Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 2: Last all right, yeah, come on us and China. Why
Speaker 2: can't you be friends?
Speaker 3: This story is in the upcoming new issue of Bloomberg
Speaker 3: Business Week. It's actually the remarks of the upcoming new issue,
Speaker 3: which will be on newstands later this week, already online
Speaker 3: at Bloomberg dot com slash Businessweekend on the Bloomberg It
Speaker 3: really gets to the decoupling that has.
Speaker 2: Been going on between the US and China.
Speaker 4: And what hey, don't call it decoupling.
Speaker 2: What I'm going to call it decoupling. But Biden officials
Speaker 2: are saying, whoa, whoa, whoa slow your role on decoupling.
Speaker 3: Let's get into it with Bloomberg Sean Donn and he's
Speaker 3: senior economics writer Aplomberg News with us on.
Speaker 2: Zoom in Washington, d C. And then we've got the editor.
Speaker 3: Of Bloomberg Business Week, Jill Weber here in our interactive
Speaker 3: Brokers studio. Jill whatever you call it, it's kind of
Speaker 3: a little bit dysfunctional.
Speaker 5: It is.
Speaker 6: I think it's like maybe the Great American Walk back.
Speaker 6: What do you think, Sean, is that is that accurate?
Speaker 4: You know?
Speaker 5: The coupling is a word that I've hated for years.
Speaker 5: It's a word that is it implies like a divorce.
Speaker 5: And I think the US and China are always going
Speaker 5: to be kind of neighbors that try to get along,
Speaker 5: that have a relationship, and they just try and put
Speaker 5: up fences here and there.
Speaker 3: Are they staying together for the kids? That's what we
Speaker 3: want to know, Sean. Are they staying together for the kids?
Speaker 5: I mean the coupling feels a little bit like that, right,
Speaker 5: I mean, it's kind of it's it's it's one of
Speaker 5: those hard ones. Look, the US and China have this
Speaker 5: immense economic relationship. They are among each other's top trading partners.
Speaker 5: They will continue to be among each each other's top
Speaker 5: trading partners for some years to come. I think what
Speaker 5: the US has been trying to do in recent years
Speaker 5: has been to try and cut off certain strategic parts
Speaker 5: of the relationship. You know, we've all been reading about
Speaker 5: the semiconductors. There's this big competition over electric vehicles and
Speaker 5: so on. In the US wants to try and get
Speaker 5: ahead of China and compete. It's tired of having its
Speaker 5: intellectual property stolen. That's something we've seen in recent years
Speaker 5: or recent decades really, and so it's a dysfunctional relationship.
Speaker 5: The US is trying to reset it. It's trying to
Speaker 5: put some boundaries there, and the Chinese are saying, well,
Speaker 5: if you're trying to do that, you're trying to contain us,
Speaker 5: and that's really impolite and that's awful, and so there's
Speaker 5: a terrible shouting match that's going on. The problem for
Speaker 5: all of us and for the global economy is these
Speaker 5: are the world's two largest economies, and if they can't
Speaker 5: get along, if they can't find a floor for their relationship,
Speaker 5: then it really is going to be a terrible buzz stuff.
Speaker 5: And it's not just the kids that are going to
Speaker 5: get hurt, the whole neighborhood.
Speaker 7: That neighborhood being the world so interesting.
Speaker 6: We've heard Janet Yellen and Jake Sullivan recently kind of
Speaker 6: say as much in their remarks and speeches and whatnot.
Speaker 6: Wondering what was the language that jumped out to you
Speaker 6: that sort of attempted to reset with this narrative is yeah,
Speaker 6: so look, I mean.
Speaker 5: It's it's there's two things. One, US officials have been
Speaker 5: trying with increasing frequency to get out there and say
Speaker 5: we are not trying to decouple. We're not trying to
Speaker 5: have this big rerupture with the Chinese economy. We're trying
Speaker 5: to have a sensible, strategic and focused change in the relationship.
Speaker 5: And then something interesting happened when Janet Yellen talking that
Speaker 5: she took that a step further and talked about the
Speaker 5: relationship between national security and the economy. And then a
Speaker 5: week later, Jake Sullivan, the National Security Advisor, came out
Speaker 5: and he started using a term that the Europeans have
Speaker 5: been using and said, rather than decup, we're looking for
Speaker 5: a de risking of the economy, which is kind of
Speaker 5: a more polite Yeah, and it's a very European term.
Speaker 4: It makes perfect sense to me, as jehean. Let me
Speaker 4: first say that I think it's an incredibly well written story.
Speaker 4: I loved it. I breathed through from start to finish,
Speaker 4: which isn't that I always do with my attention span
Speaker 4: on exactly, I have the problems learning disabilities. But I
Speaker 4: think it's right in this you know, black and white
Speaker 4: world where everybody's either in bed together or at war,
Speaker 4: to acknowledge that there can be nuance. Right, we're not
Speaker 4: kind of completely decoup, but we're not going to totally
Speaker 4: isolate China. We just want to de risk and diversify.
Speaker 4: And that makes sense because we've been so concentrated in
Speaker 4: terms of the supply chain. We found out over COVID nineteen,
Speaker 4: over the pandemic, that we had way too many eggs
Speaker 4: in that basket and we need to move a few out.
Speaker 4: But that doesn't mean we're totally leaving.
Speaker 5: And that totally makes sense. We all get that there's
Speaker 5: a problem, though, and that is that the world is
Speaker 5: more complicated and that there aren't these simple levers that
Speaker 5: you pull the kind of d risk or or decouple.
Speaker 5: The fact is is that you and I have been
Speaker 5: buying a whole lot of Chinese goods in recent years.
Speaker 5: And even though you know we've had to try the
Speaker 5: trade wars of the trunk years that we all remember,
Speaker 5: the trade between US and China last year was at
Speaker 5: a record level, in part because of our appetite for
Speaker 5: Chinese goods and a lot of companies, A lot of
Speaker 5: big American companies still want to do business in China.
Speaker 5: Tesla still wants to sell cars in China. In fact,
Speaker 5: it's adding to its factories there. So you know, the
Speaker 5: relationship is we can try and have this kind of
Speaker 5: Washington Beltway conversation about the risking and so on, but
Speaker 5: in some ways it's not just the governments that get
Speaker 5: to choose companies, and consumers are going to affect that
Speaker 5: decision in a lot of ways. And the problem is
Speaker 5: that people are worried, not just about an economic conflict, right,
Speaker 5: people are worried that you get this rhetoric building and building,
Speaker 5: and it gets into things like Taiwan and worries about
Speaker 5: a a move on Taiwan by mainland China and how
Speaker 5: the US might respond in a more belligerent world, and
Speaker 5: that gets out of hand, and then it's going to
Speaker 5: be an even the uglier world.
Speaker 4: So we also don't want to encourage slave labor. We
Speaker 4: don't want to support the Russians in their war in Ukraine.
Speaker 4: You know, there are things that we definitely need to
Speaker 4: be conscious of and make decisions based on those.
Speaker 6: I find this to be a tricky pass for American
Speaker 6: leadership to walk, you know, because it's like they can't
Speaker 6: go maybe full Trump here, because we know what that
Speaker 6: looks like. And there's some version of backpedaling that is happening.
Speaker 6: But they can't backpedal too much because then if it's
Speaker 6: going to be Biden in the election, like you know.
Speaker 4: We got back pedaling on China and on Saudi Arabia,
Speaker 4: come on the rematch.
Speaker 5: And I think that's and I think that's one of
Speaker 5: the big issues that we have right now, and it's
Speaker 5: why we're seeing this language now. The administration is trying
Speaker 5: very hard to tamp down the relationship, to tamp down
Speaker 5: the rhetoric, because it knows that in the next year,
Speaker 5: as we go into a presidential cycle, things are going
Speaker 5: to ratchet up again and it's going to get even
Speaker 5: more heated. So let's try and bring things down for
Speaker 5: earth a little bit now, and because we know what's
Speaker 5: coming ahead, and we also you know, it's a relationship
Speaker 5: that's not going to go away, and I think, you know,
Speaker 5: you're trying to set these new guardrails for the relationship.
Speaker 5: The administration has worked very hard to try and keep
Speaker 5: it focused, but the rest of the world is really
Speaker 5: worried about this. And as much as the language is
Speaker 5: aimed towards Beijing coming out of Washington right now to
Speaker 5: try and reduce the temperature there, it's also about telling
Speaker 5: allies that, look, we're not trying to get into a
Speaker 5: conflict here. We're not trying to have a major rupture
Speaker 5: between the world's two largest economies. We know that this
Speaker 5: is an important economic relationship and it's one that's going
Speaker 5: to endure no matter what we do. Uh, And we
Speaker 5: don't want the rest of the world to suffer as
Speaker 5: a result of of us going down a chaotic path.
Speaker 7: Sehn.
Speaker 6: Do you think the Biden administration would have wanted to
Speaker 6: have had this out in the open like this earlier.
Speaker 7: If not for spy balloons entering the lexicon?
Speaker 5: Yeah, so, I mean, we know, you know, one of
Speaker 5: the things I heard from from from folks as I
Speaker 5: was reporting this piece was a desire to get back
Speaker 5: to Bali And that's the phrase that they use. And
Speaker 5: Bali is where last November, Uh, President Biden and Chu Jinping.
Speaker 7: This really is a romantic company.
Speaker 5: We got to get back to thee they shot down,
Speaker 5: and they had their you know, they had their shot
Speaker 5: down in that kind of promise more engagement. They were
Speaker 5: going to get along better. Anthony Blincoln was going to
Speaker 5: head over there earlier this year, and then of course
Speaker 5: that balloon drifted over and everything went the pot. And
Speaker 5: you know what people in the youuistration are trying to
Speaker 5: do now is to get things back into a place
Speaker 5: where we can start getting that engagement again. There can
Speaker 5: be a frank conversation and you can talk through your
Speaker 5: issues rather than yell at each other. It's completely unclear
Speaker 5: whether that's actually going to happen.
Speaker 3: Yeah, But at the same time, and I'm going to
Speaker 3: bring up something Matt you shared, but it's also shown
Speaker 3: in your story that you know, it's not just the
Speaker 3: Biden administration in the US, you know, with a delicate
Speaker 3: balance when it comes to a relationship with China. And
Speaker 3: I understand that these two are the biggest superpowers out there,
Speaker 3: and I understand why it's so important. But Matt you
Speaker 3: shared earlier that Italy has signaled to the US that
Speaker 3: it tends to pull out of an investment packed with
Speaker 3: China before the end of the year. We're talking about
Speaker 3: Belt Road, which has been such a big Chinese initiative.
Speaker 3: There's a bigger, broader global thing going on where everybody's
Speaker 3: being very delicate. It feels like slowly when it comes
Speaker 3: to China and their relationship, even Apple as they pivot
Speaker 3: to India a little bit, there's still like, you know,
Speaker 3: Tim Cooks over there, I love you, I love you,
Speaker 3: China present shit, you know what I mean.
Speaker 2: Like it's this delicate balance.
Speaker 5: Yeah, and look, the rest of the world hates where
Speaker 5: it's stuck right now, right because they're stuck in between
Speaker 5: these two quarreling parents, and it has they have important
Speaker 5: relationships with both with the world.
Speaker 3: But isn't it like the whole world kind of stepping
Speaker 3: back a little bit from China.
Speaker 5: Yeah, the whole world is everyone's reconsidering their their relationship
Speaker 5: with China, you know, and for all the reasons he
Speaker 5: talked about, whether it's slave labor in Xinjiang or whether
Speaker 5: it's just an over alliance on everything from semiconductors to
Speaker 5: antibiotics coming out of China. At the same time, I
Speaker 5: think if you talk to allies of the US, a
Speaker 5: lot of them are also have their concerns about US
Speaker 5: industrial policy right now, and what they feel like is
Speaker 5: a more selfish economic policy coming out of the United
Speaker 5: States and the potential consequences for them there. And they
Speaker 5: also are more broadly concerned about a world that will
Speaker 5: become more fragmented and what that might mean. And IMF
Speaker 5: came about, you know, a few weeks ago, so that
Speaker 5: was going to mean slower growth in the world, which
Speaker 5: no one wants.
