Speaker 1: This is Bloomberg Business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news As it happened. Bloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes. Tim
Speaker 1: Stinevin on Bloomberg Radio. Hi everyone, Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. But what a week it was,
Speaker 1: especially in Washington, d C. With President Biden trying to
Speaker 1: salvage his agenda as Democrats try to come together on
Speaker 1: the cost of an infrastructure bill, taxes, and the debt ceiling.
Speaker 1: We definitely focused on politics. We also Tim focused on
Speaker 1: the markets, market volatility taking hold once again this past week,
Speaker 1: a lot of fears over persistently high inflation rattling stocks,
Speaker 1: especially when it comes to big tech stocks. We'll explore
Speaker 1: those topics and more with venture capitalist Alan patrick Off,
Speaker 1: the co founder and chairman emeritus of Great Croft Ventures.
Speaker 1: That was a wide ranging conversation. Plus we'll find out
Speaker 1: why there's been a surgeon wealthy Americans looking to establish
Speaker 1: dual citizenship and were in countries, and also how supply
Speaker 1: chain constraints and climate change are impacting. I gotta say
Speaker 1: two of our favorite things, coffee and wine. All of
Speaker 1: that and more to come, but we begin this week
Speaker 1: with a look at this week's issue, our cover story,
Speaker 1: which we're gonna get into a bit later. It's all
Speaker 1: about insider trading in America and why toothless regulations are
Speaker 1: doing little to discourage the practice. And it's not exactly
Speaker 1: what you think. I'm not going to give it all away,
Speaker 1: but it's not necessarily what you think of when you
Speaker 1: think insider trading, right, But it's insiders who are doing
Speaker 1: trading exactly. And so it's a fabulous cover story. Let's
Speaker 1: talk a little bit about the issue. There's a lot
Speaker 1: of interesting stories in there. We talked about the car industry,
Speaker 1: the online used car dealers that market used cars, thriving
Speaker 1: during the pandemic. Everybody wanted a car, partly because of
Speaker 1: the chip shortage. It's hard to get a new car,
Speaker 1: partly because people wanted to drive more and avoid public transit.
Speaker 1: They want to keep their families together in sort of pods.
Speaker 1: But one interesting thing happened was you could buy a
Speaker 1: used car at one point during the pandemic and then
Speaker 1: drive it and then sell it later and actually make
Speaker 1: a profit, which doesn't make sense, does not get exactly
Speaker 1: how it happened. I mean with a car, right, you're
Speaker 1: supposed to drive off the lot and immediately the car
Speaker 1: is worth less, right exactly. Um, really fun story and
Speaker 1: deep dive into that. UM. One of the things that
Speaker 1: caught my attention is we do a spotlight on the
Speaker 1: ten Companies to Watch, and this really follows on the
Speaker 1: list of fifty Companies to Watch that we always do
Speaker 1: in January, and so we do updates on this, but
Speaker 1: it deals with Lulu, Lemon, Roku, Airbnb, i n G,
Speaker 1: Altria Group, UH, so many interesting little companies that are
Speaker 1: out there, No, not so little, actually Folkswagen that's a
Speaker 1: big one. Uh. And so this really taps into our
Speaker 1: Bloomberg intelligence team. These alice identify UH companies for Business
Speaker 1: Week on an ongoing basis and they give their reasons
Speaker 1: why why bees need to be on your radar. So
Speaker 1: check it out. Check out that section. And also one
Speaker 1: area that grabbed my attention in this week's edition was
Speaker 1: the rye is of premium economy. It's for airlines, a
Speaker 1: new middle class carol. People are starting to travel again
Speaker 1: or at least think about traveling again, and an interesting
Speaker 1: thing is happening, and it was happening before the pandemic,
Speaker 1: and it'll be curious to see what happens post pandemic
Speaker 1: when things get back to so called normal. But the
Speaker 1: growth of this you know, type of class of service
Speaker 1: that is between economy and business class, and people are
Speaker 1: willing to pay more for you know, more elbow room
Speaker 1: and a little bit of a bigger seat, and it's
Speaker 1: actually pretty profitable for these airlines. That's what's interesting, right.
Speaker 1: They're figuring out how do they make more on each
Speaker 1: seat and from what I understand, the premium economy seats
Speaker 1: they occupy only ten more area than coach, but they
Speaker 1: do help make the service more profitable per square foot
Speaker 1: of a plane's cabin space than business class. Yes, I'm
Speaker 1: reading from the article, but it's all about how do
Speaker 1: you make more money out of each of those seats. Yeah,
Speaker 1: it's something interesting that's happening that happened early on when
Speaker 1: it came to commercial air travel, with the like the
Speaker 1: invention of business class, which was at the beginning only
Speaker 1: a little bit better than than coach. I just want
Speaker 1: to know, do I get peanuts? Do I get a blanket.
Speaker 1: I have no idea. I haven't flown him along time.
Speaker 1: Uh So that's the story that you definitely want to
Speaker 1: check out. There's also a story we are consistently here
Speaker 1: at Business Week looking into Zillo, best known for the
Speaker 1: addictive real estate listings that we all we all have
Speaker 1: done it. We're browsing the internet at night, checking out
Speaker 1: homes prices different regions around the country. But they are increasingly,
Speaker 1: as we know, now buying and selling homes. They're in
Speaker 1: that part of the market, and they're also now selling
Speaker 1: bonds to fund their instant home purchases, so wall streets
Speaker 1: being brought in. Yeah. In August, Zillo raised four fifty
Speaker 1: million dollars from a bond backed by homes that it's
Speaker 1: bought but not yet sold. The offering was led by
Speaker 1: Credit Suite and it was modeled on the loan facilities
Speaker 1: that car dealerships used to finance floor models. Yeah, it's
Speaker 1: it's fascinating and I think it's interesting to see how
Speaker 1: that Zillo model is evolving, and you do wonder how
Speaker 1: they are playing into maybe, let's go on the housing market.
Speaker 1: We talked this week about it's really tough to be
Speaker 1: a first time home buyer. It's hard to be able
Speaker 1: to afford it because there's so much demand for homes.
Speaker 1: So you're competing with other people who are looking for homes.
Speaker 1: You're competing with Wall Street, right, and because private equity,
Speaker 1: and you're also competing with companies like Zilo that are
Speaker 1: increasingly making this part of their model. Yeah, exactly. Hey,
Speaker 1: another story. I think it was also a Bloomberg big
Speaker 1: take this week, and this has to do with we
Speaker 1: are watching so closely the energy crisis over in Europe. Uh,
Speaker 1: and this story really tapped into how that crisis is
Speaker 1: coming for the rest of the world. I mean, millions
Speaker 1: of people around the globe are going to feel the
Speaker 1: impact of storing natural gas prices this winter. Remember when
Speaker 1: we had a glut? Not anymore. Yeah, But I found
Speaker 1: so fascinating about this is so much of this depends
Speaker 1: on the weather and how cold it is going to
Speaker 1: be this winter, and also how much wind is actually
Speaker 1: being is actually there to generate wind power exactly. So
Speaker 1: this is a story that just reminds you of the
Speaker 1: global implications of what seems to be a pending energy
Speaker 1: crisis for a lot of us. And that's an overview
Speaker 1: of this week's issue. There's a lot more in it,
Speaker 1: so be sure to check it out. Plenty more coming
Speaker 1: up into just a few minutes. You're also going to
Speaker 1: hear from a pair of venture capitalists. We'll check in
Speaker 1: with the Anthemus CEO Amy New Yorkis, she's going to
Speaker 1: talk fintech, and then we've also got a well known
Speaker 1: name in the VC space, Alan patrick Off. There's got
Speaker 1: to be a gradual tightening and inflation is much more
Speaker 1: of some concern than it was probably three or four
Speaker 1: or five months ago. I think there is an upset
Speaker 1: and that I believe do believe that the ending of
Speaker 1: unemployment benefits and special benefits fell a given as a
Speaker 1: result of COVID, which were very much needed, have now
Speaker 1: put a lot of people in a position where they're
Speaker 1: not going to have choice but had to have to
Speaker 1: go back to work. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes. Tim Spinnovik from Bloomberg Radio.
Speaker 1: This week re checked in with a pair of venture
Speaker 1: capitalist that includes well known VC investor Alan patrick Off,
Speaker 1: a great Croft Ventures and Primetime Partners. We'll hear from
Speaker 1: him a little later on. First up, though, is Amy
Speaker 1: no Yakis. She's the co founder and the CEO at
Speaker 1: the digital financial services from Anthemus, as well as the
Speaker 1: founder and CEO of the media production company Archer Gray.
Speaker 1: She's been behind the launch of the Female Innovator's Lab.
Speaker 1: It's a collaboration between Anthemis and Barclay's. It's all about
Speaker 1: bringing more women into entrepreneurship, really about closing that fundraising
Speaker 1: gender gap, something we've talked about a lot here at Bloomberg.
Speaker 1: Amy spoke to us about the program's recent expansion super exciting.
Speaker 1: I mean, as you guys well know, you know, investing
Speaker 1: in diverse founders has done something we've done from the
Speaker 1: very beginning. But sometimes in doing so, you run into
Speaker 1: kind of snags that things just aren't happening fast enough.
