1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:30,520 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Tesla 7 00:00:30,760 --> 00:00:34,360 Speaker 1: definitely on the forefront of people's minds this morning after 8 00:00:34,400 --> 00:00:38,680 Speaker 1: the SEC sued Elon Musk for misleading the world frankly, 9 00:00:38,720 --> 00:00:40,640 Speaker 1: but particularly the markets when he said that he was 10 00:00:40,680 --> 00:00:43,920 Speaker 1: going to take Tesla private for four d and twenty 11 00:00:44,000 --> 00:00:48,120 Speaker 1: dollars share, saying that funding was secured when in reality 12 00:00:48,159 --> 00:00:52,400 Speaker 1: it wasn't. Shares now of Tesla down by eleven percent, 13 00:00:52,600 --> 00:00:56,160 Speaker 1: so definitely seeing a big fall there. David Cutla is 14 00:00:56,160 --> 00:00:59,080 Speaker 1: founder and chief executive officer and chief investment strategist of 15 00:00:59,120 --> 00:01:03,000 Speaker 1: Mainstay Capital. David, you're joining us now, you've embarished on 16 00:01:03,080 --> 00:01:06,960 Speaker 1: Tesla all along. What's your take on this? What are 17 00:01:06,959 --> 00:01:11,000 Speaker 1: the declines really stemming from here? Well, the declines today 18 00:01:11,080 --> 00:01:16,280 Speaker 1: or something from the lawsuit by the SEC yesterday announced. Uh, 19 00:01:16,640 --> 00:01:19,039 Speaker 1: just four or five minutes after the close, and we 20 00:01:19,080 --> 00:01:21,559 Speaker 1: saw what happened after hours trading, and of course what's 21 00:01:21,560 --> 00:01:25,640 Speaker 1: happening in UH in trading today and UH, you know 22 00:01:25,680 --> 00:01:29,360 Speaker 1: this is a big problem for Elon Muskin for Tesla obviously, 23 00:01:30,400 --> 00:01:32,600 Speaker 1: David could lad do you ever look at used or 24 00:01:32,959 --> 00:01:37,920 Speaker 1: pre owned car prices when it comes to Tesla? Yes, 25 00:01:38,440 --> 00:01:40,880 Speaker 1: And I was looking, for example, at how they hold 26 00:01:40,880 --> 00:01:43,880 Speaker 1: their value and they don't seem to do so is 27 00:01:43,920 --> 00:01:47,960 Speaker 1: that concerning? I think it should be concerning, UH And 28 00:01:48,000 --> 00:01:51,240 Speaker 1: I think it's interesting too, UH that that they don't 29 00:01:51,240 --> 00:01:56,080 Speaker 1: hold their value as someone might expect. But I think 30 00:01:56,160 --> 00:02:00,000 Speaker 1: Tesla's concerned primary concern right now, they've got some more 31 00:02:00,120 --> 00:02:05,280 Speaker 1: media issues with their UH cash position, you know they're there. 32 00:02:05,920 --> 00:02:10,400 Speaker 1: Will they be able to remain solvent? UH, their production problems, 33 00:02:10,400 --> 00:02:15,000 Speaker 1: their quality problems, their service center problems, UM, and you know, 34 00:02:15,040 --> 00:02:18,480 Speaker 1: just the metrics that they're trying to to hit as 35 00:02:18,520 --> 00:02:21,240 Speaker 1: we go forward here over the coming weeks, months and 36 00:02:21,440 --> 00:02:23,760 Speaker 1: a couple of quarters. Yeah. I mean, David to follow 37 00:02:23,880 --> 00:02:25,799 Speaker 1: up on that when I asked, you know, why are 38 00:02:25,800 --> 00:02:29,040 Speaker 1: the shares falling? Is it because there is a feeling 39 00:02:29,040 --> 00:02:31,480 Speaker 1: that Elon Musk might be kicked out of the position 40 00:02:31,520 --> 00:02:34,320 Speaker 1: of chief executive officer and what that might mean for 41 00:02:34,360 --> 00:02:37,120 Speaker 1: the company, both from a capital raising standpoint as well 42 00:02:37,160 --> 00:02:40,880 Speaker 1: as directional standpoint. Is it because of concerns of fines 43 00:02:40,960 --> 00:02:43,840 Speaker 1: that are going to potentially reduce their capital position further? 44 00:02:44,240 --> 00:02:47,920 Speaker 1: Where's the risk here? Well, it's I think there's a 45 00:02:47,919 --> 00:02:52,240 Speaker 1: couple of rests. So Uh, first it's that that, uh, 46 00:02:52,520 --> 00:02:55,760 Speaker 1: this is an overhang for the company. Um, there was 47 00:02:55,760 --> 00:03:00,200 Speaker 1: an opportunity where this could have been there as a 48 00:03:00,200 --> 00:03:03,880 Speaker 1: settlement in front of Elon Musk in the board on this, 49 00:03:04,280 --> 00:03:08,680 Speaker 1: and h Elon Musk in his in his way, uh, 50 00:03:08,919 --> 00:03:12,799 Speaker 1: decided to push back and fight it. So now there 51 00:03:12,880 --> 00:03:15,160 Speaker 1: is you know, obviously a risk to shareholders as as 52 00:03:15,200 --> 00:03:17,560 Speaker 1: we've seen today. Uh, there will be a risk in 53 00:03:17,639 --> 00:03:22,720 Speaker 1: being able to raise capital and the risk of Elon 54 00:03:22,800 --> 00:03:25,560 Speaker 1: Musk future with the company because he could be barred 55 00:03:25,680 --> 00:03:28,880 Speaker 1: from being a director officer of a public company. And 56 00:03:28,919 --> 00:03:32,280 Speaker 1: that's problematic because you know, there's been estimates that there's 57 00:03:32,320 --> 00:03:34,720 Speaker 1: a hundred dollars or a hundred and twenty dollars or 58 00:03:34,720 --> 00:03:39,120 Speaker 1: a hundred forty dollars in the price of Tesla stock 59 00:03:39,760 --> 00:03:45,080 Speaker 1: as Elon Musk premium. And look, he is a genius 60 00:03:45,120 --> 00:03:50,480 Speaker 1: inventor visionary. You can obviously his his mission is admirable. 61 00:03:50,960 --> 00:03:54,520 Speaker 1: And the people the you know, it's almost a cult following. 62 00:03:54,680 --> 00:03:57,080 Speaker 1: You know, the people that are the customers that are 63 00:03:57,120 --> 00:04:00,640 Speaker 1: there at the delivery center, you know, uh respect they're 64 00:04:00,640 --> 00:04:03,440 Speaker 1: going to a wedding receiving their vehicles. There is a 65 00:04:03,480 --> 00:04:08,960 Speaker 1: loyal following. And if Ellen is gone or is forced 66 00:04:09,000 --> 00:04:11,880 Speaker 1: to be gone from the company, uh, you know, there 67 00:04:11,880 --> 00:04:13,760 Speaker 1: are analysts out there saying, well, that could be good 68 00:04:13,800 --> 00:04:16,400 Speaker 1: because of his erratic behavior and there needs to be 69 00:04:16,440 --> 00:04:18,919 Speaker 1: an adult in the room running the company. The flip 70 00:04:18,960 --> 00:04:21,560 Speaker 1: side of that is what Tesla has going for it 71 00:04:21,600 --> 00:04:24,800 Speaker 1: is is very loyal following who has given Elon Musk 72 00:04:24,880 --> 00:04:28,640 Speaker 1: and Tesla a lot of passes on broken promises, milestones 73 00:04:28,680 --> 00:04:31,800 Speaker 1: that haven't been met, cars that are not good quality 74 00:04:31,880 --> 00:04:35,960 