Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 2: It was a busy summer week that included another FED
Speaker 2: rate hike, a regional bank takeover, a historic run of
Speaker 2: gains for the Dow, and a batch of earnings from
Speaker 2: megacaps you know, Microsoft, Alphabet and Meta, and the subject
Speaker 2: of AI and the cloud came up in those reports,
Speaker 2: and on that in the magazine, a story about big
Speaker 2: data centers and their use of a very precious commodity.
Speaker 2: That story coming right up. And speaking of the big
Speaker 2: tech companies, Amazon reports this coming week, and a range
Speaker 2: of topics may come up on the call, including what
Speaker 2: might be the most intrusive scrutiny in the company's history.
Speaker 2: Plus we'll talk with the CEO of Mattel on earnings,
Speaker 2: a key figure leaving the c suite, and whether that
Speaker 2: Hollywood labor dispute is hurting the toy maker's film ambitions
Speaker 2: even as Barbie keeps breaking it in at the box office.
Speaker 2: All of that to come, We begin with a lesson
Speaker 2: in behavioral economics from one of the pioneers in the field.
Speaker 2: Peter Atwater is an adjunct professor of economics at William
Speaker 2: and Mary. He coined the term CA shaped recovery. He's
Speaker 2: here to help us navigate these unusual economic and market
Speaker 2: times with his new book, The Confidence Map, Charting a
Speaker 2: Path from Chaos to Clarity. We began by asking for
Speaker 2: his reaction to the latest round of US monetary policy
Speaker 2: tightening from j Powell and the FED this past Wednesday. Tim,
Speaker 2: no doubt about it. We're living in interesting economic and
Speaker 2: market times. We're coming off a pandemic unprecedented, and we're
Speaker 2: going to talk about that word, unprecedented. Stimulus and easing
Speaker 2: to ensure the function of the financial system and really
Speaker 2: to help protect the livelihoods of many. The end result
Speaker 2: an economy that stopped short then was revved up again
Speaker 2: big time. But we got persistent inflation which has come
Speaker 2: down less. It was an interesting time. It was the
Speaker 2: backdrop certainly for the FED the last couple of years,
Speaker 2: but it's a recovery too. That wasn't felt by all,
Speaker 2: and that was something that was coined the Case Shaped
Speaker 2: Recovery by our next guest.
Speaker 3: And so with all of that going on and more,
Speaker 3: we are so delighted to have with us in our
Speaker 3: Bloomberg Interactive Broker's studio Peter Atwater. He's Adjunct Professor of
Speaker 3: Economics at William and Mary. He's a former banker and
Speaker 3: someone who spent many years in financial services and in
Speaker 3: the securitization of assets. He's been a financial consultant, and
Speaker 3: he's also got a way forward for all of us
Speaker 3: thanks to his brand new book out brand new book.
Speaker 3: It came out this week. It's called The Confidence Map,
Speaker 3: Charting a Path from Chaos to Clarity. It's a book
Speaker 3: that our very own Mike Reagan says is a great
Speaker 3: beach read.
Speaker 2: Which is a big endorsement.
Speaker 1: Welcome Peter.
Speaker 3: It's good to have you in the studio and congratulations
Speaker 3: on the book.
Speaker 4: Thanks so much, Tim and Carol.
Speaker 5: Great to be here.
Speaker 2: Well, it's so great to have you here. First up,
Speaker 2: we would be remiss if we didn't ask you about
Speaker 2: the FED meeting and what you make of it, Anything
Speaker 2: unusual or telling, especially as you think about your book.
Speaker 4: Yeah, it was the lack of unusual to day. This
Speaker 4: was like a dive that hit the water and there
Speaker 4: was no splash. You know, Normally after a FED announcement
Speaker 4: there's a lot of battling in social media and different takes.
Speaker 4: There were no takes today.
Speaker 2: It was kind of boring.
Speaker 4: It was beyond boring. This was nothing about nothing today.
Speaker 4: And it's been interesting because in the last couple of weeks,
Speaker 4: we've seen investors take everything off the worry list, and
Speaker 4: I think this came off the worry list too. There
Speaker 4: is a sense that everything is going to be okay.
Speaker 4: We're not worried about a recession. Inflation looks like it's
Speaker 4: going to keep coming down or is coming down to
Speaker 4: a reasonable level. And if I have a take from today,
Speaker 4: it's this sense of where's the shoe that's going to
Speaker 4: drop next.
Speaker 3: Yeah, it's sort of like a complacency. And I think
Speaker 3: it was Tom Keen who was asking Diane Swank about
Speaker 3: parallels to what we saw before the Nasdaq crash in
Speaker 3: there two thousands.
Speaker 4: Yeah, this is what's been interesting on the NASTAC front
Speaker 4: is we've seen investors racing into all these abstract stocks
Speaker 4: two years ago the SPACs, and that that NFT Mania
Speaker 4: this year they're charging into the stalwarts, the thoroughbreds that
Speaker 4: are well tested, you know, Apple, that the Magnificent Seven,
Speaker 4: and that to me is an indicator that we're not
Speaker 4: as risk taking as we were a couple of years ago.
Speaker 4: That we're looking for certainty in the companies that we're
Speaker 4: investing in and too much possibility scares us.
Speaker 2: Take us to the confidence quadrant, then, all right, this
Speaker 2: is your book and explain this because there's stress center
Speaker 2: versus comfort zone, passenger seat versus launch pan. But I
Speaker 2: love this and you, as you write, can kind of
Speaker 2: apply to anything and everything. So take us to is
Speaker 2: should we be in the stress center a comfort zone
Speaker 2: right now? Because it does feel like there's so much
Speaker 2: grow both in terms of optimism, whether it's S and
Speaker 2: P strategists or economistsying a recession to help us out.
Speaker 4: Yes, So for the benefit of your listeners, this is
Speaker 4: a book that looks at the impact of certainty and
Speaker 4: control and the choices we make because we use the
Speaker 4: word confidence all the time and we don't know what
Speaker 4: it means. And so what I tried to do is
Speaker 4: to really dig into it. And those two things are
Speaker 4: really important. I need to know what's coming and I
Speaker 4: need to feel like I'm prepared for that. That's what
Speaker 4: creates confidence. And I would say that if I.
Speaker 2: Look at it, so does not elon musk confidence.
Speaker 4: No, that's confidence theater. That's that's and that's you know,
Speaker 4: and we see a lot of that, and maybe too
Speaker 4: much of it, And I worry that a lot of
Speaker 4: people think that that's what you need to be confidence.
Speaker 4: It's like no, no, no, that's an act. That's a show
Speaker 4: that people put on.
Speaker 3: Really well, So can you explain the framework that you
Speaker 3: developed here and what to do if you find yourself
Speaker 3: basically in the wrong quadrant?
Speaker 6: Yeah.
Speaker 4: So the framework takes confidence or takes certainty and control
Speaker 4: and puts them on two oxes. It's a simple four
Speaker 4: box chart, and none of them is inherently good or bad,
Speaker 4: but they but we feel very different in them. And
Speaker 4: I would say today most investors feel like they're in
Speaker 4: the comfort zone. Things feel easy. It's like they've been
Speaker 4: they're driving on a clear highway on a clear day.
Speaker 4: And that's both good and bad. Because the more confident
Speaker 4: we are, the less we think, the less we pay attention.
Speaker 4: And so that's a big risk, and we also take
Speaker 4: more risk than we should, and that's that's the potential
Speaker 4: consequence that we need to consider. But I also then
Speaker 4: look at the consumer, and there are a lot of
Speaker 4: consumers in the stress centry today, particularly those who are
Speaker 4: trying to buy a house, are buying a car, because
Speaker 4: interest rates have been very punitive to those at the bottom.
Speaker 4: Those at the top, it's been wonderful. Cash is now
Speaker 4: earning four percent, five percent, But for those at the bottom,
Speaker 4: there's been a real, a real headwind. That's that's come
Speaker 4: about because they're on a payment they paid by month,
Speaker 4: and these heights and interest rates have made their lives
Speaker 4: far more expensive.
Speaker 2: So why is it important though to understand kind of
Speaker 2: where you are, whether you're too complacent or you're comfortable,
Speaker 2: or whether you're stressed out? Like why is it important?
Speaker 2: And I think about you know, when you think about stress,
Speaker 2: we've been there a lot, as in a market environment,
Speaker 2: in an economic environment where it's the pandemic nine to eleven,
Speaker 2: the Great financial crisis.
Speaker 4: Right like help me out here, Yeah, So we forget that.
Speaker 4: Real life moves us around, so we can be in
Speaker 4: the stress center in one moment and then be in
Speaker 4: the comfort zone the next but we forget that when
Speaker 4: we're in the stress center. If you go back to
Speaker 4: the COVID, we were catastrophizing that the end of the
Speaker 4: world was here, and we forget that as we're moving
Speaker 4: into the stress center and panics occurring. Panic is almost
Speaker 4: God's way of telling us the worst is behind us,
Speaker 4: and certainly that's proven over and over in the markets,
Speaker 4: but we fall victim to it, and we respond impulsively
Speaker 4: and emotionally, rather than stepping back to say, oh, panic
Speaker 4: means we're nearing a low in confidence, and rather than
Speaker 4: throwing the baby out with the bath water, we should
Speaker 4: be preparing for what's coming next, because it's going to
Speaker 4: surprise everybody.
Speaker 3: So how do we do that right now in the
Speaker 3: context of this run up that we've seen in the markets?
Speaker 3: How does an investor use these tools?
Speaker 4: I think investors need to look and see that our
Speaker 4: preferences have changed. We're getting more conservative behind the scenes,
Speaker 4: even though the indices are moving to record highs. So
Speaker 4: you want to recognize that while we're in the comfort zone,
Speaker 4: we're nowhere near as craving possibility and abstraction as we
Speaker 4: were two years ago. And also appreciate that there's an
Speaker 4: enormous disconnect between market confidence today and main street confidence,
Speaker 4: and with wealth so concentrated in so few hands, that
Speaker 4: tension will certainly play out if the economy turns down.
Speaker 4: You know, I always think if we're in the comfort zone,
Speaker 4: we don't anticipate a recession, and that becomes really dangerous
Speaker 4: when we all think that moment has passed.
Speaker 2: Well, it's so interesting that you say that, because I
Speaker 2: think about how much we talk about consumer sentiment, our
Speaker 2: consumer confidence, our business sentiment and business confidence. Right, these
Speaker 2: things can certainly shape our actions and certainly as investors
Speaker 2: are expectations of kind of where assets should go.
Speaker 4: Yeah, they how we think out, how we feel shapes
Speaker 4: our actions also shapes the stories we tell, and so
Speaker 4: the narrative, the narrative, The narrative is simply a reflection
Speaker 4: on how we feel. And here again the narrative today
Speaker 4: is the coast is clear.
Speaker 1: Relax.
Speaker 4: If there's going to be a recession, it's going to
Speaker 4: be shallow if it. Inflations come down considerably from where
Speaker 4: we were, and so we're investors are looking out ahead
Speaker 4: and not appreciating that risks come out of nowhere.
Speaker 2: Well, that's what I was going to say, and well,
Speaker 2: we've got to do a little bit of news. But
Speaker 2: you know, when you're in the comfort zone and you're
Speaker 2: kind of relaxed, I mean, this is when all of
Speaker 2: a sudden there's a regional bank problem or there's a
Speaker 2: cryptical lapse, right like those are. So it feels like
Speaker 2: what you're saying is we can kind of anticipate, maybe
Speaker 2: not exactly what's going to go wrong, but that's something's
Speaker 2: going to wrong go wrong, absolutely, and we can kind
Speaker 2: of figure it out. Could we anticipate that a burning
Speaker 2: made off was going to happen?
Speaker 4: Yeah, because the more confident we are, the less we scrutinize,
Speaker 4: and we fall a victim to content at both extremes
Speaker 4: financial fomo a fomo, and it loads in confidence we
Speaker 4: follow the wrong people.
Speaker 2: I want to get right back to Peter Attwater, his
Speaker 2: new book The Confidence Map, Charting a Path from Chaos
Speaker 2: to Clarity. A professor at William and Mary so I said,
Speaker 2: I'm events being unprecedented. Do you know that they are
Speaker 2: entirely predictable? Is that true? Even black Swans are entirely predictable.
Speaker 4: If you look at the backdrop of how people feel.
Speaker 4: They're much more predictable than we realize. The means may change,
Speaker 4: but extremely vulnerable people always do the same five things.
Speaker 4: People who are extremely confident have a similar series of
Speaker 4: things that they do. And so if I know how
Speaker 4: people feel, I'm not going to be nearly as surprised
Speaker 4: by what they do. And I live this with my
Speaker 4: class as COVID was beginning to take hold, and we
Speaker 4: would every week we would say is confidence higher or lower?
Speaker 4: And if it got lower and lower, and each week
Speaker 4: they would say, so, if since it's lower, what are
Speaker 4: people going to do next? And as we approached March,
Speaker 4: they were the ones who told me, professor, you need
Speaker 4: to pack everything up for spring break, and because we're
Speaker 4: not going to come back if confidence continues to fall.
Speaker 4: And so we tend to overlook that confidence is changing.
Speaker 4: Our choices change, and there are clear connections between what
Speaker 4: we want and what we feel. And we look at
Speaker 4: events as being the event, not the decisions made moment
Speaker 4: before the event. If I think about nine to eleven,
Speaker 4: we would say that caused American confidence to fall, But
Speaker 4: if you look at the backdrop, confidence in them add
Speaker 4: least was really low and so you could understand why
Speaker 4: people who are feeling hopeless might undertake that samely with
Speaker 4: the Arab spring.
Speaker 3: So a skeptic of your framework might say, it's very
Speaker 3: easy to connect the dots when you look back, but
Speaker 3: how do we look forward and use this framework to
Speaker 3: predict the future.
Speaker 4: So that's what I try to do with investors in
Speaker 4: real time with corporate executives in trying to help them
Speaker 4: to realize that the choices are being are changing quickly
Speaker 4: based on how we feel. And I found myself in
Speaker 4: COVID working with corporations trying to rejigger their messages because
Speaker 4: when we lack confidence, we need simplicity, We crave nostalgia,
Speaker 4: and so you can if we can watch as people
Speaker 4: are changing their mood, we can better anticipate what to
Speaker 4: do in response. And that was one of the things
Speaker 4: that emergency room doctors and first responders really showed me
Speaker 4: that these are things you can prepare for and train
Speaker 4: to anticipate how to behave in a crisis.
Speaker 2: Right there, many of them were prepared for trauma, right
Speaker 2: so in that when it came so okay, I'm thinking
Speaker 2: people are at home, or they're driving, are they're going
Speaker 2: to download this podcast or download this later as a podcast,
Speaker 2: and they're like, Okay, so how do I apply that
Speaker 2: to investing and how should I be thinking it about
Speaker 2: it in today's market environment.
