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Speaker 1: The Bloomberg Business Week Podcast with Carol Messer and Tim
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Speaker 4: All right, everybody, a little Kanye West for you on
Speaker 4: this Thursday. The reason why? Uh he or his past
Speaker 4: relationship with Adidas.
Speaker 5: Wait?
Speaker 6: Are you sure that was Kanye West?
Speaker 4: Yes?
Speaker 6: Oh, okay, you're not familiar with the whole catalog. I
Speaker 6: just listened to the one record.
Speaker 4: I have people who make sure I get it. Re
Speaker 4: okay anyway, Yes it was and he and his former
Speaker 4: relationship with Adidas or Adidas, depending on how you want
Speaker 4: to say it is the cover story of the new
Speaker 4: show a Bloomberg Business Week, which is out on newsstands,
Speaker 4: on the Bloomberg terminal at Bloomberg dot com slash business Week.
Speaker 4: So let's get into it, because the relationship was great
Speaker 4: while it lasted, but it's no more, so let's get
Speaker 4: into it. It's a great read Kimbissine is our Bloomberg
Speaker 4: News reporter covering celebrity and athlete business deals, among other things,
Speaker 4: and he is here in our interactive Broker studio along
Speaker 4: with Bloomberg BusinessWeek editor Joel Weber. First of all, great cover.
Speaker 7: Yeah, we we do. We do it well every once
Speaker 7: in a while. I think this is hopefully every week.
Speaker 7: But this is one of my favorites the story. When
Speaker 7: this went down last year, we were like, holy only,
Speaker 7: this is a huge in sneaker world. This is a
Speaker 7: huge deal. It's like you think about Nike and the
Speaker 7: importance of the Air Jordan and Jordan brand to Nike Adidas.
Speaker 7: For them, they created a partnership with Yay formerly Kanye
Speaker 7: West correct that became ye Yeasy was a gigantic money
Speaker 7: maker for Adidas. Uh, and then it all came crashing down.
Speaker 7: Kim got to talk to you in.
Speaker 2: The middle of it all.
Speaker 3: It was.
Speaker 7: It was memorable, great reporting throughout from him, and our
Speaker 7: mission to him was like, go give us the definitive
Speaker 7: story of what happened inside Adidas as Easy fell apart
Speaker 7: and they're planning to go forward.
Speaker 6: How's that working out?
Speaker 3: I think I think it worked out well.
Speaker 7: How's it working.
Speaker 8: Yeah, So, so let me take you back to last September.
Speaker 8: It's the middle of the night. I got a call
Speaker 8: on my phone and a missed call and a text
Speaker 8: that says, hey, it's yay, call me back.
Speaker 4: Can we just sit with that for a moment.
Speaker 8: Yeah, yeah, I call him back and he uh, and
Speaker 8: and we we do an intervie and he says.
Speaker 3: Was it the middle of the night, right like midnight
Speaker 3: on a weeknight?
Speaker 8: And yeah, And he says, you know, he wants to
Speaker 8: get out of his deals. He's done with corporate America.
Speaker 8: He wants to go out and just do it alone.
Speaker 8: And three days later he sends a letter to Gap saying,
Speaker 8: you know, stop selling my stuff.
Speaker 3: I want out of this deal. That GAP deal falls
Speaker 3: apart shortly after.
Speaker 8: He starts saying more and more more crazier things and
Speaker 8: went on some anti Semitic rants and talk about really
Speaker 8: really toxic things, and eventually the Adida's partnership fell apart
Speaker 8: as well.
Speaker 6: Kim, what do you think happened to Kanye? Which is,
Speaker 6: by the way, separate from your story. Your story is
Speaker 6: really about Adidas, the history of the shoemaker, how they
Speaker 6: lost it, versus Nike and what they're trying to do
Speaker 6: to turn it around. But what you know, because I
Speaker 6: hear stories about Kanye being so cool, like Danny McBride says,
Speaker 6: you know, he just called him up and they started
Speaker 6: hanging out and it was fun and he was a
Speaker 6: good guy. But the stuff that he's said is not good.
Speaker 6: So what happened to that guy?
Speaker 3: It is not good.
Speaker 8: I don't know what happened to that guy. So on
Speaker 8: the phone, he literally asked me, do I sound crazy?
Speaker 8: And at that time, no, he did not. He did
Speaker 8: not sound crazy. He spent a few seconds waiting to
Speaker 8: answer question, really think about it and like kind.
Speaker 6: Of deliver a bar back to me.
Speaker 8: So like that that interview, he did not sound like
Speaker 8: he did when he went to the TMZ newsroom back
Speaker 8: in twenty eighteen and went on this long rant about how.
Speaker 3: Slavery was a choice. He did not do any of that.
Speaker 8: But then you know, a couple of weeks later, we're
Speaker 8: starting to we're starting to go again.
Speaker 3: He just starts saying these things.
Speaker 8: When you go back in during his time at Adidas,
Speaker 8: designers will say that he was inspirational at times, but
Speaker 8: as they learned more, they spent more time with him,
Speaker 8: they started to complain about all the types of you know,
Speaker 8: the more totalitarian ways that he ran his design studio.
Speaker 7: What this really gets to, I think, Matt, is if
Speaker 7: you're Adidas and you're looking to you know, make some
Speaker 7: money in the shoe business, you gotta chip on your
Speaker 7: shoulder about missing out in that Jordan guy. Once upon
Speaker 7: a time Easy that which Yeasy existed slightly before Adidas
Speaker 7: worth mentioning Nike actually did a little moment where Nike
Speaker 7: was making Easy, which are some of the most coveted
Speaker 7: shoes and sneakerdom, but air Easy, right, So the Yeasy thing,
Speaker 7: Adidas hit it. And what it really shows is like
Speaker 7: the reputational risk and like we hopefully this gets taught
Speaker 7: in business schools, right, this story, because the reputational risk
Speaker 7: is like you you attach yourself to Kanye, and wherever
Speaker 7: Kanye goes, you go to and when Kanye goes off
Speaker 7: the cliff, your your brand is now going with them,
Speaker 7: right right, So.
Speaker 6: Well, especially if you put all your eggs in one basket.
Speaker 7: And so that was the most amazing part of this
Speaker 7: as this reporting bore out as much as forty percent
Speaker 7: of the profits at the company.
Speaker 8: Forty percent eight percent of revenue and around forty percent
Speaker 8: of a profits as according to Morgan's down.
Speaker 7: So that is a gigantic yeasy shaped hole. And the
Speaker 7: challenge that we had for for Kim and Tim on
Speaker 7: the byline, Tim Low also in Jermany, was Okay, what's
Speaker 7: the plane to fix it? So now that they have
Speaker 7: this hole, what are they going to do about it?
Speaker 3: What is the planet fix it?
Speaker 8: So the most immediate problem before they can do any
Speaker 8: of that is that they have one point three billion
Speaker 8: dollars worth of Yeezies sitting in warehouses around all around
Speaker 8: the world.
Speaker 6: That is nuts, one point three billion dollars of sneakers
Speaker 6: of sneakers.
Speaker 4: So wait, why not just unstitch the logo?
Speaker 8: Because can you imagine the amount of manpower that would
Speaker 8: wait individually unstitching every little easy?
Speaker 1: But they thought about it.
Speaker 3: They did, They thought about they thought about burning it.
Speaker 8: They thought about, yeah, donating them, donate just fully donating
Speaker 8: them to huge, chopping them up, chopping them up and
Speaker 8: turning them into fields like the turf on a soccer
Speaker 8: field is made out a little bit.
Speaker 7: Don't you want to be in that meeting? It's like Okay,
Speaker 7: what would you walk us through the options of what
Speaker 7: we can do here?
Speaker 6: But the most interesting I think was the donating them
Speaker 6: makes a lot of sense and would be amazing. Right,
Speaker 6: You've got refugees or people that are hit by natural disasters.
Speaker 6: They need shoes. But the problem that they found was
Speaker 6: what there could be too much trafficking.
Speaker 8: You probably sell this worth two hundred and fIF three hundred,
Speaker 8: four hundred American dollars. Sure a refugee would love for him.
Speaker 8: They would love for American so would Adidas. Is what
Speaker 8: they landed on. Right, So now they're going to sell
Speaker 8: the shoes at beginning May thirty. First, they're going to
Speaker 8: start selling this huge stockpile of billion dollar stockpile of yasis.
Speaker 8: And they say, they say they will donate a portion
Speaker 8: of the proceeds to charity.
Speaker 7: And what happens to the money that Easy.
Speaker 6: Used to generate?
Speaker 7: Well, no, no, that that Kanye would give a little yeah, exactly,
Speaker 7: so his side of his wide to the steel. Because
Speaker 7: this is really interesting, right, Like part of this the
Speaker 7: way this steal is structured was that Kanye gets a
Speaker 7: portion of the revenue of every shoe that's.
Speaker 8: Sold, right, right, And that was a big part of
Speaker 8: the original deal that he signed.
Speaker 3: Nike would not give him royalties on the air yeasy.
Speaker 7: Because he wasn't an athlete.
Speaker 8: Because he wasn't an athlete. He said, he was an athlete.
Speaker 8: I am a performance athlete and I play one on No.
Speaker 8: One on stage in Madison Square Garden.
Speaker 3: Is what he said.
Speaker 6: I saw his point, by the way, I think he is.
Speaker 6: He's a performer for sure.
Speaker 3: Yeah, but they wouldn't give him that deal. Adidas would.
Speaker 8: So now he makes an eleven percent royalty on this
Speaker 8: and those shoes that were made during the time they
Speaker 8: probably do have to pay.
Speaker 3: Kanye has cut. It's fair enough.
Speaker 4: So what does Adidas do or Audidas do going forward?
Speaker 5: Right?
Speaker 4: They obviously have a big hole well to fill.
Speaker 7: There's been some churn in that time, right, Like, so
Speaker 7: what happened in the boardroom?
Speaker 8: Yeah, at the at the top level here. So Bjorn
Speaker 8: Golden is their new CEO. He comes over from Puma
Speaker 8: at the start of the year.
Speaker 7: We have a sidebar, yeah, because wow, the Adida is
Speaker 7: Puma thing.
Speaker 4: If you didn't know this that each other, right, No,
Speaker 4: they didn't.
Speaker 2: I know.
Speaker 3: You have to go back to the World War Two.
Speaker 3: This goes back to World War Two and.
Speaker 7: Two brothers who fell out Nazis and Nazi brothers who
Speaker 7: fell out.
Speaker 6: Well, everybody in the country at that point was a Nazi.
Speaker 6: I mean like you had to join the party.
Speaker 4: Shoot you the history is incredible.
Speaker 8: One of them went to war, one of them stayed
Speaker 8: home to run the factory. They they came back, they
Speaker 8: had a bitter feud. They split their company, uh, and
Speaker 8: they opened two sneaker empires across the road from each
Speaker 8: other in the same small town in Bavaria.
Speaker 6: By the way, did you watch Dust Blunder.
Speaker 3: I did not great movie, A great movie.
Speaker 6: Did not see that coming about Annie Dossler making the
Speaker 6: first exchangeable spikes for the German national team after you know,
Speaker 6: they'd lost the war and they lost there you know,
Speaker 6: any kind of national pride, and then they actually came
Speaker 6: up and won a World Cup. I think it was
Speaker 6: in nineteen fifty and it was the first time they've
Speaker 6: ever had spikes that could be changed for different grass conditions.
Speaker 6: So he was like an innovator as well.
Speaker 9: Did they win?
Speaker 3: They won?
Speaker 1: Yeah?
Speaker 3: There you go.
Speaker 4: Yeah, Okay, that's the other side bar you guys.
Speaker 6: Yeah, but so but Puma it's interesting that they bring
Speaker 6: a leader from Puma. Another leader from Puma run Tarley Davidson.
Speaker 6: Right now, y'all con sites used to run Puma. But
Speaker 6: now they've brought this new guy because Carson worshtead he'll
Speaker 6: like screwed everything up.
Speaker 3: It was.
Speaker 8: It was a tough It was a tough period and
Speaker 8: at the beginning it seemed like he was onto something right.
Speaker 8: He came in did did a bunch of cost cutting.
Speaker 8: E commerce is the thing. E commerce big. You know,
Speaker 8: I like to buy how people do love to buy
Speaker 8: things on the information super Highway.
Speaker 4: I didn't.
Speaker 3: Yeah, it's it's crazy.
Speaker 8: But over time, you know, product cycles started to go
Speaker 8: out of whack, and as other things failed, then Yay's
Speaker 8: business within the datas became a larger and larger piece
Speaker 8: of the of the fit pie.
Speaker 4: So do they pursue Can they pursue something akin to
Speaker 4: what they had with you? Or is there I don't know, Like,
Speaker 4: how are they thinking about their way forward? They have product?
Speaker 4: I mean, I have a young daughter. She was wearing
Speaker 4: Adida sneakers. At one point they go.
Speaker 6: Back, you were paying like a five hundred dollars pair
Speaker 6: of Yeezies were you Ye.
Speaker 4: That wasn't happening expensive, But I'm just saying, so, what
Speaker 4: is the way forward here?
Speaker 8: Yeah, the new CEO says, you can't replace it with
Speaker 8: just one thing. And Adidas has this habit of just
Speaker 8: going back to its oldest stuff again and again and
Speaker 8: again and just changing a little bit, updating it, new colors, new.
Speaker 7: To their credit, sometimes it's really worked, and.
Speaker 3: It has worked many many times over the years.
Speaker 8: You bring Backstance, you bring back Superstars, you bring back Sambas,
Speaker 8: you bring back Gazelle's. These are all designs that were
Speaker 8: that were that whose origins are all the way back
Speaker 8: in the sixties and seventies. This is like before Nike existed.
Speaker 8: Those shoes in the sixties were made. Now, you didn't
Speaker 8: come out till the seventies, wasn't really a factor until
Speaker 8: on the global stage until Jordan and eighty four.