Speaker 1: And that's precisely why we started the Female Innovator's Lab,
Speaker 1: is that two years ago we got getting frustrated about
Speaker 1: all the sort of people saying, oh, there aren't enough
Speaker 1: women to invest in, it's a pipeline issue, etcetera, etcetera,
Speaker 1: and none of it felt very honest to us, and
Speaker 1: so we said all right, let's let's let's go ahead
Speaker 1: and figure out if this is really a problem, if
Speaker 1: there's a pipeline problem. So we launched a very specific
Speaker 1: vehicle that invests exclusively in women in financial services, but
Speaker 1: very uniquely at the earliest stage of their company. So
Speaker 1: this is prec this is you know, come to us
Speaker 1: with an idea, We're gonna help you build it, We're
Speaker 1: gonna help you map it UM and then we're gonna
Speaker 1: help you get ready to launch it UM and and
Speaker 1: so we've had a lot of success. We've seen over
Speaker 1: hundreds of companies UM in the last two years, and
Speaker 1: last week we announced that we are moving from not
Speaker 1: just employing capital in the US market, but we're going
Speaker 1: to be deploying as well, doubling the size of the
Speaker 1: business in UM the UK and Europe. So it's it's great.
Speaker 1: We've we've had a lot of success with it UM,
Speaker 1: building out some really amazing company, finding some really great
Speaker 1: women UM and and you know, fifth vers of those
Speaker 1: women are also women of color, which I think UM
Speaker 1: you know, goes to the other points that will always
Speaker 1: say that they're just aren't enough women or people of
Speaker 1: color in the market to invest in and I'm calling
Speaker 1: I'm calling the BS on that one. We talked to
Speaker 1: any think back in November, I mean, the pandemic. What's
Speaker 1: been the impact on your world VC investing? Give us
Speaker 1: some context and inside if you could. Yeah, well, it's
Speaker 1: I mean it's been it's been crazy, right, I mean,
Speaker 1: it's for so many ways. And I think last time
Speaker 1: I was on we talked a lot about kind of
Speaker 1: you know what what what some of the things that
Speaker 1: we might be kind of reckoning with kind of as
Speaker 1: as the world starts to reopen and such. But I
Speaker 1: think that, Look, the last couple of years of venture
Speaker 1: capital has been unbelievable. I think that the year, you know,
Speaker 1: from the pandemic, year after it's it's been the biggest
Speaker 1: years of venture capital I've ever seen. The entire industry
Speaker 1: is deploying capital like it's never has before. And the
Speaker 1: sector that Anthemus is focused on, specifically, fintech, has been
Speaker 1: the hottest sector known to known to man, woman and child.
Speaker 1: And and it's really interesting, right because we've been doing
Speaker 1: this um at Anthemas first almost you know, going on
Speaker 1: like a decade and a half now, and to find
Speaker 1: out for the first time that we're you know, the
Speaker 1: things that we've always thought important, right, Investing in the
Speaker 1: service of trying to make change happen in the financial system,
Speaker 1: focusing on the rout founders, you know, investing for impact.
Speaker 1: All the things that really mattered to us have now
Speaker 1: become kind of the de facto conversation. And you know,
Speaker 1: it's crazy that that we're getting as much attention, but
Speaker 1: also that the world is starting to finally pay attention
Speaker 1: that the things that are so important for systemic change.
Speaker 1: Um So, in a lot of ways, I'm you know,
Speaker 1: I hate to say it, but I'm I'm feeling really
Speaker 1: bullish on on where where um the world stands from
Speaker 1: my perspective. Well, you have dozens of companies that you've
Speaker 1: invested on, including companies like Carta and Better Meant Easy Health, Fluidity, Goji,
Speaker 1: Happy Money, and more. I'm I'm wondering if if there
Speaker 1: can ever be, in your opinion, too much venture capital
Speaker 1: funding out there. I think I thought about is there
Speaker 1: too much money? We're you know, we're kind of all
Speaker 1: dealing with this sort of capital wall that that's sort
Speaker 1: of upon us in the private equity space generally. But
Speaker 1: it's about whose money, you know, who whose hands is
Speaker 1: that money in? And you know, one of the trends
Speaker 1: that we've been watching really closely and you guys have
Speaker 1: probably seen it since you dig into venture capitalists, what's
Speaker 1: been happening with a lot of these um, you know
Speaker 1: kind of mega rounds. I think there was around today
Speaker 1: where where one of the company's fanatics was a Series
Speaker 1: A at ten billion valuation, right, so you know in
Speaker 1: these kind of big investors like the Soft Bank of
Speaker 1: the World and the and the Tiger Gold was coming
Speaker 1: in and really just pumping up and getting founders excited
Speaker 1: about um the idea that they could be, you know,
Speaker 1: tomorrow a billion dollar company. And we're all out for
Speaker 1: building really great, fantastic companies. And as an investor, don't
Speaker 1: get me wrong, we love a unicorn as as well
Speaker 1: as the next. But the reality is, you know, particularly
Speaker 1: when you're deploying capital at the earliest stages, you know,
Speaker 1: seried seed preceed a B even C, you need to
Speaker 1: focus on what's really you know, how how a venture
Speaker 1: company can really scale, and that's about building resiliency. Right
Speaker 1: if you're giving a founder a check, um, you know,
Speaker 1: with no product, no market, no customers, no launch and
Speaker 1: you're saying, hey, here's a hundred million dollars and we're
Speaker 1: gonna value you immediately it's at five hundred million, go
Speaker 1: off and do it. There's a lot of danger that
Speaker 1: that sort of you know, what are they going to do?
Speaker 1: How are they going to spend that money? Are they
Speaker 1: going to deploy it respectively? How quickly are they gonna
Speaker 1: hire people? How do you maintain a good culture, hire
Speaker 1: the right people, hire for value, thelignment. It's got money
Speaker 1: burning a hole in your pocket. Amy, you're talking about,
Speaker 1: you know, fintech. Obviously that's your area where you guys
Speaker 1: are focusing on. Scott Minored. He's part of a story
Speaker 1: that is among our most right on the Bloomberg where
Speaker 1: Arsenal Bossik talked to a bunch of well known Wall
Speaker 1: Street names about the next big risks for investors, and
Speaker 1: he is concerned. His number one risk is the sustainability
Speaker 1: of the global payment system. And he's also looking yet,
Speaker 1: you know, concerns about hackers and so and so far
Speaker 1: as we increasingly when it comes to our personal and
Speaker 1: you know, institutional financial world, increasingly we are digital and
Speaker 1: digitizing all of this. How do you think about that
Speaker 1: in terms of investing and and kind of account for
Speaker 1: those worries those risks potentially. Yeah, I know, it's so
Speaker 1: incredibly important, and you know, as as the fintech investor,
Speaker 1: that's that's got to be something that that that we
Speaker 1: pay attention to all day, every day. And I think
Speaker 1: one of the challenges um certainly that that we're seeing is,
Speaker 1: you know, in the hype of of all the you know,
Speaker 1: you asked earlier about how much money is coming to
Speaker 1: the sector, and you know, if that's going to places responsibly,
Speaker 1: I think you have to be really careful that that
Speaker 1: not only the companies you're backing understand how important it
Speaker 1: is to operate and regulated markets and to focus on
Speaker 1: things like security. Because there's just so much money floating
Speaker 1: around that it gets to a point where people might
Speaker 1: just say, well, that will just be something I think
Speaker 1: about on the side, But this is the real deal, right,
Speaker 1: And when we're back a company, a lot of times
Speaker 1: just starting with with ideas that haven't yet fully formed
Speaker 1: themselves and so their systems are not mature. But you've
Speaker 1: got to be conscious if you're gonna build a startup
Speaker 1: using technology in financial services that it operates in an
Speaker 1: already regulated and and and you know, it's it's the space.
Speaker 1: I don't know. I mean, I guess I'm trying to
Speaker 1: try to to to sort of think about some of
Speaker 1: the you know, big billion billion dollar companies that we've
Speaker 1: heard about that have made some you know, haven't really
Speaker 1: been so great about paying attention to how they're protecting
Speaker 1: their customers and their consumers. And it does worry me,
Speaker 1: worry me very much. That was Amy no Yakis, the
Speaker 1: co founder and CEO at the digital financial services investment
Speaker 1: firm Anthemus, also the founder and CEO of Archer Gray
Speaker 1: Still ahead on Bloomberg Business Week too, and we're going
Speaker 1: to stay in the VC world. Stay tuned for a
Speaker 1: wide ranging conversation with Alan patrick Off of Greycroft Ventures,
Speaker 1: also of Primetime Partners. This is Bloomberg Broadcasting from the
Speaker 1: financial capital of the world, Bloomberg He Love in Frio
Speaker 1: in New York, to Washington, d C. Bloomberg to Boston,
Speaker 1: Bloomberg one oh six one to San Francisco, Bloomberg nine
Speaker 1: sixty to the country Sirius XM Chado one nine team,
Speaker 1: and around the globe the Bloomberg Business app and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Business Week. The next
Speaker 1: guest is a familiar named our audience. He is Alan Patrick,
Speaker 1: a highly accomplished venture capitalist. He helped building grocerge companies
Speaker 1: as America Online, Office Depot, Apple Computer, and Audible, just
Speaker 1: a few well companies ready heard of them. He now
Speaker 1: serves as Chairman emeritus of Great Craft Adventurers. It's a
Speaker 1: firm that he co founded. He's also the co founder though,
Speaker 1: of Primetime Partners. Really playing into the aging population there.
