Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelley and I'm Carol Master. Welcome to the Bloomberg
Speaker 1: Business Week Weekend podcast. Well this week, Carol, it's a
Speaker 1: special show highlights from our broadcast this week from Columbia
Speaker 1: Business School. We went uptown and what a day. What
Speaker 1: a great day, smack in the middle of the Columbia
Speaker 1: University campus on College Walk, and we caught up with
Speaker 1: the school's dean, professors and also some of its many
Speaker 1: prominent alumni. And among the most prominent James Gorman. He
Speaker 1: is the chairman and CEO of Morgan Stanley. We caught
Speaker 1: him for a really interesting conversation after he had spent
Speaker 1: about an hour with a lunch and learned with students.
Speaker 1: If you're a Columbia Business school, so how cool is
Speaker 1: that to be able to sit down It was cool
Speaker 1: for us to sit down with him as well. It
Speaker 1: was indeed. First up, though, we begin with a preview
Speaker 1: with Joel Webber, the editor of Bloomberg Business Week. Well,
Speaker 1: and it appears, Joel Webber, that this is not your
Speaker 1: first time on campus. In the last couple of weeks
Speaker 1: you were here taking a class this week. Yeah. They
Speaker 1: let me attend a class last week business analytics too,
Speaker 1: with Professor Daniel Guetta, which did you take the pre record,
Speaker 1: which means I didn't have to take business and they
Speaker 1: just let you skip ahead. So that was great, except
Speaker 1: then you show up in the class and it's like,
Speaker 1: what's going on here? Are you ready for linear regression?
Speaker 1: And that's what I got to sit through an hour
Speaker 1: and a half of linear aggression. Honestly, it was amazing
Speaker 1: because of how well taught that class was. Professor Guerta
Speaker 1: made it all very approachable. The students were amazing. It
Speaker 1: was so there was such an ingred engaged group of
Speaker 1: intelligent people asking really insightful questions, and he would repeatedly
Speaker 1: be like, no, we're coming back back to that question
Speaker 1: in two weeks, just push pause in it right now.
Speaker 1: So you end up just having this little sneak peek
Speaker 1: of of what an amazing school to Columbia's. One of
Speaker 1: the things that wanted to make sure we talked to
Speaker 1: you about was this notion that we're coming up on
Speaker 1: sort of the second version candidly under your watch of
Speaker 1: the business school rankings, you have to be fair, like
Speaker 1: really expanded this franchise in a big way, invested heavily
Speaker 1: in an ongoing series of stories. Why, like, what what
Speaker 1: do you see in business schools that's so relevant to
Speaker 1: the business audience. The thesis here is that the nexus
Speaker 1: that you get between the business schools and alumni networks
Speaker 1: and the students that are coming through, that's why people
Speaker 1: come to business school. You get a crash course in
Speaker 1: the you know, the greatest business curriculum you can get,
Speaker 1: but then you also get the case study feeling that
Speaker 1: comes from real world applications. So for us, we look
Speaker 1: at that, we look at the stories we do in
Speaker 1: many ways as as case studies and and kind of
Speaker 1: making the world of business come to life via story
Speaker 1: is what we do in the page of Business Week,
Speaker 1: which is not that dissimilar from what's happening in a
Speaker 1: classroom setting either. So for us, this just feels like
Speaker 1: the water that we swim in and the air that
Speaker 1: we breathe in. And Columbia really embodies the spirit because
Speaker 1: of you know, we're we're witnessing it here with with
Speaker 1: Mr Gorman today, like this is a powerful place to play. Well,
Speaker 1: I think about the surveys that you guys do and
Speaker 1: you really kind of dice and slice what goes on
Speaker 1: in a business school community. But it is interesting because
Speaker 1: you figure out the nuances that kind of make each
Speaker 1: NBA program distinct. One of them about Columbia is you
Speaker 1: know here you are in New York City. Yeah, so
Speaker 1: New York City is part of it. I think the
Speaker 1: big thing that we really leaned into with the way
Speaker 1: that we've done rankings and really why you know, thirty
Speaker 1: years into this, we've doubled down on it and really
Speaker 1: found the our DNA with it, which is data, you know,
Speaker 1: and leaning into how do we make this data set
Speaker 1: be extraordinary? And you get that from talking to alumni,
Speaker 1: from talking to current students and and other business schools
Speaker 1: and all of that stuff together you get there's there's
Speaker 1: messages in that data, which frankly brings me back to
Speaker 1: that business analytics class too, that which is, look, you've
Speaker 1: got a data set, and maybe that data set is
Speaker 1: ever expanding because that's what you're going to be looking
Speaker 1: at if you're at a company, right, how do you
Speaker 1: make sense of it? And where are the little nuggets
Speaker 1: inside of that? That is a business leader you can
Speaker 1: have takeaways that apply and benefit from at your company.
Speaker 1: So between sitting in on that class level, let's point
Speaker 1: that out again, but also even being here today, like
Speaker 1: what's the ethos of Columbia? I mean I would put
Speaker 1: this to Carol as well, because you worked here and
Speaker 1: you have a great sense in just like what is
Speaker 1: it about Columbia? New York City obviously is a big
Speaker 1: piece of it, but what is it about this place? Well,
Speaker 1: I'll bring it back to their tagline. Have you seen
Speaker 1: that one yet? At the very center of business? Right?
Speaker 1: I think that really does embody it because here we
Speaker 1: are in New York. You can't imagine a better setting
Speaker 1: setting for a business school when you have the real
Speaker 1: world applications that are right outside your door. And that's
Speaker 1: what you saw in Professor Gudes class was case study,
Speaker 1: case study, case study, case study. It just is an
Speaker 1: ending experiment, right, and and to be able to harness
Speaker 1: that with the resources that a Columbia has, whether in
Speaker 1: the classroom or with the alumni network, gairly powerful place?
Speaker 1: Do you think as this Well, I was thinking about
Speaker 1: when I worked here. I got my undergraduate at bar
Speaker 1: right across the street, but I worked at the business
Speaker 1: schools an undergrad, and I just think also the connection
Speaker 1: with Wall Street and the role of money. And I'm
Speaker 1: not trying to you know, money makes things happen, and
Speaker 1: whether you're an entrepreneur and you start something and ultimately
Speaker 1: you need an investor, you know that helps you get
Speaker 1: that started. I just think that connection made this schools
Speaker 1: something really special. I think that's absolutely right, and that
Speaker 1: entrepreneurs entrepreneurship spirit here routinely. It's it's among the things
Speaker 1: that comes through in the surveys and the data that
Speaker 1: we see. Uh and and you see it, you know,
Speaker 1: in the classroom, because that's a place that people can
Speaker 1: harness it and take it out and apply it to
Speaker 1: whatever your big idea is. Why even the conversation we
Speaker 1: had with Senorico Marquetti, I mean he was a banker
Speaker 1: who then came here and said, Okay, I'm gonna start
Speaker 1: a company. I'm not sure what it is, but I'm
Speaker 1: going to learn about retail. I'm gonna learn about marketing
Speaker 1: and learn about entrepreneurship, and and then he scales it.
Speaker 1: Yeah and yeah, and you know, I don't know if
Speaker 1: somebody could scale that business idea or that business model
Speaker 1: as effectively as you might have had you had a
Speaker 1: linear regression class that it's like, you know, maybe you're
Speaker 1: not gonna do it every day, but you're gonna probably
Speaker 1: talking to somebody who can do it for you. And
Speaker 1: that's Joel Weber, the editor of Bloomberg Business Week, joining
Speaker 1: us at Columbia. He had actually gone to a class
Speaker 1: the week before. He's a pretty confident guy. I think
Speaker 1: he was a little humbled by his experience in that
Speaker 1: class room. We want to talk about the global economy. Now,
Speaker 1: I'm at Candle wall Is, Columbia Business School, Professor of
Speaker 1: International Development and Economics joining us. Now, I'm a you
Speaker 1: cover a lot in terms of what is so relevant
Speaker 1: to the world right now you're sitting down with a
Speaker 1: group of students. What are the things you want to
Speaker 1: bring into the classroom that relates to the real world
Speaker 1: and what's happening. Sure, So at Columbia, I teach two
Speaker 1: kinds of courses. So I teach one core course that
Speaker 1: all incoming NBA students will will take. UM. This is
Speaker 1: a core course in manageri economics. So what we do
Speaker 1: in this class, which is not so much global related,
Speaker 1: but our general principles that we UM that we try
Speaker 1: to instill UM is for students to learn the basics
Speaker 1: of how to take data on the market environment and
Speaker 1: try to figure out what prices they might be charging,
Speaker 1: how to how to manage their revenue and product lines. UM.
Speaker 1: We consider what are the implications of their business decisions
Speaker 1: when they are reacting in an environment with competitors and
Speaker 1: and and consumers who may be responding as well. So
Speaker 1: think about kind of your classics supply and demand market conditions. UM.
