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: Stinovic on Bloomberg Radio. Hi, everyone, welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. Big tech earnings abound over
Speaker 1: the last few days. It was a busy week. We
Speaker 1: had Alphabet, Microsoft, Meta, Apple, Amazon, and oh yeah, Twitter,
Speaker 1: Yeah that one too, although that one kind of boring.
Speaker 1: I gotta be honest, Who cares? Who cares? Who cares?
Speaker 1: Speaking of Elon Musk making it official his forty four
Speaker 1: billion dollar bid for the social media platform, it was accepted,
Speaker 1: though there are still lingering questions about the deal's financing,
Speaker 1: who will ultimately take over a CEO, the political implications
Speaker 1: for the company, and what it means for Twitter's user base.
Speaker 1: That's what we cared about when it comes to Twitter,
Speaker 1: not the earnings, but this whole big deal. We'll have
Speaker 1: more in just a moment. Plus a pair of iconic
Speaker 1: retail brands going in opposite directions. We're going to talk
Speaker 1: to Mattel CEO on a possible sale of the company,
Speaker 1: and then profile a former Levis executive who stands on
Speaker 1: pandemic related policies. Well, it led to a very public
Speaker 1: departure and this week's cover story on China's COVID zero trap.
Speaker 1: We start this week with the man and the story
Speaker 1: that just keep on giving. We're talking about Elon Musk
Speaker 1: and his forty four billion dollar deal to take Twitter private.
Speaker 1: Every day there are multiple stories on this now his
Speaker 1: claim on the future of the First Amendment and content
Speaker 1: moderation on the platform. That's the story we want to
Speaker 1: get into, and that's exactly what Bloomberg Business Week editor
Speaker 1: Joel Webber and Features editor Max Chafkin talk to us about.
Speaker 1: There's free speech, which you know, I think I think
Speaker 1: most most people, especially most Americans kind of can kind
Speaker 1: of have some idea on and agree on. And then
Speaker 1: there's this kind of like political notion of free speech
Speaker 1: where um Republicans have started using that phrase and the
Speaker 1: right started using that phrase to complain like about a
Speaker 1: very specific and maybe narrower set of issues than one
Speaker 1: that like a constitutional scholar will be you know, inter
Speaker 1: sit in, and that is what Elon Musk has gravitated
Speaker 1: towards and that is why he's currently being celebrated, you know,
Speaker 1: on the right. If you if you turn on UM,
Speaker 1: you know, conservative talk radio or consertive television or whatever,
Speaker 1: Elon Musk is front and center. They are celebrating this.
Speaker 1: They're presenting this as you know, uh, Trump and his
Speaker 1: allies are going to be back on you know, back
Speaker 1: on social media. And it's like, you know, the resurgence
Speaker 1: of Trump is UM and Musk, I think, is embracing
Speaker 1: that and is trying to take advantage of it, both
Speaker 1: as a potential business strategy for Twitter, you know where
Speaker 1: where just just like you know, Fox News came along
Speaker 1: and presented itself as kind of like a right wing
Speaker 1: news network to CNNs, Like, I think that's kind of
Speaker 1: what Musk is going for here. It also has potential
Speaker 1: business implications for Tesla, which of course is UM you know,
Speaker 1: has a huge valuation and is trying to reach a
Speaker 1: different sector of consumer. Right now, let's talk about trucks,
Speaker 1: because uh, Elon's got a few that he might need
Speaker 1: to sell to some people who might lean a little
Speaker 1: bit more seen they well, right, so you know, we
Speaker 1: we had that on the cover of last week. You know,
Speaker 1: there is another cyber truck coming that. Now I think
Speaker 1: this is like a pretty savvy move. It's unclear it
Speaker 1: will work. And of course Tesla stock went you know
Speaker 1: down at the end of yesterday. But um, but I
Speaker 1: do think so. So Teslas sold a lot of cars
Speaker 1: to kind of wealthy environmentalists, right, there's there's sort of
Speaker 1: a limit to that market. And Americans buy a lot
Speaker 1: of trucks. And of course trucks are are much bigger
Speaker 1: in kind of red states they are in blue states.
Speaker 1: And we've seen Musk. This is not a new strategy
Speaker 1: for Musk. We saw him, you know, moving Tesla's operations
Speaker 1: from California to the Austin area and and talking about
Speaker 1: that in ideological terms. And of course they launched the
Speaker 1: the cyber truck, you know, at an event um a
Speaker 1: few weeks back in Austin cyber rodeo. Very much embracing
Speaker 1: you know, kind of Texas culture. And I think that's
Speaker 1: I think the jury is out on whether this will work.
Speaker 1: You know, Ford of course has a very strong, uh
Speaker 1: track record, you know, selling trucks that the f one fifty,
Speaker 1: as we wrote in our story, is you know, it's
Speaker 1: like one of the most successful consumer products of all time.
Speaker 1: But but I think musk is trying to take advantage
Speaker 1: of these political dynamics to find a niche well, and
Speaker 1: so are you. So is it basically right now? You know,
Speaker 1: his businesses, I think you write about his business interests
Speaker 1: influencing his political ideology. Is that what we're seeing right now? Yeah?
Speaker 1: I think with Musk, um, those two things are very
Speaker 1: closely connected. This is somebody who who has founded a
Speaker 1: series of companies that do business with the government. When
Speaker 1: you do business with the government, you know, primarily SpaceX,
Speaker 1: but of course Tesla got got a huge amount of
Speaker 1: government loan lending from uh in two thousand nine after
Speaker 1: the automotive crisis to benefits from these v credits. And
Speaker 1: when you do that, when you're in that business, you're
Speaker 1: you have to be political. So during the you know,
Speaker 1: the Obama era, must kind of cut this figure as
Speaker 1: this you know, stakeholder capitalist, this kind of green technocrat. Um.
Speaker 1: You know, during the Trump era he shifted a little
Speaker 1: bit back to the to the MAGA. You know, it's
Speaker 1: a little more MAGA friendly and now um, you know,
Speaker 1: with the right kind of research, it with it looks
Speaker 1: like in the in the United States, of course, U
Speaker 1: Republicans are likely to take you know, one, if not both,
Speaker 1: houses of Congress. I think he's he's making a political calculation,
Speaker 1: but it's also happening against a backdrop of an really
Speaker 1: important market to Tesla, which is China, and the company
Speaker 1: successfully built its factory in Shanghai. A couple of nights ago,
Speaker 1: we saw tweet from none other than Jeff Bezos, which
Speaker 1: I think surprised a lot of people because Jeff Bezos
Speaker 1: is pretty quiet when it comes to Twitter and this stuff.
Speaker 1: He uh implied that this could be perceived as a
Speaker 1: conflict of interest, as you right, when Musk's Twitter has
Speaker 1: to decide how to treat Chinese back to disinformation, how
Speaker 1: is this being played in Republican circles? When Republicans in
Speaker 1: the past have gone really hard after Disney for its
Speaker 1: presence in China, Nike, the NBA, and more, Musk has
Speaker 1: been pretty much teflon on this issue, despite um, you know,
Speaker 1: China critics having having plenty to criticize here. Um. I
Speaker 1: think for one thing, I think a couple of things
Speaker 1: going on. One is, look, he's a successful you know
Speaker 1: industrialist and and people like that. And and as a result, UM,
Speaker 1: people are more forgiving of some of these um, you know,
Speaker 1: connections or hypocrisies or potential vulnerabilities politically. UM. I also
Speaker 1: think that, you know, conservatives have been very eager to
Speaker 1: kind of embrace this like made in America thing. You know. Musk,
Speaker 1: despite having a huge factory in China, also employs, um
Speaker 1: you know, lots of people in the United States. So
Speaker 1: so I think it's it's it's a little bit complicated.
Speaker 1: I also want to say, you know, on the tweet
Speaker 1: from Bezos, of course he's got his own political agenda, right,
Speaker 1: He's competing with Musk also for government contracts. He owns
Speaker 1: this rocket company, so it's totally in his interest to
Speaker 1: kind of you know, slime you know, competitor on Twitter, um,
Speaker 1: you know, as part of that. And we should probably
Speaker 1: also say that that he sort of immediately backed off.
Speaker 1: That was Bloomberg Business Week features editor Max Chafkin and
Speaker 1: the editor of the magazine, Joe Weber, coming up from
Speaker 1: a technological innovator to a financial one. We dive into
Speaker 1: a new book on Wall Street Legend. We're talking about
Speaker 1: the late Great Jack Bogel, you're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio.
Speaker 1: I was never in this business to build a colossus,
Speaker 1: because I told people many times I was too stupid
Speaker 1: to realize that if we gave investors the best deal
Speaker 1: I would ever get, I'd be building a colossus. And
Speaker 1: so here we are on the way to market share
Speaker 1: of mutual fund assets, something that no one has ever
Speaker 1: achieved anything like before. There are legendary investors and financial
Speaker 1: innovators that, over the decades still stand out. Warren Buffett,
Speaker 1: of course, on value investing, fidelities, Peter Lynch amid the
Speaker 1: rise of the mutual fund industry. And then there's the
Speaker 1: man whose voice you just heard, the late Jack Bogel.
