WEBVTT - Bloomberg Businessweek Weekend - September 15th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg business Week inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.000 --> 0:00:23.000 Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. 0:00:23.160 --> 0:00:26.119 Carol Masser is off this week. We're coming off of 0:00:26.160 --> 0:00:29.680 hotter than hoped CPI and PPI readings, while August retail 0:00:29.720 --> 0:00:32.960 sales also surprise to the upside. And on Capitol Hill, 0:00:33.120 --> 0:00:36.400 a slew of tech titans, including Elon Musk and Mark Zuckerberg, 0:00:36.440 --> 0:00:39.560 met with lawmakers to discuss the potential risks of artificial 0:00:39.560 --> 0:00:43.320 intelligence technology. Tech will be a big theme on this program, 0:00:43.479 --> 0:00:47.760 as we'll be talking everything from cybersecurity, space exploration, AI 0:00:47.840 --> 0:00:50.720 in the retail space, and crypto. We begin with the 0:00:50.840 --> 0:00:53.960 Ladder in this week's Bloomberg Business Week cover story about 0:00:53.960 --> 0:00:56.200 the mom and dad behind the man accused of one 0:00:56.240 --> 0:00:59.760 of the biggest crypto related frauds ever. Bloomberg Business Week 0:00:59.800 --> 0:01:03.560 Call Max Chafkin and Bloomberg News Digital Currencies reporter Hannah 0:01:03.560 --> 0:01:06.680 Miller joined me and Simone Foxman to explain how Sam 0:01:06.720 --> 0:01:10.880 Bankman Freed's elite parents helped make the rise of FTX possible. 0:01:11.120 --> 0:01:13.919 Also with US is Bloomberg BusinessWeek editor Joe Weber. 0:01:14.080 --> 0:01:18.120 We're a couple of weeks away from SBF's trial beginning 0:01:18.280 --> 0:01:23.720 October second. I think that Joe Bankman and Barbara Freed 0:01:24.080 --> 0:01:28.400 will have some revelations about them will come out at 0:01:28.400 --> 0:01:30.800 that trial. I think that they are have been an 0:01:30.880 --> 0:01:33.840 underappreciated element of the SBF story. 0:01:34.640 --> 0:01:34.880 Max. 0:01:34.920 --> 0:01:35.480 Why is that? 0:01:36.360 --> 0:01:36.640 Well? 0:01:36.720 --> 0:01:39.480 I think, I mean, one thing is that you know, 0:01:39.520 --> 0:01:42.960 this is a massive alleged fraud. You know, if prosecutes 0:01:42.959 --> 0:01:44.840 are right, it's one of the biggest frauds in US history. 0:01:44.880 --> 0:01:47.160 And I think you know, in some sense properly we're 0:01:47.440 --> 0:01:50.840 focusing on Sam Bankman Freed in his inner circle. The 0:01:50.960 --> 0:01:54.320 thing about the parents that is so interesting is tim 0:01:54.360 --> 0:01:58.880 as you said, they are these really towering figures in academia. 0:01:58.880 --> 0:02:02.320 They're sort of famous for being like ethical and they 0:02:02.320 --> 0:02:05.720 both teach at Stanford Law School. There there it's almost 0:02:05.760 --> 0:02:10.600 like the least likely parents of an alleged crook, and 0:02:10.600 --> 0:02:12.480 that's kind of what makes them so interesting. The second 0:02:12.480 --> 0:02:14.919 thing that makes them really interesting, and the reason I 0:02:14.960 --> 0:02:17.120 think you played that clip is because they were more 0:02:17.200 --> 0:02:20.560 involved in this company than they have said that than 0:02:20.600 --> 0:02:23.600 Sam MCMANFRIEDE said, And you actually heard Joe Bankman's voice 0:02:23.680 --> 0:02:24.480 in that ad? 0:02:25.320 --> 0:02:27.240 Yeah, hold on, I thought that was Larry David. 0:02:27.600 --> 0:02:30.280 There was Larry David. But Hannah to walk us through 0:02:30.400 --> 0:02:31.040 what else. 0:02:30.880 --> 0:02:31.600 Happened in there? 0:02:32.680 --> 0:02:36.440 All right, I could not believe that Joe Bankman had 0:02:36.480 --> 0:02:40.080 been in that commercial. Right under our noses, we know 0:02:40.240 --> 0:02:44.160 that Sam bankman Fried's brother Gabriel requested a role for 0:02:44.280 --> 0:02:47.400 Joe in the commercial. I think it was kind of 0:02:47.600 --> 0:02:50.560 fitting that he played a founding father when he is 0:02:50.600 --> 0:02:54.600 the father of an FTX co founder. And yeah, he 0:02:54.639 --> 0:02:58.720 had that single line, but it was an effective one. 0:02:58.800 --> 0:03:01.480 So it just shows you that this was a family affair. 0:03:02.800 --> 0:03:07.040 Well, take me through Max the details here. How exactly 0:03:07.080 --> 0:03:10.560 were they tied to this business in a true business way, 0:03:10.600 --> 0:03:13.440 because part of the story really focuses on how they 0:03:14.080 --> 0:03:18.280 were sort of these intangible help to SBF and then 0:03:18.320 --> 0:03:20.919 there are some actual clear ties. 0:03:21.040 --> 0:03:23.680 Yeah, and I think those first of all, I think 0:03:23.680 --> 0:03:26.920 the intangibles matter here. And when you go back and 0:03:27.000 --> 0:03:29.000 kind of look at one of the big you know, 0:03:29.120 --> 0:03:32.400 enduring mysteries I think of this case is like, why 0:03:32.440 --> 0:03:34.480 did people go for this? You know, there were so 0:03:34.560 --> 0:03:36.600 many red flags. This is a guy who refused to 0:03:36.640 --> 0:03:39.800 wear pants, you know, was he was local. He's running 0:03:39.800 --> 0:03:43.600 this massive financial services company, you know, in a place 0:03:43.600 --> 0:03:46.160 that is kind of considered a tax haven. A lot 0:03:46.160 --> 0:03:48.040 of his business was not allowed. And you know, one 0:03:48.040 --> 0:03:50.520 of the things that people would point to, including investors, 0:03:50.760 --> 0:03:53.200 including you know, in one case, for as we report 0:03:53.200 --> 0:03:57.360 in the story, a former Securities and Exchange commissioner would 0:03:57.400 --> 0:04:00.760 point to the parents. These were people with a big reputation. Now, 0:04:00.960 --> 0:04:04.760 the other thing that happened is that FTX and Alameda, 0:04:04.800 --> 0:04:07.400 which was like the precursor to FTX, It was Sam 0:04:07.480 --> 0:04:11.360 Becinfried's hedge fund. They were both those companies were really 0:04:11.400 --> 0:04:14.640 operating kind of on the edges of what was legal. 0:04:14.800 --> 0:04:18.560 Right that crypto was is a novel field. They're walking, 0:04:18.680 --> 0:04:22.680 working across different countries, and Sam Megmnfreed needed lawyers, and 0:04:22.839 --> 0:04:26.080 his dad, you know, is a pretty good lawyer, or 0:04:26.120 --> 0:04:27.960 at least you know, was seen that way at the time. 0:04:28.360 --> 0:04:30.800 And his dad, you know, from the very beginning, as 0:04:30.800 --> 0:04:33.640 we report in this story, was involved. And and what 0:04:33.680 --> 0:04:36.240 has been previously said is that Oh, well, he was 0:04:36.440 --> 0:04:38.800 you know, maybe helped a little bit and he mostly 0:04:38.800 --> 0:04:41.400 worked on philanthropy. But no, as we talk about, you know, 0:04:41.440 --> 0:04:44.800 he was involved in the issuing of FTT, which was 0:04:44.880 --> 0:04:46.880 kind of like the you know, funny money that Sam 0:04:46.920 --> 0:04:51.040 Magmnfreed created to raise money for FTX. The creation of FTX, 0:04:51.760 --> 0:04:54.880 this ad and you know, it's basically numerous other areas 0:04:55.200 --> 0:04:58.000 of the business people you know we spoke to, you know, 0:04:58.080 --> 0:05:00.320 knew him. They they saw him in the office, and 0:05:00.400 --> 0:05:03.520 so you know, he was he was part of the team, uh, 0:05:03.600 --> 0:05:06.839 formally starting you know at the beginning of twenty twenty two, 0:05:06.880 --> 0:05:09.760 but going back to the to the very very beginning. 