WEBVTT - Why A TikTok-Microsoft Deal Solves A Lot of Problems 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day, 0:00:06.240 --> 0:00:09.239 we bring you interviews from CEOs, A, market pros, and 0:00:09.400 --> 0:00:12.799 Bloomberg experts, along with essential market moving news. Find the 0:00:12.800 --> 0:00:16.280 Bloomberg Markets Podcast on Apple podcast or wherever you listen 0:00:16.320 --> 0:00:22.720 to podcasts, and on Bloomberg dot com. Alright, so, the 0:00:22.840 --> 0:00:28.800 Microsoft TikTok President Trump triumvirate is a really interesting little grouping. 0:00:29.000 --> 0:00:32.560 And obviously this story started at the end of last 0:00:32.600 --> 0:00:34.800 week and then there was all sorts of reports coming 0:00:34.800 --> 0:00:38.199 out over the weekend. Today, the latest is that it 0:00:38.200 --> 0:00:41.519 looks like Microsoft is now trying to buy TikTok with 0:00:41.600 --> 0:00:45.400 Trump's approval and is trying to get back in the game, 0:00:45.560 --> 0:00:48.040 so to speak. So let's bring in a Bloomberg opinion 0:00:48.040 --> 0:00:50.839 columnist who's been writing about this. Take him. Thanks for 0:00:50.920 --> 0:00:54.920 joining us. Take him. What is this all about? It's obviously, 0:00:55.280 --> 0:00:59.520 I mean, very tenuously about national security. What would you 0:00:59.520 --> 0:01:03.680 say the reason behind this whole escapade on the part 0:01:03.680 --> 0:01:08.200 of President Trump is, um, it's tough to say. I mean, 0:01:08.200 --> 0:01:10.920 it all started at the beginning of July last month, 0:01:11.040 --> 0:01:13.920 when Secretary Stayed from Pale said, they're looking at it 0:01:14.720 --> 0:01:18.400 concerning banning all these Chinese apps based on national security ascerns. 0:01:18.560 --> 0:01:20.960 And I'm sure part of this political because everyone has 0:01:21.040 --> 0:01:24.640 opinion on TikTok, and every time they talked about TikTok, 0:01:24.800 --> 0:01:29.240 they dominate the headlines, so that that's the issue national 0:01:29.360 --> 0:01:32.280 and gaty privacy concernance according to the government, UM there 0:01:32.360 --> 0:01:35.960 hasn't been any faster evidence that they proved or presented 0:01:36.400 --> 0:01:40.319 uh to substant substantiate those concerns. But it looks like 0:01:41.200 --> 0:01:44.280 with this latest Trump phone call with the CEO of Microsoft, 0:01:44.880 --> 0:01:47.800 they're gonna have forty five days to come to some 0:01:47.880 --> 0:01:50.720 kind of agreement and this would actually solve a lot 0:01:50.720 --> 0:01:53.280 of the concerns that people have and actually makes sense 0:01:53.320 --> 0:01:57.400 for Microsoft too. So today is this kind of the 0:01:57.480 --> 0:02:00.600 latest step and maybe the most important step, and what 0:02:00.760 --> 0:02:05.760 is appearing to be evolving a cold war, a technology 0:02:05.800 --> 0:02:11.320 cold war between China and the West. I think so 0:02:11.440 --> 0:02:15.080 I mean this for some reason, TikTok, and like I said, 0:02:15.080 --> 0:02:17.799 it is because it's a very popular topic has become 0:02:17.840 --> 0:02:21.760 like defront in this rising political and economic tension war 0:02:21.800 --> 0:02:25.400 between the US and China. Trump has repeatedly said that 0:02:25.440 --> 0:02:28.880 he's considering getting the app to retaliate against China over 0:02:29.280 --> 0:02:32.240 how they handle the virus. So it's becoming that key 0:02:32.360 --> 0:02:36.520 vector in the rising tensions between the two countries. But 0:02:36.720 --> 0:02:40.919 you know, just taking everything that China has innovated, let's say, 0:02:41.160 --> 0:02:44.320 or in taking Chinese companies and having US companies buy 0:02:44.400 --> 0:02:49.080 them for parts, is that really a solution here? I 0:02:49.120 --> 0:02:52.080 think it's a solution in the short term. Um, it 0:02:52.120 --> 0:02:54.960 does make sense for Microsoft to take over the US 0:02:55.000 --> 0:02:58.920 stuff basically ensure there will be no privacy issues, no 0:02:59.000 --> 0:03:02.240 security issues, but also opens the door, like you said, 0:03:02.280 --> 0:03:07.080 to other potential