Speaker 4: So one of the things I think investors need to
Speaker 4: be careful about today is the historical relationship between stocks
Speaker 4: and bonds seems to have broken down. That we think
Speaker 4: of this in terms of a diversified pool, that owning
Speaker 4: stocks helps you because they do better when stocks do worse.
Speaker 4: And the reality is that not that long ago, confidence
Speaker 4: in both stocks and bonds was staggeringly high. We had
Speaker 4: trillions of dollars worth of negative yielding bonds at the
Speaker 4: same time we're stampeding into crypto and all of these
Speaker 4: crazy things, and we didn't realize that every piece of
Speaker 4: that pie, that diversified pie, was piping hot. So you
Speaker 4: need to think about not historical correlations, but how do
Speaker 4: investors feel about what you own? Because you want to
Speaker 4: own people, you want to own hopeless at the same time,
Speaker 4: you want to own things that we're excited because it's
Speaker 4: tomorrow land and having a mix of moods in your portfolio,
Speaker 4: because that's where the real benefit of diversification comes from.
Speaker 4: A mix of moods, A mix of moods.
Speaker 2: It's interesting like that.
Speaker 3: I mean, what does a mix of moods look like?
Speaker 3: Obviously it depends on your age and your risk tolerance.
Speaker 3: But how do you take a mood and apply that
Speaker 3: to an ETF or to a fund or to a stock.
Speaker 4: Well, price is a great way to discover it, because
Speaker 4: I think prices market prices are a barometer of mood.
Speaker 4: So you could have looked at the price of natural
Speaker 4: gas last summer and scene that. You know, we were
Speaker 4: terrified that there was going to be enormous scarcity, and
Speaker 4: now there's immense complacency in that sector, that there's views
Speaker 4: of abundance forever. And so you want to be thinking
Speaker 4: about where is there intense scarcity, where are people stampeding
Speaker 4: in and where they stampeding out?
Speaker 2: All right, I'm going to go dark for you, charting
Speaker 2: a path from chaos to clarity. I feel like climate
Speaker 2: change is one of those. This is an existential question
Speaker 2: for all of us in situation. So how do you
Speaker 2: think about that?
Speaker 4: So climate change is a very abstract concept, and if
Speaker 4: you look at our eagerness to address climate change, it
Speaker 4: migrates with our level of confidence, And what you'll find
Speaker 4: is that when confidence is high, we want to tackle
Speaker 4: climate change proactively, that our focus is prevent the problem.
Speaker 4: And when confidence falls, our response to climate change is
Speaker 4: we need to deal with the consequences of having not
Speaker 4: dealt with it. And so if confidence falls, I think
Speaker 4: you'll start to see that our interest in solving it
Speaker 4: is swapped out for our need to address the fact
Speaker 4: that we didn't. And so that's a behavioral change because
Speaker 4: we move from abstract possibility to immediate need and vulnerability.
Speaker 2: I just because it's just it's all I think about.
Speaker 2: But then a lot.
Speaker 3: Ability effects different people depending on where they live, if
Speaker 3: they live, and I think maybe one thing that changes
Speaker 3: was when you know, the skies over so much of
Speaker 3: this part of the country turned red a few months
Speaker 3: ago because of Canadian wildfires. I mean, we're in an
Speaker 3: area that's not traditionally affected by wildfires, but we're seeing
Speaker 3: the effects of that.
Speaker 4: Yeah, so we need abstract vulnerabilities to become real. Think
Speaker 4: about COVID. COVID did not become real for most Americans
Speaker 4: until March eleventh, the night the Tom Hanks and Rudy
Speaker 4: Gobert were the.
Speaker 3: Headlines and the NBA.
Speaker 4: And suddenly that was the tipping point and boom. We
Speaker 4: all felt it and you could see it.
Speaker 7: It was like a.
Speaker 4: Wildfire of a shift in sentiment.
Speaker 2: It's so true for so long we're like, it's not
Speaker 2: going to be our problem. It's not going to be
Speaker 2: our problems that all the stories went along with that. Yeah,
Speaker 2: And I have to say, as a journalist or you know,
Speaker 2: it felt kind of stupid, like on the other side,
Speaker 2: like how did we what is this when we're thinking
Speaker 2: how could this not impact us? Thank you so much,
Speaker 2: Peter Atwater, Thank you so much. Such a treat to
Speaker 2: have you in studio. The book is the Confidence Map,
Speaker 2: charting a path from chaos to Clarity. I'm actually heading
Speaker 2: to a beach, so I'm taking this with me because
Speaker 2: I've just done a little bit of reading, but I
Speaker 2: want to read it which just came out Carol, I know, Peter,
Speaker 2: Thank you, good luck with it. Come back soon. This
Speaker 2: is Bloomberg.
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Speaker 2: We have been focusing big time on Megacap tech earnings,
Speaker 2: Microsoft Alphabet, You got Amazon next week, and as they report,
Speaker 2: we always focus on a very key metric, tim and
Speaker 2: it is all about their cloud business. We did that
Speaker 2: last night with Microsoft. A little bit of a disappointment.
Speaker 2: It's a big business we know when it comes to cloud.
Speaker 2: And as a new story in Business Week notes, the
Speaker 2: cloud is part of an ecosystem that consumes many resources,
Speaker 2: including water.
Speaker 3: Yeah, this was really surprising to me because I've heard
Speaker 3: the cloud consumes a lot of energy. Check out this
Speaker 3: story in the new issue. It's on newstands later this week.
Speaker 3: It's already online at Bloomberg dot com. Slash business Week
Speaker 3: is of course on the Bloomberg terminal. It's also among
Speaker 3: the most read on the terminal today. The editor on
Speaker 3: the story, Bloomberg BusinessWeek Technology editor Joshua breustein with us
Speaker 3: here in our Bloomberg Interactive broker's studio. It's incredible to
Speaker 3: see this story. We knew view that they use a
Speaker 3: lot of energy, but water, Just how much water do
Speaker 3: data centers use?
Speaker 7: Well?
Speaker 8: Data centers are Actually it's a bit of a question
Speaker 8: because tech companies haven't generally been reporting on how much
Speaker 8: water their data centers are using. As you said, electricity
Speaker 8: has been a big deal. But basically what happens is
Speaker 8: you have these computer servers running, they're running very hot,
Speaker 8: and they use water to cool them down. As an example,
Speaker 8: Meta is planning on building a data center in a
Speaker 8: drought stricken area of Spain and it's expected to use
Speaker 8: about six hundred and sixty five million liters year.
Speaker 3: So let's talk geography here because the story goes into
Speaker 3: why these data centers are located where they are. Why
Speaker 3: not put this somewhere near that's not drought stricken.
Speaker 8: Yeah, it's a good question. I think they're looking for
Speaker 8: a couple of things. When you're citing a data center,
Speaker 8: you want access to cheap electricity, you want access to water,
Speaker 8: and you want access to a government that will allow
Speaker 8: you to build a data center. And what you found
Speaker 8: is that some areas where there is plentiful water have
Speaker 8: started to oppose these data centers exactly for the tax
Speaker 8: they put on resources.
Speaker 2: I thought what was really interesting is a quote in
Speaker 2: the story that says people don't realize that the cloud
Speaker 2: is real, that it is part of an ecosystem that
Speaker 2: consumes many resources. I mean, you're right, we're learning. Like
Speaker 2: we all talk about cloud and we just think it's
Speaker 2: just where our photos go. And if your a business,
Speaker 2: just a lot of information goes. And all we know
Speaker 2: is with AI, it's going to be even more in demand. Correct,
Speaker 2: And so we're going to continue to see data centers
Speaker 2: all around the world, if you will. And there are
Speaker 2: costs to.
Speaker 8: That, Yeah, absolutely, I think like that with so much
Speaker 8: things with tech, it just seems so clean, so easy,
Speaker 8: and then behind it there's a lot going on that
Speaker 8: we don't have to think about if we don't want to.
Speaker 2: What are companies doing?
Speaker 9: Though?
Speaker 2: So listen, And I'm curious about the oversight Joshua, Like,
Speaker 2: aren't companies they talk about being green and sustainable, So
Speaker 2: what's the oversight of understanding the impact if you build
Speaker 2: a data center here? This is what it's going to
Speaker 2: mean for the environment.
Speaker 7: Yeah.
Speaker 8: So obviously there are different environmental review processes and different jurisdictions,
Speaker 8: and the tech companies are saying that they do care
Speaker 8: a lot about the environmental impacts. Obviously, if they can
Speaker 8: cut down on energy use, on water use, it will
Speaker 8: also make their data centers cheaper. So all of the
Speaker 8: companies are working on ways to reduce water consumption, and
Speaker 8: I think what you see is that they are getting
Speaker 8: more efficient at this, but the problem is their capacity.
Speaker 8: Their need for capacity is growing so much faster than
Speaker 8: their ability to increase efficiency that overall it's going up.
Speaker 3: This seems well, my thoughts are going in a lot
Speaker 3: of different places right now, Joshua, But it seems like
Speaker 3: the type of problem that tech could solve.
Speaker 10: Right.
Speaker 3: Can't you create something that doesn't need to be cool?
Speaker 3: It's like a nuclear power plant core? Can you create
Speaker 3: something that doesn't create as much heat? This seems like
Speaker 3: there's some brilliant person somewhere who's going to be able
Speaker 3: to do this and it just hasn't happened yet. Am
Speaker 3: I being too optimistic?
Speaker 7: Yeah?
Speaker 8: I mean I think that there is a limit to
Speaker 8: how much to how much you can get this down.
Speaker 8: I mean, these things are running computers, They use power,
Speaker 8: they create heat. You have to deal with that, and
Speaker 8: there are efforts to make these things more energy efficient.
Speaker 8: The question is can they beat the can't?
Speaker 11: It's a race?
Speaker 8: Basically, their capacity needs are growing up. They need to
Speaker 8: come up with better ways to do it and like, who's.
Speaker 3: Going to get their first And it's not like the water,
Speaker 3: it's not like the water gets run through this and
Speaker 3: then you know, it's just warm water. On the other side,
Speaker 3: you talk about water just evaporating into the atmosphere as
Speaker 3: a result of this cooling process.
Speaker 8: Yeah, that's a big way that the consumption happens is
Speaker 8: actually the data centers use the water the water evaporates
Speaker 8: as a way to cool them down, and then the
Speaker 8: water is you know, effectively gone on site.
Speaker 2: Tell us about the conversation. I want to take a
Speaker 2: step back because we often when we talk with Jill Weber,
Speaker 2: the editor of the magazine, it's like, how does this
Speaker 2: story come to be and how do you guys what's
Speaker 2: the conversation in the newsroom that ultimately leads to what
Speaker 2: we are reading today. What was the germination of the story.
Speaker 8: Yeah, well, obviously this came out of Europe. There's been
Speaker 8: a lot of talk about the effects on drought and
Speaker 8: heat in Europe this summer, and there is one large
Speaker 8: data center that I mentioned that Meta is planning in Spain,
Speaker 8: and because it's happening in an area that's really being
Speaker 8: hard hit, there's a lot of questions around that data
Speaker 8: center in particular, and when you look at that conflict,
Speaker 8: you quickly realize that this is a stand in for
Speaker 8: a larger conflict that's happening in a lot of different places.
Speaker 2: It's kind of amazing because you, well are not amazing
Speaker 2: because you understand governments they want these facilities built. Right,
Speaker 2: It typically means economic impact, right or jobs created in
Speaker 2: data centers. I guess right, there's a fair amount of
Speaker 2: people in there.
Speaker 8: Yeah, I think there's some question about how much how
Speaker 8: many jobs are created by data centers. Obviously, if you
Speaker 8: think about what a data center is, the whole ideas
Speaker 8: that it is running not with people, but just running
Speaker 8: computer right service.
Speaker 3: But the doing but the construction of them takes local labor,
Speaker 3: and it creates tax revenue.
Speaker 8: Absolutely, there is some economic impact here and that's why
Speaker 8: people want them. And also just sort of overall, I
Speaker 8: think tech is an economic driver and this is a
Speaker 8: part of the infrastructure that has to be cited somewhere.
Speaker 2: You probably have to have the data center set right
Speaker 2: closer to kind of where some of the activity maybe
Speaker 2: is also happening. Can you take us to a photo
Speaker 2: the umbrellas. This is umbrellas in Spain. It's how you
Speaker 2: guys wrap up the story. But it's a canopy to
Speaker 2: protect locals, you know, And it was kind of interesting
Speaker 2: in terms of I guess, I don't know, to help
Speaker 2: the environment, I don't know.
Speaker 8: Yeah, I think we were just trying to show like
Speaker 8: how panicked people are in this area and like how
Speaker 8: much people are trying to come up with ways to
Speaker 8: even deal with the you know, the activity that's already there.
Speaker 8: This is really straining everyone, and you know, adding a
Speaker 8: data center is just an extra complication to the mix.
Speaker 3: It still seems like to me there could be just
Speaker 3: better places for data centers in the.
Speaker 11: World, like Norway.
Speaker 3: Well, Norway has expensive energy, I think is what is
Speaker 3: what the article said, Correct me if I'm wrong, Joshua.
Speaker 3: And the amounts of water, but lots of water exactly.
Speaker 3: Isn't there a place where there's you know, lots of
Speaker 3: water and hydro. I mean, I think of the bitcoin
Speaker 3: mining issue as well, and you know, when we talk
Speaker 3: about the energy, and some would call it waste some wooden,
Speaker 3: but there are places where you could co locate these
Speaker 3: facilities that would be a lot more, would have a
Speaker 3: better environmental impact, perhaps near renewable sources.
Speaker 8: Yeah, absolutely, I think that's what people are looking for.
Speaker 8: And when you mentioned bitcoin mining and so that's not
Speaker 8: even a related issue, that is the same issue. I mean,
Speaker 8: bitcoin mining operations are data centers. So you want to locate,
Speaker 8: as you said, in places with large amounts of renewable energy.
Speaker 8: Oftentimes that is hydro electricity, So those can be places
Speaker 8: where there's also plentiful water. But when you have a
Speaker 8: need for so many data centers and they need to
Speaker 8: be geographically spread out, you're going to end up going
Speaker 8: into a lot of places with different tensions.
Speaker 2: I do feel like Europe's going to ultimately lead the way,
Speaker 2: like they do on so much in terms of oversight
Speaker 2: and regulation. So where does it go from here at
Speaker 2: this point? I mean, you guys are certainly putting it
Speaker 2: on the radar by writing this story, but I'm just curious.
Speaker 2: It hasn't been something we talk a ton about, and
Speaker 2: I just wonder when it becomes one of those things
Speaker 2: that lawmakers and policy makers globally you're like, well, wait
Speaker 2: a minute, we got to think about this.
Speaker 8: Yeah, I think this is going to be an issue
Speaker 8: that you'll be hearing about more as resources continue to
Speaker 8: be taxed more and more.
