Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: YouTube search Bloomberg glovel News. Hey, one thing we want
Speaker 1: to bring to your attention. Uh it went public video
Speaker 1: spack and it's back back by venture capitalist investor Jamaal Polyopatia.
Speaker 1: It started trading today on the NASDAC. We're talking about
Speaker 1: the fintech social finance are so far raising roughly two
Speaker 1: point four billion dollars to fuel growth at the company.
Speaker 1: Let's get into it with so FI CEO Anthony Nod,
Speaker 1: a former ce and CFO over at Twitter from a
Speaker 1: Goldman Sax partner overseeing tech and media. He joins us
Speaker 1: on the phone in San Francisco, Anthony, great to have
Speaker 1: you here on Bloomberg Business Week on Bloomberg Radio. Congratulation.
Speaker 1: Why do this through a spat and spack and not
Speaker 1: a traditional I p O. UM? You know, I think
Speaker 1: each company has to evaluate the different ways to go
Speaker 1: public based on their facts and circumstances, and for us
Speaker 1: this was a great option. We had a few things
Speaker 1: to consider. First, UM, we we wanted to convert our
Speaker 1: capital structure, where that was largely preferred shares to common shares.
Speaker 1: That wasn't necessity for two reasons. One, order to file
Speaker 1: with the Battle Reserve for a bank charter, we needed
Speaker 1: of comment act that could become a public company. We
Speaker 1: also needed to make that conversion. We also had two
Speaker 1: capital needs. First, um, we had bought Galileo in March
Speaker 1: of two thousand and twenty UM and with that came
Speaker 1: a seller note and that note was going to be
Speaker 1: doing March at two thousand twenty one, So that was
Speaker 1: one capital need. A second capital need was to finance
Speaker 1: the bank if and when we were able to achieve
Speaker 1: a charter. UM and so we were raising private money
Speaker 1: at the time, and we got approached number investors that
Speaker 1: wanted to put even more capital into the company and
Speaker 1: also considered UM supporting us in and going public. And
Speaker 1: so what we ended up doing was choosing a private
Speaker 1: round with t ro Price who invested three in seventy
Speaker 1: five million dollars. Then we closed that on or about December.
Speaker 1: We launched the PIPE confidential pipe process on UH and
Speaker 1: we're able to complete that by the thirty one and
Speaker 1: then announced the combination of those two and the third
Speaker 1: leg of the soul, which was a SPAC merger with
Speaker 1: Social Capital Head of Sophia five UM on January four.
Speaker 1: And the combination of those three pieces made it a
Speaker 1: unique approach for us to raise capital and go public
Speaker 1: at the same time, and it was the right outcome
Speaker 1: for us versus a regular way I p O or directs. Well,
Speaker 1: no shortage of spacts out there, so why Social Capital
Speaker 1: Head of Sophia founded by Chamatia Patia. We're approached by
Speaker 1: a number of different um UM SPACs and UM we
Speaker 1: were confident that we're ready to become a public company.
Speaker 1: We knew we would have to go through a pretty detailed,
Speaker 1: more detailed process from a diligence standpoint than going public
Speaker 1: because it's a merger UM, and we thought that Tamas
Speaker 1: team brought one, first and foremost a strategic UM perspective
Speaker 1: to the table for us and that we could partner
Speaker 1: on different strategic opportunities over time. Number two, UM they
Speaker 1: had great experience in conducting the type of diligence of
Speaker 1: a company like US, as they've done with other companies,
Speaker 1: to make sure they brought the credibility to the PIPE
Speaker 1: investors when they made when they made the announcement and
Speaker 1: brought us to Pipe investors. UH. Three they had great
Speaker 1: experience and executing spects and so the combination of strategic value,
Speaker 1: UM the diligence process that we knew would bring incremental
Speaker 1: credibility to the PIPE investors. And then three UM expertise
Speaker 1: and having done this before were the three factors. And
Speaker 1: while we was social it was a tough decision. We
Speaker 1: brought three options to the board that came down to
Speaker 1: the wire and the board chose Social Capital. So you
Speaker 1: guys are all in their student loans, a personal loans,
Speaker 1: there's home loans or insurance, small baz financing, UM investing.