retaliation. And you know what's the stop. 0:03:08.400 --> 0:03:10.440 The main issue with TikTok is because it's owned by 0:03:10.520 --> 0:03:13.919 a Chinese company, right, Does that mean every Chinese company 0:03:14.040 --> 0:03:17.440 that owns something that becomes popular in the US or 0:03:17.480 --> 0:03:20.400 buy something in the US? Is that like in play now? 0:03:20.560 --> 0:03:23.520 So it opens the cannon worms that we're really going 0:03:23.560 --> 0:03:25.720 to see how it turns out in the next few 0:03:25.760 --> 0:03:29.160 months to a year. So to your column is out 0:03:29.200 --> 0:03:31.359 and it's in uh, you know, it's a title, the 0:03:31.400 --> 0:03:34.840 TikTok Microsoft deal might solve everything. How do you feel 0:03:35.200 --> 0:03:39.360 what's what's your thesis behind that. So, like like we said, 0:03:39.400 --> 0:03:44.240 if Microsoft does consummate this transaction, they could protect the 0:03:44.360 --> 0:03:49.000 US consumer privacy. It's a hundred million Americans now TikTok 0:03:49.000 --> 0:03:51.200 came out with that number on Saturday for the first time, 0:03:51.240 --> 0:03:53.880 so that's a huge portion of the American population. So 0:03:54.520 --> 0:04:00.680 data security wise, it protects UM Americans data it And 0:04:00.720 --> 0:04:04.480 then from Microsoft, it really helps their advertising business which 0:04:04.480 --> 0:04:07.720 has kind of been floundering. They have the being searchtensined 0:04:08.440 --> 0:04:11.160 and the big question last week with the antitrust hearing 0:04:11.160 --> 0:04:13.880 everyone saying oh there's big tech is they have all 0:04:13.960 --> 0:04:16.560 this market power and anti trust. What this deal does 0:04:16.600 --> 0:04:19.719 from Microsoft and kind a strangely for the ad market, 0:04:19.760 --> 0:04:22.200 is that adds a big third player the digital ad 0:04:22.200 --> 0:04:25.520 market that's dominated by Google and Facebook. So it counterintruvely 0:04:25.640 --> 0:04:28.640 makes UM the market more competitive in terms of the 0:04:28.640 --> 0:04:32.360 anti trust issues. And then from Microsoft this huge base 0:04:32.440 --> 0:04:35.919 of a hundred million consumers, they could cross promoted across 0:04:35.960 --> 0:04:39.159 their other consumer businesses where they have the Xbox gaming 0:04:39.160 --> 0:04:42.480 constable business, they could use this as a key tenant 0:04:42.520 --> 0:04:44.960 of their cloud service where they're the number two player 0:04:44.960 --> 0:04:48.159 ask for Amazon. And they also have this thing where 0:04:48.800 --> 0:04:51.360 on TikTok right now, a lot of the creators can 0:04:51.400 --> 0:04:54.120 do video sprains very similar to Amazon Twitch. So this 0:04:54.200 --> 0:04:57.520 is like a new market where creators can do streaming 0:04:57.600 --> 0:05:00.440 of whatever they want and they get paid the small gifts. 0:05:01.120 --> 0:05:03.880 It's clearly a great deal from Microsoft, right, I mean 0:05:03.920 --> 0:05:06.320 we have we have snapped now as well also trying 0:05:06.360 --> 0:05:08.840 to develop something quickly that would compete with it. I mean, 0:05:08.880 --> 0:05:12.520 obviously it's a great deal for Microsoft. But how unusual 0:05:12.839 --> 0:05:15.520 is it that a president would get involved to this extent. 0:05:15.640 --> 0:05:20.839 I mean, if we're concerned about national security and you know, 0:05:20.880 --> 0:05:24.600 Americans privacy and so on, are we really just handing 0:05:24.600 --> 0:05:28.440 over those concerns to another private company will be at 0:05:28.440 --> 0:05:33.320 a US one. Isn't this a regulator's job? I agree 0:05:33.320 --> 0:05:35.279 with you, it's a total regulators shop. And this is 0:05:35.440 --> 0:05:39.640 very strange in the way Trump has been unilaterally making 0:05:39.680 --> 0:05:42.800 these decisions, and traditionally it's been much more of a 0:05:42.880 --> 0:05:47.359 multilateral do process oriented process. And this is kind of 0:05:47.400 --> 0:05:49.320 strange where all of a sudden they've been looking at 0:05:49.360 --> 0:05:52.760 TikTok league last year in the sixty story view and 0:05:52.760 --> 0:05:56.360 then right before election, you know, they're really bringing up 0:05:56.360 --> 0:05:58.960 to the forefront. So the timing is strange, and the 0:05:59.080 --> 0:06:02.240 d process death only questionable in terms of what's going on, 0:06:02.320 --> 0:06:06.120 and they still haven't presented clear cut evidence that TikTok, 0:06:06.520 --> 0:06:10.120 which the company thoroughly denies, has data process the issues. 