Speaker 2: Yeah, especially with AI. Like I love the I don't
Speaker 2: know that I love it, but what it says about
Speaker 2: AI that the chips that they use for AI generate
Speaker 2: lots and lots of more more heat.
Speaker 3: In the reporting for this story, I'm wondering if and
Speaker 3: you were the editor on the story, but I'm wondering
Speaker 3: if if you know, we found that there are some
Speaker 3: governments that are so enthusiastic about this despite the environmental consequences.
Speaker 3: And we should note in the piece, it's not like
Speaker 3: these companies are coming in and advertising the fact that
Speaker 3: these are data centers. You know, the author's right that
Speaker 3: these things just look like they could be warehouses. They
Speaker 3: look like any other huge building, industrial building.
Speaker 7: Yeah.
Speaker 11: Absolutely.
Speaker 8: I don't think that this is something that the companies
Speaker 8: that are building them are necessarily wanting to go in
Speaker 8: and make a big show of things. They're just trying
Speaker 8: to set these things up and quietly go about their
Speaker 8: business and maybe talk about They really want to talk
Speaker 8: about more of the consumer facing things that people might
Speaker 8: care about or even notice.
Speaker 3: You know what's so interesting too is I was thinking
Speaker 3: a lot about Apple when I was reading this story,
Speaker 3: and a few years ago, Apple decided to when when
Speaker 3: the materials that go into phones, that go into chips
Speaker 3: came under such scrutiny the mining practices around those, Apple
Speaker 3: decided to make changes to the way it discloses its
Speaker 3: supply chain. And you can read all this on their website.
Speaker 3: But I haven't heard anything about data center usage and transparency.
Speaker 3: There is that something we're going to see a demand for.
Speaker 8: I think we're already seeing a demand for it. I
Speaker 8: think that came up in this story is what you
Speaker 8: see government saying to tech companies is well, you have
Speaker 8: to at least tell us more about how you're using water,
Speaker 8: if just so at the least we can plan for
Speaker 8: what you're doing. And obviously once they see those stats,
Speaker 8: they may want to say, well, you've got to come
Speaker 8: up with a way to use less. And the first
Speaker 8: thing to do is just get the information right.
Speaker 2: And carbon offsets don't do it. Yeah, it's like my
Speaker 2: big pet peeve, as of like, because it doesn't.
Speaker 8: It just kind of well, there is an interesting parallel
Speaker 8: to carbon offsets, which is that if we use this water,
Speaker 8: we will restore water. We will restore water somehow. And
Speaker 8: you run into a lot of the same issues where well,
Speaker 8: where is it going to be restored? How's that going
Speaker 8: to work?
Speaker 11: Exactly?
Speaker 2: No, it's like, stop doing the bad stuff. I'm sorry.
Speaker 2: I just think for how we we've the Corent off sets.
Speaker 2: It's the answer to everything. It's like, no, stop doing
Speaker 2: the bad stuff right at this point. No, But and
Speaker 2: I think about again, you know, there's just going to
Speaker 2: be more and more of these around the world, So
Speaker 2: you just think, Okay, this is just going to become
Speaker 2: a much more serious problem, especially if you look at
Speaker 2: the summer we're having in terms of the weather, right,
Speaker 2: and the impact of that. Absolutely all right, great story.
Speaker 3: I think twice about saving your photos to the cloud, Carol,
Speaker 3: You just you're just not winning as a consumer.
Speaker 2: It's if you think about like your your car, your footprint.
Speaker 2: This is part of it.
Speaker 3: I just got to notice that eighty five percent full
Speaker 3: on Google Storage.
Speaker 6: We need more clouds.
Speaker 2: It gotta buy some more cloud Yeah, it's really fascinating. Anyway,
Speaker 2: Thank you so much for bringing us the story. Absolutely
Speaker 2: so appreciate it. Joshua Brustin. He is technology editor and
Speaker 2: oversees the Tech section of Bloomberg BusinessWeek magazine. This story
Speaker 2: is in the New issue. It's coming out on newsstands tomorrow.
Speaker 2: It's already on the Bloomberg and of course at Bloomberg Dot.
Speaker 2: But I feel like all the climate stuff that's coming out,
Speaker 2: like you're just getting different pieces about, you know, our
Speaker 2: impact on our world.
Speaker 3: Yeah, and again, this is one of those things that
Speaker 3: you don't necessarily think about the environmental impact of what
Speaker 3: you're doing on your phone or what you're doing with
Speaker 3: your digital life and the real world impact that it
Speaker 3: has because these things are not actual things, right. These
Speaker 3: photos are digital, they're not you know, and it's not
Speaker 3: just photos, right, it's like AI powered in the cloud.
Speaker 2: It's everything. Can I ask you one thing? Did you
Speaker 2: oh did what did the companies say or does it
Speaker 2: just kind of like.
Speaker 8: Well, what the companies say is we know that climate
Speaker 8: change is real, we know it's a big deal, and
Speaker 8: we're working really hard to be more efficient at this
Speaker 8: which I think is true. Yeah, they are trying to
Speaker 8: come up with ways to use less water and energy,
Speaker 8: but they're also coming up with ways to put AI
Speaker 8: into everything.
Speaker 2: Is it only water though? That does it? That cools it?
Speaker 8: Like at this point, Yeah, that the main that those
Speaker 8: are the main techniques.
Speaker 3: Yeah, So while we still have you, I do want
Speaker 3: to say that there's a good there's a really good
Speaker 3: quantity way to quantify how much water is being used.
Speaker 3: And there's a team at the University of California Riverside,
Speaker 3: and this is in the piece. They've calculated that every
Speaker 3: short conversation of twenty to fifty questions and answers with
Speaker 3: chat GPT represents about five hundred milli liters of water.
Speaker 2: So stop doing it, Matt Miller. Stop talking with chat GPT.
Speaker 3: If you're just ask a few a questions, you're just
Speaker 3: watering the sidewalk when you do that, just pouring water
Speaker 3: out onto the CEM.
Speaker 2: Just stop it. Everybody, thank you, We really appreciate it.
Speaker 2: Joshua Bustin, as we said, technology editor at Bloomberg Business Week,
Speaker 2: And of course the new issue is coming out coming up.
Speaker 2: We've got a really treat for everyone. He's certainly a
Speaker 2: friend of the show. We're talking about Peter atwater over
Speaker 2: at William and Mary, but former banker, someone who understands
Speaker 2: how Wall Street and the financial markets work and financial
Speaker 2: services works. And he's got a new book. It's about
Speaker 2: the Confidence Map, and you're going to have to draw
Speaker 2: a square.
Speaker 3: I love this because it offers a framework for how
Speaker 3: to think about decision making, how to think about decisions
Speaker 3: that you make in your life. He made a really
Speaker 3: big decision when he was forty five and left financial
Speaker 3: services and decided to research confidence instead. And I think
Speaker 3: it's fair to say this this book is the product
Speaker 3: of that sort of second act that he's had.
Speaker 2: Speaking of decisions, we'll maybe ask him two a little
Speaker 2: bit about what he makes about the FOMC decision.
Speaker 5: Oh that's a good idea.
Speaker 2: Yeah, I just see what he has to say, and
Speaker 2: then we'll kind of broaden it out. All right, You
Speaker 2: are listening and watching Bloomberg Business Week. Carol Master, long it,
Speaker 2: Tim Stanic, This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen.
Speaker 5: On Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 5: Business App, or watch us live on YouTube.
Speaker 2: Can you talk about it? We all talk about a
Speaker 2: few certainties in life, right, death taxes, and the American
Speaker 2: healthcare system is, for lack of a better word, it's
Speaker 2: a mess. Yeah, like disruption, innovation. Come on, come do something.
Speaker 3: So remember, we have the Affordable Care Act Obamacare, right, right,
Speaker 3: that's supposed to solve all of the problems for uninsured Americans. Well,
Speaker 3: guess what. In twenty twenty one, nearly thirty million people,
Speaker 3: more than eight percent of the US population, didn't have
Speaker 3: help insurance. That's according to the US Census Bureau. Now,
Speaker 3: don't get me wrong, this is a lot better than
Speaker 3: things were in the decade leading up to the Affordable
Speaker 3: Care Act, when more than fifteen percent of people did
Speaker 3: not have health insurance. But this is still millions of
Speaker 3: people who are at risk.
Speaker 2: It's a lot of people in a very rich or
Speaker 2: so we're told, wealthy country. So let's get to one
Speaker 2: of the co authors, Amy Finkelstein. She is a professor
Speaker 2: of economics at MIT, director of the Healthcare Program at
Speaker 2: the National Bureau of Economic Research, and among other things,
Speaker 2: a twenty eighteen MacArthur fellow. And actually get a genius grant. Correct, Yeah,
Speaker 2: that's correct.
Speaker 3: I don't know if the geniuses are supposed to call
Speaker 3: them genius grants. That's for just us lay people.
Speaker 2: Carrol, We're going to call you a geni. We've been
Speaker 2: calling it teasing you up. She is on Zoom in
Speaker 2: Cambridge on them.
Speaker 3: Well, I got to tell you it's going to take
Speaker 3: a genius to figure out healthcare in this country.
Speaker 2: So we're lucky to have you help us. Help us
Speaker 2: because you know, Tim and I talk with a lot
Speaker 2: of folks and we talk about disruption, innovation, We've got
Speaker 2: the metaphorse coming, we've got generative AI, all these wonderful
Speaker 2: things coming at us, and yet it still feels like
Speaker 2: in some ways healthcare is way behind the times. How
Speaker 2: do you see it? How do you think about it?
Speaker 12: Yeah, thanks a lot for having me on. I'd say,
Speaker 12: you know, we didn't my co author Lauran and av
Speaker 12: and I didn't go into this thinking about disruption, but
Speaker 12: we concluded that it was the only solution. And part
Speaker 12: of the reason is related to that fact that you
Speaker 12: started with that thirty million Americans are one in ten
Speaker 12: Americans under sixty five lack health insurance at any given moment.
Speaker 12: That gets talked about endlessly, But a really, really important
Speaker 12: statistic that gets very little coverage is the fact that
Speaker 12: more than twice as many Americans, in fact, one in
Speaker 12: four Americans under sixty five will have some period of
Speaker 12: time without health insurance.
Speaker 7: Coverage over a.
Speaker 12: Two year period. In other words, health insurance, whose very
Speaker 12: purpose is to be secure and certain, is in fact
Speaker 12: highly uncertain. We all live if we are lucky enough
Speaker 12: to have health insurance with the risk of losing.
Speaker 3: That coverage is that because it's tied to our jobs.
Speaker 12: For people with employer provided health insurance, that you know
Speaker 12: half about half of the population that haves that Yes,
Speaker 12: For people with publicly provided health insurance, the risk is
Speaker 12: like Medicaid or Medicare for certain diseases, the risk is
Speaker 12: you can lose your coverage if your income changes, or
Speaker 12: you get older, or you have a disease specific coverage
Speaker 12: program and you get cured of that disease, or and
Speaker 12: this is kind of the most heartbreaking part, or you
Speaker 12: can simply lose your coverage because you fail to realize
Speaker 12: that you need it to file forms to demonstrate that
Speaker 12: you're still eligible under some income category. And that's why
Speaker 12: we realized further patches and incremental reform won't work. We
Speaker 12: have to tear this down and start over. Because whenever
Speaker 12: you have different pathways to eligibility and coverage through a
Speaker 12: myriad of programs, you're going to have gaps at the themes,
Speaker 12: and that's where people are falling through.
Speaker 2: All right, So the professor Finglestein could wave your magic
Speaker 2: wand and change one thing that you think would be
Speaker 2: a game changer in terms of improving healthcare in the
Speaker 2: United States. What would it be? I'm just curious, who
Speaker 2: would you wave the magic wand over? Is it the
Speaker 2: health insurance is Is it politicians?
Speaker 9: Is it?
Speaker 13: What?
Speaker 12: To fix our coverage problem? We need automatic universal basic
Speaker 12: coverage that's free for everyone, no patient payments, and then
Speaker 12: the option to buy supplemental coverage if you want more
Speaker 12: than the basic.
Speaker 3: Is this sounds forgive me, I'm not sixty five, but
Speaker 3: my parents are over sixty five, and this sounds like medicare.
Speaker 12: It may sound like Medicare, it's not. Here's one very
Speaker 12: important difference, and that I think a lot of the
Speaker 12: proponents of Medicare for all don't realize that Medicare for
Speaker 12: some is actually very very incomplete insurance. So, for example,
Speaker 12: for doctor visits, people have to pay twenty percent of
Speaker 12: the doctor bill out of their own pocket, with no limit,
Speaker 12: no cap. So you can, if you're unfortunate enough to
Speaker 12: be quite ill, you have cancer, say and you rack
Speaker 12: up lots of physicians visits and bills. You can be
Speaker 12: on the hook for tens of thousands of dollars that
Speaker 12: you have to pay despite having coverage. A startling fact
Speaker 12: is not only that there's enormous amounts of medical debt
Speaker 12: in the United States, but that three fifths of that
Speaker 12: is incurred by people who have health insurance. So in
Speaker 12: that sense, our plan would be much better than the
Speaker 12: current Medicare plan and there'd be no risk of having
Speaker 12: to pay anything out of pocket. On the other hand,
Speaker 12: because we are realists at least in the economic in
Speaker 12: terms of the economics, we have that coverage be much
Speaker 12: more basic than the current Medicare coverage. People are so
Speaker 12: concerned about Medicare costs growing so fast and going through
Speaker 12: the roof One reason they do that is because there's
Speaker 12: no budget constraint on the system. Patients want care, physicians
Speaker 12: are willing to provide it. There's no gatekeeper on the
Speaker 12: back end saying no, maybe we need to, you know,
Speaker 12: check to make sure you really need that CT scam
Speaker 12: because you came in with a headache. So we would
Speaker 12: have much more constraints on the nature of the care
Speaker 12: that's provided, But anything that was provided would be completely free.
Speaker 2: So how do we help you know, you know where
Speaker 2: that gets to, like people making decisions about who gets what, like,
Speaker 2: how do we make sure that is done in a
Speaker 2: pure way.
Speaker 12: That's a good question. So the first thing I want
Speaker 12: to emphasize is that the whole point of a universal
Speaker 12: basic health insurance system is to fulfill the social commitment
Speaker 12: that we clearly have and it's revealed by all our
Speaker 12: patchwork policies to provide essential medical care when people are ill,
Speaker 12: regardless of their ability to pay for it. And so
Speaker 12: the basic coverage has to cover what's medically essential, but
Speaker 12: it doesn't have to cover things that we all might
Speaker 12: like but that aren't actually essential medical care, such as
Speaker 12: you know, so you can have longer wait times for
Speaker 12: non urgent care, you can have a fewer fewer amenities
Speaker 12: of the non medical part, you know, like more people
Speaker 12: to a hospital room or and this is what other
Speaker 12: countries do. Countries like Singapore or Australia, they provide universal
Speaker 12: basic coverage, but if you want a private hospital room
Speaker 12: or good hospital food, that's what you pay extra for.
