WEBVTT - Is China's Xi the New Mao? 0:00:01.760 --> 0:00:04.400 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.800 you the latest news from the world to business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all parnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.960 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.360 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.320 YouTube search Bloomberg Global News. It's the video watched around 0:00:32.320 --> 0:00:34.519 the world. I watched it many times, feeling the gravity 0:00:34.560 --> 0:00:36.760 of it. And this was watching former General Secretary Hu 0:00:36.840 --> 0:00:40.919 Jintao ushered off stage, watching President g for an unprecedented 0:00:40.960 --> 0:00:44.559 third term as China's top leader, really come in and 0:00:44.600 --> 0:00:47.480 really cement his position going forward and really what China 0:00:47.560 --> 0:00:49.640 is going to be about in the future. We've got 0:00:49.680 --> 0:00:51.320 a great voice with us to give us an idea 0:00:51.360 --> 0:00:53.200 of what China is going to be like in the future. 0:00:53.200 --> 0:00:54.880 We got Andy Brown with us. He's a partner at 0:00:54.920 --> 0:00:56.480 the Brunswick Group. He's with us right now in the 0:00:56.480 --> 0:00:59.680 Bloomberg Interactive Broker studio, and folks will hear a familiar 0:00:59.720 --> 0:01:02.440 voice because Andy joined us many many times while he 0:01:02.480 --> 0:01:04.280 was here at Bloomberg on the program. He's good to 0:01:04.319 --> 0:01:06.280 have you with us. How are you great to be back, 0:01:06.360 --> 0:01:08.800 Thanks so much for having me. Yeah, it's really great 0:01:08.840 --> 0:01:12.120 to have you back. So a victory for she. But 0:01:12.400 --> 0:01:15.119 look how the markets are reacting right now. Just give 0:01:15.200 --> 0:01:18.120 us your overview of what you've seen transpire over the 0:01:18.200 --> 0:01:22.840 last couple of weeks. So victory for Sea, absolute triumph. 0:01:23.520 --> 0:01:27.240 Gets his third term basically if he wants it, rule 0:01:27.280 --> 0:01:30.720 of a life, packs the polit bureau standing committee with 0:01:30.800 --> 0:01:34.120 his own people. People say he's the new Mao, not 0:01:34.400 --> 0:01:37.440 in the sense that he's about to unleash chaos on China. 0:01:37.480 --> 0:01:40.240 I mean he wants order, but in the sense of power, 0:01:40.720 --> 0:01:43.760 in the sense of prestige, in the sense of his 0:01:43.840 --> 0:01:48.400 place and history. In fact, he may actually have more 0:01:48.480 --> 0:01:51.960 leeway than Mao. Mao, after all, had to launch the 0:01:52.000 --> 0:01:55.280 cultural revolution to get control of the party. She has 0:01:55.280 --> 0:01:59.800 no rivals, no peers, and no success it. He's alone 0:01:59.800 --> 0:02:02.520 at the top. Now, what the markets are reacting to 0:02:02.680 --> 0:02:05.760 is the fact that This wasn't just a personal victory. 0:02:06.040 --> 0:02:09.280 It was a victory for his policies, the policies that 0:02:09.320 --> 0:02:14.040 have so alarmed investors, portfolio investors as well as global 0:02:14.080 --> 0:02:17.280 companies investing in China over the last several years. And 0:02:17.360 --> 0:02:18.919 we saw that certainly play out in the market. We 0:02:19.000 --> 0:02:21.640 keep talking about the NaSTA Golden Dragon China Index on 0:02:21.680 --> 0:02:24.680 track for probably its biggest drop ever. It's down about 0:02:24.680 --> 0:02:29.400 fift here. So how do how should investors after decades 0:02:29.400 --> 0:02:31.800 of thinking this is where companies wanted to be, to 0:02:31.880 --> 0:02:35.880 tap into um their citizen base, what a billion plus people? 0:02:36.520 --> 0:02:39.400 How should investors think about the Chinese market going forward? 