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Speaker 1: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 1: We had first one massive story this week, as President
Speaker 1: Donald Trump imposed the steepest American tariffs in a century.
Speaker 1: That caused another massive story, a global stock sell off.
Speaker 1: I laugh, but it wasn't funny, and it included the
Speaker 1: biggest single day plunge for Apple since March sixteenth, twenty twenty.
Speaker 1: At the beginning, you might recall the COVID shutdown. Ahead,
Speaker 1: we get into how Apple found itself squarely in the
Speaker 1: crosshairs of Trump's new tariffs.
Speaker 3: Also, speaking of tariffs, the drug industry want to reprieve,
Speaker 3: though it could be short lived. We'll talk about that
Speaker 3: and the job cuts of the Department of Health and
Speaker 3: Human Services and how that could affect us.
Speaker 1: All and later in our next hour, why Tesla's best
Speaker 1: days may be behind it. All of that to come,
Speaker 1: We start with the top story this week. President Donald Trump,
Speaker 1: as telegraphed, imposed tariffs on US trading partners worldwide, his
Speaker 1: biggest assault yet on a global economic system he has
Speaker 1: long bemoaned as unfair.
Speaker 3: President Trump has imposed steep tariffs on all exporters to
Speaker 3: the US, with rates ranging from ten percent to over
Speaker 3: fifty percent, to counter large trade imbalances with the US.
Speaker 3: For more on what this may mean for American businesses,
Speaker 3: their access to global markets and ability to make decisions,
Speaker 3: we turned to Rebecca Humkuss. She's faculty at Duke Corporate Education,
Speaker 3: a lecturer at the London Business School, and former fellow
Speaker 3: for the White House's President's Council of Economic Advisors under
Speaker 3: George W. Bush.
Speaker 4: CEOs have been rethinking their global supply chain since twenty twenty,
Speaker 4: which I think we forget in some of this conversation.
Speaker 4: If the MATH worked to bring supply chains back to
Speaker 4: the US, we won't have already done it. All of
Speaker 4: those mass and models were ran in twenty twenty one
Speaker 4: and twenty twenty two with that global supply chain shock,
Speaker 4: so a lot of factors were already in place and
Speaker 4: decisions have been made. Honestly, at this point, the news
Speaker 4: was not great. We like to say markets hate bad news,
Speaker 4: but they hate uncertainty more. We got a little bit
Speaker 4: of both. We got much worse news than we expected
Speaker 4: and a lot of uncertainty. We left the door open
Speaker 4: enough that maybe these will change. So most CEOs are still,
Speaker 4: unfortunately waiting to learn more.
Speaker 3: I think one challenge that executives have, and look, I'm
Speaker 3: not an executive making decisions about a supply chain, but
Speaker 3: a lot of these companies spent many years moving out
Speaker 3: of China and moving into other countries like Vietnam during
Speaker 3: the first Trump administration. Now to be hit with blanket
Speaker 3: tariffs in every single country that is that they operate in,
Speaker 3: that they manufacture products in. What's an executive to do
Speaker 3: in a situation such as this is their only choice
Speaker 3: to either raise prices or move to the United States, which,
Speaker 3: as we know, for retail companies, could be easier said
Speaker 3: than done.
Speaker 4: I think it's for all companies that it's very difficult
Speaker 4: to move back. I can't emphasize enough even if you
Speaker 4: made the decision that you wanted to move any sort
Speaker 4: of manufacturing back to the US. This is a multi year, multimillion,
Speaker 4: sometimes into the billions dollar decision. No board is making
Speaker 4: that kind of capital decision in the current environment of
Speaker 4: chaos that we have. You know, chaos has a cost,
Speaker 4: and that cost is manifesting itself in very slow decision making.
Speaker 5: Now.
Speaker 4: CEOs have lots of options, and most of them on
Speaker 4: this since last summer into last autumn. They are looking
Speaker 4: to kind of make a more robust supply chain. They're
Speaker 4: looking for changing some inputs, They're looking to do some
Speaker 4: different things in warehousing. You certainly have more options. This
Speaker 4: is not a binary choice, but any hope this will
Speaker 4: be that second boom back of American manufacturing unfortunately doesn't
Speaker 4: really understand the math and some of the complications behind
Speaker 4: what doing that would take.
Speaker 1: But is it fair to say, I mean, the United
Speaker 1: States since World War Two has really benefited right by
Speaker 1: being helping in the rebuild, right, helping with so many
Speaker 1: different policies to get Europe back on its feet, and
Speaker 1: as a result, had a lot of leeway right in
Speaker 1: terms of its role in the world and what it
Speaker 1: got to do. But it also meant, you know, a
Speaker 1: lot of opportunities too for its global companies. So I
Speaker 1: do wonder that the more closed off we get, the
Speaker 1: pushback pullback on globalization. I mean, are we wrong to
Speaker 1: even say that there's a pullback on globalization because it
Speaker 1: certainly feels that way.
Speaker 4: Every indication of what we've been talking about the last
Speaker 4: couple of months had been a push back from globalization.
Speaker 4: That is, though a push from the administration. You are
Speaker 4: not getting that same push from publicly traded as well
Speaker 4: as private organizations. We have global supply chains, global customer bases,
Speaker 4: and global talent basis. So this push is an administration push.
Speaker 4: It's not coming from the leaders of our top companies.
Speaker 4: They are some scrambling, some a little bit ahead, trying
Speaker 4: to figure out what to do about this.
Speaker 3: You know it It makes me wonder about if we
Speaker 3: could see a change in policy from the administration. And look,
Speaker 3: nobody can read the mind of the as president. We
Speaker 3: know how he feels about tariffs. He was open about
Speaker 3: that in his first term and also during this campaign.
Speaker 3: But given what we're seeing today, do you foresee any
Speaker 3: change in policy from this White House? Or are these
Speaker 3: levies here for as long as his administration goes?
Speaker 4: You know, that's a really good question, and certainly myself
Speaker 4: and my colleagues don't try to make a business how
Speaker 4: to forecasting what this administration is going to do next.
Speaker 4: I try to focus on how executives can create value
Speaker 4: from it.
Speaker 1: It did really take away.
Speaker 4: That they were still leaving the table open for negotiation.
Speaker 4: So I think that's unfortunately what CEOs are sitting on
Speaker 4: this morning man, instead of getting news that they could
Speaker 4: actually start planning and forecasting around. It seems like maybe
Speaker 4: these will change as well, and we have the previous
Speaker 4: two months of tariff's coming on, going off, and deadlines changing.
Speaker 4: So even though we had news, I don't think it's
Speaker 4: enough that we can actually make decisions on. So I
Speaker 4: do think there is some room here. What we don't
Speaker 4: know if this was a come out strong to be
Speaker 4: a power play and a lot's going to be pulled back,
Speaker 4: or if they're going to stick with this at least
Speaker 4: midterm elections. Most executives are assuming this is going to
Speaker 4: be at least another eighteen months through the midterms. Of
Speaker 4: this amount of volatility, and many are holding off the
Speaker 4: big decisions and tell then.
Speaker 1: Are a lot of executives you think at this point
Speaker 1: pulling in their teams and say, folks, let's get ready
Speaker 1: for recession or something along those lines.
Speaker 4: The R board is certainly coming up a lot more
Speaker 4: in the past two months than I had beforehand. But
Speaker 4: CEOs I think have built a lot more robustness in
Speaker 4: and certainly the ones that I am talking to are
Speaker 4: really looking to make a change in cross strategy to
Speaker 4: do other ways around it. For many organizations. I can't
Speaker 4: emphasize this enough. This changes the how, not the what.
Speaker 4: What they're trying to do to create value remains the same.
Speaker 4: Is this is tactically they need to change some things,
Speaker 4: and pricing will come and play. There's much bigger macroeconomic implications.
Speaker 4: We know the inflationary effects of this, but I don't
Speaker 4: see a big change in many strategies.
Speaker 1: This is a change in the how. All right, great stuff,
Speaker 1: look forward to next time. Catching up with you. Doctor
Speaker 1: Rebecca pumcasts on the faculty at DO Corporate Education. As
Speaker 1: we said, also a former fellow for the White House's
Speaker 1: President's Council of Economic Advisor. So much more too, also
Speaker 1: of the book Survive, Reset, Thrive.
Speaker 2: You're listening to the Bloomberg Business Weekdaily podcast. Catch us
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Speaker 1: All right, so when we think of global supply chains,
Speaker 1: we have to talk about Apple and its massive and
Speaker 1: efficient one. President Trump's new tariffs heavily impact apple supply
Speaker 1: chain in China and other countries where it manufactures products.
Speaker 3: This even after a year's long effort by Apple to
Speaker 3: insulate itself from trade wars and supply chain disruptions, as
Speaker 3: the global nature of the tariff rollout has undercut efforts
Speaker 3: to shift production away from other countries, particularly in Asia
Speaker 3: and so on Thursday, Apple shares posted its single biggest
Speaker 3: day plunge since March sixteenth, twenty twenty.
Speaker 1: For more, we spoke to Bloomberg News Managing editor for
Speaker 1: Global Consumer Tech and our Apple guru, Mark Germitt.
Speaker 6: Apple has the pricing power, the consumer insols, the economic
Speaker 6: influence they have, the supplier relationships. They have a lot
Speaker 6: of leverage over their main manufacturing partners. Where I don't
Speaker 6: think Apple's going to need to eat the majority of
Speaker 6: the cost here. I think they're gonna really split it
Speaker 6: between themselves just a little bit they're gonna split it
Speaker 6: with the consumer, and they're gonna make their suppliers pace
Speaker 6: out of it. Right. Don't forget it's fox Con and
Speaker 6: some of their other final assembly suppliers that are exporting
Speaker 6: these things into the US, and they have so much margin.
Speaker 6: They have a little wiggle room to play with from
Speaker 6: the get go. Anyways, Now, the big picture here, though,
Speaker 6: is that Apple has spent years diversifying its supply chain
Speaker 6: in an effort to try to avoid situations like this.
Speaker 6: I'm not saying it backfired, but it didn't work out
Speaker 6: as they probably would have hoped. The tariffs against the
Speaker 6: people had expected for years. They're not really China centric, right,
Speaker 6: China's just one piece of the pie.
Speaker 7: Here.
Speaker 6: You have major terrorists I'm sure you've been talking about
Speaker 6: all day in India. You have them in Vietnam, you
Speaker 6: have them in Malaysia, you have them in Thailand, Taiwan.
Speaker 6: All the players here in the Apple supply chain are impacted.
Speaker 3: So let's think about this from the perspective of prices
Speaker 3: that hit consumers. Mark If you say it's going to
Speaker 3: sort of be buffeted by by everything, do you expect
Speaker 3: Apple to raise prices as a result of these tariffs.
Speaker 6: I do think that Apple will raise prices, I really do.
Speaker 6: I do think ultimately all of the consumer hardware players
Speaker 6: are going to need to raise prices to at some point.
Speaker 6: The question is when they're going to do it and
Speaker 6: how much they're going to do it, not if they're
Speaker 6: going to do.