Speaker 4: It's you know, I would just I want to talk
Speaker 4: about what's going on debt ceiling, but I do want
Speaker 4: to tell our listeners to encourage them to go to
Speaker 4: the website read your story because it's a great piece,
Speaker 4: and even better, buy the magazine because I like the
Speaker 4: actual paper copy.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4: I think this is really exciting. Cheryl mckisson Daniel joins
Speaker 4: US right now. She is president and chief executive officer
Speaker 4: at Mackissik. It is the oldest minority owned professional design
Speaker 4: and construction firm in the US. It's, as Carol was
Speaker 4: saying before the breakout family owned business for more than
Speaker 4: one hundred years, and I think it is incredibly interesting now,
Speaker 4: especially because of all the problems we're having regional banks,
Speaker 4: the jump in interest rates, the tightening of credit markets.
Speaker 4: So I'm very pleased to welcome Cheryl to the program.
Speaker 4: Thanks so much for joining us. Cheryl, Hi, how you
Speaker 4: doing it? We're doing I'll speak for both of us, fantastic, Sarah.
Speaker 4: I love it because we have a whole week ahead
Speaker 4: of us and I'm just getting settled in here. Let
Speaker 4: me get first your take on being the oldest minority
Speaker 4: owned business, the oldest my already know design and construction
Speaker 4: business in the US, and a family owned business for
Speaker 4: one hundred years. How much does it mean to you?
Speaker 4: How important is that to you?
Speaker 9: Wow?
Speaker 10: I stand on the shoulders of other generations, and so
Speaker 10: you know, I feel like I'm winning before I get started.
Speaker 11: For them to.
Speaker 10: Navigate this country of ours, this great country of hours,
Speaker 10: for five generations is an amazing thing, and so I
Speaker 10: feel honored, I feel blessed, and I feel as though
Speaker 10: I have a mission to keep this company going, especially
Speaker 10: in New York City.
Speaker 4: So how are you doing in that mission right now?
Speaker 4: How is business at Meckissick.
Speaker 11: Business is booming.
Speaker 10: New York just passed a three hundred and twenty two
Speaker 10: billion dollar budget and a lot of that is capital
Speaker 10: work throughout the state. And then of course we have
Speaker 10: a significantly large budget for the City of New York,
Speaker 10: so there is plenty of work for Mechissick. Corporations are
Speaker 10: working or have large capital programs. I think the only
Speaker 10: area where we're seeing some slippage is with our developers
Speaker 10: with respect to residential and office space. I think the
Speaker 10: interest rates are affecting their ability to make these deals work.
Speaker 10: And then we also need to deal with our affordable housing.
Speaker 10: We need to get something in place where we can
Speaker 10: get some assistance from our government for affordable housing so
Speaker 10: we can make those projects work as well.
Speaker 2: Cheryl, take a step back.
Speaker 3: Let's go to office because we certainly are just trying
Speaker 3: to figure out if that's the next shoe to drop.
Speaker 3: And we've been speaking a lot about, you know, the
Speaker 3: nervousness that continues, certainly among the regional banks. They rallied
Speaker 3: a bunch of them today, but nonetheless there's still questions.
Speaker 3: So office space specifically, how would you describe it? And
Speaker 3: you guys really work within the state of New York.
Speaker 12: Correct, we're in New York.
Speaker 11: We're in Philadelphia, Orlando, and down Nashville.
Speaker 10: And you know, office space right now has dwindled, as
Speaker 10: we know, as a result of COVID. You know, if
Speaker 10: we just take my hometown Nashville, Tennessee, where Amazon just
Speaker 10: finished a beautiful, you know, mid rise building, there's nobody
Speaker 10: in it. People do not want to come to work
Speaker 10: the way they used to. Most people want to well,
Speaker 10: I wouldn't say most, but a lot of people want.
Speaker 11: To work remotely.
Speaker 10: We in Nashville, we're trying to renovate or develop a
Speaker 10: building that my building, my grandfather built in nineteen twenty four.
Speaker 10: And I was just on the phone with a prominent
Speaker 10: developer on Saturday saying, Okay, can we make it office space?
Speaker 11: And the answer is absolutely not. You can't get a
Speaker 11: loan from banks for office space.
Speaker 10: For my understanding, a lot of the banks that are
Speaker 10: failing are the banks that you know let money on
Speaker 10: you know, office space construction. And so you know, it
Speaker 10: is in a crisis right now. And you know, I
Speaker 10: don't see, from what I can tell, how we're going
Speaker 10: to recover with the office space without doing maybe some conversions.
Speaker 4: Yeah, well the conversions.
Speaker 11: Yeah, conversions. Housing is a big issue in New York.
Speaker 10: As we know, we need over eight hundred thousand units
Speaker 10: of affordable housing. Housing is an issue in most urban cities,
Speaker 10: and so you know, maybe that's the answer.
Speaker 3: But a bunch of developers I talked with at Milkin
Speaker 3: last week, they said, how do you take those buildings
Speaker 3: that are in midtown old buildings like they're just not
Speaker 3: the idea of converting them into housing. It just doesn't
Speaker 3: make sense. You really need to knock them down. But
Speaker 3: then there's the problems and issues where the exteriors you know,
Speaker 3: are old and wonderful and nobody wants to mess them up.
Speaker 3: So it's it's complicated and converting isn't so easy, or
Speaker 3: you know, creating conversions.
Speaker 4: Is this good news for me chistic? I mean, can
Speaker 4: you guys do conversions or can you go to places
Speaker 4: where we knock down buildings and put up new ones?
Speaker 4: Is this great news?
Speaker 11: We absolutely can.
Speaker 10: I mean any construction project that's vertical, we are happy
Speaker 10: to participate it. On in I can't say it's great
Speaker 10: news for the private industry because we still need our
Speaker 10: developers to be able to borrow money at a good
Speaker 10: interest rate, so the deal makes sense for them, and
Speaker 10: so that's a concern for our industry.
Speaker 2: So how much has it slowed down? Like does it?
Speaker 3: Is it crisis situation in terms of what you've seen
Speaker 3: slow down in terms of development? And what tier of
Speaker 3: the market are you talking you know, is it top
Speaker 3: level top tier properties?
Speaker 2: Is it?
Speaker 4: Like?
Speaker 2: What is it?
Speaker 5: So?
Speaker 10: So at McKissick, the majority of our work is with
Speaker 10: large institutions and government. So we work for the higher
Speaker 10: ed K through twelve, you know, like.
Speaker 2: The Columbia Business School right uptown.
Speaker 10: Columbia Business School, Lehman College, Hospital Olds, you know, Cony Allen.
Speaker 10: So those projects are moving along. You know, the MTA
Speaker 10: looks like you know, their their capital program is going
Speaker 10: to be whole.
Speaker 11: And so that is the bulk of of mckissick's work.
Speaker 10: We're not really working for private developers building residential or
Speaker 10: office space. But I can only talk to you about
Speaker 10: what my colleagues are telling me that are in that area,
Speaker 10: and they're telling me that their projects are slipping out
Speaker 10: to the point that you know, they're carrying staff in
Speaker 10: hopes that a project's going to start in six months,
Speaker 10: but what if it doesn't what if it gets you know,
Speaker 10: trashed completely because the interest rates are still a problem.
Speaker 10: You know, there are companies in New York who have
Speaker 10: gone out of business in the last two months just
Speaker 10: around that issue.
Speaker 11: Yeah, because they've felt staff you.
Speaker 4: Know, you basically and mc kissing you have the dream
Speaker 4: product mix. Then you want to be in hospitals, you
Speaker 4: want to be in universities, you want to be in
Speaker 4: you know, federal government projects, because they get credit cards exactly.
Speaker 4: But your colleagues that are in other sectors, they're not
Speaker 4: able to get loans, or if they are, the loans
Speaker 4: are just unaffordably expensive, is what you're saying.
Speaker 11: Well, yes, right, And as a result, the builders for
Speaker 11: those developers, you know, what do they do with their
Speaker 11: staff because the way we went our work is by
Speaker 11: having confident staff to you know, implement, you know, whatever
Speaker 11: project that we're going after.
Speaker 10: And you know, staff again is hard to find, so
Speaker 10: you can't let us a key staff person go. You
Speaker 10: have to hold onto them in hopes that the project
Speaker 10: is going to start. And so I'm seeing that across
Speaker 10: the board with these construction firms that work for private
Speaker 10: developers that are in the office space or residential space.
Speaker 3: Yeah, we've heard that a lot in terms of the
Speaker 3: labor market, that builders just don't have the people that
Speaker 3: they need.
Speaker 2: As a result.
Speaker 7: What is that?
Speaker 3: Still is that still putting pressure on costs, the development
Speaker 3: costs and just unfortunately Shara only have about thirty forty
Speaker 3: seconds left.
Speaker 10: Yeah, well development costs, everything's going up because the supply
Speaker 10: chain is a problem still So still yes, still, yes,
Speaker 10: you know there are contractors who have contingencies just based
Speaker 10: on supply chain issues and the cost that might you
Speaker 10: know result as the you know, because you can't get
Speaker 10: switch gear or any other kind of product in a
Speaker 10: you know, reasonable amount of time. And as we know,
Speaker 10: time is money, and so you want to make sure,
Speaker 10: you know, you cover yourself if you have to wait
Speaker 10: on a supply chain. So yeah, those issues are still
Speaker 10: out there.
Speaker 3: Yeah that listen, what a great dvantage point and just
Speaker 3: very real in terms of what's going on and what
Speaker 3: a great company.
Speaker 4: I want to come over and check out the buildings
Speaker 4: you're putting up. It sounds awesome. I want to go
Speaker 4: to Nashville and see that building their grandfather put up.
Speaker 2: Let's go on the road, Cheryl'll come back soon. We
Speaker 2: would love it. Cheryl McKissick Daniels. She's president at McKissick.
Speaker 3: Joining us via zoom in New York City.
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Speaker 3: All right, we want to kind of ship back to
Speaker 3: the markets if we may, because one name that's certainly
Speaker 3: been front and center and that has palent Her soaring
Speaker 3: more than twenty percent. We saw it in the aftermarket,
Speaker 3: we saw it in today's trade. I was just going
Speaker 3: to pull it up on the Bloomberg and see where
Speaker 3: we are up twenty three percent, so pretty much holding
Speaker 3: on to its gains. A lot of it is because
Speaker 3: they talk so much about AI on the call with analysts.
Speaker 3: So let's get to it with our Yes Bloomberg News
Speaker 3: VC and Startups reporter Lazette Chapman in our San Francisco bureau.
Speaker 3: And Andrew McAfee, MIT scientist and work Helix co founder
Speaker 3: at the MIT Sloan School of Management. He joins us
Speaker 3: via zoom in Boston. Folks, thanks so much for being
Speaker 3: here with Matt and myself, Lazette. First off, just briefly
Speaker 3: kind of what we heard from Palenteer, in particular the
Speaker 3: excitement and narrative around AI. Tell us kind of what
Speaker 3: we got from the company.
Speaker 11: Yeah. Sure.
Speaker 13: Palenteer, of course, is a tech company that's been unprofitable
Speaker 13: for two decades up until this past quarter, so that
Speaker 13: was another thing that's been driving the surge and the
Speaker 13: stock price. They did a surprise profit, and then they
Speaker 13: pivoted very quickly to talking about this AI platform that
Speaker 13: they say that they've been working on for the past
Speaker 13: several months. They will be releasing to select customers they
Speaker 13: didn't say who a little later this month, and then
Speaker 13: it'll be available more broadly for their hundreds of customers
Speaker 13: in the months to come. Of course, their customers include
Speaker 13: some of the the you know, largest branches of the
Speaker 13: military here in the US, as well as that of
Speaker 13: our allies, along with a bunch of commercial customers.
Speaker 2: So that's driving the news.
Speaker 4: So and Andy, let me ask you about, you know,
Speaker 4: what kind of worry this could be When I read
Speaker 4: the Pallenteer story and I saw that they deal with
Speaker 4: very sensitive data, criminal databases, DMV records, phone data, and
Speaker 4: that they would be providing solutions AI solutions to the
Speaker 4: military to bring to dig through this data as well
Speaker 4: as you know, other institutions. I thought it's a little
Speaker 4: bit scary, and then I saw the CEOs quote Alex
Speaker 4: Carpi says the machine must remain subordinate to its creator,
Speaker 4: as if the alternative is even a possibility. You Andy
Speaker 4: wrote the book Raise Against the Machine with my buddy
Speaker 4: John Brynielsen's brother Eric, so it's great to have you
Speaker 4: on the program. Should we be worried about this AI,
Speaker 4: especially in the hands of a company like Palenteer.
