WEBVTT - Bloomberg Businessweek Weekend - May 26th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.600 editors who bring you America's most trusted business magazine. 0:00:09.119 --> 0:00:12.039 Plus gloom O Business Finance and tech news. 0:00:12.200 --> 0:00:16.279 The Bloomberg Business Week Podcast with Carol Messer and Tim 0:00:16.320 --> 0:00:20.880 Stenebeck from Bloomberg Radio h. 0:00:22.520 --> 0:00:26.720 NYC. See You Go, Digit Seen Us and Window bro 0:00:27.720 --> 0:00:31.200 Ny Say See you Go, Dig You Seeus and Wind 0:00:31.200 --> 0:00:31.600 No broke. 0:00:31.840 --> 0:00:34.800 All right, everybody, a little Kanye West for you on 0:00:34.840 --> 0:00:38.800 this Thursday. The reason why? Uh he or his past 0:00:38.840 --> 0:00:40.600 relationship with Adidas. 0:00:40.880 --> 0:00:41.080 Wait? 0:00:41.120 --> 0:00:42.440 Are you sure that was Kanye West? 0:00:42.880 --> 0:00:43.120 Yes? 0:00:43.520 --> 0:00:46.960 Oh, okay, you're not familiar with the whole catalog. I 0:00:47.040 --> 0:00:48.200 just listened to the one record. 0:00:48.520 --> 0:00:50.000 I have people who make sure I get it. Re 0:00:50.560 --> 0:00:54.720 okay anyway, Yes it was and he and his former 0:00:54.760 --> 0:00:57.600 relationship with Adidas or Adidas, depending on how you want 0:00:57.640 --> 0:00:59.959 to say it is the cover story of the new 0:01:00.040 --> 0:01:02.240 show a Bloomberg Business Week, which is out on newsstands, 0:01:03.040 --> 0:01:05.479 on the Bloomberg terminal at Bloomberg dot com slash business Week. 0:01:05.560 --> 0:01:08.040 So let's get into it, because the relationship was great 0:01:08.040 --> 0:01:11.200 while it lasted, but it's no more, so let's get 0:01:11.200 --> 0:01:13.640 into it. It's a great read Kimbissine is our Bloomberg 0:01:13.680 --> 0:01:17.800 News reporter covering celebrity and athlete business deals, among other things, 0:01:17.959 --> 0:01:20.199 and he is here in our interactive Broker studio along 0:01:20.200 --> 0:01:24.200 with Bloomberg BusinessWeek editor Joel Weber. First of all, great cover. 0:01:25.080 --> 0:01:27.520 Yeah, we we do. We do it well every once 0:01:27.520 --> 0:01:29.800 in a while. I think this is hopefully every week. 0:01:29.840 --> 0:01:33.720 But this is one of my favorites the story. When 0:01:33.720 --> 0:01:40.240 this went down last year, we were like, holy only, 0:01:40.319 --> 0:01:42.920 this is a huge in sneaker world. This is a 0:01:43.000 --> 0:01:45.760 huge deal. It's like you think about Nike and the 0:01:45.800 --> 0:01:52.000 importance of the Air Jordan and Jordan brand to Nike Adidas. 0:01:52.040 --> 0:01:58.000 For them, they created a partnership with Yay formerly Kanye 0:01:58.040 --> 0:02:04.160 West correct that became ye Yeasy was a gigantic money 0:02:04.160 --> 0:02:09.840 maker for Adidas. Uh, and then it all came crashing down. 0:02:10.600 --> 0:02:12.359 Kim got to talk to you in. 0:02:12.280 --> 0:02:13.120 The middle of it all. 0:02:13.560 --> 0:02:13.880 It was. 0:02:14.400 --> 0:02:19.080 It was memorable, great reporting throughout from him, and our 0:02:19.880 --> 0:02:23.239 mission to him was like, go give us the definitive 0:02:23.280 --> 0:02:28.079 story of what happened inside Adidas as Easy fell apart 0:02:28.120 --> 0:02:29.520 and they're planning to go forward. 0:02:30.080 --> 0:02:30.919 How's that working out? 0:02:31.800 --> 0:02:33.239 I think I think it worked out well. 0:02:38.200 --> 0:02:38.720 How's it working. 0:02:39.960 --> 0:02:43.639 Yeah, So, so let me take you back to last September. 0:02:44.000 --> 0:02:45.639 It's the middle of the night. I got a call 0:02:45.680 --> 0:02:48.880 on my phone and a missed call and a text 0:02:48.919 --> 0:02:51.480 that says, hey, it's yay, call me back. 0:02:52.040 --> 0:02:53.440 Can we just sit with that for a moment. 0:02:53.520 --> 0:02:58.880 Yeah, yeah, I call him back and he uh, and 0:02:58.880 --> 0:03:00.960 and we we do an intervie and he says. 0:03:01.360 --> 0:03:03.680 Was it the middle of the night, right like midnight 0:03:03.720 --> 0:03:04.440 on a weeknight? 0:03:04.880 --> 0:03:07.840 And yeah, And he says, you know, he wants to 0:03:07.840 --> 0:03:11.040 get out of his deals. He's done with corporate America. 0:03:11.320 --> 0:03:14.839 He wants to go out and just do it alone. 0:03:14.960 --> 0:03:18.040 And three days later he sends a letter to Gap saying, 0:03:18.440 --> 0:03:19.799 you know, stop selling my stuff. 0:03:19.960 --> 0:03:23.000 I want out of this deal. That GAP deal falls 0:03:23.040 --> 0:03:24.720 apart shortly after. 0:03:25.200 --> 0:03:30.560 He starts saying more and more more crazier things and 0:03:31.200 --> 0:03:34.400 went on some anti Semitic rants and talk about really 0:03:34.480 --> 0:03:38.400 really toxic things, and eventually the Adida's partnership fell apart 0:03:38.400 --> 0:03:38.640 as well. 0:03:38.720 --> 0:03:42.400 Kim, what do you think happened to Kanye? Which is, 0:03:42.400 --> 0:03:44.440 by the way, separate from your story. Your story is 0:03:44.480 --> 0:03:49.400 really about Adidas, the history of the shoemaker, how they 0:03:49.520 --> 0:03:53.040 lost it, versus Nike and what they're trying to do 0:03:53.080 --> 0:03:56.000 to turn it around. But what you know, because I 0:03:56.040 --> 0:03:59.600 hear stories about Kanye being so cool, like Danny McBride says, 0:03:59.680 --> 0:04:01.400 you know, he just called him up and they started 0:04:01.440 --> 0:04:03.840 hanging out and it was fun and he was a 0:04:03.840 --> 0:04:06.960 good guy. But the stuff that he's said is not good. 0:04:07.240 --> 0:04:08.560 So what happened to that guy? 0:04:08.920 --> 0:04:09.960 It is not good. 0:04:10.080 --> 0:04:12.560 I don't know what happened to that guy. So on 0:04:12.600 --> 0:04:15.800 the phone, he literally asked me, do I sound crazy? 0:04:15.840 --> 0:04:17.600 And at that time, no, he did not. He did 0:04:17.600 --> 0:04:20.400 not sound crazy. He spent a few seconds waiting to 0:04:20.440 --> 0:04:22.400 answer question, really think about it and like kind. 0:04:22.240 --> 0:04:23.640 Of deliver a bar back to me. 0:04:24.640 --> 0:04:27.719 So like that that interview, he did not sound like 0:04:27.720 --> 0:04:29.960 he did when he went to the TMZ newsroom back 0:04:29.960 --> 0:04:34.360 in twenty eighteen and went on this long rant about how. 0:04:34.240 --> 0:04:37.120 Slavery was a choice. He did not do any of that. 0:04:37.960 --> 0:04:39.920 But then you know, a couple of weeks later, we're 0:04:39.960 --> 0:04:41.680 starting to we're starting to go again. 0:04:41.760 --> 0:04:42.880 He just starts saying these things. 0:04:42.920 --> 0:04:45.599 When you go back in during his time at Adidas, 0:04:46.560 --> 0:04:50.400 designers will say that he was inspirational at times, but 0:04:51.560 --> 0:04:55.120 as they learned more, they spent more time with him, 0:04:55.640 --> 0:04:57.560 they started to complain about all the types of you know, 0:04:57.720 --> 0:05:01.560 the more totalitarian ways that he ran his design studio. 0:05:02.279 --> 0:05:05.480 What this really gets to, I think, Matt, is if 0:05:05.520 --> 0:05:09.919 you're Adidas and you're looking to you know, make some 0:05:09.920 --> 0:05:12.120 money in the shoe business, you gotta chip on your 0:05:12.160 --> 0:05:14.880 shoulder about missing out in that Jordan guy. Once upon 0:05:14.920 --> 0:05:20.960 a time Easy that which Yeasy existed slightly before Adidas 0:05:20.960 --> 0:05:24.479 worth mentioning Nike actually did a little moment where Nike 0:05:24.640 --> 0:05:27.880 was making Easy, which are some of the most coveted 0:05:27.960 --> 0:05:33.880 shoes and sneakerdom, but air Easy, right, So the Yeasy thing, 0:05:34.200 --> 0:05:37.240 Adidas hit it. And what it really shows is like 0:05:37.360 --> 0:05:41.200 the reputational risk and like we hopefully this gets taught 0:05:41.200 --> 0:05:44.640 in business schools, right, this story, because the reputational risk 0:05:44.760 --> 0:05:49.719 is like you you attach yourself to Kanye, and wherever 0:05:49.800 --> 0:05:52.520 Kanye goes, you go to and when Kanye goes off 0:05:52.560 --> 0:05:54.760 the cliff, your your brand is now going with them, 0:05:54.880 --> 0:05:55.680 right right, So. 0:05:55.800 --> 0:05:58.239 Well, especially if you put all your eggs in one basket. 0:05:58.400 --> 0:06:00.280 And so that was the most amazing part of this 0:06:00.680 --> 0:06:03.760 as this reporting bore out as much as forty percent 0:06:03.839 --> 0:06:05.360 of the profits at the company. 0:06:05.120 --> 0:06:09.320 Forty percent eight percent of revenue and around forty percent 0:06:09.480 --> 0:06:11.480 of a profits as according to Morgan's down. 0:06:11.560 --> 0:06:16.440 So that is a gigantic yeasy shaped hole. And the 0:06:16.560 --> 0:06:18.839 challenge that we had for for Kim and Tim on 0:06:18.880 --> 0:06:21.800 the byline, Tim Low also in Jermany, was Okay, what's 0:06:21.800 --> 0:06:23.760 the plane to fix it? So now that they have 0:06:23.839 --> 0:06:25.120 this hole, what are they going to do about it? 0:06:25.200 --> 0:06:26.159 What is the planet fix it? 0:06:26.240 --> 0:06:28.720 So the most immediate problem before they can do any 0:06:28.760 --> 0:06:31.520 of that is that they have one point three billion 0:06:31.680 --> 0:06:36.400 dollars worth of Yeezies sitting in warehouses around all around 0:06:36.440 --> 0:06:36.680 the world. 0:06:36.800 --> 0:06:40.200 That is nuts, one point three billion dollars of sneakers 0:06:40.320 --> 0:06:40.960 of sneakers. 0:06:41.000 --> 0:06:43.120 So wait, why not just unstitch the logo? 0:06:43.400 --> 0:06:47.160 Because can you imagine the amount of manpower that would 0:06:47.760 --> 0:06:50.359 wait individually unstitching every little easy? 0:06:50.360 --> 0:06:51.160 But they thought about it. 0:06:51.279 --> 0:06:53.560 They did, They thought about they thought about burning it. 0:06:53.839 --> 0:06:57.920 They thought about, yeah, donating them, donate just fully donating 0:06:57.960 --> 0:07:02.640 them to huge, chopping them up, chopping them up and 0:07:02.640 --> 0:07:05.360 turning them into fields like the turf on a soccer 0:07:05.400 --> 0:07:06.440 field is made out a little bit. 0:07:07.200 --> 0:07:09.200 Don't you want to be in that meeting? It's like Okay, 0:07:09.279 --> 0:07:11.240 what would you walk us through the options of what 0:07:11.280 --> 0:07:12.000 we can do here? 0:07:12.280 --> 0:07:14.760 But the most interesting I think was the donating them 0:07:14.800 --> 0:07:16.440 makes a lot of sense and would be amazing. Right, 0:07:16.480 --> 0:07:20.200 You've got refugees or people that are hit by natural disasters. 0:07:20.200 --> 0:07:24.520 They need shoes. But the problem that they found was 0:07:24.920 --> 0:07:26.600 what there could be too much trafficking. 0:07:26.680 --> 0:07:30.000 You probably sell this worth two hundred and fIF three hundred, 0:07:30.080 --> 0:07:32.720 four hundred American dollars. Sure a refugee would love for him. 0:07:33.120 --> 0:07:37.480 They would love for American so would Adidas. Is what 0:07:37.520 --> 0:07:39.280 they landed on. Right, So now they're going to sell 0:07:39.320 --> 0:07:41.840 the shoes at beginning May thirty. First, they're going to 0:07:41.880 --> 0:07:46.240 start selling this huge stockpile of billion dollar stockpile of yasis. 0:07:46.560 --> 0:07:49.200 And they say, they say they will donate a portion 0:07:49.840 --> 0:07:51.320 of the proceeds to charity. 0:07:51.640 --> 0:07:56.280 And what happens to the money that Easy. 0:07:56.640 --> 0:07:57.440 Used to generate? 0:07:58.000 --> 0:08:01.160 Well, no, no, that that Kanye would give a little yeah, exactly, 0:08:01.240 --> 0:08:05.320 so his side of his wide to the steel. Because 0:08:05.320 --> 0:08:08.080 this is really interesting, right, Like part of this the 0:08:08.480 --> 0:08:11.200 way this steal is structured was that Kanye gets a 0:08:11.240 --> 0:08:13.160 portion of the revenue of every shoe that's. 0:08:13.000 --> 0:08:15.760 Sold, right, right, And that was a big part of 0:08:15.800 --> 0:08:17.080 the original deal that he signed. 0:08:17.160 --> 0:08:20.640 Nike would not give him royalties on the air yeasy. 0:08:20.400 --> 0:08:21.840 Because he wasn't an athlete. 0:08:22.040 --> 0:08:24.320 Because he wasn't an athlete. He said, he was an athlete. 0:08:24.360 --> 0:08:27.000 I am a performance athlete and I play one on No. 0:08:27.080 --> 0:08:29.120 One on stage in Madison Square Garden. 0:08:28.920 --> 0:08:29.360 Is what he said. 0:08:29.400 --> 0:08:32.120 I saw his point, by the way, I think he is. 0:08:32.160 --> 0:08:33.240 He's a performer for sure. 0:08:33.520 --> 0:08:36.520 Yeah, but they wouldn't give him that deal. Adidas would. 0:08:37.160 --> 0:08:39.160 So now he makes an eleven percent royalty on this 0:08:39.320 --> 0:08:42.160 and those shoes that were made during the time they 0:08:42.800 --> 0:08:44.280 probably do have to pay. 0:08:45.120 --> 0:08:47.480 Kanye has cut. It's fair enough. 0:08:48.000 --> 0:08:50.640 So what does Adidas do or Audidas do going forward? 0:08:50.679 --> 0:08:50.760 Right? 0:08:50.800 --> 0:08:52.720 They obviously have a big hole well to fill. 0:08:52.760 --> 0:08:56.040 There's been some churn in that time, right, Like, so 0:08:56.520 --> 0:08:58.000 what happened in the boardroom? 0:08:58.320 --> 0:09:01.560 Yeah, at the at the top level here. So Bjorn 0:09:01.640 --> 0:09:05.199 Golden is their new CEO. He comes over from Puma 0:09:05.400 --> 0:09:07.160 at the start of the year. 0:09:07.360 --> 0:09:10.959 We have a sidebar, yeah, because wow, the Adida is 0:09:11.040 --> 0:09:11.680 Puma thing. 0:09:11.800 --> 0:09:14.199 If you didn't know this that each other, right, No, 0:09:14.280 --> 0:09:14.680 they didn't. 0:09:15.080 --> 0:09:15.280 I know. 0:09:15.640 --> 0:09:17.240 You have to go back to the World War Two. 0:09:17.240 --> 0:09:19.199 This goes back to World War Two and. 0:09:19.200 --> 0:09:23.079 Two brothers who fell out Nazis and Nazi brothers who 0:09:23.080 --> 0:09:23.480 fell out. 0:09:23.559 --> 0:09:26.000 Well, everybody in the country at that point was a Nazi. 0:09:26.000 --> 0:09:28.000 I mean like you had to join the party. 0:09:28.120 --> 0:09:30.360 Shoot you the history is incredible. 0:09:30.920 --> 0:09:32.559 One of them went to war, one of them stayed 0:09:32.559 --> 0:09:34.440 home to run the factory. They they came back, they 0:09:34.480 --> 0:09:38.040 had a bitter feud. They split their company, uh, and 0:09:38.200 --> 0:09:42.240 they opened two sneaker empires across the road from each 0:09:42.240 --> 0:09:45.040 other in the same small town in Bavaria. 0:09:45.120 --> 0:09:46.360 By the way, did you watch Dust Blunder. 0:09:47.160 --> 0:09:49.400 I did not great movie, A great movie. 0:09:50.160 --> 0:09:53.600 Did not see that coming about Annie Dossler making the 0:09:53.640 --> 0:09:58.480 first exchangeable spikes for the German national team after you know, 0:09:58.520 --> 0:10:01.040 they'd lost the war and they lost there you know, 0:10:01.640 --> 0:10:04.440 any kind of national pride, and then they actually came 0:10:04.520 --> 0:10:06.240 up and won a World Cup. I think it was 0:10:06.320 --> 0:10:08.720 in nineteen fifty and it was the first time they've 0:10:08.760 --> 0:10:11.800 ever had spikes that could be changed for different grass conditions. 0:10:11.840 --> 0:10:13.720 So he was like an innovator as well. 0:10:13.920 --> 0:10:14.440 Did they win? 0:10:14.800 --> 0:10:15.160 They won? 0:10:15.280 --> 0:10:15.520 Yeah? 0:10:15.559 --> 0:10:16.000 There you go. 0:10:16.160 --> 0:10:17.959 Yeah, Okay, that's the other side bar you guys. 0:10:18.080 --> 0:10:21.400 Yeah, but so but Puma it's interesting that they bring 0:10:21.400 --> 0:10:24.280 a leader from Puma. Another leader from Puma run Tarley Davidson. 0:10:24.360 --> 0:10:26.800 Right now, y'all con sites used to run Puma. But 0:10:26.840 --> 0:10:29.760 now they've brought this new guy because Carson worshtead he'll 0:10:29.800 --> 0:10:31.280 like screwed everything up. 0:10:31.679 --> 0:10:31.880 It was. 0:10:31.960 --> 0:10:33.520 It was a tough It was a tough period and 0:10:33.600 --> 0:10:35.679 at the beginning it seemed like he was onto something right. 0:10:35.880 --> 0:10:37.680 He came in did did a bunch of cost cutting. 0:10:38.400 --> 0:10:41.000 E commerce is the thing. E commerce big. You know, 0:10:41.000 --> 0:10:42.840 I like to buy how people do love to buy 0:10:42.920 --> 0:10:45.440 things on the information super Highway. 0:10:45.520 --> 0:10:45.840 I didn't. 0:10:45.960 --> 0:10:47.199 Yeah, it's it's crazy. 0:10:48.200 --> 0:10:50.920 But over time, you know, product cycles started to go 0:10:50.960 --> 0:10:54.480 out of whack, and as other things failed, then Yay's 0:10:54.559 --> 0:10:58.240 business within the datas became a larger and larger piece 0:10:58.320 --> 0:11:00.600 of the of the fit pie. 0:11:00.960 --> 0:11:03.840 So do they pursue Can they pursue something akin to 0:11:03.880 --> 0:11:06.320 what they had with you? Or is there I don't know, Like, 0:11:06.360 --> 0:11:09.280 how are they thinking about their way forward? They have product? 0:11:09.320 --> 0:11:11.920 I mean, I have a young daughter. She was wearing 0:11:12.080 --> 0:11:14.760 Adida sneakers. At one point they go. 0:11:14.720 --> 0:11:17.200 Back, you were paying like a five hundred dollars pair 0:11:17.240 --> 0:11:18.400 of Yeezies were you Ye. 0:11:18.440 --> 0:11:21.840 That wasn't happening expensive, But I'm just saying, so, what 0:11:21.920 --> 0:11:23.000 is the way forward here? 0:11:23.400 --> 0:11:28.679 Yeah, the new CEO says, you can't replace it with 0:11:28.800 --> 0:11:33.160 just one thing. And Adidas has this habit of just 0:11:33.200 --> 0:11:35.480 going back to its oldest stuff again and again and 0:11:35.520 --> 0:11:39.080 again and just changing a little bit, updating it, new colors, new. 0:11:39.040 --> 0:11:40.959 To their credit, sometimes it's really worked, and. 0:11:40.960 --> 0:11:43.720 It has worked many many times over the years. 0:11:43.720 --> 0:11:47.520 You bring Backstance, you bring back Superstars, you bring back Sambas, 0:11:47.520 --> 0:11:50.240 you bring back Gazelle's. These are all designs that were 0:11:50.320 --> 0:11:53.320 that were that whose origins are all the way back 0:11:53.320 --> 0:11:56.439 in the sixties and seventies. This is like before Nike existed. 0:11:56.520 --> 0:11:59.200 Those shoes in the sixties were made. Now, you didn't 0:11:59.200 --> 0:12:01.440 come out till the seventies, wasn't really a factor until 0:12:01.720 --> 0:12:05.040 on the global stage until Jordan and eighty four. 0:12:05.600 --> 0:12:09.360 And so the back to the vault, though, what does 0:12:09.400 --> 0:12:11.760 that look like in this version of it? From what 0:12:11.800 --> 0:12:12.439 we can tell so. 0:12:12.440 --> 0:12:17.080 Far, Samba's first, right, Sambas seem to be hot right now. 0:12:17.320 --> 0:12:19.000 The new CEO says he wants. 