Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason
Speaker 1: Kelly and I'm Carol Master. Welcome to the Bloomberg Business
Speaker 1: Week Weekend Podcast. Another busy week here at Bloomberg, and
Speaker 1: over the next couple of hours will bring you some
Speaker 1: of the news of the week and a lot that's
Speaker 1: in the magazine. It's such an interesting issue of the magazine, Carol,
Speaker 1: because I feel like there's an underlying theme, and it's
Speaker 1: all about the Silicon Valley notion of move fast and
Speaker 1: break stuff, the disruptors, and the implications of taking that
Speaker 1: as your business model. It shows up in Tesla, it
Speaker 1: shows up in Jewel and what we're seeing is doesn't
Speaker 1: always work so great, right some of the consequences as
Speaker 1: a result of it. And I love the Tesla story
Speaker 1: in particular, it's the cover story, but it really gets
Speaker 1: into ethical questions that as we move into this self
Speaker 1: driving universe, how comfortable are we that we want this?
Speaker 1: But probably to get to it to full self driving,
Speaker 1: we're gonna lose some lives along the way. So what's
Speaker 1: the public's comfort hall with that? And speaking of Silicon value,
Speaker 1: we've got a deep dive into Oracle it's adventures, shall
Speaker 1: we say, in the cloud. And also economics taking the
Speaker 1: and also economics taking center stage again. The risk of
Speaker 1: a global recession? What is it? And what are the
Speaker 1: risk of the recession closer to home? Well and right?
Speaker 1: And the US And and that's right, Jason, because the
Speaker 1: next US recession, it's probably not going to be homegrown.
Speaker 1: It's going to be the result of some geopolitical factors,
Speaker 1: some big macro story that's out there around the globe.
Speaker 1: So what will it be like and what can the
Speaker 1: FED do to prevent it? First up, Carol. This week,
Speaker 1: Turkey launched air strikes, fired artillery, and began a ground
Speaker 1: offensive against Kurdish fighters in northern Syria. This came after
Speaker 1: President Trump pulled US troops out of the area, and
Speaker 1: that paid the way for an assault on forces that
Speaker 1: have long been allied with the United States. Republican Senator
Speaker 1: Lindsay Graham says the move will have dire consequences. The
Speaker 1: Kurds are the owned forces that destroyed the caliphate with
Speaker 1: American air power. We've abandoned them. That breaks my heart.
Speaker 1: I hope the President will change his mind and readjust
Speaker 1: his policy before it's too late. Another busy news cycle
Speaker 1: this week, Jason, no doubt about it, and another geopolitical concern,
Speaker 1: and this one had to do with US policy in Syria.
Speaker 1: I feel like this took a lot of folks in Washington,
Speaker 1: around the country, around the world by surprise. Well, and
Speaker 1: that global element is especially important because it affects other
Speaker 1: countries in the US relationship with other countries, none more
Speaker 1: so in many ways than Russia. Henry Meyer joins us
Speaker 1: from our Moscow bureau with some really good context his story.
Speaker 1: His reporting on the terminal this week has been key
Speaker 1: to understanding everything that's going on here. So there in
Speaker 1: your backyard, Henry, help us understand Russia's place in all
Speaker 1: of this well. Russia has been looking to restore the
Speaker 1: influence at Hann in the Middle East, which was very
Speaker 1: strong during the Soviet era that changed dramatically after the
Speaker 1: collapse of the Soviet Union and really Putin. President Putin
Speaker 1: has had immense success in this field. The intervention that
Speaker 1: Russia did in Syria starting a few years ago, in
Speaker 1: which they succeeded in reversing the outcome of the Civil War.
Speaker 1: President Assett was on the verge of being overthrown and
Speaker 1: he's now firmly empowered. This has been a great success.
Speaker 1: But what is happening now is that the US withdrawal
Speaker 1: from Syria is providing Russia and opportunity to really cement
Speaker 1: that situation in Syria. But it's not just about Syria.
Speaker 1: I think you're right that Russia has since filled the
Speaker 1: vacuum from Syria to Libya, even luring Turkey into buying
Speaker 1: um some military equipment. I mean, it's it's a much
Speaker 1: broader impact here potentially, right for Russia. That's right. I mean, Syria,
Speaker 1: if you like, has been Russia's calling card in the
Speaker 1: Middle East. It's the reason why it's taken seriously now.
Speaker 1: But it's using that to expand its role in in
Speaker 1: many other countries. In Libya, there are increasing reports that
Speaker 1: Russia is backing the strongman in the East, General Halftar,
Speaker 1: and it is developing relationships with traditional US allies like
Speaker 1: Saudi Arabia. President Putin is due to visit Saudi Arabia shortly.
Speaker 1: You mentioned Turkey. That's very important. The decision by Turkey
Speaker 1: to defy US pressure and to go ahead with buying
Speaker 1: the S four hundred missile defense system. It could be
Speaker 1: a turning point actually for that country's relationship with the
Speaker 1: West and with Russia. And so what is the most
Speaker 1: likely next move for Russia. You talked about President Putin
Speaker 1: visiting Saudi Arabia. Obviously that neighborhood as it were, has
Speaker 1: become very complicated. As you described, what might Russia and
Speaker 1: Moscow do next? Well, their first priority is to try
Speaker 1: and use the current situation to its advantage in Syria,
Speaker 1: So it's trying to engineer a solution involving President Assad,
Speaker 1: the Koords and Turkey which would allow Assad to essentially
Speaker 1: reclaim control of most of the of the Kurdish area um.
Speaker 1: And then secondly, it's clearly going to be looking for
Speaker 1: corporation from Gulf country, Saudi Arabia and others in reconstruction
Speaker 1: or Syria. It has very ambitious goals in terms of
Speaker 1: remaking its relationships with all the countries in the region.
Speaker 1: Russia has a very speci ific role in the sense
Speaker 1: that it keeps ties with all of the different countries,
Speaker 1: mutual enemies. It's quite unique in that way. And that's
Speaker 1: Henry Meyer joining us from Moscow and Carol I thought
Speaker 1: that was so interesting in part because we've obviously been
Speaker 1: looking at this through a very US focus, Lens, but
Speaker 1: Russia is a major player in all of this well,
Speaker 1: especially when if we're creating vacuums in an area like
Speaker 1: the Middle East, which is so unsettled, it does provide
Speaker 1: an opportunity for Russia to fill that and you do
Speaker 1: wonder about the consequences UH in the future as a
Speaker 1: result of that. This is an important story. The story
Speaker 1: of Jewel is not unlike that of so many esteem
Speaker 1: Silicon Valley tech startups that moved fast. It disrupted an
Speaker 1: established industry. We're talking about the cigarette business, that's right,
Speaker 1: and it has found itself in the middle of probably
Speaker 1: one of the biggest public health controversies we've seen in
Speaker 1: quite some time. Lornetta joins us from l A. She
Speaker 1: is the co author of one of the really most
Speaker 1: spelling reads in the magazine this week, It's all about Jewel.
Speaker 1: I learned a ton from this story. Lauren, take us
Speaker 1: back to the beginning, because the origins of this company
Speaker 1: are fascinating. Yeah, absolutely so. Like many other Silicon Valley companies,
Speaker 1: this one started at Stanford University. The two founders of
Speaker 1: the company were graduate students studying at the Business school,
Speaker 1: and they were smokers and they were sharing smokes out
Speaker 1: back and decided that, wow, this is a very outmoded
Speaker 1: product and maybe we can innovate on this. So that's
Speaker 1: what they set out to do. They did a lot
Speaker 1: of research, they launched their very first version of an
Speaker 1: east cigarette UM at a time when there wasn't too
Speaker 1: much competition on the market. So they basically innovated in
Speaker 1: the cigarette space and launched what became the most popular
Speaker 1: east cigarette in the world. All right, but it wasn't
Speaker 1: so easy, right, because at first I think that the
Speaker 1: initial device maybe didn't work so well. It was hard
Speaker 1: getting investor money to initially. Yeah. Yeah. You know. It's
Speaker 1: interesting because is at the time when they were seeking money,
Speaker 1: this is circa two thousand and five to two thousand
Speaker 1: and ten, when they were really starting to they have
Speaker 1: their prototype, they want to start launching it, and they
Speaker 1: kind of got the cold shoulder from Silicon Valley investors. Originally,
Speaker 1: this is considered the tobacco industry is kind of considered
Speaker 1: to be one of the sin industries, and Silicon Valley
Speaker 1: really kind of shunned and shunned those sin industries. So
Speaker 1: they originally had a very tough time getting some funding.