Speaker 1: That from a Bloomberg interview back in. Bogel's idea of
Speaker 1: index investing was not only well ahead of its time,
Speaker 1: it was considered radical when he introduced the strategy at
Speaker 1: his then f jeling Vanguard Investment Group back in the
Speaker 1: nineteen seventies. Hard to think of Vanguard's fledgeling, but back
Speaker 1: then it was different. Bogel's life and his lasting impact
Speaker 1: on investing and the financial industry are explored in a
Speaker 1: new book that's excerpted in the latest issue of Bloomberg
Speaker 1: Business Week. Bloomberg Intelligence Senior et F analyst Eric Beltunus
Speaker 1: is here to break down the Bogel Effect, how John
Speaker 1: Bogel and Vanguard turned Wall Street inside out and saved
Speaker 1: investors trillions, and why it took so long for the
Speaker 1: concept of indexing to catch on. This is why where
Speaker 1: I think the story has a little more drama than
Speaker 1: people think. You know, a lot of Wall Street books
Speaker 1: are about the rise in the fall, and let's Bogel.
Speaker 1: It's sort of like he just kept, you know, slowly rising.
Speaker 1: But this guy lived in oblivion for about five years.
Speaker 1: And the reason it took so long, given what people
Speaker 1: today think is an obvious trade, why not Why wouldn't
Speaker 1: I own the whole market? For three basis points is
Speaker 1: that he operated outside of the system. He just did
Speaker 1: the Vanguard refused to pay brokers, and at that time
Speaker 1: it just there were no r i as it was
Speaker 1: just brokers, and so if you did not give them
Speaker 1: money or loads or commissions or kickbacks. Um, they were
Speaker 1: not going to sell your funds, So he had to
Speaker 1: get people to leave that system. He also had to
Speaker 1: try to explain to people that an index fund was
Speaker 1: not average. It sounded average. He had a lot of
Speaker 1: people trying to position it that way, so he had
Speaker 1: to go above and beyond to try to explain, hey,
Speaker 1: this is not average. So those two things made it
Speaker 1: take a long time. Also, the barguard mutual ownership structure,
Speaker 1: which lowers fees the more assets it gets, took a
Speaker 1: while to lower fees because the assets weren't quite there yet.
Speaker 1: So as the assets started to come in the nineties
Speaker 1: and two thousand's, that's when the fees really started to
Speaker 1: dip down. And once they got below twenty fifteen basis points,
Speaker 1: it was a done deal. And that's part of the
Speaker 1: point of making the book. Also is the index fund
Speaker 1: was a kind of a lucky byproduct. The real core
Speaker 1: nucleus of all the things we're seeing today that we're
Speaker 1: from Bogel and Vanguard are the mutual ownership structure, UH
Speaker 1: and the structure of Bogel home self. I must say
Speaker 1: he was a different kind of guy, and so I
Speaker 1: think those two things really are what I explore the
Speaker 1: most in the book. I think I've I've talked with
Speaker 1: you about this before, but I remember one of my
Speaker 1: first shows that I did in financial television and financial broadcast,
Speaker 1: and it was a mutual fund show, and we would
Speaker 1: always be like, Okay, you gotta have a Vanguard fund
Speaker 1: on because it was a low cost, no cost option.
Speaker 1: And our host was like, why would you pay fees
Speaker 1: when you can go to Vanguard and get the same
Speaker 1: strategy and pay no fees. I mean, he really was
Speaker 1: iconic in terms of his impact on this industry. Yeah, absolutely,
Speaker 1: I mean, you know it is it is just a
Speaker 1: modern miracle that you can just get the whole stock market,
Speaker 1: the whole bond market, and at this point international stocks
Speaker 1: for under six seven basis points a six before you
Speaker 1: now can be gotten for three or four basis points,
Speaker 1: basically frictionalist exposure. And that's a big theme in the book.
Speaker 1: I had this well, is that I think, you know,
Speaker 1: Bogel's called the father of the index fund, but honestly
Speaker 1: feel like you should be called either the father of
Speaker 1: low cost investing or I like this phrase addition by subtraction.
Speaker 1: What he did over forty five years was just remove
Speaker 1: all the stuff that kind of gets in the way,
Speaker 1: be it management, fees, brokers, turnover, trading costs, human emotion.
Speaker 1: I mean, taking all that out and you get the
Speaker 1: total market with its almost frictionalist exposure. And that's why
Speaker 1: it's a smash it. And it's not just Vanguard, which
Speaker 1: takes in a billion a day. The rest of the
Speaker 1: money goes to Vanguard esque index funds, even from Fidelity, right,
Speaker 1: the fierce rival of Vanguard. That's how fidelities flows come now,
Speaker 1: just through those low costs inex funds. I mean he totally.
Speaker 1: The whole industry now basically is governed by Vanguard's mutual
Speaker 1: ownership structure, which nobody copied, but yet they have to
Speaker 1: copy it in a way. Eric, when I was reading this,
Speaker 1: I thought back to this article I read in The
Speaker 1: Atlantic about a year ago by Annie Lowry. It's entitled
Speaker 1: could index funds be quote worse than Marxism? And it's
Speaker 1: actually a quote from analyst at Bernstein. They're called passive
Speaker 1: investing worse than Marxism. I see you on the zoom
Speaker 1: laughing right now about this. What do you make of
Speaker 1: criticism of passive investing or index funds such as this. Yeah,
Speaker 1: and most of it's laughable, I mean the Marxism. Somebody
Speaker 1: else said that they're worse than the misuse of antibiotics.
Speaker 1: I mean they're I've heard, I've heard it compared to
Speaker 1: the Salem which trials people go crazy with this stuff. Look,
Speaker 1: if you think about it, all people have done is
Speaker 1: moved from closet indexing. If you look at the Fidelion Magellan,
Speaker 1: it largely owns Apple, Amazon, Google, right, and they've moved
Speaker 1: to actual indexing and saved about seventy basis points in
Speaker 1: the process. Everybody owned the same stocks, they just now
Speaker 1: own it in a different format. And indexing isn't really
Speaker 1: necessarily totally passive. Russell want thousand's different than the SMP.
Speaker 1: The SMP, by the way, is run by a human committee,
Speaker 1: has some rules. It's just more rules based active. So
Speaker 1: I try to get rid of that, that line between
Speaker 1: active and passive. What really is going on is low cost.
Speaker 1: And I promise in the book that let's say indexing
Speaker 1: wasn't a thing, and Vanguard had their mutual ownership structure
Speaker 1: and only active mutual funds. In my opinion, they would
Speaker 1: be the biggest active fund manager six times over because
Speaker 1: they would have been bringing a gun to a knife
Speaker 1: fight over and over. It's the low costs, that's the thing.
Speaker 1: And I don't think anybody who writes these articles would
Speaker 1: really have too much for a problem. The one thing
Speaker 1: we got to watch for is voting power. Vanguarded Blackrock
Speaker 1: now own about seven eight percent of all stocks, and
Speaker 1: so we have to wonder how are they going to
Speaker 1: make sure that they don't vote in a way that
Speaker 1: is different than their shareholders or misuse that power. So far,
Speaker 1: I think they're fine, but we have to watch that.
Speaker 1: That's probably the one thing I would think about watching.
Speaker 1: What about Bogel Deman, I'm surprised to hear about how
Speaker 1: spiritually was um just interesting? Yeah? Look, uh, I asked
Speaker 1: everybody interviewed this question, why is has nobody copered banguards
Speaker 1: much to ownership structure? They said, well, because people go
Speaker 1: to Wall Street to get rich. They don't want to
Speaker 1: drive a Volvo. And then the other question, I said,
Speaker 1: well then why did Bogel do it? And they're like,
Speaker 1: I don't know. Good questions. So a whole chapter is
Speaker 1: called Explaining Vogel, where I try to explain the ingredients
Speaker 1: that went in to create this very unusual person. I
Speaker 1: almost feel he was miscast uh in this industry, but
Speaker 1: maybe the industry needed a miscast in this era to
Speaker 1: sort of bring it to a more fiduciary place. So
Speaker 1: he was perfectly cast in away but definitely not your
Speaker 1: average Wall Street titan. And again I explore that in
Speaker 1: a whole chapter, uh to try to explain to you
Speaker 1: how he happened. That was Bloomberg Intelligence senior et F
Speaker 1: analyst Eric Bolchune is his new book. It's out. It's
Speaker 1: called The Bogel Effect. How John Bogel and Vanguard turned
Speaker 1: to Wall Street inside out and saved investors trillions. It's
Speaker 1: out now still ahead on Bloomberg Business Week, Why a
Speaker 1: successful retail executive chose to speak out against a series
Speaker 1: of COVID related health policies and how it ended up
Speaker 1: costing her a lucrative role in the c suite of
Speaker 1: a six billion dollar company. This is Bloomberg broadcasting from
Speaker 1: the financial capital of the world, Bloomberg eleven Frio in
Speaker 1: New York to Washington, d C. Bloomberg to Boston, Bloomberg
Speaker 1: one O six one does San Francisco, Bloomberg nine sixty
Speaker 1: to the country, Sirius XM jendal one nineteen and around
Speaker 1: the globe the Bloomberg Business app and Bloomberg Radio dot com.