0:12:18.760 --> 0:12:22.319 To be quicker to latch onto trends, and they've identified 0:12:23.400 --> 0:12:24.720 the samba. 0:12:24.200 --> 0:12:27.240 As what they need to go toward at this moment. 0:12:27.320 --> 0:12:31.199 So they're they're asking for more product from factories in 0:12:31.240 --> 0:12:33.600 Asia and getting that into stores as quick as quickly 0:12:33.600 --> 0:12:34.080 as they can. 0:12:35.200 --> 0:12:38.240 And it also looks a little bit like maybe playing 0:12:38.240 --> 0:12:40.760 into some sports that people have forgotten about too, that 0:12:40.800 --> 0:12:44.800 Adidas was once known for, like wrestling, boxing, et cetera. 0:12:45.000 --> 0:12:49.680 They like the specialty stuff for for certain sports when 0:12:50.120 --> 0:12:53.440 these aren't enormous enormous You're not. It's not a billion 0:12:53.480 --> 0:12:56.520 dollar business in boxing, right, but it's certainly something that 0:12:56.559 --> 0:12:57.280 you can capitalize. 0:12:57.320 --> 0:12:59.600 And Muhammad Ali or audious exact sity. 0:12:59.640 --> 0:13:02.280 Oh yeah, has he called you since the story came out? 0:13:02.320 --> 0:13:05.240 He has not talked to me for several months now. 0:13:05.240 --> 0:13:09.480 He's ghosted, right, He hasn't really been seen or talked 0:13:09.480 --> 0:13:12.760 about or talked to almost any anyone. 0:13:12.880 --> 0:13:15.640 Yeah, he's pretty he's pretty much out of the public eye. 0:13:15.679 --> 0:13:17.120 You'll see him in the tableaus every once in a 0:13:17.160 --> 0:13:20.200 while in l A, just some photos of him. But 0:13:20.200 --> 0:13:24.160 but he hasn't been speaking too often to the press, like. 0:13:24.120 --> 0:13:24.800 He's a recluse. 0:13:24.880 --> 0:13:26.679 Now would you want to ask what would you ask him? 0:13:26.679 --> 0:13:26.839 Though? 0:13:26.880 --> 0:13:29.719 At this point, after all this reporting you've done. 0:13:29.960 --> 0:13:32.520 Yeah, I want to Yeah, I want I want to know, like, 0:13:33.400 --> 0:13:35.559 have his opinions changed at all? 0:13:35.640 --> 0:13:37.880 There was apparently there was a a lot of money 0:13:37.920 --> 0:13:39.840 off of this, right he deal. 0:13:39.840 --> 0:13:44.240 He uh at the very beginning when he called me 0:13:44.280 --> 0:13:46.800 and told me that he wanted out of these deals 0:13:46.800 --> 0:13:48.000 and wanted to go it alone. 0:13:48.080 --> 0:13:48.240 Right. 0:13:49.120 --> 0:13:51.160 I don't know how much of that I truly believed 0:13:51.200 --> 0:13:54.720 he was going to do because I knew. I've seen 0:13:54.760 --> 0:13:58.040 the I've seen the documents on this. He was making 0:13:58.840 --> 0:14:02.320 nearly two hundred million dollar a year in royalties off 0:14:02.360 --> 0:14:06.440 of this, and you're just gonna throw that away. Yeah, 0:14:06.559 --> 0:14:08.600 it seems seems like it. 0:14:08.200 --> 0:14:09.400 Amazing according to him. 0:14:09.600 --> 0:14:11.520 Didn't need him, right according to him? 0:14:11.559 --> 0:14:14.520 Yeah, yeah, So well, I feel like that's to his credit. Right, 0:14:14.520 --> 0:14:16.319 If you can really stand up and say I don't 0:14:16.440 --> 0:14:18.920 need these corporate shackles, even if it's two hundred million 0:14:18.920 --> 0:14:21.440 dollars a year, and you can throw them off, that's amazing. 0:14:21.920 --> 0:14:24.600 But if you then it's a big budd sort of 0:14:25.400 --> 0:14:30.560 turn into this like racist, anti Semitic spokesperson. That's not cool. 0:14:30.600 --> 0:14:33.360 There's a few things we need to figure out. Incredible 0:14:33.360 --> 0:14:36.680 piece of reporting, really great read Kim Bessine Slippers and 0:14:36.680 --> 0:14:38.600 Athletes reporter at Bloomberg News. It's the cover story of 0:14:38.640 --> 0:14:41.000 the new issue of Bloomberg BusinessWeek, joining us along with 0:14:41.040 --> 0:14:44.200 the editor Jill Weber here in studio. Check it out 0:14:44.240 --> 0:14:46.040 great for the upcoming holiday read. 0:14:46.440 --> 0:14:50.000 You're listening to the Bloomberg Business Week Podcast. Catch us 0:14:50.040 --> 0:14:53.720 live weekdays from two to five pm Eastern on Bloomberg Radio, 0:14:53.920 --> 0:14:55.480 the Bloomberg Business app. 0:14:55.280 --> 0:14:56.160 And YouTube. 0:14:56.200 --> 0:14:59.200 You can also listen live to our flagship New York station, 0:14:59.760 --> 0:15:02.720 Just Say Alexa, Play Bloomberg, E Love and thirty. 0:15:03.880 --> 0:15:07.120 All right, zoom was certainly an indication of how we 0:15:07.120 --> 0:15:09.680 were working during the pandemic. But we've really leaned on 0:15:09.720 --> 0:15:11.840 the team over at Microsoft three sixty five for how 0:15:11.880 --> 0:15:15.320 we are working, yes, then, but also today, and they've 0:15:15.320 --> 0:15:19.200 got a new report out that finds that there's not 0:15:19.240 --> 0:15:21.720 necessarily any need to be worried about AI. Of course, 0:15:21.800 --> 0:15:25.480 to be fair, Microsoft is deep into AI, really awakening 0:15:25.520 --> 0:15:27.480 the world earlier this year with its ten billion dollar 0:15:27.560 --> 0:15:30.840 investment into Open AI's chat GBT. So even so, our 0:15:30.880 --> 0:15:32.960 next guest is here to help answer the question will 0:15:33.000 --> 0:15:36.200 AI fix work? And great to have back with us. Jared' 0:15:36.200 --> 0:15:39.080 Spataro He is Corporate VP of Modern Work and Business 0:15:39.080 --> 0:15:42.560 Applications at Microsoft three sixty five. Once again on zoom 0:15:42.600 --> 0:15:44.560 in Redman, Washington, Jared, how are you. 0:15:45.640 --> 0:15:47.520 Oh, I'm doing great. Great to be back with you, Carol. 0:15:47.640 --> 0:15:49.320 Yeah, great to have you here with us. So tell 0:15:49.400 --> 0:15:52.080 us about this inquiry into AI. What you guys? I mean? 0:15:52.080 --> 0:15:53.800 The question is I've got the report in front of me, 0:15:53.880 --> 0:15:56.960 will AI fix work? And I think everybody's trying to 0:15:57.000 --> 0:15:58.840 figure it out. I kind of can't wait because I 0:15:58.880 --> 0:16:01.840 think it can be an assist in my job. But 0:16:01.920 --> 0:16:04.480 tell us about what you looked into, questions you asked, 0:16:04.520 --> 0:16:05.680 and who you talk to. 0:16:06.680 --> 0:16:09.480 Maybe let's look at what's broken first. So this particular 0:16:09.560 --> 0:16:12.200 survey is our annual survey thirty one thousand people across 0:16:12.200 --> 0:16:15.200 thirty one countries, and the first number that popped out 0:16:15.240 --> 0:16:18.160 to me is exactly that fix that's needed. Sixty four 0:16:18.240 --> 0:16:20.760 percent of people who respond and told us that they 0:16:20.800 --> 0:16:23.080 just don't have the time or energy to get their 0:16:23.160 --> 0:16:25.280 jobs done. And we thought that that was really interesting 0:16:25.600 --> 0:16:27.560 coming out of the pandemic. People are tired, but it 0:16:27.640 --> 0:16:29.920 seemed to be more than that. So we combine that 0:16:29.920 --> 0:16:32.520 with our telemetry data. This is the cloud data where 0:16:32.520 --> 0:16:34.320 we see how people are working, what they're up to. 0:16:34.760 --> 0:16:37.280 We found that up to about sixty percent of the 0:16:37.320 --> 0:16:41.480 average day average workers day is spent communicating and coordinating. 0:16:41.560 --> 0:16:44.080 Only forty percent is kind of spent on that day job, 0:16:44.120 --> 0:16:46.200 the thing that they're supposed to provide to the organization. 0:16:46.320 --> 0:16:50.080 So really interesting setup right now as people are feeling tired, 0:16:50.120 --> 0:16:51.280 and for good reason. 0:16:51.520 --> 0:16:54.480 And Jerry, something that strikes me anytime I talk to anyone, 0:16:54.640 --> 0:16:56.880 they're always concerned about when it comes to AI, maybe 0:16:56.880 --> 0:16:59.240 they could potentially be replaced when it comes to their job. 0:16:59.440 --> 0:17:01.720 Looking at your sty it's interesting as far as how 0:17:01.760 --> 0:17:05.120 AI is poised to create this whole new way of working, 0:17:05.160 --> 0:17:08.080 what would be the counter to that? And the benefits 0:17:08.080 --> 0:17:10.720 of AI were you might not necessarily be losing your job, 0:17:10.760 --> 0:17:11.760 it could actually assist you. 0:17:12.680 --> 0:17:14.760 Well, we'll start with the fear. There's still a little 0:17:14.800 --> 0:17:16.920 bit of fear there. Almost fifty percent, it was forty 0:17:16.960 --> 0:17:18.879 nine percent of people who responded told us that they 0:17:18.920 --> 0:17:21.120 were afraid that AI would come and take their job, 0:17:21.680 --> 0:17:25.399 but that was overshadowed by another number. A wopping seventy 0:17:25.440 --> 0:17:28.719 percent told us that despite that fear, they actually would 0:17:28.840 --> 0:17:32.000 outsource everything they could to an AI assistant just to 0:17:32.040 --> 0:17:35.040 help them relieve the burden. So there's this sense that 0:17:35.080 --> 0:17:37.800 their optimism, or at least their need for help for 0:17:37.960 --> 0:17:40.919 AI based help, really outweighs their fears. And that's a 0:17:40.960 --> 0:17:43.360 pretty interesting nuance on many of the headlines that we've 0:17:43.359 --> 0:17:44.680 been hearing for the last couple of months. 0:17:44.720 --> 0:17:47.119 Well, I'm thinking about email alone. I mean, I'm going 0:17:47.200 --> 0:17:48.760 to be quite honest with you, there's a ton of 0:17:48.760 --> 0:17:50.760 email that I never even get to read because it's 0:17:50.880 --> 0:17:53.120 just a ton of stuff that people are either pitching 0:17:53.320 --> 0:17:56.119 or research. And I definitely have figured out ways to 0:17:56.160 --> 0:17:58.199 kind of weed through do certain searches so that I 0:17:58.280 --> 0:18:00.600 really make sure I don't miss some of the important stuff. 0:18:00.600 --> 0:18:04.040 But how could AI ultimately help us in filtering through 0:18:04.520 --> 0:18:08.320 what is dumped into our email boxes on a regular basis. 0:18:09.040 --> 0:18:12.119 Well, many of your listeners are probably familiar with chat GPT, 0:18:12.320 --> 0:18:15.919 introduced last year, and it's particularly good, it's summarizing, and 0:18:15.960 --> 0:18:18.280 so I've been using a product that we call Copilot 0:18:18.280 --> 0:18:21.440 Microsoft through sixty five Copilot. It essentially takes the models 0:18:21.440 --> 0:18:24.719 behind chat GPT, these large language models, and integrates it 0:18:24.800 --> 0:18:28.280 directly into your email, into Outlook and This does amazing things. 0:18:28.280 --> 0:18:30.320 It allows you to, for instance, get a long those 0:18:30.440 --> 0:18:32.640 long email threads where you're supposed to go read from 0:18:32.640 --> 0:18:35.000 the bottom up, and it can summarize that just in 0:18:35.040 --> 0:18:37.720 one click. And then once it's summarized, it actually gives 0:18:37.720 --> 0:18:40.520 you a couple of different prompts or those are different 0:18:40.840 --> 0:18:42.840 things you can choose from to answer, so it will 0:18:42.840 --> 0:18:45.000 author an answer, allow you to make it longer, shorter, 0:18:45.359 --> 0:18:48.679 more formal, more casual. It is changed the way I 0:18:48.720 --> 0:18:51.280 do email. I never want to do email without it again, 0:18:51.320 --> 0:18:53.679 so it definitely changes work habits and practices. 0:18:53.840 --> 0:18:56.000 Well, so just share with me because, like I said 0:18:56.000 --> 0:18:57.880 at the top, I mean to be fair. You guys 0:18:57.920 --> 0:19:00.520 are all in on AI, no doubt about it. And 0:19:01.040 --> 0:19:05.280 in many ways that news of the Microsoft investment really 0:19:05.280 --> 0:19:07.480 did kind of wake up the world in terms of 0:19:07.560 --> 0:19:10.600 what you folks were doing. Specifically, Now everybody's talking about it. 0:19:10.760 --> 0:19:12.679 As you guys have been playing around with it. What 0:19:12.760 --> 0:19:15.960 are you finding are the great capabilities? What are still 0:19:16.000 --> 0:19:17.240 the things that need to be worked out? 0:19:18.920 --> 0:19:21.439 The five seconds to wow type demo I do with 0:19:21.520 --> 0:19:23.840 customers is in a meeting, So in a meeting like 0:19:23.840 --> 0:19:25.760 this that would be just a normal business meeting, we're 0:19:25.760 --> 0:19:28.879 trading kind of conversation back and forward. And what it 0:19:28.880 --> 0:19:31.119 can do there is it can literally listen in as 0:19:31.200 --> 0:19:33.320 if it were an assistant to the meeting and summarize. 0:19:33.359 --> 0:19:36.239 That means, it can write notes. It can respond when 0:19:36.240 --> 0:19:38.280 I ask questions like what did Carol say again? Or 0:19:38.320 --> 0:19:40.879 how did Jared answer this question? It can allow me, 0:19:40.920 --> 0:19:42.840 for instance, to identify, you know, what are the two 0:19:42.880 --> 0:19:45.520 sides of this argument and who's in favor of which one. 0:19:45.560 --> 0:19:48.480 It actually is incredibly valuable in a meeting. And then 0:19:48.480 --> 0:19:50.280 even better than that, Carol. The thing that I love 0:19:50.400 --> 0:19:53.680 is it allows me to attend meetings, so I can 0:19:54.000 --> 0:19:57.000 not attend a meeting and then using that same GPT 0:19:57.200 --> 0:19:59.719 large language model query the meeting after the fact, did 0:19:59.720 --> 0:20:02.679 they have mention my name or any decisions made? What 0:20:02.840 --> 0:20:05.679 decisions why did they make them? So it opens up 0:20:05.720 --> 0:20:08.520 these brand new possibilities for work because it kind of 0:20:08.880 --> 0:20:11.199 blurs time and space. You know, it's as if you 0:20:11.240 --> 0:20:14.000 could be there, but you're not there, and you're able 0:20:14.040 --> 0:20:16.480 to use the power of AI here to kind of 0:20:16.480 --> 0:20:19.679 get into the dynamics of people even just having regular conversations. 0:20:19.720 --> 0:20:21.840 So just one example, but it's integrated across all of 0:20:21.880 --> 0:20:25.480 our products. We talked about email or PowerPoint, all of 0:20:25.480 --> 0:20:26.000 those things. 0:20:26.080 --> 0:20:28.840 What's the thing though, that is still tricky because we 0:20:28.880 --> 0:20:31.480 talk about AI kind of working alongside of us and 0:20:31.800 --> 0:20:33.600 we don't have to go to the meeting. Yea, who, 0:20:34.440 --> 0:20:38.359 But I do wonder what are the things that you know? 0:20:38.480 --> 0:20:41.480 People say you can't really you know, duplicate a human 0:20:41.520 --> 0:20:43.119 in terms of their perception of things, and so on 0:20:43.160 --> 0:20:45.080 and so forth. So what do would you say that 0:20:45.160 --> 0:20:47.120 we still need to be cautious about or we're still 0:20:47.160 --> 0:20:49.040 figuring out or you guys are still figuring out when 0:20:49.080 --> 0:20:49.720 it comes to this. 0:20:50.800 --> 0:20:53.640 Very astute question, because it turns out, while these things 0:20:53.640 --> 0:20:56.920 are incredibly useful, they do make mistakes. And these things, 0:20:56.920 --> 0:20:59.919 I mean the AI assistance that we have, so they 0:21:00.080 --> 0:21:03.000 get it wrong sometimes. In fact, the technical term is hallucination. 0:21:03.160 --> 0:21:05.439 If you believe that that literally is the term they 0:21:05.440 --> 0:21:08.320 make stuff up. So the reason that we use copilot 0:21:08.359 --> 0:21:10.600 as a name for our product is really the signal 0:21:10.640 --> 0:21:13.000 to the user, Hey, this is an autopilot. You can't 0:21:13.040 --> 0:21:15.000 just take the answers and say there you go, I'm 0:21:15.000 --> 0:21:16.880 going to fire this off as an email. You really 0:21:16.880 --> 0:21:18.719 have to be in the driver's seat, You have to 0:21:18.760 --> 0:21:21.560 make the decisions. But the great news is my experience 0:21:21.560 --> 0:21:23.320 has been when it is wrong, it's what we call 0:21:23.480 --> 0:21:25.520 usefully wrong, So it doesn't just make things up. To 0:21:25.600 --> 0:21:28.159 make things up. Sometimes we'll feel in details where it 0:21:28.200 --> 0:21:30.040 didn't have all the data. You can go in and 0:21:30.080 --> 0:21:32.280 correct that, tweet that and then it's put you ahead 0:21:32.320 --> 0:21:33.160 of the game anyway. 0:21:33.359 --> 0:21:35.560 So how long do you think this could take before 0:21:35.680 --> 0:21:39.159 it's more widespread with users that could potentially use this 0:21:39.280 --> 0:21:41.120 type of things in meetings when you do have still 0:21:41.160 --> 0:21:43.600 some of these hiccups and glitches that could happen with AI. 0:21:44.800 --> 0:21:46.680 We just introduced a couple of weeks ago that we're 0:21:46.680 --> 0:21:49.200 expanding what we call our Preview program to six hundred 0:21:49.280 --> 0:21:51.680 enterprises around the world, so we'll have hundreds of thousands 0:21:51.720 --> 0:21:54.199 of users here in the coming months. So that's kind 0:21:54.240 --> 0:21:56.159 of the scale that it's out at right now. But 0:21:56.200 --> 0:21:58.399 it's moving very quickly. On my team, we talk about 0:21:58.400 --> 0:22:01.440 AI time, the psyche time of the industry has really 0:22:01.440 --> 0:22:03.280 increased as we're able to build on top of these 0:22:03.280 --> 0:22:05.639 technologies really quickly. So I don't think it'll be a 0:22:05.680 --> 0:22:07.320 matter of years. I do think it'll be a matter 0:22:07.359 --> 0:22:09.440 of months until you start to see these tools being 0:22:09.520 --> 0:22:10.480 used all over the place. 0:22:10.600 --> 0:22:12.640 You know, for someone who has been you know, focusing 0:22:12.680 --> 0:22:16.080 on workplace trends and coming off a really crazy period, 0:22:16.200 --> 0:22:19.159 you know, meaning the pandemic specifically, and we're able to 0:22:19.200 --> 0:22:21.919 track a lot of things. How are you kind of 0:22:22.160 --> 0:22:28.520 placing generative AI machine learning in kind of I don't know, 0:22:28.640 --> 0:22:32.440 is it akin to some other great or interesting development 0:22:32.680 --> 0:22:34.520 in terms of how we work? Like, how do you 0:22:34.560 --> 0:22:37.760 position it historically or technologically for that matter. 0:22:38.680 --> 0:22:41.280 We think it's as big as the PC revolution or 0:22:41.280 --> 0:22:43.439 as big as the Internet. We think it's that big. 0:22:43.600 --> 0:22:46.440 You know, if I again frame it, we would say, wow, 0:22:46.480 --> 0:22:50.200 you couldn't write a script like this if you were trying. Really, 0:22:50.200 --> 0:22:53.320 what the pandemic did is is rewire the where and 0:22:53.400 --> 0:22:56.120 the when of work. So it changed entirely around the world, 0:22:56.200 --> 0:22:58.920 you know, those two dimensions of work. All of a sudden, 0:22:59.000 --> 0:23:01.920 AI is changing the how of work. By the time 0:23:01.960 --> 0:23:04.920 we get kind of roughly four years out from the pandemic, 0:23:04.920 --> 0:23:08.080 the combination of those two things will have really just 0:23:08.240 --> 0:23:11.040 changed patterns practices associated with work. My kids, as they 0:23:11.080 --> 0:23:13.120 go to work, they're not going to enter a work 0:23:13.200 --> 0:23:15.880 environment anything like, I did you know twenty five years ago? 0:23:16.160 --> 0:23:19.880 Is that good or bad? Bottomly, because you know things 0:23:19.880 --> 0:23:21.320 they're never right black and. 0:23:21.280 --> 0:23:22.800 White, like it's it's that's right. 