Speaker 1: by a typical standards in the industry. And those people, 75 00:04:36,000 --> 00:04:38,480 Speaker 1: when Elon is gone, they look at Tesla and site 76 00:04:38,480 --> 00:04:42,400 Speaker 1: Tesla's Elon and Elon is Tesla and Elon we trust 77 00:04:42,440 --> 00:04:46,080 Speaker 1: and Elon is gone, they lose that that I think 78 00:04:46,120 --> 00:04:48,640 Speaker 1: they lose a lot. And you know, PIM to David's point, 79 00:04:48,720 --> 00:04:50,880 Speaker 1: there are a number of analysts from JP Morgan and 80 00:04:50,960 --> 00:04:54,040 Speaker 1: UBS at a number of other big firms, saying that 81 00:04:54,080 --> 00:04:57,119 Speaker 1: they are concerned that without Elon Musk at the top, 82 00:04:57,279 --> 00:04:59,680 Speaker 1: Tesla is going to really struggle to raise money. And 83 00:04:59,720 --> 00:05:01,600 Speaker 1: this is a problem because they're running out of cash 84 00:05:01,920 --> 00:05:05,400 Speaker 1: right They're burning they're burning cash. David, could do you 85 00:05:05,440 --> 00:05:08,520 Speaker 1: have any thoughts on the speed with which this action 86 00:05:08,600 --> 00:05:11,400 Speaker 1: by the Securities and Exchange Commission has been brought after 87 00:05:11,520 --> 00:05:15,600 Speaker 1: learning that Mr Musk decided to not go along with 88 00:05:15,640 --> 00:05:20,360 Speaker 1: a settlement. Well, it's it's um you know, when we 89 00:05:20,400 --> 00:05:22,640 Speaker 1: look at it, and you know, we were on Bloomberg 90 00:05:22,720 --> 00:05:27,600 Speaker 1: talking about it that week, it was it just was 91 00:05:27,880 --> 00:05:33,480 Speaker 1: pretty obvious when you looked at the circumstances very quickly 92 00:05:33,520 --> 00:05:36,000 Speaker 1: that it there just wasn't a deal there. And then 93 00:05:36,040 --> 00:05:38,839 Speaker 1: as more facts came out, it became, I think quite 94 00:05:38,839 --> 00:05:42,920 Speaker 1: apparent to a lot of people that, um, this had 95 00:05:42,960 --> 00:05:44,679 Speaker 1: a lot of the elements of what could be called 96 00:05:44,960 --> 00:05:49,679 Speaker 1: stock manipulating or fraud. And I think the SEC knows 97 00:05:49,720 --> 00:05:51,880 Speaker 1: they have an open and shut case. They wasn't. Did 98 00:05:51,920 --> 00:05:54,000 Speaker 1: you hear the report for example that the reason that 99 00:05:54,760 --> 00:05:56,360 Speaker 1: I think it was I can't remember whether it was 100 00:05:56,400 --> 00:05:58,080 Speaker 1: in the journal at the times, but I mean even 101 00:05:58,080 --> 00:06:02,400 Speaker 1: in our reporting that uh, he's selected the actual dollar 102 00:06:02,440 --> 00:06:07,560 Speaker 1: amount of four God, just tell that story. That's it. 103 00:06:07,760 --> 00:06:10,320 Speaker 1: And it was and it was I don't want to 104 00:06:10,360 --> 00:06:13,279 Speaker 1: say amusing, but unusual that it was actually in the 105 00:06:13,360 --> 00:06:20,160 Speaker 1: complaint that the SEC stated that he uh added premium 106 00:06:20,240 --> 00:06:23,039 Speaker 1: to the stock price the time came up with about 107 00:06:23,080 --> 00:06:27,599 Speaker 1: for nineteen rounded up to because of the reference to 108 00:06:28,600 --> 00:06:31,960 Speaker 1: marijuana that that has and that his girlfriend would think 109 00:06:32,040 --> 00:06:35,080 Speaker 1: that was funny and that and that's not me, No, No, 110 00:06:35,240 --> 00:06:40,000 Speaker 1: that's the SEC indeed plane and which is unusual but interesting, 111 00:06:40,040 --> 00:06:42,680 Speaker 1: and I think they wanted to point that out as 112 00:06:42,680 --> 00:06:45,279 Speaker 1: a flip at attitude about everything. And that's that's what 113 00:06:45,360 --> 00:06:47,800 Speaker 1: that's what's key here that we got David. We gotta 114 00:06:47,880 --> 00:06:50,039 Speaker 1: leave it there. Thank you very much for joining us. 115 00:06:50,120 --> 00:06:54,839 Speaker 1: David Coudla, chief executive, chief investment strategist, Mainstake Capital Management. 116 00:06:55,120 --> 00:07:09,080 Speaker 1: You're listening to Bloomberg. John Chambers he is perhaps best 117 00:07:09,160 --> 00:07:12,440 Speaker 1: known as being the chairman and the chief executive former 118 00:07:12,520 --> 00:07:16,760 Speaker 1: chairman and chief executive of Cisco. He began his career 119 00:07:16,760 --> 00:07:19,960 Speaker 1: in technology sales at IBM. He also worked for Wang 120 00:07:20,280 --> 00:07:25,680 Speaker 1: Laboratories before joining Cisco, and he joins US now as 121 00:07:25,760 --> 00:07:29,240 Speaker 1: the author of a new book entitled Connecting the Dots 122 00:07:29,440 --> 00:07:33,640 Speaker 1: Lessons for Leadership in a Startup World. John Chambers, thanks 123 00:07:33,720 --> 00:07:36,200 Speaker 1: very much for being with us, dam and Lisa. It's 124 00:07:36,200 --> 00:07:38,000 Speaker 1: going to be a lot of fun and look forward 125 00:07:38,000 --> 00:07:40,640 Speaker 1: to our conversation. Well, I just want to give full 126 00:07:40,680 --> 00:07:46,880 Speaker 1: disclosure that I first met John Chambers at a diner 127 00:07:47,240 --> 00:07:51,520 Speaker 1: in Silicon Valley with another gentleman named Eric ben Hammou 128 00:07:52,080 --> 00:07:54,720 Speaker 1: and he at that time was running a company called 129 00:07:55,080 --> 00:07:57,760 Speaker 1: three Calm. And we know what happened to three Calm, 130 00:07:58,080 --> 00:08:02,560 Speaker 1: which is it doesn't exist necessarily in its form anymore. Cisco, 131 00:08:02,680 --> 00:08:07,080 Speaker 1: on the other hand, went on to bigger and better things. John, 132 00:08:07,480 --> 00:08:09,640 Speaker 1: maybe you could tell us why you wrote the book 133 00:08:09,960 --> 00:08:15,480 Speaker 1: and why you believe that startups really demand a different 134 00:08:15,560 --> 00:08:18,320 Speaker 1: level of attention, and how you ran Cisco as a 135 00:08:18,400 --> 00:08:22,000 Speaker 1: startup really until you left. Well, thank you, Pim, and 136 00:08:22,040 --> 00:08:25,240 Speaker 1: I very much remember that conversation because Eric is an 137 00:08:25,240 --> 00:08:29,720 Speaker 1: excellent CEO and what it talks about, and I decided 138 00:08:29,720 --> 00:08:33,720 Speaker 1: to right to book. Originally, I don't like writing. I'm dyslexic. 139 00:08:33,800 --> 00:08:36,120 Speaker 1: It is really hard to do. But I kept getting 140 00:08:36,160 --> 00:08:39,480 Speaker 1: the same questions as I talked to startups around the world. 