WEBVTT - Mattel CEO Says SpaceX Deal Was Unexpected 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanobek. We're here every day bringing 0:00:07.280 --> 0:00:09.840 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:28.360 pm Eastern Time on Bloomberg Radio or watch us on YouTube. 0:00:28.400 --> 0:00:32.840 Search Bloomberg Global News and shares A matteler trading lower today, 0:00:32.880 --> 0:00:35.280 down more than six percent, after the company said second 0:00:35.360 --> 0:00:38.920 quarter margins shrank due to inflation, higher supply chain costs, 0:00:38.960 --> 0:00:42.920 and royalty expenses. CEO Kries was on with our Bloomberg 0:00:42.960 --> 0:00:45.839 TV crew earlier and they talked about um how the 0:00:45.880 --> 0:00:49.960 company that did keep their forecast intact. Enon Cries as 0:00:50.040 --> 0:00:52.479 chairman and CEO of Mattel. He joined us on the 0:00:52.479 --> 0:00:54.760 phone from California right now. Enon, great to have you 0:00:54.800 --> 0:00:58.080 back with us. How are you right, TI? Hi? Carol? 0:00:58.560 --> 0:01:00.840 Right to be here we'll bring us to to the 0:01:00.840 --> 0:01:02.800 most recent quarter and what you're expecting for the rest 0:01:02.800 --> 0:01:05.440 of two because when when we've been able to talk 0:01:05.480 --> 0:01:08.040 to you over the last few months, you've been really 0:01:08.040 --> 0:01:10.840 confident that you can manage the supply chain challenges in 0:01:10.880 --> 0:01:14.160 the inflationary environment that we find ourselves in right now, 0:01:15.840 --> 0:01:18.520 that's right. So, first of all, on the quarter that 0:01:18.640 --> 0:01:22.600 we just completed, these were excellent results from Matail, without 0:01:22.680 --> 0:01:27.039 eight consecutive quarter of top line growth. Our profits also 0:01:27.080 --> 0:01:33.160 grew significantly, with adjusted operating income up despite high inflation 0:01:34.000 --> 0:01:38.600 and following a record first half. We expect to continue 0:01:38.600 --> 0:01:41.560 growing in the second half and are planning for increase 0:01:41.640 --> 0:01:45.800 in consumer demand in the holiday season. So all in all, 0:01:45.880 --> 0:01:49.000 we're very happy with the position we are in. We 0:01:49.120 --> 0:01:52.760 expect to win markets you are going forward, and we 0:01:53.040 --> 0:01:59.960 reiterated fullier guidance for strong top line growth, um increase profitability, 0:02:01.280 --> 0:02:04.560 a higher gross margin. UH and all of this is 0:02:04.600 --> 0:02:08.600 in spite of significant inflation and negative currency impact. So 0:02:08.639 --> 0:02:13.160 are you like, come on, investors, you still got it wrong. Look, 0:02:13.200 --> 0:02:16.360 we have very focused on managing the company. We have 0:02:16.440 --> 0:02:21.800 been growing now consistently. We're executing on our strategy we have. 0:02:21.960 --> 0:02:24.040 You know, we wren market share for two years in 0:02:24.120 --> 0:02:26.160 a row, and we expect to win market share this 0:02:26.240 --> 0:02:30.360 year as well. Our supply chain is in very good shape. 0:02:31.000 --> 0:02:36.040 All of our own and operated factories are fully fully operational. 0:02:36.600 --> 0:02:41.840 Product is flowing in, we're seeing we're expecting a second 0:02:41.840 --> 0:02:45.360 half retail sales to be above the first half levels. 0:02:46.320 --> 0:02:50.040 We're seeking the industry growing as well well. So, so 0:02:50.120 --> 0:02:52.200 you know what happened because one of the things that 0:02:52.240 --> 0:02:54.480 we Tim and I have always after we talk with you, 0:02:54.520 --> 0:02:57.760 were kind of blown away by your ability to be 0:02:57.880 --> 0:03:00.560 flexible with supply chains, move them ahead of kind of 0:03:00.560 --> 0:03:02.320 some of the constraints that we've seen in the last 0:03:02.320 --> 0:03:05.560 couple of years, and manage it really really well. So 0:03:05.639 --> 0:03:08.359 what happened in the last quarter, because I think it's 0:03:08.360 --> 0:03:10.800 safe to say that what is freaking out investors and 0:03:10.800 --> 0:03:13.680 it's been a top theme for all us here at Bloomberg, 0:03:13.800 --> 0:03:18.639 is what's happening with margins? What happened that your margins shrunk? 