WEBVTT - Bloomberg Businessweek Weekend - November 1st, 2024 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week inside from the reporters and 0:00:13.039 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.680 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.000 --> 0:00:30.640 Hi, everyone, welcome to the weekend edition of Bloomberg Business Week. 0:00:30.920 --> 0:00:33.320 We are just a few days out from election day 0:00:33.440 --> 0:00:36.520 in the US, and the presidential contest between Donald Trump 0:00:36.520 --> 0:00:39.760 and Kamala Harris could not be any closer. But it's 0:00:39.760 --> 0:00:42.159 not just the election that we're focused on. We're in 0:00:42.200 --> 0:00:44.640 the midst of earning season. In this past week, five 0:00:44.680 --> 0:00:46.440 of the most valuable companies in the S and P 0:00:46.560 --> 0:00:50.800 five hundred reported results. We also got three key economic 0:00:50.880 --> 0:00:55.360 indicators GDP, an inflation print, and the October jobs report. 0:00:55.720 --> 0:00:58.720 Needless to say, it's been a busy week. Oh and 0:00:58.880 --> 0:01:01.240 let's not forget another rate decision from the Fed in 0:01:01.280 --> 0:01:04.319 the coming days. For the latest information on the election 0:01:04.440 --> 0:01:07.160 and the economy, head on over to Bloomberg dot Com 0:01:07.280 --> 0:01:10.679 or the Bloomberg Terminal. This hour, we'll break down some 0:01:10.760 --> 0:01:13.720 of the megacap earnings we got this week, we're talking 0:01:13.760 --> 0:01:17.880 meta Amazon, Apple, Microsoft, and Alphabet, plus the importance of 0:01:17.959 --> 0:01:21.280 leadership in times of crisis. The president and CEO of 0:01:21.319 --> 0:01:23.880 the nine to eleven Memorial and Museum stops by to 0:01:23.880 --> 0:01:28.000 teach us about leading through challenges. All of that to come, though, 0:01:28.000 --> 0:01:31.839 we begin with the so called Trump trade. Bloomberg opinion 0:01:31.840 --> 0:01:34.800 columnist John Authurs writes that the Trump trade is quote 0:01:34.880 --> 0:01:37.760 back in full sway, and many believe we're heading for 0:01:37.800 --> 0:01:41.360 a repeat of twenty sixteen, when Donald Trump's surprised markets 0:01:41.360 --> 0:01:44.679 by upsetting Hillary Clinton. John joined us this time to 0:01:44.720 --> 0:01:46.480 point out some important differences. 0:01:47.040 --> 0:01:49.520 You could argue about whether the move in the market 0:01:49.560 --> 0:01:52.560 has influenced what people are expecting, but I think it's 0:01:52.640 --> 0:01:57.280 fairly clear that most Wall Street, most financial markets are 0:01:57.280 --> 0:01:59.240 now working on the assumption that a Trump victory is 0:01:59.240 --> 0:02:03.240 about a two in three shot, so clearly more likely 0:02:03.240 --> 0:02:06.120 than a Harris victory, but not something anybody would want 0:02:06.160 --> 0:02:10.240 to bet their entire life savings on, because the markets 0:02:10.240 --> 0:02:12.440 still think that there's a one time in every three 0:02:12.600 --> 0:02:14.200 Kamala Harris in the election. 0:02:14.760 --> 0:02:16.720 But that's roughly where we are. 0:02:17.760 --> 0:02:22.320 That means that that's the huge difference this time compared 0:02:22.400 --> 0:02:26.080 to Donald Trump's first electoral victory assumeing he's going to 0:02:26.080 --> 0:02:28.520 get a second eight years ago, was that at that 0:02:28.680 --> 0:02:34.040 time it was generally regarded as highly unlikely, depending on 0:02:34.080 --> 0:02:36.480 which prediction market you looked at. In fact, it was 0:02:36.520 --> 0:02:39.600 not as big a surprise as some people remember it 0:02:39.600 --> 0:02:42.200 to be. It was about a thirty percent shot. So 0:02:42.440 --> 0:02:45.800 if you're a Democrat out there, the prediction market to 0:02:45.840 --> 0:02:49.280 think Camela's chance is good now as Donald Trump's were 0:02:49.320 --> 0:02:52.600 eight years ago, So that might be something cheery if 0:02:52.639 --> 0:02:55.560 you're a Democrat, but it plainly came as a very 0:02:55.600 --> 0:02:58.600 big surprise. Even if those were the odds, people hadn't 0:02:58.600 --> 0:03:01.000 banked on it. So you or first of all, a 0:03:01.200 --> 0:03:04.919 very sharp rise in bond heels. That's lastly, what we've 0:03:04.919 --> 0:03:07.680 had in the last month. People have perceived to be 0:03:07.680 --> 0:03:10.680 shifting in Donald Trump's favor, and you also had a 0:03:10.760 --> 0:03:15.320 rally in stocks that got a big second wins a 0:03:15.440 --> 0:03:18.840 year later when it became clear that the Trump tax 0:03:18.919 --> 0:03:22.680 cuts really were going to happen. So you can explain 0:03:23.280 --> 0:03:26.040 quite a lot of there other strange things that have 0:03:26.080 --> 0:03:29.320 been going on. This is the best year for the 0:03:29.400 --> 0:03:31.919 stock market of the S and P five hundred at 0:03:31.919 --> 0:03:35.400 this point in the year in over a decade, I 0:03:35.400 --> 0:03:38.760 think I'm right in saying, despite all the angst, and 0:03:38.800 --> 0:03:43.840 despite the fact that you normally have a fairly torrid 0:03:43.920 --> 0:03:46.160 time of it the last few weeks before the election, 0:03:46.560 --> 0:03:49.839 simply because of the uncertainty whatever people think is going 0:03:49.880 --> 0:03:52.880 to happen, you're nervous about chancing your arm ahead of 0:03:52.880 --> 0:03:56.240 the election. I would say that the reason that's different 0:03:56.400 --> 0:03:59.040 this time around, one of the prime reasons that's different 0:03:59.080 --> 0:04:02.440 this time around is that people have got it into 0:04:02.480 --> 0:04:04.600 their heads in the last few weeks that Trump is 0:04:04.640 --> 0:04:06.200 going to win, and that that will be good for 0:04:06.320 --> 0:04:09.800 stocks and also bad the bonds, but not so bad 0:04:09.840 --> 0:04:11.280 for bonds that he gets in the way stocks. 0:04:11.520 --> 0:04:13.400 John, One thing I first want to get kind of 0:04:13.400 --> 0:04:16.960 where we started. I mean, the financial markets in guessing 0:04:17.040 --> 0:04:19.799 presidential election outcomes, as you said, kind of the predictive 0:04:19.800 --> 0:04:23.520 market last time around for Donald Trump's first term. I mean, 0:04:23.680 --> 0:04:25.320 they got it wrong. They didn't expect them to get 0:04:25.320 --> 0:04:27.760 it right, and so I guess I don't know how 0:04:27.920 --> 0:04:30.240 you know, someone like yourself, someone like a lot of 0:04:30.320 --> 0:04:33.920 us who've seen market cycles and election cycles, you know, 0:04:34.440 --> 0:04:39.000 are we not wise to do the cause and effect 0:04:39.360 --> 0:04:43.080 or make a correlation between the two. Are investors smart 0:04:42.960 --> 0:04:47.280 in terms of, you know, playing out their expectations in 0:04:47.320 --> 0:04:48.440 the financial markets? 0:04:50.000 --> 0:04:55.839 I mean, investors are usually pretty smart because they've got 0:04:55.880 --> 0:04:59.839 money on the line and because it matters. Generally speaking, 0:05:00.000 --> 0:05:04.240 most of the time, the market is pretty darn difficult 0:05:04.279 --> 0:05:09.120 to beat. That said, markets do overshoot. They always do that. 0:05:09.360 --> 0:05:11.720 It's part of the physics of markets. 0:05:12.040 --> 0:05:12.960 At this point. 0:05:13.720 --> 0:05:16.800 And it's precisely because it's difficult to talk in these 0:05:16.920 --> 0:05:19.400 terms because so many of us do care so much 0:05:19.400 --> 0:05:22.920 about who is going to win this election. At this point, 0:05:23.000 --> 0:05:25.880 I'm inclined to agree that I think Donald Trump is 0:05:25.880 --> 0:05:29.160 more likely to win than Kamala Harris. And I also 0:05:29.279 --> 0:05:31.920 think at the current odds, I would bet on Kamala Harris. 0:05:32.400 --> 0:05:34.200 Why do you say that you only get one hundred 0:05:34.440 --> 0:05:36.560 You're going to get two hundred percent for your money. 0:05:38.480 --> 0:05:41.040 She's gonna triple your money for you. If you put 0:05:41.080 --> 0:05:42.480 a dollar on her now in the. 0:05:42.400 --> 0:05:45.920 Prediction markets, you'll get three dollars back next Wednesday if 0:05:45.920 --> 0:05:46.960 they manage to call the election. 0:05:47.040 --> 0:05:49.040 That wait, wait, so you're not looking into some crystal 0:05:49.160 --> 0:05:51.920 political crystal ball and making a prediction you're just saying 0:05:51.960 --> 0:05:54.480 in terms of a bet. It makes more sense. 0:05:54.240 --> 0:05:56.520 In terms of a bet in terms of the way 0:05:56.560 --> 0:05:59.440 people think about the NFL or Baseball these days. Who's 0:05:59.480 --> 0:06:02.359 going to beat the spread? With the spread I'm currently 0:06:02.400 --> 0:06:05.560 being offered, I'll take Kamela. If you get what I mean, 0:06:05.960 --> 0:06:10.520 I get it. And in terms of where I see 0:06:08.720 --> 0:06:14.279 the bond and stock markets at this moment, I would 0:06:14.360 --> 0:06:20.279 also be inclined to get ready for a surprise Camela trend, 0:06:20.360 --> 0:06:25.240 which would be good for bonds and bad for stocks 0:06:25.240 --> 0:06:26.680 in the short term. 0:06:27.000 --> 0:06:30.400 Sonically, talk a little bit about that, because we haven't 0:06:30.480 --> 0:06:33.720 seen the bond market. Yes, has shifted in the last month, 0:06:34.279 --> 0:06:36.839 but the stock market has continued to move higher, and 0:06:36.880 --> 0:06:40.800 it's continued a trend that was kind of interrupted, that 0:06:41.080 --> 0:06:44.000 was not interrupted, excuse me, despite the fact that these 0:06:44.040 --> 0:06:47.320 prediction markets seemed to change, John, when you look at 0:06:47.360 --> 0:06:49.760 the index level. 0:06:49.960 --> 0:06:52.240 I'm not sure I agree with that totally. I think 0:06:52.240 --> 0:06:56.719 you had two months in August and September when they 0:06:56.760 --> 0:07:00.960 were really quite sharp sell offs on the wave of data, 0:07:01.320 --> 0:07:03.760 normal economic data. At the beginning of the month, you 0:07:03.839 --> 0:07:09.279 did get the unemployment data which were surprisingly strong, surprisingly 0:07:09.320 --> 0:07:13.120 good for stock surprisingly bad for bonds, suggesting that we 0:07:13.120 --> 0:07:15.840 weren't going to need so many rate cuts after all. 0:07:16.560 --> 0:07:20.160 Then you have Elon Musk rally with Donald Trump, e 0:07:20.320 --> 0:07:23.520 tweets to everybody to look at polymarket because it's so good, 0:07:23.920 --> 0:07:27.240 and then Polymarket mysteriously, thanks to some French based whale, 0:07:27.400 --> 0:07:34.000 leaps forward. So I personally would say that the trends 0:07:34.000 --> 0:07:37.960 had largely broken down during August and September. People were 0:07:38.000 --> 0:07:43.560 getting nervous, and then a combination of oh, the unemployment 0:07:43.600 --> 0:07:47.360 market isn't a sluggish as we thought, and oh, we 0:07:47.400 --> 0:07:49.400 are going to get Donald Trump and Donald Trump means 0:07:49.400 --> 0:07:52.960 growth has led to this big, continued rally in the 0:07:53.040 --> 0:07:57.600 last few weeks. You wouldn't normally expect this to happen 0:07:57.760 --> 0:08:00.120 in an election year. This is not the right, This 0:08:00.200 --> 0:08:03.800 is not right. According to the seasonals, they've got their 0:08:03.800 --> 0:08:06.120 post election rally in before the election. 0:08:06.400 --> 0:08:08.080 This time, I would. 0:08:07.920 --> 0:08:11.960 Argue, I also do remember was it election night when 0:08:12.000 --> 0:08:13.640 Donald Trump won his first term? 0:08:13.680 --> 0:08:13.800 Right? 0:08:13.840 --> 0:08:16.360 Didn't we see futures initially sell off and then we 0:08:16.400 --> 0:08:18.760 saw a turnaround? 0:08:18.840 --> 0:08:21.280 It was right, it was. 0:08:20.880 --> 0:08:23.560 This was the other fascinating thing was that, yes, for 0:08:23.960 --> 0:08:26.840 months ahead of that result, anytime it looked as though 0:08:27.280 --> 0:08:29.000 Trump might somehow win. 0:08:29.520 --> 0:08:31.760 There was a huge sell off. Huge There was. 0:08:31.760 --> 0:08:32.800 A sell off right. 0:08:34.240 --> 0:08:39.680 When on election night, Tokyo and the Asian markets tank 0:08:40.040 --> 0:08:45.040 on the news, the S and P futures tank on 0:08:45.120 --> 0:08:49.400 the news. Everything has come back within a matter of hours. 0:08:50.320 --> 0:08:54.200 The stock market opens up the following morning, once once 0:08:54.280 --> 0:08:57.720 the cash market opens. So yes, that that was a 0:08:57.840 --> 0:09:03.160 remarkably swift response. Everybody did what they had been planning 0:09:03.200 --> 0:09:07.720 to do in reaction to a Trump victory, and then 0:09:07.800 --> 0:09:11.440 they had time to think, Actually, am I so negative 0:09:11.480 --> 0:09:15.640 about this? Donald Trump was relatively magnanimous, one of the 0:09:15.679 --> 0:09:19.079 most magnanimous speeches he's made that election night eight years ago, 0:09:19.120 --> 0:09:21.960 if you remember, so people were soothed that he wasn't 0:09:21.960 --> 0:09:24.679 going to be quite so mad, and then they suddenly thought, 0:09:24.840 --> 0:09:28.280 hang on, he's talking about big corporate tax cuts. Those 0:09:28.320 --> 0:09:32.960 are good for stocks and use and the market wasn't 0:09:33.000 --> 0:09:38.280 priced for such a thing. And you saw a remarkable rebound, 0:09:38.520 --> 0:09:42.560 and thanks to Trump delivering on those tax cuts a 0:09:42.880 --> 0:09:45.439 year on. It was more than a year before that 0:09:45.960 --> 0:09:50.480 rally broke down in twenty eighteen. So yes, that was 0:09:50.559 --> 0:09:56.440 a classic example. Though I didn't seeming either to be clear. 0:09:57.000 --> 0:09:59.240 Everything seemed to be gooar that. Oh my god, if 0:09:59.520 --> 0:10:02.120 Trump does somehow when the stocks are going to set off. 0:10:02.160 --> 0:10:05.679 Paul Cruitman, if you remember, was asked to predict when 0:10:05.720 --> 0:10:09.200 the Republic when the stock market would recover, and his 0:10:09.280 --> 0:10:10.600 reply was how about never? 0:10:11.160 --> 0:10:15.160 That was Bloomberg opinion columnist John Authors sticking with the election. 0:10:15.600 --> 0:10:18.640 It's close, needless to say, and that has some political 0:10:18.679 --> 0:10:21.880 analysts fueling visions of a sequel to the two thousand election. 0:10:22.640 --> 0:10:25.360 If you're of a certain age, you know exactly what 0:10:25.400 --> 0:10:28.040 I'm talking about. When it comes to the state of Florida, 0:10:28.440 --> 0:10:32.040 the Supreme Court determining the outcome, remember the Hanging Chad. 0:10:32.480 --> 0:10:36.040 Despite potential election litigation in various states, the Supreme Court 0:10:36.120 --> 0:10:38.640 is not likely to determine the winner this time around. 0:10:39.040 --> 0:10:42.120 Bloomberg New Supreme Court reporter Greig Store lays down the 0:10:42.160 --> 0:10:43.280 reasons why. 0:10:43.160 --> 0:10:46.959 One of them is legal and one of them is mathematical. 0:10:47.679 --> 0:10:51.280 The legal issue is that the Supreme Court in recent 0:10:51.360 --> 0:10:54.600 years has sort of narrowed the scope, narrowed the universe 0:10:54.920 --> 0:10:57.280 of issues that might actually get there. So there was 0:10:57.320 --> 0:10:59.720 a case last year, you may recall. It had to 0:10:59.720 --> 0:11:03.040 do with the power of state legislatures and in particular, 0:11:03.120 --> 0:11:08.360 whether the Supreme Court could overrule state supreme courts in 0:11:08.360 --> 0:11:12.199 interpreting their own election laws. And what the Supreme Court 0:11:12.440 --> 0:11:15.200 said was, we're not going to adopt this theory that 0:11:15.200 --> 0:11:18.360 says state supreme courts don't have any role here, and 0:11:18.400 --> 0:11:22.239 so that to some degree limited the Supreme Court's future involvement. 0:11:22.640 --> 0:11:23.920 And then the second thing is math. 0:11:24.160 --> 0:11:27.000 So I am old enough to remember the hanging chads 0:11:27.000 --> 0:11:30.839 in Bushtigor and that was a fight over five hundred 0:11:30.840 --> 0:11:33.439 and thirty seven votes in a single state that was 0:11:33.520 --> 0:11:36.760 going to determine the outcome of the election. And unless 0:11:36.800 --> 0:11:39.880 you have that sort of dynamic, then there's not the 0:11:39.920 --> 0:11:42.760 opportunity for the Supreme Court if it wants to get involved, 0:11:43.120 --> 0:11:47.760 to resolve a single legal issue and effectively resolve the election. 