141 00:08:40,000 --> 00:08:42,319 Speaker 1: I'm now which a C two ventures and where you've 142 00:08:42,360 --> 00:08:46,439 Speaker 1: invested in sixteen startups globally and focus very much on 143 00:08:46,480 --> 00:08:49,440 Speaker 1: how do you scale and grow companies? And I decided 144 00:08:49,480 --> 00:08:51,360 Speaker 1: to write the book because I kept hearing these same 145 00:08:51,440 --> 00:08:54,400 Speaker 1: questions from the startups. It didn't matter if you in Dubai, 146 00:08:55,000 --> 00:09:00,280 Speaker 1: New Delhi, Silicon Valley, West Virginia. The startupe e O 147 00:09:00,480 --> 00:09:03,400 Speaker 1: s had the same type of issues and challenges, which 148 00:09:03,400 --> 00:09:05,520 Speaker 1: were how to scale their company, how do you grow, 149 00:09:05,600 --> 00:09:08,080 Speaker 1: when do you decide to hire people, how you deal 150 00:09:08,120 --> 00:09:11,400 Speaker 1: with your challenges and your setbacks. And I love teaching 151 00:09:11,520 --> 00:09:13,560 Speaker 1: and that's what I love doing, perhaps most of all, 152 00:09:13,679 --> 00:09:18,040 Speaker 1: is building teams. So the lessons is very simple. I 153 00:09:18,160 --> 00:09:20,200 Speaker 1: like to share those. You're in a period where you grow, 154 00:09:20,320 --> 00:09:24,600 Speaker 1: you die, you disrupt, you get disrupted, you catch business 155 00:09:24,600 --> 00:09:27,520 Speaker 1: and technology trends at the same time. And Eric was 156 00:09:27,600 --> 00:09:32,080 Speaker 1: a really good competitor, unfortunately, but we had probably five 157 00:09:32,200 --> 00:09:35,360 Speaker 1: or six really tough, big competitors. Five or six companies 158 00:09:35,400 --> 00:09:38,240 Speaker 1: are sized like Free Calm and Wealth Fleet in sent Optics, 159 00:09:38,679 --> 00:09:41,439 Speaker 1: and then a whole bunch of startups. What allowed us 160 00:09:41,440 --> 00:09:44,800 Speaker 1: to break away was acting like a startup all the way, 161 00:09:44,840 --> 00:09:47,640 Speaker 1: going from four people when I joined Cisco to seventy 162 00:09:47,679 --> 00:09:51,680 Speaker 1: five thousand and to be reinvent ourselves again and again, 163 00:09:51,800 --> 00:09:54,880 Speaker 1: and to learn that setbacks, while you wish you could 164 00:09:54,880 --> 00:09:57,680 Speaker 1: avoid them, actually make you stronger as you move forward. 165 00:09:58,120 --> 00:10:00,640 Speaker 1: So sharing, that's what I'm after, And I've had the 166 00:10:00,760 --> 00:10:03,360 Speaker 1: opportunity to be in the front row seat and sometimes 167 00:10:03,400 --> 00:10:05,559 Speaker 1: in the middle of the playing field as I walk. 168 00:10:05,640 --> 00:10:08,280 Speaker 1: These transitions occur in my home state of West Virginia, 169 00:10:08,720 --> 00:10:11,680 Speaker 1: in Boston, which used to be the Silicon Valley of 170 00:10:11,720 --> 00:10:16,760 Speaker 1: the world, as mainframe computers IBM, many computers think wang 171 00:10:16,800 --> 00:10:20,400 Speaker 1: Deck data, general PC players now the Internet now moving 172 00:10:20,440 --> 00:10:23,959 Speaker 1: to digitization. So I've seen the movie, I have the scars. 173 00:10:23,960 --> 00:10:26,120 Speaker 1: I've done some things right and we have made some mistakes. 174 00:10:26,160 --> 00:10:28,360 Speaker 1: And I've quired a hundred day companies, so i know 175 00:10:28,400 --> 00:10:31,080 Speaker 1: what it's like the scale companies. So, John, given that 176 00:10:31,200 --> 00:10:34,480 Speaker 1: vast experience, and given the fact that you're currently looking 177 00:10:34,640 --> 00:10:38,040 Speaker 1: for startups that are worthy of your investment, how well 178 00:10:38,120 --> 00:10:42,160 Speaker 1: positioned is the US in the fight for you know, 179 00:10:42,280 --> 00:10:45,679 Speaker 1: future dominance, not only over technology but in general with 180 00:10:45,760 --> 00:10:49,320 Speaker 1: its startup culture. Uh. At least I think you've asked 181 00:10:49,720 --> 00:10:52,120 Speaker 1: the major takeaway. I hope people get from the book. 182 00:10:52,559 --> 00:10:55,679 Speaker 1: We think of ourselves as the innovation nation. We are 183 00:10:55,720 --> 00:10:59,480 Speaker 1: not and interesting us. The Bloomberg Index on Innovation doesn't 184 00:10:59,480 --> 00:11:02,160 Speaker 1: have us in the top ten countries anymore. We think 185 00:11:02,160 --> 00:11:04,720 Speaker 1: with the startup nation of the world. That was true 186 00:11:04,720 --> 00:11:07,040 Speaker 1: in the nineties and two thousands, and we used to 187 00:11:07,080 --> 00:11:11,000 Speaker 1: get a venture capital into our country and twenty years ago, 188 00:11:11,160 --> 00:11:14,720 Speaker 1: then ten years ago, eighty. Today it's fifty. And if 189 00:11:14,760 --> 00:11:17,440 Speaker 1: you watch, we're almost to the twenty year low in 190 00:11:17,559 --> 00:11:21,400 Speaker 1: terms of startups I e H. Versus where we were 191 00:11:21,840 --> 00:11:24,600 Speaker 1: UH two decades ago. The number of I p o 192 00:11:24,720 --> 00:11:27,040 Speaker 1: s and you guys know this very well, Lisa is 193 00:11:27,679 --> 00:11:29,599 Speaker 1: UH at a very low level compared to where it 194 00:11:29,640 --> 00:11:31,719 Speaker 1: was in the nineties. Were excited about doing two and 195 00:11:31,840 --> 00:11:33,480 Speaker 1: thirty I p o S in the New York Stock 196 00:11:33,559 --> 00:11:37,160 Speaker 1: Exchange the NASDAQ this year, and it's up slightly from 197 00:11:37,160 --> 00:11:40,720 Speaker 1: the high in one eighties last year. But we did 198 00:11:40,800 --> 00:11:44,080 Speaker 1: four hundred to five hundred per year in the nineties. 199 00:11:44,520 --> 00:11:46,559 Speaker 1: If you're going to generate twenty five to thirty million 200 00:11:46,640 --> 00:11:49,679 Speaker 1: jobs over the next decade, and if you combine with 201 00:11:49,720 --> 00:11:53,520 Speaker 1: that a requirement to generate another twenty million plus because digitization, 202 00:11:54,520 --> 00:11:58,480 Speaker 1: automation artificial intelligence will destroy twenty to thirty million jobs, 203 00:11:58,720 --> 00:12:02,040 Speaker 1: probably a third percent of our workforce if we don't 204 00:12:02,040 --> 00:12:05,400 Speaker 1: get the startup engine going again and we're too complacent. 