0:23:22.880 --> 0:23:25.360 We're worried about people not really talking to each other. 0:23:25.560 --> 0:23:28.040 I have a colleague, Matt Miller, who laughs at when 0:23:28.040 --> 0:23:29.880 we all get on a zoom call and we're literally 0:23:29.920 --> 0:23:32.639 like right next to each other. But I'm sitting there typing, 0:23:32.880 --> 0:23:36.240 you know, notes, and you know, it's just interesting. 0:23:37.880 --> 0:23:39.560 My response to that is I would say, you know, 0:23:39.640 --> 0:23:42.440 AI giveth an Ai taketh away, Like we have this moment, 0:23:42.480 --> 0:23:44.240 and the way we think about it is what have 0:23:44.320 --> 0:23:46.399 we gained and what have we lost? And how do 0:23:46.440 --> 0:23:48.280 we lose as little as possible? And how do we 0:23:48.320 --> 0:23:50.640 gain as much as possible. But you're exactly right, these 0:23:50.680 --> 0:23:52.240 big if it's as big as the PC, you know, 0:23:52.280 --> 0:23:54.320 if you really believe that it's that type of shift, 0:23:54.600 --> 0:23:56.680 then you do have to recognize, Wow, this is probably 0:23:56.720 --> 0:23:59.320 the beginning of an era, a new era. We should 0:23:59.320 --> 0:24:00.919 be really thoughtful about what we want to make sure 0:24:00.960 --> 0:24:02.719 we don't lose in that process. But that will take 0:24:02.760 --> 0:24:04.160 all of us, you know, we're all learning. 0:24:03.920 --> 0:24:04.280 As we go. 0:24:04.600 --> 0:24:06.280 Yeah, right, And the more we use it though, right, 0:24:06.320 --> 0:24:08.520 the smarter or more specific it becomes. 0:24:08.680 --> 0:24:09.000 Jared. 0:24:09.119 --> 0:24:11.480 Nice to check in with you again. Jared Spataro. He's 0:24:11.520 --> 0:24:14.120 Coroporate vice President, head of Modern Work at Microsoft three 0:24:14.160 --> 0:24:17.439 sixty five on Zoom from Redmond, Washington. 0:24:18.720 --> 0:24:26.880 Yeah, you're listening to the Bloomberg Business Week Podcast. Catch 0:24:26.960 --> 0:24:30.040 us live weekdays from two to five pm Eastern. 0:24:29.680 --> 0:24:32.959 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:24:33.320 --> 0:24:36.040 You can also listen live to our flagship New York 0:24:36.080 --> 0:24:39.800 station Just Say Alexa Play Bloomberg E Love Them thirty. 0:24:41.480 --> 0:24:43.639 So our next guest works with many Fortune one hundred 0:24:43.640 --> 0:24:46.560 companies around the globe, working with them on HR programs. 0:24:46.600 --> 0:24:49.639 We're talking about health, wellness, wealth programs. She's got a 0:24:49.680 --> 0:24:52.320 great vantage point her company does too in terms of 0:24:52.359 --> 0:24:55.200 what's going on in the overall business. And it environment 0:24:55.280 --> 0:24:57.720 so great to have back with us. The chief financial 0:24:57.760 --> 0:25:00.480 officer of the publicly held a light Katie Rooney with 0:25:00.560 --> 0:25:03.160 us in studio. It really is great to have you here. 0:25:04.240 --> 0:25:06.280 I said to you, it's like not been that long, 0:25:06.320 --> 0:25:08.879 but it feels like because every day is so dense. 0:25:08.920 --> 0:25:10.600 How are you you know? 0:25:11.119 --> 0:25:14.639 It's it's been a crazy, crazy quarter. Although I feel 0:25:14.640 --> 0:25:17.879 like within in a light years, it's normal, it's. 0:25:17.720 --> 0:25:21.240 So chea, it's true, like our perspective has changed. Let's 0:25:21.240 --> 0:25:23.119 just start broad and Macro talk to us little bit 0:25:23.119 --> 0:25:25.640 about the business environment, because you do have a great window. 0:25:25.720 --> 0:25:28.359 And forgive me for those who don't know exactly what 0:25:28.400 --> 0:25:30.920 you're doing. You do work globally, you're working with lots 0:25:30.920 --> 0:25:33.320 of companies. Remind our audience what you do. 0:25:33.520 --> 0:25:36.840 Yes, of course, so we serve thirty six million people 0:25:36.880 --> 0:25:42.920 across the globe doing basically human capital around health, well being, 0:25:43.160 --> 0:25:44.960 payroll and so the types. 0:25:44.800 --> 0:25:46.240 Of programs that companies have right. 0:25:46.080 --> 0:25:48.720 Absolutely, when you think about employee well being, everything we're 0:25:48.720 --> 0:25:51.200 trying to do for the employee in today's day and age. 0:25:51.240 --> 0:25:54.120 Given everything we're seeing, we are taking a different approach 0:25:54.160 --> 0:25:57.560 across the industry to say we have to engage with 0:25:57.640 --> 0:26:00.440 people differently to help drive a different outcome. We've done 0:26:00.480 --> 0:26:02.480 that a lot for clients, we've done that a lot 0:26:02.760 --> 0:26:04.760 kind of in the front office. We really haven't done 0:26:04.760 --> 0:26:07.560 that for our talent, and so we're trying to take 0:26:07.560 --> 0:26:09.760 a platform approach with a light work life, where it's 0:26:09.840 --> 0:26:12.760 one place to go where we can help you basically 0:26:12.840 --> 0:26:17.120 solve more complex issues to keep your for the employer 0:26:17.160 --> 0:26:19.560 and the employee, to keep them financially secure and healthy. 0:26:19.680 --> 0:26:23.960 Kitty, do you feel like post pandemic that employees companies 0:26:24.000 --> 0:26:27.160 are looking at their workers differently, or do you feel 0:26:27.160 --> 0:26:29.800 like because it's a tight labor force that maybe companies 0:26:29.800 --> 0:26:31.120 are looking at their workers differently. 0:26:31.119 --> 0:26:34.520 Honestly, I think either way you are yes, yes, or 0:26:34.800 --> 0:26:36.560 it is I mean it's a little bit of yes, yes. 0:26:36.600 --> 0:26:39.439 I think you have to We did a global mindset 0:26:39.480 --> 0:26:42.280 survey and we said eighty percent of workers say they 0:26:42.280 --> 0:26:45.959 feel moderate to high levels of stress. I mean, it 0:26:46.000 --> 0:26:50.480 doesn't matter if it's you know, the pandemic, if it's macroeconomy. 0:26:50.480 --> 0:26:53.120 There's so much in our environment today that I think 0:26:53.880 --> 0:26:56.560 employers have to play a different role in terms of 0:26:56.600 --> 0:26:57.879 how they're helping their employees. 0:26:58.520 --> 0:27:01.679 Well, you've been in this role for six years ish, 0:27:01.800 --> 0:27:03.400 a little bit longer, a little bit longer. 0:27:03.440 --> 0:27:06.159 I'm so sorry. I don't know, because a light actually 0:27:06.200 --> 0:27:09.440 carved out in twenty seventeen from a on. So I've 0:27:09.440 --> 0:27:12.440 been technically with the legacy company a little longer, and. 0:27:12.359 --> 0:27:17.600 So I'm curious about how you've seen employee demands change 0:27:17.760 --> 0:27:20.040 over the course of your tenure there, what would you 0:27:20.080 --> 0:27:23.800 say is the single biggest shift and ask from employees. 0:27:24.720 --> 0:27:28.000 Honestly, I think they found a voice. I just think 0:27:28.840 --> 0:27:31.920 we didn't, you know, And again i've you know, as 0:27:31.920 --> 0:27:37.080 an employer, I'm not sure we took the time to listen. 0:27:37.240 --> 0:27:40.399 And I think employees are now found a stronger voice 0:27:41.160 --> 0:27:45.359 that it starts with their leaving right, higher turnover, They're 0:27:45.400 --> 0:27:49.119 requesting more and so we have to help them in 0:27:49.160 --> 0:27:52.160 a different way. I don't think it's one specific thing. 0:27:52.480 --> 0:27:55.280 I just think when you think about overall well being, 0:27:55.440 --> 0:27:58.320 what they're feeling, what they're seeing, we have to take 0:27:58.320 --> 0:28:02.160 a different approach here and support them in a different way. 0:28:02.200 --> 0:28:05.160 They want to build trust with their employer. It's got 0:28:05.200 --> 0:28:07.520 to be a two way street, whereas historically I think 0:28:07.560 --> 0:28:09.000 it was a little bit more one way. 0:28:09.320 --> 0:28:11.480 Well when it comes to what the services that you 0:28:11.560 --> 0:28:15.120 guy guys provide for your clients. So I said health, 0:28:15.160 --> 0:28:17.360 wealth and wellness, right, did I get them off? 0:28:17.720 --> 0:28:18.400 Yeah? Yeah? 0:28:18.440 --> 0:28:20.240 So what is it Where are you seeing the most 0:28:20.280 --> 0:28:22.159 growth or more demand that like, this is what my 0:28:22.200 --> 0:28:23.920 employees want or is it everything? 0:28:24.720 --> 0:28:27.560 I think it's interconnected. I think that's the important thing 0:28:28.359 --> 0:28:32.440 for the employee again, think about it, they I mean, 0:28:32.440 --> 0:28:36.359 think about what you potentially do today just to figure 0:28:36.359 --> 0:28:39.520 out where your paycheck is and where your health coverages 0:28:39.600 --> 0:28:41.959 and where your four one K coverages? How many systems 0:28:42.000 --> 0:28:43.800 are you going to? Where are you going right? And 0:28:44.040 --> 0:28:45.560 how do you know what to use right? And what 0:28:45.600 --> 0:28:48.240 the right decisions are? We say, should you be investing 0:28:48.280 --> 0:28:51.000 in your HSA a health savings account or your four 0:28:51.000 --> 0:28:54.720 to oh one K? Like those are actually complex questions 0:28:54.800 --> 0:28:58.280 that we really haven't helped our employees answer, and so 0:28:58.400 --> 0:29:00.959 I think it's more the common nation of all of 0:29:01.000 --> 0:29:03.880 them to help people make a better decision. You got 0:29:03.880 --> 0:29:06.880 to pay raise, What should you do right? Of course, 0:29:06.960 --> 0:29:09.040 yes you want to make a different decision, but bring 0:29:09.080 --> 0:29:09.880 it all together for them? 0:29:10.040 --> 0:29:12.920 Well, how does AI and generative AI change this? Because 0:29:12.920 --> 0:29:16.200 I do think about think about the question, right, the 0:29:16.240 --> 0:29:19.920 conversation I could have with a system a platform that 0:29:20.080 --> 0:29:23.640 is integrated, but it seems like it could make it 0:29:23.720 --> 0:29:25.400 so much easier to use right. 0:29:25.640 --> 0:29:29.160 I love that question because I think there's so much opportunity. 0:29:30.120 --> 0:29:32.520 It starts with the data. So think about it. There's 0:29:32.600 --> 0:29:35.360 a million searches today on Google for a doctor. Where 0:29:35.360 --> 0:29:38.000 do I find a doctor. I mean do you think 0:29:38.040 --> 0:29:40.920 Google knows what health plan you're in, what's in network, 0:29:41.360 --> 0:29:44.880 where you're located, who's the highest quality, lowest cost, right 0:29:45.120 --> 0:29:46.880 and helps you make a decision and can schedule an 0:29:46.880 --> 0:29:49.400 appointment and get you a second opinion and right. So, 0:29:49.480 --> 0:29:51.800 like you need the AI in terms of the underlying 0:29:51.880 --> 0:29:55.040 data to help drive those personalized recommendations. But it has 0:29:55.120 --> 0:29:57.960 to be when you think about in a trusted source, 0:29:58.120 --> 0:29:59.080 who has access to that? 0:29:59.240 --> 0:30:00.520 So how do you do that? Yea? So how do 0:30:00.600 --> 0:30:03.400 you make it comprehensive, smart, accurate? 0:30:04.200 --> 0:30:04.400 Right? 0:30:04.600 --> 0:30:08.880 And then secure? I mean are you working on it? 0:30:08.960 --> 0:30:12.480 You know we start there today? I mean security is 0:30:12.520 --> 0:30:15.840 table stakes, Yeah, I mean that just you can't have 0:30:15.920 --> 0:30:18.280 an employee concerned or thinking about that. We spend a 0:30:18.360 --> 0:30:21.120 ton of time, resources money on that, like full stop. 0:30:21.640 --> 0:30:24.960 Put that aside. Then the next piece is why we 0:30:25.000 --> 0:30:28.520 think this integrated platform is important. We know your pay 0:30:28.720 --> 0:30:31.959 we know your claim's history, we know how you're saving. 0:30:32.440 --> 0:30:35.719 A mom just had a baby, right, Well, they might 0:30:35.760 --> 0:30:38.320 have a different need than somebody who's retiring. So I 0:30:38.360 --> 0:30:42.440 think it's more about taking that data to use kind 0:30:42.440 --> 0:30:45.680 of provide a recommendation engine up one because everyone's unique. 0:30:45.600 --> 0:30:46.400 Right exactly. 0:30:46.440 --> 0:30:47.160 That's the power of it. 0:30:47.360 --> 0:30:51.600 Okay, is there risk at all and decreased jobs because 0:30:51.600 --> 0:30:53.680 of the AI impact? I know that's like the basic 0:30:53.720 --> 0:30:55.960 obvious question, but how are you thinking about it? 0:30:56.280 --> 0:31:01.840 I just think it's different. Again. AI is only as 0:31:01.840 --> 0:31:03.600 good as the data, but it's not going to drive 0:31:03.640 --> 0:31:07.160 a decision. So you know, we have people calling us 0:31:07.240 --> 0:31:09.480 because they need to check the status, but they don't 0:31:09.480 --> 0:31:12.160 need to call us for that, Like that's fine, but listen, 0:31:12.160 --> 0:31:14.560 if somebody has a cancer diagnosis, they want to talk 0:31:14.600 --> 0:31:17.120 to someone, right, that's never going to go away. So 0:31:17.240 --> 0:31:19.520 I think it's more that jobs are changing, and we, 0:31:19.760 --> 0:31:22.120 I think have a social responsibility to figure that out, 0:31:22.640 --> 0:31:25.560 and hopefully I mean in the finance function in particular. 0:31:25.640 --> 0:31:28.520 I think that's a huge opportunity to play a bigger 0:31:28.600 --> 0:31:30.840 role strategically in the business. 0:31:30.600 --> 0:31:32.760 Because you know, I think about the services that you offer, 0:31:32.800 --> 0:31:34.920 and I even think about my own experience with and 0:31:34.960 --> 0:31:36.959 we have a company with incredible benefits, and we do 0:31:37.000 --> 0:31:41.040 have some really great usable programs and so on. But 0:31:41.120 --> 0:31:44.320 I do think about if sometimes and if Matt Miller 0:31:44.400 --> 0:31:48.240 was here, another one of our TV and radio anchors, 0:31:48.880 --> 0:31:50.840 He'll go on and on about like the chatbots and 0:31:50.880 --> 0:31:52.920 how they drive him crazy. You're on a site and 0:31:52.920 --> 0:31:56.480 he's not wrong. Sometimes where I just want to get 0:31:56.480 --> 0:31:58.480 on with the human and say help me out here, 0:31:58.680 --> 0:32:00.960 walk me through it. And so is this balance? There's 0:32:00.960 --> 0:32:03.040 a balance, But there's also other times where I love 0:32:03.080 --> 0:32:04.800 it where I can just kind of whittle through a 0:32:04.800 --> 0:32:06.360 bunch of information, figure it out. 0:32:06.440 --> 0:32:08.080 There are times you don't want to talk to someone. 0:32:08.400 --> 0:32:10.040 Yeah, absolutely right, and it's you know. 0:32:10.000 --> 0:32:11.320 I have a mental health issue. I just need to 0:32:11.360 --> 0:32:12.840 figure out where to go. I don't I don't want 0:32:12.880 --> 0:32:15.520 to have to have that conversation yet, just direct me 0:32:15.920 --> 0:32:18.160 at the same time. Okay, now I have a diagnosis, 0:32:18.320 --> 0:32:20.440 tell me what this means. Right, So I think you 0:32:20.560 --> 0:32:21.880 just have to meet people where they are. 0:32:22.080 --> 0:32:26.480 Is though chat our generative AI a big boost for 0:32:26.560 --> 0:32:28.400 what you guys ultimately do, Like, do you see that 0:32:28.400 --> 0:32:29.400 as a big growth driver? 0:32:30.080 --> 0:32:32.120 I think it's a huge opportunity. And it's not just 0:32:32.200 --> 0:32:36.880 generative AI, it's AI more broadly because you're already using that. Yeah, right, absolutely, 0:32:36.960 --> 0:32:39.560 we have to be right when you think about I 0:32:39.560 --> 0:32:42.280 think about it, there's predictive, there's a generative, there's just 0:32:43.040 --> 0:32:46.280 in essence driving an informed decision for someone. It will 0:32:46.280 --> 0:32:47.560 only continue to get better. 0:32:47.680 --> 0:32:49.280 So then what do you say to And we're gonna 0:32:49.640 --> 0:32:50.920 got about a minute and then we'll come back and 0:32:50.920 --> 0:32:53.160 talk some more. But there is this kind of wait. 0:32:53.200 --> 0:32:55.520 I'm terrified by it, and I'm also like, well, wait, 0:32:55.560 --> 0:32:58.600 we've been using it for a long time already, so 0:32:58.720 --> 0:33:01.440 how do you you know, what would you be saying 0:33:01.480 --> 0:33:03.480 to someone who was asking you, like, oh my god, 0:33:03.480 --> 0:33:03.920 what is this? 0:33:04.440 --> 0:33:06.280 I mean, I love the analogy someone told the other day. 0:33:06.320 --> 0:33:09.000 I'm in finance. You know, the calculator came along. It's 0:33:09.000 --> 0:33:11.440 not like all the finance jobs went away, right, I mean, 0:33:11.440 --> 0:33:14.760 it's just we have to just think differently. Even with 0:33:14.880 --> 0:33:17.080 generative AI, at the end of the day, there's still 0:33:17.120 --> 0:33:20.040 a judgment call. So I think it's it's changing that 0:33:20.160 --> 0:33:23.720 mindset around how we benefit and use it in a 0:33:23.800 --> 0:33:24.640 more proactive way. 0:33:24.720 --> 0:33:24.920 Yeah. 0:33:24.920 --> 0:33:26.640 I just think it's yeah, And I love that you're 0:33:26.680 --> 0:33:29.240 being smart about it and very specific and just saying 0:33:31.560 --> 0:33:34.560 technology can be so terrifying, right, I feel like and 0:33:34.600 --> 0:33:36.840 people have kind of run in that direction, and I 0:33:36.880 --> 0:33:39.680 think there's been some great reporting showing how it can 0:33:39.720 --> 0:33:43.640 go astray. But there's also a potential if you think 0:33:43.640 --> 0:33:46.240 about online when it all started, right or the internet, 0:33:46.400 --> 0:33:46.800 I think. 0:33:46.680 --> 0:33:49.520 There's always and I think it's exciting, like that's next chapter. 0:33:49.600 --> 0:33:52.040 It always sorry every time, and then it's right. 0:33:52.320 --> 0:33:53.640 You know, it's always run up. 0:33:53.840 --> 0:33:55.120 We just have to learn as we go along. 0:33:55.160 --> 0:33:55.480 We do. 0:33:56.000 --> 0:33:59.560 We're talking with the CFO of like Katie Rooney here 0:33:59.600 --> 0:34:02.480 in our studio, I want to go back to some 0:34:02.520 --> 0:34:04.880 business stuff. Is it easy being a CFO right now, 0:34:05.720 --> 0:34:09.800 especially when we talk about credit crunches, markets tightening, questions 0:34:09.840 --> 0:34:11.880 about recessions and slow downs. 0:34:13.160 --> 0:34:15.359 I don't know that i'd say easy or hard. I 0:34:15.480 --> 0:34:18.279 just think I think it's a really important time to 0:34:18.280 --> 0:34:20.360 be a CFO. There's so much. 0:34:20.560 --> 0:34:21.400 Hasn't been important. 