Speaker 1: Inactive Broker Studio. A native New Yorker, native New York City,
Speaker 1: I believe as well. So tell us what is going
Speaker 1: on out there? You guys hosted UH an event with
Speaker 1: some startups that are in the healthcare space. What are
Speaker 1: you seeing out there? Yeah, that's right. So we just
Speaker 1: had a demo day where we profiled seven companies we've
Speaker 1: been working with. These are healthcare startups that are late
Speaker 1: seed to serious c that we chose out of a
Speaker 1: field of over a hundred and fifty companies, and they're
Speaker 1: all in the space of health care, being able to
Speaker 1: work with healthcare providers to change the innovation that they're doing,
Speaker 1: and also working with corporates on employee health and wellness.
Speaker 1: Why health care And I'm curious that this is an
Speaker 1: acknowledgement that this is one of the industries that has
Speaker 1: yet to really be disrupted if you look at everything
Speaker 1: else that's going on, and this is an opportunity essentially
Speaker 1: for SAP to maybe have some significance, say in that
Speaker 1: disruption that's exactly right. That's exactly why we did this.
Speaker 1: This is an industry that is right for disruption. There
Speaker 1: are so many unfortunately inefficiencies right now, especially in the
Speaker 1: US market, So that means that pay especially US versus
Speaker 1: other developed markets or other markets that have single payer structures,
Speaker 1: for instance, where then that becomes much more of a
Speaker 1: government um controlled type of industry. And so over here.
Speaker 1: Because there's a lot of fragmentation, that means that there
Speaker 1: are many different pockets where analytics are being done. If
Speaker 1: you think about how electronic medical records really first started,
Speaker 1: it was because there had to be systems in place
Speaker 1: to track what people were doing. But because there's so
Speaker 1: many disparate players in it, it's now so all over
Speaker 1: the place. And that's why this whole entire idea of
Speaker 1: trying to create some type of centralized repository for data
Speaker 1: is really interesting. So half of the startups that we
Speaker 1: were working with over the last twelve weeks have been
Speaker 1: focused on that, using AI machine learning, thinking about ways
Speaker 1: where you can really just identify the unstructured text and
Speaker 1: finding the insights from that. So we've been talking a
Speaker 1: lot lately when we've been talking to folks in the
Speaker 1: entrepreneurial and the venture communities, specifically about diversity or lack
Speaker 1: thereof in the founder class, in the investor class as well.
Speaker 1: You have a lot of power in that world in
Speaker 1: your selections and essentially you're championing there. What do you
Speaker 1: feel like you guys are doing and how do you
Speaker 1: make a meaningful difference in that part of the equation
Speaker 1: and having candidly a much more diverse set of founders,
Speaker 1: we have a commitment where the founders we either fund
Speaker 1: or we accelerate through our accelerators have to be founders
Speaker 1: that are underrepresented here in New York. Our programs are
Speaker 1: a percent focused on that. The reason why we're doing
Speaker 1: this is because when we're saying we're going to make
Speaker 1: technology better, technology for whom, how are you going to
Speaker 1: be making that technology better exactly? And being stewards of technology,
Speaker 1: we think that we have a critical role to play
Speaker 1: to say these are the types of companies we're going
Speaker 1: to work with. Startups come in so many different forms,
Speaker 1: so many different types of innovations that are happening a
Speaker 1: lot of the times. What we're finding is that underrepresentative
Speaker 1: founders just haven't been provided the access to the right
Speaker 1: networks to surface. What they're doing is not because they
Speaker 1: don't have the great idea, because they do. So you
Speaker 1: said globally, why not just go in I want to
Speaker 1: make it fifty percent. I think it's just kind of
Speaker 1: interesting because I think, you know the research that's been
Speaker 1: out there. You know, the more diverse and I'm not
Speaker 1: just talking men and women, but the more diverse you
Speaker 1: have a group of people, whether it's creating companies or
Speaker 1: discussing certain problems that are out there, that you're more
Speaker 1: likely to have a smarter solution. That's right, smarter solution,
Speaker 1: it's going to also vial and more viable. It'll just
Speaker 1: grow that much faster, better cultures. What is it in
Speaker 1: the healthcare that you think is very interesting and innovative
Speaker 1: that's happening right now. Is it just about kind of
Speaker 1: getting the data to make sense and and organize it,
Speaker 1: or is there something else that's happening that that that
Speaker 1: would be like, wow, I didn't know that was going on.