205 00:12:05,520 --> 00:12:06,880 Speaker 1: One of the things I point out in the book 206 00:12:07,000 --> 00:12:09,640 Speaker 1: is the worst thing you can do. The worst thing 207 00:12:09,720 --> 00:12:11,720 Speaker 1: you can do is keep doing the right thing too long, 208 00:12:11,760 --> 00:12:14,760 Speaker 1: and that's what gets companies into trouble. And countries like 209 00:12:14,840 --> 00:12:17,600 Speaker 1: France that you view and Pam you would have viewed 210 00:12:17,920 --> 00:12:19,840 Speaker 1: three or four years ago, is the worst place to 211 00:12:19,840 --> 00:12:22,640 Speaker 1: do a startup. Have moved to the best place in Europe, 212 00:12:22,800 --> 00:12:25,480 Speaker 1: going from a hundred and forty high tech startup venture 213 00:12:25,520 --> 00:12:29,800 Speaker 1: backs per year to seven d and four years John, 214 00:12:29,840 --> 00:12:31,840 Speaker 1: I just wonder if you could offer your thoughts about 215 00:12:31,880 --> 00:12:36,080 Speaker 1: one of the various numbers of points that you make 216 00:12:36,280 --> 00:12:39,160 Speaker 1: in the book about vision and strategy and so on. 217 00:12:39,480 --> 00:12:44,760 Speaker 1: But I thought that one particularly geographic proximity to headquarters 218 00:12:44,880 --> 00:12:49,559 Speaker 1: or key operational centers, that's like real information you can 219 00:12:49,679 --> 00:12:53,920 Speaker 1: use it is Originally I thought at at Cisco, we 220 00:12:53,920 --> 00:12:55,920 Speaker 1: were building the Internet and we were changing the ways 221 00:12:55,920 --> 00:12:58,440 Speaker 1: the world works. Has learned some place, and I thought 222 00:12:58,480 --> 00:13:01,040 Speaker 1: you could have a company that has people everywhere and 223 00:13:01,360 --> 00:13:04,719 Speaker 1: function just as good as one that had everybody's headquarters. 224 00:13:04,760 --> 00:13:08,680 Speaker 1: I was wrong. You've got to have economic centers where 225 00:13:08,679 --> 00:13:11,160 Speaker 1: you can move your teams around as one product does 226 00:13:11,200 --> 00:13:13,839 Speaker 1: better or another product does not, as you promote people 227 00:13:13,840 --> 00:13:18,160 Speaker 1: from one function to another. And in this new startup world, Uh, 228 00:13:18,280 --> 00:13:20,440 Speaker 1: if you watch what is happening, we're not just not 229 00:13:20,520 --> 00:13:22,960 Speaker 1: doing the number of startups we should. In this country. 230 00:13:23,679 --> 00:13:27,920 Speaker 1: It's almost all Northeast Coast, almost all Silicon Valley, and 231 00:13:27,960 --> 00:13:30,880 Speaker 1: almost all Texas. We need to bring that across the 232 00:13:30,920 --> 00:13:34,560 Speaker 1: heartland of America and down to the southeast. So my 233 00:13:34,679 --> 00:13:37,800 Speaker 1: view is that we need to locate startups at these 234 00:13:37,880 --> 00:13:41,040 Speaker 1: hubs with universities and pick one or two universities per 235 00:13:41,120 --> 00:13:44,079 Speaker 1: state and make all fifty state startups because that's where 236 00:13:44,080 --> 00:13:46,520 Speaker 1: the job creation is going to occur. The big companies 237 00:13:46,559 --> 00:13:49,280 Speaker 1: in total will not add head count uh this next decade. 238 00:13:49,760 --> 00:13:51,960 Speaker 1: John Chambers, thank you so much. Unfortunately we have to 239 00:13:52,000 --> 00:13:53,800 Speaker 1: leave it there. We can talk with you all afternoon. 240 00:13:53,840 --> 00:13:56,880 Speaker 1: We'd love to. John Chambers, former executive chairman and chief 241 00:13:56,960 --> 00:14:00,520 Speaker 1: executive officer of Cisco, now is the founder CEO of 242 00:14:00,640 --> 00:14:03,719 Speaker 1: j C two Ventures in Palo Alto, California, and the 243 00:14:03,720 --> 00:14:06,040 Speaker 1: author of a new book connecting the dots lessons for 244 00:14:06,120 --> 00:14:20,840 Speaker 1: leadership in a startup world. Indeed, Tesla's founder and charismatic 245 00:14:20,920 --> 00:14:24,160 Speaker 1: chief executive, Elon Musk, was slapped with a lawsuit from 246 00:14:24,160 --> 00:14:27,680 Speaker 1: the SEC saying that he was engaged in securities manipulation 247 00:14:27,760 --> 00:14:32,000 Speaker 1: with his for twenty dollars a share tweet. He said 248 00:14:32,040 --> 00:14:35,400 Speaker 1: that funding was secured to go private, it was not. 249 00:14:35,520 --> 00:14:37,880 Speaker 1: Joining us now, John Wilson had a research and corporate 250 00:14:37,880 --> 00:14:40,880 Speaker 1: governance at Quarterstone Capital Group in New York. Joining us 251 00:14:40,880 --> 00:14:43,960 Speaker 1: here in studios, John, I'd love to get your perspective 252 00:14:44,000 --> 00:14:48,040 Speaker 1: in terms of the corporate governance aspect of this, in 253 00:14:48,200 --> 00:14:51,960 Speaker 1: terms of what the board should have done and what 254 00:14:52,120 --> 00:14:56,120 Speaker 1: the liability is of having one charismatic leader who is 255 00:14:56,160 --> 00:14:59,400 Speaker 1: somewhat unhinged. Well, that's a great that's a great couple 256 00:14:59,400 --> 00:15:01,880 Speaker 1: of questions, and I think they'll take the second one first. Right, 257 00:15:01,960 --> 00:15:05,320 Speaker 1: this is a company that you when you invest in 258 00:15:05,360 --> 00:15:08,320 Speaker 1: this company, you are investing in one person, really, right, 259 00:15:08,360 --> 00:15:10,640 Speaker 1: because this is a company. It's a car company, but 260 00:15:10,640 --> 00:15:13,120 Speaker 1: it has trouble making cars sometimes. Right, it's deep in 261 00:15:13,160 --> 00:15:17,080 Speaker 1: debt um. It's signature product, the electric car is less 262 00:15:17,120 --> 00:15:20,479 Speaker 1: and less a novelty every day, Right, as other manufacturers 263 00:15:20,480 --> 00:15:23,240 Speaker 1: are coming up with their own lines, and so what 264 00:15:23,360 --> 00:15:25,440 Speaker 1: are we investing. We're investing in the charism of this 265 00:15:25,560 --> 00:15:27,920 Speaker 1: one individual and the fact that he's such a fan 266 00:15:28,040 --> 00:15:30,840 Speaker 1: following all over the world. People want these cars in 267 00:15:30,920 --> 00:15:34,320 Speaker 1: part because of his persona, and as it starts to flag, 268 00:15:34,480 --> 00:15:36,520 Speaker 1: then you have to ask yourself, Okay, I need to 269 00:15:36,520 --> 00:15:38,520 Speaker 1: take a step back, ask the question is what am 270 00:15:38,520 --> 00:15:41,640 Speaker 1: I investing in? Is this a company that can grow beyond? 271 00:15:41,760 --> 00:15:44,440 Speaker 1: And this is what your your point about the founder's syndrome, 272 00:15:44,560 --> 00:15:47,480 Speaker 1: essentially is can we grow beyond this one individual to 273 00:15:47,680 --> 00:15:52,640 Speaker 1: create a sustainable going concern that can actually sustain itself 274 00:15:52,680 --> 00:15:54,960 Speaker 1: over the long term. At this point, especially given their 275 00:15:55,040 --> 00:15:57,480 Speaker 1: management troubles, seems hard to imagine how they're going to 276 00:15:57,560 --> 00:16:00,920 Speaker 1: do that. Now, you've written obviously not just about Tesla, 277 00:16:01,000 --> 00:16:04,360 Speaker 1: but a variety of companies, and you also speak about 278 00:16:04,400 --> 00:16:08,360 Speaker 1: how companies are not nimble enough when it comes to 279 00:16:08,400 --> 00:16:11,200 Speaker 1: these issues. Could you just explain that, well, UM, a 280 00:16:11,240 --> 00:16:14,400 Speaker 1: lot of companies have blind spots right about a lot 281 00:16:14,480 --> 00:16:17,480 Speaker 1: of different cultural and social issues that they're facing. Right. 