Speaker 2: I will say, like, there was one point my husband
Speaker 2: got ill over in the UK and we were initially
Speaker 2: in I guess their public system and right and yeah,
Speaker 2: and it was a ton of people in a room
Speaker 2: and you had to get up to get your own food.
Speaker 2: It wasn't great, I'm going to be quite honest. And
Speaker 2: he was with an employer who pulled him out and
Speaker 2: put him over to a hospital that is was like
Speaker 2: a nice hotel and you know, got a bunch of
Speaker 2: tests that they could do as soon as he walked in.
Speaker 2: Although we had to see the finance person. That was
Speaker 2: the first person we saw to make sure that it
Speaker 2: was going to be paid for. Like, it was just
Speaker 2: such a contrast. And I guess, so I'm trying to understand,
Speaker 2: you know, how we move forward and get to something
Speaker 2: where more people are getting better care, and I'm wondering,
Speaker 2: how do we pay for all of this?
Speaker 12: So I think those are related questions. The example we
Speaker 12: give in the book is, you know, how do we
Speaker 12: fulfill our obligation obligations but without you know, all the
Speaker 12: extra stuff. So your husband's example is a perfect one.
Speaker 12: It's it's I can totally understand why you liked going
Speaker 12: outside of the system more you had, you know, a
Speaker 12: private room, more convenience, et cetera. But I think our
Speaker 12: commitment as a society is not to provide everyone with luxury,
Speaker 12: high end medical care, such as your husband was fortunate
Speaker 12: to receive, but to provide essential medical care. And that's
Speaker 12: also how we keep the price down. So if you
Speaker 12: are fortunate enough to be able to afford it, and
Speaker 12: you want to buy those extra amenities, that's great, but
Speaker 12: that's not what we're committed to as a society. We're
Speaker 12: not committed to providing a luxury experience. We're committed to
Speaker 12: providing essential medical care. And as we discuss in the book,
Speaker 12: that's also how we keep the price tag.
Speaker 6: Guy great.
Speaker 2: And I certainly wasn't arguing in favor of the other
Speaker 2: because he wasn't fixed. He was basically just fixed enough
Speaker 2: to get on a plan and come back home to
Speaker 2: the United States. But it was just such a contrast,
Speaker 2: and I was trying to get my head around, like,
Speaker 2: how do we figure this out? Professor Finkelstein, don't go anywhere.
Speaker 2: We want to continue this conversation. We are talking with
Speaker 2: Amy Finkelstein. She is a co author of a new
Speaker 2: book it's called We've Got You Covered, Rebooting American Healthcare.
Speaker 2: Professor of Economics at MIT, and director of Healthcare Program
Speaker 2: at the National Bureau of Economic Research. I mean, really
Speaker 2: is coming at this from just checking all the boxes
Speaker 2: of someone I think who needs to understand how to
Speaker 2: fix this.
Speaker 3: She's at the NBER. I wonder if she can tell
Speaker 3: us if there's a recession.
Speaker 2: That's our next question. Carol Masser along with Tim Stenovik
Speaker 2: here on Bloomberg Business Week, and we want to get
Speaker 2: back to Amy Finkelstein. She's co author We've Got You
Speaker 2: Covered Rebooting American Healthcare, Professor of economics at MIT, director
Speaker 2: of the Healthcare Program at the National Bureau of Economic Research.
Speaker 2: And as we mentioned earlier at twenty eighteen, MacArthur fell
Speaker 2: on Zoom in Cambridge. So do you know is it
Speaker 2: a recession? Is a recession coming.
Speaker 12: That? Acist?
Speaker 3: We had a great Bloomberg story a few months ago.
Speaker 3: Amy and the group of folks at the NBER were
Speaker 3: described as eggheads, who are the ones who decide whether
Speaker 3: or not we're in a recession. So I guess we'll
Speaker 3: have to go to you for how we fix American healthcare.
Speaker 7: What' just the egghead on health?
Speaker 3: Hey, that's good enough for us. We appreciate that. What
Speaker 3: is the one country that is doing this the best every.
Speaker 12: High income country, but the US is doing it much
Speaker 12: better than we are. None of them do are doing
Speaker 12: it exactly as we propose.
Speaker 3: Which one is closest not a fair question.
Speaker 12: We're like some of them in some dimensions and like
Speaker 12: others on others. What I can say that every other
Speaker 12: high income country is doing, which is what we propose,
Speaker 12: is automatic universal basic coverage and the option to supplement
Speaker 12: or top it up if you want more. And the
Speaker 12: third element, which is really key, a budget that is
Speaker 12: enforced in terms of how much can be spent by
Speaker 12: the taxpayer on healthcare. One thing that's shocking about the
Speaker 12: US system is there is no healthcare budget in the
Speaker 12: sense of what a budget really means. A budget constraint,
Speaker 12: an amount that you can't spend beyond. When people talk
Speaker 12: about the Medicare budget, they mean how much Medicare has
Speaker 12: spent or will spend, not the cap on how much
Speaker 12: it can spend. So we need to enforce a budget
Speaker 12: and use that taxpayer money that we've allocated to provide
Speaker 12: universal basic coverage. Now you ask which country we're like, Well,
Speaker 12: in one dimension, we're very much like the UK and
Speaker 12: Canada in having absolutely, no patient copays in the basic coverage.
Speaker 12: No patients don't have to pay anything out of pocket.
Speaker 12: On the other hand, in terms of the design of
Speaker 12: the supplemental coverage, we very much don't want to do
Speaker 12: it the way the UK does it, but we want
Speaker 12: to do it the way say Singapore or Australia do it,
Speaker 12: where you can just pay the extra cost to top
Speaker 12: up upgrading, you know, to business class. You don't have
Speaker 12: to repurchase the entire ticket to get a little extra
Speaker 12: ligruy and just pay for the additional cost.
Speaker 2: But doesn't that create again inequities because obviously not everybody
Speaker 2: can can upspend if you will.
Speaker 12: Absolutely, we you know, we see the key mission of
Speaker 12: health care policy to make sure that everyone has access
Speaker 12: to essential medical care, regardless of resources. And beyond that.
Speaker 12: We tolerate inequality in you know, the supplemental and the
Speaker 12: same way we tolerate inequality in other aspects of our society,
Speaker 12: you know, housing, food, et cetera. Our proposals about a
Speaker 12: floor not a ceiling. And one thing that's really important
Speaker 12: to understand because I know that makes a lot of
Speaker 12: people uncomfortable because however we feel about inequality in say clothing,
Speaker 12: you know, many people feel rightly that the health is different,
Speaker 12: that it occupies a, you know, a sort of special
Speaker 12: place in our moral firmament. One of the things we
Speaker 12: make very clear in the book is that there's an
Speaker 12: enormous body of research that makes it clear that, as
Speaker 12: counterintuitive as it may seem, if you're concerned, and you
Speaker 12: should be about the shocking health disparities it exists in
Speaker 12: the United States between high end low income, between black
Speaker 12: and white, health insurance policy is simply not the lever
Speaker 12: to lean on health insurance would make reform would have
Speaker 12: little effect on those health disparities. And probably the clearest
Speaker 12: way to see that is from work that some economists
Speaker 12: have done ich In Chen Maria Poliakova and Petra Parson,
Speaker 12: who shows it in a country like Sweden, And there's
Speaker 12: other work showing this in Norway, despite universal health insurance
Speaker 12: and cradle to the grave social safety net, the health
Speaker 12: inequality across the income distribution is as large in say, Sweden,
Speaker 12: as it is in.
Speaker 3: The United Wow, that's surprising to hear. So, yeah, if
Speaker 3: you look, I have two questions for you, one yes
Speaker 3: or no. But you can also tell me it's not
Speaker 3: a fair question. Do doctors in the US make too
Speaker 3: much money?
Speaker 12: It's not relevant to our proposal.
Speaker 3: So that's my next question. When you look at the
Speaker 3: when you look at the value chain across patient access,
Speaker 3: and you know you hear the stat thrown around all
Speaker 3: the time that you know, a fifth of our GDP
Speaker 3: goes to healthcare costs. Where is that money going? Who
Speaker 3: is getting that money? Who doesn't deserve it.
Speaker 12: One of the key things about our proposal is to
Speaker 12: realize that you can separate the question of how do
Speaker 12: we make sure that everyone has access to es central
Speaker 12: medical care regardless of resources, from the very hard questions
Speaker 12: that you're raising about how to fix you know, healthcare spending,
Speaker 12: how to make sure that we can you know, spend
Speaker 12: less and still achieve good outcomes. The coverage problem turns
Speaker 12: out to be a really easy one. As I said,
Speaker 12: basically every other high income country has done it. The
Speaker 12: question you're asking, which is a good question, is one
Speaker 12: that no one knows the answer to, and I don't
Speaker 12: care what they're claiming. It's a very very hard problem.
Speaker 12: But the way we can afford it is to realize that, yes,
Speaker 12: that statistic you said is right. We spend twice as
Speaker 12: much as any other country on healthcare fifth of our
Speaker 12: economy as a share of the economy, but only half
Speaker 12: of that is publicly funded. So taxpayer dollars in the
Speaker 12: US are not more than in other countries. We're already
Speaker 12: paying for universal coverage through the tax system. We're just
Speaker 12: not getting it all.
Speaker 2: Right, So just got about a minute left here, so
Speaker 2: forgive me, and I'm just maybe a little brain day,
Speaker 2: But I mean, so, what's the step one towards what
Speaker 2: you are talking about? What would we have to change?
Speaker 2: What is it?
Speaker 12: We'd have to completely tear down the current system and
Speaker 12: build system in quotations, the current patchwork of policies we
Speaker 12: have in place and actually design and build a coherent,
Speaker 12: automatic universal.
Speaker 2: Basically, how does that start? Is it politics? Is it politicians?
Speaker 2: Is it the private sector? How do we start?
Speaker 7: It's public policies?
Speaker 12: So, yes, we need it, we need it. We're waiting
Speaker 12: for the first, you know, would be presidential candidate to
Speaker 12: sign on board for our plan. The book just came
Speaker 12: out today, so you know, I'm willing to give it
Speaker 12: a week or two.
Speaker 2: I guess what, you know, and listen, I wish we
Speaker 2: had more time because this is a really I think difficult.
Speaker 2: I always feel like health care and education, these are
Speaker 2: the two things that really need some disruption to happen
Speaker 2: in But healthcare, I feel like there's so much money
Speaker 2: in it. You know that it complicates it?
Speaker 11: Is that fair?
Speaker 2: I just got about fifteen seconds. It complicates it, right.
Speaker 12: It does. But once we agree on the solution, then
Speaker 12: we can start trying to figure out how to achieve it.
Speaker 2: I got to say, I love a book that says
Speaker 2: more than fifty shades of gray, but it has to
Speaker 2: do what's going to be considered, you know, kind of
Speaker 2: basic coverage, right, what things go? Fertility treatments is it basic?
Speaker 2: I don't know, physical therapy anyway. Amy Finkelstein, incredible. Check
Speaker 2: out the book.
Speaker 1: Everybody, you're listening to the Bloomberg Business Week podcast cat
Speaker 1: just live weekday afternoons from three to six Eastern Listen.
Speaker 5: On Bloomberg dot com, the iHeartRadio app, and the.
Speaker 1: Bloomberg Business App, or watch us live on YouTube.
Speaker 2: All right, we're going to talk a little bit about
Speaker 2: those who work specifically at Amazon their fulfillment centers, because
Speaker 2: it is a subject of a story that's in the
Speaker 2: upcoming new issue of Bloomberg BusinessWeek, And you got to
Speaker 2: keep in mind that coming up this month there are
Speaker 2: hearings into Amazon's labor practices in Washington State, just the
Speaker 2: beginning of a widening government crackdown on the company's safety record.
Speaker 2: That I guess many would argue, Matt, that they are
Speaker 2: the most intrusive scrutiny in the company's history, that is,
Speaker 2: the investigation into them.
Speaker 11: So you mean that they are monitoring these employees with
Speaker 11: cameras and electronic devices, really watching what they were doing
Speaker 11: to see how difficult a job it can be at
Speaker 11: an Amazon fulfillment fulfillment center sounds like such.
Speaker 2: A we're fulfilling.
Speaker 11: I'm trashing that term. Come on, it's a warehouse, all marketing.
Speaker 2: It's all marketing, data, democratization, right, finances? All right, So
Speaker 2: let's get to the two reporters who wrote it. This story,
Speaker 2: as we said, featured in the upcoming new issue of
Speaker 2: Bloomberg Business Week on newsstands later this week, already online
Speaker 2: at Bloomberg dot com, slash BusinessWeek, and of course on
Speaker 2: the Bloomberg terminal. So let's get to it with Bloomberg
Speaker 2: News Technology and e Commerce reporter Spencer Soper on the
Speaker 2: phone in Seattle and Josh Idelson, labor reporter at Bloomberg
Speaker 2: News on Zoom in San Francisco. Spencer, let me kick
Speaker 2: it off with you, because you take us back. You
Speaker 2: kick off the story and take us to December twenty
Speaker 2: twenty one. Tell us a little bit about what was
Speaker 2: going on.
Speaker 13: Yeah, so that's when state inspectors and so these will
Speaker 13: be people with Washington State Department of Labor and Industry,
Speaker 13: based on some concerns, including media reports about warehouse injuries
Speaker 13: as well as the injury rate at the facility itself,
Speaker 13: entered and looked around and in a huge little investigation,
Speaker 13: they'll bring cameras and survey the workplace. And ordinarily these
Speaker 13: things don't even escalate to this point of contention. It's
Speaker 13: more like a cooperative thing where an employer wants to
Speaker 13: know how to solve injuries. But in this case, they
Speaker 13: actually had a court order to enter the warehouse in
Speaker 13: Amazon's home state of Washington. Use electronic devices to put
Speaker 13: on workers and measure all kinds of things like how
Speaker 13: frequently they stoop and bend and twist, and calculate the
Speaker 13: rates that they're performing lifts every minute or every hour,
Speaker 13: and basically just surveying this workplace for ergonomic risk because
Speaker 13: they're trying to find out and answer questions what can
Speaker 13: be done. There's a high level of injury in this workplace.
Speaker 13: What can we do to make it safer?
Speaker 11: Yeah, I mean, I've been in a lot of car
Speaker 11: factories and you'll always see signs that say, like, you know,
Speaker 11: sixteen days without an injury, right, and they count higher
Speaker 11: and hire. But at Amazon warehouses, nearly one hundred people
Speaker 11: are injured every single day.
Speaker 2: That's a lot.