Speaker 14: We should always be mindful when extraordinarily powerful new technologies
Speaker 14: come out, and generative AI is an extremely powerful new technology.
Speaker 14: One way to think about it is, we have finally
Speaker 14: built a technology that understands this, that is fluent in
Speaker 14: human languages. This is kind of wild and we weren't
Speaker 14: expecting it, and Matt, like you point out it can
Speaker 14: be used for all kinds of purposes.
Speaker 9: I'm actually optimistic.
Speaker 14: I think Palenteer has a pretty long PreK record of
Speaker 14: safeguarding the sensitive information that it's given and of building
Speaker 14: very powerful technologies that normal human beings can work effectively with.
Speaker 14: I think it's an ideal match for this new category
Speaker 14: of generative AI, which is all about letting us do
Speaker 14: this and interact with huge amounts of data.
Speaker 2: Well well ways.
Speaker 3: Like Lizette Nandy, this is why I wanted also to
Speaker 3: talk to you, because I feel like we need to
Speaker 3: be rationalbal rational as we talk about AI, because I
Speaker 3: feel like there's a lot of folks out there saying,
Speaker 3: oh my god, you know the world's coming to an end. Andy,
Speaker 3: what is the smart conversation? As you say, you know,
Speaker 3: there's lots of data and information in the hands of
Speaker 3: a lot of companies already, I would say and argue
Speaker 3: just about every company.
Speaker 2: That's out there on all of us. So what is
Speaker 2: the smart, rational.
Speaker 3: Conversation to have around AI and a company like Palenteer.
Speaker 14: And what's not going to happen is that chat GPT
Speaker 14: is inadvertently or with Palenteer's help, going to take all
Speaker 14: the things that the NSA knows about it and tell
Speaker 14: the Internet about all that sensitive information.
Speaker 9: That's so unlikely.
Speaker 14: We don't need to spend a lot of time on that.
Speaker 14: What it's going to do instead is let an analyst
Speaker 14: at the NSA use different techniques to interact with huge
Speaker 14: amounts of information and draw conclusions with it. Now, again,
Speaker 14: there are risks associated with that, but I think it's
Speaker 14: fundamentally a quantum jump in productivity and in our ability
Speaker 14: to deal with machines and huge amounts of information.
Speaker 4: Well, you could, I mean see AI, Lisette. You could
Speaker 4: see the AI using for example, the way back machine
Speaker 4: and digging into Carol's social media profiles. Maybe she posted
Speaker 4: a picture that wasn't very flattering on friends to her
Speaker 4: back in the day.
Speaker 2: And not all Facebook, not on friends, and now.
Speaker 4: Someone could go and find it. Isn't this a concern?
Speaker 4: I mean, you could find it anyway, But this is
Speaker 4: a giant machine helping you to do that kind of things.
Speaker 4: That kind of stuff come on in z that.
Speaker 13: Yeah, I was just going to say, I think it's
Speaker 13: really worth keeping some sense of context around this. This
Speaker 13: is information and data that Palent's software has allowed, has aggregated,
Speaker 13: cleaned and integrated for you know, the intelligence communities, for
Speaker 13: the IRS, for the veterans affairs, for all sorts of
Speaker 13: military operations of ourselves and our and our allies for
Speaker 13: over a decade, if not more. The AI tweaked to it,
Speaker 13: if you will, is simply applying that data against large
Speaker 13: language models to go ahead and make it more accessible
Speaker 13: to more users that have the permissions to access this
Speaker 13: different information, this different data sets. You're not allowed to
Speaker 13: access it, you're not allowed to use it without it
Speaker 13: being logged and pallateer software, which they say is going
Speaker 13: to make them more secure or already more secure than
Speaker 13: some of the alternatives on the market.
Speaker 3: But Andy my understanding, there was a great thing. I
Speaker 3: think it was in the times of just kind of
Speaker 3: a very basic understanding of how generative AI works and
Speaker 3: how it like initially it's kind of code and gobblygook,
Speaker 3: and then it gets smarter and smarter the more information
Speaker 3: that's kind of put into it, So something like whatever
Speaker 3: Palenteer is using or anybody out there gets better and
Speaker 3: smarter and more accurate the more data that goes into it.
Speaker 3: So two mets concerns and sentient. He's freaking out here,
Speaker 3: he's heading for the hills.
Speaker 4: Amazing, I mean use that word.
Speaker 9: That's that's the term crator worry that don't need to.
Speaker 3: Discuss what's the balance of making our next level of
Speaker 3: AI maybe incredible for our world and smarter and safer,
Speaker 3: and also securing that it doesn't get into the wrong hands.
Speaker 14: Well, I think, like we just heard, companies like Pealantry
Speaker 14: have a long track record of segregating the data and
Speaker 14: making sure that it can't ump over those walls very easily.
Speaker 14: So that's not a thing that I'm worried about. You
Speaker 14: point out, Carol correctly, that these large language models tend
Speaker 14: to get better, they get more fluent, they get more
Speaker 14: nuanced as we give them more data.
Speaker 9: Great.
Speaker 14: I would like to interact with an extraordinarily fluent, nuanced,
Speaker 14: very flexible technology. I spend a lot of time filling
Speaker 14: out spreadsheets, making budgets, doing.
Speaker 9: Stuff like that.
Speaker 14: I would love to be able to say to a
Speaker 14: piece of technology, hey, give me the first draft of
Speaker 14: this and let me tweak it from there.
Speaker 9: That's what I think is the real innovation here.
Speaker 4: Well, and you know the limit on that is going
Speaker 4: to be the ip that the large language model has
Speaker 4: access to, right, Lizette. So I mean, for example, I
Speaker 4: would love to generate an AI chatbot that can comb
Speaker 4: through all the different used car sites and find me
Speaker 4: the exact nineteen eighty five nine to eleven sc that
Speaker 4: I want without us on roof please, But it can't
Speaker 4: because Auto Trader, Car Gurus, Classic Cars, Hemmings, they don't
Speaker 4: allow these large language models to come in and look
Speaker 4: at all of their pictures. Yet if they don't have
Speaker 4: the IP, they really can't do business, can they exactly?
Speaker 13: And so that's what we're going to be seeing and
Speaker 13: that's what they're working on now at Pallunteer. In the
Speaker 13: weeks and in the months to come, they talked about
Speaker 13: refocusing the engineering resources of their three thousand plus mostly
Speaker 13: engineers on staff. They have a very small sales team
Speaker 13: and they're looking right now.
Speaker 4: To build.
Speaker 13: You know, this platform on somewhat of a bespoke basis
Speaker 13: for customer after customer because like everyone has mentioned before me,
Speaker 13: it really comes down to each individual use case, what
Speaker 13: data they have access to and what you know, how
Speaker 13: they can bring that forward with AI to two larger
Speaker 13: use cases that are that are generative.
Speaker 3: Hey, you guys, I want to put this to both
Speaker 3: of you. What's the company to watch when it comes
Speaker 3: to AI right now? Is it feels like everybody that's right,
Speaker 3: any earnings call that's the words that have been dropped.
Speaker 4: It's obviously not IBM it because volunteers. As we have
Speaker 4: AI and the stuff goes up twenty three percent, we
Speaker 4: have new AI and the stalk falls person.
Speaker 2: To both of you. Lizette, you first is Poundteer? The
Speaker 2: company to watch? Is it Microsoft? Who is it?
Speaker 13: Let's see how they do and their results? Okay, you
Speaker 13: know this is a platform that they still haven't figured
Speaker 13: out a pricing strategy. Carp Alex CEO Alex Karp said,
Speaker 13: our strategy is to take the whole market.
Speaker 4: They're building it on the fly.
Speaker 13: They are pricing it as well on the fly, and
Speaker 13: we'll have to see how that works out in earnings.
Speaker 13: They have a big event coming up at June first
Speaker 13: to say more about it, but proof's going to be on.
Speaker 2: The pudding, Andy, who are you watching?
Speaker 3: Who's the company that all of us here at Bloomberg
Speaker 3: should be watching when it comes to AI? Is it?
Speaker 2: Can we whittle it down to one person or one company?
Speaker 14: No, But the company that I'm going to be watching
Speaker 14: very closely is Google because the team at Google wrote
Speaker 14: the paper in twenty seventeen that that presented the architecture
Speaker 14: that OpenAI is now using for GPT four and chat gpt.
Speaker 9: That was a Google innovation.
Speaker 14: They published it openly, and another company has taken the
Speaker 14: first steps with it now. I don't have any inside information,
Speaker 14: but I'm pretty sure that Google is very keenly aware
Speaker 14: of that and would like to get the momentum back
Speaker 14: in the AI space and the generative AI space. They
Speaker 14: also have an extraordinarily deep bench of talent here, So
Speaker 14: that's the company that I'm really watching with keen interests.
Speaker 4: I just wanted to ask what you and Eric are
Speaker 4: up to now? You know, you know what are you doing?
Speaker 15: Andy?
Speaker 9: Eric and I talked about this stuff all day.
Speaker 14: We are the co founders of a startup that is
Speaker 14: working in the generative AI space. We are plotting our
Speaker 14: next book and our next research that Matt, these are
Speaker 14: fascinating times. We haven't seen progress this fast with an
Speaker 14: important technology in my career, and my career is long
Speaker 14: enough to encompass the web and the smartphone and the
Speaker 14: social web.
Speaker 9: This stuff is crazy, and it's getting better so quickly,
Speaker 9: and more capable, so quickly.
Speaker 2: Bigger than the Internet, bigger than an engine.
Speaker 9: Compare it to I don't quite know. Okay, it's up there,
Speaker 9: it's up there.
Speaker 4: Pretty cool. It just developed so quickly.
Speaker 3: I know, well, well, actually AI has been around for
Speaker 3: a long time. This is just a whole other level
Speaker 3: and it just keeps getting.
Speaker 14: Right exactly, and we weren't expecting this particular leap this quickly.
Speaker 14: And then the companies have demonstrated who are leading the
Speaker 14: charge here, how quickly their technologies get better. If you
Speaker 14: go look at the images that AI can generate, and
Speaker 14: you go back just twelve months, you will see these
Speaker 14: staggering improvements in the kinds of images they can generate
Speaker 14: in response to a prompt.
Speaker 2: Sounds like I called them off guard as well as
Speaker 2: the world.
Speaker 4: I actually saw AI make a trailer for a new
Speaker 4: Wes Anderson version of Star Wars, and it's pretty impressive.
Speaker 3: It is pretty amazing. We lost Andy, Andy, come back soon.
Speaker 3: We want to continue this conversation, both of you. Incredible
Speaker 3: Annie McPhee McAfee, excuse me, co director, as we said,
Speaker 3: am I yes, yes, yes, MIT scientist and work Helix
Speaker 3: co found our just want to get it right at
Speaker 3: the MIT Sloan School of Management. Then, of course our
Speaker 3: thanks to our Lazett Chapman VC and Startups reporter.
Speaker 1: You're listening to the Bloomberg Business Week podcast. That's us
Speaker 1: live weekdays from two to five pm Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business App.
Speaker 8: And YouTube.
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Speaker 4: You love them verty.
Speaker 2: Christina Stemple.
Speaker 3: She is founder and CEO of Seattle based farm Girl Flowers.
Speaker 3: She is here in our interactive brokers. Dude, a little
Speaker 3: bit of a whirlwind trip back to New York. How
Speaker 3: are you?
Speaker 12: I'm great? Thanks for having me?
Speaker 4: Wait waiting back to New York. Are you grew up
Speaker 4: on a farm in New York?
Speaker 3: No?
Speaker 2: Come by the mic.
Speaker 12: We want to make Indiana, Indiana come to New York frequently.
Speaker 12: And I get to talk to Carol. I love talking
Speaker 12: to you guys. Okay, okay, And you brought flowers.
Speaker 4: We should say for listeners who can't see, we've got
Speaker 4: a couple of gorgeous bouquets up here, and those are.
Speaker 3: YouTube and Bloomberg originals can see them.