0:11:48.679 --> 0:11:51.040 But greg at the same time, it doesn't mean there 0:11:51.080 --> 0:11:54.320 isn't going to be legal challenges regardless of the outcome here. 0:11:54.320 --> 0:11:57.640 And you write about that the wow, more than one 0:11:57.679 --> 0:12:00.680 hundred lawsuits already that are shaping the twin twenty four 0:12:01.200 --> 0:12:03.680 US presidential election. So just because it won't be decided 0:12:04.160 --> 0:12:06.920 or I won't say won't, it's unlikely to be decided 0:12:06.920 --> 0:12:09.760 by the Supreme Court. Doesn't mean the lawyers will not 0:12:09.840 --> 0:12:11.360 be getting paid. 0:12:11.760 --> 0:12:14.160 They will be getting paid, and we'll get some things 0:12:14.160 --> 0:12:16.200 going to the Supreme Court, much like we did in 0:12:16.240 --> 0:12:18.680 twenty twenty. If you recall, there were a lot of 0:12:18.720 --> 0:12:20.439 things that came to the Supreme Court. Now, some of 0:12:20.480 --> 0:12:25.080 those were pandemic related, particular issues involving voting by mail 0:12:25.120 --> 0:12:27.960 that we hadn't dealt with before. But even after the election, 0:12:28.400 --> 0:12:31.800 he had that effort and really an unusual effort by 0:12:31.840 --> 0:12:35.520 Texas to try to overturn the results in four other states, 0:12:35.520 --> 0:12:38.800 and the Trump campaign, through its weight behind that, the 0:12:38.840 --> 0:12:41.720 Supreme Court had no interest in that. We've already got 0:12:41.720 --> 0:12:43.760 a couple things that had made it to the Supreme Court. 0:12:43.840 --> 0:12:46.360 Now there was something filed today having to do with 0:12:46.679 --> 0:12:50.120 efforts by Virginia, and of course that's not a swing state, 0:12:50.160 --> 0:12:54.240 but Virginia is trying to remove about sixteen hundred people 0:12:54.280 --> 0:12:57.000 from their voter rules and there's a dispute over that 0:12:57.000 --> 0:12:57.880 that is now at. 0:12:57.760 --> 0:12:59.000 The Supreme Court. 0:12:59.400 --> 0:13:03.120 What at this point is probably unlikely is one of 0:13:03.160 --> 0:13:06.280 these election determining fights like versus Gore. 0:13:06.600 --> 0:13:09.559 So this is good, we're so concerned or so much 0:13:09.559 --> 0:13:13.240 has been written about the politicization of the US Supreme Court. 0:13:13.880 --> 0:13:16.400 So is this a good thing in your view as 0:13:16.440 --> 0:13:19.240 you watch what may happen and what is expected to 0:13:19.280 --> 0:13:22.600 be potentially a fair amount of litigation after the election results, 0:13:22.640 --> 0:13:23.720 depending on the outcome. 0:13:24.280 --> 0:13:27.240 I think certainly from the standpoint of the Supreme Court's 0:13:27.640 --> 0:13:31.360 institutional standing, having them not be involved in the case 0:13:31.520 --> 0:13:34.280 is a good thing. The Supreme Court took a hit 0:13:34.360 --> 0:13:37.000 with Bush versus Gore, and of course the Court's been 0:13:37.080 --> 0:13:41.960 under enormous scrutiny the last few years. You've got the 0:13:42.000 --> 0:13:44.240 three Trump appointees have joined the court, made it much 0:13:44.240 --> 0:13:48.559 more conservative, some really far reaching rulings like the abortion one, 0:13:49.000 --> 0:13:51.240 and then all these ethical scandals that have. 0:13:53.520 --> 0:13:54.520 Surrounded the court. 0:13:55.080 --> 0:13:59.280 And you know, the court, every justice likes to say, 0:13:59.360 --> 0:14:02.400 we don't do politics here, we do law. But any 0:14:02.520 --> 0:14:06.960 decision that they issue that determines or significantly shapes the 0:14:06.960 --> 0:14:11.680 outcome of the presidential election undoubtedly is going to look political, 0:14:11.760 --> 0:14:13.640 and that's not the kind of thing they want. 0:14:13.920 --> 0:14:17.520 So it raises the question about how the campaigns are 0:14:17.760 --> 0:14:20.760 dealing with this ahead of time. Given that, and we 0:14:20.800 --> 0:14:24.400 spoke a couple of weeks ago to reporters who around 0:14:24.600 --> 0:14:27.360 the big take about the way that you know, Greg, 0:14:27.400 --> 0:14:31.480 this isn't really how the founders envisioned democracy, working the 0:14:31.560 --> 0:14:35.880 idea of votes then being litigated or elections being litigated. 0:14:36.360 --> 0:14:39.000 What are their campaigns doing to prepare for the scenarios here. 0:14:40.120 --> 0:14:44.400 Well, certainly they are laying legal groundwork. Yes, there are 0:14:45.320 --> 0:14:49.240 scores of cases that are out there now that potentially 0:14:49.320 --> 0:14:51.400 could just be, you know, one step away from the 0:14:51.440 --> 0:14:54.200 Supreme Court. If it turns out that I'm wrong in 0:14:54.200 --> 0:14:57.840 one of those cases, is enough to shift the balance here. 0:14:57.880 --> 0:15:01.200 So that's one thing they're making, making themselves ready. And 0:15:01.200 --> 0:15:04.440 then the second thing is both sides have these incredible 0:15:04.520 --> 0:15:08.760 legal teams that have tried to think through and brief 0:15:08.800 --> 0:15:13.040 in advance every issue under the sun, so that if 0:15:13.120 --> 0:15:17.360 it turns out a particular issue is something that they 0:15:17.480 --> 0:15:20.360 need in a Supreme Court filing that they need to 0:15:20.360 --> 0:15:21.360 get in within. 0:15:21.240 --> 0:15:23.360 Forty eight hours, they already have it at the ready. 0:15:24.200 --> 0:15:26.760 So both sides are ready to go in the event 0:15:27.360 --> 0:15:30.600 we end up with a Supreme Court showdown. 0:15:31.480 --> 0:15:34.280 What we won't know is whether that's going to be necessary. 0:15:34.680 --> 0:15:37.720 You know, you finish the piece with a quote and 0:15:37.760 --> 0:15:39.480 forgive me, I'm just trust to you who said this. 0:15:40.000 --> 0:15:43.360 And what you get into the quote is you need 0:15:43.400 --> 0:15:45.680 one state being a tipping point and a very narrow 0:15:45.720 --> 0:15:48.040 margin of victory, and then you need some kind of 0:15:48.120 --> 0:15:50.160 hook that gets the Supreme Court's attention. And I do 0:15:50.240 --> 0:15:55.000 think about that, greg, about what would ultimately get the 0:15:55.040 --> 0:15:57.040 Supreme Court's attention here. 0:15:57.680 --> 0:16:01.120 Yeah, and so just going back to to thousand, you 0:16:01.200 --> 0:16:04.320 mentioned those hanging chads. That was something that got the 0:16:04.320 --> 0:16:07.360 Supreme Court's attention. It got everybody's attention, this notion that 0:16:08.080 --> 0:16:12.880 around the state of Florida, it wasn't clear whether these 0:16:13.000 --> 0:16:15.160 votes were going to counter or not, and it was 0:16:15.200 --> 0:16:19.400 they were being judged by individuals who didn't have clear standards, 0:16:19.440 --> 0:16:22.000 and so that got their attention. And then you add 0:16:22.040 --> 0:16:25.360 into it the fact that there was at least officially 0:16:25.400 --> 0:16:27.400 a five hundred and thirty seven vote. 0:16:27.160 --> 0:16:31.320 Margin, and so you would need something like that. 0:16:31.480 --> 0:16:34.320 And you know, it doesn't necessarily necessarily have to be 0:16:34.440 --> 0:16:37.280 just one issue, just one hook. It could be a 0:16:37.320 --> 0:16:40.920 couple of them that add up, but something where there's 0:16:40.960 --> 0:16:45.240 some dispute where one side can say, hey, those whatever 0:16:45.280 --> 0:16:48.200 two thousand votes shouldn't have counted, and that might have 0:16:48.280 --> 0:16:51.360 been enough to shift the balance. That would be the 0:16:51.760 --> 0:16:54.160 sort of thing where the Supreme Court pretty much would 0:16:54.160 --> 0:16:54.920 have to get involved. 0:16:54.960 --> 0:16:56.400 Hey, one thing I want to ask you. I think 0:16:56.440 --> 0:17:01.200 we constantly just default to that the litigation would come 0:17:01.240 --> 0:17:04.040 from the Trump team, But there is potential that there 0:17:04.040 --> 0:17:06.760 could be litigation on each side, especially if it's super close. 0:17:06.880 --> 0:17:09.160 Yes, yeah, absolutely. 0:17:09.200 --> 0:17:12.119 I mean if if you know, imagine a world where 0:17:12.320 --> 0:17:14.560 you know, Donald Trump, Pennsylvania is the key state and 0:17:14.600 --> 0:17:19.280 Donald Trump wins it by a few hundred votes, absolutely, 0:17:19.320 --> 0:17:22.479 the Harris campaign will be looking for ways to challenge. 0:17:22.480 --> 0:17:24.600 And I mean part of you know, most states have 0:17:25.320 --> 0:17:29.199 provisions if an election there is exceptionally close, like it 0:17:29.240 --> 0:17:31.879 was in Florida, there's a provision there that says the 0:17:32.000 --> 0:17:35.440 loser can challenge the result, and there's a whole process there, 0:17:35.480 --> 0:17:39.840 and al Gore's campaign followed that process and it eventually 0:17:39.920 --> 0:17:43.480 led to the US Supreme Court. So if there's a 0:17:43.520 --> 0:17:46.040 state like that that is really close, no matter who's 0:17:46.040 --> 0:17:48.560 on the losing side, you can bet they will ask 0:17:48.600 --> 0:17:51.920 for a recount if that's allowed, you know, challenge any 0:17:52.080 --> 0:17:57.280 votes that might be questionable, and you know, ultimately though, 0:17:58.000 --> 0:18:00.199 when it gets to the Supreme Court, you know, the 0:18:00.280 --> 0:18:04.040 question will be in part you know, is this a 0:18:04.080 --> 0:18:06.320 court that's gonna you know, see our side of the 0:18:06.400 --> 0:18:07.840 issue on one of those things. 0:18:08.560 --> 0:18:11.760 Okay, so how are you how sharp is your pencil 0:18:12.000 --> 0:18:14.840 in terms of how you're thinking about your job after 0:18:15.119 --> 0:18:15.800 election day? 0:18:16.600 --> 0:18:18.879 Well, you know, as the Supreme Court reporter, I have 0:18:18.960 --> 0:18:21.560 a little bit of a luxury that almost everything goes 0:18:21.600 --> 0:18:25.359 through a couple of lower courts beforehand. So you know, 0:18:25.800 --> 0:18:29.200 some other colleagues will be following cases at the lower 0:18:29.240 --> 0:18:31.720 court level. That's where it will start to play out, 0:18:31.840 --> 0:18:35.640 and the Supreme Court probably will stay its hand. 0:18:35.680 --> 0:18:35.840 Now. 0:18:35.920 --> 0:18:38.560 You know, you mentioned how long bushby Gore went along. 0:18:39.240 --> 0:18:41.359 You know, that was decided on December the twelfth. The 0:18:41.400 --> 0:18:44.479 Supreme Court agreed to take that particular case up on 0:18:44.560 --> 0:18:47.520 December the ninth, so you know, quite a lot had 0:18:47.640 --> 0:18:51.400 happened between you know, when the last vote was cast 0:18:51.440 --> 0:18:54.800 on election day and when the Supreme Court jumped in 0:18:54.800 --> 0:18:55.600 in that case. 0:18:56.119 --> 0:18:57.440 And so there's you know. 0:18:57.920 --> 0:19:00.480 Different cases, different elections will play out different ways. But 0:19:00.520 --> 0:19:04.680 it's certainly very very possible that any Supreme Court involvement, 0:19:04.880 --> 0:19:08.240 should it happen in this election, won't happen for a 0:19:08.320 --> 0:19:10.720 number of weeks. 0:19:09.720 --> 0:19:12.440 Interesting stuff, Like I said, how many times have we 0:19:12.480 --> 0:19:14.760 said interesting the US election? 0:19:14.840 --> 0:19:16.879 Do we talk about Elon Musk at all? And the 0:19:16.960 --> 0:19:17.760 must giveaways? 0:19:18.000 --> 0:19:18.160 Oh? 0:19:18.200 --> 0:19:20.440 Go ahead, Greg, Yeah, we should get Greg. 0:19:20.760 --> 0:19:23.640 I'm curious how you're thinking about this, you know, from 0:19:23.640 --> 0:19:26.320 a legal standpoint, from your perch, How are you watching 0:19:27.000 --> 0:19:27.720 these giveaways? 0:19:28.760 --> 0:19:31.399 Well, there are certainly questions about those. I'm not going 0:19:31.440 --> 0:19:33.600 to pretend like I know what the answer is. But 0:19:34.080 --> 0:19:38.040 to the extent money is going to people, because they 0:19:38.080 --> 0:19:40.800 are only to people who have registered to vote, there 0:19:40.840 --> 0:19:45.639 are questions about whether that is legal. Now that being said, 0:19:45.880 --> 0:19:50.360 I'm not yet sure how that would translate to something 0:19:50.400 --> 0:19:53.720 that would determine who wins or who loses in this case, 0:19:53.960 --> 0:19:56.679 into something that is, you know, Trump v. Harris like, 0:19:58.160 --> 0:20:00.520 but it is certainly an issue worth while watching. I 0:20:00.600 --> 0:20:04.480 am quite sure that the Harris campaign is thinking about 0:20:04.480 --> 0:20:06.520 this and how they might use it if if they 0:20:06.560 --> 0:20:08.200 need you to make an argument in court. 0:20:08.640 --> 0:20:12.560 That was Bloomberg News Supreme Court reporter Greg Store coming 0:20:12.600 --> 0:20:16.000 up leadership any Time of Crisis with the President and 0:20:16.080 --> 0:20:19.800 CEO of the Nine to eleven Memorial and Museum. You're 0:20:19.840 --> 0:20:22.879 listening to Bloomberg Business Week This is Bloomberg. 0:20:23.920 --> 0:20:27.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:20:27.480 --> 0:20:30.720 live weekday afternoons from two to five pm. Easter Listen 0:20:30.760 --> 0:20:32.920 on Apple card Play and then brought auto with a 0:20:32.920 --> 0:20:35.960 Bloomberg Business app or watch us live on YouTube. 0:20:37.400 --> 0:20:38.880 All right, Tim, So, you know, we often look at 0:20:38.920 --> 0:20:42.040 history and past market cycles, past economic cycles to really 0:20:42.119 --> 0:20:45.080 understand where we are today and where we may be going. 0:20:45.600 --> 0:20:47.640 It's not a given, as shocks like the Great Financial 0:20:47.640 --> 0:20:50.560 Crisis and the global pandemic showed us, but the past 0:20:50.600 --> 0:20:53.800 can help in gaming out the possible scenarios that investors 0:20:53.840 --> 0:20:55.560 and all of us may be dealing with. And that 0:20:55.680 --> 0:20:59.119 is something that the nine to eleven Memorial Museum thinks about. 0:20:59.280 --> 0:21:02.280 As they note on their website, nearly a quarter century 0:21:02.280 --> 0:21:05.000 after nine to eleven, the lessons learned have emerged with 0:21:05.040 --> 0:21:09.320 deeper clarity, highlighting key elements of crisis response and continuity 0:21:09.560 --> 0:21:13.320 that resonate deeply with a new generation of professionals at companies, agencies, 0:21:13.600 --> 0:21:16.200 and a range of organizations. 0:21:15.560 --> 0:21:17.679 With more with us here in the studio, the President 0:21:17.720 --> 0:21:20.080 and CEO of the nine to eleven Memorial and Museum, 0:21:20.080 --> 0:21:23.120 Beth Hellman. The Memorial and museum. It is supported by 0:21:23.119 --> 0:21:27.240 Michael R. Bloomberg, founder of Bloomberg Philanthropies and at Bloomberg LP. 0:21:27.520 --> 0:21:30.200 Yeah, very involved in the nine to eleven memorial and museum. 0:21:30.240 --> 0:21:30.400 Beth. 0:21:30.560 --> 0:21:32.560 Great to have you here with us. We've kind of 0:21:32.560 --> 0:21:35.680 been talking about the environment before we got going. Nine 0:21:35.720 --> 0:21:37.879 to eleven for me always makes me kind of stop 0:21:37.880 --> 0:21:40.840 and think about where we are in terms of, first 0:21:40.880 --> 0:21:43.560 of all, what happened that day and how we as 0:21:43.640 --> 0:21:47.640 Americans began to think very different differently. I think it's 0:21:47.640 --> 0:21:49.639 safe to say about what national security means and the 0:21:49.720 --> 0:21:52.560 role of geopolitics in it all. How do you guys 0:21:52.560 --> 0:21:55.680 continue to think about what security means here for Americans? 