282 00:16:17,480 --> 00:16:20,360 Speaker 1: This is something that we look at when leaders UM 283 00:16:21,240 --> 00:16:23,960 Speaker 1: are not in touch with what there are other stakeholders 284 00:16:23,960 --> 00:16:27,400 Speaker 1: are talking about this can become a huge problem for companies. 285 00:16:27,440 --> 00:16:29,720 Speaker 1: And one issue I think that pr on people's minds 286 00:16:29,800 --> 00:16:32,320 Speaker 1: right now is the question of sexual and gender based violence. 287 00:16:32,440 --> 00:16:34,320 Speaker 1: Right It's not quite the same thing as what TESLA 288 00:16:34,360 --> 00:16:37,160 Speaker 1: is facing at the moment, but it's another cultural issue 289 00:16:37,160 --> 00:16:39,760 Speaker 1: and an issue of leadership. I think, going back a 290 00:16:39,840 --> 00:16:42,720 Speaker 1: year or so, if you had asked folks, are you 291 00:16:42,800 --> 00:16:44,960 Speaker 1: for or against sexual harassment? I think you would have 292 00:16:45,000 --> 00:16:46,920 Speaker 1: pretty much found everyone to say they were against it. 293 00:16:47,520 --> 00:16:51,440 Speaker 1: And yet, and yet, so many of these companies UM 294 00:16:51,960 --> 00:16:56,760 Speaker 1: found themselves facing allegations, credible allegations of cultures of sexual 295 00:16:56,800 --> 00:17:00,720 Speaker 1: harass but not just individual incidents, but whole ultures of 296 00:17:00,760 --> 00:17:04,520 Speaker 1: sexual harassment UM and really being surprised by this. And 297 00:17:04,560 --> 00:17:06,520 Speaker 1: that was what I talked about, by not being nimble, 298 00:17:06,640 --> 00:17:09,800 Speaker 1: not being aware of what's going on in your company 299 00:17:09,920 --> 00:17:13,200 Speaker 1: or with its customers, its employees, its suppliers, and it 300 00:17:13,359 --> 00:17:16,280 Speaker 1: prevents you from acting and it leads to surprises when 301 00:17:16,320 --> 00:17:18,240 Speaker 1: you hear things in the news. All right, So you 302 00:17:18,240 --> 00:17:20,160 Speaker 1: know you raised sort of a question. Not to conflate 303 00:17:20,240 --> 00:17:24,480 Speaker 1: sexual harassment with securities manipulation, charges that the sec is 304 00:17:24,480 --> 00:17:27,639 Speaker 1: is going after Elon Musk. For there is though a 305 00:17:27,760 --> 00:17:31,480 Speaker 1: question about the board here with Tesla as well as 306 00:17:31,600 --> 00:17:34,280 Speaker 1: as you said, in terms of what their role ought 307 00:17:34,359 --> 00:17:37,399 Speaker 1: to be in setting a culture that is conducive to 308 00:17:37,440 --> 00:17:39,640 Speaker 1: a lot of different points of view. And so I'm 309 00:17:39,640 --> 00:17:42,640 Speaker 1: wondering if you could just speak about Tesla, I mean, 310 00:17:43,080 --> 00:17:46,320 Speaker 1: where is the responsibility for their board? Well, here's the problem. 311 00:17:46,359 --> 00:17:48,400 Speaker 1: So this is this is an issue that we sometimes 312 00:17:48,400 --> 00:17:51,119 Speaker 1: talk about, which is that corporate governance doesn't matter until 313 00:17:51,160 --> 00:17:53,840 Speaker 1: it does right. In other words, what I'm saying is 314 00:17:53,920 --> 00:17:55,960 Speaker 1: that people have known for a long time the Tesla's 315 00:17:55,960 --> 00:17:58,199 Speaker 1: board is a problem that many of the people on 316 00:17:58,320 --> 00:18:02,760 Speaker 1: Tesla's board on have real close relationships to to Elon Musk. 317 00:18:02,840 --> 00:18:04,640 Speaker 1: There there are members of the board who are part 318 00:18:04,680 --> 00:18:08,000 Speaker 1: of Solar City, which then they purchased, which he also 319 00:18:08,040 --> 00:18:10,840 Speaker 1: owned um And what we're finding out also right now 320 00:18:10,960 --> 00:18:13,560 Speaker 1: is that there is no one with CEO level leadership 321 00:18:13,640 --> 00:18:15,600 Speaker 1: skills on the board who could take over if see, 322 00:18:15,680 --> 00:18:17,840 Speaker 1: if he leaves. So these are all issues that we 323 00:18:17,920 --> 00:18:21,560 Speaker 1: knew about, but Tesla stock continued to rise because of 324 00:18:21,560 --> 00:18:25,000 Speaker 1: of Elon Musk. Suddenly he's a problem, and we're looking 325 00:18:25,040 --> 00:18:27,720 Speaker 1: to the board and recognizing its inability to deal with 326 00:18:27,760 --> 00:18:29,879 Speaker 1: the crisis. Alright, So you deal with a lot of boards, 327 00:18:29,920 --> 00:18:32,199 Speaker 1: and you deal with a lot of companies. Do you 328 00:18:32,280 --> 00:18:34,480 Speaker 1: feel like there is a critical mass of boards that 329 00:18:34,560 --> 00:18:39,359 Speaker 1: recognize their role in setting up culture and can you 330 00:18:39,359 --> 00:18:41,840 Speaker 1: give us a sense of what it takes for them 331 00:18:41,840 --> 00:18:43,720 Speaker 1: to play an active role in that. So I think 332 00:18:43,760 --> 00:18:46,000 Speaker 1: that there are I don't want to I think that 333 00:18:46,080 --> 00:18:49,160 Speaker 1: what we were seeing here is a is a problem 334 00:18:49,280 --> 00:18:51,399 Speaker 1: of some boards, and I think there are other boards 335 00:18:51,440 --> 00:18:53,960 Speaker 1: that are really trying to figure out, you know, what 336 00:18:54,119 --> 00:18:56,040 Speaker 1: the right way to go is. But we're dealing with 337 00:18:56,400 --> 00:18:58,320 Speaker 1: new sets of issues all the time. There is a 338 00:18:58,440 --> 00:19:01,840 Speaker 1: much greater awareness of the kinds of cultural issues that 339 00:19:01,880 --> 00:19:04,520 Speaker 1: are going on all through you know, different companies, right, 340 00:19:04,520 --> 00:19:07,520 Speaker 1: not just Tesla, but you know, relating to sexual and 341 00:19:07,560 --> 00:19:11,080 Speaker 1: gender based violence, relating to racial equality, inequality of you know, 342 00:19:11,240 --> 00:19:14,719 Speaker 1: um of income and so forth. And and the problem 343 00:19:14,720 --> 00:19:17,040 Speaker 1: what boards need to do is they need to start 344 00:19:17,080 --> 00:19:20,720 Speaker 1: to make themselves more aware of what their employees, their 345 00:19:20,960 --> 00:19:24,720 Speaker 1: their suppliers, their customers are thinking about them. I think 346 00:19:24,720 --> 00:19:27,800 Speaker 1: there's too much in celerity on boards. There's there's not 347 00:19:28,000 --> 00:19:31,359 Speaker 1: enough turnover on board. This is one governance issue that 348 00:19:31,359 --> 00:19:34,520 Speaker 1: we talk about a lot is that Here's an interesting fact. 349 00:19:34,680 --> 00:19:38,200 Speaker 1: Most of the majority of board members coming onto boards 350 00:19:38,240 --> 00:19:41,480 Speaker 1: these days are members women are members of minority groups. However, 351 00:19:41,960 --> 00:19:45,480 Speaker 1: board turnover is so low that the number of women total, 352 00:19:45,520 --> 00:19:48,679 Speaker 1: the total women and minorities, is still less than thirty percent. 