0:06:11.440 --> 0:06:12.599 So you do you think this is kind of a 0:06:12.640 --> 0:06:15.359 done deal with Microsoft or we're gonna get other bidders 0:06:15.360 --> 0:06:16.840 coming in here, because I'm sure a lot of other 0:06:16.880 --> 0:06:20.000 tech companies would love to get the US operations of TikTok. 0:06:21.240 --> 0:06:24.640 I think if it happens, it's going to be Microsoft because, 0:06:24.680 --> 0:06:28.520 like I said, the anti trust issues with I'm sure Amazon, Facebook, 0:06:28.560 --> 0:06:31.040 all these guys who love to buy TikTok, but they 0:06:31.080 --> 0:06:33.919 have for the anti trust issues. So the one that 0:06:34.000 --> 0:06:36.160 makes sense is Microsoft because they have the whole in 0:06:36.200 --> 0:06:40.040 their consumer social media segment, and they have the technical 0:06:40.120 --> 0:06:42.960 know how, the financial resources to get down quickly. And 0:06:43.000 --> 0:06:46.960 the funny thing is TikTok's founder used to work on Microsoft, 0:06:47.000 --> 0:06:50.280 so there's a lot of connections there. That's not The 0:06:50.320 --> 0:06:52.000 deal that I was talking about was the deal with 0:06:52.080 --> 0:06:54.560 music companies to add songs to videos. So just this 0:06:54.600 --> 0:06:56.560 morning we heard that a snap and secured rights from 0:06:56.600 --> 0:07:00.839 Warner Universal Publishing and Merlin which sounds very close to 0:07:00.880 --> 0:07:03.760 what the TikTok experience would be right to ten seconds, 0:07:03.800 --> 0:07:05.840 and you can add sort of songs and so on. 0:07:06.640 --> 0:07:09.080 Is there any guarantee that all of these users that 0:07:09.240 --> 0:07:13.240 loved TikTok when it was a Chinese owned company would 0:07:13.320 --> 0:07:16.640 stay with TikTok wants a Microsoft own company, I mean something, 0:07:16.760 --> 0:07:19.920 there's something different about Microsoft own TikTok. TikTok then bye 0:07:19.960 --> 0:07:24.840 Dance TikTok. I think they're definitely gonna stay. My I'm 0:07:24.880 --> 0:07:28.040 slightly less confident in TikTok stability in a date like 0:07:28.160 --> 0:07:30.720 two or three years out as Microsoft buys them, because 0:07:30.760 --> 0:07:33.600 it was a different engineering team in different sense, but 0:07:33.880 --> 0:07:36.480 at least in the mix short and intermediate term, there's 0:07:36.480 --> 0:07:39.800 no doubt TikTok us static. Microsoft buys them because it 0:07:39.840 --> 0:07:43.520 means they're app survived. Um, they're basically like crying and 0:07:43.560 --> 0:07:46.800 depressed over over the weekend thinking that it's going to 0:07:46.800 --> 0:07:48.440 get banned because Trump said he was going to ban 0:07:48.680 --> 0:07:52.560 on Saturday and that hasn't happened. So yeah, Microsoft buying 0:07:52.560 --> 0:07:57.000 it would be the apps users will be very happy. Interesting, 0:07:57.000 --> 0:08:00.400 well fascinating story to follow in the coming week and 0:08:00.480 --> 0:08:03.520 months as you suggested take take him technology calumnists for 0:08:03.560 --> 0:08:05.600 Bloomberg Opinion. You can read all of Tay's work and 0:08:05.640 --> 0:08:08.920 that of our fine Bloomberg opinion columnists at Bloomberg dot com, 0:08:09.040 --> 0:08:12.800 slash Opinion or O. P. I. N. Go on the terminal. 