WEBVTT - Bloomberg Businessweek Weekend - February 10th, 2023 0:00:01.320 --> 0:00:05.680 This is Bloomberg business Week Inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.440 --> 0:00:13.400 bloom All business, finance and tech news. The Bloomberg Business 0:00:13.400 --> 0:00:20.239 Week Podcast with Carol Masser and Tim stinebec from Bloomberg Radio. Well, 0:00:20.239 --> 0:00:23.520 big activism, it is back. Why Well, some rule changes 0:00:23.640 --> 0:00:27.040 in a fatigue, with bad corporate governance playing important roles. 0:00:27.040 --> 0:00:29.400 But as with so many things, it starts with money 0:00:29.440 --> 0:00:32.800 and good timing. So writes Bloomberg News senior Deals reporter 0:00:32.840 --> 0:00:34.880 At Hammond in a store in the upcoming issue of 0:00:34.920 --> 0:00:38.000 Bloomberg Business Week magazine, add on newsstands later this week, 0:00:38.320 --> 0:00:40.879 already on the Bloomberg terminal and online at Bloomberg dot 0:00:40.920 --> 0:00:44.600 com slash business Week, ed Hammond. As we mentioned Deal's reporter, 0:00:44.640 --> 0:00:46.520 he joins us on the phone in New York City 0:00:46.520 --> 0:00:48.640 along with the editor of Bloomberg Business Week, Toil Webber. 0:00:48.880 --> 0:00:51.800 He's in our Bloomberg Interactive Broker studio. It does feel 0:00:51.840 --> 0:00:55.560 like all of a sudden, activists don't have kind of awakened. Yeah, 0:00:55.600 --> 0:00:58.200 and it was it got quiet there for a little bit, right, 0:00:58.280 --> 0:01:00.840 and then uh, you know the you can only you 0:01:00.880 --> 0:01:02.680 can only lick your chops for so long. But if 0:01:02.720 --> 0:01:06.280 you're like, let's do this, um so, and what what 0:01:06.400 --> 0:01:08.800 did the targets look like? And why did it go 0:01:09.080 --> 0:01:12.120 quiet for a little while? It went quite for several reasons, 0:01:12.120 --> 0:01:13.920 and obviously we try and get into all of them 0:01:13.920 --> 0:01:16.880 a little bit in the article. I think, first and foremost, 0:01:17.000 --> 0:01:19.240 it was just very expensive for activists to go after 0:01:19.240 --> 0:01:22.559 the big companies until the recent turn in the stock market, 0:01:22.600 --> 0:01:24.880 which is obviously poor evaluations down a fair bit and 0:01:24.880 --> 0:01:28.759 and just made building that initial stake easier. It also 0:01:28.760 --> 0:01:32.679 obviously gives them quite a lot more potential upsided um 0:01:32.720 --> 0:01:34.560 if you know, if share process are sort of off 0:01:34.600 --> 0:01:37.160 their all time highs. But I think there are other 0:01:37.200 --> 0:01:39.200 things to play here as well. I think the changes 0:01:39.280 --> 0:01:42.640 in the way activists and indeed anyone is allowed to 0:01:42.680 --> 0:01:46.959 sort of vote uh. In terms of nominating directors, it's 0:01:46.959 --> 0:01:52.120 significantly so called universal proxy rules, which allow dissident shareholders 0:01:52.120 --> 0:01:54.680 to put forth their nominees for the board of directors 0:01:54.760 --> 0:01:57.720 on the same card that the company has to send 0:01:57.720 --> 0:01:59.680 out shells. And now that seems very technical, but it 0:01:59.680 --> 0:02:02.560 actually is. It's a meaningful change for actors because it 0:02:02.640 --> 0:02:06.560 both lowers the cost and the workload needed to actually 0:02:06.560 --> 0:02:10.200 elect directors to go onto public company boards. So what 0:02:10.320 --> 0:02:12.360 was the name when it? When it popped that you 0:02:12.400 --> 0:02:16.239 were like, Okay, we're back in the game. I think 0:02:16.240 --> 0:02:18.440 the Sales Force was the one for us that really 0:02:18.520 --> 0:02:20.200 kind of highlighted the trend. I mean they say that 0:02:20.760 --> 0:02:23.760 three maker trends and Salesforce got four activists in the 0:02:23.800 --> 0:02:27.600 space of you know, a few days, which it's pretty 0:02:27.639 --> 0:02:29.880 unheard of. I mean occasionally you see one or two 0:02:30.400 --> 0:02:34.120 showing up in very large companies. But for four and 0:02:34.200 --> 0:02:37.720 four big brand activists in the form of Value Act 0:02:37.760 --> 0:02:40.000 and Starboard, Elliott and Jeff bubb and to all show 0:02:40.040 --> 0:02:42.639 their hands, Um, it's pretty significant and show us that, 0:02:42.800 --> 0:02:45.480 like big company that obviously back on the table, but 0:02:45.560 --> 0:02:49.640 there's obviously also enough appetite among the activists to really 0:02:49.639 --> 0:02:53.200 go for it. You know what, I was reading your story, Uh, 0:02:53.480 --> 0:02:55.320 it made me start to wonder. You know, you think 0:02:55.400 --> 0:03:00.720 of the famous activists investors out there, Nelson tells Paul Singer, 0:03:03.960 --> 0:03:08.320 But of that era, you know, that's what investors who 0:03:08.320 --> 0:03:10.880 have been around for decades now, and it makes me wonder, 0:03:10.960 --> 0:03:14.200 you know, is there a new generation coming up behind them? 0:03:14.280 --> 0:03:16.240 Or is this kind of a lost art to some degree? 0:03:16.240 --> 0:03:18.200 You know, I know there's a lot of younger investors 0:03:18.200 --> 0:03:21.840 on the activists short side, but is activist long you know, 0:03:21.960 --> 0:03:24.200 is it sort of an old fashioned thing or are 0:03:24.240 --> 0:03:27.720 there are there no one? It's it's a it's a 0:03:27.760 --> 0:03:30.200 great point. I mean, it's a sort of gentocracy of sorts, 0:03:30.280 --> 0:03:35.280 this kind of investing just wait two minutes, um and 0:03:35.280 --> 0:03:38.320 and the reason it's it's so fun to cover it's, 0:03:38.440 --> 0:03:40.000 as you say, these are sort of larger than like 0:03:40.160 --> 0:03:43.640 characters who have been around for several generations and through 0:03:43.760 --> 0:03:47.080 lots of lots of market cycles. And they're fun. I 0:03:47.080 --> 0:03:49.360 mean they say things sort are interesting, They say things 0:03:49.360 --> 0:03:51.880 that are not the sort of pre prepared speech that 0:03:51.920 --> 0:03:54.360 we might expect from a lot of investors in day market, 0:03:54.800 --> 0:03:56.640 and they make it much more intend to cover. In 0:03:56.720 --> 0:03:59.680 terms of new entrants, yes there are lots of new 0:03:59.760 --> 0:04:03.240 small all activists, but they tend to be less well financed, 0:04:03.280 --> 0:04:04.920 so it's much harder for them to come into these 0:04:05.000 --> 0:04:07.400 kind of big companies that we care about. They also 0:04:07.520 --> 0:04:10.000 tend to come in with a sort of a smaller, 0:04:10.920 --> 0:04:13.440 if you like, menu of options that they can push, 0:04:13.600 --> 0:04:15.880 so they'll come in often to small companies and say, look, 0:04:15.920 --> 0:04:18.960 just sell yourself because you did get a control premium 0:04:18.960 --> 0:04:20.640 that might be forty percent above where you are now 0:04:20.680 --> 0:04:23.520 and we want that. Well, hey, you know and you 0:04:23.560 --> 0:04:27.640 mentioned that sec UM the new SEC rules in terms 0:04:27.680 --> 0:04:30.440 of the board is how much of that, Like would 0:04:30.480 --> 0:04:32.560 we be having this conversation with you? Do you think 0:04:32.680 --> 0:04:36.680 if that hadn't happened, Um, I think it adds to 0:04:36.800 --> 0:04:39.640 the ability of activists to do these kind of things. 0:04:39.680 --> 0:04:42.919 I think we probably would be seeing some large scale activism. 0:04:42.960 --> 0:04:45.080 I mean, obviously it paused a bit during COVID, and 0:04:45.080 --> 0:04:48.039 so there's this sort of money on the sidelines it 0:04:48.120 --> 0:04:49.960 was going to be deployed. You coupled that with the 0:04:50.000 --> 0:04:52.000 fact that valuations have come in a lot, and you 0:04:52.080 --> 0:04:55.400 get that sort of inevitable uplifting activism. But I think yes, 0:04:55.440 --> 0:04:59.240 the rule changes have definitely made either. I think Pelts himself, 0:04:59.320 --> 0:05:01.599 when he came out against Disney earlier this year, was 0:05:01.720 --> 0:05:04.640 very clear on that point that the universal proxy rules 0:05:04.880 --> 0:05:07.840 in some way facilitated his campaign and actually was something 0:05:07.880 --> 0:05:12.200 he had lobbied quite hard to get UM introduced. Okay, so, Ed, 0:05:12.360 --> 0:05:14.279 what what do you think it's gonna look like like, 0:05:14.360 --> 0:05:18.760 what what's the You know, ultimately there's exits that these 0:05:18.760 --> 0:05:22.040 investors are looking for, but like when when are they 0:05:22.040 --> 0:05:24.720 willing to sort of settle and and what is it? 0:05:24.880 --> 0:05:28.680 How does the trajectory play out for for what's in store? 0:05:28.720 --> 0:05:36.120 Still so, I think usually activists want some some form 0:05:36.160 --> 0:05:38.279 of control, and that's more often than not in the 0:05:38.320 --> 0:05:41.080 form of a board seat or you know, getting one 0:05:41.120 --> 0:05:44.000 of their sort of independent people nominated as board of 0:05:44.040 --> 0:05:48.400 directors um in very big companies. I mean, yes, it's 0:05:48.400 --> 0:05:50.400 possible to do that, and they often do achieve that, 0:05:50.480 --> 0:05:55.640 but it's usually minority slates as opposed to whole control slates. 0:05:56.279 --> 0:05:58.560 All right, Ed Hammond, thank you so much. Steals, reporter 0:05:58.560 --> 0:06:01.240 at Bloomberg News on the phone in New York City. 0:06:01.320 --> 0:06:03.320 Jill Webber, the editor of Bloomberg Business Week, here in 0:06:03.400 --> 0:06:05.520 studio this story, as we mentioned in the upcoming new 0:06:05.560 --> 0:06:08.400 issue of Bloomberg Business Week, out later this week. Already 0:06:08.440 --> 0:06:10.800 on the Bloomberg and at Bloomberg dot com. This is 0:06:10.800 --> 0:06:15.560 Bloomberg Radio. You're listening to the Bloomberg Business Week podcast. 0:06:15.839 --> 0:06:18.640 Catch us live weekdays from two to five pm Easter 0:06:18.880 --> 0:06:22.560 on Bloomberg Radio. The Bloomberg business band you Doo. You 0:06:22.640 --> 0:06:25.599 can also listen live to our flagship New York station 0:06:26.000 --> 0:06:31.359 Just Say Alexa play Bloomberg E Love and Dirty. Alright, Tim, So, 0:06:31.400 --> 0:06:33.320 as we mentioned, shares a Bed Bath and Beyond their 0:06:33.360 --> 0:06:37.000 up year today still down more than from a high 0:06:37.000 --> 0:06:40.520 back in August two. It's been often grouped among the 0:06:40.520 --> 0:06:43.920 meme stocks actively traded by retail investors, and the company 0:06:43.960 --> 0:06:46.839 is indicated it's getting ready for a potential bankruptcy filing. 0:06:46.880 --> 0:06:49.680 How it got there and who's to blame that is 0:06:49.720 --> 0:06:51.799 the subject of another one of our most read stories 0:06:51.800 --> 0:06:53.800 on the Bloomberg Today. With more on her story, Let's 0:06:53.800 --> 0:06:56.720 bring in Joette Newman, Bloomberg News US luxury retail and 0:06:56.760 --> 0:06:59.440 personal care industries reporter. She's with us right now when 0:06:59.440 --> 0:07:03.440 our Bloomberg Interactive Broker's studio. So, Janette, who is to 0:07:03.480 --> 0:07:06.080 blame for what's happening at Bed Bath and Beyond. Well, 0:07:06.120 --> 0:07:08.640 there are many people. Um to blame, is the is 0:07:08.640 --> 0:07:10.880 the short answer. And I think, I mean one one 0:07:11.400 --> 0:07:13.600 thing that is to blame is Amazon. But I think 0:07:13.640 --> 0:07:16.320 Amazon kind of you know, whenever there's retail bankruptcies, people 0:07:16.400 --> 0:07:18.480 kind of cat you know, this is another one bites 0:07:18.480 --> 0:07:20.880 the dust because of Amazon. And it's much more complicated 0:07:20.920 --> 0:07:23.040 than that because obviously there's a lot of retailers out 0:07:23.040 --> 0:07:25.200 there who are competing against Amazon and they're doing and 0:07:25.200 --> 0:07:28.240 they're doing fine. So Amazon is you know, somewhat to 0:07:28.240 --> 0:07:30.440 blame for Bedbad where Bed Bath and Beyond ended up, 0:07:30.440 --> 0:07:33.600 but it's a small portion of the of the blame. 0:07:33.680 --> 0:07:36.040 And just over over the past you know, several years, 0:07:36.040 --> 0:07:40.360 there's been a series of management missteps and miscalculations that 0:07:40.440 --> 0:07:42.600 led the company to where it is today. So it's 0:07:42.640 --> 0:07:45.560 it's um structural forces with Amazon, but also you know, 0:07:45.840 --> 0:07:48.800 mistakes by managers over the past several years. Well, talk 0:07:48.840 --> 0:07:51.160 to us about some of the mistakes because we've been 0:07:51.160 --> 0:07:53.280 talking about retail I feel like for over a decade 0:07:53.560 --> 0:07:56.240 in terms of how we got overstored too many strategies 0:07:56.240 --> 0:07:58.160 out there, and we've seen fall at I mean, we 0:07:58.240 --> 0:08:00.680 even just see i mean, let's go on here post 0:08:00.680 --> 0:08:03.640 pandemic of just so many retail that have whittled down, 0:08:04.040 --> 0:08:06.680 you know, their stores, their brick and mortar stores. So 0:08:07.000 --> 0:08:09.840 what specifically though in the Bed Bath and Beyond strategy 0:08:09.840 --> 0:08:12.120 as itt that they just kind of messed up with. 0:08:12.480 --> 0:08:15.440 So they definitely didn't invest enough in in online so 0:08:15.480 --> 0:08:17.440 that that left them kind of, you know, flat footed 0:08:17.480 --> 0:08:20.080 competing against Amazon that omni channel. Right, I can go 0:08:20.120 --> 0:08:21.840 to the store, I can buy online from you guys 0:08:21.840 --> 0:08:23.680 and all that good stuff. Exactly. They didn't. They didn't, 0:08:23.680 --> 0:08:25.280 They didn't do that well. They spent a lot of 0:08:25.280 --> 0:08:29.200 money UM buying lots of companies, for example by By Baby, 0:08:29.280 --> 0:08:32.200 Christmas Tree Shops. They spent a ton of money billions 0:08:32.200 --> 0:08:35.000 and billions UM on share on share buy backs. That 0:08:35.120 --> 0:08:37.480 was kind of the previous leadership. Then a new CEO 0:08:37.640 --> 0:08:39.880 a couple of years ago UM took over. He was 0:08:39.920 --> 0:08:43.080 the former head UM chief merchant at Target. So it's 0:08:43.080 --> 0:08:45.200 a really big deal Mark Tritt, and people were really 0:08:45.200 --> 0:08:47.120 excited about what he was going to do to potentially 0:08:47.160 --> 0:08:50.120 turn this, uh this company around and and in fact, 0:08:50.200 --> 0:08:52.720 he was not able to turn it around. And you know, 0:08:53.040 --> 0:08:55.120 long story, hopefully people can can read that, can read 0:08:55.160 --> 0:08:57.520 the story. But some of what he did was also 0:08:57.600 --> 0:09:00.000 double down on share buy backs, so spent a billion 0:09:00.120 --> 0:09:02.760 dollars at a time when the company didn't have necessarily 0:09:02.800 --> 0:09:05.960 that cash on hand, and also made a pivot to 0:09:06.679 --> 0:09:09.640 UM white label or private label brands and that's something 0:09:09.640 --> 0:09:11.280 that for a retailer can actually make a lot of 0:09:11.280 --> 0:09:13.760 sense because essentially you're cutting out the middleman, right, so 0:09:13.760 --> 0:09:15.600 it's like you're going to the factory in China and 0:09:15.640 --> 0:09:19.320 you're sourcing the products. Um doesn't it seem crazy in 0:09:19.440 --> 0:09:21.439 hindsight because it's the kind of story you like a 0:09:21.520 --> 0:09:23.600 meta candles or I need some towels, or I need 0:09:23.600 --> 0:09:25.960 a rug for the bathroom. I go in bam, do 0:09:26.080 --> 0:09:28.760 it go right? Right? And so the private label thing 0:09:28.920 --> 0:09:31.120 can make sense because there's higher there's higher margins, is 0:09:31.120 --> 0:09:34.000 more profitable for companies. But they did it at right 0:09:34.280 --> 0:09:36.480 like when the pandemic hit, so they weren't able to 0:09:36.640 --> 0:09:39.600 effectively source all of their their new products from China. 0:09:40.000 --> 0:09:43.320 And also they ended up doing it at the expense 0:09:43.960 --> 0:09:46.360 perhaps unintentional, but at the expense of some of these 0:09:46.360 --> 0:09:48.760 well known brands that took people to the store for decades, 0:09:48.880 --> 0:09:51.520 Kitchen Aid, Oxo, all those brands. So now they had 0:09:51.520 --> 0:09:54.480 all their own new brands that people didn't know, didn't recognize, 0:09:54.520 --> 0:09:57.079 didn't resonate with the customer, and there wasn't the same 0:09:57.120 --> 0:10:00.000 availability of the kitchen Aids and the Oxos, so customer 0:10:00.040 --> 0:10:01.599 or is then that that started the company on a 0:10:01.640 --> 0:10:04.400 downward spiral. Right, customers go there, they don't see, they 0:10:04.440 --> 0:10:07.520 don't see what they want. The company's burning cash cash is, 0:10:07.600 --> 0:10:09.760 you know, their cash pile is is starting to dwindle. 0:10:10.120 --> 0:10:13.280 Suppliers start to get really nervous because they think that 0:10:13.280 --> 0:10:15.960 they're not going to get paid. Um, suppliers pull back, 0:10:16.440 --> 0:10:19.440 shelves end up being empty. Starts a vicious cycle where 0:10:19.480 --> 0:10:21.959 that if a shelf is empty. Yeah, yeah, So it's 0:10:21.960 --> 0:10:23.959 just it's this downward spiral that they got caught that 0:10:24.000 --> 0:10:25.920 they got caught in. And they've been known for having 0:10:25.960 --> 0:10:28.280 like right the inventory, you could just see it piled up. 0:10:28.840 --> 0:10:31.880 It was even more striking, I think because of you know, 0:10:31.920 --> 0:10:33.719 it had been kind of like a stack at high 0:10:33.760 --> 0:10:35.080 and let it fly as what they would what they 0:10:35.080 --> 0:10:37.120 would call it in retail back in the back in 0:10:37.160 --> 0:10:38.600 the day, you know, So I think that that was 0:10:38.640 --> 0:10:40.400 one of the things that also it was just such 0:10:40.440 --> 0:10:43.120 a stark contrast to what the company had had been 0:10:43.120 --> 0:10:46.200 And it's been in that downward spiral now for you know, um, 0:10:46.240 --> 0:10:48.640 nearly nearly a year. So a downward spiral that's very 0:10:48.640 --> 0:10:50.520 difficult to get out of. So how long is this 0:10:50.520 --> 0:10:53.000 downward spiral and and what could happen? I mean, what 0:10:53.000 --> 0:10:54.680 could the future of bed Beth and Beyond look like? 0:10:54.720 --> 0:10:57.440 On the other side? Is there another side? Um? There 0:10:57.520 --> 0:10:59.960 we have we have reported that our colleagues on the 0:11:00.040 --> 0:11:04.040 kruptcy team have reported that liquidation is possible. So liquidation 0:11:04.120 --> 0:11:06.640 meaning you know, Alla Barney's like a Barney's, you know, 0:11:06.679 --> 0:11:10.400 it doesn't exist. Circuit City doesn't exist anymore. Um, towys Arrest, 0:11:10.440 --> 0:11:12.520 at least in the US, doesn't exist anymore. We have 0:11:12.559 --> 0:11:15.520 reported that that is possible because of the dire financial 0:11:15.559 --> 0:11:20.000 situation that they're in. It's a it's a lot of 0:11:20.040 --> 0:11:22.280 meme stock. But is there a winner if if people 0:11:22.280 --> 0:11:24.199 can't go to bed Bath and Beyond or Bye Bye Baby? 0:11:24.280 --> 0:11:26.880 Is it a company like Target? Is it Amazon? Who 0:11:26.920 --> 0:11:29.800 could some winners be because people need this stuff? Yeah? 0:11:29.840 --> 0:11:31.200 I think I think it's all. I think it's all 0:11:31.240 --> 0:11:34.400 of the above. I mean, in in past retail bankruptcies, 0:11:34.840 --> 0:11:38.679 there often hasn't been a huge jump at any one retailer. 