353 00:19:48,840 --> 00:19:52,040 Speaker 1: And so the problem is entrenched board members, a culture 354 00:19:52,040 --> 00:19:55,400 Speaker 1: where boards are recycling themselves and you need new blood 355 00:19:55,640 --> 00:19:58,640 Speaker 1: in order to understand what the issues that are emerging 356 00:19:58,960 --> 00:20:02,240 Speaker 1: for companies are. We're speaking with John Wilson. He is 357 00:20:02,240 --> 00:20:06,480 Speaker 1: the head of research and corporate Governance at Cornerstone Capital Group. John, 358 00:20:06,600 --> 00:20:10,080 Speaker 1: is there any connection in your mind between the performance 359 00:20:10,560 --> 00:20:14,199 Speaker 1: of a corporate culture and the performance of a stock 360 00:20:14,960 --> 00:20:19,560 Speaker 1: In other words, can you make decent investment decisions? Perhaps 361 00:20:19,560 --> 00:20:23,919 Speaker 1: starting with the corporate governance issue? What I would say is, 362 00:20:23,920 --> 00:20:25,880 Speaker 1: and one of the reasons why this is a challenge 363 00:20:25,880 --> 00:20:30,320 Speaker 1: for investors is that cultural issues tend to be longer term. 364 00:20:30,440 --> 00:20:32,639 Speaker 1: As I said before, they tend to not matter until 365 00:20:32,680 --> 00:20:34,800 Speaker 1: they do. And uh, you know, the example of Nike 366 00:20:34,880 --> 00:20:37,040 Speaker 1: is a great one where they lost a lot of 367 00:20:37,119 --> 00:20:40,320 Speaker 1: talent all of a sudden because of issues of sexual 368 00:20:40,320 --> 00:20:42,959 Speaker 1: harassment in the company. And so if I, if I 369 00:20:43,000 --> 00:20:46,760 Speaker 1: was an investor UM looking at a long term investment 370 00:20:46,760 --> 00:20:49,800 Speaker 1: in a company, UM, I would definitely take corporate governance 371 00:20:49,840 --> 00:20:53,000 Speaker 1: into account. Now that may, you know, not affect my 372 00:20:53,160 --> 00:20:56,520 Speaker 1: short term decisions about market sentiment and and so forth, 373 00:20:56,560 --> 00:20:59,800 Speaker 1: but if I'm not aware of the cultural and governance issues, 374 00:21:00,200 --> 00:21:03,800 Speaker 1: then I'm opening myself up to risk over the long term, 375 00:21:03,880 --> 00:21:06,199 Speaker 1: you know. Just real quick here, I'm struck by what 376 00:21:06,359 --> 00:21:09,680 Speaker 1: someone once told me that you have one charismatic leader 377 00:21:09,720 --> 00:21:12,600 Speaker 1: who the whole company hinges on, that company is more 378 00:21:12,640 --> 00:21:17,639 Speaker 1: likely to experience fraud. Just real quick. Has that been 379 00:21:17,680 --> 00:21:20,920 Speaker 1: your experience as well? UM? Yes, I think that's right, 380 00:21:21,119 --> 00:21:23,399 Speaker 1: because if you have, if you are all about that 381 00:21:23,480 --> 00:21:27,359 Speaker 1: one person, then other people tend to operate first of 382 00:21:27,359 --> 00:21:32,119 Speaker 1: all without being um without accountability, right without transparency, and 383 00:21:32,200 --> 00:21:35,919 Speaker 1: so they sort of get the mindset of impunity, if 384 00:21:35,960 --> 00:21:38,480 Speaker 1: you will. And I think that can happen both for 385 00:21:38,640 --> 00:21:41,440 Speaker 1: other executives at the company and for the charismatic founder 386 00:21:41,600 --> 00:21:44,040 Speaker 1: who may sort of begin to see themselves as invulnerable, 387 00:21:44,080 --> 00:21:46,720 Speaker 1: and so that can happen. Thanks very much for being 388 00:21:46,720 --> 00:21:50,320 Speaker 1: with us. John Wilson, head of Research and corporate Governance 389 00:21:50,440 --> 00:21:56,440 Speaker 1: at Cornerstone Capital Group, talking about the connection between corporate governance, investments, 390 00:21:56,800 --> 00:22:10,520 Speaker 1: and corporate performance. We are broadcasting live from the Bloomberg 391 00:22:10,520 --> 00:22:14,160 Speaker 1: Interactive at Broker's studio is getting close to lunchtime in 392 00:22:14,200 --> 00:22:17,000 Speaker 1: New York, so we want to talk about food, UH 393 00:22:17,000 --> 00:22:19,240 Speaker 1: and PAYM. We're very lucky we're joined by the co 394 00:22:19,400 --> 00:22:24,159 Speaker 1: founders of AXL Foods, which is a quickly growing venture 395 00:22:24,240 --> 00:22:28,200 Speaker 1: capital firm. Looking at what we're going to be snacking 396 00:22:28,200 --> 00:22:30,240 Speaker 1: on next, it will actually be good for us. We have, 397 00:22:30,480 --> 00:22:33,800 Speaker 1: luckily Lauren Jupiter and Jordan's gas Bar here in our 398 00:22:33,800 --> 00:22:36,359 Speaker 1: eleven three oh studios. So Lauren, I want to start 399 00:22:36,359 --> 00:22:39,560 Speaker 1: with you, what is AXL Foods? Uh? First of all 400 00:22:39,600 --> 00:22:42,840 Speaker 1: things for for having us, We are a venture capital 401 00:22:42,880 --> 00:22:45,760 Speaker 1: fund focused on packaged food and beverage companies. So we 402 00:22:45,840 --> 00:22:50,120 Speaker 1: invest in the newest, you know, the healthiest foods out there, 403 00:22:50,359 --> 00:22:52,600 Speaker 1: um and and most delicious fods out there, but really 404 00:22:52,640 --> 00:22:55,639 Speaker 1: companies ranging from start up all the way to sixty 405 00:22:55,920 --> 00:22:58,200 Speaker 1: plus million of revenue and partner with them and really 406 00:22:58,200 --> 00:23:01,200 Speaker 1: help them of where the pit as along the way. 407 00:23:01,720 --> 00:23:04,359 Speaker 1: Jordan's maybe you could speak to the issue that there 408 00:23:04,359 --> 00:23:07,680 Speaker 1: are so many very large food companies and I'm thinking 409 00:23:07,720 --> 00:23:11,560 Speaker 1: of dan On and Campbell soup and you know why 410 00:23:11,600 --> 00:23:15,840 Speaker 1: that are looking to expand their business, but either they 411 00:23:15,880 --> 00:23:19,280 Speaker 1: don't know how to do it in today's environment or 412 00:23:19,359 --> 00:23:22,840 Speaker 1: they're too big to take chances on things. And I'm 413 00:23:22,840 --> 00:23:24,920 Speaker 1: wondering if you could speak to that and how you 414 00:23:25,400 --> 00:23:29,360 Speaker 1: help them in those roles. Absolutely, so we we are 415 00:23:29,440 --> 00:23:33,040 Speaker 1: very familiar obviously with both of those organizations. UM. What 416 00:23:33,040 --> 00:23:35,439 Speaker 1: we're finding right now in the climate is that you know, 417 00:23:35,560 --> 00:23:38,760 Speaker 1: large strategics are looking to either buy or invest in innovation. 