WEBVTT - Bloomberg Businessweek Weekend - December 8th, 2023 0:00:01.560 --> 0:00:05.920 This is Bloomberg business Week Inside from the reporters and 0:00:06.080 --> 0:00:09.680 editors who bring you America's most trusted business magazine, plus 0:00:09.760 --> 0:00:13.880 global business finance and tech news. The Bloomberg Business Week 0:00:13.920 --> 0:00:18.840 Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:20.120 --> 0:00:23.320 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:23.760 --> 0:00:25.800 This past week we got a pulse check on the 0:00:25.920 --> 0:00:28.760 US labor force with the release of the November jobs report. 0:00:29.200 --> 0:00:31.639 Ahead on the program, we'll hear from the CEO of 0:00:31.720 --> 0:00:35.840 International Workplace Group better known as IWG, about why big 0:00:35.840 --> 0:00:38.720 markets like New York have little hope of ever getting 0:00:38.720 --> 0:00:41.160 most people back into the office five days a week. 0:00:41.440 --> 0:00:44.080 We're also talking tech, and plenty of it, including how 0:00:44.159 --> 0:00:47.239 Israel's war with moss is affecting the country's most important 0:00:47.240 --> 0:00:50.960 business sector, ways co founder Ory Levine ways En, plus 0:00:51.000 --> 0:00:54.120 the next generation of artificial intelligence is already here. Find 0:00:54.160 --> 0:00:56.200 out what the newest tools can do from the CEO 0:00:56.320 --> 0:00:59.400 of publicly traded Big Bear AI and where the biggest 0:00:59.400 --> 0:01:01.880 threats in them could lie From the President of IDC 0:01:02.120 --> 0:01:04.600 Crawford del Pratt. All of that to come. We begin 0:01:04.680 --> 0:01:06.759 with a frontier that is still largely out of reach 0:01:06.800 --> 0:01:10.520 for most space, the magazine devoting this week's business section 0:01:10.640 --> 0:01:14.200 to it, including a story on developing drugs in micro gravity. 0:01:14.440 --> 0:01:17.680 Here to explain the space race happening inside the pharmaceutical industry, 0:01:17.720 --> 0:01:21.160 our Bloomberg News healthcare reporter Bob Langres and BusinessWeek editor 0:01:21.280 --> 0:01:21.880 Joel Weber. 0:01:22.240 --> 0:01:25.319 So, we're decided to do a little space package. 0:01:25.720 --> 0:01:27.840 There's a lot happening up there, it turns out, and 0:01:27.880 --> 0:01:30.720 there are some expected things like what SpaceX is up 0:01:30.760 --> 0:01:32.880 to you and the race to catch them, but there's 0:01:32.920 --> 0:01:36.880 also I thought, some more interesting things of like applications 0:01:36.880 --> 0:01:39.600 that you probably never heard of. And it turns out 0:01:39.600 --> 0:01:43.040 that you know, you mentioned micro gravity there there are 0:01:43.360 --> 0:01:47.400 some novel use cases for what can be accomplished in space. 0:01:47.440 --> 0:01:50.640 So Bob walk us through it is what can we 0:01:50.640 --> 0:01:53.040 do in space that we can't do as well here 0:01:53.080 --> 0:01:53.560 on Earth. 0:01:54.040 --> 0:01:55.920 Yeah, So it turns out, you know, a lot of 0:01:55.920 --> 0:01:59.880 the drugs that drug makers are making these days are proteins, 0:02:00.040 --> 0:02:02.680 things like monocle and antibiodies or cancer drugs, and these 0:02:02.680 --> 0:02:06.600 are that are that are infused and these are you know, complicated, 0:02:06.600 --> 0:02:10.040 finicky molecules, the notoriously difficult to produce on Earth in 0:02:10.080 --> 0:02:12.960 their crystal form. So it turns out that without gravity, 0:02:13.040 --> 0:02:15.440 or without much gravity, you know, it becomes much it's 0:02:15.520 --> 0:02:20.240 much easier to form like a large, large and very 0:02:20.320 --> 0:02:23.280 uniform crystals, and that, as it turns out, and enhance 0:02:23.680 --> 0:02:28.280 formulations and even potentially some existing drugs. So drug maker 0:02:28.400 --> 0:02:31.760 merk it's working. It's worked on a new formulation of 0:02:31.840 --> 0:02:34.920 it's just blockbuster cancer drug k Tuda. Now that's the 0:02:34.960 --> 0:02:37.280 cancer drug that Jimmy Carter got. It's sort of melanoma 0:02:37.280 --> 0:02:40.320 and all sorts of other ones. But right now it 0:02:40.400 --> 0:02:42.040 must be infused like you have to go to the 0:02:42.040 --> 0:02:45.639 doctor's office and infused over a couple hours. And the 0:02:45.720 --> 0:02:48.080 dry it would really like to put that in injectable forms. 0:02:48.120 --> 0:02:50.639 You could do just a self administered injection potentially even 0:02:50.680 --> 0:02:51.880 at home. But to do that, it needs to be 0:02:51.880 --> 0:02:54.120 able to concentrate that con true to much more to 0:02:54.200 --> 0:02:56.240 be concentrated now and if you did it with the 0:02:56.240 --> 0:02:59.200 current formulation, to be get like molasses. So it turns 0:02:59.200 --> 0:03:01.760 out they did some in space and the International Space 0:03:01.800 --> 0:03:04.280 Station and they came up with a way to concentrate 0:03:04.320 --> 0:03:06.600 it much more and keep it fast flowing. And the 0:03:06.680 --> 0:03:09.840 concept for was first device in space and the fact 0:03:09.880 --> 0:03:11.760 that they might go into clinical trials is something that 0:03:11.919 --> 0:03:14.720 was the first you know devised in space that's excited 0:03:14.760 --> 0:03:16.679 a lot of gotten a lot of interest in you 0:03:16.720 --> 0:03:20.919 know space spaceed drug development and other companies like Eli 0:03:20.960 --> 0:03:23.080 Lillie is up there with some experiments now, and you 0:03:23.200 --> 0:03:27.120 even now have startups that once the International Space Station 0:03:27.280 --> 0:03:30.240 is decommissioned, you know, sometime after twenty thirty that are 0:03:30.240 --> 0:03:33.560 working on developing you know, automated kind of drug formulation 0:03:33.720 --> 0:03:36.720 laboratories in space. It's sense on experiment up and then 0:03:36.760 --> 0:03:39.560 it come back down and drug companies could work on it. 0:03:39.680 --> 0:03:43.920 Okay, so when does this happen? Why don't we have 0:03:44.000 --> 0:03:44.600 this already? 0:03:44.640 --> 0:03:44.880 Bob? 0:03:45.440 --> 0:03:47.840 Well, you know, these are all kind of like, you know, 0:03:48.200 --> 0:03:49.720 I'd like to say, these are all kind of like 0:03:49.800 --> 0:03:52.680 early experiments. So say they're drug companies and setting up 0:03:52.680 --> 0:03:55.320 experiments by the way out into space for really for decades, 0:03:55.880 --> 0:03:58.520 and they're their first experiments were kind of like early 0:03:58.600 --> 0:04:02.680 stage aimed at like early stage drug crystallization works to 0:04:02.800 --> 0:04:06.400 crystallize GOT disease more promoting proteins so they could design 0:04:06.400 --> 0:04:10.240 better drugs. And in fact, a unit of a suka Holdings. 0:04:10.240 --> 0:04:13.400 That's the Japanese company. They have a drug in final 0:04:13.440 --> 0:04:17.080 stage trials in Japan for muscular dystrophe. There was was 0:04:17.200 --> 0:04:20.360 base and some very early work, you know, done early 0:04:20.360 --> 0:04:23.239 in the early days of International Space Study space station 0:04:23.360 --> 0:04:27.640 crystallizing a muscular dystrophy associated protein. But what's happening now 0:04:27.760 --> 0:04:30.520 is there actually Americans and others are showing you could 0:04:30.520 --> 0:04:34.760 actually devise you know, better formulations of existing blockbuster drugs, 0:04:34.760 --> 0:04:38.320 and that's really driven the attention to like maybe space 0:04:38.480 --> 0:04:40.600 is like you know, could really like help us get 0:04:40.600 --> 0:04:42.200 some new patents and make a lot of money. So 0:04:42.200 --> 0:04:43.360 that's really driven interest. 0:04:43.680 --> 0:04:46.760 So whose job is it to figure out how to 0:04:46.839 --> 0:04:50.479 do this in space? Like, you know, Tim, Tim, if 0:04:50.520 --> 0:04:53.200 you're going to make you know, car breaks in space, 0:04:53.240 --> 0:04:54.520 I'm sure you can figure that out. 0:04:54.560 --> 0:04:56.919 But Bob, you don't want to see how far I 0:04:56.960 --> 0:05:00.480 made it from the math in college. 0:05:00.000 --> 0:05:03.880 But within the pharmat, like, whose job is it to 0:05:03.880 --> 0:05:05.360 figure out space manufacturing? 0:05:05.800 --> 0:05:08.000 Yeah, So at the big you know, drug makers, there's 0:05:08.040 --> 0:05:11.159 relatively you know, small numbers of people like working on it, 0:05:11.200 --> 0:05:13.120 so it's still a niche field. I'd say, you know, 0:05:13.160 --> 0:05:15.040 if you go to a big drug maker, I would image. 0:05:15.040 --> 0:05:17.240 There's probably a lot more people work around AI either space, 0:05:17.320 --> 0:05:19.760 but you know, you know, space is like you know, 0:05:20.400 --> 0:05:22.960 garnering interest. Some of the people I talk to, their 0:05:23.000 --> 0:05:26.560 titles are like, you know, director of Formulations, development titles 0:05:26.600 --> 0:05:30.359 like that. But these experiments are are hard. You know, 0:05:30.480 --> 0:05:32.680 you you send something up to the space station and 0:05:33.520 --> 0:05:35.640 you know you get it back down a few months later, 0:05:35.760 --> 0:05:37.479 and if you like screwed up in the design and 0:05:37.480 --> 0:05:39.279 the experiment, you know your next shot and the next 0:05:39.320 --> 0:05:41.839 experiment maybe you know six months later. So you gotta 0:05:42.040 --> 0:05:45.119 got you gotta do it. Be very careful with experimental design. 0:05:45.360 --> 0:05:47.840 You can't, like it's hard to call an astro and say, hey, 0:05:47.920 --> 0:05:50.120 I want to change everything midstream once is up there. 0:05:50.200 --> 0:05:53.240 So there's even a whole set of like companies that 0:05:53.400 --> 0:05:56.400 help drug makers like have like self enclosed experiments that 0:05:56.440 --> 0:05:58.400 can send up that are like all ready to go. 0:05:58.480 --> 0:06:00.520 The astronart press is a couple button to turn it 0:06:00.600 --> 0:06:02.479 on and then press the couple buttons to turn it off. 0:06:02.800 --> 0:06:05.679 You know, you can't it's hard to adjust the audition mystery, 0:06:05.680 --> 0:06:06.919 and once you're up in space. 0:06:06.960 --> 0:06:11.680 The button pressing job it doesn't sound that So Bob, 0:06:11.960 --> 0:06:13.640 I want to get to this idea of scaling and 0:06:13.640 --> 0:06:15.719 make sure I understand what's actually happening in space. I 0:06:15.760 --> 0:06:17.520 want to go back to the company that you used 0:06:17.520 --> 0:06:19.520 in the lead here, LAMB Division, who's working on the 0:06:19.560 --> 0:06:24.680 world's first protein based artificial retina for patients with retinitis pigmentosa. So, 0:06:25.560 --> 0:06:29.640 if it's so hard to actually create these two hundred 0:06:29.640 --> 0:06:35.000 paper thin layers of light sensitive protein in on Earth, 0:06:35.560 --> 0:06:38.440 does that mean that they won't be able to scale 0:06:38.520 --> 0:06:41.680 it in an environment that's not zero gravity. 0:06:42.080 --> 0:06:42.320 Yeah. 0:06:42.320 --> 0:06:44.479 So they're one of the few companies that's right now 0:06:44.680 --> 0:06:47.360 is talking about actually, as I understand it, manufacturing and 0:06:47.480 --> 0:06:50.000 finished product, you know, in space. And if you think 0:06:50.040 --> 0:06:52.560 about their product, it's like literally it's a size of 0:06:52.960 --> 0:06:55.800 a whole punch, like a paper whole punch. That's like, 0:06:55.880 --> 0:06:57.280 you know, so you get I guess you get one 0:06:57.360 --> 0:06:59.720 or two of these if you're a patient. So they 0:06:59.760 --> 0:07:02.280 don't need that much finished product. You know, it's a 0:07:02.320 --> 0:07:05.320 relatively small market. I mean, this is not like an 0:07:05.320 --> 0:07:07.160 infused drug where you're going to be giving you know, 0:07:07.240 --> 0:07:09.320 two hundred millimeters every two weeks for the rest of 0:07:09.360 --> 0:07:11.920 your life. That's more like merks k true to the 0:07:12.120 --> 0:07:15.080 they make it, Mark and K true to their cancer drug. 0:07:15.120 --> 0:07:17.040 They make it like by the ton on Earth and 0:07:17.080 --> 0:07:19.480 their experiments in space. So far, I've made like one 0:07:19.520 --> 0:07:21.800 dose at a time, so you can see that it's 0:07:21.800 --> 0:07:24.120 not right now practical. Wouldn't be even if there are 0:07:24.320 --> 0:07:26.960 even though there are technical advantages, it would not be 0:07:27.000 --> 0:07:29.160 practical for them to make the finished product in space. 0:07:29.240 --> 0:07:31.800 But for something like this artificial retina, where the total 0:07:32.080 --> 0:07:35.280 quantities needed are very very small, and I imagine if 0:07:35.280 --> 0:07:36.840 we ever get this to market, it's going to be 0:07:36.880 --> 0:07:39.280 sold for a very high price. You know, you can 0:07:39.360 --> 0:07:43.000 imagine that's an actual like possibility to actually make that 0:07:43.080 --> 0:07:43.480 in space. 0:07:43.560 --> 0:07:46.760 Would you take the one jose that's been made in space, 0:07:46.960 --> 0:07:53.320 knowing that there's massive quantities on Earth, it's practically the 0:07:53.360 --> 0:07:55.240 same thing. It's just been made in space. Like, why 0:07:55.280 --> 0:07:56.680 wouldn't Why wouldn't I do it? 0:07:56.680 --> 0:07:57.760 Why not? 0:07:58.240 --> 0:07:59.560 I don't know? 0:08:00.280 --> 0:08:04.160 Is the true question that rises the whole regulatory question. 0:08:04.280 --> 0:08:06.559 No one's even got to, like, you know, if something 0:08:06.640 --> 0:08:09.120 actually were made in space, or even if like there's 0:08:09.160 --> 0:08:11.360 another idea they're talking about, it's making like a seed 0:08:11.360 --> 0:08:13.800 crystal in space, use the better conditions of space to 0:08:13.800 --> 0:08:15.760 make like little seed crystals that they could then be 0:08:15.880 --> 0:08:18.000 used sort of like a sour to start being brought 0:08:18.040 --> 0:08:20.640 down to Earth and able to grow bigger quantities on Earth. 0:08:20.640 --> 0:08:24.080 But even there, like the FDA, how would the FDA 0:08:24.200 --> 0:08:26.480 regulate that, there's a whole I guess said of unknown 0:08:26.600 --> 0:08:27.559 like questions there. 0:08:27.720 --> 0:08:29.960 Yeah, FDA is not having any problems with oversight. We 0:08:29.960 --> 0:08:33.680 did that story actually earlier today, having said that, how 0:08:33.720 --> 0:08:37.400 easy is is you duplicate the process of space drug 0:08:37.559 --> 0:08:41.360 or manufacturing drugs in space on Earth? Can we create that, 0:08:41.520 --> 0:08:42.160 recreate that? 0:08:42.679 --> 0:08:42.959 Yeah? 0:08:43.000 --> 0:08:44.360 So the way to think of it with some of 0:08:44.400 --> 0:08:47.040 these drug formulations are trying to make better, like easier 0:08:47.080 --> 0:08:50.080 to use injectable drug formulations. And the way to think 0:08:50.080 --> 0:08:52.960 about that is that there's just like you know, there's 0:08:53.000 --> 0:08:55.240 a million conditions you can put in to get something 0:08:55.240 --> 0:08:59.600 to crystallize, the temperature, the pressure, you know, the concentrations, 0:08:59.600 --> 0:09:01.920 many men conditions you can try almost an infinite number, 0:09:01.920 --> 0:09:04.400 and just things form a little without the microgravity because 0:09:04.400 --> 0:09:07.760 crystals are these kind of slow forming, finicky things, and 0:09:08.080 --> 0:09:10.880 without the convection is one of the things that goes 0:09:10.880 --> 0:09:14.120 away the fluid convections. So and that's reduced and that 0:09:14.160 --> 0:09:17.600 gets better, just gets better quality crystals in many cases. 0:09:17.920 --> 0:09:19.440 And so the way to think about it is they 0:09:19.520 --> 0:09:22.480 get an idea in space like in these better conditions, 0:09:22.520 --> 0:09:26.240 and then once they know what they're looking for, they 0:09:26.280 --> 0:09:28.920 then find you find a way to duplicate that back 0:09:28.960 --> 0:09:31.640 at the factory here on Earth. And that's what Merk 0:09:31.679 --> 0:09:34.040 did with this new formulation of k truda that may 0:09:34.120 --> 0:09:35.160 go into clinical trials. 0:09:35.200 --> 0:09:37.400 Okay, So so Merk seems to be all over this. 0:09:37.760 --> 0:09:41.679 What about other drug manufacturers are you know, is there 0:09:41.720 --> 0:09:45.439 really a race like as often is the case in 0:09:45.480 --> 0:09:48.959 space space or is everybody. 0:09:48.720 --> 0:09:51.480 Else space race? 0:09:51.480 --> 0:09:54.040 So Mark has a competitor in cancer drugs, and that's 0:09:54.040 --> 0:09:57.200 Bristol Myers Squid and they make a rival to k 0:09:57.280 --> 0:10:00.760 tree called Abdivo, and they indeed are putting experiments up 0:10:00.800 --> 0:10:04.400 into space. Look you're looking at protein crystallation, you know, 0:10:04.520 --> 0:10:07.800 and you know they they do say it includes cancer, 0:10:07.800 --> 0:10:10.359 but they won't to say which drugs and are involved. 0:10:10.400 --> 0:10:12.560 But all I can say is they do make a 0:10:12.600 --> 0:10:16.200 direct rival to k truda. So, you know, drug companies, 0:10:16.240 --> 0:10:19.080 you know, historically you know, once one company does something, 0:10:19.160 --> 0:10:20.400 you know the others want to try it out. 0:10:20.440 --> 0:10:24.000 The wait, not like a dry diet drug or anything. 0:10:24.360 --> 0:10:27.280 Yeah, well, so far I've not heard of any diet drugs, 0:10:27.320 --> 0:10:31.480 you know that maiden space. But you know, I'll keep reporting. 0:10:31.920 --> 0:10:36.079 We should make journalism in space, just so are volunteering together. 0:10:36.080 --> 0:10:38.400 I mean, you know, Bob Bob was already going to 0:10:38.440 --> 0:10:43.559 go check it out. So most cost effectively, if incorporated card. 0:10:43.520 --> 0:10:45.320 We'll cover that SpaceX trip. 0:10:45.400 --> 0:10:48.040 Okay, Hey, listen, I hate to be a bummer on 0:10:48.160 --> 0:10:51.160 all of this, but isn't the International Space Station at 0:10:51.240 --> 0:10:54.240 risk of being decommissioned after twenty thirty? So, like does 0:10:54.320 --> 0:10:55.640 that put kind of a damper. 0:10:55.360 --> 0:10:55.800 On all on this? 0:10:56.520 --> 0:10:59.680 Well, there's companies, like you know, there's like private startups 0:10:59.720 --> 0:11:02.240 and core working on like what's after the space station. 0:11:02.360 --> 0:11:05.160 There's one small one, you know, startup that actually has 0:11:05.240 --> 0:11:08.080 like a little satellite that's like a little drug production lab. 0:11:08.360 --> 0:11:10.079 They hope it's going to be a little automated drug 0:11:10.360 --> 0:11:13.680 formulation production lab up there. Now for their first mission, 0:11:14.040 --> 0:11:17.520 they've had some problems getting the reentry capsule back down 0:11:17.640 --> 0:11:23.520 because they need FAA Federal Aviation Administration permission. They haven't 0:11:23.520 --> 0:11:25.480 been able to get it yet. So it illustrates some 0:11:25.559 --> 0:11:28.520 of like you know the potential snags involved in space 0:11:28.600 --> 0:11:29.280 based production. 