0:08:12.840 --> 0:08:15.280 Lots of great work there, and again the very interesting deal, 0:08:15.640 --> 0:08:17.960 a lot of folks saying this really, you know, sets 0:08:18.000 --> 0:08:22.040 down the marker for a cold war and technology be 0:08:22.200 --> 0:08:25.360 team between China and the West um and that could 0:08:25.360 --> 0:08:28.080 have ramifications for years to come. And Bloomberg will certainly 0:08:28.120 --> 0:08:34.880 follow that story. This is Bloomberg Markets with Paul Sweeney 0:08:34.920 --> 0:08:38.480 and Bunny Quinn on Bloomberg Radio. Well, we got some 0:08:38.720 --> 0:08:42.440 better than expected manufacturing dated this morning, so that's a 0:08:42.480 --> 0:08:46.320 great time to chat about the auto business. Alan Baum, 0:08:46.440 --> 0:08:50.040 auto analysts and principal Bauman Associates, joins us this morning. Alan, 0:08:50.080 --> 0:08:52.440 thanks so much for joining us here. Let's step back 0:08:53.120 --> 0:08:55.560 just give us Allen maybe the thirty thousand foot view 0:08:55.559 --> 0:08:57.680 of the US auto industry. And I want to start 0:08:57.720 --> 0:09:00.760 with production. What are the factories doing terms of production? 0:09:00.880 --> 0:09:04.880 How open are they? Well? Production has actually done much 0:09:04.960 --> 0:09:10.240 better uh than expected and frankly better than the market needs. 0:09:10.280 --> 0:09:13.040 It to do. Now, that's obviously not true in the 0:09:13.160 --> 0:09:16.880 area of the vehicles that are doing the best, trucks 0:09:16.920 --> 0:09:22.160 and SUVs, But in general, UH production is getting the 0:09:22.200 --> 0:09:27.000 inventories back to a reasonable level, again with some exceptions 0:09:27.000 --> 0:09:29.640 in pickups where you you generally like to have a 0:09:29.640 --> 0:09:32.560 lot of inventory because there's a lot of diversity within 0:09:32.600 --> 0:09:36.800 the product line. UM. That's said, that means that we're 0:09:36.840 --> 0:09:40.240 in a position where as we expect sales to be 0:09:40.360 --> 0:09:43.600 quite shoppy now through the next couple of months because 0:09:43.600 --> 0:09:47.720 of the virus, UH production will will start to pull 0:09:47.760 --> 0:09:52.040 back a little bit unless the automakers go ahead and 0:09:52.240 --> 0:09:55.120 make those vehicles and then get themselves in a in 0:09:55.160 --> 0:09:58.760 a bit of a pickle because of H too much 0:09:58.800 --> 0:10:01.679 inventory and then apps to need to go to incentives. 0:10:02.559 --> 0:10:08.600 Who will surprise us today, Well, unfortunately, not that many 0:10:08.640 --> 0:10:13.160 automakers report UH. This is something that was started by 0:10:13.200 --> 0:10:15.560 General Motors a couple of years ago, and most of 0:10:15.559 --> 0:10:19.760 the industry has has followed. All we're gonna see today 0:10:19.800 --> 0:10:24.680 is Hyundai, Toyota, Honda, Mazdao, UM and I might have 0:10:24.880 --> 0:10:30.000 might have missed UH company or or so UM what 0:10:30.160 --> 0:10:34.520 we've already seen Hyundai and and Toyota and Mazda report UM, 0:10:34.840 --> 0:10:40.720 and Toyota uh was down. Uh. There the the group 0:10:40.760 --> 0:10:44.640 they're they're certainly the full line automakers, very much exposed 0:10:44.679 --> 0:10:47.440 to both the car and the truck market, whereas Hyundai 0:10:47.600 --> 0:10:52.280 is increasingly moving over to the crossover side. They had 0:10:52.320 --> 0:10:55.920 a one percent gain UM, which is in large part 0:10:56.040 --> 0:10:58.840 the same story as the last few months. New product 0:10:58.920 --> 0:11:04.000 has helped them a lot, particularly on the crossover side. So, Allen, 0:11:04.160 --> 0:11:06.080 where are we on the demand side? I have some 0:11:06.120 --> 0:11:09.200 anecdotal evidence from a buddy mine who manages a dealership 0:11:09.240 --> 0:11:10.920 here in New Jersey, and he was kind of surprised 0:11:10.960 --> 0:11:14.480 that how strong the sales have been as they reopened 0:11:14.600 --> 0:11:19.240 their dealership. Um, how are you viewing the demand side? Well, 0:11:19.280 --> 0:11:22.839 we've got short term pent up demand from the March 0:11:22.920 --> 0:11:27.679 April May period. Uh that has has really propelled the market. 