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Speaker 3: We are going to stay out WES though to a
Speaker 3: lighter story, no doubt about that.
Speaker 4: We're going to head back.
Speaker 3: To ces in Las Vegas and to some of those
Speaker 3: companies in the tech and media world's changing how we
Speaker 3: consume and how we access content. And among them tim
Speaker 3: is quick Play, which provides cloud solutions and platforms and
Speaker 3: services for OTT content delivery and more.
Speaker 5: Here to tell us what they're up to is the
Speaker 5: CEO of Quickplay, Paul Paster, who has held executive positions
Speaker 5: at media organizations including Disney Plus and Hulu. Paul joins
Speaker 5: us live at CEES in Las Vegas. Paul, great to
Speaker 5: have you with us. We're going to talk about what
Speaker 5: you do with regard to the OTT space, the over
Speaker 5: the top space over at quick Play in just a minute.
Speaker 5: But before that, would love your news on the consolidation
Speaker 5: news that we saw we'd love your views on the
Speaker 5: consolidation news that we saw a little earlier this week
Speaker 5: when it comes to the tie up of Hulu Live
Speaker 5: and of Fubo TV. Curious about what your reaction to that.
Speaker 5: As a former executive at Disney, somebody worked at Hulu
Speaker 5: as well, what do you see as the strategy here?
Speaker 6: Sure?
Speaker 7: Well, first, thank you for so much for having me,
Speaker 7: And second, I know your last story was covering the
Speaker 7: fires in Los Angeles as a prior Los ANGELESO and
Speaker 7: somebody in the media industry, My heart goes out.
Speaker 6: To everybody in Hobery.
Speaker 7: Be safe as it relates to the Fubo and Disney
Speaker 7: announcement obviously this week, Listen, the one thing we need
Speaker 7: to know and understand is this solved a very big
Speaker 7: problem for media companies. The Fubo lawsuit obviously was trying
Speaker 7: to ensure that media companies weren't able to bundle, and
Speaker 7: that would have devastating effects on these bigger media companies
Speaker 7: that still make a lot of money from cable. So
Speaker 7: for two and twenty million dollars plus the combination of
Speaker 7: this venture with both Hulu Plus and Fubu, they've really
Speaker 7: solved a lot of problems both in the lawsuit and
Speaker 7: in driving scale in the industry, which will hopefully let
Speaker 7: them kind of build out new consumer propositions.
Speaker 3: Paul, do you also think that decision by Disney to
Speaker 3: merge with Fubu and also launch its ESPN streaming product
Speaker 3: is kind of enough to I guess you would say
Speaker 3: future proof it's revenue from accelerated cord cutting, which we
Speaker 3: know continues.
Speaker 6: Well.
Speaker 7: Listen, there's still a long term trend where we're seeing
Speaker 7: a decline in the total reach of cable, but this
Speaker 7: most certainly lets them launch the new venue opportunity where
Speaker 7: there is a strong value proposition behind sports and finding
Speaker 7: a level of aggregation that will really solve a consumer
Speaker 7: challenge of where do I find my sports and how
Speaker 7: do I watch them? So this is a win for
Speaker 7: consumers and that this product will begin to be launched,
Speaker 7: and hopefully we'll also find a path for these media
Speaker 7: companies to continue to address some of the reach concerns
Speaker 7: they have over the loss of cable subscriptions.
Speaker 5: Let's go there and give us an understanding of how
Speaker 5: you think they navigate this tricky terrain here, I mean
Speaker 5: the cord cutting that we've seen over the last fifteen
Speaker 5: years or so has just absolutely devastated the traditional PAYTP
Speaker 5: providers and even those cable companies that have been carrying
Speaker 5: that content. These companies, apart from Netflix, are really trying
Speaker 5: to figure out what to do what happens to the
Speaker 5: smaller content players now the Warner Brothers discoveries, the paramounts
Speaker 5: and the like in an environment such as this.
Speaker 7: Yeah, listen, I think every CEO and every person in
Speaker 7: a media company today is trying to figure out how
Speaker 7: do they future prove their business and what we can
Speaker 7: see and what we can tell right from all gen
Speaker 7: Z consumption is that gen Z consumers are going to
Speaker 7: YouTube and going to TikTok.
Speaker 6: They're watching a ton of short form content.
Speaker 7: They spend three hours a day on YouTube and TikTok
Speaker 7: compared to one hour a day with broadcasts and streamers,
Speaker 7: and this is a growing trend among all demographics. So personally,
Speaker 7: where I believe these media companies to be focused is
Speaker 7: how do I begin to own the whole conversation around
Speaker 7: my IP and my content and think about developing a
Speaker 7: short form content and product strategy that really addresses these
Speaker 7: gen Z consumers the way that they like to interact
Speaker 7: with content the way they consume it in these in
Speaker 7: these moments versus lean back experiences.
Speaker 6: They they like to engage.
Speaker 7: I think that's the real opportunity for media companies today,
Speaker 7: if they really want to think about their future and
Speaker 7: not seeding into these other platforms.