Speaker 1: This is Bloomberg Business Week. Well before she quit in February,
Speaker 1: Jennifer Say was a brand president at Levi. She had
Speaker 1: risen to the rank of chief marketing Officer after more
Speaker 1: than two decades with the Danna maker, and she was
Speaker 1: seen as a potential CEO candidate. Then along came COVID
Speaker 1: nineteen with more. We turned to Bloomberg Business Week senior
Speaker 1: writer Claire Suteth Claire, good to have you with us,
Speaker 1: A really great profile of somebody who I think wasn't
Speaker 1: a household name until she made such a big splash
Speaker 1: leaving Levi's what happened to Jennifer Say, Yeah, well, you're right.
Speaker 1: So Jennifer Say was not a hostle name, but she
Speaker 1: was very high up that le. She'd been at the
Speaker 1: company since, worked her way up to chief marketing Officer,
Speaker 1: which is what she held at the start of the pandemic,
Speaker 1: and then during the pandemic she was actually promoted to
Speaker 1: it's called brand president, which took her basically right below
Speaker 1: the CEO in line to maybe one day become CEO UM.
Speaker 1: And so she's sort of the person that Levi's who
Speaker 1: has for years been crafting the brand image reputation. So
Speaker 1: whatever you think of what do you think of Levi Jeans,
Speaker 1: Levi Jeens, that's what she does for a living. UM.
Speaker 1: Some of that was, you know, inserting Levi's into the culture,
Speaker 1: holding parties at Clichella, that sort of stuffs to make
Speaker 1: it cool, and another part of it was really helping
Speaker 1: be you know, she's part of the executive team that
Speaker 1: crafted Levi's response to social issues. This company was very
Speaker 1: progressive for a very long time, actually, dating all the
Speaker 1: way back to I think in like n it was
Speaker 1: the first company to make genes for women, back when
Speaker 1: women really weren't supposed to even wear pants in public
Speaker 1: right now different you would not UM. It racially integrated
Speaker 1: its factories in the forties, like long before there were
Speaker 1: anyone's requiring it UM. And then it was actually the
Speaker 1: first Fortune hundred company that extended benefits to employees name
Speaker 1: sex partners. UM. So it has this really long history
Speaker 1: and legacy of these progressive chances UM in the past,
Speaker 1: I would say, like decade or so, it became a
Speaker 1: bit more public about them. It has you know, come
Speaker 1: out in favor of marriage equality, transgender right. Um, it's
Speaker 1: very publicly UM sort of promoting UM, you know, fun
Speaker 1: control for the parks and school shooting and and say
Speaker 1: it was actually part of the team that came up
Speaker 1: with all of this, um, and then came the pandemic. So,
Speaker 1: so tell us what happened, because right it sounds like
Speaker 1: every company has a line in the sand when it
Speaker 1: comes to what they're willing to talk about publicly, especially
Speaker 1: when it's UM some some major issues, and you know,
Speaker 1: some things are comfortable. It's some things they're not. What
Speaker 1: happened and it wasn't just her, it was her and
Speaker 1: also her husband. Yeah, so you know, I think Levy's
Speaker 1: you know, this is a really thorny issue. UM. And
Speaker 1: it's you know, this has been a two year long
Speaker 1: internal struggle between Advised that only became public when she
Speaker 1: quit in a very dramatic fashion and gave a bunch
Speaker 1: of television interviews about it. UM. But basically what happened
Speaker 1: is during the pandemic, UM to say and her husband
Speaker 1: living at the time, they lived in San Francisco UM,
Speaker 1: and she became I would say, very upset about a
Speaker 1: number of different UM safety precautions that was put in place,
Speaker 1: both at the sort of San Francisco city level, California
Speaker 1: level UM and and just what was happening at the
Speaker 1: country at large. So we're talking about lockdowns masks her.
Speaker 1: The topic that she talked about most frequently and was
Speaker 1: the most passionate about was UM school reopening, getting kids
Speaker 1: back in the classroom UM. And I think now in hindsight,
Speaker 1: nearly everyone recognizes that schools were shut down consists considerably, like,
Speaker 1: you know, way too long in certain parts of the country.
Speaker 1: There were many European countries that opened quite early. UM.
Speaker 1: She was advocating for this in like March, when no
Speaker 1: one knew what was going on in the depth of
Speaker 1: the pandemic. This is a great week. And I have
Speaker 1: to say, once I started reading the story, I couldn't
Speaker 1: put it down. We we've run out of time, so
Speaker 1: we're gonna recommend everybody check out the story online. But Claire,
Speaker 1: it's like, it's incredible how it plays out. And I
Speaker 1: feel like this gets to where a lot in your
Speaker 1: story about you know, when a company can deploy its
Speaker 1: political muscle really hard to get it right. We're seeing
Speaker 1: a play out with Disney and some other companies. Tim
Speaker 1: it also goes through says political transformation. I mean, this
Speaker 1: is a woman who had posters of Obama hanging in
Speaker 1: her dining room and supported the candidacy of Elizabeth Warren,
Speaker 1: wasn't a fan of Trump, and now she's on Fox News. Yeah,
Speaker 1: it's it's an incredible story, Claire, and you really get
Speaker 1: into all the d tale. So as we said, we
Speaker 1: highly recommend people check it out in the magazine online
Speaker 1: or on the Bloomberg terminal. That was Bloomberg Business Week,
Speaker 1: Senior writer Claire Suddeth, you're listening to Bloomberg Business Week.
Speaker 1: Up next, another quarter, another earnings beat for the toymaker Mattel.
Speaker 1: But that's not the only reason the stock got to
Speaker 1: bump this past week. That's right up next, we're going
Speaker 1: to be hearing from CEO Inn Cries about reports of
Speaker 1: a possible private equity buyout. This is Bloomberg. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes.
Speaker 1: Tim Stinovy from Bloomberg Radio. But Tell America's second largest
Speaker 1: toymaker is in preliminary buyout talks with at least two
Speaker 1: private equity First, we got that news this week. Yeah,
Speaker 1: that news emerging ahead of the company reporting first quarter
Speaker 1: results that beat Wall Street estimates once again, the retailer
Speaker 1: buoyed by Barbie and hot Wheel cells that defied the
Speaker 1: usual seasonal slowdown. All right, to break down the firm's
Speaker 1: latest results and find out more about that potential for
Speaker 1: a multibillion dollar sale, we caught up once again with
Speaker 1: Mattel's chairman and CEO in non cries. This was the
Speaker 1: highest first quarter we have on record, both revenue and profitability.
Speaker 1: Our momentum continued across the business with double digit growth
Speaker 1: in Bobbie, Hotwoods and Fisher Price. We have started the
Speaker 1: second quarter with strong consumer demand. The Follier outlook is
Speaker 1: also strong and we expect to grow market here. So
Speaker 1: all in all, an excellent start of the year and
Speaker 1: we're firmly in growth mode. And I think we highlighted yesterday.
Speaker 1: I mean, you guys have been on a tear if
Speaker 1: I look at you know, the share price in terms
Speaker 1: of the moves that you guys have been doing specifically, Um,
Speaker 1: some would say and I'm going to push a little
Speaker 1: bit that you're setting it up for a sale. Are
Speaker 1: you talking with people? Are there conversations going on? But
Speaker 1: I can't comment on the speculation. But we've been consistently
Speaker 1: growing the company, UH, and this has happened over the
Speaker 1: last four years. You followed the story, so you know
Speaker 1: that we took our adjusted IBIDA from a hundred six
Speaker 1: million dollars in two thousand and seventeen two over a billion,
Speaker 1: and guided for yet another growth this year with higher
Speaker 1: goals for three So this is not a one quarter situation.