Speaker 1: There's a lot on your platform. Will crypto be part
Speaker 1: of it at some point? UM Today we do offer
Speaker 1: within invest the ability to buy single stocks without commissions,
Speaker 1: fractional shares which we pioneered, robe advisory accounts which we've
Speaker 1: created ourselves. UM. We also have UM five so far
Speaker 1: e T s UM, and we do offer cryptocurrency. We
Speaker 1: offer eighteen different coins. UM. We do it in a
Speaker 1: very appropriate way and that we disclose to the volatility
Speaker 1: of that asset class and the risk that you could
Speaker 1: lose all your money every time you put in a
Speaker 1: bye word that is disclosed before you hit the hit
Speaker 1: the bye button. UM. It is an asset class that
Speaker 1: our members one and you want to provide cercified selection
Speaker 1: for them. Hey, Anthony, and we've got about a minute
Speaker 1: and then we'll come back and talk some more. But
Speaker 1: because you have an array of services that you can
Speaker 1: offer folks on the platform, what do you think is
Speaker 1: going to be the best growth opportunity provide the best
Speaker 1: more jins for you. Where is going to be the
Speaker 1: big business in your view? You know, we design each
Speaker 1: one of the businesses to be best in class from
Speaker 1: a consumer value proposition, but also best in class unit economics,
Speaker 1: and so we designed them all to be attractive on
Speaker 1: their own. UM. We do get incremental benefits when people
Speaker 1: take the second, third or fourth product with us, but
Speaker 1: they have to stand on their own both from a
Speaker 1: value probably to the consumer and the unit economic standpoint
Speaker 1: for us financially uh and and the reason why we
Speaker 1: do that is we want to meet the member where
Speaker 1: they are with what they want what we make money out. Anthony,
Speaker 1: I want to talk a little bit about profitability and
Speaker 1: so far's path to profitability. You currently lose money more
Speaker 1: than two million dollars in nineteen twenty each year. What
Speaker 1: is the path to profitability and when do you get there? Well,
Speaker 1: we achieved positive ebada UM in the fourth quarter of
Speaker 1: two thousand twenty is our first quarter of positive ebada
Speaker 1: since we embarked on such an ambitious strategy to become
Speaker 1: a one stop shop and opperenceive suite financial services products
Speaker 1: on on one app UM. So we made a smiff
Speaker 1: amount of investment in two thousand, eighteen and nineteen and
Speaker 1: started to bear fruit of that investment two thousand twenty,
Speaker 1: hitting positive ibadat in the fourth quarter of twenty UM
Speaker 1: and again in the first quarter of two thousand and
Speaker 1: twenty one UM then on a trailing told month basis
Speaker 1: UM we as you'll see in our financial disclosures. We've
Speaker 1: we've also achieved positive BADA so from a profitability standpoint
Speaker 1: as it relates to non gap metric of IBADAD, which
Speaker 1: we think is the best measure for cash flow. We've
Speaker 1: gotten to that point now each one of our businesses
Speaker 1: is not profitable or our lending business is very profitable.
Speaker 1: It's a it's a you know, very very well growing
Speaker 1: business UM. You can see the growth rates for the
Speaker 1: business in our filings, but it's a it's a high
Speaker 1: grower but also very profitable. Our technology platform is a
Speaker 1: high even higher grower business UM with great profitability as
Speaker 1: well with about thirty percent margins. And then our financial
Speaker 1: serve this business which consists of SOFI invest so far
Speaker 1: money and so by credit card UM. That's an acquisition
Speaker 1: business where we recoup the customer opposition costs we make
Speaker 1: in year one over the you know year and a
Speaker 1: half the two years after we acquire them. So on
Speaker 1: a per account basis, we may be hitting profitability, but
Speaker 1: because we're acquiring more customers than we currently have that
Speaker 1: are profitable, it shows a loss in that in that business,
Speaker 1: which has also seen in our financials. But we focus
Speaker 1: on unit economics reach one over our business and ProLAN
Speaker 1: economics to make sure that overall these businesses can be
Speaker 1: great unit economic businesses individually and in total. And so
Speaker 1: we're balancing both growth at a high rate with profitability
Speaker 1: in the overall mix. One thing I'm wondering, Anthony, is
Speaker 1: whether you guys UM, who are your users who are
Speaker 1: on the app, if they're buying so fi shares and
Speaker 1: kind of showing support for the platform that they're trading on,
Speaker 1: are you seeing that activity. We've definitely seen robust demand
Speaker 1: for so far. Invest you can buy individual stocks without commissions,
Speaker 1: fractional shares which we pioneered, cryptocurrency, and robo accounts, and
Speaker 1: it's the only place you can buy all four asset classes.