0:11:29.600 --> 0:11:32.959 Yeah, okay, well we know where Big Pharma is, which 0:11:33.040 --> 0:11:36.000 is the final frontier. You know, I'm curious to see 0:11:36.040 --> 0:11:38.800 if if this is for real though. I mean, like, sure, 0:11:38.880 --> 0:11:42.240 you can make a couple of applications, but scale seems 0:11:42.880 --> 0:11:46.559 maybe not easy to get there. Tim's going to try 0:11:46.640 --> 0:11:48.000 break pads and report back. 0:11:48.160 --> 0:11:51.120 But the payoff is potentially huge here. I mean, if 0:11:51.160 --> 0:11:54.280 you can cure blindness with artificial retinas, Like even though 0:11:54.280 --> 0:11:56.800 Bob says it's a relatively small number of people, I mean, 0:11:57.200 --> 0:11:58.719 people would pay so much for that. 0:11:58.920 --> 0:12:00.959 You need is you know, some micro gravity? 0:12:01.640 --> 0:12:01.959 What's that? 0:12:02.559 --> 0:12:03.559 That's why it's there for you. 0:12:04.120 --> 0:12:05.880 I think the key word we use in the headline 0:12:05.920 --> 0:12:08.079 was that the drug companies are exploring this, you know, 0:12:08.320 --> 0:12:10.959 yeah right, not a donk deal. And you know, I 0:12:11.000 --> 0:12:12.920 think the way to think of it, they're doing experiments 0:12:12.960 --> 0:12:15.360 up there that are going to help help them, you know, 0:12:15.480 --> 0:12:18.360 devise new formulations and new versions of their drugs, but 0:12:18.440 --> 0:12:20.719 it doesn't necessarily I mean those they are actually those 0:12:20.840 --> 0:12:22.920 final drugs are actually going to be produced in space. 0:12:23.120 --> 0:12:25.439 I think we call that the to be sure graph 0:12:27.360 --> 0:12:28.439 or the third word in the headline. 0:12:29.160 --> 0:12:30.960 I'm just going to say thank you, Bob, because I've 0:12:31.000 --> 0:12:32.480 been just saying drugs. 0:12:32.160 --> 0:12:35.120 In space It sounds really cool. 0:12:35.800 --> 0:12:38.720 It does sound really cool. I'm very interesting in terms 0:12:38.800 --> 0:12:41.439 of maybe what we could see down the road. Bub landgread. 0:12:41.520 --> 0:12:42.240 Thank you so much. 0:12:42.400 --> 0:12:44.920 Everything you do is just we learned something and it's 0:12:44.960 --> 0:12:47.560 a fun read and interesting read. Healthcare reporter here at 0:12:47.559 --> 0:12:50.400 Bloomberg News on zoom in San Francisco. He is not 0:12:51.480 --> 0:12:52.840 on the International Space DAG. 0:12:52.800 --> 0:12:55.200 As far as we know, despite the fact that there 0:12:55.240 --> 0:12:58.920 were some Internet connectivity issues. But yeah, never know, really 0:12:59.000 --> 0:13:01.480 really interesting stuff. I'll be the guy who presses the 0:13:01.520 --> 0:13:03.120 button stroll that sounds like it. 0:13:03.280 --> 0:13:05.600 We can fight over it maybe, yeah, exactly what has 0:13:06.040 --> 0:13:07.920 Joe Weber, of course, the editor of Bloomberg Business We 0:13:08.080 --> 0:13:10.600 check this out in an upcoming new issue of Bloomberg 0:13:10.600 --> 0:13:12.000 Business Week. It's also online. 0:13:13.679 --> 0:13:17.200 You're listening to the Bloomberg Business Week podcast. Catch us 0:13:17.280 --> 0:13:20.640 live weekday afternoons from three to six Eastern Listen. 0:13:20.520 --> 0:13:23.960 On Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:13:24.040 --> 0:13:26.680 Business app, or watch us live on YouTube. 0:13:28.080 --> 0:13:28.240 Well. 0:13:28.400 --> 0:13:30.640 As the COVID pandemic fades into the past, many things 0:13:30.679 --> 0:13:34.520 have returned to normal, the world of work has not. Companies, employees, 0:13:34.559 --> 0:13:37.319 and governments still figuring out how to adapt to lasting 0:13:37.440 --> 0:13:40.319 changes to corporate life sparked by widespread lockdowns. I put 0:13:40.440 --> 0:13:44.240 millions onto a work from home schedule at stakes. At 0:13:44.280 --> 0:13:46.920 stake really worldwide aren't just norms for office life, but 0:13:47.000 --> 0:13:50.120 really the economic health of big cities as well, particularly 0:13:50.160 --> 0:13:51.760 in the United States. We have a great voice to 0:13:51.800 --> 0:13:54.120 talk to us about what's going on in the workplace environment. 0:13:54.240 --> 0:13:55.880 Yeah, let's checked in with him a little over a 0:13:55.960 --> 0:13:57.760 year ago. It feels like so much has happened, and 0:13:57.920 --> 0:14:01.199 since then, so much has been talked about. One company, 0:14:01.440 --> 0:14:03.280 one person who's at a front seat to all of 0:14:03.320 --> 0:14:07.040 this is the London listed office space provider IWG. We've 0:14:07.080 --> 0:14:10.000 got back with us Mark Dixon, founder, executive director, a 0:14:10.120 --> 0:14:13.520 CEO of IWG. That's International Workplace Group. He's with us 0:14:13.520 --> 0:14:15.920 here in our Bloomberg Interactive Brokers studio. Talk to us 0:14:15.920 --> 0:14:17.640 a little bit about the footprint that you have and 0:14:17.920 --> 0:14:18.959 where else you've traveled. 0:14:19.280 --> 0:14:22.040 US is our biggest market's about it's more than half 0:14:22.080 --> 0:14:26.320 of the business and we've been here for more than 0:14:26.400 --> 0:14:30.160 thirty years in the US, but the growth is now 0:14:30.600 --> 0:14:35.040 really quite dramatic in terms of how we're growing the platform, 0:14:35.120 --> 0:14:38.200 how we're growing the number of buildings we have across 0:14:38.240 --> 0:14:41.000 the country. So I've just come from the Midwest from 0:14:41.040 --> 0:14:44.240 Minnesota where I've been doing site visits. But you know, 0:14:44.400 --> 0:14:48.160 we're growing the business about fifty percent growth rates in 0:14:48.280 --> 0:14:50.840 the US and it's got the place with the highest 0:14:50.920 --> 0:14:55.960 take up of hybrid working and so it's very exciting. 0:14:56.120 --> 0:15:02.080 So invested day tomorrow, but very useful to drop in 0:15:02.280 --> 0:15:04.600 and have a look at what we're doing in the market. 0:15:04.800 --> 0:15:08.200 So mark return to office, work from home hybrid, what's 0:15:08.280 --> 0:15:09.520 winning hybrid? 0:15:10.080 --> 0:15:15.640 So you have to imagine a new world driven by technology. 0:15:15.720 --> 0:15:19.280 So everyone, a lot of the narrative sort of thinks 0:15:19.400 --> 0:15:21.120 that things are going to go back to normal and 0:15:21.200 --> 0:15:24.320 everyone's going to come back to Manhattan. That's not going 0:15:24.400 --> 0:15:30.280 to happen. People want can and want to work at 0:15:30.400 --> 0:15:32.960 places near to where they live. They don't want to commute. 0:15:33.440 --> 0:15:35.520 So the elephant in the room is commuting. It's not 0:15:36.360 --> 0:15:38.800 people are working from offices, they just want to do 0:15:38.880 --> 0:15:42.960 it locally. Hybrid is a combination of work from home, 0:15:44.000 --> 0:15:46.440 work from near to home, and come into someone like 0:15:46.560 --> 0:15:50.880 Manhattan or Chicago once a month, get together with colleagues, 0:15:50.920 --> 0:15:52.920 business reviews, collaborate. 0:15:53.720 --> 0:15:55.040 So what does that mean for a market like New 0:15:55.120 --> 0:15:56.200 York City? For example? 0:15:57.320 --> 0:16:00.080 For New York City, it'll need to reinvent itself. You 0:16:00.120 --> 0:16:04.280 can see it coming back here. It's probably a little 0:16:04.320 --> 0:16:06.640 over a year since I was last in New York City. Yeah, 0:16:07.000 --> 0:16:09.240 I mean it's more vacant. I didn't think it could 0:16:09.280 --> 0:16:10.000 get more vacant. 0:16:10.040 --> 0:16:11.480 You think it's more vacant than a year ago. 0:16:11.600 --> 0:16:15.000 Oh, yes, absolutely. I mean you can see it at 0:16:15.040 --> 0:16:17.320 the retail level, and then you can just got to 0:16:17.360 --> 0:16:18.840 look up in the building. So I mean, look, it's 0:16:18.920 --> 0:16:21.760 my I've been doing this for nearly thirty five years, 0:16:21.800 --> 0:16:24.680 so I can tell looking at buildings where they're occupied 0:16:24.760 --> 0:16:26.880 or not, there's a lot of vacancy, a lot of 0:16:26.960 --> 0:16:33.240 sublet and you know, it's places like New York very 0:16:33.400 --> 0:16:38.200 very difficult places and expensive places, time consuming places to 0:16:38.240 --> 0:16:41.400 commute to for normal workers. So unless you live here, 0:16:42.320 --> 0:16:45.720 it's not convenient, and especially downtown, if you go downtown, 0:16:46.040 --> 0:16:48.880 you've got that double commute. So where you have that, 0:16:49.200 --> 0:16:50.960 it's you know that people don't want to do that. 0:16:51.760 --> 0:16:54.400 It makes complete sense because I feel like for many 0:16:54.440 --> 0:16:56.120 of us who've come back to the pandemic. I like 0:16:56.240 --> 0:16:58.480 being actually back in the office. I'm so tired of 0:16:58.560 --> 0:17:00.680 commuting though. I'm tired of it like you just and 0:17:00.920 --> 0:17:02.000 when you have that break. 0:17:01.800 --> 0:17:04.119 That we done, is you're going to keep doing it. 0:17:04.800 --> 0:17:08.240 Yeah, I'm not giving up my card anymore, my commuting card. 0:17:08.640 --> 0:17:11.520 You work with the likes of or have Disney, Uber, Microsoft, 0:17:11.600 --> 0:17:14.160 black Rocks, Spotify, which got news that it's cutting fifteen 0:17:14.240 --> 0:17:17.720 hundred jobs earlier. We got that news. Disney earlier this 0:17:17.840 --> 0:17:20.320 year began the first round of seven thousand expected job cuts. 0:17:21.080 --> 0:17:24.280 Any of that working its way into less demand for 0:17:24.400 --> 0:17:27.120 what you are doing or help me understand. 0:17:26.760 --> 0:17:28.600 Yeah, more demand. 0:17:29.480 --> 0:17:29.760 You see. 0:17:29.800 --> 0:17:35.040 What's happening is you've got globally pretty much a difficult economy, 0:17:35.160 --> 0:17:39.040 So corporations are looking at ways to be more efficient, 0:17:39.640 --> 0:17:44.000 to get more productivity, to cut cost, so more and 0:17:44.119 --> 0:17:46.399 more of a movement. You have to imagine us as 0:17:46.480 --> 0:17:51.280 providing a platform for work and support of workers. You know, 0:17:51.720 --> 0:17:54.040 at the moment in the US, as an example, we've 0:17:54.040 --> 0:17:57.840 got twelve hundred buildings every state. We're adding six hundred 0:17:57.880 --> 0:18:01.800 buildings next year, So you get this sort of work platform. 0:18:01.960 --> 0:18:05.560 It costs half the price, it's near where your people 0:18:05.640 --> 0:18:09.520 want to be. And we've also do US airport's airside, 0:18:09.640 --> 0:18:13.200 we do railway stations, rest stops. So it's a work 0:18:13.240 --> 0:18:16.920 from anywhere. It's not just office buildings, and the future, 0:18:17.119 --> 0:18:21.959 a technology powered future, is about being productive wherever you are, 0:18:23.080 --> 0:18:25.600 and it's about getting the most overt workforce. And that's 0:18:25.640 --> 0:18:27.119 what companies are looking for today. 0:18:27.600 --> 0:18:29.800 So what kind of indicator are you So if a 0:18:30.000 --> 0:18:31.160 you know what I mean, if a company is looking 0:18:31.240 --> 0:18:34.159 to cut costs and tap into more of you, is 0:18:34.200 --> 0:18:37.000 that just a smart company or is it a company 0:18:37.040 --> 0:18:38.879 feeling squeezed and they're looking to cut like you know 0:18:38.920 --> 0:18:42.199 what I'm trying to it is as soon as they 0:18:42.280 --> 0:18:44.040 need more space, Well. 0:18:45.600 --> 0:18:48.320 How they save money is they have less space. It's 0:18:48.359 --> 0:18:50.760 a bit like Uber. You don't have a car in 0:18:50.840 --> 0:18:54.080 every city you travel to Chicago, you take an Uber 0:18:54.720 --> 0:18:56.520 and you take an Uber when you need it. You 0:18:56.640 --> 0:18:58.639 don't have one city there all the time. And what 0:18:58.760 --> 0:19:01.560 we're doing on our platform, we've got eight million people 0:19:01.720 --> 0:19:04.960 using it. They you know, you one day you're in Chicago, 0:19:05.680 --> 0:19:07.600 the next day you're working from close to home. We 0:19:07.720 --> 0:19:11.840 also support nearly about eight hundred thousand people that work 0:19:11.920 --> 0:19:14.560 from home. We have a whole product range that supports homeworkers. 0:19:15.400 --> 0:19:19.040 So it's you know, it's about a technology powered workplace 0:19:19.800 --> 0:19:24.840 that's available anywhere. Our job is to create productive workplaces 0:19:25.320 --> 0:19:27.080 so that people can do the best work. 0:19:27.280 --> 0:19:28.280 But it's not coworking. 0:19:28.920 --> 0:19:33.120 We do co working offices, we do work from home. 0:19:33.359 --> 0:19:37.160 We do drop in small little things like a phone 0:19:37.200 --> 0:19:40.119 box that you can use in airports. Do your teams. 0:19:40.440 --> 0:19:42.520 How did you watch the bankruptcy if we workplay out? 0:19:43.119 --> 0:19:44.159 Well, it was long, wasn't it. 0:19:44.240 --> 0:19:48.040 I mean it's but they weren't wrong in their concept. 0:19:47.760 --> 0:19:50.520 Absolutely not wrong. They were wrong in their execution. 0:19:50.960 --> 0:19:51.160 Yeah. 0:19:51.640 --> 0:19:53.919 I mean I've been doing this business along. I started 0:19:53.960 --> 0:19:58.040 with one building in Brussels in nineteen eighty nine. We've 0:19:58.119 --> 0:20:01.880 now got just a little over four thousand, and that's 0:20:01.960 --> 0:20:04.720 been pretty much sell funded. We've had very little capital 0:20:04.760 --> 0:20:09.639 put into the business, so we've reinvested capital. They in 0:20:09.720 --> 0:20:12.240 the contrary, you know, they've used a huge amount of 0:20:12.320 --> 0:20:16.640 capital and so it's just a different discipline, right, idea, 0:20:17.080 --> 0:20:19.960 It's all about the execution. This is a detailed and 0:20:20.119 --> 0:20:23.720 difficult operational business, not easy. A lot of people misjudge it. 0:20:23.840 --> 0:20:25.840 How does the business model I'm a bit daft. How 0:20:25.880 --> 0:20:28.680 does the business model work in terms of you because 0:20:28.720 --> 0:20:32.800 you get investor money, or how does it works because 0:20:32.840 --> 0:20:34.840 you don't own because we were getting some perfect kitchen 0:20:34.920 --> 0:20:35.480 you don't own. 0:20:36.440 --> 0:20:40.720 We have a platform so and that platform is a 0:20:40.760 --> 0:20:44.840 digital platform, a sales platform, and we have huge numbers 0:20:44.840 --> 0:20:47.960 of customers sitting on one side of the platform. If 0:20:48.040 --> 0:20:52.000 you own a property, you're an institution, you're a private owner. 0:20:52.400 --> 0:20:54.879 You want to put your property on our platform, you 0:20:55.000 --> 0:20:57.840 can do that and we'll operate it for you. That's 0:20:57.880 --> 0:21:01.520 what we do. So we're working the biggest institutions in 0:21:01.600 --> 0:21:05.160 the world, insurance companies and someone who are putting property 0:21:05.200 --> 0:21:07.920 on the platform so that it's sold in a hybrid way. 0:21:08.600 --> 0:21:09.960 We're the middleman in all of that. 0:21:10.160 --> 0:21:12.719 Get a piece of the business. So you don't care 0:21:12.760 --> 0:21:16.240 if that property isn't rented out completely for the month. 0:21:16.520 --> 0:21:18.560 We do well, you do because you'd make more money. 0:21:18.400 --> 0:21:20.840 Off of it, and we want our partners to be successful, 0:21:20.880 --> 0:21:22.000 so we're very focused on that. 0:21:22.280 --> 0:21:24.439 Do you have any are you in any long term leases? 0:21:25.040 --> 0:21:28.920 We have some, We have almost no long to We 0:21:29.040 --> 0:21:31.840 have leases, but all of them are sure. We we 0:21:32.320 --> 0:21:38.040 option long and we keep them short. Otherwise pretty much 0:21:38.119 --> 0:21:40.119 a year we can get out of anything. 0:21:40.480 --> 0:21:42.800 How has the interest rate environment impacted you? 0:21:43.040 --> 0:21:47.120 If we are where our net debt is small, next 0:21:47.280 --> 0:21:48.960 year it would be about the same as our rebit 0:21:48.960 --> 0:21:50.239 do so about one time bit. 0:21:50.600 --> 0:21:54.560 But any of your customers who have properties, have they 0:21:54.720 --> 0:21:57.359 have you have some of them gone under or because 0:21:57.359 --> 0:21:58.240 of the higher rate, some. 0:21:58.320 --> 0:22:00.320 Of them, a few, very few have gone. But then 0:22:00.320 --> 0:22:03.679 you get special services. We provide cash flow in the building, 0:22:03.760 --> 0:22:07.200 and whoever takes the building, they like our cash flow. 0:22:07.320 --> 0:22:09.800 So we're the areas of the world that you're concerned 0:22:09.800 --> 0:22:12.920 about in terms of economies, economic activity, the consumer. 0:22:13.520 --> 0:22:16.040 I mean, I think there's a not a global squeeze, 0:22:16.080 --> 0:22:20.280 but it's pretty much. I think there's a universal squeeze, 0:22:20.359 --> 0:22:25.240 both on companies and on the consumer. It's pretty widespread. 0:22:25.880 --> 0:22:28.920 I mean, for me, and I've been business for nearly 0:22:29.000 --> 0:22:32.439 fifty years. You know how quickly interest rates came up. 0:22:33.359 --> 0:22:36.680 Has caught everyone you know, unawares, if you like. On 0:22:36.760 --> 0:22:39.920 the one hand, and that's caught businesses that have debt 0:22:40.560 --> 0:22:42.560 and that have taken out that debt obviously at low 0:22:42.800 --> 0:22:46.440 interest rate comes back higher but also the consumer cost 0:22:46.520 --> 0:22:49.399 of living and squeezing them as well. So that's forcing 0:22:49.520 --> 0:22:52.240 companies to take action, whether as you said, whether that's 0:22:52.320 --> 0:22:55.240 cutting people or cutting costs. And that's quite a good 0:22:55.320 --> 0:22:56.080 environment for US. 0:22:56.280 --> 0:22:58.560 Mark just got like twenty seconds left here. So based 0:22:58.600 --> 0:23:00.840 on what you're seeing, what you you are doing, you've 0:23:01.040 --> 0:23:03.600 talked about some some pretty impressive growth, especially with the 0:23:03.720 --> 0:23:08.280 US market recession. Next year, global recess from US recession 0:23:08.359 --> 0:23:09.680 very quickly, I would. 0:23:09.480 --> 0:23:13.120 Say, difficult. Yeah, small recession. 0:23:13.520 --> 0:23:16.119 Difficult year, small recession. That means a lot because you 0:23:16.240 --> 0:23:18.080 definitely have like a front receipta in terms of what 0:23:18.160 --> 0:23:20.800 many companies are doing. Come back, please sooner more than 0:23:20.920 --> 0:23:24.320 one year. Mark Dickson is founder, executive director and CEO 0:23:24.359 --> 0:23:26.560 of IWG International Workplace Group. 0:23:26.600 --> 0:23:36.680 Here in studio, you're listening to the Bloomberg Business Week podcast. 0:23:36.960 --> 0:23:40.000 Catch us live weekday afternoons from three to six Easter 0:23:40.359 --> 0:23:44.040 on Bloomberg Radio, the Bloomberg Business App and YouTube. You 0:23:44.160 --> 0:23:47.360 can also listen live on Amazon Alexa from our flagship 0:23:47.480 --> 0:23:51.359 New York station, Just say Alexa play Bloomberg eleven thirty. 0:24:00.000 --> 0:24:01.920 Hey everybody to say that a lot has happened since 0:24:01.960 --> 0:24:03.840 we last checked in with our next guest would be 0:24:04.119 --> 0:24:06.280 an understatement. 0:24:07.000 --> 0:24:07.520 Big time. 0:24:08.119 --> 0:24:10.680 Or Levine last joined us earlier this year, before the 0:24:10.760 --> 0:24:13.480 October seventh Hamas attack on Israel area. As you know, 0:24:14.560 --> 0:24:18.159 Many is the co founder, of course, at the navigation 0:24:18.240 --> 0:24:20.400 app Ways, which Google bought for more than one point 0:24:20.440 --> 0:24:22.840 one billion dollars. He was also an investor in move It, 0:24:23.280 --> 0:24:25.760 which then tim Intel bought for a billion dollars. 