0:11:38.720 --> 0:11:40.480 You know, in Circuit City went out of went out 0:11:40.480 --> 0:11:42.800 of business. It wasn't like best Buy saw a huge jump. 0:11:42.840 --> 0:11:46.280 But because it's a slow decline of something where people 0:11:46.320 --> 0:11:48.520 have already been going to those places anyway. Yeah. Yeah, 0:11:48.520 --> 0:11:50.360 and sometimes people end up buying less. Like if you 0:11:50.360 --> 0:11:52.680 you you buy more because you have a store near you, 0:11:52.720 --> 0:11:54.320 And if you don't have that store near you, then 0:11:54.520 --> 0:11:56.640 some of the demand actually just also dissipates. So there's 0:11:56.679 --> 0:11:58.920 gonna be winners target Amazon. But I don't think none 0:11:58.920 --> 0:12:00.840 of these companies are going to see the huge boosts 0:12:00.840 --> 0:12:02.559 at all of the all of the traffic from bed 0:12:02.559 --> 0:12:04.760 bath is going to go to them. Um, my apartment 0:12:04.840 --> 0:12:07.120 is not so happy about this. Okay, so we got 0:12:07.120 --> 0:12:09.560 a baby on the way is yeah, yeah, we got 0:12:09.640 --> 0:12:11.760 a baby on the way, so we need bye bye baby. 0:12:11.840 --> 0:12:15.080 And then my wife really likes face values, which is 0:12:15.160 --> 0:12:17.640 part of the bed bathroom beyond ubrelative is it is? 0:12:17.720 --> 0:12:19.600 And And look, I mean a lot of people are 0:12:19.600 --> 0:12:21.320 not very happy, you know. I mean this was a 0:12:21.360 --> 0:12:25.960 beloved brand. Um the famous coupons that drove that drove 0:12:26.000 --> 0:12:27.560 a lot of people to the to the store. And 0:12:27.600 --> 0:12:30.440 also you know there's a lot of um in it's heyday. 0:12:30.480 --> 0:12:33.439 In two thousand seventeen, the company had sixty five thousand employees. 0:12:33.679 --> 0:12:35.760 Now it has less than thirty thousand. But those you know, 0:12:35.800 --> 0:12:37.800 those people's jobs are at risk. We've written about how 0:12:37.800 --> 0:12:40.640 their severance payments, they haven't they haven't received their severance 0:12:40.679 --> 0:12:43.040 pay so there's also a lot of workers and employees 0:12:43.040 --> 0:12:45.040 who are at risk here. I mean, I do wonder 0:12:45.280 --> 0:12:48.120 with you know, the growth at things like targeting other 0:12:48.200 --> 0:12:50.280 stores where and and online where it is so easy 0:12:50.320 --> 0:12:51.800 to get so many of the goods that they offer 0:12:51.920 --> 0:12:54.120 and get them pretty quickly. Is it just a case 0:12:54.160 --> 0:12:56.679 we didn't need that model. I'm curious what retail experts 0:12:56.679 --> 0:12:58.800 have said that just that model was just not needed 0:12:58.840 --> 0:13:00.840 anymore because it was kind of a one stop shopping 0:13:00.880 --> 0:13:03.880 for a lot of different things, right. I think that 0:13:03.960 --> 0:13:06.800 it at least what what what I have heard of 0:13:06.880 --> 0:13:09.080 what I have learned is that it's not necessarily that 0:13:09.160 --> 0:13:12.360 the model wasn't needed, is that the model wasn't well executed. 0:13:12.400 --> 0:13:15.040 I think there is still space for this model. And 0:13:15.040 --> 0:13:17.600 in terms of what might happen next, you might see 0:13:17.679 --> 0:13:20.720 the company might go into bankruptcy. Then sometimes like companies 0:13:20.760 --> 0:13:23.200 will buy up the intellectual property and you'll have an 0:13:23.240 --> 0:13:26.040 online version of Bad Bath and beyond. That happened with 0:13:26.080 --> 0:13:28.320 Peer one, for example. There's no more Peer one stores left, 0:13:28.600 --> 0:13:29.920 but there's a peer one dot com and and and 0:13:30.120 --> 0:13:33.960 the toys arrus So, So how loved is not baby, 0:13:34.080 --> 0:13:38.000 is bad, bath and beyond apart from the Master Households, 0:13:39.559 --> 0:13:41.120 and I think you know it was it was one 0:13:41.160 --> 0:13:43.440 of the biggest home goods you know, still still is 0:13:43.440 --> 0:13:45.680 one of the biggest home good stores in in in 0:13:45.800 --> 0:13:48.000 the US. So I think that it is it is 0:13:48.080 --> 0:13:50.800 quite beloved, And I think that's what you know, creditors 0:13:50.800 --> 0:13:53.320 in the company right now are trying to hash out 0:13:53.360 --> 0:13:55.000 like how how much has it loved and how much 0:13:55.040 --> 0:13:58.320 is that going to um pay? Essentially how much money 0:13:58.360 --> 0:14:00.640 do they have before they've got to do something. I 0:14:00.679 --> 0:14:04.200 mean they are they are actively in bankruptcy talks as 0:14:04.679 --> 0:14:06.959 as as as we are speaking, there in bankruptcy. There 0:14:07.000 --> 0:14:09.400 in bankruptcy talks. So they've been burning burning cash for 0:14:09.440 --> 0:14:11.720 about a year and you know, in the last quarter 0:14:11.960 --> 0:14:15.720 sales fell about year over year. I mean that that's 0:14:15.800 --> 0:14:18.000 that's that's a ton all right, We're gonna leave it 0:14:18.000 --> 0:14:20.400 on that note. Jeanette, Thank you so much. Janette Newman, 0:14:20.480 --> 0:14:23.000 she is US luxury retail and personal care industries reporter 0:14:23.040 --> 0:14:27.080 at Bloomberg News. You're listening to the Bloomberg Business Week podcast. 0:14:27.320 --> 0:14:29.840 Catch us live week days from two to five pm 0:14:29.880 --> 0:14:33.800 Eastern on Bloomberg Radio, The Bloomberg Business and and You Too. 0:14:34.000 --> 0:14:37.120 You can also listen live to our flagship New York station, 0:14:37.520 --> 0:14:42.600 Just Say Alexa play Bloomberg, e Love and Dirty. Billionaire 0:14:42.640 --> 0:14:46.000 b Tamadonni is having a rough start to three. The 0:14:46.040 --> 0:14:49.400 Indian industrial Tycoons Empire has taken a roughly one billion 0:14:49.400 --> 0:14:52.120 dollar hit in a matter of days following accusations of 0:14:52.160 --> 0:14:56.240 financial wrongdoing from an American activist short seller that is 0:14:56.240 --> 0:14:59.800 the subject of this week's cover story. Nathan Anderson of 0:15:00.000 --> 0:15:03.280 Dedenburgh Research says the Donnie is quote pulling the largest 0:15:03.360 --> 0:15:07.280 Cohn in corporate history. Among Anderson's key allegations is that 0:15:07.360 --> 0:15:09.920 people close to Donnie have used a network of obscure 0:15:10.040 --> 0:15:12.960 offshore shell companies to buy and sell shares in his 0:15:13.040 --> 0:15:16.280 businesses in order to make them appear more valuable. Well 0:15:16.280 --> 0:15:18.840 to help us break down a Donnie Group's rapid rise 0:15:18.880 --> 0:15:21.680 in value and why Hindenburg Research is accusing it of 0:15:21.840 --> 0:15:25.760 widespread misconduct, which the billionaire himself denies. Returned out to 0:15:25.760 --> 0:15:29.040 Bloomberg Business Week, Markets and Finance editor Pat mcneer and 0:15:29.080 --> 0:15:32.320 Bloomberg News Wealth reporter unders melon. Now, Pat, I do 0:15:32.360 --> 0:15:34.240 want to start with you help us at the stage here, 0:15:34.240 --> 0:15:39.480 because I think Guatamadonni necessarily was not a household name. Um, 0:15:39.520 --> 0:15:41.120 how did he become one of the world's richest men 0:15:41.160 --> 0:15:43.120 and who is he? Well, he may not be a 0:15:43.120 --> 0:15:45.320 household name in the United States, but he is absolutely 0:15:45.360 --> 0:15:47.880 a household name in India. Um. He's probably one of 0:15:47.920 --> 0:15:51.080 the most important businessmen in modern India. Almost anything that 0:15:51.120 --> 0:15:54.840 you might do in India, his businesses will touch your life. 0:15:55.000 --> 0:15:58.280 So he's built this enormous empire. But a lot of 0:15:58.320 --> 0:16:04.160 the growth in its value really came during the global 0:16:04.280 --> 0:16:08.000 everything rally that began with the snap back from the 0:16:08.080 --> 0:16:12.000 COVID crash. But it just kept going even through two 0:16:12.080 --> 0:16:13.720 You just like when you when you do a chart, 0:16:13.760 --> 0:16:16.480 you just see it just going like hockey stick. Um. 0:16:16.520 --> 0:16:19.000 But then also just even in two is like global 0:16:19.040 --> 0:16:22.000 markets were falling, this one's still just going up, up, 0:16:22.080 --> 0:16:25.080 up and up. So uh, he's become sort of this 0:16:25.160 --> 0:16:28.000 like very visible global success story, you know, and he 0:16:28.040 --> 0:16:31.080 starts coming on the radar of even people you know 0:16:31.200 --> 0:16:33.200 outside of India. He may not be a consumer household 0:16:33.280 --> 0:16:36.040 name but if you're like watching as Andres does, he 0:16:36.160 --> 0:16:38.400 is now beginning to like, you know, top every league 0:16:38.400 --> 0:16:40.520 table that you can see. I mean, this was Asia's 0:16:40.600 --> 0:16:43.480 richest man, India's richest man. He was one of the 0:16:43.560 --> 0:16:46.120 richest people in the world. Anders come on in on 0:16:46.160 --> 0:16:48.120 it because he was also a man who seemed to 0:16:48.360 --> 0:16:50.920 like his privacy and kind of stay out of the limelight. 0:16:51.040 --> 0:16:52.800 Talk to us a little bit more about his empire 0:16:52.840 --> 0:16:57.800 and then the allegations by Hindenburg. Yeah, he definitely has 0:16:58.280 --> 0:17:02.760 tended to stable of the radar until recent years. And 0:17:03.200 --> 0:17:07.040 his empire really is one that touches a lot of 0:17:07.359 --> 0:17:10.239 citizens in India every day. He owns a series of 0:17:10.600 --> 0:17:16.080 infrastructure companies that that all hang together in when one conglomerate. 0:17:16.160 --> 0:17:19.280 So everything from coal mines to power plants, to power lines, 0:17:19.400 --> 0:17:25.080 to cements, production facilities and data storage centers. And he's 0:17:25.080 --> 0:17:30.000 getting into media and he owns food companies. So it's 0:17:30.280 --> 0:17:34.840 things that touch lots of Indian citizens every day. And 0:17:35.280 --> 0:17:39.680 he sort of came onto the scene internationally two when 0:17:39.760 --> 0:17:43.040 things started falling, he just really went off the church 0:17:43.280 --> 0:17:45.680 that shares of his companies just went up, up up, 0:17:46.359 --> 0:17:48.439 and all of a sudden he was the second richest 0:17:48.440 --> 0:17:51.359 man in the world in September last year, which was 0:17:52.080 --> 0:17:55.439 just quite surprising to see because the rice was it 0:17:55.560 --> 0:17:59.840 was just so incredibly baffling, especially for infrastructure companies, which 0:18:00.200 --> 0:18:03.880 don't really tend to have those kinds of rich valuations, 0:18:03.920 --> 0:18:07.800 and that piqued a lot of interest among people who said, 0:18:07.840 --> 0:18:10.880 this just doesn't make sense. It's too good to be true. 0:18:10.960 --> 0:18:15.000 These financials just can't be they can't be real. There's 0:18:15.040 --> 0:18:19.679 been whispers and news reports in India for quite a 0:18:19.680 --> 0:18:24.520 few years about various aspects of the finances of his companies, 0:18:25.240 --> 0:18:28.679 but nothing really had happened. But that obviously changed a 0:18:28.720 --> 0:18:32.720 couple of weeks ago when Hindenberg Research put out their 0:18:32.920 --> 0:18:36.280 Hunter Page note, sort of aggregating a lot of what 0:18:36.359 --> 0:18:39.280 had been out there already and then dove deeper into 0:18:39.320 --> 0:18:43.159 certain aspects. And most people in India, i think it's 0:18:43.200 --> 0:18:46.560 safe to say, expected that nothing would really happen. But 0:18:46.760 --> 0:18:50.040 the shares of his companies started falling, and then they 0:18:50.080 --> 0:18:53.439 just fell and fell and fell. Andrews we as we 0:18:53.440 --> 0:18:55.640 were preparing this story and it comes it comes through 0:18:55.680 --> 0:18:58.400 so well. In your piece, Um talked a lot about 0:18:58.440 --> 0:19:01.960 kind of a culture clash between in UM Corporate India 0:19:02.280 --> 0:19:06.080 and UM sort of it's suddenly it got big enough 0:19:06.400 --> 0:19:09.480 that it met the markets and the end of the 0:19:09.520 --> 0:19:15.280 way that people operate in UH New York and London 0:19:15.320 --> 0:19:17.960 and other financial markets, and it suddenly met this kind 0:19:18.000 --> 0:19:23.439 of brass knuckles culture of shorts UM. And can you 0:19:23.480 --> 0:19:26.160 just talk a little bit about sort of like how 0:19:26.160 --> 0:19:29.679 that's played out. Yeah. So one of the unique aspects 0:19:30.800 --> 0:19:36.440 with gout Madani's group of companies is that it's it's 0:19:36.600 --> 0:19:40.480 built sort of like a traditional Indian family conglomerate, which 0:19:40.520 --> 0:19:45.760 is UM a series of businesses that that family that 0:19:45.920 --> 0:19:48.760 it's sort of like a group of businesses that a 0:19:48.760 --> 0:19:53.760 family builds over time, and they tied together sometimes in 0:19:53.840 --> 0:19:56.960 some ways, and and you can help support each other 0:19:57.040 --> 0:20:00.119 financially when needed, and you can move personnel between in 0:20:00.200 --> 0:20:03.760 them UM. And this has been it has a long 0:20:03.840 --> 0:20:08.320 storied history in the Indian business culture in the United States. 0:20:08.320 --> 0:20:10.680 They used to be common back in the day. They 0:20:10.720 --> 0:20:15.520 are much less so now. UM. And one thing that 0:20:15.680 --> 0:20:18.399 people that I talked to ahead of writing the story 0:20:18.400 --> 0:20:22.000 you pointed out to me was that within these conglomerates, 0:20:22.800 --> 0:20:25.920 historically there has tended to be quite a bit of 0:20:27.800 --> 0:20:32.080 really related party transactions and money being moved between different 0:20:32.119 --> 0:20:37.959 parts of of the conglomerate. And um. Sometimes that might 0:20:38.040 --> 0:20:40.520 have been done in ways that others would not pick 0:20:40.600 --> 0:20:44.240 up on, or that security lawyers maybe would frown upon 0:20:44.440 --> 0:20:48.119 because it was sort of a family affair and UM 0:20:48.920 --> 0:20:52.040 and that's something that some people are told to stressed 0:20:52.080 --> 0:20:56.399 that here you have a certain culture of doing business, 0:20:56.440 --> 0:20:59.040 a certain way of doing business that has worked extremely 0:20:59.080 --> 0:21:02.919 well for the country over a really long time, that 0:21:03.119 --> 0:21:10.199 is now clashing with how things are done in the 0:21:10.200 --> 0:21:13.280 financial centers of capital like New York and London, where 0:21:13.720 --> 0:21:16.760 the culture is very different. Most companies tend to have 0:21:16.800 --> 0:21:20.200 a really broad shareholder base and not be controlled by family. 0:21:20.880 --> 0:21:24.800 Boards tend to not be stacked by family members, executive 0:21:24.880 --> 0:21:28.320 roles tend to not be stacked by family members. UM. 0:21:28.440 --> 0:21:32.639 And a lot of people in India are feeling a 0:21:32.680 --> 0:21:39.000 sense of frustration, I think because they feel like people 0:21:39.040 --> 0:21:41.800 in the West just look at this kind of corporate 0:21:41.800 --> 0:21:45.800 structure and think that there's something inherently suspicious with it, 0:21:46.440 --> 0:21:49.760 when in reality it's it's just a it's a slightly 0:21:49.800 --> 0:21:53.080 different way of just looking at how business is done 0:21:53.080 --> 0:21:55.960 and how priorities are set. The other thing I just 0:21:56.000 --> 0:21:59.159 want to under I think another layer that you do 0:21:59.240 --> 0:22:03.520 so well in your reporting is the connection between India, 0:22:03.560 --> 0:22:08.520 the country, India, the Prime Minister and a Donnie Right. 0:22:08.640 --> 0:22:14.280 The relationship just seems very close. Yes, Donnie and Prime 0:22:14.280 --> 0:22:18.000 Minister and round Remodi have known each other for twenty years. 0:22:18.160 --> 0:22:22.760 And people that knowing me a well, they say that 0:22:22.800 --> 0:22:25.920 these two are are quite close and their goals are 0:22:26.040 --> 0:22:29.080 aligned and they have benefited from each other. And in 0:22:29.119 --> 0:22:33.240 that vein, Donnie has especially in recent years taking on 0:22:33.359 --> 0:22:38.800 a really strong profile of trying to link himself and 0:22:38.960 --> 0:22:45.160 his company with the future UM and the success of India. 0:22:45.600 --> 0:22:47.919 And that's also something that is pushed really hard on 0:22:48.000 --> 0:22:50.479 now that the company is under attacked by a New 0:22:50.520 --> 0:22:52.760 York short seller. Well, it's a great deep dive and 0:22:52.760 --> 0:22:55.000 I feel like there's so much information that really gives 0:22:55.080 --> 0:22:57.760 us a much clearer picture of who this this individual 0:22:57.880 --> 0:22:59.840 is and what's going on in it. And it is 0:23:00.080 --> 0:23:02.399 over as we know, because the share price continuing to 0:23:02.400 --> 0:23:05.960 be under pressure. UH this week our thanks to Bloomberg 0:23:05.960 --> 0:23:08.879 News Wealth reporter Anders Mellin and Bloomberg Business Week Markets 0:23:08.880 --> 0:23:13.560 and Financial editor Pat reagni Er. You're listening to the 0:23:13.600 --> 0:23:17.360 Bloomberg Business Week podcast. Catch us live week days from 0:23:17.359 --> 0:23:20.800 two to five pm Easter on Bloomberg Radio, The Bloomberg 0:23:20.800 --> 0:23:23.960 Business and You too. You can also listen live to 0:23:24.000 --> 0:23:28.159 our flagship New York station, Just Say Alexa Play Bloomberg 0:23:28.160 --> 0:23:31.800 e Love and Dirty. We love talking about the travel 0:23:31.880 --> 0:23:34.560 industry and we love talking about it with our next guest, Um. 0:23:34.600 --> 0:23:36.600 We are, though, keeping a watch on shares of Chicago. 0:23:36.680 --> 0:23:38.640 We've seen some selling, a bit of a sell off 0:23:38.640 --> 0:23:41.679 today following the company's latest quarterly update. Stock is up, 0:23:41.680 --> 0:23:45.000 though almost thirty percent year to date, still down more 0:23:45.040 --> 0:23:47.960 than sixty from the high back in March of one. 0:23:48.000 --> 0:23:50.200 Like a lot of names in the space, fourth quarter 0:23:50.280 --> 0:23:53.520 earnings for the company per share missing the average analyst estimates. 0:23:53.520 --> 0:23:56.240 But let's talk about the business. Let's take a look 0:23:56.520 --> 0:23:58.879 at what's happening going forward. Great to be checking in 0:23:58.920 --> 0:24:02.000 again with Axel Hey for his CEO at Travago joining 0:24:02.119 --> 0:24:06.239 Spa Zoom from Dusseldorf. Dusseldorf, I can't even say it. 0:24:06.640 --> 0:24:10.680 Don't ask me to say Matt Miller is listening and say, 0:24:10.720 --> 0:24:12.560 oh my god, mass or can't you get it right, 0:24:12.680 --> 0:24:15.479 I'm checked, but I'm not German. All right. Um axel, 0:24:15.560 --> 0:24:17.080 good to have you here with Mike and myself. How 0:24:17.119 --> 0:24:20.760 are you? I'm well, how are you? I'm doing okay, 0:24:20.760 --> 0:24:23.040 I'm doing okay. Talk to us about the quarter. First 0:24:23.080 --> 0:24:27.280 of all, I mean, the culture has been has been great. 