Speaker 1: We started off the conversation now talking about supply chains.
Speaker 1: I echo, what the set up I'm seeing at every place?
Speaker 1: And uh, you know, people when they tend to hear
Speaker 1: this chip shortage, they think of computers, but it really
Speaker 1: permeates everything. It's medical devices, it's uh, simple things you
Speaker 1: use in the every day. It's your it's your toaster, ovens, something.
Speaker 1: Chips are every place and that's one major hole back
Speaker 1: and it's affecting a lot of industry and their shortages
Speaker 1: all over in their delays. I mean you, I'm sure
Speaker 1: you've experience yourself. It's something you wanted. They said, I'm sorry,
Speaker 1: it's going to be a one month or two months
Speaker 1: because we don't have we've all been there and get
Speaker 1: ready for the holiday seas we had We just had
Speaker 1: our ed Ludlow at on the l A Ports and
Speaker 1: just you see all the container ships just you know,
Speaker 1: piling up. And I want to go back to something
Speaker 1: that you said, because you mentioned members of Congress, and
Speaker 1: I think a lot of people listening right now would say,
Speaker 1: wait a second. We don't really see many guard rails
Speaker 1: on what members of Congress are are not allowed to
Speaker 1: do when it concentrating activity, and it's come under screening
Speaker 1: many times in recent years. Do you think their neat
Speaker 1: to be more? There needs to be more regulation about
Speaker 1: what members of Congress cannon can't do when it comes
Speaker 1: to buying and selling stocks, whether it's judges or people
Speaker 1: in political positions. We want to feel that they are
Speaker 1: independent and their user independent, and there couldn't possibly be advised. Now.
Speaker 1: I am not accusing or even thinking that people are
Speaker 1: you know, wantedly violating rules and taking advantage of it,
Speaker 1: but there there should be something in place in general
Speaker 1: that just eliminates that possibility. And and I do wonder
Speaker 1: about you know, company CEO s leaders that you talked to,
Speaker 1: portfolio companies that you guys are invested in. Are you
Speaker 1: hearing from everyone that it's just really difficult out there
Speaker 1: when it comes to the supply chain, It's pervasive. That's
Speaker 1: why I say, I don't think it makes any difference
Speaker 1: what industry, whether you're in cybersecurity area or whether you're
Speaker 1: in a new medical device or I'm sure boat manufacturers
Speaker 1: have the problem of supply sources for their radar systems.
Speaker 1: I mean, it's uh for in for red system. I mean,
Speaker 1: it's just that there is definitely a backlog created by
Speaker 1: the pandemic, created by lack of personnel and a lot
Speaker 1: of companies who were down. How do you see the economy?
Speaker 1: You can only imagine and I'm sure you have it
Speaker 1: with colleagues and friends and peers. How many conversations that
Speaker 1: we obviously have about just trying to figure out where
Speaker 1: we are in this economy. Certainly coming on the heels
Speaker 1: of last week's FED meeting, you know where j Palell
Speaker 1: not worried really about inflation. Um, a lot of metrics
Speaker 1: have gotten better, but there's still a lot to improve.
Speaker 1: How do you see where we are in this economy
Speaker 1: and where we're going? It? Is the FED policy appropriate
Speaker 1: in your view? Yeah? I think it is appropriate, and
Speaker 1: I think that uh, there there's got to be a
Speaker 1: gradual tightening, and uh inflation is much more of some
Speaker 1: concern than it was probably three or four or five
Speaker 1: months ago. I think there is an upset and that
Speaker 1: I believe do believe that the ending of the unemployment
Speaker 1: benefits and special benefits fially given as a result of
Speaker 1: the COVID, which were very much needed, UH, have now
Speaker 1: put a lot of people in a position where, uh
Speaker 1: they're not going to have choice but had to have
Speaker 1: to go back to work. So I think we're going
Speaker 1: to gradually see the employment picture. UH continue to approve
Speaker 1: as people, but we do. We do still continue out
Speaker 1: and to hear from executives at companies around the country
Speaker 1: that have such a hard time getting talent right now,
Speaker 1: whether that's in warehouses or in the c suite. And
Speaker 1: I wonder what your portfolio companies are telling you about
Speaker 1: trying to get talent right now. We had frankat Sutas
Speaker 1: from Cisco Systems on last week and she said, you know,
Speaker 1: they're raising their salaries what, Carol was five percent? Yeah,
Speaker 1: pretty and in order to get people to come work
Speaker 1: for them. What are you hearing from your portfolio companies
Speaker 1: the same ditto. I mean, it's everybody's having problems. On
Speaker 1: the other hand, uh, it is pushing wages up, which
Speaker 1: is an inflation factor. So I think that we're going
Speaker 1: to see more of that, and uh, you know, the
Speaker 1: minimum wage may end up being an academic discussion in
Speaker 1: terms of what people really are having to pay to
Speaker 1: attract people to join the workforce. But I I see
Speaker 1: that gradually evening itself as certainly as soon as people
Speaker 1: have are fully vaccinated, all these things are going to
Speaker 1: work towards a better situation, certainly as we go into
Speaker 1: the Christmas season and and uh coming into the spring.
Speaker 1: So I think that I think this thing will work
Speaker 1: itself out. But at the moment, I can see a
Speaker 1: lot of inflation prescious appearing. That's Alan patrick Off, chairman
Speaker 1: emeritus and co founder great Croft Ventures. He's also co
Speaker 1: founder of Primetime Partners. You're listening to Bloomberg Business Week.
Speaker 1: Coming up next, part two of our conversation with the
Speaker 1: well known VC investor Alan patrick Off. We're gonna get
Speaker 1: his thoughts on the find An agenda and how proposed
Speaker 1: tax hikes could impact venture capital as well as US
Speaker 1: business and ustment. More broadly, more with Alan patrickof is
Speaker 1: coming up. This is Bloomberg. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik
Speaker 1: from Bloomberg Radio. Well, we know the White House has
Speaker 1: some big fiscal spending plans to him. We talked about
Speaker 1: this a lot throughout the week. The Biden administration wants
Speaker 1: a multi trillion dollar plan that covers soft and hard infrastructure. Well,
Speaker 1: one of the ways to help pay for it could
Speaker 1: be doing away with a tax break that let's the
Speaker 1: tech industry's wealthiest people shield some of their earnings from
Speaker 1: the Internal Revenue Service. We're now from our conversation with
Speaker 1: Alan Patrikoff of Great Croft Ventures and Primetime Partners on
Speaker 1: potential changes to the tax code in support all along
Speaker 1: of making carried interest into ordinary income. And that is
Speaker 1: front and center the the major point of almost anyone
Speaker 1: in the adventure or the private at the or the
Speaker 1: real estate business. Uh, it's been an abused to the system.
Speaker 1: Carried interest is ordinary income. I'm saying that in my opinion,
Speaker 1: but it's a fact. I mean, it's part of how
Speaker 1: you get your earnings and I benefited from it, and
Speaker 1: I'm willing to be outspoken and saying I think it's
Speaker 1: something that should be addressed. I mean there left and
Speaker 1: the last change it would took from one year capital
Speaker 1: gains per to three years. Now propose was to go
Speaker 1: to five years UH to be eligible for carrot interest
Speaker 1: capital gains treatment. But basically carrot interest is ordinary incomb
Speaker 1: and I'm happy to debate that with anyone. Uh. Now,
Speaker 1: what the QSPS situation is a particular feature that's been
Speaker 1: around since when it came in with the with the
Speaker 1: Clinton tax code change at that time, and it didn't
Speaker 1: have very much impact in stimulating business because it was
Speaker 1: also said by the a m T and it was
Speaker 1: only a benefit uh. And so really it's not many
Speaker 1: people used it is only in two thousand eight when
Speaker 1: President Obama, to stimulate activity in the small business area
Speaker 1: change it and then eliminated the offset of the a
Speaker 1: MT that it really had benefit. And since that time
Speaker 1: it's been used very very broadly by not just I
Speaker 1: hate to hear the pejorative a millionaires and billionaires. It's
Speaker 1: a it's a little bit overstatement that it's it's used
Speaker 1: by anyone who's that should be used frankly by anyone
Speaker 1: who's starting up a young company which has enormous risks
Speaker 1: associated including including the entrepreneurs who are the biggest beneficiary.
Speaker 1: If you start your own company, you benefit from TSPs,
Speaker 1: just like the investors get benefits from And a lot
Speaker 1: of people have relied on that since, uh, certainly since
Speaker 1: two thousand eight, in many cases before that, where they
Speaker 1: didn't have the concern about the offset of the MC.
Speaker 1: So there are a lot of people with lots of
Speaker 1: investments in their portfolio that are are expected when they
Speaker 1: realize some of them. If you think about it, they've
Speaker 1: been there since two thousand and eight, they've been there
Speaker 1: thirteen years, and they haven't realized on the profits of
Speaker 1: the investment. Uh, but they've realized the losses in many cases.