Speaker 1: One of the things that we try to do with
Speaker 1: Columbia is to not only show when the market kind
Speaker 1: of can provide the allocation of resources that we think
Speaker 1: is efficient, but also to kind of think very carefully
Speaker 1: about what are the conditions under which the market may
Speaker 1: not be living up to what we think should be
Speaker 1: going on. So that would be your your examples of
Speaker 1: um uh just issues of fairness UM or should we
Speaker 1: have things like search pricing. It can lead to an
Speaker 1: efficient outcome, but it may not be very fair for
Speaker 1: some consumers. UM. What happens in the market when a
Speaker 1: fire and a seller arrive uh into a marketplace where
Speaker 1: they've got differences in information um. And so this is
Speaker 1: actually very relevant for very important markets like healthcare, where
Speaker 1: the provider of the service has different information than than
Speaker 1: the buyers the service, and and we know that classic
Speaker 1: economics of the market outcomes can actually can maybe not
Speaker 1: deliver UM the best outcomes in those situations. Uh. And
Speaker 1: we also consider things UM related to strategic decision making
Speaker 1: game theory, which is a very uh common set of
Speaker 1: tools that are taught in an NBA program. But we
Speaker 1: also discuss things like auction auction designs UM for instance,
Speaker 1: so Google and Facebook now made the vast majority of
Speaker 1: their revenues off of designing auctions. We will go through
Speaker 1: the very basics of of how you would bid in
Speaker 1: an auction like the one that Google sets up, How
Speaker 1: would you set up an auction and so so that's
Speaker 1: very much a kind of a set of things that
Speaker 1: we do in the in in in my core course.
Speaker 1: And then you also look at the international sort of
Speaker 1: trade landscape as well. That's correct. So I also teach
Speaker 1: a an elective course on doing business and emerging markets.
Speaker 1: And there's a starting point if you think about what
Speaker 1: is different about an emerging market relative to to to
Speaker 1: a develp country like the US is really the one
Speaker 1: which the markets are not working as as well as
Speaker 1: we think. So the capital markets might be broken down,
Speaker 1: the labor markets might be broken down, this weak rule
Speaker 1: of law. And what I try to do is to
Speaker 1: walk through, UM the core strategies that a company UM
Speaker 1: that's maybe based in the US would need to consider
Speaker 1: as they enter these environments. UM. What are the parts
Speaker 1: and products and services that might be very beneficial in
Speaker 1: these environments where the market is broken down? UM? As
Speaker 1: well as to think about what are the UM what
Speaker 1: is the role of a business in a society where
Speaker 1: we where the corruption levels very high, UM and so forth,
Speaker 1: and what should be under I want to make sure
Speaker 1: we ask you about this this bit of research, didn't
Speaker 1: you did? That caught a huge amount of attention, including
Speaker 1: on the Bloomberg which was about the effects of the
Speaker 1: trade war. UH. And I think some, if not unintended consequences,
Speaker 1: some surprising consequences tell us about that, right, So outside
Speaker 1: of the classroom, I I as you said, I'm an
Speaker 1: international trade economist. UM. I recently was involved in a
Speaker 1: project where we UM, we're looking at the impacts of
Speaker 1: the tariffs on on the U S economy. UM. If
Speaker 1: you think about what are the tariffs should do? So
Speaker 1: imagine a country like the US imposted the tariff UM.
Speaker 1: There's kind of a sequence of events that happened. So
Speaker 1: one is that the tariffs are a tax on imports. UM.
Speaker 1: Consumers are gonna start to see potentially rising prices on
Speaker 1: imported goods, so they should kind of switch towards domestic
Speaker 1: goods UM. And so that means that there's going to
Speaker 1: be a transfer from US consumers wore potentially paying higher
Speaker 1: prices to US producers who are potentially benefiting from higher
Speaker 1: prices UH. And then the government collects the tariff revenue.
Speaker 1: And so one of the goals of this exercise was
Speaker 1: to kind of calculate what is the overall effect and
Speaker 1: and what are the transfers that that are going on.
Speaker 1: One of the surprising things that we found in in
Speaker 1: in this in this research was when you look at
Speaker 1: the at the data UM and you kind of charted
Speaker 1: the time path of what happens to goods that are
Speaker 1: being targeted with terriffs as they come into the US.
Speaker 1: Is a really important number for an economist is to
Speaker 1: understand what happens to the prices of those goods UM.
Speaker 1: And we have heard from from the President, for instance,
Speaker 1: to say who says that the that the Chinese, that
Speaker 1: the Chinese will be paying for the tariffs. And in
Speaker 1: principle that is possible. And the way that could work
Speaker 1: is that if the U S imposes a tariff, the
Speaker 1: Chinese exporter may lower her price down to such a
Speaker 1: point so that the post tariff price actually doesn't change
Speaker 1: for the U S. Consumer. And that's possible, and that
Speaker 1: would be a consider a condition under which the Chinese
Speaker 1: is essentially eating the tariff um. And but when we
Speaker 1: look at the data, we in fact that's in fact
Speaker 1: not what's going on. UM. The split, of course, could
Speaker 1: be anywhere between zero percent and percent, and what we
Speaker 1: find is that the U S consumers or the U
Speaker 1: S economy is actually bearing the full incidents of the tariff.
Speaker 1: So that's am it. Candlewall, of course, professor of Global
Speaker 1: Business at Columbia love getting his perspective because I think,
Speaker 1: you know, we constantly have conversations about US China different
Speaker 1: perspectives from investors, from politics, ships, but I think it's
Speaker 1: nice to go back to academia and see how they
Speaker 1: see it. Well. And I'm glad you said that because
Speaker 1: one of the things that I was thinking throughout our
Speaker 1: time at Columbia Business School was a business degree is
Speaker 1: only as good as its applicability in a lot of ways.
Speaker 1: And I do think one of the things we heard
Speaker 1: throughout our time at Columbia. We heard it, dare I say,
Speaker 1: from Stanford. We heard it, dare I say from Harvard
Speaker 1: as well, is these deans, these faculty, they're under a
Speaker 1: lot of pressure to us. And you say, yeah, cool,
Speaker 1: that's some interesting theory. How does this apply in the
Speaker 1: real world? So, and I think what's interesting. You'll hear
Speaker 1: this later on in some of our conversations. This point
Speaker 1: of so many different disciplines that are crucial and having
Speaker 1: a successful business. So whether it's psychology, whether it's technology, marketing,
Speaker 1: you know, all of it kind of has to be
Speaker 1: in the room when you're putting together a business plan
Speaker 1: or running a business. It's also one thing to read
Speaker 1: a book. It's another thing to have a conversation with someone.
Speaker 1: And another thing. Later on the show, we're going to
Speaker 1: hear about from a very well known yogurt maker, Ziggy.
Speaker 1: He talks about the idea of some of the people
Speaker 1: he was exposed to. We hear from Federico Marquetti. He
Speaker 1: started you he got to spend some time back in
Speaker 1: the day with Mickey Drexeler, you know what I mean,
Speaker 1: the guy who worked at the Gap, who who helped
Speaker 1: create Ja grew. Well, it's such an important aspect of
Speaker 1: this because one of the folks that we talked to,
Speaker 1: of course, is James Gorman. He's the chairman and CEO
Speaker 1: of Morgan Stanley, a Columbia Business School alumnus. He spent
Speaker 1: time in the class before coming to talk with us
Speaker 1: at our special broadcast. But that's what's neat about these
Speaker 1: business schools. You have access to folks that are out
Speaker 1: in the business world, out in the financial community, folks
Speaker 1: who have learned things at the school but have had
Speaker 1: to put it to work, and so that's just a
Speaker 1: great asset. So everything we do at Homeworker Play has
Speaker 1: a digital element to it because it Mets is that
Speaker 1: assistant professor Business that the management group within Columbia Business
Speaker 1: schools focusing on manager he focuses to on all things digital.
Speaker 1: It's so nice to have you here on Bloomberg. Tell
Speaker 1: us a little bit about um. What's the typical class
Speaker 1: for you in terms of what you're teaching. It's interesting
Speaker 1: because the class that I'm teaching is not that much
Speaker 1: related to everything digital that I study, And so I
Speaker 1: teach managerial negotiations, which is really trying to help students
Speaker 1: make the most of the interpersonal relationships that they have
Speaker 1: obviously negotiating at work, negotiating with customers, their colleagues, their boss.