Speaker 1: But that all changed, of course a little bit later
Speaker 1: down the road. And what changed it, I mean, obviously
Speaker 1: part of it was positioning, because they got people on
Speaker 1: board with this idea of no, no, no, no, this
Speaker 1: is actually an antidote in a way to what was
Speaker 1: already considered then a public health crisis. Exactly. So two things, well,
Speaker 1: multiple things happened, but really cigarettes had just it was
Speaker 1: very clear that cigarettes were going to be a dying industry.
Speaker 1: Fewer people every year, we're smoking three percent declines year
Speaker 1: over year, and everybody was starting to turn away from cigarettes.
Speaker 1: But of course they're addicted. They are addicted to the nicotine.
Speaker 1: So that's sort of what the company founders really zeroed
Speaker 1: in on. We can allow smokers to continue to have
Speaker 1: a nicotine fix, but it's not going to have the
Speaker 1: combustion that causes the tar and the lungs and is
Speaker 1: ultimately the cause of lung cancer. So they kind of
Speaker 1: positioned it almost as a more healthful product, as a
Speaker 1: healthful alternative to cigarettes, and that's really it started catching on. Um.
Speaker 1: But the second thing was really it's a very addictive product. Um.
Speaker 1: They invented something called a nicotine salt vape liquid. And
Speaker 1: basically they had chemists early on in their laboratories and
Speaker 1: they devise this ultra powerful nicotine liquid and that for
Speaker 1: sure helped get a lot of people hooked onto their products. Well,
Speaker 1: and I think what is so troubling is how did
Speaker 1: so many teenagers, right those under age get hooked on
Speaker 1: a product like Jewel. Well, this is the thorniest issue
Speaker 1: regarding Jewel. Um. But the fact of the matter is
Speaker 1: early on, Jewel laid out and marketing campaign that was
Speaker 1: pretty much designed to attract kids. It was super edgy,
Speaker 1: had colorful graphics, really bold, they hired models, um it
Speaker 1: just made it look like a very cool product. They
Speaker 1: marketed on Instagram and sure enough, too much to nobody's surprise,
Speaker 1: high school students eventually and meddical middle school students eventually
Speaker 1: started trying the product. And the combination of the marketing
Speaker 1: and the highly addictive nature of the product really allowed
Speaker 1: this product or facilitated this uh facilitated the spread of
Speaker 1: this product across America and high schools and middle middle schools. Um.
Speaker 1: So now you have millions of people addicted to it. Well,
Speaker 1: the other element of your story that's so interesting, as
Speaker 1: you say, like many other Silicon Valley starts, I think
Speaker 1: of something like Uber that just kind of came into
Speaker 1: the market may be ignored, you know, regulation in this
Speaker 1: fast moving mindset. That was very much a part of
Speaker 1: the Jewel model, like just kind of get it out there,
Speaker 1: because from what I understand, and you're reporting along with
Speaker 1: Ellen Hewitt, is that there were folks within the company
Speaker 1: that were uncomfortable about kind of how fast they were
Speaker 1: ramping up into who they were ramping up. Yeah, exactly.
Speaker 1: They really adopted and embraced the model that is asked,
Speaker 1: ask forgiveness, not permission. And that's we saw that with
Speaker 1: Uber when they flooded the streets with these on demand
Speaker 1: cab drivers, and then we saw it with birds scooters.
Speaker 1: That's why you trip over bird scooters everywhere on street corners.
Speaker 1: So they really they adopted that model like let's just
Speaker 1: get it out there as fast as possible. We need
Speaker 1: to really own this market as quickly as possible because
Speaker 1: it was rapidly becoming more competitive with a big cigarette
Speaker 1: companies getting in it. So they really did. They scaled
Speaker 1: up super quickly. They were hiring lots of new people,
Speaker 1: they were producing the product at a really fast rate,
Speaker 1: and yeah, that did make people inside the company uncomfortable.
Speaker 1: All they felt like, wait a minute, let's let's slow
Speaker 1: down a little bit. Let's make sure our internal controls
Speaker 1: are adequate enough so we don't have any sort of
Speaker 1: problem down the road. But there was constantly a mindset
Speaker 1: of growth first and then let's figure it all out later,
Speaker 1: which is a traditional silicon valley model. But when you
Speaker 1: have a product that has such a huge health implications,
Speaker 1: that's sort of that's where it got sticky Well and Lauren,
Speaker 1: it feels like also mindful of the fact that regulators
Speaker 1: didn't really know what to make of this. Lawmakers didn't
Speaker 1: know what to make of it, so they had this
Speaker 1: moment that they could seize that while those were folks
Speaker 1: were figuring it all out, they were going to build
Speaker 1: a big business. Yeah. This is the most interesting aspect
Speaker 1: of all of this is when the cigarettes and jewels
Speaker 1: started really unrolling unrolling their product. It was around two
Speaker 1: thousand and fifteen and the FDA had been regulating cigarettes
Speaker 1: and tobacco products now for several years, but when they
Speaker 1: wrote the regulation, they didn't include e cigarettes as a
Speaker 1: quote unquote tobacco product. So here come these companies that
Speaker 1: are starting to sell these highly addictive nicotine products and
Speaker 1: there's virtually no regulation from the FDA, So they had
Speaker 1: a golden opportunity. Jewel and all these other cigarette companies,
Speaker 1: they had a golden opportunity to seize the market, to
Speaker 1: flood the market with as much as their product before
Speaker 1: regulators came in and kind of rain them in. So
Speaker 1: Jewel definitely exploited that, and all the other cigarette companies
Speaker 1: did too, and that facilitated definitely the rapid wildfire spread
Speaker 1: of the Jewel that we've seen over the past few years.
Speaker 1: That's Lauren Eddar joining us from Los Angeles. This feature story, Jason,
Speaker 1: you and I talked about it a lot in the
Speaker 1: news room. I think what's interesting about this one is
Speaker 1: I think we all just kind of take for granted
Speaker 1: Jewel in the marketplace, But this gets into the to Stanford,
Speaker 1: you know, graduates who worked on this, created this um,
Speaker 1: the troubles and kind of bringing it to market initially,
Speaker 1: but how they became really the major player in this market,
Speaker 1: and how they did it by flying really under the
Speaker 1: radar of regulators well and now very much front of
Speaker 1: mine for regulators. And very much front of mine. I
Speaker 1: feel like in the broader public conversation, this happened very quickly.
Speaker 1: It's a fast moving story, and this is really important
Speaker 1: context and full transparency. Michael Bloomberg, the founder majority owner
Speaker 1: of Bloomberg LP, the parent company of Bloomberg Radio Bloomberg Television,
Speaker 1: has campaigned and given money in support of a ban
Speaker 1: on flavored East cigarettes and tobacco. So, Jason, I think
Speaker 1: safe to say that increasingly we are seeing medical research
Speaker 1: tap into using the human body to figure out what
Speaker 1: ails it. Yeah, I was struck with this story. You know,
Speaker 1: we've talked a lot about immunotherapy when it comes to
Speaker 1: fighting cancer. That brings us to a story in the
Speaker 1: Tech section about really harnessing the body's garbage disposal. I
Speaker 1: love the imagery here. It's technical, but even I understood
Speaker 1: it after reading it. Rebecca Penty joins us from London.
Speaker 1: She's got the details. So, Rebecca, what do we talk
Speaker 1: about here? So for a long time, scientists have known
Speaker 1: about the body's own garbage disposal. This is at a
Speaker 1: molecular level, when when the body realizes that there's proteins
Speaker 1: that are malfunctioning, that are bad proteins or just simply
Speaker 1: proteins that it doesn't need anymore. It sends out these
Speaker 1: compounds that actually collect those proteins and break them down
Speaker 1: and either junk them or recycle them and create new ones.