0:24:25.880 --> 0:24:27.720 Well I spoke to him because of his new book, 0:24:27.800 --> 0:24:29.600 fall in Love with the Problem, Not the Solution, a 0:24:29.720 --> 0:24:33.359 handbook for entrepreneurs. It details his journey and also his 0:24:33.480 --> 0:24:37.240 unique philosophy on what it takes to be a successful innovator. 0:24:37.280 --> 0:24:40.160 He's a graduate from the Tel Aviv University and served 0:24:40.200 --> 0:24:43.240 in the Israeli Army Special Intelligence Unit. He started both 0:24:43.280 --> 0:24:45.440 Ways and move It companies in Israel, which of course 0:24:45.520 --> 0:24:48.080 is currently at war with Hamas in the Gaza strip 0:24:48.200 --> 0:24:49.960 Or he good to have you back here in the 0:24:50.000 --> 0:24:54.080 Bloomberg Interactive Brokers studio. How are you doing? 0:24:54.440 --> 0:24:58.400 It's complicated, right, because it's never going to be the same. 0:24:58.560 --> 0:25:00.159 It's never going to be the same. That was a 0:25:00.240 --> 0:25:04.080 devastating attack. That was you know, my kids are the 0:25:04.160 --> 0:25:07.119 age between twenty two and thirty three. They could have 0:25:07.240 --> 0:25:10.680 been at this party, and there were many days that 0:25:10.960 --> 0:25:13.520 that was my main thought of the day, that I'm 0:25:13.600 --> 0:25:17.400 lucky that they weren't. That was devastating. And I think 0:25:17.440 --> 0:25:18.679 that at the end of the day, if you look 0:25:18.720 --> 0:25:22.080 into the future or you realize that they might be 0:25:22.119 --> 0:25:26.520 a solution, but without Hamas being there, well. 0:25:26.400 --> 0:25:28.880 That's what we think about. We talk a lot about 0:25:28.920 --> 0:25:32.320 the way forward. I've talked to people I feel like 0:25:32.359 --> 0:25:34.760 on both sides, and when I say sides, I don't 0:25:34.800 --> 0:25:38.280 mean on Hamas's side, but I mean on the Palestinian 0:25:38.359 --> 0:25:41.399 point of view, the Israeli point of view, about how 0:25:41.480 --> 0:25:43.280 do we go forward? How do we stop that we 0:25:43.480 --> 0:25:46.080 don't find five years from now, ten years we're still 0:25:46.119 --> 0:25:49.520 talking about conflict in that region. How do you think 0:25:49.560 --> 0:25:49.960 about that? 0:25:51.520 --> 0:25:53.080 So, look, at the end of the day, if you 0:25:53.200 --> 0:25:55.800 think about the Palestinians and Gaza Streep and you ask 0:25:55.840 --> 0:25:58.440 yourself whether or not Tramas was doing any good for them, 0:25:58.600 --> 0:26:01.920 not really, they were doing very good for themselves, but 0:26:02.080 --> 0:26:06.119 not for the people. And look, Israel left the Gaza 0:26:06.160 --> 0:26:10.040 Strip some seventeen eighteen years ago. There was an opportunity 0:26:10.080 --> 0:26:13.760 to build awesome ness there and Ramas to go over 0:26:13.920 --> 0:26:16.879 and basically this is a terrorist organization, right, they are 0:26:16.920 --> 0:26:20.920 only agenda that they have is to kill us, and 0:26:21.160 --> 0:26:24.480 that doesn't work. We guess what we don't want to 0:26:24.520 --> 0:26:28.160 be to get killed. If Ramas is being removed from 0:26:28.200 --> 0:26:32.439 the region, then there are opportunities for something else completely different, right, 0:26:32.520 --> 0:26:36.240 because at the end of the day, most people prefer 0:26:36.520 --> 0:26:39.440 leaving over dying, right, And most of the people in 0:26:39.520 --> 0:26:43.040 the Gaza Strip it's the same for them. The challenge 0:26:43.160 --> 0:26:46.000 is that the leadership of the Haramas is the one 0:26:46.080 --> 0:26:49.320 that is basically enjoying the killing on one hand, and 0:26:49.440 --> 0:26:53.240 the power in particular that they have. And I think 0:26:53.320 --> 0:26:56.560 that once they are being removed, there is an opportunity 0:26:56.640 --> 0:26:59.520 and I see major role of the US, major role 0:26:59.600 --> 0:27:03.960 of US Saudi Arabia helping to recreate something new in 0:27:04.040 --> 0:27:04.560 the Middle East. 0:27:04.640 --> 0:27:07.480 We talk a little bit about that because that's a 0:27:07.560 --> 0:27:10.280 part of the equation that I'm having trouble seeing here 0:27:10.440 --> 0:27:13.639 the solution and what actually happens. And it sounds like 0:27:13.680 --> 0:27:16.240 you think Hamas can be removed from power. So let's 0:27:16.240 --> 0:27:19.040 say Hamas is successfully removed from power in the Gaza Strip, 0:27:19.680 --> 0:27:20.879 what would you like to see happened. 0:27:21.920 --> 0:27:25.640 So again we have to realize that what I would 0:27:25.720 --> 0:27:28.680 like to see has I have zero influence on that, 0:27:28.960 --> 0:27:31.240 or maybe a little bit of influence, but that's about it. 0:27:31.840 --> 0:27:34.160 But I think that the opportunity here is that really 0:27:34.440 --> 0:27:37.240 recreating something new with the support of the American, with 0:27:37.320 --> 0:27:41.520 the support of the Saudist and basically establishing sort of 0:27:43.480 --> 0:27:46.439 normalizations in the relationship. Right now, if you look at 0:27:46.480 --> 0:27:51.440 the history of Israel, every time there was a major crisis, 0:27:51.600 --> 0:27:54.040 two things happened. Number one, as well grew up stronger. 0:27:54.640 --> 0:27:57.400 Number two, we actually figure out a way, a different way. 0:27:57.480 --> 0:27:57.600 Right. 0:27:57.840 --> 0:28:01.560 That's true for the he Pour War back in the 0:28:01.640 --> 0:28:04.320 seventy three, and after that we had a peace with Egypt, right. 0:28:04.800 --> 0:28:08.040 And that's true for World War Two where the Holocaust happened, 0:28:08.040 --> 0:28:10.760 and after that there was a Jewish statement. And so 0:28:10.840 --> 0:28:12.080 at the end of the day, I think that the 0:28:12.359 --> 0:28:16.960 October seventh is such a major crisis that it will 0:28:17.119 --> 0:28:21.360 lead into something else, and you know, hopefully as soon 0:28:21.400 --> 0:28:24.240 as possible. Right, But when is that going to happen? 0:28:24.359 --> 0:28:24.840 We don't know. 0:28:25.280 --> 0:28:27.359 I want to talk economy a little bit, because I 0:28:27.400 --> 0:28:33.560 don't think people understand that when people get called back 0:28:33.600 --> 0:28:37.760 to the military. They leave their jobs to go back 0:28:38.600 --> 0:28:42.600 to the Israeli military. So there's a whole element of 0:28:42.840 --> 0:28:45.600 the Israeli economy that's not working the way that it 0:28:45.640 --> 0:28:49.480 should right now. Are you seeing the effects of that 0:28:49.720 --> 0:28:52.680 day to day that there is a shortage of workers, 0:28:52.800 --> 0:28:54.280 that there are a lot of people who I mean, 0:28:54.320 --> 0:28:57.680 I have friends on Facebook who've posted Israeli as you've said, 0:28:57.920 --> 0:29:01.240 you know, my husband is away fighting right now because 0:29:01.280 --> 0:29:04.560 he got called back. She's a tour operator who does 0:29:04.680 --> 0:29:07.560 restaurant tours for tourists. There's no tourists there right now, 0:29:07.880 --> 0:29:10.840 so she literally they literally have no income coming in 0:29:10.960 --> 0:29:11.920 right now as a result of this. 0:29:14.960 --> 0:29:18.760 So so not exactly, because when you're doing your military reserve, 0:29:18.880 --> 0:29:22.800 you do get from the Social Security the same pay 0:29:22.880 --> 0:29:26.440 that you were government if you were working. But if 0:29:26.480 --> 0:29:28.920 you look at the impact of the war on the economy, 0:29:29.040 --> 0:29:33.200 then then I would say, for a second, obviously budget 0:29:33.360 --> 0:29:37.080 for security and is going to go up dramatic. Then 0:29:37.200 --> 0:29:42.280 that's we all realize the war costs money. Some markets, 0:29:42.880 --> 0:29:47.240 some industries are completely suffering from that, right Like tourism 0:29:47.400 --> 0:29:49.920 right there is there there are no tourists going to Israel, 0:29:50.000 --> 0:29:53.600 right And and I don't blame them, right, they shouldn't. 0:29:53.680 --> 0:29:56.600 It's there is a war there and they don't feel safe. 0:29:56.640 --> 0:29:59.960 And that's all high take industry is actually getting strong 0:30:00.680 --> 0:30:02.880 because what we are realizing is that the people that 0:30:03.040 --> 0:30:08.080 are still there, they are carrying the load for all 0:30:08.120 --> 0:30:10.640 the people that are going on the military or reserve 0:30:10.680 --> 0:30:12.800 and so forth. And what we have seen is that 0:30:13.760 --> 0:30:18.080 the productivity increased dramatically. And when people that will be 0:30:18.160 --> 0:30:21.840 coming back from the military reserve, then we are likely 0:30:21.960 --> 0:30:25.600 to see huge growth in the high tech in general. 0:30:26.440 --> 0:30:28.440 The challenge right now for the high tech, the Israeli 0:30:28.520 --> 0:30:30.760 high tech, that it's harder to raise capital, right, so 0:30:30.960 --> 0:30:33.600 most of the investors will prefer to be on the 0:30:33.720 --> 0:30:36.840 fence and and you know, way to see that the 0:30:36.920 --> 0:30:41.560 war is overright, investing in a war zone people afraid, 0:30:41.640 --> 0:30:42.600 and they rightly. 0:30:42.720 --> 0:30:45.240 So that's interesting to hear because you've also got a 0:30:45.320 --> 0:30:47.920 group of very vocal Americans who are happy to give 0:30:48.040 --> 0:30:50.000 to Israeli causes. And I would think that some of 0:30:50.080 --> 0:30:53.840 those would be supportive of a venture capital. Of course 0:30:53.880 --> 0:30:56.440 they will in the country. They to kind of help 0:30:56.480 --> 0:30:58.240 prop it up time. 0:30:58.080 --> 0:30:59.240 They do, and they will. 0:31:00.080 --> 0:31:03.000 But in general, if you look at the you know, 0:31:03.200 --> 0:31:07.520 non Jewish investors or non engaged investors, then they have 0:31:08.000 --> 0:31:10.520 more challenging time, not all of them, but a lot. 0:31:10.920 --> 0:31:13.400 Or is there anything you've put on hold because that's 0:31:13.440 --> 0:31:15.120 home base for you? Correct Israel? 0:31:16.000 --> 0:31:19.720 Or so I you know, I keep on building. Look, 0:31:19.840 --> 0:31:23.000 I have a very simple life. I have a mission, 0:31:23.080 --> 0:31:25.640 I have a destiny, I have a purpose and this 0:31:25.800 --> 0:31:28.680 is about value creation. And then I can create value 0:31:28.760 --> 0:31:32.320 through multiple ways, through you know, building startups that help people, 0:31:33.120 --> 0:31:37.920 through you know, coaching and mentoring a group of CEOs. 0:31:38.040 --> 0:31:42.480 That of my startups, through teaching and through you know, 0:31:42.680 --> 0:31:45.840 the ultimate way of teaching is the book itself. They're 0:31:45.880 --> 0:31:49.080 falling love with the problem, not the solution. Book is 0:31:49.240 --> 0:31:52.040 by and large, this is sharing my know how with 0:31:52.200 --> 0:31:54.880 people and hopefully make them more successful. 0:31:55.520 --> 0:31:57.880 What's the problem that you see right now that needs 0:31:57.920 --> 0:31:59.000 to be working? 0:31:59.400 --> 0:32:02.600 There are a lot You're picked him exactly, take a pick. 0:32:03.080 --> 0:32:04.920 So the good news is that there are a lot 0:32:04.920 --> 0:32:07.000 of problems. The bad news is that there are a 0:32:07.040 --> 0:32:08.680 lot of problems. Right the end of the day, there 0:32:08.680 --> 0:32:11.360 are a lot of problems. One of the you know, 0:32:11.560 --> 0:32:14.400 major problems that we are addressing recently is actually in 0:32:14.480 --> 0:32:17.960 the US, the realization that most people will not have 0:32:18.240 --> 0:32:22.480 enough saving for retirement, and so Pontera is one of 0:32:22.520 --> 0:32:25.320 the companies that is helping that in the US help 0:32:25.360 --> 0:32:31.360 people to eventually retire richer. And so this is this 0:32:31.520 --> 0:32:33.040 is a big problem at the end of the day 0:32:33.480 --> 0:32:35.760 when people get old and they don't have enough money. 0:32:35.880 --> 0:32:38.680 This is a big problem. So this is one of 0:32:38.760 --> 0:32:41.240 the things that I'm trying to do with my startups. 0:32:42.760 --> 0:32:47.800 And you know, dealing with parking. Parking is a major 0:32:47.880 --> 0:32:50.120 problem right now in generally you would say, wait a minute, 0:32:50.160 --> 0:32:52.840 in the US, it's less of a problem because most 0:32:52.880 --> 0:32:54.960 people live in a single family house and they have 0:32:55.120 --> 0:32:57.600 a driveway and they have parking cars. But the rest 0:32:57.680 --> 0:33:01.520 of the world, most people live in a multifamily houses, 0:33:01.640 --> 0:33:05.400 multi story houses, and they don't have parking garage, and 0:33:05.760 --> 0:33:07.800 then looking for parking at the end of the day's 0:33:07.800 --> 0:33:10.920 a nightmare. And this is you know, my most recent 0:33:11.000 --> 0:33:13.640 startup that we started that a couple of years ago 0:33:13.720 --> 0:33:18.880 and h and it's stealing these well and hopefully it 0:33:18.960 --> 0:33:22.680 will grow to address that because parking is a major problem. 0:33:22.800 --> 0:33:23.959 Yeah, we could use that in Brooklyn. 0:33:25.120 --> 0:33:27.520 Okay, Well, it's something I wonder you know, when I 0:33:27.560 --> 0:33:29.800 think about so much. This year, we've talked about artificial 0:33:29.880 --> 0:33:33.520 intelligence and generative AI, and some are concerned that it's 0:33:33.560 --> 0:33:36.040 going to take jobs away from people. I see it 0:33:36.080 --> 0:33:39.600 more as complimentary. But having said that, I do think 0:33:39.640 --> 0:33:44.080 about job creation in the future because economies, whether it's 0:33:44.440 --> 0:33:46.560 the Gaza Strip, if people have a way to make 0:33:46.600 --> 0:33:49.760 a living and build a much more productive life, or 0:33:50.360 --> 0:33:55.040 whether it's in Israel or whether it's in other developing markets, 0:33:55.360 --> 0:33:59.400 if you can create a better life for yourself, it's 0:33:59.480 --> 0:34:02.360 just a better, more peaceful place, right, even create an economy. 0:34:02.760 --> 0:34:05.000 So are there I don't know. We are we moving 0:34:05.040 --> 0:34:09.080 increasingly towards the world though, where technology is replacing jobs 0:34:09.920 --> 0:34:13.120 at a faster pace than we can make them. Unless 0:34:13.120 --> 0:34:16.040 you're coder, you know, I think that I hear that 0:34:16.239 --> 0:34:17.480 for the last fifty years. 0:34:19.239 --> 0:34:23.400 So even if you think of the revolution of agriculture, 0:34:23.480 --> 0:34:26.120 that we started to have tractors and combine and different 0:34:26.239 --> 0:34:29.120 machinery and everyone said, oh, this is going to take 0:34:29.120 --> 0:34:32.640 away the work of the farmers, and guess what, it didn't. Right, 0:34:32.760 --> 0:34:36.040 So every time that there is an innovation, we tell ourselves, oh, 0:34:36.160 --> 0:34:38.400 this is going to take away all the jobs, and 0:34:38.480 --> 0:34:41.840 then you look at the unemployment rate and it doesn't change, 0:34:42.040 --> 0:34:44.560 or maybe it's becoming better because what happened is that 0:34:45.239 --> 0:34:49.480 that technology by and large increase productivity. And when it 0:34:49.640 --> 0:34:52.360 increased productivity, then we can create more. And when we 0:34:52.560 --> 0:34:56.160 create more, then more people actually have a better life. 0:34:57.040 --> 0:34:59.279 So you're not worried about AI be the end of 0:34:59.400 --> 0:34:59.840 us all. 0:35:00.719 --> 0:35:03.080 Not at all. What I think that we might find 0:35:03.160 --> 0:35:06.080 out that there are some areas that we will need 0:35:06.120 --> 0:35:10.120 to establish regulation. Right, So if I'm speaking with a person, 0:35:10.960 --> 0:35:13.960 then that's one thing, But if I don't know that 0:35:14.080 --> 0:35:16.440 I'm speaking to a machine might be a different thing. 0:35:16.520 --> 0:35:18.640 So maybe the machine will need to identify itself and 0:35:18.760 --> 0:35:24.080 tells me I'm a machine. And and this is something 0:35:24.160 --> 0:35:26.320 that I think that eventually we will need to have. 0:35:26.880 --> 0:35:30.479 Do you think that AI is close as Elon Musk 0:35:30.520 --> 0:35:33.320 believes two becoming smarter than humans? 0:35:38.280 --> 0:35:40.200 No, No, I think that we hear that for the 0:35:40.320 --> 0:35:42.640 last fifty years or computers are going to be smarter 0:35:42.800 --> 0:35:44.680 than people. Oh, we don't need people, We don't need 0:35:44.719 --> 0:35:49.560 the human brain. The human brain something video fifty years ago, right, 0:35:49.719 --> 0:35:52.040 But then you know, end of the day. I think 0:35:52.160 --> 0:35:57.600 that the creativity and the adaptability is something that only 0:35:57.719 --> 0:35:59.799 humans would have and at the end of the day, 0:36:00.880 --> 0:36:03.120 that part is not going to be taking away. 0:36:03.200 --> 0:36:03.319 Now. 0:36:03.360 --> 0:36:06.800 Whether or not you can scan way more information in 0:36:06.880 --> 0:36:09.560 a fraction of the sick and absolutely yes, Whether or 0:36:09.560 --> 0:36:12.480 not you can process some of the things way faster, yes, 0:36:13.320 --> 0:36:16.600 but not the same order of magnitude what the human 0:36:16.680 --> 0:36:17.120 mind can do. 0:36:17.560 --> 0:36:20.120 We've talked about a lot, and obviously it's a very 0:36:20.120 --> 0:36:22.759 stressful world right now. Final thoughts that you want to 0:36:22.840 --> 0:36:25.719 leave our audience as we get ready for a new year. 0:36:26.640 --> 0:36:30.520 So I think that in just about thirty seconds. 0:36:30.600 --> 0:36:30.839 Sorry. 0:36:31.360 --> 0:36:34.719 Value creation, right, value creation when you create value and 0:36:34.800 --> 0:36:37.120 valuate the way you create for others, not for yourself. 0:36:37.520 --> 0:36:39.680 If we think about value creation, then we end up 0:36:39.719 --> 0:36:41.360 with a purpose to a life. And when we end 0:36:41.480 --> 0:36:43.000 up with a purpose to a life, we're going to 0:36:43.040 --> 0:36:47.160 be happier and live longer, and the war is going 0:36:47.239 --> 0:36:48.040 to be a better place. 0:36:49.120 --> 0:36:52.080 Thank you so much than happy new year. Hope the 0:36:52.160 --> 0:36:55.520 new year is a calmer one, more peaceful one, and 0:36:55.640 --> 0:36:59.279 better one way it will be okay or OLIVI, thank 0:36:59.320 --> 0:37:01.279 you so much. We appreciate it. Co founder of Ways 0:37:01.320 --> 0:37:03.759 and so much more. As we talk about we've talked 0:37:03.800 --> 0:37:05.360 about his book fall in Love with the Problem, Not 0:37:05.440 --> 0:37:08.359 the Solution, A handbook for entrepreneurs. Happy New Year. 0:37:09.080 --> 0:37:12.600 You're listening to the Bloomberg Business Week podcast. Catch us 0:37:12.680 --> 0:37:16.000 live weekday afternoons from three to six Eastern Listen. 0:37:15.920 --> 0:37:19.360 On Bloomberg dot com, the iHeartRadio app and the Bloomberg 0:37:19.440 --> 0:37:23.759 Business app, or watch us live on YouTube with us. 0:37:24.040 --> 0:37:27.319 We got Mark Million, Bloomberg News Technology Editor and also 0:37:27.360 --> 0:37:30.080 the editor of Bloomberg BusinessWeek, Joel Weber, both here in 0:37:30.200 --> 0:37:34.120 our Bloomberg Interactive Broker's studio. This is really cool a 0:37:34.239 --> 0:37:38.160 behind the scenes look at Anderilla, closely held venture capital 0:37:38.239 --> 0:37:40.480 backed company that's competing with the likes of Raytheon. 