0:02:40.120 --> 0:02:43.000 You know, it's so interesting. I I talked to I 0:02:43.040 --> 0:02:47.280 talked to business leaders now investing in China all the time. 0:02:47.840 --> 0:02:52.320 Just about everything they knew or thought they knew about 0:02:52.440 --> 0:02:56.760 China has turned outside down. They thought that the Chinese 0:02:56.760 --> 0:03:00.639 system was optimized for growth and development. In fact, it's 0:03:00.680 --> 0:03:06.000 now optimized for security. China is looking inwards. They thought 0:03:06.080 --> 0:03:10.320 that Don chall Ping's open door, open reform and opening 0:03:10.320 --> 0:03:15.840 policies would continue indefinitely. She's Don Chalping's open door has 0:03:15.880 --> 0:03:19.480 turned into Si jim Ping's fortress. China. They thought that 0:03:20.080 --> 0:03:25.360 policy making would be pragmatic and predictable. It's become ideological, 0:03:25.520 --> 0:03:30.120 almost random. They thought businesses thought that China would do 0:03:30.400 --> 0:03:35.800 everything it could to ensure a benign global environment that 0:03:35.840 --> 0:03:42.640 would facilitate China's economic rise. Wolf warrior diplomacy, ballistic missiles 0:03:42.680 --> 0:03:48.840 over Taiwan, uh An alignment with Putin's Russia ahead of 0:03:49.360 --> 0:03:53.040 the invasion of Ukraine has reversed all of that kind 0:03:53.040 --> 0:03:56.160 of thinking. It's a very very different China. I do 0:03:56.240 --> 0:03:58.600 think about do we look back I don't know any 0:03:58.680 --> 0:04:00.840 year from how five years or not years this was 0:04:00.880 --> 0:04:05.120 the beginning of the division of the world, or maybe 0:04:05.120 --> 0:04:07.480 that was starting already, Like how do we think about 0:04:07.480 --> 0:04:10.200 this in a world where globalization was supposed to be 0:04:10.200 --> 0:04:12.920 it all that we've seen a tremendous pushback. We have 0:04:13.080 --> 0:04:18.560 to recognize that She Jimping is building a very different China. 0:04:18.640 --> 0:04:22.560 He has a very different vision. It's a vision that 0:04:22.800 --> 0:04:27.760 prioritizes security over growth, and it comes from a fundamental 0:04:27.880 --> 0:04:32.400 place of insecurity. He believes that Chinese government believes the 0:04:32.480 --> 0:04:35.359 Party believes that they're in the early stages of a 0:04:35.560 --> 0:04:40.680 decades long struggle for supremacy against the United States that 0:04:40.800 --> 0:04:44.880 may actually lead to conflict. And so all of these 0:04:44.920 --> 0:04:48.640 policies that you see rolled out from you know, uh, 0:04:48.680 --> 0:04:51.279 the advance of the state, the assault on the private 0:04:51.320 --> 0:04:56.920 sector UM, COVID zero, populist policies aimed at wealth redistribution, 0:04:57.160 --> 0:05:02.240 forcing billionaires to disgorge the money, UM, a more assertive 0:05:02.640 --> 0:05:06.159 foreign policy. UM. So much of this has to do 0:05:06.320 --> 0:05:09.760 with hardening the economy for the for the for for 0:05:09.800 --> 0:05:12.520 the struggle that they feel is coming. So what does 0:05:12.560 --> 0:05:18.960 it mean for American companies that want to do business there, Apple, Nike, Disney, Tesla, 0:05:19.240 --> 0:05:21.520 just to name a few. I mean, they want access 0:05:21.640 --> 0:05:25.359 to this growing consumer base and this what well, what 0:05:25.440 --> 0:05:29.000 could end up being a wealthier consumer base. Right, So, 0:05:29.000 --> 0:05:31.279 so they have a dilemma. They're not they're not going 0:05:31.320 --> 0:05:33.120 to leave. I mean a few are leaving, right. We 0:05:33.160 --> 0:05:37.479 saw linked in Airbnb, UM, a couple of a few 0:05:37.520 --> 0:05:41.279 companies that weren't doing much in China, had big reputational risk, 0:05:41.360 --> 0:05:44.960 weren't weren't earning many much much much money. They've they've 0:05:45.040 --> 0:05:49.520 abandoned ship, they bailed. Most companies are staying, uh and 0:05:49.560 --> 0:05:54.279 they're hedging. Uh. You know, every CEO is being leaned 0:05:54.320 --> 0:05:57.280 on now by by their boards. What is your plan B? 0:05:57.960 --> 0:06:00.520 What is your plans? C? What you do if it 0:06:00.600 --> 0:06:02.359 all goes wrong? What do you do if if the 0:06:02.440 --> 0:06:06.200 Chinese invade uh, Taiwan. We saw this just the other 0:06:06.279 --> 0:06:10.240 