0:03:18.680 --> 0:03:22.760 That maybe even caught you guys by surprise. No, the 0:03:22.800 --> 0:03:28.239 margin impact was expected. It was factored into our guidance. 0:03:28.280 --> 0:03:31.359 We talked about it at the beginning of the year. Uh, 0:03:31.400 --> 0:03:35.800 and if anything, it's getting better actually because we did 0:03:36.360 --> 0:03:41.520 revise our guidance on gross margin UM, uh, not by much, 0:03:41.560 --> 0:03:46.680 but nevertheless a positive you know, uplift. We're able to 0:03:46.920 --> 0:03:54.160 upset currency negative currency impact and maintain and reiterate our 0:03:54.240 --> 0:03:57.720 guidance for the full year. So the margin, the margin 0:03:57.960 --> 0:04:02.960 UM reduction was very much expected and and the set 0:04:03.000 --> 0:04:06.200 you know, factored into into our guidance at the beginning 0:04:06.200 --> 0:04:09.880 of the year. Over time, over time, we do expect 0:04:09.880 --> 0:04:13.480 that the combination of pricing and cost savings will more 0:04:13.520 --> 0:04:18.040 than exceed the impact of inflation and contribute to margin expansion. 0:04:18.400 --> 0:04:21.200 And we do expect that we do expect inflation to 0:04:21.320 --> 0:04:25.760 moderate in twenty three. But you know, we also reiterated 0:04:25.800 --> 0:04:31.400 our goals for three where we talk about high single 0:04:31.440 --> 0:04:35.800 digit growth and constant currency adjusted operating in a margin 0:04:35.880 --> 0:04:40.960 of six and continue to grow our earning for share 0:04:41.440 --> 0:04:45.719 and exceed at our ninety So we're staying the course, 0:04:46.200 --> 0:04:49.279 continue to execute our strategy and seeing seeing it in 0:04:49.279 --> 0:04:52.120 the numbers. Give me an idea of what you're seeing 0:04:52.120 --> 0:04:54.839 with pricing power right now? Where are you able to 0:04:54.960 --> 0:05:00.839 raise prices so that consumers will continue to pay but 0:05:01.000 --> 0:05:04.240 you can better cover increasing costs on your side without 0:05:04.800 --> 0:05:09.000 destructing demand, as pricing is one of the options we 0:05:09.120 --> 0:05:13.839 consider in times of inflation. Uh. Sorry, this is not 0:05:14.440 --> 0:05:17.560 obviously unique to Mattel or unique to the toy industry. 0:05:19.120 --> 0:05:22.800 But we've said before, and we're being very consistent about it, 0:05:22.839 --> 0:05:26.680 is that when we raise prices, we always keep consumers 0:05:26.680 --> 0:05:29.560 in mind. We're being very thoughtful and strategic and are 0:05:29.560 --> 0:05:33.920 committed to maintaining the highest quality and best value for consumers. 0:05:34.400 --> 0:05:38.480 We haven't seen, um, you know, any negative impact for 0:05:39.000 --> 0:05:43.040 the pricing actions we two class year. We just took 0:05:43.040 --> 0:05:48.360 another action that will become that will be factored into 0:05:48.440 --> 0:05:51.880 our numbers in the second half. Um. And this is 0:05:51.920 --> 0:05:54.640 something that we previously announced, So this is not new news, 0:05:55.160 --> 0:05:58.320 and we haven't seen a negative impact. You know. These 0:05:58.360 --> 0:06:03.520 actions are very method calling thought to. So what's selling? 0:06:03.880 --> 0:06:07.120 I know in our Bloomberg story that you guys I 0:06:07.120 --> 0:06:09.640 think said on the conference call last night that you 0:06:09.640 --> 0:06:11.760 guys were seeing some softness and sales of higher priced 0:06:11.760 --> 0:06:14.440 items such as a Barbie dreamhouse I think, which costs 0:06:14.440 --> 0:06:18.080 around two hundred dollars, having owned one when I was younger. Um, 0:06:18.120 --> 0:06:21.480 But anyway, so what is selling? What is not where 0:06:21.520 --> 0:06:25.120 are you seeing maybe some consumer sensitivity because of the 0:06:25.240 --> 0:06:30.080 overall inflationary environment. Well, in the in the second quarter, 0:06:30.200 --> 0:06:36.440 we saw comprehensive growth, uh, you know two in constant currency. Uh, 0:06:36.720 --> 0:06:40.359 we were up in double digit strong double digits in 0:06:40.400 --> 0:06:44.840 North America, Emia and Latin America. We grew in all 0:06:44.880 --> 0:06:48.880 of our reported categories and in three in our three 0:06:48.920 --> 0:06:53.960 power brands, Barbie, Hot Wheels, and Fisher Price. So the 0:06:54.120 --> 0:06:58.160 performance was pretty pretty comprehensive with some really strong numbers. 