Speaker 4: Though, yes, exactly, I was going to say that, let's
Speaker 4: drive the traffic there, flowers.
Speaker 2: What is the what is the drop dead date?
Speaker 12: I would say right now? Actually, when you said Friday
Speaker 12: was oh, really late. Yeah, I mean it's the sooner
Speaker 12: the better, you know. We do do some deliveries on Saturday,
Speaker 12: but depends where you live in the United States and
Speaker 12: whether you can get delivery on Saturdays. Sundays. We do
Speaker 12: not have local delivery on Sunday. So really, Friday is
Speaker 12: the last time you can order flowers if you live
Speaker 12: in a place that is lucky enough to have delivery
Speaker 12: otherwise earlier the better we all know, Like delivery delays
Speaker 12: are everyone so what?
Speaker 4: So all right, let's say I order flowers for my
Speaker 4: mom and for my wife who is a mom, and
Speaker 4: then do I like keep them in the basement refrigerator
Speaker 4: and break them out on Sunday or I mean I.
Speaker 12: Sent my mom her flowers. She got them on Monday
Speaker 12: this week, and I say happy Mother's Day week like
Speaker 12: you is. Yeah, nobody gets mad about early flowers or gifts.
Speaker 12: They get mad about late ones. I say, it's a
Speaker 12: Mother's Day a week and pam for her all week long.
Speaker 2: What's demand like right now?
Speaker 12: It's high, it's really really high.
Speaker 2: To go back to pre pandemic level or what is not?
Speaker 12: No, But I well, I mean I would say that
Speaker 12: if we did Sunday delivery jests, probably because everybody's last minute.
Speaker 12: But you know, the economy is definitely impacting every business,
Speaker 12: including us. But right now we have the demand thanks
Speaker 12: to the big flower companies that have spent you know,
Speaker 12: a century, you know, building up flowers as gifts, which
Speaker 12: I'm really grateful for. So we don't want to miss
Speaker 12: out on the demand, right But it's really hard to
Speaker 12: scale a company, as you know, everyone knows you can't
Speaker 12: really scale a company from like, you know, twenty x
Speaker 12: what it is normally without having to scale back down afterwards.
Speaker 3: So do it because like a UPS will pull in
Speaker 3: some of the executives to get out in trucks and
Speaker 3: so on and stuff with and drive during like the
Speaker 3: holiday season.
Speaker 2: Right, Like we see Amazon hires more people.
Speaker 4: What do you do?
Speaker 12: We do the same thing. Everybody is like, you know,
Speaker 12: we're all heading to Boston from here from New York.
Speaker 12: We already have people in Boston working. We have people
Speaker 12: at lots of our position your main distribution. No, it's
Speaker 12: just one where we had more space. So that's why
Speaker 12: we you know, we ramp up all the places that
Speaker 12: we can get more space. We have places in California
Speaker 12: that we have you know, people at we have South America.
Speaker 12: We have a a AY in Ecuador and Qito that
Speaker 12: we scale up to full capacity, multiple shifts. We just really,
Speaker 12: you know, we're not going there.
Speaker 4: Are other I mean, surely Mother's Day isn't the most flowers, right,
Speaker 4: Isn't Valentine's Day?
Speaker 14: No?
Speaker 12: It's not really, I mean, industry wide, Christmas the holidays
Speaker 12: is the biggest reported holiday for flowers. For us, it's
Speaker 12: Mother's Day though, because the holiday, you know, Christmas holiday
Speaker 12: is more like you know, trees and wreaths, and it's.
Speaker 4: The red belity flowers they call those, yes, point set
Speaker 4: us plants things like that, but cut flowers.
Speaker 12: Our industry and our niche is Mother's Day. Mother's Day
Speaker 12: is like it's not even just the super Bowl. I'm
Speaker 12: calling it this year like we usually do. It's literally
Speaker 12: every holiday wrapped up into one because we need it
Speaker 12: to be so big because right after Mother's Day we
Speaker 12: go into the summer slump, which means we're gonna have
Speaker 12: four months of lighter sales than normal, and this year
Speaker 12: is gonna be even worse, probably because of the economy.
Speaker 4: So so well try and offset that with other programs.
Speaker 4: A buddy of mine once when my wife had our
Speaker 4: first baby, gave us some kind of subscription where we
Speaker 4: got a new box of flowers every month. Yeah, and
Speaker 4: my wife has said for the last three years it's
Speaker 4: the best gift anyone's ever given her.
Speaker 12: That's a great testimonial everybody listened to. Yeah, we do
Speaker 12: subscriptions as well, which are great. We do some you know,
Speaker 12: weddings and events and things like that will will pop
Speaker 12: up in the summer. We do faux flower arrangements, and
Speaker 12: you know, we're just constantly trying to come up with
Speaker 12: new things that will keep you christ State.
Speaker 2: And how much of your revenues is booked on this holiday.
Speaker 12: Over twenty percent of our annual revenue will come in
Speaker 12: one week this week, so it's a big deal.
Speaker 3: Yeah, So you know I was asking for you got
Speaker 3: in because Matt and I talked with a guest earlier
Speaker 3: about where produce and fruit are.
Speaker 2: All coming from. Where do all your flowers come from?
Speaker 12: They come from all over the world, but mostly from
Speaker 12: South America and Europe and some United States. So right now,
Speaker 12: for the whole year, we'll probably be seventy percent South
Speaker 12: America seventy percent important, thirty percent domestic. Certain holidays, it'll
Speaker 12: go more to like forty sixty or fifty to fifty.
Speaker 12: But for the year, you know, we're trying to get
Speaker 12: it more to a fifty to fifty. But you know,
Speaker 12: flower farming is is is. There's a lot we get
Speaker 12: to here for an hour about flower farming in this country.
Speaker 2: Why.
Speaker 12: I mean, it's expensive. You know, it's your competing with
Speaker 12: other countries where they don't have the same you know,
Speaker 12: flavor issues. And I mean think of how much you
Speaker 12: have to pay per hour right now, plus all of
Speaker 12: the you know, insurances and workers comp and lawsuits and
Speaker 12: legal and things like that. It's just really expensive.
Speaker 4: What is the flower to get for Mother's Day? I mean,
Speaker 4: I know on Valentine's Day, get the roses at Christmas?
Speaker 4: I get the point sets you know, is there one
Speaker 4: for Mother's Day?
Speaker 16: What is it?
Speaker 13: Yes?
Speaker 12: But I would also say don't do roses on Valentine's Day,
Speaker 12: But that's another story.
Speaker 2: Okay, I'm with you. I am so with you.
Speaker 12: Yes, women don't actually want roses, but peonies. We pulled
Speaker 12: ninety two percent of our customers and peonies are their favorite,
Speaker 12: and thankfully it's peenie season. We are beholding to mother
Speaker 12: nature though, so we've been on pins and needles because
Speaker 12: you know, you place these orders, put them on for
Speaker 12: sale on your website long before you actually have the
Speaker 12: flowers in hand, and if it's too cold or too hot,
Speaker 12: it messes everything.
Speaker 2: Does that happen?
Speaker 12: It happens all the time.
Speaker 8: You know.
Speaker 12: Last year we had you know, thirty percent of our
Speaker 12: ponies on order didn't come in in time. They came
Speaker 12: the week after Mother's Day and so last minute we
Speaker 12: had to fly them in. It was really expensive. You know,
Speaker 12: it runed our cot. You know, our Uni economics for
Speaker 12: our bouquet is like great, we just extold all those
Speaker 12: at a loss, you know, for some of them. So
Speaker 12: this year it's looking really good, so fingerscrass. We still
Speaker 12: have one more shipment coming in this week, but so far,
Speaker 12: so good.
Speaker 3: Yeah, that is I mean, your supply chain, how complicated
Speaker 3: is it? It's nuts and how expensive and like you know,
Speaker 3: we talked about sustainability, like moving stuff in, I mean,
Speaker 3: how do you work on that?
Speaker 12: It's I often say, like anything we do after perishable,
Speaker 12: like really perishable product that we have is going to
Speaker 12: seem like a cake walk because you can't make a mistake.
Speaker 12: You're beholding some other nature and we found that she
Speaker 12: always wins. You cannot fight mother nature. Literally, she will
Speaker 12: win every time. So you know you're just beholden too.
Speaker 12: Is it too hot? Is it too cold? Is there
Speaker 12: shipping issues? Like after they leave our warehouses, then we
Speaker 12: have to rely on you know, third parties to deliver
Speaker 12: them on time. And you know, people are upset when
Speaker 12: they're not, of course, and then they're dead and swift
Speaker 12: to reshift. And if you over order, it's going to
Speaker 12: end up in a landfill. You know, it's gonna end
Speaker 12: up compost. You know, you can't just sell us sweater
Speaker 12: like a sweater later in you know in June?
Speaker 4: What do you do when you have leftover flowers? Do
Speaker 4: you bring them to like I don't know, churches or
Speaker 4: shelters or.
Speaker 12: The few times that we do, Yeah, I do a
Speaker 12: flash say we are we do a flash tell if
Speaker 12: you see us do flash down, I'm like, oh, that's
Speaker 12: a little bit of it here that we over ordered.
Speaker 12: So we do flashtail to sell them really quickly. But
Speaker 12: we're really really good at our supply chain.
Speaker 3: I need to ask you because I feel like with
Speaker 3: the banking and the regional banking crisis and so on and
Speaker 3: so forth. You know, we've talked with you in the
Speaker 3: past about funding evaluations and so on and so forth.
Speaker 3: Are you able to access all the funding.
Speaker 12: That you need. We are still bootstrapped companies, so we
Speaker 12: are still Yeah, we've never taken any outside capital. We
Speaker 12: got one hundred and four no's now we probably could
Speaker 12: raise capital.
Speaker 4: May know now you don't need it.
Speaker 12: Now we don't need it. We're doing okay without it.
Speaker 12: We just kind of kick at old school and spend
Speaker 12: less than we may bank like banking or anything like.
Speaker 2: You don't need any of that.
Speaker 12: Yeah, we're okay right now. Banking, we had some issues
Speaker 12: with Our bank was Silicon Valley Bank and First Silico
Speaker 12: val One, so we had it. We had some glitches
Speaker 12: in the last couple of months. The First Republic was
Speaker 12: our secondary bank. So we are now with Chase. So yeah,
Speaker 12: of course, you know, so we're now you know'd, we're
Speaker 12: confident know about that. So we'll see if there's funding
Speaker 12: options there, but if not, we're just reinvesting our profits
Speaker 12: and trying to grow kind of old school.
Speaker 3: At twenty seconds, What is the next big growth project
Speaker 3: for you guys.
Speaker 12: Next big on. I mean we now are looking towards fall,
Speaker 12: already putting orders in for Thanksgiving and Christmas and looking
Speaker 12: forward to that. An exit plan or anything. I mean, yes,
Speaker 12: I'm definitely looking for an exit plan as well sometime
Speaker 12: or I'm just going to be one hundred years old.
Speaker 3: Work one hundred hours a week, always amazing, always fun.
Speaker 3: I love talking with you because I've said this to
Speaker 3: you before. I love small business and try and get
Speaker 3: an idea, and you're not so small. I mean, I
Speaker 3: don't know what your market cap. It's tens and millions
Speaker 3: of dollars.
Speaker 12: It's yeah, and we're doing okay.
Speaker 2: Good luck with the holiday. Christina stambul Matt order your flowers.
Speaker 4: I'll order them now. While Christina is in this udio.
Speaker 2: She's founder and seat of farm Girl Flowers. Joining us
Speaker 2: here in our studio.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekdays from two to five pm Eastern.
Speaker 8: On Bloomberg Radio, the Bloomberg Business App, and YouTube.
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Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 8: This is nassigras console.
Speaker 12: I'm stander.
Speaker 3: All right, We're going to talk a bit about space
Speaker 3: explorish and when you think about it, yeah, you think
Speaker 3: about the billionaires, you know, Musk, Bezos and Branson. But
Speaker 3: what about the former dishwasher engineer who is also successful
Speaker 3: sending rockets into space and giving Musk perhaps a run
Speaker 3: for his space money. This story is the cover of
Speaker 3: the new issue of Bloomberg BusinessWeek, on newsstands tomorrow, already
Speaker 3: online at Bloomberg dot com slash BusinessWeek, and it's on
Speaker 3: the Bloomberg terminal. The story an excerpt from Ashley Vance's
Speaker 3: new book entitled When the Heavens Went On Sale The
Speaker 3: Misfits and Geniuses Racing to put Space within Ray's reach.