Speaker 5: So should Netflix be concerned because they don't necessarily have
Speaker 5: that short form content that TikTok has, that YouTube shorts
Speaker 5: that Instagram reels have.
Speaker 6: I certainly believe so.
Speaker 7: And if you follow my LinkedIn posts, so the last
Speaker 7: couple of weeks, you'll actually know I was challenging Netflix
Speaker 7: largely because of Beyonce Bowl. I am a huge Beyonce fan,
Speaker 7: cowboy Carter fan. I was suiting too for having Netflix
Speaker 7: having the Christmas NFL You too, see you love it?
Speaker 6: Right?
Speaker 7: Well, you will't watch the game, right. They made a
Speaker 7: huge push for people to watch this NFL game on
Speaker 7: on Christmas Day. I personally, all I really cared about
Speaker 7: was watching the halftime show was Beyonce. Ten minutes after
Speaker 7: the broadcast, it was nowhere to be found. No one
Speaker 7: had thought about the fact that they needed to actually
Speaker 7: clip it immediately and post it and make it available
Speaker 7: for their consumers.
Speaker 6: Instead, I had watched.
Speaker 7: It on YouTube, right, So it created a huge opportunity
Speaker 7: for YouTube demonetize a huge event when Netflix didn't own
Speaker 7: the conversation, and if they had other tools and a
Speaker 7: product focused on shorts, they could have really owned the
Speaker 7: entire conversation.
Speaker 8: Right.
Speaker 7: So it's not just about Beyonce, it's the behind the
Speaker 7: scenes and most importantly, all the social engagement that happens
Speaker 7: around it. So I think that's a real opportunity for
Speaker 7: Netflix and all the streamers out there to be thinking
Speaker 7: about owning the conversation and making sure they're not just
Speaker 7: focused on long form. They need to have a short
Speaker 7: form content experience.
Speaker 6: It's social life, all right.
Speaker 3: Well, last question about the broader industry, and then we
Speaker 3: want to talk about your company. We mentioned about Disney
Speaker 3: and Fubo doing their deal. I just want to get
Speaker 3: your thoughts because you understand space.
Speaker 4: You worked at Disney.
Speaker 3: What skill set do you think that the Disney board
Speaker 3: is likely to prioritize in searching for its next leader?
Speaker 7: Oh my goodness, Well, if I had that level of insight,
Speaker 7: well what is the years I could have been.
Speaker 6: So what do you think of different butts?
Speaker 3: What do you think it's like this iconic media company.
Speaker 3: It's got great properties, and yet it's trying to figure out,
Speaker 3: you know, what its world is for the rest of
Speaker 3: the twenty first century and maybe beyond.
Speaker 7: Most certainly, well, I think at the end of the day, listen,
Speaker 7: I think you need somebody who has a vision of
Speaker 7: what twenty thirty looks like, twenty thirty five looks like
Speaker 7: from a consumer standpoint, and how technology is going to
Speaker 7: fundamentally change both the creative side of the industry and
Speaker 7: the distribution side of the industry. It is incredible when
Speaker 7: we look at the tools that are becoming available.
Speaker 6: To everyday users.
Speaker 7: When you look at the AI technology that can take
Speaker 7: texts into a video format and more in version one,
Speaker 7: in version two of that, imagine what that looks like
Speaker 7: in five years. That blending and that differentiation between premium
Speaker 7: content and UGC driven content is eroding very rapid and
Speaker 7: so you need to figure out ways to harness it,
Speaker 7: and you need a CEO that embraces that type of vision.
Speaker 3: All right, So let's talk about your world. Tell us
Speaker 3: about you know, your company. We did a little introduction.
Speaker 3: It sounds like you guys are at this great cross
Speaker 3: section when it comes to content and not just traditional providers.
Speaker 3: But you know, it's health, it's security, it's a lot
Speaker 3: of stuff going on. Tell us about your world. What
Speaker 3: is it that moves the financial need needle?
Speaker 4: Where's the growth?
Speaker 7: Certainly, so listen, this has been a We started the
Speaker 7: company five years ago, back in the early days of
Speaker 7: the of COVID, but we recognized that this was a
Speaker 7: moment where media companies were beginning to focus on consumers
Speaker 7: and streamers right and they built out their version one
Speaker 7: other platform. We're a media company, We're a technology company
Speaker 7: focus on chier one Media who's looking to build out
Speaker 7: streaming solutions that also can advance the overall consumer experience.
Speaker 7: So what we what you've seen is we support the
Speaker 7: likes of Yankee Sports Network, Madison Square Garden and their
Speaker 7: joint venture. We support ah Media on and Media Group
Speaker 7: and delivering that overall consumer experience. What we're advancing in
Speaker 7: our conversation here at CEES is how do we begin
Speaker 7: to really think about leveraging first AI tools to help
Speaker 7: companies develop shorts content, To leverage AI tools that can
Speaker 7: take live and VOD content, convert it into shorts and
Speaker 7: then verticalize that to publish that into a syndicated or
Speaker 7: owned app experience, and second to help them advance that.
Speaker 6: Social like experience. We were just talking about that.