Speaker 3: It, Okay, when typically do they raise prices? If you're
Speaker 3: talking about the iPhone, would prices like, do they ever
Speaker 3: raise prices mid cycle for something? Has that ever? I
Speaker 3: don't want to say has that ever happened? But typically yes,
Speaker 3: it has happened, It has happened, Yes, it has happened.
Speaker 8: How does that?
Speaker 3: How did that happen last time?
Speaker 6: Hey? It's the thing that I have to step back
Speaker 6: and be very clear about. This has not happened in
Speaker 6: the US, Okay, right. This has happened in Japan, This
Speaker 6: happened with Brexit in the UK, MP been with Australia,
Speaker 6: this happened with other countries in the European Union. So
Speaker 6: there is precedent for out of cycle price changes, just
Speaker 6: not in the US.
Speaker 3: Does it mean China's business? Apple's business in China is
Speaker 3: even more threatened right now?
Speaker 9: Does it mean.
Speaker 6: Apple's business in China is even more threatened. I actually
Speaker 6: think it means a little bit of the opposite. I
Speaker 6: think it means that Apple's business in China is even
Speaker 6: more important to them because these things are being built
Speaker 6: in China and they're being exported. Now they're not having
Speaker 6: to be exported. They're being built in China and sold
Speaker 6: in China. So really, you want to sell even more
Speaker 6: stuff in China right now to make up for the
Speaker 6: impact externally.
Speaker 1: I am curious what you make of you know, if
Speaker 1: there's anything more CEOs in this case, Tim Cook and
Speaker 1: Apple can do. I mean he showed up the inauguration.
Speaker 1: I believe personally donated to the inauguration. Earlier this year,
Speaker 1: we talked about investing what like half a trillion dollars
Speaker 1: in the US over the next four years. We talked
Speaker 1: about that because I think there was already money committed,
Speaker 1: I mean, not enough. What is it that the president
Speaker 1: is maybe looking for these from these companies or it
Speaker 1: has nothing to do with them, I mean, does he
Speaker 1: care about the health of a company like Apple.
Speaker 6: It's mind boggling. So putting in these tariffs they start
Speaker 6: on the ninth right, these these big tariff increases start
Speaker 6: on the ninth. Okay, that's one thing to impact here,
Speaker 6: but it takes a lot of time to make these
Speaker 6: supply chain adjustments. The whole point of these tariffs is
Speaker 6: to get people to build things in the US, but
Speaker 6: there's not enough time to have those movements be made
Speaker 6: in the supply chain.
Speaker 1: Does go ahead, Carol, No, it's just no, no, no, it's
Speaker 1: just it's just kind of fascinating. Like I said, you know,
Speaker 1: to I just think of the inauguration and all those
Speaker 1: tech CEOs there and very visible, very prominent, and then
Speaker 1: you know, just wonder about the relationships the conversations do
Speaker 1: we assume do you hear that that Apple is continuing
Speaker 1: to have an ongoing conversation with the administration at.
Speaker 6: This point where I'm sure that Apple is trying to
Speaker 6: get exemptions here, right, I'm sure they're having these ongoing conversations.
Speaker 6: But there's a point where you're just going to have
Speaker 6: to raise prices and not in order to not eat
Speaker 6: into your margins and screw up your quarter, right. I mean,
Speaker 6: these are very important times for Apple right now, and
Speaker 6: so I think definitely there are going to be price adjustments.
Speaker 3: What about the cash cushion that that Apple has. If
Speaker 3: they view this as temporary, could they just eat into
Speaker 3: the cash cushion that they have.
Speaker 6: I don't think they should eat into it. Yes they
Speaker 6: have high margins, Yes they have a cash cushion, right,
Speaker 6: but they also have a business to run, and they
Speaker 6: don't want to adjust their business. So I think that
Speaker 6: you're going to have to see price increases. It is
Speaker 6: amazing just to take a step back here, that Apple
Speaker 6: has not increased prices over the last several years in
Speaker 6: the US, given the inflationary pressures, given everything else going on. Right,
Speaker 6: So really we're in a territory in a time where
Speaker 6: Apple probably should be raising prices anyways, right from a
Speaker 6: business standpoint, So this gives them a perfect excuse to
Speaker 6: do it.
Speaker 1: Well, I'm going to say, is my husband's like, I
Speaker 1: think I'm going to hold off and buying another phone.
Speaker 3: What does he have he's got?
Speaker 1: I think is a few you back?
Speaker 3: Because just a reminder, Carol Masters, the first Apple Watch,
Speaker 3: I actually stop using it.
Speaker 1: He keeps telling me you need to replace it.
Speaker 3: Yeah, I don't know. I can't believe it still works.
Speaker 10: It doesn't work that well.
Speaker 1: Mark Garvin, thank you so much, so glad you were
Speaker 1: you know last night? Top of mine wanted to talk
Speaker 1: to you, so so appreciated.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1: Among the stocks that sold off following President trump sweeping
Speaker 1: tariffs were those in the consumer discretionary space whose supply
Speaker 1: chains are likely outside the United States.
Speaker 3: That included Wayfair, which dropped twenty five percent on the
Speaker 3: tariff announcements. For more on how the news may affect
Speaker 3: the specialty retailer Wayfair, which calls itself the destination for
Speaker 3: all Things Home, we caught up with Wayfair CFO Kate Gulliver,
Speaker 3: who joined us from Boston.
Speaker 11: I do think this is where Wayfair is different. We
Speaker 11: operate ultimately a marketplace model, and so this means that
Speaker 11: we work with twenty thousand suppliers across the US and
Speaker 11: around the globe, and we have an ability to pivot
Speaker 11: across these suppliers, you know, as demand and needs change
Speaker 11: and Our opportunity here is that you know, we can
Speaker 11: show the customer what the best product is for them
Speaker 11: based on price, quality, et cetera. And that can really
Speaker 11: dynamically move, you know, as potentially wholesales change and as
Speaker 11: terrors change.
Speaker 1: So can I just ask you then, Kate, So since
Speaker 1: you have a global supply chain different markets, does that
Speaker 1: mean some of the markets that you operate in or
Speaker 1: you get your goods from that they did not have
Speaker 1: tariffs imposed on them.
Speaker 11: Well, we've seen virtually, you know, every country x US
Speaker 11: have some level of terrorsts. We work though with domestic
Speaker 11: suppliers as well, so we have a strong domestic supplier base,
Speaker 11: and then we work with suppliers across the globe. And
Speaker 11: I think what's a little bit different though versus somebody
Speaker 11: who has, say a product that is built to spec
Speaker 11: in a specific geography right where they have designed the product,
Speaker 11: they have a manufacturer that they work within that geography,
Speaker 11: they have a contract.
Speaker 12: For how much they're going to procure.
Speaker 11: Is we're not buying the inventory and we don't have
Speaker 11: products built a spec. We also sell a lot of
Speaker 11: very similar, highly substitutable products. So for example, if you're
Speaker 11: looking for a barstool. We may have barstools from several
Speaker 11: different geographies, and our suppliers are going to be focused
Speaker 11: on how do they get that top slot in this
Speaker 11: sort of home page as you get into it, so
Speaker 11: that they get the most conversion on that product. And
Speaker 11: part of that comes down to price. And so we
Speaker 11: create a naturally competitive dynamic through the marketplace and we're
Speaker 11: able to sort of lean into where prices are most
Speaker 11: efficient or where lean out of maybe where they're less efficient.
Speaker 7: Kay.
Speaker 3: Products that are bought on Wayfair right now, what percentage
Speaker 3: of them come from inside of the US or versus
Speaker 3: outside of the US.
Speaker 11: Yeah, we actually haven't given a breakdown by geography because
Speaker 11: of it's so dynamic, right, So it moves around quite
Speaker 11: a bit based on where you are in the short order.
Speaker 11: So what happens is as the wholesales changed, our take
Speaker 11: rates stays the same. As the wholesales change, your product
Speaker 11: may move up or down because it's perceived as more
Speaker 11: or less attractive to the consumer. And within that then
Speaker 11: you might see changes in what supplier is getting more volume,
Speaker 11: and then therefore what geography is getting more volume.
Speaker 12: So it moves around quite a bit.
Speaker 3: I'm wondering about comments that the President has made in
Speaker 3: the past. He's I believe, and I don't have the
Speaker 3: comments in front of me, but he said something along
Speaker 3: the lines of what happened to the American furniture industry.
Speaker 3: We used to make so much great furniture, and I
Speaker 3: believe he called out in North Carolina as a state
Speaker 3: where we made furniture. Is it realistic in your business
Speaker 3: to buy more products that are made in the US.
Speaker 3: Is it possible we see a return to manufacturing furniture
Speaker 3: in the US high and furniture still is, but let's
Speaker 3: be real, not a lot of the furniture that American
Speaker 3: Americans buy is made in the US.
Speaker 12: Yeah.
Speaker 11: So we operate obviously a mass market brand right Wayfair sales,
Speaker 11: you know, for the average American consumer. We do have
Speaker 11: a high end brand called Paragold. They're sourcing, can you know,
Speaker 11: be a little bit different than Wayfair as a whole.
Speaker 11: What we're focused on is being able to source and
Speaker 11: show the best products. So if that product is more
Speaker 11: competitive in the US, then we can show that.
Speaker 12: Product to our customer.
Speaker 11: If that product is more competitive in a different geography,
Speaker 11: then we actually have the capability to get that product
Speaker 11: to the country, delivered efficiently to the customer. You've seen,
Speaker 11: you know, obviously huge improvements in logistics. We have a
Speaker 11: US you know, logistics infrastructure that allows us to do that.
Speaker 11: So you know, certainly if you saw us manufacturing return,
Speaker 11: we would be able to continue to work with you know,
Speaker 11: US suppliers there and potentially continue to expand there. But
Speaker 11: we want to focus on what delivers the best value
Speaker 11: for consumer. That is our you know, manihacal focus, and
Speaker 11: it's what allowed has allowed us to take share over
Speaker 11: the last several years. It's been a very disruptive period
Speaker 11: for the category as a whole, and we've continued to
Speaker 11: be a share gainer, and we do that by continually
Speaker 11: offering the customer the best value proposition.
Speaker 1: So on that because you have thought about the customer
Speaker 1: and putting them first so often. And I am curious, Kate,
Speaker 1: will you guys have to raise prices at all? Will
Speaker 1: any of this that's happening in terms of tariffs, Will
Speaker 1: you have to pass higher costs along to your customer?
Speaker 12: Yeah, that's great question.
Speaker 11: So the way that our pricing model works is because
Speaker 11: we're not taking the inventory the supplier of that product
Speaker 11: sets the wholesales and then we apply a take rate
Speaker 11: on top of that, right, and so if wholesales go
Speaker 11: up and the take rate stays the same, you may
Speaker 11: see differences in prices. That's where it's really our responsibility
Speaker 11: to work with that supplier and help them understand the
Speaker 11: demand impact of that, because we sell, as I said,
Speaker 11: you know many barstools that might look similar. If one
Speaker 11: supplier raises price, and one supplier keeps price competitive, right,
Speaker 11: keeps wholesale competitive, they will get more demand. More demand
Speaker 11: will crue to that supplier, which may be better for
Speaker 11: that supplier overall.