0:34:21.600 --> 0:34:24.239 Well, I think that's fair. I think that's that's a 0:34:24.239 --> 0:34:26.319 fair storry. No, it's a it's a fair point. But 0:34:26.680 --> 0:34:32.080 in terms of the magnitude of risk and volatility, and 0:34:32.480 --> 0:34:34.600 so I think, you know, we spend a lot of 0:34:34.600 --> 0:34:37.279 time focusing on balance sheet right and having kind of 0:34:37.320 --> 0:34:41.239 that visibility into revenue, profitability, cash flow so that we 0:34:41.280 --> 0:34:45.319 can weather any scenario, right, Because I think even over 0:34:45.360 --> 0:34:47.400 the past couple of years, right with COVID, with everything 0:34:47.440 --> 0:34:49.880 we've been through, there's just been so much more volatility 0:34:49.920 --> 0:34:53.160 and uncertainty that you just you have to have a 0:34:53.200 --> 0:34:55.160 bigger role in managing through that. 0:34:55.560 --> 0:34:57.960 Do you feel more uncertain about the outlook? Do you 0:34:58.000 --> 0:35:00.719 think more about recession based on things that you're seeing 0:35:00.840 --> 0:35:03.040 or conversations because you do have a great as I 0:35:03.040 --> 0:35:04.840 said at the top, like a great window because you 0:35:04.920 --> 0:35:07.440 talked you have so many corporate clients. 0:35:07.560 --> 0:35:10.000 Yeah, I think that's right, and I think I mean 0:35:10.000 --> 0:35:12.240 the good news is for us, it's an opportunity because 0:35:12.360 --> 0:35:14.840 we do serve you know, fifty percent of Fortune five hundred. 0:35:14.840 --> 0:35:17.120 They are focusing more on cost. We can help address 0:35:17.160 --> 0:35:20.080 a bigger need when you think about the solutions we 0:35:20.080 --> 0:35:24.640 can provide end Yeah, I mean, you know, fortunately unfortunately 0:35:24.680 --> 0:35:27.319 you're going to provide healthcare, you're going to do payroll right, 0:35:27.400 --> 0:35:30.480 and actually we can help provide a better solution to 0:35:30.520 --> 0:35:33.400 maximize how you're using those services. So I think the 0:35:33.440 --> 0:35:36.600 conversation doesn't change. I think it's more I actually think 0:35:36.600 --> 0:35:38.480 about it as how do you make it an opportunity 0:35:38.600 --> 0:35:41.840 where we can actually invest more during this cycle to 0:35:41.920 --> 0:35:44.279 get ahead because we are coming at it from a 0:35:44.280 --> 0:35:45.080 position of strength. 0:35:45.480 --> 0:35:47.680 So what do you look at when making that decision. 0:35:48.600 --> 0:35:51.680 Yeah, I mean I think it starts with just healthy 0:35:51.719 --> 0:35:55.719 balance sheet, right, having that flexibility to weather different scenarios, 0:35:55.920 --> 0:35:58.520 so and being thoughtful about what those those could look like. 0:36:00.280 --> 0:36:02.160 Did you see any impact from the collapse of like 0:36:02.239 --> 0:36:04.799 Silicon Valley and the four regional banks? Did that in 0:36:04.840 --> 0:36:08.760 any way? I don't know. Yeah, I'm just curious. 0:36:09.480 --> 0:36:12.400 We really didn't, Okay, you know, and I think just 0:36:12.400 --> 0:36:14.520 how quickly the government stepped in. I think you know 0:36:14.760 --> 0:36:18.160 that supported so many different companies, so we really didn't. 0:36:18.840 --> 0:36:20.719 But you had to be prepared in case, right, we 0:36:20.840 --> 0:36:23.279 serve companies that have payable with those banks, Like how. 0:36:23.200 --> 0:36:25.360 Do you make sure what I was thinking along the line. 0:36:25.200 --> 0:36:27.680 Right, you're prepared and you can you can step in 0:36:27.719 --> 0:36:29.920 and help your clients, Like this moment of need is 0:36:29.960 --> 0:36:31.960 for our clients, right, if we can step in and 0:36:31.960 --> 0:36:35.600 be that trusted resource, like, it builds such goodwill in 0:36:35.640 --> 0:36:39.000 other macro environments. So I think that's that's the opportunity. 0:36:39.080 --> 0:36:41.520 So can we talk about working from home? We just 0:36:41.560 --> 0:36:44.279 did talk about retail and real estate and some of 0:36:44.320 --> 0:36:46.719 the cities we see it outside our door of some 0:36:46.800 --> 0:36:50.200 retail that still hasn't come back post pandemic. One of 0:36:50.200 --> 0:36:52.560 the things I loved when we have talked in the 0:36:52.600 --> 0:36:55.839 past is you said how you were flying all your 0:36:55.880 --> 0:36:56.919 workers in for a week. 0:36:57.560 --> 0:36:59.920 Right, yeah, I think, I think, are you still doing that? 0:37:00.200 --> 0:37:02.600 We do? We do? I think again, this is what 0:37:02.680 --> 0:37:05.600 works for me, particularly in finance quarterand is such an 0:37:05.640 --> 0:37:09.399 important time and we still need development, we still need 0:37:09.440 --> 0:37:12.120 face to face time. But trying to get people there 0:37:12.320 --> 0:37:14.279 one day a week or two, like one day a week, 0:37:14.320 --> 0:37:16.359 you spend that day just catching up with everyone. Yet 0:37:16.400 --> 0:37:19.319 like it's not which is great, but if you do 0:37:19.400 --> 0:37:21.920 it a week, we're not productive. It's not terribly productive, right, 0:37:21.960 --> 0:37:24.560 so we need a full week. It's one week. We're committed, 0:37:24.600 --> 0:37:28.000 we're all together, we do lunches together, we go out together. 0:37:28.080 --> 0:37:30.160 So there's you know, work hard, play hard. We kind 0:37:30.160 --> 0:37:32.239 of get that balance in. I think it builds a 0:37:32.280 --> 0:37:35.879 lot of camaraderie for the team and honestly it helps 0:37:35.960 --> 0:37:37.920 develop the team, which I think is so critical. 0:37:37.960 --> 0:37:39.360 So you're still doing that. So at'll be home for 0:37:39.480 --> 0:37:41.080 like three weeks and then they come in for a week. 0:37:41.400 --> 0:37:43.960 And I wonder if you see to the extent that 0:37:43.960 --> 0:37:45.960 you can talk about this as a gender impact on 0:37:46.000 --> 0:37:48.000 that because the thing that I worry about so much 0:37:48.080 --> 0:37:51.320 is that when you force people push people back to work, 0:37:51.800 --> 0:37:54.120 a lot of women are staying at home still. They're 0:37:54.160 --> 0:37:57.520 the ones taking advantage of the work from home capabilities 0:37:57.560 --> 0:37:59.319 of companies, and that freaks me out. 0:37:59.480 --> 0:38:01.799 You know, yeah, no, I get it, and I but 0:38:01.880 --> 0:38:04.760 I think that's why this strategy works for us, because 0:38:04.760 --> 0:38:08.040 they can plan. I can plan for one week. It's 0:38:08.040 --> 0:38:09.960 hard when it's one you know, it's hard to find 0:38:10.040 --> 0:38:12.160 childcare for one day a week, two days a week. 0:38:12.840 --> 0:38:15.200 So that again, that's what's worked for us there. I 0:38:15.280 --> 0:38:17.000 do have people come in a lot more. I love it. 0:38:17.040 --> 0:38:18.920 I'm in a lot more. That works for me. So 0:38:18.960 --> 0:38:21.200 I think it's just trying to get that balance right. 0:38:21.480 --> 0:38:23.719 What about the tightness of the labor force? What are 0:38:23.719 --> 0:38:25.480 you seeing on that front? Is it easing at all? 0:38:26.760 --> 0:38:27.960 If you're hiring and you're. 0:38:27.800 --> 0:38:32.480 Looking, Yeah, I'm not sure it's it's easying dramatically. I 0:38:32.520 --> 0:38:37.640 think though, that the conversation is changing in terms of 0:38:37.640 --> 0:38:40.600 what employees want. So it used to be you know, 0:38:40.680 --> 0:38:42.560 I will I can only find someone who would work 0:38:42.560 --> 0:38:45.479 from home in this location. I think because we've grown 0:38:45.480 --> 0:38:48.360 more flexible in terms of the talent pool in terms 0:38:48.360 --> 0:38:50.600 of the skill set we're looking for. We want more 0:38:50.600 --> 0:38:54.839 diverse skill sets. I think that's helping, but it's still 0:38:54.880 --> 0:38:56.480 I know, it's still a tough market. 0:38:56.239 --> 0:38:59.239 And people still want to work from home. They do absolutely, 0:38:59.520 --> 0:39:01.640 So what do you say to the debate, because it 0:39:01.719 --> 0:39:03.799 does see I mean, it's still out there and we're 0:39:03.800 --> 0:39:06.040 still trying to figure it out. And we certainly hear 0:39:06.080 --> 0:39:08.800 from CEOs who I think from the pandemic and it 0:39:08.920 --> 0:39:10.759 she like, yeah, we're gonna be flexible, and then they're like, no, 0:39:10.920 --> 0:39:15.080 we're not flexible anymore. So what is the reality of it? 0:39:15.120 --> 0:39:16.560 Are we still trying to figure it out? 0:39:16.760 --> 0:39:19.440 I think the reality is we have to find some 0:39:19.600 --> 0:39:21.839 time for people to be in the office, but it 0:39:21.920 --> 0:39:24.480 has to be meaningful. I don't need people coming into 0:39:24.520 --> 0:39:25.920 the office to sit in a cube all day and 0:39:25.920 --> 0:39:29.319 be on zoom calls. Yeah we don't, right, I mean, 0:39:29.360 --> 0:39:32.400 I a so I think, but we need training programs, 0:39:32.440 --> 0:39:35.640 we need mentorship, we need team building, we need so. 0:39:35.840 --> 0:39:39.359 I think it's making those in person experiences meaningful and 0:39:39.680 --> 0:39:42.600 having enough of them, you know, I think that's what matters. 0:39:42.880 --> 0:39:44.719 We've got like a minute and a half in our 0:39:44.760 --> 0:39:47.840 final minutes with you. You're a woman who's a CFO. 0:39:48.000 --> 0:39:50.960 I hate to do that whole thing, but just meeting 0:39:50.960 --> 0:39:52.840 you and how cool you are. Can you talk about 0:39:53.080 --> 0:39:55.359 any advice you have for other women that are in 0:39:55.520 --> 0:39:56.800 male dominated roles? 0:39:56.880 --> 0:39:58.359 Because was it easy getting here? 0:39:58.640 --> 0:39:58.879 Yeah? 0:39:58.920 --> 0:40:02.600 It was not easy. I think you have you have 0:40:02.680 --> 0:40:04.920 to be true to yourself. I got pushed a lot 0:40:04.920 --> 0:40:07.640 in times in my career have a stronger voice, be louder, 0:40:07.719 --> 0:40:10.720 do this like that wouldn't have worked for me. Interesting, 0:40:10.760 --> 0:40:13.680 and so I think I do have a strong voice 0:40:13.680 --> 0:40:15.560 when I need to, I won't be the loudest in 0:40:15.560 --> 0:40:19.520 the room. And but I know you have to figure 0:40:19.520 --> 0:40:22.080 out how to influence in your own way, to drive 0:40:22.160 --> 0:40:25.160 progress and drive change, and I think being comfortable with 0:40:25.200 --> 0:40:28.000 that is really important because then you can develop that 0:40:28.120 --> 0:40:32.200 confidence to succeed in any environment and find the right 0:40:32.200 --> 0:40:34.800 support network. I mean, I you know, men and women, 0:40:35.239 --> 0:40:39.000 it's incredibly powerful. That's so great. 0:40:39.280 --> 0:40:41.359 Yeah, no, it makes sense, it's no. But the whole 0:40:41.560 --> 0:40:43.360 concept of because I think there was for a while like, 0:40:43.400 --> 0:40:46.680 you know, you gotta be strong, yeah, lean in and 0:40:46.800 --> 0:40:49.040 I think you and at times you do, yes, but 0:40:49.080 --> 0:40:51.799 you also have to be true to yourself. Yeah, thank 0:40:51.800 --> 0:40:53.319 you so much. We know you had a busy trek 0:40:53.320 --> 0:40:54.799 while you were here in New York and you found 0:40:54.800 --> 0:40:56.239 some time for us, So thank you. Thank you guys 0:40:56.239 --> 0:41:00.279 for having always safe travels back home. Just so to 0:41:00.560 --> 0:41:02.880 kind of cover so much with you. Katie Rooney, CFO, 0:41:02.960 --> 0:41:06.120 Chief Financial Officer at Alite, thank you so much. Light Solutions. 0:41:06.360 --> 0:41:09.000 Here in our interactive Brokers studio, you're. 0:41:08.840 --> 0:41:12.480 Listening to the Bloomberg Business Week podcast. Catch us live 0:41:12.560 --> 0:41:15.120 weekdays from two to five pm Eastern. 0:41:14.760 --> 0:41:18.080 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:41:18.360 --> 0:41:21.399 You can also listen live to our flagship New York station, 0:41:22.000 --> 0:41:29.279 Just say Alexa play Bloomberg eleven thirty The. 0:41:29.280 --> 0:41:31.960 Problem by. 0:41:34.080 --> 0:41:37.319 All right, they're definitely fighting the fight, if you will, 0:41:37.320 --> 0:41:40.040 and we'll get into exactly what they're doing. Especially if 0:41:40.040 --> 0:41:42.480 you're head out west to the University of California at Berkeley, 0:41:42.560 --> 0:41:45.520 you will find a class called the Berkeley Citizen Clinic, 0:41:45.960 --> 0:41:48.680 and in its students are learning how to fight hackers 0:41:48.800 --> 0:41:52.280 and help non governmental organizations. We're talking about the NGOs 0:41:52.320 --> 0:41:56.800 really better protect themselves. This story is in the upcoming 0:41:56.840 --> 0:41:59.399 new double issue Bloomberg BusinessWeek on newstands later this week. 0:41:59.440 --> 0:42:02.480 Already online at Bloomberg dot com, slash Business Weeekend on 0:42:02.520 --> 0:42:05.680 the Bloomberg So let's get to it. Bloomberg News cybersecurity 0:42:05.719 --> 0:42:08.879 reporter Margie Murphy on zoom in San Francisco. The editor 0:42:08.880 --> 0:42:10.640 of Bloomberg Business Week, Jill Weber right here in our 0:42:10.640 --> 0:42:15.120 Bloomberg Interactive Broker's studio, Jill. This clinic the first of 0:42:15.160 --> 0:42:16.799 it's kind of the country. I'm just curious how this 0:42:16.840 --> 0:42:18.680 story got the green light, Like, what was the pitch? 0:42:18.719 --> 0:42:20.919 I just thought it was so interesting because we look, 0:42:20.920 --> 0:42:24.480 we're always interested in what's happening in the cybersecurity world, 0:42:24.520 --> 0:42:27.200 and this was just an effort that I hadn't heard about, 0:42:27.239 --> 0:42:29.840 and yet students are doing cool stuff. 0:42:29.640 --> 0:42:31.160 And this. 0:42:32.560 --> 0:42:35.440 The Travers Project, when I first even read about it 0:42:35.480 --> 0:42:37.560 in the story, just was like, wow, this is they're 0:42:37.600 --> 0:42:41.760 doing something that I had not been aware of before 0:42:42.000 --> 0:42:44.879 this Travis Project. I hadn't been aware of what they 0:42:44.880 --> 0:42:47.799 were doing. But what they're doing is actually, you know, 0:42:48.719 --> 0:42:53.600 draws attention from people that aren't exactly like, you know, 0:42:54.080 --> 0:42:55.360 doing good stuff in the world. 0:42:55.520 --> 0:42:57.040 Right, And so the. 0:42:56.960 --> 0:43:00.600 Berkeley Citizen Clinic comes in there and the this is 0:43:00.600 --> 0:43:03.239 a pro bono effort and it just has a little 0:43:03.239 --> 0:43:05.520 bit of a feel good quality. But what I'm really 0:43:05.520 --> 0:43:09.319 curious about is what happens in the classroom to lock 0:43:09.360 --> 0:43:14.400 this stuff down, Margie. So let's start actually Traverse Project. 0:43:14.000 --> 0:43:17.680 What are they doing this nonprofit and why do that? 0:43:17.800 --> 0:43:20.239 Does that draw the attention of the bad people in 0:43:20.280 --> 0:43:20.640 the world? 0:43:21.840 --> 0:43:22.960 Yeah? Absolutely, So. 0:43:23.000 --> 0:43:26.600 I talked to Austin Shamlin, who is the founder of 0:43:26.640 --> 0:43:30.719 the Travis Project, and he's spent many years working in 0:43:31.480 --> 0:43:35.600 the kind of anti human trafficking industry, I guess you 0:43:36.000 --> 0:43:40.560 could call it, and he's he's set up this nonprofit 0:43:40.640 --> 0:43:43.360 and what it is, it's tech. It's a tech company really, 0:43:43.440 --> 0:43:47.640 and they provide technology to law enforcement. 0:43:48.840 --> 0:43:49.640 Around the world. 0:43:50.600 --> 0:43:54.520 And so they you know, they have a special proprietary 0:43:54.560 --> 0:43:58.480 technology which you know is it was it's kind of 0:43:58.480 --> 0:43:59.480 their secret source. 0:44:00.680 --> 0:44:04.040 And they're helping find the bad. 0:44:03.840 --> 0:44:08.600 Guys, the people who are supplying women from Ukraine who 0:44:08.640 --> 0:44:12.160 are trying to get over to Poland sending them to 0:44:12.239 --> 0:44:15.120 brothels around eastern Europe. 0:44:15.440 --> 0:44:19.239 And he's helping with this tracking technology. 0:44:20.719 --> 0:44:22.440 A little bit of a freeze here, we'll see if 0:44:22.480 --> 0:44:22.719 we can. 0:44:23.160 --> 0:44:25.120 Are you there, Margie, I'm here. 0:44:25.239 --> 0:44:28.080 Okay, great, no, no, no, technology it happens. Go ahead 0:44:28.080 --> 0:44:29.320 and pick up please go ahead. 0:44:30.880 --> 0:44:31.120 Yeah. 0:44:31.239 --> 0:44:35.719 So often is you know, for this his human trafficking 0:44:35.760 --> 0:44:39.920 technology company. He's helping track down the people who are 0:44:40.000 --> 0:44:45.239 moving women and children around the world, often for sex trafficking. 0:44:45.800 --> 0:44:49.640 And so he's attracting the ire of some really bad people, 0:44:50.040 --> 0:44:53.200 and all the money that he's getting to fund his company, 0:44:53.440 --> 0:44:57.120 it's going into the technology that he's providing to help 0:44:57.160 --> 0:45:00.560 with this effort, and he doesn't have the b to 0:45:00.680 --> 0:45:04.440 spend it on actually securing himself and his volunteers and 0:45:04.480 --> 0:45:07.600 his employees who are kind of putting themselves on the 0:45:07.600 --> 0:45:12.319 front line against criminal gangs, you know, potential moles in 0:45:12.400 --> 0:45:17.399 the law enforcement themselves. So although he's working in tech, 0:45:17.520 --> 0:45:22.520 he doesn't have the budget to go and get a 0:45:22.560 --> 0:45:26.040 consultant to kind of show him where all the vulnerabilities. 0:45:26.080 --> 0:45:27.239 Maybe every time he. 0:45:27.239 --> 0:45:31.239 Speaks to a volunteer talk about, you know, where there 0:45:31.280 --> 0:45:33.920 could be people who might be in their networks watching 0:45:33.960 --> 0:45:36.160 what they're doing, trying to get a step ahead of them. 0:45:36.239 --> 0:45:42.440 So he heard about this clinic at Berkeley and now's 0:45:42.640 --> 0:45:46.279 this fall. We'll get about fifteen students who are going 0:45:46.360 --> 0:45:49.879 to help him draw up a cybersecurity plan, tell him 0:45:49.960 --> 0:45:52.080 kind of the best ways for him to communicate with 0:45:52.120 --> 0:45:54.319 his volunteers and with the partners that they have all 0:45:54.360 --> 0:45:57.480 around the world to make sure that they can continue 0:45:57.520 --> 0:46:00.000 doing what they need to do in a safe manner 0:46:00.440 --> 0:46:02.160 and not putting their volunteers at risk. 0:46:03.520 --> 0:46:07.240 So what's the backstory at Berkeley? Where did this program 0:46:07.320 --> 0:46:08.600 come from? 0:46:09.040 --> 0:46:09.239 Right? 0:46:09.440 --> 0:46:12.480 So it kind of it all came from as a 0:46:12.520 --> 0:46:17.000 program which is like the Public Interest Cybersecurity Program, and 0:46:17.040 --> 0:46:22.080 that that was a module that cybersecurity students could teach, 0:46:23.200 --> 0:46:26.040 and Sarah Powers out at Berkeley has been kind of. 0:46:25.960 --> 0:46:29.520 Spearheading that, and they thought, you know, often. 