Speaker 11: And Josh, it doesn't make much sense to me from
Speaker 11: the business perspective. Don't they want to keep their staff
Speaker 11: from getting injured, because if you hurt yourself on the job,
Speaker 11: then you're out not for like a day or two,
Speaker 11: but for a month or two.
Speaker 14: Well, Amazon, of course says that they are working hard
Speaker 14: to prevent their staff from being injured. We talk to people,
Speaker 14: including one of the ergonomists from the state of Washington
Speaker 14: who's testifying in this proceeding, and a warehouse safety equipment
Speaker 14: makers director who argue that there are things the company
Speaker 14: could be doing and it's not doing. And as you
Speaker 14: say that those would save the company money. It costs
Speaker 14: money to have people out injured. It costs money to
Speaker 14: bring in new employees. Now, the measures that are being
Speaker 14: urged by Washington State would also cost the company money,
Speaker 14: both because of operational changes and because fundamentally, this case
Speaker 14: in Washington State is partly about the pace of work,
Speaker 14: an issue that has dogged Amazon for years now, This
Speaker 14: question of how much the company expects workers to do
Speaker 14: in an hour and how that expectation impacts the likelihood
Speaker 14: of getting hurt.
Speaker 2: Well, this goes to the core right there. But their
Speaker 2: business model is really on trial, is what you guys
Speaker 2: report about. And Spencer, I mean so much we talked
Speaker 2: about all the time. We've all gotten used to I
Speaker 2: order and I get the next day or get it
Speaker 2: in two days, like we just all expect that. But
Speaker 2: that puts a lot of pressure right on Amazon workers
Speaker 2: to really churn stuff out.
Speaker 13: Yeah, and so there's a variety of jobs and tasks
Speaker 13: right and Amazon it's tough to get them to pin
Speaker 13: down a specific quota because I say, it kind of
Speaker 13: moves around depending on how people are performing in their
Speaker 13: own operations and stuff. But what's coming out and what
Speaker 13: Amazon is acknowledging is saying, listen, if someone's in our
Speaker 13: warehouse performing a job, and their pace of work is
Speaker 13: you know, below ninety five percent of what their peers
Speaker 13: are doing. That you know, that's the only thing that's
Speaker 13: going to trigger them getting spoken to. And what the
Speaker 13: state is saying is like, listen, that's a little bit
Speaker 13: too tight of a work expectation because you have pretty
Speaker 13: broad difference in the physical capabilities and the stamina of
Speaker 13: a workforce. You know, that's going to range from kids
Speaker 13: fresh out of high school, you know, to people in
Speaker 13: their fifties and sixties. So it's basically their operation is
Speaker 13: on trial, and the main question is is it safe?
Speaker 13: And if the answer to that is no, how can
Speaker 13: it be how can it be made more safe?
Speaker 10: Well?
Speaker 11: And they found that they're not safe in a lot
Speaker 11: in a lot of these cases, right. And by the way,
Speaker 11: they use extremely high tech gear to monitor the workers.
Speaker 11: I guess they have a Dutch company x Sense technology
Speaker 11: that that makes these motion sensors that they were putting
Speaker 11: on Amazon employees arms or legs or whatever. I thought
Speaker 11: they were gonna start using gear like that to help
Speaker 11: these workers do their jobs. Like ten years ago, I
Speaker 11: did a piece about robotics that would help you at
Speaker 11: a Mason, Right, yeah, Josh, do they not have this
Speaker 11: kind of tech or Spencer, I mean, are they putting
Speaker 11: is Amazon putting any you know, mechanical helpers in place.
Speaker 11: I don't know which one of you is a better
Speaker 11: person to ask for these for these questions. Oh right, Josh,
Speaker 11: I'll go with you.
Speaker 14: I would defer to Spencer on what the Okay, we'll.
Speaker 11: Go with Spencer.
Speaker 13: Spencer, Spencer, Yeah, yeah, I can answer that. And so, yes,
Speaker 13: there are there's a lot of automation within Amazon warehouses,
Speaker 13: and a lot of it is just focused on pushing
Speaker 13: product through the facility as quickly as possible. They have
Speaker 13: robots that shuffle things around. You're a worker, you might
Speaker 13: be if you're a picker, which is someone who's actually
Speaker 13: you know, you ordered a toothbrush on Amazon. I'm a picker.
Speaker 13: I'm going to be the one who actually retrieves that
Speaker 13: from a bin. A robot will bring that bin to
Speaker 13: me and I will retrieve that item that you've ordered.
Speaker 13: So there are robots and automation in there, but there's
Speaker 13: still extra things, and some of it is very simple.
Speaker 13: Like so, the hearings actually began today and I've been
Speaker 13: watching them, and one thing coming up is, hey, they've
Speaker 13: got they've got step ladders, which help people if they're
Speaker 13: going to minimize like reaching over your head, which is
Speaker 13: a very serious hazard if you're reaching a high above
Speaker 13: your head to grab a box. But the step ladders
Speaker 13: they're using aren't tall enough. They need to be taller.
Speaker 13: So some of these things are very aren't high tech
Speaker 13: at all, fairly simple solutions and also just rotating workers
Speaker 13: through different jobs. And the state inspector who is testifying
Speaker 13: today said he found no schedule of an actual rotation
Speaker 13: and that it just seemed to be kind of willy nilly,
Speaker 13: you know. So again, it's not necessarily high tech solutions.
Speaker 13: Some of them are. Some of them require investment, but
Speaker 13: some are pretty simple, things like step letterers and shifting
Speaker 13: people through different roles.
Speaker 2: Well, and you get into some of the different roles,
Speaker 2: the stuffers, fluid loaders, those who place outbound packages onto trucks,
Speaker 2: the stuffers who unload boxes from trucks. I mean, some
Speaker 2: of this is repetitive. It's probably pretty heavy one way.
Speaker 11: A mandatory overtime. By the way, don't forget right that
Speaker 11: they're not these are not eight hour no right.
Speaker 2: They might go really long. What I want to ask you, though,
Speaker 2: josh is has the law not kept up with kind
Speaker 2: of the way how we work has evolved. I mean,
Speaker 2: first of all, we've had assembly lines for a long time.
Speaker 2: This is a different type of assembly line, if you will.
Speaker 2: But I'm just wondering what the law has said, labor law.
Speaker 7: Well.
Speaker 14: One of the things that's interesting about this case is
Speaker 14: in several decades, it's one of the only times that
Speaker 14: there's a trial about ergonomic issues, and there is no
Speaker 14: really specific federal ergonomic standard, which is not something.
Speaker 7: No one has thought of.
Speaker 14: In fact, there were efforts in parallel a couple decades
Speaker 14: ago in Washington State and at the federal level there
Speaker 14: were what would have been ergonomic rules put in place,
Speaker 14: which then were swept away quickly because at the federal level,
Speaker 14: when George W. Bush won the two thousand election, the
Speaker 14: Republicans in Congress and President Bush used the Congressional Review
Speaker 14: Act to undo Clinton's new ergonomic rules. In inl on
Speaker 14: Washington State, there was actually a voter referendum to undo
Speaker 14: ergonomics rules. That means that instead, at the state and
Speaker 14: federal level, the enforcers are stuck using what's called the
Speaker 14: General Duty Clause in federal law, which is a more
Speaker 14: general requirement that the employer avoid hazards that are known
Speaker 14: and could cause serious harm. Of course, there's tremendous debate
Speaker 14: about what would count as such a violation, and we're
Speaker 14: going to see that play out in Washington State in
Speaker 14: this trial over the coming days.
Speaker 11: You know, it's interesting they had one of the senators
Speaker 11: quoted in the story says that she I think it
Speaker 11: was a She is one of those people who loves
Speaker 11: getting her box the next day, right, right, and now
Speaker 11: she feels guilty. But that's still achievable. It would seem
Speaker 11: to me, you just don't make one person, you know,
Speaker 11: pack two hundred boxes, you know, for twelve hours a day. So, Spencer,
Speaker 11: did you look at that, like if it's possible for
Speaker 11: Amazon to still achieve the same end with just you know,
Speaker 11: maybe more employees or more centers, or is the only
Speaker 11: answer to slow things down a little bit?
Speaker 13: Yeah, it's a it's a critical question, and I don't know,
Speaker 13: because the bottom line is Amazon basically has made you know,
Speaker 13: think about this. You used to drive to the store yourself,
Speaker 13: You used to walk yourself to the aisle to get
Speaker 13: the item. You needed, you would walk that aisle to
Speaker 13: a cash register, you would pay someone for that item,
Speaker 13: you would drive it home. Right, So basically stores were
Speaker 13: relying kind of meeting you half way to get you
Speaker 13: the product. Amazon is doing you know, all of that,
Speaker 13: saving you that trip to the store. They're using you know,
Speaker 13: another worker, paying them gas, you know, paying you know,
Speaker 13: the gas for the vehicle, the trip to your house,
Speaker 13: all that stuff, and doing it at a price that's
Speaker 13: competitive of you going to a store that's very difficult
Speaker 13: to pull off. And if you start turning knobs and
Speaker 13: increasing costs, this thing could could unravel. So that's that
Speaker 13: is that is the critical question. Can this business be
Speaker 13: done in a way that is comparable to to going
Speaker 13: to the store at the same cost or is it
Speaker 13: more of like a boutique service that you're gonna have
Speaker 13: to pay a little extra forcuse just because the cost
Speaker 13: of doing it safely is higher.
Speaker 2: Hey, real quickly, Josh, how quickly or how long is
Speaker 2: this trial expected to last? Just got about twenty five seconds.
Speaker 14: So the trial will be going on for weeks and
Speaker 14: then there is a potential appeals process that could drag
Speaker 14: this on far into the future.
Speaker 2: All Right, so we'll be talking about it for a while.
Speaker 2: All right, guys, thank you so much. Bloomberg News Technology
Speaker 2: and e commerce reporter Spencer Soaper joining us on the
Speaker 2: phone in Seattle. Josh Iidlson, labor reporter at Bloomberg News
Speaker 2: on Zoom in San Francisco. As we said this story
Speaker 2: in the upcoming new issue Bloomberg Business Week, I do
Speaker 2: wonder Matt, like, do they have to rethink their business
Speaker 2: model and start to say, well, maybe take long what.
Speaker 11: Or should we pay more if we want, you know,
Speaker 11: instant fulfillment?
Speaker 2: We used to, but we used to do that. Think
Speaker 2: about it, if you wanted something right away or overnight, like
Speaker 2: you would have to pay a company.
Speaker 11: I still do, I think I think you do more
Speaker 11: and more often. I was just ordering, for example, cricket
Speaker 11: shirts out of Austin, Texas, and they have a more
Speaker 11: normal like it takes a week or two for the
Speaker 11: shirts to get to you. If you want a faster
Speaker 11: you pay an extra twenty or thirty dollars. And I
Speaker 11: think a lot more companies are going back to that
Speaker 11: rather than promising you next day delivery.
Speaker 2: Right, And maybe we all just manage our expectations. And
Speaker 2: I have to have everything the next day. All right,
Speaker 2: this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
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Speaker 1: Just say Alexa play Bloomberg eleven.
Speaker 2: Thirty Plenty ahead in our second hour of the weekend
Speaker 2: edition of Bloomberg Business Week, including fun with the maker
Speaker 2: of Ken and Barbie. Mattel CEO inon cries on the
Speaker 2: movie The Toy Business and losing a topic Zech, plus
Speaker 2: a classically trained French chef who is big time into
Speaker 2: the vegetarian space, including plant based seafood. We talked with
Speaker 2: the founder of Conscious Foods, also joining us, Laura ray Dickey.
Speaker 2: She's the CEO of the more than eighty year old
Speaker 2: family run franchise Dicky's Barbecue Restaurants. First up this hour,
Speaker 2: Mattel reported sales and profit that beat analyst expectations, but
Speaker 2: it didn't get much help from Barbie, the fashion doll
Speaker 2: that was the focus of the top movie in the
Speaker 2: world last weekend. Those earnings came out late Wednesday, just
Speaker 2: hours after we got word that Richard Dixon, the MATEL
Speaker 2: chief operating officer who oversaw a recent Barbie turnaround, will
Speaker 2: become CEO of The Gap next month with more on
Speaker 2: all things Mattel. We were delighted to have back with
Speaker 2: us in on Cries, Chairman and CEO of Mattel. First
Speaker 2: of all, congratulations on Barbie, because we have been talking
Speaker 2: about that with you for a while. I almost feel
Speaker 2: like since the beginning and your strategy of bringing Mattel
Speaker 2: toys to life, what does the success of the movie
Speaker 2: mean to you and the company.
Speaker 9: Yes, that's right, Carol, Then thank you for having me
Speaker 9: on the show. As you remember from the very beginning,
Speaker 9: this was never about just making a movie. This was
Speaker 9: about creating a cultural event, a societal moment, and we
Speaker 9: could not be happier where we are today with such
Speaker 9: strong performance right out of the gate the first week,
Speaker 9: with over five hundred million dollars in growth in box
Speaker 9: office receipts, and more importantly the audience reaction, with people
Speaker 9: going two and even three times already in the first
Speaker 9: week to see the movie, a very broad audience including Man,
Speaker 9: and a very strong performance internationally that is stronger than
Speaker 9: the US, and it's not because the US is not
Speaker 9: doing well. It's just a very strong performance across the world.
Speaker 9: And all in all, it really is an exciting moment
Speaker 9: and a showcase for the cultural resonance of our brands,
Speaker 9: our ability to attract and collaborate with top creative talent
Speaker 9: and marketing and demand creation capabilities to create what is now,
Speaker 9: you know, a cultural phenomenon.
Speaker 2: You know what does it mean for merchandise? I mean,
Speaker 2: I've actually bought some Barbie products, to be quite honest,
Speaker 2: I grew up with Barbie's, introduced them to my daughter,
Speaker 2: My older sisters introduced me to them, and it's nostalgic
Speaker 2: for me. But I also have been in the stores
Speaker 2: where all ages are snapping out products. How how does
Speaker 2: that move the needle for you guys financially as well?
Speaker 9: All those Yeah, well, it's see incredible take up of
Speaker 9: the movie related merchandise. We have handing been sixty more
Speaker 9: than having a sixty five different consumer product partners, different
Speaker 9: different industry, different products all over the world, and we're
Speaker 9: seeing incredible excitement and as you say, you know, product
Speaker 9: is setting out quickly. This is a movie related merchandise.
Speaker 2: Does it financially have a material financial material impact on
Speaker 2: you guys, Well.
Speaker 9: We haven't broken it out, but this is already part
Speaker 9: of what we expect will be an uplift in Barbie
Speaker 9: sales in the second half. This is really where it
Speaker 9: kicked in. And of course don't forget the Hello effect
Speaker 9: on the overall Barbie brand with the significant improvement in
Speaker 9: consumer demand already in the third quarter, and expect Barbie
Speaker 9: to grow in the third quarter and and the full year.