Speaker 12: So it's really important that our team.
Speaker 11: Work very closely with the suppliers to help them see
Speaker 11: this data, be very transparent, understand otherwise they grow volume
Speaker 11: with us. You know, we recently launched our Wayfair Verified
Speaker 11: program that's designed to make the shopping experience easier for
Speaker 11: the consumer.
Speaker 12: It points out to her products that we.
Speaker 11: Have vetted that we know to be high quality and
Speaker 11: really meet the bar. That's a great way for you
Speaker 11: to consolidate demand in a category. If you're a supplier
Speaker 11: during a period like this of disruption, and so we
Speaker 11: think that there will be suppliers that you know, win
Speaker 11: out in the marketplace in this model.
Speaker 3: How are you dealing with these new tariffs? Like, what
Speaker 3: are the conversations you're having with suppliers, what are the
Speaker 3: changes you're making to your business?
Speaker 11: Yeah, we're really trying to help the suppliers understand here's
Speaker 11: how this might you know, impact your demand.
Speaker 12: Right, so here's yours how to.
Speaker 11: Think about, you know what wholesale price increases could result
Speaker 11: in retail prices. Here's how to think about other ways
Speaker 11: that you can stimulate demand in this environment. And here's
Speaker 11: how you're positioned relative to other folks you know that
Speaker 11: are selling similar products or quite transparent about that data.
Speaker 11: You know, we've operated the business for over twenty years.
Speaker 11: It's a tech enabled business, and many of these suppliers
Speaker 11: we've worked with for quite a long time, so we
Speaker 11: have very deep relationships with them. And this is a
Speaker 11: moment where that advantages us because we're actually able to
Speaker 11: call them up, get on the phone with them and
Speaker 11: help them think this through and help them think what
Speaker 11: tools they want to use. Right, you know, are you
Speaker 11: going to use price? Are you going to use promotions?
Speaker 11: Are you going to use you know, verified, are you
Speaker 11: going to use you know our supply chain, you know,
Speaker 11: our US logistics network to help consolidate demand. But how
Speaker 11: can you make sure that you're getting demand even in
Speaker 11: this environment?
Speaker 1: Are you concerned? I know earnings are about I think
Speaker 1: a month away. I think you guys report on May first,
Speaker 1: if I have my okay before the market open. In
Speaker 1: terms of P and L profit loss, like, is this
Speaker 1: going to is any of this going to impact the
Speaker 1: balance sheet?
Speaker 8: Yeah?
Speaker 11: You know, we've actually been taking a lot of steps
Speaker 11: over the last several years to continue to position us
Speaker 11: well during periods of uncertainty, and the focus really has
Speaker 11: been one on gaining market share, which I think we've
Speaker 11: done quite effectively. We've gained share for the majority of
Speaker 11: our twenty year history, but during the period of disruption
Speaker 11: post COVID, we've gained share every quarter since Q four
Speaker 11: twenty two, even in a category that's been down.
Speaker 12: We've taken out actually.
Speaker 11: Nearly two billion of cost, you know, so pretty significant
Speaker 11: restructurings over the last several years, and we've improved our
Speaker 11: balance sheet significantly to the extent that we feel really
Speaker 11: good about the position that it's in now. And so
Speaker 11: I think actually much of the work that we've done
Speaker 11: over the last few years.
Speaker 12: This has been very challenging work.
Speaker 11: It's obviously tough on teams and you go through this
Speaker 11: level of restructuring, but I think it does position us
Speaker 11: well to navigate a period of uncertainty, both from a
Speaker 11: cost perspective, from a share game perspective, a cost perspective,
Speaker 11: and from the balance sheet perspective.
Speaker 1: You know, I'm so glad we had an opportunity to
Speaker 1: talk with you, Kate, because I am also curious heading
Speaker 1: into this what have you been seeing with consumers in
Speaker 1: terms of maybe pulling back a little bit, are being
Speaker 1: a little bit more discretionary in terms of their spending,
Speaker 1: Because we certainly have talked about consumer sentiment numbers, even
Speaker 1: spending numbers in terms of some pullback, What have you
Speaker 1: seen specifically, Yeah.
Speaker 11: Obviously I can't speak to the recent quarter. What we
Speaker 11: did share sort of on our last earnings call was,
Speaker 11: you know, the consumer sentiment has been challenged over the
Speaker 11: sort of near term period, and where we saw consumers
Speaker 11: leaning in was where they saw, you know, great opportunity
Speaker 11: for deals. So promotions continue to be a way that
Speaker 11: consumers want to lean in, and we use that really
Speaker 11: as a marketing tool to bring them to the site.
Speaker 11: Actually on the on promotion, they end up you know,
Speaker 11: mostly buying products that are not on promotion. Only about
Speaker 11: thirty percent of the revenue during a promotional period is
Speaker 11: on discounted items. So what we're constantly looking for is
Speaker 11: when the consumer sort of feels like the categories out
Speaker 11: of favor, you know, pulling back, how do we get
Speaker 11: her attention and how do we get her excited about
Speaker 11: coming to the site, hendy, And how.
Speaker 3: Do you get her to pay more if demand is
Speaker 3: already low, if demand is pulling back during a time
Speaker 3: of perhaps strain, big ticket you know, home purchases are
Speaker 3: big ticket purchases, and when spending falls, discretionary items get
Speaker 3: hit harder.
Speaker 11: Yeah, that's you know, And again, as we said, the
Speaker 11: category has actually been compressed for several years now. So
Speaker 11: the category itself, by our estimates is actually you know,
Speaker 11: at twenty nineteen levels or below on a revenue basis,
Speaker 11: So obviously on a unit's basis is even lower. Right,
Speaker 11: So the category has taken compression every year since twenty
Speaker 11: twenty one. So I think you're already operating from a
Speaker 11: category that's you know, been quite compressive as consumers have
Speaker 11: shifted dollars away. Our focus right now is how do
Speaker 11: we get that product in front of her that's exciting
Speaker 11: and appealing to her. You know, Over time, as the
Speaker 11: housing sector improves, that obviously improves the category quite a
Speaker 11: bit because the category has been compressed because the housing
Speaker 11: sector's you know, been held up. That's a key factor
Speaker 11: in sort of driving that compression.
Speaker 1: Ah, it's only two now, four months in, Kate, three
Speaker 1: months in, it's only three months. I can I ask
Speaker 1: you do you feel like if visibility to the end
Speaker 1: of the year are not yet?
Speaker 11: You know, really most of our playbook remains the same, right,
Speaker 11: and so I think that's actually what's important to remember
Speaker 11: in this position is we are focused on the long term.
Speaker 12: We know that this is a period of disruption.
Speaker 11: We believe that retailers that focus on delivering for their customer,
Speaker 11: managing costs quite tightly, having a strong balance sheet will
Speaker 11: navigate through this effectively. And so our focus is on
Speaker 11: delivering that value for a consumer however best to do
Speaker 11: that and maintaining very tight.
Speaker 12: And efficient cost controls.
Speaker 11: And that, I think, you know, is what we've been
Speaker 11: doing over the last several years and says this up
Speaker 11: quite nicely going forward.
Speaker 1: Well, we so appreciate time. We know it's been a
Speaker 1: crazy day for you, a crazy year already for you,
Speaker 1: as it has for all of us. So to get
Speaker 1: some time with you. Kp Well, Kate Olliver, she's wayfair.
Speaker 1: Chief financial Officer, joining us on this Thursday from Boston.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Applecarplay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Although pharmaceuticals were spared from sweeping tariffs announced this past
Speaker 1: week by President Trump, there's still significant uncertainty on how
Speaker 1: future tarifts for the industry might be implemented.
Speaker 3: On top of that, the Department of Health and Human
Speaker 3: Services began dismissing workers, including senior leaders who oversaw drug reviews,
Speaker 3: tobacco products, and scientific research, carrying out Secretary Robert F.
Speaker 3: Kennedy Junior's goal to shrink the agency.
Speaker 1: That followed the resignation of top FDA regulator Peter Marx,
Speaker 1: which caused vaccine and biotech stocks to plunge, casting deep
Speaker 1: uncertainty about the future of vaccines and cutting edge gene therapies.
Speaker 3: For more, we caught up with two members of our
Speaker 3: healthcare team, Bloomberg Intelligence Senior pharmaceutical analyst Sam Fizzelli and
Speaker 3: Bloomberg News health reporter Madison Mueller. We should note we
Speaker 3: spoke to them before Trump's big tariff announcement on Wednesday.
Speaker 13: These changes are huge and sweeping, and I think we're
Speaker 13: still grappling with the impacts and who's affected and how
Speaker 13: this is going to affect the industry is and the
Speaker 13: industry is grappling with that right now too. I mean
Speaker 13: we are still like information is trickling in still as
Speaker 13: we're trying to figure out which divisions are being cut,
Speaker 13: who's being laid off, exactly what it is being impacted,
Speaker 13: and so that's something that's like information is still actively
Speaker 13: coming in.
Speaker 3: What's the relationship, Madison, with the government public health people
Speaker 3: who work in the government and then the private sector
Speaker 3: and the development of drugs that ultimately get put into
Speaker 3: the pipeline and approved years later. What do we know
Speaker 3: about that relationship and how one affects the other.
Speaker 13: I mean, they're critical, they work together in research, in
Speaker 13: drug approves, drug development, like the government is so important in.
Speaker 6: All of that.
Speaker 13: Obviously, the FDA, the US Food and Drug Administration, is
Speaker 13: viewed as sort of the gold standard regulatory agency for
Speaker 13: approving medications in the world, and and a lot of
Speaker 13: other countries look to the FDA.
Speaker 1: The FDA is usually.
Speaker 13: The first to approve drugs. Americans are typically the first
Speaker 13: to get access to new innovative medications. It happens more
Speaker 13: quickly here, and so I think, you know, other countries,
Speaker 13: other regulators are also looking at what's happening in the FDA,
Speaker 13: you know, in the US and at the FDA and
Speaker 13: thinking how does this impact US as well? Companies. We
Speaker 13: have companies that are you know, have padu FA dates
Speaker 13: that are expecting drug approvals and that's that is a
Speaker 13: sort of an expected drug approval window. And Sam could
Speaker 13: probably speak to this more, but we we sort of
Speaker 13: use that to to gauge when drug approvals are going
Speaker 13: to happen. We'll see, we'll see what happens with those.
Speaker 13: It's kind of all up in the area.
Speaker 7: Now.
Speaker 1: It's just this stuff that we just take for granted
Speaker 1: right that it's just going to work, because it's just
Speaker 1: the world that we've lived in, grown up in and
Speaker 1: seen for multiple generations. Sam, I thought about when we
Speaker 1: were going to have this conversation with the two of you.
Speaker 1: How many times throughout COVID we reached out to you
Speaker 1: and I would listen to you early in the morning,
Speaker 1: you know, with either our surveillance team or other teams.
Speaker 1: But like, how are you thinking about what you're seeing
Speaker 1: happen in government and what it might mean for us
Speaker 1: in terms of healthcare in the United States?