Speaker 3: Excuse me, great title, Ashley, As you know Bloomberg BusinessWeek
Speaker 3: features writer. He's also author of another book on Yeah,
Speaker 3: one of those space billionaires, Elon Musk Tesla SpaceX in
Speaker 3: the Quest for a Fantastic Future, Ashley jetting us on
Speaker 3: Zoom from Palo Alto, California, along with the editor of
Speaker 3: Bloomberg Business Week, Jill Weber here in our interactive broker's studio.
Speaker 3: Joel incredible story and we do focus on the billionaires,
Speaker 3: but there's so much more here, including what is in
Speaker 3: Ashley's book.
Speaker 6: Yeah, I'm really excited about this book because you know,
Speaker 6: BusinessWeek did a space issue of a number of years ago,
Speaker 6: and wow, it was ahead of its time, but not
Speaker 6: as quite as thorough as Ashley's book, which takes this
Speaker 6: idea of like, look, there's going to be a space
Speaker 6: economy and it's going to look completely different than anything
Speaker 6: that's come before it. It's going to involve a lot
Speaker 6: more satellites in space and this low Earth orbit thing.
Speaker 6: Just get ready to hear so much more about it
Speaker 6: and the entrepreneurs that this brings out. Obviously there's the
Speaker 6: Elon Musk and the SpaceX thing, and they really helped
Speaker 6: pioneer what this looks like.
Speaker 7: But they are not alone.
Speaker 6: And that brings us to the excerpt because there's this
Speaker 6: really unlikely SpaceX rival that actually found And by unlikely,
Speaker 6: I mean you couldn't imagine a more unlikely candidate, right Ashley, Yeah.
Speaker 17: Well, no, it is a one of a kind story.
Speaker 18: You know, You've got this guy named Peter Beck who's
Speaker 18: from New Zealand.
Speaker 17: I think a lot of times in space we think.
Speaker 18: Of you know, either the billionaires or you're like a
Speaker 18: NASA veteran or some MIT PhD. But Peter, you know,
Speaker 18: he essentially left school at sixteen, got his equivalent of
Speaker 18: the GED and was working at a dishwasher maker, you know,
Speaker 18: as an apprentice, and then he worked at a government
Speaker 18: lab for a while. But he really just did He's
Speaker 18: like this possessed engineer who was doing all this rocketry
Speaker 18: stuff in his spare time and is in the shed
Speaker 18: outside of his house, and he made it work.
Speaker 17: I mean, like for one.
Speaker 18: Hundred years, individuals had kind of tried to make a
Speaker 18: small rocket that could get to space, and Peter's the
Speaker 18: first one that actually managed to pull this off. And
Speaker 18: today Rocket Lab is like the second coming of space X.
Speaker 18: They're really the only two commercial rocket companies that are
Speaker 18: making a real go of it.
Speaker 6: So tell us more about this guy, because New Zealand
Speaker 6: not exactly known for space exploration or rockets, and yet
Speaker 6: here we have a guy and Planet Lab publicly traded company.
Speaker 7: How did this all come about?
Speaker 6: How do you get into rockets when there is no
Speaker 6: rocket industry around you?
Speaker 17: Yeah?
Speaker 18: I think just through force of will you know, I mean,
Speaker 18: Peter is he must be like, I don't know what
Speaker 18: number you want to put on it, like a one
Speaker 18: and a billion kind of engineer. And and you know,
Speaker 18: he did a lot of this early work building sort
Speaker 18: of a small rocket and then a little bit bigger
Speaker 18: one and then and then finally getting to something that
Speaker 18: could could play in this commercial field.
Speaker 17: And he was able to Marshall.
Speaker 18: You know, there are these regulations around the space industry
Speaker 18: that forbid American engineers from helping a New Zealand company
Speaker 18: like rocket Lab, and so Peter he didn't have anyone
Speaker 18: but had like build a rocket.
Speaker 17: Before on his team.
Speaker 18: Nobody was like real experience doing this, and he cobbled
Speaker 18: together this group of twenty year old New Zealanders and
Speaker 18: Australians and they managed to pull this off. I mean,
Speaker 18: he's he's sort of like what I think of as
Speaker 18: the platon ideal of engineer. It's just like runs in
Speaker 18: his blood, like Elon wants to go to Mars. Peter
Speaker 18: like just wants to make things that go fast and
Speaker 18: rockets and is just possessed to.
Speaker 17: Have to do that.
Speaker 19: Well, it's so cool that someone with that perfect description
Speaker 19: of engineer's personality in mind ended up with the money
Speaker 19: needed to sort of take that vision and personality and
Speaker 19: turn it into what he was able to turn it into.
Speaker 19: Can you talk a little bit about how he got
Speaker 19: that money and the operation he built that you described
Speaker 19: as something that might have looked absurd because it was
Speaker 19: three people in an office the size of my New
Speaker 19: York City apartment.
Speaker 18: Yeah, I mean, you know, this is like the story
Speaker 18: of commercial space right now. You know, for sixty seventy years,
Speaker 18: this was government backed stuff. It was the thing that
Speaker 18: nations did, and only a handful of nations had ever
Speaker 18: really been major players in space. And then we had
Speaker 18: this kind of like billionaire era, obviously led by Elon
Speaker 18: who is the most successful, and now you know, we're
Speaker 18: in the venture capital era of space. Over the last
Speaker 18: two or three years, about two hundred and fifty billion
Speaker 18: dollars have been put into commercial space companies. And rocket
Speaker 18: Lab was was near the front of that line of Peter.
Speaker 18: He was with these three guys in this research lab
Speaker 18: and they built this tiny rocket and sent it off
Speaker 18: and it was it was enough of a proof of
Speaker 18: concept that he seemed real that he could come to
Speaker 18: Silicon Valley. Coastal Adventures was one of the first companies
Speaker 18: to put to put money into it. But you know,
Speaker 18: there's a pretty funny story in my book. I mean,
Speaker 18: Peter comes to the valley, is this total outsider, you know,
Speaker 18: and he's like putting his engines and his rockets on
Speaker 18: the table and just like assuring these guys that he
Speaker 18: can do this. And he kind of like did it
Speaker 18: at the right time and has they're a public company now.
Speaker 18: I mean, you know, he's really gotten quite far all
Speaker 18: this and pave the way for for dozens to hundreds
Speaker 18: of other companies.
Speaker 6: I want to talk about just how crazy that is
Speaker 6: because that burst rocket he built. When you write about
Speaker 6: this in the book, and we excerpted this part, he
Speaker 6: ends up holding a bar of solid rocket fuel in
Speaker 6: his hands. I can't imagine a more dangerous idea. But yet,
Speaker 6: in order to do this, he had to figure out
Speaker 6: the propellants. So walk us through how that challenge, how
Speaker 6: he cracked that challenge.
Speaker 18: Yeah, I mean, this is a guy who, like I'm
Speaker 18: not kidding, you know, he used to just he would
Speaker 18: make propellants on his own, you know, at his house.
Speaker 18: He used to dress himself up in like garbage bags
Speaker 18: just to keep this toxic stuff.
Speaker 6: As a parent when your kids like, I'm gonna go
Speaker 6: over to Peter Beck's house, You're like, no, he's not
Speaker 6: exactly right there.
Speaker 18: Like, you know he as a kid, he had this
Speaker 18: like total freedom growing up, Like he would just go
Speaker 18: on the shed and his parents wouldn't see him for
Speaker 18: hours and then but yeah, he would put these plastic
Speaker 18: bags on. He was telling me, you know you have
Speaker 18: this this apartment. At one point he's like, yeah, I don't.
Speaker 18: I did so many experiments. I don't think the grass
Speaker 18: is ever going to grow in that in that spot again.
Speaker 18: And and there's this amazing video that people can find
Speaker 18: on YouTube.
Speaker 17: The first rocket was called the at One.
Speaker 18: It's a T E A and and you know it's Peter,
Speaker 18: two other guys, you know, and Peter's got this white
Speaker 18: lab coat on to sort of add some kind of like.
Speaker 17: Semblance so that he knows what he's doing.
Speaker 18: And they're just literally in a shed on an island
Speaker 18: in New Zealand, and he hits this button and the
Speaker 18: rocket takes off and it works, and he's just out
Speaker 18: there shouting. I mean, there's something like kind of just
Speaker 18: very wholesome and authentic, and and you know, we write
Speaker 18: about it.
Speaker 17: In the story.
Speaker 18: I mean, he's a bit of like the opposite the
Speaker 18: anti Elon. This is not like a this is not
Speaker 18: a guy on Twitter stirring things up. But you know,
Speaker 18: he's just very focused on what he wants to do.
Speaker 6: Okay, so we can definitely talk about the anti Elon,
Speaker 6: But in order to talk about the anti Elon, we
Speaker 6: also have to talk about the Elon because you know,
Speaker 6: SpaceX obviously has pioneered this. What does Elon have to
Speaker 6: say about Peter Beck and Planet Labs and the two
Speaker 6: of them have met, actually.
Speaker 17: Right, they have.
Speaker 18: I mean I actually like arranged this dinner matchmaker. Elon's like,
Speaker 18: Peter wanted to have dinner. I was like, well, you
Speaker 18: better buy me a steak and bring me some flowers.
Speaker 18: But you know, I mean SpaceX, Look, they are the
Speaker 18: giant in this this field. They're sort of lapping everybody.
Speaker 18: But the you know, Rocket Lab is incredibly real and
Speaker 18: the only you know, other player. But I think for
Speaker 18: Elon at least he Elon claims, you know, Rocket Lab
Speaker 18: was not on his radar. We were talking on the
Speaker 18: phone when I was in New Zealand. He's like, oh,
Speaker 18: what are they up to? And then I did set
Speaker 18: up this this dinner with Peter, and I think maybe
Speaker 18: Elon's tune changed where Peter said, you know, it's kind
Speaker 18: of like, be careful of poking the bear. Because because
Speaker 18: shortly after they had this dinner, SpaceX started this program
Speaker 18: where they do these these ride shares for small satellites,
Speaker 18: and small satellites are like what rocket Lab specializes in,
Speaker 18: and SpaceX drop the price drastically for what they charge
Speaker 18: to take these small satellites up to orbit. And it looked,
Speaker 18: you know, very much like a direct shot at rocket Lab.
Speaker 18: So I don't know if Peter regrets regrets that invitation.
Speaker 3: It sounds like yes, maybe, But it's interesting, I mean, Ashley,
Speaker 3: when you look at the entire space race again, if
Speaker 3: you will, it's a very different one than it was
Speaker 3: from the sixties, right under President Kennedy, and it was
Speaker 3: very government led, right, and all the money that was
Speaker 3: plowing into it. I had a dad who was involved
Speaker 3: in it, you know, from the government perspective and.
Speaker 2: Public private partnerships.
Speaker 3: When you look at it today, is it going to
Speaker 3: require Yes, the Elon Musks and SpaceX's of the world,
Speaker 3: but also the Peter Beck's in the Rocket Labs of
Speaker 3: this world as well.
Speaker 18: Oh yeah, yeah, I mean things are so different. I
Speaker 18: mean it's kind of you know, sort of amazing like that.
Speaker 18: From the Apollo era until about I don't know, ten
Speaker 18: or fifteen years ago, you know.
Speaker 17: Things really hadn't changed that much.
Speaker 18: The rockets, look to say, the satellites were on very
Speaker 18: antiquated technology, and we've had this huge shift. You know,
Speaker 18: Space X sort of kicked things off, but now we
Speaker 18: have We've got much cheaper rockets the satellites, like for
Speaker 18: the first time, I write in the book, you know,
Speaker 18: we've brought Moore's law to space. It used to be
Speaker 18: these these very specialized computing systems that we're old and
Speaker 18: we're using like consumer electronics. Now it's all very modernized.
Speaker 18: And you know, the biggest data point I can give
Speaker 18: people is that from the sixties until twenty twenty we
Speaker 18: had put up two five hundred satellites in lower Thwarbit.