Speaker 7: And so the back to the vault, though, what does
Speaker 7: that look like in this version of it? From what
Speaker 7: we can tell so.
Speaker 8: Far, Samba's first, right, Sambas seem to be hot right now.
Speaker 3: The new CEO says he wants.
Speaker 8: To be quicker to latch onto trends, and they've identified
Speaker 8: the samba.
Speaker 3: As what they need to go toward at this moment.
Speaker 8: So they're they're asking for more product from factories in
Speaker 8: Asia and getting that into stores as quick as quickly
Speaker 8: as they can.
Speaker 7: And it also looks a little bit like maybe playing
Speaker 7: into some sports that people have forgotten about too, that
Speaker 7: Adidas was once known for, like wrestling, boxing, et cetera.
Speaker 8: They like the specialty stuff for for certain sports when
Speaker 8: these aren't enormous enormous You're not. It's not a billion
Speaker 8: dollar business in boxing, right, but it's certainly something that
Speaker 8: you can capitalize.
Speaker 6: And Muhammad Ali or audious exact sity.
Speaker 4: Oh yeah, has he called you since the story came out?
Speaker 3: He has not talked to me for several months now.
Speaker 7: He's ghosted, right, He hasn't really been seen or talked
Speaker 7: about or talked to almost any anyone.
Speaker 8: Yeah, he's pretty he's pretty much out of the public eye.
Speaker 8: You'll see him in the tableaus every once in a
Speaker 8: while in l A, just some photos of him. But
Speaker 8: but he hasn't been speaking too often to the press, like.
Speaker 6: He's a recluse.
Speaker 4: Now would you want to ask what would you ask him?
Speaker 10: Though?
Speaker 4: At this point, after all this reporting you've done.
Speaker 8: Yeah, I want to Yeah, I want I want to know, like,
Speaker 8: have his opinions changed at all?
Speaker 4: There was apparently there was a a lot of money
Speaker 4: off of this, right he deal.
Speaker 8: He uh at the very beginning when he called me
Speaker 8: and told me that he wanted out of these deals
Speaker 8: and wanted to go it alone.
Speaker 10: Right.
Speaker 8: I don't know how much of that I truly believed
Speaker 8: he was going to do because I knew. I've seen
Speaker 8: the I've seen the documents on this. He was making
Speaker 8: nearly two hundred million dollar a year in royalties off
Speaker 8: of this, and you're just gonna throw that away. Yeah,
Speaker 8: it seems seems like it.
Speaker 6: Amazing according to him.
Speaker 3: Didn't need him, right according to him?
Speaker 6: Yeah, yeah, So well, I feel like that's to his credit. Right,
Speaker 6: If you can really stand up and say I don't
Speaker 6: need these corporate shackles, even if it's two hundred million
Speaker 6: dollars a year, and you can throw them off, that's amazing.
Speaker 6: But if you then it's a big budd sort of
Speaker 6: turn into this like racist, anti Semitic spokesperson. That's not cool.
Speaker 4: There's a few things we need to figure out. Incredible
Speaker 4: piece of reporting, really great read Kim Bessine Slippers and
Speaker 4: Athletes reporter at Bloomberg News. It's the cover story of
Speaker 4: the new issue of Bloomberg BusinessWeek, joining us along with
Speaker 4: the editor Jill Weber here in studio. Check it out
Speaker 4: great for the upcoming holiday read.
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Speaker 1: Just Say Alexa, Play Bloomberg, E Love and thirty.
Speaker 4: All right, zoom was certainly an indication of how we
Speaker 4: were working during the pandemic. But we've really leaned on
Speaker 4: the team over at Microsoft three sixty five for how
Speaker 4: we are working, yes, then, but also today, and they've
Speaker 4: got a new report out that finds that there's not
Speaker 4: necessarily any need to be worried about AI. Of course,
Speaker 4: to be fair, Microsoft is deep into AI, really awakening
Speaker 4: the world earlier this year with its ten billion dollar
Speaker 4: investment into Open AI's chat GBT. So even so, our
Speaker 4: next guest is here to help answer the question will
Speaker 4: AI fix work? And great to have back with us. Jared'
Speaker 4: Spataro He is Corporate VP of Modern Work and Business
Speaker 4: Applications at Microsoft three sixty five. Once again on zoom
Speaker 4: in Redman, Washington, Jared, how are you.
Speaker 11: Oh, I'm doing great. Great to be back with you, Carol.
Speaker 4: Yeah, great to have you here with us. So tell
Speaker 4: us about this inquiry into AI. What you guys? I mean?
Speaker 4: The question is I've got the report in front of me,
Speaker 4: will AI fix work? And I think everybody's trying to
Speaker 4: figure it out. I kind of can't wait because I
Speaker 4: think it can be an assist in my job. But
Speaker 4: tell us about what you looked into, questions you asked,
Speaker 4: and who you talk to.
Speaker 11: Maybe let's look at what's broken first. So this particular
Speaker 11: survey is our annual survey thirty one thousand people across
Speaker 11: thirty one countries, and the first number that popped out
Speaker 11: to me is exactly that fix that's needed. Sixty four
Speaker 11: percent of people who respond and told us that they
Speaker 11: just don't have the time or energy to get their
Speaker 11: jobs done. And we thought that that was really interesting
Speaker 11: coming out of the pandemic. People are tired, but it
Speaker 11: seemed to be more than that. So we combine that
Speaker 11: with our telemetry data. This is the cloud data where
Speaker 11: we see how people are working, what they're up to.
Speaker 11: We found that up to about sixty percent of the
Speaker 11: average day average workers day is spent communicating and coordinating.
Speaker 11: Only forty percent is kind of spent on that day job,
Speaker 11: the thing that they're supposed to provide to the organization.
Speaker 11: So really interesting setup right now as people are feeling tired,
Speaker 11: and for good reason.
Speaker 12: And Jerry, something that strikes me anytime I talk to anyone,
Speaker 12: they're always concerned about when it comes to AI, maybe
Speaker 12: they could potentially be replaced when it comes to their job.
Speaker 12: Looking at your sty it's interesting as far as how
Speaker 12: AI is poised to create this whole new way of working,
Speaker 12: what would be the counter to that? And the benefits
Speaker 12: of AI were you might not necessarily be losing your job,
Speaker 12: it could actually assist you.
Speaker 11: Well, we'll start with the fear. There's still a little
Speaker 11: bit of fear there. Almost fifty percent, it was forty
Speaker 11: nine percent of people who responded told us that they
Speaker 11: were afraid that AI would come and take their job,
Speaker 11: but that was overshadowed by another number. A wopping seventy
Speaker 11: percent told us that despite that fear, they actually would
Speaker 11: outsource everything they could to an AI assistant just to
Speaker 11: help them relieve the burden. So there's this sense that
Speaker 11: their optimism, or at least their need for help for
Speaker 11: AI based help, really outweighs their fears. And that's a
Speaker 11: pretty interesting nuance on many of the headlines that we've
Speaker 11: been hearing for the last couple of months.
Speaker 4: Well, I'm thinking about email alone. I mean, I'm going
Speaker 4: to be quite honest with you, there's a ton of
Speaker 4: email that I never even get to read because it's
Speaker 4: just a ton of stuff that people are either pitching
Speaker 4: or research. And I definitely have figured out ways to
Speaker 4: kind of weed through do certain searches so that I
Speaker 4: really make sure I don't miss some of the important stuff.
Speaker 4: But how could AI ultimately help us in filtering through
Speaker 4: what is dumped into our email boxes on a regular basis.
Speaker 11: Well, many of your listeners are probably familiar with chat GPT,
Speaker 11: introduced last year, and it's particularly good, it's summarizing, and
Speaker 11: so I've been using a product that we call Copilot
Speaker 11: Microsoft through sixty five Copilot. It essentially takes the models
Speaker 11: behind chat GPT, these large language models, and integrates it
Speaker 11: directly into your email, into Outlook and This does amazing things.
Speaker 11: It allows you to, for instance, get a long those
Speaker 11: long email threads where you're supposed to go read from
Speaker 11: the bottom up, and it can summarize that just in
Speaker 11: one click. And then once it's summarized, it actually gives
Speaker 11: you a couple of different prompts or those are different
Speaker 11: things you can choose from to answer, so it will
Speaker 11: author an answer, allow you to make it longer, shorter,
Speaker 11: more formal, more casual. It is changed the way I
Speaker 11: do email. I never want to do email without it again,
Speaker 11: so it definitely changes work habits and practices.
Speaker 4: Well, so just share with me because, like I said
Speaker 4: at the top, I mean to be fair. You guys
Speaker 4: are all in on AI, no doubt about it. And
Speaker 4: in many ways that news of the Microsoft investment really
Speaker 4: did kind of wake up the world in terms of
Speaker 4: what you folks were doing. Specifically, Now everybody's talking about it.
Speaker 4: As you guys have been playing around with it. What
Speaker 4: are you finding are the great capabilities? What are still
Speaker 4: the things that need to be worked out?
Speaker 11: The five seconds to wow type demo I do with
Speaker 11: customers is in a meeting, So in a meeting like
Speaker 11: this that would be just a normal business meeting, we're
Speaker 11: trading kind of conversation back and forward. And what it
Speaker 11: can do there is it can literally listen in as
Speaker 11: if it were an assistant to the meeting and summarize.
Speaker 11: That means, it can write notes. It can respond when
Speaker 11: I ask questions like what did Carol say again? Or
Speaker 11: how did Jared answer this question? It can allow me,
Speaker 11: for instance, to identify, you know, what are the two
Speaker 11: sides of this argument and who's in favor of which one.
Speaker 11: It actually is incredibly valuable in a meeting. And then
Speaker 11: even better than that, Carol. The thing that I love
Speaker 11: is it allows me to attend meetings, so I can
Speaker 11: not attend a meeting and then using that same GPT
Speaker 11: large language model query the meeting after the fact, did
Speaker 11: they have mention my name or any decisions made? What
Speaker 11: decisions why did they make them? So it opens up
Speaker 11: these brand new possibilities for work because it kind of
Speaker 11: blurs time and space. You know, it's as if you
Speaker 11: could be there, but you're not there, and you're able
Speaker 11: to use the power of AI here to kind of
Speaker 11: get into the dynamics of people even just having regular conversations.
Speaker 11: So just one example, but it's integrated across all of
Speaker 11: our products. We talked about email or PowerPoint, all of
Speaker 11: those things.
Speaker 4: What's the thing though, that is still tricky because we
Speaker 4: talk about AI kind of working alongside of us and
Speaker 4: we don't have to go to the meeting. Yea, who,
Speaker 4: But I do wonder what are the things that you know?
Speaker 4: People say you can't really you know, duplicate a human
Speaker 4: in terms of their perception of things, and so on
Speaker 4: and so forth. So what do would you say that
Speaker 4: we still need to be cautious about or we're still
Speaker 4: figuring out or you guys are still figuring out when
Speaker 4: it comes to this.
Speaker 11: Very astute question, because it turns out, while these things
Speaker 11: are incredibly useful, they do make mistakes. And these things,
Speaker 11: I mean the AI assistance that we have, so they
Speaker 11: get it wrong sometimes. In fact, the technical term is hallucination.
Speaker 11: If you believe that that literally is the term they
Speaker 11: make stuff up. So the reason that we use copilot
Speaker 11: as a name for our product is really the signal
Speaker 11: to the user, Hey, this is an autopilot. You can't
Speaker 11: just take the answers and say there you go, I'm
Speaker 11: going to fire this off as an email. You really
Speaker 11: have to be in the driver's seat, You have to
Speaker 11: make the decisions. But the great news is my experience
Speaker 11: has been when it is wrong, it's what we call
Speaker 11: usefully wrong, So it doesn't just make things up. To
Speaker 11: make things up. Sometimes we'll feel in details where it
Speaker 11: didn't have all the data. You can go in and
Speaker 11: correct that, tweet that and then it's put you ahead
Speaker 11: of the game anyway.
Speaker 12: So how long do you think this could take before
Speaker 12: it's more widespread with users that could potentially use this
Speaker 12: type of things in meetings when you do have still
Speaker 12: some of these hiccups and glitches that could happen with AI.
Speaker 11: We just introduced a couple of weeks ago that we're
Speaker 11: expanding what we call our Preview program to six hundred
Speaker 11: enterprises around the world, so we'll have hundreds of thousands
Speaker 11: of users here in the coming months. So that's kind
Speaker 11: of the scale that it's out at right now. But
Speaker 11: it's moving very quickly. On my team, we talk about
Speaker 11: AI time, the psyche time of the industry has really
Speaker 11: increased as we're able to build on top of these
Speaker 11: technologies really quickly. So I don't think it'll be a
Speaker 11: matter of years. I do think it'll be a matter
Speaker 11: of months until you start to see these tools being
Speaker 11: used all over the place.
Speaker 4: You know, for someone who has been you know, focusing
Speaker 4: on workplace trends and coming off a really crazy period,
Speaker 4: you know, meaning the pandemic specifically, and we're able to
Speaker 4: track a lot of things. How are you kind of
Speaker 4: placing generative AI machine learning in kind of I don't know,
Speaker 4: is it akin to some other great or interesting development
Speaker 4: in terms of how we work? Like, how do you
Speaker 4: position it historically or technologically for that matter.
Speaker 11: We think it's as big as the PC revolution or
Speaker 11: as big as the Internet. We think it's that big.
Speaker 11: You know, if I again frame it, we would say, wow,
Speaker 11: you couldn't write a script like this if you were trying. Really,
Speaker 11: what the pandemic did is is rewire the where and
Speaker 11: the when of work. So it changed entirely around the world,
Speaker 11: you know, those two dimensions of work. All of a sudden,
Speaker 11: AI is changing the how of work. By the time
Speaker 11: we get kind of roughly four years out from the pandemic,
Speaker 11: the combination of those two things will have really just
Speaker 11: changed patterns practices associated with work. My kids, as they
Speaker 11: go to work, they're not going to enter a work
Speaker 11: environment anything like, I did you know twenty five years ago?