Speaker 1: And so for years, for decades, scientists have been trying
Speaker 1: to figure out could we actually use that that system
Speaker 1: and harness it in a way that would allow us
Speaker 1: to go after diseases, because keep in mind, most diseases
Speaker 1: are really just clusters of um of proteins that are
Speaker 1: clumped together and that are misbehaving in a way, and
Speaker 1: they need to be broken up, and most traditional medicines
Speaker 1: really make them, you know, kind of put them on pause,
Speaker 1: pause their growth. In this new way of thinking, in
Speaker 1: this new technology, the drug companies are testing treatments that
Speaker 1: would go in and piggyback onto the body's own garbage
Speaker 1: disposal units and target those bad proteins and get rid
Speaker 1: of them. I feel like it makes so much sense,
Speaker 1: and I think they call them degraders. Right, So talk
Speaker 1: to us about what's going on in the medical world,
Speaker 1: who's working on it, who's who's doing the cutting edge research,
Speaker 1: Because it sounds like some big drug companies are also
Speaker 1: getting involved. Yeah, that's right. It started out as an
Speaker 1: idea that came out of Yale University, and then it
Speaker 1: turned into sort of a fringe area of medical research.
Speaker 1: It was very difficult for scientists involved in the early
Speaker 1: stage to get funding. But earlier in this past decade,
Speaker 1: what scientists started discovering is that some of the most
Speaker 1: successful drugs, so Revlimid, for example, it's a it's a
Speaker 1: multiple my aloma cancer drug, functioned by blocking the body's
Speaker 1: own garbage recycling unit so or process. Rather, so they
Speaker 1: discovered that these drugs work by blocking that process. Now
Speaker 1: scientists started to think, what if we could do the
Speaker 1: reverse and what if we could harness that process, and
Speaker 1: so in around two fourteen, two fifteen was when things
Speaker 1: really started to take off. And since then all the
Speaker 1: big drug companies as well as some smaller biotechs. So
Speaker 1: if you think of the big guys like Beer and
Speaker 1: em Gine, Novartis, they're all involved in testing these new
Speaker 1: treatments targeting various cancers, Alzheimer's, you know, pick a disease,
Speaker 1: you name it, they're looking at it. Um this this
Speaker 1: could have broad, broad appeal. Is worth mentioning that this
Speaker 1: is still very early stage. Um. Only a few of
Speaker 1: these drugs have hit human trials and a few more
Speaker 1: going to hit human trials in the coming year. So
Speaker 1: it'll be a few years yet before we find out
Speaker 1: whether this treatment, this type of treatment is really effective
Speaker 1: and safe. But there are high, high hopes. And so, Rebecca,
Speaker 1: what was the breakthrough moment in terms of moving it
Speaker 1: from the fringe to the mainstream. I mean, obviously the
Speaker 1: answer would seem to be there's some commercial appeal, that's
Speaker 1: why these big drug companies are getting into it. But
Speaker 1: as you said, initially when it was coming out of
Speaker 1: Yale or when the research was happening, there weren't a
Speaker 1: lot of takers and a lot of skepticism about whether
Speaker 1: this could even be a thing. It was. It wasn't
Speaker 1: one moment, but it was a series of discoveries with
Speaker 1: regards to drugs that were already on the market that
Speaker 1: they either found out they worked like REVLEMD the litamide,
Speaker 1: which is a predecessor drugs to revlement that they either
Speaker 1: worked by blocking the recycling process or they actually worked
Speaker 1: by using the recycling process. You know, sometimes drugs we
Speaker 1: don't actually know why they work or how they work.
Speaker 1: But they work, and then scientists go when they reverse
Speaker 1: engineer that and try to figure out how does this work.
Speaker 1: So in around thousand and fourteen, thousand and fifteen, two
Speaker 1: thousands sixteen, they were discovering that a lot of the
Speaker 1: most popular drugs were working by tapping into this garbage
Speaker 1: disposal system, and so scientists started doing more targeted work, thinking, Okay,
Speaker 1: what's the protein we want to go after to cure,
Speaker 1: you know, prostate cancer. If we've got a patient who
Speaker 1: is not responding well to traditional hormone treatments, could we
Speaker 1: start going after these proteins piggybacking onto the the garbage
Speaker 1: recycling process, and that's what they're doing. So various biotechs
Speaker 1: are doing different things. Some are doing more kind of
Speaker 1: experimental work, some are trying to just improve existing drugs,
Speaker 1: like the prostate cancer treatment. And that's Rebecca Penty joining
Speaker 1: us from London. This was an interesting little story, I
Speaker 1: have to say, because we've talked a lot about immunotherapy,
Speaker 1: but this whole notion of the garbage disposal. It was
Speaker 1: a technical story in many ways and ultimately kind of simple, yeah,
Speaker 1: very simple. And what's interesting is we increasingly in the
Speaker 1: medical community about using the body to combat illness disease,
Speaker 1: and these protein degrade ers. They could be one of
Speaker 1: the most significant advances in drug making technology in decades.
Speaker 1: Everybody's all and it may take some time for them
Speaker 1: to come out. They're still in the early stages. But
Speaker 1: I think fascinating about the possibilities. So getting to a
Speaker 1: world with self driving cars could be in a world
Speaker 1: where we save lives. Getting there, though, is probably going
Speaker 1: to require losing a few lives first. It's a predicament.
Speaker 1: This story really struck me because it is a very
Speaker 1: twenty nineteen story in the sense of technology and ethics
Speaker 1: and are very humanity all colliding in one story. Zach
Speaker 1: Miter is here with us. It's all about Tesla and
Speaker 1: its efforts to create the ultimate self driving car. What's
Speaker 1: going on? So a lot of companies are trying to
Speaker 1: build driverless cars, and the promise is that set aside
Speaker 1: all the other good things that might come with driverless
Speaker 1: UH technology, it could has the potential to save a
Speaker 1: ton of lives. Something like thirty eight thousand people die
Speaker 1: every year. It just in the United States, more than
Speaker 1: a million globally, and most of those UH fatalities are
Speaker 1: caused by human error of one kind or another. So
Speaker 1: if you can remove somehow keep the cars but remove
Speaker 1: the human error, there's just massive life saving potential. Well,
Speaker 1: and that's the predicament, right that in order to get
Speaker 1: to that point. Unfortunately, we're going to see some accidents
Speaker 1: as people continue to test auto pilots correct because they
Speaker 1: need the data to get better. Well. So Tesla is
Speaker 1: taking an approach that's totally different from everyone else in
Speaker 1: the autonomous industry. Almost everyone else is basically saying, we
Speaker 1: have to be really careful about safety. We're going to
Speaker 1: try to build an autonomous car that works autonomously before
Speaker 1: we really like start producing it in large quantities and
Speaker 1: selling it to people, and we we have to sort
Speaker 1: of get it perfect or almost almost perfect before because
Speaker 1: otherwise the concern is the public is gonna react, They're
Speaker 1: going to freak out, they're gonna ban these things. It
Speaker 1: could be a big problem. And then there's Tesla test
Speaker 1: is taking the total opposite approach, which is saying, listen,
Speaker 1: we don't have autonomous technology yet, but we have this
Speaker 1: stuff that's like pretty good. You have to oversee it.
Speaker 1: It might sometimes make mistakes, but we'll just tell we'll
Speaker 1: just sell it. We'll put it in the cars, and
Speaker 1: we'll tell the customers. You have to oversee this thing
Speaker 1: at all times. You have to constantly supervise. It only
Speaker 1: works on highways basically, but it works pretty well on highways.