Speaker 1: They personally are using data to do that, right, they
Speaker 1: do that, and so I think it's it's part of
Speaker 1: the class. So it's trying to figure out, how can
Speaker 1: I learn about my counterpart, how can I learn what
Speaker 1: they care about and use that in my negotiation. And
Speaker 1: I think to some extent, you could actually do that
Speaker 1: looking at what is it that they do online, stalking
Speaker 1: their Facebook profile, looking at their company website, so all
Speaker 1: these things could technically go into the decisions that you make. Well,
Speaker 1: And it's interesting that this is an offering in it
Speaker 1: in part, it's not surprising at think we talked to
Speaker 1: the dean you know earlier, who was talking about how
Speaker 1: this isn't just sort of like six MBAs who sort
Speaker 1: of all look alike getting in a room and making
Speaker 1: a decision. This is, you know, a couple of managers,
Speaker 1: a couple of engineers. You've got to be not just
Speaker 1: you know, sort of conversive but almost fluent in the
Speaker 1: ability to to talk to lots of different types of
Speaker 1: folks from different backgrounds, etcetera. And I hope that's the
Speaker 1: experience that the NBA is actually get out of this class,
Speaker 1: is that not the same strategy isn't always successful. It's
Speaker 1: not always the same situation that you can use the
Speaker 1: same strategy, is not the same person that you would
Speaker 1: use the same strategy. And I think the NBA actually
Speaker 1: gives them a good overview of like diverse people to
Speaker 1: to talk to. Psychology comes into this big. I think
Speaker 1: about my sister who studied psychology for years and years
Speaker 1: and years, and I think everybody was thought that was
Speaker 1: kind of like a a side form of study, right,
Speaker 1: but it is being you know, being incorporated into so
Speaker 1: much of what we do, and that includes the business world.
Speaker 1: So I actually get that question a lot when people
Speaker 1: ask me, well, your degrees in psychology, what are you
Speaker 1: doing in a business school? And I think my answer
Speaker 1: is usually well, like, there's people working in organizations. Not
Speaker 1: sure if you've noticed, but there's it's groups. Is like
Speaker 1: there's group dynamics. It's interesting to see how do people
Speaker 1: select into organizations, what makes them happy at the job
Speaker 1: where it makes them productive. So there's a lot of
Speaker 1: psychologists trying to understand like the dynamics that are going
Speaker 1: on within organizations. So give us a sense of an
Speaker 1: assignment or an exercise that you might give in this class.
Speaker 1: So we do a lot of cases, and I think
Speaker 1: that's what students benefit the most from is we throw
Speaker 1: them into a situation. We tell them just this is
Speaker 1: a role, take it on, assume that those are your
Speaker 1: own preferences, and now go and negotiate. And I think
Speaker 1: the biggest learning that they get is really the feedback
Speaker 1: from the other students. So they're like, wait, like I
Speaker 1: lost so much money on the table. I actually felt
Speaker 1: pretty good about the outcome, like after the negotiation, but
Speaker 1: now that I see what the case was actually about,
Speaker 1: maybe I see I could have pushed a lot harder.
Speaker 1: So I think it's this feedback that they get from
Speaker 1: from the students and also just seeing like how well
Speaker 1: did I actually perform in the negotiations and so is
Speaker 1: there It feels like in some of these cases, because
Speaker 1: it's not so clinical that there are some emotional aspects
Speaker 1: to it. Are you are you pushing students out of
Speaker 1: their comfort zones a little bit. So that's the that's
Speaker 1: the plan, Like you could. I mean, you have this
Speaker 1: saying that experience alone is a great teacher, and I
Speaker 1: think to some extent it's true. So I always encouraged
Speaker 1: them to go out there and while negotiate, But the
Speaker 1: problem is that you don't get the feedback and you
Speaker 1: don't experiment. I would not recommend to any of my
Speaker 1: students to go into the next sceleery negotiation and try
Speaker 1: out something entirely different, something that is completely outside of
Speaker 1: their comfort zone. So that's what we do in class,
Speaker 1: and it's just kind of providing the safe space for
Speaker 1: people to experiment and to say, like, well this is
Speaker 1: what I usually do, but maybe there's another strategy that's
Speaker 1: much more successful. I have to ask you about one
Speaker 1: of the studies that you did. I got a lot
Speaker 1: of media attention. Um, I think you do this with
Speaker 1: a colleague, and it basically found out that when it
Speaker 1: comes to finances, nice guys and gals fall short. What
Speaker 1: exactly is going on? So do you What we showed
Speaker 1: is basically that people who have a certain personality trade
Speaker 1: which we call agreeableness. So that's the idea of people
Speaker 1: are nice, trusting, caring and pathetic, that those guys have
Speaker 1: fewer savings. I a debt and I'm more likely to
Speaker 1: default on loans and everything. Why is that so? I
Speaker 1: think one of the reasons is that they just care
Speaker 1: more about other people. And I think society has this
Speaker 1: image of well, you can either care about money or
Speaker 1: you care about other people. So there seems this almost
Speaker 1: a false dichotomy saying, well, if you care about other people,
Speaker 1: you should not care about money because that makes you
Speaker 1: a lesser person. And I think agreeable people just place
Speaker 1: almost too much emphasis on the people's side, where they
Speaker 1: like neglecting their finances. Just think of someone will be agreeable,
Speaker 1: basically is the left. I think it's a different lesson
Speaker 1: so that that would be the sad news. I think
Speaker 1: it's because like, agreeable people are the people who keep
Speaker 1: society together. And I think it's the way that we
Speaker 1: think about money as a society is just the wrong way,
Speaker 1: because technically, if you care for your loved ones and
Speaker 1: if you really want to make sure that they have
Speaker 1: a good life to some extent, you should be caring
Speaker 1: about finances because if you default and if you go
Speaker 1: into debt. It's not just you suffering, but also your
Speaker 1: loved ones. And that's Sandra mac is a system professor
Speaker 1: of business, and we talk so much about technology and
Speaker 1: how it plays in that clearly is on her mind,
Speaker 1: but what's really on her mind is the mind and
Speaker 1: how people are interacting with each other as human beings.
Speaker 1: I love it. So while we were at Columbia Business
Speaker 1: School this week, as you said Carol early in the show,
Speaker 1: right there on College Walk in the midst of it,
Speaker 1: it was like college game day for business schools. We
Speaker 1: had a chance to sit down with James Gorman, he
Speaker 1: is the Morgan Stanley chairman and CEO, back to the
Speaker 1: campus where he was thirty years ago. Right. I love
Speaker 1: to hear about his experience because he came from Australia,
Speaker 1: was already a lawyer. But he talked about so many
Speaker 1: different things. We of course did speak about the I
Speaker 1: P O market, very timely, interest rates and as I said,
Speaker 1: his time at Columbia. Yeah, it's like Columbia in the
Speaker 1: mid eighties, and uh it was, you know, it was
Speaker 1: a great experience. So it was it was fun. I
Speaker 1: just did a lunch and loan Claus for about and
Speaker 1: fifty kids and they had kids there. They went BOM
Speaker 1: when I was a business school here. What do you
Speaker 1: want to know from them when you're talking with them,
Speaker 1: because I feel like the world that so many different industries,
Speaker 1: your industry also going through lots of changes. What do
Speaker 1: you want to hear from them? Well, it's what kind
Speaker 1: of cultural what kind of company they're really looking to
Speaker 1: work out? I mean, what what what matters to this
Speaker 1: generation different from my generation? You know, I grew up
Speaker 1: at a time when Solomon Brothers and Drexel and you know,
Speaker 1: that was all the rage on Wall Street is a
Speaker 1: very sort of hyper intense environment. I mean, these uh,
Speaker 1: young folks there are much more interested in social impact,
Speaker 1: um in the values of the organization and just trying
Speaker 1: to share in exchange how we think about our role
Speaker 1: in society as as an obviously global bank. Well let's
Speaker 1: go all the way back to your arrival here on campus.
Speaker 1: This was after that so long ago, but it was
Speaker 1: a big move. I mean there it was defining in
Speaker 1: a lot of ways. What do you remember most about
Speaker 1: arriving and then what did you take Because you came
Speaker 1: from Australia and you were a lawyer, already, right, yeah,
Speaker 1: I can. I came here to sort of change careers.
Speaker 1: What I remember most is the interest rate on my
Speaker 1: student loan, which I think is a world record, right.
Speaker 1: And I thought I'd died and gone to heaven because
Speaker 1: America welcomed me to come here to learn to grow,
Speaker 1: and and I just it was unbelievable. I arrived on
Speaker 1: a very hot August day. August was that classic New
Speaker 1: York's sweltering heat, and it just it was on you.
Speaker 1: It was just it was so exciting on the campus
Speaker 1: this university, which is you know, extraordinary. Um, I couldn't
Speaker 1: I couldn't have been happier, honestly to be given that chance.