Speaker 1: If you want to buy UM, robo account, cryptocurrency and
Speaker 1: stocks on any other platform, you'd have to use at
Speaker 1: least two different apps to do so. And so we're
Speaker 1: one stop shop even within invest. And we've seen robust
Speaker 1: demands since we launched, and that's only increased as interest
Speaker 1: rates have basically gone to zero and fed funds rate
Speaker 1: UM and the stay at home economy has also increased
Speaker 1: the amount awareness of the importance of investing in he
Speaker 1: so investors on the app are buying so Fi shares,
Speaker 1: that's what you're seeing. Sorry, I apologize, I thought you meant, uh,
Speaker 1: Sofi invest and it's increased popularity because really it's just
Speaker 1: so Far as it rates to so Fi shares. I
Speaker 1: haven't had a chance to look at the trading volume
Speaker 1: today of our investmentbers that are buying it. We'll get
Speaker 1: that data at the end of the close today. My
Speaker 1: my comments just to be clear, we're about the interests
Speaker 1: and so Far invest as a as a product as
Speaker 1: opposed to so Far the stock. I appreciate that. Hey,
Speaker 1: what do you what do you make of the meme
Speaker 1: stock frenzy that we're seeing and and to what extent
Speaker 1: can you talk about what you're seeing on the platform
Speaker 1: right now in terms of the way that that that
Speaker 1: that people are trading shares at AMC and and other
Speaker 1: meme stocks. Yeah. First, in our platform, we're pretty unique
Speaker 1: in that we're really targeting beginning and novice investors and
Speaker 1: they're quickly coming up the curve um. But less than
Speaker 1: one percent of our so Far invest accounts trade more
Speaker 1: than three stocks in a day, which is a great
Speaker 1: sign that people are focused on their long term as
Speaker 1: opposed to day trading, and we try to educate them
Speaker 1: and not only that, but also dollar cost averaging. We've
Speaker 1: enabled Functionality to do recurring investments UM so that they're
Speaker 1: they're buying through the volatility over time as opposed to
Speaker 1: trying to time the market. That we're proven to be
Speaker 1: successful um as released the meme stocks. It's just another
Speaker 1: phenomenon of the increased interest in and retail investing because
Speaker 1: it's just become more accessible with being able to buy
Speaker 1: fractional shares and no no commissions. But people need to
Speaker 1: be educated on how to invest in a long term
Speaker 1: and make the individual choices for themselves. We actually don't
Speaker 1: offer options in margin jet. It's something that's in our
Speaker 1: longer term roadmap. We're not really critical to our investors today.
Speaker 1: There's some demand for it, but we will add it
Speaker 1: over time, but it's not the highest priority. So that's
Speaker 1: also pretty unique. Alright, great stuff, UM, Thank you so much, Anthony,
Speaker 1: and hopefully we can catch up with you a little
Speaker 1: bit later this year for an update on the business.
Speaker 1: Anthony Nodo, he's chief executive officer, It's so FI and
Speaker 1: former CEO at Twitter, joining us on the phone from
Speaker 1: San Francisco, of course, going public trading on the nasdack Vias.
Speaker 1: Back today, you're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hey, listen,
Speaker 1: we want to talk about a story online at Business
Speaker 1: Week that we do want to bring your attention to.
Speaker 1: It's about the shine coming off the golden child of tech.
Speaker 1: That golden child, of course is Apple. So let's get
Speaker 1: into the story. Bloomberg News reporter Joe Light with us
Speaker 1: on the phone from our Washington, d C. Bureau along
Speaker 1: with Bloomberg Business We get our Joe Webber right next
Speaker 1: to in our interactive broker studio. Apple. Yeah, it does
Speaker 1: feel like over the last couple of years they have
Speaker 1: escaped the scorn of the White House and regulators. Yeah,
Speaker 1: you know, that tech clash thing has been for real
Speaker 1: and everybody has felt it and Apple hasn't. And then
Speaker 1: all of a sudden they got dragged into sort of
Speaker 1: a mud fight. And that mud fight is you know,
Speaker 1: just basically wrapped with the the epic lawsuit where Tim
Speaker 1: Cook actually took a stand, but it also just has
Speaker 1: made it feel like, oh wait, maybe maybe the luster
Speaker 1: has come off this this golden child of sorts. So so, Joe,
Speaker 1: what it's that epic fight is not the only thing
Speaker 1: that Apple has been been fitting with. What where does
Speaker 1: Apple find itself? Yeah? No, no, Apple is kind of
Speaker 1: getting hit on four fronts. You know. The first, as
Speaker 1: you mentioned, is this epic lawsuit. Um. The second, they
Speaker 1: were hauled in front of Congress in April to answer
Speaker 1: questions from lawmakers around it's up store and kind of
Speaker 1: accusations that it's you know, anti competitive, that they're not
Speaker 1: allowing enough competition to put programs on the iPhones. Then
Speaker 1: they've in May they faced you know, kind of two
Speaker 1: issues they face. Um uh, as he said, Tim Cook,
Speaker 1: he actually took the stand in the epic trial and
Speaker 1: facing those antitrust accusations. And then the New York Times
Speaker 1: came out with an investigation about some of Apple's activities
Speaker 1: in China, which just brought a new way of scorn
Speaker 1: from lawmakers who you know, say that Apple was kind
Speaker 1: of sacrificing some of the privacy of its users in
Speaker 1: China in order to gain access to that to that market. So,
Speaker 1: as he said, it was kind of nothing at all
Speaker 1: for a few years. You know, during the Trump administration,
Speaker 1: Tim Cook had a very good relationship with Donald Trump.
Speaker 1: And now now all of a sudden, you have all
Speaker 1: these things kind of hitting the company at once. So
Speaker 1: what could go ahead to say? I always thought that
Speaker 1: was unusual, Like Tim Cook and Donald Trump, like I
Speaker 1: tried to get my head around. I'll never forget him
Speaker 1: standing next to the President and not correcting him when
Speaker 1: he was making statements about the factory in Texas a
Speaker 1: few years ago. Um, Joe, I'm I'm wondering about potential
Speaker 1: worst case scenarios here for Apple. Among the many challenges
Speaker 1: that you you spoke about, what's the worst case scenario
Speaker 1: for for Apple here? Is it? Is it Epic prevailing
Speaker 1: in this fight? Um? So yeah, so so the Epic lawsuit.