Speaker 3: Nan you called it a cultural moment, and certainly that
Speaker 3: means that it can polarize some people, at least here
Speaker 3: in the United States. Got to ask about the high
Speaker 3: profile people on the right who've criticized the film. Ben
Speaker 3: Shapiro made this forty minute YouTube video. It's been viewed
Speaker 3: nearly two million times. He says he destroys the movie.
Speaker 3: He actually burns Barbies in it. Elon Musk says, if
Speaker 3: you take a sh every time Barbie says the word patriarchy,
Speaker 3: you'll pass out before the movie ends. How do you
Speaker 3: react to that criticism?
Speaker 9: Barbie has been a flag carrier for diversity and inclusivity.
Speaker 9: Barbie inspired the limitless potential in every girl, and and
Speaker 9: the genius of Greta is what she did. She took
Speaker 9: this message, you know that that focuses on female empowerment
Speaker 9: and made this movie appealing and relevant to everyone, and
Speaker 9: people who go to the movie, you know, whether you're
Speaker 9: a Barbie fan or or you know, or looking to
Speaker 9: be entertained and inspired by by a modern day interpretation
Speaker 9: of one of the most iconic brands in modern culture.
Speaker 9: This movie Will Will Will Be, Will Be, Will Be
Speaker 9: an experience for you. And what we believe is this
Speaker 9: movie will recontextualize the way people think of Barbie and
Speaker 9: what Barbie means for the world. And we could not
Speaker 9: be more proud of the of the messages and the
Speaker 9: unique voice that Greta has in this movie.
Speaker 2: Well, and I'm curious too, does it mean that we're
Speaker 2: going to see a Barbie sequel? Or is it a
Speaker 2: case of you guys move on to other toys?
Speaker 9: You know, we have an announced sequel, and you know,
Speaker 9: we're still barely a week into the religion.
Speaker 2: But how we journalists are, We're like, okay, now, now,
Speaker 2: what what's next?
Speaker 9: You know, you're not alone, You're not alone and asking
Speaker 9: the question. But of course you know, it's such a success,
Speaker 9: such a phenomenal success, you know, of course we'd be
Speaker 9: looking to extend, extend this, and we've always said that
Speaker 9: our goal is not this is broadly not just about
Speaker 9: Barbie is We're not looking to create single movies, but
Speaker 9: to build film franchises for the long term. And of
Speaker 9: course this is part of our strategy in terms of
Speaker 9: capturing the full value from our intellectual properties.
Speaker 2: You know, does that intellectual property be it in movies
Speaker 2: or streaming series or what have you. How you guys,
Speaker 2: you know, whichever ways you go, does that ultimately become
Speaker 2: a big generator of revenues.
Speaker 9: We absolutely said that our strategy in capturing the full
Speaker 9: value of our IP outside the toy isle can be
Speaker 9: meaningful in success, you know, and we're looking to scale this.
Speaker 9: This is not just about a movie or a TV series.
Speaker 9: This is about participating in the highly accreative business verticals
Speaker 9: outside the toy isle that are all driven by big franchises,
Speaker 9: big brands, and in some cases these verticals are larger
Speaker 9: than the toy industry. So we believe that we have
Speaker 9: you know, the assets, the capabilities, the relationship and with
Speaker 9: the Barbie movie, this really positions us in a very
Speaker 9: strong way as a key player that can participate in this,
Speaker 9: in these verticals and create meaningfully shareholder value and build
Speaker 9: a meaningful business out of this.
Speaker 3: You know, It's like Carol said, this has been a
Speaker 3: busy week for you. Got to ask about the big
Speaker 3: news yesterday the co president and CEO Richard Dixon moving
Speaker 3: on to be CEO of the Gap. Let's get your
Speaker 3: comments on that. How big of a loss is this
Speaker 3: for the company.
Speaker 9: Richard is a friend and has been a great colleague
Speaker 9: and partner for me since I joined the company. But
Speaker 9: one of Richard's biggest accomplishments is that we built a
Speaker 9: very very strong team of leaders, of designers, of innovators,
Speaker 9: of creative talent within the company and the executives who
Speaker 9: take over from Richard. Between Lisa McKnight, who has been
Speaker 9: the head of Barbie since twenty and sixteen and very
Speaker 9: much manage the transformation together with Richard and the head
Speaker 9: of Dools in twenty nineteen. And Josh Silverman, who has
Speaker 9: been a Disney for twenty years that is now where
Speaker 9: he oversaw all of business third party relationships with licensees,
Speaker 9: now running our non point commercial activities.
Speaker 2: So You're not worried.
Speaker 9: Two world class leaders really taking charge and we could
Speaker 9: not be more confident of our team. He's running this business,
Speaker 9: you know.
Speaker 2: On ten seconds, got to be quick. Did you give
Speaker 2: tips to Will Farrell on playing a CEO of Mattel?
Speaker 9: I can learn a lot from him on the comedy side,
Speaker 9: but I'm a big fan and it's great to see
Speaker 9: him playing the role.
Speaker 2: Well, congratulations and we're looking forward to following more of
Speaker 2: this story and what comes next. In on christ Gairman
Speaker 2: and chief executive officer at Mattel, on the phone from
Speaker 2: elsin Gundo, California. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen.
Speaker 5: On Bloomberg dot com, the iHeartRadio app and the Bloomberg.
Speaker 1: Business app, or what's just live on YouTube.
Speaker 2: We're gonna talk about something different right now. We have
Speaker 2: a really cool guess or.
Speaker 11: The same, depending on your pet.
Speaker 2: That's true. He has bicycled more than thirty four hundred
Speaker 2: miles from Montreal to the Pacific Ocean. Classically trained French chef,
Speaker 2: he's founded a couple of food companies, he has sold them.
Speaker 2: He has spent more than three decades thinking about the
Speaker 2: vegetarian food world, creating everything from a veggie hot dog
Speaker 2: and more. Matt, so he knows the space.
Speaker 11: All right, I'm interested. I'm very interested to hear about
Speaker 11: this because I would love to be a vegetarian if
Speaker 11: I could. The way we treat, especially factory farm, which
Speaker 11: is almost all of our animals, from cows to chickens,
Speaker 11: is disgusting.
Speaker 2: Yeah, processes.
Speaker 11: On the other hand, meat is so yummy and it's
Speaker 11: packed with protein.
Speaker 10: Right.
Speaker 2: Also yummy is seafood, and he's now got a new
Speaker 2: venture involving vegan seafood. It's known as Conscious Foods. So
Speaker 2: with us is chef Eve Potfinn. He's present and founder
Speaker 2: of Garden. I believe I'm saying it, I hopefully correctly
Speaker 2: Conscious Food with Us on Zoom from Vancouver, British Columbia.
Speaker 2: And forgive me if I've mispronounced. I studied a lot
Speaker 2: of Spanish, not a lot of French.
Speaker 11: Next, well, it's a famous name here in New York,
Speaker 11: pot Dan, you know, yes, it is?
Speaker 6: It is?
Speaker 2: That is true. Welcome, Welcome, tell us a little bit
Speaker 2: about yourself because you have done some really interesting stuff,
Speaker 2: and you've really spent a lot of time on you know,
Speaker 2: the vegetarian world and the plant based food world.
Speaker 7: Hot come well, Matt, I'm like you. I'm a flexitarian,
Speaker 7: so you know, I believe there's you should always try
Speaker 7: to make a contribution for a bit of world. And
Speaker 7: so I was, like you said, a trained chef, and
Speaker 7: somehow I humble into the plant based business. And for
Speaker 7: the last over thirty years I've been developing different brand
Speaker 7: and very excited to present Conscious Conscious with a Cave today.
Speaker 7: So we're a new innovative brand. We're on a mission
Speaker 7: to change the way that people eat by providing a
Speaker 7: line of frozen sushi or NIGHERI and Poke boll that
Speaker 7: this is close to my heart, that it tastes good first,
Speaker 7: and it's good for the people, good for the planet,
Speaker 7: and we're so excited to launch our nationwide with folk
Speaker 7: Food this week.
Speaker 11: I mean, it's I think an issue that's close to
Speaker 11: our hearts as well. Carol and I are both scuba
Speaker 11: divers and we've all seen the problems. All of us
Speaker 11: that have been underwater have seen the problems that giant
Speaker 11: fishing expeditions create and then for a while I thought, Okay, well,
Speaker 11: factory farm salmon, that must be a better alternative. Turns
Speaker 11: out it really isn't because they don't do a good
Speaker 11: job of raising those fish either. But the taste has
Speaker 11: been a problem for me. I've only tried artificial you know,
Speaker 11: plant based beef burgers like Impossible Burger or what's the
Speaker 11: other one beyond beyond meat. I couldn't really stomach either
Speaker 11: one of them. So how do you overcome that problem?
Speaker 7: And that's why I'm so excited to be here talking
Speaker 7: to you, Matthew Caroll, because evidently you are conscious, You
Speaker 7: are aware of your environment and the way the younger
Speaker 7: population today they vote with them mout and they say, well,
Speaker 7: I want a better future, So it has to be
Speaker 7: something that tastes good, it's good for the environment. And
Speaker 7: another thing that we're excited about conscious is that we
Speaker 7: have price parity. So a lot of the company that
Speaker 7: you mentioned before, I think it's something like twenty percent
Speaker 7: of the population that would like to incorporate plant based
Speaker 7: protein in their diet, but they say it's too expensive. Well,
Speaker 7: with the person I think of this new generation innovative
Speaker 7: brand that it's price parity it's not a more expensive
Speaker 7: than nutuitional traditional protein, but because of my chef background,
Speaker 7: it has to taste good. And a consumer now they're
Speaker 7: looking for sustainable choice that are affordable, and so you
Speaker 7: can go to Whole Food and buy a California role,
Speaker 7: a Japanese courreer, the gary or salmon poke bol and
Speaker 7: it's going to cost you seven ninety nine or eight
Speaker 7: ninety nine. You don't have to break the bank to
Speaker 7: eat consciously.
Speaker 2: Now, I guess the one thing too I will go
Speaker 2: back to is things like impossible and beyond me. What
Speaker 2: I had had a problem with Eve is that there
Speaker 2: was a lot of sodium in them, and to me,
Speaker 2: that wasn't I think of planet based proteins and I
Speaker 2: think healthier and less impact on the environment. Like it
Speaker 2: has to take off a bunch of boxes for me
Speaker 2: in order and it has to taste good. So tell
Speaker 2: us about the nutritional value or some of the metrics
Speaker 2: so that if I turn over the box, what am
Speaker 2: I going to see when it comes to sodium or whatever.
Speaker 11: The way there's a lot of boxes has to tick
Speaker 11: better for the environment, Yep. It has to cost the
Speaker 11: same or around the same, right, it's got to taste good,
Speaker 11: and it's got to be good for you because obviously, Eve,
Speaker 11: you know, there's a lot of protein and meat and
Speaker 11: it's not packed with salt, as Carol says.
Speaker 7: Yeah, totally right, And so we are looking and Matt,
Speaker 7: You're totally right. You know, in our lifetime, we know
Speaker 7: that somewhere in the next twenty thirty years we're going
Speaker 7: to drive elect a car or any other form of
Speaker 7: car that is not fueled by petroleum. But it's the
Speaker 7: same thing in our life. We know most of the farm,
Speaker 7: most of the official's going to EAT's going to be
Speaker 7: farm farm raised, and you know, a lot of salmon
Speaker 7: in the market went now it's artificial color, artificial flavor,
Speaker 7: et cetera. So we're on a mission to change the
Speaker 7: way we eat. I said earlier, is because we have
Speaker 7: a third of the sodium of traditional sushi that you
Speaker 7: eat in the supermarket, we have less fat, and we
Speaker 7: have ingredient that are easily recognizable. So our tuna as
Speaker 7: first ingredients is organic tomato. The second one is conjact.
Speaker 7: Conjact is a mood vegetable that has tremendous dietary fiber
Speaker 7: and it's good for you. So yes, there's many books
Speaker 7: that the customer is looking. First of all is the price. Well,
Speaker 7: we take care of that one. Nutritional We have about
Speaker 7: half of the protein right now that salmon or tuna has.
Speaker 7: But it's okay. Most people don't buy just because of
Speaker 7: the protein, they buy because of the whole package. But
Speaker 7: we are working very closely to trying to increase the
Speaker 7: level of protein. No artificial ingredient, non gmo, organic ingredients, etc.
Speaker 7: So I think we've done a good job putting the package.
Speaker 7: But most important, it's convenient. My wife likes to say
Speaker 7: frozen to me in five minutes. So and people ask
Speaker 7: me that why do youse in sushi? Well there's twenty
Speaker 7: thousand sushi restaurant in North America. There's a need for
Speaker 7: it to have it in your freeze.
Speaker 2: But you know, something like salmon, right, I go for
Speaker 2: it because of the omega three fatty acids. Right, that's
Speaker 2: good for me, and I would rather you know, kind
Speaker 2: of grew up with a family. You know, everything in
Speaker 2: moderation and better to eat as true to how it
Speaker 2: is grown or cultivated, hopefully and do less of it.
Speaker 2: So do I get that benefit?
Speaker 7: You do? We have only got three comes from different sorts.
Speaker 7: One of them is the fish oil, but it's also
Speaker 7: vegetable oil that we incorporate in our product that has
Speaker 7: the same level as ome got three that you have
Speaker 7: in traditional.
Speaker 2: Fish Interesting, really interesting, are.
Speaker 11: You I'm convinced. I'll tell you what. I'm convinced enough.
Speaker 11: We have a whole Foods right down here. Try on
Speaker 11: third and fifty seventh. I'll walk down there and get
Speaker 11: some for sure.
Speaker 2: Yeah, I'm right.
Speaker 7: Just follow the instruction, very tree easy way to prepare
Speaker 7: it microwave one minute. If you don't like microwave, you
Speaker 7: can put the patent pending packaging in hot water for
Speaker 7: eight minutes, or you could leave it at room temperature
Speaker 7: and it sweady.
Speaker 2: Polunch, We're talking with Eve Puffin, president and founder of
Speaker 2: Conscious Foods, on Zoom from Vancouver, British Columbia. Hey, one
Speaker 2: thing I wanted to ask you. I mean, Matt and
Speaker 2: I talk a lot about food and just the way
Speaker 2: we produce things and trying to feed this world, and
Speaker 2: a lot of the ways that we do it are
Speaker 2: not great for the environment. There's also a lot of
Speaker 2: food waste. And there's an interesting Bloomberg opinion columnist that
Speaker 2: talks about big food should be esg's next target. Basically,
Speaker 2: just going after the alter processed food makers.
Speaker 11: Should be esg's first target. Should have been esg's first target,
Speaker 11: because if you do, you want to stop carbon emissions, right,
Speaker 11: you got to go after the beef industry, even before
Speaker 11: you go after the internal combustion engine.