Speaker 1: You can um without touching a pedal or or the
Speaker 1: steering wheel. You can drive for miles. You got in
Speaker 1: a car, correct, that's right? And what was it like? Yeah,
Speaker 1: walk us through that. It's it's creepy, you know, it's
Speaker 1: a it's a creepy feeling. It's very different from cruise
Speaker 1: control because it's doing all this stuff without you and
Speaker 1: you you get to see kind of what the car seas, right,
Speaker 1: so you can you have a little video screen that
Speaker 1: shows you, you know, if you drive along and there's
Speaker 1: a bicyclist in front of you, it shows an icon
Speaker 1: of a bicyclist. It's recognizing somebody on a bike, or
Speaker 1: it's recognizing a truck, or it's recognizing a car, and
Speaker 1: it's making decisions about what these other objects are going
Speaker 1: to do where the road is, and it's it's driving.
Speaker 1: And so Tesla's approach, just so we totally understand it
Speaker 1: is this notion that they think you need a certain
Speaker 1: amount of data that can only really be captured in
Speaker 1: real life situations, Like, what is there? What's their approach here?
Speaker 1: Help me understand that their approach is essentially they think
Speaker 1: that to get to a fully driverless car, rather than
Speaker 1: kind of keep it in the lab and perfect it
Speaker 1: and get it right, they're going to put something that
Speaker 1: needs human supervision into a car they can sell for money, right,
Speaker 1: and get hundreds of thousands of them on the road.
Speaker 1: So there's like more than half a million of these
Speaker 1: cars out there today that you can use autopilot on.
Speaker 1: And the theory is it's a little bit like the
Speaker 1: Google search engine, right, which kind of gets smarter every
Speaker 1: time you search on it because it sees how well
Speaker 1: it did in giving you the right search result. There's
Speaker 1: a Tesla claims that they're doing a similar thing with
Speaker 1: their cars, that they're they're actually collecting data from all
Speaker 1: these cars and they think that they claim that that
Speaker 1: will allow their their software to improve faster than the competition,
Speaker 1: because the competition, um the other the other companies using
Speaker 1: developing autonomous vehicles are doing it mostly. You know, they've
Speaker 1: got a hundred test cars, six D test cars, there
Speaker 1: Tesla's got you know, hundreds of thousands on the road.
Speaker 1: I have to say one data points stood out for
Speaker 1: me zach test. The customers have logged more than one
Speaker 1: point five billion mi is an autopilot, right, and they're
Speaker 1: often pushing the limits, even though Tesla says, you know,
Speaker 1: you have to be aware, you have to be you know,
Speaker 1: in control at all times. We know, we've seen the
Speaker 1: stories of people doing other things while driving their Tesla.
Speaker 1: But at the same time, Tesla takes that data right
Speaker 1: and they can continue to refine the software and then
Speaker 1: spit out upgrades right to these cars. I mean, this
Speaker 1: is kind of a constant loop that is going self learning. Yeah,
Speaker 1: that's the theory, right, But this is also a company
Speaker 1: that up until very recently sounds skeptical. I think, you know,
Speaker 1: I think we have to be skeptical of all these
Speaker 1: companies and and try to kick the tires as it were,
Speaker 1: about you know what they're claiming, and it's it's uh,
Speaker 1: it may just be a coincidence. But Tesla until recently
Speaker 1: was telling everyone that it was going to become super
Speaker 1: profitable by selling the you know, by by building the
Speaker 1: first kind of mass market electric car. And selling those.
Speaker 1: It's building the first mass market electric car them at three,
Speaker 1: but it's not profitable yet. And so now the focus
Speaker 1: is kind of in this new direction. We're going to
Speaker 1: get to autonomy. First, we need more time from investors
Speaker 1: more well, what about its safety record? What do we
Speaker 1: know about that? Because if this is this is what
Speaker 1: everybody's concerned about, and if Tesla saying, hey, listen, we
Speaker 1: know the way to do it by throwing a ton
Speaker 1: of cars on the road, what is their safety record? Right,
Speaker 1: so you would think that, um, you you would think that, uh,
Speaker 1: it would be relatively easy to tell because there's so
Speaker 1: many miles that they've already got under their belt. And
Speaker 1: Tesla has of course such a good data about what
Speaker 1: all these cars are doing. It's constantly talking to all
Speaker 1: these cars. Um. But it's actually a mystery to outsiders
Speaker 1: exactly how dangerous this technology is. Regulators have basically up
Speaker 1: until now not um taking any action. They open and
Speaker 1: they open a defect investigation that closed without you know,
Speaker 1: ordering a recall or forcing Tesla to make any change.
Speaker 1: Just um, but it's actually quite hard to figure out
Speaker 1: how safety these cars are. And you know, the kind
Speaker 1: of UM positive case is that Tesla says, Look, humans
Speaker 1: are always supervising these cars, so you have all the
Speaker 1: safety of a human driver. It's just that the car
Speaker 1: is doing things to help you write almost like almost
Speaker 1: like analoc brakes or something. It's it's it's just the
Speaker 1: safe and added its additive safety feature. But um, the
Speaker 1: skeptical case says, when you take so much responsibility away
Speaker 1: from the driver, uh, they get lulled into a sense
Speaker 1: of complacency and they get distracted. It's actually very difficult
Speaker 1: to pay attention to supervising system that's working, that appears
Speaker 1: to be working perfectly well on its own right and
Speaker 1: so and this is a problem that airlines have had
Speaker 1: for a long time, as autopilot on airplanes is so
Speaker 1: good that you know, they sometimes just get distracted the
Speaker 1: pilot zone out. Yeah, and you mentioned regulators. What's the
Speaker 1: issue with regulators? Have they just not caught up essentially
Speaker 1: to to where the technology is? Can they not fully
Speaker 1: essentially comprehend where to go next? What what happens with them?
Speaker 1: This is a very different issue than the ones that um,
Speaker 1: federal uh car regulators are used to. A more kind
Speaker 1: of straightforward problem for them is, you know, company makes tires,
Speaker 1: the company that the tires fail, People get an accidents,
Speaker 1: something that you could kind of identify on a test track, right,
Speaker 1: breakston't work, the steering, steering doesn't work, something like that.
Speaker 1: That's the kind of straightforward problem that regulators are very
Speaker 1: well equipped to handle. This is is it's a little
Speaker 1: bit more like an experimental pharmaceutical. There's potential life saving opportunity,
Speaker 1: but it also might have deadly side effect, and you
Speaker 1: have to kind of weigh those things, and it's very
Speaker 1: hard to know that on a test track. You really
Speaker 1: have to put it out in the real world to
Speaker 1: find out how it's going to react when another car
Speaker 1: does something weird. I love that parallel that you make
Speaker 1: that you know, we do have a model for this industry,
Speaker 1: for the self driving vehicle industry, and that is the
Speaker 1: drug industry, right, because they do go through various phases
Speaker 1: of testing these ultimately on people to see if it works,
Speaker 1: and sometimes it does and sometimes it doesn't. Right, And
Speaker 1: so there are people who are who are following the
Speaker 1: autonomous car industry who are saying we need to um
Speaker 1: to equip regulators to essentially act like the FDA does
Speaker 1: and have kind of a series of phase tests that
Speaker 1: are overseen by somebody outside the company. The Tesla Story
Speaker 1: the cover's story, one of the future stories in the
Speaker 1: magazine as well, written by Zach Mydor. This story he
Speaker 1: drove around in a Tesla Model three. He gave us
Speaker 1: his firstand experience of what it's like. But as we
Speaker 1: talked with Joel Weber, the editor of the magazine, what's
Speaker 1: great about this story is it really does look at
Speaker 1: the ethical dilemma we've talked about, like autopilots having to
Speaker 1: make a choice between maybe somebody with a baby carriage
Speaker 1: versus somebody walking a dog. But this takes it even deeper.