0:06:59.160 --> 0:07:02.080 We did say that Hot Wheels, as an example, is 0:07:02.160 --> 0:07:08.120 on on track to achieve its fifth record year in 0:07:08.160 --> 0:07:12.240 a row. Uh. Barbie is just coming off an all 0:07:12.320 --> 0:07:17.240 time high, and we said that we expect to be 0:07:17.600 --> 0:07:21.000 sales for Barbie to be comparable. So we're holding a 0:07:21.120 --> 0:07:25.320 very high bar right, and a pretty pretty strong performance 0:07:25.320 --> 0:07:27.400 across the board. So we were talking about the Barbie 0:07:27.480 --> 0:07:29.080 movie on the call, and I know we've talked with 0:07:29.160 --> 0:07:31.960 that for you before. I think for what I've understand 0:07:32.000 --> 0:07:34.920 is that it's wrapped in terms of principal photography. What 0:07:35.200 --> 0:07:37.520 we've been wondering and I'm going to steal a question 0:07:37.520 --> 0:07:39.960 that actually Tim brought up on our call, but he said, 0:07:40.520 --> 0:07:42.760 you know, the point of do you anticipate making more 0:07:42.760 --> 0:07:46.760 money UM from the movie and your partnership on the 0:07:46.760 --> 0:07:49.400 Barbie movie, or more from the lift that the Barbie 0:07:49.480 --> 0:07:53.960 brand gets thanks to the movie. We absolutely see this 0:07:54.040 --> 0:07:59.240 opportunity as as incremental to our toy business. Our strategy 0:07:59.320 --> 0:08:02.240 to capture the full value of our IP is about 0:08:02.320 --> 0:08:06.640 participating in highly a creative business verticals that are adjacent 0:08:06.680 --> 0:08:10.520 to the toy industry and are also driven by big 0:08:10.560 --> 0:08:14.440 franchises and big brands, but we want them and expect 0:08:14.520 --> 0:08:17.840 them to be a creative in and of themselves. So 0:08:18.000 --> 0:08:21.360 the partnership or you know, the Barbie movie and the 0:08:21.680 --> 0:08:26.320 the the partnership that we have with Warner Brothers UM 0:08:26.480 --> 0:08:31.200 is such that we have a meaningful economic participation in 0:08:31.480 --> 0:08:33.959 the Barbie Movie as well as for that matter, all 0:08:34.000 --> 0:08:38.240 of our movie projects. We do have economic participation, and 0:08:38.280 --> 0:08:40.920 of course we understand that in success there will be 0:08:41.960 --> 0:08:46.040 a benefit for the toy business, but we do expect 0:08:46.120 --> 0:08:49.280 the economic participation outside of the toy aisle as well. 0:08:49.360 --> 0:08:52.040 What does meaningful economic participation mean? Does that mean that 0:08:52.040 --> 0:08:54.840 that you are that Mattels a producer of the movie, 0:08:54.880 --> 0:08:56.720 You're putting money into the movie, or does it mean 0:08:56.760 --> 0:09:01.000 that you get a percentage of ticket sales. It's uh, 0:09:01.040 --> 0:09:05.960 it's different economics, different types of participations. But we do 0:09:06.080 --> 0:09:10.080 not found the movie. We do not uh, you know, 0:09:10.120 --> 0:09:14.280 participate in in movie financing. This is not our expertise 0:09:14.679 --> 0:09:18.680 and not our business. But we do participate economically both 0:09:18.840 --> 0:09:22.000 as the I T owner, as the owner of the brand, 0:09:22.559 --> 0:09:25.520 and as a producer. We are a producer on all 0:09:25.520 --> 0:09:27.360 of our projects. Do you get a piece of the 0:09:27.360 --> 0:09:31.760 box office? You know, we haven't been specific on the 0:09:31.760 --> 0:09:37.560 commercial terms, but box office and research are part of 0:09:37.559 --> 0:09:43.040 the equation of uh of of you know, of typical participations. Hey, 0:09:43.040 --> 0:09:45.679 can we talk to you about SpaceX. We've been talking 0:09:45.679 --> 0:09:49.120 about this story all week long. UM, tell us about 0:09:49.120 --> 0:09:51.520 the collaboration. It's a multi year agreement that Mattel has 0:09:51.520 --> 0:09:56.480 announced with SpaceX to produce toys and collectibles. Yeah, this 0:09:56.559 --> 0:10:00.240 is an exciting partnership to create space exploration to and 0:10:00.320 --> 0:10:04.480 collectibles under the Matchbox brand. The toys will come out 0:10:04.559 --> 0:10:09.559 next year. The collectible uh toys will be available on 0:10:09.640 --> 0:10:12.680 matel creation or direct to consumer side. And this is 0:10:12.720 --> 0:10:18.400 really about um, you know, scaling our portfolio. UM, it's 0:10:18.400 --> 0:10:21.760 about innovation, It's about thinking out of the box and 0:10:21.880 --> 0:10:25.720 bringing new partners to the toy aisle. And this was 0:10:25.800 --> 0:10:28.800 one that people were you know, didn't expect and didn't 0:10:28.800 --> 0:10:33.320 see coming. And it is exciting because we are partnering 0:10:33.360 --> 0:10:37.520 with an exciting company in an exciting area. But you know, 0:10:38.240 --> 0:10:41.319 more than this partnership specifically, it is about how we 0:10:41.840 --> 0:10:46.040 continue to scale our portfolio work to position matel as 0:10:46.080 --> 0:10:48.679 a partner of choice major IP owners. Is there going 0:10:48.679 --> 0:10:53.360 to be a figure? That's what I want to know. Uh, 0:10:53.480 --> 0:10:57.360 it's uh, it's you know, obviously this uh, you know, 0:10:57.400 --> 0:10:59.839 we don't go into that level of resolution on the 0:11:00.120 --> 0:11:04.520 product side, but we always do to continue to innovate 0:11:04.760 --> 0:11:07.960 and delight our consumers and do it in fun and 0:11:08.000 --> 0:11:10.360 creative ways. I would imagine there is demand for that, 0:11:10.520 --> 0:11:12.360 so I guess we'll have to wait and see you. 0:11:12.760 --> 0:11:14.559 I would buy in Elan Dahl. I just think that 0:11:14.559 --> 0:11:17.160 would be kind of fun. Um Enon, thank you so 0:11:17.240 --> 0:11:19.640 much once again just giving us a nice junk of 0:11:19.640 --> 0:11:21.600 time and really leaning into the business and letting us 0:11:21.640 --> 0:11:23.960 know what's going on. Inenon cries. He is the chairman 0:11:24.320 --> 0:11:27.480 and chief executive officer of Mattel. Mattel Shares under pressure 0:11:27.480 --> 0:11:29.640 but as we mentioned, they are still up for the year. 0:11:29.679 --> 0:11:35.040 Here in two. This is Bloomberg Business Week with Carol 0:11:35.120 --> 0:11:39.559 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:11:39.840 --> 0:11:42.000 It's a new way show Bloomberg Business Week Magazine at 0:11:42.000 --> 0:11:44.960 on newsstands, online and of course on the Bloomberg terminal. 0:11:45.000 --> 0:11:47.440 And in it is a story about the AI platform 0:11:47.480 --> 0:11:50.560 behind a Jeff Bezos back startups Vegan Burger. So I 0:11:50.559 --> 0:11:52.360 feel like him that there are so many big Macro 0:11:52.480 --> 0:11:54.679 themes of the day in this story said big Mac, 0:11:54.760 --> 0:11:57.520 which kind of makes sense. Did I say big big Macro? 0:11:57.920 --> 0:11:59.560 I heard you know, so I hear big macin next 0:11:59.600 --> 0:12:02.599 I'm always talking about food, He's always. Augusta Suriva is 0:12:02.600 --> 0:12:05.240 supply chain reporter for Bloomberg New She's with us right 0:12:05.240 --> 0:12:08.640 now in the Bloomberg Interactive, a broker's studio. Augusta, good 0:12:08.679 --> 0:12:11.840 to have you with us. What is this AI platform? 