418 00:23:38,960 --> 00:23:40,879 Speaker 1: So there's a record amount of capital coming into the 419 00:23:40,920 --> 00:23:43,480 Speaker 1: industry and it's a lot of the corpors that we're 420 00:23:43,480 --> 00:23:46,199 Speaker 1: talking about, the COKEX, the pepsis that are driving a 421 00:23:46,240 --> 00:23:49,119 Speaker 1: lot of interest UM. They're coming down earlier in the market, 422 00:23:49,160 --> 00:23:52,159 Speaker 1: they're making investments in small brands, they're putting resources to 423 00:23:52,200 --> 00:23:57,520 Speaker 1: work UM and everything UM from direct partnerships with specific 424 00:23:57,560 --> 00:24:00,879 Speaker 1: small companies that they get excited about to partnering with funds. 425 00:24:00,920 --> 00:24:03,000 Speaker 1: You know, obviously we have a pretty public partnership with 426 00:24:03,080 --> 00:24:06,639 Speaker 1: donone UM. You know, in in particular, it's not just 427 00:24:06,720 --> 00:24:09,480 Speaker 1: happening though with those organizations. We're seeing the retailers also 428 00:24:09,560 --> 00:24:12,800 Speaker 1: activate and so UM there's more and more shelf space 429 00:24:12,840 --> 00:24:16,320 Speaker 1: that's becoming available from the largest retailers in the world, 430 00:24:16,440 --> 00:24:20,159 Speaker 1: including Costco and Walmart and Kroger UM. So it's across 431 00:24:20,200 --> 00:24:22,320 Speaker 1: the board. What we're seeing is is that big food 432 00:24:22,480 --> 00:24:24,960 Speaker 1: is getting very interested in the small guys. So, Lauren, 433 00:24:25,040 --> 00:24:27,440 Speaker 1: what does innovation mean in the food space right now? 434 00:24:27,480 --> 00:24:31,000 Speaker 1: Considering the fact that you definitely have a packaging innovation 435 00:24:31,040 --> 00:24:34,200 Speaker 1: to make people feel like you're getting something healthier versus 436 00:24:34,200 --> 00:24:36,560 Speaker 1: trying to make that ice cream that you eat actually 437 00:24:36,680 --> 00:24:39,280 Speaker 1: have zero calories and lots of protein and save your 438 00:24:39,320 --> 00:24:42,440 Speaker 1: life and have no problems. So we think about innovation 439 00:24:42,440 --> 00:24:45,000 Speaker 1: and what we actually called challenger brands in a variety 440 00:24:45,000 --> 00:24:47,040 Speaker 1: of ways. So it can be the product, it can 441 00:24:47,040 --> 00:24:50,040 Speaker 1: be the ingredient profile. UM. You know, as an example, 442 00:24:50,080 --> 00:24:52,840 Speaker 1: we have a product in our portfolio called for Sigmatic, 443 00:24:52,880 --> 00:24:57,080 Speaker 1: which makes mushroom based coffees and powdered beverages, and that 444 00:24:57,200 --> 00:25:01,320 Speaker 1: is an innovative ingredient profile. Innovation can also come in 445 00:25:01,760 --> 00:25:04,600 Speaker 1: marketing and packaging and how that product is sort of 446 00:25:04,640 --> 00:25:08,159 Speaker 1: delivered and communicated to the consumer. UM. And then the 447 00:25:08,200 --> 00:25:10,199 Speaker 1: third step we sort of look at is innovation in 448 00:25:10,280 --> 00:25:13,560 Speaker 1: terms of distribution and channel strategy. So we're seeing more 449 00:25:13,640 --> 00:25:15,960 Speaker 1: and more brands look at direct to consumer. We're looking 450 00:25:15,960 --> 00:25:19,120 Speaker 1: at more brands look at disrupting the office space and 451 00:25:19,280 --> 00:25:21,600 Speaker 1: going to direct a consumer in that capacity, and so 452 00:25:21,680 --> 00:25:24,720 Speaker 1: we think about it really in those three buckets, Product, marketing, 453 00:25:24,720 --> 00:25:30,639 Speaker 1: and distribution. Jordan's you are described as a reformed corporate lawyer, 454 00:25:30,680 --> 00:25:35,439 Speaker 1: but also you are the kids snack Taste tests are correct, 455 00:25:35,520 --> 00:25:39,920 Speaker 1: that's your official title. Okay, um One of the companies 456 00:25:39,960 --> 00:25:41,679 Speaker 1: I believe that you've got something to do with is 457 00:25:41,840 --> 00:25:45,800 Speaker 1: uh kid Fresh. Tell us about that and maybe use 458 00:25:45,880 --> 00:25:49,320 Speaker 1: it as example how you found it and what your 459 00:25:49,400 --> 00:25:52,400 Speaker 1: role ends up being. Where we are thrilled to talk 460 00:25:52,400 --> 00:25:55,240 Speaker 1: about kids Fresh. So something that's important to understand is 461 00:25:55,240 --> 00:25:58,120 Speaker 1: that Lauren and I are the proud moms of four 462 00:25:58,200 --> 00:26:00,840 Speaker 1: kids eating under and so it's a big part of 463 00:26:00,840 --> 00:26:03,320 Speaker 1: our thesis is that we are investing in the companies 464 00:26:03,359 --> 00:26:05,480 Speaker 1: that we are actually putting on the table for our kids. 465 00:26:05,640 --> 00:26:07,520 Speaker 1: And it's a big part of our philosophy is that 466 00:26:07,560 --> 00:26:10,080 Speaker 1: the grocery store is going to look fundamentally different, and 467 00:26:10,119 --> 00:26:13,040 Speaker 1: so we're really putting our money where our kids mouths are. 468 00:26:13,240 --> 00:26:15,400 Speaker 1: You know, for lack of a better phrase, UM kid 469 00:26:15,440 --> 00:26:18,600 Speaker 1: Fresh was a company we came across in two thousand sixteen. 470 00:26:18,640 --> 00:26:21,639 Speaker 1: They were in the market and had great traction. It's 471 00:26:21,640 --> 00:26:24,119 Speaker 1: a New York based brand that is a better for 472 00:26:24,240 --> 00:26:28,159 Speaker 1: you frozen kids platform that's really geared towards UM introducing 473 00:26:28,200 --> 00:26:31,920 Speaker 1: hidden vegetables and sort of reinventing traditional favorites like mac 474 00:26:31,920 --> 00:26:36,600 Speaker 1: and cheese and you know, chicken fingers and fish sticks 475 00:26:36,640 --> 00:26:39,800 Speaker 1: and things like that. UM at the time of our investment, 476 00:26:39,960 --> 00:26:42,239 Speaker 1: you know, Matt Cohen, the founder, had really sort of 477 00:26:42,560 --> 00:26:45,360 Speaker 1: gotten some great traction, and just as we were investing, 478 00:26:45,400 --> 00:26:47,720 Speaker 1: he happened to pick up a national partnership with Walmart 479 00:26:48,000 --> 00:26:50,600 Speaker 1: to complement his target and Kroger and our hold business. 