Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: bloom All business, finance and tech news. The Bloomberg Business
Speaker 1: Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. Well,
Speaker 1: big activism, it is back. Why Well, some rule changes
Speaker 1: in a fatigue, with bad corporate governance playing important roles.
Speaker 1: But as with so many things, it starts with money
Speaker 1: and good timing. So writes Bloomberg News senior Deals reporter
Speaker 1: At Hammond in a store in the upcoming issue of
Speaker 1: Bloomberg Business Week magazine, add on newsstands later this week,
Speaker 1: already on the Bloomberg terminal and online at Bloomberg dot
Speaker 1: com slash business Week, ed Hammond. As we mentioned Deal's reporter,
Speaker 1: he joins us on the phone in New York City
Speaker 1: along with the editor of Bloomberg Business Week, Toil Webber.
Speaker 1: He's in our Bloomberg Interactive Broker studio. It does feel
Speaker 1: like all of a sudden, activists don't have kind of awakened. Yeah,
Speaker 1: and it was it got quiet there for a little bit, right,
Speaker 1: and then uh, you know the you can only you
Speaker 1: can only lick your chops for so long. But if
Speaker 1: you're like, let's do this, um so, and what what
Speaker 1: did the targets look like? And why did it go
Speaker 1: quiet for a little while? It went quite for several reasons,
Speaker 1: and obviously we try and get into all of them
Speaker 1: a little bit in the article. I think, first and foremost,
Speaker 1: it was just very expensive for activists to go after
Speaker 1: the big companies until the recent turn in the stock market,
Speaker 1: which is obviously poor evaluations down a fair bit and
Speaker 1: and just made building that initial stake easier. It also
Speaker 1: obviously gives them quite a lot more potential upsided um
Speaker 1: if you know, if share process are sort of off
Speaker 1: their all time highs. But I think there are other
Speaker 1: things to play here as well. I think the changes
Speaker 1: in the way activists and indeed anyone is allowed to
Speaker 1: sort of vote uh. In terms of nominating directors, it's
Speaker 1: significantly so called universal proxy rules, which allow dissident shareholders
Speaker 1: to put forth their nominees for the board of directors
Speaker 1: on the same card that the company has to send
Speaker 1: out shells. And now that seems very technical, but it
Speaker 1: actually is. It's a meaningful change for actors because it
Speaker 1: both lowers the cost and the workload needed to actually
Speaker 1: elect directors to go onto public company boards. So what
Speaker 1: was the name when it? When it popped that you
Speaker 1: were like, Okay, we're back in the game. I think
Speaker 1: the Sales Force was the one for us that really
Speaker 1: kind of highlighted the trend. I mean they say that
Speaker 1: three maker trends and Salesforce got four activists in the
Speaker 1: space of you know, a few days, which it's pretty
Speaker 1: unheard of. I mean occasionally you see one or two
Speaker 1: showing up in very large companies. But for four and
Speaker 1: four big brand activists in the form of Value Act
Speaker 1: and Starboard, Elliott and Jeff bubb and to all show
Speaker 1: their hands, Um, it's pretty significant and show us that,
Speaker 1: like big company that obviously back on the table, but
Speaker 1: there's obviously also enough appetite among the activists to really
Speaker 1: go for it. You know what, I was reading your story, Uh,
Speaker 1: it made me start to wonder. You know, you think
Speaker 1: of the famous activists investors out there, Nelson tells Paul Singer,
Speaker 1: But of that era, you know, that's what investors who
Speaker 1: have been around for decades now, and it makes me wonder,
Speaker 1: you know, is there a new generation coming up behind them?
Speaker 1: Or is this kind of a lost art to some degree?
Speaker 1: You know, I know there's a lot of younger investors
Speaker 1: on the activists short side, but is activist long you know,
Speaker 1: is it sort of an old fashioned thing or are
Speaker 1: there are there no one? It's it's a it's a
Speaker 1: great point. I mean, it's a sort of gentocracy of sorts,
Speaker 1: this kind of investing just wait two minutes, um and
Speaker 1: and the reason it's it's so fun to cover it's,
Speaker 1: as you say, these are sort of larger than like
Speaker 1: characters who have been around for several generations and through
Speaker 1: lots of lots of market cycles. And they're fun. I
Speaker 1: mean they say things sort are interesting, They say things
Speaker 1: that are not the sort of pre prepared speech that
Speaker 1: we might expect from a lot of investors in day market,
Speaker 1: and they make it much more intend to cover. In
Speaker 1: terms of new entrants, yes there are lots of new
Speaker 1: small all activists, but they tend to be less well financed,
Speaker 1: so it's much harder for them to come into these
Speaker 1: kind of big companies that we care about. They also
Speaker 1: tend to come in with a sort of a smaller,
Speaker 1: if you like, menu of options that they can push,
Speaker 1: so they'll come in often to small companies and say, look,
Speaker 1: just sell yourself because you did get a control premium
Speaker 1: that might be forty percent above where you are now
Speaker 1: and we want that. Well, hey, you know and you
Speaker 1: mentioned that sec UM the new SEC rules in terms
Speaker 1: of the board is how much of that, Like would
Speaker 1: we be having this conversation with you? Do you think
Speaker 1: if that hadn't happened, Um, I think it adds to
Speaker 1: the ability of activists to do these kind of things.
Speaker 1: I think we probably would be seeing some large scale activism.
Speaker 1: I mean, obviously it paused a bit during COVID, and
Speaker 1: so there's this sort of money on the sidelines it
Speaker 1: was going to be deployed. You coupled that with the
Speaker 1: fact that valuations have come in a lot, and you
Speaker 1: get that sort of inevitable uplifting activism. But I think yes,
Speaker 1: the rule changes have definitely made either. I think Pelts himself,
Speaker 1: when he came out against Disney earlier this year, was
Speaker 1: very clear on that point that the universal proxy rules
Speaker 1: in some way facilitated his campaign and actually was something
Speaker 1: he had lobbied quite hard to get UM introduced. Okay, so, Ed,
Speaker 1: what what do you think it's gonna look like like,
Speaker 1: what what's the You know, ultimately there's exits that these
Speaker 1: investors are looking for, but like when when are they
Speaker 1: willing to sort of settle and and what is it?
Speaker 1: How does the trajectory play out for for what's in store?
Speaker 1: Still so, I think usually activists want some some form
Speaker 1: of control, and that's more often than not in the
Speaker 1: form of a board seat or you know, getting one
Speaker 1: of their sort of independent people nominated as board of
Speaker 1: directors um in very big companies. I mean, yes, it's
Speaker 1: possible to do that, and they often do achieve that,
Speaker 1: but it's usually minority slates as opposed to whole control slates.
Speaker 1: All right, Ed Hammond, thank you so much. Steals, reporter
Speaker 1: at Bloomberg News on the phone in New York City.
Speaker 1: Jill Webber, the editor of Bloomberg Business Week, here in
Speaker 1: studio this story, as we mentioned in the upcoming new
Speaker 1: issue of Bloomberg Business Week, out later this week. Already
Speaker 1: on the Bloomberg and at Bloomberg dot com. This is
Speaker 1: Bloomberg Radio. You're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekdays from two to five pm Easter
Speaker 1: on Bloomberg Radio. The Bloomberg business band you Doo. You
Speaker 1: can also listen live to our flagship New York station
Speaker 1: Just Say Alexa play Bloomberg E Love and Dirty. Alright, Tim, So,
Speaker 1: as we mentioned, shares a Bed Bath and Beyond their
Speaker 1: up year today still down more than from a high
Speaker 1: back in August two. It's been often grouped among the
Speaker 1: meme stocks actively traded by retail investors, and the company
Speaker 1: is indicated it's getting ready for a potential bankruptcy filing.
Speaker 1: How it got there and who's to blame that is
Speaker 1: the subject of another one of our most read stories
Speaker 1: on the Bloomberg Today. With more on her story, Let's
Speaker 1: bring in Joette Newman, Bloomberg News US luxury retail and
Speaker 1: personal care industries reporter. She's with us right now when
Speaker 1: our Bloomberg Interactive Broker's studio. So, Janette, who is to
Speaker 1: blame for what's happening at Bed Bath and Beyond. Well,
Speaker 1: there are many people. Um to blame, is the is
Speaker 1: the short answer. And I think, I mean one one
Speaker 1: thing that is to blame is Amazon. But I think
Speaker 1: Amazon kind of you know, whenever there's retail bankruptcies, people
Speaker 1: kind of cat you know, this is another one bites
Speaker 1: the dust because of Amazon. And it's much more complicated
Speaker 1: than that because obviously there's a lot of retailers out
Speaker 1: there who are competing against Amazon and they're doing and
Speaker 1: they're doing fine. So Amazon is you know, somewhat to
Speaker 1: blame for Bedbad where Bed Bath and Beyond ended up,
Speaker 1: but it's a small portion of the of the blame.
Speaker 1: And just over over the past you know, several years,
Speaker 1: there's been a series of management missteps and miscalculations that
Speaker 1: led the company to where it is today. So it's
Speaker 1: it's um structural forces with Amazon, but also you know,
Speaker 1: mistakes by managers over the past several years. Well, talk
Speaker 1: to us about some of the mistakes because we've been
Speaker 1: talking about retail I feel like for over a decade
Speaker 1: in terms of how we got overstored too many strategies
Speaker 1: out there, and we've seen fall at I mean, we
Speaker 1: even just see i mean, let's go on here post
Speaker 1: pandemic of just so many retail that have whittled down,
Speaker 1: you know, their stores, their brick and mortar stores. So
Speaker 1: what specifically though in the Bed Bath and Beyond strategy
Speaker 1: as itt that they just kind of messed up with.
Speaker 1: So they definitely didn't invest enough in in online so
Speaker 1: that that left them kind of, you know, flat footed
Speaker 1: competing against Amazon that omni channel. Right, I can go
Speaker 1: to the store, I can buy online from you guys
Speaker 1: and all that good stuff. Exactly. They didn't. They didn't,
Speaker 1: They didn't do that well. They spent a lot of
Speaker 1: money UM buying lots of companies, for example by By Baby,
Speaker 1: Christmas Tree Shops. They spent a ton of money billions
Speaker 1: and billions UM on share on share buy backs. That
Speaker 1: was kind of the previous leadership. Then a new CEO
Speaker 1: a couple of years ago UM took over. He was
Speaker 1: the former head UM chief merchant at Target. So it's
Speaker 1: a really big deal Mark Tritt, and people were really
Speaker 1: excited about what he was going to do to potentially
Speaker 1: turn this, uh this company around and and in fact,
Speaker 1: he was not able to turn it around. And you know,
Speaker 1: long story, hopefully people can can read that, can read
Speaker 1: the story. But some of what he did was also
Speaker 1: double down on share buy backs, so spent a billion
Speaker 1: dollars at a time when the company didn't have necessarily
Speaker 1: that cash on hand, and also made a pivot to
Speaker 1: UM white label or private label brands and that's something
Speaker 1: that for a retailer can actually make a lot of
Speaker 1: sense because essentially you're cutting out the middleman, right, so
Speaker 1: it's like you're going to the factory in China and
Speaker 1: you're sourcing the products. Um doesn't it seem crazy in
Speaker 1: hindsight because it's the kind of story you like a
Speaker 1: meta candles or I need some towels, or I need
Speaker 1: a rug for the bathroom. I go in bam, do
Speaker 1: it go right? Right? And so the private label thing
Speaker 1: can make sense because there's higher there's higher margins, is
Speaker 1: more profitable for companies. But they did it at right
Speaker 1: like when the pandemic hit, so they weren't able to
Speaker 1: effectively source all of their their new products from China.
Speaker 1: And also they ended up doing it at the expense
Speaker 1: perhaps unintentional, but at the expense of some of these
Speaker 1: well known brands that took people to the store for decades,
Speaker 1: Kitchen Aid, Oxo, all those brands. So now they had
Speaker 1: all their own new brands that people didn't know, didn't recognize,
Speaker 1: didn't resonate with the customer, and there wasn't the same
Speaker 1: availability of the kitchen Aids and the Oxos, so customer
Speaker 1: or is then that that started the company on a
Speaker 1: downward spiral. Right, customers go there, they don't see, they
Speaker 1: don't see what they want. The company's burning cash cash is,
Speaker 1: you know, their cash pile is is starting to dwindle.
Speaker 1: Suppliers start to get really nervous because they think that
Speaker 1: they're not going to get paid. Um, suppliers pull back,
Speaker 1: shelves end up being empty. Starts a vicious cycle where
Speaker 1: that if a shelf is empty. Yeah, yeah, So it's
Speaker 1: just it's this downward spiral that they got caught that
Speaker 1: they got caught in. And they've been known for having
Speaker 1: like right the inventory, you could just see it piled up.
Speaker 1: It was even more striking, I think because of you know,
Speaker 1: it had been kind of like a stack at high
Speaker 1: and let it fly as what they would what they
Speaker 1: would call it in retail back in the back in
Speaker 1: the day, you know, So I think that that was
Speaker 1: one of the things that also it was just such
Speaker 1: a stark contrast to what the company had had been
Speaker 1: And it's been in that downward spiral now for you know, um,
Speaker 1: nearly nearly a year. So a downward spiral that's very
Speaker 1: difficult to get out of. So how long is this
Speaker 1: downward spiral and and what could happen? I mean, what
Speaker 1: could the future of bed Beth and Beyond look like?
Speaker 1: On the other side? Is there another side? Um? There
Speaker 1: we have we have reported that our colleagues on the
Speaker 1: kruptcy team have reported that liquidation is possible. So liquidation
Speaker 1: meaning you know, Alla Barney's like a Barney's, you know,
Speaker 1: it doesn't exist. Circuit City doesn't exist anymore. Um, towys Arrest,
Speaker 1: at least in the US, doesn't exist anymore. We have
Speaker 1: reported that that is possible because of the dire financial
Speaker 1: situation that they're in. It's a it's a lot of
Speaker 1: meme stock. But is there a winner if if people
Speaker 1: can't go to bed Bath and Beyond or Bye Bye Baby?
Speaker 1: Is it a company like Target? Is it Amazon? Who
Speaker 1: could some winners be because people need this stuff? Yeah?
Speaker 1: I think I think it's all. I think it's all
Speaker 1: of the above. I mean, in in past retail bankruptcies,
Speaker 1: there often hasn't been a huge jump at any one retailer.
Speaker 1: You know, in Circuit City went out of went out
Speaker 1: of business. It wasn't like best Buy saw a huge jump.