Speaker 7: How do you build a destination where you can have
Speaker 7: an infinite scroll, interact with the content with legs, commons,
Speaker 7: emojis to be able to share that into other platforms,
Speaker 7: So the basis of the conversation starts on owned platform.
Speaker 6: Those are the types of experiences we're hoping to.
Speaker 7: Advance within the media industry and really help shape the
Speaker 7: opportunity for these streamers around new ad units, around driving promotion,
Speaker 7: around their long form engagement, driving promotion around their subscriptions,
Speaker 7: and fundamentally creating this virtual cycle of consumers leveraging and
Speaker 7: using their app on a daily basis, which really becomes
Speaker 7: the foundation for gaining mind share and time spent with consumers.
Speaker 5: So it sounds like you're making a bet that these
Speaker 5: companies that are your clients can actually build the audience
Speaker 5: within apps and then get consumers and get viewers and
Speaker 5: audience to engage there and not just on the tiktoks,
Speaker 5: the instagrams and the youtubes. Is that correct, because that
Speaker 5: seems like a really tall task.
Speaker 7: That's that's right, Well, if you think about the IP
Speaker 7: that they have. So I'm saying, why don't you start
Speaker 7: with the destination that's built around your IP right and
Speaker 7: own the conversation. This is a very traditional way of
Speaker 7: looking at media in some respects. We've always had windowing
Speaker 7: strategies where content would start on one platform, then migrate
Speaker 7: to another, then migrate to another. Today you could take
Speaker 7: content from live premieres from a VOD where you can
Speaker 7: say this is exclusive to our platform. We're going to
Speaker 7: hold it for a window, maybe it's fifteen minutes. Start
Speaker 7: the conversation on my platform. Then I'll allow for it
Speaker 7: to be shared onto other platforms. But its foundation starts
Speaker 7: with yours. And if you can find a way to
Speaker 7: get the consumer to open up your app on a
Speaker 7: more frequent basis right and reach a new audience like
Speaker 7: a gen Z audience, then you can win the attention game.
Speaker 4: Paul, how do you support it financially?
Speaker 3: Because that sounds like a lot of people competing for
Speaker 3: eyeballs and hits and so on and so forth, but
Speaker 3: also the traditional advertising model also competing for all of that,
Speaker 3: So how do you support it?
Speaker 7: Certainly, so one is I should say the quick play
Speaker 7: does release research working with gen Z Insights that showcase
Speaker 7: that gen Z consumer said they would go and visit
Speaker 7: their streamer more frequently seventy nine percent they would visit
Speaker 7: it more frequently if they offered a compelling shorts offering.
Speaker 7: And what they told us is what they're looking to
Speaker 7: see is reality programming, original content, highlights and clips from
Speaker 7: their favorite shows and their sports events. So there's a
Speaker 7: really clear defined opportunity for the media companies themselves. Then
Speaker 7: in terms of monetization, right now, you're thinking about adding
Speaker 7: ad units into your short form experience and then promoting
Speaker 7: to that long form content experience where you can similarly
Speaker 7: monetize through ads. If you look at the subscription ads
Speaker 7: over the last last quarter coming off of the latest
Speaker 7: Antenna research, the majority of subscription ads are coming through
Speaker 7: AD defined subscription plans. So this tells you there's a
Speaker 7: huge opportunity sitting in the monetization space of relative to ads.
Speaker 3: So tiered right, so you're can be able to pay
Speaker 3: for something so you don't maybe get those ads or
Speaker 3: something right.
Speaker 7: Well, everybody always wants the excuse of the ability to
Speaker 7: opt out. I would say that I look at shorts
Speaker 7: though as a way to think about it as a
Speaker 7: front porch. You make that available to all consumers, and
Speaker 7: then behind that experience, in your long form traditional streaming experience,
Speaker 7: you offer the opportunity to have no ads.
Speaker 5: Well, where does AI come into this. Does it come
Speaker 5: into this in the sense of it makes it very
Speaker 5: easy to actually clip and share something or does it
Speaker 5: go beyond that? And is there a way for AI
Speaker 5: to identify that moment that will go viral because editorially
Speaker 5: people do that. People have to understand what really resonates
Speaker 5: with the audience.
Speaker 6: This is a great question.
Speaker 7: So if you think if we break apart at the
Speaker 7: shorts opportunity and two component parts, I'll tell.
Speaker 6: You about the application of AI.
Speaker 7: The first part is how do you take a piece
Speaker 7: of long form content or a live experience and say
Speaker 7: what are the viral moments?
Speaker 6: Right?
Speaker 7: And you can actually marry that with what's going on
Speaker 7: with Google trends to actually take the piece of asset
Speaker 7: leverage AI, pend the metadata to it, and then say, actually.
Speaker 6: This matches a trending moment on Google.
Speaker 7: Let's publish in the short form vertical format into an
Speaker 7: owned or syndicated experience.
Speaker 6: So that's all AI driven.