0:12:12.160 --> 0:12:16.600 Um with not company? Essay, thank you for having me on. 0:12:16.679 --> 0:12:18.880 And it's interesting that you said big Mac because they 0:12:18.880 --> 0:12:22.000 actually have a big deal with Burger king um. But 0:12:22.120 --> 0:12:24.880 this company is actually a Chilean start up. It was 0:12:24.920 --> 0:12:27.000 a big Mac McDonald's or Burger King, Big Mac is 0:12:27.040 --> 0:12:31.719 McDonald's Whoppers, Burger King. But there I'm getting picky, But 0:12:31.760 --> 0:12:33.760 they're they're kind of the counterparts of the restaurant. You 0:12:33.720 --> 0:12:38.360 gotta know your burger's carols. These are not burgers. They're 0:12:38.440 --> 0:12:42.600 not burgers literally, they're made out of potato chips. They're 0:12:42.640 --> 0:12:45.480 made out of sunflower oil. Everything that you would not 0:12:45.800 --> 0:12:48.160 expect to see on a burger is there? Okay? The 0:12:48.160 --> 0:12:50.360 problem though, is sunflower oil a little hard to come 0:12:50.360 --> 0:12:54.840 by these days? Yes, And when you're making alternatives to burgers, 0:12:54.920 --> 0:12:58.520 that's extremely needed because it goes on a third of 0:12:58.520 --> 0:13:01.600 all of the alternative burger out there. And because of 0:13:01.640 --> 0:13:03.800 the war in Ukraine and because all of the supply 0:13:03.880 --> 0:13:06.559 change shortages we've been hearing about over the past year, 0:13:06.840 --> 0:13:09.520 it's been hard to find. So what this company did, 0:13:09.640 --> 0:13:12.760 I mean, since they were already creating alternatives to everything, 0:13:12.840 --> 0:13:16.000 they just decided to make alternatives to the alternatives, right, 0:13:16.080 --> 0:13:19.440 So that's how they came up with the idea. And 0:13:19.440 --> 0:13:20.839 how does it work? Is it good? And does it 0:13:20.920 --> 0:13:23.559 taste right? Or it like wow? That's the point. They 0:13:23.600 --> 0:13:26.120 just started trying it out and if it works out, 0:13:26.240 --> 0:13:29.520 that's the plan. They want to sort of like revolutionize 0:13:29.880 --> 0:13:32.360 the industry. But right now, what they're doing is that 0:13:32.640 --> 0:13:35.920 they're using the algorithm, which they call Giu Zappe. It's 0:13:35.920 --> 0:13:38.600 sort of a nickname, and they're trying to use that 0:13:38.679 --> 0:13:40.559 to create on that somebody was in a lab. There 0:13:40.640 --> 0:13:42.280 was a little i don't know, to kill a going 0:13:42.320 --> 0:13:43.800 around and like, what are we gonna call this thing 0:13:43.920 --> 0:13:47.160 just or is there a reason behind it? There is 0:13:47.200 --> 0:13:50.600 a reason behind It's based on an Italian painter that 0:13:50.640 --> 0:13:55.560 would only paint using vegetables, So that's why there's the reason. Okay, 0:13:55.640 --> 0:13:58.000 So so I'm also imagining in my head like a 0:13:58.000 --> 0:14:00.839 little robot that kind of goes in and taste things 0:14:00.880 --> 0:14:03.360 and things to itself. Okay, this is what could be 0:14:03.440 --> 0:14:06.440 a meaningful alternative. But we're just talking about algorithms at 0:14:06.440 --> 0:14:09.640 a computer, right Yeah, in a way, it's just a computer, 0:14:09.800 --> 0:14:12.560 but it's sort of scans the product and then it 0:14:12.640 --> 0:14:17.000 breaks everything down, either if it's a recipe or if 0:14:17.080 --> 0:14:21.280 it's an ingredient the product. So it looks at let's 0:14:21.320 --> 0:14:25.400 say a lettuce leaf, and it's like, so what's here, 0:14:25.520 --> 0:14:28.400 what are the molecules? What is everything that is here? 0:14:28.640 --> 0:14:30.400 So that they look at that and then they're like, 0:14:30.480 --> 0:14:34.160 how can I recreate that using different things? Maybe lettice 0:14:34.360 --> 0:14:37.520 wasn't the best example because we don't actually need vegan 0:14:37.560 --> 0:14:39.880 alternatives to that, but maybe if you look at a burger, 0:14:40.200 --> 0:14:42.720 how do you take the animal out of the equation? 0:14:42.840 --> 0:14:45.120 So that's what the algorithm does. I keep thinking of, 0:14:45.160 --> 0:14:47.320 like this incredible white borders right, like, and here's what 0:14:47.320 --> 0:14:49.160 the traditional thing is, and what are some things that 0:14:49.200 --> 0:14:51.000 we can use to substitute that maybe give it the 0:14:51.000 --> 0:14:55.760 same kick nutritionally or because the bigger story here and 0:14:55.760 --> 0:14:57.720 this is why I get to the big mac story. 