0:21:56.119 --> 0:21:58.600 For you, Carol and for me, nine to eleven brings 0:21:58.680 --> 0:22:01.720 up those memories. There were a hundred million Americans born 0:22:01.760 --> 0:22:04.840 since we're too young to remember nine to eleven for themselves. Yet, 0:22:04.880 --> 0:22:07.520 there's so many crises upon us now and ahead of 0:22:07.600 --> 0:22:12.119 us environmental, geopolitical health that will need the kind of 0:22:12.200 --> 0:22:14.520 leadership that helped us respond to nine to eleven in 0:22:14.600 --> 0:22:17.199 order to get through. So for us, we've realized the 0:22:17.240 --> 0:22:20.800 crisis leadership programs that we've built over time are responsive 0:22:20.800 --> 0:22:23.879 to that tremendous need out there right now for people 0:22:24.040 --> 0:22:27.639 at all levels of leadership within an organization, public and 0:22:27.680 --> 0:22:30.040 private sectors to figure out how they can respond to 0:22:30.119 --> 0:22:31.440 crises they didn't anticipate. 0:22:32.200 --> 0:22:34.120 For me, it's hard to think about this as being 0:22:34.240 --> 0:22:36.840 history because it didn't happen to It didn't feel like 0:22:36.880 --> 0:22:39.000 it happened that long ago. And I think for many 0:22:39.040 --> 0:22:41.679 of us who were alive and old enough to remember 0:22:41.760 --> 0:22:45.040 what happened, it's still so vivid and the images are 0:22:45.080 --> 0:22:48.040 still so vivid in our heads. But how at the 0:22:48.119 --> 0:22:52.639 museum and at the memorial do you convey what happened 0:22:52.680 --> 0:22:55.639 that day and what happened after to a generation that 0:22:55.680 --> 0:22:57.480 didn't live it well. 0:22:57.520 --> 0:22:59.800 I think the value of visiting the Memorial in the 0:23:00.320 --> 0:23:03.439 in person is really unmatched in helping to convey what 0:23:03.560 --> 0:23:07.080 happened because of the power of the design, of the text, 0:23:07.200 --> 0:23:09.840 of the images, of the care that went into virtually 0:23:09.880 --> 0:23:13.639 every decision about how our visitors encounter the memorial and 0:23:13.720 --> 0:23:16.359 then the museum itself. We have work, though to reach 0:23:16.400 --> 0:23:19.000 the people who can't come in person to the memorial 0:23:19.040 --> 0:23:21.040 and to the museum, So we now have programs that 0:23:21.160 --> 0:23:24.280 actually translate some of those lessons outside. But I do 0:23:24.320 --> 0:23:26.919 think you're right that there's a lot of people who 0:23:27.000 --> 0:23:30.080 that's so vivid for they have a hard time unpacking it. 0:23:30.320 --> 0:23:34.120 Yet it's distant enough in time that we've had time 0:23:34.160 --> 0:23:36.639 to study and to actually understand what happened, and we 0:23:36.720 --> 0:23:40.440 realize that people came from across New York, the country, 0:23:40.520 --> 0:23:43.199 the world to respond to those terrorist attacks and to 0:23:43.240 --> 0:23:45.760 help New York and the other and the Pentagon, and 0:23:45.760 --> 0:23:48.200 then in Shanksville, Pennsylvania, the other sites and the people 0:23:48.200 --> 0:23:51.480 who were affected start to heal, to recover and to rebuild, 0:23:51.680 --> 0:23:53.600 and to make sure we remember what was lost that 0:23:53.680 --> 0:23:54.040 day too. 0:23:54.240 --> 0:23:54.440 Beth. 0:23:54.480 --> 0:23:56.679 We always talk about the Great Financial Crisis and how 0:23:56.720 --> 0:23:59.480 the role of CFO changed dramatically, right because they had 0:23:59.520 --> 0:24:02.399 to figure out how to keep companies their company around. 0:24:02.440 --> 0:24:05.600 Same thing for the global pandemic nine to eleven. In 0:24:05.720 --> 0:24:08.680 terms of what is needed in leaders today, how has 0:24:08.680 --> 0:24:09.479 that impacted it? 0:24:10.119 --> 0:24:10.960 You hit it. 0:24:11.080 --> 0:24:14.840 The security function that we didn't really realize was at 0:24:14.840 --> 0:24:17.600 the center of what every organizational leader has to reckon 0:24:17.640 --> 0:24:20.080 with after nine to eleven was certainly on the table, 0:24:20.119 --> 0:24:23.320 and our Summit on Security brings together private and public 0:24:23.359 --> 0:24:26.960 sector leaders in the security fields who are working to 0:24:26.960 --> 0:24:29.600 make sure their employees are safe, their customers, their clients, 0:24:29.680 --> 0:24:33.280 their communities are safe because without that baseline of knowing 0:24:33.280 --> 0:24:36.200 what to expect and how you'd respond when something goes wrong, 0:24:36.240 --> 0:24:38.399 because we do know it will go wrong. It's that 0:24:39.240 --> 0:24:41.840 ability to respond in a crisis that nine to eleven 0:24:42.240 --> 0:24:44.080 taught us we all really have to have from the 0:24:44.119 --> 0:24:45.720 top to the bottom of our organizations. 0:24:45.840 --> 0:24:47.199 Well, I was going to ask you, because when you 0:24:47.240 --> 0:24:51.280 came in, I was like, okay, underachiever. You have a 0:24:51.320 --> 0:24:54.160 BS in electrical engineering from Duke An MA in history 0:24:54.200 --> 0:24:56.760 from the University of Pennsylvania, a jd from Yale Law School, 0:24:56.960 --> 0:24:59.760 PhD in history from Yale University, and I feel like 0:25:00.000 --> 0:25:03.000 it just gives you what an incredible view on kind 0:25:03.000 --> 0:25:05.359 of the world and how we look at things. What 0:25:05.480 --> 0:25:07.959 are the specific skills that you think a leader needs 0:25:08.000 --> 0:25:11.600 today in order to deal with threats that may come 0:25:12.000 --> 0:25:13.760 from all different places. 0:25:15.080 --> 0:25:18.600 I think that being empathetic and understanding the impact that 0:25:19.080 --> 0:25:21.560 any crisis has on the people who are experiencing it, 0:25:21.920 --> 0:25:25.159 Realizing that they're already responding and their contributions have to 0:25:25.200 --> 0:25:28.520 be recognized. Being able to communicate effectively. It's so important today, 0:25:28.880 --> 0:25:31.120 you can't communicate too often or too much and then 0:25:31.320 --> 0:25:34.520 being calm and decisive. And that's really what some of 0:25:34.560 --> 0:25:38.040 the iconic leaders that speak actually in our new Leading 0:25:38.040 --> 0:25:44.480 Through Crisis program like who like Mike Bloomberg, Bob Eiger, Kenshinal, 0:25:45.040 --> 0:25:50.080 Bill McRaven. There are in many others, including first responders 0:25:50.200 --> 0:25:54.240 and private sector leaders, principles of schools who were actually 0:25:54.280 --> 0:25:57.120 on that day figuring out what to do. And as 0:25:57.119 --> 0:25:59.680 they reflect on and they talk about that, it really 0:26:00.200 --> 0:26:02.399 honestly gives you hope that people can figure out what 0:26:02.440 --> 0:26:04.800 to do and they can come together when a crisis hits. 0:26:05.080 --> 0:26:08.080 The thing is, though, is security has changed a lot 0:26:08.240 --> 0:26:12.000 in terms of what threats are in you know, a 0:26:12.080 --> 0:26:15.200 quarter of a century. We have this whole element of 0:26:15.720 --> 0:26:23.960 what foreign states are bad actors could do online targeting, infrastructure, cybersecurity, 0:26:24.359 --> 0:26:27.719 ransomware and the like. How have you seen the conversations 0:26:27.720 --> 0:26:31.720 around that shift from those types of targets to perhaps, 0:26:32.000 --> 0:26:35.680 you know, not a stadium necessarily full of people, right. 0:26:35.720 --> 0:26:39.000 It's interesting. One of the speakers in this year's Summit 0:26:39.040 --> 0:26:42.399 on Security is the NFL head of Security. So, Kathy Lanier, 0:26:43.560 --> 0:26:45.240 you know, no one who's taking care of people at 0:26:45.240 --> 0:26:48.159 a stadium thinks they don't have to worry about cybersecurity. 0:26:48.320 --> 0:26:50.800 They realize there's a connection between the virtual and the real. 0:26:50.920 --> 0:26:53.520 That means that their preparedness in all of those arenas 0:26:53.560 --> 0:26:56.080 that you just described as essential to the actual physical 0:26:56.080 --> 0:27:00.400 security of people. Protecting our water safety, for instance, isn't 0:27:00.400 --> 0:27:02.720 a technical challenge as well as a physical challenge. So 0:27:02.760 --> 0:27:05.240 I think what we've realized is that the proliferation of 0:27:05.280 --> 0:27:08.360 different threats has just broadened the scope of the security 0:27:08.400 --> 0:27:11.280 professionals responsible and the leaders responsible for keeping all those 0:27:11.320 --> 0:27:13.879 different elements of our basic security in place. 0:27:14.760 --> 0:27:18.439 Jamie Diamond said something about it being like the most 0:27:18.480 --> 0:27:21.119 threats in terms of geopolitics that he can remember of 0:27:21.119 --> 0:27:22.960 his career, and forgive me if I'm not quoting it, 0:27:23.280 --> 0:27:27.040 you know exactly. I mean, he's Jp Morgan has hired 0:27:27.040 --> 0:27:30.440 someone on climate, but he's looking at the world and 0:27:30.480 --> 0:27:33.240 where the threats are coming from is the world? I 0:27:33.280 --> 0:27:34.960 don't know, how do you how do you assess it? 0:27:35.040 --> 0:27:36.960 How dangerous is it? I mean, I know I asked 0:27:37.000 --> 0:27:39.600 for the panel I did for you guys in the 0:27:39.680 --> 0:27:41.720 upcoming summit, and it was NICKI Haley and it was 0:27:41.760 --> 0:27:45.480 Tom nyd's former US Ambassador to Israel, Nikki Haley, of course, 0:27:45.560 --> 0:27:49.199 former US Ambassador to the UN. They both I think 0:27:49.240 --> 0:27:51.120 it was Nicki who said eight, and I think Tom 0:27:51.160 --> 0:27:54.560 said incredibly dangerous. I mean, these are people who understand 0:27:54.600 --> 0:27:57.879 it from the inside, and I just wonder, do you 0:27:57.880 --> 0:28:00.280 feel like we're getting better information? Do you feel like 0:28:01.400 --> 0:28:04.440 leaders are feeling more stressed? Like, how do you see it? 0:28:05.440 --> 0:28:09.400 I think that eternal vigilance is always the lesson of 0:28:09.560 --> 0:28:12.280 people trying to keep others safe and protect our communities 0:28:12.280 --> 0:28:15.080 and our nation in the world. I think that we 0:28:15.119 --> 0:28:18.960 didn't realize how dangerous the world was on September tenth. 0:28:19.200 --> 0:28:20.280 We never thought something. 0:28:20.040 --> 0:28:21.000 Like that thousand one. 0:28:21.840 --> 0:28:24.280 You know, we felt differently on the twelfth, and then 0:28:24.280 --> 0:28:25.840 we responded since. 0:28:25.960 --> 0:28:28.439 You know you were talking about this, Carol, and you 0:28:28.520 --> 0:28:31.240 brought this up too. We never thought it would happen. 0:28:31.359 --> 0:28:34.560 I can remember January sixth, twenty twenty one. I think 0:28:34.600 --> 0:28:37.560 a lot of Americans never thought that would happen. And 0:28:37.880 --> 0:28:43.560 that type of attack actually happening from within the United States. 0:28:43.600 --> 0:28:46.480 What do you hear from executives at a time when 0:28:46.480 --> 0:28:48.880 there's serious political turmoil in our country? Just a few 0:28:48.920 --> 0:28:54.160 days away from the election, how they're navigating this idea that, yes, 0:28:54.240 --> 0:28:56.160 there's tension within our country too. 0:28:57.760 --> 0:29:01.720 I think that a sense of community, creating the kind 0:29:01.720 --> 0:29:05.600 of culture within an organization that can hold people through 0:29:05.680 --> 0:29:09.040 difficult times, and also remembering I'm trained as a historian. 0:29:09.600 --> 0:29:11.880 I think we've seen a lot before. We've forgotten about 0:29:11.920 --> 0:29:13.320 a lot of what we've seen. The nine to eleven 0:29:13.360 --> 0:29:16.280 Memorial Museum is committed to making sure we don't forget 0:29:16.320 --> 0:29:18.720 what happened on nine to eleven, but we have forgotten 0:29:18.720 --> 0:29:22.120 many of the tremendous challenges and periods of turmoil that 0:29:22.160 --> 0:29:24.880 we've been through in the United States. They're communicated in 0:29:24.920 --> 0:29:27.240 a different way now and they feel more and less immediate, 0:29:27.280 --> 0:29:29.160 I think, than they have in the past. Two different 0:29:29.200 --> 0:29:31.880 sectors of our world. But it's really important to remember 0:29:31.920 --> 0:29:34.360 we've been through a lot, and people are resilient, and 0:29:35.720 --> 0:29:39.280 there's rarely one point in time that determines winning or losing, 0:29:39.640 --> 0:29:42.480 and you know, so continuing regardless of the consequences, I 0:29:42.520 --> 0:29:46.760 think is important to every agency and organization and company 0:29:46.760 --> 0:29:47.200 out there. 0:29:47.400 --> 0:29:49.160 You know, it's interesting I think about that a lot. 0:29:49.200 --> 0:29:51.240 Bath I think, you know, my dad and his three 0:29:51.240 --> 0:29:53.520 brothers all thought in World War Two, and I wish 0:29:53.600 --> 0:29:55.760 they were still around because I'm like, how did I 0:29:55.800 --> 0:29:58.520 want to pick their brain about the stresses they felt 0:29:58.520 --> 0:30:00.920 at that time versus what we feel today. I think 0:30:00.920 --> 0:30:05.680 about with all the college campus protests around the war 0:30:05.760 --> 0:30:10.000 between Israel and Hamas, and how we had with a 0:30:10.120 --> 0:30:12.360 David Western or somebody who came in and said, you know, 0:30:12.440 --> 0:30:15.920 during the sixties, right race riots and the protesting over 0:30:16.000 --> 0:30:17.640 Vietnam War and so on and so forth, We've seen 0:30:17.680 --> 0:30:23.240 these times before, but we didn't have social media as much, 0:30:23.320 --> 0:30:27.960 and the velocity of information and maybe inaccurate information, false information, 0:30:28.000 --> 0:30:31.360 And I just wonder how leaders are grappling with all 0:30:31.400 --> 0:30:34.239 of that, you know, whether they're managing their institutions, their 0:30:34.280 --> 0:30:36.640 employees and just trying to figure it out. 0:30:37.720 --> 0:30:40.160 I think you're right, it's definitely different conditions the when 0:30:40.200 --> 0:30:42.280 we face these challenges in the past. But we also 0:30:42.320 --> 0:30:43.960 have a lot more muscle than we used to in 0:30:44.040 --> 0:30:46.080 terms of During World War Two, it was a time 0:30:46.080 --> 0:30:49.000 when most women didn't contribute to the economy, to the polity, 0:30:49.120 --> 0:30:51.720 to the intellectual life of the nation, as well as 0:30:51.800 --> 0:30:55.480 many other marginalized groups. That's a lot more intellectual firepower. 0:30:55.560 --> 0:30:57.400 That's a lot more people who can help. It's a 0:30:57.480 --> 0:30:59.560 lot more literal muscle that's out there. So are there 0:30:59.560 --> 0:31:01.440 are a lot of to have a hope notwithstanding the 0:31:01.520 --> 0:31:02.800 challenges that are out there. 0:31:03.480 --> 0:31:04.880 The summit is coming up. 0:31:04.800 --> 0:31:08.800 On launches on the twelfth, November twelfth, it launches and 0:31:08.800 --> 0:31:11.520 we're very excited. Is a set of virtual programs with 0:31:11.600 --> 0:31:14.680 the top leaders across the public and private sector, the 0:31:14.760 --> 0:31:18.400 nation's top law enforcement official, the director of the FBI, 0:31:18.520 --> 0:31:22.080 Christopher Ray. There's just there's a tremendous number of people 0:31:22.120 --> 0:31:24.480 to learn from and to listen to, the director of 0:31:24.480 --> 0:31:27.000 an agency, the administrator of an agency created after nine 0:31:27.000 --> 0:31:30.120 to eleven. The tsall will help teach us how we 0:31:30.160 --> 0:31:31.480 can respond to what's out there right now. 0:31:31.560 --> 0:31:32.120 Is it amazing? 0:31:32.160 --> 0:31:33.480 Like you think there was a time when there was 0:31:33.520 --> 0:31:35.640 no TSA right remember when we also walk right up 0:31:35.680 --> 0:31:36.000 to the gate. 0:31:36.280 --> 0:31:37.600 Did you have to take your shoes off when you 0:31:37.680 --> 0:31:38.800 were going through airport security? 0:31:39.240 --> 0:31:42.000 Meet our families coming right off the plane. It's great 0:31:42.040 --> 0:31:44.360 stuff and we participate in some of the panels and 0:31:44.800 --> 0:31:46.480 definitely learn a lot. So thank you so much for 0:31:46.640 --> 0:31:47.600 joining us, for your support. 0:31:47.680 --> 0:31:47.960 Thank you. 0:31:48.280 --> 0:31:50.760 That was Beth Hillman, President and CEO of the nine 0:31:50.760 --> 0:31:53.960 to eleven Memorial and Museum, and a reminder. The Memorial 0:31:54.000 --> 0:31:57.640 and Museum is supported by Michael R. Bloomberg and Bloomberg Philanthropies. 