Speaker 1: How willing are we as a society um going to
Speaker 1: be comfortable with autopilot? We want it, but are we
Speaker 1: going to be comfortable with losing some lives along the
Speaker 1: way to get to that end? And there is, Carol,
Speaker 1: a really strong connection between this story and the Jewel
Speaker 1: story all around the regulatory framework, the ethos of Silicon
Speaker 1: Valley in a lot of ways, and some big questions
Speaker 1: that I think we're all wrestling with in terms of
Speaker 1: the role of big tech in our lives. This story
Speaker 1: was among the most read on the Bloomberg terminal. When
Speaker 1: it came out, we talked about it so much on
Speaker 1: our daily radio program, and it was looking at what
Speaker 1: the next US recession might be like. And it will
Speaker 1: probably be like no other, right, we always talk about
Speaker 1: this time will be different. It's beginning to feel like
Speaker 1: it actually may be true when it comes to the
Speaker 1: US economy. Christina lind Lad, who oversees the economic coverage
Speaker 1: in the magazine, here with us about this story. So
Speaker 1: give us the potential shape of a recession even when
Speaker 1: it ever comes. Well, they're usually from history. We know
Speaker 1: that they're triggered by a spike in inflation followed by
Speaker 1: a spike in interest rate as a FED intervened, and
Speaker 1: then that causes an unwinding of you know, either economic
Speaker 1: um you know, excesses or financial excesses. But this time,
Speaker 1: inflation is low, the FED is cutting, and we don't
Speaker 1: really see any bubbles. You know, stock prices don't really
Speaker 1: seem to be you know, out of out of sync
Speaker 1: considering that that rates are still low. So what is
Speaker 1: going on? Why is there so much talk about recession?
Speaker 1: And basically, as we joked around this week, it's geopolitics stupid,
Speaker 1: you know, it's it's it's coming. It's sort of an
Speaker 1: external shock that we kind of self induced because we
Speaker 1: started this trade war. But it's causing so much uncertainty
Speaker 1: that businesses are are not investing or not spending and
Speaker 1: creating new capacity because they're afraid that their supply chains
Speaker 1: going to start unwinding and lower interest rates by the
Speaker 1: Federal Reserve. I mean they're already low, you know as
Speaker 1: we as we sit right now, but even lowering them,
Speaker 1: that's not going to necessarily give businesses the confidence, right
Speaker 1: Christina to go out and spell. So it doesn't change
Speaker 1: I mean, it doesn't change the outlook. I mean, it
Speaker 1: may weaken the dollar, which you know that would be helpful,
Speaker 1: but it doesn't materially change you know. It's basically you
Speaker 1: know what we call the fog of the trade warld right, well,
Speaker 1: And we talked so much about the strength of the
Speaker 1: consumer amid all of this, and there is this notion
Speaker 1: that at some point, if businesses do curtail spending by
Speaker 1: curtail hiring, people start to get a little bit more
Speaker 1: worried about their jobs or promotions or bonuses or raises. Uh.
Speaker 1: But we don't see any signs of that yet, how
Speaker 1: is the consumer looking amid all this? The consumer is
Speaker 1: feeling pretty good because the consumer was you know, kind
Speaker 1: of late to harvest the fruits of this tenure um expansion,
Speaker 1: you know that we've been in companies and other investors
Speaker 1: felt at first. So wage growth has been ticking up
Speaker 1: in in the you know, in the recent year, you know,
Speaker 1: and hiring, you know, even though there's been a little
Speaker 1: bit of wobbles, is still a pretty you know, on
Speaker 1: a high sustained pace. So we don't see yet that
Speaker 1: the consumer has lost their nerve. But that really is
Speaker 1: going to be one of the things that people are
Speaker 1: going to be looking at the next year, and they're
Speaker 1: when we get hiring and how companies, because the feeling
Speaker 1: is that at some point the trade wark will may
Speaker 1: cause companies to start, you know, really um dialing back
Speaker 1: on hiring, right, right, if they start to look for
Speaker 1: ways to cut costs, right they either or let start
Speaker 1: to let people go, and then it just kind of
Speaker 1: all snowballs from there. I mean, the odds of a recession.
Speaker 1: I mean, I feel like we keep seeing different polls
Speaker 1: of you know, maybe a little bit higher than they
Speaker 1: were a year ago, maybe a little bit lower. I
Speaker 1: mean kind of go back and forth. Actually, bloomber Economics
Speaker 1: said there were higher than the beginning of the year,
Speaker 1: but actually lower than during the summer. So people are
Speaker 1: looking at a twelve month horizon and are seeing you know,
Speaker 1: Bloomberg Economics, for example, says less than chance of ever recession.
Speaker 1: I think the highest you see. The big one big
Speaker 1: wild card is whether Trump would go ahead and levy
Speaker 1: UM tariffs on the remainder of Chinese UM imports that
Speaker 1: have not been tariffed yet. Some people say that if
Speaker 1: that happens, it's inevitable. Well, and we've certainly heard from
Speaker 1: FED chief J. Powell right who has talked about They
Speaker 1: seem to still be optimistic about the outlook and say
Speaker 1: that there's no reason why this expansion can't continue except
Speaker 1: for these kind of macro factors, and they often point
Speaker 1: to trade at this point right at the same time,
Speaker 1: though most people expect that they will cut again, you know,
Speaker 1: at the at the meeting at the end of October.
Speaker 1: And that's Christina Lynn Blad. She oversees all of our
Speaker 1: economics coverage at Bloomberg Business Week. Carol always loved getting
Speaker 1: her perspective. It's global and also has a lot of
Speaker 1: context about what's happened before and what actually, I know,
Speaker 1: we say this all the time, may be different this
Speaker 1: time right, And this story really digs into what might
Speaker 1: cause the next US recession. It's been a long time
Speaker 1: in coming, we keep talking about it, and yet it
Speaker 1: hasn't happened. The expansion continues. What's interesting about this story
Speaker 1: is that it might be different this time around in
Speaker 1: terms of what causes a recession here in the United States.
Speaker 1: It's been the talk of the global IPO circuit for years,
Speaker 1: the saudio around co I p O, and after several
Speaker 1: falls Stars Jason, it seems to be finally finally happening. Well,
Speaker 1: this one is such a collision of politics, economics, financial markets,
Speaker 1: investment banking, and of course the global energy market. Will
Speaker 1: Kennedy joins us from London with the latest. So we'll
Speaker 1: remind us where we are now and a little bit
Speaker 1: about where we've been. So this was first suggested by
Speaker 1: the Crown Prince Society Arabia back in twenty sixteen, and
Speaker 1: he stunned the world actually when he announced it by
Speaker 1: saying that this company, Saudi Aramco, which had been part
Speaker 1: of the Saudi state for decades. He was going to
Speaker 1: do an I p O and a billions of dollars
Speaker 1: and bring it to global scrutiny and open up its finances.
Speaker 1: Then it went away for a while. They have been
Speaker 1: talking about listing in London or New York, but investors
Speaker 1: bought really that the valuation the Crown princes had put
Speaker 1: on the company of two trillion dollars, which is, as
Speaker 1: you know, double what even the Microsoft or Apple. Currently
Speaker 1: the world's too large as companies are worth. All of
Speaker 1: a sudden has come back, but it's come back in
Speaker 1: a slightly different form. It's going to be listed in
Speaker 1: React only. They're going to sell one or two percent
Speaker 1: of the company. And it seems that they've got the
Speaker 1: backing of some of Saudi of Ages, Saudi Arabia's richest people,
Speaker 1: richest families, and at the moment they think they can
Speaker 1: get that two trillion dollar valuation. Well that's what I
Speaker 1: think is also interesting. First of all, in terms of
Speaker 1: the listing, well, it's not like it's New York, it's
Speaker 1: not London, it's not Hong Kong. They're doing it on
Speaker 1: the Saudi Exchange. And I do feel like even though
Speaker 1: it's going public. The Saudi government will still have a
Speaker 1: lot of oversight here. That's exactly right. I mean, the
Speaker 1: the rules on transparency are not quite the same as
Speaker 1: they would have been in New York. For example, I'll
Speaker 1: give you one example of that. In New York, sec
Speaker 1: regulations mean you have been very precise on your oil
Speaker 1: reserves as an oil company, how much is ready to
Speaker 1: drill now, how much might be ready to drill in
Speaker 1: the near future, and how much is still pretty speculative.
Speaker 1: They won't have to do that, for example, listing in
Speaker 1: the read UM. They will be able to encourage Saudi
Speaker 1: banks to lend to potential investors, both large and small.