Speaker 1: I mean, Apple could potentially, you know, lose some of
Speaker 1: its power over the App store if Epic wins. I mean,
Speaker 1: the worst case scenario for Apple is if it starts
Speaker 1: getting hit with antitrust lawsuits from governments, you know, whether
Speaker 1: it's the whether it's the federal government. The Bloombergs reported
Speaker 1: that is as uh as late as January, UM d
Speaker 1: Og investigators were interviewing a developer on the app store,
Speaker 1: so clearly they're doing some sort of investigation around that. Um.
Speaker 1: Some seat governments have also brought lawsuits against those other companies,
Speaker 1: against Amazon, against Facebook, against Google, and if it starts
Speaker 1: getting hit with those sorts of antitrust lawsuits, I mean,
Speaker 1: that's where the real real pressure comes. I mean all
Speaker 1: this lawmaker stuff. You know, they say mean things, but
Speaker 1: very rarely does it actually result in some sort of legislation.
Speaker 1: But um, you know, these federal enforcers are a completely
Speaker 1: different story. I think, I think you're right there, Like,
Speaker 1: you know, it sounds good to talk mean and you know,
Speaker 1: but it's another thing to actually like wheeled a stick Joe.
Speaker 1: But you know, one of the things that I wonder
Speaker 1: here is do you feel that, you know, is it
Speaker 1: worse for Apple that you know, face something you know,
Speaker 1: on a one on one basis, or to be sort
Speaker 1: of part of like a zone defense where you've got
Speaker 1: you know, they get wrapped up in things that might
Speaker 1: also affect the Amazon's and another and facebooks of the world,
Speaker 1: you know, other tech companies. Well, I mean, I guess
Speaker 1: I guess you'd much rather be, you know, kind of
Speaker 1: one in a crowd of people who are are facing iro.
Speaker 1: I mean, you know, in the same way like you know,
Speaker 1: you want to be like if you're a zebra, you know,
Speaker 1: you kind of want to be in the middle of
Speaker 1: the herd and kind of blend in and hope that
Speaker 1: you're not the one the lion takes down or whatever.
Speaker 1: But the you know, once they start facing this one
Speaker 1: on one scrutiny, you know from these enforcers. I mean,
Speaker 1: one of the lessons we had from Microsoft, which faces
Speaker 1: ny I trust scrutiny. Um, you know, like twenty years ago.
Speaker 1: Is Microsoft ultimately one that case. But because of the pressure,
Speaker 1: because they didn't want to be seen as to um,
Speaker 1: you know, growing into other businesses that could face even
Speaker 1: more anti competitive scrutiny, they missed out on some business.
Speaker 1: You know, people say that that's what gave Google the
Speaker 1: opening to become the giant that it became. So that
Speaker 1: that's the sort of you know thing that Apple is
Speaker 1: gonna want to avoid, you know, fight this scrutiny while
Speaker 1: also being aggressive in innovating in business expansion. But you know,
Speaker 1: you also make a good point that you know, ultimately,
Speaker 1: even the pressure, the political pressure that Apple and some
Speaker 1: other tech companies have faced. You know, it's uncomfortable. It
Speaker 1: gives great fodder for us to talk about on radio
Speaker 1: and on TV and in Business Week magazine and online,
Speaker 1: but ultimately didn't really hurt them to find too much financially, right, yeah,
Speaker 1: so so so Ultimately, the thing, the thing that you know,
Speaker 1: I'm sure Apple executives are gonna want to avoid is
Speaker 1: where they decide, you know, not not to do something.
Speaker 1: You know some you know what, one of their one
Speaker 1: of their attorneys or even executive in his own mind
Speaker 1: says no, we're not gonna we're not going to expand
Speaker 1: into that business line because we know that you know,
Speaker 1: such and such an investigator that will be just another
Speaker 1: thing for this investigator or for this lawmaker um to
Speaker 1: uh to yell at this about um so that that's
Speaker 1: the sort of kind of you know, self editing of
Speaker 1: their business business that that could ultimately be the effect
Speaker 1: of you know, all this scrutiny. Well, Joe, I think
Speaker 1: that another challenge to think about from an ant trust
Speaker 1: perspective for for lawmakers is when it comes to Apple,
Speaker 1: is how do you actually separate apples businesses or break
Speaker 1: up apples businesses It's not like Amazon, where you could,
Speaker 1: you know, like Elizabeth Warren has done in the past,
Speaker 1: called for breaking off Zappos or in some cases people
Speaker 1: have said, and it's Gott Galloway on our show said,
Speaker 1: you know, the company A w S could be separated
Speaker 1: from Amazon or or Facebook divesting from What's App for example.