0:11:27.960 --> 0:11:31.319 You know, a lot of lease leases were extended, UM 0:11:31.600 --> 0:11:35.400 and Uh it became a good deal, particularly in the 0:11:35.480 --> 0:11:38.960 earlier part of the of this May June July period 0:11:39.320 --> 0:11:41.880 to come in and and get a get a product, 0:11:42.440 --> 0:11:45.560 as I say, particularly with high incentives. Those incentives have 0:11:45.600 --> 0:11:49.760 actually backed off dramatically because they're they're simply in the 0:11:50.080 --> 0:11:55.000 high uh demand uh segments. Uh, there's not as much 0:11:55.040 --> 0:11:58.480 product uh and so no reason for the automakers or 0:11:58.520 --> 0:12:02.000 the dealers to offer those high incentives. In fact, the 0:12:02.040 --> 0:12:05.280 automakers and the and the dealers are making more per 0:12:05.400 --> 0:12:09.040 vehicle right now than they do normally, again, because those 0:12:09.080 --> 0:12:12.920 incentives are down, and because fleet sales have almost dropped 0:12:12.920 --> 0:12:16.000 to to to nothing uh and of course those were 0:12:16.080 --> 0:12:23.280 less generally less profitable UH sales. That said, I'm expecting 0:12:23.280 --> 0:12:29.360 a rather uh poor uh fall period. Um. Again, going back, 0:12:29.840 --> 0:12:33.520 of course to the virus, what we're also seeing is 0:12:33.559 --> 0:12:36.000 that UM, you know, there there's a lot of talk, 0:12:36.200 --> 0:12:39.520 even uh from me a few months ago that might 0:12:39.559 --> 0:12:41.680 have said, well, this is not going to be quite 0:12:41.760 --> 0:12:45.240 as bad as it might otherwise be because new cars 0:12:45.240 --> 0:12:49.600 are bought by upper income people. In fact, we are 0:12:49.640 --> 0:12:54.720 seeing the luxury carmakers, particularly the Mercedes and and the 0:12:55.000 --> 0:12:59.080 BMW's of the world, not doing well at all uh 0:12:59.120 --> 0:13:02.120 and and I think that's attributed to the fact, not 0:13:02.200 --> 0:13:06.360 necessarily the buyers don't at the income but because they're 0:13:06.400 --> 0:13:11.199 they're they're so concerned about what the process of recovery 0:13:11.320 --> 0:13:15.400 is going to be, either for their own businesses or 0:13:15.559 --> 0:13:18.880 for the the economy as a whole. And how uh 0:13:19.200 --> 0:13:22.760 they clearly don't have to buy. And with the decline 0:13:22.760 --> 0:13:26.800 and uh in availability in some cases and incentages in 0:13:26.840 --> 0:13:30.520 the other, uh, they're not. So if that's the case 0:13:30.559 --> 0:13:34.400 with wealthy buyers, what's the case with less wealthy buyers 0:13:34.440 --> 0:13:37.160 that might be hoping for a new stimulus check or 0:13:37.320 --> 0:13:40.200 waiting on you know, the extension of federal benefits to 0:13:40.240 --> 0:13:43.600 add too unemployment benefits statewise in order just to live, 0:13:43.640 --> 0:13:48.319 never mind drive well. Yeah, and and those less wealthy buyers, 0:13:48.360 --> 0:13:51.680 as you say, very correctly, uh, the the almost the 0:13:51.760 --> 0:13:53.720 last thing that they're going to think about is a 0:13:53.720 --> 0:13:58.040 new car, and even a late model used car. I mean, 0:13:58.160 --> 0:14:01.120 this is this is the time. Uh. And and those 0:14:01.160 --> 0:14:05.199 those volumes are a little depressed, as some people hold 0:14:05.240 --> 0:14:11.400 onto their lease cars beyond uh the expiration of their lease. Uh. 0:14:11.440 --> 0:14:14.560 And so clearly, as you say, you're gonna be paying 0:14:14.559 --> 0:14:18.040 the rent and uh and giving yourself uh fed and 0:14:18.040 --> 0:14:23.040 and uh in your home as opposed to buying even 0:14:23.200 --> 0:14:26.320 a used car. And and uh, as as I said 0:14:26.360 --> 0:14:30.320 a minute ago, uh, increasingly that new car buyer is 0:14:30.360 --> 0:14:34.160 the upper income buyers. So those uh now that's not 0:14:34.240 --> 0:14:37.760 to say, of course that uh the unemployment search has 0:14:37.800 --> 0:14:41.360 not affected across the board, but it certainly has a 0:14:41.400 --> 0:14:46.560 greater impact on that lower income person. So, Allen, let's 0:14:46.800 --> 0:14:49.640 just real quickly here. What's the impact of any so 0:14:49.680 --> 0:14:54.560 far on the electric vehicle market stemming from the pandemic? Well, 0:14:54.760 --> 0:14:59.600 you know, the problem is UH that uh a number 0:15:00.000 --> 0:15:03.800 of new vehicles have been delayed a little bit new 0:15:03.880 --> 0:15:09.200 launches um, and the volumes were pretty modest, uh even 