Speaker 4: Is that good or bad? Bottomly, because you know things
Speaker 4: they're never right black and.
Speaker 11: White, like it's it's that's right.
Speaker 4: We're worried about people not really talking to each other.
Speaker 4: I have a colleague, Matt Miller, who laughs at when
Speaker 4: we all get on a zoom call and we're literally
Speaker 4: like right next to each other. But I'm sitting there typing,
Speaker 4: you know, notes, and you know, it's just interesting.
Speaker 11: My response to that is I would say, you know,
Speaker 11: AI giveth an Ai taketh away, Like we have this moment,
Speaker 11: and the way we think about it is what have
Speaker 11: we gained and what have we lost? And how do
Speaker 11: we lose as little as possible? And how do we
Speaker 11: gain as much as possible. But you're exactly right, these
Speaker 11: big if it's as big as the PC, you know,
Speaker 11: if you really believe that it's that type of shift,
Speaker 11: then you do have to recognize, Wow, this is probably
Speaker 11: the beginning of an era, a new era. We should
Speaker 11: be really thoughtful about what we want to make sure
Speaker 11: we don't lose in that process. But that will take
Speaker 11: all of us, you know, we're all learning.
Speaker 3: As we go.
Speaker 4: Yeah, right, And the more we use it though, right,
Speaker 4: the smarter or more specific it becomes.
Speaker 13: Jared.
Speaker 4: Nice to check in with you again. Jared Spataro. He's
Speaker 4: Coroporate vice President, head of Modern Work at Microsoft three
Speaker 4: sixty five on Zoom from Redmond, Washington.
Speaker 1: Yeah, you're listening to the Bloomberg Business Week Podcast. Catch
Speaker 1: us live weekdays from two to five pm Eastern.
Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and you too.
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Speaker 1: station Just Say Alexa Play Bloomberg E Love Them thirty.
Speaker 4: So our next guest works with many Fortune one hundred
Speaker 4: companies around the globe, working with them on HR programs.
Speaker 4: We're talking about health, wellness, wealth programs. She's got a
Speaker 4: great vantage point her company does too in terms of
Speaker 4: what's going on in the overall business. And it environment
Speaker 4: so great to have back with us. The chief financial
Speaker 4: officer of the publicly held a light Katie Rooney with
Speaker 4: us in studio. It really is great to have you here.
Speaker 4: I said to you, it's like not been that long,
Speaker 4: but it feels like because every day is so dense.
Speaker 4: How are you you know?
Speaker 14: It's it's been a crazy, crazy quarter. Although I feel
Speaker 14: like within in a light years, it's normal, it's.
Speaker 4: So chea, it's true, like our perspective has changed. Let's
Speaker 4: just start broad and Macro talk to us little bit
Speaker 4: about the business environment, because you do have a great window.
Speaker 4: And forgive me for those who don't know exactly what
Speaker 4: you're doing. You do work globally, you're working with lots
Speaker 4: of companies. Remind our audience what you do.
Speaker 14: Yes, of course, so we serve thirty six million people
Speaker 14: across the globe doing basically human capital around health, well being,
Speaker 14: payroll and so the types.
Speaker 4: Of programs that companies have right.
Speaker 14: Absolutely, when you think about employee well being, everything we're
Speaker 14: trying to do for the employee in today's day and age.
Speaker 14: Given everything we're seeing, we are taking a different approach
Speaker 14: across the industry to say we have to engage with
Speaker 14: people differently to help drive a different outcome. We've done
Speaker 14: that a lot for clients, we've done that a lot
Speaker 14: kind of in the front office. We really haven't done
Speaker 14: that for our talent, and so we're trying to take
Speaker 14: a platform approach with a light work life, where it's
Speaker 14: one place to go where we can help you basically
Speaker 14: solve more complex issues to keep your for the employer
Speaker 14: and the employee, to keep them financially secure and healthy.
Speaker 4: Kitty, do you feel like post pandemic that employees companies
Speaker 4: are looking at their workers differently, or do you feel
Speaker 4: like because it's a tight labor force that maybe companies
Speaker 4: are looking at their workers differently.
Speaker 14: Honestly, I think either way you are yes, yes, or
Speaker 14: it is I mean it's a little bit of yes, yes.
Speaker 14: I think you have to We did a global mindset
Speaker 14: survey and we said eighty percent of workers say they
Speaker 14: feel moderate to high levels of stress. I mean, it
Speaker 14: doesn't matter if it's you know, the pandemic, if it's macroeconomy.
Speaker 14: There's so much in our environment today that I think
Speaker 14: employers have to play a different role in terms of
Speaker 14: how they're helping their employees.
Speaker 15: Well, you've been in this role for six years ish,
Speaker 15: a little bit longer, a little bit longer.
Speaker 14: I'm so sorry. I don't know, because a light actually
Speaker 14: carved out in twenty seventeen from a on. So I've
Speaker 14: been technically with the legacy company a little longer, and.
Speaker 15: So I'm curious about how you've seen employee demands change
Speaker 15: over the course of your tenure there, what would you
Speaker 15: say is the single biggest shift and ask from employees.
Speaker 14: Honestly, I think they found a voice. I just think
Speaker 14: we didn't, you know, And again i've you know, as
Speaker 14: an employer, I'm not sure we took the time to listen.
Speaker 14: And I think employees are now found a stronger voice
Speaker 14: that it starts with their leaving right, higher turnover, They're
Speaker 14: requesting more and so we have to help them in
Speaker 14: a different way. I don't think it's one specific thing.
Speaker 14: I just think when you think about overall well being,
Speaker 14: what they're feeling, what they're seeing, we have to take
Speaker 14: a different approach here and support them in a different way.
Speaker 14: They want to build trust with their employer. It's got
Speaker 14: to be a two way street, whereas historically I think
Speaker 14: it was a little bit more one way.
Speaker 4: Well when it comes to what the services that you
Speaker 4: guy guys provide for your clients. So I said health,
Speaker 4: wealth and wellness, right, did I get them off?
Speaker 3: Yeah? Yeah?
Speaker 4: So what is it Where are you seeing the most
Speaker 4: growth or more demand that like, this is what my
Speaker 4: employees want or is it everything?
Speaker 14: I think it's interconnected. I think that's the important thing
Speaker 14: for the employee again, think about it, they I mean,
Speaker 14: think about what you potentially do today just to figure
Speaker 14: out where your paycheck is and where your health coverages
Speaker 14: and where your four one K coverages? How many systems
Speaker 14: are you going to? Where are you going right? And
Speaker 14: how do you know what to use right? And what
Speaker 14: the right decisions are? We say, should you be investing
Speaker 14: in your HSA a health savings account or your four
Speaker 14: to oh one K? Like those are actually complex questions
Speaker 14: that we really haven't helped our employees answer, and so
Speaker 14: I think it's more the common nation of all of
Speaker 14: them to help people make a better decision. You got
Speaker 14: to pay raise, What should you do right? Of course,
Speaker 14: yes you want to make a different decision, but bring
Speaker 14: it all together for them?
Speaker 4: Well, how does AI and generative AI change this? Because
Speaker 4: I do think about think about the question, right, the
Speaker 4: conversation I could have with a system a platform that
Speaker 4: is integrated, but it seems like it could make it
Speaker 4: so much easier to use right.
Speaker 14: I love that question because I think there's so much opportunity.
Speaker 14: It starts with the data. So think about it. There's
Speaker 14: a million searches today on Google for a doctor. Where
Speaker 14: do I find a doctor. I mean do you think
Speaker 14: Google knows what health plan you're in, what's in network,
Speaker 14: where you're located, who's the highest quality, lowest cost, right
Speaker 14: and helps you make a decision and can schedule an
Speaker 14: appointment and get you a second opinion and right. So,
Speaker 14: like you need the AI in terms of the underlying
Speaker 14: data to help drive those personalized recommendations. But it has
Speaker 14: to be when you think about in a trusted source,
Speaker 14: who has access to that?
Speaker 4: So how do you do that? Yea? So how do
Speaker 4: you make it comprehensive, smart, accurate?
Speaker 16: Right?
Speaker 4: And then secure? I mean are you working on it?
Speaker 14: You know we start there today? I mean security is
Speaker 14: table stakes, Yeah, I mean that just you can't have
Speaker 14: an employee concerned or thinking about that. We spend a
Speaker 14: ton of time, resources money on that, like full stop.
Speaker 14: Put that aside. Then the next piece is why we
Speaker 14: think this integrated platform is important. We know your pay
Speaker 14: we know your claim's history, we know how you're saving.
Speaker 14: A mom just had a baby, right, Well, they might
Speaker 14: have a different need than somebody who's retiring. So I
Speaker 14: think it's more about taking that data to use kind
Speaker 14: of provide a recommendation engine up one because everyone's unique.
Speaker 4: Right exactly.
Speaker 14: That's the power of it.
Speaker 15: Okay, is there risk at all and decreased jobs because
Speaker 15: of the AI impact? I know that's like the basic
Speaker 15: obvious question, but how are you thinking about it?
Speaker 14: I just think it's different. Again. AI is only as
Speaker 14: good as the data, but it's not going to drive
Speaker 14: a decision. So you know, we have people calling us
Speaker 14: because they need to check the status, but they don't
Speaker 14: need to call us for that, Like that's fine, but listen,
Speaker 14: if somebody has a cancer diagnosis, they want to talk
Speaker 14: to someone, right, that's never going to go away. So
Speaker 14: I think it's more that jobs are changing, and we,
Speaker 14: I think have a social responsibility to figure that out,
Speaker 14: and hopefully I mean in the finance function in particular.
Speaker 14: I think that's a huge opportunity to play a bigger
Speaker 14: role strategically in the business.
Speaker 4: Because you know, I think about the services that you offer,
Speaker 4: and I even think about my own experience with and
Speaker 4: we have a company with incredible benefits, and we do
Speaker 4: have some really great usable programs and so on. But
Speaker 4: I do think about if sometimes and if Matt Miller
Speaker 4: was here, another one of our TV and radio anchors,
Speaker 4: He'll go on and on about like the chatbots and
Speaker 4: how they drive him crazy. You're on a site and
Speaker 4: he's not wrong. Sometimes where I just want to get
Speaker 4: on with the human and say help me out here,
Speaker 4: walk me through it. And so is this balance? There's
Speaker 4: a balance, But there's also other times where I love
Speaker 4: it where I can just kind of whittle through a
Speaker 4: bunch of information, figure it out.
Speaker 14: There are times you don't want to talk to someone.
Speaker 4: Yeah, absolutely right, and it's you know.
Speaker 14: I have a mental health issue. I just need to
Speaker 14: figure out where to go. I don't I don't want
Speaker 14: to have to have that conversation yet, just direct me
Speaker 14: at the same time. Okay, now I have a diagnosis,
Speaker 14: tell me what this means. Right, So I think you
Speaker 14: just have to meet people where they are.
Speaker 4: Is though chat our generative AI a big boost for
Speaker 4: what you guys ultimately do, Like, do you see that
Speaker 4: as a big growth driver?
Speaker 14: I think it's a huge opportunity. And it's not just
Speaker 14: generative AI, it's AI more broadly because you're already using that. Yeah, right, absolutely,
Speaker 14: we have to be right when you think about I
Speaker 14: think about it, there's predictive, there's a generative, there's just
Speaker 14: in essence driving an informed decision for someone. It will
Speaker 14: only continue to get better.
Speaker 4: So then what do you say to And we're gonna
Speaker 4: got about a minute and then we'll come back and
Speaker 4: talk some more. But there is this kind of wait.
Speaker 4: I'm terrified by it, and I'm also like, well, wait,
Speaker 4: we've been using it for a long time already, so
Speaker 4: how do you you know, what would you be saying
Speaker 4: to someone who was asking you, like, oh my god,
Speaker 4: what is this?
Speaker 14: I mean, I love the analogy someone told the other day.
Speaker 14: I'm in finance. You know, the calculator came along. It's
Speaker 14: not like all the finance jobs went away, right, I mean,
Speaker 14: it's just we have to just think differently. Even with
Speaker 14: generative AI, at the end of the day, there's still
Speaker 14: a judgment call. So I think it's it's changing that
Speaker 14: mindset around how we benefit and use it in a
Speaker 14: more proactive way.
Speaker 10: Yeah.
Speaker 4: I just think it's yeah, And I love that you're
Speaker 4: being smart about it and very specific and just saying
Speaker 4: technology can be so terrifying, right, I feel like and
Speaker 4: people have kind of run in that direction, and I
Speaker 4: think there's been some great reporting showing how it can
Speaker 4: go astray. But there's also a potential if you think
Speaker 4: about online when it all started, right or the internet,
Speaker 4: I think.
Speaker 14: There's always and I think it's exciting, like that's next chapter.
Speaker 15: It always sorry every time, and then it's right.
Speaker 14: You know, it's always run up.
Speaker 4: We just have to learn as we go along.
Speaker 14: We do.
Speaker 4: We're talking with the CFO of like Katie Rooney here
Speaker 4: in our studio, I want to go back to some
Speaker 4: business stuff. Is it easy being a CFO right now,
Speaker 4: especially when we talk about credit crunches, markets tightening, questions
Speaker 4: about recessions and slow downs.
Speaker 14: I don't know that i'd say easy or hard. I
Speaker 14: just think I think it's a really important time to
Speaker 14: be a CFO. There's so much.
Speaker 4: Hasn't been important.