Speaker 7: The second piece within that consumer experience that you may
Speaker 7: have as a destination sitting with within your app. We're
Speaker 7: leveraging personalization, right, that's all AI driven, right, which is
Speaker 7: to understand what are your consumer likes and dislikes, what
Speaker 7: do you engage with, how much time do you spend
Speaker 7: with it, and leveraging that to make it a more
Speaker 7: compelling experience for you every single team time you log in,
Speaker 7: and of course then apply to that as all the
Speaker 7: AD opportunity that sits within that, right, because now we
Speaker 7: can also do contextual advertising because when you know what
Speaker 7: the content is along with the personalization, so you're getting
Speaker 7: a double hit on AI within the ad delivery component.
Speaker 7: So really AI can be applied applied across the entire spectrum.
Speaker 3: Cool stuff, Cool stuff, Come back soon. Love to get
Speaker 3: an update as things move along through twenty twenty five.
Speaker 3: Paul Pastor, here's CEO of quick Play joining us there
Speaker 3: from cees in Las Vegas.
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Speaker 5: Our Live blogout with the latest too dead a high
Speaker 5: number of significant injuries from the fires as they firefighters
Speaker 5: struggle to contain blazes in Pacific Palace Stades in Pasadena, Carol.
Speaker 5: More than twenty three thousand acres have burned in twenty
Speaker 5: four hours. Utilities have cut power to thousands of homes
Speaker 5: and businesses. My brother's out there in South Pasadena.
Speaker 4: How's he doing.
Speaker 5: He's getting out of there, waiting for his girlfriend to
Speaker 5: get off of work. I think they're going to head
Speaker 5: up to the Central Coast to see my parents. But
Speaker 5: he's been without power since yesterday.
Speaker 3: You know, I feel like we're all kind of messaging
Speaker 3: everybody out on the West Coast. I mean, it's real,
Speaker 3: and like you just have a matter of time to
Speaker 3: like kind of leave your homes and so on and
Speaker 3: so forth. In something that we're continuing to track because
Speaker 3: this fire is expected to continue for at least a
Speaker 3: couple of days for the latest, and we've been trying
Speaker 3: to track it in real time and to really help
Speaker 3: us understand the connection between whether and climate and the
Speaker 3: insurance story, which is yep, we're a business organization and
Speaker 3: that is an aspect of it. No doubt about it.
Speaker 3: We're joined by a great roundtable. Mark Onngloff is editor
Speaker 3: of Bloomberg Opinion. He covers climate change for US and
Speaker 3: also back with us as David Baker. He's Bloomberg News
Speaker 3: Energy and Climate reporter Marcus in New York. David is
Speaker 3: in San Francisco. David, let's go back out to the
Speaker 3: West coast. You've been keeping us up to speed on
Speaker 3: what's been going on. What's the latest at this hour
Speaker 3: that you are hearing?
Speaker 8: Well, none of it is good. The fires are still
Speaker 8: utterly out of control most of them. The two biggest
Speaker 8: ones keep growing. We keep getting updates from cal Fire.
Speaker 8: The Palisades fire is now above eleven thousand acres. The
Speaker 8: Eden fire above Pasadena is now above ten thousand. And
Speaker 8: they're not just burning through woodlands or grassy hillsides. They're
Speaker 8: burning through actual neighborhoods, both of them. We have more
Speaker 8: than one hundred and twenty thousand people evacuated. They are
Speaker 8: filling into hotels, they're calling up friends and family trying
Speaker 8: to find a place to stay, and it is starting
Speaker 8: to really paralyze life in our second largest city.
Speaker 3: We just want to mention for those who are watching
Speaker 3: right now on YouTube and of course on our Bloomberg
Speaker 3: Original streaming channel that what you are seeing right now
Speaker 3: is a live shot of the fire. So we're not
Speaker 3: quite exactly sure of the location here, but obviously within
Speaker 3: the area that we've been talking the Pacific Palisades, Pasadena,
Speaker 3: those general areas, but that's what we're seeing right now.
Speaker 5: David. I'm racking my brain here trying to come up
Speaker 5: with a recent historical corollary to this historical precedent to
Speaker 5: the scale of this evacuation and how many people in
Speaker 5: structures and homes are at risk here, and I can't
Speaker 5: do it. Is this unprecedented or do we have historical
Speaker 5: examples of when fires have threatened and in the devastated
Speaker 5: areas such as this in the past.
Speaker 8: It's funny you say that, because I was having this
Speaker 8: conversation with a net or a few minutes ago, and honestly,
Speaker 8: I think the closest thing that you can compare this
Speaker 8: to is the nineteen ninety four north Ridge earthquake in
Speaker 8: La I thought, I mean, in terms of a natural
Speaker 8: disaster of this scope affecting so many people, that's probably it. California.
Speaker 8: We've endured so many bad wildfires in the last decade,
Speaker 8: but most of them have been in rural areas, not
Speaker 8: in a major city like this, And yeah, this is
Speaker 8: something different.
Speaker 4: Mark Gong Gleff, I want to bring you in.
Speaker 3: I've been watching your face on the monitor and you're
Speaker 3: shaking your head here.
Speaker 4: You know, I feel like you and you meet Tim.