Speaker 1: But because it's a slow decline of something where people
Speaker 1: have already been going to those places anyway. Yeah. Yeah,
Speaker 1: and sometimes people end up buying less. Like if you
Speaker 1: you you buy more because you have a store near you,
Speaker 1: And if you don't have that store near you, then
Speaker 1: some of the demand actually just also dissipates. So there's
Speaker 1: gonna be winners target Amazon. But I don't think none
Speaker 1: of these companies are going to see the huge boosts
Speaker 1: at all of the all of the traffic from bed
Speaker 1: bath is going to go to them. Um, my apartment
Speaker 1: is not so happy about this. Okay, so we got
Speaker 1: a baby on the way is yeah, yeah, we got
Speaker 1: a baby on the way, so we need bye bye baby.
Speaker 1: And then my wife really likes face values, which is
Speaker 1: part of the bed bathroom beyond ubrelative is it is?
Speaker 1: And And look, I mean a lot of people are
Speaker 1: not very happy, you know. I mean this was a
Speaker 1: beloved brand. Um the famous coupons that drove that drove
Speaker 1: a lot of people to the to the store. And
Speaker 1: also you know there's a lot of um in it's heyday.
Speaker 1: In two thousand seventeen, the company had sixty five thousand employees.
Speaker 1: Now it has less than thirty thousand. But those you know,
Speaker 1: those people's jobs are at risk. We've written about how
Speaker 1: their severance payments, they haven't they haven't received their severance
Speaker 1: pay so there's also a lot of workers and employees
Speaker 1: who are at risk here. I mean, I do wonder
Speaker 1: with you know, the growth at things like targeting other
Speaker 1: stores where and and online where it is so easy
Speaker 1: to get so many of the goods that they offer
Speaker 1: and get them pretty quickly. Is it just a case
Speaker 1: we didn't need that model. I'm curious what retail experts
Speaker 1: have said that just that model was just not needed
Speaker 1: anymore because it was kind of a one stop shopping
Speaker 1: for a lot of different things, right. I think that
Speaker 1: it at least what what what I have heard of
Speaker 1: what I have learned is that it's not necessarily that
Speaker 1: the model wasn't needed, is that the model wasn't well executed.
Speaker 1: I think there is still space for this model. And
Speaker 1: in terms of what might happen next, you might see
Speaker 1: the company might go into bankruptcy. Then sometimes like companies
Speaker 1: will buy up the intellectual property and you'll have an
Speaker 1: online version of Bad Bath and beyond. That happened with
Speaker 1: Peer one, for example. There's no more Peer one stores left,
Speaker 1: but there's a peer one dot com and and and
Speaker 1: the toys arrus So, So how loved is not baby,
Speaker 1: is bad, bath and beyond apart from the Master Households,
Speaker 1: and I think you know it was it was one
Speaker 1: of the biggest home goods you know, still still is
Speaker 1: one of the biggest home good stores in in in
Speaker 1: the US. So I think that it is it is
Speaker 1: quite beloved, And I think that's what you know, creditors
Speaker 1: in the company right now are trying to hash out
Speaker 1: like how how much has it loved and how much
Speaker 1: is that going to um pay? Essentially how much money
Speaker 1: do they have before they've got to do something. I
Speaker 1: mean they are they are actively in bankruptcy talks as
Speaker 1: as as as we are speaking, there in bankruptcy. There
Speaker 1: in bankruptcy talks. So they've been burning burning cash for
Speaker 1: about a year and you know, in the last quarter
Speaker 1: sales fell about year over year. I mean that that's
Speaker 1: that's that's a ton all right, We're gonna leave it
Speaker 1: on that note. Jeanette, Thank you so much. Janette Newman,
Speaker 1: she is US luxury retail and personal care industries reporter
Speaker 1: at Bloomberg News. You're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live week days from two to five pm
Speaker 1: Eastern on Bloomberg Radio, The Bloomberg Business and and You Too.
Speaker 1: You can also listen live to our flagship New York station,
Speaker 1: Just Say Alexa play Bloomberg, e Love and Dirty. Billionaire
Speaker 1: b Tamadonni is having a rough start to three. The
Speaker 1: Indian industrial Tycoons Empire has taken a roughly one billion
Speaker 1: dollar hit in a matter of days following accusations of
Speaker 1: financial wrongdoing from an American activist short seller that is
Speaker 1: the subject of this week's cover story. Nathan Anderson of
Speaker 1: Dedenburgh Research says the Donnie is quote pulling the largest
Speaker 1: Cohn in corporate history. Among Anderson's key allegations is that
Speaker 1: people close to Donnie have used a network of obscure
Speaker 1: offshore shell companies to buy and sell shares in his
Speaker 1: businesses in order to make them appear more valuable. Well
Speaker 1: to help us break down a Donnie Group's rapid rise
Speaker 1: in value and why Hindenburg Research is accusing it of
Speaker 1: widespread misconduct, which the billionaire himself denies. Returned out to
Speaker 1: Bloomberg Business Week, Markets and Finance editor Pat mcneer and
Speaker 1: Bloomberg News Wealth reporter unders melon. Now, Pat, I do
Speaker 1: want to start with you help us at the stage here,
Speaker 1: because I think Guatamadonni necessarily was not a household name. Um,
Speaker 1: how did he become one of the world's richest men
Speaker 1: and who is he? Well, he may not be a
Speaker 1: household name in the United States, but he is absolutely
Speaker 1: a household name in India. Um. He's probably one of
Speaker 1: the most important businessmen in modern India. Almost anything that
Speaker 1: you might do in India, his businesses will touch your life.
Speaker 1: So he's built this enormous empire. But a lot of
Speaker 1: the growth in its value really came during the global
Speaker 1: everything rally that began with the snap back from the
Speaker 1: COVID crash. But it just kept going even through two
Speaker 1: You just like when you when you do a chart,
Speaker 1: you just see it just going like hockey stick. Um.
Speaker 1: But then also just even in two is like global
Speaker 1: markets were falling, this one's still just going up, up,
Speaker 1: up and up. So uh, he's become sort of this
Speaker 1: like very visible global success story, you know, and he
Speaker 1: starts coming on the radar of even people you know
Speaker 1: outside of India. He may not be a consumer household
Speaker 1: name but if you're like watching as Andres does, he
Speaker 1: is now beginning to like, you know, top every league
Speaker 1: table that you can see. I mean, this was Asia's
Speaker 1: richest man, India's richest man. He was one of the
Speaker 1: richest people in the world. Anders come on in on
Speaker 1: it because he was also a man who seemed to
Speaker 1: like his privacy and kind of stay out of the limelight.
Speaker 1: Talk to us a little bit more about his empire
Speaker 1: and then the allegations by Hindenburg. Yeah, he definitely has
Speaker 1: tended to stable of the radar until recent years. And
Speaker 1: his empire really is one that touches a lot of
Speaker 1: citizens in India every day. He owns a series of
Speaker 1: infrastructure companies that that all hang together in when one conglomerate.
Speaker 1: So everything from coal mines to power plants, to power lines,
Speaker 1: to cements, production facilities and data storage centers. And he's
Speaker 1: getting into media and he owns food companies. So it's
Speaker 1: things that touch lots of Indian citizens every day. And
Speaker 1: he sort of came onto the scene internationally two when
Speaker 1: things started falling, he just really went off the church
Speaker 1: that shares of his companies just went up, up up,
Speaker 1: and all of a sudden he was the second richest
Speaker 1: man in the world in September last year, which was
Speaker 1: just quite surprising to see because the rice was it
Speaker 1: was just so incredibly baffling, especially for infrastructure companies, which
Speaker 1: don't really tend to have those kinds of rich valuations,
Speaker 1: and that piqued a lot of interest among people who said,
Speaker 1: this just doesn't make sense. It's too good to be true.
Speaker 1: These financials just can't be they can't be real. There's
Speaker 1: been whispers and news reports in India for quite a
Speaker 1: few years about various aspects of the finances of his companies,
Speaker 1: but nothing really had happened. But that obviously changed a
Speaker 1: couple of weeks ago when Hindenberg Research put out their
Speaker 1: Hunter Page note, sort of aggregating a lot of what
Speaker 1: had been out there already and then dove deeper into
Speaker 1: certain aspects. And most people in India, i think it's
Speaker 1: safe to say, expected that nothing would really happen. But
Speaker 1: the shares of his companies started falling, and then they
Speaker 1: just fell and fell and fell. Andrews we as we
Speaker 1: were preparing this story and it comes it comes through
Speaker 1: so well. In your piece, Um talked a lot about
Speaker 1: kind of a culture clash between in UM Corporate India
Speaker 1: and UM sort of it's suddenly it got big enough
Speaker 1: that it met the markets and the end of the
Speaker 1: way that people operate in UH New York and London
Speaker 1: and other financial markets, and it suddenly met this kind
Speaker 1: of brass knuckles culture of shorts UM. And can you
Speaker 1: just talk a little bit about sort of like how
Speaker 1: that's played out. Yeah. So one of the unique aspects
Speaker 1: with gout Madani's group of companies is that it's it's
Speaker 1: built sort of like a traditional Indian family conglomerate, which
Speaker 1: is UM a series of businesses that that family that
Speaker 1: it's sort of like a group of businesses that a
Speaker 1: family builds over time, and they tied together sometimes in
Speaker 1: some ways, and and you can help support each other
Speaker 1: financially when needed, and you can move personnel between in
Speaker 1: them UM. And this has been it has a long
Speaker 1: storied history in the Indian business culture in the United States.
Speaker 1: They used to be common back in the day. They
Speaker 1: are much less so now. UM. And one thing that
Speaker 1: people that I talked to ahead of writing the story
Speaker 1: you pointed out to me was that within these conglomerates,
Speaker 1: historically there has tended to be quite a bit of
Speaker 1: really related party transactions and money being moved between different
Speaker 1: parts of of the conglomerate. And um. Sometimes that might
Speaker 1: have been done in ways that others would not pick
Speaker 1: up on, or that security lawyers maybe would frown upon
Speaker 1: because it was sort of a family affair and UM
Speaker 1: and that's something that some people are told to stressed
Speaker 1: that here you have a certain culture of doing business,
Speaker 1: a certain way of doing business that has worked extremely
Speaker 1: well for the country over a really long time, that
Speaker 1: is now clashing with how things are done in the
Speaker 1: financial centers of capital like New York and London, where
Speaker 1: the culture is very different. Most companies tend to have
Speaker 1: a really broad shareholder base and not be controlled by family.
Speaker 1: Boards tend to not be stacked by family members, executive
Speaker 1: roles tend to not be stacked by family members. UM.
Speaker 1: And a lot of people in India are feeling a
Speaker 1: sense of frustration, I think because they feel like people
Speaker 1: in the West just look at this kind of corporate
Speaker 1: structure and think that there's something inherently suspicious with it,
Speaker 1: when in reality it's it's just a it's a slightly
Speaker 1: different way of just looking at how business is done
Speaker 1: and how priorities are set. The other thing I just
Speaker 1: want to under I think another layer that you do
Speaker 1: so well in your reporting is the connection between India,
Speaker 1: the country, India, the Prime Minister and a Donnie Right.
Speaker 1: The relationship just seems very close. Yes, Donnie and Prime
Speaker 1: Minister and round Remodi have known each other for twenty years.
Speaker 1: And people that knowing me a well, they say that
Speaker 1: these two are are quite close and their goals are
Speaker 1: aligned and they have benefited from each other. And in
Speaker 1: that vein, Donnie has especially in recent years taking on
Speaker 1: a really strong profile of trying to link himself and
Speaker 1: his company with the future UM and the success of India.
Speaker 1: And that's also something that is pushed really hard on
Speaker 1: now that the company is under attacked by a New
Speaker 1: York short seller. Well, it's a great deep dive and
Speaker 1: I feel like there's so much information that really gives
Speaker 1: us a much clearer picture of who this this individual
Speaker 1: is and what's going on in it. And it is
Speaker 1: over as we know, because the share price continuing to
Speaker 1: be under pressure. UH this week our thanks to Bloomberg
Speaker 1: News Wealth reporter Anders Mellin and Bloomberg Business Week Markets
Speaker 1: and Financial editor Pat reagni Er. You're listening to the
Speaker 1: Bloomberg Business Week podcast. Catch us live week days from
Speaker 1: two to five pm Easter on Bloomberg Radio, The Bloomberg
Speaker 1: Business and You too. You can also listen live to
Speaker 1: our flagship New York station, Just Say Alexa Play Bloomberg
Speaker 1: e Love and Dirty. We love talking about the travel
Speaker 1: industry and we love talking about it with our next guest, Um.
Speaker 1: We are, though, keeping a watch on shares of Chicago.
Speaker 1: We've seen some selling, a bit of a sell off
Speaker 1: today following the company's latest quarterly update. Stock is up,
Speaker 1: though almost thirty percent year to date, still down more
Speaker 1: than sixty from the high back in March of one.
Speaker 1: Like a lot of names in the space, fourth quarter
Speaker 1: earnings for the company per share missing the average analyst estimates.
Speaker 1: But let's talk about the business. Let's take a look
Speaker 1: at what's happening going forward. Great to be checking in
Speaker 1: again with Axel Hey for his CEO at Travago joining
Speaker 1: Spa Zoom from Dusseldorf. Dusseldorf, I can't even say it.
Speaker 1: Don't ask me to say Matt Miller is listening and say,
Speaker 1: oh my god, mass or can't you get it right,
Speaker 1: I'm checked, but I'm not German. All right. Um axel,
Speaker 1: good to have you here with Mike and myself. How
Speaker 1: are you? I'm well, how are you? I'm doing okay,
Speaker 1: I'm doing okay. Talk to us about the quarter. First
Speaker 1: of all, I mean, the culture has been has been great.