Speaker 1: So one of the things that we focus on the
Speaker 1: other half of the cohort were actually corporates that are
Speaker 1: not going to be every day linked to healthcare, but
Speaker 1: they have an important role to play. If you think
Speaker 1: about the Fortune five companies out there, the number of
Speaker 1: employees that they employ, what can you do if you
Speaker 1: can tap into what they do with employees. So if
Speaker 1: you think about mental health and wellness, you think about
Speaker 1: how one in four people nowadays are battling some type
Speaker 1: of mental health condition. But yet if you look in
Speaker 1: the workplace, about sixty of people don't talk about it.
Speaker 1: They don't even talk about the fact that they are
Speaker 1: struggling with something. Employers can have a very critical role
Speaker 1: to play because they are there with them. And so
Speaker 1: that is a shift that we see. It's not just
Speaker 1: about providers, it's not just about payers, but it's also
Speaker 1: the role that companies can play. We think that that's
Speaker 1: a really really big innovation, really big area. That is
Speaker 1: what we're going to see a lot happening there in
Speaker 1: the next few years. And that's Vanessa Leeu, vice president
Speaker 1: of SAP dot Io. All Right, So Jason ma hade
Speaker 1: a pretty cool conversation with the folks over at Zeneth
Speaker 1: watches the companies a hundred and fifty years old. They
Speaker 1: continues to innovate and think about how to attract customers,
Speaker 1: especially younger customers who increasingly have more and more choices.
Speaker 1: So we caught up with the CEO of Zedeth, Julian Tournaure,
Speaker 1: and check out what you have to say. Watches are
Speaker 1: pardon the pun, sort of having a moment in a way.
Speaker 1: People are rediscovering the sort of artisan nature in many ways,
Speaker 1: the craftsmanship that Carol was alluding to. What do you
Speaker 1: think that is? Why are people sort of pivoting back
Speaker 1: and maybe away from the smart watch? Well, you know,
Speaker 1: first of all, you don't have so many objects like
Speaker 1: a watch, and I think today we live in such
Speaker 1: a fast world. I mean between the Internet, between the
Speaker 1: social media, and don't forget that to watch, a mechanical
Speaker 1: watch is one of the few objects that will last forever.
Speaker 1: Right if in one thousand years you have a watch
Speaker 1: and you have a watchmaker able to put some oil,
Speaker 1: it's still going to work. How many object in this
Speaker 1: room we'll still work in one thousand years. So when
Speaker 1: you buy a cell phone, when you buy a smart watch,
Speaker 1: you know the minute you buy it, it's already obsolete.
Speaker 1: So I think sometimes people need to attach themselves to
Speaker 1: something that will that will last forever. I do wonder
Speaker 1: about and I think about the conversations we keep having
Speaker 1: about fast fashion and the pushback this kind of disposable
Speaker 1: society that we've become where we used to old something
Speaker 1: or our dad would fix something that got broken. And
Speaker 1: I do wonder if we're kind of channeling back to that.
Speaker 1: And what are you seeing in terms of your consumer,
Speaker 1: especially the younger consumer, because you talk about you've got
Speaker 1: to invent to bring in a younger generation. What do
Speaker 1: they want? And watch I think they want. They buy history,
Speaker 1: they buy authenticity. That's what they want. Also because today
Speaker 1: also we are bombarded by marketing, communication, publicity everywhere, and
Speaker 1: they want to buy something with substance, with content, So
Speaker 1: they often ask us questions about how it's made, how
Speaker 1: long does it take, basically, what's behind the brand and
Speaker 1: what's behind the price? What do I pay when I
Speaker 1: get a watch? So we have to to show them
Speaker 1: the savoi fare and how many hours of watchmaker is
Speaker 1: working on a watch. So that's super important. But also
Speaker 1: we need to show them creativity and innovation. Let's not
Speaker 1: forget that when that watch was made in the sixties.