0:37:40.600 --> 0:37:43.600 Joel Yet and the company had been You're right into 0:37:44.960 --> 0:37:50.839 Oculus and developed Oculus, which now Meta Facebook acquired. Ever 0:37:50.960 --> 0:37:55.680 since then it has been more interested in doing military applications. 0:37:56.280 --> 0:38:00.160 And this roadrunner, which announced on Friday and after they 0:38:00.160 --> 0:38:03.360 had an exclusive look at it, attempts to solve a 0:38:03.440 --> 0:38:05.280 big problem for the US military. 0:38:05.320 --> 0:38:06.360 Mark what is that problem? 0:38:07.520 --> 0:38:12.200 The problem is drones, and so in particular in Iraq 0:38:12.280 --> 0:38:17.520 and Syria, they the militants there have been able to 0:38:18.600 --> 0:38:21.600 import these consumer drones like the kinds that you'd buy 0:38:21.760 --> 0:38:24.080 for the holidays for your kids. They take them apart, 0:38:24.280 --> 0:38:26.840 they attach bombs to them, and they are able to 0:38:26.920 --> 0:38:30.040 assemble so many so cheaply that it's become a huge 0:38:30.120 --> 0:38:31.400 threat to American forces. 0:38:31.480 --> 0:38:33.640 I mean, these are the drones that are essentially being 0:38:33.760 --> 0:38:38.600 used by Ukrainian forces to bomb Russian forces at are 0:38:38.640 --> 0:38:39.600 really low cost. 0:38:39.800 --> 0:38:41.360 And right back at Ukraine. 0:38:41.440 --> 0:38:44.239 Yeah, they're like taping Russia. They're taping bombs to them. 0:38:44.520 --> 0:38:47.360 Yes, that's the example of an ally using it as 0:38:47.400 --> 0:38:51.439 a cheap way to kind of protect themselves in war. 0:38:51.600 --> 0:38:54.440 But it's also a huge threat to American troops, and 0:38:54.560 --> 0:38:58.040 so they've been working on ways to not just be 0:38:58.160 --> 0:39:01.640 able to take out individual drones, but when forces create, 0:39:01.719 --> 0:39:04.239 you know, militants create like what's what they call these 0:39:04.840 --> 0:39:07.719 swarm assaults where there's like a bunch of them all 0:39:07.800 --> 0:39:12.040 coming at at once, you need new technology to take 0:39:12.080 --> 0:39:14.799 it out. So this is one answer to that. It's it's, 0:39:14.880 --> 0:39:17.919 as you said, like almost a miniaturized fighter jet looking 0:39:18.000 --> 0:39:21.279 thing that just goes in and uh and throws a 0:39:21.360 --> 0:39:23.960 missile at these like swarms of drones, tries to take 0:39:24.000 --> 0:39:25.440 them all out, and then it can it can go 0:39:25.600 --> 0:39:27.719 back and it can land and they can load another 0:39:27.760 --> 0:39:28.960 missile onto it and send. 0:39:28.840 --> 0:39:29.319 It back up. 0:39:29.840 --> 0:39:32.600 So how much do we think this technology is actually 0:39:32.640 --> 0:39:34.920 going to cost? Because obviously the cost is the thing here. 0:39:35.000 --> 0:39:39.520 You weaponize a drone, which I can do some holiday 0:39:39.560 --> 0:39:41.480 shopping and acquire many druns. I'm not going to touch 0:39:41.520 --> 0:39:43.239 the bomb part, but I can get the I can 0:39:43.280 --> 0:39:45.719 get the drones, h and I get I get what 0:39:45.800 --> 0:39:48.319 we're going for here. Because ultimately it's like, how can 0:39:48.360 --> 0:39:51.040 the US military bring the cost down with something that 0:39:51.080 --> 0:39:54.640 could be reusable? So so what what kind of budget 0:39:54.920 --> 0:39:57.160 do I need to acquire many of these road runners? 0:39:57.680 --> 0:40:02.759 So traditionally U US military was using Patriot missiles just 0:40:02.840 --> 0:40:05.680 like kind of the default option. Those can run like 0:40:05.840 --> 0:40:09.560 four million dollars a missile. ANDERIL says that they can 0:40:09.680 --> 0:40:12.880 make these these things, these road runners for in the 0:40:13.000 --> 0:40:16.120 low six figures, so you know, one thousand, two hundred 0:40:16.120 --> 0:40:19.560 thousand per unit. So if they can pull it off, 0:40:19.719 --> 0:40:21.960 and to be clear, it's it's a star, it's an 0:40:22.000 --> 0:40:25.759 unproven company, it's startups, not raytheon. So there's there's doubts 0:40:25.760 --> 0:40:27.480 about whether they can pull it off. But if they can, 0:40:28.000 --> 0:40:29.600 the US could save a lot of money. 0:40:29.800 --> 0:40:31.920 All right, so so far, so good in terms of 0:40:32.239 --> 0:40:34.720 how effective it is in terms of trials and testing. 0:40:35.160 --> 0:40:36.200 Yeah, it's very early. 0:40:36.280 --> 0:40:39.080 It's a it's a brand new product. But they say 0:40:39.440 --> 0:40:42.040 the US has ordered a bunch of them and they 0:40:42.360 --> 0:40:44.000 expect them to be in the field next year. 0:40:44.520 --> 0:40:47.600 So who else is attempting to come up with solutions 0:40:47.640 --> 0:40:48.120 in this space? 0:40:48.480 --> 0:40:50.640 Because this is a huge problem, Like I mean, US 0:40:50.760 --> 0:40:54.680 forces around the world just basically, you know, you with 0:40:54.880 --> 0:40:59.680 not that much technology, it becomes a serious problem. And 0:40:59.840 --> 0:41:02.359 like you know, andder All can't be the only one 0:41:02.880 --> 0:41:06.040 looking for looking at this base to provide potential SLA 0:41:06.120 --> 0:41:06.319 and I. 0:41:06.320 --> 0:41:07.960 Have to say reading this story, this is what to me, 0:41:08.040 --> 0:41:10.200 I said, Okay, this is modern warfare, this is war 0:41:10.440 --> 0:41:12.440 going forward, so you really need to have something to 0:41:12.680 --> 0:41:13.120 counter it. 0:41:13.719 --> 0:41:14.040 Yeaheah. 0:41:14.200 --> 0:41:18.760 So the major defense contractors offer options that the USCS, 0:41:18.800 --> 0:41:20.680 and again I mentioned the Patriot missile is kind of 0:41:20.719 --> 0:41:23.200 the default. It's like, you know, tried and tested and 0:41:24.680 --> 0:41:29.120 they know it works. But Andrels is taking this bet 0:41:29.280 --> 0:41:32.080 that they can kind of break into this market with 0:41:32.360 --> 0:41:33.720 a very different option. 0:41:34.000 --> 0:41:36.480 Ashley makes this point a couple times in the story 0:41:36.560 --> 0:41:39.440 that even though this thing the Roadrunner has been unveiled, 0:41:40.000 --> 0:41:42.480 it hasn't yet been manufactured at scale. And if there's 0:41:42.480 --> 0:41:45.160 one thing that we've learned from Tesselas's troubles over the 0:41:45.239 --> 0:41:48.880 last six years or so, manufacturing one or ten of 0:41:48.960 --> 0:41:53.960 something isn't as difficult is manufacturing a large number doing 0:41:54.000 --> 0:41:57.240 this stuff at scale. What did the experts Ashley spoke 0:41:57.320 --> 0:42:00.680 to about scaling this say in terms of challenges here? 0:42:01.239 --> 0:42:02.279 Yeah, you're right, it's hard. 0:42:02.440 --> 0:42:05.800 And it's also not a traditional consumer electronic where you 0:42:05.920 --> 0:42:09.120 can use, you know, factories of China sule. 0:42:09.200 --> 0:42:11.520 You can't buy one of these for the holidays for 0:42:11.760 --> 0:42:13.240 your Family'll try. 0:42:13.120 --> 0:42:16.759 Still, and but yeah, I mean there's always the dark web, 0:42:17.080 --> 0:42:19.719 that's true. The philosophy inside this company has been to 0:42:19.960 --> 0:42:22.480 try to do everything themselves, and so they're building their 0:42:22.520 --> 0:42:25.440 own factory capabilities, their own factory lines to try to 0:42:25.600 --> 0:42:28.080 be able to build the whole thing, uh and do 0:42:28.239 --> 0:42:31.040 it in America, which is kind of what the US 0:42:31.120 --> 0:42:32.040 government would like to see. 0:42:32.120 --> 0:42:33.880 What's really kind of cool, too, is they're not this 0:42:34.120 --> 0:42:36.160 is one thing, and hopefully if they get it up 0:42:36.160 --> 0:42:37.920 and running, this is one thing, but they plan to 0:42:38.000 --> 0:42:40.760 take this technology and spread it across other products. 0:42:40.840 --> 0:42:41.000 Right. 0:42:41.600 --> 0:42:45.000 Yeah, yeah, so ander Old already has a bunch of 0:42:45.200 --> 0:42:50.000 different products that they sell to to the US and allies. 0:42:50.520 --> 0:42:53.800 They do like you know, Century towers, sort of like 0:42:53.880 --> 0:42:58.120 a virtual border wall that the US, their Border Control 0:42:58.160 --> 0:43:02.560 has has purchased. But yeah, they've they've said that they've 0:43:02.719 --> 0:43:05.600 spent these years developing all this new technology and they 0:43:05.680 --> 0:43:08.440 think that it will They haven't gone to specifics, but 0:43:08.520 --> 0:43:10.840 they think it some of it will be useful to 0:43:11.200 --> 0:43:12.600 some of the other products that they're working on. 0:43:12.960 --> 0:43:16.520 Okay, so something about this name strikes me as being 0:43:16.560 --> 0:43:20.800 a little cheeky road redder. What is that a reference to? 0:43:21.600 --> 0:43:25.320 Yeah, so, so Raytheon has a product called Coyote, So 0:43:25.400 --> 0:43:26.160 it's a looney. 0:43:26.000 --> 0:43:28.480 Tunes Raytheon being a competitor of. 0:43:28.920 --> 0:43:32.680 Exactly right, So they're trying to stick it to their 0:43:32.800 --> 0:43:34.840 much bigger rival. 0:43:35.000 --> 0:43:39.000 What is the Coyote other than you know, just trying 0:43:39.080 --> 0:43:41.160 to get the road Runner again and again and again 0:43:41.160 --> 0:43:43.960 and again and never quite being able to it in 0:43:44.640 --> 0:43:45.400 the real world? 0:43:45.600 --> 0:43:48.319 What what is the coyote made by Ratheon. 0:43:48.120 --> 0:43:52.440 Do It's a it's another sort of like autonomous defense 0:43:53.160 --> 0:43:58.680 system that the main innovation that anderil Is is talking 0:43:58.800 --> 0:44:01.400 up with This new product is that it's reusable. 0:44:01.440 --> 0:44:02.000 It can land. 0:44:02.239 --> 0:44:09.280 Like various companies including Androl, have built counter drone products 0:44:09.320 --> 0:44:12.520 that can go and blow up a single drone that's 0:44:12.560 --> 0:44:17.480 flying around. And so the main targets here are swarms 0:44:17.480 --> 0:44:19.680 of drones and being able to reuse them so that 0:44:20.080 --> 0:44:22.040 you're not having to buy a new one every single 0:44:22.120 --> 0:44:22.920 time you take out. 0:44:23.120 --> 0:44:25.439 My understanding too, is it's just one person that's needed 0:44:25.480 --> 0:44:28.880 to kind of actually run it right or operate it 0:44:29.040 --> 0:44:30.160 rather than multiples. 0:44:30.480 --> 0:44:31.319 That's part of the pitch. 0:44:31.480 --> 0:44:33.000 Yeah, yeah, it remains me seen. 0:44:33.040 --> 0:44:35.000 But yeah, they part. 0:44:35.200 --> 0:44:38.400 You know, Androl builds this kind of like software system 0:44:38.560 --> 0:44:41.120 that they call Lattice where you can hook in all 0:44:41.200 --> 0:44:44.600 sorts of different defense products and they're saying, you know 0:44:44.719 --> 0:44:47.839 this will work with that that you can have them 0:44:47.880 --> 0:44:50.719 all kind of communicate wirelessly so you can see where 0:44:50.760 --> 0:44:52.279 all of your different roadrunners are. 0:44:52.440 --> 0:44:55.560 It kind of sounds like the Ring camera system from Amazon, 0:44:55.680 --> 0:44:56.719 but for you know. 0:44:56.920 --> 0:44:59.359 You're obsessed with your Ring camera system right now. 0:45:00.000 --> 0:45:02.040 You just add you know, you add the border wall 0:45:02.120 --> 0:45:04.520 to it. I'll take a couple of drag and drop 0:45:04.560 --> 0:45:06.879 into your car. I'll take a couple you know, road 0:45:06.960 --> 0:45:11.440 runners through man well, the bigger thing an opportunity here 0:45:11.520 --> 0:45:14.800 is obviously the Vince budget gigantic and being able to 0:45:14.880 --> 0:45:18.160 crack it even with something that you know, may only 0:45:18.239 --> 0:45:22.120 cost him the six figures, but around the world at scale, 0:45:22.120 --> 0:45:24.400 if you can manufacture it there, that's that's huge. But 0:45:24.760 --> 0:45:28.719 you know, the bigger challenge here does seem like the 0:45:29.360 --> 0:45:34.680 US military being geared for different wars than we've ever seen. 0:45:34.760 --> 0:45:37.040 And I think you know what, what we witnessed in 0:45:37.200 --> 0:45:42.600 Iraq earlier in the two thousands was that the US 0:45:42.680 --> 0:45:46.600 military was basically ill equipped to fight a certain type 0:45:46.600 --> 0:45:50.480 of war. And you know when obviously Ashley has spent 0:45:50.520 --> 0:45:52.239 a lot of time in this space, but like there 0:45:52.360 --> 0:45:56.920 seems to be a new kind of war that the 0:45:57.120 --> 0:46:00.560 US may not be ready for and we're getting of it. 0:46:02.640 --> 0:46:06.239 What else is Androil maybe developing that could help down 0:46:06.280 --> 0:46:07.719 the line? Do we have any sense of what this 0:46:07.840 --> 0:46:08.360 could look like? 0:46:08.680 --> 0:46:11.160 Yeah, the thing about defense contractors, they don't like to 0:46:11.239 --> 0:46:13.080 talk to they don't like to talk about their weapons 0:46:13.200 --> 0:46:16.920 until they're until they're ready. But but I mean, you've 0:46:16.960 --> 0:46:19.279 raised a really good point about the kind of like 0:46:19.400 --> 0:46:22.840 the new realities of war. One of the one of 0:46:22.880 --> 0:46:24.960 the interesting things and one of the things that Andrel 0:46:25.080 --> 0:46:27.799 was trying to address is this kind of like imbalance 0:46:28.040 --> 0:46:32.680 in the in the economics of the of battling drones. 0:46:32.719 --> 0:46:36.960 Like I said earlier, it's so cheap to assemble like 0:46:37.239 --> 0:46:39.840 large quantities of drones and put bombs on them and 0:46:40.239 --> 0:46:45.200 create some very powerful weapons and high high quantities. As 0:46:45.280 --> 0:46:47.960 it stands now, it's very expensive to take them out. 0:46:48.120 --> 0:46:51.839 And so it would cost so much more to blow 0:46:51.920 --> 0:46:54.680 up these drones than it would cost to create like 0:46:54.800 --> 0:46:57.839 a kamikaze drone that can kind of can blow up 0:46:58.239 --> 0:47:01.000 and harm a lot of soldiers. And so that's something 0:47:01.040 --> 0:47:03.719 that Anderil is trying to address by by focusing on 0:47:03.920 --> 0:47:05.120 costs as one of the main things. 0:47:05.239 --> 0:47:06.680 So I just want to make sure I understand the 0:47:06.719 --> 0:47:08.480 product here that actually got to see. 0:47:09.080 --> 0:47:09.759 It's a. 0:47:11.239 --> 0:47:14.840 Fighter jet type of drone that takes off autonomously, but 0:47:14.960 --> 0:47:18.400 then has a and has an explosive projectile that destroys 0:47:18.440 --> 0:47:21.719 a drone. The explosive projectile obviously not reusable, but the 0:47:21.880 --> 0:47:24.040 part that it's launched from is the part that's. 0:47:23.920 --> 0:47:28.279 Reusable exactly well, so in the current model, it's not 0:47:28.480 --> 0:47:32.480 reasonable once it once it it sends off, it's it's 0:47:32.560 --> 0:47:34.839 missile the boy, I mean, the thing tends to blow 0:47:34.920 --> 0:47:37.400 up and you can't use it again. They say that 0:47:37.480 --> 0:47:42.040 they're close to developing basically a V two that that 0:47:42.480 --> 0:47:46.520 what you did there jet the jet can can be reused. 0:47:46.840 --> 0:47:49.560 So if you send the jet out in the current model, 0:47:49.560 --> 0:47:52.440 you send the jet out, it doesn't see anything that 0:47:52.600 --> 0:47:54.400 it that it needs to blow up. It can come 0:47:54.440 --> 0:47:57.360 back and it can land. That's that's like an innovation. 0:47:57.480 --> 0:47:59.719 It's almost like a tiny SpaceX rocket. 0:47:59.760 --> 0:48:01.279 That's I was thinking, right, it's the whole kind of 0:48:01.320 --> 0:48:01.960 Tesla idea. 0:48:02.040 --> 0:48:03.960 Yeah, and it takes off in the lands and similar 0:48:04.040 --> 0:48:06.040 it takes off vertically and then it kind of turns 0:48:06.080 --> 0:48:09.160 and then flies like a like a jet. And so 0:48:09.440 --> 0:48:12.040 but but they say, you know, the next big invention 0:48:12.200 --> 0:48:15.359 here in the next model will be able to fight, 0:48:15.560 --> 0:48:17.279 like take out a drone and then come back and 0:48:17.400 --> 0:48:19.160 land and you can load it up with another missile. 0:48:19.320 --> 0:48:21.040 It is, though, something we talk so much about disruption 0:48:21.160 --> 0:48:22.880 in so many different spaces, and right it's been these 0:48:22.960 --> 0:48:25.359 major defense contractors that have been so involved. But it's 0:48:25.440 --> 0:48:28.600 really kind of fascinating to see this company just kind 0:48:28.640 --> 0:48:30.880 of coming up potentially with something that would be very 0:48:31.000 --> 0:48:34.040 dramatic and would become, you know, certainly something that governments 0:48:34.040 --> 0:48:34.320 would do. 0:48:34.440 --> 0:48:36.440 What truck record do they have in this space? 0:48:36.520 --> 0:48:39.800 Because this they've been toying around in the military application 0:48:39.960 --> 0:48:43.000 space basically since they got out of the headset one, right. 0:48:43.719 --> 0:48:47.320 Yeah, so they're relatively new. I mean when you compare 0:48:47.400 --> 0:48:50.600 them to the major defense you know, raytheon Boeing like that, 0:48:50.840 --> 0:48:54.080 you know, not they're not super tested, but they they 0:48:54.160 --> 0:48:58.480 started early. Really they're started putting out products early in 0:48:58.520 --> 0:49:01.320 the Trump administration, and they seize on that as like 0:49:01.400 --> 0:49:04.279 their first big opportunity was he was talking a lot 0:49:04.320 --> 0:49:06.520 about the wall, like why don't we sell him a 0:49:06.640 --> 0:49:07.680 virtual border wall? 0:49:08.000 --> 0:49:09.040 And they bought it. 0:49:10.440 --> 0:49:15.719 And so they've like worked on some other products to 0:49:15.880 --> 0:49:18.279 varying degrees of success, but they're really making a lot 0:49:18.320 --> 0:49:20.399 of noise about this one because they see a really 0:49:20.480 --> 0:49:21.440 big opportunity. 0:49:21.600 --> 0:49:23.640 I keep thinking like if this engine is so powerful, 0:49:23.760 --> 0:49:25.640 like do they sell it to Bezos? You know who 0:49:25.640 --> 0:49:27.600 wants to deliver things? Like is there some kind of 0:49:27.760 --> 0:49:31.160 you know, commercial not just defensive commercial application. 0:49:31.000 --> 0:49:34.359 Storied history of starting with military applications and then turning 0:49:34.520 --> 0:49:39.759 finding the commercial finding the commercial application years later but 0:49:40.400 --> 0:49:42.759 I think to their credit they have looked at this 0:49:42.920 --> 0:49:45.680 as like, what is the problem that the US military 0:49:46.280 --> 0:49:48.880 is facing in the field, and how can we perhaps 0:49:49.000 --> 0:49:53.200 protect American soldiers And that goes for allies as well. 0:49:53.239 --> 0:49:55.279 I mean, like we will see where this application ends up, 0:49:55.320 --> 0:50:01.759 because clearly as Ukraine is currently shown and other battlefields 0:50:02.680 --> 0:50:04.960 around the world, like, we will see more and more 0:50:05.200 --> 0:50:08.920 and more drums, and currently those are being used abroad. 0:50:09.160 --> 0:50:11.800 But the technology is scary enough that it can be 0:50:11.960 --> 0:50:14.600 used to really inflect pain everywhere. 