0:05:09.600 --> 0:05:13.560 Hannah, can you enlighten us about another key element of 0:05:13.600 --> 0:05:18.279 the reporting, which is the importance that the parents represented 0:05:18.360 --> 0:05:23.760 in terms of just their reputations vetting basically Sam's idea 0:05:23.800 --> 0:05:27.120 for the business right Sequoia Capital played a huge part 0:05:27.120 --> 0:05:27.640 in that too. 0:05:28.680 --> 0:05:31.640 Yeah, we know, you know that they were known figures 0:05:32.200 --> 0:05:36.279 both in the Stanford community and outside of it. You know, 0:05:36.360 --> 0:05:38.840 I live in the Bay Area. I came across many 0:05:38.839 --> 0:05:41.719 people who knew of them and interviewed them for this story, 0:05:42.200 --> 0:05:46.400 and they had influence, you know, they gave their stamp 0:05:46.440 --> 0:05:51.280 of approval, you know, to their family friend who then 0:05:51.360 --> 0:05:55.560 went to Sequoia and you know, gave the recommendation that 0:05:55.800 --> 0:05:57.320 you know, this was a company that they should be 0:05:57.320 --> 0:06:01.560 looking at. That he knew Sam Bank mcfreed's parents that 0:06:01.600 --> 0:06:06.479 these were people who were well respected, well known. So yeah, 0:06:06.520 --> 0:06:08.720 they you know, they kind of helped pave the way 0:06:08.760 --> 0:06:09.320 for their son. 0:06:10.240 --> 0:06:13.719 There's also the political element, you know, a big part 0:06:13.760 --> 0:06:15.839 of Sam bankman Freed. It's both his kind of like 0:06:16.320 --> 0:06:19.560 actual business strategy and when you look at like what's 0:06:19.560 --> 0:06:22.000 the mythology around him was as a political player. He 0:06:22.160 --> 0:06:27.040 was donating huge sums of money to especially the Democratic Party, 0:06:27.080 --> 0:06:29.800 but as we've learned throughout the case, to both parties. 0:06:30.360 --> 0:06:34.719 Officially he was trying to like for these like effective 0:06:34.760 --> 0:06:38.880 altruism related causes, mostly around pandemics. But of course, I 0:06:38.880 --> 0:06:41.440 think all along there was a bit of a wink wink, hey, 0:06:41.440 --> 0:06:43.039 and it would be pretty nice if there were some 0:06:43.080 --> 0:06:47.280 good crypto policy too. Now, his mother, Barbara Fried, in 0:06:47.279 --> 0:06:50.040 addition to being this you know, famous ethicist, she's I mean, 0:06:50.080 --> 0:06:52.599 she's a really impressive person. She's written kind of like 0:06:52.600 --> 0:06:54.880 a seminal paper on the trolley problem, which is the 0:06:54.960 --> 0:06:57.240 if you've watched The Good Place, it's kind of like 0:06:57.240 --> 0:07:00.359 a famous ethical quandary. She in twenty sixteen came this 0:07:00.480 --> 0:07:04.840 major figure on the left as a kind of Democratic 0:07:04.920 --> 0:07:08.839 Party fundraiser, funneling money from like Eric Schmidt and these 0:07:08.920 --> 0:07:12.160 big time Silicon Valley folks. That gives, of course, gives 0:07:12.160 --> 0:07:15.400 the family a bunch of connections. It also allows Sam 0:07:15.440 --> 0:07:18.240 Bankman Freed to kind of slot right in right. He 0:07:18.320 --> 0:07:22.840 starts donating money in twenty in twenty twenty and almost 0:07:22.880 --> 0:07:27.760 immediately is like on the inner circle of Democratic Party fundraising. 0:07:28.400 --> 0:07:32.360 And it's in part by giving through this network. Joe 0:07:32.360 --> 0:07:36.720 Bankman also had and has, you know, real connections. He's 0:07:36.800 --> 0:07:40.360 he's worked, he's advised political figures on tax policies. He's 0:07:40.400 --> 0:07:43.840 he's done a lot of advocacy for tax reform. And 0:07:43.920 --> 0:07:47.040 so he knew people, you know, they were both Barbara's 0:07:47.080 --> 0:07:50.640 networks and then and then Joe's contacts. I think we're 0:07:50.680 --> 0:07:53.200 helpful on both fronts and allowed Sam Bankment Freed to, 0:07:53.240 --> 0:07:55.920 you know, out of almost nowhere to be you know, 0:07:56.160 --> 0:07:58.880 really really on the inner circle in Washington, DC, where 0:07:58.880 --> 0:08:01.880 all of a sudden you have like major political figures 0:08:01.920 --> 0:08:05.000 taking seriously the idea that like this again, guy who 0:08:05.040 --> 0:08:08.160 refused to wear pants and you know, based in some 0:08:08.240 --> 0:08:10.320 kind of jurisdiction that no one really knows for sure, 0:08:10.440 --> 0:08:12.200 no one knows what he does, that he is going 0:08:12.240 --> 0:08:14.640 to be like the guru to tell us how to 0:08:15.240 --> 0:08:16.760 you know, reform digital currencies. 0:08:16.920 --> 0:08:19.280 A guy who said we should note who didn't want 0:08:19.280 --> 0:08:24.200 a yacht. Though, as the reporting shows from Max and Hannah, 0:08:24.520 --> 0:08:27.800 FTX and people associated with FTX did end up buying 0:08:28.120 --> 0:08:31.080 some sort of yacht. Hannah to that point, talk to 0:08:31.200 --> 0:08:33.520 us a little bit about how Sam BigMan Fried's parents 0:08:33.600 --> 0:08:37.640 benefited financially from their relationship with FTX and with their son. 0:08:38.040 --> 0:08:39.000 What did you guys uncover? 0:08:39.840 --> 0:08:43.880 Well, we know that they frequently visited the FTX campus 0:08:43.920 --> 0:08:46.960 and the Bahamas, that they sometimes even flew private to 0:08:46.960 --> 0:08:50.560 get there. They would frequently stay at a sixteen million 0:08:50.640 --> 0:08:54.760 dollar beach side apartment that FTX had purchased. They considered 0:08:54.760 --> 0:08:58.160 it to be the company's property, not their home. But 0:08:58.600 --> 0:09:05.360 they also you know, really helped him gain footing. They 0:09:05.520 --> 0:09:07.760 you know, we as Snacks mentioned, you know, Joe would 0:09:08.160 --> 0:09:11.960 go with him to meet with elected officials. You know, 0:09:12.040 --> 0:09:15.360 they got a taste of the nice life with their son, 0:09:15.960 --> 0:09:19.840 and it's it was very interesting to report about their 0:09:19.880 --> 0:09:20.960 presence at FTX. 0:09:21.040 --> 0:09:24.000 Yeah, that house, by the way, I mean, it's so 0:09:24.000 --> 0:09:25.960 so they're what they say and we should we should 0:09:26.000 --> 0:09:27.400 say this is you know, they did not see it 0:09:27.440 --> 0:09:30.480 as theirs. They thought it was you know, company property. Essentially, 0:09:30.520 --> 0:09:33.679 there were a lot of wonderful perks to working for FTX, 0:09:33.720 --> 0:09:36.400 you know, like the people were flying private and they 0:09:36.400 --> 0:09:40.319 were in fact flying their Amazon packages private. But Bloomberg 0:09:40.720 --> 0:09:43.800 uncovered a bill of sale that has their names on it, 0:09:43.960 --> 0:09:47.000 so so legally, you know, they own the home. And 0:09:47.240 --> 0:09:49.280 the other thing is they received quite a bit of money. 0:09:49.280 --> 0:09:53.600 And in early twenty twenty two, Sam mcminfrey gave his 0:09:53.640 --> 0:09:56.320 father ten million dollars. And the way he did that was, 0:09:56.360 --> 0:09:59.280 as we report in the piece, is he borrowed money 0:09:59.280 --> 0:10:02.600 from Alameda. Those are accounts that, according to prosecutors, contain 0:10:02.640 --> 0:10:06.440 customer funds, transfer to himself, transferred the money to Joe. 0:10:06.480 --> 0:10:10.040 According to court documents, he asked Joe for advice on this, 0:10:10.120 --> 0:10:12.319 asked his dad for advice, and then sent this ten 0:10:12.320 --> 0:10:16.120 million dollar check. And court documents have alleged that they're 0:10:16.240 --> 0:10:18.280 using that money, you know, to pay for the defense, because, 0:10:18.280 --> 0:10:21.080 of course, a massive criminal defense is not cheap. 0:10:21.160 --> 0:10:23.680 Our thanks to Bloomberg's Max Chafkin and Hannah Miller for 0:10:23.720 --> 0:10:26.000 breaking down the cover story with me and Simone Foxman 0:10:26.400 --> 0:10:29.160 for the entire conversation. Head on over to our BusinessWeek 0:10:29.200 --> 0:10:32.000 podcast feed and read the article in the magazine as well. 0:10:32.120 --> 0:10:35.040 It's on newsstands, now online, and on the Bloomberg terminal. 