0:15:09.480 --> 0:15:13.560 with the launches, with the obvious exception of Tesla. UH 0:15:13.600 --> 0:15:16.560 and and Tesla, just as its stock seems to be 0:15:16.640 --> 0:15:19.200 on another plane, uh, some of its sales are on 0:15:19.240 --> 0:15:23.080 another plane as well. UM because uh and and I 0:15:23.400 --> 0:15:25.800 will be one of the first pisode that the uh 0:15:26.080 --> 0:15:30.280 the competition the Tesla faces is a lot less obvious 0:15:30.280 --> 0:15:32.280 than it than it might seem. And what I mean 0:15:32.360 --> 0:15:38.040 by that is as other automakers UH introduce electric vehicles, 0:15:38.080 --> 0:15:42.440 some of them frankly with a lot less uh interest 0:15:42.680 --> 0:15:46.640 or excitement if you will, UH than a player like Tesla, 0:15:47.200 --> 0:15:50.600 UM with their own marketing efforts, UH leading the way 0:15:50.680 --> 0:15:53.960 in that lack of excitement if you will, UM that 0:15:54.360 --> 0:15:58.440 those those sales are not gonna be great. Uh and uh. 0:15:58.480 --> 0:16:02.840 We've also seen UM in part because of regulatory issues 0:16:02.880 --> 0:16:05.680 here in the US, where they at least temporarily have 0:16:05.840 --> 0:16:10.040 backed away, and in Europe where those requirements are quite strong. 0:16:10.560 --> 0:16:14.360 Uh and uh, the automakers have focused on the markets 0:16:14.360 --> 0:16:17.880 where they need to meet regulations. Alan, thank you, always 0:16:17.920 --> 0:16:20.160 a pleasure to speak with you. That's allan Bomb, a 0:16:20.240 --> 0:16:22.680 Bomb and associates. And don't forget a little later on 0:16:22.760 --> 0:16:32.520 we get July auto sales numbers. This is Bloomberg. Robert 0:16:32.520 --> 0:16:36.480 Thompson is CEO of Clinical Reference Laboratory. It's one of 0:16:36.520 --> 0:16:39.520 the largest privately held clinical testing labs in the US. 0:16:39.680 --> 0:16:43.320 Well now it's developing a rapid response COVID test, basically 0:16:43.360 --> 0:16:47.200 one with the forty eight hour turnaround period. Let's check 0:16:47.240 --> 0:16:49.720 in with Mr Thompson now to see how the development 0:16:49.720 --> 0:16:52.600 of this test is going, not only development of the test, 0:16:52.680 --> 0:16:56.880 but also FDA emergency approval. Robert, thank you for joining us. 0:16:56.920 --> 0:17:00.400 First of all, how does your rapid response test differ 0:17:00.480 --> 0:17:05.280 from others that are almost on the market. So our 0:17:05.320 --> 0:17:08.880 test is a saliva based test. Um It's called CRL 0:17:09.000 --> 0:17:14.160 rapid response and saliva allows for easy, frequent testing. It's 0:17:14.240 --> 0:17:17.840 much more pleasant than the traditional nasal swabs, and it 0:17:17.840 --> 0:17:24.320 allows for the testing of large populations quickly and cost effectively. Alright, So, Robert, 0:17:24.320 --> 0:17:27.480 one of the key things is turnaround times. Um, you know, 0:17:27.480 --> 0:17:30.040 we talk about we're doing millions and millions of tests, 0:17:30.080 --> 0:17:33.840 but they're really, for many people ineffectual because the turnaround 0:17:33.840 --> 0:17:35.879 times can take you know, seven, eight, nine days and 0:17:35.880 --> 0:17:38.320 therefore kind of defeats the whole purpose. Give us a 0:17:38.359 --> 0:17:41.040 sense of how sure, how much confident do you have 0:17:41.040 --> 0:17:46.800 in your hour turnaround time? Well, I have a great 0:17:46.960 --> 0:17:50.920 degree of confidence in it. We have invested heavily in automation, 0:17:51.000 --> 0:17:54.720 which has allowed us to really radically expand the number 0:17:54.760 --> 0:17:57.680 of tests that we can do in any given day. Um, 0:17:57.840 --> 0:18:02.280 we're planning on fifty US per day and actually have 0:18:02.320 --> 0:18:06.399 the ability to scale beyond that if need be. So, 0:18:06.640 --> 0:18:10.240 how does the FDA emergency approval work? Are there stag disolves? 