0:14:57.800 --> 0:15:01.080 The big macri story is we are looking at a 0:15:01.120 --> 0:15:03.960 world that is getting maxed out, and how do we 0:15:04.000 --> 0:15:06.440 don't feed the people that are currently on this earth? 0:15:06.480 --> 0:15:07.760 So how do we do it in the face of 0:15:07.760 --> 0:15:10.520 things like climate change that are really shifting where we 0:15:10.600 --> 0:15:13.880 traditionally farm and so on? So it's like, how do 0:15:13.960 --> 0:15:16.440 we do this? And and this is maybe part of 0:15:16.440 --> 0:15:19.720 the solution. Yeah, And that's exactly how Nacho was born. 0:15:19.840 --> 0:15:22.280 They were born not only to create alternatives. So it's 0:15:22.280 --> 0:15:26.360 not like oat milk that actually doesn't taste anything like milk, right, 0:15:26.840 --> 0:15:29.440 Their goal is to make alternatives that are good for 0:15:29.560 --> 0:15:33.080 the climate. They're good for people who do not eat meat, 0:15:33.160 --> 0:15:36.320 who try to avoid that, but they also want their 0:15:36.360 --> 0:15:39.480 products to taste like the real ones. So their milk, 0:15:39.520 --> 0:15:41.400 if you go and try them, it's made out of 0:15:41.400 --> 0:15:44.480 pineapple juice, but still it tastes like actual milk. It's 0:15:44.480 --> 0:15:47.120 pretty amazing that they're able to do that. Augusta, I'm 0:15:47.160 --> 0:15:50.400 I'm wondering about competitors in this space. We talked a 0:15:50.400 --> 0:15:53.000 lot about Beyond Meats, publicly traded company. This stock has 0:15:53.000 --> 0:15:55.280 been under a ton of pressure. We just had Dina 0:15:55.320 --> 0:15:57.640 Shanker on our program yesterday talking about the challenges that 0:15:57.640 --> 0:16:01.120 they're having with Pepperoni, and then if course Impossible Foods, 0:16:01.160 --> 0:16:04.000 which is still privately held. They sort of have their 0:16:04.080 --> 0:16:07.320 you know, secret recipes to try to replicate what the 0:16:07.360 --> 0:16:11.640 taste of a burger or animal protein is. Is this 0:16:12.040 --> 0:16:14.360 like a secret not a secret recipe, but is this 0:16:14.400 --> 0:16:17.560 like a secret sauce for this company, this algorithm to 0:16:17.600 --> 0:16:21.160 try to replicate it is? Indeed, uh, And that's the point. 0:16:21.160 --> 0:16:23.520 It's a private company, so at this point we don't 0:16:23.560 --> 0:16:26.360 really know where they're going with that. They actually had 0:16:26.400 --> 0:16:29.880 plans to go public next year, but with all the headwinds. 0:16:29.920 --> 0:16:32.760 That might not be the case, um, but as of now, yes, 0:16:32.880 --> 0:16:36.280 that's their secret ingredient right there, Big Max Sauce. It's 0:16:36.360 --> 0:16:38.280 kind of the next step when we keep thinking about 0:16:39.200 --> 0:16:41.200 It's so funny we're talking about Beyond Meat this week, 0:16:41.240 --> 0:16:42.760 and like when it first came on the scene, it 0:16:42.800 --> 0:16:45.280 was like, Okay, this is the answer, right, defeating the world. 0:16:45.720 --> 0:16:48.280 But this actually takes a much bigger picture, right and 0:16:48.280 --> 0:16:51.040 looks at all the elements and things, and like, how 0:16:51.200 --> 0:16:55.760 do we kind of figure out alternatives? Is that fair? Yes, 0:16:55.960 --> 0:16:58.360 it is fair, and that's what they're saying. They don't 0:16:58.400 --> 0:17:01.360 want to only revolutionize the one product. They want to 0:17:01.400 --> 0:17:04.119 revolutionize the industry. So maybe one day we're going to 0:17:04.240 --> 0:17:07.879 see that algorithm that jews app becoming the norm in 0:17:07.880 --> 0:17:10.600 the industry, but not right now. Yeah, exactly. It's got 0:17:10.600 --> 0:17:12.560 some big money behind it, right. We talked about Jeff 0:17:12.560 --> 0:17:16.600 Bezos is behind it, Danny Meyer, uh, and a few others. Okay, 0:17:16.640 --> 0:17:18.879 so we talked a little bit about taste. I'm wondering 0:17:18.920 --> 0:17:20.560 about being able to do this on a mass scale. 