0:10:35.640 --> 0:10:37.760 Joe Weber will be back with us a bit later. 0:10:38.160 --> 0:10:40.120 Coming up, We talked to a man who's spent the 0:10:40.120 --> 0:10:43.559 past two years investigating SBF along with many other players 0:10:43.559 --> 0:10:47.440 and ponds in the Crypto universe. Bloomberg Investigations reporter Zeke 0:10:47.520 --> 0:10:51.240 Fox explains the ultimate financial bubble and the gut wrenching 0:10:51.320 --> 0:10:54.480 scams it's helped to foster across the globe. You're listening 0:10:54.520 --> 0:10:57.319 to Bloomberg BusinessWeek. This is Bloomberg. 0:10:58.080 --> 0:11:01.440 You're listening to the Bloomberg Business This Week Podcast. Catch 0:11:01.520 --> 0:11:05.199 us live weekday afternoons from three to six Eastern Listen. 0:11:04.920 --> 0:11:07.920 On Bloomberg dot com, the iHeartRadio app, and the. 0:11:07.880 --> 0:11:11.200 Bloomberg Business App, or watch us live on YouTube. 0:11:12.440 --> 0:11:16.240 In twenty twenty one, Crypto went mainstream, with celebrity endorsements 0:11:16.240 --> 0:11:19.120 from the likes of Tom Brady to Matt Damon. Investment 0:11:19.120 --> 0:11:21.440 funds were buying it. TV ads hailed it as the 0:11:21.480 --> 0:11:24.320 future of money, and retail traders were making a fortune 0:11:24.360 --> 0:11:27.360 from dogecoin, which was originally created as a joke. Back 0:11:27.400 --> 0:11:30.400 in twenty thirteen, A new book from Bloomberg News financial 0:11:30.400 --> 0:11:33.640 investigations reporter Zeke Fox tries to help us decide whether 0:11:33.840 --> 0:11:37.600 there's anything behind these unusual alternative assets or if it's 0:11:37.679 --> 0:11:41.200 all just a confidence game of epic proportions. Zeke's book 0:11:41.280 --> 0:11:44.560 is called Number Go Up. Inside Crypto's Wild Rise and 0:11:44.640 --> 0:11:47.800 Staggering Fall. He joined me and Bloomberg News Deputy team 0:11:47.880 --> 0:11:50.520 leader for US Equities Jess Metton in our New York 0:11:50.520 --> 0:11:53.559 studios to explain his motivation for taking a two year 0:11:53.640 --> 0:11:58.319 journey around the globe, chasing both true believers and outright fraudsters. 0:11:58.640 --> 0:12:00.959 Ever since I was like a I wanted to write 0:12:01.040 --> 0:12:04.040 like a crazy nonfiction story like I loved like John 0:12:04.120 --> 0:12:08.280 Krackours Into Thin Air or Ben Mezrich's Bringing Down the 0:12:08.280 --> 0:12:11.640 House about the MT Blackjack Kids. But I never found 0:12:12.000 --> 0:12:15.680 a story crazy enough to turn into a whole book. 0:12:15.720 --> 0:12:17.520 Because the last thing I want to do is bore anyone. 0:12:18.000 --> 0:12:22.040 And I got once. I was kind of resistant to crypto, 0:12:22.120 --> 0:12:24.559 but as once I jumped in, I started meeting all 0:12:24.600 --> 0:12:28.199 these like wild billionaires and hustlers and conment and scammers 0:12:28.240 --> 0:12:30.880 and like at some point, maybe when I found myself 0:12:30.920 --> 0:12:35.280 on one crazy crypto billionaire's yacht off the Bahamas, I 0:12:35.360 --> 0:12:39.160 was like, wait, this is the adventure, Like, you're on 0:12:39.200 --> 0:12:41.360 it right now, this is what you got to write about. 0:12:41.640 --> 0:12:44.320 And I've ended up spending two years going down this 0:12:44.440 --> 0:12:45.000 rabbit hole. 0:12:45.520 --> 0:12:45.760 Yeah. 0:12:46.040 --> 0:12:48.040 I don't know that the world will ever see a 0:12:48.080 --> 0:12:50.040 financial mania like this like ever again. 0:12:50.400 --> 0:12:52.079 And we're still in the midst of it too. I mean, 0:12:52.120 --> 0:12:54.120 we see big moves in crypto, not like we saw 0:12:54.120 --> 0:12:55.920 a couple of years ago, zeek. But you know, we're 0:12:56.480 --> 0:12:59.320 we're not done talking about crypto at this point. There's 0:12:59.760 --> 0:13:02.360 a lot that sticks out to me from the book, 0:13:02.360 --> 0:13:04.120 but there's this one quote that I want to read 0:13:04.800 --> 0:13:06.920 to our audience. From the beginning, I had thought that 0:13:07.000 --> 0:13:09.560 crypto was pretty dumb, and it turned out to be 0:13:09.600 --> 0:13:13.280 even dumber than I imagined. So even after spending years 0:13:13.720 --> 0:13:17.200 working on this book talking to crypto billionaires, diving into 0:13:17.360 --> 0:13:20.000 these cryptocurrencies. You still think crypto's dumb. 0:13:20.200 --> 0:13:23.320 I think that if you anyone who's lived through like 0:13:23.360 --> 0:13:26.640 these last couple of years, I don't think we can 0:13:26.760 --> 0:13:29.400 just like memory hole that like all I went to. 0:13:29.480 --> 0:13:31.720 The one of the first places I went was Bitcoin 0:13:31.760 --> 0:13:34.520 twenty twenty one, this big conference in me at Miami, 0:13:34.600 --> 0:13:36.400 right after COVID. 0:13:36.080 --> 0:13:37.920 Restrictions, the one where everybody got COVID. 0:13:38.640 --> 0:13:41.800 Yes, not me. I became convinced after that that I 0:13:41.840 --> 0:13:43.840 was immune to COVID and I would never get COVID. 0:13:43.880 --> 0:13:47.320 But pretty soon after that, I did get COVID. But 0:13:48.080 --> 0:13:52.520 like I'm meeting, some of these guys were really legit 0:13:52.600 --> 0:13:56.199 at the time. Like I met Celsius's Alex Mathshinski. He 0:13:56.240 --> 0:13:59.600 was like talking to everybody and he was promising eighteen 0:13:59.640 --> 0:14:04.000 percent yields if you deposited your savings with his company. 0:14:04.400 --> 0:14:08.640 And he told me when we met, somebody's lying. Either 0:14:08.720 --> 0:14:11.000 the banks are lying that they can only pay zero 0:14:11.040 --> 0:14:14.920 percent or Celsius is lying that we can safely deliver 0:14:15.000 --> 0:14:18.040 eighteen percent. And like a couple of weeks ago, he 0:14:18.120 --> 0:14:23.600 got arrested. Just like a huge number of the founders 0:14:23.640 --> 0:14:27.520 that I met are now facing lawsuits or bankruptcy or 0:14:27.560 --> 0:14:32.160 criminal charges. So well, I do think there probably is 0:14:32.280 --> 0:14:37.000 some good cryptocurrency company out there. I'm not going to 0:14:37.000 --> 0:14:38.760 be the one to spend the effort to sift through 0:14:38.840 --> 0:14:41.320 like another giant pile of scammers to find it. 0:14:42.240 --> 0:14:45.240 Something that struck me too, because you did travel to 0:14:45.360 --> 0:14:48.640 all these different hotspots, from you're in Manhattan to Miami, 0:14:48.720 --> 0:14:51.720 you're in Bahamas, like you mentioned earlier, El Salvador to 0:14:51.760 --> 0:14:54.440 the Philippines, and so you were talking about how that 0:14:54.520 --> 0:14:56.320 you did see a lot of empty hype and a 0:14:56.320 --> 0:14:59.080 lot of scams, And what struck me was this new 0:14:59.320 --> 0:15:02.560 kind of yesmind fraud that you found were it often 0:15:02.600 --> 0:15:04.600 started with a text and it was a scame called 0:15:04.840 --> 0:15:08.280 pig butchering. Explain what that is and how that actually 0:15:08.360 --> 0:15:09.480 ended up happening to you. 0:15:10.200 --> 0:15:14.000 So pig butchering is when someone approaches you with the 0:15:14.000 --> 0:15:17.080 spam text, like we all get them, and it's like, hey, Dave, 0:15:17.200 --> 0:15:19.040 did you get the milk for the cat on your 0:15:19.080 --> 0:15:21.800 way home? Like they don't. They're like a little off right, 0:15:22.040 --> 0:15:24.400 But if you write back, they'll try to make friends 0:15:24.440 --> 0:15:26.800 with you and they'll often the person at the other 0:15:26.920 --> 0:15:30.240 end will pretend to be like an attractive young Asian woman, 0:15:30.800 --> 0:15:35.080 and they'll start dropping hints about they didn't have a 0:15:35.160 --> 0:15:38.680 rich uncle who's able to make these really profitable crypto trades. 