Speaker 1: And that's why I think, you know, immigration, welcoming foreigners,
Speaker 1: giving them an opportunity to contribute. And I'm still here, right,
Speaker 1: you know, thirty past years later. Because you had an
Speaker 1: experience living in International House, I believe, and so many
Speaker 1: people are exposed to many different cultures. I mean, you
Speaker 1: were living in it in a lot of ways. How
Speaker 1: did that affect sort of your world view? I used
Speaker 1: to play chess every Sunday night with a Danish guy
Speaker 1: who listened to Frank Sinatra with candles on, you know,
Speaker 1: in the dark, and it was so you know, and
Speaker 1: one of my closest friends, uh I was from leon
Speaker 1: in France and another guy from Morocco. Uh. So you
Speaker 1: you you learned to experience the cultures and the diversity
Speaker 1: that this world has. And one of the great things
Speaker 1: about a university like this is it brings people like
Speaker 1: that together who all motivated, they're all they're obviously uh
Speaker 1: they're talented, uh and they want to move forward. So
Speaker 1: I thought it was a tremendous experience. Well, having said that, James,
Speaker 1: I do wonder what you think about kind of the
Speaker 1: pushback that we're getting, um from the current administration when
Speaker 1: it comes to folks coming in from other countries to
Speaker 1: study here, maybe start companies here. But it's not that
Speaker 1: happy an environment or hospitable environment for them right now. Yeah,
Speaker 1: I mean I think, um, this country has always been
Speaker 1: a country of immigrants, and uh celebrating and welcoming those
Speaker 1: immigrants and seeing how they've contributed to this society here.
Speaker 1: I mean, it's it's been one of the great elixas
Speaker 1: of what's made America different is most countries people trying
Speaker 1: to move out of to get a better life. This
Speaker 1: is one of the few countries in the world in
Speaker 1: Australia was like that where a lot of people are
Speaker 1: trying to get into and I think welcoming those immigrants,
Speaker 1: providing opportunities for them, obviously having sensible border control, which
Speaker 1: I support. People shouldn't come here illegally, right I didn't
Speaker 1: you come through passport control. You earn your way into
Speaker 1: this country, you set the tests, you I became a citizen.
Speaker 1: I mean, you do it the right way. But having
Speaker 1: as many people as you can bring in talent into
Speaker 1: the US I think has been one of the great
Speaker 1: hallmarks of the success of last century. When you think
Speaker 1: about talent as well, you know, it used to be
Speaker 1: a much more prescribed path. That feels like at a
Speaker 1: business school, you went to a big consulting company, you
Speaker 1: went to Wall Street. You know, you talked about hearing
Speaker 1: from the students, going to have a social impact. What
Speaker 1: do you draw in terms of student and talent from
Speaker 1: a business school like Columbia, And what's the case you
Speaker 1: make to them for working on Wall Street right now? Well,
Speaker 1: they're they're they're great tourism Wall Street. There always have been,
Speaker 1: I mean, things out and flow. I think the largest recruiter.
Speaker 1: I don't know for sure, but I think Amazon might
Speaker 1: be the largest or one of the largest at the
Speaker 1: business school now. So at different points, the sort of
Speaker 1: cadence and flow and focus changes as society is changing,
Speaker 1: in as business opportunities are changing. Listen, Wall Street is
Speaker 1: highly sophisticated, very intellectually interesting, very dynamic because you're in
Speaker 1: the markets. As you guys know, this is what you do.
Speaker 1: Um So for a lot of people, not everybody, for
Speaker 1: a lot of people, who remains an extremely attractive career option.
Speaker 1: So let's talk about the market you're in it. We
Speaker 1: obviously watch a day in and day out. There's so
Speaker 1: many big macro stories that are out there, whether it's Brexit,
Speaker 1: whether it's US China trade. How do you see the market,
Speaker 1: the global market environment right now, Well, you know, it's
Speaker 1: it's a conundrum. At one level, We've got record low unemployment,
Speaker 1: we do still have global growth. The US economy, the
Speaker 1: most important economy in the world, is performing strongly. China
Speaker 1: is still performing strongly. Um Europe. Europe is obviously mixed,
Speaker 1: but it's been mixed for two decades now. Um So,
Speaker 1: one level, the fundamentals are actually quite strong. Uh. At
Speaker 1: the other level, the sense of confidence there isn't the
Speaker 1: confidence and there's a sense of inevitability where at the
Speaker 1: end of a cycle, you know it doesn't have to
Speaker 1: be you don't. I mean, statistically there is a recession
Speaker 1: every seven years, right, each year you begin with the
Speaker 1: fifth percent chance of recession, but it doesn't have to be.
Speaker 1: You know, in Australia they haven't had a recession for
Speaker 1: twenty eight years in a row. So why is there
Speaker 1: so much pressure though then on the Federal Reserve to
Speaker 1: continue cutting race? Does that make sense? Well, because the
Speaker 1: economy is slowing. The economy is slowing, and you know
Speaker 1: the job of the Fed is to sort of balance
Speaker 1: monetary policy with economic outlook and fiscal policy, and you
Speaker 1: know they should feather rates obviously when the economy is
Speaker 1: getting hot, their job is to raise raids, slow it
Speaker 1: down and the reverse. So you know, I've supported the
Speaker 1: latest FED rate cut, and I suspect they'll do one
Speaker 1: or two more, but then it's time for pause and
Speaker 1: really absorb this because the problem with cutting is it's
Speaker 1: one of the few tools you've got. So if you
Speaker 1: give it away too easily, what do you have If
Speaker 1: we have a real problem. I want to go back
Speaker 1: to something you said a minute ago. It sort of
Speaker 1: squaring some of the different elements out there, and especially
Speaker 1: businesses that certainly seem more cautious with a consumer that
Speaker 1: isn't showing much signs of caution at all. How do
Speaker 1: you square those things as you talk to your customers
Speaker 1: and what do you see out there that that could
Speaker 1: help explain that dichotomy as it were, Well, we're you know,
Speaker 1: we're we're in a bit of an echo chamber. If
Speaker 1: you're a business leader, you go to business leadership meetings,
Speaker 1: we all talk to each other. We sort of, you know,
Speaker 1: we bounce off each other. So a little bit of
Speaker 1: it is, Gee, we must be at the end of
Speaker 1: the cycle, the Feds cutting rates, we must be about
Speaker 1: to have a recession. By the way, we've had an
Speaker 1: inverted Yolka, which has been highly predictive of a recession.
Speaker 1: So there's some hard evidence that things are more likely
Speaker 1: to slow down than accelerat at this point. I don't
Speaker 1: think there's any doubt about that. So as executives, his
Speaker 1: job is to think about capital investment of a multi
Speaker 1: years you would be prudent and being cautious at this point.
Speaker 1: There's nothing wrong with that. Consumers aren't yet experiencing that
Speaker 1: they've got very cheap dead housing is starting to recover
Speaker 1: their consumer consumer read apart from student loan sadly is
Speaker 1: in very strong shape. So the consumer balance sheet is
Speaker 1: still very strong and that's why it's lagging where the
Speaker 1: corporate balance sheet and corporate attitudes are. There implications though,
Speaker 1: from having rates at such a low level for such
Speaker 1: a protracted time. I mean, it's it's all about funding
Speaker 1: equilibrium between economic growth and the cost of money. So
Speaker 1: I mean there are only implications if it creates a bubble, right,
Speaker 1: that's a cheap money eventually will create a bubble. We're
Speaker 1: a long way from that now. Don't see any of that.
Speaker 1: I'm seeing no bubbles. And how do you manage your
Speaker 1: business given all of those different inputs and and outputs
Speaker 1: that Where do you hire? Where do you maybe stay steady?
Speaker 1: Where do you invest? Across the empire of Morgan Stanley empire,
Speaker 1: never thought about it. We're just a simple business, um,
Speaker 1: you know. Firstly, very long the US our wealth management
Speaker 1: business is I think percent us UM and at least
Speaker 1: half a securities business here. So that's a good thing, right.
Speaker 1: This is an eighteen tree in dollar economy, strongest economy
Speaker 1: in the world, most important economy in the world. I'm
Speaker 1: happy to be along in the US, where obviously, you know,
Speaker 1: we've been aggressively building our Asia business, which is now
Speaker 1: i think fourteen percent or sell of the company. With
Speaker 1: the trade talks, things have slowed clearly across parts of Asia,
Speaker 1: so let's be played out. But our job is to
Speaker 1: try and look past one three six months hiccups or slowdowns.
Speaker 1: Our job, certainly, my job is to think out five
Speaker 1: plus years. And you know, traders are thinking every five minutes.
Speaker 1: I'm trying to think five years and can do that
Speaker 1: in this environment though, because it does feel like we've
Speaker 1: been going back and forth on let's you've got to
Speaker 1: we've been around three d five years. I mean, we're
Speaker 1: managing two point six three in people's money. They're not
Speaker 1: all selling into the market on day and all buying
Speaker 1: on the next day. No. Things things actually move in
Speaker 1: in small increments. It's it's small things like the public
Speaker 1: markets and companies going public that you know or m
Speaker 1: and A transactions happening or not. But most about core
Speaker 1: businesses are relatively immune to what's going on right now,
Speaker 1: you wouldn't see the impact on that wealth management business
Speaker 1: greatly at all. That's James Gorman, Columbia Business School alum,
Speaker 1: also the CEO and chairman of Morgan Stanley. And that's
Speaker 1: not all we've talked to him about. Well. More of
Speaker 1: that conversation part two coming up in the next hour,
Speaker 1: and for the full interview, download Bloomberg Business Week Extra
Speaker 1: wherever you get your podcasts. We caught up with Kastee
Speaker 1: mclara's He is the new dean of Columbia Business School.