Speaker 1: I mean, let's be honest, I mean, the whole year
Speaker 1: has been has been terrific. If you're in travel, Um,
Speaker 1: all of us wanted to travel and we have the
Speaker 1: money to spend it, so we we haven't traveled us
Speaker 1: as we used to for for two years. We haven't
Speaker 1: died in wine for two years. So um. Yeah. Two
Speaker 1: was the of the travel industry act. As we get
Speaker 1: back into sort of hopefully a more normal economic cycle
Speaker 1: with the pandemic disruptions in the ver view mirror, how
Speaker 1: do you think travel fits into that cycle? Is would
Speaker 1: weakness and travel be a leading indicator of the economy,
Speaker 1: do you think? Or does it weeken along, you know,
Speaker 1: coincidentally with the economy. It's difficult to say. I mean,
Speaker 1: I mean from from our perspective, and one of the
Speaker 1: key learnings has been of the pandemic has been that
Speaker 1: travel is not really luxury. Good but it's it's a
Speaker 1: basic necessity. I guess we've all experienced it, sitting in
Speaker 1: lockdown and not being able to get a break and
Speaker 1: break out of our daily routine. And I think a
Speaker 1: lot of people have experienced that. So so we do
Speaker 1: think that that people will continue to travel. Irrespective of
Speaker 1: the economic scenario that you're thinking of. They will, um,
Speaker 1: you know, save money on traveling to a greater or
Speaker 1: lesser extent, depending on how much money is available. But
Speaker 1: we do believe that people will continue to travel. Tell
Speaker 1: us what the trends that you're seeing so far, that
Speaker 1: you saw in the last quarter and coming up, uh,
Speaker 1: and going into this new year. So far we're already
Speaker 1: one a month and a week or so in here.
Speaker 1: Who's traveling? What kind of trips are they taking? Um?
Speaker 1: Are they comfortable paying the prices offer? Are they're looking
Speaker 1: for better deals? What's going on? Yeah, I mean, let's
Speaker 1: start with the with the obvious. Prices are up also,
Speaker 1: so traveling is expensive, and it would stay expensive and
Speaker 1: prices continue to go up if you look at the
Speaker 1: year of the year trends, um and UM. And I guess,
Speaker 1: like like everything else, it's getting more expensive and and
Speaker 1: like with everything else that that is getting more expensive,
Speaker 1: travelers are trying to save money and and what they
Speaker 1: are doing, and we've we've seen some indications of that
Speaker 1: in queue four A ready UM. The first first lever
Speaker 1: that travelers are pulling is they are going to different locations,
Speaker 1: so UM cheaper locations, not not the top cities, but
Speaker 1: more um, more hidden gems UM. The second lever that
Speaker 1: travelers are pulling is they're trading down on hotel categories
Speaker 1: and so two to three stars are gaining and share
Speaker 1: four to five are are losing. And and the last
Speaker 1: one is that the people um cut the overall length
Speaker 1: of stay UM to save some money. But we do
Speaker 1: expect that despite all these these trends that we are seeing,
Speaker 1: that the overall market will be up in three act.
Speaker 1: So I'm wondering how all these geopolitical issues play into
Speaker 1: your business and the travel industry. I mean, obviously there's
Speaker 1: Russia and Ukraine. Also a lot of unrest now in
Speaker 1: South America and prove some you know, political uncertainty in Brazil.
Speaker 1: Is any of that showing up in the numbers? Yet?
Speaker 1: Are people avoiding some of these South American destinations? Yeah? Absolutely,
Speaker 1: I mean that's that's to be honest, that's the beauty
Speaker 1: of running a global business. You always have a few
Speaker 1: markets where you have some turmoil, um and and and
Speaker 1: stability is not good for travel, so you want to
Speaker 1: make sure that you can get somewhere, have a good
Speaker 1: experience and also get back safely. Um and I mean
Speaker 1: Ukraine and Russia is obviously has been has been a
Speaker 1: very very severe disruption and it's obviously a terrible situation
Speaker 1: where you have the whole markets that that are they're
Speaker 1: not traveling and where you can't travel to. But also
Speaker 1: um disruption of some of the flight routes, etcetera. UM.
Speaker 1: On a global level, it's usually evening out. But yeah,
Speaker 1: you can clearly see the immediate impact of a crisis
Speaker 1: of our uncertainty in in any given regional country. Accell.
Speaker 1: What about Europe specifically, which you know so well, you guys,
Speaker 1: I think your biggest chunk of revenues essentially comes from Europe.
Speaker 1: So what would you from what you're seeing, um, what's
Speaker 1: going on in Europe and that economy specifically, Yeah, I
Speaker 1: mean it's it's Europe is a bit difficult to say
Speaker 1: because one one key, um key assumption that you need
Speaker 1: to have to to predict the year is where you
Speaker 1: go for a soft or heard landing, And the discussion
Speaker 1: in Europe is the same then in the US it
Speaker 1: will all depend on on the central bank and whether
Speaker 1: the economies will dip into a recession. UM. I think
Speaker 1: that the hour of view on Europe is slightly more
Speaker 1: negative than the US. So we think it's it's more
Speaker 1: likely that you will have a hard landing than a
Speaker 1: soft landing UM in the US. But even in that scenario,
Speaker 1: we do expect the overall travel span to be up.
Speaker 1: So actually, any big plans for three, any any changes
Speaker 1: coming to the company, or any expansion plans. Yeah, I
Speaker 1: mean you always have to have to have plans, and
Speaker 1: I guess you you always have to prepare for, you know,
Speaker 1: the even difficult times and and think about the opportunity
Speaker 1: that's arising from it. So the the plan or the
Speaker 1: initiative that we are most excited about is our direct
Speaker 1: hotel initiative. And the reason why that is is UM,
Speaker 1: when you think about the online accommodation industry, UM, we
Speaker 1: think that the biggest opportunity that is that is out
Speaker 1: there is to connect travelers directly with hotels UM and
Speaker 1: allow have a list in a very convenient way to
Speaker 1: book all the potential hotels directly from one side, UM
Speaker 1: interacting directly with the hotelier, and for the hotelier to
Speaker 1: interact directly with the the traveler and customize their offering,
Speaker 1: whereas most of the bookings are either in a very
Speaker 1: inconvenient way where you go to the hotel website directly
Speaker 1: or have to call them or are going through O, T,
Speaker 1: A S. And UM. Yeah, I mean that's why why
Speaker 1: we have been pushing UM quite aggressively now in in
Speaker 1: a test markets are coverage of direct hotel access UM.
Speaker 1: We are now at fifty and we want to reach
Speaker 1: eight percent by end of the year. And we do
Speaker 1: believe that by offering this direct booking UM functionality on
Speaker 1: our website, we complement our existing offer and and can
Speaker 1: serve your travelers even better than we have done in
Speaker 1: the past. Axtell help me out there. How does that
Speaker 1: not kind of compete with what you already do? Yees?
Speaker 1: So it's a bit different. Yeah, So our research shows
Speaker 1: that twenty of travelers do want to book direct and
Speaker 1: the other eight I mean want to book direct in
Speaker 1: certain cases and UM I know, I'm just thinking about
Speaker 1: myself when when my children were young, UM, I had
Speaker 1: to book direct because I needed to adjacent rooms, which
Speaker 1: I can't really book through an O t A. Whereas
Speaker 1: when I was traveling for business, UM, I and a
Speaker 1: lot of cases just went through an O t A.
Speaker 1: It's easier to to cancel, it's easier to actually rebook
Speaker 1: something else. So it's really it's it's complimentary to what
Speaker 1: we are doing already. It's it's just making sure that
Speaker 1: for every UM specific situation and for every trip, we
Speaker 1: can serve the travelers as as well as possible. Excel. Uh,
Speaker 1: spring break coming up, I've I've got a college daughter
Speaker 1: is very excited. What are you thinking for springbreak? Easter season? UM?
Speaker 1: Is it boom times in the travel industry again, I
Speaker 1: know that's a very busy time for you. Absolutely, yeah,
Speaker 1: for sure. So if you find a good deal, you
Speaker 1: should lock it. UM and you, I guess you have
Speaker 1: the usual suspect Vegas on top of the list. But
Speaker 1: what is interesting from a US perspective that UM some
Speaker 1: of the international destinations have actually made it back into
Speaker 1: the top ten. So London, Paris and also Tokyo are
Speaker 1: back to back to the spring bank destinations. Hey, just
Speaker 1: quickly thirty seconds. Any signs of recession out there? Uh no,
Speaker 1: I don't know. Not from our perspective, we think stopped landing,
Speaker 1: stop landing really wild? And you are you getting all
Speaker 1: the workers you need? Another twenty seconds? Um, yeah, for sure.
Speaker 1: We've got a global brand recruit for globally and not
Speaker 1: in Germany though. You have to go global. Yeah, no,
Speaker 1: I remember you always talked about that. Hey, Axel, thank
Speaker 1: you so much. I know it's a little later where
Speaker 1: you are, and we really appreciate you joining us on
Speaker 1: this Wednesday. Axel, he for He's the chief executive officer
Speaker 1: over at Trovago, joining us from Dusseldorf, Germany. You're listening
Speaker 1: to the Bloomberg Business Week podcast. Catch us live weekdays
Speaker 1: from two to five pm Easter on Bloomberg Radio, the
Speaker 1: Bloomberg Business Band, you two. You can also listen live
Speaker 1: to our flagship New York station, Just say Alexa, play Bloomberg,
Speaker 1: E Loove and Dirty Ian. One thing that we've been
Speaker 1: talking a lot about robots, and I think this all
Speaker 1: has to come with so much attention being paid once
Speaker 1: again on artificial intelligence. We're gonna talk about that in
Speaker 1: regards to Microsoft a little bit later on, but we're
Speaker 1: just talking about robots getting smarter, what it means for
Speaker 1: our jobs, what it means for our world at large,
Speaker 1: and so, um, we did want to get into it
Speaker 1: because a certain Bloomberg Opinion column definitely caught our attention.
Speaker 1: Let's bring in Beth Coitch. She is, um someone who
Speaker 1: covers corporate America for us here at Bloomberg Bloomberg Opinion specifically,
Speaker 1: and she's here in our Bloomberg Interactive Broker's studio. Beth,
Speaker 1: I do feel like all of a sudden, AI, artificial intelligence,
Speaker 1: it's the new World's a girl, if you will. And
Speaker 1: so now we're like, oh my god, oh my god,
Speaker 1: what's gonna happen to our world? Um, In terms of
Speaker 1: the corporate world, AI still is already a big part
Speaker 1: of what goes on absolutely, and we've seen this for
Speaker 1: a long time and human resources already, right, AI is
Speaker 1: part of training, it's part of recruiting, it's part it's
Speaker 1: part of hiring. UM. So I think how explained to
Speaker 1: us how that is. Well. For example, if you submit
Speaker 1: a resume, you might have a company might have a
Speaker 1: system where it goes through and finds keywords. So if
Speaker 1: you have those keywords, you get passed onto the next level.
Speaker 1: So so we've already seen it sort of infiltrate parts
Speaker 1: of the process. Well, you know, I'm picturing this Arnold
Speaker 1: Schwarzenegger terminator coming to UH to fire me here, Beth.
Speaker 1: But you know, how would it work? Would it be
Speaker 1: a similar type of thing, just somehow the AI is
Speaker 1: able to assess your performance better than a human, or
Speaker 1: assess more employees in bulk better than a an HR manager. Yeah,
Speaker 1: I mean I think it's we have to be careful here.
Speaker 1: I don't think you know, an HR manager is going
Speaker 1: to push a button and now will come the pink slips, right.
Speaker 1: I think it's going to be a similar thing where
Speaker 1: it will scan and maybe do a first pass, and
Speaker 1: then a human will hopefully make the decisions. Of course,
Speaker 1: I'm sure some companies will try to rely solely on
Speaker 1: AI and algorithms. I'm not sure that's the best idea.
Speaker 1: I have to say. When I was reading through your story,
Speaker 1: one thing I thought about when I did a deep
Speaker 1: dive on UPS a few years back. Um, excuse me,
Speaker 1: and I went out with the driver and you know,
Speaker 1: they're inputting data, picking up packages, delivering packages. I mean
Speaker 1: there's a lot of information about that individual's day in
Speaker 1: terms of how productive they were. And I do wonder
Speaker 1: Amazon's using it as you highlighten your story, like how
Speaker 1: that data could potentially be used in terms of assessing
Speaker 1: the value, you know, the value of a worker. I mean,
Speaker 1: that's a really good point. Hourly workers have already been
Speaker 1: managed algorithmicically for a long time. I think what we're
Speaker 1: seeing now is whiters of output and stuff, right right.
Speaker 1: I think we're seeing a shift now to office workers. Right.
Speaker 1: We have so much more data on how people perform
Speaker 1: their key strokes, their mouse clicks, and I think that
Speaker 1: the data wasn't there before. Going to raise a journalist
Speaker 1: right right that? Sorry, sorry, keep going, keep going, Yeah,
Speaker 1: But I do think now that the data is there,
Speaker 1: it's going to start feeding into some of these automated decisions.
Speaker 1: I'm on the radio. That's why I'm not writing stories today. Right.
Speaker 1: My boss is if any robots are listening, that's my story.
Speaker 1: I'm sticking with it. But that's you know, I picture
Speaker 1: investors out there thinking, all right, AI is coming in HR,
Speaker 1: how do I invest in that who are there sort
Speaker 1: of third party software companies will be a Google, a Chat, GPT, like,
Speaker 1: is there anyone sort of taking the lead as a
Speaker 1: vendor for this type of product? Well, you know, it's
Speaker 1: interesting because I do think that we're the forefront of
Speaker 1: this is going to be tech companies right we they're
Speaker 1: already using it. I think a lot of them have
Speaker 1: their own technology. One thing is, I don't think a
Speaker 1: lot of companies really want to talk about this. You know,
Speaker 1: there's it comes across as the kind of callous um
Speaker 1: and so I do think surveillance so much right and
Speaker 1: I there will be pushed back from employees. We're going
Speaker 1: to see that eventually, if we haven't already. So I
Speaker 1: think that there there is going to be caution and
Speaker 1: weariness here about talking. It's like with hedge funds that
Speaker 1: use AI too. It's like fight club. The first rule
Speaker 1: of AI is you don't talk. I'll talk about how
Speaker 1: you're using it. You don't want to tip your hand.
Speaker 1: I guess no. It's a really good point. Um, And
Speaker 1: what kind of advantage is I guess it particularly gives
Speaker 1: who's ever using it? You guys in your story, um
Speaker 1: that you include a lot of a few surveys about
Speaker 1: what HR leaders say they will use it for. Is
Speaker 1: there some kind of big takeaway? Well, one of the
Speaker 1: big takeaways is something like nine of HR leaders said
Speaker 1: that they will rely to some extent on on software
Speaker 1: and algorithms if they're making labor cuts in processions, so
Speaker 1: we know it's going to happen. The other stat that
Speaker 1: stats that are kind of interesting is that they don't
Speaker 1: necessarily believe that it will make the right decisions, so
Speaker 1: they'll they say they're going to use it, but they're
Speaker 1: a little bit hesitant. So I think that's something that
Speaker 1: we all need to to keep in mind too. Yeah,
Speaker 1: do you think they'll still always be some sort of
Speaker 1: human element involved? You know, maybe AI spits out plenty
Speaker 1: names that you can perhaps lay off, and then a
Speaker 1: human goes through and sorts through. There needs to be um.