Speaker 1: And the Saudi government actually has a history of when
Speaker 1: there's an I p O in read it tends to
Speaker 1: encourage some intervention in the market to ensure that the
Speaker 1: price stays buoyant. So it's not quite like an IPO
Speaker 1: would have been in New York or London UM, but
Speaker 1: it's still a very vay by exercise, and they will
Speaker 1: be marketing the equity outside the AD to international investors
Speaker 1: who want to come in through that mechanism. There will
Speaker 1: be a one four for a mechanism in New York
Speaker 1: for example, So it will be there for international investors,
Speaker 1: but it's not the same as the New York listing.
Speaker 1: Hell well, and when you go back and think about
Speaker 1: where the world was in sen what the world thought
Speaker 1: of Saudi Arabia, Saudi Arabia's place in the global economy
Speaker 1: and the global political scene, Well that's changed pretty dramatically,
Speaker 1: not just for Saudi Arabia, but specifically for a Ramca
Speaker 1: was targeted by some Iranian made strikes missile strikes not
Speaker 1: too long ago. How has that changed the perception of
Speaker 1: this deal. Yes, this is a world class oil company
Speaker 1: and operationally it's probably on a par with excellent Shell,
Speaker 1: but it operates Jason in a wholly different political situation.
Speaker 1: And we see that in several ways. This attack from
Speaker 1: drone strike, people aren't sure exactly what it was, a
Speaker 1: missile strike, showed the very vulnerability of the Saudi energy
Speaker 1: system and the fact that it's in the world's most
Speaker 1: dangerous neighborhood. And that's going to presume in the encourage
Speaker 1: investors to perhaps apply some kind of discount. And then
Speaker 1: you've got the political risk associated with Saudi Arabia that
Speaker 1: was illustrated by the murder of Jamal Ka Shoggy, So
Speaker 1: investors are going to have to take those things into
Speaker 1: account when they assess the I p O for for sure.
Speaker 1: I do also find it interesting in you I think
Speaker 1: mentioned this or references earlier, that some of those are
Speaker 1: some of the investors who were once under house arrest
Speaker 1: by MBS right, who are you know, kept up in
Speaker 1: that hotel a crackdown on corruption in they are now
Speaker 1: being asked to be potentially anchor investors. It's just kind
Speaker 1: of interesting to see how it all works friend and foe,
Speaker 1: it feels like at the same time in terms of
Speaker 1: relationships in Saudi Arabia, I mean from from the Crown
Speaker 1: Prince's point of view, he probably thinks that's the legitimate
Speaker 1: way to go, that a lot of these families, a
Speaker 1: lot of these people had managed to construct fortunes on
Speaker 1: the back of perhaps favorable contracts with a savvy state,
Speaker 1: and that it's legitimate to ask them to take part
Speaker 1: in his program of economic reform. But perhaps one way
Speaker 1: of looking at the deal as it's structured at the moment,
Speaker 1: as it will move a very large sum of money
Speaker 1: from the pockets of private Saudi investors, whether those are
Speaker 1: big millionaire and billionaire families or indeed smaller individuals who
Speaker 1: will be asked to subscribe in a big retail offer
Speaker 1: from private pockets and Saudi Arabia into the coffers of
Speaker 1: the Sovereign Wealth Fund. And it's a way of financing
Speaker 1: the Prince's economics ambitions. This public investment fund he has
Speaker 1: to both drive economic change inside Saudi Arabia and invest
Speaker 1: in companies outside Saudi Arabia. Well and well, I'm so
Speaker 1: glad you mentioned that. I believe it's called the PITH,
Speaker 1: the Public Investment Fund, which obviously will stand to gain
Speaker 1: huge amounts. And by virtue of that, you've got global
Speaker 1: investors in private equity and hedge funds and other types
Speaker 1: of funds just licking their chaps at the prospect of
Speaker 1: this huge new pool of money, not to mention the
Speaker 1: investment bankers who are signed up to work on this deal.
Speaker 1: So it has financial ramifications far beyond the Kingdom, it does.
Speaker 1: I mean, it's worth dwelling on the banks for a minute.
Speaker 1: I think, Jason, there were more than twenty five banks
Speaker 1: around the world manddated on mandated on this deal. It
Speaker 1: includes all the giants of Wall Street Goldman Sacks, JP
Speaker 1: Morgan Morgan Stanley UM and they will make good money
Speaker 1: outside from this deal if and when it goes ahead.
Speaker 1: But also, as you say, it's sort of kicks off
Speaker 1: more transactions because that capital will then go through the
Speaker 1: p I F which will invest it in places outside
Speaker 1: side of the Arabia in private equity funds. So there's
Speaker 1: a lot of transactions here from people for people to
Speaker 1: make money from. And don't forget this is just one
Speaker 1: side of the deal. There was a deal last year
Speaker 1: which isn't yet completed, where a RAMCA would buy from
Speaker 1: the p IF stake in the Saudi Arabia's chemical giant Sabbok,
Speaker 1: and that money is also going to p IF. So
Speaker 1: when you take both deals to David, you may be
Speaker 1: looking at something in the region of a hundred billion dollars.
Speaker 1: That's Will Kennedy. We caught up with him in London, Jason,
Speaker 1: and this aroundco I p O, it's been the talk
Speaker 1: of the global IPO circuit for years. Finally seems to
Speaker 1: be happy, but lots of questions about the valuation UH
Speaker 1: coming to market when the price of oils and as
Speaker 1: high as it's been in the past and I do
Speaker 1: think it's also interesting in terms of the exchange. It's
Speaker 1: not rolling out in London and New York, it's rolling
Speaker 1: out in Saudi Arabia well. And there are also all
Speaker 1: of these questions for investment bankers, for politicians, for investors
Speaker 1: on the other side of this who are waiting to
Speaker 1: get their hands on the proceeds of that I PO
Speaker 1: For years, Oracle has been making promises about its potential
Speaker 1: footprint in the cloud, and yet Jason, it has not
Speaker 1: quite happened yet well, and so much drama going on
Speaker 1: there in the C suite as well as just around
Speaker 1: this marketplace, a different sort of see the cloud, as
Speaker 1: you say. Nicole Grant joins us from San Francisco with
Speaker 1: that story. So what are oracles ambitions and how are
Speaker 1: they playing out at this moment in the cloud? So
Speaker 1: first I want to unpack a little bit what the
Speaker 1: cloud is and what we mean by the cloud here.
Speaker 1: So there are three parts to cloud computing. One is
Speaker 1: where Amazon and Microsoft dominate, and this is renting computing
Speaker 1: and storage from a network of server farms around the world,
Speaker 1: and this is the market that Oracle has struggled the
Speaker 1: most with. And then you have you know right above
Speaker 1: that sitting on top coding languages, databases, UM and other
Speaker 1: tools that organizations use. And then at the very top
Speaker 1: of of that cloud pyramid you have applications. Think of
Speaker 1: these like your smartphone apps. You know, tools that can
Speaker 1: help a business, for instance, manage its customers, or manage
Speaker 1: its human resources, manage its accounting. Oracle has for a
Speaker 1: long time touted its ability to play in all three
Speaker 1: of these markets. The companies started out being very strong
Speaker 1: and databases, and then over time it developed and acquired
Speaker 1: many applications. But this bottom layer, where Amazon has been
Speaker 1: the pioneer and really shown what's possible, Oracle has struggled.
Speaker 1: And right now what we see is the company deciding
Speaker 1: to de emphasize UM this part of the market basically
Speaker 1: using its cloud infrastructure, which is the name of the
Speaker 1: bottom layer, in order to be you know, the hosting
Speaker 1: site for the rest of the tools that they actually
Speaker 1: think UM they can sell to customers and make a
Speaker 1: mark in the in the industry. So tell us what
Speaker 1: happened here, because they certainly put a lot of efforts
Speaker 1: a lot of money, they kind of put this whole
Speaker 1: cloud group separate from the rest of the company was
Speaker 1: kind of a kind of a hit place to be
Speaker 1: in terms of working. They got engineers from a lot
Speaker 1: of the other Silicon Valley companies. So what went wrong?