Speaker 1: This has been consistent delivery and execution on a on
Speaker 1: a clear strategy and a clear roadmap with Tracking Whale,
Speaker 1: and we are in a great position to continue to
Speaker 1: grow the company. And I will point out that from
Speaker 1: the end of the stock is up almost so investors
Speaker 1: have certainly noticed that performance in those changes. On one
Speaker 1: element that you've had to UH deal with just not
Speaker 1: just over the last year, but over the last few quarters,
Speaker 1: to our inflationary prefer pressures on the supply chain. We've
Speaker 1: spoken to you in the company in past quarters about
Speaker 1: moves that you've made to try to make sure that
Speaker 1: your supply chain remains intact what you've being do ahead
Speaker 1: of time, but it doesn't mean you've been immune to
Speaker 1: higher prices. Talk to us about the pricing power that
Speaker 1: you've had and how much you've had to raise prices
Speaker 1: and how consumers are being affected by that. Yeah, we
Speaker 1: you know, given the anticipated inflation, implementing pricing action UM
Speaker 1: is one of the things we consider at times of
Speaker 1: of of inflationary pressures. Uh. We're not the only ones,
Speaker 1: and it's not unique to the toy industry. Uh. And
Speaker 1: this is something that we've done, like in the second
Speaker 1: half of last year, and we expect to do that
Speaker 1: again uh in the second half of this year. It's
Speaker 1: important to say that when raising prices, we always keep
Speaker 1: the consumer in mind, and we're being very thoughtful and
Speaker 1: very strategic and remain strategic committed to maintaining the right
Speaker 1: balance between quality and value for our consumers. Well, you
Speaker 1: know what's really great is I mean, you guys have
Speaker 1: some old iconic brands. We've talked about it with you before,
Speaker 1: whether it's Barbie, whether it's Hot Wheels. I mean, it's
Speaker 1: just one brand after another. But then you have folded
Speaker 1: into the mix and embrace of all that is new
Speaker 1: through alliances and partnerships. What is it that really drives
Speaker 1: growth for you guys, What is it that you say, Okay,
Speaker 1: this is top of mind, you know. In terms of
Speaker 1: the performance for the company overall, well, we've been growing
Speaker 1: on the toy side of the company very strongly. We
Speaker 1: expect further growth this year. We expect growth in the
Speaker 1: second quarter and growth for the full year. We expect
Speaker 1: our power brands to continue to grow this year, Barbie,
Speaker 1: Hotwells and Fisher Price, as well as American Girl, and
Speaker 1: we expect to see strong growth in the challenging categories.
Speaker 1: This is where we're not a global leader, but we're
Speaker 1: seeing tremendous momentum and growth in categories like action figures
Speaker 1: and building sets. So we are in a great position
Speaker 1: to grow in the toy side of the company. And
Speaker 1: in addition to that, we're also seeing great momentum on
Speaker 1: the I P strategy. This is film, television content in general,
Speaker 1: consumer products, digital experiences. And this week alone, we had
Speaker 1: two very exciting news to share. One is that we
Speaker 1: partnered with J. J Abrams to produce the Hot Wheels
Speaker 1: movie that we're developing with Warner Brothers. JJ is one
Speaker 1: of the most prolific, respected producers of this generation filmmakers
Speaker 1: in general, is also a director and we're very excited
Speaker 1: to have him partnered with us on Hot Wheels. And
Speaker 1: in addition, we also announced or Warner Brothers announced at
Speaker 1: CinemaCon the release date of The Barbie Movie, which will
Speaker 1: be July one, three, And this film is shaping up
Speaker 1: really well to be an iconic cultural event. We could
Speaker 1: not be more excited with the creative, execution and vision
Speaker 1: of Great Gelwig, who is also one of the most
Speaker 1: respected and prolific creative filmmakers of this generation. And an
Speaker 1: all star cast with Margot Robbie, Ryan Gosling, Will Farrell Simulo,
Speaker 1: America Ferra and many other you know, very strong talent
Speaker 1: and exciting cast. So expect something very special, uh from
Speaker 1: the Barbie Movie as well as Hot Wheels, and as
Speaker 1: well as other twelve films that we have in development,
Speaker 1: you know. And I want to go back to something
Speaker 1: that you said about challenger categories areas where you're not
Speaker 1: actually the top of the category. Um, do you think
Speaker 1: you can become the leader of the pack in those categories?
Speaker 1: In action figures, for example? What will it take? We
Speaker 1: we're seeing tremendous growth and momentum. In the first quarter,
Speaker 1: we grew by fort in the core and this is
Speaker 1: on top of six six percent in the same quarter
Speaker 1: last year, so we're lapping a very strong year with
Speaker 1: forty in in the first quarter. Within that action figures
Speaker 1: actually grew by sev so uh shoes momentum even by
Speaker 1: our own properties such as Masters of the Universe, as
Speaker 1: well as third party franchises that we manage on the
Speaker 1: toy sides such as Jurassic World, Minions and Light Year three,
Speaker 1: big theatrical releases that are coming up in the second
Speaker 1: quarter and will further amplify growth in this category in
Speaker 1: addition to what we do already. So this is an
Speaker 1: area where we see an opportunity to position Mattel as
Speaker 1: a partner of choice for the major entertainment companies and
Speaker 1: owners of big important franchises to leverage our platform, our
Speaker 1: capabilities on the design side, supply and supply chain, and
Speaker 1: commercial execution and really grow these franchises and manage them
Speaker 1: as evergreen properties that are not just dependent on the
Speaker 1: movie launch. But this is where we can bring out
Speaker 1: capabilities and manage franchises as evergreen I P. And continue
Speaker 1: great value for our partners. Well, you know, I think
Speaker 1: about what you said about IP strategy film TV. You
Speaker 1: guys are already do with the Barbie movie. You're gonna
Speaker 1: do it, as you said, with Hot Wheels, And I
Speaker 1: do think about, um, what's the best way for you
Speaker 1: to leverage all of that? Is it by doing it
Speaker 1: as a standalone and just partnering and you know, creating
Speaker 1: alliances with media and entertainment companies, or is there some
Speaker 1: kind of you know, going back to our first question,
Speaker 1: some kind of more significant link up with a specific
Speaker 1: media house Disney for the matter, you know, that would
Speaker 1: make sense and really create some incredible leverage. Our approach
Speaker 1: has been capitalized in that we don't take capital risk
Speaker 1: in investing in movies um, and that capitale approach applies
Speaker 1: also to our manufacturing strategy. What we do do on
Speaker 1: the content side is with partner with the best the
Speaker 1: best in their respective field. So we're partnered with the
Speaker 1: best distributor as a major studio and the best creative
Speaker 1: talent per genre, per project. And that gives us the
Speaker 1: ability to do that at scale and develop multiple projects
Speaker 1: at the same time and not be limited to UH
Speaker 1: one or two movie movies coming out every one or
Speaker 1: two or three years. So we can do it at scale,
Speaker 1: work with the best people, per genre, per opportunity across
Speaker 1: across the industry, and have multiple shots on goal with
Speaker 1: incredible brands and incredible incredible franchises and still find the
Speaker 1: right economic balance in terms of risk and reward for matail.
Speaker 1: Where our currency, our contribution is the I P the
Speaker 1: franchises that we know, our expertise and know how of
Speaker 1: those of those franchises, and making sure that we collaborate
Speaker 1: and and and bring our understanding and the nuance knowledge
Speaker 1: of these franchises to the table and create something very
Speaker 1: excited for exciting for insumers all over the world. All right,
Speaker 1: you know, and I'm I'm a little persistent, as you
Speaker 1: might know, having re talked a few times. So go,
Speaker 1: So you are firing at all cylinders. Mattel is firing
Speaker 1: at all cylinders. And you guys have had what three
Speaker 1: consecutive years of dynamic certainly equity growth. Uh And like
Speaker 1: I said, investors are noticing. So some would say that
Speaker 1: is a reason the top perhaps or at a prime
Speaker 1: moment to sell the company. Others would say it's you know,
Speaker 1: you are talking about more avenues for growth. What would
Speaker 1: it take to do a deal that makes sense? Obviously
Speaker 1: shareholders of the board have to agree. But you know,
Speaker 1: is it just about price or is it about strategy. Well,
Speaker 1: we're here to create shareholder value. We've been very consistent
Speaker 1: about executing our strategy and always have our shareholders interests
Speaker 1: as a north star. We have been doing it consistently.
Speaker 1: We see a lot of runway for the company to
Speaker 1: continue to grow and to create more shareholder value. That's
Speaker 1: our job, that's how focus, that's what we've been doing,
Speaker 1: and this is what we are looking to do going forward.
Speaker 1: That's a non christ chairman and CEO of Mattel. And
Speaker 1: that wraps up our first hour of the weekend edition
Speaker 1: of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser
Speaker 1: and I'm Stovik. Ahead in our next hour, our cover
Speaker 1: story on how China's campaign to wipe out COVID is
Speaker 1: crushing its economy, plus the chief technology officer of Chipotle
Speaker 1: on strong earnings amid rising costs, and then our pursuits
Speaker 1: team reveals the secrets behind some of the world's most
Speaker 1: expensive wedding bashes. We're talking millions and millions of dollars,
Speaker 1: tens of millions dollars. This is Bloomberg. This is Bloomberg
Speaker 1: Business Week inside from the reporters and editors who bring
Speaker 1: you America's most trusted business magazine, plus global business, finance
Speaker 1: and tech news as it happens. Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio.