Speaker 1: I make the point in the column that human resources
Speaker 1: is about humans and we need to keep that in mind.
Speaker 1: I mean, a layoff is one of the most traumatic
Speaker 1: things that can happen to a person, and it's kind
Speaker 1: of unfair to turn that decision completely over to the robots.
Speaker 1: But I always think about, right the filtering of data
Speaker 1: is only as good as the inputs of data. And
Speaker 1: this is you know, we talk about it. I'm sure
Speaker 1: you do. You know the just concept of bias, yes,
Speaker 1: and data that's put into whatever group of data points
Speaker 1: and then your outcomes are going to be biased if
Speaker 1: the data is biased. So that's something that they've got
Speaker 1: to be thinking about, right, right, bad data and bad
Speaker 1: data out and I think people might believe, oh, this
Speaker 1: is a fairer way to do it, right, this is
Speaker 1: just based strictly on numbers. But we know that AI
Speaker 1: has the potential to encode bias. We've seen a lot
Speaker 1: of examples of that, and I think we're not going
Speaker 1: to get rid of this problem, right. We have to
Speaker 1: be careful and wary of that. Yeah, it's funny. I
Speaker 1: was talking to less Matt Partolini. He's works for Spiders,
Speaker 1: the E t F company, and they have an AI
Speaker 1: H E t F that basically scours thousands of SEC filings,
Speaker 1: annual reports, proxies, whatever, looking for certain things. And he said,
Speaker 1: there's there's a concern about companies starting to to sort
Speaker 1: of game that process, like they know what words the
Speaker 1: robots are looking for, and they'll start, you know, inserting
Speaker 1: them into their earnings, calls into their statements. I wonder,
Speaker 1: you know, it's when I wonder when we get to
Speaker 1: that point where sort of the employee starts to you know,
Speaker 1: get ahead of the AI. I guess we're you know,
Speaker 1: probably too early to say when that's coming. But do
Speaker 1: you think that's af fector at all? Yeah? I do,
Speaker 1: And I think the bigger risk might be though this
Speaker 1: the bias piece right where we where we just talked about.
Speaker 1: There's a really interesting example that a couple of people
Speaker 1: pointed me to have Amazon trying to create a system
Speaker 1: where it could it could find can't job candidates that
Speaker 1: it felt were going to be the longest, and it
Speaker 1: was based on historical applicating job applications. Most of them,
Speaker 1: not surprisingly we're talking tech, we're from men. So the
Speaker 1: system penalized women who applied for jobs. I think that
Speaker 1: this is you know, wait, how did it penalize them?
Speaker 1: Because because it was looking at past applications, it saw
Speaker 1: that most of them were from men. So when it
Speaker 1: was kind of calculating going forward, it was like most
Speaker 1: of our successful job candidates have been mailing. So women
Speaker 1: were penalized and as part of the process, but to
Speaker 1: speaking to what you just said, Mike, like you think
Speaker 1: about it in the future, like when someone is filling
Speaker 1: out a digital jobs application, do they put certain keywords
Speaker 1: in there to trigger, you know, being caught up in
Speaker 1: a job searching. I bet that's already happening. I bet
Speaker 1: that's already You can put your name is Carl Masters right,
Speaker 1: Oh my god. That reminds me of grade school when
Speaker 1: people winter, so that your teachers would call me Carl
Speaker 1: and I'd be like devastating. Um, how do you think
Speaker 1: about AIM more broadly in terms of the workforce, because
Speaker 1: I do think or just the word environment, I think
Speaker 1: we're all jumping on it and thinking about kind of
Speaker 1: those dystopian movies that are crazy. But I love that
Speaker 1: you remind us like we've been using it for a
Speaker 1: long time, Mike, As you say, the Investment space has
Speaker 1: been using AI. So how do you think we have
Speaker 1: to be smart about it when we use kind of
Speaker 1: throw this term around. Yeah. I think that there is
Speaker 1: a misunderstanding about what AI is, what it can do.
Speaker 1: And one of the things I liked about this example,
Speaker 1: this this column is that I do think there are
Speaker 1: some things that only humans can do, and it's part
Speaker 1: of that interaction. You know, again, the workforce is a
Speaker 1: human thing. We can't always we don't always know how
Speaker 1: our decisions are going to play out long term. Human
Speaker 1: intuition still plays a role. Well, and it seems like
Speaker 1: you know, AI has been around for a while now,
Speaker 1: companies are using it in various functions. But this whole
Speaker 1: chat cheep et thing really seems to have accelerated the conversation.
Speaker 1: You know, it seems like this just a little bit,
Speaker 1: you know, but it just seems like such a leap
Speaker 1: in innovation almost over night. Is that? Do you think
Speaker 1: that's a misperception? Is it? You know, just the fact
Speaker 1: that this thing launched. Um? But really, you know, it's
Speaker 1: it's not as big of a leap of innovation as
Speaker 1: it looks like. No, I think it is a big leap,
Speaker 1: And I think that is where we are talking about
Speaker 1: this so much. Somehow I managed to not mention that
Speaker 1: in my column. I should get points for that. But
Speaker 1: I do. I do think that people, if it hasn't
Speaker 1: been on your radar yet, I think it is now um,
Speaker 1: And I I do think we're going to see people
Speaker 1: closely watching what's next. Well, it's that it's the deep fakes,
Speaker 1: Like there's all of a sudden a lot of reporting
Speaker 1: on that, like just this ability to make things look
Speaker 1: so realistic in our world and how it can be
Speaker 1: misconstrued or just false information getting out there right. No,
Speaker 1: I agree? So, Um, robot pinks lips? Are they coming?
Speaker 1: Hopefully not? I'm stealing your term from our our Ariagami
Speaker 1: who was saying it. Wait, is you know? Is that
Speaker 1: just around the corner, robotic pink slips? Um? Beth really
Speaker 1: appreciate talking to you because it really just fits into
Speaker 1: this bigger, broader conversation we're having. Beth Coitch is your
Speaker 1: columnist to Bloomberg Opinion. You can check her out on
Speaker 1: Twitter and also check her out at Bloomberg dot com
Speaker 1: and on the Bloomberg A little bit more, you're listening
Speaker 1: to the Bloomberg Business Week podcast. Catch us live week
Speaker 1: days from two to five pm Easter on Bloomberg Radio,
Speaker 1: The Bloomberg Business and and you too. You can also
Speaker 1: listen live to our flagship New York station, Just Say
Speaker 1: Alexa play Bloomberg e Love and Dirty. As you know, Mike,
Speaker 1: you know Valentine's Days next week? Whoops, be your well
Speaker 1: that day along with Mother's Day are two of the
Speaker 1: biggest for the flower industry, which is why we wanted
Speaker 1: to check in once again with Christina's stanbl founder and
Speaker 1: CEO farm Girl Flowers. She joins us in our Bloomberg
Speaker 1: Interactive Broker studio based on the West Coast, but here
Speaker 1: in New York. So great to have you here. How
Speaker 1: are you. I'm good, Thanks for having me back. It's
Speaker 1: it's great to be in person this time. It's so great.
Speaker 1: I mean, we've talked to you, like throughout the pandemic. Um,
Speaker 1: how does the world feel. Does it feel like we're
Speaker 1: over the pandemic? Comp has your world sort of? I mean,
Speaker 1: I feel that there's residual effects that are still like,
Speaker 1: you know, impacting supply chain and transportation and things like that.
Speaker 1: But really I think we're holding onto, you know, getting
Speaker 1: as much money as you possibly can in those areas,
Speaker 1: and you know costs, you know, costners have not come
Speaker 1: down yet. Um, so I think that will normally next
Speaker 1: twelve months and come down at all a little bit,
Speaker 1: but definitely not where we were hoping to see them.
Speaker 1: So I think that this this next year is going
Speaker 1: to be really transformative that way, and kind of normalize
Speaker 1: a little bit more. You sound like Jay Powell. That's
Speaker 1: what I said. It's maybe yeah, well he was saying
Speaker 1: like maybe it's wishful things. You know, Christine, It's funny.
Speaker 1: I'm here. I'm a father, husband, father of three girls.
Speaker 1: So I've got certain occasions where I buy flowers right
Speaker 1: once when I get in trouble, obviously you know which
Speaker 1: so reading those cards. But the other is Valentine's Day
Speaker 1: and the other was you know, Theo's Daddy daughter dances
Speaker 1: that all got canceled during the pandemic. So I've missed
Speaker 1: your visitor in the pandemic days. How bad was it?
Speaker 1: Did you lose a lot of suppliers? I mean, I
Speaker 1: feel like the flower industry especially must have been really
Speaker 1: hard hit. Yeah it was. We actually benefited, though, I
Speaker 1: have to say, and I felt a little smarmy even
Speaker 1: saying that early on. I mean the gifting segment in general,
Speaker 1: and we were definitely in that that space really benefit
Speaker 1: from the pandemic because everybody were sending gifts instead of
Speaker 1: being in person. But that the flowers, yeah, thank you.
Speaker 1: But what that did was it created you know, we
Speaker 1: all had to build infrastructures that we couldn't support later on,
Speaker 1: so we you know, turned off marketing and you know,
Speaker 1: for ten and a half months, we just turned it
Speaker 1: off and we still did a growth, you know, and
Speaker 1: then one came and I always said, oh no, when
Speaker 1: vaccines become readily available, I don't know what's going to happen.
Speaker 1: I know something big is going to happen, but I
Speaker 1: don't know how big it's going to be. And we
Speaker 1: just built this infrastructure, you know, that we couldn't support
Speaker 1: any longer. And so then we had to rethink everything
Speaker 1: and be like, oh, you know, now we have to
Speaker 1: right size the business, which is like the dreaded word
Speaker 1: right And so then we had to do that. And
Speaker 1: then you know, last year everybody thought, okay, it's over,
Speaker 1: and it's like I can't wait until it's finally going
Speaker 1: to be over. Nope, not over, huh nope. So then
Speaker 1: you know, we have like transportation costs that are like
Speaker 1: you know, all the ancillary fees on top of ancillary
Speaker 1: fees on top of antler fees, and we have like
Speaker 1: containers that can't get there, and you know, flowers they
Speaker 1: can't get there on time, and flowers and number one
Speaker 1: thing you have to get them there quickly, and so
Speaker 1: not be able to get them there quickly. And then
Speaker 1: we had one month where like over half of our
Speaker 1: orders weren't delivered on time and it resulted in like
Speaker 1: five and a half million dollars of losses. And I
Speaker 1: mean things like that. It was just constant. And so
Speaker 1: this year we're like, you know, now we're in a
Speaker 1: down economy and I'm like, oh my gosh, this is
Speaker 1: ever going to really end. I don't know how to
Speaker 1: feel to own a business that's great, everybody should do it. Well,
Speaker 1: I'll say, as when you're a husband in trouble, those
Speaker 1: delays are no good. You need it like some You
Speaker 1: need it like yesterday for that because did to go
Speaker 1: back to some of the inflationary pressures. Because this is
Speaker 1: something we talked with UM, a person in the trucking industry.
Speaker 1: We're trying to really get a good feel. We've talked
Speaker 1: with chefs and while things have come down, they do
Speaker 1: talk a lot of that labor costs still are pretty high. Um,
Speaker 1: you said they've come down a little bit, but it's
Speaker 1: still your supply chain. It's still kind of expensive. Yeah.
Speaker 1: I mean, we're at the size of a company that
Speaker 1: we don't have the buying power that a lot of
Speaker 1: large companies have, and so I'm sure that they're they're
Speaker 1: seeing it come down much quicker than companies, you know,
Speaker 1: the medium size small medium companies are just really you know,
Speaker 1: the last ones to see those savings because we can't
Speaker 1: go and say, like we have you know, two hundred
Speaker 1: million dollars of buying power, you know, and go to
Speaker 1: the transfiaction companies that way. But so it's coming, but
Speaker 1: then it's also being offset by higher labor costs and
Speaker 1: things like that. So it's just, you know, we want
Speaker 1: to be able to to show our customers and have
Speaker 1: our customers realize these savings. And we every time we
Speaker 1: think we're going to be able to lower our prices again,
Speaker 1: it's not. Then it's just, you know, we're dipping into
Speaker 1: our margins again. Can you find all the workers you
Speaker 1: need and want? No? Absolutely not. So. UM, you know,
Speaker 1: we've been very creative about how we do that, you know,
Speaker 1: with partnerships with farms, um that are drop shipping for
Speaker 1: us and things like that. Um, it's just you know,
Speaker 1: it's really hard wage level employee, you know, labors really
Speaker 1: hard in the United States right now, does it feel
Speaker 1: like we're at the beginning of a down economy? You
Speaker 1: mentioned you know you're prepping for down economy. Is it's
Speaker 1: starting to feel like that for you for it's felt
Speaker 1: that way for a while now. I think we've you know,
Speaker 1: I definitely think that we've been there for a while.
Speaker 1: And nobody wants to actually call a spade a spade
Speaker 1: because demand is less, demand is far less, demand is
Speaker 1: far less. I mean, you know, we're discriptionary. I mean,
Speaker 1: like it, flowers are not a necessity even, you know,
Speaker 1: food seems even food in the gifting space, chocolates off
Speaker 1: like that feel like more of a necessity even than flowers. Um,
Speaker 1: I kind of agree with that, you know, the sweets
Speaker 1: and things, but um, you know, we're just you know,
Speaker 1: we benefited at times where you know where it was,
Speaker 1: you know, gifts were sent a lot, and then when
Speaker 1: you know, the economy goes down, people kind of tighten
Speaker 1: their belts a bit, and things like flowers don't seem
Speaker 1: as much of a necessity. And the great thing is
Speaker 1: where a bootstrap company and we spend less today all alone. Yes, absolutely,
Speaker 1: and so you know we'll get through it. I'm a
Speaker 1: hundred percent sure, we'll get through it. Unlike some companies
Speaker 1: that you know, I'm really feeling for that are reliant
Speaker 1: on raising capital right out and money is really expensive
Speaker 1: and things like that. You know, we've always done this,
Speaker 1: done it this way, and so we'll get through it.