0:46:30.040 --> 0:46:32.239 These universities do you have a bit of a pro 0:46:32.320 --> 0:46:34.719 bono effort and they look around in their community and think, 0:46:34.760 --> 0:46:35.480 you know, how can. 0:46:35.360 --> 0:46:36.080 We be helpful? 0:46:36.719 --> 0:46:40.880 And they realized that the a lot of these students 0:46:40.920 --> 0:46:46.200 were going on to work with large companies with huge 0:46:46.239 --> 0:46:49.319 sums of money, and they were never they were never 0:46:49.360 --> 0:46:51.880 going on to help kind of work with the small 0:46:52.000 --> 0:46:56.240 organizations around them or the the NGOs and nonprofits that 0:46:56.520 --> 0:47:00.680 they felt really needed the help the help secure themselves. 0:47:01.080 --> 0:47:03.440 And so they started off by I think they did 0:47:03.480 --> 0:47:07.160 a couple of local women's health clinics, anti abortion clinics, 0:47:07.560 --> 0:47:11.440 and then they started getting more interest and they realized 0:47:11.480 --> 0:47:13.080 this is like an international thing. 0:47:13.160 --> 0:47:14.000 And so now. 0:47:13.800 --> 0:47:17.239 They've been doing it for about I think it's like 0:47:17.320 --> 0:47:21.760 four years now, and they now they have to scream 0:47:22.080 --> 0:47:24.799 for the clients that they have come in and they 0:47:24.800 --> 0:47:26.920 make sure that they're going for the kind of lowest 0:47:26.960 --> 0:47:29.920 budget but higher risk clients. 0:47:30.520 --> 0:47:32.960 Margie, you know one thing I think is interesting too, 0:47:32.960 --> 0:47:35.920 And we have so many conversations where when you talk 0:47:35.960 --> 0:47:38.080 to the head of a company, a publicly held company 0:47:38.160 --> 0:47:41.240 or other, you know, cybersecurity is a big issue. It 0:47:41.320 --> 0:47:43.239 is just a part of doing business. Of course they're 0:47:43.280 --> 0:47:45.239 going to spend on it, they have money to do so. 0:47:45.760 --> 0:47:50.000 But there's some information in your story we write about 0:47:50.000 --> 0:47:53.799 these NGO small organizations that they are three times more 0:47:53.920 --> 0:47:57.239 likely to be targeted by hackers than large companies, and 0:47:57.280 --> 0:48:00.799 about sixty percent of those groups shut down within six 0:48:00.840 --> 0:48:04.560 months of an attack. So they are very vulnerable and 0:48:04.600 --> 0:48:07.799 their organization is really at stake of being shut down 0:48:07.840 --> 0:48:10.319 if they get hacked. I had no idea and didn't 0:48:10.320 --> 0:48:12.600 think about how vulnerable they are and that they don't 0:48:12.600 --> 0:48:16.720 have the access to either spend to protect their information 0:48:16.840 --> 0:48:18.160 or their organizations. 0:48:19.200 --> 0:48:21.360 Yeah. Absolutely, And there's two things here. 0:48:21.440 --> 0:48:25.560 So these specific NGOs that the Berkeley Clinic are working with, 0:48:25.600 --> 0:48:28.719 it's like that they tend to be super high risk 0:48:28.800 --> 0:48:34.280 because they are doing things like anti human trafficking, abortion work, 0:48:35.800 --> 0:48:40.560 you know, political kind of NGOs, and so they're super 0:48:40.640 --> 0:48:46.160 high risk and they are highly highly at risk of 0:48:46.200 --> 0:48:48.440 being hacked because of the work they do, because of 0:48:48.480 --> 0:48:51.799 brying governments and criminal gangs. Then on top of that, 0:48:52.160 --> 0:48:55.960 there's also the risk that is too small businesses generally 0:48:56.040 --> 0:48:59.799 across the US, because we hear so much about really 0:48:59.840 --> 0:49:03.760 like scale hats hackers going after you know, publicly listed 0:49:03.800 --> 0:49:07.160 companies because the return one you know, if they if 0:49:07.160 --> 0:49:09.560 they do a ransomware attack and if they try and 0:49:09.600 --> 0:49:12.640 get like five percent of their quarterly. 0:49:12.280 --> 0:49:13.879 Earnings, it's a huge sum. 0:49:14.239 --> 0:49:18.360 But we never really talk about how like the scale 0:49:18.560 --> 0:49:21.400 of the smaller organizations that are being hacked and the 0:49:21.480 --> 0:49:23.960 returns are smaller for the hackers, but it's easier for 0:49:24.000 --> 0:49:27.520 them to get in and cumulatively they're making tons of 0:49:27.560 --> 0:49:30.560 money off the smaller organizations which are less likely to 0:49:30.600 --> 0:49:33.680 be protected, which are less likely to have cyber insurance 0:49:33.960 --> 0:49:36.799 and then as the stats show, are more likely to 0:49:36.880 --> 0:49:38.440 fold as a result of that attack. 0:49:39.640 --> 0:49:42.080 Marguie, This isn't really featured in the story, but I'm 0:49:42.080 --> 0:49:45.280 just curious. Is this something that the sources you spoke 0:49:45.320 --> 0:49:49.600 with think they could scale in a tangible way. Do 0:49:49.640 --> 0:49:53.200 they anticipate trying to roll out resources that make the 0:49:53.320 --> 0:49:55.719 education on how to do this a little bit more accessible. 0:49:57.080 --> 0:49:58.600 I think it's something they'd love to do. 0:49:58.840 --> 0:50:03.080 And in this example, what the students are doing is 0:50:03.320 --> 0:50:09.400 essentially it's free consultancy, so they're not providing any technology themselves. 0:50:10.840 --> 0:50:14.000 And I think that a lot of what the students 0:50:14.040 --> 0:50:17.680 going to do is they become consultants. They're working like 0:50:17.800 --> 0:50:20.319 one of the one of my sources, Rachel, she now 0:50:20.320 --> 0:50:25.399 works at Deloitte, and they're kind of I guess they're 0:50:25.440 --> 0:50:27.759 hoping that they could maybe bring what they learned with 0:50:27.840 --> 0:50:29.360 them and pay it back. 0:50:30.320 --> 0:50:31.680 In terms of scaling it. 0:50:33.200 --> 0:50:36.960 At the moment, there's actually Berkeley is one of several 0:50:37.080 --> 0:50:39.360 clinics that have actually popped up, and there is a 0:50:39.360 --> 0:50:42.600 consortium that they've all all together, and there are donors 0:50:42.600 --> 0:50:45.160 who are feeding some money into that, and I think 0:50:45.160 --> 0:50:47.960 they're hoping that that will expand and that will get bigger, 0:50:48.000 --> 0:50:52.960 and we'll see more community based pro bono work as 0:50:53.200 --> 0:50:56.239 kind of we see more cyber attacks happening and we. 0:50:56.280 --> 0:50:58.840 See the cost of cybersecurity software rising. 0:51:00.000 --> 0:51:03.520 In terms of scaling, it wouldn't be a scale like 0:51:03.560 --> 0:51:05.520 we would see with a product, but I think in 0:51:05.640 --> 0:51:09.120 terms of people getting involved in trying to help and 0:51:09.200 --> 0:51:13.040 maybe seeing private companies put some funding behind it, that 0:51:13.120 --> 0:51:14.880 we might see scale. 0:51:15.320 --> 0:51:18.719 So the Travis Project, obviously, that was a really interesting one. 0:51:18.880 --> 0:51:25.000 I'm curious what other organizations the clinic at Berkeley and beyond, 0:51:25.280 --> 0:51:28.160 who else are they attempting to assist with these efforts. 0:51:28.760 --> 0:51:34.200 Yeah, so interestingly, each each clinic so they they're attached 0:51:34.200 --> 0:51:40.239 to universities, and each university has their own I guess 0:51:39.920 --> 0:51:42.439 the theme probably isn't the right word, but the type 0:51:42.440 --> 0:51:46.120 of organization they do, so Berkeley was these high risk NGOs. 0:51:47.120 --> 0:51:49.840 I think M I T was doing more community focused 0:51:49.840 --> 0:51:56.520 like local healthcare and government, and so they kind of 0:51:56.600 --> 0:52:01.959 specialized on that, but Berkeley specifically. 0:52:02.200 --> 0:52:03.440 I also spoke to. 0:52:04.760 --> 0:52:09.400 The administrative manager at the abortion clinic in the San 0:52:09.440 --> 0:52:13.600 Francisco General Hospital who has worked with them. They've also 0:52:13.640 --> 0:52:23.120 done other women's health organizations. They also work with. There 0:52:23.200 --> 0:52:26.319 was a organization in Guatemala which was kind of more 0:52:26.320 --> 0:52:32.600 of a political NGO, so it's quite international, and I 0:52:32.640 --> 0:52:38.879 think that what really struck me was how this could 0:52:38.880 --> 0:52:43.480 be applied to pretty much any vertical as well, you know, impacts. 0:52:43.520 --> 0:52:47.680 It's not just the NGOs. There are small businesses around 0:52:47.680 --> 0:52:51.160 the country which really need this help and they're not 0:52:51.160 --> 0:52:52.600 getting it and they can't afford it. 0:52:52.680 --> 0:52:57.400 And yeah, we've read about all the ransomware hats that 0:52:57.480 --> 0:53:02.320 have gone down, and it's like hospital schools, private companies. 0:53:02.360 --> 0:53:05.240 It's like take your pick, and like anytime it happens, 0:53:05.239 --> 0:53:08.200 it is your nightmare. And then to think like you 0:53:08.239 --> 0:53:10.640 don't have the funding that you need to actually defend 0:53:10.680 --> 0:53:14.040 yourselves from these things, and especially if you're attempted you 0:53:14.080 --> 0:53:17.840 could work like these folks. It's an amazing conundrum. 0:53:17.280 --> 0:53:19.239 Right, the concept of that, like what you're doing is 0:53:19.280 --> 0:53:20.960 all of a sudden shut down and then maybe you 0:53:21.000 --> 0:53:24.080 can't even recover from it. So it's really really concerning. 0:53:24.360 --> 0:53:26.440 The Other thing I thought was interesting, Margie, and maybe 0:53:26.440 --> 0:53:28.960 because we've been talking a lot about earlier on our 0:53:29.040 --> 0:53:33.560 broadcast matter and I got into how women participations, certainly 0:53:33.560 --> 0:53:38.239 in the prime earning their participation post pandemic is at 0:53:38.239 --> 0:53:39.960 a record high, and I just think about the tight 0:53:40.080 --> 0:53:44.680 labor force that is forcing Also companies or folks that 0:53:44.760 --> 0:53:47.600 maybe night might not have in another environment leaned on 0:53:47.760 --> 0:53:50.640 students to help them. They're like, I'm okay with it 0:53:50.680 --> 0:53:52.680 because it's actually kind of solving a problem because there's 0:53:52.719 --> 0:53:55.200 just not enough cybersecurity officials right to go out there 0:53:55.200 --> 0:53:57.120 and do it right. 0:53:57.280 --> 0:53:57.720 Totally. 0:53:57.760 --> 0:54:00.640 I mean, the idea itself sounds terrifying selling a load 0:54:00.680 --> 0:54:04.120 of students on your kind of cybersecurity practice, which is 0:54:04.160 --> 0:54:07.120 meant to be you know, the most people well cybersecurity 0:54:07.120 --> 0:54:08.320 people would argue is the most. 0:54:08.200 --> 0:54:09.720 Important part of your business. 0:54:10.120 --> 0:54:13.200 But when you don't have the people to help you that, 0:54:13.560 --> 0:54:15.440 you know, when you can't afford it, you'll take what 0:54:15.440 --> 0:54:15.879 you're given. 0:54:15.920 --> 0:54:16.800 And it turns out. 0:54:16.680 --> 0:54:19.480 That actually these students are really, really good and they 0:54:19.480 --> 0:54:22.719 are being trained by the best in class. So the 0:54:23.360 --> 0:54:25.319 tutors that they have are people who've worked in the 0:54:25.360 --> 0:54:27.799 industry for years and they want to give back and 0:54:27.840 --> 0:54:31.240 they know what the problem is. And oftentimes these problems 0:54:31.280 --> 0:54:35.200 aren't really expensive to solve. That sometimes people are being 0:54:35.320 --> 0:54:38.000 sold things that you know they're being told you need 0:54:38.040 --> 0:54:40.040 to pay a certain amount for this. A lot of 0:54:40.040 --> 0:54:43.759 it comes down to cyber hygiene. But with the kind 0:54:43.800 --> 0:54:50.200 of growing threat and the sophistication in which cyber criminals are, 0:54:50.320 --> 0:54:54.200 you know, evolving, we just need people need refreshes quite 0:54:54.200 --> 0:54:59.239 often on how to you know, privately message access controls 0:54:59.320 --> 0:55:02.000 over your fire else who can see what It can 0:55:02.040 --> 0:55:05.359 be quite simple stuff, but unless you have someone who 0:55:05.400 --> 0:55:09.360 knows telling you that you know, you don't know until 0:55:09.360 --> 0:55:13.200 you don't know, and then you've been hacked, and that's 0:55:13.239 --> 0:55:13.760 a problem. 0:55:13.880 --> 0:55:16.879 So I think seven weeks of training. I love this, right, 0:55:17.040 --> 0:55:20.320 power of backups, importance of privacy controls and software, the 0:55:20.360 --> 0:55:22.680 operation of virtual private networks, and how to assemble it 0:55:22.719 --> 0:55:25.839 all into a cybersecurity plan. Seven weeks and they can 0:55:25.880 --> 0:55:29.080 then take on clients. I love it. It's just a 0:55:29.120 --> 0:55:32.360 really smart story and just people figuring out how to 0:55:32.360 --> 0:55:35.000 get it done. MARGI thank you so much, appreciate it. 0:55:35.000 --> 0:55:37.759 Margi Murphy, Cybersecurity report at Bloomberg News. She is there 0:55:37.760 --> 0:55:40.279 on zoom in San Francisco. Jill Webber, the editor of 0:55:40.280 --> 0:55:42.520 Bloomberg Business Week, here in studio. This story in the 0:55:42.560 --> 0:55:45.440 upcoming new issue of Business Week. Do add on newstands 0:55:45.440 --> 0:55:48.920 on Thursday. Online already on the Bloomberg This is Bootberg Radio. 0:55:50.560 --> 0:55:54.120 You're listening to the Bloomberg Business Week Podcast. Catch us 0:55:54.160 --> 0:55:56.680 live weekdays from two to five pm Easter. 0:55:56.719 --> 0:55:59.960 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:56:00.320 --> 0:56:03.359 You can also listen live to our flagship New York station, 0:56:03.920 --> 0:56:06.840 Just say Alexa play Bloomberg. You Love and thirty. 0:56:08.640 --> 0:56:11.000 The world was once in love with them and thanks 0:56:11.040 --> 0:56:13.759 to account and hiss ip and industry was created until, 0:56:13.800 --> 0:56:16.920 of course, disaster struck in nineteen thirty seven. Fast forward 0:56:17.080 --> 0:56:20.440 and you adding a multi billionaire tech titan, the Airship. 0:56:20.520 --> 0:56:22.560 It is packed with more in the past, the present, 0:56:22.600 --> 0:56:25.400 in the future of lighter than air vehicles. A story 0:56:25.400 --> 0:56:27.600 in the new double issue of Bloomberg Business Week with 0:56:27.719 --> 0:56:31.160 us is Ashley Vance joining us on the phone along 0:56:31.160 --> 0:56:33.319 with the editor of Bloomberg Business Week, Joe Weber here 0:56:33.440 --> 0:56:36.799 in studio. Joe sounds like this is a story that's 0:56:36.840 --> 0:56:38.760 been in the works for a little bit. 0:56:39.440 --> 0:56:43.120 More than a little bit, and Ashley had just an 0:56:43.200 --> 0:56:49.239 inside look at what is just an incredible story. You 0:56:49.280 --> 0:56:51.840 mentioned Airship, So we're going to talk about an effort 0:56:51.960 --> 0:56:55.640 to modernize that airship. That takes a lot of money, 0:56:55.760 --> 0:56:57.880 a lot of patients, on a lot of time, and 0:56:57.960 --> 0:57:02.759 it really starts Deck kades ago with the Hindenburg and 0:57:02.800 --> 0:57:09.360 the disaster that was then, and so much attention basically, 0:57:09.440 --> 0:57:11.920 you know, has always been on that, and everybody's probably 0:57:11.920 --> 0:57:14.640 just forgotten that once upon a time there was hope 0:57:14.719 --> 0:57:17.960 that the airship, the era of the of the airship, 0:57:18.840 --> 0:57:21.120 was going to be a thing and we might be 0:57:21.160 --> 0:57:23.400 in the brink of it again. Okay, Ashley, I've set 0:57:23.440 --> 0:57:25.600 that up and been kind of a long winded with it. 0:57:25.640 --> 0:57:28.760 I want you to tell us how you found out 0:57:29.360 --> 0:57:32.760 about Sergey Brin's attempt to bring back the airship. 0:57:34.360 --> 0:57:36.320 Yeah, well, this one's a bit of a long in 0:57:36.440 --> 0:57:40.440 winding story. I broke the first story on this around 0:57:40.520 --> 0:57:43.360 like twenty seventeen. I had heard rumors that Serge was 0:57:43.360 --> 0:57:46.960 building this secret airship near my house in Mountain View, 0:57:47.040 --> 0:57:51.120 California at NASA AMES. And we published that story and 0:57:51.160 --> 0:57:55.400 SERGEI was not happy about it. And then and then 0:57:55.520 --> 0:57:59.640 some years passed and I just I met the man 0:57:59.680 --> 0:58:03.040 who's actually doing the building. This guy named Al Weston 0:58:03.360 --> 0:58:09.520 is an aerospace engineer and he forgave me for disclosing 0:58:09.640 --> 0:58:13.040 his secrets and then actually let me watch the construction 0:58:13.320 --> 0:58:15.440 of this airship over the last couple of years, and 0:58:16.280 --> 0:58:18.720 in next month, in June, it comes out of the 0:58:18.760 --> 0:58:21.919 hangar for the first time. The first craft is called 0:58:21.920 --> 0:58:24.160 the Pathfinder one and. 0:58:24.240 --> 0:58:29.360 The company that al Weston's CEO of Lighter than Air. Obviously, 0:58:29.400 --> 0:58:32.920 the thing with the Hindenburg was that it went up 0:58:32.960 --> 0:58:36.080 in flames, went down in flames. To be more specific, 0:58:36.680 --> 0:58:38.200 what is different about this. 0:58:38.200 --> 0:58:42.480 Attempt, Well, so you're right, I mean, we have this 0:58:42.600 --> 0:58:46.440 glorious period from kind of like the early nineteen hundreds, 0:58:46.480 --> 0:58:48.840 even you know, the Hinderberg I think was nineteen thirty seven, 0:58:48.960 --> 0:58:52.920 and even past there where where we actually various countries 0:58:52.960 --> 0:58:55.720 produced hundreds of airships. They were used for tourism, in 0:58:55.760 --> 0:59:00.280 the military, all kinds of stuff. The Hindenburg disaster put 0:59:00.280 --> 0:59:02.440 an end to the tourism things, and then and then 0:59:02.480 --> 0:59:06.280 airplane kind of ended the rest. And nobody has attempted, 0:59:06.320 --> 0:59:09.400 you know, we see blimps and whatever, hot air balloons, 0:59:09.440 --> 0:59:13.600 but nobody's attempted to make a proper airship with a 0:59:13.720 --> 0:59:17.480 rigid structure, which is what allows them to get really 0:59:17.560 --> 0:59:20.400 large and carry lots of stuff and lots of people. 0:59:20.840 --> 0:59:23.360 No one's tried to do that for eighty five years, 0:59:23.600 --> 0:59:27.520 and so this is the first attempt. As you mentioned, Joel, 0:59:27.520 --> 0:59:29.960 it takes a lot of money. And then and then 0:59:30.040 --> 0:59:32.919 you know they've tried to modernize the whole idea given 0:59:32.960 --> 0:59:35.680 that it's been eighty five years. 0:59:35.440 --> 0:59:39.080 And so what how does it accomplish the lighter than air, right, 0:59:39.160 --> 0:59:42.400 because previously that was hydrogen. We know that's explosive. 0:59:42.440 --> 0:59:47.480 So the magic is Yeah, this time it's helium, which 0:59:48.200 --> 0:59:52.240 which has the benefit of not being flammable. It is 0:59:52.320 --> 0:59:53.280 a lot more expensing. 