Speaker 1: Plenty ahead in our second hour of the weekend edition
Speaker 1: of Bloomberg Business Week, including Chipotle's chief technology officer on
Speaker 1: the company's response to inflation, plus how to spend it
Speaker 1: twenty five million bucks in one weekend. It's actually not
Speaker 1: as hard as you think. That's, of course, if you
Speaker 1: have the right wedding planner and if you have the
Speaker 1: million alright. First up this hour, this week's cover story
Speaker 1: the rising cost of China's COVID zero policy, and the
Speaker 1: entire economics section of the magazine breaking down the ripple
Speaker 1: effects and also questioning credibility of the country's coronavirus statistics.
Speaker 1: Bloomberg Business Week Economics editor Christina Lynn Blad overseeing the coverage.
Speaker 1: She and Business Week editor Joel Webber help with the
Speaker 1: damage to China's economy and its people into perspective, Joel,
Speaker 1: I want to start with you, uh, take us into
Speaker 1: sort of the idea for the cover here and why
Speaker 1: you wanted to make China and its response to COVID
Speaker 1: more than two years into the crisis. The focus well
Speaker 1: China throughout the pandemic has to a COVID zero policy
Speaker 1: where borders are closed and whenever there is a uh,
Speaker 1: you know, an uptick in cases, they meet that with
Speaker 1: a lockdown. That has basically not had to happen for
Speaker 1: two years since Wuhan in the early days of the pandemic,
Speaker 1: but we've seen within the last couple of months o
Speaker 1: macron driven cases have started to surge throughout the country.
Speaker 1: Really this came to a head in Shanghai, where all
Speaker 1: of a sudden the whole city was basically brought to
Speaker 1: its knees uh. And what China has done since then
Speaker 1: is basically become even more more proactive and shutting down
Speaker 1: cities and regions whenever cases start to tick up, and
Speaker 1: that will have profound impacts on the global economy um
Speaker 1: in addition to to China. And that's when we started
Speaker 1: to see this unfold and talk to our colleagues in Shanghai.
Speaker 1: We realized that this is a much bigger story with
Speaker 1: way bigger globe implications than than anything that we've really
Speaker 1: seen in the China conversation over the last two years.
Speaker 1: And that's when Christina's pulled all this up and we
Speaker 1: started running with a bunch of stories. And Christina, you
Speaker 1: know what stuck out to you as we started spooling
Speaker 1: up this coverage, um and and trying to kind of
Speaker 1: like wrap it all together. What were the elements that
Speaker 1: you wanted to really focus on. Well, for me, a
Speaker 1: lot of it was the contrast of the fact that
Speaker 1: when we were all stuck working from home waiting for
Speaker 1: vaccines to arrive, Chinese people, because they had been so um,
Speaker 1: you know, committed to stamping out the virus in the
Speaker 1: initial phase, We're going to the movies, we're going to restaurants.
Speaker 1: Life had returned to normal in China in you know,
Speaker 1: by the by the end of the beginning. And then
Speaker 1: when I was looking now, I was saying, my god,
Speaker 1: it's this country is going through now what we all
Speaker 1: already went through, because um it is committed to not
Speaker 1: transitioning to a living with the virus phase because it can't,
Speaker 1: partly because it has less effective vaccines that you know.
Speaker 1: I mean, I think a lot of the world is
Speaker 1: sort of looking at China and can't understand the commitment
Speaker 1: to this policy. But I think we have to acknowledge
Speaker 1: the fact that the human cost would be really, really
Speaker 1: large to try and to do a quick transition. And
Speaker 1: one of the reasons is that China um has six
Speaker 1: m R and A vaccines in development, but not a
Speaker 1: single one will reach the market this year, and they
Speaker 1: are committed to not allowing foreign made ones UH to
Speaker 1: you know, use commercially. So that when you think about that,
Speaker 1: this this staggering human cost that that China would face
Speaker 1: if it if it did sort of open up and
Speaker 1: start to live with the virus, it really reveals what
Speaker 1: a conundrum President g has there. And keep in mind
Speaker 1: this is a Congress year. There there will be a
Speaker 1: big gathering later in the year, and when we talk
Speaker 1: to our colleagues that it is all about stability, so
Speaker 1: there will be no change of policy. They have to
Speaker 1: stay the course because to do anything other than that
Speaker 1: would to look like you made their own call. That's right.
Speaker 1: The political imperative is sticking with the policy. This is
Speaker 1: all playing out on social media in a really fascinating
Speaker 1: way in China right now. Traditionally social media has been
Speaker 1: censored in the country, and a lot of that censorship
Speaker 1: has actually come from the companies themselves. What's happening right
Speaker 1: now in social media in terms of uh, this the
Speaker 1: people of China pushing back against the government narratives. Well,
Speaker 1: there's been this huge outpouring of resentment um about the
Speaker 1: way the policy is being enforced. And also the fact
Speaker 1: that unlike most Western countries, China has not um done
Speaker 1: stimulus to households, only to businesses so um. And also
Speaker 1: people are getting much more creative about avoiding sensors, human
Speaker 1: sensors and censorships software. So one of the things we've seen,
Speaker 1: for example, is that these government hashtags that are used
Speaker 1: to sort of you know, make pronouncements, well people are
Speaker 1: hijacking them and actually using them to to sound off,
Speaker 1: you know, on government policies and have sometimes like ironic
Speaker 1: messages like oh, it would be so terrible to live
Speaker 1: in the United States, you know, and people know when
Speaker 1: people are saying things like that, what they mean. Another
Speaker 1: thing that we saw recently, which is really interesting was
Speaker 1: there was a six minute video that somebody made about
Speaker 1: life in Shanghai during the lockdown. They just pieced together
Speaker 1: all these sort of it's very moving um and UM
Speaker 1: and the sensors UM were quick to to find it
Speaker 1: and take it down. But people did things like they
Speaker 1: loaded it back upside down, They loaded up mirrored versions
Speaker 1: of the video that because the software wasn't picking up
Speaker 1: that this was the same clip, you know, and uh.
Speaker 1: And by the end of that same day they were like,
Speaker 1: ow many more versions of that video we're in on
Speaker 1: the internet. You know. Well, it's an incredible package of coverage,
Speaker 1: including looking at Shanghai and ex pats and people may
Speaker 1: be rethinking, um, their exposure to that part of the world. Christina,
Speaker 1: thank you so much. Bloomberg Business Week economicseditor Christina Limbled
Speaker 1: and of course Joel Weber, the editor of the magazine
Speaker 1: you're listening to, Bloomberg Business Week. Coming up, Chipotle seeing
Speaker 1: robust growth with diners undeterred by price hikes. You gotta
Speaker 1: get your burrito right too, and avocado. We'll break down
Speaker 1: the first quarter earnings with the company's chief technology officer.
Speaker 1: That's coming up next, and this is Bloomberg. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stinovik from Bloomberg Radio. Chipotle Mexican Grill's latest menu
Speaker 1: price increases help boost comparable sales beyond analyst estimates. That
Speaker 1: key measure rose nine in the company's latest quarter. Chipoli
Speaker 1: still wants to expand its brick and mortar footprint as
Speaker 1: well as its digital reach. For more on the company's
Speaker 1: earnings in its path forward, it is the threat of
Speaker 1: COVID waynes here in the US. Carol spoke with Chief
Speaker 1: Technology Officer Kurt Garner. Our digital business wouldn't be strong
Speaker 1: if it wasn't for the great culinary teams at Chipotle. Certainly,
Speaker 1: the launch of new Pliosada was very, very popular as
Speaker 1: our most popular protein that we've ever introduced, and there's
Speaker 1: a lot of excitement now for people to come back
Speaker 1: and eat in restaurants and come to Chipole. You guys
Speaker 1: have been able to You are one of the few companies.
Speaker 1: You know, as we go through this earning season once again,
Speaker 1: there are some companies who can raise prices and keep
Speaker 1: customers still coming back, and there's some that cannot. You
Speaker 1: guys have been able to push through price increases to
Speaker 1: combat hire food prices, hired labor costs. That helped her
Speaker 1: out about this last quarter as well. Can you continue
Speaker 1: to do that though if needed? We're completely real ingredient company,
Speaker 1: very much farm to table and are very affordable in
Speaker 1: terms of what we provide. Certainly, we hope we don't
Speaker 1: have to continue to do this and that inflation and
Speaker 1: the other other pressures in the marketplace moderate or subside.