Speaker 18: From twenty twenty to twenty twenty two, just the last
Speaker 18: two years, that number doubled. It's going to double again
Speaker 18: this year and the next year we're going to get
Speaker 18: to one hundred thousand satellites.
Speaker 2: It's amazing.
Speaker 18: Possibly like in the next decade, and so you know,
Speaker 18: it is not governments that are are putting all those
Speaker 18: things up. These are companies that are building a sort
Speaker 18: of computing shell around the planet. And I think this
Speaker 18: is like our next is our next big technology infrastructure play,
Speaker 18: you know, like the next stage after sort of the
Speaker 18: dot com boom.
Speaker 19: So by the end of your book, do we know
Speaker 19: who is going to win?
Speaker 17: No, this is still still tom.
Speaker 3: I think it's going to be AI generated Ashley. It's
Speaker 3: something that we just don't even know yet.
Speaker 17: We already have. We've already got AI in space, you know,
Speaker 17: for verre or worse.
Speaker 18: But but you know, there's a couple companies that are
Speaker 18: kind of clear winners, like Planet Labs is this satellite company.
Speaker 18: They pioneered sort of the low cost satellite and they're
Speaker 18: doing great. Rocket Lab I'm sure will be around. I
Speaker 18: think we're going to have There was such this like
Speaker 18: frenetic explosion of activity. All this back stuff helped, you know,
Speaker 18: add some gas to the fire, and I think we're
Speaker 18: going to have We just saw Virgin Orbit go bankrupt.
Speaker 18: I think we're going to see a little retrenching here
Speaker 18: for a minute. But the underlying principle that like the
Speaker 18: economics of this, that this is a business as opposed
Speaker 18: to a government led endeavor. You know, I think all
Speaker 18: of that stuff holds.
Speaker 6: Okay, So we got to talk about Rocket Labs here.
Speaker 6: Who else figures into the book that you were excited about,
Speaker 6: don't you?
Speaker 17: Yeah?
Speaker 18: I mean Planet Labs, the one I mentioned. They're the
Speaker 18: satellite company. They've surrounded the Earth with hundreds of imaging satellites.
Speaker 18: They take pictures of every spot on Earth all every
Speaker 18: day and sort of get this.
Speaker 17: Sounds like espionage, but it's not really.
Speaker 18: It's more like this this kind of like real time
Speaker 18: accounting system of human activity. You know, where is oil going,
Speaker 18: how many cars are in a Walmart parking lot, how
Speaker 18: many trees are in the Amazon sort of counting these things.
Speaker 18: There's another company called Astra, which is like the the
Speaker 18: opposite of Rocket Lab. It's this sort of like chaotic,
Speaker 18: fast paced company that's trying to make the cheapest rockets
Speaker 18: ever created and are sort of.
Speaker 17: Going through some things and then maybe you know.
Speaker 18: One of my absolute favorite stories is this guy Max Polyyakov,
Speaker 18: who was the former owner of a company called Firefly.
Speaker 17: He was Ukrainian.
Speaker 18: He poured two hundred and fifty million dollars into this
Speaker 18: rocket company, and then you'll see in my book the
Speaker 18: US government tosses him out of the country right before
Speaker 18: the war with Russia.
Speaker 3: Unbelievable stories. Fifteen seconds. Elon, though, in your view based
Speaker 3: on what you're seeing, because is still very central to
Speaker 3: what's going on.
Speaker 2: Just very quickly is Elon?
Speaker 17: Did you say yeah?
Speaker 2: Elon?
Speaker 17: Oh?
Speaker 18: Yeah, I mean SpaceX is just the dominant force looming
Speaker 18: over everything in commercial space. They're lapping everybody.
Speaker 3: Just watch if you have dinner with them, because he
Speaker 3: might impact what he's going to do. Ashley Ohwi's Great
Speaker 3: Stuff features writer Bloomberg business Week. Check out his new book,
Speaker 3: When the Heavens Went On Sale, The Misfits and Geniuses
Speaker 3: Racing to put Space within Reach an excerpt in the
Speaker 3: new issue of Bloomberg Business Week on newstands, online and
Speaker 3: on the.
Speaker 2: Bloomberg and Our thanks to Jill Weber as well.
Speaker 12: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 8: On Bloomberg Radio, the Bloomberg Business App, and you too.
Speaker 1: You can also listen live to our flagship New York station.
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: Carol Masser along with Jess Mettin.
Speaker 3: She's back at our Bloomberg Interactive Broker's studio. I'm here
Speaker 3: live in Beverly Hills at the Milkin Institute Global Conference.
Speaker 3: I'm reading from a book and here's what it says.
Speaker 3: Those first weeks that United were a frenzy of NonStop activity,
Speaker 3: from the moment I walked into the office on my
Speaker 3: first day to the moment my heartstop thirty seven days later.
Speaker 3: This book is called turn Around Time, Uniting an Airline
Speaker 3: and its employees in the Friendly Skies, and it's written
Speaker 3: by Oscar Munos. He's the former CEO of United Airlines,
Speaker 3: which then became United Continental and then back to United.
Speaker 3: He was also executive chairman at United. Oscar, it is
Speaker 3: so wonderful. I wish I was back in our studio
Speaker 3: with you, and I know you're there with Jess. Congratulations
Speaker 3: on the book. It's very personal and you talk about
Speaker 3: your time at United. Tell us a little bit about
Speaker 3: when you landed No pun intended as CEO in twenty fifteen,
Speaker 3: it was.
Speaker 2: Five years after their merger. What was top of mind?
Speaker 20: What were you seeing Oh well, thanks thanks for having
Speaker 20: me both of you. It's great to see you. And
Speaker 20: I listened to you guys quite a bit, so it's
Speaker 20: good to see you personally.
Speaker 15: You know.
Speaker 20: I think, you know, I had a lot of insight
Speaker 20: into the business only because we all was on the board.
Speaker 20: But as we all know, being on the board and
Speaker 20: leading something in is a very different situation. So even
Speaker 20: in a short few days as I met tonight traveled,
Speaker 20: I could I could sense, you know, there were smiles
Speaker 20: and nagulation and people wanting to say hello, but there
Speaker 20: was always this kind of this lingering, holding on to
Speaker 20: a sleeve sort of thing and look at like, almost
Speaker 20: without being dramatic, you know, help me, help us sort
Speaker 20: of things. So I could sense something, and I think
Speaker 20: my first, my first interview, I used the terms I'm
Speaker 20: finding our team disillusion disenfranchised, and disengaged then on the
Speaker 20: three d's, just because they had and I also said
Speaker 20: I'm a little embarrassed as a board member that we
Speaker 20: didn't see this before. And so that's what I found
Speaker 20: to your question, And then of course lots of things happened.
Speaker 20: Everybody wants to know what you're gonna do first, and
Speaker 20: I thought I would ask my team rather than myself.
Speaker 3: All right, there's a lot I'm sure of conversations and
Speaker 3: talking to your team. One month in though you did
Speaker 3: suffer a near fatal heart attack, I can't even imagine
Speaker 3: some of the things that you were dealing with personally, professionally.
Speaker 2: Give us a little bit of what that was like.
Speaker 3: I read a little bit of a passage from your book,
Speaker 3: but I just can't even imagine. Take us again back there.
Speaker 20: You know, it's every time I begin to talk about
Speaker 20: it orally, when I write about it, all of that
Speaker 20: comes back to you. Because heart disease is the biggest
Speaker 20: killer in America by far. The symptoms are varied and wide,
Speaker 20: the difference between men and women, and unfortunately, what a
Speaker 20: lot of people do is they just ignore those signs
Speaker 20: and you know, we take a shower, we lay down,
Speaker 20: and of course never to be done. So I was
Speaker 20: fortunate to have a good friend who's a cardiologist, who
Speaker 20: I did a lot of again, I trained for you know,
Speaker 20: we ran marathons, we did long bike rides.
Speaker 15: I mean, so I was fit. I was a vegan.
Speaker 20: But he'd always kind of warned us that heart diseases
Speaker 20: is not optics, it's internal plumbing.
Speaker 15: And one day in.
Speaker 20: Particular, he said something to the degree that listen, if
Speaker 20: you ever feel anything weird, call nine one one. The
Speaker 20: worst you can be is embarrassed. And then he added
Speaker 20: something that I remembered those a couple of years later
Speaker 20: when I had my event, when he said, when when
Speaker 20: you call nine one one, immediately tell him where.
Speaker 15: You are, which like, duh, of course that makes sense.
Speaker 20: But then he had it because you may not make
Speaker 20: it past the phone call, and I remember exactly where
Speaker 20: I was, and I'm like, okay, that's a little dramatic.
Speaker 20: But two years later, I'm sitting there having my vegan
Speaker 20: protein shake after a run, and my phone buzzes and
Speaker 20: I go to move it and my legs sort of
Speaker 20: give out. I feel clammy, and his words came rushing back.
Speaker 20: I crawled over to the landline. Some of you may
Speaker 20: know what that is and call nine one one and
Speaker 20: told him immediately where I was. So thirty seven days
Speaker 20: into the job, and again in the story you really
Speaker 20: can't make up thirty seven minutes later, Wow as in
Speaker 20: the hospital and I was on life support on a
Speaker 20: heart artificial heart lung machine because I had my heart
Speaker 20: had gotten pretty blown up.
Speaker 21: And how did this end up basically transforming your career
Speaker 21: as well as how you ended up managing United through
Speaker 21: what Carol was just talking about, this huge transformation between
Speaker 21: twenty fifteen up until early in the pandemic when you
Speaker 21: were still CEO.
Speaker 20: You know, the few days, the thirty seven days before
Speaker 20: the event, the Heart event, I got a chance to
Speaker 20: meet a lot of the people that united what became
Speaker 20: pretty immediately my family. And so to your question, there's
Speaker 20: two things that happen, not quite transformational, but certainly ratifying.
Speaker 20: The outpouring of love, support, kindness, food, flowers, car herds
Speaker 20: from all over the world from the United Family was amazing.
Speaker 20: My kids would read those notes every day, so you know,
Speaker 20: I confirmed what I had seen out there. These these
Speaker 20: are wonderful people, but they're sort of wandering nomad's in
Speaker 20: the desert, and there's no North.
Speaker 15: Star for that, by the way, North starts Plaris, and
Speaker 15: if you fly us, you know us.
Speaker 20: So there's a history and a tie into everything. So
Speaker 20: the people were amazing. The second thing for all of
Speaker 20: us out here, you know, this concept of mind over
Speaker 20: body and all that sort of stuff. I never once
Speaker 20: thought I was never coming back. I never once thought
Speaker 20: I was in any kind of serious situation. My doctors
Speaker 20: didn't agree with me.
Speaker 21: Right, I mean, I'm surprised to hear you were a
Speaker 21: vegan and this happened typically to think that would be
Speaker 21: obviously more healthy lifestyle.
Speaker 20: Again, you know, heart disease is a genetic aspect. I
Speaker 20: didn't know my biological father, so I didn't have any
Speaker 20: of that history. So it's what's important for all of
Speaker 20: us get. You know, if an EKG doesn't do anything
Speaker 20: stress tests do. There's more invasive process and there's a
Speaker 20: lot of great new technology that's coming out that's going
Speaker 20: to be if you think about breast cancer and the
Speaker 20: old way we used to you know, women used to
Speaker 20: do it.
Speaker 15: Now mimography comes in.
Speaker 20: There's new as a company called Clearly that I'm involved
Speaker 20: with that does in essence mimography for the heart. So
Speaker 20: there's a lot of waste to do that. But you know,
Speaker 20: the transformation was partly that and partly the fact of
Speaker 20: I was, you know, I just I love this United
Speaker 20: Team and we knew we had to do something about it, and.
Speaker 15: Didn't who I was, didn't chinchaw I'd led, But.
Speaker 20: Of course there's a level of gratitude that comes with
Speaker 20: surviving something like that.
Speaker 3: So how did you create a culture that was better
Speaker 3: for employees, better for the company overall, and better for
Speaker 3: those who flew United.
Speaker 15: This will be a shocking revelation.
Speaker 20: I did nothing but actually listen and learn from the
Speaker 20: tens of thousands of people that we have out in
Speaker 20: the field that take care of you, the people you
Speaker 20: see and the people that you don't see below the
Speaker 20: wing and in the maintenance facilities. And then the thirty
Speaker 20: seven days before I was on a massive listening tour
Speaker 20: and nothing, nothing structured, nothing deeply you know, academic or intellectual.