0:24:27.320 --> 0:24:29.040 I mean, let's be honest, I mean, the whole year 0:24:29.119 --> 0:24:32.760 has been has been terrific. If you're in travel, Um, 0:24:32.800 --> 0:24:34.800 all of us wanted to travel and we have the 0:24:34.840 --> 0:24:38.080 money to spend it, so we we haven't traveled us 0:24:38.119 --> 0:24:40.760 as we used to for for two years. We haven't 0:24:40.800 --> 0:24:45.040 died in wine for two years. So um. Yeah. Two 0:24:45.119 --> 0:24:48.400 was the of the travel industry act. As we get 0:24:48.440 --> 0:24:53.040 back into sort of hopefully a more normal economic cycle 0:24:53.680 --> 0:24:57.480 with the pandemic disruptions in the ver view mirror, how 0:24:57.520 --> 0:25:01.320 do you think travel fits into that cycle? Is would 0:25:01.359 --> 0:25:04.120 weakness and travel be a leading indicator of the economy, 0:25:04.119 --> 0:25:06.560 do you think? Or does it weeken along, you know, 0:25:06.720 --> 0:25:12.720 coincidentally with the economy. It's difficult to say. I mean, 0:25:13.760 --> 0:25:15.639 I mean from from our perspective, and one of the 0:25:15.720 --> 0:25:18.560 key learnings has been of the pandemic has been that 0:25:19.240 --> 0:25:21.520 travel is not really luxury. Good but it's it's a 0:25:21.560 --> 0:25:25.159 basic necessity. I guess we've all experienced it, sitting in 0:25:25.200 --> 0:25:28.240 lockdown and not being able to get a break and 0:25:28.280 --> 0:25:30.159 break out of our daily routine. And I think a 0:25:30.160 --> 0:25:33.159 lot of people have experienced that. So so we do 0:25:33.280 --> 0:25:36.720 think that that people will continue to travel. Irrespective of 0:25:36.760 --> 0:25:40.800 the economic scenario that you're thinking of. They will, um, 0:25:40.880 --> 0:25:43.760 you know, save money on traveling to a greater or 0:25:43.840 --> 0:25:47.480 lesser extent, depending on how much money is available. But 0:25:47.840 --> 0:25:50.200 we do believe that people will continue to travel. Tell 0:25:50.240 --> 0:25:52.399 us what the trends that you're seeing so far, that 0:25:52.440 --> 0:25:54.960 you saw in the last quarter and coming up, uh, 0:25:54.960 --> 0:25:57.200 and going into this new year. So far we're already 0:25:57.240 --> 0:25:59.960 one a month and a week or so in here. 0:26:00.000 --> 0:26:03.160 Who's traveling? What kind of trips are they taking? Um? 0:26:03.200 --> 0:26:06.000 Are they comfortable paying the prices offer? Are they're looking 0:26:06.000 --> 0:26:09.440 for better deals? What's going on? Yeah, I mean, let's 0:26:09.440 --> 0:26:12.159 start with the with the obvious. Prices are up also, 0:26:12.280 --> 0:26:15.560 so traveling is expensive, and it would stay expensive and 0:26:15.680 --> 0:26:18.200 prices continue to go up if you look at the 0:26:18.240 --> 0:26:21.600 year of the year trends, um and UM. And I guess, 0:26:21.600 --> 0:26:24.719 like like everything else, it's getting more expensive and and 0:26:24.840 --> 0:26:27.480 like with everything else that that is getting more expensive, 0:26:27.880 --> 0:26:30.920 travelers are trying to save money and and what they 0:26:30.920 --> 0:26:34.240 are doing, and we've we've seen some indications of that 0:26:34.840 --> 0:26:37.840 in queue four A ready UM. The first first lever 0:26:37.960 --> 0:26:41.000 that travelers are pulling is they are going to different locations, 0:26:41.280 --> 0:26:45.560 so UM cheaper locations, not not the top cities, but 0:26:45.680 --> 0:26:49.600 more um, more hidden gems UM. The second lever that 0:26:49.720 --> 0:26:53.520 travelers are pulling is they're trading down on hotel categories 0:26:53.600 --> 0:26:56.040 and so two to three stars are gaining and share 0:26:56.240 --> 0:27:01.240 four to five are are losing. And and the last 0:27:01.240 --> 0:27:07.119 one is that the people um cut the overall length 0:27:07.160 --> 0:27:10.199 of stay UM to save some money. But we do 0:27:10.320 --> 0:27:14.040 expect that despite all these these trends that we are seeing, 0:27:14.080 --> 0:27:18.120 that the overall market will be up in three act. 0:27:18.119 --> 0:27:21.480 So I'm wondering how all these geopolitical issues play into 0:27:21.760 --> 0:27:24.480 your business and the travel industry. I mean, obviously there's 0:27:24.600 --> 0:27:28.800 Russia and Ukraine. Also a lot of unrest now in 0:27:29.080 --> 0:27:33.280 South America and prove some you know, political uncertainty in Brazil. 0:27:33.800 --> 0:27:35.479 Is any of that showing up in the numbers? Yet? 0:27:35.520 --> 0:27:41.080 Are people avoiding some of these South American destinations? Yeah? Absolutely, 0:27:41.160 --> 0:27:42.880 I mean that's that's to be honest, that's the beauty 0:27:42.920 --> 0:27:45.960 of running a global business. You always have a few 0:27:46.000 --> 0:27:50.520 markets where you have some turmoil, um and and and 0:27:50.600 --> 0:27:53.159 stability is not good for travel, so you want to 0:27:53.160 --> 0:27:56.040 make sure that you can get somewhere, have a good 0:27:56.040 --> 0:28:00.639 experience and also get back safely. Um and I mean 0:28:00.800 --> 0:28:04.160 Ukraine and Russia is obviously has been has been a 0:28:04.280 --> 0:28:07.760 very very severe disruption and it's obviously a terrible situation 0:28:08.320 --> 0:28:11.280 where you have the whole markets that that are they're 0:28:11.320 --> 0:28:13.560 not traveling and where you can't travel to. But also 0:28:14.200 --> 0:28:17.760 um disruption of some of the flight routes, etcetera. UM. 0:28:17.840 --> 0:28:21.480 On a global level, it's usually evening out. But yeah, 0:28:21.520 --> 0:28:24.240 you can clearly see the immediate impact of a crisis 0:28:24.280 --> 0:28:28.159 of our uncertainty in in any given regional country. Accell. 0:28:28.200 --> 0:28:30.920 What about Europe specifically, which you know so well, you guys, 0:28:30.960 --> 0:28:34.000 I think your biggest chunk of revenues essentially comes from Europe. 0:28:34.000 --> 0:28:37.200 So what would you from what you're seeing, um, what's 0:28:37.240 --> 0:28:41.720 going on in Europe and that economy specifically, Yeah, I 0:28:41.720 --> 0:28:44.800 mean it's it's Europe is a bit difficult to say 0:28:44.840 --> 0:28:48.959 because one one key, um key assumption that you need 0:28:49.040 --> 0:28:51.760 to have to to predict the year is where you 0:28:51.800 --> 0:28:54.240 go for a soft or heard landing, And the discussion 0:28:54.240 --> 0:28:56.880 in Europe is the same then in the US it 0:28:56.920 --> 0:28:59.520 will all depend on on the central bank and whether 0:28:59.560 --> 0:29:03.240 the economies will dip into a recession. UM. I think 0:29:03.240 --> 0:29:06.040 that the hour of view on Europe is slightly more 0:29:06.040 --> 0:29:08.280 negative than the US. So we think it's it's more 0:29:08.320 --> 0:29:11.760 likely that you will have a hard landing than a 0:29:11.840 --> 0:29:15.680 soft landing UM in the US. But even in that scenario, 0:29:15.840 --> 0:29:18.239 we do expect the overall travel span to be up. 0:29:19.600 --> 0:29:23.240 So actually, any big plans for three, any any changes 0:29:23.280 --> 0:29:27.160 coming to the company, or any expansion plans. Yeah, I 0:29:27.160 --> 0:29:29.520 mean you always have to have to have plans, and 0:29:29.840 --> 0:29:33.400 I guess you you always have to prepare for, you know, 0:29:33.440 --> 0:29:37.360 the even difficult times and and think about the opportunity 0:29:37.400 --> 0:29:40.640 that's arising from it. So the the plan or the 0:29:40.680 --> 0:29:43.840 initiative that we are most excited about is our direct 0:29:43.840 --> 0:29:47.960 hotel initiative. And the reason why that is is UM, 0:29:48.040 --> 0:29:51.880 when you think about the online accommodation industry, UM, we 0:29:51.920 --> 0:29:54.480 think that the biggest opportunity that is that is out 0:29:54.480 --> 0:29:59.200 there is to connect travelers directly with hotels UM and 0:29:59.240 --> 0:30:02.120 allow have a list in a very convenient way to 0:30:02.200 --> 0:30:07.400 book all the potential hotels directly from one side, UM 0:30:07.480 --> 0:30:11.200 interacting directly with the hotelier, and for the hotelier to 0:30:11.320 --> 0:30:15.280 interact directly with the the traveler and customize their offering, 0:30:15.800 --> 0:30:19.400 whereas most of the bookings are either in a very 0:30:19.400 --> 0:30:22.400 inconvenient way where you go to the hotel website directly 0:30:22.480 --> 0:30:25.840 or have to call them or are going through O, T, 0:30:26.000 --> 0:30:29.040 A S. And UM. Yeah, I mean that's why why 0:30:29.160 --> 0:30:32.960 we have been pushing UM quite aggressively now in in 0:30:33.040 --> 0:30:37.360 a test markets are coverage of direct hotel access UM. 0:30:37.720 --> 0:30:39.840 We are now at fifty and we want to reach 0:30:39.880 --> 0:30:42.080 eight percent by end of the year. And we do 0:30:42.160 --> 0:30:47.680 believe that by offering this direct booking UM functionality on 0:30:47.680 --> 0:30:51.640 our website, we complement our existing offer and and can 0:30:51.680 --> 0:30:54.360 serve your travelers even better than we have done in 0:30:54.400 --> 0:30:56.520 the past. Axtell help me out there. How does that 0:30:56.600 --> 0:31:01.080 not kind of compete with what you already do? Yees? 0:31:01.160 --> 0:31:04.240 So it's a bit different. Yeah, So our research shows 0:31:04.240 --> 0:31:07.560 that twenty of travelers do want to book direct and 0:31:08.080 --> 0:31:10.640 the other eight I mean want to book direct in 0:31:10.960 --> 0:31:15.120 certain cases and UM I know, I'm just thinking about 0:31:15.160 --> 0:31:18.320 myself when when my children were young, UM, I had 0:31:18.360 --> 0:31:21.160 to book direct because I needed to adjacent rooms, which 0:31:21.280 --> 0:31:24.080 I can't really book through an O t A. Whereas 0:31:24.080 --> 0:31:27.040 when I was traveling for business, UM, I and a 0:31:27.040 --> 0:31:28.760 lot of cases just went through an O t A. 0:31:28.840 --> 0:31:32.560 It's easier to to cancel, it's easier to actually rebook 0:31:33.240 --> 0:31:36.479 something else. So it's really it's it's complimentary to what 0:31:36.520 --> 0:31:39.160 we are doing already. It's it's just making sure that 0:31:39.560 --> 0:31:43.920 for every UM specific situation and for every trip, we 0:31:44.000 --> 0:31:48.480 can serve the travelers as as well as possible. Excel. Uh, 0:31:48.720 --> 0:31:50.960 spring break coming up, I've I've got a college daughter 0:31:51.080 --> 0:31:56.040 is very excited. What are you thinking for springbreak? Easter season? UM? 0:31:56.120 --> 0:31:58.840 Is it boom times in the travel industry again, I 0:31:58.840 --> 0:32:03.280 know that's a very busy time for you. Absolutely, yeah, 0:32:03.520 --> 0:32:05.440 for sure. So if you find a good deal, you 0:32:05.440 --> 0:32:08.680 should lock it. UM and you, I guess you have 0:32:08.760 --> 0:32:11.760 the usual suspect Vegas on top of the list. But 0:32:12.120 --> 0:32:15.520 what is interesting from a US perspective that UM some 0:32:15.640 --> 0:32:18.920 of the international destinations have actually made it back into 0:32:18.920 --> 0:32:23.240 the top ten. So London, Paris and also Tokyo are 0:32:23.400 --> 0:32:27.560 back to back to the spring bank destinations. Hey, just 0:32:27.640 --> 0:32:34.120 quickly thirty seconds. Any signs of recession out there? Uh no, 0:32:34.240 --> 0:32:36.880 I don't know. Not from our perspective, we think stopped landing, 0:32:37.160 --> 0:32:39.360 stop landing really wild? And you are you getting all 0:32:39.400 --> 0:32:43.640 the workers you need? Another twenty seconds? Um, yeah, for sure. 0:32:43.680 --> 0:32:46.080 We've got a global brand recruit for globally and not 0:32:46.120 --> 0:32:48.640 in Germany though. You have to go global. Yeah, no, 0:32:48.720 --> 0:32:51.080 I remember you always talked about that. Hey, Axel, thank 0:32:51.080 --> 0:32:52.480 you so much. I know it's a little later where 0:32:52.480 --> 0:32:55.040 you are, and we really appreciate you joining us on 0:32:55.080 --> 0:32:57.840 this Wednesday. Axel, he for He's the chief executive officer 0:32:57.840 --> 0:33:02.600 over at Trovago, joining us from Dusseldorf, Germany. You're listening 0:33:02.640 --> 0:33:06.480 to the Bloomberg Business Week podcast. Catch us live weekdays 0:33:06.480 --> 0:33:09.520 from two to five pm Easter on Bloomberg Radio, the 0:33:09.560 --> 0:33:13.080 Bloomberg Business Band, you two. You can also listen live 0:33:13.200 --> 0:33:17.480 to our flagship New York station, Just say Alexa, play Bloomberg, 0:33:17.480 --> 0:33:20.760 E Loove and Dirty Ian. One thing that we've been 0:33:20.800 --> 0:33:23.960 talking a lot about robots, and I think this all 0:33:24.040 --> 0:33:27.480 has to come with so much attention being paid once 0:33:27.520 --> 0:33:31.040 again on artificial intelligence. We're gonna talk about that in 0:33:31.520 --> 0:33:34.200 regards to Microsoft a little bit later on, but we're 0:33:34.240 --> 0:33:37.200 just talking about robots getting smarter, what it means for 0:33:37.240 --> 0:33:39.520 our jobs, what it means for our world at large, 0:33:40.000 --> 0:33:42.760 and so, um, we did want to get into it 0:33:42.760 --> 0:33:45.680 because a certain Bloomberg Opinion column definitely caught our attention. 0:33:45.880 --> 0:33:48.760 Let's bring in Beth Coitch. She is, um someone who 0:33:48.800 --> 0:33:52.600 covers corporate America for us here at Bloomberg Bloomberg Opinion specifically, 0:33:52.640 --> 0:33:55.960 and she's here in our Bloomberg Interactive Broker's studio. Beth, 0:33:56.080 --> 0:33:59.520 I do feel like all of a sudden, AI, artificial intelligence, 0:33:59.560 --> 0:34:02.520 it's the new World's a girl, if you will. And 0:34:02.560 --> 0:34:04.480 so now we're like, oh my god, oh my god, 0:34:04.520 --> 0:34:07.120 what's gonna happen to our world? Um, In terms of 0:34:07.160 --> 0:34:10.080 the corporate world, AI still is already a big part 0:34:10.160 --> 0:34:12.759 of what goes on absolutely, and we've seen this for 0:34:12.760 --> 0:34:16.080 a long time and human resources already, right, AI is 0:34:16.120 --> 0:34:19.040 part of training, it's part of recruiting, it's part it's 0:34:19.040 --> 0:34:22.200 part of hiring. UM. So I think how explained to 0:34:22.280 --> 0:34:24.320 us how that is. Well. For example, if you submit 0:34:24.360 --> 0:34:26.960 a resume, you might have a company might have a 0:34:27.000 --> 0:34:29.440 system where it goes through and finds keywords. So if 0:34:29.480 --> 0:34:31.839 you have those keywords, you get passed onto the next level. 0:34:31.880 --> 0:34:34.719 So so we've already seen it sort of infiltrate parts 0:34:34.719 --> 0:34:37.959 of the process. Well, you know, I'm picturing this Arnold 0:34:37.960 --> 0:34:41.560 Schwarzenegger terminator coming to UH to fire me here, Beth. 0:34:41.680 --> 0:34:43.759 But you know, how would it work? Would it be 0:34:43.760 --> 0:34:47.160 a similar type of thing, just somehow the AI is 0:34:47.239 --> 0:34:49.759 able to assess your performance better than a human, or 0:34:50.440 --> 0:34:54.759 assess more employees in bulk better than a an HR manager. Yeah, 0:34:54.840 --> 0:34:56.600 I mean I think it's we have to be careful here. 0:34:56.640 --> 0:34:58.560 I don't think you know, an HR manager is going 0:34:58.600 --> 0:35:00.640 to push a button and now will come the pink slips, right. 0:35:00.680 --> 0:35:02.480 I think it's going to be a similar thing where 0:35:02.520 --> 0:35:04.839 it will scan and maybe do a first pass, and 0:35:04.880 --> 0:35:08.080 then a human will hopefully make the decisions. Of course, 0:35:08.120 --> 0:35:11.160 I'm sure some companies will try to rely solely on 0:35:11.440 --> 0:35:13.960 AI and algorithms. I'm not sure that's the best idea. 0:35:14.200 --> 0:35:15.919 I have to say. When I was reading through your story, 0:35:15.960 --> 0:35:17.399 one thing I thought about when I did a deep 0:35:17.440 --> 0:35:20.520 dive on UPS a few years back. Um, excuse me, 0:35:20.680 --> 0:35:22.799 and I went out with the driver and you know, 0:35:22.960 --> 0:35:26.040 they're inputting data, picking up packages, delivering packages. I mean 0:35:26.040 --> 0:35:29.600 there's a lot of information about that individual's day in 0:35:29.719 --> 0:35:32.560 terms of how productive they were. And I do wonder 0:35:32.680 --> 0:35:35.680 Amazon's using it as you highlighten your story, like how 0:35:35.760 --> 0:35:39.120 that data could potentially be used in terms of assessing 0:35:39.760 --> 0:35:41.960 the value, you know, the value of a worker. I mean, 0:35:42.000 --> 0:35:45.239 that's a really good point. Hourly workers have already been 0:35:45.280 --> 0:35:48.640 managed algorithmicically for a long time. I think what we're 0:35:48.640 --> 0:35:51.000 seeing now is whiters of output and stuff, right right. 0:35:51.000 --> 0:35:53.359 I think we're seeing a shift now to office workers. Right. 0:35:53.600 --> 0:35:56.440 We have so much more data on how people perform 0:35:56.480 --> 0:35:59.799 their key strokes, their mouse clicks, and I think that 0:36:00.080 --> 0:36:02.400 the data wasn't there before. Going to raise a journalist 0:36:02.480 --> 0:36:06.719 right right that? Sorry, sorry, keep going, keep going, Yeah, 0:36:06.719 --> 0:36:09.120 But I do think now that the data is there, 0:36:09.400 --> 0:36:12.040 it's going to start feeding into some of these automated decisions. 0:36:12.480 --> 0:36:15.160 I'm on the radio. That's why I'm not writing stories today. Right. 0:36:15.360 --> 0:36:18.440 My boss is if any robots are listening, that's my story. 0:36:18.520 --> 0:36:21.040 I'm sticking with it. But that's you know, I picture 0:36:21.080 --> 0:36:24.360 investors out there thinking, all right, AI is coming in HR, 0:36:24.640 --> 0:36:27.279 how do I invest in that who are there sort 0:36:27.320 --> 0:36:31.440 of third party software companies will be a Google, a Chat, GPT, like, 0:36:31.719 --> 0:36:34.200 is there anyone sort of taking the lead as a 0:36:34.280 --> 0:36:37.000 vendor for this type of product? Well, you know, it's 0:36:37.040 --> 0:36:40.080 interesting because I do think that we're the forefront of 0:36:40.080 --> 0:36:41.799 this is going to be tech companies right we they're 0:36:41.800 --> 0:36:43.520 already using it. I think a lot of them have 0:36:43.600 --> 0:36:46.640 their own technology. One thing is, I don't think a 0:36:46.680 --> 0:36:48.719 lot of companies really want to talk about this. You know, 0:36:48.760 --> 0:36:51.840 there's it comes across as the kind of callous um 0:36:52.239 --> 0:36:55.000 and so I do think surveillance so much right and 0:36:55.040 --> 0:36:57.239 I there will be pushed back from employees. We're going 0:36:57.239 --> 0:37:00.040 to see that eventually, if we haven't already. So I 0:37:00.400 --> 0:37:02.600 think that there there is going to be caution and 0:37:02.600 --> 0:37:04.840 weariness here about talking. It's like with hedge funds that 0:37:04.960 --> 0:37:07.120 use AI too. It's like fight club. The first rule 0:37:07.160 --> 0:37:09.279 of AI is you don't talk. I'll talk about how 0:37:09.320 --> 0:37:10.719 you're using it. You don't want to tip your hand. 0:37:10.719 --> 0:37:13.000 I guess no. It's a really good point. Um, And 0:37:13.040 --> 0:37:15.400 what kind of advantage is I guess it particularly gives 0:37:15.719 --> 0:37:19.120 who's ever using it? You guys in your story, um 0:37:19.200 --> 0:37:22.480 that you include a lot of a few surveys about 0:37:22.520 --> 0:37:24.759 what HR leaders say they will use it for. Is 0:37:24.760 --> 0:37:27.440 there some kind of big takeaway? Well, one of the 0:37:27.440 --> 0:37:31.200 big takeaways is something like nine of HR leaders said 0:37:31.200 --> 0:37:35.080 that they will rely to some extent on on software 0:37:35.080 --> 0:37:39.480 and algorithms if they're making labor cuts in processions, so 0:37:39.480 --> 0:37:42.600 we know it's going to happen. The other stat that 0:37:42.680 --> 0:37:44.839 stats that are kind of interesting is that they don't 0:37:44.840 --> 0:37:47.680 necessarily believe that it will make the right decisions, so 0:37:47.960 --> 0:37:49.560 they'll they say they're going to use it, but they're 0:37:49.600 --> 0:37:51.680 a little bit hesitant. So I think that's something that 0:37:51.719 --> 0:37:53.520 we all need to to keep in mind too. Yeah, 0:37:53.520 --> 0:37:55.480 do you think they'll still always be some sort of 0:37:55.560 --> 0:38:00.279 human element involved? You know, maybe AI spits out plenty 0:38:00.560 --> 0:38:02.800 names that you can perhaps lay off, and then a 0:38:02.880 --> 0:38:05.919 human goes through and sorts through. There needs to be um. 0:38:06.000 --> 0:38:08.880 I make the point in the column that human resources 0:38:08.960 --> 0:38:10.920 is about humans and we need to keep that in mind. 0:38:10.960 --> 0:38:12.760 I mean, a layoff is one of the most traumatic 0:38:12.800 --> 0:38:15.480 things that can happen to a person, and it's kind 0:38:15.480 --> 0:38:19.120 of unfair to turn that decision completely over to the robots. 