Speaker 1: We chatted about the cost of higher education. We started
Speaker 1: by asking about what he's learned since taking the top job.
Speaker 1: A few things to UH to say about that. I
Speaker 1: I have been embraced with a lot of enthusiasm from
Speaker 1: my colleagues, and we're actually working on some very interesting
Speaker 1: initiatives here at this pol both to sort of improve
Speaker 1: and change education UH and UH and also sort of
Speaker 1: talk to business leaders that have been sort of flocking
Speaker 1: in to meet the new deane and see how they
Speaker 1: can be involved in help. So I think it has
Speaker 1: been exciting first three months. That seems like a very
Speaker 1: long day for McLaren's I mean he talked to us
Speaker 1: about the NBA because there's so much of a conversation
Speaker 1: right now about the cost of education, right, and I'm curious,
Speaker 1: how do you see the NBA of the future. How
Speaker 1: do you kind of justify you know, the education with
Speaker 1: the cost. Yeah, so, uh, a few things. First of all,
Speaker 1: we're constantly looking at the cost of the education, and
Speaker 1: we're always trying to take cost out of the equation.
Speaker 1: We're also working on providing good financial aid to our
Speaker 1: students to essentially uh facilitate that investment on their part. Uh.
Speaker 1: And we're really focusing on the value of the degree.
Speaker 1: So I think, actually, because business is undergoing quite a
Speaker 1: bit of change right now, it's it's a great opportunity
Speaker 1: for us to innovate in the value that we offer
Speaker 1: to our students. And in fact, I actually believe that, uh,
Speaker 1: the NBA degree now it's a fantastic investment, both in
Speaker 1: terms of time and return, uh, simply because you know,
Speaker 1: you need new skills to succeed in practice, uh, and
Speaker 1: that's what we're trying to do here. So I actually
Speaker 1: think that the degree free to robust uh. And and
Speaker 1: I think, in fact, because of the change we're undergoing
Speaker 1: is actually more valuable now than it potentially was five
Speaker 1: ten years ago. So as those business leaders, especially here
Speaker 1: in New York City alum include James Gorman from more Etainly,
Speaker 1: he's going to be with us later on when he
Speaker 1: and his friends and and Phillo olam Or are visiting
Speaker 1: with you. What are they asking you for that may
Speaker 1: be different than what they've been getting in the past
Speaker 1: in terms of what you're teaching or the types of
Speaker 1: students that you're turning out. Yeah, So I think when
Speaker 1: you talk to business leaders, you realize that they're encountering
Speaker 1: two things. First of all, technology data analytics is really
Speaker 1: changing the way their business is being transacted, so they
Speaker 1: leave that for quite some time. They also understand that
Speaker 1: the nature of the NBA jobs, the types of jobs
Speaker 1: that our graduates are going to do, is itself changing
Speaker 1: over time. So they want to see in what way
Speaker 1: are we going to best prepare students in order to
Speaker 1: really participate in the digital future. So they ask what
Speaker 1: are we doing in the curriculum, what are we doing
Speaker 1: in experiential learning? How do we bring NBA students together
Speaker 1: with engineering students so that they learn how to collaborate
Speaker 1: because that's what they're going to do when they go
Speaker 1: out to work. So these are the types of things
Speaker 1: we talk about. I'm also cures how much you talk
Speaker 1: about the U. S. China trades spat and what that
Speaker 1: has done to students who want to come to the
Speaker 1: clumby business goal to get a degree, but they're nervous
Speaker 1: about what does this mean. Can I stay in the country,
Speaker 1: can I create a company? You know? So I'm just
Speaker 1: curious if you're seeing pushback or a decline in students
Speaker 1: from overseas that you know want to apply. So for
Speaker 1: now at Columbia, we haven't actually experienced that, uh, no
Speaker 1: change at all, almost almost no change. We continue to
Speaker 1: have about international students, uh about two thirds of them,
Speaker 1: about six of them that just graduated that wanted to
Speaker 1: stay in the US actually found jobs in the US,
Speaker 1: uh And of that left, I think a lot of
Speaker 1: them actually wanted to go back in different areas of
Speaker 1: the world. Having said that, you know, our service economy
Speaker 1: here in the US depends on really high skilled human capital.
Speaker 1: So this is a problem that we need to solve,
Speaker 1: not just for business education, but for essentially training any
Speaker 1: type of high skilled labor that we would like to
Speaker 1: retain in the country and hopefully we'll get to have
Speaker 1: the dialogue and then move to a solution. Well, I'm
Speaker 1: curious that that's where I wanted to go. Are you
Speaker 1: being a dialogue with folks in Washington about this issue?
Speaker 1: There are there is some dialogue that is going on. Yes, uh,
Speaker 1: you know, but early steps. I mean, people understand that
Speaker 1: this is an opportunity for the US to actually do better. Ah,
Speaker 1: and people understand the value of high skilled human capital,
Speaker 1: which is how we actually helped build companies, start companies,
Speaker 1: create new ideas, new technology. So you know, they recognize
Speaker 1: the value and I think, you know, hopefully we'll keep
Speaker 1: talking about it and resolve. And that's coach Us mcglaura's
Speaker 1: Columbia Business Schools New Deane. What's interesting is he's been
Speaker 1: at the school for a long time as a professor.
Speaker 1: He focuses on operations, research, data analytics, and he focuses
Speaker 1: on the increasingly larger and larger role of technology in
Speaker 1: our world at large and of course in the business community.
Speaker 1: So fun conversation, interesting to talk to him about, you know,
Speaker 1: teaching there for a while, but then you become the
Speaker 1: boss it's a whole different scenario. Lulu Wong, she is
Speaker 1: definitely a pioneer when it comes to Wall Street. She
Speaker 1: graduated from the Columbia Business School back in eighty three
Speaker 1: on the executive program, but she's been doing financial money
Speaker 1: management since about nineteen seventy two, so she's seen a
Speaker 1: lot of up and down cycles. And we want to
Speaker 1: start by talking with you about coming to Columbia in three.
Speaker 1: Columbia was different, New York City was different. What drew
Speaker 1: you here? I came to Columbia because um I had
Speaker 1: already been working in Wall Street for a number of years.
Speaker 1: Um I had developed a good um practice, but I
Speaker 1: knew that in the future was a firm of my own,
Speaker 1: and I really want to have the best credentials. I
Speaker 1: had gone to Wellesley uh College undergraduate strong credential, but
Speaker 1: I thought I needed to have the credentials of a
Speaker 1: great university like Columbia. So I came really for that reason,
Speaker 1: but found that it was far more than that. Well,
Speaker 1: talk about that specifically, because you were working and doing
Speaker 1: the executive program right, which was like Friday's for a
Speaker 1: long time. Tell us about what you got from being here,
Speaker 1: I found, but coming to Columbia that everything I've been
Speaker 1: doing and observing as an investor on Wall Street, it
Speaker 1: all began to come together in the context of theory
Speaker 1: and practice. And I believe that when you take practice
Speaker 1: from experience and then putting it into some sort of
Speaker 1: a structure and theory it really works. Then it all
Speaker 1: makes sense. And one of the things that you quickly
Speaker 1: identified was the ability both as an investor and a leader,
Speaker 1: a business leader, to make stronger connections between the US
Speaker 1: and China. That clearly has been a big part of
Speaker 1: what you've been doing. That has never been more relevant
Speaker 1: than it is today. Tell us what you see right now,
Speaker 1: especially headlines every day about Hong Kong. Maybe maybe we
Speaker 1: start there. What do you make of that situation? I
Speaker 1: think it's it's a very fraught situation, and I hear
Speaker 1: from friends and colleagues on both sides and they're both
Speaker 1: equally grieved of And I think the way it works
Speaker 1: out is that, um, I don't think Beijing realized it
Speaker 1: was going to go this far. I think they certainly
Speaker 1: do not want to have a tantemous square. It's a
Speaker 1: very different world we live in social media. They cannot
Speaker 1: have that, So they have to find some face saving
Speaker 1: way to begin to come the crowds. Um. I think fortunately,
Speaker 1: the beef that's the demonstrators have is really more with
Speaker 1: the Hong Kong government than with Beijing. So I think
Speaker 1: if you can work through Carrie Lamb where she has
Speaker 1: already withdrawn the Tradition Bill, and if she can begin
Speaker 1: to negotiate on the three other conditions that the the
Speaker 1: protesters have set up, there is a potential to work
Speaker 1: through some understanding. Lulu, is there a role for folks
Speaker 1: outside of Hong Kong and outside of China, because there's
Speaker 1: certainly been some push among the protesters to involve the
Speaker 1: United States. What's your role on that or well, I
Speaker 1: do think there is a role um Um. In my
Speaker 1: uh not day job, I'm also on the board of
Speaker 1: Asia Society, which is really the u foremost nonpartisan group
Speaker 1: trying to bridge US and Asia, and we have been
Speaker 1: very busy talking to both sides about the issues. Um.