Speaker 1: It's but it's gonna be tough. It's gonna be another
Speaker 1: tough year. Well in terms of then growth plans, what
Speaker 1: do you do? Do you put things on hold? Um,
Speaker 1: we really change our focus. So and I started this early,
Speaker 1: and I'm really glad that I did. UM and it
Speaker 1: panned out when I was it doesn't UM, but you know,
Speaker 1: we really I switched our focus from growth to profitability
Speaker 1: and so and I did that seeing what was coming
Speaker 1: ahead of us. Are you not profitable? Before? We always
Speaker 1: had to be profitable to a point. The thing that
Speaker 1: I said is the only way that we're like Amazon
Speaker 1: is that we ran as close to zero as possible
Speaker 1: and then reinvest the profits back into the company. So
Speaker 1: there were many times were like one percent profit and
Speaker 1: things like that. Um. There's a lot of sleepless nights
Speaker 1: before payroll for me in the last twelve years. UM.
Speaker 1: So we really focused on having more of a cushion
Speaker 1: and I'm glad we did that, and so we really
Speaker 1: we we did things that actually cut our revenue, and
Speaker 1: we knew it would cut our revenue, but it made
Speaker 1: us financially just healthier as a company. And so that's
Speaker 1: we're you know, going through this with that mentality. We're
Speaker 1: not growth at all costs. We are really maintaining a healthy, um,
Speaker 1: you know, a healthy stance and where we want to be. Well,
Speaker 1: I have to say what I love about you, and
Speaker 1: we have some flowers and I think our producer Aerielhead
Speaker 1: took a picture for those who are watching on YouTube
Speaker 1: and on our streaming service. Um, it's just organic and
Speaker 1: it's just beautiful. Twenty seconds left Valentine's Day. We can
Speaker 1: still order, yes, absolutely might get your order. Yes, yes,
Speaker 1: get your orders. Are still we're still taking orders right now.
Speaker 1: So let's go to farm reel Flowers dot com to
Speaker 1: placers now. We love flowers. Um, Christina, thank you so much,
Speaker 1: good luck, look forward to catching up with you in
Speaker 1: the future. Christina Stable, founder and CEO of farm Girl Flowers.
Speaker 1: You can find them on Twitter at farm Girl Flowers.
Speaker 1: And you are listening to Bloomberg Business Week, Carl Masser
Speaker 1: along with Mike Reagan. And this is Bloomberg Radio. You're
Speaker 1: listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: week days from two to five pm Easter on Bloomberg Radio,
Speaker 1: The blue Berg Business and and you too. You can
Speaker 1: also listen live to our flagship New York station, Just
Speaker 1: say Alexa, play Bloomberg e Love and Dirty. Alright, you
Speaker 1: watch the Super Bowl and you know what's always kind
Speaker 1: of a staple when it comes to the commercials is
Speaker 1: bud Wiser. And that's an old Budwiser commercial. Does that
Speaker 1: bring familiar to you? I haven't heard that one. I
Speaker 1: recognize that it's an old right, Paul. It's an old one. Seventies. Yeah,
Speaker 1: that's an old one, Paul. It's going back a little bit.
Speaker 1: All right. Well, the big game is this weekend. Will
Speaker 1: it be the Eagles? Will it be the Chiefs that
Speaker 1: take on the Lombardi Trophy? Time will tell. But already
Speaker 1: a winner is Fox, which sold out of its in
Speaker 1: game ads, some topping seven million dollars. With more on it,
Speaker 1: let's get to Bloomberg News Media reporter Jerry Smith here
Speaker 1: in our Bloomberg Interactive Broker studio. UM Good to have
Speaker 1: you here with Mike and myself. That sounds pretty optimistic,
Speaker 1: pretty nice. Yeah, this is there was a lot of
Speaker 1: uncertainty obviously coming into the Super Bowl. With the economy.
Speaker 1: We've seen a lot of advertisers pull back their budgets.
Speaker 1: But you know that certainly didn't dissuade a lot of
Speaker 1: advertisers from spending on the Super Bowl. It's funny, right
Speaker 1: because on the mobile, the social we've all been worried
Speaker 1: about advertising, but not for the big game here. Yeah,
Speaker 1: I mean, it's it's the power of live sports, and
Speaker 1: advertisers are still willing to pay upwards of seven million
Speaker 1: dollars for a thirty second ad because this is the
Speaker 1: largest TV event of the year. You're talking about getting
Speaker 1: your brand in front of over a hundred million people.
Speaker 1: People watch the commercials for the Super Bowl unlike a
Speaker 1: lot of other types of programs, and I don't go
Speaker 1: fast forward. I gotta say, as a lifelong Philadelphia Eagles fan,
Speaker 1: just this conversation alone is making me anxious. I was
Speaker 1: trying to pretend this game actually wasn't try it'll help,
Speaker 1: but cherry is that? Is that what it's all about,
Speaker 1: the fact that the Super Bowl is the one thing
Speaker 1: you can't fast forward or watch on demand. You know
Speaker 1: that this live advertising, this is sort of the last
Speaker 1: bastion for for live advertisers to really make their statement. Yeah,
Speaker 1: if you if you look at it. I mean, one
Speaker 1: of the craziest stats you'll see is UM last year,
Speaker 1: over a hunt, the top one most watched shows on TV,
Speaker 1: I think ninety four of them were UM sports. Uh,
Speaker 1: and the vast majority of those were NFL games. So,
Speaker 1: you know, you think about your dramas and your comedies
Speaker 1: and how they've increasingly moved from cable to streaming services. Uh,
Speaker 1: live sports is still UM. You know, it's still really dominant.
Speaker 1: It's expensive though, right for everybody who wants to air it.
Speaker 1: It's it's expensive for everyone involved. I mean, the advertisers, uh,
Speaker 1: certainly for the Super Bowl are paying top dollar. These
Speaker 1: TV networks are spending an enormous amount of money acquiring
Speaker 1: the rights to these games. Uh. So everybody's spending more
Speaker 1: UM and it's But the important thing to think about
Speaker 1: is the entire cable TV industry really depends on live sports.
Speaker 1: A lot of the people who still subscribe to cable,
Speaker 1: who are not the cord cutters are watching sports. So
Speaker 1: you know, if these TV networks, the day that an
Speaker 1: Amazon or an Apple years from now starts taking exclude
Speaker 1: of rights to some of these big events and more
Speaker 1: people cut the cord, the whole industry is really going
Speaker 1: to be It's almost like a dominoes. I want to
Speaker 1: go back to the ads in a in a moment,
Speaker 1: but let's just stay here with the sports rights, because
Speaker 1: you know, we are increasingly seeing the streaming companies, you know,
Speaker 1: pay up or want to have those exclusive sports rights
Speaker 1: or or will it be exclusive at some point or
Speaker 1: will it be where they show it, network show it,
Speaker 1: Like is it going to the point where streaming has
Speaker 1: it only? I think we're years away from that. I
Speaker 1: think the NFL is the best example where the NFL
Speaker 1: did deals with the big TV networks the NBC, CBS, Fox,
Speaker 1: at ESPN, and so they have the rights for the
Speaker 1: next decade. But they also did a deal with Amazon
Speaker 1: where Amazon had the exclusive rights to Thursday night football.
Speaker 1: So if you think about some other sports, the NBA
Speaker 1: now is in the process of renegotiating their deal. Currently
Speaker 1: it's on T N T and ESPN. Could potentially an
Speaker 1: Amazon or an Apple get some of those games. Um,
Speaker 1: that's a really big question in the sports media industry,
Speaker 1: and it's for the averag consumer. I think you're looking
Speaker 1: at a future where you have to have cable and
Speaker 1: you have to have multiple streaming services if you want
Speaker 1: to be able to watch all the sports that you
Speaker 1: want to see. Yea and Cherry. Obviously, last year, the
Speaker 1: crypto ads were the big buzz. I'm assuming uh, not
Speaker 1: so much this year. But is there any sort of
Speaker 1: growth industry that you know, pops out as as buying
Speaker 1: a lot of ads this year? You know, I remember
Speaker 1: back in the dot com day there's always the funny
Speaker 1: trade ads and stuff like that. Is there something to
Speaker 1: take that crypto place? Yeah? I think what's really interesting
Speaker 1: is that this is going to be the first time
Speaker 1: in more than three decades that you're gonna see Super
Speaker 1: Bowl ads uh from alcohol brands that are not uh
Speaker 1: Anheuser Busch InBev Um. It was really interesting to find
Speaker 1: out that they had the exclusive rights to be the
Speaker 1: alcohol brand for the Super Bowl since back since nine.
Speaker 1: They gave up those rights in June, So now you're
Speaker 1: gonna see ads from Molson Coors, which owns Miller Lte
Speaker 1: and Chords Light. You're gonna see ads from for Crown
Speaker 1: Royal Whiskey. Um. So you're starting to see more more
Speaker 1: alcohol ads this year. No other alcohol that ever were
Speaker 1: shown trying in a national super Bowl ad. There was
Speaker 1: that they had Antezard Bush and they're famous for their
Speaker 1: ads for the Super Bowl that you think about the
Speaker 1: Gladesdale as you think about the uh, the Frogs. I
Speaker 1: mean there's there's their classics, but they were you know,
Speaker 1: they had the exclusive rights to be the you know,
Speaker 1: the exclusive alcohol brand, and that's over now. So you're
Speaker 1: gonna see more alcohol brands. You're certainly not going to
Speaker 1: see as many crypto ads as we did last year
Speaker 1: when there were so many of them, people called it
Speaker 1: the Crypto Bowl. Um, Tom Brady, Yeah, crypt But I
Speaker 1: think you're gonna I also think you'll see a lot
Speaker 1: of the same players that you see a year after year.
Speaker 1: That Derrito's ad, the Pepsi ads, You're gonna see a
Speaker 1: ton of celebrities, which is pretty standard, and it always
Speaker 1: seems like, you know, the creative departments behind these ads
Speaker 1: are at their peak, you know, creativity for these ads. Uh,
Speaker 1: A few have come out already. Have any catch your
Speaker 1: eyes as especially entertaining so far. Yeah, I mean these
Speaker 1: are this is if you're a creative UM, if you're
Speaker 1: an advertising agency, this is your big moment um. You know.
Speaker 1: One thing that is particularly interesting is this idea of
Speaker 1: UM live betting. UM. There's a lot of sports books
Speaker 1: that are DraftKings and FanDuel have ads. And one thing
Speaker 1: that's particularly interesting is Rob Gronkowski, who was a tight
Speaker 1: end in his playing career. He's now retired. He's going
Speaker 1: to be kicking a attempting to kick a field goal
Speaker 1: uh live uh during the third quarter during a commercial
Speaker 1: for Fan Duel. This is part of this marketing campaign
Speaker 1: that they've had going for several weeks, and you can
Speaker 1: bet on whether he makes the kick or not. UM.
Speaker 1: And it's it's live. It's it's not a taped commercial.
Speaker 1: It's happening live. So that's kind of an innovative way, UM,
Speaker 1: you know, to do it. There's you're gonna see a
Speaker 1: lot of these partnerships. One is Netflix and General Motors,
Speaker 1: where you're gonna Will Ferrell he's gonna be appearing in
Speaker 1: UM episodes of Bridge or Tin or Squid Game, and
Speaker 1: he's gonna be driving electric vehicles that of General Motors
Speaker 1: and that's an interesting partnership. UM. So that's another thing
Speaker 1: that I've I've noticed is just these companies that are
Speaker 1: teaming up in their commercials. We're gonna we're gonna check
Speaker 1: in actually, um with the CEO of Hotel Planner in
Speaker 1: a moment and talk about lining up a hotel if
Speaker 1: you still want to head to the big game. UM.
Speaker 1: Travel companies not so much this year, That's right. I
Speaker 1: think you're gonna see fewer travel companies. And I think
Speaker 1: that's a reflection of a sign of the times where uh,
Speaker 1: you know, customers are people are dealing with inflation, and
Speaker 1: people are just you know, have less money to spend
Speaker 1: on travel. Um. I think you're going to see fewer
Speaker 1: auto commercials than you have in the past. Uh. Those
Speaker 1: can be for various reasons. Um, but yeah, it's it's
Speaker 1: gonna be um. Fox as much as people. You know,
Speaker 1: there's a lot of concern about advertisers pulling back their budgets.
Speaker 1: Fox said that they didn't see that much much of that. Um.
Speaker 1: The Super Bowl still dominates the media landscape, and you know,
Speaker 1: advertisers are still wanting to pay a lot of money
Speaker 1: to be seen on there. I'd hate to be the
Speaker 1: poor m I t grad at traff Kings or Fandel
Speaker 1: that has to set the money line on Grand Kit
Speaker 1: In that field goal, what do you think, Carol? I
Speaker 1: think called make it. I don't know that's that really
Speaker 1: his I want to say, it's like a twenty five
Speaker 1: yard field goal. And he's been training with um, you
Speaker 1: know for weeks, uh with Adam Vinit Terry, So I mean,
Speaker 1: who knows you might get the job with Dallas after
Speaker 1: after that? Oh my god. Paul Brandon's like um eminem
Speaker 1: and the spokes candies are they going to make an
Speaker 1: uh an appearance? Do we know? You know they pull
Speaker 1: those spokes candies And we were all trying to figure
Speaker 1: out is it a Super Bowl campaign? That's a good question.
Speaker 1: I mean what's interesting is that almost all of the
Speaker 1: commercials are released weeks in advance or days in advance
Speaker 1: online and the idea is to try and drum up
Speaker 1: as much conversation as you kind about your brand. But
Speaker 1: there are a few companies that are advertising that are
Speaker 1: going to be surprises. So I guess we just have
Speaker 1: to watch and tune in. Yeah, remember like when Mr
Speaker 1: Peanut like just the rest in peace and that's that's right.
Speaker 1: But it was all all of uh. It's a fun
Speaker 1: part of the game. And we'll I'll be watching. Jerry,
Speaker 1: thank you so much. Erry Smith. He's media reporter at
Speaker 1: Bloomberg News here in our interactive Broker studio. Find him
Speaker 1: on Twitter at Jerry F. Smith. Are you are listening
Speaker 1: in watching Bloomberg Business Week and this is Bloomberg Radio.