Speaker 3: We have these conversations of just when we think it
Speaker 3: can't get any worse, it certainly feels like it can.
Speaker 9: Yeah, it's really grim. And when we were talking about
Speaker 9: things that are in present, you know, one of the
Speaker 9: things you made. One of the scary things about these
Speaker 9: fires is that they didn't exist Tuesday morning, like thirty
Speaker 9: six hours ago. They didn't exist. All we had was
Speaker 9: a warning from the Weather Service that there were going
Speaker 9: to be strong Santa Anna wins maybe the strongest ever,
Speaker 9: the strongest since at least twenty eleven when there were
Speaker 9: some really devastating ones, and they warned that there was
Speaker 9: an extreme risk of wildfire. And this is the first
Speaker 9: time that the National Weather Service has ever warned of
Speaker 9: an extreme wildfire risk in the lower forty eight states
Speaker 9: in January ever, And so right away you got this sense, well,
Speaker 9: this could be really bad. And you know, we hoped
Speaker 9: that it wouldn't be, but it has turned out to
Speaker 9: be as bad, if not worse, than we expected.
Speaker 5: Santa Ana Wins mark nothing new, as you write in
Speaker 5: your piece, what's unique about this moment in history, the
Speaker 5: development of this area and what's been happening in the
Speaker 5: broader climate over the last three decades or so that
Speaker 5: create this really combustible mix.
Speaker 9: Yeah, it's a toxic mix, as you say, Santa Ana
Speaker 9: wins wildfires, those have been part of California life forever.
Speaker 9: The difference now is that climate change has made a
Speaker 9: lot of factors much worse. So you get a lot
Speaker 9: of rain and snow and during those seasons, and that
Speaker 9: is great. It produces a lot of you get a
Speaker 9: lot of water, but it produces a lot of plants.
Speaker 9: And then during the summer and fall seasons when you
Speaker 9: don't you're not having any rain, the air is hotter,
Speaker 9: the air is drier. All these plants that grew during
Speaker 9: the spring are drying out and providing kindling for these fires.
Speaker 9: The air is drier, which makes it more combustible. The
Speaker 9: other big problem here is that we have built millions
Speaker 9: of homes in the wild and urban interface where maybe
Speaker 9: you know, wildfires used to just burn and only affect
Speaker 9: plants and trees. Now the houses themselves are serving as
Speaker 9: kindling for these fires. And so you have these fires
Speaker 9: that are that are hotter than usual, moving faster than usual,
Speaker 9: and they're jumping to houses which are burning and then
Speaker 9: creating their own kindling to spread the fires even faster.
Speaker 9: And it's a scary situation.
Speaker 3: It makes me think of the conversations we had over
Speaker 3: the summer or was it fall really I got to
Speaker 3: kind of remember my timing here, but just in Upper
Speaker 3: Manhattan or across the Hudson along the Palisades, something that
Speaker 3: we've never seen. And what's unusual is that once again
Speaker 3: you're having these wildfires because of dry conditions, and they're
Speaker 3: happening in places that are very, very heavily populated, are
Speaker 3: near major cities. You're talking about a lot of people
Speaker 3: and there's a lot there that can quickly catch fire.
Speaker 4: David, I want to go back to you.
Speaker 3: We know President Biden was in the region, he was
Speaker 3: there with California Governor Newsom. What are we knowing about
Speaker 3: resources that are coming in and making sure that everything
Speaker 3: that can go to fight these wildfires are there.
Speaker 8: Biden has pledged federal support for fighting these fires and
Speaker 8: for helping recover afterward. Newsom has done the same at
Speaker 8: the state level. And Newsom has quite a lot of
Speaker 8: experience with this tenure as our governor has coincided with
Speaker 8: many of these the worst of the fires we've experienced.
Speaker 8: That said, in terms of actually getting these fires stopped,
Speaker 8: there's going to be not much either man can do
Speaker 8: until these winds start abating. I mean, the main thing
Speaker 8: driving this right now really is the weather, and it's
Speaker 8: going to be the case for the next couple of days.
Speaker 8: As dreadful as all these images are that we're seeing here,
Speaker 8: and as many people as we throw at the firefight,
Speaker 8: we're still going to be stuck with these fires growing
Speaker 8: for several days before we see the full extent of
Speaker 8: the damage. And bear in mind there's the possibility of
Speaker 8: another windstorm bearing down on us early next week.
Speaker 4: Hey, David, one last question.
Speaker 3: Then we want to let you get back to your reporting,
Speaker 3: because we've been leaning on you heavily and understanding day
Speaker 3: by day or hour by hour, I should say, what's happening.
Speaker 3: I am looking at the live blog on the LA
Speaker 3: wildfires and the leader of the California State Senate, Mike Maguire,
Speaker 3: saying hoods didn't have proper water flow during the blaze.
Speaker 3: I mean, is there the concerns, the threats already, the
Speaker 3: reality that there's not water where it's needed.