0:38:19.160 --> 0:38:20.960 But I always think about, right the filtering of data 0:38:21.000 --> 0:38:22.840 is only as good as the inputs of data. And 0:38:22.840 --> 0:38:24.439 this is you know, we talk about it. I'm sure 0:38:24.440 --> 0:38:28.000 you do. You know the just concept of bias, yes, 0:38:28.320 --> 0:38:32.720 and data that's put into whatever group of data points 0:38:32.760 --> 0:38:34.680 and then your outcomes are going to be biased if 0:38:34.680 --> 0:38:36.719 the data is biased. So that's something that they've got 0:38:36.760 --> 0:38:39.239 to be thinking about, right, right, bad data and bad 0:38:39.320 --> 0:38:42.799 data out and I think people might believe, oh, this 0:38:42.880 --> 0:38:44.680 is a fairer way to do it, right, this is 0:38:44.719 --> 0:38:47.240 just based strictly on numbers. But we know that AI 0:38:47.360 --> 0:38:49.960 has the potential to encode bias. We've seen a lot 0:38:49.960 --> 0:38:53.960 of examples of that, and I think we're not going 0:38:54.000 --> 0:38:55.520 to get rid of this problem, right. We have to 0:38:55.560 --> 0:38:58.719 be careful and wary of that. Yeah, it's funny. I 0:38:58.760 --> 0:39:03.280 was talking to less Matt Partolini. He's works for Spiders, 0:39:03.320 --> 0:39:05.640 the E t F company, and they have an AI 0:39:06.000 --> 0:39:11.600 H E t F that basically scours thousands of SEC filings, 0:39:11.920 --> 0:39:15.399 annual reports, proxies, whatever, looking for certain things. And he said, 0:39:15.400 --> 0:39:18.520 there's there's a concern about companies starting to to sort 0:39:18.560 --> 0:39:21.560 of game that process, like they know what words the 0:39:21.640 --> 0:39:25.040 robots are looking for, and they'll start, you know, inserting 0:39:25.080 --> 0:39:29.360 them into their earnings, calls into their statements. I wonder, 0:39:29.480 --> 0:39:32.960 you know, it's when I wonder when we get to 0:39:33.000 --> 0:39:35.960 that point where sort of the employee starts to you know, 0:39:37.200 --> 0:39:39.520 get ahead of the AI. I guess we're you know, 0:39:39.880 --> 0:39:41.920 probably too early to say when that's coming. But do 0:39:41.920 --> 0:39:44.200 you think that's af fector at all? Yeah? I do, 0:39:44.280 --> 0:39:46.680 And I think the bigger risk might be though this 0:39:46.920 --> 0:39:49.279 the bias piece right where we where we just talked about. 0:39:49.280 --> 0:39:51.719 There's a really interesting example that a couple of people 0:39:51.800 --> 0:39:55.360 pointed me to have Amazon trying to create a system 0:39:55.400 --> 0:39:59.040 where it could it could find can't job candidates that 0:39:59.040 --> 0:40:00.960 it felt were going to be the longest, and it 0:40:01.000 --> 0:40:05.040 was based on historical applicating job applications. Most of them, 0:40:05.040 --> 0:40:08.080 not surprisingly we're talking tech, we're from men. So the 0:40:08.520 --> 0:40:11.719 system penalized women who applied for jobs. I think that 0:40:11.760 --> 0:40:14.879 this is you know, wait, how did it penalize them? 0:40:14.960 --> 0:40:18.960 Because because it was looking at past applications, it saw 0:40:19.000 --> 0:40:21.880 that most of them were from men. So when it 0:40:22.000 --> 0:40:24.120 was kind of calculating going forward, it was like most 0:40:24.120 --> 0:40:27.640 of our successful job candidates have been mailing. So women 0:40:27.680 --> 0:40:30.360 were penalized and as part of the process, but to 0:40:30.400 --> 0:40:32.040 speaking to what you just said, Mike, like you think 0:40:32.080 --> 0:40:34.440 about it in the future, like when someone is filling 0:40:34.440 --> 0:40:37.680 out a digital jobs application, do they put certain keywords 0:40:37.680 --> 0:40:41.120 in there to trigger, you know, being caught up in 0:40:41.120 --> 0:40:44.520 a job searching. I bet that's already happening. I bet 0:40:44.520 --> 0:40:47.520 that's already You can put your name is Carl Masters right, 0:40:48.040 --> 0:40:50.399 Oh my god. That reminds me of grade school when 0:40:50.440 --> 0:40:52.839 people winter, so that your teachers would call me Carl 0:40:52.880 --> 0:40:56.319 and I'd be like devastating. Um, how do you think 0:40:56.320 --> 0:40:58.719 about AIM more broadly in terms of the workforce, because 0:40:58.719 --> 0:41:01.239 I do think or just the word environment, I think 0:41:01.280 --> 0:41:03.279 we're all jumping on it and thinking about kind of 0:41:03.280 --> 0:41:06.560 those dystopian movies that are crazy. But I love that 0:41:06.600 --> 0:41:09.279 you remind us like we've been using it for a 0:41:09.320 --> 0:41:12.040 long time, Mike, As you say, the Investment space has 0:41:12.040 --> 0:41:13.799 been using AI. So how do you think we have 0:41:13.840 --> 0:41:16.279 to be smart about it when we use kind of 0:41:16.280 --> 0:41:18.880 throw this term around. Yeah. I think that there is 0:41:18.920 --> 0:41:21.759 a misunderstanding about what AI is, what it can do. 0:41:22.120 --> 0:41:25.160 And one of the things I liked about this example, 0:41:25.320 --> 0:41:28.879 this this column is that I do think there are 0:41:28.920 --> 0:41:31.080 some things that only humans can do, and it's part 0:41:31.120 --> 0:41:34.040 of that interaction. You know, again, the workforce is a 0:41:34.160 --> 0:41:37.239 human thing. We can't always we don't always know how 0:41:37.280 --> 0:41:39.720 our decisions are going to play out long term. Human 0:41:39.760 --> 0:41:42.719 intuition still plays a role. Well, and it seems like 0:41:42.800 --> 0:41:45.120 you know, AI has been around for a while now, 0:41:45.239 --> 0:41:47.799 companies are using it in various functions. But this whole 0:41:47.880 --> 0:41:52.080 chat cheep et thing really seems to have accelerated the conversation. 0:41:52.120 --> 0:41:55.160 You know, it seems like this just a little bit, 0:41:55.239 --> 0:41:57.680 you know, but it just seems like such a leap 0:41:58.080 --> 0:42:01.200 in innovation almost over night. Is that? Do you think 0:42:01.200 --> 0:42:03.959 that's a misperception? Is it? You know, just the fact 0:42:04.000 --> 0:42:07.839 that this thing launched. Um? But really, you know, it's 0:42:07.920 --> 0:42:09.719 it's not as big of a leap of innovation as 0:42:09.760 --> 0:42:11.560 it looks like. No, I think it is a big leap, 0:42:11.600 --> 0:42:14.080 And I think that is where we are talking about 0:42:14.080 --> 0:42:16.000 this so much. Somehow I managed to not mention that 0:42:16.040 --> 0:42:17.719 in my column. I should get points for that. But 0:42:17.800 --> 0:42:21.880 I do. I do think that people, if it hasn't 0:42:21.880 --> 0:42:24.080 been on your radar yet, I think it is now um, 0:42:24.200 --> 0:42:26.359 And I I do think we're going to see people 0:42:26.400 --> 0:42:30.040 closely watching what's next. Well, it's that it's the deep fakes, 0:42:30.080 --> 0:42:31.480 Like there's all of a sudden a lot of reporting 0:42:31.480 --> 0:42:34.040 on that, like just this ability to make things look 0:42:34.080 --> 0:42:37.600 so realistic in our world and how it can be 0:42:37.640 --> 0:42:40.600 misconstrued or just false information getting out there right. No, 0:42:40.719 --> 0:42:44.640 I agree? So, Um, robot pinks lips? Are they coming? 0:42:45.239 --> 0:42:49.200 Hopefully not? I'm stealing your term from our our Ariagami 0:42:49.280 --> 0:42:51.799 who was saying it. Wait, is you know? Is that 0:42:51.880 --> 0:42:54.440 just around the corner, robotic pink slips? Um? Beth really 0:42:54.480 --> 0:42:56.560 appreciate talking to you because it really just fits into 0:42:56.560 --> 0:43:00.080 this bigger, broader conversation we're having. Beth Coitch is your 0:43:00.120 --> 0:43:02.279 columnist to Bloomberg Opinion. You can check her out on 0:43:02.320 --> 0:43:04.799 Twitter and also check her out at Bloomberg dot com 0:43:04.800 --> 0:43:11.040 and on the Bloomberg A little bit more, you're listening 0:43:11.080 --> 0:43:14.520 to the Bloomberg Business Week podcast. Catch us live week 0:43:14.640 --> 0:43:17.680 days from two to five pm Easter on Bloomberg Radio, 0:43:17.880 --> 0:43:20.719 The Bloomberg Business and and you too. You can also 0:43:20.840 --> 0:43:24.120 listen live to our flagship New York station, Just Say 0:43:24.239 --> 0:43:29.040 Alexa play Bloomberg e Love and Dirty. As you know, Mike, 0:43:29.160 --> 0:43:34.759 you know Valentine's Days next week? Whoops, be your well 0:43:34.800 --> 0:43:36.640 that day along with Mother's Day are two of the 0:43:36.640 --> 0:43:38.799 biggest for the flower industry, which is why we wanted 0:43:38.840 --> 0:43:41.600 to check in once again with Christina's stanbl founder and 0:43:41.719 --> 0:43:44.600 CEO farm Girl Flowers. She joins us in our Bloomberg 0:43:44.600 --> 0:43:47.200 Interactive Broker studio based on the West Coast, but here 0:43:47.200 --> 0:43:49.440 in New York. So great to have you here. How 0:43:49.480 --> 0:43:51.719 are you. I'm good, Thanks for having me back. It's 0:43:51.800 --> 0:43:54.200 it's great to be in person this time. It's so great. 0:43:54.320 --> 0:43:57.240 I mean, we've talked to you, like throughout the pandemic. Um, 0:43:57.280 --> 0:43:59.440 how does the world feel. Does it feel like we're 0:43:59.640 --> 0:44:02.759 over the pandemic? Comp has your world sort of? I mean, 0:44:02.800 --> 0:44:04.960 I feel that there's residual effects that are still like, 0:44:05.320 --> 0:44:08.080 you know, impacting supply chain and transportation and things like that. 0:44:08.120 --> 0:44:10.880 But really I think we're holding onto, you know, getting 0:44:10.920 --> 0:44:13.240 as much money as you possibly can in those areas, 0:44:13.320 --> 0:44:15.560 and you know costs, you know, costners have not come 0:44:15.640 --> 0:44:18.040 down yet. Um, so I think that will normally next 0:44:18.040 --> 0:44:19.879 twelve months and come down at all a little bit, 0:44:20.000 --> 0:44:22.120 but definitely not where we were hoping to see them. 0:44:22.120 --> 0:44:23.799 So I think that this this next year is going 0:44:23.880 --> 0:44:27.040 to be really transformative that way, and kind of normalize 0:44:27.040 --> 0:44:28.759 a little bit more. You sound like Jay Powell. That's 0:44:28.760 --> 0:44:31.040 what I said. It's maybe yeah, well he was saying 0:44:31.040 --> 0:44:38.280 like maybe it's wishful things. You know, Christine, It's funny. 0:44:38.320 --> 0:44:41.800 I'm here. I'm a father, husband, father of three girls. 0:44:41.960 --> 0:44:44.560 So I've got certain occasions where I buy flowers right 0:44:44.640 --> 0:44:47.279 once when I get in trouble, obviously you know which 0:44:47.320 --> 0:44:54.879 so reading those cards. But the other is Valentine's Day 0:44:55.040 --> 0:44:57.320 and the other was you know, Theo's Daddy daughter dances 0:44:57.360 --> 0:44:59.680 that all got canceled during the pandemic. So I've missed 0:44:59.680 --> 0:45:03.840 your visitor in the pandemic days. How bad was it? 0:45:03.880 --> 0:45:05.520 Did you lose a lot of suppliers? I mean, I 0:45:05.560 --> 0:45:08.319 feel like the flower industry especially must have been really 0:45:08.600 --> 0:45:12.120 hard hit. Yeah it was. We actually benefited, though, I 0:45:12.120 --> 0:45:13.879 have to say, and I felt a little smarmy even 0:45:13.920 --> 0:45:16.720 saying that early on. I mean the gifting segment in general, 0:45:16.760 --> 0:45:19.680 and we were definitely in that that space really benefit 0:45:19.719 --> 0:45:22.160 from the pandemic because everybody were sending gifts instead of 0:45:22.160 --> 0:45:26.160 being in person. But that the flowers, yeah, thank you. 0:45:26.680 --> 0:45:28.640 But what that did was it created you know, we 0:45:28.680 --> 0:45:31.440 all had to build infrastructures that we couldn't support later on, 0:45:31.760 --> 0:45:34.600 so we you know, turned off marketing and you know, 0:45:34.640 --> 0:45:36.160 for ten and a half months, we just turned it 0:45:36.160 --> 0:45:38.799 off and we still did a growth, you know, and 0:45:38.880 --> 0:45:41.719 then one came and I always said, oh no, when 0:45:42.120 --> 0:45:45.680 vaccines become readily available, I don't know what's going to happen. 0:45:45.760 --> 0:45:47.080 I know something big is going to happen, but I 0:45:47.120 --> 0:45:48.480 don't know how big it's going to be. And we 0:45:48.600 --> 0:45:51.480 just built this infrastructure, you know, that we couldn't support 0:45:51.520 --> 0:45:53.480 any longer. And so then we had to rethink everything 0:45:53.520 --> 0:45:55.359 and be like, oh, you know, now we have to 0:45:55.560 --> 0:45:57.720 right size the business, which is like the dreaded word 0:45:57.800 --> 0:45:59.719 right And so then we had to do that. And 0:45:59.760 --> 0:46:02.120 then you know, last year everybody thought, okay, it's over, 0:46:02.160 --> 0:46:05.680 and it's like I can't wait until it's finally going 0:46:05.719 --> 0:46:08.200 to be over. Nope, not over, huh nope. So then 0:46:08.320 --> 0:46:10.640 you know, we have like transportation costs that are like 0:46:10.920 --> 0:46:12.760 you know, all the ancillary fees on top of ancillary 0:46:12.760 --> 0:46:14.239 fees on top of antler fees, and we have like 0:46:14.280 --> 0:46:16.400 containers that can't get there, and you know, flowers they 0:46:16.400 --> 0:46:18.759 can't get there on time, and flowers and number one 0:46:18.760 --> 0:46:20.360 thing you have to get them there quickly, and so 0:46:20.400 --> 0:46:21.799 not be able to get them there quickly. And then 0:46:21.840 --> 0:46:23.960 we had one month where like over half of our 0:46:24.040 --> 0:46:25.799 orders weren't delivered on time and it resulted in like 0:46:25.840 --> 0:46:28.360 five and a half million dollars of losses. And I 0:46:28.360 --> 0:46:30.440 mean things like that. It was just constant. And so 0:46:30.520 --> 0:46:31.800 this year we're like, you know, now we're in a 0:46:31.840 --> 0:46:33.640 down economy and I'm like, oh my gosh, this is 0:46:33.640 --> 0:46:36.400 ever going to really end. I don't know how to 0:46:36.440 --> 0:46:39.759 feel to own a business that's great, everybody should do it. Well, 0:46:39.800 --> 0:46:41.799 I'll say, as when you're a husband in trouble, those 0:46:41.840 --> 0:46:45.120 delays are no good. You need it like some You 0:46:45.160 --> 0:46:48.200 need it like yesterday for that because did to go 0:46:48.239 --> 0:46:50.279 back to some of the inflationary pressures. Because this is 0:46:50.320 --> 0:46:54.520 something we talked with UM, a person in the trucking industry. 0:46:54.520 --> 0:46:57.200 We're trying to really get a good feel. We've talked 0:46:57.239 --> 0:46:59.319 with chefs and while things have come down, they do 0:46:59.360 --> 0:47:02.560 talk a lot of that labor costs still are pretty high. Um, 0:47:02.640 --> 0:47:05.279 you said they've come down a little bit, but it's 0:47:05.320 --> 0:47:08.000 still your supply chain. It's still kind of expensive. Yeah. 0:47:08.040 --> 0:47:09.920 I mean, we're at the size of a company that 0:47:09.960 --> 0:47:11.600 we don't have the buying power that a lot of 0:47:11.640 --> 0:47:13.719 large companies have, and so I'm sure that they're they're 0:47:13.719 --> 0:47:16.080 seeing it come down much quicker than companies, you know, 0:47:16.160 --> 0:47:19.560 the medium size small medium companies are just really you know, 0:47:19.600 --> 0:47:21.600 the last ones to see those savings because we can't 0:47:21.640 --> 0:47:23.640 go and say, like we have you know, two hundred 0:47:23.640 --> 0:47:26.680 million dollars of buying power, you know, and go to 0:47:26.719 --> 0:47:29.520 the transfiaction companies that way. But so it's coming, but 0:47:29.560 --> 0:47:32.200 then it's also being offset by higher labor costs and 0:47:32.239 --> 0:47:34.319 things like that. So it's just, you know, we want 0:47:34.320 --> 0:47:36.239 to be able to to show our customers and have 0:47:36.280 --> 0:47:38.279 our customers realize these savings. And we every time we 0:47:38.280 --> 0:47:40.640 think we're going to be able to lower our prices again, 0:47:40.840 --> 0:47:43.000 it's not. Then it's just, you know, we're dipping into 0:47:43.000 --> 0:47:45.080 our margins again. Can you find all the workers you 0:47:45.120 --> 0:47:48.759 need and want? No? Absolutely not. So. UM, you know, 0:47:48.800 --> 0:47:51.080 we've been very creative about how we do that, you know, 0:47:51.200 --> 0:47:54.400 with partnerships with farms, um that are drop shipping for 0:47:54.480 --> 0:47:56.680 us and things like that. Um, it's just you know, 0:47:56.920 --> 0:48:00.239 it's really hard wage level employee, you know, labors really 0:48:00.239 --> 0:48:02.200 hard in the United States right now, does it feel 0:48:02.200 --> 0:48:04.680 like we're at the beginning of a down economy? You 0:48:04.719 --> 0:48:07.000 mentioned you know you're prepping for down economy. Is it's 0:48:07.040 --> 0:48:09.080 starting to feel like that for you for it's felt 0:48:09.120 --> 0:48:10.680 that way for a while now. I think we've you know, 0:48:10.760 --> 0:48:13.040 I definitely think that we've been there for a while. 