Speaker 1: Mm hmmm. So Oracle basically old, you know, a colony
Speaker 1: within itself, and it was based up in Seattle. It
Speaker 1: still is up there. It's led by a man named
Speaker 1: Don Johnson, no relation to Melanie Griffith sex husband Um.
Speaker 1: And the idea was to find a lot of people
Speaker 1: from the cloud diaspora up in Seattle, people who had
Speaker 1: helped build the Amazon Web Services cloud, helped build Microsoft
Speaker 1: Azure UM and get them to really make Oracle competitive
Speaker 1: in this market. And so starting in it began a
Speaker 1: process of hiring lots of people and it ended up
Speaker 1: being thousands of people UM. In terms of budget, you know,
Speaker 1: there was a lot of flexibility for them to pay
Speaker 1: staffers a lot of money. Mid level product managers were
Speaker 1: offered seven hundred fifty thousand UM. Engineers who were senior
Speaker 1: with vice president titles were sometimes paid more than five
Speaker 1: million dollars in total compensation. This is all from a
Speaker 1: company that, by Silicon Valley standards, is thought of as
Speaker 1: thrifty UM. Oracle generally doesn't give races to employees from
Speaker 1: year to year. Uh. The company also never tops any
Speaker 1: any lists in terms of compensation in the valley, like
Speaker 1: you know Google and Facebook and other companies we can
Speaker 1: think of. And so they gave these engineers um lots
Speaker 1: of resources. They gave them these beautiful offices up in Seattle,
Speaker 1: UM with you know, lots of whimsy that you don't
Speaker 1: find at other Oracle offices. Uh. You know, massive chess
Speaker 1: sets for instance, and game rooms and pool tables and
Speaker 1: doctor who telephone booths. And you know, the prompt was
Speaker 1: make us a cloud that is competitive, and also make
Speaker 1: us a cloud that you know works best for Oracle
Speaker 1: applications and Oracle databases. And you know what we saw
Speaker 1: is that group grew to be thousands of people. UM.
Speaker 1: Larry Ellison, the co founder and chairman of Oracle, placed
Speaker 1: so much trust in Don Johnson that he actually decided
Speaker 1: to reorganize Oracle and take thousands of staff members away
Speaker 1: from Thomas Curian, who had been seen as his technological air.
Speaker 1: His last job at Oracle was being president of the
Speaker 1: Product Organization, the only president that the company had at
Speaker 1: the time. And he, you know, gave those cloud engineers
Speaker 1: to Don Johnson and this group in order to expand
Speaker 1: it further. And that's Nico Grant joining us from San Francisco.
Speaker 1: I really love his reporting about Oracle. It's so in
Speaker 1: depth and this story really captures a lot of what
Speaker 1: was going on at the company in this ambitious effort
Speaker 1: to really make a dent, as it were, in the
Speaker 1: cloud business. I also love that Nico went into the
Speaker 1: three layers of the cloud. If you really don't understand
Speaker 1: what's going on, he laid it out so clearly, so
Speaker 1: I gets an important read, a must read. So time
Speaker 1: for check on pursuites lots of stories to get us
Speaker 1: all ready for the colder weather and for skiing. It's
Speaker 1: ski season. That's very excited. We caught up with the
Speaker 1: CEO of Veil Resorts actually last week when we were
Speaker 1: out in Colorado. Here with this in New York City
Speaker 1: is Chris Rouser. And one of the things I guess
Speaker 1: we may be doing is ice polo. You maybe watching
Speaker 1: some polo on the ice. We were closing this. Every
Speaker 1: year we do a snow special, so skiing, snowboarding, um,
Speaker 1: you know, winter camping, and as we were closing it,
Speaker 1: it was eighty degrees in New York City. We were like,
Speaker 1: this feels crazy, but it's snowing out west and it's
Speaker 1: time for us to think about the winter. And one
Speaker 1: of the best, most crazy events during the winter around
Speaker 1: the world is the annual snow Polo in St. Maritz
Speaker 1: And it happens after Davos, and so a lot of
Speaker 1: people just hop in their private jets and go there.
Speaker 1: And it's sponsored by net Jets and Maserati and some
Speaker 1: other really luxury companies. And it's just a three day weekend.
Speaker 1: It's a polo tournament. They clear off the ice and
Speaker 1: they play polo all weekend and it's champagne and for
Speaker 1: and parties and bling the whole thing. It sounds a decadent.
Speaker 1: It's it's nearly over the top. It's the first time
Speaker 1: and we cover luxury. And I had not heard of
Speaker 1: what they call a caviar bump, which is when they
Speaker 1: spoon caviar directly onto your fist for you for you
Speaker 1: to eat it that way, which you know, caviar on
Speaker 1: flash is a thing. But I had not party like
Speaker 1: you can go you can get beers and brought worst
Speaker 1: or you can have somebody you know, put some caviar
Speaker 1: right right hand. Well, and that is something that jumped
Speaker 1: out at me is that this isn't even though you
Speaker 1: have to get the stand words to it, like they
Speaker 1: it's not just for the ultra decadent wealthy, like you
Speaker 1: can actually go as a like a regular. Yeah. So
Speaker 1: it's you know, it's one of the spots on sort
Speaker 1: of the global ultra high net worth calendar. But what
Speaker 1: they're trying to do is also make it accessible to anybody,
Speaker 1: so you can actually go and if you're there, you're
Speaker 1: a local, you're living nearby, you can go for free. Actually,
Speaker 1: although tickets in the grandstands can cost up to almost
Speaker 1: seven hundred Swiss francs. But yeah, yeah, you can go,
Speaker 1: get a beer and just sort of watch this crazy
Speaker 1: sport of kings. It brings in a lot of money
Speaker 1: to the area too, right, Yeah, it brings in like
Speaker 1: twelve million francs and it um you know, they get
Speaker 1: a lot of money from sponsorships. Uh, and they you know,
Speaker 1: once they stopped doing it one year, they immediately start
Speaker 1: planning for the next year. Well, and the other thing
Speaker 1: that struck me as just the mechanics and the logistics
Speaker 1: of how to put on a polo match on a
Speaker 1: frozen lake? Is it is what they're doing right? Yeah,
Speaker 1: so it's about three thousand tons of stuff, of tens
Speaker 1: of grandstands and stuff on the ice. The ice is
Speaker 1: about twenty six inches thick, so it's totally fine and
Speaker 1: a polo u the polo pitch is actually smaller than
Speaker 1: a normal pitch. You can get closer to the games.
Speaker 1: They call them Chucka's and I was like, the horses
Speaker 1: must slip right like the man uh, And actually they don't.
Speaker 1: They give them special who's that have studs in them
Speaker 1: and braces to protect them from injury. But the you know,
Speaker 1: the only sort of injuries are stopped they actually have
Speaker 1: as usually from people getting hit by mallets, which is
Speaker 1: actually kind of something that can happen in any standard polo. Yeah, right,
Speaker 1: a standard hazard of polo. But it's a big business event.