Speaker 8: This is what President Electrump was referring to in some
Speaker 8: social media posts earlier today, at least obliquely. There was
Speaker 8: last night in Pacific Palisades. They were taking so much
Speaker 8: water out of the hydrants to fight this fire that
Speaker 8: it tapped out the system's capability to deliver more water.
Speaker 8: And they're in the Palisades. They have these water tanks
Speaker 8: that are able to feed extra water into the hydrants
Speaker 8: in emergency situations. They even tapped out those as of
Speaker 8: about I think three am this morning. Now the city
Speaker 8: which runs the water system there has been bringing in
Speaker 8: portable tankers to make sure that doesn't happen again. But yeah, yeah,
Speaker 8: essentially they're using every bit of water they can get
Speaker 8: their hands on.
Speaker 3: All right, So appreciate the updates, and I'm sure we'll
Speaker 3: be leaning on you later today as well as into
Speaker 3: the next couple of days, but hopefully less because that
Speaker 3: means we're getting these fires under control.
Speaker 4: David R.
Speaker 3: Baker, Bloomberg News Energy and Climate reporter, joining us from
Speaker 3: our bureau in San Francisco. We're going to let you go,
Speaker 3: but we're going to continue with Mark onlof Hey.
Speaker 5: Mark, your most recent column is about a fires exposing
Speaker 5: a one trillion dollar hole in home insurance. You write
Speaker 5: about homeowners in increasingly risky areas not being able to
Speaker 5: obtain adequate coverage as insurers flee the state to avoid losses.
Speaker 5: We're talking about places including Pacific Palisades. What's happening with
Speaker 5: the insurance market and what are these in these areas
Speaker 5: of California. What are these homeowners doing, What is the
Speaker 5: system and what is the program that they're tapping into.
Speaker 9: So these houses that we were talking about have become
Speaker 9: kindling during these wildfires, and insurers noticed that years ago
Speaker 9: and started pulling out of the state. When they did that,
Speaker 9: they started raising prices and pulling out of the state
Speaker 9: or pulling out of these risky areas. When they did that,
Speaker 9: some homeowners, who you need to have insurance in order
Speaker 9: to get a mortgage, they turned to less regulated insurers,
Speaker 9: which are more costly and more risky. A lot of people,
Speaker 9: though have turned to California's state run plan, the Fair Plan,
Speaker 9: which has tripled in size, tripled in its obligations over
Speaker 9: the past five years, almost four hundred and almost five
Speaker 9: hundred billion worth of potential losses there. If all of
Speaker 9: the homes in California went up, there would be five
Speaker 9: hundred billion dollars six billion dollars alone in the neighborhood
Speaker 9: of Pacific Palisades. It's one of the heaviest users of
Speaker 9: the Fair Plan because State Farm and a lot of
Speaker 9: big insurers pulled out of Palisade Pacific Palisades a while
Speaker 9: back last year and said we don't want to ensure
Speaker 9: you anymore. So a lot of these people with very
Speaker 9: wealthy homes. I mean, the average house in that neighborhood
Speaker 9: is three and a half million dollars, which for California
Speaker 9: is maybe not that high, but it's still pretty high.
Speaker 9: A lot of these people are using the California Fair Plan.
Speaker 9: California Fair Plan last count only had seven hundred million
Speaker 9: dollars in the bank. And so if just a percentage
Speaker 9: of the damages in Pacific Palisades and some of these
Speaker 9: other neighborhoods close by and Pasadena are going to fall
Speaker 9: on the fair plan, then fair Plans can have enough money,
Speaker 9: and then it's going to turn to other insurers in
Speaker 9: the state. And when I talk about California, you know,
Speaker 9: this is just one part of a national insurance crisis.
Speaker 9: This is this is a problem that we're seeing in
Speaker 9: states all over the country.
Speaker 3: Mark are redoomed. Just got about forty seconds. I say
Speaker 3: this because one of the stories Tim and I talked
Speaker 3: about yesterday JP Morgan quitting the Net zero Banking Alliance
Speaker 3: following city in ba A.
Speaker 4: And this has to do with you know work.
Speaker 3: They say they're going to work independently to advance low
Speaker 3: carbon technologies and support you know, clients engage in any transition,
Speaker 3: energy transition and decarbonization.
Speaker 4: Forgive me, I'm rushing through.
Speaker 3: But I mean I feel like, man, this feels like
Speaker 3: everybody's turning their back on climate change.
Speaker 4: Well, we're watching these fires. Got about twenty five seconds.
Speaker 9: Here, crazy cognitive dissonance.
Speaker 10: Here.
Speaker 9: We are not doomed. We are only doomed if we
Speaker 9: don't do anything about it. New York State could regulate
Speaker 9: the banks and try to make them stick to some
Speaker 9: of their I'm promises. We can all put political pressure
Speaker 9: on our elected officials to say, hey, look at what's happening.
Speaker 9: We're losing money in a chart on home insurance. There's
Speaker 9: a potential financial risk here. Please do something and just
Speaker 9: health risk and lifestylerist, please do something about this. We
Speaker 9: can do that.
Speaker 3: Well, and everybody read Mark on Gloff's columns, because that'll
Speaker 3: that'll make you do it.