0:50:14.800 --> 0:50:19.000 So yeah, first thing got to make sure it works right, Yes, little. 0:50:19.400 --> 0:50:21.560 Good start tested in the desert. 0:50:21.760 --> 0:50:24.279 Okay, not around that all right. 0:50:24.360 --> 0:50:26.640 Note to self, Mark Mirillian, thank you so much. Really 0:50:26.640 --> 0:50:28.319 appreciate you coming in and spend some time with us, 0:50:28.320 --> 0:50:30.880 Bloomberg News Technology editor and of course the editor of 0:50:30.920 --> 0:50:32.239 Bloomberg BusinessWeek, Tel Weber. 0:50:38.960 --> 0:50:42.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:50:42.600 --> 0:50:46.560 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:50:46.800 --> 0:50:50.040 the Bloomberg Business app, and YouTube. You can also listen 0:50:50.200 --> 0:50:53.280 live on Amazon Alexa from our flagship New York station, 0:50:53.719 --> 0:50:56.759 Just Say Alexa Play Bloomberg eleven thirty. 0:50:57.960 --> 0:50:59.759 Twenty ahead in our second hour of the wee Get 0:51:00.200 --> 0:51:03.840 of Bloomberg BusinessWeek, including a conversation with private equity heavyweight 0:51:03.920 --> 0:51:07.000 Mark Patrickoff on his investment in the sports education company 0:51:07.160 --> 0:51:10.680 IMG Academy. Plus, we'll explore the personal tech and enterprise 0:51:10.800 --> 0:51:13.319 level IT trends to watch for in twenty twenty four 0:51:13.760 --> 0:51:16.800 with Crawford del prehtt of IDC. As you might expect, 0:51:16.920 --> 0:51:20.040 artificial intelligence is high on Crawford's list, and first up 0:51:20.040 --> 0:51:21.960 this hour, we have an executive with a front row 0:51:22.040 --> 0:51:24.640 seat to some of the cutting edge developments in this space. 0:51:25.080 --> 0:51:27.319 Mandy Long is the CEO and a board member at 0:51:27.360 --> 0:51:30.360 Big Bear AI. It's a publicly traded software maker that 0:51:30.400 --> 0:51:33.680 provides AI and machine learning technology to support its customers 0:51:33.760 --> 0:51:37.719 and defense, manufacturing, healthcare, and life sciences. Mandy spoke with 0:51:37.800 --> 0:51:40.959 Carol in Bloomberg News equities reporter Bailey Lipschultz last week. 0:51:41.320 --> 0:51:44.400 Billy, it was interesting to talk to David Weston who 0:51:44.480 --> 0:51:47.160 talked about talking with Larry Summers about a year ago 0:51:47.480 --> 0:51:50.799 and Larry was saying, oh my god, AIAI generated AI. 0:51:51.080 --> 0:51:53.720 And then it was January of this year when Microsoft 0:51:53.760 --> 0:51:55.360 made that ten billion dollar investment. Then all of a 0:51:55.360 --> 0:51:56.279 sudden we were all in it. 0:51:56.520 --> 0:51:59.239 Exactly a year ago. Yesterday I believe was the birth 0:51:59.280 --> 0:52:02.040 of Chad GPS. It just celebrated its first birthday. I 0:52:02.080 --> 0:52:03.680 don't know if you use it. I'd like to a 0:52:03.719 --> 0:52:05.840 little bit play around with it more. Have it explained 0:52:05.880 --> 0:52:06.800 complex topics? 0:52:07.040 --> 0:52:07.800 Yeah, I'd say. 0:52:07.719 --> 0:52:08.319 Write some code. 0:52:08.440 --> 0:52:09.919 Tell it to me like, oh, I wish I could 0:52:10.000 --> 0:52:10.239 do that. 0:52:11.800 --> 0:52:14.000 But it's interesting and I feel like we've all become 0:52:14.120 --> 0:52:17.320 enamored big time with it. We talked about the Microsoft investment. 0:52:18.360 --> 0:52:20.600 It does feel like everything that was connected with AI 0:52:20.840 --> 0:52:24.200 was often running. It became the buzzword on corporate earnings calls. 0:52:24.440 --> 0:52:27.160 Yet Nvidia, it's your top performing name in the S 0:52:27.239 --> 0:52:29.640 and P five hundred, two hundred and twenty percent. They 0:52:29.760 --> 0:52:31.760 make the chips that are needed in the massive amounts 0:52:31.760 --> 0:52:34.719 of calculations. Just today we had syrup Tech. It's a 0:52:34.760 --> 0:52:37.960 startup that makes AI tools to help fashion retailers plan 0:52:38.040 --> 0:52:40.040 and manage their inventory. They raised about seventeen and a 0:52:40.080 --> 0:52:43.120 half million in a funding round. So it's just all 0:52:43.239 --> 0:52:43.759 in on AI. 0:52:43.840 --> 0:52:45.680 There's a lot going on, and it's everywhere. 0:52:45.719 --> 0:52:47.440 I was talking to a banker this morning and she 0:52:47.600 --> 0:52:50.040 was saying that when we think about AI. You can't 0:52:50.160 --> 0:52:53.080 just think about it as generator AVEAI or the chip 0:52:53.120 --> 0:52:56.560 makers the foundations. This is something that every company has 0:52:56.680 --> 0:52:59.040 to have an answer to and investors are asking that 0:52:59.200 --> 0:53:01.440 question because because the way she put it, either. 0:53:01.320 --> 0:53:02.680 Going to be a winner or you're going to be roadkill. 0:53:02.800 --> 0:53:04.880 Right, that's a really interesting and people are building out 0:53:04.880 --> 0:53:07.760 their infrastructure to support it. So our next guest definitely 0:53:07.840 --> 0:53:10.359 all in on AI. Delighted to have with us. Mandy Long, 0:53:10.680 --> 0:53:13.279 CEO and board member at Big Bear AI joining us 0:53:13.320 --> 0:53:16.440 on Zoom in Chicago. Mandy, it is I feel like 0:53:16.640 --> 0:53:19.640 the topic there's two topics this year. It's weight loss, 0:53:19.719 --> 0:53:23.040 drugs and AI, no doubt about it. Tell us about 0:53:23.120 --> 0:53:25.480 what this year has been like for you guys. 0:53:25.840 --> 0:53:27.080 Absolutely, and thank you for having me. 0:53:27.360 --> 0:53:31.200 Yeah, it has been a huge year for AI, and 0:53:32.000 --> 0:53:35.120 in no small part because of the rollout of chat GPT, 0:53:35.239 --> 0:53:37.480 which did celebrate its birthday yesterday. 0:53:38.640 --> 0:53:41.759 I think what it's meant for us, right and Big 0:53:41.800 --> 0:53:44.400 Bar AI. You know, we've been well, we've only been 0:53:44.440 --> 0:53:46.319 a publicly traded company for a couple of years. 0:53:46.680 --> 0:53:49.759 We've been at this for a while and we apply 0:53:49.880 --> 0:53:52.840 artificial intelligence to national security missions. 0:53:52.920 --> 0:53:53.719 Right and enterprises. 0:53:53.760 --> 0:53:57.080 I think something that has been a big catalyst for us, 0:53:57.239 --> 0:53:59.920 and I heard the comments earlier around the fact that 0:54:00.000 --> 0:54:04.440 but it really isn't just about generative AI artificial intelligence 0:54:04.520 --> 0:54:07.400 in general, right in the application of it, particularly the 0:54:07.480 --> 0:54:11.440 operational application of it, right the use in production helping 0:54:11.560 --> 0:54:15.279 people is what has been a big game changer for 0:54:15.360 --> 0:54:17.400 our business, and as we look towards the future, it's 0:54:17.480 --> 0:54:20.600 what makes us incredibly excited about where we're headed. 0:54:20.760 --> 0:54:22.799 You are a small market cap two hundred and eighty 0:54:22.840 --> 0:54:25.120 two million. You've had quite a run this year, Like 0:54:25.200 --> 0:54:26.800 a lot of names in the space, up one hundred 0:54:26.800 --> 0:54:29.640 and sixty seven percent. About fifteen percent of the float 0:54:29.719 --> 0:54:32.520 is shorted, so investors are watching it very carefully considering 0:54:32.560 --> 0:54:35.440 the run up. Dig a little deeper and tell us 0:54:35.520 --> 0:54:39.080 exactly what you guys are doing and who your customers are, 0:54:39.160 --> 0:54:40.759 because from what I understand, it's a lot of the 0:54:40.840 --> 0:54:42.120 US government, if not all. 0:54:43.480 --> 0:54:46.480 Yeah, so our entire business is not all federal government. 0:54:46.520 --> 0:54:49.880 We work about twenty federal agencies, about one hundred and 0:54:49.960 --> 0:54:53.920 sixty commercial customers in the private sector, and how our 0:54:53.960 --> 0:54:56.480 business breaks down is really into three verticals. We do 0:54:56.600 --> 0:54:59.840 work in supply chainel logistics, we do work in cybersecurity, 0:55:00.000 --> 0:55:03.480 and we do work in autonomous systems, and when you 0:55:03.600 --> 0:55:06.320 think about those three markets, there's actually a high degree 0:55:06.400 --> 0:55:10.359 of complementary nature because we're securing supply chains the same 0:55:10.400 --> 0:55:13.800 way that we're introducing autonomous technology, and AI plays a 0:55:13.880 --> 0:55:16.680 role in all three of those. The big difference maker 0:55:16.800 --> 0:55:20.879 for us is that we combine very deep subject matter 0:55:20.960 --> 0:55:23.360 expertise or the vast majority of our employees who are 0:55:23.360 --> 0:55:27.080 supporting our customers come directly from those customer environments, regardless 0:55:27.160 --> 0:55:29.480 of whether it's in the public or private sector, and 0:55:29.640 --> 0:55:34.040 we pair that with a really open architecture approach associated 0:55:34.080 --> 0:55:36.239 with solving customer problems. And when it comes to the 0:55:36.280 --> 0:55:38.600 competitive landscape, where there's still a lot of players who 0:55:38.719 --> 0:55:43.800 live in proprietary, closed system pay me support forever, we 0:55:43.880 --> 0:55:46.320 take a pretty different tactic because for us, it's outcomes. 0:55:46.719 --> 0:55:49.600 Well, Manda, you mentioned competition. How do you view the 0:55:49.800 --> 0:55:53.440 evolution of big bar AI within what still is a 0:55:53.920 --> 0:55:56.200 very much nascent part of the market. 0:55:57.880 --> 0:56:01.160 AI is absolutely still in the early days because the 0:56:01.960 --> 0:56:04.799 difference maker and is going to be you know whether 0:56:04.880 --> 0:56:07.160 or not you can do it in production at scale 0:56:07.640 --> 0:56:10.800 and you can work in an environment that is imperfect 0:56:11.800 --> 0:56:13.800 for us, right, I think because of our roots in 0:56:13.920 --> 0:56:19.000 national security and in working in highly complex and imperfect environments, 0:56:19.800 --> 0:56:21.279 we have a bit of a leg up there, right, 0:56:21.360 --> 0:56:23.800 that causes us to stand out relative to the competition. 0:56:24.880 --> 0:56:27.160 A lot of how we also apply the technology, right. 0:56:27.200 --> 0:56:28.800 I mentioned open architecture before. 0:56:29.560 --> 0:56:32.520 That's a really big tenant of how we operate as 0:56:32.560 --> 0:56:34.520 a business, and I think it plays a big role 0:56:34.560 --> 0:56:37.200 as you start to think about the implications of applying 0:56:37.320 --> 0:56:39.560 AI in production, right, as you start to get into 0:56:39.560 --> 0:56:41.759 those questions of how do you know how do you 0:56:41.880 --> 0:56:42.360 monitor in. 0:56:42.320 --> 0:56:45.239 An ongoing basis? As these technologies mature. 0:56:45.120 --> 0:56:48.240 Andandy, you know what's interesting is the conversation and narrative 0:56:48.280 --> 0:56:50.800 has evolved over the year and everybody getting so excited 0:56:50.800 --> 0:56:53.239 about AI. You know, I laughed, but it truly was. 0:56:53.280 --> 0:56:55.200 On the earnings call, we would just search for AI 0:56:55.360 --> 0:56:58.200 because every CEO is dropping it in to their press 0:56:58.320 --> 0:57:00.239 releases or somehow bringing it up for a while. While 0:57:00.920 --> 0:57:06.480 having said that, help me understand practically, whether it's supply 0:57:06.640 --> 0:57:10.200 chains or cybersecurity or autonomous systems. Give me a for 0:57:10.560 --> 0:57:15.640 instance of what you guys do using advanced AI. Generative 0:57:15.680 --> 0:57:19.080 AI to help a company absolutely. 0:57:19.200 --> 0:57:21.440 So a couple of really specific things that we do. 0:57:22.040 --> 0:57:24.440 One is we have a very mature portfolio and computer 0:57:24.560 --> 0:57:27.080 vision right. So it's an area that I think for 0:57:27.520 --> 0:57:30.000 the technology industry has been somewhat out of reach for 0:57:30.000 --> 0:57:31.800 a long time because you needed the compute. 0:57:32.560 --> 0:57:34.000 We have a solution called arcis Right. 0:57:34.040 --> 0:57:37.000 We're partnered with L three Harris in supporting their autonomous 0:57:37.000 --> 0:57:39.720 surface vessel fleet, so we do the computer vision at 0:57:39.720 --> 0:57:45.800 the edge on those vessels to help with vessel identification, weapons, etc. 0:57:46.280 --> 0:57:46.440 Right. 0:57:46.480 --> 0:57:49.640 Associated with deployments and missions where you're working in really 0:57:50.160 --> 0:57:54.280 disconnected and difficult to process environments, we provide CV there. 0:57:55.480 --> 0:57:59.240 Over on the supply chain side, a really good example 0:57:59.480 --> 0:58:02.360 of our capabilities are associated with what we do from 0:58:02.560 --> 0:58:06.520 predictive analytics. We have a solution that we call Dominate 0:58:06.880 --> 0:58:10.280 that's very focused on geopolitical and macroeconomic forecasting. 0:58:10.680 --> 0:58:10.800 Right. 0:58:10.880 --> 0:58:14.760 That's applied in an environment today, right, incredibly relevant as 0:58:14.800 --> 0:58:17.520 you look at the global landscape and your suppliers who 0:58:17.560 --> 0:58:21.000 are working through very difficult capital deployment decisions associated with 0:58:21.120 --> 0:58:24.360 still having to deliver en product to a customer and 0:58:24.440 --> 0:58:28.080 an environment where you can no longer rely on the 0:58:28.160 --> 0:58:30.640 same turnaround times associated with the assembly process. 0:58:30.680 --> 0:58:32.479 What's interesting is I hear you talk and I'm thinking, 0:58:32.760 --> 0:58:35.440 were you laughing at everybody in January when they're like, 0:58:35.520 --> 0:58:36.120 oh my god? 0:58:36.240 --> 0:58:36.520 AI? 0:58:36.920 --> 0:58:38.840 I mean, we know AI has been around for decades, 0:58:39.160 --> 0:58:42.640 but in terms of this more advanced level, it sounds like, 0:58:42.800 --> 0:58:46.440 I mean, how long have you guys been working on that? 0:58:46.520 --> 0:58:49.400 Although it doesn't like the processing power, right, has been 0:58:49.880 --> 0:58:52.000 a newer thing to kind of take it to another level. 0:58:52.040 --> 0:58:54.160 So I'm just curious connect the dots for me on 0:58:54.280 --> 0:58:54.919 that if you would. 0:58:55.600 --> 0:58:57.800 Yeah, And the answer is no, by the way, in 0:58:57.920 --> 0:59:00.600 terms of whether I was laughing and everyone right, I 0:59:00.680 --> 0:59:04.320 think this year has been a As a technologist, it's 0:59:04.360 --> 0:59:08.800 a it's a liberating year because I've talked about previously, 0:59:09.720 --> 0:59:10.680 you know, this idea that. 0:59:11.040 --> 0:59:12.760 I think AI is the new literacy. 0:59:13.120 --> 0:59:13.240 Right. 0:59:13.400 --> 0:59:16.920 You know, previously literacy for a long time was held 0:59:16.960 --> 0:59:18.760 at a high priest and priestess level. 0:59:19.240 --> 0:59:21.280 It was inaccessible to the masses. 0:59:21.320 --> 0:59:25.160 And what change, right is the idea of literacy empowers 0:59:25.160 --> 0:59:28.000 and liberates people. I think what's happened this year is 0:59:28.040 --> 0:59:30.960 the exact same thing is happening with AI. Right, We've 0:59:31.000 --> 0:59:34.240 democratized the ability to interact with these advanced models in 0:59:34.320 --> 0:59:36.680 a way that it didn't exist right a little over 0:59:36.720 --> 0:59:40.080 twelve months ago. And you know, whether you're talking about 0:59:40.920 --> 0:59:44.400 empowering creativity, right, An example of you know how even 0:59:44.440 --> 0:59:47.320 I use gender tove AI and tools like that is I, 0:59:47.760 --> 0:59:49.560 you know, I play with my kids and I asked them, 0:59:49.600 --> 0:59:52.120 you know, who's the main character and what's our bedtime 0:59:52.200 --> 0:59:54.200 story going to be? And we you know, you work 0:59:54.240 --> 0:59:56.640 with technology to change the way that people can think 0:59:56.680 --> 0:59:57.800 about being creative. 0:59:57.880 --> 1:00:01.280 And I think that for me is you know, it's 1:00:01.320 --> 1:00:03.600 why I love what I do, right. And I think 1:00:03.680 --> 1:00:04.760 that what we're going to. 1:00:04.760 --> 1:00:08.040 See on a go forward basis is that because the 1:00:08.120 --> 1:00:10.920 level of understanding of what is just what is possible 1:00:11.280 --> 1:00:14.720 associated with kind of technology is now becoming more mainstream, 1:00:15.200 --> 1:00:17.640 we're going to see the applications of it become widely 1:00:17.680 --> 1:00:21.920 adopted because it shouldn't be limited to those who can 1:00:22.040 --> 1:00:25.280 speak the technical language, right, It's humanity that's going to 1:00:25.320 --> 1:00:26.080 decide where this goes. 1:00:26.400 --> 1:00:28.600 When you look at Big Barry, I is the growth 1:00:29.000 --> 1:00:32.280 prospect within the private or public sector? Like, what is 1:00:32.360 --> 1:00:34.280 more attractive and where do you see that growth for 1:00:34.400 --> 1:00:34.800 the company? 1:00:35.120 --> 1:00:37.680 The answer is both right, And I would say that 1:00:37.840 --> 1:00:40.960 because what has changed, particularly over the past two years, 1:00:41.080 --> 1:00:43.600 as we've seen massive disruption in the global supply chain 1:00:43.720 --> 1:00:47.000 and we've seen a geopolitical climate right that looks like 1:00:47.120 --> 1:00:47.560 we could be. 1:00:49.040 --> 1:00:49.280 In a. 1:00:50.840 --> 1:00:53.560 New face of a conflict in the coming years. Means 1:00:53.560 --> 1:00:55.680 that both sides of my business are very busy because 1:00:55.720 --> 1:00:57.760 one needs the other, right in order to look into 1:00:57.800 --> 1:00:58.880 the future and be successful. 1:00:58.920 --> 1:01:01.040 We're talking with Mandy Long, CEO and board member at 1:01:01.080 --> 1:01:04.320 Big Bear AI, still with us on Zoom in Chicago. Mandy, 1:01:04.360 --> 1:01:06.920 you were talking about the importance of both the public 1:01:06.960 --> 1:01:10.680 and private worlds in terms of your business going forward. 1:01:10.720 --> 1:01:12.320 Talk to us a little bit more about that, and 1:01:12.400 --> 1:01:14.760 I know you also made a recent acquisition. Tell us 1:01:14.760 --> 1:01:17.200 about that and how that kind of feeds into your 1:01:17.240 --> 1:01:19.040 business and fits into the business growth. 1:01:19.400 --> 1:01:22.959 Absolutely, and I think the best way to break down 1:01:23.400 --> 1:01:26.480 the importance of the relationship between the public and private 1:01:26.520 --> 1:01:28.880 sector side of what we do is that there's an 1:01:28.920 --> 1:01:32.440 incredible amount of collaboration that happens between both sides today 1:01:32.600 --> 1:01:35.200 and I think Big Bear in particular sits. 1:01:35.800 --> 1:01:37.800 At an intersection point between the two of those. 