0:31:57.920 --> 0:32:00.760 Michael Bloomberg is founder and majority owner of Bloomberg LP, 0:32:01.000 --> 0:32:04.520 the parent company of Bloomberg Radio. Still ahead on Bloomberg 0:32:04.560 --> 0:32:07.120 Business Week, a roundup of this week's earnings from me 0:32:07.240 --> 0:32:10.720 mag seven's heavy hitters. This is Bloomberg. 0:32:12.680 --> 0:32:16.520 You're listening to the Bloomberg Business Week podcast. Listen live 0:32:16.640 --> 0:32:19.440 each weekday starting at two pm Eastern on Apple car 0:32:19.560 --> 0:32:22.520 Play and Android Auto with the Bloomberg Business App. You 0:32:22.560 --> 0:32:25.840 can also listen live on Amazon Alexa from our flagship 0:32:25.880 --> 0:32:28.280 New York station, Just say Alexa Play. 0:32:28.360 --> 0:32:33.080 Bloomberg eleven thirty Thursday wrapped up the biggest week of 0:32:33.160 --> 0:32:35.920 tech earnings for the quarter, with names like Amazon, Apple, 0:32:35.960 --> 0:32:39.840 and Intel reporting after the bell. James Chokmonk, technology analyst 0:32:39.880 --> 0:32:42.880 at Clockwise Capital, joined Emily GRIFFEO and me right as 0:32:42.920 --> 0:32:45.960 the results were crossing the terminal. We started off with Amazon. 0:32:46.160 --> 0:32:49.080 Total third quarter revenue increased eleven percent to one hundred 0:32:49.080 --> 0:32:51.760 and fifty eight point nine billion dollars. That exceeded estimates. 0:32:52.120 --> 0:32:56.000 An operating profit was seventeen point four billion dollars, demolishing 0:32:56.040 --> 0:32:59.560 the average estimate of fourteen point seven billion dollars. 0:33:00.120 --> 0:33:03.240 I think it's just what Andy Jassey has laid out 0:33:03.320 --> 0:33:06.760 basically about a year ago, that the path of profitability 0:33:06.800 --> 0:33:10.000 on the retail side of the business will continue and 0:33:10.360 --> 0:33:12.920 continue in a in a bigger and bigger way as 0:33:14.200 --> 0:33:18.720 as they achieve the efficiencies across their fulfillment network and 0:33:18.720 --> 0:33:25.440 and and further optimized for for shorter duration delivery time. 0:33:25.520 --> 0:33:28.960 So I think you're seeing what you want to see 0:33:29.000 --> 0:33:31.480 on the bottom line. The top line continues to perform 0:33:31.720 --> 0:33:36.200 more of on a status quo basis, so you know, 0:33:36.240 --> 0:33:40.800 we continue to like the name and uh and pretty please. 0:33:40.640 --> 0:33:40.959 With the core. 0:33:41.920 --> 0:33:43.920 You know, one big theme that we were looking at 0:33:44.200 --> 0:33:47.960 is whether these big tech companies are seeing the results 0:33:48.000 --> 0:33:50.280 in their earnings from all of the capex that they've 0:33:50.280 --> 0:33:54.360 done on AI. What does this Amazon earnings tell us 0:33:54.360 --> 0:33:58.440 about whether Amazon is able to kind of show all 0:33:58.480 --> 0:34:01.120 of the investments the fruit of their investments. 0:34:01.920 --> 0:34:03.680 Yeah, I haven't gone through it with a fine tooth 0:34:03.760 --> 0:34:09.440 thoe to change the NSS kind of the returns this quarter, 0:34:09.520 --> 0:34:13.920 but I think that from a bigger picture perspective, you know, 0:34:14.040 --> 0:34:17.279 you're not going to see a lot of trickle down 0:34:17.320 --> 0:34:22.400 to the bottom lane or or accretion to revenue on 0:34:22.440 --> 0:34:24.560 a short term basis. I think that these are much 0:34:24.719 --> 0:34:29.560 longer term investment cycles that will bear fruit over a 0:34:29.600 --> 0:34:32.640 longer term. So you know, that is a question that 0:34:32.680 --> 0:34:36.640 comes up repeatedly with investors. You know, where's ROI you're 0:34:36.640 --> 0:34:39.520 spending all these cappex But I think it just helps 0:34:39.560 --> 0:34:46.080 reinforce the competitive modes and crew over time. The way 0:34:46.200 --> 0:34:49.319 that we're looking at Big Peck more broadly is that 0:34:49.440 --> 0:34:51.160 you know, a lot of these names have run up. 0:34:51.200 --> 0:34:54.640 You know, we've been rotating out of these names for 0:34:55.560 --> 0:34:58.560 the last couple of weeks, now rotating into smaller cap names, 0:34:58.600 --> 0:35:02.680 more value oriented names, because you know, you have expanded 0:35:02.760 --> 0:35:07.759 multiple's high expectations, as you saw with Microsoft Meta. You know, 0:35:07.880 --> 0:35:10.720 I think the correction helped Amazon to a certain extent 0:35:10.800 --> 0:35:14.279 that the expert the bar had been lowered. But I 0:35:14.320 --> 0:35:18.439 think that big tech should likely remain choppy at least 0:35:18.440 --> 0:35:21.040 for the interim, as we you know, have uncertain teens 0:35:21.080 --> 0:35:25.360 around geopolitics, the election, and just the sovereign debt situation. 0:35:26.080 --> 0:35:29.480 So let's let's zoom out a little bit and talk 0:35:29.560 --> 0:35:35.520 specifically about AWS, because this is the number that you know, 0:35:35.600 --> 0:35:38.120 everybody cares about. It was pretty amazing to see net 0:35:38.160 --> 0:35:42.879 sales up nineteen percent year over year. We heard from 0:35:42.920 --> 0:35:47.000 Alphabet earlier this week in Google Cloud. We also heard 0:35:47.480 --> 0:35:52.920 from Microsoft Amazon with AWS James, they're the company that 0:35:53.040 --> 0:35:57.040 started at all. What's their competitive advantage? How do they 0:35:57.080 --> 0:36:01.880 continue to win business or compete again the second and 0:36:01.960 --> 0:36:06.440 third place Azure and Alphabet. How do they maintain their 0:36:06.480 --> 0:36:08.919 position when there is so much competition out there. 0:36:09.800 --> 0:36:11.880 Yeah, I think it's going to be more of a 0:36:11.960 --> 0:36:16.319 rising tide lifts all boat situation. You know, obviously is 0:36:16.360 --> 0:36:19.480 the number one scale player in the space, and all 0:36:19.560 --> 0:36:22.960 companies that are looking to the cloud, you know, will 0:36:23.600 --> 0:36:27.560 utilize them in some capacity. I think that the spend 0:36:28.080 --> 0:36:31.640 over AI and the shift from analog to digital will 0:36:31.680 --> 0:36:34.880 only get stronger and get faster, So all three of 0:36:34.920 --> 0:36:38.920 these companies will benefit. It's really for us, it's around 0:36:38.960 --> 0:36:42.239 what are the expectations around those growth rates and are 0:36:42.320 --> 0:36:45.759 those reasonable? Like, for example, with Amazon, throughout the course 0:36:45.760 --> 0:36:48.120 of this year, you know, we were expecting that that 0:36:48.239 --> 0:36:52.400 growth rate to keep notching up toward the twenty percent number, 0:36:52.920 --> 0:36:55.800 which it has. So long as you know the growth 0:36:55.880 --> 0:36:59.640 rates from an investment standpoint, are you know the bars 0:36:59.640 --> 0:37:02.160 are at achievable. We think that, you know, as you 0:37:02.200 --> 0:37:05.960 look into the medium and longer term, all three will 0:37:06.000 --> 0:37:08.560 benefit from it. But as far as you know Amazon 0:37:08.640 --> 0:37:13.440 specific competitive advantages, obviously they're they're the biggest player. They 0:37:13.480 --> 0:37:16.759 continue to iterate and provide more and more services more 0:37:16.800 --> 0:37:19.719 once stops shop solutions, so they're going to have an 0:37:19.800 --> 0:37:25.160 edge there. Obviously Microsoft and Google are not standing still. 0:37:25.719 --> 0:37:29.040 But you know, I think for us, it's as long 0:37:29.080 --> 0:37:34.680 as the overall industry trends toward capex spend and the 0:37:34.680 --> 0:37:37.600 cloud spend continue to move in the right directions on 0:37:37.640 --> 0:37:41.400 a secular basis, then all three should be fine. 0:37:42.280 --> 0:37:45.080 We've spoke to a number of guests about the Mag 0:37:45.160 --> 0:37:50.319 seven and whether this is a time to hold or 0:37:50.360 --> 0:37:53.600 to buy the Mag seven or to kind of play 0:37:53.760 --> 0:37:57.800 tech and AI in different names. What do you think 0:37:57.880 --> 0:38:01.480 when you're looking at you know, how to play the 0:38:01.520 --> 0:38:02.080 MAG seven. 0:38:03.239 --> 0:38:04.959 We think that it's good to be there. 0:38:05.520 --> 0:38:08.360 For us, it's a question of what size, Uh, you know, 0:38:08.480 --> 0:38:12.280 these companies were our top weight a couple of quarters 0:38:12.320 --> 0:38:16.319 ago five six seven percent weights in the portfolio, you know, 0:38:16.360 --> 0:38:20.399 but now we've trimmed those back between two and four 0:38:21.200 --> 0:38:24.719 and we've all been we've exited Google for example, we 0:38:24.800 --> 0:38:28.200 no longer hold that, and you know which much smaller 0:38:28.239 --> 0:38:32.040 in Tesla, much smaller in Amazon Microsoft. So for us, 0:38:32.200 --> 0:38:34.279 you know, the trends continue to be the friend of 0:38:34.320 --> 0:38:37.399 these companies, but given how much they run, we think 0:38:37.400 --> 0:38:40.120 that you hold them, but just at lower weights and 0:38:40.280 --> 0:38:44.640 reallocate that to areas that have more opportunity. Like we 0:38:44.760 --> 0:38:48.680 like software for example. You know, we established positions some 0:38:48.800 --> 0:38:52.279 time ago and new tanics get lab and data. Do 0:38:52.520 --> 0:38:54.000 you know, we think those could do well. You look 0:38:54.040 --> 0:38:56.200 at confluence results. We think that there's a lot of 0:38:56.239 --> 0:38:57.040 opportunity there. 0:38:57.120 --> 0:38:57.239 You know. 0:38:57.280 --> 0:39:00.360 We're going into value names at the same time, like 0:39:00.400 --> 0:39:02.800 the commodities. You know, we're not sure that the inflation 0:39:02.840 --> 0:39:03.800 trade is off the table. 0:39:03.880 --> 0:39:06.240 That's interesting. Yeah, I see Alcoa in here. 0:39:06.040 --> 0:39:09.200 So yeah, we have our CoA US steel we think 0:39:09.239 --> 0:39:10.200 could be a real winner. 0:39:10.280 --> 0:39:10.440 You know. 0:39:10.480 --> 0:39:13.600 We also like gold, you know, so we are you know, 0:39:13.640 --> 0:39:17.200 we're betting on that. We added General Motors, for example, 0:39:17.440 --> 0:39:20.200 so I think that that could be a great stock 0:39:20.280 --> 0:39:21.960 for as we look into twenty twenty five. 0:39:22.239 --> 0:39:26.280 That was James Chockmack, technology analyst at Clockwise Capital. Keeping 0:39:26.320 --> 0:39:29.040 with Tech earnings, we moved now to Intel, which saw 0:39:29.120 --> 0:39:31.880 share surge after the company gave a revenue forecast slightly 0:39:31.880 --> 0:39:35.799 above estimates, fueling investor hopes that a turnaround could be 0:39:35.800 --> 0:39:37.799 in store for the chip maker. For more on the 0:39:37.840 --> 0:39:40.400 report and the comments from Intel CEO, we spoke with 0:39:40.400 --> 0:39:42.840 Bloomberg Technology co host ed lud though. 0:39:42.880 --> 0:39:45.640 And there's a lot to unpick here. It's not straightforward 0:39:45.719 --> 0:39:49.520 because in the quarter gone, Intel which was previously like 0:39:49.640 --> 0:39:52.520 one of the world's leading chip makers, has given us 0:39:52.520 --> 0:39:56.080 a mixed bag. It's data center chips business did better 0:39:56.120 --> 0:39:59.480 than expected, but it's PC business, where it has historically 0:39:59.520 --> 0:40:02.640 been the lead, did worse. The answer to that is 0:40:03.440 --> 0:40:07.360 customers had inventories and they worked through backlogs, and that 0:40:07.560 --> 0:40:11.440 the almost three billion dollars of impairment charges that Intel 0:40:11.480 --> 0:40:16.440 took relating to headcount reduction canceled projects. And what's so 0:40:16.520 --> 0:40:19.280 interesting about that is if you look at the estimates 0:40:19.320 --> 0:40:22.279 going into this quarter, and lists on Wall Street had 0:40:22.280 --> 0:40:25.960 not factored that in. So it's a surprise, a negative surprise, 0:40:26.320 --> 0:40:28.920 and even so, the top line of the story is 0:40:29.239 --> 0:40:30.840 maybe there's some hope here for Intel. 0:40:31.160 --> 0:40:34.160 They're reducing headcount by sixteen five hundred employees. Is that 0:40:34.239 --> 0:40:37.160 on top of the other headcount productions this year. 0:40:37.840 --> 0:40:41.600 This is a confirmation of the previously stated plan for 0:40:41.680 --> 0:40:46.600 headcount reduction and that the literal update is that the 0:40:46.640 --> 0:40:51.239 Audit Committee of Intel, a section of its board, has 0:40:51.280 --> 0:40:54.879 approved that plan. So the number is final sixteen five 0:40:54.960 --> 0:40:58.520 hundred staff to be cut. And again I go back 0:40:58.560 --> 0:41:01.000 to the impairment charges. If you look at the adjusted 0:41:01.040 --> 0:41:04.320 loss per chare in the quarter gone much much wider 0:41:04.719 --> 0:41:07.640 than anyone on the wall street had anticipated. And a 0:41:07.680 --> 0:41:10.880 part of that was that the impairment charges it disclosed 0:41:11.440 --> 0:41:14.919 relative to headcount reduction, But there's other things in there. 0:41:15.160 --> 0:41:18.240 They just hadn't factored that in for this quarter. Intel 0:41:18.320 --> 0:41:20.960 wasn't able to guide for it into this quarter. So 0:41:21.000 --> 0:41:24.120 it's a timing and an accounting issue, which sometimes can 0:41:24.160 --> 0:41:27.040 be a bit dry. But there's much more to discuss. 0:41:26.719 --> 0:41:29.960 Okay, well' speina much more to discuss. The Intel CEO 0:41:30.000 --> 0:41:32.719 Pat Gelsinger saying in a statement that he intends to 0:41:32.800 --> 0:41:37.239 keep the company together. Yeah, he says that distinct but 0:41:37.320 --> 0:41:41.200 better together is the strategy. The context for this is 0:41:41.200 --> 0:41:43.600 is reporting from earlier this year that said they were 0:41:43.960 --> 0:41:46.600 exploring a separation of parts of the company. 0:41:47.360 --> 0:41:51.120 So it's complicated. And first off, the headlines from Pat 0:41:51.120 --> 0:41:53.640 Gelsinger were a part of a brief conversation that our 0:41:53.680 --> 0:41:56.640 colleaguey and King had with him on the phone, and 0:41:57.480 --> 0:42:01.480 the context is, yes, Intel is a chip company. It 0:42:01.600 --> 0:42:05.440 offers chip products processors that go into computers and data 0:42:05.480 --> 0:42:08.719 centers and other business areas, but it also has a 0:42:08.760 --> 0:42:12.480 manufacturing business, which historically the reason that Intel was so 0:42:12.560 --> 0:42:16.200 good at chips is it manufactured them for itself. As 0:42:16.239 --> 0:42:18.000 many of your listeners have learned in the last two 0:42:18.080 --> 0:42:21.280 or three years, there's a company in Taiwan called TSMC 0:42:21.719 --> 0:42:25.320 that has basically taken over the vast majority of cutting 0:42:25.400 --> 0:42:28.920 edge chip manufacturing on a contract basis for everyone else, 0:42:29.360 --> 0:42:32.920 and it Intel had really fallen behind. But Intel's ambition 0:42:33.040 --> 0:42:35.239 is to have a company where it has its own products, 0:42:35.600 --> 0:42:38.520 it manufactures its own products, but it also wants to 0:42:38.520 --> 0:42:42.040 manufacture chips for others, just like TSMC does. And that's 0:42:42.040 --> 0:42:44.120 a long answer, but the short of it is, this 0:42:44.239 --> 0:42:47.319 is Pat Gelsinger saying, yes, we're going to run the 0:42:47.360 --> 0:42:50.560 company that way to separate divisions, but no, we're not 0:42:50.600 --> 0:42:52.760 going to sell off one part to a third party 0:42:53.200 --> 0:42:55.719 or be acquired by a third party. That's kind of 0:42:55.719 --> 0:42:58.520 reading between the lines because he was not explicit. 