day in the congressional hearings. You had politicians grilling you know, 0:06:10.960 --> 0:06:16.360 uh Jamie, Jamie Dimond, you know, uh, all of the 0:06:16.360 --> 0:06:21.279 the the you know, Brian Brian Moyne, Jane Phrase. It's like, okay, what, 0:06:21.400 --> 0:06:23.640 what's what's your plan? What would you do? You know, well, 0:06:23.680 --> 0:06:25.279 of course we would salute the flag and do what 0:06:25.320 --> 0:06:27.200 we're told to do. Right. And then somebody said to 0:06:27.279 --> 0:06:29.440 Jane Phraser, No, no, no, what what if you weren't 0:06:29.480 --> 0:06:31.880 told what you had to do? She said, well, we 0:06:31.880 --> 0:06:35.000 would probably still we would probably still pull out. Now 0:06:35.040 --> 0:06:38.240 this is this is a very different situation from Russia, right. 0:06:38.279 --> 0:06:40.279 I mean these companies that some of them are getting 0:06:40.480 --> 0:06:43.919 forty fifties six of their global revenues out of China. 0:06:43.960 --> 0:06:46.000 I want to get right back to Andy Brown, former 0:06:46.000 --> 0:06:49.279 Bloomberg colleague. He was editorial director of Bloomberg New Economy. 0:06:49.320 --> 0:06:52.679 He has partnered Brunswick Group and uh, you know, really 0:06:52.680 --> 0:06:54.480 looking at what's going on in the China space. He 0:06:54.640 --> 0:06:57.000 spent thirty years I think it was actually thirty five 0:06:57.120 --> 0:06:59.919 over in Asia. He was both China editor and columnist 0:07:00.000 --> 0:07:02.000 of the Wall Street Journal, UM and and he's here 0:07:02.000 --> 0:07:06.440 in our interactive broker studio. So I do wonder about 0:07:06.440 --> 0:07:08.960 President g with everything that happened over the weekend, Andy, 0:07:09.160 --> 0:07:11.600 who's there to question him? We always talk about it's 0:07:11.600 --> 0:07:14.800 important for our leaders to be questioned. So who's there? 0:07:14.800 --> 0:07:16.720 And as a result, if there is no one, what 0:07:16.920 --> 0:07:20.760 happens in terms of China and the Chinese economy? Carol, 0:07:21.080 --> 0:07:24.760 You don't need to be a sinologist to figure out 0:07:25.480 --> 0:07:30.040 where all this goes. Uh. You know, the longer he 0:07:30.200 --> 0:07:33.080 lingers in office, the more he's going to face this 0:07:33.320 --> 0:07:40.480 autocrat's dilemma. Right. So as the autocrat ages he or she, 0:07:40.760 --> 0:07:46.840 usually he becomes more isolated, more paranoid, doesn't know where 0:07:46.840 --> 0:07:50.280 the next threat is going to come from. And as 0:07:50.320 --> 0:07:55.280 a consequence of that, the tendency is to pack themselves 0:07:55.320 --> 0:08:01.640 around with yes men, with sickophants. He and these are 0:08:01.720 --> 0:08:05.600 not the people who are going to challenge the great leader. 0:08:06.160 --> 0:08:10.600 And as a result, course correction becomes quite a bit 0:08:10.600 --> 0:08:13.600 more difficult. Right, and for all its faults. For all 0:08:13.680 --> 0:08:19.200 its faults, democracy does have within it this capacity to shift. Course, 0:08:19.240 --> 0:08:25.960 we've seen it very very dramatical, right, ask Liz Trust Okay, uh, 0:08:26.000 --> 0:08:28.080 you know that does not that is not going to 0:08:28.200 --> 0:08:32.360 happen in in China. Ask ask you know global business 0:08:32.440 --> 0:08:37.040 people operating over there about COVID zero. It is absolutely 0:08:37.120 --> 0:08:40.679 clear that COVID zero doesn't survive O Macron, or it 0:08:40.800 --> 0:08:43.760 can survive O Macron, but at the expense of destroying 0:08:43.800 --> 0:08:47.360 the economy. Course correction is needed when not getting it, 0:08:47.559 --> 0:08:49.360 and I think that's one of the reasons why you're 0:08:49.360 --> 0:08:53.719 seeing the markets collapsing, the China markets collapsing today. Give 0:08:53.800 --> 0:08:59.559 us an understanding andy of surveillance in China and how 0:08:59.600 --> 0:09:02.400 the country he uses it to essentially stifle this cent 0:09:02.559 --> 0:09:04.640 because like you said, this is not the UK, This 0:09:04.720 --> 0:09:06.920 