0:48:13.080 --> 0:48:15.320 And nobody wants to actually call a spade a spade 0:48:15.360 --> 0:48:19.080 because demand is less, demand is far less, demand is 0:48:19.080 --> 0:48:21.200 far less. I mean, you know, we're discriptionary. I mean, 0:48:21.239 --> 0:48:23.680 like it, flowers are not a necessity even, you know, 0:48:23.719 --> 0:48:26.879 food seems even food in the gifting space, chocolates off 0:48:26.920 --> 0:48:30.040 like that feel like more of a necessity even than flowers. Um, 0:48:30.320 --> 0:48:32.120 I kind of agree with that, you know, the sweets 0:48:32.160 --> 0:48:34.960 and things, but um, you know, we're just you know, 0:48:35.640 --> 0:48:38.400 we benefited at times where you know where it was, 0:48:38.560 --> 0:48:40.520 you know, gifts were sent a lot, and then when 0:48:40.640 --> 0:48:42.399 you know, the economy goes down, people kind of tighten 0:48:42.400 --> 0:48:44.799 their belts a bit, and things like flowers don't seem 0:48:44.840 --> 0:48:47.000 as much of a necessity. And the great thing is 0:48:47.000 --> 0:48:52.000 where a bootstrap company and we spend less today all alone. Yes, absolutely, 0:48:52.320 --> 0:48:54.160 and so you know we'll get through it. I'm a 0:48:54.239 --> 0:48:56.400 hundred percent sure, we'll get through it. Unlike some companies 0:48:56.440 --> 0:48:58.760 that you know, I'm really feeling for that are reliant 0:48:58.800 --> 0:49:01.400 on raising capital right out and money is really expensive 0:49:01.440 --> 0:49:04.000 and things like that. You know, we've always done this, 0:49:04.160 --> 0:49:05.759 done it this way, and so we'll get through it. 0:49:05.760 --> 0:49:07.560 It's but it's gonna be tough. It's gonna be another 0:49:07.600 --> 0:49:11.000 tough year. Well in terms of then growth plans, what 0:49:11.040 --> 0:49:13.239 do you do? Do you put things on hold? Um, 0:49:13.280 --> 0:49:16.200 we really change our focus. So and I started this early, 0:49:16.200 --> 0:49:18.400 and I'm really glad that I did. UM and it 0:49:18.440 --> 0:49:20.799 panned out when I was it doesn't UM, but you know, 0:49:20.880 --> 0:49:23.920 we really I switched our focus from growth to profitability 0:49:24.000 --> 0:49:26.120 and so and I did that seeing what was coming 0:49:26.200 --> 0:49:28.760 ahead of us. Are you not profitable? Before? We always 0:49:28.760 --> 0:49:31.279 had to be profitable to a point. The thing that 0:49:31.320 --> 0:49:33.240 I said is the only way that we're like Amazon 0:49:33.360 --> 0:49:36.800 is that we ran as close to zero as possible 0:49:36.840 --> 0:49:38.719 and then reinvest the profits back into the company. So 0:49:38.719 --> 0:49:41.640 there were many times were like one percent profit and 0:49:41.680 --> 0:49:43.839 things like that. Um. There's a lot of sleepless nights 0:49:43.880 --> 0:49:46.440 before payroll for me in the last twelve years. UM. 0:49:46.600 --> 0:49:49.040 So we really focused on having more of a cushion 0:49:49.400 --> 0:49:51.320 and I'm glad we did that, and so we really 0:49:51.360 --> 0:49:53.719 we we did things that actually cut our revenue, and 0:49:53.760 --> 0:49:55.239 we knew it would cut our revenue, but it made 0:49:55.320 --> 0:49:57.799 us financially just healthier as a company. And so that's 0:49:57.880 --> 0:50:00.560 we're you know, going through this with that mentality. We're 0:50:00.560 --> 0:50:04.960 not growth at all costs. We are really maintaining a healthy, um, 0:50:05.000 --> 0:50:06.920 you know, a healthy stance and where we want to be. Well, 0:50:06.920 --> 0:50:08.239 I have to say what I love about you, and 0:50:08.280 --> 0:50:11.120 we have some flowers and I think our producer Aerielhead 0:50:11.120 --> 0:50:12.920 took a picture for those who are watching on YouTube 0:50:12.920 --> 0:50:16.200 and on our streaming service. Um, it's just organic and 0:50:16.239 --> 0:50:19.839 it's just beautiful. Twenty seconds left Valentine's Day. We can 0:50:19.840 --> 0:50:24.919 still order, yes, absolutely might get your order. Yes, yes, 0:50:25.280 --> 0:50:27.400 get your orders. Are still we're still taking orders right now. 0:50:27.400 --> 0:50:29.000 So let's go to farm reel Flowers dot com to 0:50:29.040 --> 0:50:32.000 placers now. We love flowers. Um, Christina, thank you so much, 0:50:32.000 --> 0:50:34.040 good luck, look forward to catching up with you in 0:50:34.080 --> 0:50:37.520 the future. Christina Stable, founder and CEO of farm Girl Flowers. 0:50:37.560 --> 0:50:40.160 You can find them on Twitter at farm Girl Flowers. 0:50:40.560 --> 0:50:42.960 And you are listening to Bloomberg Business Week, Carl Masser 0:50:43.239 --> 0:50:52.399 along with Mike Reagan. And this is Bloomberg Radio. You're 0:50:52.440 --> 0:50:56.040 listening to the Bloomberg Business Week podcast. Catch us live 0:50:56.120 --> 0:50:59.440 week days from two to five pm Easter on Bloomberg Radio, 0:50:59.640 --> 0:51:02.239 The blue Berg Business and and you too. You can 0:51:02.280 --> 0:51:05.640 also listen live to our flagship New York station, Just 0:51:05.680 --> 0:51:10.840 say Alexa, play Bloomberg e Love and Dirty. Alright, you 0:51:10.840 --> 0:51:13.520 watch the Super Bowl and you know what's always kind 0:51:13.560 --> 0:51:18.080 of a staple when it comes to the commercials is 0:51:18.080 --> 0:51:20.440 bud Wiser. And that's an old Budwiser commercial. Does that 0:51:20.560 --> 0:51:23.000 bring familiar to you? I haven't heard that one. I 0:51:23.520 --> 0:51:27.799 recognize that it's an old right, Paul. It's an old one. Seventies. Yeah, 0:51:27.840 --> 0:51:31.680 that's an old one, Paul. It's going back a little bit. 0:51:31.880 --> 0:51:34.520 All right. Well, the big game is this weekend. Will 0:51:34.520 --> 0:51:36.759 it be the Eagles? Will it be the Chiefs that 0:51:36.800 --> 0:51:39.520 take on the Lombardi Trophy? Time will tell. But already 0:51:39.560 --> 0:51:42.239 a winner is Fox, which sold out of its in 0:51:42.400 --> 0:51:46.640 game ads, some topping seven million dollars. With more on it, 0:51:46.680 --> 0:51:48.920 let's get to Bloomberg News Media reporter Jerry Smith here 0:51:48.920 --> 0:51:52.000 in our Bloomberg Interactive Broker studio. UM Good to have 0:51:52.040 --> 0:51:54.279 you here with Mike and myself. That sounds pretty optimistic, 0:51:54.360 --> 0:51:57.200 pretty nice. Yeah, this is there was a lot of 0:51:57.280 --> 0:52:00.440 uncertainty obviously coming into the Super Bowl. With the economy. 0:52:00.520 --> 0:52:03.160 We've seen a lot of advertisers pull back their budgets. 0:52:03.920 --> 0:52:06.400 But you know that certainly didn't dissuade a lot of 0:52:06.400 --> 0:52:09.960 advertisers from spending on the Super Bowl. It's funny, right 0:52:10.000 --> 0:52:12.160 because on the mobile, the social we've all been worried 0:52:12.160 --> 0:52:14.239 about advertising, but not for the big game here. Yeah, 0:52:14.280 --> 0:52:16.400 I mean, it's it's the power of live sports, and 0:52:16.640 --> 0:52:20.240 advertisers are still willing to pay upwards of seven million 0:52:20.280 --> 0:52:22.799 dollars for a thirty second ad because this is the 0:52:22.880 --> 0:52:25.400 largest TV event of the year. You're talking about getting 0:52:25.400 --> 0:52:27.600 your brand in front of over a hundred million people. 0:52:28.200 --> 0:52:30.560 People watch the commercials for the Super Bowl unlike a 0:52:30.560 --> 0:52:32.600 lot of other types of programs, and I don't go 0:52:32.719 --> 0:52:37.560 fast forward. I gotta say, as a lifelong Philadelphia Eagles fan, 0:52:37.920 --> 0:52:40.480 just this conversation alone is making me anxious. I was 0:52:40.480 --> 0:52:44.080 trying to pretend this game actually wasn't try it'll help, 0:52:44.600 --> 0:52:46.880 but cherry is that? Is that what it's all about, 0:52:46.920 --> 0:52:49.040 the fact that the Super Bowl is the one thing 0:52:49.080 --> 0:52:51.600 you can't fast forward or watch on demand. You know 0:52:51.680 --> 0:52:55.280 that this live advertising, this is sort of the last 0:52:55.320 --> 0:52:59.680 bastion for for live advertisers to really make their statement. Yeah, 0:52:59.680 --> 0:53:01.080 if you if you look at it. I mean, one 0:53:01.120 --> 0:53:03.879 of the craziest stats you'll see is UM last year, 0:53:04.080 --> 0:53:07.319 over a hunt, the top one most watched shows on TV, 0:53:07.440 --> 0:53:11.000 I think ninety four of them were UM sports. Uh, 0:53:11.000 --> 0:53:13.880 and the vast majority of those were NFL games. So, 0:53:14.120 --> 0:53:17.120 you know, you think about your dramas and your comedies 0:53:17.160 --> 0:53:21.799 and how they've increasingly moved from cable to streaming services. Uh, 0:53:21.880 --> 0:53:25.800 live sports is still UM. You know, it's still really dominant. 0:53:26.120 --> 0:53:28.440 It's expensive though, right for everybody who wants to air it. 0:53:28.800 --> 0:53:32.399 It's it's expensive for everyone involved. I mean, the advertisers, uh, 0:53:32.440 --> 0:53:35.040 certainly for the Super Bowl are paying top dollar. These 0:53:35.080 --> 0:53:38.560 TV networks are spending an enormous amount of money acquiring 0:53:38.600 --> 0:53:41.799 the rights to these games. Uh. So everybody's spending more 0:53:42.239 --> 0:53:44.760 UM and it's But the important thing to think about 0:53:44.880 --> 0:53:48.600 is the entire cable TV industry really depends on live sports. 0:53:48.640 --> 0:53:50.720 A lot of the people who still subscribe to cable, 0:53:50.719 --> 0:53:53.719 who are not the cord cutters are watching sports. So 0:53:54.120 --> 0:53:56.719 you know, if these TV networks, the day that an 0:53:56.760 --> 0:54:00.000 Amazon or an Apple years from now starts taking exclude 0:54:00.120 --> 0:54:01.920 of rights to some of these big events and more 0:54:01.960 --> 0:54:04.719 people cut the cord, the whole industry is really going 0:54:04.760 --> 0:54:07.200 to be It's almost like a dominoes. I want to 0:54:07.200 --> 0:54:08.719 go back to the ads in a in a moment, 0:54:08.760 --> 0:54:11.480 but let's just stay here with the sports rights, because 0:54:11.760 --> 0:54:14.759 you know, we are increasingly seeing the streaming companies, you know, 0:54:14.800 --> 0:54:17.640 pay up or want to have those exclusive sports rights 0:54:17.719 --> 0:54:19.800 or or will it be exclusive at some point or 0:54:19.840 --> 0:54:22.320 will it be where they show it, network show it, 0:54:22.440 --> 0:54:24.680 Like is it going to the point where streaming has 0:54:24.719 --> 0:54:27.320 it only? I think we're years away from that. I 0:54:27.320 --> 0:54:30.360 think the NFL is the best example where the NFL 0:54:30.440 --> 0:54:34.440 did deals with the big TV networks the NBC, CBS, Fox, 0:54:34.920 --> 0:54:37.319 at ESPN, and so they have the rights for the 0:54:37.360 --> 0:54:40.000 next decade. But they also did a deal with Amazon 0:54:40.040 --> 0:54:43.040 where Amazon had the exclusive rights to Thursday night football. 0:54:43.480 --> 0:54:46.320 So if you think about some other sports, the NBA 0:54:46.440 --> 0:54:50.080 now is in the process of renegotiating their deal. Currently 0:54:50.120 --> 0:54:53.239 it's on T N T and ESPN. Could potentially an 0:54:53.239 --> 0:54:56.440 Amazon or an Apple get some of those games. Um, 0:54:56.520 --> 0:54:59.160 that's a really big question in the sports media industry, 0:54:59.160 --> 0:55:01.560 and it's for the averag consumer. I think you're looking 0:55:01.600 --> 0:55:03.960 at a future where you have to have cable and 0:55:04.000 --> 0:55:06.439 you have to have multiple streaming services if you want 0:55:06.440 --> 0:55:08.120 to be able to watch all the sports that you 0:55:08.120 --> 0:55:10.920 want to see. Yea and Cherry. Obviously, last year, the 0:55:10.960 --> 0:55:14.799 crypto ads were the big buzz. I'm assuming uh, not 0:55:14.880 --> 0:55:16.680 so much this year. But is there any sort of 0:55:16.719 --> 0:55:19.760 growth industry that you know, pops out as as buying 0:55:19.760 --> 0:55:21.520 a lot of ads this year? You know, I remember 0:55:21.520 --> 0:55:24.160 back in the dot com day there's always the funny 0:55:24.320 --> 0:55:26.360 trade ads and stuff like that. Is there something to 0:55:26.440 --> 0:55:29.759 take that crypto place? Yeah? I think what's really interesting 0:55:29.920 --> 0:55:31.479 is that this is going to be the first time 0:55:31.520 --> 0:55:34.400 in more than three decades that you're gonna see Super 0:55:34.440 --> 0:55:37.680 Bowl ads uh from alcohol brands that are not uh 0:55:37.760 --> 0:55:41.040 Anheuser Busch InBev Um. It was really interesting to find 0:55:41.040 --> 0:55:44.319 out that they had the exclusive rights to be the 0:55:44.360 --> 0:55:47.640 alcohol brand for the Super Bowl since back since nine. 0:55:47.719 --> 0:55:50.480 They gave up those rights in June, So now you're 0:55:50.520 --> 0:55:54.560 gonna see ads from Molson Coors, which owns Miller Lte 0:55:54.560 --> 0:55:56.959 and Chords Light. You're gonna see ads from for Crown 0:55:57.080 --> 0:56:00.160 Royal Whiskey. Um. So you're starting to see more more 0:56:00.200 --> 0:56:02.799 alcohol ads this year. No other alcohol that ever were 0:56:02.800 --> 0:56:05.960 shown trying in a national super Bowl ad. There was 0:56:06.120 --> 0:56:08.960 that they had Antezard Bush and they're famous for their 0:56:09.000 --> 0:56:10.640 ads for the Super Bowl that you think about the 0:56:10.640 --> 0:56:13.680 Gladesdale as you think about the uh, the Frogs. I 0:56:13.680 --> 0:56:16.120 mean there's there's their classics, but they were you know, 0:56:16.160 --> 0:56:19.080 they had the exclusive rights to be the you know, 0:56:19.120 --> 0:56:21.640 the exclusive alcohol brand, and that's over now. So you're 0:56:21.640 --> 0:56:23.759 gonna see more alcohol brands. You're certainly not going to 0:56:23.840 --> 0:56:26.600 see as many crypto ads as we did last year 0:56:26.640 --> 0:56:28.279 when there were so many of them, people called it 0:56:28.320 --> 0:56:33.040 the Crypto Bowl. Um, Tom Brady, Yeah, crypt But I 0:56:33.080 --> 0:56:35.120 think you're gonna I also think you'll see a lot 0:56:35.200 --> 0:56:37.640 of the same players that you see a year after year. 0:56:37.680 --> 0:56:40.400 That Derrito's ad, the Pepsi ads, You're gonna see a 0:56:40.400 --> 0:56:43.760 ton of celebrities, which is pretty standard, and it always 0:56:43.800 --> 0:56:46.839 seems like, you know, the creative departments behind these ads 0:56:46.840 --> 0:56:49.920 are at their peak, you know, creativity for these ads. Uh, 0:56:50.160 --> 0:56:52.319 A few have come out already. Have any catch your 0:56:52.320 --> 0:56:55.359 eyes as especially entertaining so far. Yeah, I mean these 0:56:55.360 --> 0:56:57.839 are this is if you're a creative UM, if you're 0:56:57.840 --> 0:57:01.239 an advertising agency, this is your big moment um. You know. 0:57:01.280 --> 0:57:04.200 One thing that is particularly interesting is this idea of 0:57:04.360 --> 0:57:07.600 UM live betting. UM. There's a lot of sports books 0:57:07.600 --> 0:57:10.359 that are DraftKings and FanDuel have ads. And one thing 0:57:10.400 --> 0:57:13.480 that's particularly interesting is Rob Gronkowski, who was a tight 0:57:13.560 --> 0:57:16.400 end in his playing career. He's now retired. He's going 0:57:16.440 --> 0:57:19.120 to be kicking a attempting to kick a field goal 0:57:19.520 --> 0:57:22.600 uh live uh during the third quarter during a commercial 0:57:22.640 --> 0:57:25.440 for Fan Duel. This is part of this marketing campaign 0:57:25.440 --> 0:57:28.680 that they've had going for several weeks, and you can 0:57:28.720 --> 0:57:30.960 bet on whether he makes the kick or not. UM. 0:57:31.160 --> 0:57:34.160 And it's it's live. It's it's not a taped commercial. 0:57:34.160 --> 0:57:37.760 It's happening live. So that's kind of an innovative way, UM, 0:57:37.800 --> 0:57:39.560 you know, to do it. There's you're gonna see a 0:57:39.600 --> 0:57:43.240 lot of these partnerships. One is Netflix and General Motors, 0:57:43.280 --> 0:57:46.000 where you're gonna Will Ferrell he's gonna be appearing in 0:57:46.600 --> 0:57:49.560 UM episodes of Bridge or Tin or Squid Game, and 0:57:49.560 --> 0:57:53.080 he's gonna be driving electric vehicles that of General Motors 0:57:53.120 --> 0:57:56.560 and that's an interesting partnership. UM. So that's another thing 0:57:56.600 --> 0:57:58.680 that I've I've noticed is just these companies that are 0:57:58.680 --> 0:58:01.160 teaming up in their commercials. We're gonna we're gonna check 0:58:01.200 --> 0:58:04.640 in actually, um with the CEO of Hotel Planner in 0:58:04.680 --> 0:58:07.400 a moment and talk about lining up a hotel if 0:58:07.400 --> 0:58:09.720 you still want to head to the big game. UM. 0:58:10.080 --> 0:58:12.840 Travel companies not so much this year, That's right. I 0:58:12.840 --> 0:58:15.160 think you're gonna see fewer travel companies. And I think 0:58:15.160 --> 0:58:18.360 that's a reflection of a sign of the times where uh, 0:58:18.600 --> 0:58:21.480 you know, customers are people are dealing with inflation, and 0:58:21.640 --> 0:58:24.440 people are just you know, have less money to spend 0:58:24.440 --> 0:58:27.320 on travel. Um. I think you're going to see fewer 0:58:27.560 --> 0:58:30.160 auto commercials than you have in the past. Uh. Those 0:58:30.200 --> 0:58:33.520 can be for various reasons. Um, but yeah, it's it's 0:58:33.520 --> 0:58:36.600 gonna be um. Fox as much as people. You know, 0:58:36.680 --> 0:58:39.600 there's a lot of concern about advertisers pulling back their budgets. 0:58:39.880 --> 0:58:42.960 Fox said that they didn't see that much much of that. Um. 0:58:43.000 --> 0:58:47.000 The Super Bowl still dominates the media landscape, and you know, 0:58:47.120 --> 0:58:49.160 advertisers are still wanting to pay a lot of money 0:58:49.200 --> 0:58:51.360 to be seen on there. I'd hate to be the 0:58:51.440 --> 0:58:54.760 poor m I t grad at traff Kings or Fandel 0:58:55.000 --> 0:58:57.440 that has to set the money line on Grand Kit 0:58:57.520 --> 0:58:58.840 In that field goal, what do you think, Carol? I 0:58:58.880 --> 0:59:02.600 think called make it. I don't know that's that really 0:59:02.640 --> 0:59:06.080 his I want to say, it's like a twenty five 0:59:06.200 --> 0:59:09.360 yard field goal. And he's been training with um, you 0:59:09.400 --> 0:59:13.040 know for weeks, uh with Adam Vinit Terry, So I mean, 0:59:13.080 --> 0:59:15.520 who knows you might get the job with Dallas after 0:59:15.680 --> 0:59:19.880 after that? Oh my god. Paul Brandon's like um eminem 0:59:19.880 --> 0:59:21.760 and the spokes candies are they going to make an 0:59:22.000 --> 0:59:24.560 uh an appearance? Do we know? You know they pull 0:59:24.680 --> 0:59:26.959 those spokes candies And we were all trying to figure 0:59:26.960 --> 0:59:30.240 out is it a Super Bowl campaign? That's a good question. 0:59:30.520 --> 0:59:33.400 I mean what's interesting is that almost all of the 0:59:33.400 --> 0:59:36.440 commercials are released weeks in advance or days in advance 0:59:36.480 --> 0:59:38.760 online and the idea is to try and drum up 0:59:38.800 --> 0:59:41.720 as much conversation as you kind about your brand. But 0:59:41.760 --> 0:59:45.080 there are a few companies that are advertising that are 0:59:45.080 --> 0:59:47.760 going to be surprises. So I guess we just have 0:59:47.840 --> 0:59:50.520 to watch and tune in. Yeah, remember like when Mr 0:59:50.560 --> 0:59:53.720 Peanut like just the rest in peace and that's that's right. 0:59:53.920 --> 0:59:56.919 But it was all all of uh. It's a fun 0:59:56.960 --> 0:59:59.160 part of the game. And we'll I'll be watching. Jerry, 0:59:59.160 --> 1:00:01.240 thank you so much. Erry Smith. He's media reporter at 1:00:01.240 --> 1:00:04.040 Bloomberg News here in our interactive Broker studio. Find him 1:00:04.040 --> 1:00:06.800 on Twitter at Jerry F. Smith. Are you are listening 1:00:06.800 --> 1:00:09.840 in watching Bloomberg Business Week and this is Bloomberg Radio. 