Speaker 4: This is Bloomberg.
Speaker 1: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 7: Mac beout you let me drive you.
Speaker 4: Oh no, no, no no, this is not a toy. Please, honey, please,
Speaker 4: I'll do the ravels. Let's wait, I want to drive.
Speaker 2: It's a good question.
Speaker 1: God. This is the Drive to the Clothes Quan sum
Speaker 1: thing well run on Bloomberg Radio.
Speaker 3: All right, everybody, just under twenty minutes to go until
Speaker 3: we wrap up the trade on this Wednesday, January eighth. Yep,
Speaker 3: we are focused on the mark. It's got to say.
Speaker 3: It's as you heard from Charlie Pellett and Bill Maloney
Speaker 3: really kind of a quiet trade or little changes.
Speaker 5: I should say, less you're a quantum computing company.
Speaker 3: Unless you're a quantum computing company, right you are really
Speaker 3: taking it still trying to figure.
Speaker 5: Out what to do when those companies do well.
Speaker 3: It's you know, I am too like it's it sounds
Speaker 3: like there's going to be some collaboration with AI. I mean,
Speaker 3: AI is apparently going to be an application of quantum computing.
Speaker 4: I've been doing some.
Speaker 3: Searching around, but it basically is quantum mechanics, and it
Speaker 3: leverages or harnesses the laws of quantum mechanics.
Speaker 4: If you use to solve really complex problems.
Speaker 5: If you ask AI this question, does it eat itself?
Speaker 4: That's a really come to meta.
Speaker 5: Is that what happens?
Speaker 1: Well?
Speaker 5: The reason I say that is because doing this why
Speaker 5: just kidding, I don't know Getty computing. Carol's one of
Speaker 5: my decliners, down forty five percent right now.
Speaker 3: Yeah, yeah, So it's kind of interesting, and I guess
Speaker 3: you know, it's going to use specific.
Speaker 4: Hardware, there's going to be algorithms. It's still in development.
Speaker 3: It's kind of all of our new world order, but
Speaker 3: it is interesting to see this group move in a
Speaker 3: big way, and some of it has to do with
Speaker 3: right what Jensen Wang had to say.
Speaker 5: Yeah, Jensen said that quote, very useful quantum computers are
Speaker 5: likely decades away. Here's what he said. If you kind
Speaker 5: of said fifteen years for very useful quantum computers, that
Speaker 5: would probably be on the early side. If you said thirty,
Speaker 5: it's probably on the late side. He said this in
Speaker 5: a Q and A session during Video's analyst day. If
Speaker 5: you pick twenty, I think a whole bunch of us
Speaker 5: would believe it.
Speaker 3: Yeah, all I know is AI, you know, which has
Speaker 3: been around for decades and then all of a sudden
Speaker 3: two years ago, bam. You know, you get a major development,
Speaker 3: or you get a major technological development or breakthrough, and
Speaker 3: then all of a sudden, you know, these things that
Speaker 3: maybe are going to be five, ten, twenty, or you know,
Speaker 3: years away all of a sudden, maybe are not so
Speaker 3: long away. So anyway, that group, though, it is taking
Speaker 3: a hit on those comments from Jensen, who obviously knows
Speaker 3: this space and very involved. But it's something that we're
Speaker 3: going to watch play out. Having said that, I look
Speaker 3: at the S and P five hundred folks kind of
Speaker 3: an even split in the trade. So you've got about
Speaker 3: two hundred and sixty five names that are actually gaining
Speaker 3: ground in today's session, and you've got about two hundred
Speaker 3: and thirty seven to the downside. I will say one
Speaker 3: of the most read stories though on the Bloomberg today,
Speaker 3: it's about Bank of America creating a group of specialists
Speaker 3: that cater to the ultra wealth. They are talking ten
Speaker 3: million dollars in above in assets, the bank looking to
Speaker 3: capitalize on the growing ranks of super rich clients needing
Speaker 3: complex financial products and advice. Our drive to the closed.
Speaker 3: Guest works in the wealth management space with us as
Speaker 3: Brook Bay. She's managing partner at Evans May Wealth. They've
Speaker 3: got about one point three billion in assets under management,
Speaker 3: and she joins us from Indiana.
Speaker 4: Brook great to have you here with us.
Speaker 3: Tell us about kind of the wealth management business, because
Speaker 3: it just feels like everybody and anybody has a specific
Speaker 3: division that's wealth management, the big bank, smaller firms. What
Speaker 3: are you seeing in terms of who actually is kind
Speaker 3: of your higher NETWT worth individual?
Speaker 4: You know, it spreads the gamut.
Speaker 10: High net worth individuals can come from all walks, all professions.
Speaker 10: We have a lot of tech entrepreneurs in addition to
Speaker 10: CEOs of publicly traded companies, doctors and lawyers who've been
Speaker 10: good stewards of their money. So really, you know, there
Speaker 10: are there are all kinds of all types of high
Speaker 10: net worth individuals who are clients.