Speaker 1: I mean, it's a very high loss ratio and starting
Speaker 1: up and building young companies. And it's only for companies
Speaker 1: up to raising a total of fifty million dollars, which
Speaker 1: may seem like a large money about but it really
Speaker 1: isn't because myotech industries includes a lot of capital intensive
Speaker 1: industries and it's to take care of that early stage.
Speaker 1: And now the proposal is wrapped in here and slipped in.
Speaker 1: I don't mean deviously slipped in, but it's slipped into
Speaker 1: the system, which is to cut it for for anyone
Speaker 1: with incomes of over four hundred thousand dollars, which is
Speaker 1: going to affect a lot out of entrepreneurs as much
Speaker 1: of not more so than the investors. And I'm open
Speaker 1: minded to the fact that, Okay, going forward, perhaps they
Speaker 1: wanted good thing. The president needs tax income from various sources,
Speaker 1: and of course you read when you needed, you reach
Speaker 1: out any place you can. But I think the first
Speaker 1: thing is to deal with people who have invested on
Speaker 1: the basis of expecting this to be qualified under the
Speaker 1: q SPS twelve or two of the tax code. And now, uh,
Speaker 1: then there's a second part, which is going forward. Now
Speaker 1: going forward, I think there's certainly room for coming in
Speaker 1: with some constructive approach to that benefit, but nixing the
Speaker 1: two is really to me. Uh there do you do
Speaker 1: you agree with the President and many Democratic politicians who
Speaker 1: say that the wealthiest Americans are not paying their fair share? Absolutely,
Speaker 1: I totally support the president. I support infrastructure bill. Both
Speaker 1: both bills that are being uh discussed, negotiated, compromised, hopefully
Speaker 1: and I would certainly do anything I could to help
Speaker 1: help get it get it passed, and I think it's
Speaker 1: essential for the Democrats that it gets gets passed. And
Speaker 1: I think that uh, we have an unfortunately a bifurcated
Speaker 1: UH economy by bifurcated system in this country where we
Speaker 1: do have a lot of people who have benefited I
Speaker 1: would say unfairly, but have benefited to such extremes and
Speaker 1: while we at the same time we have a lot
Speaker 1: of people who are are just not participating and this
Speaker 1: has to be addressed. If we don't address it, what
Speaker 1: is the best way to address it? You mentioned the
Speaker 1: closing the carried interests loophole that many would many would
Speaker 1: argue is well, but what are the other best ways
Speaker 1: to address it? Well, I think there is a way
Speaker 1: of addressing income and how income is tax and particularly
Speaker 1: uh CEO disparities compared to other people working on the company.
Speaker 1: And UH, I don't know, I don't want to. I'm
Speaker 1: not a socialist. I'm a capitalist first and foremost that
Speaker 1: I've been that for all my life. But I do
Speaker 1: think that gets to a point where you know, enough
Speaker 1: is too much. UH. And I think that we you know,
Speaker 1: we have, you know, the billionaires of this country. Uh,
Speaker 1: perhaps we have to find a way where there's some
Speaker 1: kind of mechanism. And I don't have the answers. I'm
Speaker 1: not in Congress, and I'm not legislating it, not the
Speaker 1: tax policy, but there there's got to be a way to,
Speaker 1: uh find a way where we have some more equality
Speaker 1: in the sense not that everyone is going to be
Speaker 1: treated the same, but that there has to be there's
Speaker 1: just too much differential between the tops and the bottom.
Speaker 1: I think I think the President's tax still goes does
Speaker 1: go towards ameliorating that to some uh some extent with
Speaker 1: the earned income tax credits and and helping poor people
Speaker 1: in terms of subsidies for their care, for home care, childcare.
Speaker 1: All those things contribute to help helping solves some very
Speaker 1: serious burdens that people are bearing. Hey, Alan, you know
Speaker 1: some of our reporting that we've done is said that
Speaker 1: some people who have been holders of qsbs UM have
Speaker 1: been rushing to sell their shares to hoping that they
Speaker 1: can claim a full tax break on next year's ten
Speaker 1: forty form just in anticipation. Have you seen signs of this?
Speaker 1: I mean, I think part of tax code is so complicated,
Speaker 1: and I think there are lots of moving parts. To
Speaker 1: tell you, YEA let me the answers. No, I haven't
Speaker 1: seen it. A b if I read it correctly, it
Speaker 1: wasn't too much good because it's effective the thirteenth, so
Speaker 1: that doing it today is kind of the the barn
Speaker 1: doors closed. I mean, for ample, we have two companies
Speaker 1: are in the process of being sold, both of which
Speaker 1: are qsps that we're in. We're in both these particular
Speaker 1: companies one to seven years and one the thirteen years
Speaker 1: since two thousand eight to that maybe two thousand nine,
Speaker 1: and we haven't completed the sale, and based on what
Speaker 1: is pending and what's possible, they will not be eligible
Speaker 1: to the qusps. So and we couldn't accelerate the sale anyhow.
Speaker 1: I mean, companies don't get solid. These are not on
Speaker 1: the stock market. These things that are private companies, and
Speaker 1: these are private transactions. I can't even disclose to you
Speaker 1: much less realize on the on it capitalize on qsps.
Speaker 1: It will when it when it comes, it will depend
Speaker 1: on what the tax system is at the time and sold.
Speaker 1: But but the shame is that it was invested in
Speaker 1: a time with the incentive of q SPS taxation. Well,
Speaker 1: so what is your expectation, Allen, if if this changes,
Speaker 1: if indeed present find the Democrats or some of them
Speaker 1: get this through, how do you think it would change?
Speaker 1: It would impact the venture capitals scene, because I think
Speaker 1: there's often arguments saying, you know, people aren't going to
Speaker 1: invest in innovation, uh and so on, and yet it
Speaker 1: does continue. I find it hard to believe that you
Speaker 1: might think twice maybe, but I find it hard to
Speaker 1: believe that venture capitals would pull back completely. I think
Speaker 1: you know, but help me. You're not wrong. You're not wrong.
Speaker 1: It's not gonna market, it's not going to shut down.
Speaker 1: I do think this is just an added incentive for
Speaker 1: people to take risk. I mean, it's a lot easier
Speaker 1: to be in the private equity business of being the
Speaker 1: stock market. If you don't like it, If you don't
Speaker 1: like the stock market and you don't like your company,
Speaker 1: the next day you sell it, I mean, or the
Speaker 1: next hour or the next minute by it and sell it.
Speaker 1: You don't like it when you're in it. When you're
Speaker 1: in a private transaction, you're in it for life. I mean,
Speaker 1: you're until something happens at a liquidity event. So you
Speaker 1: become a partner in that business. You may have be
Speaker 1: the partner, but you in effect or long term partner.
Speaker 1: I just gave you an example of a company we've
Speaker 1: been in thirteen years, twelve years, I'm not sure the
Speaker 1: exact date. And uh, we haven't had the ability to
Speaker 1: sell for twelve years. Uh yeah, and uh we took
Speaker 1: a high risk at a burg. Almost all these companies
Speaker 1: were remembered ground zero when they started right and uh
Speaker 1: and the fact that they succeeded. Uh, it doesn't talk
Speaker 1: about all the losses we've incurred in various other companies
Speaker 1: that were q STS qualified that died on the way.
Speaker 1: That's Alan Patrikoff, chairman emeritus and co founder of Great
Speaker 1: Craft Ventures and co founder of Primetime Partners. That wraps
Speaker 1: up the first hour of the weekend edition of Bloomberg
Speaker 1: Business Week from Bloomberg Radio. I'm Tim Stanback and I'm
Speaker 1: Carol Masser. Ahead in our next hour, we're going to
Speaker 1: dig into our cover story this week. It's the practice
Speaker 1: of insider trading and how it appears to be flourishing
Speaker 1: in the US, but much of it is beyond the
Speaker 1: reach of regulators, and there seems to be little interest
Speaker 1: in clamping down. Plus, if you've ever thought about planting
Speaker 1: your flag in a new place, you may want to
Speaker 1: consider it doing it in another country and getting a
Speaker 1: new passport too, well, if you can afford it. We're
Speaker 1: gonna break down the growing trend of investment to migration.
Speaker 1: So we're talking to passports, dose dose, alright, looking forward
Speaker 1: to that. This is Bloomberg. This is Bloomberg Business Week
Speaker 1: inside from the reporters and editors who bring you America's
Speaker 1: most trusted business magazine, plus global business, finance and tech
Speaker 1: news as it happened, Sloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. I
Speaker 1: am Carol Masser and I'm Tim stock Clinia. In our
Speaker 1: second hour of the weekend edition of Bloomberg Business Week,
Speaker 1: including investment migration, We're going to explore the growing trend
Speaker 1: of wealthy individuals pursuing citizenship in countries other than their own.
Speaker 1: We say wealthy because it's not cheap to do. Yeah,
Speaker 1: I mean we're talking hundreds of thousands of dollars depending
Speaker 1: where you want to. Plus, the coffee and wine businesses
Speaker 1: facing challenges ranging from climate change to supply change shocks.
Speaker 1: We're gonna learn about a series of entrepreneurs who are
Speaker 1: overcoming these hurdles and thriving in highly competitive markets. First
Speaker 1: up this hour. This week's cover story also a Bloomberg
Speaker 1: Big take this week all about successful traders who appear
Speaker 1: to have more than just luck and sound research on
Speaker 1: their side. How do we deal with insiders winning trades.