Speaker 1: But we're very happy with where we are right now,
Speaker 1: and we'll continue to take a look at what's going
Speaker 1: on across the business and across the landscape frankly of
Speaker 1: our supplier network as we get through the rest of
Speaker 1: the year. So current is it's safe to say fair
Speaker 1: to say though that raising prices. Continuing to raise prices
Speaker 1: is always on the table if need be well. Again,
Speaker 1: we're going to continue to investigate and look at what's
Speaker 1: going on. I would never say that anything's on or
Speaker 1: off the table permanently. We're a company operated organizations, so
Speaker 1: we can move quickly as new data becomes available to us.
Speaker 1: And again we're hopeful that we're past most of the
Speaker 1: acceleration that we've seen in terms of commodity prices. But
Speaker 1: we're going to continue to be wise and how we
Speaker 1: run the business and how we consume that data. Recently
Speaker 1: caught up with Jack Cartown. We talked about labor, we
Speaker 1: talked about supply chains. What's the toughest nut to crack
Speaker 1: right now? I think for us, it's about continuing to
Speaker 1: to provide access to our customers, and when we do
Speaker 1: that and do that really well, we provide growth opportunities
Speaker 1: for our teams. Um Certainly the last couple of years,
Speaker 1: there have been a lot of challenges that we've all
Speaker 1: had to face, uh and frankly adapt our business too.
Speaker 1: At the same time. Finding great real estate, continuing to
Speaker 1: develop our people, innovating and food and technology are all
Speaker 1: the things that we're focused on right now as we
Speaker 1: continue to be an extraordinary growth company in this environment.
Speaker 1: How's the supply chain doing. Our teams have done a
Speaker 1: great job working with our suppliers. Certainly their stressed within
Speaker 1: the network. A lot of our relationships are very long standing.
Speaker 1: We've been partners for a very long time, and we
Speaker 1: look at it in a partnership model of how we
Speaker 1: can work collaboratively with all of our suppliers and vendors
Speaker 1: to make sure that they're okay as we're going through this,
Speaker 1: and make sure that we're okay and and stock and
Speaker 1: able to provide the experience that we need to to
Speaker 1: provide to our customers. But you know, we all like
Speaker 1: to mention it like there's some stress points, right, whether
Speaker 1: it's avocados or some different things. I mean, is it
Speaker 1: getting more difficult, is it easy? Is it easing a
Speaker 1: little bit, or is it just kind of more the
Speaker 1: same of what we've seen over the last couple of months.
Speaker 1: It seems like we're getting to a point where it's stabilizing,
Speaker 1: But uh, it's hard to tell what the next challenge
Speaker 1: or shock to the system will be. Certainly the avocado
Speaker 1: issue was more of a political one than it was
Speaker 1: a pure supply chain or agricultural challenge. Our suppliers are
Speaker 1: continuing to face challenges with we all ingredients and with labor,
Speaker 1: so there are a lot of different things that go
Speaker 1: on to that or go into that. But again, Carol,
Speaker 1: it seems like at this point we're starting to hit
Speaker 1: more of a place where it's moderating, but we're going
Speaker 1: to continue to again be wise and sure that We're
Speaker 1: agile and able to react to an even challenges that
Speaker 1: might come up. You know, Kurt, all of your management
Speaker 1: team always talks about the culture at the company, and
Speaker 1: key to that culture is the employees. Those that in particular,
Speaker 1: we see front and center center As customers talked to
Speaker 1: us about the labor market, is that also moderating? Is
Speaker 1: that plateauing in terms of the stresses there and the
Speaker 1: difficulty to find workers or pay up for those workers.
Speaker 1: We're really really excited that our labor situation right now
Speaker 1: is the best that it's been in several years. And
Speaker 1: that's a result of the fact that we're a growth
Speaker 1: company that's investing heavily within our teams. Of our general
Speaker 1: managers were internal promotions last year. UH, and that's some
Speaker 1: power that we have as a company operated growth company. UM.
Speaker 1: Within three years, you can go from being a crew
Speaker 1: member to running a Chipotle UH. And we just promoted
Speaker 1: a regional vice president who runs several hundred restaurants that
Speaker 1: have started as a crew member. So that strong career
Speaker 1: path and the opportunity that provide we, we think is
Speaker 1: a big part of why our staffing levels frankly, are
Speaker 1: in really good shape right now, Hey, one thing I
Speaker 1: wanted to ask you, and and the Bloomberg Green Summit
Speaker 1: is going on, and I caught up with the founder
Speaker 1: and head of Daily Harvest and they are big on
Speaker 1: organic farming and regenerated farming and really speaks to what
Speaker 1: so many of the initiatives you guys are doing over Chippola.
Speaker 1: Talk to me about Cultivate Next because this is your
Speaker 1: opportunity to invest in those companies that align with your mission. Yeah,
Speaker 1: we're really excited about Cultivate Next UM and I've I've
Speaker 1: said it earlier. We're a company operated, restaurant chained, so
Speaker 1: when we find a new idea, we can be agile
Speaker 1: and pivot very quickly. We've got a very strong balance sheet,
Speaker 1: and we've got a great technology foundation. It makes us
Speaker 1: the ideal sandbox to be an accelerator for new technologies
Speaker 1: and new ideas. Since the announcement of the fun UH,
Speaker 1: our expectations have been certainly surpassed in terms of the
Speaker 1: interest that we're seeing the amount of a number and diversity, frankly,
Speaker 1: of companies that have reached out to us to become
Speaker 1: part of this UH. And and we're looking at this
Speaker 1: across the business as ways to improve the experience of
Speaker 1: working within the Chipole That proved the experience as a
Speaker 1: guest of Chipotle certainly down into the supply chain and
Speaker 1: our mission of cultivating a better world. We think there's
Speaker 1: a lot of good ideas out there looking for a
Speaker 1: space to show what they can do, and we believe
Speaker 1: that we're again a great platform for that type of ideation. Yeah,
Speaker 1: it's interesting to hear the conversations around this. Certainly, moving forward,
Speaker 1: I feel like more broadly out in the world. Hey,
Speaker 1: one last question, Kurt Um, you guys feel confident enough
Speaker 1: in terms of your cap spend, your increase of stores,
Speaker 1: all of your missions at this point or do you
Speaker 1: feel like the outlook is a little murky and you
Speaker 1: might have to hold back. We're extremely optimistic. We're continuing
Speaker 1: to grow. We're accelerating our new restaurant account this year.
Speaker 1: We're not even halfway to our goal of seven thousand
Speaker 1: restaurants in North America, and we're not at our goal
Speaker 1: of what we believe our average unit volumes will be yet.
Speaker 1: So all of our growth strategies are intact. Certainly, our
Speaker 1: staff in situation gives us a lot of comfitt confidence
Speaker 1: and optimist optimism that we're going to have the leaders
Speaker 1: of the future to help us run the company as
Speaker 1: we grow, so it's full steam ahead. That was Kurt Garner.
Speaker 1: He's chief technology officer at Chipotle Mexican. Grow still to
Speaker 1: come on Bloomberg Business Week and organic food maker setting
Speaker 1: its sites even higher after achieving Unicorn status. This is
Speaker 1: Bloomberg broadcasting from the financial capital of the world Bloomberg
Speaker 1: eleven Frio in New York to Washington, d C. Bloomberg
Speaker 1: to Boston, Bloomberg one oh six one does San Francisco,
Speaker 1: Bloomberg nine sixty to the country Serious XM Chado one
Speaker 1: nine team and around the globe the Bloomberg Business app
Speaker 1: and Bloomberg Radio dot Com. This is Bloomberg Business Week.
Speaker 1: Bloomberg Green Summit took place this past week. It's where
Speaker 1: we check in on investors, companies, individuals who are paving
Speaker 1: the way for more sustainable and climate conscious future. That
Speaker 1: includes the start up Daily Harvest. It counts Serena Williams,
Speaker 1: Bobby Flay, and Gwyneth Paltrow among its investors. It's a
Speaker 1: direct to consumer organic produced vendor, and its latest funding
Speaker 1: round pushed it past a billion dollar valuation and into
Speaker 1: Unicorn territory. I sat down with the CEO and founder
Speaker 1: Rachel Drury and chief supply chain officer Ricky Silver. We
Speaker 1: talked about with the government and companies can do to
Speaker 1: help the organic farming space. People can vote with their dollars,
Speaker 1: people can can put their their money where their mouth is. Um.
Speaker 1: But these problems have to be solved at the corporate
Speaker 1: and systemic level. Um. There's so much research that needs
Speaker 1: to be done on regenerative agriculture and um, you know,
Speaker 1: agriculture and climate change that the government needs to invest in.