Speaker 1: I think if we can find ways the Chinese are
Speaker 1: very big unface, they cannot be humiliated, and there's a
Speaker 1: way in which they can continue to stay with the
Speaker 1: one country two systems, begin to exert some some control
Speaker 1: over Hong Kong, but not with the heavy heavy handedness
Speaker 1: we've seen. I think there will be a solution. Business
Speaker 1: leaders and certainly investors are talking increasingly of a decoupling
Speaker 1: between the United States and China. Given you've spent decades
Speaker 1: coupling in the US and in many ways, how much
Speaker 1: do you worry that that that may become a reality.
Speaker 1: I think there are many people who concerned that this
Speaker 1: is going to be uh uh, one win, one lose.
Speaker 1: I still am a believer that it can be a
Speaker 1: win win situation. UM. I think right now we have
Speaker 1: two leaders who are both under short term pressure to
Speaker 1: try to resolve some of the problems for their economy's crumble.
Speaker 1: I think the advantage that she has is that he
Speaker 1: also is playing the long game, and I think he
Speaker 1: believes that the long term future of China is very
Speaker 1: conditioned on China retaining economic political, not necessarily military, but
Speaker 1: geo political power. UM. The question is does the economy
Speaker 1: crumble before he can achieve this. But he has many
Speaker 1: lovers that are not present in America which he's been pulling.
Speaker 1: Especially there's absolutely he has been pulling levers. He's um
Speaker 1: moving more liquidity into the system. UM. He's getting some
Speaker 1: of his UM companies, both multinational and Chinese, to begin
Speaker 1: to try to UM do more investing in the economy.
Speaker 1: He's trying to bring more capitals UM investment back into China. Well,
Speaker 1: I'm curious that what you are hearing is that, well,
Speaker 1: there ultimately are the expectations from US folks that you're
Speaker 1: talking to folks in China that there will be some
Speaker 1: kind of a trade deal that's done. Or is the
Speaker 1: fear that I think we keep hearing is that we're
Speaker 1: going to see China kind of go off with their
Speaker 1: plans and have its allies, and the US will go
Speaker 1: off on its plans. And when it comes to trade
Speaker 1: and developing technology, what do you expect. I think it
Speaker 1: would be very difficult for there to be two fortresses.
Speaker 1: The world is too connected, the supply chain of the markets,
Speaker 1: we are interdependent, so I don't think we can truly
Speaker 1: exist separately. UM. I do think that some of the
Speaker 1: reforms that the US is pressuring China to make are
Speaker 1: not actually bad for China. Some of the progressive in
Speaker 1: China have been militating for them all along, but they
Speaker 1: had been sort of outnumbered by the Hawks. But I
Speaker 1: think with this current situation where she's under pressure internally
Speaker 1: for UM having managed it UH in an indelicate way,
Speaker 1: it's going to provide some opportunity for the progressive to say, look,
Speaker 1: it makes sense that we open our markets, it makes
Speaker 1: sense that we liberalize, and so let's do some of this.
Speaker 1: We will make it appear that it is our own initiation.
Speaker 1: We're not being bullied into it. That's very important. The
Speaker 1: West has to not play the bully hand. I think
Speaker 1: that will be very difficult for SHEET overcome. But if
Speaker 1: there can be UM sensitive diplomatic accommodations on both sides,
Speaker 1: I think it could come out better for both countries.
Speaker 1: One of the biggest concerns for investors, sort of broadening
Speaker 1: to the entire world, Lulu, is this notion of negative yields,
Speaker 1: a world where pensions and other huge institutional investors are
Speaker 1: just not making the money they need. Do you see
Speaker 1: a short term change in that You're so involved in
Speaker 1: so many of these big institutions as customers and as
Speaker 1: an advisor, right well, I think there's a lot of
Speaker 1: liquidity around. There is money to be invested, and in
Speaker 1: a way, that's why many UM bears on the US
Speaker 1: market a puzzled and frustrated that they've been shut and
Speaker 1: the market continues to just want to work this way
Speaker 1: up so that money wants to find a place. And
Speaker 1: in this very troubled world, um the U S and
Speaker 1: the U S Dollar seems to be a relative, relative
Speaker 1: safe haven. That's Lulu Wong, founder and CEO of two
Speaker 1: Below Capital Management. She has been on Wall Street for
Speaker 1: a long time, been an investor for a long time.
Speaker 1: But I also thought, what a great time to be
Speaker 1: sitting with her because of her experience and understanding really
Speaker 1: both the United States and China as well as we
Speaker 1: sit in this trade war. She brought nuance to an
Speaker 1: issue that I think far too often is painted in
Speaker 1: very broad brush rokes. Yummy, I got loving my perfect song.
Speaker 1: And before we wrap up our day here at Columbia
Speaker 1: Business Going one more treat. The founder of ciggis who
Speaker 1: when he came to the United States, I think, first
Speaker 1: for an interview at the Clumbia Business School and then
Speaker 1: to actually go to school here, he kind of missed
Speaker 1: something from home. Yeah, and that was yogurt. And so
Speaker 1: now his yogurt it's available in tens of thousands of
Speaker 1: locations around the world. The founder is Siggy Hillmerson. He
Speaker 1: is here with us at Columbia Business School, your alma mater. Welcome,
Speaker 1: Thanks to you, Thanks for having me. Alright, So what
Speaker 1: are your feeling sort of coming back here. What do
Speaker 1: you remember most clearly about your time in Columbia. Uh,
Speaker 1: it's great to be back on campus. I love the campus.
Speaker 1: It's beautiful and it's uh, you know, I live in
Speaker 1: the festivaliy now, so it's like pretty close. It's awesome
Speaker 1: to just jump on the subway and come up here.
Speaker 1: Uh what I miss. What I remember most vividly about
Speaker 1: Columbia was to come here and all the amazing people
Speaker 1: that would come through campus. I'm a big basketball buff
Speaker 1: and uh, as a kid used to wake up in
Speaker 1: the middle of the night to watch, you know, the
Speaker 1: Bulls play Michael Jordan's And I remember very vividly coming
Speaker 1: to campus one day and David Stern, who was the
Speaker 1: NBA Right Commissioner, was giving a talk to the students.
Speaker 1: And I when I was a kid that the whole
Speaker 1: world felt so distant and then you come to Columbia
Speaker 1: and these people are just there giving you advice, and
Speaker 1: it was just my mind was blown, and I felt
Speaker 1: so lucky I got to be here, and I was
Speaker 1: just I remember it very vividly. I was so grateful
Speaker 1: and it was just kind of amazing, you know. Well,
Speaker 1: and what's interesting is, I mean, obviously you started your
Speaker 1: own business when you initially went to business school. I
Speaker 1: mean you started at a consulting from did you think
Speaker 1: at some point while you were studying, man, this is
Speaker 1: what I want to do, is have my own company. No,
Speaker 1: I didn't have like a clear vision of what I
Speaker 1: wanted to do post business school. I'm sort of like
Speaker 1: a stubborn guy and I have an independent streak in me,
Speaker 1: so I knew I would probably do something by myself.
Speaker 1: I just wasn't quite sure what it was. And after
Speaker 1: business school, I actually uh started working in management consulting.
Speaker 1: But I think I was a very poor consultant, you know. Uh,
Speaker 1: you know, I couldn't consult very well. So I was
Speaker 1: sort of thinking about what to do with my life.
Speaker 1: And I had started making the yogurt, you know, the skier,
Speaker 1: which is sort of the classic iceland at yogurt from home.
Speaker 1: I sort of started making it as a hobby, uh,
Speaker 1: and sort of long story short, I had had a
Speaker 1: professor at business school who I was friendly with, and
Speaker 1: he sort of encouraged me to explore it and started
Speaker 1: as a business and that's sort of how it came about.
Speaker 1: And he backed you. Yeah, and so Michael, Michael Lambiema
Speaker 1: is his name. He basically became my business partner and
Speaker 1: first investor and and and was on the board, uh
Speaker 1: all the way until we sold the company last year.
Speaker 1: So as a rich Columbia connection there, What was it
Speaker 1: that though you learned at at the at Columbia Business
Speaker 1: School in terms of now running your own company and
Speaker 1: starting because it's not always easy in the beginning. Yeah,
Speaker 1: it's actually it's a it's a funny story. And it's
Speaker 1: another sort of one of those serendipitous events is that
Speaker 1: my background was econ and I sort of opted out
Speaker 1: of some classes when I started Columbian and I needed
Speaker 1: to film my schedule and I had never done anything
Speaker 1: in supply chain, and Columbia has a great supply chain
Speaker 1: program and and and great professors there, so I just
Speaker 1: took a bunch of those last is not having any
Speaker 1: idea that would ever use it. But one of the
Speaker 1: most important things when you run a consumer products business
Speaker 1: CpG company is supply chain and logistics, right. A business
Speaker 1: in that industry can be broken if you don't have
Speaker 1: your supply chain correct. So one of the most important
Speaker 1: things that I learned from Columbia was actually supply chain.