0:15:39.240 --> 0:15:42.000 And I started I got one of these texts and 0:15:42.240 --> 0:15:46.480 started playing along and developed a pen pal friendship with 0:15:46.560 --> 0:15:49.200 this person who was saying their name was Vicky Hoe. 0:15:49.760 --> 0:15:55.440 And she eventually told me, hey, buy one hundred tethers, 0:15:55.480 --> 0:15:58.800 which are like a mainstream stable coin you can get 0:15:58.840 --> 0:16:01.120 on coin base or Crypto or any of the like 0:16:01.200 --> 0:16:05.320 normal crypto apps, and send them to this other crypto 0:16:05.360 --> 0:16:09.320 app called zbxs. And Vicky promised me that if I 0:16:09.360 --> 0:16:12.760 did that, she was going to introduce me to profitable 0:16:12.880 --> 0:16:16.800 short term node trades that would generate reliable thirty percent returns. 0:16:17.520 --> 0:16:21.720 And like, we all know this is nonsense, but in 0:16:21.720 --> 0:16:23.920 this like crypto world, like where for a couple of 0:16:23.960 --> 0:16:26.080 years it seemed like anything was possible, a lot of 0:16:26.120 --> 0:16:29.600 people were falling for this. People sent in hundreds of thousands, 0:16:29.760 --> 0:16:34.320 millions of dollars. One expert that I spoke to estimated 0:16:34.400 --> 0:16:36.960 that ten billion dollars have been lost to these crypto 0:16:37.080 --> 0:16:40.160 romance scams. And the crypto plays two roles in it. 0:16:40.200 --> 0:16:42.240 One is It's like it's the story that gets people 0:16:42.280 --> 0:16:44.600 to send their money. And the other thing is that 0:16:45.240 --> 0:16:48.560 you can go on crypto exchanges, acquire these tether tokens 0:16:48.640 --> 0:16:51.800 very easily, and then zap them over and you'll never 0:16:51.800 --> 0:16:54.200 get them back. It's anonymous. There's no way for the 0:16:54.200 --> 0:16:55.520 authorities to trace them. 0:16:55.800 --> 0:16:58.320 This portion of the book that Jessica it just is 0:16:58.360 --> 0:17:01.800 referring to is from was in the book, but we 0:17:01.800 --> 0:17:03.600 also were able to get you to talk to us 0:17:03.600 --> 0:17:06.119 about it. A couple of weeks ago, Zeke was featured 0:17:06.119 --> 0:17:08.840 in the August twenty first issue of Bloomberg Business Week. 0:17:08.880 --> 0:17:12.680 Excerpted in there, you also you know, I got to 0:17:12.680 --> 0:17:15.520 tell you. After our conversation and reading that excerpt, Zeke 0:17:15.600 --> 0:17:18.520 I stopped. I started thinking about those spam texts in 0:17:18.560 --> 0:17:22.480 a completely different way because it's really ugly the truth there. 0:17:22.480 --> 0:17:24.719 I mean, you spoke to somebody who had escaped from 0:17:24.840 --> 0:17:32.879 essentially prison or slavery indentured servitude by cobbling together an iPhone, 0:17:33.359 --> 0:17:35.439 making an iPhone work by essentially hotwiring it. 0:17:35.920 --> 0:17:38.679 Yeah, So that is the really dark part is that 0:17:38.720 --> 0:17:41.480 the people on the other end of these texts are often. 0:17:41.280 --> 0:17:42.040 It's not vicky. 0:17:42.240 --> 0:17:46.040 Yeah, they're like Vicky disappeared, never never found out who 0:17:46.040 --> 0:17:47.800 she was. But what I did find out is that 0:17:47.840 --> 0:17:50.520 a lot of the people sending these messages there are 0:17:51.160 --> 0:17:54.000 people from Southeast Asia who've been tricked into traveling to 0:17:54.080 --> 0:17:57.840 Cambodia and then trapped And like, legitimately sounds like a 0:17:57.840 --> 0:18:00.399 conspiracy theory, but I've seen it with my own eyes, 0:18:00.840 --> 0:18:03.800 huge like office towers filled with floor after a floor 0:18:03.840 --> 0:18:07.439 of people who are sending these spam text messages around 0:18:07.440 --> 0:18:11.359 the clock. So that the person that sent you that 0:18:11.440 --> 0:18:13.840 kind of nonsense text, like, it's not a bot. It 0:18:13.880 --> 0:18:17.840 could be someone who is being threatened with beatings of 0:18:18.000 --> 0:18:22.040 the torture, who would have who can't leave this job 0:18:22.080 --> 0:18:24.639 without paying a ransom And like you said, yeah, well, 0:18:24.640 --> 0:18:27.960 I spoke to Twee, who was victimized in this way 0:18:28.320 --> 0:18:31.960 and had raised money for the ransom from a YouTuber 0:18:32.480 --> 0:18:34.920 And when I spoke to him, he returned to Ho 0:18:35.080 --> 0:18:37.639 Chi Minh City and Vietnam and he told this crazy 0:18:37.720 --> 0:18:40.800 yeah mcguiverage story about how he was able to get 0:18:40.800 --> 0:18:47.720 an iPhone and charge it using no tools and a fluorescent. 0:18:47.200 --> 0:18:49.880 Lamp and he had to smuggle the iPhone in. 0:18:50.880 --> 0:18:53.320 He's so His story was that he had stolen it 0:18:53.320 --> 0:18:57.359 from the guards, but not the charger. He had secreted 0:18:57.400 --> 0:19:00.439 it inside himself, a trick that he learned in prison, 0:19:00.960 --> 0:19:04.159 and that he when he was alone, he took this 0:19:04.280 --> 0:19:08.320 iPhone apart and peeled out the battery and then hotwired 0:19:08.359 --> 0:19:11.800 it to afforest lamp and so very respectfully. When we 0:19:11.800 --> 0:19:15.280 were together in Vietnam, I was like, tweet, I don't 0:19:15.320 --> 0:19:17.679 think you can do that. Like You're like, I'm very 0:19:17.720 --> 0:19:19.560 sorry for what you went through, but like, are you shit? 0:19:19.680 --> 0:19:22.440 Is that really true? And he was like, I'll show 0:19:22.480 --> 0:19:25.320 you right now. We bought an iPhone. He took it 0:19:25.359 --> 0:19:28.760 apart with no tools, took apart a led lamp in 0:19:28.800 --> 0:19:31.919 my hotel room, wired the battery to this lamp, charged 0:19:31.960 --> 0:19:36.159 it and turned it right on. U. Yeah, I was floored. 0:19:37.080 --> 0:19:40.520 That was Bloomberg News Financial Investigations reporter Zeke Fox. Pick 0:19:40.600 --> 0:19:42.720 up a copy of his new book, Number Go Up 0:19:42.920 --> 0:19:46.159 Inside Crypto's Wild Rise and Staggering Fall, And you can 0:19:46.200 --> 0:19:48.560 also get his thoughts on the poort Ape Yacht Club 0:19:48.600 --> 0:19:51.440 by just heading over to our podcast feed. Jess Menton 0:19:51.560 --> 0:19:54.200 sticking with us for the rest of the program still 0:19:54.240 --> 0:19:56.760 had on Bloomberg Business Week. Even if you've been able 0:19:56.760 --> 0:19:59.280 to avoid crypto related fraud up to now, there are 0:19:59.320 --> 0:20:01.920 still some other to be aware of in the digital world, 0:20:02.200 --> 0:20:03.800 especially when it comes to AI. 0:20:04.240 --> 0:20:06.600 Cyber professionals have to be right one hundred percent of 0:20:06.640 --> 0:20:09.280 the time, and bad guys only have to be right 0:20:09.440 --> 0:20:12.399 once in order to get inside of your defenses. 0:20:12.760 --> 0:20:15.720 We'll break it down when we come back. This is Bloomberg. 0:20:17.000 --> 0:20:20.560 You're listening to the Bloomberg Business Week podcast. Catch us 0:20:20.600 --> 0:20:24.720 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:20:24.800 --> 0:20:28.080 the Bloomberg Business app, and YouTube. You can also listen 0:20:28.200 --> 0:20:31.280 live on Amazon Alexa from our flagship New York station, 0:20:31.760 --> 0:20:34.520 Just say Alexa play Bloomberg eleven thirty. 0:20:35.800 --> 0:20:38.280 The reason that I've been such a pretty cool AI 0:20:38.359 --> 0:20:41.840 safety in advance of sort of anything terrible happening is 0:20:41.880 --> 0:20:45.840 that I think the consequences of AI going wrong are 0:20:46.000 --> 0:20:49.880 our sphere, so we have to be proactive rather than reactive. 