0:18:10.520 --> 0:18:14.840 How do you sort of distinguish yourself from you know, 0:18:15.119 --> 0:18:17.600 I'm sure tens, if not hundreds of other companies trying 0:18:17.640 --> 0:18:22.840 to do various things in terms of testing. So the 0:18:22.960 --> 0:18:26.680 FDA processes is a rigorous multi month process where they 0:18:26.720 --> 0:18:29.480 make you, uh, you go through a set of clinical 0:18:29.520 --> 0:18:33.320 trials where you're comparing your product to other approved products 0:18:33.320 --> 0:18:36.359 on the market. We compared ourselves to those sort of 0:18:36.480 --> 0:18:40.800 six inch deep UH deep sinus and pea swabs um 0:18:40.840 --> 0:18:43.400 and we showed a hundred percent agreement with those, so 0:18:43.680 --> 0:18:48.040 we're uh as accurate as the n P swab is. 0:18:48.720 --> 0:18:53.159 The goal here is really to provide a service to 0:18:53.200 --> 0:18:56.840 get America back to work and school. So we paired 0:18:56.960 --> 0:19:00.560 the the test itself with a with a web application 0:19:01.080 --> 0:19:04.760 which uh sort of pre registers a test whether you're 0:19:04.800 --> 0:19:07.280 doing it at home, or you're doing it in a 0:19:07.359 --> 0:19:11.760 school cafeteria, or you're doing um, doing it in a workplace, 0:19:12.280 --> 0:19:16.359 and we deliver the result back to the you know, 0:19:16.400 --> 0:19:19.960 the employee or the student back over that that same 0:19:20.000 --> 0:19:23.920 app So we've wrapped an entire solution around the very accurate, 0:19:24.000 --> 0:19:28.000 quick and easy test UM. All right, so you received 0:19:28.119 --> 0:19:31.240 the clinical research laboratory received the approval. What are next steps? 0:19:33.400 --> 0:19:36.080 We've been able to operate as a lab developed test 0:19:36.160 --> 0:19:40.520 for some time, so we have we have aggressively built 0:19:40.560 --> 0:19:43.200 out our capacity. So at this point, there were a 0:19:43.240 --> 0:19:46.160 bunch of our clients that were waiting for the eu 0:19:46.240 --> 0:19:50.560 A before they started testing. So we've really the phones 0:19:50.600 --> 0:19:53.879 have been ringing off the hook. Here we have banks, airlines, 0:19:53.960 --> 0:20:00.480 sports teams, auto manufacturers, retailers, financial organizations, and universe cities 0:20:01.000 --> 0:20:06.840 all under contractor in the process of contracting with us UM. 0:20:06.920 --> 0:20:10.480 As an example, University of Kansas, we will be handling 0:20:10.480 --> 0:20:15.240 over twenty five students as they returned to to school 0:20:15.280 --> 0:20:17.320 over the next three weeks. We'll be testing all of 0:20:17.359 --> 0:20:20.879 them upon entry. So, Robert, I mean, this sounds amazing. 0:20:21.320 --> 0:20:23.240 And you know, if everyone in the country were to 0:20:23.240 --> 0:20:25.960 get one, you know, on a twice weekly basis, we'd 0:20:25.960 --> 0:20:29.480 probably really tump down this thing. What are the barriers 0:20:29.480 --> 0:20:35.200 to something like that happening? Really, the restriction on capacity 0:20:35.240 --> 0:20:38.200 is more about the availability of the testing equipment than 0:20:38.240 --> 0:20:42.119 anything else. Most of these tests at our lab and 0:20:42.160 --> 0:20:45.120 a QUEST and lab corps as well, we rely on 0:20:45.200 --> 0:20:49.440 automation in the form of liquid handling robots, and those 0:20:49.440 --> 0:20:53.040 have been very hard to come by. Uh. Gradually, the 0:20:53.160 --> 0:20:56.239 supply chains are expanding and we're beginning to see not 0:20:56.320 --> 0:20:58.639 only in our lab but in other labs UM the 0:20:58.680 --> 0:21:01.960 ability to ramp up for auctions significantly. The f t 0:21:02.080 --> 0:21:05.080 A also recently approved pooling, which I know QUEST and 0:21:05.160 --> 0:21:08.240 lab corps are going to be using which will expand 0:21:08.359 --> 0:21:12.800 their capacity to test, especially in low prevalence areas, by 0:21:12.800 --> 0:21:16.760 four to five times. So, Robert, is a scenario for you. 0:21:16.760 --> 0:21:20.240 You mentioned a test as a capacity that you could 0:21:20.560 --> 0:21:22.240 increase from. There is it does it make sense to 0:21:22.240 --> 0:21:25.000 you to license your technology out to maybe some of 0:21:25.000 --> 0:21:31.440 these bigger testing companies UM. We are having conversations with 0:21:31.640 --> 0:21:37.280 some additional laboratories UM, in particular in the university space. 