Speaker 1: It's not that simple with Apple's business, No, and and
Speaker 1: and one of the points that um, you know, Tim
Speaker 1: Cook made in this testimony a couple of weeks ago
Speaker 1: was that, you know, the user experience in the app
Speaker 1: store is it is pretty positive, right, Like they don't
Speaker 1: face some of the male malware or security issues that
Speaker 1: more open systems face. So when um uh, you know,
Speaker 1: if if lawmakers or investigators ultimate or courts you know,
Speaker 1: ultimately cause Apple to open up access to its marketplace,
Speaker 1: I mean, one of the one of the arguments Apple makes,
Speaker 1: and one of the things these people want to avoid
Speaker 1: is making the user experience you know, actually worse, because
Speaker 1: you know, the whole point of bringing bringing you know,
Speaker 1: bringing more competition to a marketplace is supposed to be
Speaker 1: that you make pricing and the experience you know better
Speaker 1: for consumers. If you actually have the opposite effect in
Speaker 1: bringing these cases. Um, you know that could cause a
Speaker 1: you know, a backlash to some of the anti dress enforcement. Yeah,
Speaker 1: I'm just thinking about you know, we're an Apple household
Speaker 1: because it's it all works together seamlessly, and you do
Speaker 1: wonder if you start pulling it apart, what happens? Music
Speaker 1: to Tim Cook's here's Carol Kinching, Kinching, Joe Light, thank
Speaker 1: you so much for porter of Bloomberg News joining us
Speaker 1: from our Washington d C. Pure Check out his story
Speaker 1: and many others at Bloomberg business Week dot com. Till Webber,
Speaker 1: our editor of Bloomberg Business Week, joining us here in studio.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. It's Bloomberg
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Speaker 1: dot com Slash I m s so Tim this story
Speaker 1: among our most read on the Bloomberg at this hour
Speaker 1: about how employees are quitting instead of giving up working
Speaker 1: from home. This is on a day when Deutsche Bank
Speaker 1: launched its new remote working policy. So we've got a
Speaker 1: lot going on when it comes to how people come
Speaker 1: back to work. We're figuring it out. I guess as
Speaker 1: we go here with more Anders Melon, he is wealth
Speaker 1: reporter at Bloomberg News. He's in our interactive broker studio.
Speaker 1: There is there was no playback playbook for the pandemic.
Speaker 1: There's no playbook for how we come back to work, right,
Speaker 1: That's right. I think every company is trying to figure
Speaker 1: out how to deal with this. Well, employees do, right,
Speaker 1: So tell us what you found out. So we are
Speaker 1: finding out that there are some people that feel so
Speaker 1: strongly about this that they're actually quitting their jobs, in
Speaker 1: some cases with other employment lined up and in some
Speaker 1: cases not, or they're looking for remote only opportunities because
Speaker 1: they just don't want to go back to the office.
Speaker 1: It's generational though, as you guys point out in your story,
Speaker 1: a survey of a thousand adults in the US show
Speaker 1: that would consider quitting if their employers weren't flexible. But
Speaker 1: among millennials and Gen Z that figure was that's a
Speaker 1: acording to a poll by Morning consult On behalf of
Speaker 1: Bloomberg News. Right, so, I think it's hard to paint
Speaker 1: with the braun brush. But but I think generally, you know,
Speaker 1: reporting shows that younger generations tend to be more you know,
Speaker 1: I think more fondly of remote work, see the benefits
Speaker 1: of it, whereas older generations tend to be more of
Speaker 1: the office first. Well, younger generations may not have kids
Speaker 1: or mortgages either. No, I mean I do wonder about,
Speaker 1: you know, kind of where you are in life that
Speaker 1: determines kind of your your bargaining position on all of this.
Speaker 1: But unders as you guys day in and day out
Speaker 1: report on this, we have constant conversations around the office
Speaker 1: about what companies are doing. And I do feel like
Speaker 1: there's just not one one format fits all. I mean,
Speaker 1: is hybrid here to stay or or what I think
Speaker 1: companies themselves are asking that too. I feel like right
Speaker 1: now everybody's just looking at everybody else to see who's
Speaker 1: making the first move. Um. I think many looked to
Speaker 1: Jamie Diamond, who of course made a very strong statement
Speaker 1: last month saying that should be in the office. I'm
Speaker 1: sick of zoom calls, and with that you get a
Speaker 1: trickle by the financial firms following. So it's financial firms
Speaker 1: that are like, if we focus on them, I feel
Speaker 1: like there's more of a push to be kind of
Speaker 1: back in the office. I mean, I would say so
Speaker 1: definitely from from the bigger ones. But like you we
Speaker 1: may have said earlier, Deutschebank came out today saying that
Speaker 1: there's a hybrid model coming. So I feel like again,
Speaker 1: it also might depend on who you consider your competitors
Speaker 1: to be, because if you're tech focused, or want to
Speaker 1: be tech focused, or if you have tech focused workers,
Speaker 1: then you're competing with an industry where remote first has
Speaker 1: been decades in the making, and who might be more
Speaker 1: prone to go fully your remote Well. I wonder how
Speaker 1: much power employees have right now and how much power
Speaker 1: the worker has right now, And I use the term
Speaker 1: worker totally understanding there are different types of workers in
Speaker 1: this economy. We have more than a million people who
Speaker 1: are still unemployed, and there are many businesses that say
Speaker 1: they're having trouble finding workers. But based on the people
Speaker 1: you talk to, how confident are they can find another
Speaker 1: job after quitting depends a bit of what on what
Speaker 1: industry you're in, UM, But like you're saying, there is
Speaker 1: a lot of movement going on at the moment um,
Speaker 1: surprising amount of movement according to some experts. And with that,
Speaker 1: of course comes openings for UM and also companies are
Speaker 1: seeing this as an opportunity to perhaps attract people that
Speaker 1: would be hard to get otherwise because you can all
Speaker 1: of a sudden offer up this perk that you're larger,
Speaker 1: perhaps wealthy arrivals. We'll just will not do unless you
Speaker 1: don't have that perk right right. Well. It's also interesting
Speaker 1: in the story that you guys report UM about how
Speaker 1: only about US office workers are back at their at
Speaker 1: their buildings according to an index of ten metro areas
Speaker 1: compiled by the security company Council Systems. We're still kind
Speaker 1: of early in on the game in terms of people
Speaker 1: were turning back to work. Our office feels a little
Speaker 1: bit more normal, but there's still a lot of missing workers.