is not a prime minister who could last, you know, 0:09:07.000 --> 0:09:10.719 forty six days and then end up leaving because of 0:09:10.720 --> 0:09:12.439 the will of the people. The will of the people 0:09:12.760 --> 0:09:16.520 in many cases is not necessarily heard because it's cut 0:09:16.559 --> 0:09:19.640 off from the rest of the world. Well, high tech 0:09:19.720 --> 0:09:23.280 surveillance is a central feature of the security state that 0:09:23.400 --> 0:09:27.319 Shijimping is building, and we we've we've seen the extreme 0:09:27.440 --> 0:09:33.640 example of that in Shin John. Everybody is profiled facial recognition, 0:09:33.800 --> 0:09:38.160 gate recognition, you know apps, building the into the telephones 0:09:38.240 --> 0:09:42.360 and so on. What's kind of freaky about these COVID 0:09:42.440 --> 0:09:47.439 zero restrictions is this new additional layer of control and 0:09:47.520 --> 0:09:52.520 surveillance UH and border control that they've built into the system. 0:09:52.600 --> 0:09:55.960 I personally don't believe this is going away. Maybe they won't, 0:09:56.000 --> 0:09:58.920 maybe they won't practice it quite quite as extreme way. 0:09:58.960 --> 0:10:01.439 Didn't everybody have to sign up because of COVID Essentially 0:10:01.440 --> 0:10:04.679 beyond this app everybody everything, everybody has to I mean 0:10:04.720 --> 0:10:06.600 I was, I was in as you know I was. 0:10:06.679 --> 0:10:09.160 I was earlier this year in Beijing for the two 0:10:10.400 --> 0:10:15.640 Winter Olympics. I was in something called a closed loop bubble, 0:10:16.160 --> 0:10:20.679 essentially a series of protected corridors running through the whole city. 0:10:20.720 --> 0:10:24.800 This was an extraordinary arrangement. I can't imagine any other 0:10:25.200 --> 0:10:27.600 city in the world, let alone any capital city in 0:10:27.640 --> 0:10:30.840 the world, pulling this off. But they did. But what 0:10:30.920 --> 0:10:34.120 was what was what was so unnerving about it was 0:10:34.240 --> 0:10:39.720 how effortless this all seemed. This is the Chinese operating model, 0:10:39.800 --> 0:10:44.280 you know, an immense institutional capacity, unlimited numbers of people, 0:10:44.640 --> 0:10:49.360 huge I mean virtually bottomless sums of money, and all 0:10:49.400 --> 0:10:54.200 animated by this sort of mass mobilization, whole of government effort. 0:10:54.559 --> 0:10:57.600 That's the system that China operates on and which, by 0:10:57.640 --> 0:11:00.559 the way, it presents to the world as the efficient 0:11:00.600 --> 0:11:03.679 model for economic development. Now you point that in the 0:11:03.800 --> 0:11:07.000 right direction, alleviating poverty, and you get a great answer. 0:11:07.000 --> 0:11:10.439 You've got a great result, right, extreme poverty eliminated. You 0:11:10.520 --> 0:11:15.120 pointed in the wrong direction, for instance COVID zero or 0:11:15.160 --> 0:11:18.360 in sin jong uh, and you create a whole set 0:11:18.400 --> 0:11:21.120 of a whole set of problems. In a sense, our 0:11:21.160 --> 0:11:25.400 problems in the West is a lack of institutional capacity, 0:11:25.520 --> 0:11:27.880 lack of will, lack of ability to get things done. 0:11:28.040 --> 0:11:30.640 In China, one might say it's the opposite. The state 0:11:30.679 --> 0:11:34.120 has too much power and control. So what do you 0:11:34.480 --> 0:11:36.960 kind of watch out for over the next I don't know, 0:11:37.080 --> 0:11:40.080 six months, twelve months, as this, as we move away 0:11:40.120 --> 0:11:41.680 from what we got from over the last couple of 0:11:41.679 --> 0:11:43.320 weeks in terms of the news flow, what is it 0:11:43.360 --> 0:11:45.640 that you'll be keeping an eye on. You know, they 0:11:45.640 --> 0:11:47.720 don't want to tank the economy. I mean, let's let's 0:11:47.720 --> 0:11:49.920 be let's be serious, right, I mean and and having 0:11:49.960 --> 0:11:53.559 said that, you know, dictators packed themselves around with sycophants, 0:11:53.559 --> 0:11:55.520 and yes, man, I do have a lot of faith 0:11:55.559 --> 0:12:00.199 in