1:01:37.920 --> 1:01:40.640 Right in the private sector side, right, we support with 1:01:40.720 --> 1:01:43.360 a lot of the technology we have in not only 1:01:43.440 --> 1:01:45.640 in the autonomous system side of our business, but also 1:01:45.760 --> 1:01:50.480 supply chains a lot of capabilities that then get delivered 1:01:50.560 --> 1:01:54.120 right into the federal government through those providers. In addition 1:01:54.320 --> 1:01:58.440 to that, we work that we do and for example healthcare, 1:01:59.160 --> 1:02:02.000 I spent fifteen years in healthcare, I was early days 1:02:02.040 --> 1:02:04.920 in machine learning and vision AI. There we do a 1:02:05.000 --> 1:02:09.640 lot of work with hospitals and health systems supporting patient 1:02:09.680 --> 1:02:11.760 flow optimization. Right, So if you have a patient that 1:02:11.800 --> 1:02:13.880 presents inn the ED, how do you make sure that 1:02:13.920 --> 1:02:15.760 you get them to the right place at the right time. 1:02:16.640 --> 1:02:20.000 Those patterns right in the ability to apply advanced technology 1:02:20.080 --> 1:02:22.360 to that means that both sides of our business right 1:02:22.440 --> 1:02:26.680 are growing right and relevant because we're solving problems that 1:02:27.280 --> 1:02:30.560 cross the chasm of both sides. And when we look 1:02:30.640 --> 1:02:35.880 forward to where we're headed, the anticipated acquisition that we 1:02:35.920 --> 1:02:41.200 announced recently with Pangam bolsters our vision AI portfolio. Because 1:02:41.760 --> 1:02:44.280 you heard me talk you know a lot about arcists 1:02:44.400 --> 1:02:47.680 right in the work that we do in horizontal imagery 1:02:48.000 --> 1:02:52.439 right in satellite Pangam has a remarkable portfolio that does 1:02:53.200 --> 1:02:57.200 advanced biometrics right facial you know iris based work and 1:02:57.680 --> 1:03:00.880 it provides a really comprehensive solution that we can bring 1:03:00.920 --> 1:03:01.560 to our customers. 1:03:02.200 --> 1:03:06.240 And Manie kind of balancing though the utilization of technology 1:03:06.280 --> 1:03:10.320 AI streamlining things, helping work in healthcare and better treat people. 1:03:10.440 --> 1:03:13.360 But on the flip side, buying a facial recognition company, 1:03:13.440 --> 1:03:16.400 how does that play into some of the security issues 1:03:16.440 --> 1:03:19.680 and getting customers and consumers kind of on board with that. 1:03:19.840 --> 1:03:22.640 Just given as you mentioned, biometrics is something that's very 1:03:22.720 --> 1:03:23.800 hotly debated. 1:03:23.720 --> 1:03:25.400 It very much is right, and I think it was 1:03:26.640 --> 1:03:30.640 an important strategic decision right and it was not made 1:03:30.720 --> 1:03:31.400 lightly right. 1:03:32.680 --> 1:03:34.000 At Big Bear, we play. 1:03:34.200 --> 1:03:36.600 A very big role and we use our voice very 1:03:36.680 --> 1:03:40.080 openly as it relates to talking about the safety and 1:03:40.120 --> 1:03:43.760 security of AI technology. We're very active right in the 1:03:44.440 --> 1:03:49.240 responsible innovation category, the input associated with how to do 1:03:49.360 --> 1:03:53.280 regulation at scale, and so when we think about the 1:03:53.400 --> 1:03:55.320 use of biometrics, I think one of the things that's 1:03:55.360 --> 1:03:59.840 really important to keep in mind, right is that in 1:04:00.080 --> 1:04:03.880 many ways as a society, we've we've crossed over a 1:04:03.920 --> 1:04:06.680 lot of the chasm associated with putting information out there 1:04:06.760 --> 1:04:07.160 because of. 1:04:07.200 --> 1:04:10.880 The widespread use right and multi year at scale use 1:04:10.920 --> 1:04:11.560 of social media. 1:04:12.760 --> 1:04:16.160 Now from a kind of where we sit on that 1:04:16.280 --> 1:04:18.960 spectrum and the role that we play, right, most of 1:04:19.120 --> 1:04:24.120 the capabilities that when we think about our vision portfolio today, 1:04:24.480 --> 1:04:28.600 where we're very focused on, is not in making autonomous decisions, right, 1:04:28.640 --> 1:04:31.880 it's in helping to distill and provide decision support for 1:04:31.960 --> 1:04:32.720 the ultimate. 1:04:32.440 --> 1:04:35.560 Costomer believe, So you'd be working side by side with 1:04:35.640 --> 1:04:38.120 a human might come up all in terms of one 1:04:38.120 --> 1:04:40.760 of your systems saying hey, here's what we've come up with, 1:04:41.040 --> 1:04:42.440 but you need to look at it and kind of 1:04:42.480 --> 1:04:45.200 make some kind of decisions maybe off of it. Correct, 1:04:45.280 --> 1:04:47.520 because I think what we're human in the loop, because 1:04:47.560 --> 1:04:49.480 I think we get we get worried. You know, our 1:04:49.560 --> 1:04:52.000 David Weston we talked with, who had talked with Henry Kissinger, 1:04:52.200 --> 1:04:57.120 very concerned about AI in war time or in war specifically. 1:04:57.160 --> 1:04:58.800 And I think about the role that you know, you 1:04:58.880 --> 1:05:00.480 guys are going to be. You know they you already 1:05:00.480 --> 1:05:02.880 do work with the government. I mean, what are some 1:05:03.040 --> 1:05:06.520 of the oversights that we need to have though in 1:05:06.720 --> 1:05:09.720 place to make sure that there isn't some kind of 1:05:09.960 --> 1:05:12.680 runaway technology. And I'm not trying to be silly and 1:05:13.280 --> 1:05:15.400 sci fi, but these things could happen. 1:05:15.800 --> 1:05:16.880 It's not an unfair question. 1:05:17.120 --> 1:05:20.160 Yeah, and I think it's you saw in the executive 1:05:20.240 --> 1:05:22.920 order that came out, you know, the top item is 1:05:23.360 --> 1:05:25.640 safety and security of AI technology, and that is not 1:05:25.840 --> 1:05:30.240 for no reason. One of the things that I think 1:05:30.280 --> 1:05:33.000 we have to keep in mind as a society as well, 1:05:33.240 --> 1:05:36.640 is that we have already passed through the gates of 1:05:37.600 --> 1:05:43.720 a human being able to individually manage and provide oversight 1:05:43.760 --> 1:05:47.120 of this kind of technology at scale. We're already an 1:05:47.160 --> 1:05:50.040 augmented species, right. You know, you have I'm sure a 1:05:50.080 --> 1:05:52.840 phone right on you at all times, or a computer 1:05:52.960 --> 1:05:58.800 at home. Leveraging technology to help keep those guardrails in 1:05:58.880 --> 1:06:02.280 place is going to be what's important here because the 1:06:02.680 --> 1:06:05.080 traditional processes in paperwork is not going to get us. 1:06:05.000 --> 1:06:08.240 There many One of the things that played out with 1:06:08.360 --> 1:06:10.760 Opening Eye going too fast too soon. I think back 1:06:10.840 --> 1:06:13.480 to you know, Facebook, with Cambridge Atalytica, there is this 1:06:14.240 --> 1:06:16.600 the government was not kind of in the know and 1:06:17.000 --> 1:06:20.160 regulating these things, and technology companies were able to run rampant. 1:06:20.360 --> 1:06:22.720 How do you balance that because obviously that seemed to 1:06:22.760 --> 1:06:24.560 be playing out at Opening IY with Sam Altman. 1:06:24.840 --> 1:06:26.640 So the rate and pace of innovation today has no 1:06:26.840 --> 1:06:30.920 historical precedent, So I think even looking at those examples, right, 1:06:31.000 --> 1:06:34.080 it's different. Now, look at what has happened with chat 1:06:34.160 --> 1:06:37.040 GPT in terms of adoption over the last year, Right, 1:06:37.360 --> 1:06:41.040 there's nothing like it. So as you think about regulation 1:06:41.200 --> 1:06:43.280 and oversight, you know, I go back to the same 1:06:43.800 --> 1:06:45.600 core issue, which is that I don't think we're going 1:06:45.680 --> 1:06:48.919 to get there without tech regulating tech, and that tech 1:06:49.000 --> 1:06:51.280 needs to be open architecture, right, and it needs to 1:06:51.360 --> 1:06:53.480 include the open source, and it needs to evolve the 1:06:53.520 --> 1:06:56.440 way that these models are going to evolve or you know, 1:06:56.520 --> 1:06:57.680 we could get in trouble, But. 1:06:57.800 --> 1:06:59.560 Aren't you worried a little bit about open source getting 1:06:59.560 --> 1:07:00.400 into the wrong hands? 1:07:01.280 --> 1:07:03.840 There is a philosophical discussion to have around the role 1:07:03.880 --> 1:07:06.760 of open source versus closed source and the relationship between 1:07:06.800 --> 1:07:09.000 the two of them. There is power in the open 1:07:09.040 --> 1:07:13.560 source and the community level of effort associated with the 1:07:13.640 --> 1:07:16.800 oversight of that provides a scale that does not happen 1:07:17.000 --> 1:07:19.000 when you have a closed source system with a tight 1:07:19.160 --> 1:07:19.880 R and D budget. 1:07:20.600 --> 1:07:22.280 I'm a promoter of the open source. 1:07:22.320 --> 1:07:24.240 I think that we're finally getting to the place where 1:07:24.640 --> 1:07:27.160 it's going to become a really relevant part of how 1:07:27.200 --> 1:07:29.960 we operate as a society because of this pace of innovation, 1:07:30.520 --> 1:07:32.880 but it doesn't come without the need to have guardrails. 1:07:33.000 --> 1:07:35.040 Well, listen, this was a really cool conversation and I 1:07:35.120 --> 1:07:37.800 hope you'll come back because guessing in twenty twenty four 1:07:37.880 --> 1:07:41.760 will still be talking about generative AI AI and all 1:07:41.840 --> 1:07:44.400 that it can do, because, as you said, we're really 1:07:44.480 --> 1:07:47.000 kind of early on in this whole process. Thank you 1:07:47.120 --> 1:07:49.280 so much. Have a great week in great holiday season. 1:07:49.360 --> 1:07:52.240 Mandy Long, CEO and board member at Big Bear AI 1:07:52.360 --> 1:07:54.760 Jennings on Zoom in Chicago. We covered a lot, but 1:07:54.840 --> 1:07:56.280 I have like a million more questions. 1:07:56.320 --> 1:07:57.680 I know, I wish we had two more blocks to 1:07:57.800 --> 1:07:59.160 kind of really dig into other things. 1:07:59.280 --> 1:08:01.360 We'll come back to have her back. Are folks, you 1:08:01.440 --> 1:08:04.640 are listening and watching Bloomberg BusinessWeek right here on Bloomberg Radio. 1:08:05.360 --> 1:08:08.880 You're listening to the Bloomberg Business Week podcast. Catch us 1:08:08.960 --> 1:08:12.320 live weekday afternoons from three to six Eastern Listen. 1:08:12.200 --> 1:08:15.640 On Bloomberg dot com, the iHeartRadio app, and the Bloomberg 1:08:15.720 --> 1:08:18.360 Business app, or watch us live on YouTube. 1:08:19.360 --> 1:08:22.160 So care well, pretty much through earning season, and like 1:08:22.280 --> 1:08:24.679 last quarter one, theme has been clear. It was clear 1:08:24.760 --> 1:08:27.800 today hefn with Mango DB's results. Right, Companies of all 1:08:27.840 --> 1:08:30.720 stripes are embracing AI, and for good reason. Take Wall 1:08:30.760 --> 1:08:35.000 Street for example, Banks using generative AI tools could boost 1:08:35.000 --> 1:08:36.840 their earnings by as much as three hundred and forty 1:08:36.880 --> 1:08:40.320 billion dollars annually through increased productivity. It's a nine to 1:08:40.520 --> 1:08:43.719 fifteen percent increase in operating profits. That's according we should 1:08:43.760 --> 1:08:46.840 knowe to a McKinsey Global Institute report that was published today. 1:08:46.920 --> 1:08:48.720 We know they kind of want you to use AI 1:08:48.800 --> 1:08:49.799 because then you'll hire. 1:08:49.680 --> 1:08:51.960 Them consolutely say yeah, you can look back to day. 1:08:52.400 --> 1:08:53.840 All right, We've got a great guest to give us 1:08:53.840 --> 1:08:55.840 an idea though, of where companies are going to be 1:08:55.920 --> 1:08:58.599 spending money when it comes to it in the new year. 1:08:58.760 --> 1:09:01.760 Crawfordal pret back with, President of the global market intelligence 1:09:01.840 --> 1:09:06.920 firm IDC International Data Corporation, also known as he joins 1:09:07.000 --> 1:09:10.000 us here in our Bloomberg Interactive Broker studio at Bloomberg Headquarters. 1:09:10.040 --> 1:09:10.240 Hello. 1:09:10.320 --> 1:09:11.800 Hello, almost happy new year. 1:09:12.080 --> 1:09:14.080 So great to see you guys, So great to have 1:09:14.240 --> 1:09:14.599 you here. 1:09:14.800 --> 1:09:16.439 How are you thinking about twenty twenty four? 1:09:16.960 --> 1:09:20.040 So when we think about twenty twenty four, it's a 1:09:20.200 --> 1:09:24.240 year of transition for tech twenty twenty three was a 1:09:24.360 --> 1:09:26.839 year that people were extremely concerned about inflation. 1:09:26.880 --> 1:09:28.759 They were extremely concerned about. 1:09:28.680 --> 1:09:31.560 About the impact of inflation on tech. And at the 1:09:31.640 --> 1:09:34.679 end of the day, we'll see tech spending around about 1:09:34.800 --> 1:09:38.840 five percent, which continues the trend that tech is just 1:09:38.960 --> 1:09:41.640 so core to what companies do for next year. This 1:09:41.840 --> 1:09:42.920 five percent for twenty twenty three. 1:09:43.360 --> 1:09:46.200 When you say tech spending, what is the umbrella that 1:09:46.320 --> 1:09:47.520 that covers. 1:09:47.360 --> 1:09:51.640 So think about information technology spending, so everything from devices 1:09:51.760 --> 1:09:55.120 like personal compute devices, all the way through application software, 1:09:55.160 --> 1:09:56.920 all the ways of the partner software, all of it. 1:09:57.080 --> 1:09:58.720 And services, what about. 1:10:00.000 --> 1:10:04.879 Cybersecurity services, securities in there, any any any it and professionals. 1:10:04.880 --> 1:10:08.000 And this is across is across the world, It's across 1:10:08.080 --> 1:10:09.320 it's across all regions. 1:10:09.360 --> 1:10:11.360 I would think it'd be higher five percent a lot. 1:10:11.520 --> 1:10:15.280 Yeah, So five percent we've seen we saw it ramp 1:10:15.400 --> 1:10:19.880 up to double that during COVID when we saw things accelerate. 1:10:20.200 --> 1:10:22.400 But you know, we've seen it bounce in that five 1:10:22.520 --> 1:10:25.760 to eight percent range for It's been pretty range bound 1:10:25.840 --> 1:10:27.720 for for quite some time. If you take out sort 1:10:27.760 --> 1:10:29.960 of the two thousand and eight downturn, if you take 1:10:30.000 --> 1:10:31.639 out the craziness that happened during COVID. 1:10:31.680 --> 1:10:33.680 What kind of growth were we seeing prior to the 1:10:33.760 --> 1:10:35.120 pandemic the year before. 1:10:35.600 --> 1:10:37.280 So prior to the pandemic, like I said, you know, 1:10:37.360 --> 1:10:41.519 we saw that in those years it was about seven percent. Yeah, 1:10:41.640 --> 1:10:43.400 so it was kind of in that range. 1:10:43.439 --> 1:10:47.880 Okay, why why isn't it higher? Why hasn't it grown 1:10:48.160 --> 1:10:50.559 As we've become more reliant on. 1:10:51.240 --> 1:10:55.120 Tech every company, the tech you think about is hot, 1:10:55.560 --> 1:10:58.040 the new hot thing it's and that stuff is growing, right, 1:10:58.120 --> 1:11:02.000 So application software ten percent and we've seen you think 1:11:02.040 --> 1:11:06.000 you think about the cloud thirty percent growth now cooling to. 1:11:06.160 --> 1:11:09.360 So companies are spending less on let's say, a PC 1:11:09.640 --> 1:11:11.880 for every person because they've come down in price. These 1:11:11.920 --> 1:11:15.599 are commodities, and they're spending more on the cybersecurity stuff 1:11:15.640 --> 1:11:16.320 that keeps there. 1:11:16.400 --> 1:11:17.640 So it's actually worse than that. 1:11:18.080 --> 1:11:20.320 If you look at something like twenty twenty three, it 1:11:20.600 --> 1:11:23.759 spending growth in PCs got shalacked. It was down fifteen 1:11:23.960 --> 1:11:27.800 fourteen percent, it was down dramatically. Now PCs are actually 1:11:27.880 --> 1:11:30.120 a thing that moved the needle because every man, woman 1:11:30.240 --> 1:11:33.000 and child needs a PC who needs to be connected 1:11:33.000 --> 1:11:35.439 to the internet, and they spend somewhere between eight to 1:11:36.120 --> 1:11:38.679 twelve hundred dollars on a PC. So as PCs start 1:11:38.720 --> 1:11:41.000 to come back, which we think that they will next year, 1:11:41.200 --> 1:11:44.040 they actually move the needle on it demand. It's not 1:11:44.120 --> 1:11:46.800 uncommon to see them move the needle a couple percentage points. 1:11:46.880 --> 1:11:48.160 Why are they coming back next year? 1:11:48.240 --> 1:11:50.040 They're coming back next year because there's because we saw 1:11:50.160 --> 1:11:54.720 this huge increase during the pandemic, and they start to 1:11:54.760 --> 1:11:56.559 get old, and they start to age and they break 1:11:56.640 --> 1:11:59.960 and people need to start replacing them as well. They'll 1:12:00.120 --> 1:12:04.000 be a Windows eleven upgrade cycle next year, and we'll 1:12:04.080 --> 1:12:08.600 start to see new PCs that actually bring wait for it, 1:12:08.800 --> 1:12:12.400 AI out to the edge, so you see a coprocessor 1:12:12.680 --> 1:12:15.080 which we'll be able to run the AI workloads, and 1:12:15.120 --> 1:12:17.519 we think that will start to fuel by the middle 1:12:17.520 --> 1:12:19.360 of next year another upgrade cycle. 1:12:19.800 --> 1:12:23.599 I am curious because you guys consult you talk with clients. 1:12:24.160 --> 1:12:28.120 What's the constructive conversation to be having around AI right now? 1:12:28.360 --> 1:12:30.160 What are you hearing from those clients. 1:12:30.640 --> 1:12:33.120 I think what customers are starting to get into now 1:12:33.479 --> 1:12:37.120 are what is we're sort of beyond kind of the 1:12:37.479 --> 1:12:40.320 big mind art of the possible, and we're now getting 1:12:40.360 --> 1:12:43.639 into how can I actually apply AI to my business 1:12:43.720 --> 1:12:47.280 and what are the barriers associated with AI. So a 1:12:47.360 --> 1:12:50.120 lot of the axioms that have always applied to tech 1:12:50.280 --> 1:12:53.200 apply here, which is, you know, things like garbage in, 1:12:53.360 --> 1:12:56.439 garbage out. You've got to get your data organized. You've 1:12:56.479 --> 1:12:59.920 got to understand how to structure your data in order 1:12:59.920 --> 1:13:02.200 to make sense and in order to be able to 1:13:02.240 --> 1:13:05.760 synthesize your data in order to make better decisions with 1:13:05.880 --> 1:13:08.599 your data. And so we're spending a lot of time 1:13:08.680 --> 1:13:11.439 talking with customers around the choices they make around their data, 1:13:11.600 --> 1:13:13.760 how they invest in their data, and how they can 1:13:14.400 --> 1:13:17.120 really think about structuring it for a world where they're 1:13:17.120 --> 1:13:20.920 going to be making decisions that they're potentially synthesizing and 1:13:20.960 --> 1:13:23.479 getting output from AI. 1:13:24.120 --> 1:13:27.280 You know, Carol knows this. I've been completely obsessed with 1:13:27.479 --> 1:13:29.280 the sort of two different schools of thought when it 1:13:29.360 --> 1:13:33.280 comes to development of artificial general intelligence AGI, especially in 1:13:33.280 --> 1:13:36.679 the wake of everything that happened at Open AI, Sam Wellman, 1:13:36.720 --> 1:13:40.160 you came on and spoke yes during that crisis, I 1:13:40.200 --> 1:13:41.799 don't know if I could call it a crisis. Actually, 1:13:41.880 --> 1:13:45.000 during the drama, let's call it drama. The thing, Yeah, 1:13:45.800 --> 1:13:49.479 are you you spend you know, you're in this day 1:13:49.560 --> 1:13:53.520 in and day out. Is there any sort of reality 1:13:53.640 --> 1:13:59.000 to the idea that artificial general intelligence is something we 1:13:59.360 --> 1:14:02.360 as a human species should be concerned about? 1:14:03.439 --> 1:14:03.519 Oh? 1:14:03.600 --> 1:14:08.600 Absolutely there is. It's going to take a while for 1:14:08.800 --> 1:14:10.800 us to get to that point. And I think that 1:14:11.400 --> 1:14:14.520 seeing companies start to come together and have a discussion 1:14:14.760 --> 1:14:18.400 around the responsibility and not necessarily doing it after the 1:14:18.439 --> 1:14:22.400 horses have left the proverbial barn is very very important. 