1:00:15.520 --> 1:00:19.080 You're listening to the Bloomberg Business Week podcast. Catch us 1:00:19.120 --> 1:00:22.800 live weekdays from two to five pm Eastern on Bloomberg Radio, 1:00:23.000 --> 1:00:25.920 the Bloomberg Business app, and you too. You can also 1:00:26.000 --> 1:00:29.920 listen live to our flagship New York station, Just Say Alexa, 1:00:30.120 --> 1:00:34.600 Play Bloomberg, Elove and Dirty. We also wanted to bring 1:00:34.680 --> 1:00:37.320 to you someone we caught a went back in December 1:00:37.360 --> 1:00:39.560 when we were live on the Stanford campus to mark 1:00:39.600 --> 1:00:42.000 the Stanford Graduate School of Business, big name once again 1:00:42.240 --> 1:00:45.000 by Bloomberg Business Week is the top NBA program in 1:00:45.040 --> 1:00:47.680 the US. We had a conversation live on air, and 1:00:47.720 --> 1:00:49.640 we knew Tim we wanted to talk a little bit 1:00:49.640 --> 1:00:52.480 more with him. It's PAULA. Wayer, Senior Associate Dean at 1:00:52.480 --> 1:00:55.280 the Stanford Graduate School of Business, Professor of Economics, also 1:00:55.280 --> 1:00:58.200 the author of an Economist Goes to the Game, how 1:00:58.200 --> 1:01:01.520 to throw Away five eighty million dollars and other surprising 1:01:01.520 --> 1:01:03.920 insights from the economics of sports. He joins us via 1:01:03.960 --> 1:01:06.720 zoom from Stanford, California. Professor, are good to have you 1:01:06.720 --> 1:01:09.280 back with us. How are you great to talk to 1:01:09.360 --> 1:01:12.320 you again. Thanks for joining us. We we promised we'd 1:01:12.360 --> 1:01:13.840 do more with you, and we're eager to have you 1:01:13.840 --> 1:01:16.080 back this afternoon because we got so much to talk about, 1:01:16.320 --> 1:01:18.640 especially with regard to your book. But before we get 1:01:18.680 --> 1:01:20.960 to your you know what's in the book. I want 1:01:21.000 --> 1:01:23.160 to know what got you to write this book, Like 1:01:23.200 --> 1:01:26.640 what was the number that you ran across that this 1:01:26.720 --> 1:01:29.000 light bulb went off in your head and you said, Okay, 1:01:29.040 --> 1:01:32.040 there's there's so many inefficiencies when it comes to the 1:01:32.080 --> 1:01:37.320 way that people think about sports. It could fill a book. Yeah, 1:01:37.600 --> 1:01:40.480 I that's I don't think there was any one moment, 1:01:40.520 --> 1:01:43.480 although if maybe it was thinking about kids sports the 1:01:43.520 --> 1:01:46.960 first chapter of Youth Sports, which um may have been 1:01:47.200 --> 1:01:50.880 what really drew me into this, having kids and taking 1:01:50.880 --> 1:01:52.760 them to do sports and thinking about whether that was 1:01:52.800 --> 1:01:55.280 a good use of resources or not. So I think 1:01:55.320 --> 1:01:57.400 that may have really gotten me into it. Also, when 1:01:57.440 --> 1:02:01.720 I started the book, my son was UM in college 1:02:01.720 --> 1:02:03.720 and he helped me with a lot of the original research. 1:02:03.760 --> 1:02:05.800 There was a good chance for us to work together. 1:02:06.160 --> 1:02:08.480 He doesn't have much interest in economics, but he has 1:02:08.480 --> 1:02:11.000 a lot of interest in sports, so so it was 1:02:11.280 --> 1:02:14.040 a good chance to get to do some spend time 1:02:14.080 --> 1:02:17.240 with him while calling it work. Is your kid a 1:02:17.240 --> 1:02:24.800 pro athlete? Sorry? He was on the Gun High school 1:02:24.840 --> 1:02:27.360 baseball team. The reason I ask is because the first 1:02:27.440 --> 1:02:31.520 chapter is should you help your kid become a pro athlete? Yeah? 1:02:31.600 --> 1:02:35.520 You should not. UM, Well, it depends, that's where the 1:02:35.600 --> 1:02:38.600 chapter is. It depends. But for most kids the answer 1:02:38.720 --> 1:02:42.360 is no, you don't want to. UM. It's not the 1:02:42.400 --> 1:02:44.800 best use of funds to try to help your kids 1:02:44.800 --> 1:02:48.120 become a pro athlete. It is kind of shocking, though, 1:02:48.240 --> 1:02:49.840 I have to say, I remember we talked with you. 1:02:49.920 --> 1:02:53.880 That really resonated with me, because you know, I've seen 1:02:53.960 --> 1:02:57.440 it in people I know where they're like Johnny or 1:02:57.480 --> 1:02:59.560 Susan they're gonna be the best and they're gonna go 1:02:59.640 --> 1:03:01.440 pro o and da da da da da, and they 1:03:01.480 --> 1:03:04.680 never do because the odds are stacked against them. And 1:03:04.840 --> 1:03:12.040 I just find it interesting. Well, it is troubling if 1:03:12.080 --> 1:03:14.960 you give up other things. So if you sort of 1:03:15.040 --> 1:03:17.400 do it as I'm gonna learn a lot, I'm going 1:03:17.440 --> 1:03:19.520 to really focus on sports and that will help me 1:03:19.600 --> 1:03:22.880 be more disciplined and other things that might come out 1:03:22.880 --> 1:03:24.520 of it. There's not a lot of evidence that that 1:03:24.600 --> 1:03:26.640 helps you in the labor market later in life, by 1:03:26.640 --> 1:03:29.560 the way, but at least if you don't go all in, 1:03:29.800 --> 1:03:32.040 you can see the argument for it. What if it 1:03:32.080 --> 1:03:35.360 helps you get into college, that is a big So 1:03:35.400 --> 1:03:37.080 I think that if you're going to make the case 1:03:37.640 --> 1:03:39.600 for if you're going to make the case for investing 1:03:39.600 --> 1:03:41.840 in your sports career as a kid, I think you 1:03:41.880 --> 1:03:44.920 need one of two things. You either need to argue 1:03:44.960 --> 1:03:47.000 it's going to help you get into college, And one 1:03:47.000 --> 1:03:49.360 of my economist friends says, if you're going to do that, 1:03:49.800 --> 1:03:52.600 you should get your kid into fencing. The fencing is 1:03:52.640 --> 1:03:55.720 a particularly good way to help you get into a good, 1:03:55.960 --> 1:04:00.360 uh and elite college. So getting into college is one thing, 1:04:00.440 --> 1:04:02.400 and in the book I go into that. Of course, 1:04:02.560 --> 1:04:05.520 it's it's hard to even show a lot of evidence 1:04:05.560 --> 1:04:09.840 that that there's a big advantage to that, because, um, 1:04:09.880 --> 1:04:12.120 it might get you into a slightly better college. But 1:04:12.200 --> 1:04:16.920 economists generally aren't sure that the quality of the college 1:04:17.400 --> 1:04:20.200 on the margin makes that much difference. So if the 1:04:20.280 --> 1:04:24.280 same kid goes to Ohio State or Harvard, it's not 1:04:24.400 --> 1:04:27.800 a complete given that it has a big difference on 1:04:27.840 --> 1:04:30.200 their outcomes. And yet you do say, what if your 1:04:30.280 --> 1:04:33.560 kid is Kevin Durant. So that's the other So I 1:04:33.600 --> 1:04:35.520 said there were two reasons you might do it. One 1:04:35.560 --> 1:04:37.720 is college and the other is if your kid is 1:04:37.800 --> 1:04:41.240 six ft eight and very coordinated at age thirteen, then 1:04:41.280 --> 1:04:45.320 the odds changed dramatically. Um. So Kevin Durant is a 1:04:45.640 --> 1:04:47.520 is a wonderful example that I go into in the 1:04:47.560 --> 1:04:51.000 book because he has a bunch of He has a 1:04:51.040 --> 1:04:53.680 bunch of things in favor of him becoming a star. 1:04:53.920 --> 1:04:56.600 One is, well, the reasons he became a star with 1:04:56.800 --> 1:04:59.960 his physique, just the fact that he's such a gifted athlete. 1:05:00.040 --> 1:05:02.919 Andy happens to be six ft eight inches tall as 1:05:03.240 --> 1:05:06.600 as they as the basketball players say, you can't learned taul. 1:05:07.400 --> 1:05:12.880 So he had that advantage going him. Um and then um. 1:05:12.960 --> 1:05:15.480 But the other thing, the other thing about Kevin Durant 1:05:15.560 --> 1:05:19.160 is the calculus is slightly different if you're if you 1:05:19.240 --> 1:05:22.800 come from a background where your labor market prospects may 1:05:22.840 --> 1:05:27.120 not be as great. And so, given how hard it 1:05:27.240 --> 1:05:29.640 is to move up the socio economic ladder in the 1:05:29.680 --> 1:05:33.000 United States for you know, reasons you've probably talked about 1:05:33.040 --> 1:05:36.360 on your show before, the economic mobility isn't what we 1:05:36.400 --> 1:05:39.160 would hope it would be. Um, and so if you 1:05:39.240 --> 1:05:43.320 come from a really tough background, sports might be looked 1:05:43.360 --> 1:05:46.560 like a better way to really jump to a higher 1:05:46.560 --> 1:05:50.800 income distribution relative to more traditional ways in the labor market. 1:05:50.800 --> 1:05:54.960 And Kevin Durant came from a very humble background, and 1:05:54.960 --> 1:05:59.080 and um, you know, if you just sort of statistically 1:05:59.080 --> 1:06:01.880 looked at what is future might have been like without sports, 1:06:02.160 --> 1:06:05.160 it may not. You know, it wasn't a rosy picture. Yeah, 1:06:05.160 --> 1:06:07.720 I think of like you know, Venus and Serena Williams. 1:06:07.840 --> 1:06:10.040 I mean, and they obviously had a dad that was 1:06:10.120 --> 1:06:12.200 very driven, in a family that was supportive, and it 1:06:12.280 --> 1:06:15.080 was a tough background. But it's you know, you wonder 1:06:15.120 --> 1:06:17.560 how much of it is it because of the dad 1:06:17.560 --> 1:06:19.760 and pushing them, how much of it was just you know, 1:06:19.880 --> 1:06:22.120 natural skill. I mean, there's a there's a lot that 1:06:22.160 --> 1:06:24.200 has to be taken into considering. Can you answer that 1:06:24.600 --> 1:06:29.520 professor that you know the nature versus nurture debate here, Well, yeah, 1:06:29.640 --> 1:06:31.720 I mean, I think it's easy to answer it in 1:06:31.800 --> 1:06:34.880 basketball because the answer is, if you're six ft eight, 1:06:34.880 --> 1:06:38.080 your odds of getting for the NBA are just like 1:06:38.560 --> 1:06:41.160 wildly higher than if you're six ft tall. So in 1:06:41.200 --> 1:06:44.240 the book, I talked about Russell Westbrook, who went as 1:06:44.280 --> 1:06:48.240 a kid into much the same investment mode as Kevin Durant. 1:06:48.280 --> 1:06:50.880 His family went all in on basketball, and of course 1:06:50.880 --> 1:06:52.400 it paid off for both of them. But if you 1:06:52.480 --> 1:06:56.560 looked before they made those investments, Kevin Durant probably made 1:06:56.560 --> 1:07:00.520 a rational investment. Russell Westbrook probably got lucky, meaning a 1:07:00.640 --> 1:07:05.400 six There are tons of athletics six foot kids, and 1:07:05.440 --> 1:07:08.520 the vast, vast majority of them never get to the NBA. 1:07:08.800 --> 1:07:12.000 There are not that many six ft eight thirteen year 1:07:12.000 --> 1:07:15.200 old and a substantial fraction of them get to the NBA. 1:07:15.440 --> 1:07:20.800 So Venus and Serena again probably obviously worked out amazing. 1:07:21.120 --> 1:07:23.600 But if you were to try to run the numbers, 1:07:24.160 --> 1:07:27.480 was that a good investment beforehand? I think you would. 1:07:27.680 --> 1:07:29.680 I think you would have to say it wasn't. But 1:07:29.760 --> 1:07:32.000 it just paid off. It did end up paying off 1:07:32.040 --> 1:07:34.920 really well. Obviously we're gonna go into more chapters. Just 1:07:35.000 --> 1:07:36.600 got a minute before we have to take a break 1:07:36.600 --> 1:07:38.680 and then we'll come back and continue. But as someone 1:07:38.720 --> 1:07:41.800 who is Czechoslovaki and I love this chapter two, what 1:07:41.840 --> 1:07:44.920 do Silicon Valley and Check Women's Tennis have in commons? 1:07:44.960 --> 1:07:46.640 So you've got a minute to talk about it. Then 1:07:46.640 --> 1:07:50.200 we'll talk some more. But what is the connection? Just quickly, well, 1:07:50.280 --> 1:07:53.640 very quickly, I like to say, um, check women's tennis 1:07:53.760 --> 1:07:57.480 is this is like uh, Silicon Valley. There's not a 1:07:57.640 --> 1:08:00.640 natural reason why check women should be so great, but 1:08:00.720 --> 1:08:04.080 there's a combination of historical accidents and then these network 1:08:04.160 --> 1:08:07.560 effects where the Check women sort of push each other. 1:08:08.120 --> 1:08:11.760 Check girls push each other so hard that they end 1:08:11.840 --> 1:08:15.720 up becoming just great tennis players. There's no natural reason 1:08:15.800 --> 1:08:17.960 they should be any good. You know, if you look 1:08:18.000 --> 1:08:21.360 at why are Norwegian so good across country skiing as 1:08:21.360 --> 1:08:23.040 you do, as I do in the book, there's a 1:08:23.040 --> 1:08:25.880 lot more of a natural reason for that. But economic 1:08:26.000 --> 1:08:31.720 networks and economic competition really can lead to dynast What 1:08:31.800 --> 1:08:35.320 about the weather as well, Well, the weather doesn't work 1:08:35.360 --> 1:08:38.559 for the Check story. It's the Norwegian story. I know 1:08:38.600 --> 1:08:40.320 what the answer is because my family is two kids 1:08:40.400 --> 1:08:43.120 that check women were strong like bull So that's why 1:08:43.800 --> 1:08:45.400 you know, I'm just kidding. I'm just kidding, But we 1:08:45.400 --> 1:08:47.439 did used to say that at home with us. Paul Ayer, 1:08:47.680 --> 1:08:50.639 he senior Associate dean and economics professor at the Stanford 1:08:50.640 --> 1:08:53.920 Graduate School of Business. We're talking about his book and 1:08:54.000 --> 1:08:56.320 economist goes to the game how to throw Away five 1:08:56.760 --> 1:09:00.520 eight million dollars and other Surprising Insights from the Economics 1:09:00.560 --> 1:09:02.880 of Sports five eighty million dollars. Wait, wait, where'd that 1:09:02.960 --> 1:09:08.519 number come from? So that's an estimate I calculated based 1:09:08.560 --> 1:09:11.720 on the strike at the NBA, and I believe it 1:09:11.760 --> 1:09:16.040 was two thousand eleven. So, um, there was a maybe 1:09:16.040 --> 1:09:18.640 a more up to date version to talk about was 1:09:18.680 --> 1:09:21.160 there was a strike in Major League Baseball at the 1:09:21.200 --> 1:09:23.519 beginning of the most recent season, and if you remember 1:09:23.800 --> 1:09:27.200 last spring training, not a strike. Sorry, I lock both cases. 1:09:27.240 --> 1:09:30.120 It was a lockout, not a strike. So the point 1:09:30.240 --> 1:09:33.719 in whether talking about the NBA or Major League Baseball 1:09:33.800 --> 1:09:37.000 or whatever, is you see in sports, and this is 1:09:37.000 --> 1:09:40.639 a broader thing. You see it in other collective bargaining 1:09:40.640 --> 1:09:46.439 agreement situations where um, you get these two these two 1:09:46.479 --> 1:09:49.240 groups in the case of sports. It's the owners and 1:09:49.320 --> 1:09:53.679 the players union, and they rely so much on each 1:09:53.720 --> 1:09:57.400 other there their options are so much better if they 1:09:57.439 --> 1:09:59.880 work together than if they split up. But at the 1:10:00.040 --> 1:10:03.160 same time, they can't help themselves from trying to steal 1:10:03.160 --> 1:10:05.880 a bigger share of the pie. It's a It's a 1:10:05.960 --> 1:10:09.680 very common thing in economics where you have these bilateral 1:10:09.720 --> 1:10:12.960 agreements where there's a lot of value captured by the 1:10:13.200 --> 1:10:16.840 by the agreement, and you don't want to mess it up, 1:10:16.840 --> 1:10:19.120 but at the same time you can't help but try 1:10:19.120 --> 1:10:21.599 to take too much, and when that leads to a lockout, 1:10:21.600 --> 1:10:24.000 as it did in the NBA, it's sometimes it's just 1:10:24.080 --> 1:10:28.320 like literally, the NBA and the players pretty much just 1:10:28.439 --> 1:10:31.479 burned a pile of five million dollars that they'll never 1:10:31.560 --> 1:10:36.599 get back. Okay, it's a lot of money. I want 1:10:36.600 --> 1:10:39.679 to I want to talk cheating. I want to talk cheating. Okay. 1:10:40.000 --> 1:10:42.960 There's an entire chapter in your book dedicated to cheating, 1:10:43.680 --> 1:10:46.920 and it talks about Lance Armstrong and the way that 1:10:47.439 --> 1:10:49.200 it asked the question about whether or not you can 1:10:49.240 --> 1:10:54.080 actually win the Tour de France if you're not doping. Um, 1:10:54.280 --> 1:11:00.000 take us into this chapter and why athletes cheat, so um, 1:11:00.000 --> 1:11:02.800 they they You only got half of it. I like 1:11:02.920 --> 1:11:05.280 to think that chapter is about why they cheat and lie. 1:11:05.520 --> 1:11:11.960 Oh sorry, excuse me, said they cheat and lie because 1:11:12.000 --> 1:11:14.679 the incentives there are very strong. I mean we see 1:11:14.720 --> 1:11:17.599 this in other places as well, when when we set 1:11:17.680 --> 1:11:21.120 up rules that we can't enforce and the value of 1:11:21.200 --> 1:11:24.760 breaking those rules is really high, people are going to 1:11:24.800 --> 1:11:27.960 break them. And it's sad because that's human nature, but 1:11:28.000 --> 1:11:30.840 it's what we need to expect. And you know, if 1:11:30.840 --> 1:11:33.400 you there was a period of time, I don't know, 1:11:33.439 --> 1:11:35.880 maybe the testing is better now, but there was a 1:11:35.880 --> 1:11:37.880 period of time where you had to cheat to whin 1:11:37.960 --> 1:11:40.680 they to win the toward to France and to win 1:11:40.800 --> 1:11:44.519 certain sprinting events in track and field. It's just every 1:11:44.600 --> 1:11:47.000 single person who won over a long period of time 1:11:47.000 --> 1:11:50.840 and both those sports was taking steroids and lying about it. 1:11:51.479 --> 1:11:54.519 And what the reason it happens is, it's just simple 1:11:54.560 --> 1:11:58.080 prisoners dilemmas, straight out of your most basic college game 1:11:58.160 --> 1:12:01.320 theory class. If you don't cheat, there was no way 1:12:01.360 --> 1:12:04.200 you were going to win, and the incentives from winning 1:12:04.280 --> 1:12:06.679 were so are so large. I mean, think about it, 1:12:06.760 --> 1:12:08.800 what was Lance Armstrong going to do if he wasn't 1:12:08.840 --> 1:12:11.920 a champion biker. His next best option was not making 1:12:12.479 --> 1:12:14.840 a little bit less than he made. As are you 1:12:14.880 --> 1:12:19.280 see the ends justify the means. Well, I'm not saying 1:12:19.520 --> 1:12:22.840 this is an advice. This is um you know, it's descriptive. 1:12:22.920 --> 1:12:26.280 It's not prescriptive. I'm not telling you to lie ar cheap, 1:12:26.320 --> 1:12:29.080 but I will tell you that in situations like the 1:12:29.080 --> 1:12:31.439 Tour de Front, you have to recognize that your opponents 1:12:31.479 --> 1:12:33.920 will be cheating, and so you do have to think 1:12:33.960 --> 1:12:36.599 about that. It's interesting though, because it's not just kids 1:12:36.640 --> 1:12:38.400 around the world are not listening to me. But what 1:12:38.439 --> 1:12:40.920 I think is pretty remarkable about this is is it 1:12:40.960 --> 1:12:42.759 is just numbers at the end of the day. Because 1:12:42.760 --> 1:12:46.240 there are downsides to to pumping your body full of 1:12:46.280 --> 1:12:51.120 these bad substances. There are downsides to uh blood transfusion 1:12:51.880 --> 1:12:54.040 that you do on the road with blood that you 1:12:54.040 --> 1:12:57.479 know was taken from your body uh months earlier when 1:12:57.479 --> 1:13:00.120 you weren't so tired. I mean, bad things can up 1:13:00.160 --> 1:13:02.360 in to you. Yeah. So, so keep in mind that 1:13:02.400 --> 1:13:04.479 not everybody will lie in cheat. A lot of people 1:13:04.479 --> 1:13:07.320 who could have been great bikers will see that the 1:13:07.360 --> 1:13:09.040 only way they can get ahead is to lie to 1:13:09.160 --> 1:13:11.680 cheat and they take and they have they place a 1:13:11.760 --> 1:13:14.559 high cost on the things you just mentioned, either the 1:13:14.640 --> 1:13:17.680 long term damages or just they have moral qualms. They're like, 1:13:17.720 --> 1:13:20.720 I can't do that. And so for those people they 1:13:20.760 --> 1:13:23.200 put it into their own personal calculus and they say, 1:13:23.240 --> 1:13:25.439 I'm not gonna lie in cheat. Now they don't become 1:13:26.200 --> 1:13:31.160 um famous famous um bikers as a result. So it's 1:13:31.200 --> 1:13:33.640 absolutely the case that there are cost to this and 1:13:33.680 --> 1:13:35.639 a lot of people just opt out of the system 1:13:35.640 --> 1:13:37.640 when that's the case. Hey, one thing I want to 1:13:37.640 --> 1:13:39.439 get to and maybe because we were all obsessed with 1:13:39.680 --> 1:13:42.599 Taylor Swift last week and you know, trying to get 1:13:42.600 --> 1:13:45.320 tickets for a concert, I couldn't get one bummer bummer. 1:13:45.360 --> 1:13:49.000 But anyway, we're looking at you know, um getting tickets 1:13:49.040 --> 1:13:51.280 for for things, and I'm assuming sports games as well, 1:13:51.360 --> 1:13:53.160 especially when you know, we get to something like the 1:13:53.160 --> 1:13:56.000 super Bowl or the playoffs, things get a little pricy. 