0:17:20.560 --> 0:17:23.359 Carol alluded to the challenges of feeding the world in 0:17:23.359 --> 0:17:26.520 a previous comment to you, Augusta and I'm wondering how 0:17:26.520 --> 0:17:29.159 we do this in a way that solves the problems 0:17:29.160 --> 0:17:31.240 that we're seeing right now, not just hunger, but of 0:17:31.240 --> 0:17:33.639 course climate change and the and the emissions that are 0:17:33.680 --> 0:17:37.199 associated with raising animals. Yes, and that's one of the 0:17:37.240 --> 0:17:39.879 reasons why we decided to take the supply chain angle 0:17:39.960 --> 0:17:43.320 for this story, right, because with everything that is going 0:17:43.359 --> 0:17:46.439 on nowadays, the disruptions, the war in Ukraine, it's so 0:17:46.480 --> 0:17:49.040 hard to find alternatives. And at the same time you 0:17:49.119 --> 0:17:51.640 have so much hunger going on. And when you think 0:17:52.040 --> 0:17:55.800 even the alternatives, right, even boat milk, the production of that, 0:17:56.080 --> 0:17:59.600 it takes so much water to produce. So even when 0:17:59.600 --> 0:18:04.600 you think of because feel guilty because I love my totally, 0:18:05.280 --> 0:18:08.520 yes I do too. So that's the point, right, can 0:18:08.600 --> 0:18:10.840 we ever get this right? And I think that's what 0:18:10.920 --> 0:18:14.240 this company is trying to do. Create an alternative that 0:18:14.400 --> 0:18:17.159 is good, that is fair, and that doesn't take a 0:18:17.160 --> 0:18:18.880 lot out of us. Well, and if you can start 0:18:18.920 --> 0:18:21.520 to compare like A from B, from C from D 0:18:21.560 --> 0:18:24.159 in terms of different ways of either producing things and 0:18:24.200 --> 0:18:26.399 food the impact on the climate, you can kind of 0:18:26.400 --> 0:18:28.680 figure out which is the most sustainable way. And also, 0:18:29.240 --> 0:18:31.320 you know, meeting the goals of feeding the world if 0:18:31.320 --> 0:18:33.760 you will, august to survive as she is supply chain 0:18:33.800 --> 0:18:35.440 reporter here at Bloomberg News. I love that we have 0:18:35.480 --> 0:18:38.439 a supply chain reporter so relevant and she's just awesome. 0:18:38.640 --> 0:18:40.160 She got to be on our team at quick Take 0:18:40.240 --> 0:18:43.480 for a few months as a rotator and we miss you, Augusta. 0:18:43.640 --> 0:18:47.240 You're listening to Bloomberg Business Week with Carol Messer and 0:18:47.320 --> 0:18:51.680 Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. A lot 0:18:51.680 --> 0:18:54.080 going on in the world of crypto, and what was 0:18:54.119 --> 0:18:56.280 interesting is we are seeing in some ways over the 0:18:56.320 --> 0:18:59.960 past ten days, investors scooping up about a billion dollars 0:19:00.040 --> 0:19:02.800 worth of crypto exposed companies as a cornd of report 0:19:02.800 --> 0:19:05.399 we've published on Wednesday by Vanda Tracks. So they were 0:19:05.400 --> 0:19:10.080 buying things Tim like Marathon digital coin based Global Riot blockchain. 0:19:10.600 --> 0:19:13.280 I mean, after the carnage, people are finding some opportunity. 0:19:13.280 --> 0:19:15.120 At the same time, Carol, we're starting to see some 0:19:15.400 --> 0:19:18.600 legal action taken against people. Three have been charged in 0:19:18.600 --> 0:19:22.880 the first ever cryptocurrency insider trading tipping scheme. To get 0:19:22.920 --> 0:19:25.399 some information on this and more when it comes to crypto, 0:19:25.520 --> 0:19:28.920 we turned to Kathy Craninger. She's a former director of 0:19:28.960 --> 0:19:33.200 the Consumer Protection Financial Bureau, also vice president of Regulatory Affairs. 0:19:33.200 --> 0:19:35.640 That's sold US Labs. Cathy, great to have you back 0:19:35.720 --> 0:19:38.240 with us, joining us once again from Washington, d C. 0:19:38.400 --> 0:19:41.920 How are you. I'm great, Thank you for having me back. 0:19:42.000 --> 0:19:46.320 It's definitely a busy time in crypto. Yeah. I want 0:19:46.320 --> 0:19:48.320 to start with this coin based news that three have 0:19:48.359 --> 0:19:52.600 been charged in the first ever cryptocurrency insider trading tipping scheme. 