0:59:53.280 --> 0:59:56.160 Seems like a key ingredient there, right right. 0:59:57.160 --> 1:00:00.000 I mean, you know there are people now the hit 1:00:00.400 --> 1:00:03.640 it is very complicated the series on what exactly went wrong. There. 1:00:03.640 --> 1:00:05.800 There are people who think you could build these with 1:00:05.880 --> 1:00:08.880 hydrogen and do it much more safely. But obviously there's 1:00:08.920 --> 1:00:12.520 you know, all these years later, the sticks in people's heads. 1:00:12.800 --> 1:00:16.400 But this one's helium. It's it's enormous. It's bigger than 1:00:16.440 --> 1:00:21.200 a football field in lengths. I've seen it many times 1:00:20.800 --> 1:00:25.640 and it's this time it's made instead of wood or metal, 1:00:25.680 --> 1:00:28.840 it's made out of carbon fiber and titanium, so it's 1:00:28.840 --> 1:00:32.440 a lot lighter and sturdier than the airships of the past. 1:00:32.520 --> 1:00:36.240 And so this really is this modern take on one 1:00:36.320 --> 1:00:39.800 and now obviously kind of goes searching for a purpose. 1:00:40.120 --> 1:00:42.600 I guess I'm curious too about what's it like inside. 1:00:44.600 --> 1:00:47.120 Yeah, well, this one for the moment, it's I would 1:00:47.160 --> 1:00:51.000 say not super super spectacular. It hasn't gone alot like 1:00:51.040 --> 1:00:53.760 on the inside of the actual structure. It's amazing. You 1:00:53.800 --> 1:00:59.800 see this geometric pattern of all these carbon fiber tubes 1:01:00.160 --> 1:01:03.840 again to the titanium and all the electronics and everything 1:01:03.960 --> 1:01:06.960 that goes into this. The outside it looks just like 1:01:07.040 --> 1:01:09.560 any kind of blimp airship you might have seen before. 1:01:09.640 --> 1:01:13.040 And there's a gondola underneath that has room for a 1:01:13.080 --> 1:01:15.800 couple of pilots and probably about eight or ten people. 1:01:16.000 --> 1:01:20.280 And this first one, the Pathfinder one from LTA is 1:01:20.440 --> 1:01:23.160 this is it's almost like a prototype to prove what 1:01:23.200 --> 1:01:26.120 they can do. They already have plans to make a 1:01:26.680 --> 1:01:29.800 much much larger one as their second craft. 1:01:30.160 --> 1:01:32.720 One thing I wanted to ask you about Alan Western 1:01:32.880 --> 1:01:36.120 and Serge Bryn. How did these two guys get together. 1:01:37.600 --> 1:01:42.400 It's an odd pairing. Yeah, right, it's almost It was 1:01:42.440 --> 1:01:47.040 almost a marriage made through logistics. Google's headquarters are about 1:01:47.040 --> 1:01:50.080 two miles from NASA Ames, which is where the Pathfinder 1:01:50.120 --> 1:01:54.680 one is being built, NASA's Silicon Valley Center, and now Weston. 1:01:55.360 --> 1:01:57.760 He had a career in the Air Force, working on 1:01:57.840 --> 1:02:00.880 pretty top secret sort of projects like this wars missile 1:02:00.920 --> 1:02:03.480 defense shields, and then he ended up at AIMS for 1:02:03.520 --> 1:02:06.760 many years working on low cost lunar landers and other 1:02:06.800 --> 1:02:11.120 space projects. And so they met just by way of 1:02:11.200 --> 1:02:14.640 things Google had been doing in concert with NASA and 1:02:14.720 --> 1:02:18.200 various projects, and they both struck up this kinship around airships. 1:02:18.240 --> 1:02:20.080 They both just really liked them. This is what this 1:02:20.200 --> 1:02:24.440 boils down to is that Sergey Ran likes airships and 1:02:24.560 --> 1:02:25.200 he wanted one. 1:02:25.440 --> 1:02:27.880 So what are they going to use these for? Is 1:02:27.880 --> 1:02:28.600 it clear yet? 1:02:30.200 --> 1:02:34.000 Yeah, when it is clear what they intend to use 1:02:34.040 --> 1:02:36.200 it for, I don't know if the business case is 1:02:36.240 --> 1:02:39.000 totally clear. They you know, SERGEI maybe doesn't have to 1:02:39.040 --> 1:02:41.760 turn this into a profitable, profitable thing. He wants to 1:02:41.840 --> 1:02:47.080 use them to to take tons of cargo. He's very 1:02:47.120 --> 1:02:50.200 into disaster relief. This is kind of where he focuses 1:02:51.080 --> 1:02:53.840 some of his money. So you'd fly tons of cargo 1:02:54.120 --> 1:02:56.800 into an area that maybe's hit by a hurricane that 1:02:56.920 --> 1:02:59.600 can't be reached very well by by boats or planes, 1:02:59.680 --> 1:03:03.160 or the instructures damaged, and you can drop an airship 1:03:03.320 --> 1:03:05.760 in there. There is a pretty strong case to be 1:03:05.840 --> 1:03:10.680 made that this is a greener form of shipping cargoes 1:03:10.800 --> 1:03:14.960 than something like a plane and possibly in some cases 1:03:15.480 --> 1:03:18.640 a ship or a train. But they can These large 1:03:18.760 --> 1:03:22.600 airships that LTA is looking to build can carry hundreds 1:03:22.600 --> 1:03:25.960 of tons of stuff, and then far in the future 1:03:27.120 --> 1:03:29.760 tourism might come back again with these kind of flying 1:03:31.160 --> 1:03:33.960 somewhere between a cruise ship and a five star hotel 1:03:34.160 --> 1:03:37.120 in the sky, and you would take like a two 1:03:37.200 --> 1:03:39.600 day journey from London to New York and be able 1:03:39.600 --> 1:03:41.920 to walk around and open the windows and sit on 1:03:42.000 --> 1:03:45.880 a deck and have meals, you know, in class. 1:03:46.280 --> 1:03:48.160 Sounds like somebody who actually went up and won and 1:03:48.200 --> 1:03:50.360 got to open up a window and get the experience. 1:03:50.640 --> 1:03:53.440 Take us to Germany, because one of my questions when 1:03:53.440 --> 1:03:55.400 I was reading this, I'm like, is this really a business? 1:03:55.600 --> 1:03:57.560 Take us to Germany and what's been going on there? 1:03:59.080 --> 1:04:02.320 Right? So much of this airship pioneering was done by 1:04:02.800 --> 1:04:10.680 Count Zeppelin in Germany, a person, and he's left his legacy. Oddly, 1:04:11.840 --> 1:04:14.400 a bunch of intellectual property that that he came up 1:04:14.440 --> 1:04:18.280 with ended up as the fuel of like an aerospace 1:04:18.280 --> 1:04:23.200 and automotive empire in Germany. And the foundation behind this 1:04:23.240 --> 1:04:26.760 intellectual property donates millions of dollars to the city of 1:04:26.800 --> 1:04:30.600 friedrich Schaffen, where I went, and they have they fund 1:04:30.800 --> 1:04:34.400 these these tourist flights at a Zeppelin nt airship. It's 1:04:34.440 --> 1:04:37.560 it's smaller than the ones LTA's building, but yeah, for 1:04:37.560 --> 1:04:40.400 about eight hundred dollars, you could fly for ninety minutes 1:04:40.600 --> 1:04:44.320 and feel like a wizard. It's a strange experience. 1:04:44.360 --> 1:04:45.320 The way you did it. 1:04:46.560 --> 1:04:48.280 I did it. I did it. I did it for 1:04:48.640 --> 1:04:50.720 the story and for Hello World by TV show, So 1:04:51.000 --> 1:04:55.240 you know, you it's very different to a plane or 1:04:55.240 --> 1:04:58.280 a helicopter, which which can take off quite violently and 1:04:58.280 --> 1:05:01.200 suddenly you just kind of slow glide up and then 1:05:01.240 --> 1:05:04.640 you're you've got some propulsion from these propellers, but you're 1:05:04.680 --> 1:05:06.600 also at the mercy of the wind and you just 1:05:06.640 --> 1:05:11.360 kind of bob around and there's no air pressure like 1:05:11.440 --> 1:05:13.560 in a plane where the cabin is pressure, so you 1:05:13.560 --> 1:05:15.800 could just open the window. You can stick your head 1:05:15.840 --> 1:05:18.800 out and see all the sites below. I felt like 1:05:18.880 --> 1:05:19.760 a like a dog. 1:05:20.360 --> 1:05:22.840 I was gonna say, how many times did they ask 1:05:22.920 --> 1:05:26.920 you to put your head back inside it? Sir? 1:05:27.000 --> 1:05:28.480 Could you put your head back in? 1:05:29.640 --> 1:05:32.280 I think our whole Hello World crew was left and 1:05:32.280 --> 1:05:34.520 every eye this huge smile of my face. I liked. 1:05:34.600 --> 1:05:35.560 I liked the window thing. 1:05:36.560 --> 1:05:39.760 So where does it go from here? There's there's gonna 1:05:39.760 --> 1:05:44.560 be this unveiling, uh and what comes next for LT 1:05:44.680 --> 1:05:45.280 A lighter than that. 1:05:46.440 --> 1:05:48.240 It's a pretty cool part of the story. I think, 1:05:48.320 --> 1:05:51.880 you know. The one hundred years ago Goodyear was the 1:05:52.000 --> 1:05:54.160 airship king in the United States, and most of that 1:05:54.240 --> 1:05:58.880 took place in Ohio. Sergey Brinn has actually his company, 1:05:58.960 --> 1:06:02.880 his family trust has gotten taken over the old Goodyear 1:06:03.000 --> 1:06:06.360 air Dock, which is a huge hangar in Akron, Ohio. 1:06:06.720 --> 1:06:09.680 And that's where their next vehicle, which is called Past 1:06:09.760 --> 1:06:12.320 Finer three for some reason they just skipped past find 1:06:12.360 --> 1:06:14.960 or two, is going to come to life at this 1:06:15.040 --> 1:06:18.240 air dock in Akron. And there's still all these people 1:06:18.280 --> 1:06:20.920 who used to work for Goodyear, and and there's a 1:06:21.000 --> 1:06:25.600 university there that has a bunch of archives and talent 1:06:26.040 --> 1:06:28.560 in this field. And so it's like a revival of 1:06:28.600 --> 1:06:33.280 this hundred year old story, and oddly Sergey Brinn is 1:06:33.320 --> 1:06:34.280 at the center of it. 1:06:34.920 --> 1:06:37.400 So you got to talk to him about his interest here, right. 1:06:38.720 --> 1:06:44.040 I wish figure Ferger saw my first story. He told 1:06:44.040 --> 1:06:46.760 me that he enjoys my writing, but that he didn't 1:06:46.760 --> 1:06:49.920 want to talk about his airship. And that was about 1:06:49.960 --> 1:06:54.400 six years ago, and I frequently asked him he knows, 1:06:54.520 --> 1:06:56.200 he knows I've been in there, he knows I've been 1:06:56.240 --> 1:06:59.040 talking to Al. He just does not want to comments 1:06:59.200 --> 1:07:01.880 about the airship himself. And so so it's kind of 1:07:01.880 --> 1:07:05.840 been me talking aw lesson about Sergey's motivations and then 1:07:05.920 --> 1:07:08.080 and then talking to a bunch of employees there. I'm 1:07:08.080 --> 1:07:11.240 not sure why wants to be so secretive. You know, 1:07:11.360 --> 1:07:13.240 the cat is out of the bag, but but there 1:07:13.240 --> 1:07:13.560 it is. 1:07:14.440 --> 1:07:16.640 Well, there's a lot of money that he's put into 1:07:16.680 --> 1:07:20.880 this thing, and so I'm wondering, you know, like, what's 1:07:20.920 --> 1:07:25.040 in it? What's in it for him? 1:07:25.080 --> 1:07:27.920 Part of it? I think he really does do all 1:07:27.960 --> 1:07:30.640 this humanitarian stuff. I think that's part of it. I 1:07:30.640 --> 1:07:32.840 think he really does just want an airship. You know, 1:07:32.880 --> 1:07:37.280 everybody's got a mega yacht. Not many of these billionaires. 1:07:37.560 --> 1:07:44.760 A rocket or something like that, yeast the rockets, Like, uh, 1:07:45.040 --> 1:07:48.000 you know, is this how does this compare with the rocket? 1:07:48.000 --> 1:07:48.439 Do you think? 1:07:49.560 --> 1:07:49.840 Well? 1:07:50.160 --> 1:07:53.480 I mean it's it's similar in terms of sort of 1:07:53.480 --> 1:07:56.600 the scale of this and the cost and the time 1:07:56.640 --> 1:07:58.360 it takes. The mega Yeah, I think you roll up 1:07:58.400 --> 1:08:01.000 to the party and everyone's showing picture of their rockets 1:08:01.080 --> 1:08:03.120 or their lega yachts and you're the only one with 1:08:03.200 --> 1:08:07.640 the airshipt photo. That's it's it's the claim to say it. 1:08:07.640 --> 1:08:11.200 Is true barely if you're going for just like number 1:08:11.240 --> 1:08:13.880 of crazy things that can go in the air, fewer 1:08:13.920 --> 1:08:18.560 air airships than there are rockets, right, Yeah. 1:08:18.520 --> 1:08:20.160 But you know, I think this is this is like 1:08:20.200 --> 1:08:24.320 the worry. So many people are really in the airshifts. 1:08:24.360 --> 1:08:26.880 They've seen a bunch of startups coming go. It always 1:08:26.960 --> 1:08:29.720 ends up costing more money, and so people are excited 1:08:30.200 --> 1:08:33.280 in this field, but they're really concerned that Sergey loses 1:08:33.360 --> 1:08:35.120 interest as this just keeps costing. 1:08:35.200 --> 1:08:37.400 But once he goes up, right, that's going to change everything. 1:08:37.400 --> 1:08:39.439 You'll have his head out the windows. You know, he's 1:08:39.439 --> 1:08:40.439 going to double down on it. 1:08:41.600 --> 1:08:44.160 I think that's the hope for the guys at LTA 1:08:44.439 --> 1:08:48.040 is just falls in love with it all over again. 1:08:48.080 --> 1:08:50.400 This has taken a number of years longer I think 1:08:50.439 --> 1:08:53.280 that he expected, and it's up over two hundred and 1:08:53.280 --> 1:08:56.080 fifty million dollars, probably quite a bit above that. That 1:08:56.160 --> 1:09:01.120 was the best figure I could get. And yeah, you know, so, 1:09:02.200 --> 1:09:04.160 I'm sure he wants to see a bit more progress. 1:09:04.160 --> 1:09:07.439 But he has acquired this facility at Ohio and and 1:09:08.080 --> 1:09:09.040 is pushing on. 1:09:09.360 --> 1:09:11.240 Are there dates like on the calendar, like there's going 1:09:11.320 --> 1:09:13.240 to be some big press conference and we're going to 1:09:13.280 --> 1:09:16.400 get to see a launch of it or I'm just curious, 1:09:16.439 --> 1:09:19.040 like kind of what's on your radar of what's next 1:09:19.320 --> 1:09:21.400 from the company and from them. 1:09:22.200 --> 1:09:22.400 Yeah. 1:09:22.400 --> 1:09:25.559 Absolutely, so I've seen it. I've seen it flying as 1:09:25.640 --> 1:09:27.240 such as you can in a hangar. I mean, this 1:09:27.280 --> 1:09:29.519 hangar is giant, so it could kind of bob around. 1:09:29.520 --> 1:09:33.800 But in early June, after our story runs, I'm sure 1:09:34.000 --> 1:09:36.799 LPA is going to put out an announcement to invite 1:09:37.400 --> 1:09:40.080 some other press to see it come out of the 1:09:40.120 --> 1:09:43.000 hangar for the first time. It doesn't immediately soar or 1:09:43.000 --> 1:09:45.519 anything like that. There's a lot of ground testing that's 1:09:45.560 --> 1:09:47.519 going to take place over months. It's got to get 1:09:47.520 --> 1:09:51.680 certified by the FAA. Pilots have to be certified and 1:09:52.000 --> 1:09:53.760 all that. So it's going to be some time before 1:09:53.760 --> 1:09:57.320 it's soaring in the air. But it's it's all completed now, 1:09:57.400 --> 1:10:01.479 and yes, it's going to make it big entrance into 1:10:01.520 --> 1:10:02.599 the world here every day. 1:10:03.000 --> 1:10:04.679 All right, I'm just going to get a little teaser. 1:10:04.720 --> 1:10:08.240 There's well, I don't know Al Weston in a gorilla suit, 1:10:08.280 --> 1:10:10.880 but maybe people have to check that one out. It's 1:10:10.920 --> 1:10:13.640 a little bit of a rumor. This is really fascinating 1:10:13.640 --> 1:10:15.240 when we think about kind of where things are going 1:10:15.280 --> 1:10:17.400 to go and how things are moving around. You know, Ashley, 1:10:17.400 --> 1:10:19.680 You're always on it, so thank you so much for 1:10:20.240 --> 1:10:22.960 sharing this with us. Ashley Vance, of course he is. 1:10:22.960 --> 1:10:26.720 Bloomberg BusinessWeek features writer joining us along with the editor 1:10:26.760 --> 1:10:28.960 of Bloomberg Business Week, Jill Weber, and the story and 1:10:29.000 --> 1:10:31.519 the upcoming new issue of Bloomberg Business Week. 1:10:31.840 --> 1:10:35.400 You're listening to the Bloomberg Business Week Podcast. Catch us 1:10:35.439 --> 1:10:37.959 live weekdays from two to five pm Easter. 1:10:38.000 --> 1:10:41.320 On Bloomberg Radio, the Bloomberg Business App, and you too. 1:10:41.600 --> 1:10:44.639 You can also listen live to our flagship New York station, 1:10:45.200 --> 1:10:48.440 Just Say Alexa Play Bloomberg eleven thirty. 1:10:49.680 --> 1:10:51.960 So about a week ago, Bloomberg News was that with 1:10:52.000 --> 1:10:55.000 a story. It was about how airlines first class makeovers 1:10:55.040 --> 1:10:57.960 are giving the rich hotel rooms in the sky. That 1:10:58.040 --> 1:11:01.160 means carriers are investing billions of dollar to upgrade cabins. 1:11:01.200 --> 1:11:04.679 They've got sofas, double beds, TVs, desks, wardrobes, mini bars, 1:11:05.320 --> 1:11:07.879 and in some cases Matt Miller walking showers. 1:11:08.600 --> 1:11:09.280 That's awesome. 1:11:09.680 --> 1:11:10.280 I know it. 1:11:10.680 --> 1:11:12.479 I think that right sign. 1:11:12.760 --> 1:11:14.559 It's like your flight. You're gonna take it out over 1:11:14.600 --> 1:11:15.439 the weekend, right. 1:11:16.000 --> 1:11:18.280 Yeah, No, I'm flying to Detroit over the weekend and 1:11:18.360 --> 1:11:21.519 it'll probably be on an incredibly uncomfortable narrow body jet 1:11:21.640 --> 1:11:22.400 in coach. 1:11:22.760 --> 1:11:26.040 Okay, sorry about that. Well listen. If that doesn't cut it, though, 1:11:26.040 --> 1:11:28.519 these upgrades that some are enjoying in first class, you 1:11:28.560 --> 1:11:31.280 can always buy your own private jet, including you, Matt Miller. 1:11:31.360 --> 1:11:34.640 So let's get into that with our next guest, Janine Janarelli. 1:11:34.720 --> 1:11:36.760 She is founder and president of par Avion. It's an 1:11:36.840 --> 1:11:40.320 international business aircraft sales and a marketing firm, and she 1:11:40.439 --> 1:11:43.240 joins us once again on zoom in Houston, Texas. Jannin, 1:11:43.360 --> 1:11:46.160 nice to have you back here on Bloomberg it's been 1:11:46.200 --> 1:11:48.720 a little while. Tell us about the market and what 1:11:48.760 --> 1:11:51.080 you're seeing right now and how everything has really kind 1:11:51.120 --> 1:11:54.640 of settled in post pandemic, Aha. 1:11:54.520 --> 1:11:57.360 Settled in well. The term that you're hearing off used 1:11:57.400 --> 1:12:00.880 among the trade is a return and normalization, and it 1:12:00.960 --> 1:12:03.320 certainly feels that way now that we're through Q one 1:12:03.400 --> 1:12:06.360 and well into Q two, as compared to the last 1:12:06.360 --> 1:12:10.160 two years. Whereas in late twenty one and all of 1:12:10.240 --> 1:12:13.720 twenty two we were saying, who knew a pandemic could 1:12:13.720 --> 1:12:18.080 be good for business aviation? But it was. And now 1:12:18.120 --> 1:12:21.559 that we're on the backside of that, we see I 1:12:21.720 --> 1:12:24.200 personally see and I hear it echoed by my peers, 1:12:24.640 --> 1:12:28.960 a pronounced slowdown in the number of inquiries, the level 1:12:29.000 --> 1:12:33.240 of activity, and you know, prices are starting to correct. 