Speaker 1: These gentlemen that I met, actually they're all in their
Speaker 1: mid eighties. They were so innovative passionate, creative, already having
Speaker 1: a startup spirit. So that's what we need to continue
Speaker 1: to do to build the legendary watch of tomorrow, so
Speaker 1: that it's really connecting tradition to the future. Well, and
Speaker 1: you're not alone and identifying this opportunity. In many ways,
Speaker 1: it's a very competitive space. There's even some acquisitions obviously
Speaker 1: going on. You're very familiar with that. How does that
Speaker 1: change the landscape from a business perspective, From a competitive perspective,
Speaker 1: I think it's a competition is pretty healthy, and I
Speaker 1: think we are pushing each other, you know, whether it's
Speaker 1: inside our group, inside the VMH, or outside the group.
Speaker 1: The more we create, the more we push the limits,
Speaker 1: the more we will go further. And I think it's
Speaker 1: very healthy. You know, it's very competitive, but in the
Speaker 1: watch industry, it's it's quite friendly competition. You know, we
Speaker 1: do trade shows together, we share things, we discussed a lot.
Speaker 1: It's a pretty friendly one, you know. It's a bit
Speaker 1: of the Swiss way, you know, compromise with I do
Speaker 1: wonder about the benefits of being part of a conglomerate
Speaker 1: where there's a bunch of brands versus being on your
Speaker 1: own and when you're in a conglomerate, um, you know,
Speaker 1: how do you keep and maintain your identity. We talked
Speaker 1: to a little bit about that. Yes, of course that's
Speaker 1: that's a very important point. And I would say I'm
Speaker 1: lucky to to run a brand that's part of LVMH
Speaker 1: because LVMAGE culture is to leave independence to each brand,
Speaker 1: very vertical. So we share things, we work together on
Speaker 1: some projects, but each band is very independent in its
Speaker 1: own development. And I think that's very healthy because you know,
Speaker 1: clients are not buying the conglomerate, the group product, they
Speaker 1: are buying brand by brand. So if we want the
Speaker 1: client to remain loyal to a to a brand, you
Speaker 1: need to keep its identity and that's super important. Let's
Speaker 1: talk markets in terms of you know, emerging markets. We
Speaker 1: know Asia, Hong Kong, these are important markets. What have
Speaker 1: you seen specifically in Hong Kong, because we've talked a
Speaker 1: lot about the high end luxury market certainly impacted by
Speaker 1: the protest there. I moved back to Europe two years
Speaker 1: ago after seven years in Hong Kong, so I know
Speaker 1: Hong Kong quite well. And of course it had been
Speaker 1: such a hub for Asia and mostly for Chinese clients.
Speaker 1: It became to a certain extent that was quite quite unbelievable.
Speaker 1: I would say now with the recent events, of course
Speaker 1: the whole industry is suffering, but I think it's also
Speaker 1: rebalancing because Hong Kong now is not alone anymore. You know,
Speaker 1: there is a tough competition. Plenty of cities, whether in
Speaker 1: China and the rest of Asia Pacific, dat are basically
Speaker 1: as a shopping destination as Hong Kong and Hong Kong
Speaker 1: used to be a hub. Now it's just another destination
Speaker 1: among others. So I think it will rebalance, and hopefully
Speaker 1: these events will we'll go away and we can resume
Speaker 1: normal business. But to that exact point, just to put
Speaker 1: you a little bit, we've heard a lot about the
Speaker 1: rise of Singapore as an alternate. As an alternative, I
Speaker 1: should say, what do you make of that? Yeah, I
Speaker 1: mean you're totally right. Singapore is for me the Hong
Speaker 1: Kong or Southeast Asia. But you have also sold in
Speaker 1: South Korea. You have a Japan that's really developing very
Speaker 1: fast for us. And then inside channel also people talk
Speaker 1: often about Shanga and Beijing, but if you go to
Speaker 1: hang Jo, if you go to shenz and if you
Speaker 1: go to Guangzho, these are cities that are developing in
Speaker 1: such a fast way. And when I was there in
Speaker 1: twenty eleven, you didn't feel like doing shopping there. You
Speaker 1: go Now it's the best shopping all in the world.