Speaker 1: There definitely are, But I think I would think that
Speaker 1: will remain the case throughout the summer. I feel like
Speaker 1: towards the end of the summer companies will probably have
Speaker 1: put in place more solid policies for this and decided
Speaker 1: which route they're going to take, which, in turn also
Speaker 1: workers will have had a couple of more months to
Speaker 1: think through what they really want to do and perhaps
Speaker 1: move as well. I'd also wonder two orders, if it
Speaker 1: means that these larger companies that have been vocal proponents
Speaker 1: for for working from the office, for cultural reasons, for
Speaker 1: business reasons, they might change their tune a little bit
Speaker 1: if they start to see that not necessarily peers or competitors,
Speaker 1: but other companies that attract their workforce don't do that. Yeah,
Speaker 1: we spoke to um one professor down at Texas A
Speaker 1: and M University who said that thing that if you
Speaker 1: are a company and you think that the world is
Speaker 1: not changing, you might be right, but you're taking a
Speaker 1: pretty big risk in making that assumption because you might
Speaker 1: just start seeing your people jump ship. Yeah exactly, Or
Speaker 1: is this somebody said to me earlier Listen, it may
Speaker 1: go back to the way it was like its We
Speaker 1: just don't know at this point. But it's interesting because
Speaker 1: you guys talk to a lot of individuals, and one
Speaker 1: of the things that people want is more time, like
Speaker 1: you lose time in commuting. I know that is certainly
Speaker 1: the case from my world, Like, there's things you do
Speaker 1: benefit by by not having to go to the office,
Speaker 1: totally commute, child care, having more flexibility, freedom to work
Speaker 1: kind of when you want, as opposed to set hours.
Speaker 1: It's something that you know, we've shown for people that
Speaker 1: work from home for for a year that you know,
Speaker 1: it's something that we can manage largely, and many people
Speaker 1: are just not willing to give up those benefits. One
Speaker 1: of the things that I wonder too, is though as
Speaker 1: some people come back to work, others don't. I mean
Speaker 1: no doubt about it. If you're in the office, you
Speaker 1: can easily get face time with the boss, if your
Speaker 1: boss at the office, if your bosses at the office.
Speaker 1: But you wonder if at that point whether that will
Speaker 1: have some sway on some of those workers who stay
Speaker 1: at home and said, well, wait a minute, I might
Speaker 1: miss add on some opportunities because it's just the way
Speaker 1: the world works. Yeah, and it's especially could be especially perilous.
Speaker 1: One expert, and it's to me if you're a younger worker,
Speaker 1: you're new in the game, and being at home could
Speaker 1: be very isolating. You don't get FaceTime, you'll learn from
Speaker 1: older colleagues, so there could be drawbacks for for younger workers.
Speaker 1: I just think it's interesting because I think you go
Speaker 1: back six months, eight months, and everybody said, Okay, this
Speaker 1: is changing, our workforce is going to be changed forever.
Speaker 1: Or you go back a year and workers were scared
Speaker 1: to quit and trying to find another job because they
Speaker 1: didn't know if they were going to get laid off
Speaker 1: in the next three weeks, which I think means equals
Speaker 1: we still don't know tb D. Anyways, great reporters, great reporting,
Speaker 1: and it's a great read. It's among the most read
Speaker 1: on the Bloomberg terminals. So Unders, thanks for stopping by.
Speaker 1: Thank you appreciate it. Unders Melon, he's wealth reporter here
Speaker 1: at Bloomberg News. Check him out at Melan Anders. Unders.