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, Elove and Dirty. We also wanted to bring
Speaker 1: to you someone we caught a went back in December
Speaker 1: when we were live on the Stanford campus to mark
Speaker 1: the Stanford Graduate School of Business, big name once again
Speaker 1: by Bloomberg Business Week is the top NBA program in
Speaker 1: the US. We had a conversation live on air, and
Speaker 1: we knew Tim we wanted to talk a little bit
Speaker 1: more with him. It's PAULA. Wayer, Senior Associate Dean at
Speaker 1: the Stanford Graduate School of Business, Professor of Economics, also
Speaker 1: the author of an Economist Goes to the Game, how
Speaker 1: to throw Away five eighty million dollars and other surprising
Speaker 1: insights from the economics of sports. He joins us via
Speaker 1: zoom from Stanford, California. Professor, are good to have you
Speaker 1: back with us. How are you great to talk to
Speaker 1: you again. Thanks for joining us. We we promised we'd
Speaker 1: do more with you, and we're eager to have you
Speaker 1: back this afternoon because we got so much to talk about,
Speaker 1: especially with regard to your book. But before we get
Speaker 1: to your you know what's in the book. I want
Speaker 1: to know what got you to write this book, Like
Speaker 1: what was the number that you ran across that this
Speaker 1: light bulb went off in your head and you said, Okay,
Speaker 1: there's there's so many inefficiencies when it comes to the
Speaker 1: way that people think about sports. It could fill a book. Yeah,
Speaker 1: I that's I don't think there was any one moment,
Speaker 1: although if maybe it was thinking about kids sports the
Speaker 1: first chapter of Youth Sports, which um may have been
Speaker 1: what really drew me into this, having kids and taking
Speaker 1: them to do sports and thinking about whether that was
Speaker 1: a good use of resources or not. So I think
Speaker 1: that may have really gotten me into it. Also, when
Speaker 1: I started the book, my son was UM in college
Speaker 1: and he helped me with a lot of the original research.
Speaker 1: There was a good chance for us to work together.
Speaker 1: He doesn't have much interest in economics, but he has
Speaker 1: a lot of interest in sports, so so it was
Speaker 1: a good chance to get to do some spend time
Speaker 1: with him while calling it work. Is your kid a
Speaker 1: pro athlete? Sorry? He was on the Gun High school
Speaker 1: baseball team. The reason I ask is because the first
Speaker 1: chapter is should you help your kid become a pro athlete? Yeah?
Speaker 1: You should not. UM, Well, it depends, that's where the
Speaker 1: chapter is. It depends. But for most kids the answer
Speaker 1: is no, you don't want to. UM. It's not the
Speaker 1: best use of funds to try to help your kids
Speaker 1: become a pro athlete. It is kind of shocking, though,
Speaker 1: I have to say, I remember we talked with you.
Speaker 1: That really resonated with me, because you know, I've seen
Speaker 1: it in people I know where they're like Johnny or
Speaker 1: Susan they're gonna be the best and they're gonna go
Speaker 1: pro o and da da da da da, and they
Speaker 1: never do because the odds are stacked against them. And
Speaker 1: I just find it interesting. Well, it is troubling if
Speaker 1: you give up other things. So if you sort of
Speaker 1: do it as I'm gonna learn a lot, I'm going
Speaker 1: to really focus on sports and that will help me
Speaker 1: be more disciplined and other things that might come out
Speaker 1: of it. There's not a lot of evidence that that
Speaker 1: helps you in the labor market later in life, by
Speaker 1: the way, but at least if you don't go all in,
Speaker 1: you can see the argument for it. What if it
Speaker 1: helps you get into college, that is a big So
Speaker 1: I think that if you're going to make the case
Speaker 1: for if you're going to make the case for investing
Speaker 1: in your sports career as a kid, I think you
Speaker 1: need one of two things. You either need to argue
Speaker 1: it's going to help you get into college, And one
Speaker 1: of my economist friends says, if you're going to do that,
Speaker 1: you should get your kid into fencing. The fencing is
Speaker 1: a particularly good way to help you get into a good,
Speaker 1: uh and elite college. So getting into college is one thing,
Speaker 1: and in the book I go into that. Of course,
Speaker 1: it's it's hard to even show a lot of evidence
Speaker 1: that that there's a big advantage to that, because, um,
Speaker 1: it might get you into a slightly better college. But
Speaker 1: economists generally aren't sure that the quality of the college
Speaker 1: on the margin makes that much difference. So if the
Speaker 1: same kid goes to Ohio State or Harvard, it's not
Speaker 1: a complete given that it has a big difference on
Speaker 1: their outcomes. And yet you do say, what if your
Speaker 1: kid is Kevin Durant. So that's the other So I
Speaker 1: said there were two reasons you might do it. One
Speaker 1: is college and the other is if your kid is
Speaker 1: six ft eight and very coordinated at age thirteen, then
Speaker 1: the odds changed dramatically. Um. So Kevin Durant is a
Speaker 1: is a wonderful example that I go into in the
Speaker 1: book because he has a bunch of He has a
Speaker 1: bunch of things in favor of him becoming a star.
Speaker 1: One is, well, the reasons he became a star with
Speaker 1: his physique, just the fact that he's such a gifted athlete.
Speaker 1: Andy happens to be six ft eight inches tall as
Speaker 1: as they as the basketball players say, you can't learned taul.
Speaker 1: So he had that advantage going him. Um and then um.
Speaker 1: But the other thing, the other thing about Kevin Durant
Speaker 1: is the calculus is slightly different if you're if you
Speaker 1: come from a background where your labor market prospects may
Speaker 1: not be as great. And so, given how hard it
Speaker 1: is to move up the socio economic ladder in the
Speaker 1: United States for you know, reasons you've probably talked about
Speaker 1: on your show before, the economic mobility isn't what we
Speaker 1: would hope it would be. Um, and so if you
Speaker 1: come from a really tough background, sports might be looked
Speaker 1: like a better way to really jump to a higher
Speaker 1: income distribution relative to more traditional ways in the labor market.
Speaker 1: And Kevin Durant came from a very humble background, and
Speaker 1: and um, you know, if you just sort of statistically
Speaker 1: looked at what is future might have been like without sports,
Speaker 1: it may not. You know, it wasn't a rosy picture. Yeah,
Speaker 1: I think of like you know, Venus and Serena Williams.
Speaker 1: I mean, and they obviously had a dad that was
Speaker 1: very driven, in a family that was supportive, and it
Speaker 1: was a tough background. But it's you know, you wonder
Speaker 1: how much of it is it because of the dad
Speaker 1: and pushing them, how much of it was just you know,
Speaker 1: natural skill. I mean, there's a there's a lot that
Speaker 1: has to be taken into considering. Can you answer that
Speaker 1: professor that you know the nature versus nurture debate here, Well, yeah,
Speaker 1: I mean, I think it's easy to answer it in
Speaker 1: basketball because the answer is, if you're six ft eight,
Speaker 1: your odds of getting for the NBA are just like
Speaker 1: wildly higher than if you're six ft tall. So in
Speaker 1: the book, I talked about Russell Westbrook, who went as
Speaker 1: a kid into much the same investment mode as Kevin Durant.
Speaker 1: His family went all in on basketball, and of course
Speaker 1: it paid off for both of them. But if you
Speaker 1: looked before they made those investments, Kevin Durant probably made
Speaker 1: a rational investment. Russell Westbrook probably got lucky, meaning a
Speaker 1: six There are tons of athletics six foot kids, and
Speaker 1: the vast, vast majority of them never get to the NBA.
Speaker 1: There are not that many six ft eight thirteen year
Speaker 1: old and a substantial fraction of them get to the NBA.
Speaker 1: So Venus and Serena again probably obviously worked out amazing.
Speaker 1: But if you were to try to run the numbers,
Speaker 1: was that a good investment beforehand? I think you would.
Speaker 1: I think you would have to say it wasn't. But
Speaker 1: it just paid off. It did end up paying off
Speaker 1: really well. Obviously we're gonna go into more chapters. Just
Speaker 1: got a minute before we have to take a break
Speaker 1: and then we'll come back and continue. But as someone
Speaker 1: who is Czechoslovaki and I love this chapter two, what
Speaker 1: do Silicon Valley and Check Women's Tennis have in commons?
Speaker 1: So you've got a minute to talk about it. Then
Speaker 1: we'll talk some more. But what is the connection? Just quickly, well,
Speaker 1: very quickly, I like to say, um, check women's tennis
Speaker 1: is this is like uh, Silicon Valley. There's not a
Speaker 1: natural reason why check women should be so great, but
Speaker 1: there's a combination of historical accidents and then these network
Speaker 1: effects where the Check women sort of push each other.
Speaker 1: Check girls push each other so hard that they end
Speaker 1: up becoming just great tennis players. There's no natural reason
Speaker 1: they should be any good. You know, if you look
Speaker 1: at why are Norwegian so good across country skiing as
Speaker 1: you do, as I do in the book, there's a
Speaker 1: lot more of a natural reason for that. But economic
Speaker 1: networks and economic competition really can lead to dynast What
Speaker 1: about the weather as well, Well, the weather doesn't work
Speaker 1: for the Check story. It's the Norwegian story. I know
Speaker 1: what the answer is because my family is two kids
Speaker 1: that check women were strong like bull So that's why
Speaker 1: you know, I'm just kidding. I'm just kidding, But we
Speaker 1: did used to say that at home with us. Paul Ayer,
Speaker 1: he senior Associate dean and economics professor at the Stanford
Speaker 1: Graduate School of Business. We're talking about his book and
Speaker 1: economist goes to the game how to throw Away five
Speaker 1: eight million dollars and other Surprising Insights from the Economics
Speaker 1: of Sports five eighty million dollars. Wait, wait, where'd that
Speaker 1: number come from? So that's an estimate I calculated based
Speaker 1: on the strike at the NBA, and I believe it
Speaker 1: was two thousand eleven. So, um, there was a maybe
Speaker 1: a more up to date version to talk about was
Speaker 1: there was a strike in Major League Baseball at the
Speaker 1: beginning of the most recent season, and if you remember
Speaker 1: last spring training, not a strike. Sorry, I lock both cases.
Speaker 1: It was a lockout, not a strike. So the point
Speaker 1: in whether talking about the NBA or Major League Baseball
Speaker 1: or whatever, is you see in sports, and this is
Speaker 1: a broader thing. You see it in other collective bargaining
Speaker 1: agreement situations where um, you get these two these two
Speaker 1: groups in the case of sports. It's the owners and
Speaker 1: the players union, and they rely so much on each
Speaker 1: other there their options are so much better if they
Speaker 1: work together than if they split up. But at the
Speaker 1: same time, they can't help themselves from trying to steal
Speaker 1: a bigger share of the pie. It's a It's a
Speaker 1: very common thing in economics where you have these bilateral
Speaker 1: agreements where there's a lot of value captured by the
Speaker 1: by the agreement, and you don't want to mess it up,
Speaker 1: but at the same time you can't help but try
Speaker 1: to take too much, and when that leads to a lockout,
Speaker 1: as it did in the NBA, it's sometimes it's just
Speaker 1: like literally, the NBA and the players pretty much just
Speaker 1: burned a pile of five million dollars that they'll never
Speaker 1: get back. Okay, it's a lot of money. I want
Speaker 1: to I want to talk cheating. I want to talk cheating. Okay.
Speaker 1: There's an entire chapter in your book dedicated to cheating,
Speaker 1: and it talks about Lance Armstrong and the way that
Speaker 1: it asked the question about whether or not you can
Speaker 1: actually win the Tour de France if you're not doping. Um,
Speaker 1: take us into this chapter and why athletes cheat, so um,
Speaker 1: they they You only got half of it. I like
Speaker 1: to think that chapter is about why they cheat and lie.
Speaker 1: Oh sorry, excuse me, said they cheat and lie because
Speaker 1: the incentives there are very strong. I mean we see
Speaker 1: this in other places as well, when when we set
Speaker 1: up rules that we can't enforce and the value of
Speaker 1: breaking those rules is really high, people are going to
Speaker 1: break them. And it's sad because that's human nature, but
Speaker 1: it's what we need to expect. And you know, if
Speaker 1: you there was a period of time, I don't know,
Speaker 1: maybe the testing is better now, but there was a
Speaker 1: period of time where you had to cheat to whin
Speaker 1: they to win the toward to France and to win
Speaker 1: certain sprinting events in track and field. It's just every
Speaker 1: single person who won over a long period of time
Speaker 1: and both those sports was taking steroids and lying about it.
Speaker 1: And what the reason it happens is, it's just simple
Speaker 1: prisoners dilemmas, straight out of your most basic college game
Speaker 1: theory class. If you don't cheat, there was no way
Speaker 1: you were going to win, and the incentives from winning
Speaker 1: were so are so large. I mean, think about it,
Speaker 1: what was Lance Armstrong going to do if he wasn't
Speaker 1: a champion biker. His next best option was not making
Speaker 1: a little bit less than he made. As are you
Speaker 1: see the ends justify the means. Well, I'm not saying
Speaker 1: this is an advice. This is um you know, it's descriptive.
Speaker 1: It's not prescriptive. I'm not telling you to lie ar cheap,
Speaker 1: but I will tell you that in situations like the
Speaker 1: Tour de Front, you have to recognize that your opponents
Speaker 1: will be cheating, and so you do have to think
Speaker 1: about that. It's interesting though, because it's not just kids
Speaker 1: around the world are not listening to me. But what
Speaker 1: I think is pretty remarkable about this is is it
Speaker 1: is just numbers at the end of the day. Because
Speaker 1: there are downsides to to pumping your body full of
Speaker 1: these bad substances. There are downsides to uh blood transfusion
Speaker 1: that you do on the road with blood that you
Speaker 1: know was taken from your body uh months earlier when
Speaker 1: you weren't so tired. I mean, bad things can up
Speaker 1: in to you. Yeah. So, so keep in mind that
Speaker 1: not everybody will lie in cheat. A lot of people
Speaker 1: who could have been great bikers will see that the
Speaker 1: only way they can get ahead is to lie to
Speaker 1: cheat and they take and they have they place a
Speaker 1: high cost on the things you just mentioned, either the
Speaker 1: long term damages or just they have moral qualms. They're like,
Speaker 1: I can't do that. And so for those people they
Speaker 1: put it into their own personal calculus and they say,
Speaker 1: I'm not gonna lie in cheat. Now they don't become
Speaker 1: um famous famous um bikers as a result. So it's
Speaker 1: absolutely the case that there are cost to this and
Speaker 1: a lot of people just opt out of the system
Speaker 1: when that's the case. Hey, one thing I want to
Speaker 1: get to and maybe because we were all obsessed with
Speaker 1: Taylor Swift last week and you know, trying to get
Speaker 1: tickets for a concert, I couldn't get one bummer bummer.
Speaker 1: But anyway, we're looking at you know, um getting tickets
Speaker 1: for for things, and I'm assuming sports games as well,
Speaker 1: especially when you know, we get to something like the
Speaker 1: super Bowl or the playoffs, things get a little pricy.
Speaker 1: You have a chapter that talks about ticket scalpers making
Speaker 1: the world a better place? Is that a question mark?