0:20:50.320 --> 0:20:52.440 That was the voice of Elon Musk. He's been among 0:20:52.480 --> 0:20:55.399 the people calling for regulatory guidelines when it comes to 0:20:55.480 --> 0:20:58.320 artificial intelligence, and he was on Capitol Hill this past 0:20:58.359 --> 0:21:01.359 week to discuss the potential society risks posed by the 0:21:01.400 --> 0:21:04.560 nascent technology. The world's richest man was among more than 0:21:04.600 --> 0:21:07.440 twenty tch and civil society leaders attending a closed door 0:21:07.480 --> 0:21:11.520 Senate summit on Wednesday that focused on AI. Meantime, many 0:21:11.560 --> 0:21:14.159 companies are trying to gauge its impact on cybersecurity in 0:21:14.160 --> 0:21:18.400 the workplace, especially since generative AI applications continue to evolve. 0:21:18.720 --> 0:21:20.760 Jess Menton and I have the perfect guest with us 0:21:20.800 --> 0:21:22.600 to help answer these burning questions. 0:21:22.960 --> 0:21:28.280 Dana zimbercov chief Risk, Privacy and Information Security officer at 0:21:28.320 --> 0:21:31.399 a Point, joining us on Zoom from New Hampshire to 0:21:31.560 --> 0:21:35.520 explain why the cybersecurity industry isn't ready for the AI 0:21:35.560 --> 0:21:39.400 boom and what guardrails companies should use to protect their 0:21:39.760 --> 0:21:43.400 employees data. Thanks so much for joining us. As always, 0:21:43.560 --> 0:21:45.280 I want to get your thoughts on that, because when 0:21:45.320 --> 0:21:48.680 we are discussing, like Tim and myself about this AI boom, 0:21:48.760 --> 0:21:51.640 why is it that cybersecurity companies may not be ready 0:21:51.680 --> 0:21:52.480 for this just yet? 0:21:52.800 --> 0:21:56.320 I think AI is just yet another obstacle in the 0:21:56.400 --> 0:21:59.520 road to looking for that perfect security solution that just 0:21:59.560 --> 0:22:03.960 doesn't at this out there honestly so. Artificial intelligence and 0:22:04.040 --> 0:22:07.760 sort of the deep learning that is coming through technologies 0:22:07.880 --> 0:22:14.000 like GBT really puts cyber professionals on edge, because this 0:22:14.160 --> 0:22:18.560 is just one more ripple in the world we live 0:22:18.600 --> 0:22:21.520 in where cyber professionals have to be right one hundred 0:22:21.520 --> 0:22:24.679 percent of the time and bad guys only have to 0:22:24.680 --> 0:22:28.399 be right once in order to get inside of your defenses. 0:22:28.560 --> 0:22:30.879 And there's a shortage of bad guys out there, Dana, 0:22:30.880 --> 0:22:33.119 as we as we certainly know. So what's the worst 0:22:33.119 --> 0:22:35.840 case scenario here? I mean, describe for us what kind 0:22:35.880 --> 0:22:37.479 of keeps you up at night, what makes you scared? 0:22:37.920 --> 0:22:42.159 Well, I think that really the secret to building a 0:22:42.200 --> 0:22:45.080 good program and addressing this is really to go back 0:22:45.119 --> 0:22:47.720 to cyber hygiene basics, doing what we do every day, 0:22:47.760 --> 0:22:50.040 which is making sure that we have good data governance 0:22:50.080 --> 0:22:55.359 in place within our companies and across our partner ecosystems. 0:22:55.440 --> 0:22:58.840 Because if you know what information you're handling, if you 0:22:58.920 --> 0:23:01.600 know what it is, where it is, who can access it, 0:23:01.640 --> 0:23:04.640 and how it's being shared, then you can largely mitigate 0:23:04.640 --> 0:23:07.280 some of the risks that are associated with AI. It 0:23:07.280 --> 0:23:12.240 does come down to people, policy and technology. So there 0:23:12.240 --> 0:23:16.560 really is no bad technology, just bad use of technology. 0:23:16.600 --> 0:23:20.359 And when you're talking about cybersecurity, are there particular sub 0:23:20.359 --> 0:23:23.120 industries or companies that you think might potentially be more 0:23:23.160 --> 0:23:24.159 vulnerable than others. 0:23:24.560 --> 0:23:27.800 Well, I certainly think that the ability for again those 0:23:27.880 --> 0:23:34.600 malicious bad actors to use AI to potentially perpetrate cybercrime 0:23:34.720 --> 0:23:38.840 take advantage of insiders inside of a company to really 0:23:39.800 --> 0:23:43.160 accelerate the process of cyber attacks. We've already seen through 0:23:43.359 --> 0:23:47.439 phishing and smishing where somebody receives a phone call or 0:23:47.440 --> 0:23:50.119 a text message saying that they are an executive that 0:23:50.160 --> 0:23:52.960 need help right away. Just imagine that amplified with the 0:23:53.000 --> 0:23:57.280 ability to actually fake person over video, these deep fakes 0:23:57.280 --> 0:24:00.480 that we've been hearing about, where a person's image voice 0:24:00.480 --> 0:24:01.840 could be easily replicated. 0:24:02.440 --> 0:24:06.000 H Dana, I'm you said phishing. We all know about phishing. 0:24:06.320 --> 0:24:08.120 Did you say smishing smishing? 0:24:08.240 --> 0:24:13.080 Yes, that's smishing is using using a text message or 0:24:13.200 --> 0:24:16.200 some kind of social media. So whether it's WhatsApp, your 0:24:16.200 --> 0:24:19.879 own or you know, just pretending to be somebody that 0:24:19.880 --> 0:24:23.280 you're not and using technology to get to an intended target. 0:24:23.320 --> 0:24:25.680 And this is really common. We see it a lot 0:24:26.160 --> 0:24:29.520 both inside of our company, as you know, as we 0:24:29.600 --> 0:24:33.160 build our own cyber defenses, but also across our customer 0:24:33.200 --> 0:24:37.720 ecosystem where it really isn't just what you know, but 0:24:37.840 --> 0:24:40.960 who you are that makes you a target potentially within 0:24:40.960 --> 0:24:41.359 a company. 0:24:41.440 --> 0:24:42.679 Yeah, I didn't know that what it was. That's what 0:24:42.680 --> 0:24:44.359 it was called. We had a great cover story an 0:24:44.359 --> 0:24:47.440 excerpt from Zeke Fox's book Number Go Up that talked 0:24:47.440 --> 0:24:49.920 all about where those text messages actually come from. I 0:24:49.920 --> 0:24:52.800 also encourage everybody listening who's interested to go check that 0:24:52.840 --> 0:24:54.440 one out. It was just a couple of weeks ago. 0:24:54.840 --> 0:24:56.600 Uh okay, So, Dana, what about when it comes to 0:24:56.640 --> 0:24:58.560 I mean, when I think about the worst case scenario, 0:24:58.640 --> 0:25:01.480 I mean I understand, like I consider myself pretty savvy 0:25:01.520 --> 0:25:04.800 when it comes to uh not answering those phishing emails. 0:25:04.800 --> 0:25:06.680 And we certainly get trained pretty well here at Bloomberg, 0:25:06.720 --> 0:25:08.520 and I think a lot of companies do that in 0:25:08.520 --> 0:25:09.040 this day and age. 0:25:09.080 --> 0:25:10.760 It's into some trick emails at times. 0:25:10.800 --> 0:25:13.200 Just if we get caught, yeah they do. You got 0:25:13.200 --> 0:25:15.840 to you got to be vigilant. I think my concern, though, 0:25:15.920 --> 0:25:19.359 is is is how generative AI sort of changes that, 0:25:19.440 --> 0:25:21.640 and it makes it so it's like really not possible 0:25:21.640 --> 0:25:24.679 to distinguish what is real and what isn't real. So 0:25:24.680 --> 0:25:27.320 so let's say that the weakest link is always the person. 0:25:27.680 --> 0:25:30.000 Where do companies like as point come in to to 0:25:30.080 --> 0:25:31.240 try to stop that from happening. 