Speaker 1: It's one of the biggest regulatory conundrums in finance, and
Speaker 1: to break it down, we spoke to a business wee
Speaker 1: getitor Joel Webber, along with Bloomberg News Projects and Investigations
Speaker 1: reporter Liam Van. Inside of trading always likes its head
Speaker 1: like it was. It was really big in the eighties
Speaker 1: with Michael Millcould and Boski and then again you know
Speaker 1: when you had Sack Capital and pre Berara and stuff.
Speaker 1: But the thing is, like the stories keep coming, but
Speaker 1: the issue never goes away. And I think fundamentally the
Speaker 1: reason for that is that the law in America around
Speaker 1: inside of trading is just really shoddy and isn't really
Speaker 1: up to the task. Um So, for example, there's no
Speaker 1: crime of insider trading in America in the same way
Speaker 1: that there is in the UK or in other places. Um,
Speaker 1: what happens in America is that you have to charge
Speaker 1: people with securities fraud UM, and it's all done via
Speaker 1: kind of case law. There isn't an insider trading statue,
Speaker 1: even though people are pushing for that UM and essentially
Speaker 1: that really raises the bar but behind bringing these cases,
Speaker 1: because to prove fraud you have to demonstrate this thing
Speaker 1: called scienceer which is like criminal intent. So you have
Speaker 1: to demonstrate that this inside the trade and you their
Speaker 1: head inside infimation and liberally set out to take advantage
Speaker 1: of it UM. And the problem with that is that
Speaker 1: even though you can sort of see what the CEO
Speaker 1: keeps getting very lucky, they can turn around and say, well,
Speaker 1: if you look at the information that was in the
Speaker 1: public domain already, you know it was pretty obvious that
Speaker 1: the shares were going to go up, or you know,
Speaker 1: I just had better ability to judge what was ready
Speaker 1: out there, and it's very hard to prove them wrong.
Speaker 1: And if you think about like normal insider trading cases
Speaker 1: that you think of like the sack capitals of this world,
Speaker 1: and hopefully if you're a prosecutor, you'll find some email
Speaker 1: or find some witness whereas in this it's really just
Speaker 1: all going on in the executive's head. Um. Well, so
Speaker 1: you know, I spoke to a bunch of you know,
Speaker 1: x SEC folks, ex prosecutors, and they all said that
Speaker 1: these cases are just absolute pigs and that's why they're
Speaker 1: largely you know, it's almost like an unprosecutable crime essentially,
Speaker 1: meaning that they're not necessary isn't necessarily a case There
Speaker 1: you're saying, well, it's just incredibly hard to demonstrate wrong
Speaker 1: for criminal prosecutors. Yeah. Liam, What I found so fascinating
Speaker 1: about this was that even you know, some government lawyers
Speaker 1: who you talked to question how much damage the executive
Speaker 1: trading really causes, which makes me think it's like, wait
Speaker 1: a second, is it really is it a victimless Yeah,
Speaker 1: that that really struck out to me about this story.
Speaker 1: So explain that because not everybody thinks this is necessarily
Speaker 1: that bad. Well, I think that's the thing that really
Speaker 1: appealed to me about the story. It's the kind of
Speaker 1: moral and philosophical questions that it it raises. So you've
Speaker 1: got someone like pret Berrara, who kind of made his
Speaker 1: name as the Sheriff of Wall Street, and he brought
Speaker 1: down all these insider traders, and then a load of
Speaker 1: his cases ended up having to be quashed because just
Speaker 1: down to this you know, function of this kind of
Speaker 1: squiggly law and the case law. But he would argue, look,
Speaker 1: it's about fairness. Like fundamentally, um, you know, elites in
Speaker 1: society shouldn't have an advantage when you know, trading our
Speaker 1: financial markets over other people. And even if the losses
Speaker 1: are small or they're disparate and spread out, that's you know,
Speaker 1: fundamentally the principle at stake. Whereas other people, particularly economists,
Speaker 1: so around and say, well, actually, you know, by trading,
Speaker 1: these guys are helping making markets more efficient because they
Speaker 1: make disclosures. People can look at the discloses and ultimately
Speaker 1: it kind of helps wheel the grief the wheels of capitalism.
Speaker 1: And therefore it's a bit like you know, I sort
Speaker 1: of make the analogy of of like drug enforcement. It's
Speaker 1: almost like an unwitnable thing. So prosecutors will be better
Speaker 1: off just ignoring it all together and accepting that this
Speaker 1: is kind of part and parting of the way that
Speaker 1: the world works. So pick your side. This is it's
Speaker 1: also rather tamely because you know, we have new new
Speaker 1: chair in SEC. There's been some shatter in d C.
Speaker 1: What what what has been that chattering? And where could
Speaker 1: we see this this conversation go on the regulatory front. Yes,
Speaker 1: so there's two. One is at the higher level political
Speaker 1: legislative level, where they're talking about actually introducing insider trading
Speaker 1: statutes and rules which would have a quite profound impact.
Speaker 1: And then there's the more kind of rule based stuff
Speaker 1: that's going on at the SEC where they have actually
Speaker 1: talked about and it looks like it could have a
Speaker 1: quite quickly reforming one of the main culprits of this
Speaker 1: whole story, which is these kind of they're called ten
Speaker 1: B five trading plans. Basically, what it is, if you're
Speaker 1: an executive and you want to sell your stock, you
Speaker 1: could enter a plan with like a third party that
Speaker 1: says I'm going to trade x amount of stock over
Speaker 1: this period of time. But the problem is these things
Speaker 1: are kind of right with loop holes, and um, you know,
Speaker 1: it's been various kind of research showing how how vulnerable
Speaker 1: they are to abuse. So it looks like at least
Speaker 1: on that side of things, on the trading plans thing,
Speaker 1: there could be some movement. But again the way that
Speaker 1: the law has written. My you know, my understanding of
Speaker 1: people are spoken to. He says that there's only certain
Speaker 1: things they could do. They can't completely solve the problems
Speaker 1: in the way that they'd like to without ripping up
Speaker 1: the rule because and rewriting the hole inside of trading. Look.
Speaker 1: That was Bloomberg News Projects and Investigations reporter at Liam
Speaker 1: Vaughn along with a Business Week editor Joel Webber. You're
Speaker 1: listening to Bloomberg Business Week coming up. You may have
Speaker 1: considered buying a second home, a second car, perhaps, what
Speaker 1: about a second passport and why the demand for dual
Speaker 1: citizenship is skyrocketing, especially among wealthy Americans. We're going to
Speaker 1: explore the concept of investment migration. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovik from Bloomberg Radio. So, investment migration, it's
Speaker 1: a growing trend where citizens of one country look to
Speaker 1: gain residency in another for a variety of purposes. It
Speaker 1: could be estate planning to being able to start a
Speaker 1: new business that carries a smaller tax burden. Esidine Solomon
Speaker 1: is a managing partner for North America at Latitude Consultancy.
Speaker 1: It's a residency and citizenship by Investment Advisory Firm, which
Speaker 1: is seen a three jump in Americans seeking dual citizenship
Speaker 1: over the last year. Getting a second passport or resident
Speaker 1: for a wealthy individual is an important part of their
Speaker 1: wealth or you know, their legacy planning. Really when they're
Speaker 1: looking at you know, how they're going to plan for
Speaker 1: the future, what they're going to leave to their children,
Speaker 1: the future generation, a second passport is very powerful. Another
Speaker 1: reason is mobility. Really in the last year, Americans have
Speaker 1: had their wings really and um, you know, getting a
Speaker 1: second passport really gives them that option or that freedom
Speaker 1: of you know what, now is the time for me
Speaker 1: to go in a different country or in a different continent. Um.
Speaker 1: And then you know, finally, uh, it really is a
Speaker 1: lifestyle play. Uh. You know, many Americans and many clients
Speaker 1: are seeing that. You know, I'd like the option to live, work, travel,
Speaker 1: whether it's in Europe or different parts of the world.
Speaker 1: And you know, that freedom or those options are really powerful.
Speaker 1: So I am curious if somebody's listening to be like,
Speaker 1: is this the way to avoid paying taxes or something?
Speaker 1: Tell us, you know, what is your typical client? Who
Speaker 1: are the demographic of people that you tend to work with? UM,
Speaker 1: give us an idea. Yeah, Well, the reality is, I mean,
Speaker 1: you know, Americans are taxed on their worldliding. So whether
Speaker 1: you have one press forward or ten, you know, it's
Speaker 1: it's not about avoiding taxes. The usual the typical client
Speaker 1: is you know, someone who is looking to live or
Speaker 1: spend a signific amount of their time in a different country.
Speaker 1: Someone that's looking for a plan B. But mostly it's
Speaker 1: I mean wealthy families. So if you're looking to invest
Speaker 1: anywhere between you know, two hundred thou euros up to
Speaker 1: a million euros. Uh. You know, we've had those conversations
Speaker 1: and typically you know, before the pandemic, we've seen a
Speaker 1: lot of smart money. I really get into this, whether
Speaker 1: it's for you know, uh crises, a pandemic, a global crisis. Uh.