Speaker 1: I always do that wrong, Melan Unders on Twitter. You're
Speaker 1: listening to Bloomberg Business Week a journal. Yeah, but you
Speaker 1: let me drive? Oh no, no, no, no no, Ann, Please,
Speaker 1: I'll do the right rivel. I want to drive, just drive,
Speaker 1: question trying. This is the drive to the Globe community. Thanks,
Speaker 1: we'll drying us to dawn on Bloomberg Radio. All right,
Speaker 1: just got about ten and a half minutes left into
Speaker 1: today's trading session. It is the first trading day of
Speaker 1: the week and the first trading day of the new month. Okay,
Speaker 1: let's get to with Aaron Kennon, co founder and chief
Speaker 1: executive officer at Clear Harbor Asset Management roughly one billion
Speaker 1: in assets under management, on the phone from Stanford, Connecticut. Aaron,
Speaker 1: good to have you here. You know, it's interesting. I
Speaker 1: always love knowing about the assets under management, and I
Speaker 1: think it was up from the last time we talked
Speaker 1: to you. Is that just appreciation or is it new
Speaker 1: money coming in? I'm always curious. Well, it's a bit
Speaker 1: of both. Carol, good to be with you again. And uh,
Speaker 1: certainly the tail winds of the market have assisted. But
Speaker 1: you know, the work that we do in advising families
Speaker 1: and individuals and non for profits has been uh an
Speaker 1: endeavor of ours where we have great passion and a
Speaker 1: lot of you know, individuals during this time of uncertainty
Speaker 1: and economic tumult have sought advice and we have thankfully
Speaker 1: been the recipient of some of that. What kind of
Speaker 1: advice are they looking for? What are the questions that
Speaker 1: they come to you with. That's a great question. Tim
Speaker 1: you know, it's everything from gosh, I just sold this
Speaker 1: tech stock that I bought it almost zero several years ago.
Speaker 1: And is there any way for me to you know,
Speaker 1: sort of allocated in a tax efficient manner. You know,
Speaker 1: maybe it's through an opportunity zone fund or some other strategy,
Speaker 1: or if it's a non for profit, it's you know,
Speaker 1: a question about you know, can you take a look
Speaker 1: at our investment policy statement and are we you know,
Speaker 1: looking through corporate governance issues correctly? And how about our
Speaker 1: capital allocations strategy? And do you think it represents our
Speaker 1: risk tolerance and our long term objectives? And you know
Speaker 1: the same for families, um, whether it's planning for retirement,
Speaker 1: planning for college, or just trying to preserve wealth relative
Speaker 1: to this great inflation debate. So all of these issues
Speaker 1: we be tackled here at Clear Harbor. Hey, how many
Speaker 1: more people Aaron are saying, you know what, it's been
Speaker 1: a crazy year. I think I'm going to retire earlier
Speaker 1: because we've done this story at Bloomberg. I've certainly been
Speaker 1: talking with individuals of my own family and elsewhere who
Speaker 1: are like, you know what, you know, how much is
Speaker 1: just too much? At this point? And maybe I should
Speaker 1: just retire. It's interesting because I look at the labor
Speaker 1: participation rate and that sort of speaks to the issue
Speaker 1: that you you raise, which is some people are certainly
Speaker 1: doing that, and they're looking at themselves in the mirror
Speaker 1: and they're realizing life is short and perhaps now now
Speaker 1: is a great time to retire. I'm not seeing that here,
Speaker 1: to be honest, at the firm. I mean, we have
Speaker 1: many retirees as clients, but I think those who are
Speaker 1: working are are you know, for the most part, doing
Speaker 1: it because they're they're they're driven to achieve their their
Speaker 1: long term family financial goals and there to some extent
Speaker 1: passionate about what they do. So we're just not seeing
Speaker 1: that to a great extent. All right, let's get into
Speaker 1: the knee gritty of the trade and what you've been
Speaker 1: seeing as far as trends over the last few months
Speaker 1: and what you see looking forward starting with inflation. The
Speaker 1: transitory or to be transitory or not to be transitory,
Speaker 1: that is the question. And what's the answer. Well, you know,
Speaker 1: I think there's a lot of nuance here that that
Speaker 1: requires um peeling back the onion a bit. I mean,
Speaker 1: certainly we've had a huge supply Chaine disruption the likes
Speaker 1: we haven't seen in our lifetime, and uh now we're
Speaker 1: seeing demand. We're back as the economies of the United
Speaker 1: States and the global economy generally generally reopen. And that
Speaker 1: requires you know that the notion that the supply chain
Speaker 1: is going to normalize overnight, I think is is a
Speaker 1: naive one, and that the idea that there's going to
Speaker 1: exist a supply response from every important input is also
Speaker 1: just not possible. So you look at something like oil
Speaker 1: where supply can come back online over the course of weeks, months,
Speaker 1: and quarters, and relative robust fashion UM versus copper, which
Speaker 1: is an important input has always been an important input,
Speaker 1: and even more so now that we're talking about the
Speaker 1: renewable initiatives in the economy e V, which requires three
Speaker 1: times more copper, for example, than a combustion engine vehicle
Speaker 1: UM that requires about an eight year period of time
Speaker 1: to bring a full mind supply online. Of course, you
Speaker 1: have recyclable UH copper that can come online, you have
Speaker 1: a mine expansion that can occur over let's say a
Speaker 1: two year period. But if you want a robust supply
Speaker 1: to come online and and something as important as copper,
Speaker 1: it can take as long as eight years. So the
Speaker 1: point there is that inflation variables are are very nuanced.