0:25:31.640 --> 0:25:33.800 Well, I think at the end of the day, it 0:25:33.880 --> 0:25:37.840 really is going to come down to not only identity, 0:25:38.880 --> 0:25:42.119 but also technology and what we allow individuals to do. So, 0:25:42.920 --> 0:25:44.560 just in the same way we've been talking over the 0:25:44.600 --> 0:25:47.199 last really couple of years with covid about now the 0:25:47.240 --> 0:25:51.679 borderless office, where employs are working really from anywhere in 0:25:51.680 --> 0:25:55.840 the world, their home, Starbucks, you know, the office. That 0:25:55.920 --> 0:25:58.800 means that there's no perimeter around the office that you 0:25:58.840 --> 0:26:01.359 can protect, and so identity really has become that new 0:26:01.400 --> 0:26:03.960 perimeter to a great extent, and making sure that you 0:26:04.119 --> 0:26:06.760 know who you're talking to and who you are is 0:26:06.800 --> 0:26:10.560 going to be critical. And limiting the ability for somebody 0:26:10.560 --> 0:26:13.320 to move either horizontally or vertically within a company if 0:26:13.320 --> 0:26:16.159 they are impersonated, is going to really help sort of 0:26:16.200 --> 0:26:18.720 fill that gap and protect against that kind of risk. 0:26:19.160 --> 0:26:21.720 We actually did hear from z Scaler and I did 0:26:21.720 --> 0:26:25.159 report earnings and their forecast for EPs did beat estimates. 0:26:25.200 --> 0:26:28.720 But of course, when it comes to a cloud cybersecurity 0:26:28.720 --> 0:26:31.760 company like this, how does cloud play into this And 0:26:31.840 --> 0:26:33.560 when it comes to AI as well and some of 0:26:33.600 --> 0:26:34.800 your concerns. 0:26:34.480 --> 0:26:37.080 Well, cloud is both an opportunity and a risk. That 0:26:37.200 --> 0:26:40.159 certainly a point as a as a cloud first company 0:26:40.160 --> 0:26:43.080 providing services to you know, millions of our customers around 0:26:43.080 --> 0:26:45.639 the world, takes advantage of a lot of the build 0:26:45.680 --> 0:26:49.119 in security controls that exist through our partners like Microsoft 0:26:49.119 --> 0:26:52.800 and others. There's also real opportunity with AI and the 0:26:52.800 --> 0:26:57.040 cloud to benefit from, you know, the kind of machine 0:26:57.080 --> 0:26:59.960 learning and intelligence that could also be used to fight cybercrimes. 0:27:00.200 --> 0:27:02.439 So I think there are tremendous opportunities that the cloud 0:27:02.440 --> 0:27:04.239 brings are really at the end of the day at 0:27:04.240 --> 0:27:09.040 somebody else's computer, and so that good data hygiene data 0:27:09.080 --> 0:27:11.000 governance is going to be critical to making sure that 0:27:11.040 --> 0:27:14.040 whether you're in the cloud or on premise, that you're 0:27:14.119 --> 0:27:16.000 really doing the right things to protect your business and 0:27:16.040 --> 0:27:16.680 your data. 0:27:16.880 --> 0:27:18.320 Is there a future for on premise or is it 0:27:18.359 --> 0:27:18.960 all in the cloud? 0:27:19.320 --> 0:27:22.159 Well, hard to say. I think, you know, the cloud 0:27:22.200 --> 0:27:26.240 is certainly the future. It's the wave, it's the direction 0:27:26.320 --> 0:27:29.680 that we see companies moving more and more. I think 0:27:29.680 --> 0:27:32.800 that there will likely always be some hybrid environments, and 0:27:32.880 --> 0:27:35.280 depending on your industry, depending on the kind of information 0:27:35.400 --> 0:27:38.960 you have cloud is not always possible, but we'll see now. 0:27:39.000 --> 0:27:41.120 You never say never, and I think it's always good 0:27:41.160 --> 0:27:42.080 to head your bets. 0:27:42.560 --> 0:27:46.360 Whenever you speak to companies, what is their biggest concern 0:27:46.440 --> 0:27:46.800 right now? 0:27:47.520 --> 0:27:50.080 Well, again, I think it is knowing where that data is. 0:27:50.119 --> 0:27:54.200 It's that unknown, that risk of not knowing is never better. 0:27:54.600 --> 0:27:57.640 And so you know, the challenge for AI is clearly 0:27:57.720 --> 0:28:00.560 that you can have a machine outpacing you rapidly. We 0:28:00.600 --> 0:28:03.399 now see that our computers regularly are asking us to 0:28:03.400 --> 0:28:05.960 prove that we're human by answering thinks like captures when 0:28:05.960 --> 0:28:10.440 you go to websites, will computers outpace humans at some point? 0:28:10.480 --> 0:28:10.840 Maybe? 0:28:10.880 --> 0:28:14.240 I think again, for cybersecurity and privacy professionals, it's building 0:28:14.280 --> 0:28:17.200 accountability into the way that we use data, making sure 0:28:17.240 --> 0:28:20.680 that there's good transparency with our customers, and making sure 0:28:20.680 --> 0:28:22.600 that we're really, you know, doing the right thing to 0:28:22.760 --> 0:28:26.439 maximize the opportunity for businesses to do what they should 0:28:26.440 --> 0:28:29.560 be doing while protecting the rights of individuals and data subjects. 0:28:29.600 --> 0:28:30.919 I don't know, just do you have any ever have 0:28:30.960 --> 0:28:33.600 a problem with those captures. I feel like they're they're 0:28:33.640 --> 0:28:36.840 already the captures have already outsmarted me. You know, I'm 0:28:36.840 --> 0:28:38.680 talking about wright those things. 0:28:39.480 --> 0:28:41.400 Yeah, yeah, come. 0:28:41.280 --> 0:28:43.600 On, I mean, I mean, I honestly like one time 0:28:43.640 --> 0:28:46.080 I got one of those Bloomberg emails and accidentally clicked 0:28:46.080 --> 0:28:47.440 it on something. Then I had to go back through 0:28:47.440 --> 0:28:50.520 and do all of the training. So I'm super vigilant now. 0:28:50.360 --> 0:28:51.400 And not to bust it. 0:28:51.480 --> 0:28:52.960 You only make that mistake once, I. 0:28:52.920 --> 0:28:54.880 Know exactly, so never again after doing that. 0:28:55.400 --> 0:28:56.560 Well, that's that's good. 0:28:56.680 --> 0:28:57.800 That's good hyber training. 0:28:58.160 --> 0:29:01.520 That was Dana Simbercoff, chief Risk, Privacy and Information Security 0:29:01.560 --> 0:29:05.240 officer at AFPOINT. You're listening to Bloomberg Business Week Up next. 0:29:05.280 --> 0:29:08.360 Apple just unveiling the iPhone fifteen this week, but not 0:29:08.480 --> 0:29:11.960 before Chinese telecom giant Huawei released its own advanced mobile 0:29:11.960 --> 0:29:14.520 phone that uses tech the US has sought to keep 0:29:14.560 --> 0:29:15.920 out of Beijing's hands. 0:29:16.200 --> 0:29:18.360 They have been able to make some sort of breakthroughs 0:29:18.440 --> 0:29:21.000 to tech levels that the US was trying to avoid 0:29:21.040 --> 0:29:22.960 them to getting. And just to be clear, this isn't 0:29:23.000 --> 0:29:25.479 just so much that they don't want them necessarily compete 0:29:25.480 --> 0:29:29.480 with the iPhone or Apple or other US manufacturers or 0:29:29.520 --> 0:29:33.760 allies in terms of selling phones. It's really a concern 0:29:34.200 --> 0:29:37.960 about economic security as well with military security. Worried that 0:29:38.000 --> 0:29:40.960 some of these tips and some of this technology that 0:29:41.000 --> 0:29:43.720 they could make breakthroughs on will be used in a 0:29:43.760 --> 0:29:46.920 way they could be quite competitive militarily insecurity wise. 0:29:47.040 --> 0:29:49.920 With the US, we go from cybersecurity concerns at the 0:29:49.960 --> 0:29:53.200 corporate level to a technological arms race on a global scale. 0:29:53.480 --> 0:29:54.640 This is Bloomberg. 0:29:54.880 --> 0:29:58.400 You're listening to the Bloomberg Business Week podcast. Catch us 0:29:58.480 --> 0:30:01.960 live weekday afternoons for from three to six Eastern Listen. 0:30:01.720 --> 0:30:04.680 On Bloomberg dot com, the iHeartRadio app, and. 0:30:04.600 --> 0:30:08.880 The Bloomberg Business app, or watch US Live on YouTube. 0:30:08.960 --> 0:30:12.280 The excitement surrounding the iPhone fifteen's unveiling this past week 0:30:12.360 --> 0:30:15.800 was palpable for Apple loyalists around the world. Accepted one 0:30:15.880 --> 0:30:20.120 key market, China. Officials there are claiming to have experienced 0:30:20.120 --> 0:30:24.320 so called security incidents with prior models. Bloomberg News reported 0:30:24.320 --> 0:30:26.400 this month that China plans to widen a ban on 0:30:26.440 --> 0:30:28.560 the use of iPhones to a number of state backed 0:30:28.560 --> 0:30:31.840 companies and agencies. The White House says it's a retaliatory 0:30:31.880 --> 0:30:35.480 move against the US, and even before Apple's latest product launch, 0:30:35.600 --> 0:30:38.040 Huawei had already begun pre sales of its new Mate 0:30:38.080 --> 0:30:41.040 sixty pro phone, which uses technology the US has sought 0:30:41.080 --> 0:30:43.560 to keep out of Beijing's hands. Jess Menton and I 0:30:43.640 --> 0:30:47.440 spoke with Bloomberg News senior editor Ramsey Albercabi and Businessweeks 0:30:47.520 --> 0:30:49.959 Joe Weber for a read on the Chinese telecom giants' 0:30:50.000 --> 0:30:50.960 surprise development. 