Speaker 20: It was just a human conversation. It's like, just tell
Speaker 20: me how it's going, tell me what you can think.
Speaker 20: And I heard lots of different things, and in a
Speaker 20: very pivotal moment for the turnaround in United, it's on
Speaker 20: a flight with a flight attendant. And I was on
Speaker 20: a flight and I went in and talked with the
Speaker 20: flight TENSI hig, I'm Oscar, and she clearly did not
Speaker 20: want to talk to me.
Speaker 15: Oh really, that's how far we had disengaged our folks.
Speaker 20: It's like I don't want to listen, you know, why
Speaker 20: am I going to waste my breath right over time?
Speaker 20: We had had I don't know five six CEOs in
Speaker 20: the last few years. What she said to me when
Speaker 20: I finally got her to open up, she just said, Oscar,
Speaker 20: I'm just tired of always having to say I'm sorry,
Speaker 20: I'm sorry, the coffee sex, I'm sorry, we're late. And
Speaker 20: if you think about an individual that works with such
Speaker 20: a large global company, who we embodied this concept of
Speaker 20: friendly skies, but everything was broken and they are the
Speaker 20: ones that had to, in essence, you know, apologize, That's
Speaker 20: how you lose human engagement. And so to your question,
Speaker 20: how we built the culture is just from that perspective,
Speaker 20: is just telling them like, okay, employees, you don't have
Speaker 20: to do anything. I and this team have to regain
Speaker 20: your trust and from that we're going to build what
Speaker 20: you see now.
Speaker 2: So I am curious.
Speaker 3: You know, we're all flying around. People want to go
Speaker 3: out and experience things. The industry today it can be stressful. Again,
Speaker 3: what is it that you think we could do better
Speaker 3: in the airline industry? And I think I know there's
Speaker 3: things you've talked about in terms of the type of
Speaker 3: fuel that's being used because it certainly has a carbon imprint.
Speaker 3: We just have about a minute left. How do you
Speaker 3: think it can go to the next level if you will?
Speaker 15: I think two things.
Speaker 20: I think from a broader perspective, air traffic control in
Speaker 20: America is outdated and obsolete. If we don't start getting
Speaker 20: it fixed soon, like a lot of the other infrastructure,
Speaker 20: we're going to pay the price. I know it's easy
Speaker 20: to blame the airlines for a lot of the delays.
Speaker 20: We are often hampered by the fact that we can't
Speaker 20: put a lot of airplanes in the air because we
Speaker 20: can effectively and safety monitor them without slowing everything down
Speaker 20: A and B. You know, a little carrying goes a
Speaker 20: long way. You're not the only one that has something
Speaker 20: important to go to. And if you just kind of
Speaker 20: lay back a little bit, you know, have a little care.
Speaker 20: If somebody is in a wheelchair, you know they're in
Speaker 20: a worse state than you, and I know they're holding
Speaker 20: you up.
Speaker 15: But it wouldn't be a bad thing if you just
Speaker 15: show it to a little love and care.
Speaker 3: We're going to leave it on that note. Just great
Speaker 3: words in a world where I think it's very trying
Speaker 3: on a lot of people. We certainly see it from
Speaker 3: the financial perspective, but just in general, there's a lot
Speaker 3: coming at people and great to hear your story and
Speaker 3: to see you know what you personally and professionally have achieved.
Speaker 3: So Oscar, thank you so much for for spending some
Speaker 3: time with us. Oscar Munnos He is of course the
Speaker 3: former CEO of United Airlines executive chairman as well, and
Speaker 3: his new book is turned around Time Uniting an airline
Speaker 3: and it's employees in the friendly sky. So some really,
Speaker 3: you know, just logical about how we can make things better.
Speaker 3: And it's amazing when you start listening to people what
Speaker 3: you cannot find out.
Speaker 2: All right, Oscar, thank you so much.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4: Well.
Speaker 3: The new I show Bloomberg BusinessWeek is out on news stands,
Speaker 3: online and on the Bloomberg terminal, and that means we
Speaker 3: get to dive into the latest pursuit section and for
Speaker 3: our summer arts preview edition, we have not one, but
Speaker 3: two great voices to help guide us through it. Chris
Speaker 3: Rouser is the editor of Pursuits and James Tarmi is
Speaker 3: our resident arts columnist and the opener of this week's
Speaker 3: section deals with the elite collectibles market, which looks like
Speaker 3: it could be following the broader economy into recession. So
Speaker 3: what does it mean that we're no longer splurging on
Speaker 3: all these things that I thought were supposed to be
Speaker 3: resistant even in an economic downturn.
Speaker 22: Yes, So people tend to think of collectibles like wine,
Speaker 22: fine art, maybe watches, gold, whatever, to be detached from
Speaker 22: the stock market and to just be detached from the
Speaker 22: broader economy. And you know, during the pandemic, collectibles like
Speaker 22: classic cars, like watches and jewelry and handbags really soared
Speaker 22: because people weren't spending a lot of money on other
Speaker 22: things like maybe living life, traveling in restaurants. So collectibles
Speaker 22: became more broadly popular and soared in value. Now that
Speaker 22: people are spending money on other things and people have
Speaker 22: maybe bought the classic car that they wanted over the
Speaker 22: past three years, the market is softening for these things.
Speaker 22: A fine art can maybe be more cyclical, and James,
Speaker 22: who wrote the story can talk to us about that.
Speaker 22: This is the opener to our section, which is all
Speaker 22: about our summer Arts preview and culture preview.
Speaker 2: Mister Tarmi, come on in.
Speaker 16: I do think that we are at an interesting tipping
Speaker 16: point because a lot of participants in the collectable market
Speaker 16: broadly really started during COVID, and so there is a perception,
Speaker 16: not unfounded by the people who are sort of new
Speaker 16: to these various categories, that anything they buy will go up,
Speaker 16: because that's what happened basically from twenty twenty to late
Speaker 16: twenty twenty two. And now you're seeing the growth curve
Speaker 16: slow or flatline. It's not to say that these categories
Speaker 16: are collapsing by any means, but you're certainly not seeing
Speaker 16: returns that are out pacing the S and P. And
Speaker 16: so what it does is one, it pokes a hole
Speaker 16: in this notion that these are a hedge against traditional
Speaker 16: equity markets. And two, it is a real kind of
Speaker 16: come down for people who might have assumed that they
Speaker 16: were buying something to then resell it at a spectacular profit.
Speaker 16: And it's very interesting to drill down from category to
Speaker 16: category to actually look at what various experts are saying
Speaker 16: about the mid, short, and long term future of these
Speaker 16: various objects, and Chris.
Speaker 2: Touched on some of it. So go through them because
Speaker 2: you do.
Speaker 3: You cover cars, you cover wine, you cover handbags, sports memorabilia.
Speaker 3: I mean, I kind of love how you started with
Speaker 3: a pair of Michael Jordan sneakers, which we're expected to
Speaker 3: go through for a lot, right.
Speaker 16: Yes, well, and this is the thing, and this is
Speaker 16: the real paradox of it. The sneakers still set a
Speaker 16: worldwide auction record, right, they hammered for one point eight
Speaker 16: million dollars in an auction bumped to the total up
Speaker 16: to two point two million dollars for a pair of
Speaker 16: you sneakers.
Speaker 7: Right, they are.
Speaker 16: Collectibles, but are my culture. They are, and they have
Speaker 16: real cultural sociological cachet. But it's still two point two
Speaker 16: million dollars a ton of money. The joke, though, is
Speaker 16: that it's the very very bottom end of where they
Speaker 16: were expected to go. They had a high estimate of
Speaker 16: four million dollars, and there's a tremendous amount of chatter
Speaker 16: leading up to the sale speculating that these would be
Speaker 16: ten fifteen million dollars sneakers. So they set an auction record,
Speaker 16: but they still disappointed people in the actual category. And
Speaker 16: that's what you see similarly in classic cars, right, you
Speaker 16: still see some very good prices, you see some strong results,
Speaker 16: but you don't see dazzling results.
Speaker 3: Chris, I want to bring you in on watches because
Speaker 3: you guys just did a whole big section on like
Speaker 3: the yes, unbelievable watches. So what's going on with that,
Speaker 3: because that's another thing I felt like some would always
Speaker 3: hold their value.
Speaker 4: Yeah.
Speaker 22: So you know, watches over the past fifteen twenty years
Speaker 22: have really like had a slow burning boom and then
Speaker 22: in the past five four or five years really taken off.
Speaker 22: And I remember during the pandemic talking to friends of
Speaker 22: mine who are collectors, who were like, just buy a watch,
Speaker 22: is guaranteed to be worth the three times what you
Speaker 22: bought it for, you know, in five years, And I said, no,
Speaker 22: it's not. You think that because you joined this collector's
Speaker 22: market during this boom, and like you think everything is
Speaker 22: just going to double the second you buy it, and
Speaker 22: that's not true. And this and we're seeing that now
Speaker 22: in the watch market. The high end resell market for
Speaker 22: watches is softening, especially for these things that people have
Speaker 22: really been competing over. So people with high value collections
Speaker 22: have seen the value of their watch collection it's decrease.
Speaker 22: Now that said, do I think watches are going to
Speaker 22: grow generally into the future.
Speaker 16: Yes.
Speaker 22: Is it hard to get a new watch?
Speaker 4: Yes?
Speaker 22: Is there still a big market for this, Yes, it's
Speaker 22: just not going to give you those crazy returns of
Speaker 22: people were seeing in the past two years.
Speaker 2: Kind of like a reality check, Yeah, totally.
Speaker 3: And this whole idea of assets don't always go up,
Speaker 3: You're right, like had we have a generation that just
Speaker 3: doesn't understand that, just like inflation goes up.
Speaker 22: But gen z it believes now when they buy something
Speaker 22: that it's not something that they own and then they
Speaker 22: throw out like it's something that they can trade and resell.
Speaker 22: So that that has changed the dynamic for all these
Speaker 22: collectible markets. And now for handbags, for example, maybe burkins
Speaker 22: broadly are sort of softening the very high end ones
Speaker 22: are like Dynamite, but more inexpensive bags that or more
Speaker 22: broader range are actually going up because people kind of
Speaker 22: want less expensive alternatives.
Speaker 16: Right, And what we are seeing is a bifurcation in
Speaker 16: the market between very very kind of powerful name brands
Speaker 16: like Rimez Birket, bags like roll Exys and so forth,
Speaker 16: and things that might be slightly lower down on the
Speaker 16: kind of spectrum of prestige. And that makes intuitive sense
Speaker 16: because the price discovery already exists, right, Thousands of Rolexes
Speaker 16: have already sold, so you know that you're buying a
Speaker 16: Rolex for an accurate price. It's harder when there is
Speaker 16: a slightly lower tier or a niche brand, or some
Speaker 16: slightly more customized thing where you don't necessar really know
Speaker 16: what you're actually purchasing.
Speaker 2: It's a really great point. Where do you want to go?
Speaker 22: Let's go to the best Books of Summer because we
Speaker 22: always love books.
Speaker 12: Tells, Yes, is he just like?
Speaker 2: Can he just not do?
Speaker 4: Like?
Speaker 2: He just does everything?
Speaker 4: Enough?
Speaker 9: Is enough?
Speaker 7: Matter?
Speaker 4: Things to leave something for the rest of it?
Speaker 2: Deserted Island? Oh you did that? Made a movie?
Speaker 8: Oh?
Speaker 2: Sorry?
Speaker 4: Yeah?
Speaker 22: Yeah, the Making of Them made of another major motion
Speaker 22: picture masterpiece by Tom Hanks, is going to be great.
Speaker 22: It's going to be a big book. There's also Elliott
Speaker 22: Page's memoir Page Boy, which we're really excited about, and
Speaker 22: the new Colson Whitehead book also.
Speaker 4: Yeah, that very good.
Speaker 16: Honestly, probably my favorite of the bunch, which one the
Speaker 16: Colson Whitehead. It's set in the nineteen seventies Harlem and
Speaker 16: is a mosaic of characters, but it follows the protagonist
Speaker 16: who's this kind of family man and also furniture salesman
Speaker 16: and also like low key criminal fence as he navigates
Speaker 16: Harlem as the entire city of New York, but particularly
Speaker 16: Harlem sort of degenerates into anarchy. So it's a lot
Speaker 16: of fun.