0:21:37.680 --> 0:21:40.080 There have been some labs that have that have expressed 0:21:40.080 --> 0:21:43.879 an interest. There are other labs working on saliva based testing. 0:21:43.920 --> 0:21:46.600 You'll be hearing more about it in the coming weeks, 0:21:46.640 --> 0:21:49.399 just because of the ease of use and the and 0:21:49.520 --> 0:21:53.000 the accuracy of the test. We partnered with a couple 0:21:53.000 --> 0:21:57.840 of companies or Shure Technologies for the collection device which 0:21:57.920 --> 0:22:00.439 preserves the sample for shipping to the labrary tory for 0:22:00.520 --> 0:22:03.840 up to twenty one days, and with Codiagnostics, who's our 0:22:03.920 --> 0:22:07.400 partner for probes and primers, which is you know, sort 0:22:07.400 --> 0:22:09.960 of think of it as the chemicals that that detect 0:22:10.440 --> 0:22:14.960 the viral nucleic acid UM and both of them together 0:22:15.480 --> 0:22:19.040 it creates a very unique and sensitive tests were more 0:22:19.080 --> 0:22:22.760 sensitive statistically than the other products on the market, Robert, 0:22:22.760 --> 0:22:24.399 how much does it cost and how long does it 0:22:24.440 --> 0:22:26.800 stay valid for? So if I'm tested today and I 0:22:26.840 --> 0:22:29.520 meet somebody later that hazard, you know, will I need 0:22:29.720 --> 0:22:33.800 another test tomorrow? It is always. All of these viral 0:22:33.840 --> 0:22:38.680 tests are a spot in time. So the most companies 0:22:38.720 --> 0:22:42.240 are creating and universities are creating sort of a regular 0:22:42.760 --> 0:22:46.920 frequency of testing, a cadence of testing to try to 0:22:47.040 --> 0:22:49.240 keep you know, as you were calling it tamped down 0:22:49.280 --> 0:22:52.560 on the on the number of outbreaks. The other aspect 0:22:52.560 --> 0:22:54.959 of this is that we have to respond quickly when 0:22:55.040 --> 0:22:58.000 there is an outbreak. We can't wait fourteen days or 0:22:58.119 --> 0:23:00.600 even seven days for results, as you were saying earlier, 0:23:00.960 --> 0:23:03.120 they have to get results back in twenty four forty 0:23:03.160 --> 0:23:05.800 eight hours. Okay, Robert, really really exciting news. The best 0:23:05.800 --> 0:23:07.600 of luck to you in the company. Robert Thompson, CEO 0:23:07.600 --> 0:23:11.840 of Clinical Reference Lab talking about a rapid COVID nineteen 0:23:11.840 --> 0:23:19.720 tests using saliva, key thing, twenty four hour turnaround. Very 0:23:19.760 --> 0:23:22.280 excited to speak with our next guest. He is known 0:23:22.480 --> 0:23:27.560 the country over after the very popular documentary on cheer 0:23:27.640 --> 0:23:30.560 leading called Cheer but also because many people need to 0:23:30.600 --> 0:23:35.000 buy his stuff Adam Bloominfeld is CEO at Varsity Brands 0:23:35.000 --> 0:23:38.720 and he joins us now from Pharmas, Texas. Adam, thanks 0:23:38.760 --> 0:23:41.200 for joining. Talked to us about how the pandemic has 0:23:41.320 --> 0:23:46.160 impacted sales and also subscriptions, for example to your internal 0:23:46.200 --> 0:23:50.680 TV service. Well, thank you Vannie and Paul for having me. Um. 0:23:50.720 --> 0:23:52.520 I will tell you that the pandemic has been no 0:23:52.600 --> 0:23:56.240 friend to anybody that serves schools, as you will probably imagine. 0:23:56.720 --> 0:23:59.760 But that being said, we have pivoted pretty hard to 0:24:00.040 --> 0:24:03.520 a virtual world here at Varsity Brands. For those who 0:24:03.560 --> 0:24:06.840 don't know, we're comprised of b Sen Sports does sporting 0:24:06.880 --> 0:24:10.439 goods apparel across the country, Varsity Spirit as cheered dancing 0:24:10.480 --> 0:24:13.000 band as your reference, and Hearth Jones is our achievement 0:24:13.080 --> 0:24:17.120 arm that does class rings, caps and gowns and diplomas. 0:24:17.240 --> 0:24:20.199 And I will tell you that post pandemic, we have 0:24:20.400 --> 0:24:23.600 really started engaging with our clients a different way, UH, 0:24:23.720 --> 0:24:26.880 most notably to a program called Impact Now, which launches 0:24:27.000 --> 0:24:30.480