Speaker 7: Oh, how long do you have?
Speaker 3: We got a little bit of time, we can hang.
Speaker 1: But I am thinking, like, right, these things that we
Speaker 1: take for granted.
Speaker 7: HHS, the Health and Human Services, which is run by
Speaker 7: RFK Junior. It runs quite a lot of these important institutions,
Speaker 7: or at least decides and a budget, et cetera. So
Speaker 7: the CMS centers for Medica services, so that includes Medicaid, Medicare,
Speaker 7: and medicine steppy in any time you fancy, right y, Yeah,
Speaker 7: You've got the FDA, which we've just been talking about,
Speaker 7: and you've also got the CDC, et cetera. So pretty
Speaker 7: much the health of the nation is in the hands
Speaker 7: of this institution and they have to decide whether they
Speaker 7: want to continue to support vaccinations and be, for example,
Speaker 7: very positive about saying you got to go and get
Speaker 7: your vaccines and not say but it's a personal choice
Speaker 7: because vaccines don't save lives. I've said that this morning also,
Speaker 7: vaccinations saved lives. You've got to get it in the arms.
Speaker 7: If only eighty percent of people take you, do you
Speaker 7: remember her immunity and yeah, yeah, totally for measles that's critical,
Speaker 7: which is why you see these pockets.
Speaker 10: Sam.
Speaker 3: You spend here visiting us in New York, which we love.
Speaker 3: You're usually in London, you spend a lot of time
Speaker 3: in France. You have this global view, As Madison said,
Speaker 3: the FDA is the gold standard for approvals. Does the
Speaker 3: world have to look somewhere else? Does it have to
Speaker 3: look to the NHS? Does it have to look to
Speaker 3: another regulatory body? Now I think I'll come back to.
Speaker 7: You with the word uncertainty.
Speaker 10: I don't know.
Speaker 7: I don't think so.
Speaker 1: And is there an institution out there that is akin.
Speaker 7: To the European Lisson's Agency the MHRA in the UK
Speaker 7: they are all great. MHRRA is one that does its
Speaker 7: own assessments and the Europeans tend to or at least
Speaker 7: and maybe the UK also tend to rely on the
Speaker 7: depth of work that the FDA does. The FDA gets
Speaker 7: literally rolls up its sleeves and looks at raw data
Speaker 7: and makes its own analysis.
Speaker 10: Then the companies present.
Speaker 1: That is so interesting, So come on back. In medicine,
Speaker 1: like I do think about like collaboration right on a
Speaker 1: global scale, what typically happens. I mean, again, these are
Speaker 1: things that I don't think anybody ever thinks about, but
Speaker 1: I'm assuming that there is data sharing, especially when it
Speaker 1: comes to important medications and so on.
Speaker 13: Yeah, and I mean even with vaccines like you were
Speaker 13: talking about there, we've seen some back and forth of
Speaker 13: there are global regulators and health experts that meet to
Speaker 13: decide on what the flu vaccines will be for the season.
Speaker 13: And we saw some pullback with the US deciding whether
Speaker 13: or not to attend this meeting, which has happened, you know,
Speaker 13: every season for I don't know how many, a long
Speaker 13: time and so yeah, decades, and so it's there is
Speaker 13: so much collaboration that goes into it, and you know,
Speaker 13: whether or not the US is going to be participating
Speaker 13: in that going forward is a question right now, because
Speaker 13: we don't even know who's left at the agency is
Speaker 13: quite frankly at this point, So.
Speaker 7: We did have that uncertainty. Yeah, and at least a
Speaker 7: little silver lining is that they did decide. They did
Speaker 7: phone line with what the who said, They looked at
Speaker 7: their view and so we now know what we're all
Speaker 7: hopefully going to get for our flu vaccine this coming winter.
Speaker 7: So things do happen, and the FDA, let's face it,
Speaker 7: it's causing major uncertainty. You look at the share prices
Speaker 7: for biotech companies, farmer companies, they're all fully farmer. On
Speaker 7: top of it's got this Tario Fisher, which I'm sure
Speaker 7: we'll talk about. The interesting thing, of course, is that
Speaker 7: the FDA isn't infallible. They have done things that we've
Speaker 7: all both questioned in the past five to ten years. However,
Speaker 7: it causes uncertainty. We don't know what shape this FDA
Speaker 7: is going to be when it comes back to life.
Speaker 1: And this is what's just one thing I wanted to
Speaker 1: bring up to be fair, I think there are some
Speaker 1: that would say with certain drug approvals or certainly for
Speaker 1: testing for people who maybe have no other choices, like,
Speaker 1: there are things that could be better. And I just
Speaker 1: I'm assuming that you both would agree that there are
Speaker 1: some improvements that you could make in this department. It
Speaker 1: just feels like things are being done in an uncertain way,
Speaker 1: in an uncomfortable way, that it's not necessarily helpful, right.
Speaker 13: And I think the part of the problem is, I mean,
Speaker 13: RFK has said and this administration has said that obviously
Speaker 13: these cuts and sort of restructuring is a priority. And
Speaker 13: RFK has laid out restructuring for HHS, But the bigger
Speaker 13: picture of what exactly they're trying to do here is
Speaker 13: not clear. And I don't think that that has been
Speaker 13: communicated to the public, not to us, not to people,
Speaker 13: you know, staffers at these agencies. So people are just
Speaker 13: kind of like, what's going on.
Speaker 3: We're going to talk about the tariffic you in just
Speaker 3: a minute, but I want to get one more question
Speaker 3: into both of you before that. Madison, you went to
Speaker 3: the JP Morgan Healthcare conference in San Francisco middle of January.
Speaker 3: You came back here and you told us there was
Speaker 3: this optimism about M and A. There was optimism despite
Speaker 3: the fact that RFK was coming in. Canter Fitzgerald Biotech
Speaker 3: analysts slam the leadership of RFK, calling on the Trump
Speaker 3: administration to reevaluate his role after this top vaccine official
Speaker 3: step down. This is Canter Fitzgerald, This is Howard Latinix
Speaker 3: firm that we're talking about the Commerce secretary. Is that
Speaker 3: optimism still there?
Speaker 13: I mean that was a really striking comment, and I
Speaker 13: think departure from what we've seen in sort of these
Speaker 13: more like soft comments, soft criticism. I think people are
Speaker 13: being really careful with what they're saying publicly, and they're
Speaker 13: not saying that they're not optimistic anymore. But there are
Speaker 13: concerns about what the greater plan is and what's happening
Speaker 13: obviously at AGHS, what's happening with tariffs, and I think
Speaker 13: that some of the power and influence that these companies
Speaker 13: and trade organizations and I'm talking about pharmaceutical companies have
Speaker 13: had in the past is being tested. And you know,
Speaker 13: they are They thought that they were going to, you know,
Speaker 13: be talking about the Inflation Reduction Act and IRA and
Speaker 13: drug pricing with the administration, and that is not then
Speaker 13: the priority so far. And you know, I think this
Speaker 13: this administration is moving fast and the companies and are
Speaker 13: sort of scrambling to keep up.
Speaker 7: The problem with biotech is more than just this recent issue.
Speaker 7: Every it's been about four years, every JP organ I
Speaker 7: felt just a little bit of a twinge of optimism,
Speaker 7: and you come back and things fall apart. The reality
Speaker 7: here is that this is this is the peak of
Speaker 7: uncertainty at the minute. Maybe maybe it's the peak of uncertainty.
Speaker 7: Let's let's see.
Speaker 3: Okay, let's get to tariffs. What do we have to
Speaker 3: know about the way generics could be affected with this?
Speaker 7: Yeah, So the reason generics are particularly at risk is
Speaker 7: that they have their little margin. They price low, like
Speaker 7: big farmer companies have got a lot of profit, the
Speaker 7: prices are high, they can usually eat the tariffs and
Speaker 7: not put the prices up, whereas generics. You know, the
Speaker 7: whole point of a generic is that you end up
Speaker 7: getting some of these drugs eventually for cents on the
Speaker 7: dollar per pill. And once you get hit by a
Speaker 7: twenty five percent increase in your basic cost of goods,
Speaker 7: so you know, your your raw material or your active
Speaker 7: ingredient that goes into it, then it eats your margin.
Speaker 7: So you can't help but pass that price increase on.
Speaker 7: Whereas in the world of large farmer with more expensive,
Speaker 7: more highly valued branded drugs, you can absorb some of that.
Speaker 7: It does get your EPs hit, but nowhere near a
Speaker 7: BMW or a Mercedes Benz with a having a EPs
Speaker 7: potential forecasts maybe two or three percent, depending on how
Speaker 7: they're calculating their transfer pricing, et cetera. And then something
Speaker 7: gets manufactured in Ireland gets transferred here, so they're they're exposed,
Speaker 7: but not nowhere near as much as the generics.
Speaker 1: I am curious. Just one last final question that you know,
Speaker 1: you guys are talking to companies, people in the industry,
Speaker 1: and I just think about the stuff that's coming from government.
Speaker 1: Let me ask you first, Sam, I mean, are people
Speaker 1: able to even companies able to access the White House,
Speaker 1: get to the administration find out what's going on? Are
Speaker 1: they getting I know there's a lot of uncertainty. Are
Speaker 1: they getting any information? I think kind of what's coming down.
Speaker 7: On trips to golf courses and I think they've been
Speaker 7: a good few dinners. I think there is communication. The
Speaker 7: problem is you can be communicated, but the direction changes
Speaker 7: the next day, or there is a if. No, there
Speaker 7: isn't that if some will be exempted, No, they won't be.
Speaker 7: You know, it's very hard to plan. However, all the
Speaker 7: companies are really taking it in this right.
Speaker 1: Yeah, I do get a little nervous about We've talked
Speaker 1: about companies cutting back on like Capex, but you wonder
Speaker 1: how much that might potentially slow down some r and
Speaker 1: d of just not wondering how the system is going
Speaker 1: to work or not work. God, this is I think
Speaker 1: my favorite moment of the day.
Speaker 7: Thank you, say to everyone.
Speaker 1: I will I will know, I will promise. No no oh,
Speaker 1: I don't say that to everyone, but I will tell everyone.
Speaker 1: You guys, thank you so much. I really appreciate that
Speaker 1: important story important to the country. Bloomberg News Health reporter
Speaker 1: Madison Muller, along with Bloomberg News Senior pharmaceutical alis Sam Fazzelli,
Speaker 1: doko back to your.
Speaker 3: How you stand with.
Speaker 7: Us until Thursday.
Speaker 3: Okay, we'll get you back.
Speaker 12: Thanks Garding, be here for tariffs.
Speaker 1: Rock stars. Truly, truly, so appreciate it.
Speaker 2: You're listening to the Bloomberg Business Weekdaily podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Applecarplay and the Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube plenty.
Speaker 1: Head on our second hour of the weekend edition of
Speaker 1: Bloomberg Business Week, as promised, taking a break from the
Speaker 1: tariff news and subsequent market sell off from this past week,
Speaker 1: be sure to check though the Bloomberg and Bloomberg dot
Speaker 1: com for the latest on all of it.