Speaker 2: So how do you think about all of this? You know,
Speaker 2: you've been working in the food industry for a long time.
Speaker 2: How do you think about it? And what is a
Speaker 2: better way forward?
Speaker 7: Well, it's about diversity. You know. Last year August, we
Speaker 7: reached a milestone of eight billion in population. We know that,
Speaker 7: and that's what's one of the reasons. You know, I
Speaker 7: have a younger daughter. When she was born not that
Speaker 7: long ago, twenty five years ago, the population was three
Speaker 7: point seven billion. Now we're at eight and we're going
Speaker 7: to be at ten billion. So and that was my idea,
Speaker 7: and I said, it makes a lot of sense. We know,
Speaker 7: and taking Vancouver Simon reached the price of thirty dollars
Speaker 7: a pound this summer, So traditional protein is going to
Speaker 7: go higher and higher in price, So why not diversify
Speaker 7: the protein and use the plant base, you know, and
Speaker 7: the question is having manufactured and processor like the innovator
Speaker 7: that takes those protein, the p protein, all the different
Speaker 7: sourts of protein, put it in a way and forming
Speaker 7: in the shape that people are accustomed to. Because people
Speaker 7: won't start feeding themselves lentil and chickpea and a thing
Speaker 7: like this is too complicated. So and that's what we do.
Speaker 7: We use traditional sushi and we make our own snow
Speaker 7: crab or on now on salmon. And I'm really excited
Speaker 7: for you, Matt, to go try it because you're going
Speaker 7: to say, Wow, this tastes great. And I feel very
Speaker 7: proud about what we accomplish. And I think the world
Speaker 7: is changing. The younger population is voting with them out
Speaker 7: and I think it's a question of using all our
Speaker 7: source of protein. That is what we're going to find
Speaker 7: a solution, not beef, not just seafood, but using the
Speaker 7: protein from a variety of sorts. Seaweed is fantastic source
Speaker 7: of protein.
Speaker 11: All right. So and the sushi, it's packed full of protein.
Speaker 11: What's the protein and the calorie value of that of
Speaker 11: that sushi those California roles.
Speaker 7: Calorie is about three hundred and fifty calorie for eight
Speaker 7: coin and it's about you know, traditional sushi is about
Speaker 7: eight percent protein. This is about four percent. So but
Speaker 7: most people don't go to the sushi and say I'm
Speaker 7: eating there because of protein. Most people have too much
Speaker 7: protein and dead dye. That's that's that's the reality. So
Speaker 7: I think it's more about nutrition. What you bring nutrition,
Speaker 7: and I think our product is pack of nutrition. We
Speaker 7: have all the vitamin d A, b et cetera that
Speaker 7: your body need, so and it. But most important is
Speaker 7: what we're offering is convenience. You can have sushi on
Speaker 7: a giary, poke bol at lunch, dinner, smack, have a
Speaker 7: party with your friend, so having the product available in
Speaker 7: your freezer and ready in five minutes. And it's about
Speaker 7: giving a choice to the consumer that whenever you want,
Speaker 7: you can have a product that you like. Like I
Speaker 7: said earlier, twenty thousand sushi, five thousand, poke bowl, wrestlant,
Speaker 7: there's a.
Speaker 2: Market for so Eve as demand. Let's assume that this
Speaker 2: takes off and as demand picks up, can you keep
Speaker 2: it at the cost level that you have now or
Speaker 2: will just like with kind of regular food, it just
Speaker 2: feels like, as you said, the growing population, like demand
Speaker 2: just has gotten out of control. And as the developed
Speaker 2: world has a much more or the developing world has
Speaker 2: more of a developed diet, like right, there's more demand
Speaker 2: of that traditional food thing. So the cost, I'm just
Speaker 2: curious about the process and the cost as demand ramps up.
Speaker 11: One of the main inputs pease, Well, the rice comes
Speaker 11: from California.
Speaker 7: All our vegetables are from British Columbia, so we're trying
Speaker 7: to buy local as possible. But we have a thirty
Speaker 7: four thousand square feet facility in Vancouver. Over here we
Speaker 7: can produce four thousand row an hour, so that's a
Speaker 7: pair amount of volume. But our plan is to open
Speaker 7: a factory or a processing facility in the US, one
Speaker 7: in Asia, and one in Europe. So your question, Carol
Speaker 7: is more about ingredient. Has you increased the demand? Well,
Speaker 7: the view with root vegetable is you can grow more,
Speaker 7: you know, from a I'm not anti beef, I'm not
Speaker 7: anti fish, but it's just it's not a logical way
Speaker 7: to grow your protein. It takes eighteen months to raise
Speaker 7: a cattle and half of the you know, take you
Speaker 7: feed it more than what you get at the end,
Speaker 7: so versus the plant based protein. That's why it makes
Speaker 7: so much sense.
Speaker 2: Even with climate change, even with climate change making it
Speaker 2: sometimes more problematic or difficult.
Speaker 7: And depending what you're growing, Carol, you see if you're
Speaker 7: growing more corn or more wheat or more soy. But
Speaker 7: you know, there's a lot of place in Asia, for example,
Speaker 7: that's where the root vegetable conscious. It's all over Asia.
Speaker 7: But rice, there's lots of room to grow rice and
Speaker 7: so and you need to you need to eat something.
Speaker 7: You know, at one point people asking me why in
Speaker 7: my previous business, why are you using wheat or soy?
Speaker 7: Except what I said, I don't use nil, I don't
Speaker 7: use dairy, I don't use egg. You need to eat
Speaker 7: food something you can't just live with with water and air.
Speaker 7: And I think the food we grow, the food we
Speaker 7: use that conscious is very good. And yes, it's sustainable.
Speaker 2: Interesting, all right, we're going to leave it on that note.
Speaker 2: Really really fascinating. And I do feel like more and
Speaker 2: more we continue to see the food space slowly being disrupted,
Speaker 2: if you will.
Speaker 11: Yeah, well, And I also the deeper I look into it,
Speaker 11: the more problems I have with the way our food
Speaker 11: is produced or farmed or caught. And as I said,
Speaker 11: you know, salmon is one of the biggest conundrums because
Speaker 11: I don't want to support industrial fishing and I don't
Speaker 11: want to support the factory farming of salmon, but I
Speaker 11: love salmon.
Speaker 2: There was just a story did you see at the
Speaker 2: New York Times about the fate of Alaska's king salmon
Speaker 2: and starving orcas at orcas like don't have enough food,
Speaker 2: and so they're trying to figure out what to do,
Speaker 2: and they're thinking about maybe that we have to stop
Speaker 2: fishing them. But then you've got, you know, folks that
Speaker 2: rely on it.
Speaker 11: For we can't and you can't, they won't stop.
Speaker 2: I don't know, it's just tricky. Eve. Thank you so much,
Speaker 2: really appreciate it, Eve Pop, and hopefully you'll come back
Speaker 2: soon and give us an update on the business. President
Speaker 2: and founder of Conscious Foods. Showing us on zoom from Vancouver,
Speaker 2: British Columbia.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: So we're gonna take a little bit of a break
Speaker 2: from earnings from FED, talk from yeal curves. And because
Speaker 2: it's summer, we're gonna talk some barbecue.
Speaker 11: Okay with that, Well, I mean not, It's not just
Speaker 11: like a summer fun session, right, because this actually is
Speaker 11: very closely connected to markets, to inflation, to the FED,
Speaker 11: because the costs have been soaring.
Speaker 2: I just said we're gonna take a break. Okay, gosh, okay,
Speaker 2: can you just follow my lead? Okay, all right, let's
Speaker 2: get to it.
Speaker 7: Lower.
Speaker 2: Ray Dickie is with us. She's CEO of the more
Speaker 2: than eighty year old family run barbecue franchise business, Dicky's
Speaker 2: Barbecue Restaurant. It's based in Dallas. Six hundred and fifty
Speaker 2: Dickeys Barbecue pits locations in forty four US dates eight
Speaker 2: other countries. I want to confirm some of these numbers
Speaker 2: with her. Laura joining us on Zoom in Texas. Laura
Speaker 2: is so delighted to have you here with Matt and myself.
Speaker 2: And I hate to say it, I'm going to say
Speaker 2: he is right because labor beef, this is certainly our world.
Speaker 2: First of all the business of barbecue. How's it going?
Speaker 2: Tell us about it.
Speaker 15: You know, in general, the business of barbecue is good,
Speaker 15: but you are absolutely right, those macroeconomic factors that you
Speaker 15: see and you talk about every day all the time
Speaker 15: are definitely affecting us because you know, I hate to
Speaker 15: say this for Duncan, but America runs on trucks actually,
Speaker 15: and so every part of the supply chain has stress
Speaker 15: for us, whether that's it's all the fuel costs, labor
Speaker 15: costs are beef packers, for example, going to a shorter
Speaker 15: work week is directly affecting the price of beef in
Speaker 15: the market. You know, the beef average this year has
Speaker 15: been out about about four dollars and eighty three cents.
Speaker 15: That's about two cents higher than it was in an
Speaker 15: all time last year. You know, our price actually is
Speaker 15: about three thirty four pound because of our purchasing power,
Speaker 15: we're actually with the number of restaurants that we have
Speaker 15: one of the largest, the largest purchaser of beef brisket
Speaker 15: in the country in the restaurant space. And so you know,
Speaker 15: we really really feel that food inflation. And so while
Speaker 15: business is good, we've certainly had to be very proactive.
Speaker 15: We've taken many reductions, you know, actually in our eighty
Speaker 15: two year history, and this is the largest menu reduction
Speaker 15: we've ever taken. We've cut our menu by forty one
Speaker 15: percent to fight food inflation, to keep from passing on
Speaker 15: all of those costs to our guests.
Speaker 11: So certainly, chet, let me, let's let's try and break
Speaker 11: this down a little bit. Because so first of all,
Speaker 11: on your menu, when you see prices of beef, I
Speaker 11: think have risen a lot more than pork, has risen
Speaker 11: more than chicken. If i'm if I'm not mistaken, I
Speaker 11: know that feed costs are much higher than cattle, it
Speaker 11: is smaller. And so what does this mean for your menu?
Speaker 11: Do you raise the price then of your beef products?
Speaker 11: Are people choosing more chicken? Are you trying to offer
Speaker 11: more interesting chicken, you know, entrees so that people take
Speaker 11: those instead of pork? How does it? How do you
Speaker 11: work it out?
Speaker 15: Absolutely well? So, first, you're absolutely right, beef has been
Speaker 15: the most effective. It has the largest market cycle, if
Speaker 15: you will, it's actually a ten year cycle, but the
Speaker 15: last three years or really make the most difference in
Speaker 15: that price per pound that you're seeing when you pay
Speaker 15: you go to the grocery store, you certainly go to restaurants,
Speaker 15: and so that price per pound hid an all time
Speaker 15: high last year, and again we're two cents above that
Speaker 15: this year, and we expect that to stay stable, but
Speaker 15: in order to you know, not pass all of that
Speaker 15: onto guests, which there's certainly a tolerance that that market
Speaker 15: tolerance that guests just can't simply absorb you price yourself
Speaker 15: out of the market. So we certainly do shift to pork.
Speaker 15: It's certainly that for us the summer of pulled pork,
Speaker 15: if you will. We have a wonderful pulled pork sandwich,
Speaker 15: our kicken comeback sandwich, which is great pulled pork with
Speaker 15: some wonderful kicking comeback claw on it. And we're doing
Speaker 15: that intentionally to guide guests towards pork. Chicken is in
Speaker 15: a good place. It's still high, but not as high
Speaker 15: as it has been. It's about three dollars and sixty
Speaker 15: two cents a pound right now. It's certainly taken a
Speaker 15: break from its high two years ago. And you can
Speaker 15: see the influx of the wing business as well as
Speaker 15: the Avian flu and some other things like that, but
Speaker 15: chicken has just a much shorter market cycle, so it
Speaker 15: can recover much quicker so that you'll see the flux
Speaker 15: of chicken more so, and that's why you'll see specials
Speaker 15: roll on and off with chicken with more frequency. Although
Speaker 15: there's a lot of chicken in the market, it's one
Speaker 15: of the most popular proteins out there, so you have
Speaker 15: to be kind of careful with that because it can
Speaker 15: really fluctuate pricing again due to that short of market.
Speaker 2: So there's nothing like that. I'm I'm going to say,
Speaker 2: there's nothing like a brisket sandwich.
Speaker 15: I agree with you.
Speaker 2: I love brisket well. So then how do you guys
Speaker 2: deal with some of the stress points? I'm assuming wages too,
Speaker 2: and labor is another issue, right.
Speaker 15: It is, And that's where it's really challenging for folks
Speaker 15: in the business at large, in the restaurant industry is
Speaker 15: because again going back to that supply chain, there is
Speaker 15: stress at every point in the supply chain, whether it's
Speaker 15: the fuel costs for the trucks to get there. And
Speaker 15: with the restaurant business, you have labor not only in
Speaker 15: the supply chain, but obviously in the restaurants themselves, and
Speaker 15: then the food inflation that all guests all consumers are feeling.
Speaker 15: We certainly feel as well. So you have that and
Speaker 15: you have to be really, really really careful about where
Speaker 15: you can take price, but you also have to maintain value.
Speaker 15: And so for us, we shrunk our menu down to
Speaker 15: our core proteins. We cut anything from the menu that
Speaker 15: we didn't feel that we could pass on, you know,
Speaker 15: what we would have to in order to sell that.
Speaker 15: For example, we cut smoke turkey, which has been a
Speaker 15: staple for us and it will only be here for
Speaker 15: the holidays, but we just didn't feel that we could
Speaker 15: pass that on to the guest, and so we made
Speaker 15: that menu reduction.
Speaker 2: Go back to diesel. Because I just looked at Matt,
Speaker 2: I'm like, how many energy costs come down? Is like diesel?
Speaker 13: Right?
Speaker 2: You guys use diesel to cook it?
Speaker 13: All?
Speaker 10: Right?
Speaker 15: Usually? Well we do, so we use it. There's lots
Speaker 15: of different pieces, but yes we do. But it's certainly
Speaker 15: in the restaurant in the cooking process, but it's also
Speaker 15: in the freight everything. And sometimes what people forget is
Speaker 15: when you look at all of the markets that you
Speaker 15: see a lot of different opportunities in retail or folks
Speaker 15: that have longer shelf life on their products. But for us,
Speaker 15: because we have two to three days of perishable product
Speaker 15: on hand, we're so susceptible to what the markets are doing.
Speaker 15: And so it's very, very very hard to be able
Speaker 15: to work around that labor cost of stress points, that
Speaker 15: fuel costs, the labor shortages, and then what the commodity
Speaker 15: markets do. And so we're thankfully in a position where
Speaker 15: we have enough restaurants and we have enough purchasing power
Speaker 15: in the market that we can again kind of speculate
Speaker 15: out by buy with speculation, buy and hold, do those
Speaker 15: sorts of things that a lot of smaller restaurant chains
Speaker 15: don't have the opportunity to do, or mom and pop
Speaker 15: may not have the opportunity.