0:42:59.560 --> 0:42:59.640 Ed. 0:42:59.840 --> 0:43:04.239 You have to wonder how much patience investors have right 0:43:04.280 --> 0:43:09.239 now to see this turnaround play out, because, like Tim 0:43:09.280 --> 0:43:13.080 had mentioned, Intel stock is down almost sixty percent year 0:43:13.120 --> 0:43:15.840 to date. So what do we know right now about 0:43:15.920 --> 0:43:20.319 just how urgent the need for the turnaround is. When 0:43:20.360 --> 0:43:23.200 you think about the share price, I. 0:43:23.160 --> 0:43:25.680 Mean, do we have to wait? What Intel told us 0:43:25.680 --> 0:43:27.560 for the final three months of this year is here's 0:43:27.600 --> 0:43:29.640 a range of revenues we think we're going to have. 0:43:30.000 --> 0:43:32.320 At the midpoint of that range, it was just slightly 0:43:32.360 --> 0:43:35.759 ahead of consensus estimates. But the market is you know, 0:43:35.800 --> 0:43:38.759 what's the saying, you guys that the investors vote with 0:43:38.800 --> 0:43:42.799 their feet, right, and you know, I think that's the 0:43:42.880 --> 0:43:45.879 read here. They look at the commentary from Intel and say, 0:43:45.880 --> 0:43:48.080 you've done some really painful things in the course is gone. 0:43:48.120 --> 0:43:50.319 You've let go of a lot of people, canceled a 0:43:50.320 --> 0:43:52.880 lot of projects. You had a pretty rough quarter in 0:43:52.920 --> 0:43:55.040 your PC business, where you were once a leader and 0:43:55.080 --> 0:43:57.319 you've fallen behind. But as we look to the next 0:43:57.320 --> 0:43:59.719 three months and beyond that, there are signs that you 0:43:59.800 --> 0:44:00.960 might be turning a corner. 0:44:01.000 --> 0:44:04.160 Here our thanks to Bloomberg Technology co host ed Ludlow. 0:44:04.480 --> 0:44:06.839 Also big thank you to Emily Graffeo stepping in while 0:44:06.880 --> 0:44:09.640 Carol Masser was out this week. And that wraps up 0:44:09.680 --> 0:44:12.000 the first hour of the weekend edition of Bloomberg Business 0:44:12.000 --> 0:44:14.760 Week from Bloomberg Radio. Coming up in our next hour, 0:44:14.960 --> 0:44:18.240 we are all in on AI. We explore the notions 0:44:18.239 --> 0:44:21.960 of thinking and intelligence in large language models with the 0:44:22.000 --> 0:44:26.560 author of the Deep Learning Revolution. Plus calling all Swifties 0:44:27.120 --> 0:44:31.680 or swifters, the immersive indoor cycling gaming company is using 0:44:31.719 --> 0:44:34.600 AI to try to get ahead of the competition. This 0:44:34.640 --> 0:44:35.840 is Bloomberg BusinessWeek. 0:44:41.880 --> 0:44:45.720 You're listening to the Bloomberg Business Week podcast. Listen live 0:44:45.840 --> 0:44:49.040 each weekday starting at two pm Eastern on applecar Play 0:44:49.040 --> 0:44:51.920 and Android Auto with the Bloomberg Business App. You can 0:44:51.960 --> 0:44:55.200 also listen live on Amazon Alexa from our flagship New 0:44:55.239 --> 0:44:59.200 York station Just Say Alexa play Bloomberg eleven thirty. 0:45:00.239 --> 0:45:02.680 Plenty ahead in our second hour of the weekend edition 0:45:02.719 --> 0:45:06.239 of Bloomberg Business Week, including a new cycling craze harnessing 0:45:06.280 --> 0:45:09.880 the power of AI, plus the tequila brand co founded 0:45:09.920 --> 0:45:12.680 by Michael Jordan and counting stars such as Derek Jeter, 0:45:12.880 --> 0:45:16.360 Serena Williams, and Michael Strahan as investors. The story of 0:45:16.360 --> 0:45:19.560 sin Quodo Tequila coming up first up this hour. We 0:45:19.640 --> 0:45:22.719 cannot seem to stop talking about AI, and perhaps for 0:45:22.800 --> 0:45:25.680 good reason. Just look at what's happened to the companies 0:45:26.120 --> 0:45:29.120 that are in the space. Alphabet's investments in AI seem 0:45:29.160 --> 0:45:32.319 to be paying off. Microsoft's GitHub has agreed to bake 0:45:32.400 --> 0:45:36.240 AI models from Anthropic and Google into a coding assistant 0:45:36.320 --> 0:45:39.319 used by millions of software developers, and earlier this week, 0:45:39.400 --> 0:45:42.920 The Wall Street Journal reported that Elon Musk's Exai is 0:45:42.920 --> 0:45:44.800 in talks to raise funding at a value of forty 0:45:44.920 --> 0:45:48.880 billion dollars. But as investors reward companies use of AI, 0:45:49.320 --> 0:45:52.239 others are ringing alarm bells about getting the tech under 0:45:52.280 --> 0:45:56.920 control before it controls US. Doctor Terrence Sinowski is Francis 0:45:56.960 --> 0:46:00.920 Krikchair at the Salk Institute for Biological Studies, also Distinguished 0:46:00.920 --> 0:46:03.879 Professor at the University of California at San Diego. He's 0:46:03.920 --> 0:46:07.960 also president of the Neural Information Processing Systems Foundation. His 0:46:08.080 --> 0:46:11.000 dual expertise in AI and neuroscience led him to write 0:46:11.000 --> 0:46:14.120 the book Chat, GPT and the Future of AI, The 0:46:14.160 --> 0:46:15.719 Deep Language Revolution. 0:46:16.239 --> 0:46:21.400 I think that what's happening right now is really unbelievable. 0:46:21.520 --> 0:46:24.239 I was there at the beginning. Jeffrey Hinton and I 0:46:24.320 --> 0:46:28.600 collaborated in the nineteen eighties. All the learning algorithms that 0:46:28.640 --> 0:46:32.399 are being used today for these large language models and 0:46:32.520 --> 0:46:37.359 deep learning were developed by us back in that era. 0:46:37.680 --> 0:46:40.719 And of course what we didn't have back then were 0:46:40.800 --> 0:46:44.480 computers that were fast enough that could scale up these 0:46:44.680 --> 0:46:49.319 models to be you know, be able to solve these 0:46:49.400 --> 0:46:54.400 very difficult problems and artificial intelligence. But the Neural Information 0:46:54.480 --> 0:46:59.000 Processing Systems Foundation, I'm the president, re organized the biggest 0:46:59.040 --> 0:47:03.680 AI meeting December. Were expecting sixteen thousand researchers to descend 0:47:03.760 --> 0:47:09.200 on Vancouver after By the way, Taylor Swift, she's the 0:47:09.239 --> 0:47:12.400 big headliner on Sunday, but we have the rest of 0:47:12.440 --> 0:47:12.719 the week. 0:47:13.560 --> 0:47:15.200 So I want to ask you, how did you think 0:47:15.239 --> 0:47:18.640 about neural networks in large language models in the nineteen eighties, 0:47:18.680 --> 0:47:19.920 How do you think about them today? 0:47:21.120 --> 0:47:26.320 Well, we actually had a premonition that these large language models, 0:47:26.880 --> 0:47:30.640 they were small language models back were really good at language. 0:47:30.640 --> 0:47:33.600 And that was a particular project, a summer project for 0:47:33.600 --> 0:47:37.000 a gratitude in my lap called net talk, which was 0:47:37.080 --> 0:47:41.040 trained on a dictionary to be able to pronounce English text. 0:47:41.120 --> 0:47:43.040 You know, if you give it an article from the 0:47:43.040 --> 0:47:45.600 Wall Street Journal and they would pronounce it in an 0:47:45.680 --> 0:47:49.600 understandable way. And this in linguistics is a very difficult 0:47:49.920 --> 0:47:52.920 problem because English is so irregular. There are a lot 0:47:52.920 --> 0:47:57.440 of regularities, but you also have irregularities, and then you 0:47:57.480 --> 0:48:01.760 have rules for the irregularities. But it really was amazing 0:48:01.840 --> 0:48:04.000 that a small, tiny network with just a few hundred 0:48:04.040 --> 0:48:08.000 units and tens of thousands of weights, the parameters, the 0:48:08.000 --> 0:48:11.279 connections between the units could do that. It was like 0:48:11.320 --> 0:48:15.680 an amazing compression of complexity. And now we know that 0:48:16.520 --> 0:48:20.600 these large language models, that deep learning networks, they love 0:48:20.719 --> 0:48:24.040 language and they are capable of things that we never 0:48:24.080 --> 0:48:24.880 could have imagined. 0:48:25.160 --> 0:48:27.680 That's really what I wanted to talk about the idea 0:48:27.719 --> 0:48:32.960 of super intelligent AI. What are we not thinking about? 0:48:33.080 --> 0:48:35.120 What's the threat out there? 0:48:35.760 --> 0:48:38.879 My good friend Jeff is very concerned, and I think 0:48:38.960 --> 0:48:42.279 he's one of the smartest people I've ever met. And 0:48:42.520 --> 0:48:47.000 if he's worried about it, then there's some as a concern. However, 0:48:47.800 --> 0:48:52.160 I think that even if you're concerned, it's very difficult 0:48:52.520 --> 0:48:55.120 to know when that's going to happen, if it ever 0:48:55.160 --> 0:48:59.200 will happen. And there are super forecasters out there and 0:48:59.239 --> 0:49:02.680 this is from the Economist magazine, who are much better 0:49:02.760 --> 0:49:06.719 at people who are experts at predicting you know, if 0:49:06.760 --> 0:49:10.400 and when there may be a catastrophic or existential threat, 0:49:11.160 --> 0:49:14.239 and it turns out that in fact they're not as 0:49:15.120 --> 0:49:24.040 concerned as the experts in AI. I'm happy that someone 0:49:24.160 --> 0:49:27.799 is thinking about the worst case outcome because if not, 0:49:28.000 --> 0:49:31.040 then if it ever happens, we're in trouble. But right 0:49:31.080 --> 0:49:35.040 now I'm more concerned about trying to understand how they 0:49:35.080 --> 0:49:39.920 work mathematically, and also to learn more from the brain. 0:49:40.000 --> 0:49:43.640 After all these were designed Back then, Jeff and I 0:49:43.680 --> 0:49:46.319 looked at the brain the only existence proof you could 0:49:46.320 --> 0:49:49.359 solve any problem in AI, and you know, we tried 0:49:49.360 --> 0:49:52.600 to build something that was based on similar principles. So 0:49:53.000 --> 0:49:54.759 now we can continue. There's a lot more in the 0:49:54.760 --> 0:49:55.800 brain we can learn from. 0:49:55.880 --> 0:49:57.680 But paint that picture for us, because I think a 0:49:57.719 --> 0:50:00.640 lot of people are worried about doomsday scenarios here and 0:50:00.960 --> 0:50:04.719 if Jeffrey Hinton is worried about that stuff, I mean, 0:50:05.600 --> 0:50:07.279 should we we should be worried about it? 0:50:07.360 --> 0:50:11.880 You're saying, I think that we should be cautious, that 0:50:12.080 --> 0:50:15.560 is to say we we should be constantly thinking along 0:50:15.719 --> 0:50:18.080 the lines that Jeff is in terms of what could 0:50:18.160 --> 0:50:21.440 possibly happen, and you know, be cautious and put in 0:50:21.480 --> 0:50:23.680 precautions so that it can't happen. 0:50:23.960 --> 0:50:27.120 What I'm really concerned about are the unintended consequences, things 0:50:27.160 --> 0:50:30.440 that you cannot predict. Something may happen that you know, 0:50:30.520 --> 0:50:31.280 no one thought. 0:50:31.080 --> 0:50:31.800 Of, even Jeff. 0:50:32.680 --> 0:50:35.160 Yeah, and like you know, we have learned certainly right, 0:50:35.200 --> 0:50:40.720 great financial crisis, pandemic like the un the unthinkable can happen, 0:50:40.800 --> 0:50:42.960 and you throw technology into it and you just kind 0:50:42.960 --> 0:50:46.239 of don't know where it's going to go exactly. I 0:50:46.280 --> 0:50:48.920 got to ask you because I am still trying to understand, 0:50:48.920 --> 0:50:51.040 and I get worried that we throw these words around. 0:50:51.080 --> 0:50:54.840 Certainly not you, but we as we try to understand this, 0:50:55.480 --> 0:50:59.439 not having full comprehension of what artificial intelligence, the large 0:50:59.480 --> 0:51:02.200 language mind that we're talking about today, where it takes us. 0:51:02.600 --> 0:51:06.480 Is it as subtle and evolving in life changing as 0:51:06.520 --> 0:51:09.600 the Internet was for us. 0:51:09.680 --> 0:51:15.000 So this is something that is emerging, and I have 0:51:15.400 --> 0:51:17.960 since the book was sent to press in the summer, 0:51:18.000 --> 0:51:21.000 I have a sub stack where I have tried to 0:51:21.040 --> 0:51:23.200 fill in with, you know, the new things that are happening. 0:51:23.280 --> 0:51:29.880 And I'm preparing something a new twelfth version the blog 0:51:30.080 --> 0:51:34.520 on the question of whether AI is overhyped or under hyped, 0:51:35.520 --> 0:51:38.160 And you know, I've thought a lot about this, and 0:51:38.960 --> 0:51:42.000 you know, I think that it depends on the timescale. 0:51:42.040 --> 0:51:45.440 I think that on the short timescale it is overhyped. 0:51:45.440 --> 0:51:47.719 There's no doubt about it. There's just so much out there. 0:51:47.800 --> 0:51:50.600 I mean, every day the newspapers are filled with AI 0:51:50.760 --> 0:51:53.759 and your program. But I think in the long run 0:51:53.800 --> 0:51:56.759 it's actually under hyped. I think the real change in 0:51:56.800 --> 0:52:00.000 the Internet, for example, didn't occur within the first ten years. 0:52:00.280 --> 0:52:05.799 It was much later. Again, unintended applications that marriage that 0:52:05.880 --> 0:52:09.640 you know, have enormous impact on our lives, like social media. 0:52:09.760 --> 0:52:11.799 So I think the same thing's going to happen with AI. 0:52:12.560 --> 0:52:16.799 But is it is it different? Like the Internet is 0:52:17.160 --> 0:52:20.120 not I wanted to say comfortable, but it's not because 0:52:20.120 --> 0:52:23.600 there's some really bad things that happen and we know that, 0:52:23.800 --> 0:52:25.839 right and that's the battle we have with social media, 0:52:25.840 --> 0:52:27.040 and we want to talk to you about kind of 0:52:27.040 --> 0:52:29.759 regulatory oversight of AI in a moment. But I just 0:52:29.960 --> 0:52:32.560 I'm just trying to understand. You know, it does feel 0:52:32.600 --> 0:52:35.560 so seamless and just such a part of everything we do. 0:52:36.480 --> 0:52:39.520 But it hasn't necessarily replaced a ton of jobs. It's 0:52:39.560 --> 0:52:42.439 created jobs, it's replaced some jobs. I guess you could say, 0:52:43.200 --> 0:52:46.560 I'm just trying to understand, Like on what scale do 0:52:46.600 --> 0:52:49.879 you put it? You mentioned the internet, So is it 0:52:49.960 --> 0:52:52.200 apples to apples or is it something else? 0:52:53.440 --> 0:52:57.040 No, Well, first of all, it uses the Internet, so 0:52:57.080 --> 0:53:02.439 I mean that's like the the machinery that you need 0:53:02.480 --> 0:53:05.440 to reach to scale up and reach a large population. 0:53:06.600 --> 0:53:10.560 But it's more intimate than the Internet in the following 0:53:10.640 --> 0:53:13.600 sense that it talks to us, right, I mean, it's 0:53:13.640 --> 0:53:16.440 as if an alien landed on the Earth and could 0:53:16.480 --> 0:53:20.200 talk to us in English and it knew everything about 0:53:20.239 --> 0:53:23.839 you know, what humans, history, everything, and the only thing 0:53:23.880 --> 0:53:26.920 we can be sure if it's not human. But it's 0:53:27.000 --> 0:53:30.000 really quite remarkable. Let me give you one example of 0:53:30.040 --> 0:53:33.279 something that I was really surprised at when they did 0:53:33.280 --> 0:53:36.880 a study of whether people who needed cognitive therapy preferred 0:53:37.560 --> 0:53:43.440 real humans or AI. They preferred AI, which was really 0:53:43.520 --> 0:53:45.759 quite remarkable. I didn't expect that. And then part of 0:53:45.800 --> 0:53:49.720 the reason is that the AI is not judgmental like humans. 0:53:50.440 --> 0:53:52.799 Well wait, but doesn't it depends on the data like 0:53:52.840 --> 0:53:53.440 we talk about. 0:53:53.520 --> 0:53:57.200 It wasn't getting trained on judgmental data. 0:53:57.640 --> 0:54:01.799 It was you know, actually, it's a good question, what 0:54:01.880 --> 0:54:03.880 was it trained on. I think that it was fine 0:54:03.920 --> 0:54:10.120 tuned with data from real subjects that we're talking with 0:54:10.200 --> 0:54:14.200 a doctor. But even without that, I'll tell you again, 0:54:14.280 --> 0:54:18.439 it's shocking is that it is actually empathy. These large 0:54:18.480 --> 0:54:22.480 language models can empathize with humans. And why is it? 0:54:22.480 --> 0:54:24.680 How is that? Well, it actually absorbed a lot of 0:54:24.800 --> 0:54:29.840 text out there, novels, letters, and read it and so forth, 0:54:29.920 --> 0:54:36.080 and where empathy was being part of the discussion, and 0:54:36.160 --> 0:54:37.440 so it absorbed that too. 0:54:38.200 --> 0:54:41.440 Well. I wanted to hear a little bit of your 0:54:41.440 --> 0:54:44.120 thoughts on what we heard from Elon Musk. He actually 0:54:44.440 --> 0:54:47.840 participated in a surprise conversation at the Future Investment Initiative 0:54:47.840 --> 0:54:49.680 to discuss the future of AI. 0:54:50.080 --> 0:54:51.960 It's most likely going to be great, and there's this 0:54:52.120 --> 0:54:56.360 some chance which could be tense twenty percent, that it 0:54:56.680 --> 0:55:02.400 goes bad. The chances on zero, it goes bad. But overall, 0:55:02.400 --> 0:55:04.480 at one point, what you said, the covers eighty percent 0:55:04.520 --> 0:55:07.319 full is one positive way to look at it. Maybe 0:55:07.400 --> 0:55:08.279 ninety percent. 