Speaker 1: Some are going to normalize sooner than others. I think
Speaker 1: the FED is fully aware of this, which is why
Speaker 1: I think they're far less data centric focused and much
Speaker 1: more sort of time focused, realizing that many of these
Speaker 1: supply chain issues, whether it's semi conductors, oil, uh, and
Speaker 1: and others, it will take several quarters to bear themselves out,
Speaker 1: and I think we're going to have a clearer picture
Speaker 1: by the end of the year. Tim all right, Aaron,
Speaker 1: this is kind of a wacky question, but the meme
Speaker 1: stocks whether to see or others? How much of that
Speaker 1: comes up with your conversations with some of your institutional
Speaker 1: or are private wealth UM clients, for example, Oh the Mets. Yeah, sorry,
Speaker 1: I didn't didn't hear that. UM. Not not significantly. I mean,
Speaker 1: I think there are clearly there's a human sort of
Speaker 1: desire to you know, appear onto proverbial screens and and
Speaker 1: maybe there's a temptation to uh to chase some of
Speaker 1: these things. But UH and I understand that, but we're
Speaker 1: not really seeing that. We're not receiving phone calls from
Speaker 1: people that want to own these sorts of things. And
Speaker 1: we are discretionary managers on behalf of clients, but we
Speaker 1: have intimate financial conversations. We're just not not seeing that
Speaker 1: to a great extent. What about when it comes to cryptocurrency,
Speaker 1: Are they asking questions about whether cryptocurrency bitcoins should be
Speaker 1: part of their portfolio? Certainly seeing more of that um
Speaker 1: And we're having some really um interesting conversations with many
Speaker 1: clients about sort of the evolution of uh centralized you know,
Speaker 1: sort of de decentralized finance, and the importance of the
Speaker 1: blockchain and its application and why bitcoin and the THEORYUM
Speaker 1: for example, could be the beneficiaries of this, not only
Speaker 1: today but into the future. And of course we've seen
Speaker 1: a major correction in that segment of the marketplace. But
Speaker 1: while the vast majority of our clients have zero exposure
Speaker 1: to cryptocurrencies, we are seeing a sort of incympiate level
Speaker 1: of conversation occurring here at the firm. Hey, any thoughts
Speaker 1: about the monthly jobs report and how that might impact
Speaker 1: kind of investor psyche. Yes, I mean it's been extraordinarily noisy, right,
Speaker 1: and I think it's going to continue to be because
Speaker 1: you have a bunch of dynamics at play. One is
Speaker 1: the um the unemployment bonuses are are continuing to roll
Speaker 1: into bank accounts for millions of Americans and that will
Speaker 1: not stop until September. So you have, you know, sort
Speaker 1: of that issue to deal with and UH, and you
Speaker 1: also have the the whole schooling concern where people are
Speaker 1: at home with their children and not everyone worse in
Speaker 1: an industry where they can you know, serve telecommute, right
Speaker 1: and so uh, we're seeing help wanted ads at restaurants
Speaker 1: and yet more people in the service sector are unemployed
Speaker 1: now than they were pre COVID. And I think this
Speaker 1: dynamic is again going to sort itself out probably in
Speaker 1: the fourth quarter, Carol, when the bonus pop ups dissipate
Speaker 1: and UH and people get back to work. I'm wondering
Speaker 1: about I don't know, It's like the conversation has shifted
Speaker 1: so much in recent months about trying to get those
Speaker 1: employees back to work. How closely are you watching wage
Speaker 1: inflation is a sign of of inflation being not transitory,
Speaker 1: because if we do continue to see employees sitting on
Speaker 1: the sidelines of employers are going to have to start
Speaker 1: raising those wages. That's right, And I think this is
Speaker 1: the big question at the moment. And and and my
Speaker 1: own personal view is that the FED has been critiqued
Speaker 1: for maybe not responding, but I think they're fully aware
Speaker 1: that we have supply chain bottlenecks, and we have government
Speaker 1: fiscal policy again, you know, the unemployment bonus payments which
Speaker 1: are impacting decisions on the part of potential workers to
Speaker 1: either work or not work. Um, And of course this
Speaker 1: sort of schooling issue, right, And so I think you're
Speaker 1: seeing wage inflation. My guess is that part is more transitory,
Speaker 1: particularly in the sort of unskilled or lower skilled service
Speaker 1: segment of the economy. Um. The facts of all this
Speaker 1: will come out in the quarters ahead. Yeah, well certainly,
Speaker 1: and we're looking for and I think investors are kind
Speaker 1: of looking forward to it as well. Hey, Aaron, thank
Speaker 1: you so much. Aaron Kennon, co founder CEO of Clear
Speaker 1: Harbor Asset Management roughly one billion in assets under management,
Speaker 1: on the phone from Stanford, Connecticut. Thanks for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or
Speaker 1: Bloomberg dot com, and you can also listen to our
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Speaker 1: watch us on YouTube. Search to Bloomberg Global News