Speaker 2: And this is over Jackson five tickets, right.
Speaker 16: Well, that's how it begins. It's like a one more
Speaker 16: job and he's out because he wants to get his
Speaker 16: daughter tickets to Jackson five. It's magnificent.
Speaker 2: I've been trying to get Taylor Swift tickets. I know
Speaker 2: what this is.
Speaker 4: Like, Well, there you go, it's just this version.
Speaker 22: You're gonna have to sell a Rolex to get.
Speaker 12: And I can't.
Speaker 2: All right, one more thing. What do you want to highlight?
Speaker 16: UK arts?
Speaker 2: I didn't realize money funding.
Speaker 16: Well, this is the thing, you know, it's been going
Speaker 16: on for a while. The funding government funding for UK
Speaker 16: arts institutions has not kept pace with inflation, and it's
Speaker 16: also become a lot more diffuse so organizations that for
Speaker 16: decades relied on the government paying for their various bills
Speaker 16: no longer can rely on that. But at the very
Speaker 16: moment where it's becoming a truly critical issue, there is
Speaker 16: an increasing scrutiny on the source of private funds, and
Speaker 16: so UK arts institutions in particular are in a real
Speaker 16: pickle because they are stuck between a rock, which is
Speaker 16: dwindling funding from the government, and a hard place, which
Speaker 16: is an audience that will not accept, or a very
Speaker 16: vocal part of an audience that will not accept funds
Speaker 16: from companies that are perceived to be bad for the environment,
Speaker 16: like the big oil companies exactly, or even companies that
Speaker 16: might be gambling companies.
Speaker 7: And so.
Speaker 16: The problem is that people don't really have a fantastic
Speaker 16: answer for where else they can go. And unlike the US,
Speaker 16: where you know, we have a very long history of
Speaker 16: relying on private philanthropy, that doesn't really exist in the UK,
Speaker 16: So people are forced to get creative and they're really
Speaker 16: staring down a barrel here.
Speaker 3: Yeah, I thought this was really kind of eye opening.
Speaker 3: I had no idea first of all, what was going
Speaker 3: on over there, and then how they're getting creative to
Speaker 3: bring and funding. There's a lot more in that story.
Speaker 3: There's a lot more in this section, including the upcoming
Speaker 3: art auctions which people will be buying, but it's going
Speaker 3: to be a little bit different as well.
Speaker 2: Really all right, guys, we got to run. Thank you
Speaker 2: so much, so love it.
Speaker 3: That's the dynamic duo of Chris Rouser and James Tarmi
Speaker 3: on the Bloomberg Pursuit Summer Arts Preview. Always great to
Speaker 3: speak with them.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekdays from two to five pm Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and you too. You can also
Speaker 1: listen live to our flagship New York station, Just Say Alexa,
Speaker 1: play Bloomberg You Love Them thirty So.
Speaker 3: Last year, four point one billion dollars in tequila was
Speaker 3: exported from Mexico.
Speaker 2: That's up one.
Speaker 3: Hundred and sixteen percent from twenty nineteen, Americans sucking up
Speaker 3: eighty one percent of this and women edging out men
Speaker 3: in consumption. But when it comes to women running the
Speaker 3: brands in Mexico, well, there are just a few odd
Speaker 3: Considering that women have been so involved in tequila and
Speaker 3: mescal for centuries. So one such woman who did launch
Speaker 3: her own brand is Bertha Gonzales Nieves, an alumna of
Speaker 3: Jose Corbo International. She co founded Casa Dragonez Tequila in
Speaker 3: two thousand and eight. She joins us on Asmayo de
Speaker 3: Sinco on Zoom from the Hotel Matilda in San Miguel
Speaker 3: de Allende, Mexico. I'm sure I like killed some of
Speaker 3: the pronunciations, so I'm really sorry about that.
Speaker 2: Asicico demayo. Sorry.
Speaker 3: I haven't even started drinking on the Cicco demio and
Speaker 3: I'm already messing things up. Bertha, is so nice to
Speaker 3: have you here with Jess and myself on Bloomberg Business Week.
Speaker 2: Welcome, Welcome, Welcome.
Speaker 3: First of all, for those who are watching on YouTube
Speaker 3: and our streaming service, tell us where you are, because
Speaker 3: it's stunning behind you.
Speaker 23: Carolyn, Jess, I'm super excited to be here on the
Speaker 23: show and not such a special date, and I'm actually
Speaker 23: moved locations. I was in Hotel Matilda, which I call
Speaker 23: my home away from home here in San Miguel de Allende,
Speaker 23: but we are at La Casadra in San Miguel.
Speaker 2: And this is the Obsidian bar Ah so this is
Speaker 2: where people can visit right to do sampling.
Speaker 23: Correct, Yes, this is where we do tastings, and we do.
Speaker 23: We just actually are closing up Cocktail week here in
Speaker 23: San Miguel, and we had such exciting jamming sessions with
Speaker 23: some of the top bars in the world like Atta
Speaker 23: Boid Dante employees only, So it's a very exciting week
Speaker 23: here in San Miguel.
Speaker 3: So you talk about sampling, We're going to do a
Speaker 3: little sampling because you are kind enough to send us
Speaker 3: some and I'm going to pour it for Jess and myself.
Speaker 3: We're going to be very careful becus we're still on
Speaker 3: air and we still have to finish up our broadcast.
Speaker 3: But as you open and as I pour, love to
Speaker 3: tell you a little bit about your tequila and what
Speaker 3: you guys have done. There's so many out there on
Speaker 3: the market, but tell us about what makes your special.
Speaker 15: So we are.
Speaker 23: We became entrepreneurs in the tequila industry for the opportunity
Speaker 23: of continue to push the boundaries of what has been
Speaker 23: done before and try to ex found that tequila repertoire
Speaker 23: through modern production and showcasing the beauty and the gift
Speaker 23: of Mexican craftsmanship. So what we're trying to do is
Speaker 23: we believe that, you know, expanding the experience of taste
Speaker 23: to continue to seduce the palettes out there that not
Speaker 23: only are lovers of tequila, but also love and respect
Speaker 23: other categories like champagne or pognac or whiskeys. And we
Speaker 23: want to showcase the complexity and the real beauty of
Speaker 23: the spirit in every single label that we do. And
Speaker 23: I think the best example of the innovation that we
Speaker 23: bring to the category it's it's expressing the tequila that
Speaker 23: we're going to try today on the show, which is
Speaker 23: Casa Reposao, which is a tequila that the first tequila
Speaker 23: ever that has been rested in Japanese Mitsunata oak casts.
Speaker 3: I have and I'm smelling it and it's really lovely.
Speaker 3: It's very soft and smooth.
Speaker 11: Yeah, it's very beautiful.
Speaker 23: It has these beautiful butter Scotch magnolia flower and still
Speaker 23: elevates and showcases the herbaceous, the citrus and the floral
Speaker 23: notes that people come for in tequila.
Speaker 21: And I know you've talked about how this is important
Speaker 21: to be savored, not necessarily be taken in shots.
Speaker 12: Can you talk to us about the craftsmanshift here.
Speaker 23: So when we founded the company, we set on a
Speaker 23: quest to deliver a true sipping tequila. We wanted to
Speaker 23: prove that tequila can be part of the of the
Speaker 23: sipping ocation, of the spirits industry, of the luxury sipping occasion,
Speaker 23: and as people are sipping on single malts and cognacs,
Speaker 23: we wanted to have to showcase that tequila you can
Speaker 23: actually sip and savor.
Speaker 11: So what we're trying to do.
Speaker 23: Is continue to evolve the spirit, you know, on the
Speaker 23: way people perceive it and the role that it really
Speaker 23: plays in a sip in occasion. So that's why this
Speaker 23: plant is such an extraordinary plant. There's around six hundred
Speaker 23: different aromas and flavors cataloged in the Mexican Academy of Tequila.
Speaker 23: So the options that we have as producers are really endless,
Speaker 23: and we want to showcase that complexity and that balance
Speaker 23: and that richness in everything we do, as well as
Speaker 23: the purity of our water and our gavet in all
Speaker 23: of our expressions.
Speaker 3: Bertha, I have to say I am not a lover
Speaker 3: of tequila on its own usually, and I just kind
Speaker 3: of said to Jess, I think had my first shot
Speaker 3: maybe just about a year ago, which is kind of embarrassing,
Speaker 3: and I often drink it in Margarita's.
Speaker 2: But this is really lovely. It's very gentle, very smooth.
Speaker 3: And you talk about the choices that you have, I mean,
Speaker 3: because not all tequila is the same, So how do
Speaker 3: you choose in terms of what you want to put in.
Speaker 12: We you know, we become entrepreneurs for having the.
Speaker 23: Opportunity of exploration and satisfying never ending curiosities. I think
Speaker 23: that if people enjoy as much our tequila as we
Speaker 23: enjoy producing it, we're doing something right.
Speaker 11: So the decisions that we take.
Speaker 23: Are just always based on our juice being the hero
Speaker 23: of our company. So we truly give ourselves a chance
Speaker 23: to explore and truly give ourselves a chance to When
Speaker 23: we had the idea with Reposado Misunara, we had the
Speaker 23: idea of really studying Japanese whisky and really trying to
Speaker 23: learn what they have accomplished in the last twenty years
Speaker 23: and the nuances and the beauty of the spirit they
Speaker 23: were delivering. And that's how we found the Misunata cask.
Speaker 23: And then we went on a quest to convince, you know,
Speaker 23: the only independent.
Speaker 11: Producer family in.
Speaker 23: Japan of Japanese casks, and you know, it took us
Speaker 23: time to convince them. I remember in twenty eighteen they
Speaker 23: sold us two casks and with those two casks, we
Speaker 23: started really like learning about, you know, the relationship within
Speaker 23: tequila and this Japanese oak. And as time went by,
Speaker 23: we started following in love more and more and more.
Speaker 23: So it's less about us having having the freedom of
Speaker 23: a canvas and really exploring it.
Speaker 11: And then really we're committed to bringing your news to.
Speaker 23: The tequila lover and that's really kind of like the
Speaker 23: decision making process that we follow.
Speaker 3: Our Bluebird Pursuits did an incredible story that highlighted you
Speaker 3: among a few other women where it's women.
Speaker 2: Led tequila companies out of Mexico.
Speaker 3: And what they pointed out is that women have been
Speaker 3: involved in the tequila or the making of tequila for
Speaker 3: a long long time, and yet there are a few
Speaker 3: that are running their own companies. You are doing it.
Speaker 3: How difficult. I hate to ask this question, but you
Speaker 3: are a rarity. How tough has it been to build
Speaker 3: to be a woman in the tequila industry in Mexico?
Speaker 3: And just got about forty forty five seconds.
Speaker 11: Yeah, No, I think it's been.
Speaker 23: I don't have another frame of reference. I only have
Speaker 23: the history of my own career. Yeah, but it's been,
Speaker 23: you know, it's it's definitely there's been challenges in the
Speaker 23: industry for me. But I always focus on building my
Speaker 23: career by really focusing on my craft and let my
Speaker 23: craft open the door, you know, rather than position myself
Speaker 23: as a woman in the tequila industry, because I really
Speaker 23: want to be shown will I really want to be
Speaker 23: recognized as a professional in the tequila industry rather than
Speaker 23: a woman in the in the tequila industry, and because
Speaker 23: I believe that, uh, craft doesn't recognize gender and uh
Speaker 23: and that's really my focus and I continue to really
Speaker 23: just stay focused on that. But today I believe that
Speaker 23: there had been many women before in the tequila industry.
Speaker 23: They were just they never were recognized for it. And
Speaker 23: today I'm really excited to, you know, to welcome more
Speaker 23: women into the industry. Yeah, and constantly talk about that.
Speaker 23: You know, your passion into an industry should not be
Speaker 23: based on your gender. You should just choose something that
Speaker 23: intellectually provides you with a platform for your growth and
Speaker 23: your development.
Speaker 3: Bertha, It's a pretty incredible. Cassidragniz on this single. Demayo
Speaker 3: are really lovely tequila and great to check with you
Speaker 3: and hear about your story.
Speaker 2: This is Bloomberg.
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