1:13:56.160 --> 1:13:58.599 You have a chapter that talks about ticket scalpers making 1:13:58.600 --> 1:14:00.920 the world a better place? Is that a question mark? 1:14:01.000 --> 1:14:04.960 Are affirmative? Well, I mean I wouldn't say that about 1:14:04.960 --> 1:14:08.000 every single ticket scalper, but as a collective they do now, 1:14:08.040 --> 1:14:10.240 not the not the ones who go out and use 1:14:10.360 --> 1:14:14.040 bots to and and make every waste everybody's time. But 1:14:14.120 --> 1:14:17.000 the traditional ticket scalper, the old days when you would 1:14:17.000 --> 1:14:18.920 go to a shop and buy and sell tickets, or 1:14:18.960 --> 1:14:22.479 go on eBay StubHub and buy and sell tickets that 1:14:22.600 --> 1:14:25.800 people just had extra tickets and wanted to resell them. 1:14:25.840 --> 1:14:28.799 There's a lot of value in that right. Just more broadly, 1:14:28.920 --> 1:14:33.040 resale markets are really good. They transfer items from somebody 1:14:33.040 --> 1:14:35.639 who values them less to somebody who values them more. 1:14:36.000 --> 1:14:38.360 So if you have a ticket to a game and 1:14:38.439 --> 1:14:41.320 you know your kids soccer team is going to play 1:14:41.400 --> 1:14:44.000 some playoff that day and you want to resell that ticket, 1:14:44.120 --> 1:14:46.040 that is great that you have the ability to go 1:14:46.080 --> 1:14:49.559 on StubHub and make somebody's day where they were dying 1:14:49.560 --> 1:14:51.559 to have a ticket to that game, and now you're 1:14:51.600 --> 1:14:53.439 both better off. You have some money and you go 1:14:53.520 --> 1:14:56.920 to your kids game and that other person goes to 1:14:57.040 --> 1:14:59.840 the professional sports game that you sold them a ticket 1:14:59.840 --> 1:15:03.960 for resale is fantastic. And the middle people who make 1:15:04.000 --> 1:15:07.360 that happen, which now is more stubbub but traditionally was 1:15:07.800 --> 1:15:12.839 ticket scalpers or ticket agents, those those people are providing 1:15:12.880 --> 1:15:16.879 a really valuable service. You know, it's not just tickets, 1:15:16.920 --> 1:15:19.920 it's used cars, it's all sorts of increasingly Ticketmasters getting 1:15:19.920 --> 1:15:21.719 into it as well. I mean you can you can 1:15:21.760 --> 1:15:26.080 buy and sell tickets on that platform. Yeah, and so 1:15:26.160 --> 1:15:29.519 they're there in lies the problem right with Ticketmaster. I'm 1:15:29.520 --> 1:15:31.960 not as crazy about ticket Master and some of what's 1:15:31.960 --> 1:15:35.479 going on there because what happened is traditional ticket scalping, 1:15:35.479 --> 1:15:38.599 where you have a vibrant and fragmented market with a 1:15:38.600 --> 1:15:42.280 lot of competition. That's good. What what gets ruined is 1:15:42.320 --> 1:15:46.479 when somebody gets exclusive rights to resale or exclusive rights 1:15:46.479 --> 1:15:49.960 to you know, Ticketmaster is now sort of has arrangements 1:15:49.960 --> 1:15:52.040 where they'll sell the ticket and you have to resell 1:15:52.080 --> 1:15:54.719 it through them, and and that I'm not as excited 1:15:54.760 --> 1:15:58.799 about because then you start having more um uh, pricing 1:15:58.840 --> 1:16:02.840 power in the part of a single entity. All right, Paul, 1:16:03.120 --> 1:16:05.080 one last question, what's the FED gonna do? No, I'm 1:16:05.120 --> 1:16:06.920 just kidding. I'm just kidding. We're not going to talk 1:16:06.960 --> 1:16:09.960 about that. We did two segments without talking about, Hey, 1:16:10.000 --> 1:16:12.920 there there are more chapters. Are athletes worth all that money? 1:16:12.960 --> 1:16:15.400 If your hometown hosts the Olympics? This is really a 1:16:15.600 --> 1:16:19.840 fun game. A proliferation of French Canadian goalies. Um such 1:16:19.840 --> 1:16:21.760 a fun read and just plays into I mean, we 1:16:21.760 --> 1:16:23.680 talked about the business and sports all the time, and 1:16:23.720 --> 1:16:26.320 there's a lot of really thoughtful chapters in his book. 1:16:26.360 --> 1:16:28.519 Paul Oyer, thank you so much. Fun to catch up 1:16:28.520 --> 1:16:31.839 with you again. He is Senior Associate Dean Economics Professor 1:16:31.920 --> 1:16:33.880 at the Stanford Graduate School of Business. Check out his 1:16:33.920 --> 1:16:36.479 book and Economists Goes to the Game, how to throw 1:16:36.479 --> 1:16:39.599 Away five eighty million dollars and other surprising insights from 1:16:39.600 --> 1:16:47.759 the economics of sports. Right here on Bloomberg, you're listening 1:16:47.800 --> 1:16:51.600 to the Bloomberg Business Week Podcast. Catch us live weekdays 1:16:51.640 --> 1:16:54.680 from two to five pm Easter on Bloomberg Radio, the 1:16:54.680 --> 1:16:58.240 Bloomberg Business Band You too. You can also listen live 1:16:58.320 --> 1:17:01.960 to our flagship New York station, Just Say Alexa Play 1:17:02.040 --> 1:17:05.400 Bloomberg e Love and Dirty. I wanted to get to 1:17:05.439 --> 1:17:07.800 a guest because it was a story I think you 1:17:07.840 --> 1:17:10.960 could safely say heard around the world. We're talking about 1:17:11.000 --> 1:17:14.000 a story by Bloomberg Business Weeks Ashley Vance. He wrote 1:17:14.040 --> 1:17:16.600 it on the forty five year old Tech sent a 1:17:16.600 --> 1:17:19.200 millionaire who is spending some two million dollars a year 1:17:19.240 --> 1:17:22.360 to be eighteen years old again. In a project known 1:17:22.479 --> 1:17:25.439 as Blueprint. We love talking with Ashley about the story 1:17:25.640 --> 1:17:27.760 and the time he spent with Brian Johnson so much 1:17:27.800 --> 1:17:29.160 so that we knew we wanted to go straight to 1:17:29.160 --> 1:17:31.679 the source. So with us right now is Brian Johnson, 1:17:31.720 --> 1:17:34.840 who is the founder and CEO Blueprint, CEO of Colonel 1:17:34.880 --> 1:17:37.639 and Os Fund, and he joins us via zoom from 1:17:37.640 --> 1:17:39.599 Los Angeles. Brian, it is good to have you here 1:17:39.600 --> 1:17:42.720 with Mike and myself. How are you? I'm great, Thank 1:17:42.760 --> 1:17:44.479 you for having me. Well, tell us a little bit 1:17:44.479 --> 1:17:49.040 about your mission and why you wanted to do this 1:17:49.160 --> 1:17:51.080 and and I know we're kind of hitting it hard 1:17:51.080 --> 1:17:53.840 and cold. We've talked about it for our listeners and 1:17:53.880 --> 1:17:57.080 our audience before, about spending about two million dollars a 1:17:57.160 --> 1:18:00.400 year to be eighteen years old. Again, why did you 1:18:00.400 --> 1:18:03.120 want to do this? I mean that the Fountain of 1:18:03.160 --> 1:18:05.720 Youth is a story as oldest humanity, and typically the 1:18:05.720 --> 1:18:08.080 story is a group of people in a boat going 1:18:08.120 --> 1:18:10.880 to the jungle, traveling to a temple with some of 1:18:11.040 --> 1:18:14.120 some elixir that they'll drink. And the question we wanted 1:18:14.160 --> 1:18:16.559 to pose is is a fountain of youth actually here 1:18:16.640 --> 1:18:19.320 right now? It's just hiding in tens of thousands of 1:18:19.320 --> 1:18:23.080 scientific publications and an extremely rigorous protocol, and so we 1:18:23.120 --> 1:18:25.439 took this to the ends of science. We basically said, 1:18:25.520 --> 1:18:28.559 if we measure every organ of the body via every 1:18:28.560 --> 1:18:32.320 possible measurable modality blood, slaves, stool, m ri I, ultrasound, 1:18:32.320 --> 1:18:35.240 fitness tests, dame astilation, we look at the gold standard 1:18:35.280 --> 1:18:39.080 scientific evidence, create clinical grade protocols, and then my life 1:18:39.120 --> 1:18:42.760 becomes a perfect implementation of that what is possible with 1:18:42.800 --> 1:18:45.760 today's science. And the results were pretty stunning. Last year, 1:18:45.760 --> 1:18:48.880 I reversed my epogetic age five point one years in 1:18:48.880 --> 1:18:51.000 in seven months. It was a world record, and I 1:18:51.120 --> 1:18:54.719 slowed the speed of which I age twenty eight percent. 1:18:55.000 --> 1:18:57.439 So generally speaking, and I humorously kind of say this, 1:18:58.000 --> 1:19:02.360 I get October, November, December for every year. Do you 1:19:02.400 --> 1:19:06.479 feel different as a result. I've never felt better in 1:19:06.479 --> 1:19:09.400 my entire life. But bright at the same time, A 1:19:09.400 --> 1:19:11.960 lot of what you're doing is sort of I don't 1:19:11.960 --> 1:19:14.040 know if you call it experimental or you know, I 1:19:14.080 --> 1:19:16.680 hate to say. You're almost your own guinea pig. And 1:19:17.120 --> 1:19:20.480 to some degree, have there been any sort of unpleasant surprises, 1:19:20.520 --> 1:19:24.240 any bad reaction to any of the uh food You've 1:19:24.280 --> 1:19:27.360 eaten or any of the treatments you've undergone. As part 1:19:27.360 --> 1:19:30.439 of this process, we certainly have learnings all the time, 1:19:30.479 --> 1:19:33.679 and we do share exactly what we whether the result 1:19:33.760 --> 1:19:36.160 is good or bad, we share independently because the value 1:19:36.160 --> 1:19:39.280 of this is as an open public uh protocol. The 1:19:39.920 --> 1:19:43.080 It's it's important to remember though that this blueprint is 1:19:43.120 --> 1:19:46.679 based upon scientific evidence, gold standard scientific evidence in clinical 1:19:46.680 --> 1:19:49.639 grade protocols. So it's not like we're randomly doing things 1:19:49.720 --> 1:19:54.560 or taking some obscure thing. It's based upon evidence and protocols, 1:19:54.960 --> 1:19:57.400 and so we're really following a process to say what 1:19:57.680 --> 1:19:59.960 is possible with with what's been proven. And the thing 1:20:00.040 --> 1:20:02.200 we're doing is we no one in the world has 1:20:02.240 --> 1:20:05.240 ever looked at all the scientific evidence and created a 1:20:05.280 --> 1:20:08.320 perfect protocol, and so fundamentally what we're doing is in 1:20:08.400 --> 1:20:12.120 measuring every organ of the body, we're asking every single 1:20:12.160 --> 1:20:16.160 thing liver, pancreas, lungs, kidney, what do you need to 1:20:16.280 --> 1:20:18.840 be in an ideal state? And that goes directly into 1:20:18.880 --> 1:20:21.160 a protocol, which means I no longer look at menus 1:20:21.160 --> 1:20:23.479 at restaurants, I don't know pizza parties at hawk, I 1:20:23.520 --> 1:20:25.840 don't drink alcohol with friends and go on bingers and 1:20:25.840 --> 1:20:28.759 say about stay at late at night. It's entirely followed. 1:20:28.800 --> 1:20:32.840 So it's really interesting question of it's a demonstration of 1:20:32.920 --> 1:20:36.080 going to what is possible today with science. Take a 1:20:36.120 --> 1:20:38.400 step back, what did it take to get this program 1:20:38.439 --> 1:20:42.320 up and running. The team is now about thirty members, 1:20:42.520 --> 1:20:44.759 and so they're specialist. For example, I have a medical 1:20:44.760 --> 1:20:47.479 grade ultrasound machine here in the clinic, and we have 1:20:47.560 --> 1:20:50.400 a specialist that looks at the heart, another at the lungs, 1:20:50.520 --> 1:20:52.760 than another for the other organs of the body, and 1:20:52.800 --> 1:20:55.240 we build out specialists throughout the entire body through all 1:20:55.240 --> 1:20:57.960 the different measurement modalities. I do a full body m 1:20:58.040 --> 1:21:00.960 R I every organ of the body on an annual basis. 1:21:01.320 --> 1:21:03.960 So having this kind of specialty, we're doing things that 1:21:04.000 --> 1:21:06.839 no one's ever done before, and so it's it's challenging. 1:21:07.040 --> 1:21:08.800 We have to identify the task that we have to 1:21:08.800 --> 1:21:10.040 build a team to do it. Then we have to 1:21:10.080 --> 1:21:12.960 normalize it in a protocol and so it's extremely difficult. 1:21:12.960 --> 1:21:14.840 And so I do spend a few million dollars a 1:21:14.880 --> 1:21:18.680 year on this, but I basically reduce the learning to 1:21:18.840 --> 1:21:21.839 something that anybody can implement. So you can take everything 1:21:21.880 --> 1:21:24.760 I've done. It's freely available online to everybody, and you 1:21:24.760 --> 1:21:29.040 can implement it in roughly a month. You know, Brian, 1:21:29.280 --> 1:21:31.439 as you point out that diet element of it is 1:21:31.439 --> 1:21:34.600 obviously so important to something like this. But but I 1:21:34.600 --> 1:21:36.840 gotta wonder, do you ever just get a craving like, Wow, 1:21:36.880 --> 1:21:39.920 I could go for some pizza and a beer right now? 1:21:39.960 --> 1:21:41.960 You know, how do you deal with that sort of 1:21:42.160 --> 1:21:45.920 you know, craving that we all get. It's funny, it's 1:21:46.000 --> 1:21:49.880 gone and in fact, imagine doing that kind of makes 1:21:49.880 --> 1:21:54.200 me sick. Yeah, so it's gone. The A lot of 1:21:54.200 --> 1:21:57.120 people think it perpetually persists, that there's this urge to 1:21:57.680 --> 1:22:00.479 eat those kinds of foods or eat uh more than 1:22:01.200 --> 1:22:04.240 like binge, But it just doesn't. It's actually reversed, and 1:22:04.320 --> 1:22:06.680 I can't imagine doing it now. Well, I mean, do 1:22:06.720 --> 1:22:09.439 you ever fall off the wagon, so to speak, whether 1:22:09.479 --> 1:22:13.120 it's in food or so on. I mean, initially, yes, 1:22:13.200 --> 1:22:15.479 I had several times where I just couldn't keep up 1:22:15.479 --> 1:22:18.839 with the protocol. So I basically agreed, can I build 1:22:18.880 --> 1:22:22.519 a system that takes better care of me than I 1:22:22.560 --> 1:22:24.840 can myself? And so we're all accustomed to this idea 1:22:24.880 --> 1:22:27.799 that we make we have good intentions to follow certain routines, 1:22:27.840 --> 1:22:29.760 go to the gym and eat well, and then we 1:22:29.840 --> 1:22:32.400 break we have a dessert, or we eat drink alcohol, 1:22:32.479 --> 1:22:33.960 or we eat too much food or the wrong kind 1:22:33.960 --> 1:22:36.200 of food. And so the question for me was can 1:22:36.240 --> 1:22:40.719 I just sign up for a system measurement, scientific evidence 1:22:40.720 --> 1:22:44.639 and protocol and follow exactly that? And it's been, honestly 1:22:44.800 --> 1:22:48.519 such a relief where the system now takes care better 1:22:48.560 --> 1:22:51.240 care of me than I can myself. And we see 1:22:51.280 --> 1:22:54.920 this throughout society. We know when a navigation app does 1:22:54.920 --> 1:22:57.080 a better job and getting this to our destination, we 1:22:57.120 --> 1:22:59.200 do so, and we don't use paper maps anymore. And 1:22:59.240 --> 1:23:02.439 that's what I've done, as I've shown a system of measurement, 1:23:02.520 --> 1:23:05.639 science and protocol better cares for me than I can. Brian, 1:23:05.680 --> 1:23:07.280 one thing I wanted to ask you what has been 1:23:07.320 --> 1:23:09.320 the downside of this? I mean, do you feel like 1:23:09.760 --> 1:23:11.120 from the minute you get up to the minute and 1:23:11.120 --> 1:23:14.080 go to sleep, like you're just you know, constantly monitoring 1:23:14.280 --> 1:23:18.960 everything you know? For me, it's all fun. I think 1:23:18.960 --> 1:23:22.080 of myself as a professional rejuvenation athlete when you know, 1:23:22.080 --> 1:23:26.000 building my former company Braintree Venmo oftentimes among my entrepreneur friends, 1:23:26.000 --> 1:23:27.720 it was a badge of honor to sleep under your 1:23:27.720 --> 1:23:30.680 desk and look haggard and go days without sleeping. But 1:23:30.720 --> 1:23:32.599 to me it always seemed been saying that you're really 1:23:32.880 --> 1:23:36.240 they entrepreneurs are athletes of the mind, and so it 1:23:36.280 --> 1:23:38.280 makes sense to eat well and sleep well. And so 1:23:38.680 --> 1:23:41.240 I've never felt better in my entire life. I love 1:23:41.880 --> 1:23:44.960 following this protocol, you know, And Brian, obviously you've got 1:23:44.960 --> 1:23:48.240 a personal motivation to make yourself as healthy as possible, 1:23:48.320 --> 1:23:51.640 live as long as possible. But I wonder, clearly there 1:23:51.880 --> 1:23:54.800 there's a business motivation too, and I wonder how you 1:23:54.880 --> 1:23:58.720 see where you see the business going. Um, is this 1:23:58.800 --> 1:24:01.080 ready for prime times, something that you're ready to roll 1:24:01.120 --> 1:24:04.720 out to consumers? And how would it work a subscription 1:24:05.080 --> 1:24:06.720 or you know, how are you thinking about it as 1:24:06.720 --> 1:24:09.320 a business. I mean, I didn't started off as a business. 1:24:09.320 --> 1:24:11.840 It really is an open, public, scientific experiment. And what 1:24:11.880 --> 1:24:13.920 I was proposing is that I've read a lot of 1:24:13.920 --> 1:24:16.880 biographies and I really admire people who in their time 1:24:16.920 --> 1:24:19.640 and place identify the point on the horizon that is 1:24:19.800 --> 1:24:22.920 barely visible and UH, in the early twenty one century, 1:24:22.960 --> 1:24:27.320 that could be UH neutralizing aging. If we didn't age 1:24:27.320 --> 1:24:30.840 and naturally deteriorate and think the death was inevitable. We 1:24:30.880 --> 1:24:32.600 may have a different relationship with time, and so in 1:24:32.640 --> 1:24:35.559 the early century, I would put forward the hypothesis that 1:24:35.680 --> 1:24:40.080 the a defining moment maybe our ability to neutralize or 1:24:40.160 --> 1:24:43.240 dramatically slow aging. And that's what I'm trying to do. 1:24:43.280 --> 1:24:44.800 If I can prove this end of one and my 1:24:44.840 --> 1:24:47.680 results are stable and repeatable, it may fundamentally change how 1:24:47.720 --> 1:24:49.840 we think about ourselves and society. You know, it's funny. 1:24:50.000 --> 1:24:51.640 I'm thinking about, you know, the news that we got 1:24:51.680 --> 1:24:54.519 about CVS doing a deal. They're thinking about, you know, 1:24:54.600 --> 1:24:57.800 kind of how to keep Medicare patients um, well, if 1:24:57.840 --> 1:25:01.479 you will, and I do think disruption innovation when it 1:25:01.479 --> 1:25:03.120 comes to healthcare. We're all trying to figure out what 1:25:03.120 --> 1:25:05.160 it really means and how do we really change the 1:25:05.240 --> 1:25:09.479 system so it's better, cost less with a better outcome impact. So, 1:25:09.720 --> 1:25:12.640 is there you know, a way to really scale what 1:25:12.720 --> 1:25:14.160 you are doing, just to kind of build on what 1:25:14.280 --> 1:25:17.479 Mike asked you, you know, in terms of really reaching 1:25:17.520 --> 1:25:20.120 the masses so that we all live a better life, 1:25:20.120 --> 1:25:24.559 a healthier life, potentially longer life. Um and maybe with 1:25:24.640 --> 1:25:29.000 better methods and better wellness overall. Yeah, I mean it 1:25:29.040 --> 1:25:31.519 started as a science experiment and I've been sharing all 1:25:31.560 --> 1:25:33.640 of my data and results with everybody. I make the 1:25:33.680 --> 1:25:37.040 protocol available for free. And since this viral the story 1:25:37.080 --> 1:25:40.840 went viral, wee can half ago. Uh, every single supplier 1:25:40.880 --> 1:25:43.240 we have for blueprint is sold out for months. Nobody 1:25:43.280 --> 1:25:45.439 can get anything to start this is start the program. 