480 00:26:50,680 --> 00:26:52,520 Speaker 1: So we really enjoyed kind of working with Matt over 481 00:26:52,520 --> 00:26:55,479 Speaker 1: the past two years. Is he's been scaling really quickly, 482 00:26:55,600 --> 00:26:58,640 Speaker 1: and UM certainly has found himself in a great position 483 00:26:58,720 --> 00:27:01,960 Speaker 1: right now where everyone's thinking out innovation and kids platforms 484 00:27:01,960 --> 00:27:03,960 Speaker 1: and who's going to be sort of the the going 485 00:27:04,000 --> 00:27:06,159 Speaker 1: forward leader, and frozen is obviously one of the hottest 486 00:27:06,200 --> 00:27:08,960 Speaker 1: categories now, but it's also in you know, these are 487 00:27:09,000 --> 00:27:12,520 Speaker 1: traditional foods that people you know all across America are eating. 488 00:27:12,600 --> 00:27:14,440 Speaker 1: This is just a better for you version, and I 489 00:27:14,480 --> 00:27:17,040 Speaker 1: will say as a working mother myself of two young children, 490 00:27:17,040 --> 00:27:19,280 Speaker 1: one of the big challenges is making sure that you 491 00:27:19,320 --> 00:27:21,800 Speaker 1: actually have something on the table at night. I mean, 492 00:27:21,840 --> 00:27:25,119 Speaker 1: I'm sorry, but it's much more basic than just having 493 00:27:25,160 --> 00:27:29,240 Speaker 1: something healthy sometimes. And it's not just in frozen meal solutions. 494 00:27:29,280 --> 00:27:32,360 Speaker 1: Right Also, we're investing heavily into kids beverages. We think 495 00:27:32,359 --> 00:27:34,480 Speaker 1: that right now is the time it's right for innovation 496 00:27:34,520 --> 00:27:37,080 Speaker 1: on shelf where we just made a big investment into 497 00:27:37,160 --> 00:27:39,600 Speaker 1: a kid's water play, you know, and for us, it's 498 00:27:39,640 --> 00:27:42,120 Speaker 1: a boxed water that's almost like it's an essence water 499 00:27:42,200 --> 00:27:44,800 Speaker 1: for kids, and so it was launching ten thousand doors 500 00:27:44,800 --> 00:27:47,720 Speaker 1: this summer, and it's an alternative to some of the 501 00:27:48,400 --> 00:27:50,800 Speaker 1: you know, sort of more traditional players that we've seen, 502 00:27:50,880 --> 00:27:52,960 Speaker 1: like the Capri Sons in the market. But you know, 503 00:27:53,040 --> 00:27:54,879 Speaker 1: for us, the idea that we're now going to have 504 00:27:54,920 --> 00:27:59,040 Speaker 1: an offering for kids where it's a no sugar alternative 505 00:27:59,280 --> 00:28:01,320 Speaker 1: is you know, pretty powerful. I was definitely the bad 506 00:28:01,359 --> 00:28:03,720 Speaker 1: mom who brought Capri son for a snack, So I'm 507 00:28:03,760 --> 00:28:06,520 Speaker 1: going to confess my guilty, Laura. I do want to 508 00:28:06,520 --> 00:28:08,760 Speaker 1: just get your thoughts on when you have a smaller 509 00:28:08,800 --> 00:28:14,760 Speaker 1: company scaling up in food businesses is traditionally very difficult. 510 00:28:15,119 --> 00:28:17,320 Speaker 1: How do you help with that? So, you know, we 511 00:28:17,359 --> 00:28:19,800 Speaker 1: think about ourselves as dot connectors and what we like 512 00:28:19,920 --> 00:28:22,359 Speaker 1: to do is help connect the dots for these brands 513 00:28:22,400 --> 00:28:25,640 Speaker 1: between the resources they need in the industry. It's the relationships. 514 00:28:25,640 --> 00:28:29,400 Speaker 1: It's the retailers, the distributors, the strategics who may someday 515 00:28:29,400 --> 00:28:32,800 Speaker 1: beut their exit partners, and we create those relationships early 516 00:28:32,960 --> 00:28:36,680 Speaker 1: and deeply as these brands grow. Um. But that being said, 517 00:28:36,720 --> 00:28:39,360 Speaker 1: I think there's more and more um sort of resources 518 00:28:39,400 --> 00:28:41,160 Speaker 1: out there for brands to scale up. A lot of 519 00:28:41,160 --> 00:28:44,840 Speaker 1: them are working with outsource manufacturers, co packers, and there's 520 00:28:44,880 --> 00:28:47,440 Speaker 1: a lot of support from the retailers out there who 521 00:28:47,440 --> 00:28:49,840 Speaker 1: are looking to bring these innovative products to shelf. And 522 00:28:49,880 --> 00:28:51,760 Speaker 1: so it's a very exciting time I think to be 523 00:28:51,760 --> 00:28:54,040 Speaker 1: a food entrepreneur. And you know, not to mention how 524 00:28:54,040 --> 00:28:56,760 Speaker 1: receptive I think consumers are today to to new healthy brands, 525 00:28:57,640 --> 00:29:01,520 Speaker 1: just quickly, Jordan, give you about what is the biggest 526 00:29:01,520 --> 00:29:05,080 Speaker 1: thing that you've learned working together, about the whole process 527 00:29:05,320 --> 00:29:09,000 Speaker 1: of investing and then seeing it through the production. And 528 00:29:09,040 --> 00:29:11,080 Speaker 1: so it's a wild ride. Um. I think that you 529 00:29:11,120 --> 00:29:14,200 Speaker 1: know and for us. Lauren and I are are entrepreneurs ourselves, 530 00:29:14,200 --> 00:29:16,000 Speaker 1: and you know, we look at Excel we started only 531 00:29:16,040 --> 00:29:18,240 Speaker 1: a couple of years ago and things have changed dramatically 532 00:29:18,280 --> 00:29:20,760 Speaker 1: over the past couple of years. UM, it's really important 533 00:29:20,800 --> 00:29:23,160 Speaker 1: to have have people around you that challenge you and make 534 00:29:23,200 --> 00:29:26,400 Speaker 1: you think critically about your business, but also UM to 535 00:29:27,360 --> 00:29:29,040 Speaker 1: really be able to rely on that you trust them. 536 00:29:29,080 --> 00:29:30,760 Speaker 1: And so we think of ourselves as a partner for 537 00:29:30,800 --> 00:29:33,520 Speaker 1: our founders, that it's a real brain trust and you know, 538 00:29:33,560 --> 00:29:36,040 Speaker 1: it's it's a different type of partnership. All right, We've 539 00:29:36,040 --> 00:29:37,320 Speaker 1: got to leave it there, but I want to thank 540 00:29:37,360 --> 00:29:40,920 Speaker 1: you both very much. Jordan's gas Bar, managing partner and 541 00:29:41,000 --> 00:29:44,160 Speaker 1: Lauren Jupiter, co founder and managing partner of the venture 542 00:29:44,200 --> 00:29:51,160 Speaker 1: capital fund Excel Foods. Thanks for listening to the Bloomberg 543 00:29:51,200 --> 00:29:53,840 Speaker 1: P and L podcast. You can subscribe and listen to 544 00:29:53,880 --> 00:29:58,400 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 545 00:29:58,800 --> 00:30:02,400 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 546 00:30:02,400 --> 00:30:05,720 Speaker 1: on Twitter at Lisa Abramo wits one. Before the podcast, 547 00:30:05,760 --> 00:30:08,360 Speaker 1: you can always catch us worldwide on Bloomberg Radio.