0:55:08.280 --> 0:55:12.239 Okay, eighty or ninety percent positive. The question I have 0:55:12.320 --> 0:55:16.640 for you is do we need an international regulatory body 0:55:16.800 --> 0:55:19.319 to ensure or help ensure that this goes the right way? 0:55:19.920 --> 0:55:23.320 Well, as you know, in the UK they have passed 0:55:23.880 --> 0:55:27.680 an ai Act which is like one hundred pages long 0:55:27.800 --> 0:55:33.800 and you know, incredibly detailed, and it's already absolute. I 0:55:34.040 --> 0:55:37.719 just moving blasting forward and you know you're trying to 0:55:37.760 --> 0:55:41.600 catch up with it. But I do believe that it's 0:55:41.640 --> 0:55:45.440 absolutely essential that it be regulated, and it should be 0:55:45.520 --> 0:55:49.240 regulated by people who are building it. The government, okay, 0:55:49.400 --> 0:55:52.799 is the business of protecting people. And we'll see how 0:55:52.840 --> 0:55:57.160 that plays out. But in for example, genetics, this happened, 0:55:57.400 --> 0:55:59.800 you know, back in the sixties seventies. They had a 0:56:00.280 --> 0:56:03.239 where they came together at a solomar and they came 0:56:03.320 --> 0:56:07.160 up with rules and regulations for doing experiments under the 0:56:07.280 --> 0:56:11.080 careful protection so that nothing leaks out, nothing gets out. 0:56:11.560 --> 0:56:13.120 And I think we need to do the same. 0:56:14.520 --> 0:56:17.360 Okay, So when does as you said, ten years for 0:56:17.400 --> 0:56:20.960 the Internet to really kind of make its impact and 0:56:21.080 --> 0:56:25.400 presence really known and maybe, you know, integrated into our lives. 0:56:25.520 --> 0:56:31.320 So is it a decade before we see LMS and 0:56:31.480 --> 0:56:35.160 AI at this level integrated into our lives. 0:56:36.160 --> 0:56:39.200 We are at a stage that aviation was at when 0:56:40.440 --> 0:56:44.720 at Kitty Hawk the Wright Brothers made the first flight. 0:56:44.920 --> 0:56:47.840 It was ten feet up and one hundred feet long. 0:56:48.440 --> 0:56:52.520 And that really was the you know, something that then 0:56:52.840 --> 0:56:56.680 took decades and decades to build. And the most difficult thing, 0:56:56.719 --> 0:57:00.279 by the way that airplanes, you know, design of airplaces 0:57:00.280 --> 0:57:03.319 had to solve was control. How you how do you 0:57:03.400 --> 0:57:05.920 make a go where you want to go without crashing? 0:57:06.000 --> 0:57:09.080 And that's something that again it's like we're going through 0:57:09.120 --> 0:57:11.760 right now with AI, And yes, it will take decades, 0:57:11.800 --> 0:57:13.120 it's not going to happen overnight. 0:57:13.400 --> 0:57:16.160 That was doctor Terrence Sanowski Francis krik Cher at the 0:57:16.240 --> 0:57:19.760 Salk Institute for Biological Studies and Distinguished Professor at the 0:57:19.840 --> 0:57:23.040 University of California at San Diego. His new book chat 0:57:23.080 --> 0:57:26.120 GPT in the Future of AI, The Deep Language Revolution 0:57:26.520 --> 0:57:26.840 is out. 0:57:26.880 --> 0:57:27.160 Now. 0:57:27.360 --> 0:57:30.360 You're listening to Bloomberg Business Week coming up from the 0:57:30.480 --> 0:57:32.840 Road to the Web. How one app is harnessing the 0:57:32.880 --> 0:57:37.040 power of AI to improve your cycling routine. This is Bloomberg. 0:57:38.080 --> 0:57:41.600 You're listening to the Bloomberg Business Week podcast. Catch us 0:57:41.640 --> 0:57:44.880 live weekday afternoons from two to five pm Eastern. Listen 0:57:44.920 --> 0:57:47.080 on Apple car Play and then brout Auto with a 0:57:47.120 --> 0:57:50.160 Bloomberg Business app, or watch us live on YouTube. 0:57:51.680 --> 0:57:54.800 Well full disclosure, People who know me know I ride 0:57:54.800 --> 0:57:55.360 bikes a lot. 0:57:55.520 --> 0:57:56.280 You certainly do. 0:57:57.160 --> 0:58:00.160 I'm a big swifter too. Zwift is well known among 0:58:00.240 --> 0:58:02.080 cyclists as a way to train or compete when it's 0:58:02.120 --> 0:58:04.360 too cold or rainy to go on your bike outside, 0:58:04.680 --> 0:58:06.400 or if you want to get a quick workout. In 0:58:06.800 --> 0:58:09.360 the app, connect cyclists riding their bikes inside to real 0:58:09.400 --> 0:58:12.520 time races in virtual worlds through a mobile device, a computer, 0:58:12.720 --> 0:58:14.920 or an Apple TV. Think about it like kind of 0:58:14.960 --> 0:58:18.600 like gaming with your bike. The company is raised six 0:58:18.680 --> 0:58:23.000 hundred and twenty million dollars from backers including KKR, Premiere Holdings, 0:58:23.000 --> 0:58:26.320 Amazon's Alexa Fund, and more, giving it a market value 0:58:26.320 --> 0:58:28.320 of more than a billion dollars. We've got with us, 0:58:28.440 --> 0:58:30.440 Eric min, the co founder and CEO of Swift. A 0:58:30.440 --> 0:58:33.120 lot has happened since you last joined us on Bloomberg Katie. 0:58:33.160 --> 0:58:34.240 I don't know if you saw this, we got to 0:58:34.240 --> 0:58:35.640 do this virtual ride together. 0:58:35.800 --> 0:58:37.000 No, I remember it well. 0:58:37.120 --> 0:58:37.840 It was pretty cool. 0:58:37.920 --> 0:58:39.480 Yeah, I thought you were going to wear the outfit. 0:58:39.560 --> 0:58:40.280 I'm not wearing that. 0:58:41.680 --> 0:58:42.760 You got your helmet over there. 0:58:42.760 --> 0:58:45.360 I got the helmet here. Don't need that for swift. 0:58:46.360 --> 0:58:48.120 But there's a lot has happened. There was a there 0:58:48.120 --> 0:58:50.680 was a round of layoffs earlier this year, a big 0:58:50.720 --> 0:58:54.200 hardware pivot. But I think you being back as sole 0:58:54.320 --> 0:58:57.560 CEO of the company is sort of among the biggest news. 0:58:58.200 --> 0:58:59.720 Give us an update. How's the business going. 0:59:00.640 --> 0:59:04.640 The business is doing really well. I mean it's doing 0:59:04.680 --> 0:59:08.000 better than we expected. We've had some change earlier this year, 0:59:08.480 --> 0:59:11.600 and we've pivoted and really the focus for the business 0:59:11.640 --> 0:59:13.920 has been really around like what can we do to 0:59:14.000 --> 0:59:17.000 supercharge our community, I think, which is the most valuable 0:59:17.000 --> 0:59:21.240 asset that we have. So we are a leaner team 0:59:21.320 --> 0:59:23.680 and we're finding that we're moving faster. Of course we're 0:59:23.720 --> 0:59:28.280 doing less, but we're you know, we get to focus 0:59:28.360 --> 0:59:30.400 on the things that I think we'll really move the 0:59:30.480 --> 0:59:33.600 needle for us. So the business is doing great, and 0:59:34.040 --> 0:59:38.040 you know, we launched new hardware this year. It's surprising, 0:59:37.840 --> 0:59:40.959 doing very very well, and you know, over the next 0:59:41.040 --> 0:59:43.960 few months is really the height of our season. 0:59:44.080 --> 0:59:45.520 I do want to explain to people who might not 0:59:45.760 --> 0:59:48.560 know what Swift is. When Eric says new hardware, we're 0:59:48.600 --> 0:59:53.080 talking about an actual like bike that Zwift has released. 0:59:53.120 --> 0:59:56.000 It's called the Swift Right smart bike. And typically the 0:59:56.040 --> 0:59:58.800 way that people use Swift as they hook up their 0:59:59.120 --> 1:00:02.560 own bike to what's called a trainer and one that 1:00:02.680 --> 1:00:05.320 can be hooked up to a virtual world using Bluetooth 1:00:05.440 --> 1:00:09.120 or another type of connection. So instead of using or 1:00:09.160 --> 1:00:12.000 you're using a you're still using a trainer with the 1:00:12.040 --> 1:00:15.640 smart bike. But what's the idea behind a thirteen hundred 1:00:15.640 --> 1:00:16.080 dollars bike. 1:00:16.480 --> 1:00:19.520 Yeah, I mean the price point is an important one. 1:00:19.680 --> 1:00:23.240 It's probably less than half or third of what you 1:00:23.240 --> 1:00:25.600 would typically pay for a smart bike. So we've i 1:00:25.640 --> 1:00:30.400 think innovated on price. We've also developed and designed it 1:00:30.440 --> 1:00:32.600 in a way that you can leverage existing hardwad that 1:00:32.640 --> 1:00:36.360 you've already invested in. So what you have is essentially 1:00:36.360 --> 1:00:39.680 a bike frame that slides onto a trainer that you 1:00:39.720 --> 1:00:42.640 probably already purchased. The other piece of innovation that we 1:00:43.960 --> 1:00:47.320 pushed about a year ago is what we call the ziftcog. 1:00:47.960 --> 1:00:51.720 And you know, for non cyclis, it's very complicated to understand, 1:00:51.720 --> 1:00:54.680 like what kind of gears you need to put on 1:00:54.720 --> 1:00:55.320 these trainers. 1:00:55.680 --> 1:00:56.880 We got rid of all that. 1:00:56.880 --> 1:00:59.840 With a single cog and then what we layered on 1:00:59.840 --> 1:01:04.480 top of that is a little device that can control 1:01:04.840 --> 1:01:09.240 and create the gears virtually. And you know, our goal 1:01:09.400 --> 1:01:12.480 is to of course bring down the cost of the 1:01:12.520 --> 1:01:15.360 hardware to get ontos with, but also just to simplify 1:01:15.400 --> 1:01:18.640 the onborne experience, and that is how we open up 1:01:18.640 --> 1:01:22.360 the market. All our studies have suggested that those are 1:01:22.360 --> 1:01:26.240 the two drivers for holding us back from growing even more. 1:01:26.480 --> 1:01:28.480 Well, let's talk a little bit more about your business. 1:01:28.560 --> 1:01:31.600 I assume you make money off of a subscription based 1:01:32.240 --> 1:01:35.240 sort of membership. There where are you when it comes 1:01:35.240 --> 1:01:37.360 to membership. I think the last time you guys spoke, 1:01:37.400 --> 1:01:40.520 you said around a million members. How has that number changed? 1:01:40.840 --> 1:01:44.640 We're over a million. I think the pandemic that wonders 1:01:44.640 --> 1:01:46.880 for us, it also had it was a double edged 1:01:46.880 --> 1:01:49.720 sword because you know, of course, like many companies, we 1:01:49.720 --> 1:01:53.840 thought the growth would continue forever. But what we're finding 1:01:53.880 --> 1:01:57.640 today is that it's these these are we're growing. We're 1:01:57.680 --> 1:02:01.200 certainly growing on a number of different level, both revenue 1:02:02.000 --> 1:02:05.360 and subscribers. But I think, you know, to double your 1:02:05.360 --> 1:02:07.320 business like we did during the pandemic is just an 1:02:07.400 --> 1:02:11.640 unrealistic expectation. So we've adjusted our business to that. 1:02:12.240 --> 1:02:14.320 One thing that you've also done within the last year 1:02:14.360 --> 1:02:17.000 is actually increased prices. I believe since the first time, 1:02:17.040 --> 1:02:20.000 since twenty seventeen. So for years it costs about fifteen 1:02:20.040 --> 1:02:22.600 bucks a month. Now it's twenty dollars per month. If 1:02:23.000 --> 1:02:27.000 not an annual membership, that's a monthly membership. How did 1:02:27.000 --> 1:02:28.840 members respond? What has churn been like? 1:02:29.080 --> 1:02:32.040 Well, you know, I don't think anyone likes price increases, 1:02:32.240 --> 1:02:35.520 let's be honest, right, but I think I certainly we 1:02:35.560 --> 1:02:38.160 feel very good about it. The value that we offer 1:02:38.680 --> 1:02:42.600 to our community at twenty dollars a month and two 1:02:42.720 --> 1:02:46.280 hundred for the year, is is really good value given 1:02:46.520 --> 1:02:48.080 you know, all the other products that are out there 1:02:48.080 --> 1:02:51.960 and the experiences that we offer. But things have gotten 1:02:51.960 --> 1:02:55.600 more expensive since since twenty seventeen, we've not raised the prices, 1:02:55.600 --> 1:02:58.880 and I remember reading from community members saying, hey, you 1:02:58.880 --> 1:03:02.040 should have just increased rice is incrementally Well, we would 1:03:02.080 --> 1:03:05.439 have actually collected more revenues had you done that, But 1:03:05.960 --> 1:03:08.240 we felt that the timing was right for us to 1:03:09.360 --> 1:03:13.040 increase the price. And I think the customers have largely 1:03:13.120 --> 1:03:14.280 voted with their wallets. 1:03:14.720 --> 1:03:16.240 Any more price shikes on the horizon. 1:03:17.360 --> 1:03:21.000 Look, you know things, I would never say that there 1:03:21.040 --> 1:03:24.840 will never be future price hikes. I you know, I 1:03:24.880 --> 1:03:28.200 think the five dollars move on a relative basis is big. 1:03:29.000 --> 1:03:30.920 If we do have future price rise, I think we 1:03:30.920 --> 1:03:33.760 should do it more incrementally, like I see from Netflix 1:03:33.840 --> 1:03:34.680 almost every year. 1:03:35.240 --> 1:03:37.680 Well, i'd love to talk about, you know what went 1:03:38.200 --> 1:03:41.720 into that? Like Tim mentioned first price sikes since twenty seventeen, 1:03:42.080 --> 1:03:44.800 what did that decision try look like? Because you think 1:03:44.800 --> 1:03:48.840 about everything that's happened since twenty seventeen, it's exhausting and 1:03:48.880 --> 1:03:51.760 it's been a really strange economic moment. 1:03:52.960 --> 1:03:57.840 Well, we delayed and delayed our price increase, and we've 1:03:57.880 --> 1:04:00.720 done this twice before, every time we've done a rice increase. 1:04:01.600 --> 1:04:03.680 The you know how we feel about it is we 1:04:03.680 --> 1:04:07.120 should have done it much earlier. And you know, look, 1:04:07.200 --> 1:04:10.840 things do get more expensive. Our costs have gone up, 1:04:10.840 --> 1:04:13.000 and we haven't passed that on to our customers. The 1:04:13.040 --> 1:04:16.440 product is vastly improved since twenty and seventeen. So we 1:04:16.480 --> 1:04:18.520 feel really good about it and we stand behind it 1:04:18.600 --> 1:04:21.280 when we you know, we were committed to making that change. 1:04:21.560 --> 1:04:23.200 Yeah, that's actually one thing that I that I haven't 1:04:23.200 --> 1:04:26.480 talked about the heads of display the worlds. There's been 1:04:26.560 --> 1:04:29.760 a lot of changes to the gaming environment since I 1:04:29.800 --> 1:04:32.880 started swifting, which was during the pandemic. Personally, I don't 1:04:32.880 --> 1:04:35.320 see myself. That's the main way I actually ride and 1:04:35.320 --> 1:04:38.040 get exercised because I have two little kids and going 1:04:38.040 --> 1:04:39.720 on a five hour bike ride on a Saturday like 1:04:39.720 --> 1:04:40.160 I used to do. 1:04:40.240 --> 1:04:41.360 Your wife isn't into that. 1:04:41.600 --> 1:04:44.520 She's just not feasible right now. So Swift is where 1:04:44.560 --> 1:04:47.160 I do it. You run a lot here I do. 1:04:47.560 --> 1:04:51.520 Are you a Strava person? No, okay, that's interesting. She's 1:04:51.520 --> 1:04:52.400 a garment person. 1:04:52.600 --> 1:04:54.800 I feel like I killed a line of questioning you 1:04:54.840 --> 1:04:55.320 were about to go. 1:04:55.480 --> 1:04:57.400 That's fine, I'm going to turn this way. I'll talk 1:04:57.440 --> 1:04:58.160 to Eric about it. 1:04:58.160 --> 1:04:58.440 You did. 1:04:59.520 --> 1:05:01.440 One thing I know just recently with Strava is the 1:05:01.520 --> 1:05:07.800 AI sort of integration that they're experimenting with. How are 1:05:07.840 --> 1:05:11.160 you using AI? You recently launched for me recently virtual 1:05:11.240 --> 1:05:13.960 ride Partners, which I find a really helpful thing. 1:05:13.960 --> 1:05:14.200 For me. 1:05:14.320 --> 1:05:18.080 So this is like a pacer that will kind of 1:05:18.240 --> 1:05:21.600 go at a specific speed that you can keep up with, 1:05:21.640 --> 1:05:25.520 and it's really helpful for training and for riding. How 1:05:25.560 --> 1:05:26.360 are you thinking about AI? 1:05:26.880 --> 1:05:32.240 So we already use AI in our engineering development, so 1:05:32.840 --> 1:05:35.240 that's already been happening. I think in terms of how 1:05:36.360 --> 1:05:41.240 we can expose these types of technology for consumer related features, 1:05:42.440 --> 1:05:46.120 we're absolutely thinking about that. And the two obvious places 1:05:46.240 --> 1:05:50.360 will be the conversational you know AI experience that you know, 1:05:50.360 --> 1:05:52.440 for example, Strava is doing, and I think that's going 1:05:52.520 --> 1:05:56.000 to be table mistakes for many many products. You know, 1:05:56.040 --> 1:05:59.160 it's not going to be something you know so innovative, 1:05:59.200 --> 1:06:02.640 it's we have to offer it. And I think the 1:06:02.680 --> 1:06:06.320 other opportunity for us and others is just using machine 1:06:06.360 --> 1:06:07.720 learning to. 1:06:07.200 --> 1:06:08.840 To figure out exactly. 