Speaker 1: And you know, I think about farm subsidies where um,
Speaker 1: you know, soy wheat corn are where the government is
Speaker 1: still putting their money after all these years, and the
Speaker 1: downstream effects of those investments, where if we took that
Speaker 1: money and put it towards investment and research and regenerative agriculture,
Speaker 1: we would be in a whole different place. I'd also
Speaker 1: love to say there's some basic oversight and sort of
Speaker 1: action of the systems within government that we can uh
Speaker 1: push for. So for example, we were down an organic
Speaker 1: week a couple of weeks back, um, and there's a
Speaker 1: bill that right now is being pushed called the Continuous
Speaker 1: Improvement and Accountability Act for Organic that would basically just
Speaker 1: ensure a twenty year backlog of recommendations and changes to
Speaker 1: how organic is managed and overseen uh go into effect
Speaker 1: or at least get reviewed. And that type of a
Speaker 1: backlog is exactly why I think the farming community, the
Speaker 1: AG space hasn't been able to make more progress because
Speaker 1: government isn't stepping up and even doing the fundamentals, let
Speaker 1: alone the investments. At Rachel's talk, so you're saying there's
Speaker 1: a backlog of farmers who want to produce organically and
Speaker 1: they just need to be signed off unimproved. More so,
Speaker 1: the you know, the oversight of the organic certification process
Speaker 1: something that means a lot to consumers, right, you need
Speaker 1: to have trust in that. So there's a backlog of
Speaker 1: recommendations that would make the oversight and the process of
Speaker 1: becoming organic certified or maintaining it. This is the Green Summit, right,
Speaker 1: And so we're thinking about things that impact the environment.
Speaker 1: Why is organic farming? Why is regenerative farming? Which is
Speaker 1: what you guys are focusing on. Why is this so important?
Speaker 1: And part of understanding this is understanding exactly what regenerative
Speaker 1: farming is about versus conventional farming. Absolutely, I mean, regenerative
Speaker 1: agriculture just a level set is bringing our soil back
Speaker 1: to a place where, you know, mother nature can do
Speaker 1: what mother nature does. It takes a lot of hubris
Speaker 1: for us as a society to to say like, oh,
Speaker 1: we can do better than mother nature. We can you know,
Speaker 1: use you know, fungicides and pesticides and fertilizers to do
Speaker 1: something better. So it's kind of bringing agriculture, bringing our
Speaker 1: soil back to a place where it can sustain human
Speaker 1: life on this planet for future generations. Yeah. I would
Speaker 1: just say the other thing that's really important to know
Speaker 1: is that this is not new, right. Regenerative agriculture is
Speaker 1: certainly kind of what farmers did wait way back when. Yeah,
Speaker 1: And it's it's about a holistic approach to as Rachel said,
Speaker 1: both soil management and the farm management right, the people
Speaker 1: on the on the land as well. Can we scale
Speaker 1: it up? I mean, just looking at some statistics in
Speaker 1: terms of agriculture and what it you know, the contribution
Speaker 1: to the economy, but so much is done conventionally. Can
Speaker 1: we scale it up? Yes? I think that there's a
Speaker 1: big misnomer that says, you know, organic agriculture and regenerative
Speaker 1: agriculture can't be scaled. But the truth is many farmers
Speaker 1: are doing this already, and so it's not to say
Speaker 1: that it can't be scaled. But why aren't more then
Speaker 1: because the organic is what was the statistic you shared
Speaker 1: with me, So food that we act, that we eat
Speaker 1: is one percent of US agriculture, only one percent of
Speaker 1: that is organic, so a really small amount. So why
Speaker 1: can't So why aren't were doing it? It's expensive and unproven,
Speaker 1: and so you think about what the farming community is
Speaker 1: looking for, right, we we do go out of our
Speaker 1: way to make sure we listen first. Right, We're not
Speaker 1: going to tell people what they should do. We're gonna listen.
Speaker 1: And what's amazing to see is in a more regional,
Speaker 1: local way there are farmers that are building community around
Speaker 1: applying these regenerative practices, improving to themselves that it makes
Speaker 1: a difference. Right, And so how do you go to
Speaker 1: the farming community that is you know, Razor thin Margins
Speaker 1: already and said we need you to spend more to
Speaker 1: invest This might take five ten years to you know,
Speaker 1: get to the outposts you need. That's where businesses and
Speaker 1: government needs to step in and incentivize that transition, and
Speaker 1: that's really where we play a role. Right. So we
Speaker 1: have a belief that if everybody eats more fruits and
Speaker 1: vegetables every single day, that this is something that is
Speaker 1: objectively good for humans and objectively good for the planet.
Speaker 1: But not all fruits and vegetables are grown the same way,
Speaker 1: and they have to be grown in a way that
Speaker 1: gives back to the soil that that puts us all
Speaker 1: in a in a better position. Um So, giving those
Speaker 1: farmers a hand and saying that we will help support
Speaker 1: you through the three year transition from conventional two organic.
Speaker 1: That was Daily Harvest founder and CEO Rachel Dorry, along
Speaker 1: with Chief Supply chain Officer Ricky Silver at the Bloomberg
Speaker 1: Green Summit. Check out the full conversation that Carol had
Speaker 1: You can do that at Bloomberg Live dot com and
Speaker 1: one other note. Daily Harvest also launching its own version
Speaker 1: of plant based meat, Rachel revealing that touring our discussion,
Speaker 1: we made some news. You know what's different about it
Speaker 1: what it's grown from the ground, not in a lab
Speaker 1: on a meat tree. Plants, you're just gonna have to listen.
Speaker 1: You're gonna have to go and check out the full conversation.
Speaker 1: You're listening to Bloomberg Business Week coming up, behind the
Speaker 1: scenes of the most lavish weddings money can buy. This
Speaker 1: is Bloomberg. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg. Quick to Tim Stinovik from Bloomberg Radio.
Speaker 1: Planning a wedding weather for yourself or your kid or
Speaker 1: anyone else. You can kind to say, it's among the
Speaker 1: most stressful social activities on the planet. But what if
Speaker 1: your reward or job for doing so was, let's say
Speaker 1: a six or perhaps a seven figure page check, would
Speaker 1: that kind of help take the edge off? Probably be? Probably,
Speaker 1: it's still a very stressful job. Well, Bloomberg Pursuits team
Speaker 1: has the right person to help us find out. Brandon
Speaker 1: Presser has already been undercover as a go between for
Speaker 1: Vegas high Rollers a decade on super Yachts even you'll
Speaker 1: recall not so long ago as a cast member at
Speaker 1: Disney World. Now he's taken us behind the scenes at
Speaker 1: some ultra opulent weddings. I mean we're talking ultra opulent,
Speaker 1: like tens of millions of dollars like crazy amount. Brandon
Speaker 1: spent a week working with some of the top event
Speaker 1: planners in the world and discovered all the unromantic work
Speaker 1: that goes into achieving nuptial bliss. He and Bloomberg Pursuits
Speaker 1: editor Chris Royles are joining us now with a look
Speaker 1: at the lead story in this week's Pursuit section. Because
Speaker 1: let me just set you and Brandon of on each
Speaker 1: other for a while. You've done a lot of these ventures.
Speaker 1: I gotta say that Disney one was a favor of mine.
Speaker 1: So tell me about, Like, how did you suggest this
Speaker 1: to Brandon? Brandon? Did Brandon come to you with this idea?
Speaker 1: Brandon came to us with this idea. So we sometimes, um,
Speaker 1: when we're daydreaming about where to send the amazing Brandon undercover,
Speaker 1: we'll think, Okay, what's a like a crazy sort of
Speaker 1: ultra luxury experience that we want to know more about,
Speaker 1: like you know, being a ski Instarcter at Aspen or
Speaker 1: being a waiter at nobu Um. And then Brandon, through
Speaker 1: this process actually gets to know a lot of the
Speaker 1: people who work in the in service in these industries,
Speaker 1: and he can sometimes say, like you know, I haven't
Speaker 1: in at this place where like I think we can
Speaker 1: do this. So we he did um like ultra luxury
Speaker 1: vacations like honeymoon planning, and that kind of led him
Speaker 1: to this. We started think Brandon with with Colin Cowie.