Speaker 1: You know, clients are looking at the best place to live,
Speaker 1: what's the safe place? And you know, most recently, actually
Speaker 1: your your previous guest was talking about you know, uh,
Speaker 1: climate change. You know, we have clients that are looking
Speaker 1: for the cleanest place, the place with the best food,
Speaker 1: the best air, and the best environment. So It really
Speaker 1: depends on you know, our clients needs and what the
Speaker 1: family is looking for. Well, right now, Europe. Europe is
Speaker 1: the next best thing I can tell you right now, um,
Speaker 1: just because you know, by getting a citizenship or by
Speaker 1: getting a passwork from Europe, um, you know, you have
Speaker 1: access to all the countries. Meaning so if you have
Speaker 1: a German passwork tempt you can go live in France.
Speaker 1: You can live in Germany, you can work in Spain,
Speaker 1: you can buy home in Italy. So it really gives
Speaker 1: you all the options that our clients are looking for
Speaker 1: um and they're there. You know, their needs are global
Speaker 1: and that's what we're there to do. So is it
Speaker 1: older people who tend to tap into this and just
Speaker 1: curious a little bit more about the demographics? Yeah, so
Speaker 1: it really ranges. Typically our clients range anywhere between you know,
Speaker 1: you have the new tech investors, you have people that
Speaker 1: are you know in their their their golden ages that
Speaker 1: are really planning for retirement. UM. So it really depends
Speaker 1: on the needs. But I could tell you it's a
Speaker 1: dealer between thirty and you know even sixty or sixty
Speaker 1: five um. And and that's really how much does function
Speaker 1: is really what's motivating them? I'm sorry, how much does
Speaker 1: it cost to go through with this? Tim and I
Speaker 1: were both thinking like okay, so all right, let's get
Speaker 1: down of the dating pretty Yeah, well that's that's usually
Speaker 1: the first question. So, UM, it's a typically range between
Speaker 1: a hundred thousand for a second passport, you know, either
Speaker 1: from the Caribbean or a second passport from your range
Speaker 1: anywhere between five hundred thousand to over a million euros.
Speaker 1: And it's typically no, I was just going to say,
Speaker 1: it's typically something that's done remotely. Um, there is you know,
Speaker 1: a process, but we walk you through that, um and
Speaker 1: everything is done. You know, it's really a turnkey solution
Speaker 1: that we offer. Well, so it's a it's a hundred
Speaker 1: thousand dollars, Where does that money go? I mean that
Speaker 1: includes your fee? Or does that are those fees paid
Speaker 1: to the country that you're you're going to or does
Speaker 1: it do you need to you know, buy property that
Speaker 1: has an associated all you have that much? Where does
Speaker 1: you know? So it's either you could either go into
Speaker 1: a fund, whether you know it's a hurricane relief fund
Speaker 1: or an economic development fund, or it could even be
Speaker 1: a real estate play where you know, clients are buying
Speaker 1: vacation homes or second residencies. Um. And then most cases,
Speaker 1: you know you can either invest in the business, you know,
Speaker 1: start your own company, or again you know, just donate
Speaker 1: directly to a fund that would encourage social and economic
Speaker 1: development in that country. So, um, if it's Europe, typically
Speaker 1: it's a it's a real estate play. When it comes
Speaker 1: to different places that you could tap into getting another passports,
Speaker 1: whether it's the Caribbean, whether it's Europe, I mean is
Speaker 1: what what are the differences? It is just access or
Speaker 1: what's different? Yeah, well, it's really access. And like I said,
Speaker 1: you know, having a second passport, the next best thing
Speaker 1: would be Europe just because it opens the door to
Speaker 1: all of those countries, meaning you know, if you could
Speaker 1: spend as much time as you want in you know,
Speaker 1: over twenty countries on any given moment. That is really
Speaker 1: the golden UM. And a lot of clients what they're
Speaker 1: doing is if you get a second possible from Europe,
Speaker 1: that that is something that's passed down to generations. So
Speaker 1: those are typically what our clients are looking for. Um,
Speaker 1: you know, mobility, freedom and something that you know we
Speaker 1: can give to the next generation. So if you get it,
Speaker 1: you can pass it down at no cost to your kids.
Speaker 1: That's yeah, that's correct. How busy have you been over
Speaker 1: the last past year or so the last couple of years. Well,
Speaker 1: we've we've been very busy. I mean the US right
Speaker 1: now is our most important market. And like I said,
Speaker 1: that's why we opened our office here. Um and you know,
Speaker 1: the the smart money is what started it. But now
Speaker 1: it's becoming more and more popular. And you know we
Speaker 1: work with Loft Runs Family Offices and they're catching onto this.
Speaker 1: So yeah, quite busy. Actually, that's Ezitene Solomon, Managing partner
Speaker 1: for North America at Latitude Consultancy, Carol. Where would you go?
Speaker 1: Oh gosh, probably somewhere in Europe because if you get
Speaker 1: you know right, it opens up all of Europe to you.
Speaker 1: But it's expensive up start vent you have two passport?
Speaker 1: I do, I do, but I didn't you know, buy
Speaker 1: citizenship right. I was able to get it through my family.
Speaker 1: But I haven't traveled much on my European passport. But
Speaker 1: it's interesting, right to have that flexibility you haven't used now,
Speaker 1: I haven't. I've used it a little bit, but um,
Speaker 1: you know, I haven't done much traveling recently and a
Speaker 1: lot of the places that I've gone to, um you
Speaker 1: could get in just as easily with an American passport. Well,
Speaker 1: and it's interesting if you're an American but still have
Speaker 1: maybe a second passport, you still have to pay American taxes.
Speaker 1: Of course wherever you, guys will find you all right,
Speaker 1: still to come on Bloomberg Business Week. Coffee and wine.
Speaker 1: There are two of our favorite things. Sometimes they go
Speaker 1: well together after a nice meal. Uh. There are also
Speaker 1: two industries though facing serious global challenges. We're going to
Speaker 1: talk about how entrepreneurs are surviving and thriving amid climate
Speaker 1: change and supply chain troubles. This is Bloomberg Broadcasting from
Speaker 1: the financial capital of the World, Bloomberg in Rio in
Speaker 1: New York, to Washington, d C. Bloomberg to Austin, Bloomberg
Speaker 1: one O six one does San Francisco, Bloomberg nine sixty
Speaker 1: to the country Sirius XM Chado one nine team, and
Speaker 1: around the globe the Bloomberg Business app and Bloomberg Radio
Speaker 1: dot Com. This is Bloomberg Business Week newing coffee supply.
Speaker 1: It was founded and it is led by a first
Speaker 1: generation Vietnamese American she's the daughter of refugees. We're talking
Speaker 1: about Sarah new In. The young entrepreneur is based in Brooklyn,
Speaker 1: but she sources her beans from the world's second largest
Speaker 1: coffee producer, her family's home country of Vietnam. Sara joined
Speaker 1: us on National Coffee Day to talk supply chains, the
Speaker 1: cost of doing business finding workers in a highly competitive
Speaker 1: coffee market. She understanding how honestly, I feel like it's
Speaker 1: actually really easy because as crowded as a coffee market
Speaker 1: feel actually, there's literally no one else offering a single
Speaker 1: origin Vietnamese roboosta coffee, right, And it was because like
Speaker 1: we we pride ourselves and being a direct trade importer,
Speaker 1: because no one else was offering this. And I couldn't
Speaker 1: even buy single or die Vinese coffee from a green
Speaker 1: bean buy or importer because no one was paying attention
Speaker 1: to Vietnam as especialty coffee producer. Right, So where do
Speaker 1: where do Vietnamese beans usually go? Um? Well, actually, interestingly enough,
Speaker 1: the top three imports the Vietnice coffee beans are Germany,
Speaker 1: United States, and Italy. Right, However, it's often being pushed
Speaker 1: into you know, nondiscrete blends or maybe instant coffee products
Speaker 1: and so a lot of people aren't aware that they're
Speaker 1: drinking Vietnamese coffee already. We talk so much with heads
Speaker 1: of companies, leaders of institutions. We're talking about supply chain
Speaker 1: management and the bottlenecks. What are you seeing specifically, and
Speaker 1: that has to do with getting your coffee beans, but
Speaker 1: also workforce and let's talk about beans first. Can you
Speaker 1: get everything you need and does it cost more or less? Yeah?
Speaker 1: So at this uncture, we're able to get everything we
Speaker 1: need and candidly, our prices have not changed because a
Speaker 1: lot of the price fluctuations that we're hearing about the
Speaker 1: news is really related to a rappic of farms um
Speaker 1: that in like South America and whereas yet now because
Speaker 1: their primary production is robusa, we haven't been affected yet.
Speaker 1: What about when it comes to shipping. We've been checked
Speaker 1: in earlier this week with I'd love though he was
Speaker 1: at the port of Los Angeles. Dozens of ships just
Speaker 1: stuck there. Um, so yeah, how much is it costing
Speaker 1: you to to to get your beans? Yeah, shipping has
Speaker 1: been horrible. It has been super back and congested. I
Speaker 1: say the cost of shipping for us we're getting container
Speaker 1: has quadrupled um and and we're super backed up. However,
Speaker 1: we've been preparing for this, so we've just been calling
Speaker 1: our orders way away in a van, so we haven't
Speaker 1: run into any inventory issues yet. Fortunately, what about workforce?