Speaker 5: What are they what are what are they telling you
Speaker 5: right now about how they're looking to grow their money,
Speaker 5: their asset allocation, what they're thinking about when it comes
Speaker 5: to where they want to put their money, because or
Speaker 5: do you even have these conversations with them or do
Speaker 5: do they just say to you, Hey, you do your thing,
Speaker 5: you're the professional. We're just going to give you the power.
Speaker 4: A lot of it's the latter.
Speaker 10: That said, everyone's everyone's interests are different. Some want to
Speaker 10: grow their wealth and they want to grow it to
Speaker 10: the maximum or willing to take the risks. Say you know,
Speaker 10: I worked hard for this money, I want to protect
Speaker 10: it and.
Speaker 4: I want downside protection.
Speaker 10: So you know, really, we try to customize portfolios to
Speaker 10: individuals and make sure that it meets their needs. One theme,
Speaker 10: though we see consistently across the board is that family
Speaker 10: is very important to these high net worth individuals and
Speaker 10: they want us to treat their kids and their grandchildren
Speaker 10: as if their ultra high net worth and help them
Speaker 10: with charitable gifting in addition to educating them on being
Speaker 10: an investor and really all the things that come with that. Hey,
Speaker 10: I would say that's really the number one priority.
Speaker 3: Playing to the b of a story, though, what's the
Speaker 3: kiddie worth? Like, what do we I mean, I'm curious
Speaker 3: about what is your typical ultra high net worth individual.
Speaker 4: Are we talking about.
Speaker 3: Two million, five million, ten million?
Speaker 4: Is it you know, you said doctors? Is it former
Speaker 4: business owners?
Speaker 3: What's typically the type of their portfolio or the amount
Speaker 3: the value of their portfolio that you're managing for them.
Speaker 10: Our ultra high networth client is around twenty to one
Speaker 10: hundred million, and we have clients that are below those
Speaker 10: levels that are still high net worth, but we would
Speaker 10: consider the ultra high net worth and the more specific
Speaker 10: unique needs to be in the space of twenty million plus.
Speaker 3: Are they all looking for outperformance? In other words, yeah, okay, stocks, bonds,
Speaker 3: all that good stuff, but they really want to be
Speaker 3: in the private markets. They want to be investing in startups,
Speaker 3: Like where is it going and where are you guys
Speaker 3: putting it for them?
Speaker 10: Yeah, we're broadly diversifying. We have balanced portfolios for our
Speaker 10: high networth clients. We're equity biased, so we do have
Speaker 10: more inequities than a lot of other shops, but we
Speaker 10: balance that with fixed income. And then we've been incorporating
Speaker 10: alternatives the last few years just to diversify. And as
Speaker 10: these individuals are at cocktail parties, their friends and associates
Speaker 10: are talking about these unique investments, and so it's something
Speaker 10: that we've spent a lot of time learning about and
Speaker 10: investigating and then offering that to our clients as well well.
Speaker 5: In terms of alternatives, what's sort of top of mind
Speaker 5: for you in twenty twenty five when you know alternatives
Speaker 5: and compasses a lot. It could be real estate, it
Speaker 5: could be private equity, it could be venture capital, it
Speaker 5: could be private credit, it could be you know, many
Speaker 5: more things. What's alternatives to you?
Speaker 10: We really like.
Speaker 8: The private credit space.
Speaker 10: It's been the buzzword for the last few years. And
Speaker 10: you know, private credit space to us, though, isn't your
Speaker 10: safe money. And I think a lot of investors don't
Speaker 10: understand the private credit space. Oftentimes in private credit, you know,
Speaker 10: they're investing in companies that aren't necessarily considered investment grade,
Speaker 10: and oftentimes these products can have some leverage associated with
Speaker 10: them and there's recency bias. You know, we haven't been
Speaker 10: in an environment with a lot of defaults. I've done
Speaker 10: this for twenty five years, and if I look back
Speaker 10: to seven eight nine, where there were a lot of defaults,
Speaker 10: you know, a product that's scott lower quality companies and
Speaker 10: some leverage can really have a lot of downside. So
Speaker 10: we are incorporating private credit into the portfolios, but doing
Speaker 10: it for the client. That's a little bit more accepting
Speaker 10: of risk. In addition to that, we like senior retirement communities.
Speaker 10: That's an area where we've been investing for clients and
Speaker 10: think that there's tremendous growth and upside there.
Speaker 3: We just had guests on that represents the reed industry
Speaker 3: and he specifically, unfortunately at off air, we were asking
Speaker 3: kind of one of the hot areas and one of
Speaker 3: the areas you talked about in terms of real estate
Speaker 3: was specifically this senior housing area we're talking about. John Worreth,
Speaker 3: Executive VP of Research and Investor Outreach at AYREACH.
Speaker 4: National Association of Reach. But that is certainly something he
Speaker 4: highlighted as well. Hey, Brook, Thank you so much. Happy
Speaker 4: New Year.
Speaker 3: Brook May, managing partner at Evans Maywealthy've got about one
Speaker 3: point three billion in assets under management. Joining us from
Speaker 3: Indiana on this Wednesday.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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