Speaker 14: Well, I think that's fair. I think that's that's a
Speaker 14: fair storry. No, it's a it's a fair point. But
Speaker 14: in terms of the magnitude of risk and volatility, and
Speaker 14: so I think, you know, we spend a lot of
Speaker 14: time focusing on balance sheet right and having kind of
Speaker 14: that visibility into revenue, profitability, cash flow so that we
Speaker 14: can weather any scenario, right, Because I think even over
Speaker 14: the past couple of years, right with COVID, with everything
Speaker 14: we've been through, there's just been so much more volatility
Speaker 14: and uncertainty that you just you have to have a
Speaker 14: bigger role in managing through that.
Speaker 4: Do you feel more uncertain about the outlook? Do you
Speaker 4: think more about recession based on things that you're seeing
Speaker 4: or conversations because you do have a great as I
Speaker 4: said at the top, like a great window because you
Speaker 4: talked you have so many corporate clients.
Speaker 14: Yeah, I think that's right, and I think I mean
Speaker 14: the good news is for us, it's an opportunity because
Speaker 14: we do serve you know, fifty percent of Fortune five hundred.
Speaker 14: They are focusing more on cost. We can help address
Speaker 14: a bigger need when you think about the solutions we
Speaker 14: can provide end Yeah, I mean, you know, fortunately unfortunately
Speaker 14: you're going to provide healthcare, you're going to do payroll right,
Speaker 14: and actually we can help provide a better solution to
Speaker 14: maximize how you're using those services. So I think the
Speaker 14: conversation doesn't change. I think it's more I actually think
Speaker 14: about it as how do you make it an opportunity
Speaker 14: where we can actually invest more during this cycle to
Speaker 14: get ahead because we are coming at it from a
Speaker 14: position of strength.
Speaker 6: So what do you look at when making that decision.
Speaker 14: Yeah, I mean I think it starts with just healthy
Speaker 14: balance sheet, right, having that flexibility to weather different scenarios,
Speaker 14: so and being thoughtful about what those those could look like.
Speaker 4: Did you see any impact from the collapse of like
Speaker 4: Silicon Valley and the four regional banks? Did that in
Speaker 4: any way? I don't know. Yeah, I'm just curious.
Speaker 14: We really didn't, Okay, you know, and I think just
Speaker 14: how quickly the government stepped in. I think you know
Speaker 14: that supported so many different companies, so we really didn't.
Speaker 14: But you had to be prepared in case, right, we
Speaker 14: serve companies that have payable with those banks, Like how.
Speaker 4: Do you make sure what I was thinking along the line.
Speaker 14: Right, you're prepared and you can you can step in
Speaker 14: and help your clients, Like this moment of need is
Speaker 14: for our clients, right, if we can step in and
Speaker 14: be that trusted resource, like, it builds such goodwill in
Speaker 14: other macro environments. So I think that's that's the opportunity.
Speaker 4: So can we talk about working from home? We just
Speaker 4: did talk about retail and real estate and some of
Speaker 4: the cities we see it outside our door of some
Speaker 4: retail that still hasn't come back post pandemic. One of
Speaker 4: the things I loved when we have talked in the
Speaker 4: past is you said how you were flying all your
Speaker 4: workers in for a week.
Speaker 14: Right, yeah, I think, I think, are you still doing that?
Speaker 14: We do? We do? I think again, this is what
Speaker 14: works for me, particularly in finance quarterand is such an
Speaker 14: important time and we still need development, we still need
Speaker 14: face to face time. But trying to get people there
Speaker 14: one day a week or two, like one day a week,
Speaker 14: you spend that day just catching up with everyone. Yet
Speaker 14: like it's not which is great, but if you do
Speaker 14: it a week, we're not productive. It's not terribly productive, right,
Speaker 14: so we need a full week. It's one week. We're committed,
Speaker 14: we're all together, we do lunches together, we go out together.
Speaker 14: So there's you know, work hard, play hard. We kind
Speaker 14: of get that balance in. I think it builds a
Speaker 14: lot of camaraderie for the team and honestly it helps
Speaker 14: develop the team, which I think is so critical.
Speaker 4: So you're still doing that. So at'll be home for
Speaker 4: like three weeks and then they come in for a week.
Speaker 15: And I wonder if you see to the extent that
Speaker 15: you can talk about this as a gender impact on
Speaker 15: that because the thing that I worry about so much
Speaker 15: is that when you force people push people back to work,
Speaker 15: a lot of women are staying at home still. They're
Speaker 15: the ones taking advantage of the work from home capabilities
Speaker 15: of companies, and that freaks me out.
Speaker 14: You know, yeah, no, I get it, and I but
Speaker 14: I think that's why this strategy works for us, because
Speaker 14: they can plan. I can plan for one week. It's
Speaker 14: hard when it's one you know, it's hard to find
Speaker 14: childcare for one day a week, two days a week.
Speaker 14: So that again, that's what's worked for us there. I
Speaker 14: do have people come in a lot more. I love it.
Speaker 14: I'm in a lot more. That works for me. So
Speaker 14: I think it's just trying to get that balance right.
Speaker 4: What about the tightness of the labor force? What are
Speaker 4: you seeing on that front? Is it easing at all?
Speaker 4: If you're hiring and you're.
Speaker 14: Looking, Yeah, I'm not sure it's it's easying dramatically. I
Speaker 14: think though, that the conversation is changing in terms of
Speaker 14: what employees want. So it used to be you know,
Speaker 14: I will I can only find someone who would work
Speaker 14: from home in this location. I think because we've grown
Speaker 14: more flexible in terms of the talent pool in terms
Speaker 14: of the skill set we're looking for. We want more
Speaker 14: diverse skill sets. I think that's helping, but it's still
Speaker 14: I know, it's still a tough market.
Speaker 4: And people still want to work from home. They do absolutely,
Speaker 4: So what do you say to the debate, because it
Speaker 4: does see I mean, it's still out there and we're
Speaker 4: still trying to figure it out. And we certainly hear
Speaker 4: from CEOs who I think from the pandemic and it
Speaker 4: she like, yeah, we're gonna be flexible, and then they're like, no,
Speaker 4: we're not flexible anymore. So what is the reality of it?
Speaker 4: Are we still trying to figure it out?
Speaker 14: I think the reality is we have to find some
Speaker 14: time for people to be in the office, but it
Speaker 14: has to be meaningful. I don't need people coming into
Speaker 14: the office to sit in a cube all day and
Speaker 14: be on zoom calls. Yeah we don't, right, I mean,
Speaker 14: I a so I think, but we need training programs,
Speaker 14: we need mentorship, we need team building, we need so.
Speaker 14: I think it's making those in person experiences meaningful and
Speaker 14: having enough of them, you know, I think that's what matters.
Speaker 15: We've got like a minute and a half in our
Speaker 15: final minutes with you. You're a woman who's a CFO.
Speaker 15: I hate to do that whole thing, but just meeting
Speaker 15: you and how cool you are. Can you talk about
Speaker 15: any advice you have for other women that are in
Speaker 15: male dominated roles?
Speaker 4: Because was it easy getting here?
Speaker 5: Yeah?
Speaker 14: It was not easy. I think you have you have
Speaker 14: to be true to yourself. I got pushed a lot
Speaker 14: in times in my career have a stronger voice, be louder,
Speaker 14: do this like that wouldn't have worked for me. Interesting,
Speaker 14: and so I think I do have a strong voice
Speaker 14: when I need to, I won't be the loudest in
Speaker 14: the room. And but I know you have to figure
Speaker 14: out how to influence in your own way, to drive
Speaker 14: progress and drive change, and I think being comfortable with
Speaker 14: that is really important because then you can develop that
Speaker 14: confidence to succeed in any environment and find the right
Speaker 14: support network. I mean, I you know, men and women,
Speaker 14: it's incredibly powerful. That's so great.
Speaker 4: Yeah, no, it makes sense, it's no. But the whole
Speaker 4: concept of because I think there was for a while like,
Speaker 4: you know, you gotta be strong, yeah, lean in and
Speaker 4: I think you and at times you do, yes, but
Speaker 4: you also have to be true to yourself. Yeah, thank
Speaker 4: you so much. We know you had a busy trek
Speaker 4: while you were here in New York and you found
Speaker 4: some time for us, So thank you. Thank you guys
Speaker 4: for having always safe travels back home. Just so to
Speaker 4: kind of cover so much with you. Katie Rooney, CFO,
Speaker 4: Chief Financial Officer at Alite, thank you so much. Light Solutions.
Speaker 4: Here in our interactive Brokers studio, you're.
Speaker 1: Listening to the Bloomberg Business Week podcast. Catch us live
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Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and you too.
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Speaker 1: Just say Alexa play Bloomberg eleven thirty The.
Speaker 10: Problem by.
Speaker 4: All right, they're definitely fighting the fight, if you will,
Speaker 4: and we'll get into exactly what they're doing. Especially if
Speaker 4: you're head out west to the University of California at Berkeley,
Speaker 4: you will find a class called the Berkeley Citizen Clinic,
Speaker 4: and in its students are learning how to fight hackers
Speaker 4: and help non governmental organizations. We're talking about the NGOs
Speaker 4: really better protect themselves. This story is in the upcoming
Speaker 4: new double issue Bloomberg BusinessWeek on newstands later this week.
Speaker 4: Already online at Bloomberg dot com, slash Business Weeekend on
Speaker 4: the Bloomberg So let's get to it. Bloomberg News cybersecurity
Speaker 4: reporter Margie Murphy on zoom in San Francisco. The editor
Speaker 4: of Bloomberg Business Week, Jill Weber right here in our
Speaker 4: Bloomberg Interactive Broker's studio, Jill. This clinic the first of
Speaker 4: it's kind of the country. I'm just curious how this
Speaker 4: story got the green light, Like, what was the pitch?
Speaker 7: I just thought it was so interesting because we look,
Speaker 7: we're always interested in what's happening in the cybersecurity world,
Speaker 7: and this was just an effort that I hadn't heard about,
Speaker 7: and yet students are doing cool stuff.
Speaker 3: And this.
Speaker 7: The Travers Project, when I first even read about it
Speaker 7: in the story, just was like, wow, this is they're
Speaker 7: doing something that I had not been aware of before
Speaker 7: this Travis Project. I hadn't been aware of what they
Speaker 7: were doing. But what they're doing is actually, you know,
Speaker 7: draws attention from people that aren't exactly like, you know,
Speaker 7: doing good stuff in the world.
Speaker 3: Right, And so the.
Speaker 7: Berkeley Citizen Clinic comes in there and the this is
Speaker 7: a pro bono effort and it just has a little
Speaker 7: bit of a feel good quality. But what I'm really
Speaker 7: curious about is what happens in the classroom to lock
Speaker 7: this stuff down, Margie. So let's start actually Traverse Project.
Speaker 7: What are they doing this nonprofit and why do that?
Speaker 7: Does that draw the attention of the bad people in
Speaker 7: the world?
Speaker 16: Yeah? Absolutely, So.
Speaker 17: I talked to Austin Shamlin, who is the founder of
Speaker 17: the Travis Project, and he's spent many years working in
Speaker 17: the kind of anti human trafficking industry, I guess you
Speaker 17: could call it, and he's he's set up this nonprofit
Speaker 17: and what it is, it's tech. It's a tech company really,
Speaker 17: and they provide technology to law enforcement.
Speaker 16: Around the world.
Speaker 17: And so they you know, they have a special proprietary
Speaker 17: technology which you know is it was it's kind of
Speaker 17: their secret source.
Speaker 16: And they're helping find the bad.
Speaker 17: Guys, the people who are supplying women from Ukraine who
Speaker 17: are trying to get over to Poland sending them to
Speaker 17: brothels around eastern Europe.
Speaker 16: And he's helping with this tracking technology.
Speaker 4: A little bit of a freeze here, we'll see if
Speaker 4: we can.
Speaker 16: Are you there, Margie, I'm here.
Speaker 4: Okay, great, no, no, no, technology it happens. Go ahead
Speaker 4: and pick up please go ahead.
Speaker 16: Yeah.
Speaker 17: So often is you know, for this his human trafficking
Speaker 17: technology company. He's helping track down the people who are
Speaker 17: moving women and children around the world, often for sex trafficking.
Speaker 17: And so he's attracting the ire of some really bad people,
Speaker 17: and all the money that he's getting to fund his company,
Speaker 17: it's going into the technology that he's providing to help
Speaker 17: with this effort, and he doesn't have the b to
Speaker 17: spend it on actually securing himself and his volunteers and
Speaker 17: his employees who are kind of putting themselves on the
Speaker 17: front line against criminal gangs, you know, potential moles in
Speaker 17: the law enforcement themselves. So although he's working in tech,
Speaker 17: he doesn't have the budget to go and get a
Speaker 17: consultant to kind of show him where all the vulnerabilities.
Speaker 16: Maybe every time he.
Speaker 17: Speaks to a volunteer talk about, you know, where there
Speaker 17: could be people who might be in their networks watching
Speaker 17: what they're doing, trying to get a step ahead of them.
Speaker 17: So he heard about this clinic at Berkeley and now's
Speaker 17: this fall. We'll get about fifteen students who are going
Speaker 17: to help him draw up a cybersecurity plan, tell him
Speaker 17: kind of the best ways for him to communicate with
Speaker 17: his volunteers and with the partners that they have all
Speaker 17: around the world to make sure that they can continue
Speaker 17: doing what they need to do in a safe manner
Speaker 17: and not putting their volunteers at risk.
Speaker 7: So what's the backstory at Berkeley? Where did this program
Speaker 7: come from?
Speaker 10: Right?
Speaker 17: So it kind of it all came from as a
Speaker 17: program which is like the Public Interest Cybersecurity Program, and
Speaker 17: that that was a module that cybersecurity students could teach,
Speaker 17: and Sarah Powers out at Berkeley has been kind of.
Speaker 16: Spearheading that, and they thought, you know, often.
Speaker 17: These universities do you have a bit of a pro
Speaker 17: bono effort and they look around in their community and think,
Speaker 17: you know, how can.
Speaker 16: We be helpful?