Speaker 1: Can you get everybody you need or you're having to
Speaker 1: pay up um for those employees. I'm not quite sure
Speaker 1: how big your company is and how many workers you've got. Yeah,
Speaker 1: so our company is currently five full time and it
Speaker 1: will also have about eight part time people in production. UM.
Speaker 1: Workforce is challenging on this UM. You know, always had
Speaker 1: to turn over and it is. It's like a workers
Speaker 1: market right now in New York City. UM. But fortunately
Speaker 1: we haven't had too many challenges there, meaning you how
Speaker 1: had to raise wages or you have not had trouble
Speaker 1: getting talent or holding onto them. Yeah, we haven't had
Speaker 1: trouble getting talent. We do have to hire, but we've
Speaker 1: raised we've raised wages just out of our own principle.
Speaker 1: We want to just compensate people better. So you've raised
Speaker 1: wages and shipping costs have gone up, but you haven't
Speaker 1: raised the price of coffee yet. We have not yet.
Speaker 1: So you're just eating this. Yes, we are eating this
Speaker 1: right now? How much longer can you do? That? Great question?
Speaker 1: I believe when the new container comes in, we're gonna
Speaker 1: have to take a serious look at how the cards
Speaker 1: people defect are free is going to affect the bottom line,
Speaker 1: and we're gonna try to hold off as long as
Speaker 1: we can for our consumers. Um, but our next container
Speaker 1: will be arriving in Q four. Actually does it come
Speaker 1: into just because we're all in a shipping mindset, right,
Speaker 1: it's not waiting off the port of l A. I'm
Speaker 1: guessing it's coming into New York two months to meet
Speaker 1: the container in Newark and correct, yes, in New work Um, Hey, listen,
Speaker 1: just got about a minute or so left. We You know,
Speaker 1: it's been an interesting rough couple of years between the pandemic,
Speaker 1: between what happened with George Floyd and other black Americans. UM,
Speaker 1: as an Asian American, a Vietnamese American female entrepreneur, how
Speaker 1: easy has it been for you in your path? Um?
Speaker 1: There are a lot of hurdles that I have to
Speaker 1: work through, a lot of perceptions and biases that I
Speaker 1: have to really challenge. Um, it's challenging, but honestly, I
Speaker 1: would say that the support of the community and our
Speaker 1: customers just really keeps me going. Um, people haven't really
Speaker 1: open to a shifting narrative around Vietnamese coffee. I think
Speaker 1: one just relates to the ticking anti Asian violence. Right.
Speaker 1: This idea of the valuing Asian lives is actually related
Speaker 1: to how people devalue Asian food and culture very often,
Speaker 1: and it relates to people the value Vietnamese coffee. Right. Um,
Speaker 1: it's all related, and so that has been a challenge
Speaker 1: in itself, but really with our company where ships the
Speaker 1: narrative and bringing value invisibility to vietn these coffee and producers,
Speaker 1: and and I hope that that will also translate to
Speaker 1: how people value our communities and lives behind our products
Speaker 1: as well. That's their new way. And she's the founder
Speaker 1: and CEO of New In Coffee Supply. Carol five cups
Speaker 1: of coffee a day for her, to be fair. We
Speaker 1: had a really great conversation with her, but we kind
Speaker 1: of had some fun with her because she felt like
Speaker 1: she sounded like she had five cups of coffee. She
Speaker 1: said she had one more than normal, right, So she
Speaker 1: had six because it was National Coffee Day, but five
Speaker 1: is usually what she has and it's more caffeinated than
Speaker 1: traditional the typical coffee. Right. She was definitely pumped at
Speaker 1: the beginning of the interview, but a really fun to
Speaker 1: interview and just to find about her career path because
Speaker 1: she's done so many different things. All Right, you're listening
Speaker 1: to Bloomberg Business Week. By the way, you can hear
Speaker 1: the full conversation on our podcast feed. Coming up, we're
Speaker 1: gonna go from beans to grapes, look at the challenges
Speaker 1: facing winemakers from across the world, what you need to
Speaker 1: know about this year's vintage. We're gonna take a deep
Speaker 1: dive into our Pursuit section. This is Bloomberg. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes tim cent of it from Bloomberg Radio. It's time
Speaker 1: for the Pursuit section of Bloomberg Business Week magazine. And
Speaker 1: to be a last segment, we talked about coffee, which
Speaker 1: is a great way to start the day. Now it's
Speaker 1: time to think about how we might want to end
Speaker 1: our day. How about kicking back with a nice bottle
Speaker 1: of wine. That sounds pretty good to me. I mean,
Speaker 1: you know that I like to drink non alcoholic beer.
Speaker 1: But I have to tell you, as we get into fall,
Speaker 1: the weather gets a little cooler. I have been drinking
Speaker 1: a little bit of red wine lately. I love a
Speaker 1: nice class. It's healthy for you. Good. Well, you've heard
Speaker 1: them there. It's our Bloomberg Pursuits editor Chris Rouser. He
Speaker 1: joins us now with a look at this week's Pursuits section. Chris,
Speaker 1: we know, I believe it's Dr Chris Rouser. Isn't wine
Speaker 1: the doctor of wine? Is that? Is that an m
Speaker 1: D that's on my LinkedIn? Well, Chris, we know there's
Speaker 1: good wine to be had, but maybe not in the
Speaker 1: quantity that we had in recent years. Yes. So this year, UM,
Speaker 1: we had Ellen McCoy, who is our great long term
Speaker 1: Bloomberg wine columnist. Uh, do a harvest report for the
Speaker 1: whole section, UM about what harvest has been like and
Speaker 1: climate change has wreaked havoc in almost every wine region
Speaker 1: around the world, particularly France. UM. Climate change in general
Speaker 1: means can mean hotter, drier summers. It can push the
Speaker 1: harvest later, but it also can mean cold. And there
Speaker 1: was frost across a lot of France. And you saw
Speaker 1: there are these crazy photographs of people lighting fires like
Speaker 1: every ten feet through the vineyards and it looks like
Speaker 1: a real medieval like haunted scene. Um. But you have
Speaker 1: to do that to try to save your grapes because
Speaker 1: frost killed you know, almost up to of grapes in
Speaker 1: some people's vineyards. So the harvest, like the hall, the
Speaker 1: quantity in France is going to be very low, but
Speaker 1: that doesn't mean the wine is not going to be good.
Speaker 1: The surviving grapes are tough and they've made it through
Speaker 1: um and in some places people are expecting very good wine,
Speaker 1: just a small quantity. Even in France, as you said,
Speaker 1: that got hit hard. Yeah, Chardonnay was hit hard. Bordeaux
Speaker 1: and Burgundy had mildew in addition to the frost. Provence
Speaker 1: had frost um but Italy had an okay harvest, Portugal
Speaker 1: had a great a risk, Spain in Germany and Austria
Speaker 1: sort of seemed about average. And the US, you know,
Speaker 1: you saw the wildfires. They also this is California, they
Speaker 1: also had some frost, but they are hoping for a
Speaker 1: good vintage as well. The Louire Valley in France had hailstones. Yes,
Speaker 1: I don't know if you saw footage of this, but
Speaker 1: it was really crazy, like one of those like fist
Speaker 1: sized hailstones thing and that you know, you can have
Speaker 1: hail for fifteen minutes and that can wipe out a crop.
Speaker 1: So does this mean that this wine is going to
Speaker 1: be more expensive because there's less of it? It can
Speaker 1: mean that, yes, but there's also there's a backup, especially
Speaker 1: from Bordeaux of the past few years, which were bountiful crops,
Speaker 1: and that that can have the you know, the vintage,
Speaker 1: that can have an evening out effect on price just
Speaker 1: because the demand is met. Um. But yeah, it could
Speaker 1: mean that the prices are higher. Really good things to know. Uh,
Speaker 1: let's go, let's kind of stay in the United States.
Speaker 1: Let's or let's go to the United States and let's
Speaker 1: talk about the Hampton's and Long Island. I mean, there's
Speaker 1: a lot of vineyards right out in Long Island. So
Speaker 1: we have us piece this week in Pursuits about the
Speaker 1: North Fork of Long Island, which is the other two
Speaker 1: people really go to North Fork there. I'm just kidding.