1:25:45.640 --> 1:25:47.120 So yeah, I mean, as of this week, we've been 1:25:47.120 --> 1:25:49.880 actually dipping our toe into exploring building a business of 1:25:50.240 --> 1:25:53.200 can we basically just solve this problem and make the 1:25:53.200 --> 1:25:55.519 product available for anyone who wants it, with the added 1:25:55.560 --> 1:25:57.479 benefit that we incorporate the evidence. So it didn't start 1:25:57.520 --> 1:25:59.519 that way. It's kind of a problem now because people 1:25:59.520 --> 1:26:00.840 want to follow us and we want people to be 1:26:00.880 --> 1:26:02.240 even to be in the community, and they just can't 1:26:02.240 --> 1:26:04.919 do it because everyone's out of the items. Are doctors 1:26:05.080 --> 1:26:10.639 reaching out to your hospitals, our healthcare organizations, managed care, 1:26:10.640 --> 1:26:12.760 they reaching out to just say, okay, what exactly are 1:26:12.800 --> 1:26:16.360 you doing exactly? We launched a part of this rejuvenation 1:26:16.360 --> 1:26:18.960 olympics dot com, which is a leaderboard for people who 1:26:19.160 --> 1:26:22.120 reverse or who slow their speed of aging. So I'm 1:26:22.120 --> 1:26:24.320 trying to create a sport out of this of people 1:26:24.360 --> 1:26:27.200 can be a leader in a professional as a professional 1:26:27.200 --> 1:26:30.800 rejuvenation athlete. And this creates a different, uh paradigm for 1:26:30.840 --> 1:26:34.120 anyone using healthcare where if I'm receiving the recipient of 1:26:34.160 --> 1:26:37.760 anyone services, I want to know what's happening to me overall. 1:26:37.880 --> 1:26:40.000 I can get fifty different biomarkers, but it doesn't tell 1:26:40.000 --> 1:26:42.280 me a whole story about me overall, but a speed 1:26:42.320 --> 1:26:45.400 of aging which you can get rejuvenation Olympics does And 1:26:45.439 --> 1:26:48.000 so hopefully it was a paradigm shift for how people 1:26:48.320 --> 1:26:51.679 what people expect in exchange for health through well thees services. 1:26:52.360 --> 1:26:54.160 You know, Brian, For those of us on a budget 1:26:54.200 --> 1:26:56.920 who kind of wanna replicate what you're doing, you know, 1:26:57.080 --> 1:27:00.439 can you boil it down to the simplest of forms 1:27:00.479 --> 1:27:02.479 of advice that that you would give us from what 1:27:02.520 --> 1:27:06.280 you've learned, Yes, it's actually very simple. Number one and 1:27:06.360 --> 1:27:10.559 most important is stop self destructive behaviors. So that is 1:27:10.600 --> 1:27:13.960 eating too much, eating the wrong foods, drinking too much alcohol, 1:27:14.080 --> 1:27:16.800 smoking the stuff we all know we don't want to do, 1:27:16.880 --> 1:27:19.080 we do it anyways, So stop that as much as 1:27:19.080 --> 1:27:21.840 you can. Number to eat more vegetables, berries, and nuts, 1:27:22.240 --> 1:27:26.879 three prioritized sleep, and four exercise. Just getting those basics 1:27:26.880 --> 1:27:29.120 in place, a person can get the majority the benefits 1:27:30.040 --> 1:27:32.960 um and again it's go please go ahead and the end. 1:27:33.000 --> 1:27:35.840 The entire protocol is available at no cost on my 1:27:35.920 --> 1:27:39.880 website blueprint dot Brian Johnson dot co. So, uh, feel 1:27:39.880 --> 1:27:41.160 free to look at all my data, look at all 1:27:41.200 --> 1:27:43.519 the protocols. There's there's even links to products we use. 1:27:43.520 --> 1:27:45.400 Again they're out of stock. But you get the idea 1:27:45.400 --> 1:27:47.160 of everything is there? Is this your Is this your 1:27:47.200 --> 1:27:50.240 way of life forever? Now? I think so? I mean, 1:27:50.280 --> 1:27:52.280 I've never this is the whole thing. It's so interesting 1:27:52.280 --> 1:27:54.400 to me. Is a system now takes care of me 1:27:54.439 --> 1:27:56.360 better than I can take care of myself. And I 1:27:57.560 --> 1:28:00.280 it's uh, it's not exciting to think about will be 1:28:00.320 --> 1:28:02.000 back in charge of myself again? You know, I don't. 1:28:02.000 --> 1:28:03.400 I didn't do a great job. And I think most 1:28:03.400 --> 1:28:05.639 of us would acknowledge we don't do a great job 1:28:05.680 --> 1:28:08.519 taking care of ourselves because it's very hard, you know, Brian. 1:28:08.560 --> 1:28:10.360 One of the things that Mike was pointing out, he said, 1:28:10.520 --> 1:28:13.479 you know in the story, because we're talking about your pale, 1:28:14.760 --> 1:28:17.719 you look great for those who are watching on YouTube 1:28:17.760 --> 1:28:20.960 and and our Blueberg original streaming service. But you stay 1:28:20.960 --> 1:28:23.880 out of the sun, correct, Yeah, A lot of people 1:28:24.000 --> 1:28:25.640 suggest I look like a vampire, so I need to 1:28:25.680 --> 1:28:28.799 get extensions to you know. No, but I think about 1:28:28.960 --> 1:28:31.880 you know, I remember going to pediatrician and then say 1:28:32.280 --> 1:28:34.840 at my PEDIATRICI and be like, make sure your daughter 1:28:34.880 --> 1:28:37.439 when she was young, get some sun. You know, obviously 1:28:37.479 --> 1:28:39.320 not in the middle of the day when it's the hottest, 1:28:39.360 --> 1:28:42.000 but kids were being you know, so much sunscreen and 1:28:42.040 --> 1:28:44.120 being kept out that their vitamin D levels were low. 1:28:44.360 --> 1:28:46.639 So I am curious, like, what were the adjustments you've 1:28:46.640 --> 1:28:50.400 had to make because of this regime that you're following. Yeah, 1:28:50.439 --> 1:28:52.680 I do avoid the sun, and that's primarily because we're 1:28:52.680 --> 1:28:54.360 trying to get my skin age again to be the 1:28:54.439 --> 1:28:56.439 age of eighteen, and so we do that. We measure 1:28:56.600 --> 1:29:01.120 using multispectral imagery and autofluorescence biopsies and photos and so 1:29:01.160 --> 1:29:03.040 with that kind of measurement protocol and that we implement 1:29:03.479 --> 1:29:06.320 lasers and all kinds of things. And so my treatments 1:29:06.320 --> 1:29:08.160 do prevent me from going into the sun just for 1:29:08.240 --> 1:29:12.599 recovery time. So it's not like I'm son avoidant all together. 1:29:12.680 --> 1:29:15.200 It's just that I rarely have downtime. My skin is 1:29:15.200 --> 1:29:17.240 typically all we have some kind of impression of a 1:29:17.280 --> 1:29:19.600 laser treatment or something, and so really is just an 1:29:19.600 --> 1:29:22.120 effort to try to have eighteen year old skin again, 1:29:22.240 --> 1:29:25.519 which I think we've made. I've currently lessened my skin 1:29:25.560 --> 1:29:28.080 age twenty two years. Since beginning as a kid, I 1:29:28.120 --> 1:29:29.959 was missed on a lot a lot of skin debauchery 1:29:30.040 --> 1:29:32.000 never works on screen, so I have I've had to 1:29:32.000 --> 1:29:34.040 make up a lot of ground. You gotta stop before 1:29:34.080 --> 1:29:39.320 you get that teenage Jackney again. All right, listen, we're 1:29:39.320 --> 1:29:41.080 gonna leave it on that note. Really great to get 1:29:41.120 --> 1:29:43.840 some time with you. UM fascinating as we said, to 1:29:43.840 --> 1:29:45.640 read the story that Ashuley did, but even better to 1:29:45.640 --> 1:29:47.799 get a chance to actually talk with you directly. Brian, 1:29:47.800 --> 1:29:49.599 Thank you so much, Good luck with it, and look 1:29:49.600 --> 1:29:52.960 forward to hearing updates. Brian Johnson, uh founder and CEO Blueprint. 1:29:53.040 --> 1:29:56.639 Joining s V A Zoom from Los Angeles. You're listening 1:29:56.680 --> 1:30:00.200 to the Bloomberg Business Week podcast. Catch Just live week 1:30:00.280 --> 1:30:03.280 days from two to five pm Eastern on Bloomberg Radio, 1:30:03.439 --> 1:30:06.360 The Bloomberg Business and and you too. You can also 1:30:06.439 --> 1:30:09.719 listen live to our flagship New York station just say 1:30:09.840 --> 1:30:15.080 Alexa play Bloomberg, e Love and Verdi. Safe to say 1:30:15.120 --> 1:30:18.599 we are all a bit obsessed with chat CHPT right 1:30:18.640 --> 1:30:21.720 since Microsoft's tenderly an dollar investment. We're hearing about it 1:30:21.720 --> 1:30:24.719 in earnings calls. Google did their own, albeit much smaller, 1:30:24.760 --> 1:30:27.679 a ideal. We talked about it with Kathy would last week, 1:30:27.840 --> 1:30:30.040 and then there is a Bloomberg Business Week story that 1:30:30.080 --> 1:30:32.759 you can find online that definitely takes it into account. 1:30:33.160 --> 1:30:35.719 Art put chat GPT to the test on a Warden 1:30:35.800 --> 1:30:39.120 exam with more. We've got Demetri casandis a senior editor 1:30:39.160 --> 1:30:41.160 at Bloomberg News on the phone in New York City 1:30:41.160 --> 1:30:43.760 along with the editor of Bloomberg Business to Week, Joel 1:30:43.760 --> 1:30:47.880 Weber in our Bloomberg Interactive Broker's studio. So Joel, how 1:30:47.880 --> 1:30:51.280 did chatp GPT do on that Warden exam? Well, we're 1:30:51.280 --> 1:30:55.280 gonna find out. I do think just in general, um, 1:30:55.320 --> 1:30:58.439 it is causing existential crazies everywhere you look, right, I 1:30:58.479 --> 1:31:00.679 speak for yourself, man, Yeah, it's all gonna be great. 1:31:02.760 --> 1:31:05.679 And I think you know an NBA or tests. In general, 1:31:05.680 --> 1:31:07.840 I've heard from some professors who are like, I've had 1:31:07.920 --> 1:31:11.680 to up end my entire curriculum to account for uh 1:31:11.840 --> 1:31:15.280 chat gpt UM, so that you know, proving that you know, 1:31:15.680 --> 1:31:19.320 AI program didn't actually do the student's own work. Um, 1:31:19.720 --> 1:31:24.640 AI my homework. I think we'll get us. Uh so 1:31:25.560 --> 1:31:29.560 take us to Wharton. UM and the professor who you 1:31:29.640 --> 1:31:32.920 based the story around. Yeah, I mean I think those 1:31:32.960 --> 1:31:37.080 are all good points. Christian Turley teaches at Wharton, and 1:31:37.200 --> 1:31:39.280 you know, it started as kind of a fun conversation 1:31:39.320 --> 1:31:41.880 over the holidays with his sons, who both have dealt 1:31:41.920 --> 1:31:46.240 with other programs. UM. You know, we're we're intrigued by it. 1:31:46.360 --> 1:31:50.360 Our b schools coverage sometimes is about research that can 1:31:50.360 --> 1:31:52.360 steal very out of touch with what's going on in 1:31:52.360 --> 1:31:55.280 the real world. And Professor to Reach was very quick 1:31:55.280 --> 1:31:57.760 and nimble to say, Hey, let me see what this 1:31:58.120 --> 1:31:59.960 this thing is about all the hubbub. Let me give 1:32:00.000 --> 1:32:02.320 it an exam that I've given to my students. Um. 1:32:02.320 --> 1:32:04.240 It did quite well, it did above average, it got 1:32:04.240 --> 1:32:07.400 to be minus UM. But it is not you know, 1:32:07.720 --> 1:32:10.160 it's the context of a business school course. In a 1:32:10.160 --> 1:32:13.439 business school exam is not the kind of context in 1:32:13.479 --> 1:32:17.040 which you know, students can realistically put the chatbot to 1:32:17.080 --> 1:32:19.680 take the exam for them. That's not to say that 1:32:19.720 --> 1:32:22.960 the concerns of educators across the country, as the professor 1:32:23.040 --> 1:32:25.360 noted to me, are not legitimate. I mean, there are 1:32:25.400 --> 1:32:29.040 many educators with far fewer resources than a warton professor 1:32:29.400 --> 1:32:31.439 who do have to contend with the reality of how 1:32:31.479 --> 1:32:34.160 students are going to use this. He used this as 1:32:34.160 --> 1:32:35.960 a way to see what it's all about, and then 1:32:36.000 --> 1:32:38.880 as a way to say, hey, this is very powerful, 1:32:39.080 --> 1:32:43.080 it's doing quite well. It's answering in ways that legitimately 1:32:43.280 --> 1:32:46.400 might pass as a student, how can we use something 1:32:46.439 --> 1:32:49.519 like this more creatively in our in our classroom. Our 1:32:49.760 --> 1:32:52.080 job as educators is to really think about how to 1:32:52.160 --> 1:32:56.240 bring education along and be more creative and really spark imagination. 1:32:56.360 --> 1:32:59.120 And so this is the first step of this one 1:32:59.160 --> 1:33:01.960 protestor intro to do that. Did the professor give you 1:33:02.000 --> 1:33:07.040 any idea how he would actually use it in a classroom? Well, 1:33:07.080 --> 1:33:09.519 I mean he gave me an idea off of something 1:33:09.560 --> 1:33:12.320 that we talked about in the conversation. Like let's say 1:33:12.520 --> 1:33:15.600 he was teaching philosophy for example, not business, but you 1:33:15.640 --> 1:33:17.840 can swap out people. And I mentioned this in the 1:33:17.920 --> 1:33:20.120 Q and A, and and he says, you know, I 1:33:20.160 --> 1:33:23.760 want you to go back to your libraries and to 1:33:23.920 --> 1:33:27.400 your apartments and research, you know, the work we've studied 1:33:27.400 --> 1:33:31.439 on Sarta or on you know Camu and Sarta. Write 1:33:31.439 --> 1:33:34.080 me a five hundred word essay on the differences between 1:33:34.120 --> 1:33:37.240 these two. Um. You know, they might go home and 1:33:37.280 --> 1:33:40.280 decide to have chat GPT write the paper for them. 1:33:40.600 --> 1:33:42.400 But what he might do that would be even more 1:33:42.400 --> 1:33:46.400 effective is have chat GPT really engage in a conversation. 1:33:46.760 --> 1:33:50.479 That's what these chats do with students, Um and step 1:33:50.520 --> 1:33:54.360 in as the philosophers, the French philosophers and do something 1:33:54.400 --> 1:33:57.000 that might spark some more creative ideas with the students. 1:33:57.000 --> 1:33:59.840 And so he as a as a professor could start 1:34:00.080 --> 1:34:02.280 be in a position to introduce the use of the 1:34:02.360 --> 1:34:05.400 chatbot in that way. Um demiti, I got a jump 1:34:05.400 --> 1:34:07.040 in for a second, because how did it do? When 1:34:07.040 --> 1:34:09.840 it came to which I bet the whole student body 1:34:10.080 --> 1:34:12.680 universe is saying, I hope I can do math. How 1:34:12.680 --> 1:34:14.679 did it do on math? Oh? It doesn't. They don't 1:34:14.680 --> 1:34:16.600 do well on math, at least in this instance. And 1:34:16.640 --> 1:34:18.720 he said that that's something that you know, I think 1:34:18.760 --> 1:34:20.760 we see that across the universe of stories that have 1:34:20.800 --> 1:34:23.120 been done by Bloomberg and many others. What you said 1:34:23.200 --> 1:34:25.040 is true. Everybody's kind of been a frenzy about this 1:34:25.160 --> 1:34:27.880 right now. Mathematics it did not do well, and I 1:34:27.880 --> 1:34:30.200 mean Professor Turvich was very funny about that. I mean, 1:34:30.200 --> 1:34:33.200 it's like your your computer, dude, like you can't actually 1:34:33.320 --> 1:34:36.280 like put some numbers together. Um. And in fact, numbers 1:34:36.360 --> 1:34:38.320 is where it was really tripped up. And it was 1:34:38.400 --> 1:34:41.040 more in language that it was far more impressive, and 1:34:41.240 --> 1:34:45.120 in logic and application of logic um. So it was 1:34:45.160 --> 1:34:48.800 all around super surprising to him. I think that he, 1:34:48.960 --> 1:34:51.320 as well as many others who are engaging with chat 1:34:51.360 --> 1:34:53.040 cheep two right now, it's a little tough to do. 1:34:53.120 --> 1:34:55.960 You go to the website, it's so popular, there are 1:34:56.000 --> 1:34:58.120 so many users that generally what you're going to get 1:34:58.160 --> 1:35:00.960 as a message that says chat qep he is expacity 1:35:01.040 --> 1:35:03.439 right now. So you can't try it because the world 1:35:03.520 --> 1:35:07.040 is trying cat gbt um. But he did it. He 1:35:07.080 --> 1:35:09.360 did it quickly. He wrote a paper and he said, 1:35:09.400 --> 1:35:12.240 I was really impressed, and I think I'm gonna try 1:35:12.280 --> 1:35:14.840 to think more creatively about how to use this. And 1:35:14.880 --> 1:35:17.280 I think that in that context, I mean, I want 1:35:17.320 --> 1:35:19.080 to be clear, we came at it with a very 1:35:19.120 --> 1:35:23.679 specific sort of context of B schools, you know, teaching business, teaching, 1:35:23.760 --> 1:35:26.680 taste management and so on. You know, there's probably going 1:35:26.760 --> 1:35:29.120 to be space for something like this. It will emerge 1:35:29.120 --> 1:35:31.200 in time. I don't think that we have the answers 1:35:31.320 --> 1:35:33.880 right now in terms of like this semester, how is 1:35:33.960 --> 1:35:36.720 CHATCHYTI going to, um, you know, a stand in for 1:35:36.840 --> 1:35:39.400 something in the curriculum. We're not. We're not there yet. 1:35:39.439 --> 1:35:46.880 But take that take that computer not a yeah, but yeah, 1:35:47.000 --> 1:35:49.559 I mean everything's on a curve in business school anyway. Yeah, 1:35:49.600 --> 1:35:52.080 so you know, it kind of doesn't matter. So so 1:35:52.080 --> 1:35:55.120 one of the things that stuck out to me Dmitrou 1:35:55.320 --> 1:36:00.000 was him saying, we are not running out of work, um, 1:36:00.120 --> 1:36:03.160 but what is shifting is the efficiency frontier. And I'm curious, 1:36:03.200 --> 1:36:05.559 you know, this would be an optimistic take, I think 1:36:05.600 --> 1:36:08.040 on chat GPT, but but what what is it? What 1:36:08.200 --> 1:36:12.280 is the potential here in the classroom. I mean again, 1:36:12.320 --> 1:36:14.720 I think that there are ways he thinks to use 1:36:14.760 --> 1:36:16.960 it and engage it to be added and I hate 1:36:16.960 --> 1:36:21.000 to use the word additive, but to engage brains and 1:36:21.080 --> 1:36:23.960 students in a way that that there isn't time enough 1:36:24.360 --> 1:36:27.720 in the classroom, but it's to extend the learning that's 1:36:27.720 --> 1:36:30.320 already happening. You're going to the Internet, you're looking for 1:36:30.439 --> 1:36:33.680 videos of things as it is you're looking up resources. 1:36:33.920 --> 1:36:36.280 So this might take it to another level in which 1:36:36.400 --> 1:36:39.680 is not as passive, though it might be more active. Um. 1:36:40.120 --> 1:36:42.879 He does have a far more or let's say, positive 1:36:42.880 --> 1:36:45.759 and optimistic view, which is that these things should be 1:36:46.000 --> 1:36:49.400 seen as tools that are very innovative and technologically advanced, 1:36:49.800 --> 1:36:52.600 that that we should not really be so fearful of 1:36:52.640 --> 1:36:55.960 them as replacements for actual people in many settings. I mean, 1:36:56.439 --> 1:36:58.599 you wrote this Q and A, not chat GPT, are 1:36:58.600 --> 1:37:02.360 you sure? Though I'm not sure. Did a robot do this? Interview? 1:37:03.560 --> 1:37:06.320 The Big Secret? Um? It's so funny. I mean, I 1:37:06.360 --> 1:37:08.880 was just reading an interview that a former colleague of 1:37:08.920 --> 1:37:10.840 mine from a time I worked at a company called 1:37:10.880 --> 1:37:13.080 The American Lawyer. He did a Q and A with 1:37:13.160 --> 1:37:16.320 chat GPT and just posted it on LinkedIn, and he's 1:37:16.360 --> 1:37:19.800 asking chat GPT like, if Nike wants to sponsor you, 1:37:19.840 --> 1:37:22.439 will you will you accept the sponsorship? And chat GPT 1:37:22.680 --> 1:37:25.680 is like, I'm an open flash form. I Am not 1:37:25.880 --> 1:37:27.840 somebody who's going to give in to open spot to 1:37:27.960 --> 1:37:31.600 sponsorship by private interest. It's a very interesting, it's a 1:37:31.680 --> 1:37:34.600 very interesting back and forth, and it's actually like a 1:37:34.760 --> 1:37:39.920 real engaged, like intelligent conversation that this individual has. Everyone 1:37:39.960 --> 1:37:42.080 sells for a price. Stroll right, me too. You know 1:37:42.160 --> 1:37:46.680 it's not I can't wait for Google's bar, which you 1:37:46.680 --> 1:37:48.840 know is also in the headlines now to have a 1:37:48.840 --> 1:37:54.679 competition or a conversation that's ai comptimistic name. We gotta run, 1:37:54.760 --> 1:37:58.320 Joel Dmitro, thank you. This is the bloom Bird Business 1:37:58.320 --> 1:38:02.360 Week podcast. Avail at Apple, Spotify, and anywhere else you 1:38:02.479 --> 1:38:06.120 get your podcasts. Listen live each weekday starting a two 1:38:06.160 --> 1:38:09.559 pm Eastern on Bloomberg dot com, the I Heart Radio app, 1:38:09.680 --> 1:38:12.400 tune In, and the Bloomberg Business app. You can also 1:38:12.479 --> 1:38:16.240 watch us live on Bloomberg Quicktake every weekday on YouTube 1:38:16.360 --> 1:38:18.120 and always on the Bloomberg terminal.