Speaker 3: Coming up this hour, we'll hear from the former CNN
Speaker 3: reporter who's helping women take charge of their financial futures.
Speaker 3: The author of What's Up with Women and Money joins
Speaker 3: us a bit later, Plus.
Speaker 1: We take you to Irvine, California and the billionaire developer
Speaker 1: who controls most of it everything from apartments to newspaper
Speaker 1: stands and where the police department drives cyber trucks. And
Speaker 1: we've also got what to watch, read, or head to
Speaker 1: the theaters for this month, courtesy of Bloomberg Pursuits.
Speaker 3: First up this hour Tesla, which, despite its recent struggles
Speaker 3: like a collapsing stock price and political backdrop against founder
Speaker 3: Elon Musk, our Bloomberg intelligence researchers gave the company a
Speaker 3: rosy outlook, and this.
Speaker 1: Week Tesla investors shrugged off the company's worst vehicle sales
Speaker 1: since twenty twenty two and bid up its shares and
Speaker 1: hopes that Elon Musk will step back from his work
Speaker 1: for the Trump administration. Yet gotta say not everyone is
Speaker 1: convinced of a Tesla rebound.
Speaker 3: One of those people is Sean Tucker. He's editor of
Speaker 3: Kelly Bluebook. It's the vehicle valuation and automotive research company.
Speaker 3: We should note that we spoke to Sean before it
Speaker 3: report that suggested Elon will step aside from Doge sooner
Speaker 3: rather than later.
Speaker 1: Sean explained why Tesla's best days maybe in the rear
Speaker 1: view mirror.
Speaker 5: Because its peak in terms of auto sales was in
Speaker 5: February of twenty twenty three. We weren't able to call
Speaker 5: the peak at the time because we weren't sure that
Speaker 5: the decline would last. But what we see now is
Speaker 5: if you look at Tesla's as a percentage of the
Speaker 5: new cars sold in twenty twenty three, they hit four
Speaker 5: point twenty nine percent, and that's their peak, and in
Speaker 5: twenty twenty four they were back down to three point
Speaker 5: ninety five. So it was already falling before this political
Speaker 5: controversy began.
Speaker 3: What is the issue. Is it political controversy or is
Speaker 3: it the fact that this is a space that a
Speaker 3: lot of competitors have gotten involved in and I think
Speaker 3: Americans This is not on Americans radar, but byd and
Speaker 3: show me those vehicles blow away anybody who gets behind
Speaker 3: the wheel. How big of an issue is that?
Speaker 5: It's absolutely huge for Tesla. But for a moment, if
Speaker 5: you could imagine if we could take elon Musk out
Speaker 5: of consideration for this, what you would have is a
Speaker 5: company with an aging lineup. You know, the Model QUE,
Speaker 5: the Model X. The platform underneath those was introduced in
Speaker 5: twenty twelve. That is ancient by auto industry standards. There's
Speaker 5: nothing new in the pipeline, at least nothing particularly high
Speaker 5: volume new in the pipeline, and sales peaked back in
Speaker 5: twenty twenty three. Then you add in the fact that
Speaker 5: they've got all of this new competition and they're not
Speaker 5: innovating any I don't know that they would be doing
Speaker 5: well without the political controversy. Stack the political controversy on
Speaker 5: top of that, and you just you have what you
Speaker 5: see today.
Speaker 1: So and I have to counter just because earlier in
Speaker 1: our last hour, we talked with a member of our
Speaker 1: Bloomberg intelligence team are Tim Craighead, and we've got a
Speaker 1: story out in Bloomberg BusinessWeek about the ten companies to
Speaker 1: watch for good or bad, reasons for better for worse,
Speaker 1: and Tesla was a company that was singled out for better.
Speaker 1: And basically what they talked about is that several positives
Speaker 1: to look forward to. Orders for Tesla's newly revamped Model
Speaker 1: Y are accelerating, notably even in China. Production rates are
Speaker 1: poised to increase quickly. Meantime, the company's battery sales to utilities,
Speaker 1: which generate higher margins that autos appear underappreciated as a
Speaker 1: profit driver. So that's more of a corporate overview. But
Speaker 1: I am curious about, you know, the Model Why, and
Speaker 1: I think there's also a subcompact right that could start
Speaker 1: in June, widening, you know, kind of Tesla's reach and appeal.
Speaker 1: So what would you say to that.
Speaker 5: The Model Why refresh is essentially a visual refresh. It's
Speaker 5: it's basically the same car underneath that it's been since
Speaker 5: about twenty seventeen, So we kind of question whether that's
Speaker 5: really going to generate much of a sales spike. Absolutely,
Speaker 5: it's their best selling model. I believe it was one
Speaker 5: of the top five best selling models in the United
Speaker 5: States last year. But I don't think there's a lot
Speaker 5: of opportunity for growth with that, and then you pile
Speaker 5: Musk's troubles on top of it, and I'd be very
Speaker 5: surprised if you see sales actually increase anywhere outside of China,
Speaker 5: And then in China you've got BYD to contend with.
Speaker 5: As for you know, battery sales, that's a little bit
Speaker 5: outside of our scope, is Kelly book, But I wouldn't
Speaker 5: know that Musk. Musk is fond of saying these days
Speaker 5: that Tesla's not a car company, and if he's right,
Speaker 5: and he's got significant plans outside of cars, then that
Speaker 5: changes the equation. But he needs to be right because
Speaker 5: as a car company, it really sales really peaked a
Speaker 5: little over two years ago.
Speaker 3: Yeah, maybe he's betting it all on the humanoid robot
Speaker 3: and the robo taxi. Where does the robotaxi come into
Speaker 3: your analysis?
Speaker 5: Many of the Tesla's rivals have attempted to make a
Speaker 5: sort of robotaxi project work. Several of them have gotten
Speaker 5: out of the business. When in the last few years,
Speaker 5: it's possible that Tesla has secret sauce that nobody else
Speaker 5: has and will make this profitable. But it's proven to
Speaker 5: be a very difficult business to profit.
Speaker 3: In you're in Washington, d C. I believe you're going
Speaker 3: to start getting weimos soon in Washington, d C. Have
Speaker 3: you been able to ride in one outside of DC?
Speaker 5: I have written in a zooks, but not a WEIMO.
Speaker 3: How what was your experience, just as somebody who is
Speaker 3: in this world day in and day out with a
Speaker 3: driver on the radar, what was your experience without a driver?
Speaker 5: You know, I'd drive fifty two different cars a year.
Speaker 5: As I get a new car wants a week to
Speaker 5: test drive. And I have really come around on the
Speaker 5: concept of self driving cars over time. They may be
Speaker 5: nervous to begin with, but the truth is now I
Speaker 5: look around me in traffic and I see so many
Speaker 5: people tapping on their phones that I would rather drive
Speaker 5: where at least the car was paying attention.
Speaker 3: I love. I completely agree with you, Carol knows my
Speaker 3: trip to San Francisco a few months ago. My life
Speaker 3: was like turned upside down with this just my first
Speaker 3: experience in a WEEIMO. I think it's fantastic. I wish
Speaker 3: this stuff was all over because these things follow the
Speaker 3: rules and they're not texting and driving. But realistically, in
Speaker 3: your view, do you see that world existing, it's going
Speaker 3: to take.
Speaker 5: A lot longer to get there than some of these
Speaker 5: technology companies. What have you believe? There are significant regulatory
Speaker 5: challenges because right now this is regulated by the states,
Speaker 5: So even if you can make the technology work, you'd
Speaker 5: have to work through fifty sets of liability laws and
Speaker 5: different legislatures.
Speaker 3: Maybe started, maybe, but not if Elon Musk has his
Speaker 3: way in terms of regulation. With Sean Duffy at the
Speaker 3: helm of the Department of Transportation.
Speaker 5: Which is one of the more interesting proposals he put
Speaker 5: He's put out there. The other thing I'll put out
Speaker 5: is that when we start to master self driving cars
Speaker 5: and actually get them functional, you open a whole new
Speaker 5: questions we've never run into before. Mercedes has the most
Speaker 5: advanced system for sale in the United States. It's a
Speaker 5: legal lawn right now, only in Nevada and California, and
Speaker 5: they have proposed, just to give you one example, that
Speaker 5: the industry adopts teal exterior lights as a signal that
Speaker 5: the self driving system is on. Because how are police
Speaker 5: supposed to know whether the driver's distracted, If it's okay
Speaker 5: for the driver to.
Speaker 3: Be distracted, what was the signal? You said?
Speaker 5: And exterior lights and colored and teal.
Speaker 3: Does that work? Does that exist now.
Speaker 5: Only in testing? And again that would be a legal issue.
Speaker 5: You'd have to get fifty states to agree to that.
Speaker 5: The point is just to say that even once the
Speaker 5: technology works, we've got a whole public policy system that
Speaker 5: we'd have to work through a lot of new questions.
Speaker 3: But that's none of that has to do with the
Speaker 3: Actually a lot of what you're talking about do with
Speaker 3: policy and with sort of the way that law enforcement
Speaker 3: looks at this stuff. In your view is the tech,
Speaker 3: is the tech there.
Speaker 5: It's getting there. But Tesla has more significant challenges than
Speaker 5: most of its rivals in that way. Elon Musk is
Speaker 5: very insistent on doing self driving with nothing but cameras
Speaker 5: and the systems that have surpassed Tesla, like that Mercedes
Speaker 5: system that's the only Level three approved anywhere in America
Speaker 5: uses radar, cameras and leadar. If Tesla can't adopt additional
Speaker 5: technologies like that, it's going to take them longer to
Speaker 5: get an effective self driving car.
Speaker 1: All right, Sean, I just was like, wait a minute,
Speaker 1: I got to ask you something. Are you saying Mercedes
Speaker 1: is better than Tesla when it comes to self driving.
Speaker 5: The automotive industry uses a system of five levels to
Speaker 5: describe self driving cars, from level one just your basic
Speaker 5: smart cruise control, up to level five being a car
Speaker 5: with no steering wheel. Almost every automaker has a level
Speaker 5: two system right now, including Tesla, and Mercedes has the
Speaker 5: only Level three system that's approved anywhere in the United States.
Speaker 5: What that means is that legally you can look away
Speaker 5: from the roadway while it's working. Some Mercedes has that.
Speaker 5: It's only Nevada and parts of California right now, but
Speaker 5: there is currently a Mercedes system you can buy that
Speaker 5: will let you settle back and read a book in
Speaker 5: a car, and Tesla doesn't have anything like that.
Speaker 1: I have to say, I am a little bit familiar
Speaker 1: with Mercedes and just their safety systems are like blown
Speaker 1: away where you can take your hands off the wheel,
Speaker 1: and especially like on away.
Speaker 3: Not even a brand new car that you're talking about,
Speaker 3: yeah experience with right.