Speaker 1: Are affirmative? Well, I mean I wouldn't say that about
Speaker 1: every single ticket scalper, but as a collective they do now,
Speaker 1: not the not the ones who go out and use
Speaker 1: bots to and and make every waste everybody's time. But
Speaker 1: the traditional ticket scalper, the old days when you would
Speaker 1: go to a shop and buy and sell tickets, or
Speaker 1: go on eBay StubHub and buy and sell tickets that
Speaker 1: people just had extra tickets and wanted to resell them.
Speaker 1: There's a lot of value in that right. Just more broadly,
Speaker 1: resale markets are really good. They transfer items from somebody
Speaker 1: who values them less to somebody who values them more.
Speaker 1: So if you have a ticket to a game and
Speaker 1: you know your kids soccer team is going to play
Speaker 1: some playoff that day and you want to resell that ticket,
Speaker 1: that is great that you have the ability to go
Speaker 1: on StubHub and make somebody's day where they were dying
Speaker 1: to have a ticket to that game, and now you're
Speaker 1: both better off. You have some money and you go
Speaker 1: to your kids game and that other person goes to
Speaker 1: the professional sports game that you sold them a ticket
Speaker 1: for resale is fantastic. And the middle people who make
Speaker 1: that happen, which now is more stubbub but traditionally was
Speaker 1: ticket scalpers or ticket agents, those those people are providing
Speaker 1: a really valuable service. You know, it's not just tickets,
Speaker 1: it's used cars, it's all sorts of increasingly Ticketmasters getting
Speaker 1: into it as well. I mean you can you can
Speaker 1: buy and sell tickets on that platform. Yeah, and so
Speaker 1: they're there in lies the problem right with Ticketmaster. I'm
Speaker 1: not as crazy about ticket Master and some of what's
Speaker 1: going on there because what happened is traditional ticket scalping,
Speaker 1: where you have a vibrant and fragmented market with a
Speaker 1: lot of competition. That's good. What what gets ruined is
Speaker 1: when somebody gets exclusive rights to resale or exclusive rights
Speaker 1: to you know, Ticketmaster is now sort of has arrangements
Speaker 1: where they'll sell the ticket and you have to resell
Speaker 1: it through them, and and that I'm not as excited
Speaker 1: about because then you start having more um uh, pricing
Speaker 1: power in the part of a single entity. All right, Paul,
Speaker 1: one last question, what's the FED gonna do? No, I'm
Speaker 1: just kidding. I'm just kidding. We're not going to talk
Speaker 1: about that. We did two segments without talking about, Hey,
Speaker 1: there there are more chapters. Are athletes worth all that money?
Speaker 1: If your hometown hosts the Olympics? This is really a
Speaker 1: fun game. A proliferation of French Canadian goalies. Um such
Speaker 1: a fun read and just plays into I mean, we
Speaker 1: talked about the business and sports all the time, and
Speaker 1: there's a lot of really thoughtful chapters in his book.
Speaker 1: Paul Oyer, thank you so much. Fun to catch up
Speaker 1: with you again. He is Senior Associate Dean Economics Professor
Speaker 1: at the Stanford Graduate School of Business. Check out his
Speaker 1: book and Economists Goes to the Game, how to throw
Speaker 1: Away five eighty million dollars and other surprising insights from
Speaker 1: the economics of sports. Right here on Bloomberg, you're listening
Speaker 1: to the Bloomberg Business Week Podcast. Catch us live weekdays
Speaker 1: from two to five pm Easter on Bloomberg Radio, the
Speaker 1: Bloomberg Business Band You too. You can also listen live
Speaker 1: to our flagship New York station, Just Say Alexa Play
Speaker 1: Bloomberg e Love and Dirty. I wanted to get to
Speaker 1: a guest because it was a story I think you
Speaker 1: could safely say heard around the world. We're talking about
Speaker 1: a story by Bloomberg Business Weeks Ashley Vance. He wrote
Speaker 1: it on the forty five year old Tech sent a
Speaker 1: millionaire who is spending some two million dollars a year
Speaker 1: to be eighteen years old again. In a project known
Speaker 1: as Blueprint. We love talking with Ashley about the story
Speaker 1: and the time he spent with Brian Johnson so much
Speaker 1: so that we knew we wanted to go straight to
Speaker 1: the source. So with us right now is Brian Johnson,
Speaker 1: who is the founder and CEO Blueprint, CEO of Colonel
Speaker 1: and Os Fund, and he joins us via zoom from
Speaker 1: Los Angeles. Brian, it is good to have you here
Speaker 1: with Mike and myself. How are you? I'm great, Thank
Speaker 1: you for having me. Well, tell us a little bit
Speaker 1: about your mission and why you wanted to do this
Speaker 1: and and I know we're kind of hitting it hard
Speaker 1: and cold. We've talked about it for our listeners and
Speaker 1: our audience before, about spending about two million dollars a
Speaker 1: year to be eighteen years old. Again, why did you
Speaker 1: want to do this? I mean that the Fountain of
Speaker 1: Youth is a story as oldest humanity, and typically the
Speaker 1: story is a group of people in a boat going
Speaker 1: to the jungle, traveling to a temple with some of
Speaker 1: some elixir that they'll drink. And the question we wanted
Speaker 1: to pose is is a fountain of youth actually here
Speaker 1: right now? It's just hiding in tens of thousands of
Speaker 1: scientific publications and an extremely rigorous protocol, and so we
Speaker 1: took this to the ends of science. We basically said,
Speaker 1: if we measure every organ of the body via every
Speaker 1: possible measurable modality blood, slaves, stool, m ri I, ultrasound,
Speaker 1: fitness tests, dame astilation, we look at the gold standard
Speaker 1: scientific evidence, create clinical grade protocols, and then my life
Speaker 1: becomes a perfect implementation of that what is possible with
Speaker 1: today's science. And the results were pretty stunning. Last year,
Speaker 1: I reversed my epogetic age five point one years in
Speaker 1: in seven months. It was a world record, and I
Speaker 1: slowed the speed of which I age twenty eight percent.
Speaker 1: So generally speaking, and I humorously kind of say this,
Speaker 1: I get October, November, December for every year. Do you
Speaker 1: feel different as a result. I've never felt better in
Speaker 1: my entire life. But bright at the same time, A
Speaker 1: lot of what you're doing is sort of I don't
Speaker 1: know if you call it experimental or you know, I
Speaker 1: hate to say. You're almost your own guinea pig. And
Speaker 1: to some degree, have there been any sort of unpleasant surprises,
Speaker 1: any bad reaction to any of the uh food You've
Speaker 1: eaten or any of the treatments you've undergone. As part
Speaker 1: of this process, we certainly have learnings all the time,
Speaker 1: and we do share exactly what we whether the result
Speaker 1: is good or bad, we share independently because the value
Speaker 1: of this is as an open public uh protocol. The
Speaker 1: It's it's important to remember though that this blueprint is
Speaker 1: based upon scientific evidence, gold standard scientific evidence in clinical
Speaker 1: grade protocols. So it's not like we're randomly doing things
Speaker 1: or taking some obscure thing. It's based upon evidence and protocols,
Speaker 1: and so we're really following a process to say what
Speaker 1: is possible with with what's been proven. And the thing
Speaker 1: we're doing is we no one in the world has
Speaker 1: ever looked at all the scientific evidence and created a
Speaker 1: perfect protocol, and so fundamentally what we're doing is in
Speaker 1: measuring every organ of the body, we're asking every single
Speaker 1: thing liver, pancreas, lungs, kidney, what do you need to
Speaker 1: be in an ideal state? And that goes directly into
Speaker 1: a protocol, which means I no longer look at menus
Speaker 1: at restaurants, I don't know pizza parties at hawk, I
Speaker 1: don't drink alcohol with friends and go on bingers and
Speaker 1: say about stay at late at night. It's entirely followed.
Speaker 1: So it's really interesting question of it's a demonstration of
Speaker 1: going to what is possible today with science. Take a
Speaker 1: step back, what did it take to get this program
Speaker 1: up and running. The team is now about thirty members,
Speaker 1: and so they're specialist. For example, I have a medical
Speaker 1: grade ultrasound machine here in the clinic, and we have
Speaker 1: a specialist that looks at the heart, another at the lungs,
Speaker 1: than another for the other organs of the body, and
Speaker 1: we build out specialists throughout the entire body through all
Speaker 1: the different measurement modalities. I do a full body m
Speaker 1: R I every organ of the body on an annual basis.
Speaker 1: So having this kind of specialty, we're doing things that
Speaker 1: no one's ever done before, and so it's it's challenging.
Speaker 1: We have to identify the task that we have to
Speaker 1: build a team to do it. Then we have to
Speaker 1: normalize it in a protocol and so it's extremely difficult.
Speaker 1: And so I do spend a few million dollars a
Speaker 1: year on this, but I basically reduce the learning to
Speaker 1: something that anybody can implement. So you can take everything
Speaker 1: I've done. It's freely available online to everybody, and you
Speaker 1: can implement it in roughly a month. You know, Brian,
Speaker 1: as you point out that diet element of it is
Speaker 1: obviously so important to something like this. But but I
Speaker 1: gotta wonder, do you ever just get a craving like, Wow,
Speaker 1: I could go for some pizza and a beer right now?
Speaker 1: You know, how do you deal with that sort of
Speaker 1: you know, craving that we all get. It's funny, it's
Speaker 1: gone and in fact, imagine doing that kind of makes
Speaker 1: me sick. Yeah, so it's gone. The A lot of
Speaker 1: people think it perpetually persists, that there's this urge to
Speaker 1: eat those kinds of foods or eat uh more than
Speaker 1: like binge, But it just doesn't. It's actually reversed, and
Speaker 1: I can't imagine doing it now. Well, I mean, do
Speaker 1: you ever fall off the wagon, so to speak, whether
Speaker 1: it's in food or so on. I mean, initially, yes,
Speaker 1: I had several times where I just couldn't keep up
Speaker 1: with the protocol. So I basically agreed, can I build
Speaker 1: a system that takes better care of me than I
Speaker 1: can myself? And so we're all accustomed to this idea
Speaker 1: that we make we have good intentions to follow certain routines,
Speaker 1: go to the gym and eat well, and then we
Speaker 1: break we have a dessert, or we eat drink alcohol,
Speaker 1: or we eat too much food or the wrong kind
Speaker 1: of food. And so the question for me was can
Speaker 1: I just sign up for a system measurement, scientific evidence
Speaker 1: and protocol and follow exactly that? And it's been, honestly
Speaker 1: such a relief where the system now takes care better
Speaker 1: care of me than I can myself. And we see
Speaker 1: this throughout society. We know when a navigation app does
Speaker 1: a better job and getting this to our destination, we
Speaker 1: do so, and we don't use paper maps anymore. And
Speaker 1: that's what I've done, as I've shown a system of measurement,
Speaker 1: science and protocol better cares for me than I can. Brian,
Speaker 1: one thing I wanted to ask you what has been
Speaker 1: the downside of this? I mean, do you feel like
Speaker 1: from the minute you get up to the minute and
Speaker 1: go to sleep, like you're just you know, constantly monitoring
Speaker 1: everything you know? For me, it's all fun. I think
Speaker 1: of myself as a professional rejuvenation athlete when you know,
Speaker 1: building my former company Braintree Venmo oftentimes among my entrepreneur friends,
Speaker 1: it was a badge of honor to sleep under your
Speaker 1: desk and look haggard and go days without sleeping. But
Speaker 1: to me it always seemed been saying that you're really
Speaker 1: they entrepreneurs are athletes of the mind, and so it
Speaker 1: makes sense to eat well and sleep well. And so
Speaker 1: I've never felt better in my entire life. I love
Speaker 1: following this protocol, you know, And Brian, obviously you've got
Speaker 1: a personal motivation to make yourself as healthy as possible,
Speaker 1: live as long as possible. But I wonder, clearly there
Speaker 1: there's a business motivation too, and I wonder how you
Speaker 1: see where you see the business going. Um, is this
Speaker 1: ready for prime times, something that you're ready to roll
Speaker 1: out to consumers? And how would it work a subscription
Speaker 1: or you know, how are you thinking about it as
Speaker 1: a business. I mean, I didn't started off as a business.
Speaker 1: It really is an open, public, scientific experiment. And what
Speaker 1: I was proposing is that I've read a lot of
Speaker 1: biographies and I really admire people who in their time
Speaker 1: and place identify the point on the horizon that is
Speaker 1: barely visible and UH, in the early twenty one century,
Speaker 1: that could be UH neutralizing aging. If we didn't age
Speaker 1: and naturally deteriorate and think the death was inevitable. We
Speaker 1: may have a different relationship with time, and so in
Speaker 1: the early century, I would put forward the hypothesis that
Speaker 1: the a defining moment maybe our ability to neutralize or
Speaker 1: dramatically slow aging. And that's what I'm trying to do.
Speaker 1: If I can prove this end of one and my
Speaker 1: results are stable and repeatable, it may fundamentally change how
Speaker 1: we think about ourselves and society. You know, it's funny.
Speaker 1: I'm thinking about, you know, the news that we got
Speaker 1: about CVS doing a deal. They're thinking about, you know,
Speaker 1: kind of how to keep Medicare patients um, well, if
Speaker 1: you will, and I do think disruption innovation when it
Speaker 1: comes to healthcare. We're all trying to figure out what
Speaker 1: it really means and how do we really change the
Speaker 1: system so it's better, cost less with a better outcome impact. So,
Speaker 1: is there you know, a way to really scale what
Speaker 1: you are doing, just to kind of build on what
Speaker 1: Mike asked you, you know, in terms of really reaching
Speaker 1: the masses so that we all live a better life,
Speaker 1: a healthier life, potentially longer life. Um and maybe with
Speaker 1: better methods and better wellness overall. Yeah, I mean it
Speaker 1: started as a science experiment and I've been sharing all
Speaker 1: of my data and results with everybody. I make the
Speaker 1: protocol available for free. And since this viral the story
Speaker 1: went viral, wee can half ago. Uh, every single supplier
Speaker 1: we have for blueprint is sold out for months. Nobody
Speaker 1: can get anything to start this is start the program.