0:30:51.240 --> 0:30:54.680 All this news came from a Bloomberg teardown of a 0:30:54.760 --> 0:30:58.719 Wadwei phone that revealed China had made significant advances on 0:30:58.760 --> 0:31:03.920 the chip front, and it put some attention on sanctions, 0:31:03.920 --> 0:31:06.560 which have been obviously a huge weapon that the US 0:31:07.040 --> 0:31:11.080 has used not just to perhaps try and slow China down, 0:31:11.160 --> 0:31:14.160 but also in Russia and in Ramsey, the thing that 0:31:14.200 --> 0:31:18.240 came to mind was just that perhaps the sanctions were 0:31:18.400 --> 0:31:20.960 an inevitable thing that would only work for a while, right. 0:31:21.200 --> 0:31:21.360 Yeah. 0:31:21.680 --> 0:31:25.200 The timing of it was really noteworthy to because it 0:31:25.320 --> 0:31:27.720 came just on the end of a visit by the 0:31:27.760 --> 0:31:31.720 Commerce Secretary Tina Romando and her department, particularly the Bureau 0:31:31.760 --> 0:31:34.280 of Industry and Security, are the ones that manage all 0:31:34.320 --> 0:31:37.560 of the tech control tech export controls that are put 0:31:37.640 --> 0:31:39.720 in place to try to keep this sort of technology 0:31:39.720 --> 0:31:42.360 out of China's hands. So the day that she's taking off, 0:31:42.680 --> 0:31:45.560 they quietly start selling this phone, which they'll send a 0:31:45.560 --> 0:31:48.320 clear message that they have been able to make some 0:31:48.320 --> 0:31:51.000 sort of breakthroughs to tech levels that the US was 0:31:51.240 --> 0:31:53.480 trying to avoid them to getting. And just to be clear, 0:31:53.520 --> 0:31:55.560 this isn't just so much that they don't want them 0:31:55.600 --> 0:31:59.480 necessarily compete with the iPhone or Apple or other US 0:31:59.520 --> 0:32:04.160 manufacturer or allies in terms of selling phones. It's really 0:32:04.160 --> 0:32:08.320 a concern about economic scurity as well with military security. 0:32:08.480 --> 0:32:11.120 Worried that some of these tips and some of this 0:32:11.200 --> 0:32:14.200 technology that they could make breakthroughs on will be used 0:32:14.480 --> 0:32:17.440 in a way they can be quite competitive militarily insecurity 0:32:17.440 --> 0:32:18.480 wise with the US. 0:32:18.960 --> 0:32:22.480 Ramsey, I'm curious, how could this potentially escalate some of 0:32:22.480 --> 0:32:25.440 the tensions when we're thinking about what's already there right 0:32:25.440 --> 0:32:27.360 now between the US and China. 0:32:27.680 --> 0:32:29.800 The thing is that I get back to Raymondo. She 0:32:29.880 --> 0:32:31.800 was on the tail end of a series of visits. 0:32:31.800 --> 0:32:34.480 There was Blinkeln had gone, Yellen had gone, John Carry 0:32:34.480 --> 0:32:37.280 had gone, There was there was an effort by the 0:32:37.320 --> 0:32:40.960 Bido administration to sort of ease some of the tensions. 0:32:41.760 --> 0:32:43.560 And what happens though once it comes out, you're going 0:32:43.600 --> 0:32:45.960 to have a lot of pressure domestically to do more 0:32:46.240 --> 0:32:49.280 of the particularly in the House the GOP, with like 0:32:49.360 --> 0:32:54.080 McCall and gallagher calling for stronger sanctions, stronger reactions, the 0:32:54.120 --> 0:32:57.719 stronger response from the administration clamp down on some of 0:32:57.760 --> 0:33:00.520 the experts that are still allowed to some of these companies. 0:33:00.840 --> 0:33:04.040 So that kind of uh can can kind of heat 0:33:04.120 --> 0:33:06.640 up those tensions again on the commerce side of things 0:33:06.680 --> 0:33:08.800 that I think the the White House is hoping could 0:33:09.120 --> 0:33:11.440 could uh it could keep a keep a lid on. 0:33:11.720 --> 0:33:16.160 Okay, So what about uh uh the chips that came 0:33:16.200 --> 0:33:18.800 from like South Korea that ended up in the phone, 0:33:18.840 --> 0:33:21.080 what what is the what's the US feel about that? 0:33:21.520 --> 0:33:23.640 Well? I think the the s K high next memory 0:33:23.720 --> 0:33:27.800 chip took x K hinex by by surprise too. I 0:33:27.840 --> 0:33:30.440 don't I think that they don't know how Huawei got 0:33:30.480 --> 0:33:32.560 a hold of those. Uh So that's a that's a 0:33:32.640 --> 0:33:34.080 question I have to look into, and the and the 0:33:34.240 --> 0:33:37.040 in the U S is you know, investigating the where 0:33:37.040 --> 0:33:39.280 these chips came from on the China side, on the 0:33:39.400 --> 0:33:41.400 on the Korea side, and we had Jakes all have 0:33:41.440 --> 0:33:44.080 been quite recently saying that a matter of time, they're 0:33:44.080 --> 0:33:46.360 gonna they're looking into this and talk to their their 0:33:46.400 --> 0:33:48.920 They said, consult their partners. I'm assuming they mean South 0:33:49.000 --> 0:33:51.440 Koreans as well as the Dutch and the Japanese who 0:33:51.760 --> 0:33:54.040 who sort of who build some of the technology needed 0:33:54.040 --> 0:33:56.440 to make these chips and uh, and then they'll said, 0:33:56.480 --> 0:33:59.160 we'll make decisions accordingly. So I think, uh, you know 0:33:59.200 --> 0:34:02.600 this topic here. Yeah, they're trying to try to figure 0:34:02.600 --> 0:34:05.640 out where, you know, what's out there, what's happening. And 0:34:05.640 --> 0:34:08.440 then they'll also try to hopefully wait for this domestic 0:34:08.440 --> 0:34:11.320 political heat to cool off before they decide their next step. 0:34:11.400 --> 0:34:14.400 That was Bloomberg News Senior editor Ramsey Albracabbi with me 0:34:14.440 --> 0:34:17.040 and Jess Metton. Joe Webber will be sticking with us 0:34:17.080 --> 0:34:19.400 for our next couple of stories, and that wraps up 0:34:19.440 --> 0:34:21.560 the first hour of the weekend edition of Bloomberg Business 0:34:21.600 --> 0:34:24.160 Week from Bloomberg Radio. Coming up in our next hour, 0:34:24.320 --> 0:34:28.080 we'll detail the remarkable true story of America's first women astronauts, 0:34:28.239 --> 0:34:31.279 plus the CEO of J. C. Penny talks renewal and 0:34:31.320 --> 0:34:35.720 reinvestment at the previously bankrupt retailer, and how MSG boss 0:34:35.800 --> 0:34:39.240 James Dolan turned his notepad sketch into a multi billion 0:34:39.280 --> 0:34:42.919 dollar entertainment venue in the heart of Las Vegas. This 0:34:43.120 --> 0:34:46.040 is Bloomberg Business Week. I'm Tim Stenovec. Stay with us. 0:34:46.040 --> 0:34:48.719 Today's top stories and global business headlines are coming up. 0:34:48.880 --> 0:34:53.160 Right now, you're listening to the Bloomberg Business Week Podcast. 0:34:53.360 --> 0:34:56.439 Catch us live weekday afternoons from three to six Easter 0:34:56.760 --> 0:35:00.520 on Bloomberg Radio, the Bloomberg Business app and you. You 0:35:00.560 --> 0:35:03.840 can also listen live on Amazon Alexa from our flagship 0:35:03.880 --> 0:35:07.800 New York station Just Say Alexa Play Bloomberg eleven thirty. 0:35:09.400 --> 0:35:11.960 Tim Stenevic and Jess metting with you plenty ahead in 0:35:12.000 --> 0:35:14.879 our second hour of the weekend edition of Bloomberg Business Week, 0:35:15.120 --> 0:35:17.560 including the CEO of J. C. Penny on bringing the 0:35:17.560 --> 0:35:21.440 embattled retailer back from near extinction and James Dolan's ten 0:35:21.520 --> 0:35:24.719 figure bid to leave his mark on the future of entertainment. 