Speaker 1: Yeah, I have one and it's old, it's over ten
Speaker 1: years old. But the safety systems are unbelievable in terms
Speaker 1: of what you can do and how it just tracks
Speaker 1: and just keeps you safe. And what I also do
Speaker 1: wonder sean that if we're not kind of quite ready
Speaker 1: to just look away and let the car drive, do
Speaker 1: we just continue to see the safety systems get better
Speaker 1: and better on these cars, because I almost feel like
Speaker 1: Cinems amount of highway you know, you put on basically
Speaker 1: cruise control, and these cars are tracking. It almost feels
Speaker 1: like with one another. And in that regard, I feel
Speaker 1: so much safer where my car. If I get distracted,
Speaker 1: it's going to stop the car if I miss the
Speaker 1: car stopping in front of me, And that's pretty amazing.
Speaker 5: And those are essentially the same technologies. Yeah, the technologies
Speaker 5: that will ultimately result in self driving cars. The first
Speaker 5: thing they do is give us those safety systems, and
Speaker 5: when all those safety systems can work together and talk
Speaker 5: to each other, you end up with a self driving car.
Speaker 5: That's also how the industry is going to have to
Speaker 5: get people comfortable with it. Triple A did a study,
Speaker 5: I believed just a month ago in which sixteen percent
Speaker 5: of Americans said they would get into a self driving car.
Speaker 5: That's the public challenge that they face in terms of approval.
Speaker 5: Sixteen percent don't.
Speaker 3: So I don't buy that number. And here's why. The
Speaker 3: only reason I got into it in San Francisco. It
Speaker 3: wasn't even on my radar. And then I met up
Speaker 3: with a friend who was like, Hey, did you go
Speaker 3: in the Waimo yet? And I was like no, and
Speaker 3: she's like, Oh, it's so awesome. Just download the app
Speaker 3: and do it. And I did it. And I'm a
Speaker 3: true believer. I'm converted. And I think it's just like
Speaker 3: word of mouth, and just because people haven't been around
Speaker 3: this technology means they're going to answer that question a
Speaker 3: certain way.
Speaker 5: Well maybe right, But I think that as people get
Speaker 5: more accustomed to the safety systems, they get more comfortable
Speaker 5: and more comfortable with the car making certain decisions like that.
Speaker 5: That's how we eventually get to a world where most
Speaker 5: of us are willing to get.
Speaker 3: In our thanks to Sean Talker, the editor of Kelly Bluebook.
Speaker 1: We should also point out, while talking about Elon, there
Speaker 1: was a lot of other news and some speculation courtesy
Speaker 1: of a report in Politico that President Trump had told
Speaker 1: us inner circle that Elon Musk would be stepping back
Speaker 1: from his advisory role in the coming weeks, of Politico
Speaker 1: citing three people close to the president.
Speaker 3: And we should note too that Caroline Levitt after this
Speaker 3: report in Politico came out, called it garbage and said
Speaker 3: that Elon will stay on until the work is done
Speaker 3: at DOGE. Vice President Jady Vance, though said in an
Speaker 3: interview on a Thursday with Fox News that Elon Musk
Speaker 3: will remain an advisor to President Trump after he leaves DOGE.
Speaker 3: He also said that Musk's work is quote not even
Speaker 3: close to done.
Speaker 1: It's really kind of interesting, right, kind of the pushback,
Speaker 1: and we will say that part of the reason we
Speaker 1: saw a rally, even on a day when Tesla sales
Speaker 1: some news came out that was pretty negative, that the
Speaker 1: stock rallied on expectation that maybe Elon was leaving the
Speaker 1: White House sooner rather than later and coming back to
Speaker 1: the company because we've seen how many stories have we
Speaker 1: done about kind of declining sales for Tesla, the political backlash,
Speaker 1: and so almost a call for Elon to come back
Speaker 1: to the company.
Speaker 3: I think the question is if he does, and when
Speaker 3: he does, and look go back in what sense, right,
Speaker 3: He's still involved in the company, still the company CEO,
Speaker 3: but absolutely taking a more active role, and would that
Speaker 3: actually help Tesla at this point because how much of
Speaker 3: the decline in sales that we've seen in recent quarters
Speaker 3: is the result of the association that people have with
Speaker 3: Elon politically. Certainly, that's a big issue outside of the
Speaker 3: US too.
Speaker 1: Yeah, and if he continues, even if he leaves the
Speaker 1: administration in some official unofficial role, right, if he's still
Speaker 1: doing things politically for the President and Republicans, right, that
Speaker 1: political backlash probably doesn't go away.
Speaker 3: Hey, speaking of cars, buying a car, negotiating for a car,
Speaker 3: it's one of the topics that is approached in the
Speaker 3: book by our next author. She wrote What's Up with
Speaker 3: Women and Money, and she experienced some of these lessons
Speaker 3: the hard way. She joins us on the other side.
Speaker 1: This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
Speaker 2: Play and the Android Auto with the Bloomberg Business App.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station, just Say Alexa played Bloomberg eleven thirty.
Speaker 3: Researchers from McKinsey recently determined that women spend less time
Speaker 3: on the job than men in comparable roles in career paths.
Speaker 3: Eight point six years for women versus ten years for men,
Speaker 3: and that they were more likely to make decisions putting
Speaker 3: them in roles in industries that were dying. It's really grim. Yeah,
Speaker 3: large career gaps, especially during child rearing years, and the
Speaker 3: desire for more flexible work took a toll. Listen to this, Carol,
Speaker 3: Time and career choices they said, docted women's lifetime pay
Speaker 3: by a cool half million dollars.
Speaker 1: That's a lot.
Speaker 3: Women, they urged, need to choose careers in fast grown
Speaker 3: fields and spend more time on the job.
Speaker 1: Rab that's a strong message. Yeah, I mean that's a
Speaker 1: big difference. And if you think about people living longer
Speaker 1: and like maybe on their own, like how do you
Speaker 1: support yourself?
Speaker 3: Simone Foxman writing about this for Blueberg News. Check out
Speaker 3: that story and more if you're interested.
Speaker 1: All right, curious what Alison Kasik has to say about
Speaker 1: all of this. She's the author and journalist who has
Speaker 1: worked at CNN and is a freelance correspondent for ABC News.
Speaker 1: Equal payge just one of the things she tackles in
Speaker 1: her deeply personal new book. It's entitled What's Up with
Speaker 1: Women in Money? How to do all the financial stuff
Speaker 1: you've been avoiding, She joins us from Long Island. You know,
Speaker 1: we've been talking about your book, and you know very
Speaker 1: deeply personal your story. You go there right in the
Speaker 1: beginning of the book, tell us about and share with
Speaker 1: our audience why you said about writing this.
Speaker 9: Yeah, great to be on your show, Thanks for having me.
Speaker 9: So I've wrote this because yes, I was CNN's business correspondent,
Speaker 9: often reporting from the New York Stock Exchange. But at
Speaker 9: the beginning of my time there, I wasn't involved in
Speaker 9: my own financial life. I let my husband handle all
Speaker 9: things financial, and that was that was not a good
Speaker 9: decision because when the marriage went bad, when you know
Speaker 9: I wanted to get out of the marriage, I felt stuck.
Speaker 9: I stayed in the marriage longer than I should have,
Speaker 9: years longer than I should have, because he kind of
Speaker 9: knew where all the money was and how to handle
Speaker 9: all the money things. And I had two kids under
Speaker 9: the age of ten at the time. You know, what
Speaker 9: if I made a mistake, what if I lost all
Speaker 9: of our money. The difference is that I just didn't
Speaker 9: have the confidence to make those big financial decisions. I
Speaker 9: didn't have the experience of making the decisions over the
Speaker 9: course of my marriage, and that in essence cut down
Speaker 9: on my confidence in my ability to make those decisions.
Speaker 9: But as I got through that, I realized that there
Speaker 9: are a lot of women, different kinds of jobs, high
Speaker 9: income scale to low income scale, Mary, divorced, widowed, single,
Speaker 9: who feel the way I felt that. You know, they
Speaker 9: don't have any kind of involvement or as much involvement
Speaker 9: as they should have in their own financial lives. And
Speaker 9: it's not something that women talk about because you know,
Speaker 9: we don't want to be seen as unintelligent. There's also
Speaker 9: a lot of embarrassment and shame around it as well.
Speaker 3: Why do you think men are the ones who end
Speaker 3: up doing this stuff in a lot of relationships? Like
Speaker 3: you have a chapter in here on how to buy
Speaker 3: a car with confidence, understanding insurance, negotiating in your words
Speaker 3: like a man. Why do men? Why are men the
Speaker 3: ones who usually do this in relationships?
Speaker 10: You know?
Speaker 9: I think if I could answer that in one reason only,
Speaker 9: there are I think there are many reasons, but I
Speaker 9: think the biggest reason is that it is cultural. There's
Speaker 9: a cultural aspect that women have with money, and I
Speaker 9: think it starts early when we are girls, and we
Speaker 9: like it or not. Girls and boys are socialized differently.
Speaker 9: And it's not that girls are told not to care
Speaker 9: about money. It's just that boys are often introduced to
Speaker 9: the family finances earlier, They're encouraged to be financially independent earlier.
Speaker 9: And so you've got these girls who grow up being uninvolved,
Speaker 9: and they can grow up to be women who avoid
Speaker 9: money issues. And that avoidance can be compounding in the
Speaker 9: way that you avoid something long enough, you become fearful
Speaker 9: of it. And so lack of interest can lead to
Speaker 9: a lack of information, and that lack of information can
Speaker 9: lead to a lack of confidence in being able to
Speaker 9: manage all things financial, you know, whether it's managing your spending,
Speaker 9: managing your debt, being able to invest, and being able
Speaker 9: to negotiate your salary, all of that hits confidence. And
Speaker 9: I think, I think, if I'm going to answer it
Speaker 9: in one answer only, I'd say, it's the culture. It's
Speaker 9: got to be the culture.
Speaker 3: So, you know, it's interesting. Carol mentioned this is a
Speaker 3: deeply personal book, and I mean it really is. You're
Speaker 3: not just you don't just talk about your relationship and
Speaker 3: your marriage that prompted you to write this, but also
Speaker 3: your upbringing in your relationship with your father, and I
Speaker 3: think a lot of people would say that that was
Speaker 3: really challenging. I'm wondering, though, as a parent now, how
Speaker 3: you make sure that your kids are equipped to make
Speaker 3: these decisions independently.
Speaker 9: Very good question. I'm not a perfect parent, and I've
Speaker 9: got two kids once nineteen, my son is nineteen, my
Speaker 9: daughter is twenty two. They are invested in the market. Yes,
Speaker 9: I've taught them how to do it, and I've encouraged
Speaker 9: them to consistently invest as much as they can. I've
Speaker 9: explained to them the difference between savings and investments and
Speaker 9: what the difference is, and why it's important to invest
Speaker 9: your way to wealth, because you can't save your way
Speaker 9: to wealth. You know. The thing is, these things are
Speaker 9: not taught in school, so there's only so much parents
Speaker 9: can do. And really, I think so much of this
Speaker 9: is is really just taking the effort to learn it
Speaker 9: on your own or through osmosis, or hopefully you've got
Speaker 9: parents to guide you. I'm certainly trying to guide my
Speaker 9: kids as much as possible.