the institutional, technical, technocratic capacity of the China. These 0:12:00.240 --> 0:12:03.160 states they've been the bureaucratic state has as has been 0:12:03.200 --> 0:12:06.080 a feature of the efficient bureaucratic state, has been the 0:12:06.360 --> 0:12:10.000 feature of Chinese governance for thousands of years, right, So 0:12:10.280 --> 0:12:12.200 you know, I do believe that they're going to hold 0:12:12.240 --> 0:12:15.400 things together. Um, A figure like Lee Chang, who could 0:12:15.440 --> 0:12:18.120 well be the next premier, is actually very well thought 0:12:18.160 --> 0:12:21.680 of by the foreign business community, by the international business community. 0:12:21.880 --> 0:12:25.600 He's run Drajiang province basically size of a small country 0:12:25.640 --> 0:12:28.920 in terms of the economy, ran Shanghai best city, best 0:12:28.920 --> 0:12:31.920 city in China. So I would be looking for signs 0:12:31.960 --> 0:12:34.679 that a they're going to try to figure out some 0:12:34.920 --> 0:12:38.040 endgame for COVID zero. It's not going to happen overnight. 0:12:38.080 --> 0:12:41.720 People are terrified and be something about property, and I 0:12:41.720 --> 0:12:43.760 think that is very much a problem that they could 0:12:43.760 --> 0:12:47.199 get under control. Andy Brown, thank you so much. Great 0:12:47.240 --> 0:12:49.839 to be here. Thank you so much, Carol. Thanks to him. 0:12:51.160 --> 0:12:53.280 Andy Brown Partner Brunswick Group and as we said, a 0:12:53.320 --> 0:12:58.200 former editorial director of Bloomberg New Economy. This is Bloomberg 0:12:58.240 --> 0:13:01.880 Business Week with Carol Master and Bloomberg Quick Takes Tim 0:13:01.960 --> 0:13:05.199 Stinovic on Bloomberg Radio. So we don't want to get 0:13:05.200 --> 0:13:09.680 to a Bloomberg Business Week's story found online and on 0:13:09.720 --> 0:13:12.520 the Bloomberg about the implosion of instant delivery startups that 0:13:12.600 --> 0:13:15.320 soared during the pandemic. We're going to actually zero in 0:13:15.400 --> 0:13:18.160 on one in life after Peak Pandemic. We got Jackie 0:13:18.200 --> 0:13:20.720 de Vallo's technology reporter for Bloomberg New She wrote the 0:13:20.720 --> 0:13:24.760 piece along with Brad Stone. She's joining from running studio 0:13:24.800 --> 0:13:26.800 in Washington, d C. We also got the editor of 0:13:26.920 --> 0:13:29.480 Bloomberg Business Week with us, Joel Webber. He's in the 0:13:29.480 --> 0:13:34.360 Bloomberg Interactive Broker's studio. Joel counted one to three, only 0:13:34.440 --> 0:13:37.200 four paragraphs until I find a reference to the nineteen 0:13:37.280 --> 0:13:39.400 nineties and Cosmo dot com in here, Because when I 0:13:39.480 --> 0:13:43.240 think of delivery implosion, I say, wait a second. We've 0:13:43.240 --> 0:13:47.120 seen this story before. Yeah, Um, we have, and but 0:13:47.160 --> 0:13:49.400 we haven't quite seen it like this. And you know 0:13:49.480 --> 0:13:52.960 the story that UM Brad and Jackie um. The company 0:13:52.960 --> 0:13:55.760 that Bread and Jackie focused on. UM it's called Go Puff, 0:13:55.800 --> 0:13:58.280 which finally I know why it's called Go Puff, you do. Um, 0:13:58.480 --> 0:14:00.800 We'll let Jackie kind of stick with one. We'll come 0:14:00.800 --> 0:14:03.520 back to what I'm sure. Um, but Go Buff has 0:14:03.559 --> 0:14:06.720 been sort of the example. Um and with the stories 0:14:06.760 --> 0:14:11.480 ultimately about of like this instant delivery thing that became 0:14:11.559 --> 0:14:15.720 supercharged with VC dollars. Um. And now as the economy 0:14:15.760 --> 0:14:18.360 is starting to you know, not do not go up 0:14:18.360 --> 0:14:21.400 and up and up, um, some places like instant delivery 0:14:21.440 --> 0:14:24.720 maybe feel uh like a lot of money went in there, 0:14:24.800 --> 0:14:28.120 and maybe there are owas not exactly what people had 0:14:28.240 --> 0:14:32.120 hoped um. And there are some echoes of some yesterday's 0:14:32.120 --> 0:14:36.400 in including a dot com era flame out called Cosmo 0:14:36.480 --> 0:14:39.320 dot