Speaker 17: And they realized that the a lot of these students
Speaker 17: were going on to work with large companies with huge
Speaker 17: sums of money, and they were never they were never
Speaker 17: going on to help kind of work with the small
Speaker 17: organizations around them or the the NGOs and nonprofits that
Speaker 17: they felt really needed the help the help secure themselves.
Speaker 17: And so they started off by I think they did
Speaker 17: a couple of local women's health clinics, anti abortion clinics,
Speaker 17: and then they started getting more interest and they realized
Speaker 17: this is like an international thing.
Speaker 16: And so now.
Speaker 17: They've been doing it for about I think it's like
Speaker 17: four years now, and they now they have to scream
Speaker 17: for the clients that they have come in and they
Speaker 17: make sure that they're going for the kind of lowest
Speaker 17: budget but higher risk clients.
Speaker 4: Margie, you know one thing I think is interesting too,
Speaker 4: And we have so many conversations where when you talk
Speaker 4: to the head of a company, a publicly held company
Speaker 4: or other, you know, cybersecurity is a big issue. It
Speaker 4: is just a part of doing business. Of course they're
Speaker 4: going to spend on it, they have money to do so.
Speaker 4: But there's some information in your story we write about
Speaker 4: these NGO small organizations that they are three times more
Speaker 4: likely to be targeted by hackers than large companies, and
Speaker 4: about sixty percent of those groups shut down within six
Speaker 4: months of an attack. So they are very vulnerable and
Speaker 4: their organization is really at stake of being shut down
Speaker 4: if they get hacked. I had no idea and didn't
Speaker 4: think about how vulnerable they are and that they don't
Speaker 4: have the access to either spend to protect their information
Speaker 4: or their organizations.
Speaker 16: Yeah. Absolutely, And there's two things here.
Speaker 17: So these specific NGOs that the Berkeley Clinic are working with,
Speaker 17: it's like that they tend to be super high risk
Speaker 17: because they are doing things like anti human trafficking, abortion work,
Speaker 17: you know, political kind of NGOs, and so they're super
Speaker 17: high risk and they are highly highly at risk of
Speaker 17: being hacked because of the work they do, because of
Speaker 17: brying governments and criminal gangs. Then on top of that,
Speaker 17: there's also the risk that is too small businesses generally
Speaker 17: across the US, because we hear so much about really
Speaker 17: like scale hats hackers going after you know, publicly listed
Speaker 17: companies because the return one you know, if they if
Speaker 17: they do a ransomware attack and if they try and
Speaker 17: get like five percent of their quarterly.
Speaker 16: Earnings, it's a huge sum.
Speaker 17: But we never really talk about how like the scale
Speaker 17: of the smaller organizations that are being hacked and the
Speaker 17: returns are smaller for the hackers, but it's easier for
Speaker 17: them to get in and cumulatively they're making tons of
Speaker 17: money off the smaller organizations which are less likely to
Speaker 17: be protected, which are less likely to have cyber insurance
Speaker 17: and then as the stats show, are more likely to
Speaker 17: fold as a result of that attack.
Speaker 15: Marguie, This isn't really featured in the story, but I'm
Speaker 15: just curious. Is this something that the sources you spoke
Speaker 15: with think they could scale in a tangible way. Do
Speaker 15: they anticipate trying to roll out resources that make the
Speaker 15: education on how to do this a little bit more accessible.
Speaker 16: I think it's something they'd love to do.
Speaker 17: And in this example, what the students are doing is
Speaker 17: essentially it's free consultancy, so they're not providing any technology themselves.
Speaker 17: And I think that a lot of what the students
Speaker 17: going to do is they become consultants. They're working like
Speaker 17: one of the one of my sources, Rachel, she now
Speaker 17: works at Deloitte, and they're kind of I guess they're
Speaker 17: hoping that they could maybe bring what they learned with
Speaker 17: them and pay it back.
Speaker 16: In terms of scaling it.
Speaker 17: At the moment, there's actually Berkeley is one of several
Speaker 17: clinics that have actually popped up, and there is a
Speaker 17: consortium that they've all all together, and there are donors
Speaker 17: who are feeding some money into that, and I think
Speaker 17: they're hoping that that will expand and that will get bigger,
Speaker 17: and we'll see more community based pro bono work as
Speaker 17: kind of we see more cyber attacks happening and we.
Speaker 16: See the cost of cybersecurity software rising.
Speaker 17: In terms of scaling, it wouldn't be a scale like
Speaker 17: we would see with a product, but I think in
Speaker 17: terms of people getting involved in trying to help and
Speaker 17: maybe seeing private companies put some funding behind it, that
Speaker 17: we might see scale.
Speaker 7: So the Travis Project, obviously, that was a really interesting one.
Speaker 7: I'm curious what other organizations the clinic at Berkeley and beyond,
Speaker 7: who else are they attempting to assist with these efforts.
Speaker 17: Yeah, so interestingly, each each clinic so they they're attached
Speaker 17: to universities, and each university has their own I guess
Speaker 17: the theme probably isn't the right word, but the type
Speaker 17: of organization they do, so Berkeley was these high risk NGOs.
Speaker 17: I think M I T was doing more community focused
Speaker 17: like local healthcare and government, and so they kind of
Speaker 17: specialized on that, but Berkeley specifically.
Speaker 16: I also spoke to.
Speaker 17: The administrative manager at the abortion clinic in the San
Speaker 17: Francisco General Hospital who has worked with them. They've also
Speaker 17: done other women's health organizations. They also work with. There
Speaker 17: was a organization in Guatemala which was kind of more
Speaker 17: of a political NGO, so it's quite international, and I
Speaker 17: think that what really struck me was how this could
Speaker 17: be applied to pretty much any vertical as well, you know, impacts.
Speaker 17: It's not just the NGOs. There are small businesses around
Speaker 17: the country which really need this help and they're not
Speaker 17: getting it and they can't afford it.
Speaker 7: And yeah, we've read about all the ransomware hats that
Speaker 7: have gone down, and it's like hospital schools, private companies.
Speaker 7: It's like take your pick, and like anytime it happens,
Speaker 7: it is your nightmare. And then to think like you
Speaker 7: don't have the funding that you need to actually defend
Speaker 7: yourselves from these things, and especially if you're attempted you
Speaker 7: could work like these folks. It's an amazing conundrum.
Speaker 4: Right, the concept of that, like what you're doing is
Speaker 4: all of a sudden shut down and then maybe you
Speaker 4: can't even recover from it. So it's really really concerning.
Speaker 4: The Other thing I thought was interesting, Margie, and maybe
Speaker 4: because we've been talking a lot about earlier on our
Speaker 4: broadcast matter and I got into how women participations, certainly
Speaker 4: in the prime earning their participation post pandemic is at
Speaker 4: a record high, and I just think about the tight
Speaker 4: labor force that is forcing Also companies or folks that
Speaker 4: maybe night might not have in another environment leaned on
Speaker 4: students to help them. They're like, I'm okay with it
Speaker 4: because it's actually kind of solving a problem because there's
Speaker 4: just not enough cybersecurity officials right to go out there
Speaker 4: and do it right.
Speaker 16: Totally.
Speaker 17: I mean, the idea itself sounds terrifying selling a load
Speaker 17: of students on your kind of cybersecurity practice, which is
Speaker 17: meant to be you know, the most people well cybersecurity
Speaker 17: people would argue is the most.
Speaker 16: Important part of your business.
Speaker 17: But when you don't have the people to help you that,
Speaker 17: you know, when you can't afford it, you'll take what
Speaker 17: you're given.
Speaker 16: And it turns out.
Speaker 17: That actually these students are really, really good and they
Speaker 17: are being trained by the best in class. So the
Speaker 17: tutors that they have are people who've worked in the
Speaker 17: industry for years and they want to give back and
Speaker 17: they know what the problem is. And oftentimes these problems
Speaker 17: aren't really expensive to solve. That sometimes people are being
Speaker 17: sold things that you know they're being told you need
Speaker 17: to pay a certain amount for this. A lot of
Speaker 17: it comes down to cyber hygiene. But with the kind
Speaker 17: of growing threat and the sophistication in which cyber criminals are,
Speaker 17: you know, evolving, we just need people need refreshes quite
Speaker 17: often on how to you know, privately message access controls
Speaker 17: over your fire else who can see what It can
Speaker 17: be quite simple stuff, but unless you have someone who
Speaker 17: knows telling you that you know, you don't know until
Speaker 17: you don't know, and then you've been hacked, and that's
Speaker 17: a problem.
Speaker 4: So I think seven weeks of training. I love this, right,
Speaker 4: power of backups, importance of privacy controls and software, the
Speaker 4: operation of virtual private networks, and how to assemble it
Speaker 4: all into a cybersecurity plan. Seven weeks and they can
Speaker 4: then take on clients. I love it. It's just a
Speaker 4: really smart story and just people figuring out how to
Speaker 4: get it done. MARGI thank you so much, appreciate it.
Speaker 4: Margi Murphy, Cybersecurity report at Bloomberg News. She is there
Speaker 4: on zoom in San Francisco. Jill Webber, the editor of
Speaker 4: Bloomberg Business Week, here in studio. This story in the
Speaker 4: upcoming new issue of Business Week. Do add on newstands
Speaker 4: on Thursday. Online already on the Bloomberg This is Bootberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekdays from two to five pm Easter.
Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and you too.
Speaker 1: You can also listen live to our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg. You Love and thirty.
Speaker 4: The world was once in love with them and thanks
Speaker 4: to account and hiss ip and industry was created until,
Speaker 4: of course, disaster struck in nineteen thirty seven. Fast forward
Speaker 4: and you adding a multi billionaire tech titan, the Airship.
Speaker 4: It is packed with more in the past, the present,
Speaker 4: in the future of lighter than air vehicles. A story
Speaker 4: in the new double issue of Bloomberg Business Week with
Speaker 4: us is Ashley Vance joining us on the phone along
Speaker 4: with the editor of Bloomberg Business Week, Joe Weber here
Speaker 4: in studio. Joe sounds like this is a story that's
Speaker 4: been in the works for a little bit.
Speaker 7: More than a little bit, and Ashley had just an
Speaker 7: inside look at what is just an incredible story. You
Speaker 7: mentioned Airship, So we're going to talk about an effort
Speaker 7: to modernize that airship. That takes a lot of money,
Speaker 7: a lot of patients, on a lot of time, and
Speaker 7: it really starts Deck kades ago with the Hindenburg and
Speaker 7: the disaster that was then, and so much attention basically,
Speaker 7: you know, has always been on that, and everybody's probably
Speaker 7: just forgotten that once upon a time there was hope
Speaker 7: that the airship, the era of the of the airship,
Speaker 7: was going to be a thing and we might be
Speaker 7: in the brink of it again. Okay, Ashley, I've set
Speaker 7: that up and been kind of a long winded with it.
Speaker 7: I want you to tell us how you found out
Speaker 7: about Sergey Brin's attempt to bring back the airship.
Speaker 10: Yeah, well, this one's a bit of a long in
Speaker 10: winding story. I broke the first story on this around
Speaker 10: like twenty seventeen. I had heard rumors that Serge was
Speaker 10: building this secret airship near my house in Mountain View,
Speaker 10: California at NASA AMES. And we published that story and
Speaker 10: SERGEI was not happy about it. And then and then
Speaker 10: some years passed and I just I met the man
Speaker 10: who's actually doing the building. This guy named Al Weston
Speaker 10: is an aerospace engineer and he forgave me for disclosing
Speaker 10: his secrets and then actually let me watch the construction
Speaker 10: of this airship over the last couple of years, and
Speaker 10: in next month, in June, it comes out of the
Speaker 10: hangar for the first time. The first craft is called
Speaker 10: the Pathfinder one and.
Speaker 7: The company that al Weston's CEO of Lighter than Air. Obviously,
Speaker 7: the thing with the Hindenburg was that it went up
Speaker 7: in flames, went down in flames. To be more specific,
Speaker 7: what is different about this.
Speaker 10: Attempt, Well, so you're right, I mean, we have this
Speaker 10: glorious period from kind of like the early nineteen hundreds,
Speaker 10: even you know, the Hinderberg I think was nineteen thirty seven,
Speaker 10: and even past there where where we actually various countries
Speaker 10: produced hundreds of airships. They were used for tourism, in
Speaker 10: the military, all kinds of stuff. The Hindenburg disaster put
Speaker 10: an end to the tourism things, and then and then
Speaker 10: airplane kind of ended the rest. And nobody has attempted,
Speaker 10: you know, we see blimps and whatever, hot air balloons,
Speaker 10: but nobody's attempted to make a proper airship with a
Speaker 10: rigid structure, which is what allows them to get really
Speaker 10: large and carry lots of stuff and lots of people.
Speaker 10: No one's tried to do that for eighty five years,
Speaker 10: and so this is the first attempt. As you mentioned, Joel,
Speaker 10: it takes a lot of money. And then and then
Speaker 10: you know they've tried to modernize the whole idea given
Speaker 10: that it's been eighty five years.
Speaker 7: And so what how does it accomplish the lighter than air, right,
Speaker 7: because previously that was hydrogen. We know that's explosive.
Speaker 10: So the magic is Yeah, this time it's helium, which
Speaker 10: which has the benefit of not being flammable. It is
Speaker 10: a lot more expensing.
Speaker 7: Seems like a key ingredient there, right right.
Speaker 10: I mean, you know there are people now the hit
Speaker 10: it is very complicated the series on what exactly went wrong. There.
Speaker 10: There are people who think you could build these with
Speaker 10: hydrogen and do it much more safely. But obviously there's
Speaker 10: you know, all these years later, the sticks in people's heads.
Speaker 10: But this one's helium. It's it's enormous. It's bigger than
Speaker 10: a football field in lengths. I've seen it many times
Speaker 10: and it's this time it's made instead of wood or metal,
Speaker 10: it's made out of carbon fiber and titanium, so it's
Speaker 10: a lot lighter and sturdier than the airships of the past.