Speaker 1: That's a good place to start because he is the
Speaker 1: party planner to the stars. Who is he and why
Speaker 1: do you need at least a million bucks for him
Speaker 1: to even pay attention to you? Well, I think Colin
Speaker 1: has cultivated a celebrity status in his own right, and
Speaker 1: he sort of created a brand around himself long before
Speaker 1: the idea of branding oneself was a thing. Back about
Speaker 1: five years ago. He started working with Oprah and Oprah
Speaker 1: sort of dubbed him the event center to the Star,
Speaker 1: So then everyone came running um and then so you know,
Speaker 1: he's planned events and weddings for everyone from John Travolta
Speaker 1: to Bruce Willis, Tryan Seacrest to um Mariah carry uh
Speaker 1: and and and so the brand has solved him around
Speaker 1: and people who want that sort of star studded experience
Speaker 1: seek him out, and he can command a million dollars
Speaker 1: to produce, you know, a sort of entry level wedding
Speaker 1: in his in his world? What is he like a
Speaker 1: supermodel from the nineties. I don't get out of bed
Speaker 1: for a for a million dollars. That's funny thing you
Speaker 1: say that, because when I was writing this story, actually
Speaker 1: was toying with trying to do like a Linda Linda
Speaker 1: Evandelista lead for the story, and it just totally ended
Speaker 1: I think a bit of a metaphor, but I was
Speaker 1: thinking about that the whole time. So, Chris, what was
Speaker 1: it that you wanted to know top of mind from Brandon? Well,
Speaker 1: you know, I a lot of times what's interesting about
Speaker 1: these undercover stories is a that the people who work
Speaker 1: that Brandon works with are incredibly talented and they are
Speaker 1: able to accomplish like superhuman feats of um, you know,
Speaker 1: making amazing things happen and dealing with insane requests and
Speaker 1: then be the second most interesting thing is usually the
Speaker 1: bad behavior or the wild requests of the people who
Speaker 1: are indulging in the service. So I wanted to know
Speaker 1: how crazy the brides and grooms were, and you know,
Speaker 1: Brandon actually learned that, you know, the whole sort of
Speaker 1: bride zilla groom zilla thing isn't really as much of
Speaker 1: a thing at this tier. When people are spending one
Speaker 1: to eleven million dollars on a wedding, they're getting everything
Speaker 1: they want, But what about mom Zilla or Dad's right,
Speaker 1: So the people the zilla's are the people around the
Speaker 1: bride and groom. And Brandon saw some some bad behavior
Speaker 1: on the parts of families of celebrities. So I don't know, Brandon,
Speaker 1: you want to tell them about some of the family
Speaker 1: bad behavior you saw? Yeah? No, absolutely, Yeah. Going into this,
Speaker 1: I was really excited to mind, you know, some of
Speaker 1: the more classic breend Bill the stories, and it was
Speaker 1: told to me right from the start. You know, when
Speaker 1: you're getting everything you want for your wedding, you're the
Speaker 1: latitude doesn't come out. But then the mom's that like
Speaker 1: treaks out, especially amongst um new moneyed individuals, because likely
Speaker 1: when they were, you know, in their twenties or early
Speaker 1: threes having their wedding, Um, they didn't get to have
Speaker 1: the nine million dollar wedding. So um. Some of the
Speaker 1: funny things that I was hearing about was that a
Speaker 1: mom would wear white um to the wedding. In college Champagne,
Speaker 1: there was there was a mom who had the videographer
Speaker 1: completely re edit the wedding video. Because she didn't star
Speaker 1: in it enough. By the way, who goes back and
Speaker 1: watch of those things anyway? Yeah, well it's interesting too,
Speaker 1: So tell us about some of the other things that
Speaker 1: you came about came across I mean, open bars being
Speaker 1: kind of the devil. There's a great story I'm gonna
Speaker 1: go there about someone who got so drunk. What happened?
Speaker 1: Oh yeah, um? So at one oneting, you know, it's
Speaker 1: really hard to control alcohol consumption. UM. At a wedding,
Speaker 1: you bought out the whole resort. Um. You know, you
Speaker 1: have all the service that you can ever need, um,
Speaker 1: and you can't water down the drinks because you need
Speaker 1: to keep everything, you know, at a certain standard. Um.
Speaker 1: So people just get absolutely shattered. And one woman actually
Speaker 1: was so drunk she fell over onto her wineglass and
Speaker 1: it popped her silicone bread. So that is why Colin
Speaker 1: Cowy always has an ambulance at every event at the
Speaker 1: um that he throws popped os or not. Okay, well,
Speaker 1: I think this perhaps could be the perfect segue to
Speaker 1: talk about once catering a Game of Thrones themed wedding
Speaker 1: at a private estate. There was body paint involved, but
Speaker 1: I'll let you take it away well, I should say
Speaker 1: so Colin Cowie, that does predate himself with inventing the
Speaker 1: human food tray. And that's not like the like a
Speaker 1: regular Thomas. I mean someone had to do it, um
Speaker 1: and uh. And so he creates these architectural pieces that
Speaker 1: you know, he can have his servers go around and
Speaker 1: you can pick food off of their dress or different
Speaker 1: things like that. And then you know other people have
Speaker 1: mimicked that. Um. And so there's an individual um who
Speaker 1: through a wedding UM that the groom was an art
Speaker 1: and game of thrones span and he wanted all of
Speaker 1: that sort of sexiness from you know, medieval sexiness imbued
Speaker 1: in the festivities. Um. And he doesn't have to have
Speaker 1: a b DSM dungeon in his house regular I mean
Speaker 1: basically all right. I mean you know, if you live
Speaker 1: in the burbs, why not and and uh and they
Speaker 1: made fully they made full use of it because it
Speaker 1: was thrown at his private states. I'm speechless. You get that,
Speaker 1: you get the wedding. You aren't when you're paying uh
Speaker 1: that level of money. Brandon, what are the some of
Speaker 1: the fun or funny things that you had to do?
Speaker 1: Like uh, I remember you were telling us that there
Speaker 1: was some some sneaking of snacks across borders. Yeah. So
Speaker 1: one of the big things, um is the welcome amenity. Right,
Speaker 1: So if you're doing a destination wedding, you want to curate,
Speaker 1: you know, a very special personalized welcome amenity, and that
Speaker 1: usually is a snass box or something like that. And UM,
Speaker 1: at the wedding that I was working out in Mexico, UM,
Speaker 1: the Brandon groom really loved Freedo's and the very specific
Speaker 1: type of freedom that you can't get in Mexico. So
Speaker 1: I was responsible for actually stuffing two duffle bag full
Speaker 1: of these barbecued flavor twists and kind of having to
Speaker 1: smuggle them across the border, Otherwise it would have looked
Speaker 1: like I was trying to sell them in Kanon. Or
Speaker 1: when I think multimillion dollars weddings, I think barbecue flavor
Speaker 1: twist Freedo's for sure first thing that comes to mind. Well,
Speaker 1: one thing that I speaking of smuggling and just logist
Speaker 1: logistics of this, getting everything to a destination where the
Speaker 1: wedding is is a big part of this. And one
Speaker 1: thing that you wrote about was the use of private
Speaker 1: aircraft or cargo containers to actually get furniture, food, why meat,
Speaker 1: The list goes on, uh in the in the realm
Speaker 1: of the millions of dollars. Yeah, and and the planning
Speaker 1: starts so early. So for example, at the wedding that
Speaker 1: I was working at, UM, they it was a kacher wedding,
Speaker 1: so they wanted particular meats to be brought down from
Speaker 1: the United States. And UM there was actually of an
Speaker 1: overland like a large semi truck that left New York
Speaker 1: City ten weeks before the wedding to make sure that
Speaker 1: certain materials arrived to set up a kosher kitchen in Mexico.
Speaker 1: With all this spending and all this planning, UM, it
Speaker 1: doesn't always actually I'll go the way you expect. In
Speaker 1: other words, it doesn't always happen right, because prenups kind
Speaker 1: of get in the way sometimes, you know. Yeah, UM,
Speaker 1: I think the prenup is the ultimate UM weapon UM
Speaker 1: that is wielded at the last minute. If someone wants
Speaker 1: to get more money UM in the prenup, they'll wait
Speaker 1: and sign right before the wedding. And you know, with
Speaker 1: the threat of cancelation UM and Colin has this incredible
Speaker 1: ability to befriend a lot of his clients, and sometimes
Speaker 1: he gets rolled into the prenup drama. A big thank
Speaker 1: you to Bloomberg contributor Brandon press Or, of course, also
Speaker 1: to Bloomberg Pursuits editor Is Rouser. Another great undercover tail. Yeah,
Speaker 1: a pretty stressful job apparently a wedding planner. That wraps
Speaker 1: up the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 1: Thanks so much for joining us. I'm Carol Masser and
Speaker 1: I'm Tim Stanovik. Be sure to tune into Bloomberg Business
Speaker 1: Week Monday through Friday. It starts at two pm Wall
Speaker 1: Street Time on Bloomberg Radio. You can also watch our
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Speaker 1: your podcast. Bloomberg Business Week is available on newstands, now,
Speaker 1: at Bloomberg dot com, at business week dot com, and
Speaker 1: always on the Bloomberg terminal. You can also see me
Speaker 1: on Bloomberg Quick Take, available at Bloomberg dot com, slash qt,
Speaker 1: and streaming platforms like Roku, Apple TV, Samsung TV, and more.
Speaker 1: Have a great weekend, everyone. Did you have a pre nup?
Speaker 1: Did your wife had a pre up? First of all,
Speaker 1: that's a personal question. Okay, did you know? I'll be
Speaker 1: fully there was no prenups, but there was also did
Speaker 1: you see that? You know it's not too late. You
Speaker 1: can do postnups too. Do you know in that story
Speaker 1: the average wedding I think for most America exactly. Big difference,
Speaker 1: big difference. All right, everybody, have a good and safe weekend.
Speaker 1: This is Bloomberg. H