Speaker 1: I'm just kidding. I know, I know the North Fork
Speaker 1: is it's a lot of farmland and it's a lot
Speaker 1: of vineyards, and it's it's been known as a much
Speaker 1: more chill place to go, although the Long Island Railroad
Speaker 1: goes there and so it's a lot of there's less
Speaker 1: traffic often to get there. But since there have been
Speaker 1: new hotels, new restaurants, and new vineyards that actually have
Speaker 1: been drawing sort of a more sceni crowd. Some some
Speaker 1: restaurants from like Montauk and stuff have opened up locations
Speaker 1: in the North Fork. So now you're getting some entrepreneurs
Speaker 1: coming in and opening up establishments, like people from Manhattan,
Speaker 1: and some private equity UH companies coming in and buying
Speaker 1: hotels and redeveloping them. So and the one hand is
Speaker 1: getting like pretty cool and also more lively. On the
Speaker 1: other hand, locals are a little worried, or people who
Speaker 1: have been going there for years are a little worried
Speaker 1: it's going to become too scenic. It's like what happened
Speaker 1: in Montauk. Montalk used to be like nobody went there right,
Speaker 1: just the fisherman and it, and then it just became
Speaker 1: like the place to go, and you're seeing that happen
Speaker 1: in North Fork. Yeah, real estate prices have increased quite
Speaker 1: a bit. In twenty two thousand five, the median home
Speaker 1: price in the North Fork was four hundred and fifty
Speaker 1: one thousand dollars. Now it's seven hundred eighty thousand dollars, Chris,
Speaker 1: So perhaps people missed out on actually getting a place there. Yeah,
Speaker 1: you know, I have some I have a few friends
Speaker 1: who have bought in the past couple of years, and
Speaker 1: I was like, we're going to wait and see, and
Speaker 1: now we've waited too long. We have friends who lived there,
Speaker 1: so you can go stay with them, right, exactly, exactly. Yeah,
Speaker 1: one broker told us that she can't find anything under
Speaker 1: two million dollars, which is which still is not Hampton's level,
Speaker 1: you know at all. Like the median price there is
Speaker 1: so high and it's impossible to find anything. But still
Speaker 1: two million dollars is a lot for what, you know,
Speaker 1: for that area, what it used to be. I always
Speaker 1: think when private equity get involved, you know that it's
Speaker 1: getting serious, right in terms of development or or channeling
Speaker 1: money to that area. They're buying old motel you know,
Speaker 1: like run down motels, and they're turning them and they're
Speaker 1: going to like she confy them, you know that whole
Speaker 1: All right, let's talk about a couple of individuals that
Speaker 1: you guys profile in the section this week, one is
Speaker 1: about the busiest man in Nappa. Who is he? We
Speaker 1: actually have I would say the two guys that we
Speaker 1: profile are like are tied for busiest men in Nappa.
Speaker 1: The UM. We interviewed Carlton McCoy who is a managing
Speaker 1: director of Heights Sellers and he what used to be
Speaker 1: the samolier at the Little Nell and Aspen And Galen Lawrence,
Speaker 1: who's a big owner in Napa, hired him to be
Speaker 1: his CEO a few years ago. And um and he
Speaker 1: is the only he's like, he's the most powerful UM
Speaker 1: man and Nappa who's black. And he has taken it
Speaker 1: upon himself who to uh not only like expand the
Speaker 1: company and really revolutionize at higher a bunch of young people,
Speaker 1: but also try to draw more people of color into
Speaker 1: the wine industry, which is traditionally very white and European. Yeah,
Speaker 1: that's right. It's another industry right where there's not a
Speaker 1: lot of diversity. Yeah, exactly. And he you know, he's uh,
Speaker 1: you know, putting other people's money where his mouth is,
Speaker 1: Like he started to fund was raised hundreds of thousands
Speaker 1: of dollars, brought scholarships to bring in BIPOC people to learn, uh,
Speaker 1: to learn about the industry. They've sent people to Europe
Speaker 1: to study to be somes and and vintners. It's it's
Speaker 1: really been working. And we know we talked about climate
Speaker 1: change and Ellen McCoy and her profile of McCoy check wait,
Speaker 1: her profile of Carlton McCoy. Uh. She addresses that with
Speaker 1: him because if we think about what's happened in NAPA
Speaker 1: in recent years, every year we see images of fires
Speaker 1: raging in northern California and also at the same time
Speaker 1: drought happening. So so what's he doing in order to
Speaker 1: make sure that he can harvest? Yeah? So he right
Speaker 1: when he started, one of his vineyards burnt down. Uh,
Speaker 1: and you know, Ellen said, oh my god, what what
Speaker 1: was that like? And he was like, well, you have
Speaker 1: to learn, we have to learn from what happened. And
Speaker 1: so they immediately began building more vineyards because you know,
Speaker 1: in NAPA you were marketing and your sales are also involved,
Speaker 1: like are tied up in hospitalities. You gotta get peop
Speaker 1: to come have a like a luxury experience, taste the wine,
Speaker 1: join the wine club. Um. But also they're doing very
Speaker 1: old school things like literally vineyard clearing, like clearing the
Speaker 1: land around vineyards. Uh, they're doing stuff to literally fight
Speaker 1: off forest fires. It's unbelievable. I feel like he's just
Speaker 1: working on so many different fronts, you know, trying to
Speaker 1: create more diversity within the industry, support that when it
Speaker 1: comes to like Black Lives Matter, really being behind that.
Speaker 1: He's also got a series for CNN. Yeah, he has.
Speaker 1: He has a new TV series and it's um, it's
Speaker 1: it's actually it's called Nomad with Carlton McCoy. So yeah,
Speaker 1: it's a lifestyle series. He goes around, it goes all
Speaker 1: around the world. It's music, art, religion, fashion. So it's
Speaker 1: going to come out in love it, love it, love it.
Speaker 1: Let's get you said that there were two busiest men
Speaker 1: in nap but let's talk about the other individual. This
Speaker 1: is uh. You guys also call him the grape Guru.
Speaker 1: I think. Yeah. So Steve Mathieson has his own winery,
Speaker 1: he makes his own wine, and he also is a
Speaker 1: consultant on like fifteen other important wineries in the Napa area.
Speaker 1: And this is one of those people that you hire,
Speaker 1: uh to help you figure out when to harvest, how
Speaker 1: to harvest, how to handle the grapes, because all those
Speaker 1: decisions which happen actually very quickly, it's in the span
Speaker 1: of a few weeks, are have huge repercussions in terms
Speaker 1: of margins and sales and you know, the popularity of
Speaker 1: your wine. So people really depend on him to come
Speaker 1: to taste their grapes, to measure the sugar content of
Speaker 1: the grapes, to tell them whether they should de stem
Speaker 1: the grapes once they're harvested. And you know, if you've
Speaker 1: ever been to a winery when they're when they've picked
Speaker 1: the grapes and they've smashed them in, they're in these
Speaker 1: big bats and they're they're they're fermenting. It doesn't smell
Speaker 1: like wine. It smells like a punch in the face.
Speaker 1: And you could taste it. That's a perfect that's a
Speaker 1: medical term. Um. And you know he's with a guy
Speaker 1: who can go in and taste that wine and say, Okay,
Speaker 1: this is actually gonna be great, you know, like you
Speaker 1: or I would taste it and say like this is horrible,
Speaker 1: throw this out and um, and he'll be like, oh
Speaker 1: my god, this you got it. Or he'll be like,
Speaker 1: you know, take some steps out, push, push it down more, Hey,
Speaker 1: let's wrap up because you zero in on pen Fold,
Speaker 1: which is Australia's most famous winery. Australia's most famous winery
Speaker 1: has started a California collection because their own by a
Speaker 1: parent company that has some um has some wineries in Napa.
Speaker 1: So pen Folds, which is the Australian company, also decided
Speaker 1: to create a wine blend that was you know, the
Speaker 1: bulk of the wine was actually from Nappa with a
Speaker 1: little bit of Shara's, the famous Penfolds from Australia. UM,
Speaker 1: and to do a global blend, which traditionally if you
Speaker 1: see a wine that has grapes from all over the world,
Speaker 1: it means it's like pretty bad. And people they were
Speaker 1: just buying exit. Yeah, exactly through everything. Um, but this
Speaker 1: is a seven bottle of wine and it's uh. Ellen
Speaker 1: thinks this is probably going to be a collectible wine
Speaker 1: that will age. She's tasted it. She says, it's very good,
Speaker 1: very powerful. Um and uh, you know, pen Folds has
Speaker 1: a history of doing this. They also when they did
Speaker 1: their Grange wine, which is one of their most collect
Speaker 1: able wines, it was also a blend that people thought
Speaker 1: this is this is a gimmick. This isn't gonna work,
Speaker 1: and now it's incredibly collectible. All right, Well, bottoms up, everybody,
Speaker 1: have a nice glass of wine over the weekend. Chris Rouser,
Speaker 1: Dr Chris Rouser, our wine expert and editor of Pursuits,
Speaker 1: thank you so much, really appreciate it. Thanks. We should
Speaker 1: note he's not a real doctor, but he does play
Speaker 1: one on the radio. And nicely done. But bump. Alright.
Speaker 1: That wraps up the weekend edition to Bloomberg Business Week
Speaker 1: from Bloomberg Radio. Thanks so much for joining us. I'm
Speaker 1: Carol Massa and I'm Tim STANEVK. Be sure to tune
Speaker 1: into our Bloomberg Business Week daily show. It's Monday through
Speaker 1: Friday starting at two pm Wall Street Time on Bloomberg Radio.
Speaker 1: You can also watch our daily broadcast on YouTube just
Speaker 1: search Bloomberg Global News. Also check out our Bloomberg Business
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Speaker 1: dot com, and on the Bloomberg Terminal. You can also
Speaker 1: see me on Bloomberg quick Take available at Bloomberg dot com.
Speaker 1: Slash QT and streaming platforms like Roku, Apple TV, Samsung TV,
Speaker 1: and more. Have a great weekend everyone. Do you drink wine?
Speaker 1: On quick take, we haven't. We should though, to be
Speaker 1: continued this Splinberg