1:12:33.760 --> 1:12:36.920 So is that because I mean, I guess during the pandemic, 1:12:36.920 --> 1:12:40.400 if you had enough money to fly not just privately, 1:12:40.600 --> 1:12:44.280 but more importantly separately from everyone else, you did that 1:12:44.439 --> 1:12:48.439 so that you wouldn't get sick. Now maybe people are 1:12:48.720 --> 1:12:51.960 less worried about that and willing to you know, as 1:12:52.040 --> 1:12:56.400 Carol said, you know, airlines, commercial airlines are putting your 1:12:56.439 --> 1:12:59.080 own room on the flight, so you might as well, 1:12:59.120 --> 1:13:02.519 just take that instead of buying a G five fifty 1:13:02.600 --> 1:13:03.280 or whatever it is. 1:13:04.280 --> 1:13:08.679 Well, there's still a huge difference between commercial airline travel 1:13:08.800 --> 1:13:11.519 and that of flying on your own aircraft. I mean, 1:13:11.720 --> 1:13:14.679 let's just talk about the convenience. First of all, there's 1:13:14.800 --> 1:13:18.160 not necessarily a deadline by which time they're going to 1:13:18.200 --> 1:13:23.040 close the door and you've missed your flight. Secondly, it's 1:13:23.240 --> 1:13:27.000 not the restrictive sort of feel with business or private 1:13:27.040 --> 1:13:30.920 aviation as it has with commercial and commercial you're sharing 1:13:30.960 --> 1:13:36.559 the space still with dozens, if not hundreds of fellow 1:13:36.640 --> 1:13:40.280 passengers that are trampling down the same aisle, using the 1:13:40.360 --> 1:13:44.559 same restrooms, taking advantage of all the well limited open 1:13:44.640 --> 1:13:48.840 space that you have. Whereas when people gravitated towards private 1:13:48.840 --> 1:13:52.320 aircraft during the pandemic, it was exactly that, creating a 1:13:52.479 --> 1:13:56.200 health corridor, so they knew who they were mingling with, 1:13:56.360 --> 1:13:58.920 what they were touching, from the moment they left their 1:13:58.920 --> 1:14:02.479 home till they reached their destination. You are correct there 1:14:02.600 --> 1:14:06.160 is a slide back towards commercial travel, but I would 1:14:06.200 --> 1:14:07.479 say most of the draw. 1:14:08.400 --> 1:14:10.599 Sorry, no, well you don't want to jump in because 1:14:10.640 --> 1:14:14.760 I am curious. You said normalization pronounced slow down. I 1:14:14.800 --> 1:14:17.120 am curious what that means in your business? Is it 1:14:17.120 --> 1:14:19.400 down fifty percent? Is it down forty percent? I mean, 1:14:19.400 --> 1:14:20.840 I'm looking at your website. 1:14:21.080 --> 1:14:21.439 You know. 1:14:23.200 --> 1:14:26.120 What have I got here? As Cessna citation, a Bombardier 1:14:26.160 --> 1:14:29.720 Global seventy five hundred. You're talking about planes echo for 1:14:29.760 --> 1:14:32.519 what tens of millions of dollars? Hundreds of millions of dollars. 1:14:32.560 --> 1:14:36.479 These are not inexpensive items. And I'm just curious, what's 1:14:36.479 --> 1:14:38.400 a slowdown in this space look like? 1:14:39.360 --> 1:14:42.280 Well, you know, slow down is probably let's talk activity. 1:14:42.680 --> 1:14:45.280 Whereas before you could even get the airplane the market, 1:14:45.360 --> 1:14:46.719 you had a ready buyer for it. 1:14:46.720 --> 1:14:47.559 It was gone. 1:14:47.960 --> 1:14:52.120 The advertising was just done to sort of serve as 1:14:52.120 --> 1:14:54.479 a means by which to get other people to call in. 1:14:55.080 --> 1:14:59.160 Today we are now seeing lead times where I should say, 1:14:59.400 --> 1:15:02.200 bring the air have to market and you're going to 1:15:02.240 --> 1:15:04.639 sit on the market ninety one hundred and twenty days 1:15:04.680 --> 1:15:08.599 on average With most of the aircraft. I would say 1:15:09.000 --> 1:15:13.240 the flight or the decline and activity is being felt 1:15:13.680 --> 1:15:16.479 at the top end for sure, as well as at 1:15:16.479 --> 1:15:21.080 the entry level. The two to seven million dollar business 1:15:21.200 --> 1:15:25.320 jet that people jumped on a in a panic, in 1:15:25.400 --> 1:15:29.680 a frenzied buying. I would say through late twenty right 1:15:29.760 --> 1:15:31.800 up until Q three twenty two. 1:15:32.120 --> 1:15:33.439 Right, that's all gone away. 1:15:34.960 --> 1:15:38.400 By the way, in terms of you know, owning a 1:15:38.439 --> 1:15:42.639 private jet and using it, how many people actually fly 1:15:42.800 --> 1:15:44.640 their own Do you have clients like that? 1:15:45.760 --> 1:15:48.800 A few, but very few. That is the small percentage 1:15:48.840 --> 1:15:53.400 of the entire let's say ownership pool that actually pilot. 1:15:53.120 --> 1:15:54.000 Their own aircraft. 1:15:54.160 --> 1:15:56.240 So or at least in the category the airplane I 1:15:56.320 --> 1:15:56.760 work with. 1:15:57.320 --> 1:15:59.679 So, what are the hottest ones that you sell? What's 1:15:59.720 --> 1:16:03.080 the private jet? If I, you know, have some liquidity 1:16:03.120 --> 1:16:06.760 event and I'm all of a sudden holding a billion cash, I. 1:16:06.720 --> 1:16:08.479 Come to you and say, can you sell your bitcoin? 1:16:08.600 --> 1:16:13.240 Yeah, Jennine, give me the hottest IT jet that you've got. 1:16:13.280 --> 1:16:15.080 What's the one that everybody wants. 1:16:15.960 --> 1:16:18.560 I've got Global seventy five hundred that you're taking a 1:16:18.600 --> 1:16:22.280 good look at. If you come into a billion dollars, 1:16:22.280 --> 1:16:24.400 that is the aircraft for you. You can go anywhere in 1:16:24.400 --> 1:16:27.360 the world quite comfortably. But the other side of the 1:16:27.400 --> 1:16:30.120 it jet, let's call it an IT sector, is the 1:16:30.360 --> 1:16:35.040 mid size super mid size popular airplane, perfect size ideally 1:16:35.080 --> 1:16:39.400 suited for continental US travel, and the charter operators love it. 1:16:40.439 --> 1:16:41.920 You know what I'm curious too about I think the 1:16:42.000 --> 1:16:43.599 last time we talked, and again it was a few 1:16:44.000 --> 1:16:47.280 few years ago. I think cross border was a big 1:16:47.280 --> 1:16:51.040 thing for you. And so we're entrepreneurs. Who is buying today? 1:16:51.040 --> 1:16:54.840 And I'm curious entrepreneurs maybe think Silicon Valley Bank or 1:16:54.880 --> 1:16:56.439 slow down if that's had an impact. 1:16:57.800 --> 1:17:02.559 Well, Hexcector certainly has seen a slowdown and decline of 1:17:02.600 --> 1:17:06.960 inquiry is coming from that particular industry. But entrepreneurs are 1:17:06.960 --> 1:17:09.360 still my sweet spot. And remember there are entrepreneurs doing 1:17:09.400 --> 1:17:14.280 many different things, and one market declines, another one rises, 1:17:14.320 --> 1:17:18.120 one industry declines, and other rises. In the aircraft sales world, 1:17:18.280 --> 1:17:22.080 we make money coming and going in economic cycles. As 1:17:22.120 --> 1:17:24.320 far as the cross border that's starting to pick up 1:17:24.360 --> 1:17:28.160 but still lagging behind demand within the United. 1:17:27.840 --> 1:17:31.240 States, Janine, what if I only have, like, I don't know, 1:17:31.280 --> 1:17:34.120 fifty sixty million bucks, but I have a few friends 1:17:34.120 --> 1:17:38.280 with fifty or sixty million bucks? Do you recommend people 1:17:38.320 --> 1:17:41.880 going in on a jet or where do you steer 1:17:41.920 --> 1:17:44.559 someone away from that idea? I mean, does it really 1:17:44.600 --> 1:17:47.519 make sense to buy your own jet? Isn't it better 1:17:47.600 --> 1:17:48.640 to be able to lease it? 1:17:48.680 --> 1:17:54.120 Out occasionally, Well, what you buy is driven by your need. 1:17:54.320 --> 1:17:57.680 For sure, how many hours per month you anticipate you'll 1:17:57.680 --> 1:18:00.000 be flying, what's the distances you're going to be traveled. 1:18:00.600 --> 1:18:04.320 While partnership in aircraft is not uncommon, it doesn't always 1:18:04.360 --> 1:18:08.000 work because you have conflicting needs or conflicting schedules. So 1:18:08.040 --> 1:18:09.880 if you had three friends and each of you had 1:18:09.880 --> 1:18:13.880 fifty million apiece, sure pull and buy one jet. That 1:18:14.080 --> 1:18:17.240 might facilitate some of the trips, but ultimately I think 1:18:17.240 --> 1:18:18.639 you'll find you each need your own. 1:18:18.960 --> 1:18:21.080 You know, I do wonder too, Jinny, like there are weird, 1:18:21.240 --> 1:18:23.360 kind of weird things that we sometimes look at for 1:18:23.479 --> 1:18:26.439 global economic indicators, and I'm curious about what you are 1:18:26.439 --> 1:18:28.280 seeing in your business as it says to you that 1:18:28.360 --> 1:18:31.240 a recession is on the horizon, or how would you 1:18:31.320 --> 1:18:34.880 describe kind of the economic outlook the big R word. 1:18:35.120 --> 1:18:39.479 So that's obviously been something that's been discussed within the 1:18:39.520 --> 1:18:44.320 trade for oh since the middle of last year, because 1:18:44.360 --> 1:18:48.120 we know it's looming. An economic cycle is inevitable, and 1:18:48.360 --> 1:18:50.640 we've been through a boom period in our business, and 1:18:50.680 --> 1:18:53.680 I would say that business jets historically have been a 1:18:53.720 --> 1:18:56.880 pretty good leading indicator of things to come. I think 1:18:57.120 --> 1:18:59.760 the waters are a bit muddied at this time, that 1:19:00.240 --> 1:19:04.599 we're not predicting what's coming next. The slowdown that we're feeling, 1:19:04.720 --> 1:19:08.240 I think was inevitable as a result of several things. 1:19:08.280 --> 1:19:12.200 One the one hundred percent bonus appreciation going away at 1:19:12.200 --> 1:19:15.960 the end of last year. The pandemic frenzied buying is 1:19:16.000 --> 1:19:19.240 pretty much over. Most everyone made their selections, got their 1:19:19.320 --> 1:19:22.800 deals done. And now that's why we call it a 1:19:22.840 --> 1:19:27.880 return to normalization, a normal turntime on the aircraft. The 1:19:28.000 --> 1:19:31.960 number of inquiries are equalizing, and you know, as prices slide, 1:19:32.240 --> 1:19:35.680 it's going to stimulate demand once again. And I have 1:19:35.760 --> 1:19:37.640 to say that I'm not sure prices are going to 1:19:37.640 --> 1:19:42.519 slide dramatically. They're going to correct slightly. And if these 1:19:42.560 --> 1:19:46.320 prices slid to twenty nineteen level, is that still a 1:19:46.360 --> 1:19:47.800 win for everybody? 1:19:48.360 --> 1:19:50.920 I hear you. I think about that all the time myself. Actually, 1:19:51.200 --> 1:19:53.720 what's that you know, if we drop just back to 1:19:53.760 --> 1:19:56.599 twenty nineteen levels, is that bad? Or is that a win? 1:19:56.680 --> 1:20:00.439 We've gone through this incredible pandemic. You know, well, it 1:20:00.920 --> 1:20:03.880 doesn't seem like it's such a horrible stat anyway. Janine 1:20:03.920 --> 1:20:05.920 great having you on. I always love to get a 1:20:06.000 --> 1:20:10.040 check on the private jet industry. Jeanine Giannarelli. They are 1:20:10.120 --> 1:20:13.000 founder and president of par Abr. 1:20:16.840 --> 1:20:20.439 You're listening to the Bloomberg Business Week podcast. Catch us 1:20:20.439 --> 1:20:23.360 live weekdays from two to five pm Eastern. 1:20:23.000 --> 1:20:26.400 On Bloomberg Radio, the Bloomberg Business App, and YouTube. 1:20:26.640 --> 1:20:29.679 You can also listen live to our flagship New York station, 1:20:30.240 --> 1:20:33.120 Just Say Alexa Play Bloomberg E Love and thirty. 1:20:34.720 --> 1:20:37.360 It's the official, unofficial start of the summer. Our Bloomberg 1:20:37.400 --> 1:20:40.280 Pursuits team is back with its annual summer travel guide 1:20:40.320 --> 1:20:42.840 on this Memorial Day weekend, and we've got two great 1:20:42.880 --> 1:20:44.960 voices to help us put together in itinerary for a 1:20:45.000 --> 1:20:48.360 potential scape from the grind. Listen up. Everybody joining us 1:20:48.360 --> 1:20:51.360 now are Bloomberg Pursuits Editor Chris Rouser and Travel editor 1:20:51.439 --> 1:20:53.760 Nikki Eckstein. They're here to tell us where to go, 1:20:53.800 --> 1:20:56.200 what to do, and even what type of luggage to use. 1:20:56.600 --> 1:20:58.360 And they're giving some love to my home state of 1:20:58.360 --> 1:21:02.760 New Jersey. Everyone seems to be wanting to travel right now. 1:21:02.800 --> 1:21:05.200 I feel like, so, how did you guys think about 1:21:05.240 --> 1:21:08.719 putting together summer travel and what you wanted to cover. 1:21:08.720 --> 1:21:11.680 So we covered travel all year round, of course, but 1:21:12.040 --> 1:21:14.240 summer travel last summer and this summer are going to 1:21:14.240 --> 1:21:17.120 be crazy. Everyone wants to travel. We're back to above 1:21:17.200 --> 1:21:20.479 pre pandemic levels. But when we put together this summer 1:21:20.560 --> 1:21:24.320 travel package, we're always thinking, Okay, what's different about summer travel, 1:21:24.400 --> 1:21:26.880 Like because you feel like maybe I get more of 1:21:26.920 --> 1:21:28.760 a break. People really aren't going to bug you while 1:21:28.760 --> 1:21:30.599 you're gone. I can go somewhere really far, I can 1:21:30.640 --> 1:21:33.520 do something really different. And we put together a package 1:21:33.560 --> 1:21:38.400 of unexpected things, places that are changing, and modes of 1:21:38.400 --> 1:21:41.719 travel that you may not have thought about. Like our opener, 1:21:41.760 --> 1:21:46.920 which is about walking trips. It's not hiking trips, it's walking. 1:21:46.840 --> 1:21:48.320 Well, and let's talk about it because I have to 1:21:48.360 --> 1:21:53.320 say and Chris that the Berkshires are so beautiful. I've 1:21:53.360 --> 1:21:55.280 got I used to go up there pretty regularly in 1:21:55.320 --> 1:21:57.240 the fall. It is stunning. So tell us a little 1:21:57.240 --> 1:21:57.960 bit about this story. 1:21:58.160 --> 1:22:01.040 So Matt Cronsberg, who's one of our favorite writers, had 1:22:01.080 --> 1:22:02.800 the idea to do a walking trip story because there 1:22:02.800 --> 1:22:05.320 are these two books that came out about walking trips. 1:22:05.360 --> 1:22:08.400 One's called American Rambles by Neil King Junior and one's 1:22:08.400 --> 1:22:12.240 called Walking with Sam by Andrew McCarthy, the actor and wine. 1:22:12.040 --> 1:22:12.920 What is the actor? 1:22:13.240 --> 1:22:13.479 Yeah? 1:22:13.520 --> 1:22:15.040 Sure, okay, And. 1:22:15.040 --> 1:22:17.640 Matt called up Andrew McCarthy actually and said, what do 1:22:17.640 --> 1:22:20.040 you have any advice? And Andrew McCarthy's advice was just go, 1:22:20.320 --> 1:22:22.120 just go, just go. Don't think about it, just go, 1:22:22.439 --> 1:22:24.320 he said, must have said it ten times in four minutes. 1:22:24.680 --> 1:22:26.160 And so Matt called us and said, okay, I'm going 1:22:26.240 --> 1:22:28.479 to go and we and NICKI can tell you, like 1:22:28.479 --> 1:22:30.360 how we kind of figured landed on the Berkshears. 1:22:30.479 --> 1:22:32.479 All right, so NICKI, come on in. How did he 1:22:32.560 --> 1:22:33.440 land on the Berkshires? 1:22:33.800 --> 1:22:35.280 Yeah? So Matt was like, I want to do a 1:22:35.320 --> 1:22:38.040 walking trip. I'm inspired. I've read these books. I'm drinking 1:22:38.040 --> 1:22:40.000 the kool aid. And I was like, right, Matt, where 1:22:40.000 --> 1:22:41.559 are you going to go? And he said, well, maybe 1:22:41.560 --> 1:22:43.519 I could do something in your Washington d C. Maybe 1:22:43.560 --> 1:22:45.479 I can do something in California. Maybe I could do something. 1:22:45.479 --> 1:22:48.519 And you know, the whole board was wide open to him, 1:22:48.760 --> 1:22:50.639 and I said, okay, let's figure out what the route 1:22:50.680 --> 1:22:53.479 would be. And let me tell you, walking is not 1:22:53.760 --> 1:22:58.600 something that is infrastructurally set up in this country for 1:22:58.720 --> 1:23:00.840 these long distance routes the way that it might be 1:23:00.920 --> 1:23:04.240 in Europe with like the Comino de Santiago or the 1:23:04.280 --> 1:23:07.519 Transcaucasian Trail. These are all kind of large walking routes 1:23:07.520 --> 1:23:09.960 that are deliberately set up that way, the Great Walks 1:23:09.960 --> 1:23:12.599 of Australia, not so much in the US, where towns 1:23:12.640 --> 1:23:16.880 aren't clustered together in walking distance often. We stumbled upon 1:23:16.920 --> 1:23:20.439 this woman who created a company called Berkshire Camino, inspired 1:23:20.479 --> 1:23:22.960 by the Comuno to Santiago in Spain, and she helped 1:23:23.000 --> 1:23:26.559 him create an itinerary of about fifty miles over four 1:23:26.640 --> 1:23:28.920 days throughout the Berkshires, and we said, oh my god, 1:23:29.320 --> 1:23:31.880 this is perfect and the Berkshires are beautiful, and where 1:23:31.880 --> 1:23:33.400 else do you want to be in the summer other 1:23:33.439 --> 1:23:37.840 than lush mountains with beautiful artsy towns with great ice 1:23:37.880 --> 1:23:41.360 cream shops. It's just the perfect all American summer destination. 1:23:41.520 --> 1:23:43.960 Everybody's ears perk up, ice cream, wait ice creams down 1:23:44.000 --> 1:23:46.599 the tour. But it is it is like, I feel 1:23:46.600 --> 1:23:48.519 like one of those areas in the country. Especially it's 1:23:48.520 --> 1:23:50.120 not that far from New York City and you can 1:23:50.200 --> 1:23:52.280 kind of breathe once you get there. Talked to us 1:23:52.280 --> 1:23:57.759 about some of the places that Matt and his wife visited, well, can. 1:23:57.600 --> 1:23:59.160 I tell you one place that they didn't visit. They 1:23:59.160 --> 1:24:01.439 didn't live in an air which to me is like 1:24:01.960 --> 1:24:05.040 thinking about just thinking about Memorial Day coming up, and 1:24:05.080 --> 1:24:07.160 there's like the staff that is lodged in my brain 1:24:07.240 --> 1:24:09.080 right now that seventeen million people are going to be 1:24:09.120 --> 1:24:12.280 in US airports this weekend. But he did not go 1:24:12.479 --> 1:24:15.280 through an airport. The places that he walked through were 1:24:15.280 --> 1:24:20.640 these beautiful country roads and he walked into this like 1:24:20.720 --> 1:24:23.840 little itty bitty town called Lee, where he found a 1:24:23.880 --> 1:24:28.120 diner that inspired a Norman Rockwell painting. And he walked 1:24:28.160 --> 1:24:32.280 to a dairy where the cows are free range and 1:24:32.320 --> 1:24:34.880 then are milked right on site, and that milk has 1:24:34.880 --> 1:24:37.320 turned into sweet cream ice cream. And you know, it 1:24:37.439 --> 1:24:43.920 was just bucolic small town destinations away from crowds, surrounded 1:24:43.960 --> 1:24:49.040 by nature, and he stayed. Are really cute, artsy upscale 1:24:49.200 --> 1:24:53.920 lodges like Little Cat Lodge, for instance, is a relatively 1:24:54.000 --> 1:24:57.360 new opening that we're all pretty excited about. It's owned 1:24:57.400 --> 1:25:00.120 by the same guy that owns Milands, the really cool 1:25:00.160 --> 1:25:02.760 Montreal bagel shop here in New York City. He's got 1:25:02.800 --> 1:25:04.639 at posts in Brooklyn, and in midtown, and he opened 1:25:04.640 --> 1:25:07.599 this little lodge and so he stayed in cool places 1:25:07.680 --> 1:25:10.120 like that. So that's really the difference between walking and 1:25:10.200 --> 1:25:12.920 hiking is you don't have to camp out, you don't 1:25:12.960 --> 1:25:16.160 sleep in a tent. It's not really about technical gear 1:25:16.320 --> 1:25:19.800 and uphill. It's like you calic walking staying a lovely 1:25:19.800 --> 1:25:20.360 little lodges. 