Speaker 1: You know, it's interesting, Allison. We talk about this a
Speaker 1: lot here, and I feel like you've obviously you know,
Speaker 1: you're a journalist, And I know this topic has come
Speaker 1: up over the years, and I would say for those
Speaker 1: of us who've been doing it for a while, just
Speaker 1: like yourself, I feel like I could go back ten
Speaker 1: years and have this conversation. Twenty years, I could have
Speaker 1: this conversation. I think about CEOs, female CEOs who've come
Speaker 1: in and talked about even that in their households to
Speaker 1: some extent. So I'm wondering, you know, why haven't we
Speaker 1: we've talked about financial literacy forever. Why isn't that happening?
Speaker 1: What is it that we are missing? Because you can
Speaker 1: teach stuff at home, right, But I wonder if we
Speaker 1: made it part of our curriculum from kind of a
Speaker 1: younger age, teaching kids about money, the importance of money
Speaker 1: and all that good stuff, how different things might be.
Speaker 9: Oh, I am one hundred percent with you, And to
Speaker 9: be honest with you, I don't know why this stuff
Speaker 9: isn't really being taught. And I think it's actually beginning
Speaker 9: to be taught. It's being thrown into the curriculum. I
Speaker 9: don't know how much, really, And I'm wondering if maturity
Speaker 9: has a lot to do with it, because can you
Speaker 9: imagine getting into all the finer details of investing with
Speaker 9: a fifteen, sixteen year old, there's a I think there's
Speaker 9: also maybe a mindset here of younger of younger people.
Speaker 9: I know when I was younger, and it may have
Speaker 9: just been because we didn't have access to investment platforms.
Speaker 7: Like we do today.
Speaker 1: Right in fractionally investing, you.
Speaker 9: Know, I think that I think that you think that
Speaker 9: you have got, you know, fifteen years old. Let's say
Speaker 9: they bring it into the schools at fifteen the curriculum
Speaker 9: at fifteen years old, you'll pay attention. But I guess
Speaker 9: how seriously will the kid take it because they think
Speaker 9: they've got forever to start investing. And I think unless
Speaker 9: the curriculum really hits home about the importance of investing
Speaker 9: early and consistently, but investing early, maybe then it'll catch on.
Speaker 9: But I think you make a really good point. And
Speaker 9: I did write this book through a journalist lens, So
Speaker 9: not only did I get through the tips and tools
Speaker 9: of financial literacy, I wanted to tell stories, so not
Speaker 9: just inspirational ones through the celebrities that I interviewed, but
Speaker 9: also names you wouldn't recognize a lot of these people,
Speaker 9: a lot of these women are anonymous because they are
Speaker 9: ashamed that they're in this situation. So, for example, I
Speaker 9: interviewed a venture capitalist who described money as something that
Speaker 9: she was fearful of. And she at fifty three years old,
Speaker 9: she hadn't invested in one retirement account, didn't know the
Speaker 9: basics of personal financing, and really was felt overwhelmed. And
Speaker 9: this is a woman in venture capital, in the venture
Speaker 9: capital space who is highly, highly successful, but she had
Speaker 9: not invested in herself because she didn't have the confidence.
Speaker 9: I mean, it is really amazing that we can be
Speaker 9: badasses at our jobs, but then in our own life
Speaker 9: there's this connect that's really inexplicable.
Speaker 1: Yeah, and I guess what I would say in terms
Speaker 1: of I agree with you, like a teenager, they're gonna
Speaker 1: be like yo, uh, you know investing, you know, Warren Buffett,
Speaker 1: like all that stuff might go past, but just the
Speaker 1: idea of debt versus not debt savings versus, you know,
Speaker 1: just kind of those kinds of things or like you know,
Speaker 1: you even talk I love this idea. I think I
Speaker 1: even remember my parents like having an envelope in the
Speaker 1: drawer of cash that was like the cash for the
Speaker 1: month or something, and we don't really do that anymore, right,
Speaker 1: everything's digital, but having that concept of like a digital
Speaker 1: envelope of this money is my spending money, this is
Speaker 1: my savings money. Like those concepts are really clean and
Speaker 1: pure and I think make a lot of sense. And
Speaker 1: I do think about even today of giving a kid
Speaker 1: and saying here's some spending money. That's it, You've got
Speaker 1: it for the month, figure it out, Like that's teaching
Speaker 1: them to budget.
Speaker 9: Right right and getting them involved. And as parents, you know,
Speaker 9: your kids are watching you. They're watching if you're piling
Speaker 9: on debt onto your credit cards, they're watching you know
Speaker 9: how you how you shop around for things if you broke,
Speaker 9: if the refrigerator is broken, do you just buy whatever?
Speaker 9: Or are you taking them with you to go shop
Speaker 9: around and get the or at least online to shop
Speaker 9: around and get the cheapest price.
Speaker 7: You know.
Speaker 9: I think involving children in money details is really a
Speaker 9: first step. It seems so simplistic, but it really is
Speaker 9: a way to get them involved.
Speaker 1: Okay, we have been talking about your book in the
Speaker 1: newsroom and you coming on, and I have a bunch
Speaker 1: of questions actually from one of my producers. But if
Speaker 1: you've got two four oh one K plans from different employers.
Speaker 1: How do you determine whether to merge it or just
Speaker 1: leave it alone.
Speaker 9: I've been told, I've been told to merge them. But
Speaker 9: you're asking the wrong person. I'm not a certified financial planner.
Speaker 9: I can't even I can't even give you financial advice.
Speaker 9: That is not my realm. I So, like I said,
Speaker 9: I approached this book as a journalist. I did research
Speaker 9: and interviews to get these to get these topics on paper.
Speaker 9: And yeah, they'll have to go talk to their at CFP.
Speaker 1: All right, that's fair.
Speaker 3: Actually great advice.
Speaker 1: Actually, that's great advice. And she's a journalist too, and
Speaker 1: I know she'll end up doing research. There's a lot
Speaker 1: in the book. It's very usable, it's really fun. What's
Speaker 1: one piece of advice you want to leave our audience with,
Speaker 1: just quickly.
Speaker 9: Ladies, be involved in all things financial in your house.
Speaker 9: Have great visibility onto what's happening. Know what your assets are,
Speaker 9: know your debt, know who your beneficiaries are on your accounts,
Speaker 9: know the passwords to your accounts, and especially know how
Speaker 9: much debt you are caring and get involved in the
Speaker 9: tax process as well. It's so as We're nearing tax
Speaker 9: time here, be involved in filing your taxes.
Speaker 1: All right, really fun, Good luck with everything. Alison Kassick
Speaker 1: joining us her new book, What's Up with Women and Money?
Speaker 1: How to do all the financial stuff You've been avoiding.
Speaker 1: Joining us from Long Island.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: Irvine, you know, it's a city in Orange County, California,
Speaker 1: at south of Los Angeles, home to some major tech
Speaker 1: companies such as gay Maker, Blizzard Entertainment, and Rivian. It's
Speaker 1: also the state's most planned city, with one company owning
Speaker 1: most aspects of it, from apartments to shopping centers to
Speaker 1: a golf club, solar panel installation business, even the community newspaper.
Speaker 3: We're talking about the Irvine company and the secretive developer
Speaker 3: behind it, Donald Brenn, who's the wealthiest real estate developer
Speaker 3: in America. That's according to the Bloomberg Billionaires Index, a
Speaker 3: fortune of seventeen point four billion dollars to his name.
Speaker 3: Michael Waters is a Bloomberg BusinessWeek freelance contributor. He joins
Speaker 3: us to explain who this secret of billionaire really is.
Speaker 8: So Donald Brenn is the CEO of the Irvine Company,
Speaker 8: and he is one of the wealthiest real estate magnates
Speaker 8: in America. And essentially the Irvine Company historically was owned
Speaker 8: by the Irvine family, so they essentially consolid this vast
Speaker 8: pot of land in Orange County. At its peak, the
Speaker 8: Irvines owned one hundred thousand acres of Orange County land,
Speaker 8: and eventually they decided to convert that land into a
Speaker 8: city and develop housing on top of it. And so
Speaker 8: the Irvine Company was born out of this inherited land
Speaker 8: and in the starting in the seventies and continuing to
Speaker 8: the eighties when he took full control. Donald Brenn, who
Speaker 8: is this developer from the area, entered the orbit of
Speaker 8: the Irvine Company, and he started out as a partial
Speaker 8: owner of the new company and eventually took over and
Speaker 8: took this company that had been created by the Irvine
Speaker 8: family and pushed it really to new heights under his leadership, Donald, do.
Speaker 1: I want to live there? I mean, no cannabis shops,
Speaker 1: no cemeteries, no almost what do you know?
Speaker 3: A cemetery for what do you did? A cannabis shop
Speaker 3: for us?
Speaker 1: No above ground cables. You've know you've left the city
Speaker 1: when you start to see telephone polls. One person that
Speaker 1: you guys talked to for the story, a professor driving through.
Speaker 1: She says, you know, once in a while she'll make
Speaker 1: a turn and there's this very spooky feeling like, oh
Speaker 1: my gosh, where am I now? Because it all looks
Speaker 1: the same. I mean, do we want to live there?
Speaker 8: I mean it depends on I think there's a lot
Speaker 8: of different opinions on it, but it's certainly the result
Speaker 8: of meticulous planning. And I think that's why, you know,
Speaker 8: like the Irvine family when they own the company and
Speaker 8: now Donald Brenn as the owner, like think about the
Speaker 8: smallest details. I mean Donald Brenn himself is known to
Speaker 8: drive around the city and like look at his property
Speaker 8: and like ask for really specific aesthetic changes. And you
Speaker 8: really feel that in the city everything is just the
Speaker 8: way that someone thinks it should be and is you know,
Speaker 8: many people I spoke to described it as variations on boring.
Speaker 3: I think other.
Speaker 8: People just feel it's very clean, you know what I mean?
Speaker 8: It's different perspectives, but it's the result of this really
Speaker 8: phenomenal sort of like top down control over so much
Speaker 8: of the city.
Speaker 3: So Donald Brann is ninety two years old and he's
Speaker 3: got no announced successor. You guys just describe him as
Speaker 3: the one man hoa what happens when he's gone.
Speaker 10: Yeah, no one knows.
Speaker 8: The Irvine Company says they have a plan for what
Speaker 8: happens after brand nothing has been announced, and you know,
Speaker 8: some of the people we spoke to, you know, are
Speaker 8: just really not sure what's going to happen. Certainly, it
Speaker 8: will be consequential for the city of Irvine. So while
Speaker 8: the City of Irvine, you know, they obviously have their
Speaker 8: own city council and governing structure independent of the company,
Speaker 8: the Irvine Company is has such a large amount of
Speaker 8: control over just like housing and commercial real estate in
Speaker 8: the city that you know, who runs the Irvine Company
Speaker 8: really has a big effect on what the city will
Speaker 8: look like. And you know, this is an issue around
Speaker 8: affordable housing for instance, Like you know, the new mayor
Speaker 8: of Irvine who just came into office this year, wants
Speaker 8: to negotiate with the company to cut rents on housing.