Speaker 1: But that was kind of almost by luck. You know
Speaker 1: that that happened, so um, very thankful. It feels like
Speaker 1: you did when you created this company anticipate a place
Speaker 1: where we are now when when it comes to food
Speaker 1: and ingredients and people's willingness candidly to pay up for
Speaker 1: high quality and to really care about where their food
Speaker 1: is coming from. What did you see sort of looking
Speaker 1: around the corner that that convinced you that this was
Speaker 1: the way to go. Oh, that's that's pretty easy to answer.
Speaker 1: I when I came here, I not only missed Skier,
Speaker 1: the Iceland, the yogurt. I noticed that a lot of
Speaker 1: the yogurts here are very sweet, and the most popular
Speaker 1: yogurt in America at the time had more sugar proounds
Speaker 1: than a koind of coke. And the difference between coke
Speaker 1: and yogurt was that, you know, people drink Coca cola
Speaker 1: and they kind of know it's not healthy, but they
Speaker 1: do it. Anyway. Right with yogurt, it had the halo
Speaker 1: of health products, so people were totally indiscriminating of eating it,
Speaker 1: even if it contained more sugar than the coke. Right,
Speaker 1: So I thought, this is like a contradiction here, like
Speaker 1: people need to know about this and I need to
Speaker 1: do something to fix it. So when we started the company,
Speaker 1: I wanted to make the yogurt but not make it
Speaker 1: so sweet that it was equivalent to candy or soda.
Speaker 1: And that was a challenge. People were sort of not
Speaker 1: super receptive at first, but then it really took off
Speaker 1: two and twelve and why do you think it Why
Speaker 1: do you think it took off? And why do you
Speaker 1: think that sort of mega trend really set in and
Speaker 1: people just finally realized, how that's terrible for me. I
Speaker 1: shouldn't be eating so much sugar. Like what what was
Speaker 1: the catalytic moment? Well, I think I think it was
Speaker 1: just sort of generally people came to realize this. I
Speaker 1: think people have been so focused on fat as the enemy, uh,
Speaker 1: and not focused enough on sugar and all the suddenly
Speaker 1: sort of the drumbeat of a lot of dietitians doctors
Speaker 1: who work in diabetes, you know, personal trainers, also some
Speaker 1: people who work in health. That sort of started trickling
Speaker 1: off to mainstream media and getting a lot of attention.
Speaker 1: And that really helped us as well because we've been
Speaker 1: around for a while when that started happening and had
Speaker 1: been saying the same thing. So so we were lucky
Speaker 1: to catch that wave. I do feel like there's been
Speaker 1: an enlightenment when it comes to food right in terms
Speaker 1: of absolutely what's in it? Because I was talking with
Speaker 1: you before we get started. I mean I loved the
Speaker 1: video online. I mean there's not a lot of ingredients
Speaker 1: in it. And I think more and more people we
Speaker 1: talk about it about our kids are turning around the
Speaker 1: containers and saying, Okay, what's in something so fast forward
Speaker 1: you've got this company, People are like, yeah, I don't
Speaker 1: need all that sugar. I need just kind of healthy
Speaker 1: ingredients in something. There's more competition, So how do you
Speaker 1: continue to get the shelf space and set yourself upon
Speaker 1: a right Well, we were we were very lucky in
Speaker 1: that regard because when we started, nobody was focusing on that. Uh.
Speaker 1: And the weirdest thing I actually found was that, uh,
Speaker 1: we didn't get a lot of competition. We heard sort
Speaker 1: of rumors that some of the big companies looked at
Speaker 1: our space and said, yeah, people are not gonna like that.
Speaker 1: You know, Oh, this is a cool little brand, but
Speaker 1: people are not gonna like it. It's not sweet enough. Uh.
Speaker 1: And then all of the suddenly we we sort of
Speaker 1: are starting to have a meaningful share of the U. S.
Speaker 1: Grocery market. First one percent, then two percent, then close
Speaker 1: to three percent, and then sort of the competition came in.
Speaker 1: So I think our luck in that regard was a
Speaker 1: little bit that we managed to establish ourselves before the
Speaker 1: competition first over advantage. Yes, so that makes a difference exactly.
Speaker 1: So that kind of helped fight the fact that we
Speaker 1: don't have as much fun to some of the bigger
Speaker 1: players got and and and and they're like why you know,
Speaker 1: I just think, is somebody who runs a company just
Speaker 1: twenty seconds, um, you know, your advice to other entrepreneurs
Speaker 1: and just quickly planned for success. There's nothing worse than
Speaker 1: having the demand and having the things out there that
Speaker 1: people watch your product and not being able to supply them.
Speaker 1: So build the infrastructure. And that's Siggy Ellmerson. He's the
Speaker 1: founder of Siggy's I Love his story about you know,
Speaker 1: studying at school and the things he was interested and
Speaker 1: he took a class on supply chain management. He's like,
Speaker 1: I don't know if I'm into it, but it turned
Speaker 1: out he needed it in running and developing his company.
Speaker 1: Super important when you're growing a big brand like that.
Speaker 1: Last hour, we caught up with James Gorman about the
Speaker 1: FED his view on interest rates. He admitted to getting
Speaker 1: it wrong when it came to how the ten year
Speaker 1: is trading Now. We talk about how tech has been
Speaker 1: driving Wall Street and also about how folks are getting
Speaker 1: realistic with I p O valuations. But some of those
Speaker 1: that have come public this year, whether it's an uber,
Speaker 1: whether it's a lift, you know, came out with a bang,
Speaker 1: but then I pulled back. So it's the market telling
Speaker 1: you will wait a minute, you weren't worth that much
Speaker 1: or or what is it? Does? It take some time
Speaker 1: with these companies that have been around for a while
Speaker 1: that are still not profitable. But I've been around for
Speaker 1: a long time, how do you make sense that? Uh?
Speaker 1: You know, the market can be very stupid in the
Speaker 1: short run, um in the medium term and occasionally gets
Speaker 1: things wrong, and the long term you're the one is stupid,
Speaker 1: right right? So, uh, you know when facebo yeah totally.
Speaker 1: When Facebook went public, Um, I went on TV. I
Speaker 1: can't remember if it was with you guys or not.
Speaker 1: Let's just say what it was obviously was you know,
Speaker 1: I said, this is a great, great new company that
Speaker 1: has been formed by incredibly innovative people who have created
Speaker 1: something that didn't exist before. That should be celebrated. The
Speaker 1: fact that traded at a value in the weeks and
Speaker 1: months after went public below what people wanted on the
Speaker 1: day of the issue. Okay, that happens, but look at it.
Speaker 1: Give it time, give it a year, and now it's
Speaker 1: it's something like six times the valuation, you know, in
Speaker 1: a relatively short prade of time. So we should all
Speaker 1: wish to have Facebook's problem. So I give this, I
Speaker 1: give this a little bit of time. I'm not I
Speaker 1: wouldn't be too too wound up about it. Are you
Speaker 1: seeing more issues that your team? Are you talking to
Speaker 1: more people who to bring more companies to public? How
Speaker 1: active is it right now? Are they? Are they not
Speaker 1: bringing them public because of this? I think it's making
Speaker 1: people more realistic about valuations, you know, for some of
Speaker 1: these unicorns. I think there's a little reality check has
Speaker 1: gone into the system, and that's that's okay, this is
Speaker 1: what the market does. You know. In fact, to my point,
Speaker 1: the market in the long run gets it right. The
Speaker 1: short run is how you find opportunities when you think
Speaker 1: about this, uh, maybe overstate the little bit. This negative
Speaker 1: yield world that that we're living in. How does that
Speaker 1: change your view of the market. How does it change
Speaker 1: the way you may deploy some assets and may deploy
Speaker 1: some of your teams around the world. Well, I firstly,
Speaker 1: I've been very surprised at where rates are. I'll just
Speaker 1: say that up front. I felt the tenure at this point.
Speaker 1: I'd expected by the end of this year the tenure
Speaker 1: would be around three I was dead wrong. Okay. Um,
Speaker 1: so you know, a negative yield curve has been historically
Speaker 1: highly predictive of recession. But as Janet Yellen, former chair
Speaker 1: Yelling said, uh, it's not necessary really, so it doesn't
Speaker 1: necessarily lead to a recession. Uh So, how does it
Speaker 1: change our business? It doesn't. You know, We're we run
Speaker 1: our business based upon what we see going on in
Speaker 1: the broader economy rather than where rates are trading on
Speaker 1: any particular day. And I think in the last week,
Speaker 1: you've seen the tenure recover about ten fifteen basis points,
Speaker 1: so you know, we'll see you know, I'm curious to
Speaker 1: about the role of technology and finance. We see it increasingly,
Speaker 1: so talked to a little bit about, you know, the
Speaker 1: incorporation of it at Morgan Stanley and where you see
Speaker 1: it kind of all going, because it's certainly a big
Speaker 1: part of what they're being you know, taught at the
Speaker 1: Columbia Business School and more and more so, whether it's algorithms,
Speaker 1: whether it's engine engineers coming in and coding, where do
Speaker 1: you see it all playing out. It's interesting. I just
Speaker 1: came from our monthly Risk committee meeting to our meeting
Speaker 1: this morning, and we had a whole section on electronic
Speaker 1: trading and um, what we're doing in that space and
Speaker 1: how it's bleeding from equities into the fixed income space. Um.