1:25:20.520 --> 1:25:23.120 It's so beautiful and I highly recommend everybody check it 1:25:23.160 --> 1:25:25.760 out the pictures and there's so much detail. I also 1:25:25.800 --> 1:25:27.439 love that there was one point after a full day 1:25:27.479 --> 1:25:29.479 of walking and they're like trying to figure out dinner, 1:25:29.520 --> 1:25:31.120 and he's like, let's walk a little bit more, let's. 1:25:30.960 --> 1:25:31.599 Go find dinner. 1:25:32.040 --> 1:25:33.320 Three miles to dinner. 1:25:33.120 --> 1:25:35.200 Right Like, it was kind of well, all right, let's 1:25:35.240 --> 1:25:40.240 move along to Majorca. Am I saying it correctly. Yeah, okay, 1:25:40.240 --> 1:25:44.360 that's cool. Tell me what's going on there, Nikki when 1:25:44.360 --> 1:25:46.559 it comes to because it feels like it was an 1:25:46.600 --> 1:25:48.439 area where people would go to party big time, but 1:25:48.479 --> 1:25:50.679 it's kind of going through a little bit of a change. 1:25:51.320 --> 1:25:53.400 So have you been to Myerica, Carl, I have not 1:25:53.439 --> 1:25:55.160 been to Majorca. You have not, Okay, put it on 1:25:55.200 --> 1:25:57.280 your list. Okay, is one of the most beautiful places 1:25:57.320 --> 1:26:00.200 I've ever been. And it's true the majority of people 1:26:00.240 --> 1:26:03.080 who've gone to Myorca in the past, like totally dominating 1:26:03.080 --> 1:26:08.200 their tourism scene are Europeans, Brits, Germans, people who are 1:26:08.240 --> 1:26:12.240 relatively short range distances away. Mayorka is an island right 1:26:12.240 --> 1:26:14.920 off the coast of spin one of the Ballyarics, and 1:26:15.280 --> 1:26:21.160 it is defined by beautiful cove like beaches and these 1:26:21.240 --> 1:26:26.360 dramatic Tramontana mountains, and most people stay on the fringes 1:26:26.360 --> 1:26:29.800 of the island, relatively near the capital of Palma. It's 1:26:29.840 --> 1:26:32.280 where you might get cruise ships stocking, It's where you 1:26:32.280 --> 1:26:35.040 get a lot of all inclusive resorts. The smart way 1:26:35.040 --> 1:26:37.400 to do my Erica, in my opinion, is to bypass 1:26:37.439 --> 1:26:39.360 all of that and go to the resorts that are 1:26:39.400 --> 1:26:42.400 in the mountain towns. But there's only been a few 1:26:42.600 --> 1:26:46.360 in the past. Very high end, very lovely, harder to find. 1:26:46.760 --> 1:26:49.160 It's not the easiest and most intuitive trip to plan. 1:26:49.840 --> 1:26:52.639 That's changing as the island and its tourism boards start 1:26:52.720 --> 1:26:57.200 to actually enact restrictions that limit the activity of crews 1:26:57.200 --> 1:27:01.560 and all inclusive business and reallyocus on highlighting the cultural 1:27:01.960 --> 1:27:05.000 and culinary offerings. Of the island that are often scattered 1:27:05.000 --> 1:27:08.240 in these beautiful mountain towns. That's kind of what's happening. 1:27:08.360 --> 1:27:10.519 It looks stunning. I do like the idea too, that 1:27:10.560 --> 1:27:12.960 the government, as you said, like limiting the number of 1:27:12.960 --> 1:27:17.560 cruise ships, limiting the number of drinks that folks can have, 1:27:17.640 --> 1:27:19.640 just to kind of give it a certain feel. I 1:27:19.680 --> 1:27:21.200 want to spend more. I'd love to spend more time 1:27:21.240 --> 1:27:23.439 on it, but I got to go to because you 1:27:23.479 --> 1:27:26.320 guys wrap up with glamour on the Jersey Shore, which 1:27:26.400 --> 1:27:28.080 kind of breaks my heart a little bit, but because 1:27:28.120 --> 1:27:31.800 I am a Jersey girl. But it is amazing what 1:27:32.040 --> 1:27:34.519 is going on along because like Chris, you go to 1:27:34.560 --> 1:27:35.240 the Jersey Shore. 1:27:35.479 --> 1:27:37.840 Yes, my in laws are on the Jersey Shore and 1:27:37.920 --> 1:27:40.320 Nikki lives in New Jersey. So we are we were, 1:27:40.560 --> 1:27:42.800 We are already fans. But there is a ton of 1:27:42.880 --> 1:27:45.280 development happening all up and down the shore, hundreds of 1:27:45.280 --> 1:27:47.920 millions of dollars a lot in Atlantic City. You're going 1:27:48.000 --> 1:27:49.519 to see Atlantic City coming back? 1:27:50.160 --> 1:27:51.840 Are they really coming back? Because I can't tell you 1:27:51.840 --> 1:27:53.439 how many times we've done this story. I've gone down 1:27:53.439 --> 1:27:56.800 and done remoats there and you know, new hotels and casinos, 1:27:56.840 --> 1:27:59.720 and you know, and then we're people tried, Yeah is 1:27:59.760 --> 1:28:01.000 it this time around? 1:28:01.240 --> 1:28:04.479 This feels different because it's not just one project at 1:28:04.479 --> 1:28:07.920 a time. It's a real amalgamation of developments. I mean 1:28:08.320 --> 1:28:11.080 more than a billion dollars have been pumped into Atlantic 1:28:11.080 --> 1:28:13.679 City in the last year. A billion, I mean more 1:28:13.680 --> 1:28:16.960 than a billion. It's eye popping. And it's a team 1:28:17.040 --> 1:28:19.320 effort really in Atlantic City between a lot of major 1:28:19.360 --> 1:28:21.920 players and also a lot of independence. And granted we 1:28:21.960 --> 1:28:25.400 didn't have time to go through every single development in 1:28:25.400 --> 1:28:28.720 this story, because it is the amount of news is tremendous. 1:28:29.240 --> 1:28:33.760 But there are you know, small local residents doing really enterprising, 1:28:34.040 --> 1:28:36.200 small business these type things. And then there are the 1:28:36.560 --> 1:28:39.519 big wig casinos, the MGMs, the hard Rocks, the Caesars 1:28:39.560 --> 1:28:42.799 of the world, pumping in mega, mega, mega money to 1:28:42.960 --> 1:28:46.640 restore entire tracts of Atlantic City at a time. So 1:28:46.720 --> 1:28:51.439 I think you will see a rising sophistication there that 1:28:51.520 --> 1:28:53.160 hasn't been seen in decades. 1:28:53.320 --> 1:28:55.679 And there's also you know, just to cover the rest 1:28:55.680 --> 1:28:57.240 of the sort all the way down in Cape May, 1:28:57.280 --> 1:29:00.360 they're doing a lot of development on the ferry terminal there. 1:29:00.360 --> 1:29:03.080 There's gonna probably be a big new resort being built 1:29:03.080 --> 1:29:05.120 in the next couple of years. Then further up in 1:29:05.160 --> 1:29:08.000 Bradley Beach, really cute hotel. Asbury Park has tons of 1:29:08.040 --> 1:29:12.680 great restaurants. I was just there, really cool hotels and 1:29:12.840 --> 1:29:15.440 there's just a lot. There's a lot of like Sheik stuff. 1:29:15.200 --> 1:29:17.040 Happening well, and I think what's interesting, And I think 1:29:17.080 --> 1:29:20.040 what's interesting is it's not just about gambling or casinos anymore, 1:29:20.040 --> 1:29:22.880 and that's maybe the difference. Final thought, Go ahead, Nikki. 1:29:23.160 --> 1:29:25.320 Yeah. Well, the funny thing that I kept hearing while 1:29:25.320 --> 1:29:28.200 I was there reporting the story was we're getting people 1:29:28.200 --> 1:29:30.439 from the Hampton. People are tired of the traffic for 1:29:30.479 --> 1:29:33.280 the Hampton. They want an easier place to go, they 1:29:33.280 --> 1:29:34.719 want a little bit more flesh. 1:29:35.040 --> 1:29:35.680 I love it. 1:29:36.320 --> 1:29:36.680 I love it. 1:29:37.040 --> 1:29:40.280 People are slapping for the Jersey Harmon briving the Hamptons, 1:29:40.280 --> 1:29:41.040 for the Jersey Shore. 1:29:41.280 --> 1:29:43.200 It could happen. It could happen. And there's also a 1:29:43.200 --> 1:29:46.000 great piece on different types of luggage if you're planning 1:29:46.080 --> 1:29:49.320 holiday or business travel. Some different choices for everybody, So 1:29:49.479 --> 1:29:52.160 I highly recommend everybody check it out. All right, thank you, guys. 1:29:52.160 --> 1:29:55.360 Bloomberg Pursuits editor Chris Rouser and Travel editor Nikki x 1:29:55.360 --> 1:29:57.559 Stein with our guide to summer travel. If you're listening 1:29:57.600 --> 1:30:00.719 to Bloomberg Business Week, coming up more on summer travel 1:30:00.720 --> 1:30:03.200 and why globe trotters can expect the busiest and most 1:30:03.240 --> 1:30:06.360 expensive season since prior to COVID. That's coming up. This 1:30:06.439 --> 1:30:07.040 is Bloomberg. 1:30:07.560 --> 1:30:11.160 You're listening to the Bloomberg Business Week podcast. Catch us 1:30:11.160 --> 1:30:14.040 live weekdays from two to five pm Eastern. 1:30:13.760 --> 1:30:17.080 On Bloomberg Radio, the Bloomberg Business App, and you too. 1:30:17.360 --> 1:30:20.360 You can also listen live to our flagship New York station, 1:30:20.960 --> 1:30:23.880 Just say Alexa, play Bloomberg eleven thirty. 1:30:25.520 --> 1:30:27.439 All right, so we've talked a little about retail, which 1:30:27.439 --> 1:30:30.040 gives you a great idea in terms of what's going 1:30:30.080 --> 1:30:34.680 on in the consumer world. Another thing is travel, and 1:30:34.720 --> 1:30:36.439 it also tells us kind of what's going on in 1:30:36.479 --> 1:30:38.519 the economy. So let's get to it with Haley Berg. 1:30:38.880 --> 1:30:41.960 She's lead economist at the mobile travel app Hopper, and 1:30:42.000 --> 1:30:45.040 she joins us on the phone in New York City. Hailey, 1:30:45.160 --> 1:30:48.200 good to have you here. Tell us what you are 1:30:48.240 --> 1:30:50.160 seeing when it comes to the travel industri As we 1:30:50.360 --> 1:30:51.839 head into the summer travel season. 1:30:52.240 --> 1:30:55.080 We're headed into the busiest time of year for travel, 1:30:55.200 --> 1:30:58.799 and really we're expecting this to be the biggest summer 1:30:58.840 --> 1:31:03.920 for travel since pandemic. International travel has completely opened up 1:31:04.000 --> 1:31:08.439 since last year, and domestic travel remains very strong, especially 1:31:08.520 --> 1:31:11.000 as prices are down about twenty percent from this time 1:31:11.080 --> 1:31:13.640 last year. All in, it looks like it's going to 1:31:13.640 --> 1:31:17.040 be a busy summer and an extremely expensive summer for 1:31:17.080 --> 1:31:19.880 those travelers who are headed abroad, but they're not being 1:31:19.880 --> 1:31:20.880 held back by fares. 1:31:21.560 --> 1:31:21.760 Yeah. 1:31:21.760 --> 1:31:24.200 We actually heard from Jen bartashas we were talking to 1:31:24.280 --> 1:31:28.200 our Bloomberg Intelligence retail analyst, and she said, you know, 1:31:28.960 --> 1:31:33.040 middle class to wealthier people are shopping for food at 1:31:33.120 --> 1:31:36.000 cheaper stores so they can still afford to spend money 1:31:36.000 --> 1:31:38.479 on discretionary items. I guess travel is one of those 1:31:39.280 --> 1:31:42.519 You don't see anybody holding back. I mean, is nobody 1:31:42.600 --> 1:31:44.840 balking at the incredibly high prices. 1:31:45.120 --> 1:31:49.160 What we're really seeing, Hopper is travelers are taking that 1:31:49.360 --> 1:31:52.920 same or a slightly larger travel budget and trying to 1:31:52.960 --> 1:31:56.720 stretch it further. So maybe previously they've been taking one 1:31:56.760 --> 1:31:59.600 trip a year, Now they're taking two trips on the 1:31:59.600 --> 1:32:04.400 same budget, So that means they're engaging in deal seeking behavior. 1:32:04.520 --> 1:32:06.879 You know, more than fifty percent of our Hopper customers 1:32:06.920 --> 1:32:09.519 are booking the cheapest flight that's available to them at 1:32:09.520 --> 1:32:13.400 the time they're searching. We're seeing them check prices about 1:32:13.400 --> 1:32:16.720 fifty percent more often, even as they plan trips more 1:32:16.800 --> 1:32:21.439 last minute. So though travelers are still spending and taking 1:32:21.439 --> 1:32:25.599 more trips, they are finding ways to stretch that budget 1:32:25.680 --> 1:32:26.519 quite a bit further. 1:32:27.040 --> 1:32:29.719 So talk to U about some numbers, Bloomberg. We love 1:32:29.800 --> 1:32:32.120 to hear about numbers and percentage changes. So give me 1:32:32.160 --> 1:32:35.280 an idea. If you're heading from New York over to Europe, 1:32:35.320 --> 1:32:37.519 pick your city or whatever. What are we looking for 1:32:37.560 --> 1:32:38.680 in terms of airfares. 1:32:40.280 --> 1:32:43.479 Average airfare from the US to anywhere in Europe about 1:32:43.479 --> 1:32:47.679 twelve hundred dollars right now. There are some destinations direct 1:32:47.720 --> 1:32:50.040 from New York City as low as eight or nine 1:32:50.120 --> 1:32:54.240 hundred dollars round trip. But overall that twelve hundred ticket 1:32:54.280 --> 1:32:57.800 price on average, that's up thirty seven percent from this 1:32:58.000 --> 1:33:01.240 time last year, and in twenty nineteen that's about three 1:33:01.280 --> 1:33:05.080 hundred and twenty dollars more per ticket for travelers who 1:33:05.080 --> 1:33:07.280 are headed to Europe, which is the top destination for 1:33:07.400 --> 1:33:08.080 summer vacation. 1:33:08.439 --> 1:33:11.040 AH, where are they going in Europe? Is it just 1:33:11.400 --> 1:33:14.880 in general the continent, or are people going specifically to 1:33:15.040 --> 1:33:17.400 Spain or Italy or Greece Paris. 1:33:18.280 --> 1:33:22.679 We typically see London, Paris and Rome are the top three, 1:33:22.760 --> 1:33:27.320 the ultimate trifecta. They're definite destinations for tourists who are 1:33:27.360 --> 1:33:29.960 just dipping their toe in Europe. But we do also 1:33:30.040 --> 1:33:33.240 see demand some of these smaller cities, especially in Italy. 1:33:33.960 --> 1:33:37.440 Sicily is popular coming off the success of the White Lotus, 1:33:37.800 --> 1:33:40.880 but we've also seen Venice and Milan are. 1:33:40.800 --> 1:33:43.400 Saying, right, White Lotus, it's really a thing in terms 1:33:43.439 --> 1:33:44.360 of travel. 1:33:44.960 --> 1:33:45.800 It absolutely is. 1:33:45.880 --> 1:33:49.160 We call it set jetting. It happened with Croatia and 1:33:49.240 --> 1:33:52.040 Iceland win Game of Thrones was released. It's happening with 1:33:52.280 --> 1:33:53.480 Yellow show. 1:33:53.080 --> 1:33:55.400 In White Lotus. I'm just saying it was a little eerie. 1:33:55.680 --> 1:33:58.840 It's great though I love both seasons. I will say 1:33:59.000 --> 1:34:01.400 pro tip to those looking to travel to Europe over 1:34:01.400 --> 1:34:06.880 the summer. It is extremely hot in southern Europe. If 1:34:06.880 --> 1:34:09.200 you want to go to Sicily in August, I don't 1:34:09.240 --> 1:34:10.760 want to be with you because you are going to 1:34:10.800 --> 1:34:14.240 be pouring with sweat. I would much rather be in 1:34:14.360 --> 1:34:20.800 Scandinavia in August because so hot. The Spaniards don't even 1:34:20.840 --> 1:34:24.160 go outside. They just they just sit inside and sleep 1:34:24.160 --> 1:34:26.040 all day and then at night they go in the pool. 1:34:26.520 --> 1:34:30.080 That's why September and October actually the best bet for 1:34:30.200 --> 1:34:33.240 travel to Europe. You'll pay as much as thirty percent 1:34:33.320 --> 1:34:35.200 less than you will to go in June or July. 1:34:35.800 --> 1:34:39.400 Temperatures will be better. And keep in mind Americans are 1:34:39.439 --> 1:34:43.360 on vacation all summer. Europeans often go on multi week 1:34:43.479 --> 1:34:46.800 vacations in August, so if you're going in August, you're 1:34:46.840 --> 1:34:50.040 going to be facing crowds of tourists from around the world. 1:34:50.400 --> 1:34:53.560 September is going to be lighter crowds, less expensive for 1:34:53.600 --> 1:34:54.799 accommodations and airfare. 1:34:55.200 --> 1:34:57.519 So what's your advice for folks who want to travel? 1:34:57.920 --> 1:35:01.920 Plan ahead if possible, So right now you're booking way 1:35:01.960 --> 1:35:04.719 too late. If you want to go somewhere internationally this summer, 1:35:04.760 --> 1:35:07.080 you are going to pay quite a bit more and 1:35:07.160 --> 1:35:10.040 be flexible. So if you can plan ahead to go 1:35:10.160 --> 1:35:14.280 this fall, get lower prices, fly midweek if possible, you'll 1:35:14.320 --> 1:35:17.000 save about fifty to one hundred dollars on domestic airfare 1:35:17.600 --> 1:35:21.519 one fifty to two hundred on international and flight early 1:35:21.600 --> 1:35:25.160 in the day, delays, cancelations, twice as likely to hit 1:35:25.200 --> 1:35:28.000 you if you depart after eight am, So there is 1:35:28.479 --> 1:35:30.800 something to taking that first flight out of the day 1:35:30.840 --> 1:35:33.280 on a Monday or Tuesday will save you some stress, 1:35:33.320 --> 1:35:35.320 it will save you some money as well. 1:35:35.320 --> 1:35:39.559 What about airbnbs, what's your verdict on You know, we 1:35:39.600 --> 1:35:41.920 went to Austin for the Moto GP a couple weeks ago, 1:35:42.000 --> 1:35:45.120 and hotels were like a grand We found an airbnb 1:35:45.439 --> 1:35:48.360 that was less than half the price and it was 1:35:48.400 --> 1:35:50.599 pretty good. I mean, they no one comes to change 1:35:50.600 --> 1:35:53.559 your sheets every day, but it was nice and you know, 1:35:53.600 --> 1:35:56.720 with the extra money we were able to go to 1:35:56.800 --> 1:35:58.320 more expensive restaurants for dinner. 1:35:58.680 --> 1:36:04.360 We can send you red homes extremely popular, especially around 1:36:04.640 --> 1:36:09.400 destinations at the beach or Disney. Disney's hugely popular for 1:36:09.560 --> 1:36:12.760 vacation homes. Often larger groups of family members are there 1:36:13.400 --> 1:36:16.000 and it really helps bring down the cost of maybe 1:36:16.040 --> 1:36:19.760 getting multiple hotel rooms. But keep in mind that those 1:36:19.800 --> 1:36:23.000 rental homes can book out really far in advance, especially 1:36:23.000 --> 1:36:26.439 in popular destinations, and hotel rooms on the other hand, 1:36:26.800 --> 1:36:29.759 drop in price when you book at the last minute, 1:36:29.800 --> 1:36:33.559 so way your options. If you're looking for more space, 1:36:33.640 --> 1:36:37.240 rental homes can definitely be more economical, but at times, 1:36:37.280 --> 1:36:39.280 if you're booking last minute hotels, you can get a 1:36:39.280 --> 1:36:41.040 fabulous deal, especially in big cities. 1:36:41.280 --> 1:36:43.320 All Right, we're gonna leave it there. We're'll let you 1:36:43.320 --> 1:36:46.400 go get some water because I'm a little worried about you. Hailey, 1:36:46.479 --> 1:36:49.120 come on back soon. We'd love to continue with you 1:36:49.520 --> 1:36:52.000 at a future date. Haley Burg Lead economist Different Hopper 1:36:52.280 --> 1:36:53.920 joining us on the phone in New York City. 1:36:54.520 --> 1:37:00.000 This is the Bloomberg Business Week podcast. Spotify and anywhere 1:37:00.000 --> 1:37:03.280 he us you get your podcast. 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