1:14:22.479 --> 1:14:25.640 I think we're starting to be able to elevate that 1:14:25.880 --> 1:14:30.479 but that that discussion. But I definitely believe that the 1:14:30.600 --> 1:14:35.599 ability to do harm and the ability to spin people 1:14:35.720 --> 1:14:38.439 up with misinformation, those are things you can just start 1:14:38.520 --> 1:14:41.120 to see on the horizon where we really have to 1:14:41.160 --> 1:14:44.280 think about what is the provenance of that decision or 1:14:44.640 --> 1:14:46.479 of that data. And I think we're going to see 1:14:46.479 --> 1:14:47.519 a lot of that. I think we're going to see 1:14:47.520 --> 1:14:51.120 governments start to require Okay, you've you've been told something, 1:14:51.200 --> 1:14:52.800 but what was the source of that? Where did that 1:14:52.920 --> 1:14:54.040 information come from? 1:14:54.120 --> 1:14:57.200 So much journalism a little bit, no, no, I mean 1:14:57.240 --> 1:14:58.679 a lot of it. Like I used to think about 1:14:58.720 --> 1:15:01.200 when I started, you know this, you had to know 1:15:02.000 --> 1:15:04.360 what the source of the material was right, and whether 1:15:04.400 --> 1:15:06.759 it was a perspective or point of view, so subjective 1:15:06.840 --> 1:15:10.000 versus objective or data points who supplied it. So it's 1:15:10.080 --> 1:15:13.360 kind of interesting to hear you say that, but I 1:15:13.479 --> 1:15:17.360 do wonder what's it going to take Crawford. Are we 1:15:17.479 --> 1:15:19.120 going to be kind of chasing just like we were 1:15:19.200 --> 1:15:21.120 in social media? Like social media? 1:15:21.240 --> 1:15:21.320 Right? 1:15:21.360 --> 1:15:22.160 Where's the yes? 1:15:22.360 --> 1:15:25.639 Sadly, I think companies are going to try to get 1:15:25.640 --> 1:15:27.479 ahead of this. I think governments are going to try 1:15:27.479 --> 1:15:29.600 to get ahead of it, but we are going to 1:15:29.640 --> 1:15:31.479 be chasing it for a long time. I mean, what 1:15:31.760 --> 1:15:36.800 happens when someone can apply AI to a social engineering 1:15:37.920 --> 1:15:40.280 piece of ransomware that works really really well, and I'd 1:15:40.360 --> 1:15:43.320 like to have thirty by tomorrow morning. What happens when 1:15:43.720 --> 1:15:45.960 when someone can say, oh, you know what, if I 1:15:46.080 --> 1:15:51.080 alter the code of that genome, I can create a 1:15:51.200 --> 1:15:53.519 new kind of a virus, and I'd like ten thousand 1:15:53.640 --> 1:15:57.760 by tomorrow. These are the really horrible things that people 1:15:57.960 --> 1:16:02.840 could do with generative AI. To really think about setting 1:16:02.960 --> 1:16:07.439 loose a new generation of malware in a way we're 1:16:07.439 --> 1:16:09.120 not really thinking about chasing. 1:16:09.160 --> 1:16:11.639 But each example that you bring up has a person 1:16:11.760 --> 1:16:14.400 behind it making a decision to actually do that. Yeah, 1:16:15.200 --> 1:16:21.479 what about that science fiction scenario where literally the robots 1:16:21.520 --> 1:16:24.320 become more powerful than us because they can think, because 1:16:24.360 --> 1:16:25.040 they can reason. 1:16:26.360 --> 1:16:31.760 So when you start to get to broad agi, if 1:16:31.800 --> 1:16:35.719 you will, that is a risk where when you're dealing 1:16:35.800 --> 1:16:40.679 with massive amounts of information and the machine starts deciding 1:16:41.120 --> 1:16:45.000 what's right and what's wrong, then you're into that zone 1:16:45.280 --> 1:16:47.679 and you're into that zone of wait, wait a minute, 1:16:47.720 --> 1:16:50.160 what do you mean my credentials don't work because now 1:16:50.240 --> 1:16:52.080 I've been decided that I'm a person who shouldn't be 1:16:52.120 --> 1:16:55.160 included in this place, in the airport, on the plane, 1:16:55.360 --> 1:16:58.759 in some safe place. Make up your science fiction scenario. 1:16:59.000 --> 1:17:01.920 But when you start dealing with huge volumes information and 1:17:02.000 --> 1:17:06.000 instante instantaneously making those kinds of decisions, things get a 1:17:06.080 --> 1:17:07.439 little bit dodgy, isn't. 1:17:07.280 --> 1:17:10.080 It kind of sort of the problem with self driving cars? Right, 1:17:11.000 --> 1:17:14.599 dog on the right, woman with a stroller on the left. Actually, 1:17:14.640 --> 1:17:17.840 how does it determine and someone it's going to hit something? Right? 1:17:18.200 --> 1:17:19.400 How does it make that decision right? 1:17:19.439 --> 1:17:21.680 And so someone has to write that code and get 1:17:21.720 --> 1:17:24.720 to a point where that decision can be made. But 1:17:25.080 --> 1:17:28.800 eventually there's a set of parameters and rules associated with 1:17:28.840 --> 1:17:30.519 decisions like that, and the machine has to decide. 1:17:30.520 --> 1:17:34.200 Are you worried because of warfare? I'm sorry military warfare, of. 1:17:34.240 --> 1:17:36.400 Course, Yeah, I mean absolutely. I mean these are the 1:17:36.479 --> 1:17:39.080 kinds of things that that bad actors can capitalize on, 1:17:39.200 --> 1:17:41.280 and bad actors sometimes get aggregated and it becomes a 1:17:41.600 --> 1:17:42.040 bad nation. 1:17:42.120 --> 1:17:43.400 Think of the Jones story that we did. 1:17:43.720 --> 1:17:45.080 I know, and you know, I go back to the 1:17:45.120 --> 1:17:48.160 Elon Musk conversation that he had at the Deal Book 1:17:48.200 --> 1:17:50.519 summit of the New York Times last week. He said that, 1:17:51.000 --> 1:17:53.240 you know, the government doesn't allow you to build a 1:17:53.320 --> 1:17:55.360 nuclear weapon in your backyard. There are grand rolls and 1:17:55.439 --> 1:17:59.920 rules and regulations. He thinks this is more dangerous than 1:18:00.160 --> 1:18:00.960 a nuclear weapon. 1:18:01.760 --> 1:18:05.320 Yeah, And I think he's jumping ahead a number of steps. 1:18:05.400 --> 1:18:08.080 But I think if you walk back from that putting 1:18:08.520 --> 1:18:11.160 the bullets in one hand and the gun in the other, 1:18:11.439 --> 1:18:13.200 and being able to say, Okay, I'm going to give 1:18:13.200 --> 1:18:16.719 you the tools to load those together and eventually start shooting, 1:18:17.600 --> 1:18:20.559 he's not completely wrong in terms of where you can draw. 1:18:20.760 --> 1:18:21.280 The line to. 1:18:21.520 --> 1:18:24.800 And so I agree that we have to be really 1:18:25.000 --> 1:18:31.240 mindful as governments to think about not letting these circumstances happen, 1:18:31.720 --> 1:18:34.360 and unfortunately, Carol, I'll take the conversation back to something 1:18:34.400 --> 1:18:35.920 that you asked, which is are we going to be 1:18:35.960 --> 1:18:38.080 playing catch up? And I think the answer is, more 1:18:38.200 --> 1:18:40.000 often than not, we are going to be playing catch 1:18:40.040 --> 1:18:43.200 up because the number of situations and the number of 1:18:43.560 --> 1:18:47.760 instances is just so vast and we just don't know 1:18:48.960 --> 1:18:51.160 how why that spectrum can get. 1:18:51.479 --> 1:18:54.439 Do you think the good will outweigh the concern? 1:18:54.560 --> 1:18:57.040 Okay? I believe we are going to go through a 1:18:57.200 --> 1:19:02.240 very very difficult period where work and jobs get redefined, 1:19:02.320 --> 1:19:03.800 and there are a lot of roles and a lot 1:19:03.840 --> 1:19:06.160 of jobs that are going to be threatened by AI. 1:19:06.640 --> 1:19:09.200 Think about the legal profession, think about pair ofalegals, think 1:19:09.240 --> 1:19:12.000 about accountants, think about those kinds of areas. We will 1:19:12.040 --> 1:19:15.879 then invent new jobs that can stand on the shoulders 1:19:15.920 --> 1:19:18.400 of AI, and people will be reskilled and we will 1:19:18.880 --> 1:19:20.200 that will be a great time. 1:19:20.360 --> 1:19:22.519 Who created Way as our co founder, he was kind 1:19:22.560 --> 1:19:23.679 of saying as very similar. 1:19:23.680 --> 1:19:27.000 Absolutely, if there's going to be a period of pain 1:19:27.120 --> 1:19:29.960 associated with AI, that will I think lead to a 1:19:30.000 --> 1:19:31.040 period of tremendous growth. 1:19:31.120 --> 1:19:34.200 But there's also responsibility that comes along with any technology. 1:19:35.000 --> 1:19:37.719 Happy New Year, bewhile proffer del Pratt IDC. 1:19:37.960 --> 1:19:38.600 Thank you, thank you. 1:19:43.880 --> 1:19:47.400 You're listening to the Bloomberg Business Week Podcast. Catch us 1:19:47.479 --> 1:19:51.479 live weekday afternoons from three to six Easter on Bloomberg Radio, 1:19:51.720 --> 1:19:54.920 the Bloomberg Business App, and YouTube. You can also listen 1:19:55.080 --> 1:19:58.160 live on Amazon Alexa from our flagship New York station, 1:19:58.640 --> 1:20:00.599 Just say Alexa play Bloomberg. 1:20:03.320 --> 1:20:05.600 So excited about our next guest. So much going on, 1:20:05.720 --> 1:20:08.320 as you know, at the intersection of sports, money and education, 1:20:08.400 --> 1:20:10.160 which is why this next story we're going to kind 1:20:10.160 --> 1:20:12.560 of start here is on our radar. It's courtesy of 1:20:12.600 --> 1:20:16.400 Bloomberg'sjillian ten. She reported last week on Patrick Coff Company, 1:20:16.439 --> 1:20:19.320 which works with athletes and entrepreneurs to invest in private equity. 1:20:20.240 --> 1:20:22.360 The company, along with more than fifty of its current 1:20:22.600 --> 1:20:26.679 and former athlete clients, including Philadelphia Eagles center Jason Kelsey. 1:20:26.960 --> 1:20:31.719 And I've heard that name, okay, Jason Swift. 1:20:31.800 --> 1:20:34.519 Oh wait wait? Can I say that cool? That's the 1:20:34.600 --> 1:20:34.960 cool one. 1:20:35.560 --> 1:20:37.639 You are hearing the voice of Mark Patrick Coff, founder 1:20:37.640 --> 1:20:39.479 and CEO of Patrick Cough Company. Joenning us here in 1:20:39.520 --> 1:20:42.559 her Bloomberg Interactive Broker Studio. Just you know, you're here 1:20:42.600 --> 1:20:44.760 for the next sixty minutes. No, I'm just next time. 1:20:44.800 --> 1:20:47.040 You're going to be here for the next are you. 1:20:48.840 --> 1:20:51.560 Well, we love an opt in choice, not you have 1:20:51.640 --> 1:20:52.639 to go do this choice. 1:20:53.160 --> 1:20:54.840 Well, we love having you. First of all, tell us 1:20:54.840 --> 1:20:58.160 about this deal. I am G academy. I wasn't that familiar. 1:20:59.200 --> 1:21:00.840 Did kind of a deep but tell me what you 1:21:00.840 --> 1:21:01.320 guys are doing. 1:21:01.439 --> 1:21:04.200 But you loved tennis though years ago I loved gymnastics 1:21:04.880 --> 1:21:07.439 was a little bit less. But with relevant IMG they 1:21:07.479 --> 1:21:08.240 haveppened gymnastics. 1:21:08.320 --> 1:21:10.120 But I remember when I was in high school, I 1:21:10.160 --> 1:21:12.000 had friends who, if they were really good tennis players, 1:21:12.040 --> 1:21:13.760 all they wanted to do was go to Nick Boltary 1:21:14.360 --> 1:21:14.960 in Tampa. 1:21:15.320 --> 1:21:18.400 And that is IMG Academy, by the way. So that evolved. 1:21:18.920 --> 1:21:24.200 Ultimately IMG acquired voluntary changed the name, and it's always 1:21:24.240 --> 1:21:27.839 been the pre eminent place for in some cases privilege. 1:21:27.920 --> 1:21:30.920 But as it's changed for under privilege. 1:21:30.560 --> 1:21:31.920 I mean, I guess he didn't I guess he didn't 1:21:31.920 --> 1:21:32.360 pay a time to. 1:21:32.400 --> 1:21:35.840 Yeah, exactly. So, so on one hand, you kind of 1:21:35.920 --> 1:21:36.479 knew the brand. 1:21:36.640 --> 1:21:39.559 I did a lot of investment banking work for IMG 1:21:39.840 --> 1:21:43.240 when they were an independent agency. When Endeavor bought them. 1:21:43.320 --> 1:21:46.960 I stayed in close touch with IMG Mumbatala invested. 1:21:46.800 --> 1:21:47.280 At the time. 1:21:47.360 --> 1:21:50.760 I was involved in that transaction and one of the 1:21:50.840 --> 1:21:53.120 heads of the head of corp David and devver Got 1:21:53.200 --> 1:21:54.880 named Brent Richard, who was an old friend of mine. 1:21:54.920 --> 1:21:56.400 We've been on the opposite side of a couple of 1:21:56.439 --> 1:22:00.599 different banking deals. Ended up as part of his role 1:22:00.680 --> 1:22:03.600 and endeavor taking over this acquisition they had done with 1:22:03.760 --> 1:22:06.479 IMG and focusing on the academy and seeing a really 1:22:06.479 --> 1:22:11.839 big vision for for private education, democratizing I think access 1:22:11.880 --> 1:22:12.839 to the best coaching. 1:22:13.800 --> 1:22:15.559 Well, yeah, I just wanted to jump in just because 1:22:16.360 --> 1:22:18.920 when you talk Politaria, I did. It's funny we did 1:22:18.920 --> 1:22:21.000 the US Open this year, got super into tennis again. 1:22:21.120 --> 1:22:24.200 Read Agasy's book. He talks about his experience at Politary. 1:22:24.479 --> 1:22:26.920 One thing that he made hate, Oh yeah, more hate 1:22:26.960 --> 1:22:31.479 than love for sure. Actually it's totally worth and Politary 1:22:31.520 --> 1:22:34.160 for years was his coach. But one thing that he 1:22:34.200 --> 1:22:37.760 talked about was academics and and that's that's you know, 1:22:37.840 --> 1:22:40.760 in my experience too with growing up in California and 1:22:40.800 --> 1:22:44.960 seeing other tennis academies, the tennis was great, academics were lacking. 1:22:45.080 --> 1:22:45.920 Talk to me a little bit. 1:22:45.840 --> 1:22:49.160 About Yeah, I will I'm sorry to interrupt you. I 1:22:49.200 --> 1:22:50.920 will do a little plug here, but it'll make sense 1:22:50.920 --> 1:22:52.800 for a second. I've been the chairman of the board 1:22:52.800 --> 1:22:54.639 of a charity in New York called New Heights Youth 1:22:54.840 --> 1:22:59.040 and it's a basketball related charity. But we use academics 1:23:00.120 --> 1:23:02.000 as a benefit for getting good coaching. 1:23:02.080 --> 1:23:03.439 So we've sort of said, look, if you can. 1:23:03.360 --> 1:23:06.320 Be part of a team, if you can consistently commit 1:23:06.479 --> 1:23:08.200 to what's required beyond a team, you can do the 1:23:08.240 --> 1:23:09.200 same thing in the classroom. 1:23:09.479 --> 1:23:11.320 So if you want our coaching, we're going to give you. 1:23:11.560 --> 1:23:15.320 We're going to force you into after school programs, SAT prep, college, 1:23:15.400 --> 1:23:19.840 you know, admissions process, you know help. So IMG has 1:23:19.880 --> 1:23:21.560 done that at a much greater scale in the for 1:23:21.720 --> 1:23:26.280 profit ways. So, yes, academics is a story here today. 1:23:26.960 --> 1:23:29.920 Athletics is what has always been what people talked about, 1:23:30.400 --> 1:23:32.599 but it's the combination of the two that is really 1:23:33.000 --> 1:23:36.560 what's interesting here. So using sports as a hook to 1:23:36.680 --> 1:23:41.040 bring in kids either underprivileged or privileged, put them into 1:23:41.080 --> 1:23:44.000 the right types of programs to professionalize in their minds, 1:23:44.439 --> 1:23:46.600 how they take advantage of this physical skill they have 1:23:47.760 --> 1:23:50.679 off the court, off the field, and to have better, bigger, 1:23:50.840 --> 1:23:53.320 more fulfilling lives because of it. And there's proof points 1:23:53.680 --> 1:23:58.240 across the globe. So when IMG sold you know itself, 1:23:58.960 --> 1:24:04.599 Endeavor sold IMG Academy at EQT, the and NOORDA and GLA, 1:24:04.880 --> 1:24:09.360 the opportunity was here to globalize a really interesting methodology 1:24:09.439 --> 1:24:12.240 that has changed people's lives for many, many years. 1:24:12.680 --> 1:24:13.920 And Andre is a good example. 1:24:14.240 --> 1:24:17.240 He probably wouldn't be the Andre Weovius Williams in the 1:24:17.320 --> 1:24:20.759 long list of people who have created discipline their lives, 1:24:20.920 --> 1:24:23.519 learned how to exercise one muscle. If they can do 1:24:23.600 --> 1:24:26.280 that successfully, realize they can exercise their intellectual muscles too. 1:24:26.439 --> 1:24:29.439 And IMG is a really phenomenal, i think academic process 1:24:29.520 --> 1:24:29.840 to do that. 1:24:30.000 --> 1:24:31.800 And the asception isn't that everybody's going to become this 1:24:31.880 --> 1:24:32.960 big professional play. 1:24:33.160 --> 1:24:35.400 It's very few make it to the kind of like. 1:24:35.439 --> 1:24:38.479 A great finishing boarding school, right of course. 1:24:38.560 --> 1:24:40.200 I mean it's one way of looking at I mean 1:24:40.880 --> 1:24:43.599 at New Heights IMG two. If five percent of these 1:24:43.680 --> 1:24:47.799 kids go and play some level professional sports. Remember professional sports, 1:24:47.880 --> 1:24:49.719 you know, take basketball isn't just the NBA. 1:24:49.840 --> 1:24:52.160 There's leagues in Italy and. 1:24:52.240 --> 1:24:56.120 France and Greece and Israel and many other places Brazil, 1:24:56.360 --> 1:24:58.280 great players coming from all over the world. Now, So 1:24:58.640 --> 1:25:01.040 that's the other opportunity here with I Academy and why 1:25:01.120 --> 1:25:03.360 they chose EQT and why we could be helpful is 1:25:03.600 --> 1:25:05.280 there's a real opportunity to globalize this. 1:25:05.880 --> 1:25:08.840 You know, speaking of globalization, there's so many places I 1:25:08.920 --> 1:25:12.200 want to go with you, PGA and live they're supposed to. 1:25:12.400 --> 1:25:14.040 I think there's a deadline at the end of this 1:25:14.120 --> 1:25:15.040 year for this merger. 1:25:15.520 --> 1:25:17.280 I think we talked about it this spring as if 1:25:17.320 --> 1:25:18.360 it was a done deal already. 1:25:18.760 --> 1:25:22.479 It's coming or it's expected to. What do you think 1:25:22.520 --> 1:25:23.120 happens next? 1:25:23.960 --> 1:25:26.040 You know, I don't know. I mean it's very hard 1:25:26.120 --> 1:25:28.520 to say. I think it's this is a good thing absolutely. 1:25:29.320 --> 1:25:34.320 Look, I think anytime people have an opportunity to be 1:25:34.520 --> 1:25:36.320 paid fairly for their talent. 1:25:37.680 --> 1:25:38.280 Is a good thing. 1:25:38.520 --> 1:25:43.040 So if it's one league, clearly you know that caps 1:25:43.080 --> 1:25:46.040 to some extent what someone can make. I think competition 1:25:46.320 --> 1:25:48.720 ultimately is a good thing. I think the way it's 1:25:48.760 --> 1:25:51.000 been managed has been quite poor. 1:25:51.600 --> 1:25:55.200 I'm really pretty certain that the JP Morgan's of the 1:25:55.280 --> 1:25:57.639 world who happened on you know here just in full 1:25:57.680 --> 1:25:59.240 disclosure of twenty percent of my business. 1:25:59.120 --> 1:26:01.160 Yeah, but who are the bigges sponsors of the US Open, 1:26:01.200 --> 1:26:03.880 for example, I'm sure they were, And by the way, 1:26:04.360 --> 1:26:07.960 the Masters and other things like that, I'm sure they'd 1:26:07.960 --> 1:26:10.960 allowed voice when this fell upon us in the spring. So, 1:26:11.520 --> 1:26:13.479 you know, I think it's a good thing if it helps, 1:26:13.600 --> 1:26:16.920 you know, you know, democratize golf, so more people play golf, 1:26:17.000 --> 1:26:20.120 more people see golf, more people attend golf tournaments. I 1:26:20.160 --> 1:26:22.080 mean it's been for the privileged few who get to 1:26:22.280 --> 1:26:25.160 go to see the Masters or go, you know, watch 1:26:25.240 --> 1:26:26.160 any of these tournaments. 