Speaker 10: And so this really is this modern take on one
Speaker 10: and now obviously kind of goes searching for a purpose.
Speaker 4: I guess I'm curious too about what's it like inside.
Speaker 10: Yeah, well, this one for the moment, it's I would
Speaker 10: say not super super spectacular. It hasn't gone alot like
Speaker 10: on the inside of the actual structure. It's amazing. You
Speaker 10: see this geometric pattern of all these carbon fiber tubes
Speaker 10: again to the titanium and all the electronics and everything
Speaker 10: that goes into this. The outside it looks just like
Speaker 10: any kind of blimp airship you might have seen before.
Speaker 10: And there's a gondola underneath that has room for a
Speaker 10: couple of pilots and probably about eight or ten people.
Speaker 10: And this first one, the Pathfinder one from LTA is
Speaker 10: this is it's almost like a prototype to prove what
Speaker 10: they can do. They already have plans to make a
Speaker 10: much much larger one as their second craft.
Speaker 4: One thing I wanted to ask you about Alan Western
Speaker 4: and Serge Bryn. How did these two guys get together.
Speaker 10: It's an odd pairing. Yeah, right, it's almost It was
Speaker 10: almost a marriage made through logistics. Google's headquarters are about
Speaker 10: two miles from NASA Ames, which is where the Pathfinder
Speaker 10: one is being built, NASA's Silicon Valley Center, and now Weston.
Speaker 10: He had a career in the Air Force, working on
Speaker 10: pretty top secret sort of projects like this wars missile
Speaker 10: defense shields, and then he ended up at AIMS for
Speaker 10: many years working on low cost lunar landers and other
Speaker 10: space projects. And so they met just by way of
Speaker 10: things Google had been doing in concert with NASA and
Speaker 10: various projects, and they both struck up this kinship around airships.
Speaker 10: They both just really liked them. This is what this
Speaker 10: boils down to is that Sergey Ran likes airships and
Speaker 10: he wanted one.
Speaker 7: So what are they going to use these for? Is
Speaker 7: it clear yet?
Speaker 10: Yeah, when it is clear what they intend to use
Speaker 10: it for, I don't know if the business case is
Speaker 10: totally clear. They you know, SERGEI maybe doesn't have to
Speaker 10: turn this into a profitable, profitable thing. He wants to
Speaker 10: use them to to take tons of cargo. He's very
Speaker 10: into disaster relief. This is kind of where he focuses
Speaker 10: some of his money. So you'd fly tons of cargo
Speaker 10: into an area that maybe's hit by a hurricane that
Speaker 10: can't be reached very well by by boats or planes,
Speaker 10: or the instructures damaged, and you can drop an airship
Speaker 10: in there. There is a pretty strong case to be
Speaker 10: made that this is a greener form of shipping cargoes
Speaker 10: than something like a plane and possibly in some cases
Speaker 10: a ship or a train. But they can These large
Speaker 10: airships that LTA is looking to build can carry hundreds
Speaker 10: of tons of stuff, and then far in the future
Speaker 10: tourism might come back again with these kind of flying
Speaker 10: somewhere between a cruise ship and a five star hotel
Speaker 10: in the sky, and you would take like a two
Speaker 10: day journey from London to New York and be able
Speaker 10: to walk around and open the windows and sit on
Speaker 10: a deck and have meals, you know, in class.
Speaker 4: Sounds like somebody who actually went up and won and
Speaker 4: got to open up a window and get the experience.
Speaker 4: Take us to Germany, because one of my questions when
Speaker 4: I was reading this, I'm like, is this really a business?
Speaker 4: Take us to Germany and what's been going on there?
Speaker 10: Right? So much of this airship pioneering was done by
Speaker 10: Count Zeppelin in Germany, a person, and he's left his legacy. Oddly,
Speaker 10: a bunch of intellectual property that that he came up
Speaker 10: with ended up as the fuel of like an aerospace
Speaker 10: and automotive empire in Germany. And the foundation behind this
Speaker 10: intellectual property donates millions of dollars to the city of
Speaker 10: friedrich Schaffen, where I went, and they have they fund
Speaker 10: these these tourist flights at a Zeppelin nt airship. It's
Speaker 10: it's smaller than the ones LTA's building, but yeah, for
Speaker 10: about eight hundred dollars, you could fly for ninety minutes
Speaker 10: and feel like a wizard. It's a strange experience.
Speaker 4: The way you did it.
Speaker 10: I did it. I did it. I did it for
Speaker 10: the story and for Hello World by TV show, So
Speaker 10: you know, you it's very different to a plane or
Speaker 10: a helicopter, which which can take off quite violently and
Speaker 10: suddenly you just kind of slow glide up and then
Speaker 10: you're you've got some propulsion from these propellers, but you're
Speaker 10: also at the mercy of the wind and you just
Speaker 10: kind of bob around and there's no air pressure like
Speaker 10: in a plane where the cabin is pressure, so you
Speaker 10: could just open the window. You can stick your head
Speaker 10: out and see all the sites below. I felt like
Speaker 10: a like a dog.
Speaker 7: I was gonna say, how many times did they ask
Speaker 7: you to put your head back inside it? Sir?
Speaker 4: Could you put your head back in?
Speaker 10: I think our whole Hello World crew was left and
Speaker 10: every eye this huge smile of my face. I liked.
Speaker 10: I liked the window thing.
Speaker 7: So where does it go from here? There's there's gonna
Speaker 7: be this unveiling, uh and what comes next for LT
Speaker 7: A lighter than that.
Speaker 10: It's a pretty cool part of the story. I think,
Speaker 10: you know. The one hundred years ago Goodyear was the
Speaker 10: airship king in the United States, and most of that
Speaker 10: took place in Ohio. Sergey Brinn has actually his company,
Speaker 10: his family trust has gotten taken over the old Goodyear
Speaker 10: air Dock, which is a huge hangar in Akron, Ohio.
Speaker 10: And that's where their next vehicle, which is called Past
Speaker 10: Finer three for some reason they just skipped past find
Speaker 10: or two, is going to come to life at this
Speaker 10: air dock in Akron. And there's still all these people
Speaker 10: who used to work for Goodyear, and and there's a
Speaker 10: university there that has a bunch of archives and talent
Speaker 10: in this field. And so it's like a revival of
Speaker 10: this hundred year old story, and oddly Sergey Brinn is
Speaker 10: at the center of it.
Speaker 7: So you got to talk to him about his interest here, right.
Speaker 10: I wish figure Ferger saw my first story. He told
Speaker 10: me that he enjoys my writing, but that he didn't
Speaker 10: want to talk about his airship. And that was about
Speaker 10: six years ago, and I frequently asked him he knows,
Speaker 10: he knows I've been in there, he knows I've been
Speaker 10: talking to Al. He just does not want to comments
Speaker 10: about the airship himself. And so so it's kind of
Speaker 10: been me talking aw lesson about Sergey's motivations and then
Speaker 10: and then talking to a bunch of employees there. I'm
Speaker 10: not sure why wants to be so secretive. You know,
Speaker 10: the cat is out of the bag, but but there
Speaker 10: it is.
Speaker 7: Well, there's a lot of money that he's put into
Speaker 7: this thing, and so I'm wondering, you know, like, what's
Speaker 7: in it? What's in it for him?
Speaker 10: Part of it? I think he really does do all
Speaker 10: this humanitarian stuff. I think that's part of it. I
Speaker 10: think he really does just want an airship. You know,
Speaker 10: everybody's got a mega yacht. Not many of these billionaires.
Speaker 9: A rocket or something like that, yeast the rockets, Like, uh,
Speaker 9: you know, is this how does this compare with the rocket?
Speaker 1: Do you think?
Speaker 4: Well?
Speaker 10: I mean it's it's similar in terms of sort of
Speaker 10: the scale of this and the cost and the time
Speaker 10: it takes. The mega Yeah, I think you roll up
Speaker 10: to the party and everyone's showing picture of their rockets
Speaker 10: or their lega yachts and you're the only one with
Speaker 10: the airshipt photo. That's it's it's the claim to say it.
Speaker 7: Is true barely if you're going for just like number
Speaker 7: of crazy things that can go in the air, fewer
Speaker 7: air airships than there are rockets, right, Yeah.
Speaker 10: But you know, I think this is this is like
Speaker 10: the worry. So many people are really in the airshifts.
Speaker 10: They've seen a bunch of startups coming go. It always
Speaker 10: ends up costing more money, and so people are excited
Speaker 10: in this field, but they're really concerned that Sergey loses
Speaker 10: interest as this just keeps costing.
Speaker 7: But once he goes up, right, that's going to change everything.
Speaker 7: You'll have his head out the windows. You know, he's
Speaker 7: going to double down on it.
Speaker 10: I think that's the hope for the guys at LTA
Speaker 10: is just falls in love with it all over again.
Speaker 10: This has taken a number of years longer I think
Speaker 10: that he expected, and it's up over two hundred and
Speaker 10: fifty million dollars, probably quite a bit above that. That
Speaker 10: was the best figure I could get. And yeah, you know, so,
Speaker 10: I'm sure he wants to see a bit more progress.
Speaker 10: But he has acquired this facility at Ohio and and
Speaker 10: is pushing on.
Speaker 4: Are there dates like on the calendar, like there's going
Speaker 4: to be some big press conference and we're going to
Speaker 4: get to see a launch of it or I'm just curious,
Speaker 4: like kind of what's on your radar of what's next
Speaker 4: from the company and from them.
Speaker 1: Yeah.
Speaker 10: Absolutely, so I've seen it. I've seen it flying as
Speaker 10: such as you can in a hangar. I mean, this
Speaker 10: hangar is giant, so it could kind of bob around.
Speaker 10: But in early June, after our story runs, I'm sure
Speaker 10: LPA is going to put out an announcement to invite
Speaker 10: some other press to see it come out of the
Speaker 10: hangar for the first time. It doesn't immediately soar or
Speaker 10: anything like that. There's a lot of ground testing that's
Speaker 10: going to take place over months. It's got to get
Speaker 10: certified by the FAA. Pilots have to be certified and
Speaker 10: all that. So it's going to be some time before
Speaker 10: it's soaring in the air. But it's it's all completed now,
Speaker 10: and yes, it's going to make it big entrance into
Speaker 10: the world here every day.
Speaker 4: All right, I'm just going to get a little teaser.
Speaker 4: There's well, I don't know Al Weston in a gorilla suit,
Speaker 4: but maybe people have to check that one out. It's
Speaker 4: a little bit of a rumor. This is really fascinating
Speaker 4: when we think about kind of where things are going
Speaker 4: to go and how things are moving around. You know, Ashley,
Speaker 4: You're always on it, so thank you so much for
Speaker 4: sharing this with us. Ashley Vance, of course he is.
Speaker 4: Bloomberg BusinessWeek features writer joining us along with the editor
Speaker 4: of Bloomberg Business Week, Jill Weber, and the story and
Speaker 4: the upcoming new issue of Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekdays from two to five pm Easter.
Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and you too.
Speaker 1: You can also listen live to our flagship New York station,
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 4: So about a week ago, Bloomberg News was that with
Speaker 4: a story. It was about how airlines first class makeovers
Speaker 4: are giving the rich hotel rooms in the sky. That
Speaker 4: means carriers are investing billions of dollar to upgrade cabins.
Speaker 4: They've got sofas, double beds, TVs, desks, wardrobes, mini bars,
Speaker 4: and in some cases Matt Miller walking showers.
Speaker 3: That's awesome.
Speaker 14: I know it.
Speaker 6: I think that right sign.
Speaker 4: It's like your flight. You're gonna take it out over
Speaker 4: the weekend, right.
Speaker 6: Yeah, No, I'm flying to Detroit over the weekend and
Speaker 6: it'll probably be on an incredibly uncomfortable narrow body jet
Speaker 6: in coach.
Speaker 4: Okay, sorry about that. Well listen. If that doesn't cut it, though,
Speaker 4: these upgrades that some are enjoying in first class, you
Speaker 4: can always buy your own private jet, including you, Matt Miller.
Speaker 4: So let's get into that with our next guest, Janine Janarelli.
Speaker 4: She is founder and president of par Avion. It's an
Speaker 4: international business aircraft sales and a marketing firm, and she
Speaker 4: joins us once again on zoom in Houston, Texas. Jannin,
Speaker 4: nice to have you back here on Bloomberg it's been
Speaker 4: a little while. Tell us about the market and what
Speaker 4: you're seeing right now and how everything has really kind
Speaker 4: of settled in post pandemic, Aha.
Speaker 13: Settled in well. The term that you're hearing off used
Speaker 13: among the trade is a return and normalization, and it
Speaker 13: certainly feels that way now that we're through Q one
Speaker 13: and well into Q two, as compared to the last
Speaker 13: two years. Whereas in late twenty one and all of
Speaker 13: twenty two we were saying, who knew a pandemic could
Speaker 13: be good for business aviation? But it was. And now
Speaker 13: that we're on the backside of that, we see I
Speaker 13: personally see and I hear it echoed by my peers,
Speaker 13: a pronounced slowdown in the number of inquiries, the level
Speaker 13: of activity, and you know, prices are starting to correct.
Speaker 6: So is that because I mean, I guess during the pandemic,
Speaker 6: if you had enough money to fly not just privately,
Speaker 6: but more importantly separately from everyone else, you did that
Speaker 6: so that you wouldn't get sick. Now maybe people are
Speaker 6: less worried about that and willing to you know, as
Speaker 6: Carol said, you know, airlines, commercial airlines are putting your
Speaker 6: own room on the flight, so you might as well,
Speaker 6: just take that instead of buying a G five fifty
Speaker 6: or whatever it is.