1:06:08.600 --> 1:06:11.960 What to offer in terms of content and when and 1:06:12.000 --> 1:06:16.240 with whom. That I think is the next innovation that's. 1:06:16.000 --> 1:06:18.920 More like an Instagram timeline approach, where it like serves 1:06:18.960 --> 1:06:20.640 you what you think you are, yes. 1:06:20.480 --> 1:06:23.240 Yes, yes, And I think you know it can factor 1:06:23.320 --> 1:06:26.920 into you know your usage behavior, who your friends are, 1:06:27.640 --> 1:06:30.200 when you know what kind of events you like, what 1:06:30.320 --> 1:06:32.959 kind of fitness you have today and we can serve 1:06:33.040 --> 1:06:34.960 up the right content at the right time. I think 1:06:35.000 --> 1:06:39.840 that that is innovation that no one has really, you know, 1:06:40.560 --> 1:06:43.520 produced yet, But that's an exciting opportunity for us. 1:06:43.600 --> 1:06:47.320 What about AI and coaching, I asked, because I think 1:06:47.320 --> 1:06:51.560 about myself, you know, my world revolves around me, and 1:06:51.600 --> 1:06:54.240 the thing that I miss about college is having a coach. 1:06:54.280 --> 1:06:56.160 And I was part of a running club, but it 1:06:56.240 --> 1:06:59.360 was just too much, so I sort of like making 1:06:59.400 --> 1:07:01.280 up my own trains. I could see a lot of 1:07:01.360 --> 1:07:04.240 value in having an AI coach be able. 1:07:04.040 --> 1:07:05.400 To see your SATs, see. 1:07:05.160 --> 1:07:07.000 What you're doing, and suggest workouts. 1:07:07.160 --> 1:07:09.120 Let's face it, if you can afford it, you'd rather 1:07:09.160 --> 1:07:12.000 have a human coach right right, because they will motivate 1:07:12.040 --> 1:07:14.480 you more than any any tool that you have in 1:07:14.520 --> 1:07:16.280 front of you. But I think the two pieces that 1:07:16.320 --> 1:07:19.200 I just mentioned to you, which is like a conversation 1:07:19.280 --> 1:07:22.520 about how you did with your workout, and then the 1:07:22.840 --> 1:07:26.160 AI to tell you exactly what you should recommend next, 1:07:26.320 --> 1:07:30.360 those two pieces should in theory represent you know, a 1:07:30.440 --> 1:07:33.840 replacement for an expensive coach, and that I think is 1:07:33.840 --> 1:07:37.960 a solution for you know, the ninety five percent of 1:07:38.000 --> 1:07:41.919 the customer base. Yeah, the five percent should and will 1:07:41.960 --> 1:07:44.840 continue to invest in, you know, human coaches. 1:07:45.000 --> 1:07:47.200 Two hundred to two hundred and fifty dollars three hundred 1:07:47.240 --> 1:07:50.160 dollars a month or more, by the way, for a coach, 1:07:50.680 --> 1:07:52.880 for a coach that you've never met, and just like puts, 1:07:52.960 --> 1:07:54.600 you know, yeats in Swift. 1:07:54.360 --> 1:07:56.680 And so I mean, I just I you know, I'm 1:07:56.720 --> 1:07:58.920 not like I'm not going to the Olympics. You did 1:07:58.920 --> 1:08:01.440 go to the Olympics, then I didn't compete with the 1:08:02.200 --> 1:08:05.080 devastated to say, it feels like a steep bill for 1:08:05.720 --> 1:08:06.600 my ambitions. 1:08:07.160 --> 1:08:11.000 Eric, I'm wondering about competition here because you guys were 1:08:11.680 --> 1:08:13.960 pretty much the only game in town for a while 1:08:14.080 --> 1:08:17.200 with what you did. At least Copy Trainer was around before. 1:08:17.280 --> 1:08:20.600 But Training Peaks bought Indie Vello and now they have 1:08:20.640 --> 1:08:24.080 Training Peaks Virtual. I remember before I joined Strava, I 1:08:24.280 --> 1:08:26.160 used Training Peaks and I quit Training Peaks during the 1:08:26.200 --> 1:08:28.839 pandemic or to go to Swift. Excuse me, not Strava. 1:08:30.680 --> 1:08:32.840 How are you thinking about competition right now? 1:08:33.400 --> 1:08:37.880 Well, we have a lot of competition, it's not surprising 1:08:38.720 --> 1:08:43.080 and we've had it all along. I think the Training 1:08:43.080 --> 1:08:47.280 Peaks and indievelopment makes absolute sense. For Training Peaks. I 1:08:47.320 --> 1:08:51.439 mean we are partners with many different training platforms that 1:08:51.439 --> 1:08:54.519 are out there. We launched something called the Training API, 1:08:54.680 --> 1:09:00.200 and we've onboarded multiple training apps. So we continue to 1:09:00.320 --> 1:09:04.880 will continue to be a platform where coaches and these 1:09:04.920 --> 1:09:09.480 coaching apps can push activities and event you know, activities 1:09:10.200 --> 1:09:13.040 where you can actually do the event ons with. So 1:09:13.080 --> 1:09:16.920 that won't change. It'll be really and I don't know 1:09:16.960 --> 1:09:19.960 the strategy behind Training Peaks and what they'll do with 1:09:20.200 --> 1:09:23.000 in development doesn't really change what we need to focus on. 1:09:23.680 --> 1:09:27.799 And our focus is really to do everything to continue 1:09:27.840 --> 1:09:31.599 to add value and features for a community. That's really 1:09:31.640 --> 1:09:33.240 the important asset that we have. 1:09:33.680 --> 1:09:35.960 Let's talk a little bit more about the future. This 1:09:36.000 --> 1:09:38.760 is something I love to ask private companies. Are you 1:09:38.840 --> 1:09:42.559 thinking about IPO? Would you be open to either acquiring 1:09:42.600 --> 1:09:44.880 a business or being acquired? What are you thinking about 1:09:44.880 --> 1:09:45.719 along those lines. 1:09:47.040 --> 1:09:51.360 I think we should always look at opportunities to acquire, merge. 1:09:52.080 --> 1:09:54.519 Those are opportunities we should be looking at all the time. 1:09:54.920 --> 1:09:58.760 In terms of you know, you know, what is our 1:09:59.400 --> 1:10:02.560 end go in terms of like a liquidity event, I 1:10:02.640 --> 1:10:05.720 think that just will take some time. But I think 1:10:05.760 --> 1:10:08.920 we all have aspirations of being a public listed company. 1:10:09.240 --> 1:10:11.880 Whether that happens you know, in three years or five years, 1:10:12.120 --> 1:10:15.120 I don't know whether you know we do that alone 1:10:15.200 --> 1:10:17.680 or we do it with with others. You know, these 1:10:17.720 --> 1:10:20.400 are all I think things. Time will only tell and 1:10:20.520 --> 1:10:26.320 how that unfolds. But absolutely, our board, my co founders, 1:10:26.320 --> 1:10:31.479 my management team, and investors have big aspirations for this business. 1:10:31.479 --> 1:10:35.200 So that hasn't changed. It's just timing, is everything right? 1:10:35.520 --> 1:10:37.479 I mentioned that you raised more than six hundred million 1:10:37.520 --> 1:10:41.200 dollars since inception. Last time you and I spoke, you 1:10:41.200 --> 1:10:44.280 said you didn't need to raise money in the near future. Yeah, 1:10:44.320 --> 1:10:46.320 how's the cash balance looking right now? 1:10:46.360 --> 1:10:52.200 We're very fortunate we we didn't spend all that capital, 1:10:52.840 --> 1:10:55.920 so we have a pretty strong balance sheet. I don't 1:10:55.960 --> 1:10:58.879 think we need to raise any more capital. That's helpful, 1:10:58.920 --> 1:11:03.240 and that gives us ever ever, I just yeah, ever, 1:11:03.880 --> 1:11:06.840 which is great. It gives us a lot of optionality. 1:11:08.120 --> 1:11:10.439 But you know, look, having just a lot of cash 1:11:10.479 --> 1:11:13.559 doesn't help either. We need to deploy it and smartly, 1:11:13.640 --> 1:11:17.280 and we need to think of how we can leverage 1:11:17.320 --> 1:11:19.200 that to build a business. 1:11:19.439 --> 1:11:22.200 Last question, how do you you know the cycling business? 1:11:22.280 --> 1:11:24.679 There's a ceiling there there are only so many people 1:11:25.240 --> 1:11:28.360 who want to be riding bikes in their basement. How 1:11:28.400 --> 1:11:29.479 do you get people like Katie? 1:11:30.640 --> 1:11:32.919 Well, first you have to get rid of the basement 1:11:33.000 --> 1:11:33.960 or the garage thing. 1:11:34.240 --> 1:11:35.840 And that's why we launched the ride. 1:11:36.000 --> 1:11:40.320 It's beautiful, it's it's in white. We deliberately picked white 1:11:40.360 --> 1:11:44.400 instead of black because in our testing it resonated really 1:11:44.439 --> 1:11:45.599 well with women. 1:11:45.640 --> 1:11:46.200 It's interesting. 1:11:46.320 --> 1:11:50.160 Yeah, and I think you know, we're not just going 1:11:50.200 --> 1:11:54.240 after cyclist. We're going after people who want to exercise 1:11:54.439 --> 1:11:57.519 and who want to get fit and cycling just the 1:11:57.560 --> 1:11:59.960 indoor bike and cycling in general happens to be just 1:12:00.000 --> 1:12:02.320 it's a great activity. You can do it for a 1:12:02.360 --> 1:12:05.519 long time, it's low impact, and you have access with 1:12:05.600 --> 1:12:08.000 your hands, and you can get engaged with an experience 1:12:08.080 --> 1:12:12.160 like Swift. So it's not just recyclists. We hope that 1:12:12.200 --> 1:12:14.840 the bike really opens up the addressable market for us. 1:12:15.520 --> 1:12:18.719 Our thanks to Eric Mann, co founder and CEO of Swift, 1:12:19.120 --> 1:12:22.759 still adad on Bloomberg Business Week five rival NBA owners 1:12:22.880 --> 1:12:26.400 meet for dinner and craft a premium tequila the story 1:12:26.400 --> 1:12:30.160 of Sincoto Tequila. On the other side, this is Bloomberg. 1:12:31.360 --> 1:12:34.920 You're listening to the Bloomberg Business Week podcast. Catch us 1:12:34.960 --> 1:12:38.200 live weekday afternoons from two to five pm Eastern. Listen 1:12:38.200 --> 1:12:40.360 on Apple, car Play and and Broud Auto with a 1:12:40.400 --> 1:12:44.120 Bloomberg Business at or watch us live on YouTube. 1:12:44.960 --> 1:12:48.120 Okay, Carol Masser, I'm with you. Picture this. Yes, Michael 1:12:48.200 --> 1:12:49.559 Jordan cool, Yes. 1:12:49.439 --> 1:12:50.200 That's Michael Jordan. 1:12:50.280 --> 1:12:51.479 Really, that's what I thought. 1:12:51.760 --> 1:12:54.760 Genie Buss of the La Lakers, Cool West Edens of 1:12:54.840 --> 1:12:58.680 the Milwaukee Oh, my bos, god Wick Grausebeck, and Amelia 1:12:58.760 --> 1:13:02.439 Fessalari of the Celtics. They all get together for dinner. No, 1:13:02.560 --> 1:13:04.800 it's not the start of some sort of you know, 1:13:05.000 --> 1:13:05.880 NBA on her joke. 1:13:06.000 --> 1:13:08.120 No, it's sort of a really cool company. 1:13:07.800 --> 1:13:11.080 Tequila company, Sinkora Tequila. 1:13:10.479 --> 1:13:12.519 Right and company lore has it that the dinner happened 1:13:12.520 --> 1:13:14.679 back in twenty sixteen. This is like, you can almost 1:13:14.680 --> 1:13:17.360 feel like it should be a streaming series already. Fast 1:13:17.400 --> 1:13:20.080 forward to today and sin Koro Tequila has sold more 1:13:20.120 --> 1:13:22.639 than two and a half million bottles. It's won more 1:13:22.680 --> 1:13:26.639 than two dozen awards. Investors now include Serena Williams, Derek Jeter, 1:13:26.800 --> 1:13:28.880 who was just in our studio a couple. 1:13:28.560 --> 1:13:29.040 Of weeks ago. 1:13:29.160 --> 1:13:30.360 He wasn't drinking tequila. 1:13:30.520 --> 1:13:34.240 He was not No, also Michael Strahan and more. Amelia 1:13:34.280 --> 1:13:37.879 Fazzalari is co founder and executive chairperson of Sincoro Tequila. 1:13:38.080 --> 1:13:39.599 She joins us here in our Bloomberg studio. 1:13:39.720 --> 1:13:40.479 Amelia, it is. 1:13:40.520 --> 1:13:42.200 So good to see you. 1:13:42.320 --> 1:13:43.639 How are you great? 1:13:43.720 --> 1:13:45.960 And it's great to be back in the building. 1:13:46.120 --> 1:13:46.719 What do you think? 1:13:46.880 --> 1:13:49.200 I love it. I missed bringing back some good memories 1:13:49.320 --> 1:13:51.360 one hundred percent. I was here twenty three years. 1:13:51.640 --> 1:13:52.519 It's a long time. 1:13:52.720 --> 1:13:55.120 You did everything from head of marketing for Bloomberg TV, 1:13:55.280 --> 1:13:57.879 you ran the trading system department, you led the product 1:13:57.880 --> 1:14:02.080 strategy department, and this by tequila tequila. 1:14:02.200 --> 1:14:02.439 I know. 1:14:02.680 --> 1:14:05.600 Well, you know, we always love like someone's journey and 1:14:05.640 --> 1:14:07.719 how they get to something like what is it about 1:14:07.800 --> 1:14:09.960 kind of your background and the things that you did 1:14:10.200 --> 1:14:11.720 got you to where you are to be. 1:14:11.720 --> 1:14:14.439 Well, actually, that's really interesting because there is a connection 1:14:14.520 --> 1:14:17.719 because most of my time at Bloomberg I was involved 1:14:17.720 --> 1:14:22.559 in startups and involved in starting new businesses. And so 1:14:22.840 --> 1:14:25.160 when and I remember Mike Bloomberg saying to me a 1:14:25.160 --> 1:14:27.759 long time ago, it doesn't really matter what the subject 1:14:27.800 --> 1:14:29.880 matter is. It's your approach to starting and running a 1:14:29.880 --> 1:14:33.160 business that matters because you can learn the subject matter right. 1:14:33.600 --> 1:14:35.640 And so I did remember that when when we were 1:14:35.640 --> 1:14:38.479 starting the tequila company, because it was very different than 1:14:38.560 --> 1:14:42.360 commodities or anything else I was involved in. But it worked, 1:14:42.360 --> 1:14:45.559 you know. It was it was a focus on trying 1:14:45.640 --> 1:14:49.599 to do things at the very highest level. And you know, 1:14:49.680 --> 1:14:53.720 my partners are incredible and they're incredibly competitive, and so 1:14:53.840 --> 1:14:54.840 there's a very high bar. 1:14:55.160 --> 1:14:57.679 So it's interesting because you know the story that dinner 1:14:57.800 --> 1:15:00.559 goes back at twenty sixteen is company law, right, But 1:15:00.600 --> 1:15:02.479 you didn't launch for a few years because you just 1:15:02.520 --> 1:15:04.160 celebrated your five year anniversary. 1:15:04.280 --> 1:15:07.280 True, I'm glad you're asking that. 1:15:06.680 --> 1:15:09.960 Why did it take so long? Is that normal for tequila? 1:15:09.960 --> 1:15:10.240 I don't know. 1:15:10.439 --> 1:15:12.640 I don't think that is normal for tequila, but it 1:15:12.800 --> 1:15:15.280 was the norm for us. And the reason for that 1:15:15.560 --> 1:15:18.680 is and one of the unique aspects about Sincoro is 1:15:18.760 --> 1:15:23.280 we created this tequila. We literally created the recipe and 1:15:24.240 --> 1:15:27.599 the liquid was our north star from day one. Nothing 1:15:27.640 --> 1:15:29.920 else mattered. We had to get the liquid right. And 1:15:30.000 --> 1:15:33.080 when from that first famous dinner now in the summer 1:15:33.120 --> 1:15:36.000 of twenty sixteen, you know, Michael was a true tequila 1:15:36.040 --> 1:15:37.080 Commosseewer in the group, and. 1:15:37.040 --> 1:15:38.400 He told me Michael Jordan. 1:15:38.560 --> 1:15:41.000 Michael Jordan, that would be mj that would be Michael Jordan, 1:15:41.520 --> 1:15:44.400 and he taught us how to drink tequila, and we 1:15:44.439 --> 1:15:46.880 realized we had a shared love for tequila and that 1:15:47.080 --> 1:15:51.240 really was the you know, we had to make the 1:15:51.240 --> 1:15:53.800 most delicious tequila. That's what we talked about. We wanted 1:15:53.800 --> 1:15:56.240 a tequila that was super smooth and had a long, 1:15:56.280 --> 1:15:59.200 beautiful finish, like a fine cognac or bourbon. And so 1:15:59.280 --> 1:16:02.880 it took us three year. We created a thousand tequilas 1:16:03.080 --> 1:16:06.000 over a three year period, and to this day, Michael 1:16:06.000 --> 1:16:08.599 and I taste every batch before we wor Jordan Michael 1:16:08.680 --> 1:16:12.639 Juran to ensure that it is the best. What did 1:16:12.640 --> 1:16:15.320 he teach you about how to taste to kill? Yeah, 1:16:15.360 --> 1:16:19.120 that's great, great question. So we looked for four things 1:16:19.280 --> 1:16:23.439 and first being color, even the crystal even the blanco. 