1:26:26.240 --> 1:26:27.960 And I hope something good comes of it. 1:26:28.040 --> 1:26:30.960 I mean, I think TQL is interesting, which is the 1:26:31.120 --> 1:26:33.679 new Indoor League right, see if that that got Scott delayed, 1:26:34.160 --> 1:26:36.640 you know, it's it's an interesting way to take a 1:26:36.720 --> 1:26:39.200 sport that's been for very few people who could afford it. 1:26:39.720 --> 1:26:44.040 So if LIVE and PG come together, you have to 1:26:44.080 --> 1:26:44.920 see what that means. 1:26:45.120 --> 1:26:45.439 TBD. 1:26:45.840 --> 1:26:47.920 Yeah, Hey, listen, we've only got a couple of minutes, 1:26:48.120 --> 1:26:50.360 so you've got to already promise to come back really soon. 1:26:51.000 --> 1:26:55.439 But two minutes. The world's pretty stressful, to say the least. 1:26:56.600 --> 1:26:58.960 And who'd have thought, like just kind of this year, 1:26:59.640 --> 1:27:04.000 the stuff that we were talking about seeing living athletes, 1:27:04.200 --> 1:27:06.120 what's their role in all of this? And we're getting 1:27:06.160 --> 1:27:09.360 ready for a really important presidential election in the United States, 1:27:09.439 --> 1:27:12.000 what's their role or should be their role? Where you 1:27:12.160 --> 1:27:14.560 know it can backfire in an instant. 1:27:14.720 --> 1:27:15.080 Used to be. 1:27:15.280 --> 1:27:17.880 I think in the locker rooms of the old days, 1:27:17.920 --> 1:27:22.080 you didn't talk about money, you didn't talk about sex, 1:27:22.160 --> 1:27:25.360 and you didn't talk about politics. I think in the 1:27:25.479 --> 1:27:31.000 last cycle of professional sports, where these kids are seeing 1:27:31.080 --> 1:27:33.439 the world in a very different way, they're learning more 1:27:33.840 --> 1:27:36.280 by accident or intentionally at a much younger age. 1:27:36.400 --> 1:27:39.879 They are forming opinions, they're realizing the power of their brains. 1:27:40.080 --> 1:27:43.960 Back to IMG Academy and I speak to athletes most 1:27:44.000 --> 1:27:45.120 cases seven days a week. 1:27:45.560 --> 1:27:47.320 They'll bring up, what do you think is going to 1:27:47.360 --> 1:27:50.680 happen next November? I don't like this candidate, I do 1:27:50.880 --> 1:27:52.120 like that candidate. 1:27:52.240 --> 1:27:55.040 And they're starting to understand that if they decide to 1:27:55.080 --> 1:27:57.920 amplify a point of view that's well informed, that could 1:27:57.920 --> 1:28:00.960 be influential. I mean not to make it about diversity, 1:28:01.080 --> 1:28:04.639 but you think about Obama and Oprah and the impact 1:28:04.760 --> 1:28:07.840 she had the Number one I'm going to use this 1:28:07.920 --> 1:28:09.760 example because it's kind of off point for the US 1:28:09.840 --> 1:28:11.479 but the number one cricket player in India has two 1:28:11.560 --> 1:28:16.000 hundred and fifty million Instagram followers. I don't have offhand 1:28:16.439 --> 1:28:19.479 how many Instagram followers Joe Burrow has or Kyrie Irving 1:28:19.640 --> 1:28:21.360 or but you saw what Kyrie Irving did last fall. 1:28:22.960 --> 1:28:26.920 They can make a difference. And if athlete A doesn't 1:28:26.920 --> 1:28:29.519 want to see Donald Trump become president, he or she 1:28:29.680 --> 1:28:32.760 has a voice, and I think you're going to see 1:28:32.960 --> 1:28:35.360 a willingness that you did not see in the past 1:28:35.920 --> 1:28:38.799 other than from a very select few to use. 1:28:38.720 --> 1:28:40.040 That voice to. 1:28:41.479 --> 1:28:45.320 I think a positive event. And any opinion is a 1:28:45.320 --> 1:28:47.560 good opinion. I would say that about athletes and you know, 1:28:47.920 --> 1:28:49.479 just have an opinion. I don't care whether you go 1:28:49.600 --> 1:28:51.400 left or right or do this deal, don't do this deal. 1:28:51.640 --> 1:28:53.400 I just want you to have an opinion. So we 1:28:53.479 --> 1:28:55.719 say that a lot of them about politics. How an opinion, 1:28:55.760 --> 1:28:57.240 it matters. It's going to affect your lives. 1:28:58.160 --> 1:28:59.880 As I said, promise to come back soon because we'll 1:28:59.880 --> 1:29:02.880 do more. We will obviously. Mark patrick Hoff, president and 1:29:02.960 --> 1:29:05.559 CEO of Patrickcoff Company, joining us here in studio. 1:29:06.240 --> 1:29:09.760 You're listening to the Bloomberg Business Week podcast. Catch us 1:29:09.840 --> 1:29:13.240 Live weekday afternoons from three to six Eastern Listen. 1:29:13.080 --> 1:29:16.519 On Bloomberg dot com, the iHeartRadio app, and the Bloomberg 1:29:16.600 --> 1:29:19.240 Business app, or watch us live on YouTube. 1:29:20.479 --> 1:29:22.360 She's the founder and CEO of a consulting firm that's 1:29:22.520 --> 1:29:25.479 worked with the likes of Northorpe, Grumman, Lockheed Martin, the SEC, 1:29:25.880 --> 1:29:29.960 the US Army, US Marine Corps, Booz, Allen Hamilton, and more, 1:29:30.080 --> 1:29:33.920 including Harvard and Howard Universities. The company's name, KUSSY is 1:29:33.920 --> 1:29:37.600 an acronym for knowledge, Understanding, strategy and Implementation, and in 1:29:37.680 --> 1:29:40.959 the company's own words, is quote committed to transforming, inspiring 1:29:41.320 --> 1:29:43.360 and cultivating leaders around the world. 1:29:43.439 --> 1:29:44.960 So let's get to it. Her new book is The 1:29:45.000 --> 1:29:48.280 Power of Conscious Connection for Habits to transform. 1:29:47.880 --> 1:29:49.240 How you live and lead. 1:29:49.960 --> 1:29:52.080 We have with us Talia Fox. She's the chief executive 1:29:52.120 --> 1:29:55.600 officer of the consultancy Cousy Global and a fellow at 1:29:55.640 --> 1:29:58.800 Harvard University. Talia, nice to have you here with us. 1:29:59.160 --> 1:30:01.599 You know, we're talking about Charlie Munger, quite a leader 1:30:02.720 --> 1:30:06.280 and someone who also kind of seemed to live to 1:30:06.400 --> 1:30:11.880 the fullest and was very honest and transparent about his views. 1:30:12.840 --> 1:30:14.559 Tell us a little bit about how you are thinking 1:30:14.640 --> 1:30:17.840 about how people can transform how they live and lead. 1:30:18.320 --> 1:30:19.400 Yeah, you know, it's amazing. 1:30:20.479 --> 1:30:23.160 With his death, he almost reached one hundred years old. 1:30:23.360 --> 1:30:25.840 And what you were describing about all of the giving 1:30:26.040 --> 1:30:28.760 that he did with his time here. That is what 1:30:28.960 --> 1:30:31.840 conscious connection is about. It's about being conscious of what's 1:30:31.880 --> 1:30:34.800 happening in the world and the needs and being connected 1:30:34.880 --> 1:30:36.680 to the power that you have to change it. And 1:30:36.760 --> 1:30:38.920 that power can look different from many different people. 1:30:39.560 --> 1:30:41.240 So let's think about I want to think about your 1:30:41.280 --> 1:30:44.600 own journey as a leader, because you started this consultancy 1:30:44.920 --> 1:30:48.639 quite a few years ago and you work with companies 1:30:48.720 --> 1:30:51.200 to help cultivate leaders. And it's not just companies that 1:30:51.240 --> 1:30:54.880 you work with, but you also offer these online learning modules. 1:30:55.160 --> 1:30:56.920 Can you talk a little bit about your own journey 1:30:56.920 --> 1:30:59.280 as a leader, because when I speak to people who 1:31:00.400 --> 1:31:01.920 do this type of work, I always want to get 1:31:01.920 --> 1:31:04.160 an understanding of Okay, well, how do they develop themselves 1:31:04.439 --> 1:31:06.960 into somebody who can actually teach these skills. 1:31:07.240 --> 1:31:07.400 Yeah. 1:31:07.439 --> 1:31:10.200 So my background is in psychology, so I really studied. 1:31:10.800 --> 1:31:13.839 I started off in nonprofit studying the impact that leadership 1:31:13.920 --> 1:31:16.479 has on real lives, and I started doing keynotes speaking 1:31:16.520 --> 1:31:20.840 events for nonprofit organizations. But I was very connected to 1:31:21.000 --> 1:31:24.400 the fact that leadership decisions impact. I was able to 1:31:24.439 --> 1:31:27.679 look into children's eyes and see the impact of leadership decisions. 1:31:28.280 --> 1:31:31.080 I've had quite an interesting journey of being a single mom, 1:31:31.960 --> 1:31:35.479 of having to really find my way and study what 1:31:35.840 --> 1:31:38.800 matters and what makes a difference in achievement. And so 1:31:39.000 --> 1:31:42.640 I've read literally hundreds of books, and I have been 1:31:42.680 --> 1:31:45.400 on a hunt for my entire twenty year career, twenty 1:31:45.439 --> 1:31:48.640 plus years finding out what are those core ideas, what 1:31:48.720 --> 1:31:51.040 are those core things that really make a difference in 1:31:51.120 --> 1:31:53.640 how we live and lead. And that is really what 1:31:53.760 --> 1:31:56.639 this book is about. I'm sharing those stories, the stories 1:31:56.640 --> 1:31:59.840 of achievement and the hack that I call it to 1:32:00.240 --> 1:32:02.040 a great leadership and a great life. 1:32:02.160 --> 1:32:05.559 So let's get to the four habits. So talk to us, 1:32:06.600 --> 1:32:07.720 walk us through them, if you will. 1:32:07.920 --> 1:32:09.960 So it's very interesting because the four habits make up 1:32:10.000 --> 1:32:14.040 the acronym love. But that absolutely was a beautiful coincidence. 1:32:14.560 --> 1:32:15.240 So the four. 1:32:15.160 --> 1:32:20.040 Habits are listening, observe, value, and engage, And each of 1:32:20.120 --> 1:32:24.240 these habits is connected to a leadership skill that we 1:32:24.400 --> 1:32:28.280 want to master. So listening is connected to emotional intelligence 1:32:28.360 --> 1:32:31.599 that's very critical for our success. And so I outline 1:32:31.640 --> 1:32:34.839 in the book how to do that. Observation is connected 1:32:34.880 --> 1:32:39.080 to systems thinking. This opportunity to be to see patterns 1:32:39.120 --> 1:32:43.719 and to understand how interdependent we are. Values is connected 1:32:43.880 --> 1:32:48.759 to cultural competence, our capacity to value people, to value 1:32:48.840 --> 1:32:52.120 connection to value differences, to really be able to see 1:32:52.160 --> 1:32:54.719 all the big issues happening in the world and understand 1:32:54.760 --> 1:32:57.360 how adapt how to adapt our world views to those 1:32:57.920 --> 1:33:02.360 and then lastly engage the real critical key value, particularly 1:33:02.439 --> 1:33:04.560 in the world we are in today, is to be 1:33:04.640 --> 1:33:08.000 able to communicate in such a way that connects instead 1:33:08.040 --> 1:33:11.200 of divides, and so that habit makes up the acronym love, 1:33:11.560 --> 1:33:13.439 which I don't know my Department of Defense folks on 1:33:13.640 --> 1:33:17.080 how I feel about that acronym. I was actually cringing 1:33:17.320 --> 1:33:19.760 at how fluffy it was. But when I saw it 1:33:19.880 --> 1:33:21.680 right there, I said, oh, it makes up love. I 1:33:21.840 --> 1:33:24.120 wasn't going to shy away from it, and so we're 1:33:24.200 --> 1:33:27.280 sticking to it. So we'll see if leaders can handle 1:33:28.040 --> 1:33:32.759 the experience of that being so conscious connected in their strategy. 1:33:32.960 --> 1:33:35.479 It's so funny because you know, you do work with 1:33:35.880 --> 1:33:38.160 clients like the Department of Defense, the US Army, of 1:33:38.160 --> 1:33:40.120 the US Marine Corps. What's the reaction to the folks 1:33:40.160 --> 1:33:42.200 when you share with them this methodology. 1:33:43.240 --> 1:33:47.320 Well, our our firm kusai kusi knowledge as you've shared 1:33:47.439 --> 1:33:50.760 understanding strategy implementation that is real. That has been the 1:33:51.040 --> 1:33:53.600 strategic approach that we use when we go and do 1:33:53.720 --> 1:33:57.920 culture transformation projects. So this book I wrote not only 1:33:58.040 --> 1:34:00.960 for my clients but also for it's for the people, 1:34:01.360 --> 1:34:03.760 and so it's really about on an individual level and 1:34:03.960 --> 1:34:06.439 on a leadership level, what are those habits that we 1:34:06.560 --> 1:34:09.639 need to master on a regular basis, on a daily 1:34:09.680 --> 1:34:11.040 basis to impact change. 1:34:11.280 --> 1:34:13.160 Talia. You know, we talk with leaders all the time, 1:34:13.439 --> 1:34:15.240 you know, And I'm curious about when you're working with 1:34:16.080 --> 1:34:18.320 the defense contractors do a lot of government work, it 1:34:18.360 --> 1:34:21.360 looks like consultants university. I mean, what is it that 1:34:21.760 --> 1:34:24.800 people often come to you and say, Okay, here's we've 1:34:24.840 --> 1:34:27.080 got this situation, here's what's wrong, or here's what's wrong 1:34:27.120 --> 1:34:27.879 with our leadership? 1:34:28.000 --> 1:34:29.479 Like help us? Or do they not even know? 1:34:30.040 --> 1:34:32.960 What's interesting is that, you know, I really wish that 1:34:33.000 --> 1:34:35.560 people would be more pulled by purpose as opposed to 1:34:35.600 --> 1:34:38.759 push by stress. But typically when people do come to Kusai, 1:34:39.400 --> 1:34:42.360 there's something happening in the news, there's a you know, 1:34:42.600 --> 1:34:46.800 racial issues, social issues, political issues, and you're seeing a 1:34:47.200 --> 1:34:51.799 huge divide or even bleeding out executives. You're seeing problem, 1:34:51.960 --> 1:34:54.920 serious problems. We actually call it a culture shot. They 1:34:55.000 --> 1:34:57.439 need to be triaged if you will, to get the 1:34:57.520 --> 1:34:59.839 culture back on board. You've got a lot of conflict. 1:35:00.000 --> 1:35:03.519 People aren't talking to each other. That's when people say, okay, 1:35:04.120 --> 1:35:06.000 who do you go to? You go to Kusai for 1:35:06.080 --> 1:35:08.800 those kinds of challenges, and we really come in with 1:35:09.040 --> 1:35:11.840 sort of skills and systems to support in a full 1:35:11.880 --> 1:35:13.120 scale culture transformation. 1:35:13.720 --> 1:35:17.080 So what are the issues right now that the companies 1:35:17.200 --> 1:35:20.000 that are coming to you right now are telling you 1:35:20.080 --> 1:35:20.679 that they're facing. 1:35:21.360 --> 1:35:23.800 So right now we're dealing, of course with a lot 1:35:23.840 --> 1:35:30.840 of diversity, equity and inclusion issues, particularly around conversations about politics, 1:35:30.920 --> 1:35:36.800 conversations that are really highly tense, and so there is 1:35:36.920 --> 1:35:39.760 this opportunity. I mean, in the government, they have an 1:35:39.800 --> 1:35:41.280 act in a law that you're not supposed to talk 1:35:41.280 --> 1:35:43.720 about these things. But people know their social media and 1:35:43.880 --> 1:35:46.080 so one of the things that we're doing is how 1:35:46.120 --> 1:35:49.200 do you have these difficult conversations, how do you see 1:35:49.400 --> 1:35:52.240 authentic without having to get into the weeds of what's 1:35:52.280 --> 1:35:54.400 actually happening in the world. So how do you build 1:35:54.600 --> 1:35:58.720 those relationships in a way that feels professional but that 1:35:58.840 --> 1:35:59.879 also feels authentic. 1:36:00.040 --> 1:36:04.559 Well, I'm curious. I'm glad you went there because it's fascinating. 1:36:04.600 --> 1:36:07.080 We have conversations, and I feel like they certainly picked 1:36:07.160 --> 1:36:09.680 up momentum when it comes to diversity inclusion coming off 1:36:09.720 --> 1:36:12.920 of the pandemic, coming off of George Floyd. It's amazing 1:36:13.280 --> 1:36:15.720 how here we are, how many years out from that, 1:36:16.320 --> 1:36:19.160 how many years before that that we were having those conversations, 1:36:19.200 --> 1:36:20.799 and yet we still have a problem. 1:36:21.960 --> 1:36:22.400 I don't know. 1:36:22.680 --> 1:36:25.280 You talk with leaders, you work with companies. What is 1:36:25.400 --> 1:36:28.920 the fix so that we don't have to have the 1:36:28.920 --> 1:36:30.600 conversation anymore? Because it just is. 1:36:31.240 --> 1:36:33.679 I don't think that it's a fix. I think it's 1:36:33.840 --> 1:36:37.640 actually almost like hygiene, cultural hygiene. I love that you 1:36:38.479 --> 1:36:41.040 have new people coming into an organization. This is something 1:36:41.080 --> 1:36:44.080 where where people we have feelings, we have triggers, we 1:36:44.160 --> 1:36:47.080 have experiences, we have life, and so we really need 1:36:47.160 --> 1:36:50.439 to treat it as a constant opportunity to create space, 1:36:50.840 --> 1:36:53.840 to be able to build this environment where people are 1:36:53.880 --> 1:36:57.760 committed to innovation, committed to growth, committed to being their 1:36:57.840 --> 1:37:00.439 best selves. But in order to do that, the soil 1:37:00.560 --> 1:37:04.600 has to be We have some very specific communication strategies 1:37:04.640 --> 1:37:07.439 and ways that this culture operates, and we need to 1:37:07.479 --> 1:37:09.920 make sure that everyone is on the same page. I 1:37:10.080 --> 1:37:12.160 kind of like to use the very plain language of 1:37:12.320 --> 1:37:15.240 in this house, this is how we behave in this house. 1:37:15.360 --> 1:37:17.760 This is how we talk to each other, and that's 1:37:17.840 --> 1:37:21.120 that's the corporate speak. This is what we do here together, 1:37:21.280 --> 1:37:24.120 and this is how we have these kinds of conversations 1:37:24.240 --> 1:37:25.599 and connect and deal with each other. 1:37:25.720 --> 1:37:27.160 Corporate hygiene. Is that what you said? 1:37:27.479 --> 1:37:29.280 Yes, I like that. 1:37:29.760 --> 1:37:30.760 I like that right. 1:37:30.840 --> 1:37:33.439 It's just it just is like you do it because 1:37:33.479 --> 1:37:36.080 you're yeah, you have to. You should be gotta brush 1:37:36.120 --> 1:37:36.479 your teeth. 1:37:36.520 --> 1:37:39.320 You gotta brush your teeth act and using that analogy, 1:37:39.400 --> 1:37:42.080 the more you keep brushing your teeth, you have less cavities, 1:37:42.160 --> 1:37:44.519 less paces. You know, I don't want to be going 1:37:44.560 --> 1:37:46.240 on a wonderful trip somewhere and you have to go 1:37:46.280 --> 1:37:48.439 get a root canal. But that's what organizations are dealing 1:37:48.520 --> 1:37:50.880 with right now. I will tell you if I was 1:37:50.960 --> 1:37:53.320 leading in any large organization, I would not lead a 1:37:53.400 --> 1:37:55.799 team that has not been trained on how to manage 1:37:55.920 --> 1:37:58.920 and communicate. I think in this day and age, it's 1:37:58.960 --> 1:38:01.000 almost like not having a way upsider people not being 1:38:01.000 --> 1:38:01.840 able to use a computer. 1:38:02.000 --> 1:38:03.880 It's a great way, but it's a great way of 1:38:03.920 --> 1:38:05.519 thinking about It's a different mindset and I think that's 1:38:05.560 --> 1:38:09.160 really important in terms of changing ultimately the outcome. Tell 1:38:09.160 --> 1:38:11.600 you Fox, thank you so much, Chief executive Officer, the 1:38:11.760 --> 1:38:16.200 consultancy Kusai Global, A fellow at Harvard and CURSS. Our 1:38:16.240 --> 1:38:18.360 book is the Power of Conscious Connections for habits to 1:38:18.439 --> 1:38:21.160 transform how you live and lead. This is the. 1:38:21.200 --> 1:38:25.960 Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere 1:38:26.000 --> 1:38:29.680 else you can get your podcasts. Listen live weekday afternoons 1:38:29.720 --> 1:38:32.800 from three to six Eastern on Bloomberg dot Com, the 1:38:32.880 --> 1:38:36.160 iHeartRadio app, tune In, and the Bloomberg Business App. You 1:38:36.240 --> 1:38:39.360 can also watch us live every weekday on YouTube and 1:38:39.600 --> 1:38:41.520 always on the Bloomberg Jermale