Speaker 1: So yeah, I mean, as of this week, we've been
Speaker 1: actually dipping our toe into exploring building a business of
Speaker 1: can we basically just solve this problem and make the
Speaker 1: product available for anyone who wants it, with the added
Speaker 1: benefit that we incorporate the evidence. So it didn't start
Speaker 1: that way. It's kind of a problem now because people
Speaker 1: want to follow us and we want people to be
Speaker 1: even to be in the community, and they just can't
Speaker 1: do it because everyone's out of the items. Are doctors
Speaker 1: reaching out to your hospitals, our healthcare organizations, managed care,
Speaker 1: they reaching out to just say, okay, what exactly are
Speaker 1: you doing exactly? We launched a part of this rejuvenation
Speaker 1: olympics dot com, which is a leaderboard for people who
Speaker 1: reverse or who slow their speed of aging. So I'm
Speaker 1: trying to create a sport out of this of people
Speaker 1: can be a leader in a professional as a professional
Speaker 1: rejuvenation athlete. And this creates a different, uh paradigm for
Speaker 1: anyone using healthcare where if I'm receiving the recipient of
Speaker 1: anyone services, I want to know what's happening to me overall.
Speaker 1: I can get fifty different biomarkers, but it doesn't tell
Speaker 1: me a whole story about me overall, but a speed
Speaker 1: of aging which you can get rejuvenation Olympics does And
Speaker 1: so hopefully it was a paradigm shift for how people
Speaker 1: what people expect in exchange for health through well thees services.
Speaker 1: You know, Brian, For those of us on a budget
Speaker 1: who kind of wanna replicate what you're doing, you know,
Speaker 1: can you boil it down to the simplest of forms
Speaker 1: of advice that that you would give us from what
Speaker 1: you've learned, Yes, it's actually very simple. Number one and
Speaker 1: most important is stop self destructive behaviors. So that is
Speaker 1: eating too much, eating the wrong foods, drinking too much alcohol,
Speaker 1: smoking the stuff we all know we don't want to do,
Speaker 1: we do it anyways, So stop that as much as
Speaker 1: you can. Number to eat more vegetables, berries, and nuts,
Speaker 1: three prioritized sleep, and four exercise. Just getting those basics
Speaker 1: in place, a person can get the majority the benefits
Speaker 1: um and again it's go please go ahead and the end.
Speaker 1: The entire protocol is available at no cost on my
Speaker 1: website blueprint dot Brian Johnson dot co. So, uh, feel
Speaker 1: free to look at all my data, look at all
Speaker 1: the protocols. There's there's even links to products we use.
Speaker 1: Again they're out of stock. But you get the idea
Speaker 1: of everything is there? Is this your Is this your
Speaker 1: way of life forever? Now? I think so? I mean,
Speaker 1: I've never this is the whole thing. It's so interesting
Speaker 1: to me. Is a system now takes care of me
Speaker 1: better than I can take care of myself. And I
Speaker 1: it's uh, it's not exciting to think about will be
Speaker 1: back in charge of myself again? You know, I don't.
Speaker 1: I didn't do a great job. And I think most
Speaker 1: of us would acknowledge we don't do a great job
Speaker 1: taking care of ourselves because it's very hard, you know, Brian.
Speaker 1: One of the things that Mike was pointing out, he said,
Speaker 1: you know in the story, because we're talking about your pale,
Speaker 1: you look great for those who are watching on YouTube
Speaker 1: and and our Blueberg original streaming service. But you stay
Speaker 1: out of the sun, correct, Yeah, A lot of people
Speaker 1: suggest I look like a vampire, so I need to
Speaker 1: get extensions to you know. No, but I think about
Speaker 1: you know, I remember going to pediatrician and then say
Speaker 1: at my PEDIATRICI and be like, make sure your daughter
Speaker 1: when she was young, get some sun. You know, obviously
Speaker 1: not in the middle of the day when it's the hottest,
Speaker 1: but kids were being you know, so much sunscreen and
Speaker 1: being kept out that their vitamin D levels were low.
Speaker 1: So I am curious, like, what were the adjustments you've
Speaker 1: had to make because of this regime that you're following. Yeah,
Speaker 1: I do avoid the sun, and that's primarily because we're
Speaker 1: trying to get my skin age again to be the
Speaker 1: age of eighteen, and so we do that. We measure
Speaker 1: using multispectral imagery and autofluorescence biopsies and photos and so
Speaker 1: with that kind of measurement protocol and that we implement
Speaker 1: lasers and all kinds of things. And so my treatments
Speaker 1: do prevent me from going into the sun just for
Speaker 1: recovery time. So it's not like I'm son avoidant all together.
Speaker 1: It's just that I rarely have downtime. My skin is
Speaker 1: typically all we have some kind of impression of a
Speaker 1: laser treatment or something, and so really is just an
Speaker 1: effort to try to have eighteen year old skin again,
Speaker 1: which I think we've made. I've currently lessened my skin
Speaker 1: age twenty two years. Since beginning as a kid, I
Speaker 1: was missed on a lot a lot of skin debauchery
Speaker 1: never works on screen, so I have I've had to
Speaker 1: make up a lot of ground. You gotta stop before
Speaker 1: you get that teenage Jackney again. All right, listen, we're
Speaker 1: gonna leave it on that note. Really great to get
Speaker 1: some time with you. UM fascinating as we said, to
Speaker 1: read the story that Ashuley did, but even better to
Speaker 1: get a chance to actually talk with you directly. Brian,
Speaker 1: Thank you so much, Good luck with it, and look
Speaker 1: forward to hearing updates. Brian Johnson, uh founder and CEO Blueprint.
Speaker 1: Joining s V A Zoom from Los Angeles. You're listening
Speaker 1: to the Bloomberg Business Week podcast. Catch Just live week
Speaker 1: days from two to five pm Eastern on Bloomberg Radio,
Speaker 1: The Bloomberg Business and and you too. You can also
Speaker 1: listen live to our flagship New York station just say
Speaker 1: Alexa play Bloomberg, e Love and Verdi. Safe to say
Speaker 1: we are all a bit obsessed with chat CHPT right
Speaker 1: since Microsoft's tenderly an dollar investment. We're hearing about it
Speaker 1: in earnings calls. Google did their own, albeit much smaller,
Speaker 1: a ideal. We talked about it with Kathy would last week,
Speaker 1: and then there is a Bloomberg Business Week story that
Speaker 1: you can find online that definitely takes it into account.
Speaker 1: Art put chat GPT to the test on a Warden
Speaker 1: exam with more. We've got Demetri casandis a senior editor
Speaker 1: at Bloomberg News on the phone in New York City
Speaker 1: along with the editor of Bloomberg Business to Week, Joel
Speaker 1: Weber in our Bloomberg Interactive Broker's studio. So Joel, how
Speaker 1: did chatp GPT do on that Warden exam? Well, we're
Speaker 1: gonna find out. I do think just in general, um,
Speaker 1: it is causing existential crazies everywhere you look, right, I
Speaker 1: speak for yourself, man, Yeah, it's all gonna be great.
Speaker 1: And I think you know an NBA or tests. In general,
Speaker 1: I've heard from some professors who are like, I've had
Speaker 1: to up end my entire curriculum to account for uh
Speaker 1: chat gpt UM, so that you know, proving that you know,
Speaker 1: AI program didn't actually do the student's own work. Um,
Speaker 1: AI my homework. I think we'll get us. Uh so
Speaker 1: take us to Wharton. UM and the professor who you
Speaker 1: based the story around. Yeah, I mean I think those
Speaker 1: are all good points. Christian Turley teaches at Wharton, and
Speaker 1: you know, it started as kind of a fun conversation
Speaker 1: over the holidays with his sons, who both have dealt
Speaker 1: with other programs. UM. You know, we're we're intrigued by it.
Speaker 1: Our b schools coverage sometimes is about research that can
Speaker 1: steal very out of touch with what's going on in
Speaker 1: the real world. And Professor to Reach was very quick
Speaker 1: and nimble to say, Hey, let me see what this
Speaker 1: this thing is about all the hubbub. Let me give
Speaker 1: it an exam that I've given to my students. Um.
Speaker 1: It did quite well, it did above average, it got
Speaker 1: to be minus UM. But it is not you know,
Speaker 1: it's the context of a business school course. In a
Speaker 1: business school exam is not the kind of context in
Speaker 1: which you know, students can realistically put the chatbot to
Speaker 1: take the exam for them. That's not to say that
Speaker 1: the concerns of educators across the country, as the professor
Speaker 1: noted to me, are not legitimate. I mean, there are
Speaker 1: many educators with far fewer resources than a warton professor
Speaker 1: who do have to contend with the reality of how
Speaker 1: students are going to use this. He used this as
Speaker 1: a way to see what it's all about, and then
Speaker 1: as a way to say, hey, this is very powerful,
Speaker 1: it's doing quite well. It's answering in ways that legitimately
Speaker 1: might pass as a student, how can we use something
Speaker 1: like this more creatively in our in our classroom. Our
Speaker 1: job as educators is to really think about how to
Speaker 1: bring education along and be more creative and really spark imagination.
Speaker 1: And so this is the first step of this one
Speaker 1: protestor intro to do that. Did the professor give you
Speaker 1: any idea how he would actually use it in a classroom? Well,
Speaker 1: I mean he gave me an idea off of something
Speaker 1: that we talked about in the conversation. Like let's say
Speaker 1: he was teaching philosophy for example, not business, but you
Speaker 1: can swap out people. And I mentioned this in the
Speaker 1: Q and A, and and he says, you know, I
Speaker 1: want you to go back to your libraries and to
Speaker 1: your apartments and research, you know, the work we've studied
Speaker 1: on Sarta or on you know Camu and Sarta. Write
Speaker 1: me a five hundred word essay on the differences between
Speaker 1: these two. Um. You know, they might go home and
Speaker 1: decide to have chat GPT write the paper for them.
Speaker 1: But what he might do that would be even more
Speaker 1: effective is have chat GPT really engage in a conversation.
Speaker 1: That's what these chats do with students, Um and step
Speaker 1: in as the philosophers, the French philosophers and do something
Speaker 1: that might spark some more creative ideas with the students.
Speaker 1: And so he as a as a professor could start
Speaker 1: be in a position to introduce the use of the
Speaker 1: chatbot in that way. Um demiti, I got a jump
Speaker 1: in for a second, because how did it do? When
Speaker 1: it came to which I bet the whole student body
Speaker 1: universe is saying, I hope I can do math. How
Speaker 1: did it do on math? Oh? It doesn't. They don't
Speaker 1: do well on math, at least in this instance. And
Speaker 1: he said that that's something that you know, I think
Speaker 1: we see that across the universe of stories that have
Speaker 1: been done by Bloomberg and many others. What you said
Speaker 1: is true. Everybody's kind of been a frenzy about this
Speaker 1: right now. Mathematics it did not do well, and I
Speaker 1: mean Professor Turvich was very funny about that. I mean,
Speaker 1: it's like your your computer, dude, like you can't actually
Speaker 1: like put some numbers together. Um. And in fact, numbers
Speaker 1: is where it was really tripped up. And it was
Speaker 1: more in language that it was far more impressive, and
Speaker 1: in logic and application of logic um. So it was
Speaker 1: all around super surprising to him. I think that he,
Speaker 1: as well as many others who are engaging with chat
Speaker 1: cheep two right now, it's a little tough to do.
Speaker 1: You go to the website, it's so popular, there are
Speaker 1: so many users that generally what you're going to get
Speaker 1: as a message that says chat qep he is expacity
Speaker 1: right now. So you can't try it because the world
Speaker 1: is trying cat gbt um. But he did it. He
Speaker 1: did it quickly. He wrote a paper and he said,
Speaker 1: I was really impressed, and I think I'm gonna try
Speaker 1: to think more creatively about how to use this. And
Speaker 1: I think that in that context, I mean, I want
Speaker 1: to be clear, we came at it with a very
Speaker 1: specific sort of context of B schools, you know, teaching business, teaching,
Speaker 1: taste management and so on. You know, there's probably going
Speaker 1: to be space for something like this. It will emerge
Speaker 1: in time. I don't think that we have the answers
Speaker 1: right now in terms of like this semester, how is
Speaker 1: CHATCHYTI going to, um, you know, a stand in for
Speaker 1: something in the curriculum. We're not. We're not there yet.
Speaker 1: But take that take that computer not a yeah, but yeah,
Speaker 1: I mean everything's on a curve in business school anyway. Yeah,
Speaker 1: so you know, it kind of doesn't matter. So so
Speaker 1: one of the things that stuck out to me Dmitrou
Speaker 1: was him saying, we are not running out of work, um,
Speaker 1: but what is shifting is the efficiency frontier. And I'm curious,
Speaker 1: you know, this would be an optimistic take, I think
Speaker 1: on chat GPT, but but what what is it? What
Speaker 1: is the potential here in the classroom. I mean again,
Speaker 1: I think that there are ways he thinks to use
Speaker 1: it and engage it to be added and I hate
Speaker 1: to use the word additive, but to engage brains and
Speaker 1: students in a way that that there isn't time enough
Speaker 1: in the classroom, but it's to extend the learning that's
Speaker 1: already happening. You're going to the Internet, you're looking for
Speaker 1: videos of things as it is you're looking up resources.
Speaker 1: So this might take it to another level in which
Speaker 1: is not as passive, though it might be more active. Um.
Speaker 1: He does have a far more or let's say, positive
Speaker 1: and optimistic view, which is that these things should be
Speaker 1: seen as tools that are very innovative and technologically advanced,
Speaker 1: that that we should not really be so fearful of
Speaker 1: them as replacements for actual people in many settings. I mean,
Speaker 1: you wrote this Q and A, not chat GPT, are
Speaker 1: you sure? Though I'm not sure. Did a robot do this? Interview?
Speaker 1: The Big Secret? Um? It's so funny. I mean, I
Speaker 1: was just reading an interview that a former colleague of
Speaker 1: mine from a time I worked at a company called
Speaker 1: The American Lawyer. He did a Q and A with
Speaker 1: chat GPT and just posted it on LinkedIn, and he's
Speaker 1: asking chat GPT like, if Nike wants to sponsor you,
Speaker 1: will you will you accept the sponsorship? And chat GPT
Speaker 1: is like, I'm an open flash form. I Am not
Speaker 1: somebody who's going to give in to open spot to
Speaker 1: sponsorship by private interest. It's a very interesting, it's a
Speaker 1: very interesting back and forth, and it's actually like a
Speaker 1: real engaged, like intelligent conversation that this individual has. Everyone
Speaker 1: sells for a price. Stroll right, me too. You know
Speaker 1: it's not I can't wait for Google's bar, which you
Speaker 1: know is also in the headlines now to have a
Speaker 1: competition or a conversation that's ai comptimistic name. We gotta run,
Speaker 1: Joel Dmitro, thank you. This is the bloom Bird Business
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