Speaker 13: Well, there's still a huge difference between commercial airline travel
Speaker 13: and that of flying on your own aircraft. I mean,
Speaker 13: let's just talk about the convenience. First of all, there's
Speaker 13: not necessarily a deadline by which time they're going to
Speaker 13: close the door and you've missed your flight. Secondly, it's
Speaker 13: not the restrictive sort of feel with business or private
Speaker 13: aviation as it has with commercial and commercial you're sharing
Speaker 13: the space still with dozens, if not hundreds of fellow
Speaker 13: passengers that are trampling down the same aisle, using the
Speaker 13: same restrooms, taking advantage of all the well limited open
Speaker 13: space that you have. Whereas when people gravitated towards private
Speaker 13: aircraft during the pandemic, it was exactly that, creating a
Speaker 13: health corridor, so they knew who they were mingling with,
Speaker 13: what they were touching, from the moment they left their
Speaker 13: home till they reached their destination. You are correct there
Speaker 13: is a slide back towards commercial travel, but I would
Speaker 13: say most of the draw.
Speaker 4: Sorry, no, well you don't want to jump in because
Speaker 4: I am curious. You said normalization pronounced slow down. I
Speaker 4: am curious what that means in your business? Is it
Speaker 4: down fifty percent? Is it down forty percent? I mean,
Speaker 4: I'm looking at your website.
Speaker 5: You know.
Speaker 4: What have I got here? As Cessna citation, a Bombardier
Speaker 4: Global seventy five hundred. You're talking about planes echo for
Speaker 4: what tens of millions of dollars? Hundreds of millions of dollars.
Speaker 4: These are not inexpensive items. And I'm just curious, what's
Speaker 4: a slowdown in this space look like?
Speaker 13: Well, you know, slow down is probably let's talk activity.
Speaker 13: Whereas before you could even get the airplane the market,
Speaker 13: you had a ready buyer for it.
Speaker 11: It was gone.
Speaker 13: The advertising was just done to sort of serve as
Speaker 13: a means by which to get other people to call in.
Speaker 13: Today we are now seeing lead times where I should say,
Speaker 13: bring the air have to market and you're going to
Speaker 13: sit on the market ninety one hundred and twenty days
Speaker 13: on average With most of the aircraft. I would say
Speaker 13: the flight or the decline and activity is being felt
Speaker 13: at the top end for sure, as well as at
Speaker 13: the entry level. The two to seven million dollar business
Speaker 13: jet that people jumped on a in a panic, in
Speaker 13: a frenzied buying. I would say through late twenty right
Speaker 13: up until Q three twenty two.
Speaker 4: Right, that's all gone away.
Speaker 6: By the way, in terms of you know, owning a
Speaker 6: private jet and using it, how many people actually fly
Speaker 6: their own Do you have clients like that?
Speaker 13: A few, but very few. That is the small percentage
Speaker 13: of the entire let's say ownership pool that actually pilot.
Speaker 11: Their own aircraft.
Speaker 13: So or at least in the category the airplane I
Speaker 13: work with.
Speaker 6: So, what are the hottest ones that you sell? What's
Speaker 6: the private jet? If I, you know, have some liquidity
Speaker 6: event and I'm all of a sudden holding a billion cash, I.
Speaker 4: Come to you and say, can you sell your bitcoin?
Speaker 6: Yeah, Jennine, give me the hottest IT jet that you've got.
Speaker 6: What's the one that everybody wants.
Speaker 13: I've got Global seventy five hundred that you're taking a
Speaker 13: good look at. If you come into a billion dollars,
Speaker 13: that is the aircraft for you. You can go anywhere in
Speaker 13: the world quite comfortably. But the other side of the
Speaker 13: it jet, let's call it an IT sector, is the
Speaker 13: mid size super mid size popular airplane, perfect size ideally
Speaker 13: suited for continental US travel, and the charter operators love it.
Speaker 4: You know what I'm curious too about I think the
Speaker 4: last time we talked, and again it was a few
Speaker 4: few years ago. I think cross border was a big
Speaker 4: thing for you. And so we're entrepreneurs. Who is buying today?
Speaker 4: And I'm curious entrepreneurs maybe think Silicon Valley Bank or
Speaker 4: slow down if that's had an impact.
Speaker 13: Well, Hexcector certainly has seen a slowdown and decline of
Speaker 13: inquiry is coming from that particular industry. But entrepreneurs are
Speaker 13: still my sweet spot. And remember there are entrepreneurs doing
Speaker 13: many different things, and one market declines, another one rises,
Speaker 13: one industry declines, and other rises. In the aircraft sales world,
Speaker 13: we make money coming and going in economic cycles. As
Speaker 13: far as the cross border that's starting to pick up
Speaker 13: but still lagging behind demand within the United.
Speaker 6: States, Janine, what if I only have, like, I don't know,
Speaker 6: fifty sixty million bucks, but I have a few friends
Speaker 6: with fifty or sixty million bucks? Do you recommend people
Speaker 6: going in on a jet or where do you steer
Speaker 6: someone away from that idea? I mean, does it really
Speaker 6: make sense to buy your own jet? Isn't it better
Speaker 6: to be able to lease it?
Speaker 13: Out occasionally, Well, what you buy is driven by your need.
Speaker 13: For sure, how many hours per month you anticipate you'll
Speaker 13: be flying, what's the distances you're going to be traveled.
Speaker 13: While partnership in aircraft is not uncommon, it doesn't always
Speaker 13: work because you have conflicting needs or conflicting schedules. So
Speaker 13: if you had three friends and each of you had
Speaker 13: fifty million apiece, sure pull and buy one jet. That
Speaker 13: might facilitate some of the trips, but ultimately I think
Speaker 13: you'll find you each need your own.
Speaker 4: You know, I do wonder too, Jinny, like there are weird,
Speaker 4: kind of weird things that we sometimes look at for
Speaker 4: global economic indicators, and I'm curious about what you are
Speaker 4: seeing in your business as it says to you that
Speaker 4: a recession is on the horizon, or how would you
Speaker 4: describe kind of the economic outlook the big R word.
Speaker 13: So that's obviously been something that's been discussed within the
Speaker 13: trade for oh since the middle of last year, because
Speaker 13: we know it's looming. An economic cycle is inevitable, and
Speaker 13: we've been through a boom period in our business, and
Speaker 13: I would say that business jets historically have been a
Speaker 13: pretty good leading indicator of things to come. I think
Speaker 13: the waters are a bit muddied at this time, that
Speaker 13: we're not predicting what's coming next. The slowdown that we're feeling,
Speaker 13: I think was inevitable as a result of several things.
Speaker 13: One the one hundred percent bonus appreciation going away at
Speaker 13: the end of last year. The pandemic frenzied buying is
Speaker 13: pretty much over. Most everyone made their selections, got their
Speaker 13: deals done. And now that's why we call it a
Speaker 13: return to normalization, a normal turntime on the aircraft. The
Speaker 13: number of inquiries are equalizing, and you know, as prices slide,
Speaker 13: it's going to stimulate demand once again. And I have
Speaker 13: to say that I'm not sure prices are going to
Speaker 13: slide dramatically. They're going to correct slightly. And if these
Speaker 13: prices slid to twenty nineteen level, is that still a
Speaker 13: win for everybody?
Speaker 6: I hear you. I think about that all the time myself. Actually,
Speaker 6: what's that you know, if we drop just back to
Speaker 6: twenty nineteen levels, is that bad? Or is that a win?
Speaker 6: We've gone through this incredible pandemic. You know, well, it
Speaker 6: doesn't seem like it's such a horrible stat anyway. Janine
Speaker 6: great having you on. I always love to get a
Speaker 6: check on the private jet industry. Jeanine Giannarelli. They are
Speaker 6: founder and president of par Abr.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekdays from two to five pm Eastern.
Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and YouTube.
Speaker 1: You can also listen live to our flagship New York station,
Speaker 1: Just Say Alexa Play Bloomberg E Love and thirty.
Speaker 4: It's the official, unofficial start of the summer. Our Bloomberg
Speaker 4: Pursuits team is back with its annual summer travel guide
Speaker 4: on this Memorial Day weekend, and we've got two great
Speaker 4: voices to help us put together in itinerary for a
Speaker 4: potential scape from the grind. Listen up. Everybody joining us
Speaker 4: now are Bloomberg Pursuits Editor Chris Rouser and Travel editor
Speaker 4: Nikki Eckstein. They're here to tell us where to go,
Speaker 4: what to do, and even what type of luggage to use.
Speaker 4: And they're giving some love to my home state of
Speaker 4: New Jersey. Everyone seems to be wanting to travel right now.
Speaker 4: I feel like, so, how did you guys think about
Speaker 4: putting together summer travel and what you wanted to cover.
Speaker 18: So we covered travel all year round, of course, but
Speaker 18: summer travel last summer and this summer are going to
Speaker 18: be crazy. Everyone wants to travel. We're back to above
Speaker 18: pre pandemic levels. But when we put together this summer
Speaker 18: travel package, we're always thinking, Okay, what's different about summer travel,
Speaker 18: Like because you feel like maybe I get more of
Speaker 18: a break. People really aren't going to bug you while
Speaker 18: you're gone. I can go somewhere really far, I can
Speaker 18: do something really different. And we put together a package
Speaker 18: of unexpected things, places that are changing, and modes of
Speaker 18: travel that you may not have thought about. Like our opener,
Speaker 18: which is about walking trips. It's not hiking trips, it's walking.
Speaker 4: Well, and let's talk about it because I have to
Speaker 4: say and Chris that the Berkshires are so beautiful. I've
Speaker 4: got I used to go up there pretty regularly in
Speaker 4: the fall. It is stunning. So tell us a little
Speaker 4: bit about this story.
Speaker 18: So Matt Cronsberg, who's one of our favorite writers, had
Speaker 18: the idea to do a walking trip story because there
Speaker 18: are these two books that came out about walking trips.
Speaker 18: One's called American Rambles by Neil King Junior and one's
Speaker 18: called Walking with Sam by Andrew McCarthy, the actor and wine.
Speaker 3: What is the actor?
Speaker 10: Yeah?
Speaker 4: Sure, okay, And.
Speaker 18: Matt called up Andrew McCarthy actually and said, what do
Speaker 18: you have any advice? And Andrew McCarthy's advice was just go,
Speaker 18: just go, just go. Don't think about it, just go,
Speaker 18: he said, must have said it ten times in four minutes.
Speaker 18: And so Matt called us and said, okay, I'm going
Speaker 18: to go and we and NICKI can tell you, like
Speaker 18: how we kind of figured landed on the Berkshears.
Speaker 4: All right, so NICKI, come on in. How did he
Speaker 4: land on the Berkshires?
Speaker 5: Yeah? So Matt was like, I want to do a
Speaker 5: walking trip. I'm inspired. I've read these books. I'm drinking
Speaker 5: the kool aid. And I was like, right, Matt, where
Speaker 5: are you going to go? And he said, well, maybe
Speaker 5: I could do something in your Washington d C. Maybe
Speaker 5: I can do something in California. Maybe I could do something.
Speaker 5: And you know, the whole board was wide open to him,
Speaker 5: and I said, okay, let's figure out what the route
Speaker 5: would be. And let me tell you, walking is not
Speaker 5: something that is infrastructurally set up in this country for
Speaker 5: these long distance routes the way that it might be
Speaker 5: in Europe with like the Comino de Santiago or the
Speaker 5: Transcaucasian Trail. These are all kind of large walking routes
Speaker 5: that are deliberately set up that way, the Great Walks
Speaker 5: of Australia, not so much in the US, where towns
Speaker 5: aren't clustered together in walking distance often. We stumbled upon
Speaker 5: this woman who created a company called Berkshire Camino, inspired
Speaker 5: by the Comuno to Santiago in Spain, and she helped
Speaker 5: him create an itinerary of about fifty miles over four
Speaker 5: days throughout the Berkshires, and we said, oh my god,
Speaker 5: this is perfect and the Berkshires are beautiful, and where
Speaker 5: else do you want to be in the summer other
Speaker 5: than lush mountains with beautiful artsy towns with great ice
Speaker 5: cream shops. It's just the perfect all American summer destination.
Speaker 4: Everybody's ears perk up, ice cream, wait ice creams down
Speaker 4: the tour. But it is it is like, I feel
Speaker 4: like one of those areas in the country. Especially it's
Speaker 4: not that far from New York City and you can
Speaker 4: kind of breathe once you get there. Talked to us
Speaker 4: about some of the places that Matt and his wife visited, well, can.
Speaker 5: I tell you one place that they didn't visit. They
Speaker 5: didn't live in an air which to me is like
Speaker 5: thinking about just thinking about Memorial Day coming up, and
Speaker 5: there's like the staff that is lodged in my brain
Speaker 5: right now that seventeen million people are going to be
Speaker 5: in US airports this weekend. But he did not go
Speaker 5: through an airport. The places that he walked through were
Speaker 5: these beautiful country roads and he walked into this like
Speaker 5: little itty bitty town called Lee, where he found a
Speaker 5: diner that inspired a Norman Rockwell painting. And he walked
Speaker 5: to a dairy where the cows are free range and
Speaker 5: then are milked right on site, and that milk has
Speaker 5: turned into sweet cream ice cream. And you know, it
Speaker 5: was just bucolic small town destinations away from crowds, surrounded
Speaker 5: by nature, and he stayed. Are really cute, artsy upscale
Speaker 5: lodges like Little Cat Lodge, for instance, is a relatively
Speaker 5: new opening that we're all pretty excited about. It's owned
Speaker 5: by the same guy that owns Milands, the really cool
Speaker 5: Montreal bagel shop here in New York City. He's got
Speaker 5: at posts in Brooklyn, and in midtown, and he opened
Speaker 5: this little lodge and so he stayed in cool places
Speaker 5: like that. So that's really the difference between walking and
Speaker 5: hiking is you don't have to camp out, you don't
Speaker 5: sleep in a tent. It's not really about technical gear
Speaker 5: and uphill. It's like you calic walking staying a lovely
Speaker 5: little lodges.