Speaker 1: You know, the technology has been driving Wall Street dirty
Speaker 1: little secret for a very long time. You know, we
Speaker 1: set up our electronic trading businesses in the mid nineties,
Speaker 1: and it's like everybody suddenly discovered technology because of fintech. Um,
Speaker 1: there's a lot of innovation going on in the fintech sector,
Speaker 1: for sure, and we're partnering with a lot of those companies.
Speaker 1: But we are you know, we spend upwards of four
Speaker 1: b and all its on technology. We have centers of
Speaker 1: competence in machine learning, robotics, artificial intelligence, cloud computing, big
Speaker 1: data management. Obviously, our cyberspace is huge, so we have
Speaker 1: the resources and I think the intellectual horsepower to be
Speaker 1: at the forefront of a lot of the new technology development,
Speaker 1: but not all of it we want to do in house.
Speaker 1: So we're actively looking to partner with large and small companies,
Speaker 1: whether it's in software development, in data management in particular,
Speaker 1: and you know, embrace it. So it's it's very much
Speaker 1: a part of everything we do. Digital currencies as well,
Speaker 1: Uh we Yeah, we're helping clients hedge and manage their
Speaker 1: exposures to digital currencies. We haven't been um, you know,
Speaker 1: we haven't set up a digital business unit focused on
Speaker 1: you know, the various forms of cryptos. Per see much
Speaker 1: more interested in the blockchain technology. I don't know what.
Speaker 1: It's just another form of stored value to me. And
Speaker 1: I'm you know, people, maybe I'm dead wrong about this.
Speaker 1: I've been quite conservative on this for a long time. Um,
Speaker 1: I see much more value around the blockchain technology supporting
Speaker 1: the currency, in the currency itself. You mentioned sort of
Speaker 1: various partnerships, especially on the fin tech side. From a
Speaker 1: competitive standpoint, where do you see the most competition across
Speaker 1: your line of business at this point? Um, Well, in
Speaker 1: wealth management clearly, you know the online space, but but
Speaker 1: that's not new. I mean schwab and e Trade and
Speaker 1: merrit Trade being around an awfully long time. They've been
Speaker 1: doing online you know, digital business. It was just called
Speaker 1: something different, which was direct brokerage, right, had a different name.
Speaker 1: So that's always been competitive. I think. UM. In the
Speaker 1: asset management space obviously the challenge of a lot of
Speaker 1: the package t F indexing versus the traditional long earning
Speaker 1: active manage. But a lot of our businesses are very complex,
Speaker 1: require global capability, you know hedging, uh, you know a
Speaker 1: currency exposure in Japan, being long certain rate securities in Australia.
Speaker 1: I mean we're twenty four hours. It's a lot of
Speaker 1: it is um. It's it's not that it's not challenged competitively,
Speaker 1: but most of our challenge comes from our traditional competitors,
Speaker 1: the big banks. James, I'm always curious, you know, we
Speaker 1: spend our time so much talking about FED policy, yield curves,
Speaker 1: us trying to trade policy. What is it that you
Speaker 1: folks and Morgan are spending so much time having conversations about.
Speaker 1: What is it that we're not talking about that really
Speaker 1: deserve a little bit more attention? Leadership culture um creating
Speaker 1: an organization where diverse employees don't feel included, but feel
Speaker 1: not just included, but feel they belong. That's something I've
Speaker 1: felt very strongly about the whole diversity inclusion discussion in place.
Speaker 1: Somebody invited you into the room, Now I want you
Speaker 1: to belong. It's your room. So we talk about a
Speaker 1: lot of the qualities that get at. Do employees respect
Speaker 1: your institution, want to be part of your institution, want
Speaker 1: to make their careers and lives there? That the macro
Speaker 1: stuff okay, rates for two and a half percent, now
Speaker 1: they're one and a a half percent. Is Morgan sending fundamentally
Speaker 1: changing strategy because of that? Of course not. But if
Speaker 1: we can't attract really talented, committed people who do things
Speaker 1: the right way you have the right vegas, then then
Speaker 1: we're going nowhere. So I'm very Once your strategy is
Speaker 1: in place, and I think we have a really sound strategy.
Speaker 1: It's all about reaffirming the cultural values and putting the
Speaker 1: leadership in place for the next ten and fifteen years.
Speaker 1: Who can drive those vas? Are we making in roads?
Speaker 1: I want to ask about diversity because I feel like
Speaker 1: we've been talking about diversity, parody women, you know, issues
Speaker 1: on Wall Street for a long long time, and we're
Speaker 1: still struggling and we will be talking about it for
Speaker 1: a long long time. I share one fact with you,
Speaker 1: uh this year and this somebody design. It was an
Speaker 1: outcome this year for the first time ever, more than
Speaker 1: fifty of our intern class, which is a thousand interns
Speaker 1: globally with women, first time ever, ahead of China as
Speaker 1: a woman, Head of Europe, Middle East, Africa as a woman,
Speaker 1: cohead of Investment banking as a woman, the head of
Speaker 1: our bank as a woman. I mean, we have senior
Speaker 1: leadership women in multiple roles, but are they representative of
Speaker 1: the role of women in society? No, they're not. Right.
Speaker 1: So we've we've we've we've made steps, but it starts
Speaker 1: with the pipeline at the beginning, and then finding ways
Speaker 1: in which you can keep those folks through all the
Speaker 1: transitions we make in life. Have h terrific careers of
Speaker 1: Morgan Stanleys. Are those discussions and those efforts becoming easier
Speaker 1: or harder given the political climate we're in. We live
Speaker 1: in a pretty I think it's here to say, divisive time,
Speaker 1: hyper political time in a lot of ways. How do
Speaker 1: you cut through all that to make these sorts of decisions?
Speaker 1: I think from a diversity perspective, No, I think from
Speaker 1: what is the role of the corporation society? Yes, I
Speaker 1: think we're being called as CEOs into the public debate
Speaker 1: much more we're our our employees want us to express
Speaker 1: opinions on a wide range of issues, and it's very
Speaker 1: difficult because you've got to you you know, we all
Speaker 1: have personally. I mean, I'm I'm a voter, right, I'm
Speaker 1: a citizen. I have opinions on all these issues. And
Speaker 1: it can't be just what James Gorman thinks. I'm not
Speaker 1: the company. It's what what is for the greater good
Speaker 1: of the whole organization. And I think what a lot
Speaker 1: of companies are now struggling with is what is our
Speaker 1: role in society? And this is why the statement came
Speaker 1: out recently from the CEOs at the roundtable, which was
Speaker 1: basically two embrace the broadest stakeholders that we have. You
Speaker 1: can listen, you can be a bank and runner only
Speaker 1: for Shareholderbayou. But if society turns against you and nationalize
Speaker 1: as your bank, that didn't work out so well. All right,
Speaker 1: So I've always believed you have to operate in the
Speaker 1: ecosystem with respect for everybody in that ecosystem. But what's
Speaker 1: interesting isn't We had a very smart conversation with um
Speaker 1: like we're having right now, but with another individual in
Speaker 1: the financial community, but talking about no, not everybody has
Speaker 1: the same access to education, you know, and I do
Speaker 1: wonder you know what that has done in terms of
Speaker 1: creating the gaps within our society. So how do we
Speaker 1: deal with that? Well? There, I mean, there are gaps
Speaker 1: in in in every society and not everybody starts off
Speaker 1: with the same exus. I mean it's you know, you're
Speaker 1: like I was lucky. I was born in Melbourne to
Speaker 1: the family of his born with and given the education
Speaker 1: I was given. That's why I'm here. That's James Gorman,
Speaker 1: CEO and chairman on Morgan Stanley, a Columbia Business School alumnus.
Speaker 1: Great conversation, of course, we talked the obvious about the
Speaker 1: market environment, the business outlook. We talked about I P
Speaker 1: O S, but I really did also love the other
Speaker 1: areas we went Jason when it came to either diversity,
Speaker 1: UH and other issues inequalities that we're facing in our
Speaker 1: society right at politics too. Very thoughtful guy, obviously a
Speaker 1: big job, and he does echo back a lot to
Speaker 1: his time at Columbia. For the full interview, download Bloomberg
Speaker 1: Business Week Extra wherever you get your podcasts. And that
Speaker 1: wraps up Bloomberg Business Week's weekend podcast. Thanks for joining us.
Speaker 1: I'm Carol Masser and 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. Catch us live well.
Speaker 1: Check out our daily podcast for the Ride Home at iTunes, SoundCloud,
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Speaker 1: week's edition of the magazine on newsstands now. We'll be
Speaker 1: back next week at the same time. This is Bloomberg