Speaker 8: It's a very expensive place to live. And you know,
Speaker 8: so whoever is in control of the Irvine Company will
Speaker 8: have a big downstream impact on the city itself. But
Speaker 8: you know, as of now, Donald Brenn is still in charge,
Speaker 8: he still has the top title, and no one really
Speaker 8: knows what's going to happen next.
Speaker 1: You know, it's so interesting. I feel like over the
Speaker 1: years we've talked so much about urban planning and the
Speaker 1: development you know that are needed today. I mean, is
Speaker 1: this considered a success in terms of urban planning or
Speaker 1: maybe or a miss on some on some aspects, I.
Speaker 8: Think that it is by far the most successful master
Speaker 8: planned city. So, like I mentioned, you know, Irvine, California.
Speaker 8: It started out as it's just like vast plot of
Speaker 8: inherited land owned by this one family and was converted
Speaker 8: into what is a very thriving city. It's the sixty
Speaker 8: third largest city in America. It's a very expensive place
Speaker 8: to live now, and so I think, you know, I
Speaker 8: think on one level, there is no larger master plan
Speaker 8: city in America. So the fact that this sort of
Speaker 8: empty space was then converted into such a thriving city
Speaker 8: is to some, I like, to some, a hallmark of success.
Speaker 8: Then On the flip side, it's also a very exclusive
Speaker 8: and expensive place to live. And you know, some might
Speaker 8: say like lax character in certain key ways, as as
Speaker 8: we litted to earlier, and so I think that is
Speaker 8: kind of dependent. But certainly there's no other larger example
Speaker 8: of a city that was really conceived of from the
Speaker 8: ground up like this.
Speaker 3: The cops drive cyber trucks. Michael, Yeah, oh for sure.
Speaker 8: I mean I think there it's kind of like there's
Speaker 8: a part of it that's like tech utopia and then
Speaker 8: also tech dystopia. I think it's well, you know, you
Speaker 8: see like plenty of.
Speaker 3: Other to that point. To that point, you you too
Speaker 3: write about the notion that you know, yes there's an
Speaker 3: Apple store, Yes there's a Capital One cafe. But if
Speaker 3: you're a local business, you got to follow and play
Speaker 3: by the rules. What are some of those rules?
Speaker 8: Yeah, I mean, I think they really want certain kinds
Speaker 8: of businesses only, you know, like businesses that they feel
Speaker 8: are like family friendly in different ways. They also, you
Speaker 8: know a lot of stores in Irvine are chain stores
Speaker 8: or have like locations elsewhere. I think they really like
Speaker 8: these like bigger stores that already have followings and bring
Speaker 8: in new people, and also just the way that the
Speaker 8: contracts are structured is that the Irvine Company takes you know,
Speaker 8: you have your like maintenance, your base rent, and then
Speaker 8: a percentage. The Irvine Company takes a percentage of revenue
Speaker 8: from a lot of those business owners. And you know they,
Speaker 8: I mean they have a lot of control. If you
Speaker 8: want open a business in Irvine, you most likely will
Speaker 8: do it by renting from the Irvine Company, and so
Speaker 8: they have a lot of ability to sort of set
Speaker 8: those terms.
Speaker 1: Well, the history of this development and then this individual
Speaker 1: who has accumulated so much wealth and how he's been
Speaker 1: able to stay under the radar is just kind of
Speaker 1: mind blowing. A great read. Incredible read, no doubt about it.
Speaker 1: So appreciate it. Michael Waters and John Gilson writing this
Speaker 1: story for Bloomberg Business Week on Donald Bryn Check it out, guys. Interesting.
Speaker 1: Thanks so much, Michael, So appreciate it. This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1: Also from our Bloomberg Business Week team, Things to watch,
Speaker 1: read and go see this month.
Speaker 3: Bloomberg BusinessWeek Arts columnist James Tarmy has the enviable job
Speaker 3: of picking and choosing which movies, TV shows, theater, books
Speaker 3: and more to feature for April. Does he really watch
Speaker 3: and read all of this?
Speaker 10: Yes? Actually I do.
Speaker 1: Yeah.
Speaker 10: I mean it's it's in the job title. I'm so impressed.
Speaker 3: Well, do you sit at your desk and read a book?
Speaker 10: No, I don't say it's not a good look to
Speaker 10: sit at yours. It's after ours activity.
Speaker 1: But via a desk, nobody says anything.
Speaker 10: Well, you know, maybe someone says something and you haven't
Speaker 10: heard of it.
Speaker 3: That's I think it's the correct answer.
Speaker 10: Listen to me. All I'm saying is it's not working
Speaker 10: in a coal mine. So I wouldn't exactly describe this
Speaker 10: as I wouldn't overvalorize what I do. Let's put it
Speaker 10: that way.
Speaker 3: Okay, where do you want to start? Do you want
Speaker 3: to start with something you watch, something you go see,
Speaker 3: or something you read.
Speaker 10: Well, I have to say that the thing that I
Speaker 10: am most excited about is something that I haven't seen
Speaker 10: a liar of myself. It has yet to open. There
Speaker 10: is a David Hockney massive exhibition of David Hockey in
Speaker 10: Paris at the Fund. You've got to go there.
Speaker 1: I do, And you just want to go to Paris.
Speaker 10: Well, the two things are not mutually exclusive, but I
Speaker 10: would really like to go to Paris to see this.
Speaker 10: It's over four hundred artworks. It is called the title
Speaker 10: of it is David Hockney twenty five, but it's also
Speaker 10: a historical show. But it really emphasizes the work that
Speaker 10: he's been doing in the last twenty five years. It's
Speaker 10: almost certainly going to be the most important David Hockney
Speaker 10: show to ever be put on under during the artist's lifetime.
Speaker 10: But then there's a lot of other things where you
Speaker 10: don't have to travel to Paris, even if you would
Speaker 10: like to travel to Paris.
Speaker 3: But there's something equally as difficult to get tickets for.
Speaker 10: I think, honestly, I think I put two things. It
Speaker 10: was sort of perverse of me to put the two
Speaker 10: most impossible shows.
Speaker 3: Can I tell you something. It's really annoying to live
Speaker 3: in New York, I know. And then to also get
Speaker 3: constant reminders of how good cultural events are and then
Speaker 3: not be able to get tickets for them because they're
Speaker 3: like eight hundred dollars for a seit.
Speaker 1: Have relatives come from out of town.
Speaker 3: Like I want to go see it?
Speaker 1: Do you see this? And I'm like no, because I
Speaker 1: have a mortgage to pay. Like it's crazy.
Speaker 10: Honestly, I suggest you move into a studio rental and
Speaker 10: go see all the.
Speaker 3: Culture or do what I used to do when I
Speaker 3: didn't have kids, which was like go line up to
Speaker 3: try to get the lottery tickets. Guess how many times
Speaker 3: I was able to get none. It was the biggest
Speaker 3: waste of time ever. We're talking about good Night and
Speaker 3: good Luck.
Speaker 10: We're talking about good Night and good Luck, which is
Speaker 10: almost a word for word recreation of the tooth in five.
Speaker 3: Saw that one movie.
Speaker 10: Ye, good movie, great movie, Yes, And so Clooney has
Speaker 10: adapted it for stage and he is apparently fantastic, apparently
Speaker 10: to the extent that it is the hardest ticket to
Speaker 10: get in New York City right now. Prices are selling
Speaker 10: for catastrophic sums for in terms of resale. It is
Speaker 10: very very very very popular. But there's something else to
Speaker 10: do in New York City that costs a lot to us.
Speaker 1: But he plays Edward R. Murrow this time around, which
Speaker 1: hes in the in the film. Okay, now what else
Speaker 1: can we do.
Speaker 10: The thing that is not on this list, but which
Speaker 10: I have also written about is the Frick Collection is reopening,
Speaker 10: and it is reopening after a very very long movie
Speaker 10: about the Well, yes, there was a lot of back
Speaker 10: and forth. I mean they first, So for people who
Speaker 10: are listening who are not familiar with this, the Frick
Speaker 10: Collection is this historic Gilded Age mansion on Fifth Avenue
Speaker 10: that was built and resided in by Henry Klay Frick,
Speaker 10: who is an investor and also he was a very
Speaker 10: rich man and he bought a ton of absolutely spectacular art.
Speaker 10: The Frick Collection has three vermirez for instance, I mean
Speaker 10: the goyas, the menets, they've got, they have an incredible collestion.
Speaker 10: But the mansion that his was turned into a museum
Speaker 10: was this jewel box.
Speaker 3: Right.
Speaker 10: You walk in and you feel like you're in this
Speaker 10: kind of special other time. And so when the Frick
Speaker 10: announced way back in twenty fourteen that they wanted to
Speaker 10: do an expansion not of the museum itself but everything
Speaker 10: around it, people lost their minds. I mean, there were
Speaker 10: thousands of signatures from very famous people that were like
Speaker 10: stop the Frick. Everyone didn't want the Frick to change
Speaker 10: in any way, but the Frick wanted to change for
Speaker 10: a lot of different reasons.
Speaker 3: I mean, to be fair, it was a pretty cool
Speaker 3: intimate place you could go and see amazing art.
Speaker 10: Well, the good news is, having been back before the opening,
Speaker 10: I can tell you that it is still an incredibly
Speaker 10: cool intimate place to seeard. And the things that they
Speaker 10: have changed. They've changed the way that. First of all,
Speaker 10: they buried underneath the guard an auditorium underneath the guard,
Speaker 10: and it's exquisite. They did a very discreete addition, this
Speaker 10: is all done by the starchitect, Annabel Zeldorf, who is
Speaker 10: a really thoughtful, very canny person. They kind of bumped
Speaker 10: up the space where the music room was and turned
Speaker 10: that into this vestibule and there's a cafe now. And
Speaker 10: they also opened up the second floor of the Frick
Speaker 10: so that you can go and you can go into
Speaker 10: the bedrooms which were once offices and now our bedrooms again,
Speaker 10: and so you get more of a run place. It's
Speaker 10: more fricky than the Frick was before.
Speaker 3: You know, I'm going to go to this. I can
Speaker 3: go to and I did go to the Frick before
Speaker 3: the renovation.
Speaker 10: It opens April seventeenth. It's very close to us. Go
Speaker 10: runs out. I don't, but I would bet that is
Speaker 10: less than twenty dollars. But that's a bet.
Speaker 1: Cheaper than going to see cleaning up on stage.
Speaker 10: Well, it is cheaper, indeed, so highly recommend. And then
Speaker 10: there's books, but I don't know if you have enough time,
Speaker 10: don't books? Unfortunately, you know you always have me on
Speaker 10: at the end. I should take up the entire segment.
Speaker 3: Next week, you can, you know, a half hour forty
Speaker 3: five Army Okay, that's what we want, Army time, with.
Speaker 1: Tons and tons of time with.
Speaker 10: PTARMI look, the alliteration spills out. The people want it
Speaker 10: terrific tons of time for it. I'm sure terrible time.
Speaker 3: That's what that's. Bloomer Regards column James Tarmy. Check out
Speaker 3: this and more in Bloomberg Pursuits We're Freaky.
Speaker 7: I like that.
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