Com. Um. But but Jackie talked to us about 0:14:39.640 --> 0:14:43.960 Go Puff because that company, um I've used if you 0:14:44.000 --> 0:14:45.480 need to get cop styrup for your kid in the 0:14:45.520 --> 0:14:47.080 middle of the night, turns out to be a pretty 0:14:47.080 --> 0:14:49.640 effective way to do that. But but maybe not to 0:14:49.800 --> 0:14:54.160 scale and go global, right, you know that's exactly it. 0:14:54.320 --> 0:14:57.480 I think what Puff really shows is that there was 0:14:57.640 --> 0:15:00.560 absolutely a demand for these kinds of service. Is when 0:15:01.000 --> 0:15:03.240 you're stuck at home, you're on the couch, you want 0:15:03.280 --> 0:15:06.920 some last minute ice cream or chips, even beer. Uh. 0:15:07.040 --> 0:15:10.720 They've been around for quite a while now since UH 0:15:10.760 --> 0:15:12.800 and they really kind of came off the off the 0:15:12.840 --> 0:15:16.040 ground after e commerce had started to become much more 0:15:16.080 --> 0:15:19.080 widely adopted. Amazon was kind of known for, you know, 0:15:19.120 --> 0:15:21.680 being the delivery giant back in the day, and when 0:15:21.720 --> 0:15:25.320 these two founders started the company, it was on the 0:15:25.360 --> 0:15:28.040 back of you know what about you know, in college 0:15:28.080 --> 0:15:32.320 campuses when you want you know, last minute packas a 0:15:32.360 --> 0:15:35.440 beer before a game or your tailgating, and it was 0:15:35.520 --> 0:15:39.560 really uh, you know, in a place where it made sense. 0:15:39.720 --> 0:15:43.080 You have a dense pocket of uh students who are 0:15:43.080 --> 0:15:46.200 willing to pay a dollar ninety five to get extra 0:15:46.280 --> 0:15:50.000 snacks delivered. And this was absolutely super charged once we 0:15:50.040 --> 0:15:53.440 got into the pandemic and delivery across the board was 0:15:54.200 --> 0:15:57.000 turno charged. And when you add in all of those 0:15:57.040 --> 0:16:00.400 billions of dollars of venture capital, becomes very easy to 0:16:00.480 --> 0:16:02.960 accept the reality that, you know what, maybe we can 0:16:03.040 --> 0:16:06.280 expand at rapid pace. But what we're seeing now and 0:16:06.320 --> 0:16:08.000 not just with go Puff, but a lot of the 0:16:08.080 --> 0:16:12.120 rapid delivery companies that sprouted during the pandemic, is that 0:16:12.160 --> 0:16:16.000 it's not a sustainable business in an inflationary environment. And 0:16:16.120 --> 0:16:18.840 when the economy is also starting to take a turn. 0:16:19.320 --> 0:16:21.360 Can we talk about the co founders and co c 0:16:21.520 --> 0:16:24.280 e O s of Go Puff and you know what 0:16:24.400 --> 0:16:26.640 their story was, because this is not their first attempt 0:16:26.680 --> 0:16:28.560 at a delivery company, even though they're not even thirty 0:16:28.640 --> 0:16:32.600 yet exactly and there they really are a fascinating pair. 0:16:33.440 --> 0:16:36.520 They're you know, very hard working in the sense that 0:16:36.560 --> 0:16:39.880 you know, they kind of started this in a really 0:16:39.960 --> 0:16:43.480 scrappy way. They didn't know a whole time about venture capital. 0:16:43.640 --> 0:16:47.360 They it was really a bootstraps kind of attempt at 0:16:47.760 --> 0:16:51.640 you know, building a company. They ran this themselves, bought 0:16:51.720 --> 0:16:55.640 the warehouse by themselves. They hired someone to you know, 0:16:55.680 --> 0:16:59.760 off Google to help them negotiate their first liquor license. UM. 0:16:59.800 --> 0:17:02.080 So their work ethic, I really, I think really speaks 0:17:02.160 --> 0:17:05.800 to um you know, coming out of an era where 0:17:06.040 --> 0:17:10.000 you have a delivery giant, you know, as the aspirational 0:17:10.119 --> 0:17:13.280 company that they were hoping to be one day and 0:17:13.520 --> 0:17:15.679 um but they also had a lot to learn. You know, 0:17:15.760 --> 0:17:19.399 they started doing these deliveries, um, you know, by themselves, 0:17:19.440 --> 0:17:22.359 with their own minivan, off their own money. And once 0:17:22.440 --> 0:17:25.000 you add