1:16:23.720 --> 1:16:26.200 It's clear, but it needed to be a crystal clear 1:16:27.160 --> 1:16:30.680 blanco and obviously our aged expressions. And then there is 1:16:30.720 --> 1:16:33.559 the nose, like what does it smell like? You wanted 1:16:33.560 --> 1:16:37.040 to have a beautiful aroma. And then the taste, which 1:16:37.120 --> 1:16:40.280 needed to be smooth on the palette. And then a long, 1:16:40.320 --> 1:16:43.320 beautiful finish like a fine Coniak or Bourbon. So that's 1:16:43.360 --> 1:16:44.080 what we looked for. 1:16:44.160 --> 1:16:45.360 That was the cork popping. 1:16:46.120 --> 1:16:48.800 Yeah, that in the moment, keep going, keep going. 1:16:49.320 --> 1:16:52.000 What I think is so interesting about this is when 1:16:52.120 --> 1:16:56.720 you look at especially celebrity backed alcohol companies, oftentimes they 1:16:56.760 --> 1:16:59.799 sort of go with, Okay, what is the hot spirit 1:17:00.160 --> 1:17:02.720 of the moment. And it seems like you guys were 1:17:02.760 --> 1:17:06.599 a little ahead of tequila becoming such a big part 1:17:06.720 --> 1:17:09.960 of American culture, at least because in the last few 1:17:10.040 --> 1:17:13.280 years you've had some huge exits when it comes to tequila. 1:17:13.320 --> 1:17:15.160 But you guys had this idea close to a decade ago. 1:17:15.400 --> 1:17:15.760 We did. 1:17:15.920 --> 1:17:19.160 And for us, you know, Michael Jordan's part of the group, 1:17:19.200 --> 1:17:22.679 and now we've got other incredible celebrities part of the group. 1:17:22.680 --> 1:17:25.280 But it was never about the celebrity for us. And 1:17:26.080 --> 1:17:30.040 if you notice in our marketing, we're not celebrity focused 1:17:30.200 --> 1:17:32.719 or you know, there's no one standing up saying please, 1:17:33.080 --> 1:17:35.720 you know, buy this tequila because of me. We want 1:17:35.760 --> 1:17:38.679 people that you may hear about Sincoro because of Michael 1:17:38.760 --> 1:17:42.840 Jordan or Derek Jeter, Serena Williams. But you're going to 1:17:42.960 --> 1:17:45.679 buy your first bottle, your second, your third, and hopefully 1:17:45.720 --> 1:17:50.479 many cases thereafter. Because you love the tequila, you love Cincoro, 1:17:50.640 --> 1:17:55.559 and that's really important to us. It's about being super authentic. Actually, 1:17:55.800 --> 1:17:58.000 there's a ring around the neck of our bottle that 1:17:58.080 --> 1:18:00.840 says share truth, and that is our truth. It is 1:18:00.840 --> 1:18:05.639 about being you know, authentic and true to our north star. 1:18:05.920 --> 1:18:10.120 This delicious liquid. Your bottles alone are just stunning. There's 1:18:10.160 --> 1:18:12.880 a whole story there too. What is the story? So 1:18:14.200 --> 1:18:16.439 during that three year period where we're focused on making 1:18:16.439 --> 1:18:21.120 the liquid, Michael called Mark Smith, who was the vice 1:18:21.160 --> 1:18:24.720 president of Special Projects and Innovation at Nike at the 1:18:24.800 --> 1:18:28.840 time and had done everything Jordan and Michael called Mark 1:18:28.880 --> 1:18:31.720 Smith and asked him to create a designed tekuill a 1:18:31.720 --> 1:18:34.679 bottle for him. And so the story is that Mark 1:18:34.800 --> 1:18:37.240 said to Michael, close your eyes and describe what you 1:18:37.280 --> 1:18:41.679 see using three words, and Michael said, sleek, contemporary, and unique, 1:18:41.720 --> 1:18:44.240 And that was the brief for the bottle. And the 1:18:44.360 --> 1:18:46.200 bottle like a piece of crystal or something like. You 1:18:46.240 --> 1:18:49.439 could have a bottles stunning. It's it looks like a 1:18:49.479 --> 1:18:52.880 trophy and if you feel the bottom of the bottle, 1:18:53.720 --> 1:18:57.679 it actually slants twenty three degrees as a non Jay's 1:18:57.720 --> 1:19:01.200 jersey number. The stopper slants down on twenty three degrees. 1:19:01.560 --> 1:19:04.519 And then get this. If you take twenty three bottles 1:19:04.560 --> 1:19:07.920 exactly and you line them up head to toe, they 1:19:07.960 --> 1:19:11.040 form a perfect circle and the diameter of that circle 1:19:11.120 --> 1:19:13.439 is the same as a tip off circle on an 1:19:13.520 --> 1:19:14.120 NBA court. 1:19:14.320 --> 1:19:16.360 Oh my god, it's a lot of thought went into that. 1:19:17.120 --> 1:19:17.719 Oh my god. 1:19:18.520 --> 1:19:20.240 One thing I want to take me back to because 1:19:20.240 --> 1:19:23.560 you said with Michael Jordan that you sampled about a 1:19:23.640 --> 1:19:27.280 thousand tequilas that process. Were you down in Mexico, because 1:19:27.320 --> 1:19:29.640 we've did a lot of reporting on you know, kind 1:19:29.680 --> 1:19:32.280 of where all the tequila comes from and talked about it. 1:19:32.439 --> 1:19:35.760 Tell us about that process. Yeah, so I did go 1:19:35.800 --> 1:19:38.800 down to Mexico a ton Wes and Wick joined me 1:19:38.880 --> 1:19:42.599 on a few of those trips, and we actually started 1:19:42.640 --> 1:19:47.080 with more than one distillery because we actually had them 1:19:47.120 --> 1:19:49.919 compete and we wanted to really refine the taste profile. 1:19:49.960 --> 1:19:53.519 And then we finally landed on one and we would 1:19:54.040 --> 1:19:56.519 get samples, bring them back and we would meet as 1:19:56.560 --> 1:20:00.760 a group and taste through a whole table of tequila. 1:20:01.320 --> 1:20:03.120 Was there a lot of like debate and disagreement, like 1:20:03.160 --> 1:20:05.320 as you went through the process. I'm just curious about that. 1:20:05.680 --> 1:20:08.559 I think, you know, not really honestly, And that's been 1:20:08.600 --> 1:20:12.640 an incredibly magical thing about my partners and I. We 1:20:12.640 --> 1:20:16.000 we have been really aligned from day one. They're true 1:20:16.000 --> 1:20:19.880 collaborators and incredible team players. But we did align on 1:20:19.920 --> 1:20:22.920 the taste profile from the second. You know, from right 1:20:22.960 --> 1:20:23.360 out of the. 1:20:23.320 --> 1:20:25.519 Gate, what do you see as the market for this? 1:20:26.240 --> 1:20:26.360 Who? 1:20:26.600 --> 1:20:27.160 Who? 1:20:27.240 --> 1:20:29.680 Who do you think wants it? Who has been buying it? 1:20:29.720 --> 1:20:30.400 How do you grow it? 1:20:30.600 --> 1:20:30.800 Yeap? 1:20:31.000 --> 1:20:33.920 So the great thing about Cincoro is that the taste 1:20:33.920 --> 1:20:38.360 profile is a very is appealing to a very wide audience. 1:20:39.280 --> 1:20:42.120 We don't have that traditional Gabi burn. So if you 1:20:42.160 --> 1:20:45.200 had that bad tequila experience, you love cincorro. If you 1:20:45.280 --> 1:20:48.000 like whiskey, I've had that bad tequila, You're gonna love 1:20:48.000 --> 1:20:53.519 Cincoro and college. The one word that everybody uses to 1:20:53.560 --> 1:20:57.880 describe Cincoro is delicious. And so it's a high end tequila. 1:20:57.880 --> 1:21:01.000 It's a high end sipping tequila. You know, we gravitate 1:21:01.080 --> 1:21:04.559 towards the you know, more affluent consumer. 1:21:05.120 --> 1:21:09.760 Is that more is the price point aligned with that? Yeah, 1:21:09.920 --> 1:21:13.719 I've heard horror stories about liquor distribution, and I'm wondering 1:21:14.280 --> 1:21:17.439 how competitive is how you make sure to get in 1:21:17.439 --> 1:21:19.960 with the right I've talked to owners of local stores 1:21:20.000 --> 1:21:22.360 who are like, I'm not allowed to carry this one 1:21:22.439 --> 1:21:26.800 brand because my distributor is this distributor and carries this 1:21:26.840 --> 1:21:29.160 one brand. Like it's a really tough it's really tough 1:21:29.160 --> 1:21:31.360 for independence in some cases. How do you navigate that 1:21:32.200 --> 1:21:32.679 hard work? 1:21:32.880 --> 1:21:36.839 There's that's possible, well, one hundred percent, you know, you've. 1:21:36.640 --> 1:21:39.120 Got to I mean, I've heard the words like cartel, 1:21:39.320 --> 1:21:41.200 mafia like to describe. 1:21:40.680 --> 1:21:44.240 The industry, right right, I think that it starts with 1:21:44.280 --> 1:21:47.320 having an amazing product, and we want the product to 1:21:47.320 --> 1:21:51.160 speak to for itself. And so there are difficult accounts, 1:21:51.240 --> 1:21:53.840 and there are you know, it's a super competitive market 1:21:53.840 --> 1:21:57.439 in the United States, but you grind through it, and 1:21:57.680 --> 1:21:59.720 you know, we have a product that we are so 1:22:00.080 --> 1:22:03.040 out of and that when people taste it, they are 1:22:03.080 --> 1:22:04.679 so proud to have it on their backbar. 1:22:05.760 --> 1:22:09.120 You know, sports, it's pretty amazing. Bloomberg spends so much 1:22:09.160 --> 1:22:12.200 time on the business of sports, and it does feel 1:22:12.240 --> 1:22:16.280 like investor interest, the value of teams. There's so much 1:22:16.280 --> 1:22:19.599 interesting stuff going on. And my understanding is that your 1:22:19.640 --> 1:22:24.040 husband's thinking of selling. Yeah, I mean, I know. 1:22:24.000 --> 1:22:25.880 You put your way, but I. 1:22:25.840 --> 1:22:27.320 Mean it's just interesting. 1:22:27.360 --> 1:22:29.800 I don't know if there's anything about timing or you know, 1:22:30.120 --> 1:22:32.000 owned it for a while and you just move on, 1:22:32.080 --> 1:22:33.280 like like what is it? 1:22:33.400 --> 1:22:33.599 Yeah? 1:22:33.720 --> 1:22:35.960 No, well I think that's for Wick to talk about. 1:22:36.160 --> 1:22:40.360 But you know it's he's got two families, a Celtics 1:22:40.360 --> 1:22:45.679 family and his family, and his family's interested in selling. 1:22:45.760 --> 1:22:47.040 So that's what's going on. 1:22:47.320 --> 1:22:48.040 We find too. 1:22:48.080 --> 1:22:50.000 We have a lot of guests, whether it comes to 1:22:50.040 --> 1:22:53.080 the Spirits world, whether it comes to tequila, tell us 1:22:53.080 --> 1:22:55.000 about because there's two options, tell us about the second 1:22:55.000 --> 1:22:55.720 one that you brought us. 1:22:55.800 --> 1:22:58.600 Yes, So the second one is our brand new Crystallino. 1:22:58.840 --> 1:23:04.360 This is a limited addition. It's this beautiful platinum silver 1:23:04.479 --> 1:23:10.960 bottle and this Crystallino is it's really actually a super 1:23:11.000 --> 1:23:16.240 hot category for tequila right now. They're staying that the 1:23:16.320 --> 1:23:19.360 category will be about six percent of the tequila market 1:23:19.360 --> 1:23:22.000 by twenty twenty eight and it's a really key driver 1:23:22.080 --> 1:23:27.479 of premisation. The liquid is our Nyeho liquid and it's 1:23:27.560 --> 1:23:32.599 charcoal filtered to remove the color and it's absolutely delicious. 1:23:32.600 --> 1:23:35.320 We just had our five year anniversary party where we 1:23:35.360 --> 1:23:39.720 celebrated the launch of Crystallino and people tasted it for 1:23:39.760 --> 1:23:43.479 the first time and absolutely loved it. So definitely try 1:23:43.520 --> 1:23:45.880 to find a bottle because they're going to run out. 1:23:46.320 --> 1:23:48.880 What are you thinking in terms of product growth and 1:23:48.920 --> 1:23:52.759 product category growth? You obviously have these two different lines, 1:23:52.760 --> 1:23:53.360 but how do you. 1:23:53.680 --> 1:23:56.360 So this is a different yeah taste, It is a 1:23:56.360 --> 1:24:03.440 different taste. So we actually have a Blanco a repisodo, 1:24:03.840 --> 1:24:08.599 which is slightly less age than the Nyeh. We also 1:24:08.720 --> 1:24:12.000 have an Extra and Yeh which is aged forty four 1:24:12.000 --> 1:24:14.160 months and that's in a black crystal bottle and that's 1:24:14.160 --> 1:24:18.880 really our halo expression. That's about seventeen hundred dollars a bottle. 1:24:18.920 --> 1:24:24.679 It's Michael Jordan's favorite. And we have a Sincoro Gold 1:24:24.800 --> 1:24:29.799 and it's in a gold metallic bottle. And that gold 1:24:30.000 --> 1:24:33.559 is a combination of our Blanco Repo and a Yaho 1:24:33.720 --> 1:24:35.519 and Extra and Ah. It has a ton of Extra 1:24:35.520 --> 1:24:38.920 and Yaho in it. So, yes, we have a beautiful 1:24:38.960 --> 1:24:42.439 portfolio of five expressions. This is our sixth. Then we're 1:24:42.439 --> 1:24:45.360 doing some super exciting innovations next year. 1:24:45.760 --> 1:24:47.559 So how much do you expand it? Because that's a 1:24:47.560 --> 1:24:49.880 lot of choices already. When you think about the portfolio, 1:24:50.040 --> 1:24:51.439 how do you think about where you want to go? 1:24:51.600 --> 1:24:54.880 Yeah, so innovation is really in our DNA. We've been 1:24:54.880 --> 1:24:57.840 innovating the brand since we launched. We've come out with 1:24:58.160 --> 1:25:02.360 either interesting bottle or you know, for example, a limited 1:25:02.479 --> 1:25:06.760 edition new expression. So where we're going next year is, 1:25:07.120 --> 1:25:09.600 like I said, we're going to do three different innovations 1:25:10.360 --> 1:25:14.040 to our collaboration with some super cool people. So I'll 1:25:14.040 --> 1:25:17.439 be back to tell you about those. Yeah, and you 1:25:17.439 --> 1:25:19.519 know that's how we're going to stay current and really 1:25:19.520 --> 1:25:20.040 in the news. 1:25:20.200 --> 1:25:21.960 How do you think about who you want to partner 1:25:21.960 --> 1:25:25.280 in or partner with or bring in as additional business 1:25:25.360 --> 1:25:28.599 partners on this, because it sounds like Michael Jordan has 1:25:28.640 --> 1:25:31.800 a very specific vision. It sounds like you do as well, right, 1:25:31.920 --> 1:25:33.559 So I'm just curious how you figure that out. 1:25:33.640 --> 1:25:33.840 Yeah. 1:25:33.880 --> 1:25:36.520 The first thing is you got to love it authentically 1:25:36.840 --> 1:25:41.280 and just really live the brand and then really embody 1:25:41.360 --> 1:25:45.240 the ethos of the brand, which is doing things right, 1:25:45.360 --> 1:25:47.920 working hard, and striving for greatness. 1:25:48.400 --> 1:25:50.599 What's the hardest part of this because I do think 1:25:51.000 --> 1:25:54.040 you know, it's a crowded space, but it sounds like 1:25:54.080 --> 1:25:55.639 you guys are trying to carve out a certain space. 1:25:55.680 --> 1:25:56.599 What's the hardest part of. 1:25:56.560 --> 1:26:00.280 This, it's you know, it's a long game. Yeah, this 1:26:00.400 --> 1:26:03.240 is not the business is not something that you do. 1:26:03.560 --> 1:26:06.360 It's not a quick in and out. We're in this 1:26:06.400 --> 1:26:10.759 for the long term, you know, we really want what's 1:26:10.760 --> 1:26:15.800 happening internationally is really exciting because I think in many 1:26:15.840 --> 1:26:17.679 of these markets we're in the first or second inning 1:26:17.720 --> 1:26:19.599 of the game, and so it's going to be really 1:26:19.640 --> 1:26:23.960 exciting to watch it grow and have people have an appetite. 1:26:23.479 --> 1:26:26.519 For this tough to import or once you figure it out, 1:26:26.520 --> 1:26:27.280 you figured it out. 1:26:27.120 --> 1:26:30.240 You figure it out. I mean, there's definitely teething pains 1:26:30.360 --> 1:26:33.519 of doing all of that, and there's a lot of 1:26:34.080 --> 1:26:38.320 legalities around the liquor business on a global scale, but 1:26:38.640 --> 1:26:40.240 it's not insurmountable. 1:26:40.320 --> 1:26:43.519 That was Amelia Fazalari, co founder and executive chairperson of 1:26:43.560 --> 1:26:45.960 sin Quota a Tequila, And that wraps up the weekeet 1:26:46.040 --> 1:26:48.920 edition of Bloomberg Business Week from Bloomberg Radio. Thanks so 1:26:49.000 --> 1:26:51.120 much for joining us. Be sure to tune into Bloomberg 1:26:51.160 --> 1:26:53.599 Business Week Monday through Friday starting at two pm Wall 1:26:53.600 --> 1:26:56.599 Street Time on Bloomberg TV, Bloomberg Radio, and on Serious 1:26:56.680 --> 1:26:59.200 XM Channel one twenty one, and you can listen to 1:26:59.280 --> 1:27:01.400 us on Apple car Our Play and Android Auto Free 1:27:01.400 --> 1:27:03.880 in the Apple app Store or on Google Play. You 1:27:03.880 --> 1:27:06.519 can also watch our daily broadcast on YouTube. Just search 1:27:06.520 --> 1:27:10.559 Bloomberg Global News, and we're simulcast on Bloomberg Originals available 1:27:10.560 --> 1:27:15.080 at Bloomberg dot com, Slash Originals, and streaming platforms like Roku, Amazon, fireTV, 1:27:15.200 --> 1:27:18.960 Samsung TV Plus and more. 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