Speaker 4: It's so beautiful and I highly recommend everybody check it
Speaker 4: out the pictures and there's so much detail. I also
Speaker 4: love that there was one point after a full day
Speaker 4: of walking and they're like trying to figure out dinner,
Speaker 4: and he's like, let's walk a little bit more, let's.
Speaker 14: Go find dinner.
Speaker 18: Three miles to dinner.
Speaker 4: Right Like, it was kind of well, all right, let's
Speaker 4: move along to Majorca. Am I saying it correctly. Yeah, okay,
Speaker 4: that's cool. Tell me what's going on there, Nikki when
Speaker 4: it comes to because it feels like it was an
Speaker 4: area where people would go to party big time, but
Speaker 4: it's kind of going through a little bit of a change.
Speaker 5: So have you been to Myerica, Carl, I have not
Speaker 5: been to Majorca. You have not, Okay, put it on
Speaker 5: your list. Okay, is one of the most beautiful places
Speaker 5: I've ever been. And it's true the majority of people
Speaker 5: who've gone to Myorca in the past, like totally dominating
Speaker 5: their tourism scene are Europeans, Brits, Germans, people who are
Speaker 5: relatively short range distances away. Mayorka is an island right
Speaker 5: off the coast of spin one of the Ballyarics, and
Speaker 5: it is defined by beautiful cove like beaches and these
Speaker 5: dramatic Tramontana mountains, and most people stay on the fringes
Speaker 5: of the island, relatively near the capital of Palma. It's
Speaker 5: where you might get cruise ships stocking, It's where you
Speaker 5: get a lot of all inclusive resorts. The smart way
Speaker 5: to do my Erica, in my opinion, is to bypass
Speaker 5: all of that and go to the resorts that are
Speaker 5: in the mountain towns. But there's only been a few
Speaker 5: in the past. Very high end, very lovely, harder to find.
Speaker 5: It's not the easiest and most intuitive trip to plan.
Speaker 5: That's changing as the island and its tourism boards start
Speaker 5: to actually enact restrictions that limit the activity of crews
Speaker 5: and all inclusive business and reallyocus on highlighting the cultural
Speaker 5: and culinary offerings. Of the island that are often scattered
Speaker 5: in these beautiful mountain towns. That's kind of what's happening.
Speaker 4: It looks stunning. I do like the idea too, that
Speaker 4: the government, as you said, like limiting the number of
Speaker 4: cruise ships, limiting the number of drinks that folks can have,
Speaker 4: just to kind of give it a certain feel. I
Speaker 4: want to spend more. I'd love to spend more time
Speaker 4: on it, but I got to go to because you
Speaker 4: guys wrap up with glamour on the Jersey Shore, which
Speaker 4: kind of breaks my heart a little bit, but because
Speaker 4: I am a Jersey girl. But it is amazing what
Speaker 4: is going on along because like Chris, you go to
Speaker 4: the Jersey Shore.
Speaker 18: Yes, my in laws are on the Jersey Shore and
Speaker 18: Nikki lives in New Jersey. So we are we were,
Speaker 18: We are already fans. But there is a ton of
Speaker 18: development happening all up and down the shore, hundreds of
Speaker 18: millions of dollars a lot in Atlantic City. You're going
Speaker 18: to see Atlantic City coming back?
Speaker 4: Are they really coming back? Because I can't tell you
Speaker 4: how many times we've done this story. I've gone down
Speaker 4: and done remoats there and you know, new hotels and casinos,
Speaker 4: and you know, and then we're people tried, Yeah is
Speaker 4: it this time around?
Speaker 5: This feels different because it's not just one project at
Speaker 5: a time. It's a real amalgamation of developments. I mean
Speaker 5: more than a billion dollars have been pumped into Atlantic
Speaker 5: City in the last year. A billion, I mean more
Speaker 5: than a billion. It's eye popping. And it's a team
Speaker 5: effort really in Atlantic City between a lot of major
Speaker 5: players and also a lot of independence. And granted we
Speaker 5: didn't have time to go through every single development in
Speaker 5: this story, because it is the amount of news is tremendous.
Speaker 5: But there are you know, small local residents doing really enterprising,
Speaker 5: small business these type things. And then there are the
Speaker 5: big wig casinos, the MGMs, the hard Rocks, the Caesars
Speaker 5: of the world, pumping in mega, mega, mega money to
Speaker 5: restore entire tracts of Atlantic City at a time. So
Speaker 5: I think you will see a rising sophistication there that
Speaker 5: hasn't been seen in decades.
Speaker 18: And there's also you know, just to cover the rest
Speaker 18: of the sort all the way down in Cape May,
Speaker 18: they're doing a lot of development on the ferry terminal there.
Speaker 18: There's gonna probably be a big new resort being built
Speaker 18: in the next couple of years. Then further up in
Speaker 18: Bradley Beach, really cute hotel. Asbury Park has tons of
Speaker 18: great restaurants. I was just there, really cool hotels and
Speaker 18: there's just a lot. There's a lot of like Sheik stuff.
Speaker 4: Happening well, and I think what's interesting, And I think
Speaker 4: what's interesting is it's not just about gambling or casinos anymore,
Speaker 4: and that's maybe the difference. Final thought, Go ahead, Nikki.
Speaker 5: Yeah. Well, the funny thing that I kept hearing while
Speaker 5: I was there reporting the story was we're getting people
Speaker 5: from the Hampton. People are tired of the traffic for
Speaker 5: the Hampton. They want an easier place to go, they
Speaker 5: want a little bit more flesh.
Speaker 4: I love it.
Speaker 10: I love it.
Speaker 5: People are slapping for the Jersey Harmon briving the Hamptons,
Speaker 5: for the Jersey Shore.
Speaker 4: It could happen. It could happen. And there's also a
Speaker 4: great piece on different types of luggage if you're planning
Speaker 4: holiday or business travel. Some different choices for everybody, So
Speaker 4: I highly recommend everybody check it out. All right, thank you, guys.
Speaker 4: Bloomberg Pursuits editor Chris Rouser and Travel editor Nikki x
Speaker 4: Stein with our guide to summer travel. If you're listening
Speaker 4: to Bloomberg Business Week, coming up more on summer travel
Speaker 4: and why globe trotters can expect the busiest and most
Speaker 4: expensive season since prior to COVID. That's coming up. This
Speaker 4: is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekdays from two to five pm Eastern.
Speaker 2: On Bloomberg Radio, the Bloomberg Business App, and you too.
Speaker 1: You can also listen live to our flagship New York station,
Speaker 1: Just say Alexa, play Bloomberg eleven thirty.
Speaker 4: All right, so we've talked a little about retail, which
Speaker 4: gives you a great idea in terms of what's going
Speaker 4: on in the consumer world. Another thing is travel, and
Speaker 4: it also tells us kind of what's going on in
Speaker 4: the economy. So let's get to it with Haley Berg.
Speaker 4: She's lead economist at the mobile travel app Hopper, and
Speaker 4: she joins us on the phone in New York City. Hailey,
Speaker 4: good to have you here. Tell us what you are
Speaker 4: seeing when it comes to the travel industri As we
Speaker 4: head into the summer travel season.
Speaker 5: We're headed into the busiest time of year for travel,
Speaker 5: and really we're expecting this to be the biggest summer
Speaker 5: for travel since pandemic. International travel has completely opened up
Speaker 5: since last year, and domestic travel remains very strong, especially
Speaker 5: as prices are down about twenty percent from this time
Speaker 5: last year. All in, it looks like it's going to
Speaker 5: be a busy summer and an extremely expensive summer for
Speaker 5: those travelers who are headed abroad, but they're not being
Speaker 5: held back by fares.
Speaker 2: Yeah.
Speaker 6: We actually heard from Jen bartashas we were talking to
Speaker 6: our Bloomberg Intelligence retail analyst, and she said, you know,
Speaker 6: middle class to wealthier people are shopping for food at
Speaker 6: cheaper stores so they can still afford to spend money
Speaker 6: on discretionary items. I guess travel is one of those
Speaker 6: You don't see anybody holding back. I mean, is nobody
Speaker 6: balking at the incredibly high prices.
Speaker 5: What we're really seeing, Hopper is travelers are taking that
Speaker 5: same or a slightly larger travel budget and trying to
Speaker 5: stretch it further. So maybe previously they've been taking one
Speaker 5: trip a year, Now they're taking two trips on the
Speaker 5: same budget, So that means they're engaging in deal seeking behavior.
Speaker 5: You know, more than fifty percent of our Hopper customers
Speaker 5: are booking the cheapest flight that's available to them at
Speaker 5: the time they're searching. We're seeing them check prices about
Speaker 5: fifty percent more often, even as they plan trips more
Speaker 5: last minute. So though travelers are still spending and taking
Speaker 5: more trips, they are finding ways to stretch that budget
Speaker 5: quite a bit further.
Speaker 4: So talk to U about some numbers, Bloomberg. We love
Speaker 4: to hear about numbers and percentage changes. So give me
Speaker 4: an idea. If you're heading from New York over to Europe,
Speaker 4: pick your city or whatever. What are we looking for
Speaker 4: in terms of airfares.
Speaker 5: Average airfare from the US to anywhere in Europe about
Speaker 5: twelve hundred dollars right now. There are some destinations direct
Speaker 5: from New York City as low as eight or nine
Speaker 5: hundred dollars round trip. But overall that twelve hundred ticket
Speaker 5: price on average, that's up thirty seven percent from this
Speaker 5: time last year, and in twenty nineteen that's about three
Speaker 5: hundred and twenty dollars more per ticket for travelers who
Speaker 5: are headed to Europe, which is the top destination for
Speaker 5: summer vacation.
Speaker 6: AH, where are they going in Europe? Is it just
Speaker 6: in general the continent, or are people going specifically to
Speaker 6: Spain or Italy or Greece Paris.
Speaker 5: We typically see London, Paris and Rome are the top three,
Speaker 5: the ultimate trifecta. They're definite destinations for tourists who are
Speaker 5: just dipping their toe in Europe. But we do also
Speaker 5: see demand some of these smaller cities, especially in Italy.
Speaker 5: Sicily is popular coming off the success of the White Lotus,
Speaker 5: but we've also seen Venice and Milan are.
Speaker 4: Saying, right, White Lotus, it's really a thing in terms
Speaker 4: of travel.
Speaker 16: It absolutely is.
Speaker 5: We call it set jetting. It happened with Croatia and
Speaker 5: Iceland win Game of Thrones was released. It's happening with
Speaker 5: Yellow show.
Speaker 4: In White Lotus. I'm just saying it was a little eerie.
Speaker 6: It's great though I love both seasons. I will say
Speaker 6: pro tip to those looking to travel to Europe over
Speaker 6: the summer. It is extremely hot in southern Europe. If
Speaker 6: you want to go to Sicily in August, I don't
Speaker 6: want to be with you because you are going to
Speaker 6: be pouring with sweat. I would much rather be in
Speaker 6: Scandinavia in August because so hot. The Spaniards don't even
Speaker 6: go outside. They just they just sit inside and sleep
Speaker 6: all day and then at night they go in the pool.
Speaker 5: That's why September and October actually the best bet for
Speaker 5: travel to Europe. You'll pay as much as thirty percent
Speaker 5: less than you will to go in June or July.
Speaker 5: Temperatures will be better. And keep in mind Americans are
Speaker 5: on vacation all summer. Europeans often go on multi week
Speaker 5: vacations in August, so if you're going in August, you're
Speaker 5: going to be facing crowds of tourists from around the world.
Speaker 5: September is going to be lighter crowds, less expensive for
Speaker 5: accommodations and airfare.
Speaker 4: So what's your advice for folks who want to travel?
Speaker 5: Plan ahead if possible, So right now you're booking way
Speaker 5: too late. If you want to go somewhere internationally this summer,
Speaker 5: you are going to pay quite a bit more and
Speaker 5: be flexible. So if you can plan ahead to go
Speaker 5: this fall, get lower prices, fly midweek if possible, you'll
Speaker 5: save about fifty to one hundred dollars on domestic airfare
Speaker 5: one fifty to two hundred on international and flight early
Speaker 5: in the day, delays, cancelations, twice as likely to hit
Speaker 5: you if you depart after eight am, So there is
Speaker 5: something to taking that first flight out of the day
Speaker 5: on a Monday or Tuesday will save you some stress,
Speaker 5: it will save you some money as well.
Speaker 6: What about airbnbs, what's your verdict on You know, we
Speaker 6: went to Austin for the Moto GP a couple weeks ago,
Speaker 6: and hotels were like a grand We found an airbnb
Speaker 6: that was less than half the price and it was
Speaker 6: pretty good. I mean, they no one comes to change
Speaker 6: your sheets every day, but it was nice and you know,
Speaker 6: with the extra money we were able to go to
Speaker 6: more expensive restaurants for dinner.
Speaker 5: We can send you red homes extremely popular, especially around
Speaker 5: destinations at the beach or Disney. Disney's hugely popular for
Speaker 5: vacation homes. Often larger groups of family members are there
Speaker 5: and it really helps bring down the cost of maybe
Speaker 5: getting multiple hotel rooms. But keep in mind that those
Speaker 5: rental homes can book out really far in advance, especially
Speaker 5: in popular destinations, and hotel rooms on the other hand,
Speaker 5: drop in price when you book at the last minute,
Speaker 5: so way your options. If you're looking for more space,
Speaker 5: rental homes can definitely be more economical, but at times,
Speaker 5: if you're booking last minute hotels, you can get a
Speaker 5: fabulous deal, especially in big cities.
Speaker 4: All Right, we're gonna leave it there. We're'll let you
Speaker 4: go get some water because I'm a little worried about you. Hailey,
Speaker 4: come on back soon. We'd love to continue with you
Speaker 4: at a future date. Haley Burg Lead economist Different Hopper
Speaker 4: joining us on the phone in New York City.
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