in, you know, all the billions of venture 0:17:25.040 --> 0:17:28.400 capital cash. Um, it got a little bit out of control, 0:17:28.440 --> 0:17:32.280 and whether it was just expanding into too many cities 0:17:32.320 --> 0:17:36.680 in the US, international expansion, just the exuberance overall that 0:17:37.320 --> 0:17:40.400 permeated the company. UM. You know, it also shows that 0:17:40.800 --> 0:17:43.440 there's um, there's ways to kind of rein it back 0:17:43.440 --> 0:17:47.679 in and this was kind of a tough um bringing 0:17:47.720 --> 0:17:50.639 it back down to reality given the tech route just 0:17:50.720 --> 0:17:53.119 kind of you know, came out of nowhere earlier this spring, 0:17:53.160 --> 0:17:56.320 and you can see them trying to navigate the turbulence 0:17:56.400 --> 0:17:59.760 with the layoffs and you know, pivoting out of certain sectors. 0:17:59.760 --> 0:18:02.240 So we'll see where that takes them. You know, it's funny, Jackie. 0:18:02.280 --> 0:18:03.719 This week, we're going to spend a lot of time 0:18:03.760 --> 0:18:06.120 talking about valuation because of big tech earnings that are 0:18:06.119 --> 0:18:08.040 coming out and what's the reality And I feel like 0:18:08.119 --> 0:18:10.840 they had to have kind of a reality moment when 0:18:10.880 --> 0:18:14.719 they thought about their valuation yet the tech company, but 0:18:14.880 --> 0:18:18.160 maybe not like some other tech companies that demand higher valuations. 0:18:18.720 --> 0:18:20.720 That's absolutely right. At the end of the day, they're 0:18:20.720 --> 0:18:23.600 more like a retail company. They're not different and you 0:18:23.640 --> 0:18:27.119 know than um a convenience store just online, you're buying 0:18:27.200 --> 0:18:31.120 things at warehouse prices and selling them for a markup. 0:18:31.680 --> 0:18:33.000 But at the end of the day, you have a 0:18:33.040 --> 0:18:36.080 lot of overhead. This is a very asset heavy business. 0:18:36.160 --> 0:18:40.720 It's you know, many Amazon type warehouses everywhere, and those 0:18:40.840 --> 0:18:44.760 leases cost money, especially when you're expanding at the pace 0:18:44.840 --> 0:18:48.359 that that they were, and add in competition who's also 0:18:48.440 --> 0:18:51.080 buying to scoop up leases. Think about New York City. 0:18:51.080 --> 0:18:54.080 How many companies we had running around here. Um, and 0:18:54.119 --> 0:18:56.919 now that they've had to shut a few of those down, Um, 0:18:56.960 --> 0:18:59.520 you know that's still something that's they have to foot 0:18:59.520 --> 0:19:02.000 the bill for. Are okay? So we talked about some 0:19:02.040 --> 0:19:06.040 things that they've gotten into, like alcohol. Um, we talked 0:19:06.040 --> 0:19:09.040 about some things that they've gotten out of. Um, what 0:19:09.320 --> 0:19:13.200 have they not gotten into that they might yet? Jackie, Well, 0:19:13.240 --> 0:19:15.480 this is kind of the kicker, you know. It's uh 0:19:15.520 --> 0:19:19.840 it harkens back to uh, their start and it's called 0:19:19.880 --> 0:19:22.520 go Puff because they used to deliver hookah's and like 0:19:22.760 --> 0:19:29.280 hooka accessories to college students and it was exactly And 0:19:29.320 --> 0:19:31.080 the funny thing is, you know they claim that to 0:19:31.119 --> 0:19:36.359 be smokers themselves. Um. But you know, kind of bringing 0:19:36.359 --> 0:19:39.240 it back to where we are now, you're seeing Uber 0:19:39.400 --> 0:19:44.080 and door Dash facilitating orders for cannabis deliverate. It's a 0:19:44.119 --> 0:19:46.480 kind of a touchy thing here is still because it's 0:19:46.480 --> 0:19:49.040 at the federal level that hasn't been legalized obviously, but 0:19:49.240 --> 0:19:52.400 you're seeing many states kind of take steps to embrace 0:19:52.800 --> 0:19:57.159 weed and UM for companies that want to capture the 0:19:57.160 --> 0:19:59.280 delivery component. It's going to be a little tricky and 0:19:59.359 --> 0:20:01.800 door dash and uper still kind of inching around it 0:20:01.800 --> 0:20:03.720 in the US, but in Canada, you know, they're