Speaker 11: Take us back, Laura Ray, and talk to us about
Speaker 11: the business and your involvement in it, because I think
Speaker 11: a lot of people are listening. You know, they think
Speaker 11: of Dickies as this family owned business and they're like,
Speaker 11: how come you know, I don't know, Travis, Dicky's granddaughter
Speaker 11: is like a PhD economist. But you actually have extensive
Speaker 11: experience in the markets. You've worked with agencies and covered
Speaker 11: big restaurant chains like Chick fil A and others. So
Speaker 11: you have you come to this CEO position with real
Speaker 11: experience in the industry and you have really grown the business.
Speaker 11: You have six hundred and fifty restaurants around the world.
Speaker 11: It's not just like one barbecue pit in Texas. So
Speaker 11: tell us, tell us about the business.
Speaker 2: My family in Texas would say just would not be
Speaker 2: the way to say Texas is a good place to be.
Speaker 15: Anyway, go ahead, Well, you know, actually I'm married in
Speaker 15: I will say that, so I'm actually the granddaughter in law.
Speaker 15: I missed a meeting and got demoted to CEO, is
Speaker 15: how I like to put it. But I did. I
Speaker 15: did have a lot of experience in the industry before
Speaker 15: I joined actually married and met Roland and then was
Speaker 15: drafted into service and thought it would be temporary. And
Speaker 15: here I stand today. But it's been just that kind of.
Speaker 16: Journey of working always in hospitality, technology and strategic planning
Speaker 16: and a lot of restaurant clients in that genre, and
Speaker 16: so have worked with lots of different brands and there's
Speaker 16: a lot of similarity, and then there's a.
Speaker 15: Lot that's unique about Dickies. But we certainly have grown it.
Speaker 15: We are now third generation. We are still family owned
Speaker 15: and operated. I would love for guests to just think
Speaker 15: that their neighborhood Dickies is the only Dickies. I think,
Speaker 15: then we're doing something right, because that's how barbecue should feel.
Speaker 15: It's that passion food. It's really an experience. We smoke
Speaker 15: all of our meats on site. You go in and
Speaker 15: you should be able to smell that hickory smoke. You
Speaker 15: should be able to have that experience where you're hand chopped,
Speaker 15: sliced or if you are a pulled coort fan that
Speaker 15: brass stop.
Speaker 2: I'm starving, pet starving now, So wait, just quickly, we
Speaker 2: only have about thirty seconds. Where's the growth come? Because
Speaker 2: you led the company into international expansion? Is that the
Speaker 2: growth and unfortunately just got about thirty seconds left.
Speaker 15: Yes, there's international growth, but there is still domestic growth.
Speaker 15: Believe it or not. California is our second largest market,
Speaker 15: so it's not all vegan country out there. Folks still
Speaker 15: do like their barbecue, and there's just opportunity in barbecue.
Speaker 15: There's a lot of burgers, there's a lot of chicken,
Speaker 15: but there's less and less a really really great barbecue.
Speaker 15: So there's still markets here.
Speaker 2: It's funny you said californ because I was gonna say,
Speaker 2: what about plant based barbecue? Is that something that you
Speaker 2: have to think about just real quick?
Speaker 15: Yeah, God, no, no, no, you know what that's I
Speaker 15: like to say, we can serve something for everybody. That's
Speaker 15: where we would do a giant stuff baker without meat,
Speaker 15: but everything else will be real traditional barbecue.
Speaker 2: All right, Well, come back soon, Loorery Dicky, but you
Speaker 2: have to bring some barbecue next time. Louray Dicky. She's
Speaker 2: chief executive officer of Dicky's Barbecue Restaurants. On Zoom from Dallas.
Speaker 2: I'm starved.
Speaker 11: I can't wait to go to a Dickie's. I'm going
Speaker 11: to find any reason to get on a plane and go.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: People are going on vacation, folks. We are in the
Speaker 2: thick of summer. We're from the US airlines too. Over
Speaker 2: the past week or so, United just yesterday, latest major
Speaker 2: US carrier to benefit from strength and global travel. Yeah,
Speaker 2: aren't you going overseas?
Speaker 11: I'm going to Spain next week.
Speaker 2: See, so everybody's on vacation.
Speaker 11: Not looking forward to it?
Speaker 6: Why so hot?
Speaker 2: I know it's hot, It's yeah, it's going to be rough.
Speaker 11: I want to go to Alaska. Do you want to
Speaker 11: go to the Arctic right now? I need to be
Speaker 11: somewhere cool.
Speaker 2: Fyi it's melting.
Speaker 11: Yeah, I know, but at least it's still chilly.
Speaker 2: All right, So let's get to it. Let's talk about vacationing,
Speaker 2: demand and pricing. I'm curious what our next guest to see.
Speaker 2: Montage International founder, chairman and CEO, Alan Firstman is with
Speaker 2: us on zoom is in Maui. Montage is a luxury
Speaker 2: hospital to that, but at a luxury hospitality management company.
Speaker 2: Try that again. It's got properties in California, Mexico, Bahamas
Speaker 2: and more. Alan, Nice to be talking with you again.
Speaker 2: How are you. I think it's been about a year.
Speaker 2: Talk to us about great.
Speaker 6: Great to be back.
Speaker 2: Well, great to have you. How busy are you guys?
Speaker 2: What are you seeing?
Speaker 10: We're in the middle of summer. Busy summer. The resorts
Speaker 10: have been the place to escape the heat and enjoy
Speaker 10: the relaxation. See a lot of families traveling and an
Speaker 10: exciting time for us.
Speaker 11: So what's it like out there? I mean, Hawaii is
Speaker 11: like a bucket list place for me. I've also seen
Speaker 11: Mawana like a thousand times, so he has a young daughter, Maui.
Speaker 11: The name Maui has a special place in my heart.
Speaker 11: But it's hot here. I can't imagine wanting to go outside.
Speaker 11: What's it like there?
Speaker 6: Well, here, it's tropical beautiful.
Speaker 10: I mean, the beaches and the pools amazing. I'm here
Speaker 10: with five grandchildren and extended family. It's just a great
Speaker 10: opportunity to work a little bit in the morning and
Speaker 10: relax and enjoy the afternoons with the family.
Speaker 2: But eighty one degrees Matt, Oh, that's nice humidity.
Speaker 11: I'm just trying to get to what this heat wave
Speaker 11: and what these air quality issues. What kind of effect
Speaker 11: has that had on travel?
Speaker 6: Well, I mean there's an escape to markets that aren't as.
Speaker 10: Hot I would imagine, and it's important that those areas
Speaker 10: that are hot are taking all the necessary precautions to
Speaker 10: make sure the staff stays hydrated. And there's plenty of
Speaker 10: water stations for guests. We've taken some additional steps of
Speaker 10: late to make sure that there's plenty of water everywhere,
Speaker 10: but hotels and resources are a good place generally to
Speaker 10: escape the heat.
Speaker 2: All Right, So let's like we said, it's about a
Speaker 2: year since we last talked with you. Give me an idea.
Speaker 2: You say, great, everything is a good place to be,
Speaker 2: But give me an idea in terms of demand and pricing.
Speaker 2: What it's like. Is demand up from a year ago?
Speaker 2: Is it down from a year ago? What's pricing light?
Speaker 2: Is pricing like in terms of deals? Is it softer?
Speaker 11: I will say, allan, we saw AMX today. They had
Speaker 11: record volumes, but since they had such difficult comps because
Speaker 11: last year was so great, the market was a little
Speaker 11: bit disappointed.
Speaker 10: Yeah, I think I think pricing might have has come
Speaker 10: down a little bit over the highs of last year
Speaker 10: when you think about so much of the luxury travel
Speaker 10: heading to Europe and other markets that have opened up
Speaker 10: that weren't available a year ago, but well above conditions
Speaker 10: pre pandemic. So we're seeing some relatively strong numbers still.
Speaker 10: So that's a very positive sign. And we're just seeing
Speaker 10: that there's continued demand for highly differentiated special places.
Speaker 2: What about for you guys specifically, right, you're involved in
Speaker 2: the management of these properties. Do you have the workers
Speaker 2: you need? Are you again having to pay up for them?
Speaker 10: Well, we've had to pay up, but there's been certainly
Speaker 10: a rise in costs, and again it's been market by market.
Speaker 10: Some markets have been less difficult to attract labor, but
Speaker 10: it's an important component of what we do. You've seen though,
Speaker 10: part of the pricing increases that have been passed on
Speaker 10: to guests have come from the need to pay up,
Speaker 10: both for wages and for cost of goods. That's been
Speaker 10: the story of the inflationary time period we've been going through.
Speaker 10: It's good to see it settling down a little bit
Speaker 10: and we're somewhat optimistic that things will stabilize. We've had
Speaker 10: a very strong workforce fect we're in the process of
Speaker 10: opening Pendry Newport Beach, which is going to open in September,
Speaker 10: and we're hiring over four hundred new associates there and
Speaker 10: have had great success in attracting and finding superior talent.
Speaker 11: Are there any have trend shifted at all, you know,
Speaker 11: pre pandemic to now in terms of where people want
Speaker 11: to go, what they want to do what they're budgeting.
Speaker 11: I mean, are they focused more on vacations, because certainly
Speaker 11: I think a lot of employees are focused more on
Speaker 11: life in the work life balance.
Speaker 10: Yeah, I think so, And I think the advent of
Speaker 10: being able to work remotely means doesn't mean working just
Speaker 10: remotely from home.
Speaker 6: Why not extend your.
Speaker 10: Stay at a vacation destination no longer and there's a
Speaker 10: lot of combination. I'll work a little bit, but I'll
Speaker 10: also be enjoying. So we're seeing longer length of stays
Speaker 10: as a result of the need not to get back
Speaker 10: to the office as promptly as we may have years
Speaker 10: a few years back. So that's been a plus for
Speaker 10: us being able to work from our hotels and resorts effectively.
Speaker 2: Ell where are people going? Because you guys have properties
Speaker 2: in Los Cabos, Mexico. I've see in Hawaii where you
Speaker 2: guys are Utah, Laguna Beach, California. I know I'm leaving
Speaker 2: stuff out other places.
Speaker 6: Big Big Sky, Montana, for example.
Speaker 10: It's it's such a such a cool temperature wise and
Speaker 10: otherwise get away. And when we opened there a year ago,
Speaker 10: essentially the first luxury hotel in that market. It's opened
Speaker 10: up a new market, and in the case of Big Sky,
Speaker 10: you're an hour from Yellowstone and you get to experience
Speaker 10: the park but also the luxury amenities, the outdoor lifestyle.
Speaker 10: So we're seeing some newer destinations like Big Sky, Montana,
Speaker 10: and certainly great strength in in the other mountain destinations.
Speaker 6: We were in Deer Valley, we're in we have a
Speaker 6: penry in Park.
Speaker 10: City, so good, good breath across our portfolios. So we're
Speaker 10: seeing we're seeing strong travel throughout.
Speaker 11: Big Sky's also close to Bozeman, so it's an easy
Speaker 11: uh from the airport. And I have to say my family,
Speaker 11: we go skiing in Big Sky, do you love that
Speaker 11: big backcountry? You know, nice off piece, a lot of powder,
Speaker 11: very cool.
Speaker 2: It looks gorgeous.
Speaker 11: Can I ask you, unlus, You've got a very exclusive
Speaker 11: resort on the backside of the mountain. Sounds like Yellowstone?
Speaker 2: Okay, sold? Sold? Is it the But in the Bahamas
Speaker 2: there's a forty eight acre private island resort and community
Speaker 2: that I guess you can rent out.
Speaker 6: We're under construction.
Speaker 10: There were building abacos called Montage Key Private Island. We're
Speaker 10: selling real estate there now, homes, amazing homes, on the
Speaker 10: on the ocean front and building building the resort. Well,
Speaker 10: we should open the end of twenty four, early twenty five,
Speaker 10: and it will be an amazing destination, easily accessible the
Speaker 10: entire East coast, and it'll be a truly global destination,
Speaker 10: very special resort under construction.
Speaker 11: Allen, what's the rates? How is the rates picture affected that?
Speaker 11: Because when you say that, I think, well, I want
Speaker 11: to buy a house there, But then I realize I
Speaker 11: don't want a seven percent mortgage. I guess those people
Speaker 11: maybe pay cash.
Speaker 10: Yes, I think there's the buyer for that market is less?
Speaker 6: Is less interest rates sensitive?
Speaker 13: Yeah?
Speaker 2: Sorry, Matt, Hey, listen twenty years in that you guys
Speaker 2: are happy twentieth anniversary. What's what do you think about?
Speaker 2: You talk about the you know, the development you're doing
Speaker 2: in the Bahamas, but how do you think about what's
Speaker 2: to come.
Speaker 11: The next twenty years?
Speaker 10: Now, we've got fourteen hotels open today, seven Montages and
Speaker 10: seven Pendries, so we have the two luxury brands. We
Speaker 10: have another twelve projects that are either under construction or
Speaker 10: in design right now, and of those, eight are Pendries
Speaker 10: and four are Montages. And we're seeing some real international growth.
Speaker 10: Initially mostly North America. Now we're expanding globally. We've announced
Speaker 10: a couple of projects in the Middle East. We've just
Speaker 10: announced two hotels in Puntomita, which is near Porta Viarta, Mexico,
Speaker 10: both a Montage and a Pendri there.
Speaker 6: We announced a project in Barbados.
Speaker 10: So I think you're going to continue to see both
Speaker 10: domestic and international growth for our company.
Speaker 2: Sounds like you're moving ahead. You're not worried about a recession.
Speaker 2: Are those higher rates? Is that fair? Just got about
Speaker 2: thirty seconds or tell me, yeah, we are.
Speaker 10: But high interst rates are concerning obviously for capitalizing new projects.
Speaker 6: It's obviously a.
Speaker 10: Big concern, and we're hopeful that we've seen the height
Speaker 10: of the interest rates.
Speaker 6: But we are very optimistic.
Speaker 10: We build hotels for generations to come, so we'll withstand
Speaker 10: small blips if they happen, which.
Speaker 6: Are due to happen.
Speaker 11: So cool, you know, to think that a kid from
Speaker 11: New Milford could go to Gettysburg, then he runs the Phoenician,
Speaker 11: then he runs the Bolagio and you found this great,
Speaker 11: big business. I think it's a super a super cool
Speaker 11: story inspiring dream.
Speaker 10: I've got to say how fortunate I've been and yeah
Speaker 10: now I'm truly lucky.
Speaker 2: Well enjoy Maui and always good to check in with you.
Speaker 2: Alan Firstman, founder, chairman and CEO of Montage International joining us.
Speaker 2: As we said from Hawaii.
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