Speaker 1: So it's it's it's really catching up on Hong Kong. Well,
Speaker 1: And I do wonder about because I think everybody has
Speaker 1: been covering mainland China as well. I mean, what are
Speaker 1: the big growth markets for your the big growth cities
Speaker 1: right now? Definitely Greater Channel we remain and when I
Speaker 1: say greater include Hong Kong and then Taiwan to a
Speaker 1: certain extent, we remained the growth engine because of its population.
Speaker 1: You know, still to the only four percent of the
Speaker 1: people that have a passport they travel. And definitely I
Speaker 1: believe for social um, for social peace, social developments, there
Speaker 1: will be a development of the of the middle class
Speaker 1: in China. So we have we have a huge growth
Speaker 1: engine upcoming. But I'm in countries like Indonesia are developing
Speaker 1: very fast. In luxury Vietnam also we have more and
Speaker 1: more clients coming from Vietnam buying in Singapore. So I
Speaker 1: would say this region will remain the growth engine for sure,
Speaker 1: and and America as well. So a hundred and fifty
Speaker 1: five years and this brand is what happens over the
Speaker 1: next say ten That's difficult to say, but I think
Speaker 1: again we will remain a Swiss watch brand in a
Speaker 1: very small city in Switzerland, which gives us the authenticity
Speaker 1: I referred to before the long history. But we should
Speaker 1: not sleep in the past, and that had been a
Speaker 1: bit the tent tendency of Swiss watchmaking brand new to
Speaker 1: repeat the past. We want to build the future. That's
Speaker 1: super important. If we want to keep again young generation
Speaker 1: interested into mechanical watchmaking, we need to be very dynamic
Speaker 1: and that's the mission of the brandan Jilian, Does that
Speaker 1: conclude more watches for Zenith breaking auction records? Because you
Speaker 1: just did right, Yes, we just did it. Was it
Speaker 1: was a great thing and we we had with Philip's
Speaker 1: Philips auction House. We did that correct in Geneva and
Speaker 1: it's fantastic. I mean, we'll continue to do that. How
Speaker 1: much did you come? Forty dollars? Wow? All right, that
Speaker 1: was Julianne Turner just slightly above what I'm looking for
Speaker 1: when I'm shopping for a watch. But beautiful watches. I
Speaker 1: have to say, check out the video of that once
Speaker 1: it's supposed to we'll tweet it out because he does
Speaker 1: a nice job showing off to watch. It's two very
Speaker 1: different watches. Love that he came in with. But he
Speaker 1: did say he normally does not wear to watches. No, no,
Speaker 1: he doesn't, um but it was really fascinating and I
Speaker 1: think the insight that he had here here was somebody
Speaker 1: who lived in Hong Kong is watching what's going on
Speaker 1: and really has a global perspective terms of certainly the
Speaker 1: luxury consumer. What's going on? All right, So let's talk
Speaker 1: a little motorcycles. We have got just the man to
Speaker 1: do it. Jason Chinok is here. He is CEO of
Speaker 1: Ducati North America. And can I just start by saying
Speaker 1: we're gonna talk about new bikes and stuff like that,
Speaker 1: But can I just say, this must be like the
Speaker 1: coolest job in the world. Unquestionably, it's definitely one of
Speaker 1: the coolest. Your motorcycle guy, I mean you actually started
Speaker 1: working behind the counter at a like doing motorcycle parts, right, Yes,
Speaker 1: I did. In fact, it was something that years ago.
Speaker 1: I was following a different career path and I made
Speaker 1: the decision. I said, Okay, this is clearly not working
Speaker 1: out for me this other way I was going, And
Speaker 1: so I decided, I'm going to follow another passion in life.
Speaker 1: And I started doing my homework, research, informational interviews with
Speaker 1: executives in the motorcycling industry. And then I realized, I said,
Speaker 1: the way for me to really learn this is just
Speaker 1: to cut my teeth at the at the beginning, at
Speaker 1: the very bottom. And so I started it off as
Speaker 1: a parts guy at a motorcycle dealership. Men. I had
Speaker 1: an education, and I was way overqualified for like what
Speaker 1: I was doing, but I said, this is where I
Speaker 1: gotta learn. And I learned customers, I learned the product.