the 0:20:03.760 --> 0:20:06.480 ones that are offering it on their apps, and you know, 0:20:06.520 --> 0:20:08.960 whether it's someone else delivering or people can go pick 0:20:08.960 --> 0:20:11.560 it up, that app is now kind of like the 0:20:11.600 --> 0:20:15.960 center point for um, you know, transacting this kind of 0:20:15.960 --> 0:20:17.760 product that was kind of thought to be you know, 0:20:18.119 --> 0:20:20.720 off the off the radar for a long time. For 0:20:20.760 --> 0:20:23.840 a company like go Puff, it could actually uh you know, 0:20:23.920 --> 0:20:27.120 propose a poses a new opportunity to kind of tap 0:20:27.119 --> 0:20:30.200 into a much higher margin line of business. I mean, 0:20:30.520 --> 0:20:32.880 you know, I don't know what a weed order would 0:20:32.880 --> 0:20:34.880 go for it, but certainly seems to be a little 0:20:34.880 --> 0:20:41.800 bit more lucrative than you know, uh chips and you know, sodas. 0:20:42.400 --> 0:20:49.080 You've got the rest of everything exact, uh you know, 0:20:50.040 --> 0:20:52.680 giving way the goods here, but um, we're go puff 0:20:52.760 --> 0:20:56.320 one director said that we quoted it's our birthrate to 0:20:56.400 --> 0:21:00.000 sell it, right, Like it's so good. So we'll see 0:21:00.000 --> 0:21:02.280 if they go there or not, you know like DBD. 0:21:03.119 --> 0:21:05.560 All right, we're gonna leave with their great story. Um, Jackie, 0:21:05.600 --> 0:21:08.200 thank you so much. Jackie Deavlos. She is technology reporter 0:21:08.280 --> 0:21:11.560 at Bloomberg News from our nine one studio in Washington, DC. 0:21:11.760 --> 0:21:13.680 A story she wrote with our Bradstone and of course 0:21:13.680 --> 0:21:16.680 our thanks to Jill Weber, editor of Bloomberg Business Week. 0:21:17.240 --> 0:21:20.719 Here in our Interactive Broker studio, you're listening to Bloomberg 0:21:20.720 --> 0:21:24.440 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:21:24.480 --> 0:21:28.119 Stinovic on Bloomberg Radio. I'm just gonna tell you we're 0:21:28.160 --> 0:21:30.520 getting a reality check big time, courtesy of our Gina 0:21:30.560 --> 0:21:33.160 Martin Adams. We want to talk about a lot of things, 0:21:33.200 --> 0:21:35.639 and in particular, we want to talk about what's been 0:21:35.680 --> 0:21:37.920 really key growth engines for the S and P five hundred. 0:21:37.960 --> 0:21:41.600 We're talking about those megacap technology stocks which are entering 0:21:41.960 --> 0:21:45.920 the earning season. I love this story with diminished stature, 0:21:46.280 --> 0:21:48.120 so let's get into it with our Gina Martin Adams. 0:21:48.119 --> 0:21:50.560 She's Chief Equity Strategies at Bloomberg Intelligence here in our 0:21:50.600 --> 0:21:54.200 interactive broker studio. So we want to talk about everything, Um, 0:21:54.320 --> 0:21:55.520 I do want to do you want to touch on 0:21:55.520 --> 0:21:57.680 the broader macro or do you want to go Let's 0:21:57.720 --> 0:22:00.320 let's touch on broader macro for a second. Because of work. 0:22:00.680 --> 0:22:03.119 I mean, we're going to hear about broader macro from Apple, 0:22:03.160 --> 0:22:06.440 from Microsoft, from Alphabet, Amazon, and Meta platforms this week. 0:22:06.480 --> 0:22:07.880 I mean Meta is going to talk about it a lot. 0:22:07.880 --> 0:22:10.160 I bet afee what we saw with Snap. But Gina, 0:22:10.240 --> 0:22:11.639 just bring us up to speed on how you and 0:22:11.640 --> 0:22:14.119 the team are thinking about macro right now. Because we 0:22:14.119 --> 0:22:16.840 were talking about rates. Well, we heard from you know 0:22:16.840 --> 0:22:20.760 earlier a little earlier during the program, and um, you're 0:22:20.760 --> 0:22:22.520 saying that the era of low rates is over, at 0:22:22.600 --> 0:22:24.560 least in the short term. Yeah. I think that we 0:22:24.600 --> 0:22:27.159 need to put the pandemic in the past, right and 0:22:27.160 --> 0:22:29.679 I think that the the just the activity levels that 0:22:29.720 --> 0:22:32.800 we've experienced in recovery will also be over. Will not 0:22:32.920 --> 0:22:36.399