Speaker 1: Like I think about the sponsors that get involved. I
Speaker 1: think you guys talk about Maserati, right, They organized kind
Speaker 1: of some driving things around the Maserati will do like
Speaker 1: a snow driving test drives and they say they do
Speaker 1: about twelve They do about a dozen deals every time
Speaker 1: they do this, so they're selling cars, people are selling clothes,
Speaker 1: and you know it's for net jets. They do about
Speaker 1: twenty flights in just that weekend. That's like a flight
Speaker 1: every cup private for every couple of hours. And it's
Speaker 1: and and in town there's a bunch of festivities to writes,
Speaker 1: some like black tie events. There's a club they're called
Speaker 1: Dracula's Ghost Riders Club where they has that want to
Speaker 1: go to something shaped like a head of garlic, which
Speaker 1: now I have to go. Yeah, they have parties all
Speaker 1: weekend long. All right, So if you're not doing that,
Speaker 1: you're probably thinking about skiing. And everybody's always looking for
Speaker 1: the next place. Zermat is so yeah, I guess, So
Speaker 1: what's the new place? So there is this place that's
Speaker 1: been in development since about two thousand seven called Andermatt,
Speaker 1: which is it was actually quite an old resort um,
Speaker 1: but it kind of fell out of use by most
Speaker 1: people in the eighties and it used to have a
Speaker 1: military base and the military base clothes in the nineties
Speaker 1: and so it kind of became very sleepy. And then
Speaker 1: this Egyptian billionaire named Sammy Sars actually looked at this
Speaker 1: looked at the place and was like, you know what
Speaker 1: I could develop this. This has all the bones of
Speaker 1: an amazing resort. So he developed a hotel, the Hotel Chetty,
Speaker 1: He built a golf course, and actually he got a
Speaker 1: special distimppensation to allow foreigners to buy second homes there,
Speaker 1: which you can actually really do in Switzerland. Um. And
Speaker 1: so basically over the past few years it's become more
Speaker 1: and more of an international destination. And of course it's
Speaker 1: a cute old Swiss town, so it's got all the
Speaker 1: charm that want of a kind of like Shamoni that
Speaker 1: kind of thing, but it's actually kind of untouched. And
Speaker 1: now they're replacing all the old lists with gondolas and stuff,
Speaker 1: and it's really an amazing place. And it's big. Yeah,
Speaker 1: it's really big. And they're actually connecting more fountains with
Speaker 1: with gondolas and stuff, so you can actually connect to
Speaker 1: other resorts too. Yeah, because it says the interconnected c
Speaker 1: Ski area ultimately a d eight kilometers hundred twelve miles
Speaker 1: of slopes and thirty three lifts and just by way
Speaker 1: of comparison, it's two more lips than Veil, yeah, exactly,
Speaker 1: and some pretty cool hotels and places to stay. Yeah,
Speaker 1: So there's the Chetty, which is which is actually a
Speaker 1: small chain and it's quite big and glamorous and new.
Speaker 1: But then there's some old ones like the Hotel Zone,
Speaker 1: which are have been around for a while and there
Speaker 1: even though the Chetty is kind of the big new thing,
Speaker 1: all the hotels are pretty sight because a lot more
Speaker 1: people are coming now. Well, and we should point out
Speaker 1: not all the locals are thrilled. It sounds like, yeah,
Speaker 1: this was kind of one of those throwback places, well
Speaker 1: hidden sort of secret gem for the locals, and people
Speaker 1: do it and now it's solid commercial. Yeah, that's the
Speaker 1: story of a lot of these ski resorts, right, like Whistler,
Speaker 1: and now everyone's worried it's gonna it's going corporate. You know,
Speaker 1: they're all charming, they're all independent, and then as they
Speaker 1: get bigger, it's it's good for a lot of the businesses,
Speaker 1: but then it does lose some of the character. All right.
Speaker 1: So um, speaking of characters, the puffer coat kind of
Speaker 1: getting a bit of a makeover, right, I think a
Speaker 1: puffer coats and you just feel like the Michelin Michelin
Speaker 1: man right, bouncing off of each other during the winter time.
Speaker 1: You make it fancy, you guys have some nice versions.
Speaker 1: So the question when it gets the winter and style
Speaker 1: that we get asked the most is like, what is
Speaker 1: a cute puffer coat? Which is like kind of an oxymoron,
Speaker 1: and also the newsroom goes silent, right, Well, one that
Speaker 1: doesn't look this like Canada goose, you know, they kind
Speaker 1: of all look the same. They're gray, they're blue, they're black,
Speaker 1: and they have that same look. So we went out
Speaker 1: and tried to find, uh, some other puffer coats that
Speaker 1: don't look the same and that are sort of trim
Speaker 1: and tailored. So we found a few and I brought
Speaker 1: some in case you guys want to and we're going
Speaker 1: to try and describe them for radio. And for those
Speaker 1: folks on radio, please go to Bloomberg dot com or
Speaker 1: buy the magazin check it out so you can really
Speaker 1: see the pictures. So one of my favorites is by
Speaker 1: this brand called Perfect Moment, and it's four dollars and
Speaker 1: it's got this like harring Bone red and blue and white.
Speaker 1: I'm trying to sign like digital Harry's cute. It's pretty
Speaker 1: short though it's in the picture because you get jeans,
Speaker 1: so you will if you're going to ski you were
Speaker 1: Skypands with the you know, the ones that go at
Speaker 1: the top. And then one of my favorite new brands
Speaker 1: is called Aztec Mountain. They actually have the designer from
Speaker 1: Mooglaire is also which is a very fancy fashion brand.
Speaker 1: They also have that's Adjason kind of Yeah, this is
Speaker 1: this is sex? Are these like? Is this one you're wearing?
Speaker 1: The perfect moment? One is for women, and then Jason
Speaker 1: they have for men and women like this little yoga
Speaker 1: a little yoga hands, little elastics that cover your that
Speaker 1: cover your hands, and so Jason's is all blue and
Speaker 1: that's seven but it isn't. That's like a technical like
Speaker 1: a puffer, but like more hardcore. And yeah, and that's
Speaker 1: called the Nukes Suit. And that's Strands for you. And
Speaker 1: then I have one call from a brand called mam Mood,
Speaker 1: which is eight hundred dollars and it is the blingiest,
Speaker 1: goldest thing. Are you gonna put it on? I'm gonna
Speaker 1: put it on. Oh my god, it's going over alright
Speaker 1: for a bidden radio. Chris is putting it over, so
Speaker 1: I'm not going to lose everyone. Yeah, but it definitely
Speaker 1: um looks good. Yeah, and it's so warm. The second
Speaker 1: you put it on, You're like, this is warm and
Speaker 1: kind of like a solar panel too. Yeah. That's Chris Rouser,
Speaker 1: the editor of Pursuits and so much in this magazine,
Speaker 1: and Jason. What I love about it is there are
Speaker 1: some really great deep dives. You and I talked a
Speaker 1: lot about Jewel, finding out how the company was created,
Speaker 1: its process, hard to find investors initially on um but
Speaker 1: it was a great deep dive. It's what the magazine
Speaker 1: is known for. And I feel like the story with
Speaker 1: Tesla too, it took us in another direction well, and
Speaker 1: there's a lot of connective tissue between those two stories,
Speaker 1: and we have talked a lot about that with the
Speaker 1: editor of Business Week, Joe Webber and others here in
Speaker 1: the newsroom, because we do seem to be at this
Speaker 1: moment where we're asking a lot of questions about what
Speaker 1: big tech has wrought, what our responsibility is just as
Speaker 1: people and as investors and as human beings, you know
Speaker 1: where this all goes and what the trade offs are
Speaker 1: as we really embrace these different advances. And speaking of questions,
Speaker 1: I mean there's questions about are we headed for a
Speaker 1: US recession and if so, what will ultimately cause it,
Speaker 1: and what can maybe the US Central Bank do to
Speaker 1: help us along the way to maybe stay away from
Speaker 1: it or get us through it. The other thing in
Speaker 1: terms of questions Syria, right, and the change in terms
Speaker 1: of US policy, the Turkey invasion, I think you know,
Speaker 1: just added to the list of macro concerns that are
Speaker 1: out there. We'll be keeping an eye on all of that.
Speaker 1: And that's going to wrap up the Bloomberg Business Week
Speaker 1: Weekend Podcast. Thank you so much for joining us. I'm
Speaker 1: Jason Kelly and I'm Carol mass Or. Be sure to
Speaker 1: tune into Bloomberg Business Week Radio Live Monday through Friday
Speaker 1: starting at two pm Wall Street time. And if you
Speaker 1: can't catch us live, get our daily podcast for the
Speaker 1: ride home. Check that out at Bloomberg dot com or
Speaker 1: wherever you at your podcast, and of course you can
Speaker 1: get this week's edition of the magazine on newsstands. Now,
Speaker 1: you know you want to see pictures of those puffer coats, right,
Speaker 1: you can see them in the magazine, but you'll have
Speaker 1: to go to Twitter to check us out modeling those
Speaker 1: puffer coats. I'm at Jason Kelly News and she's at
Speaker 1: Carol Master and we'll be back right here next week.
Speaker 1: At the same time, this is Bloomberg