Speaker 1: I learned how to work with manufacturers. I mean, like
Speaker 1: that was those those four years were probably the most
Speaker 1: formative years of my career, uh, in terms of setting
Speaker 1: me for my future. What's changed about the industry since
Speaker 1: you've started, Uh, The industry is actually it's become a
Speaker 1: little bit smaller than back then. I mean back then, obviously,
Speaker 1: back in the early nineties or late nineties, credit was
Speaker 1: a little looser, uh, and so a lot of people
Speaker 1: were getting finance from motorcycles that maybe weren't really in
Speaker 1: the position where they should be financing motorcycles, and so
Speaker 1: as a result, what we saw is we saw a
Speaker 1: bit of shrinking in the industry when the recession hitting.
Speaker 1: Credit dried up. But the good thing is is for
Speaker 1: brands like Ducati and where we're at, we really weren't
Speaker 1: affected by that because we always sold in the premium
Speaker 1: and we never had predatory lending or questionable credit practices,
Speaker 1: and so as a result, we gained a tremendous amount
Speaker 1: of market share when the recession hit. Now, volumes did affect,
Speaker 1: we're effected a little bit as well, but and then
Speaker 1: as the market came back, not to the same degree
Speaker 1: as it was before. As it came back, we retained
Speaker 1: our share, increased our volumes, and so it's been quite
Speaker 1: positive for us in that regard. All right, so let's
Speaker 1: talk about this new lineup. What's different? What can people
Speaker 1: be looking for. Well, one of the flagship motorcycle that
Speaker 1: a lot of people are getting really excited about is
Speaker 1: a new motorcycle that we have called the street Fighter.
Speaker 1: And this know that it is and and it comes
Speaker 1: from the idea of somebody taking a sport motorcycle like
Speaker 1: what you would see on the racetrack, removing the farings
Speaker 1: off of it, the body work and putting on a
Speaker 1: really cool headlight in the handlebar, and that basically takes
Speaker 1: a very aggressive sport bike. It makes it accessible for
Speaker 1: the street except for we've taken it and redone a
Speaker 1: completely beautiful redesign and it's built off of the V
Speaker 1: four platform and chassis which is UH which which is
Speaker 1: a number one seller last year for us. So there's
Speaker 1: that product and that that's on one end, and on
Speaker 1: the other end we find ourselves into the e bike
Speaker 1: world as well. Well, that's no curious about tell us
Speaker 1: how aggressively you guys are pursuing, I mean, how much
Speaker 1: your customer wants this. Well, this is something they launched
Speaker 1: in Europe last year as a pilot project, and then
Speaker 1: when I saw it come out on myself, being a
Speaker 1: mountain biker, was like, I want that product, even if
Speaker 1: it's just to have one for myself. UH. And then
Speaker 1: we took the last year in taking feedback from our
Speaker 1: customer base, from our dealer network and just really to
Speaker 1: understand and research what that markets like. And it's incredible.
Speaker 1: It's a very fast growing segment. In North America. In Europe,
Speaker 1: it had actually been going for quite years. But our
Speaker 1: customer base is our first audience for this product because
Speaker 1: it's branded Ducatti. But there's also really unique technologies and
Speaker 1: the partnership that we have with the company that's making
Speaker 1: the bikes with us, and that's Jason Chinek, the CEO
Speaker 1: of Dukati North America. Well, that wraps up the weekend
Speaker 1: edition of Bloomberg Business Week from Bloomberg Radio. Thanks so
Speaker 1: much for joining us. I'm Jason Kelly. Be sure to
Speaker 1: tune into Bloomberg Business Week Radio Live Monday through Friday
Speaker 1: starting at two pm Wall Street Time. And if you
Speaker 1: get catch us live, get our daily podcast for the
Speaker 1: at home wherever you download your podcast. We'll be back
Speaker 1: right here next week at the same time. This is
Speaker 1: Whoober mmmmmmmmmmmmmmmm