0:19:52.680 --> 0:19:55.840 Here are we going to start to see more legal 0:19:55.880 --> 0:20:00.399 action taken against those in the crypto industry. Well, this 0:20:00.520 --> 0:20:04.760 just demonstrates that this industry is in fact obviously regulated 0:20:04.840 --> 0:20:08.040 and subject to the law. And as was said by 0:20:08.080 --> 0:20:11.359 the U S Attorney, fraud is fraud. Um. So the 0:20:11.440 --> 0:20:14.680 indictments are are fairly clear. Um. You know, obviously we'll 0:20:14.680 --> 0:20:18.400 see how the case carries out, but it is critical 0:20:18.520 --> 0:20:23.480 to see rules be enforced. And I'd also note that 0:20:23.840 --> 0:20:27.040 you see in the indictment that coin based had policies 0:20:27.080 --> 0:20:29.879 in place and was in fact monitoring the behavior of 0:20:29.960 --> 0:20:34.040 their employees, which again is what a responsible, um you know, 0:20:34.080 --> 0:20:36.320 market participant would do and what you would hope and 0:20:36.359 --> 0:20:39.280 expect from them. So, UM, I think again, it just 0:20:39.320 --> 0:20:43.320 demonstrates that there are responsible actors in this space, and 0:20:43.359 --> 0:20:46.480 that the people who are engaged in wrongdoing and fraud 0:20:46.840 --> 0:20:50.200 should in fact space prosecution. Is it? Is it also? 0:20:50.240 --> 0:20:52.200 I mean, is there a silver lining to this in 0:20:52.240 --> 0:20:55.159 that it shows that the industry is growing up and 0:20:55.200 --> 0:20:58.959 it's essentially on solid footing in the sense that regulators 0:20:58.960 --> 0:21:03.720 are taking it serious. Now, I think that's that's that's true. 0:21:03.760 --> 0:21:08.680 You see definitely a maturation process regulators understanding the industry better. 0:21:08.800 --> 0:21:10.840 But but as I said, if you go back to 0:21:10.880 --> 0:21:13.439 the lesson here, I think it really is you know, 0:21:13.520 --> 0:21:17.080 fraud is fraud no matter where it happens, um and 0:21:17.160 --> 0:21:19.920 that's something that I think is important. And there are 0:21:19.960 --> 0:21:24.480 absolutely new and novel things about digital asset markets and 0:21:24.920 --> 0:21:28.560 ways that we need to, you know, Taylor things to 0:21:28.640 --> 0:21:32.000 make sure that you're treating, you know, like activities in 0:21:32.000 --> 0:21:35.760 a like way from a regulation standpoint. But some of 0:21:35.800 --> 0:21:38.800 these things, certainly are are things that you see across 0:21:38.840 --> 0:21:41.960 the board wherever there is an opportunity to make money 0:21:41.960 --> 0:21:44.960 and where people see an opportunity to you know, unfairly 0:21:44.960 --> 0:21:46.919 take advantage of others. I feel like it's not a 0:21:46.920 --> 0:21:50.159 new problem We've heard this before, Kathy Um. So alright, 0:21:50.160 --> 0:21:52.840 So three Charge in the first ever cryptocurrency Inside are Trading, 0:21:52.880 --> 0:21:54.720 one of the most read stories in the Bloomberg gets 0:21:54.760 --> 0:21:59.119 an exclusive and it talks about the three Arrow founder story, 0:21:59.320 --> 0:22:02.880 huge story, once high flying hedge fund saying that they're bungled, 0:22:02.880 --> 0:22:06.560 crypto speculation, unleashed, cascading margin, calls on loans that should 0:22:06.560 --> 0:22:10.199 never have been made. So as more things continue to 0:22:10.240 --> 0:22:14.080 come out in different ways, but showing continued carnage, if 0:22:14.119 --> 0:22:17.320 you will, in different ways in the crypto world. What 0:22:17.440 --> 0:22:20.160 are the key problems, the key vulnerabilities in the crypto 0:22:20.200 --> 0:22:23.120 world in your view, that need to be tackled by regulators. 0:22:25.080 --> 0:22:27.439 So there there are definitely things, as I noted, that 0:22:27.520 --> 0:22:31.000 make this space more unique in areas where there needs 0:22:31.040 --> 0:22:34.800 to be some more conversation. I think the Lamas Jilabrand 0:22:34.840 --> 0:22:37.560 bill certainly is an attempt at getting to some of 0:22:37.560 --> 0:22:41.240 those gaps in a more comprehensive treatment in the US, 0:22:41.280 --> 0:22:44.360