0:35:25.200 --> 0:35:27.719 First up this hour, a bit of history. Back in 0:35:27.800 --> 0:35:31.040 nineteen seventy seven, more than eight thousand applied and six 0:35:31.040 --> 0:35:34.520 were chosen. The six Sally Rye, Judy Resnick Anna Fisher, 0:35:34.600 --> 0:35:38.759 Kathy Sullivan, Shannon Lucid and Rhea Seddin were America's first 0:35:38.760 --> 0:35:41.439 women astronauts, and they're the subject of a new book 0:35:41.440 --> 0:35:45.000 from Bloomberg News space reporter Lauren Grush. It's called The 0:35:45.040 --> 0:35:48.920 Six The Untold Story of America's First Women Astronauts. An 0:35:48.920 --> 0:35:51.120 excerpt of the book was published in the August twenty 0:35:51.120 --> 0:35:53.719 eighth issue of the magazine, and this past week, Jess 0:35:53.719 --> 0:35:56.840 and I welcomed BusinessWeek editor Joe Weber and Lauren into 0:35:56.880 --> 0:35:59.480 our New York studios to discuss the project, along with 0:35:59.520 --> 0:36:00.920 the author's unique background. 0:36:01.120 --> 0:36:03.560 So, I'm actually a bit of a NASA baby. Both 0:36:03.560 --> 0:36:06.160 of my parents worked on the Space Shuttle program, which 0:36:06.239 --> 0:36:08.920 is you know, makes a big appearance in the book. 0:36:09.400 --> 0:36:12.399 My mother was the deputy orbiter chief engineer, and then 0:36:12.440 --> 0:36:15.960 my father helmed up the propulsion branch before he retired. 0:36:16.000 --> 0:36:18.400 And so I very much, you know, I grew up 0:36:18.400 --> 0:36:22.040 with the Space Shuttle. I lived outside of Houston. It 0:36:22.080 --> 0:36:24.480 really was like a full circle moment getting to report 0:36:24.480 --> 0:36:27.320 on it and go back to kind of my childhood roots. 0:36:27.680 --> 0:36:29.600 The part that we wanted to talk about in the 0:36:29.600 --> 0:36:33.600 book was specifically about Sally Ride, and when you worked 0:36:33.600 --> 0:36:35.480 on that part of the book, like, I'm curious, like 0:36:35.600 --> 0:36:38.960 there's an element that still resonates today, and I'm curious, 0:36:39.000 --> 0:36:41.839 like walk us through why Sally Ride matters all these 0:36:41.920 --> 0:36:42.359 years later. 0:36:42.680 --> 0:36:45.640 Absolutely, I think right now it's more relevant than ever. 0:36:45.800 --> 0:36:48.120 You know, NASA is working to go back to the 0:36:48.160 --> 0:36:50.840 Moon with its Artemis program, and one of the stated 0:36:50.880 --> 0:36:53.560 goals of that program is to send the first woman 0:36:53.600 --> 0:36:56.080 and the first person of color to the lunar surface. 0:36:56.120 --> 0:36:58.240 And I really think that is a first for NASA 0:36:58.320 --> 0:37:01.160 to actually have that a stated goal. Normally in their programs, 0:37:01.200 --> 0:37:04.799 they really don't specify who would go. It's really just 0:37:04.960 --> 0:37:06.759 we're going to get there, and we'll send the right 0:37:06.800 --> 0:37:09.319 people for the job when we do. So this is 0:37:09.320 --> 0:37:11.520 a bit of a first, and so it's interesting that 0:37:11.560 --> 0:37:15.160 they're clarifying that before they go. And I think Sally's 0:37:15.160 --> 0:37:18.920 story is really pertinent right now because obviously, when Sally 0:37:19.080 --> 0:37:22.000 was going up to space, you know, it was such 0:37:22.040 --> 0:37:25.560 a novel concept for the country, even though you know 0:37:26.440 --> 0:37:29.120 it really shouldn't have been. You know a lot of 0:37:29.280 --> 0:37:32.400 journalists in the media, we're asking questions about her, and 0:37:32.440 --> 0:37:34.960 you know, we're just so curious how that women and 0:37:35.000 --> 0:37:37.759 men could possibly fly into space together. So, you know, 0:37:37.840 --> 0:37:40.400 Sally kind of took on that burden when she was 0:37:40.440 --> 0:37:42.880 the first one, and so hopefully, you know, as we 0:37:42.920 --> 0:37:46.080 move forward and try to fix these you know, errors 0:37:46.080 --> 0:37:48.239 in our space history. By sending the first woman and 0:37:48.280 --> 0:37:50.279 the first person of color to the moon, those people 0:37:50.360 --> 0:37:52.680 have it a little bit easier. And the press will 0:37:52.920 --> 0:37:54.239 you know, I'll be a member of the press, so 0:37:54.280 --> 0:37:57.160 I won't ask those questions of those people when they fly. 0:37:58.280 --> 0:38:01.319 Let's talk about the American competition, right, and that was 0:38:01.360 --> 0:38:06.319 like a fascinating competition because it was like a moment 0:38:06.360 --> 0:38:08.479 of equality and yet like was it. 0:38:08.840 --> 0:38:11.400 Well, I mean, you have to understand when you have 0:38:11.520 --> 0:38:14.320 a group of competitive astronauts, as you had with the 0:38:14.719 --> 0:38:18.320 class of astronauts that Sally was in, you know, they're 0:38:18.400 --> 0:38:22.840 an extremely competitive group of individuals. So obviously their sole 0:38:22.920 --> 0:38:24.399 ambition was to fly into space. 0:38:24.440 --> 0:38:24.680 I hear. 0:38:24.719 --> 0:38:27.640 That is the sole ambition of every astronaut obviously, and 0:38:27.760 --> 0:38:31.439 so you know, obviously they all wanted to be the first, 0:38:31.520 --> 0:38:34.040 and I think with the women, obviously there was that 0:38:34.080 --> 0:38:36.799 added pressure of being the first American woman. And so 0:38:37.320 --> 0:38:39.640 the issue they had though was they really had no 0:38:39.920 --> 0:38:44.200 idea what the terms of this quote unquote competition, where 0:38:44.239 --> 0:38:48.000 obviously NASA wasn't saying there was a competition, but everybody 0:38:48.080 --> 0:38:50.719 was asking about it. The media all knew about it. 0:38:50.880 --> 0:38:53.640 They were all kind of picking their favorites by who 0:38:53.680 --> 0:38:56.319 they liked to cover and who you know, they they 0:38:56.400 --> 0:39:01.360 thought maybe fit the best feminine architetye. You know, that 0:39:01.800 --> 0:39:03.879 was kind of playing out and the press before they 0:39:03.880 --> 0:39:04.360 were chosen. 0:39:04.360 --> 0:39:06.600 Well, talk a little bit more about the press coverage 0:39:06.600 --> 0:39:09.880 at the time, and I kept having to remind myself, 0:39:09.960 --> 0:39:12.360 this isn't that long ago. I mean we're talking like 0:39:12.880 --> 0:39:16.160 just before the nineteen eighties, which you know, was the 0:39:16.200 --> 0:39:18.400 decade I was born in, Like, this is not that 0:39:18.520 --> 0:39:19.000 long ago. 0:39:19.320 --> 0:39:21.640 Yeah, I mean even when they first came on board, 0:39:21.680 --> 0:39:23.799 when the first six women came on board, you know, 0:39:24.200 --> 0:39:28.279 a reporter asked during the initial press conference that announced them, 0:39:28.360 --> 0:39:31.920 you know, was Shannon's three kids taken into account? And 0:39:31.960 --> 0:39:34.120 it's you know, we've been flying with men who had 0:39:34.200 --> 0:39:37.280 children for many, many years by that point, and still, 0:39:37.719 --> 0:39:40.360 you know, they were concerned about whether or not a 0:39:40.440 --> 0:39:42.960 mother could handle this role. And so that was just 0:39:43.040 --> 0:39:45.279 reflected in many of the questions that were asked. Sally 0:39:45.360 --> 0:39:47.600 probably got the worst of them, just because she was 0:39:47.680 --> 0:39:51.120 the first. You know, famously, she was asked if she 0:39:51.239 --> 0:39:54.640 wept in the simulator when it broke down. There were 0:39:54.680 --> 0:39:57.360 some other I mean there was another one. I actually 0:39:57.400 --> 0:40:00.600 have the video of that press conference before she would 0:40:00.640 --> 0:40:03.520 you have to watch in person because she her facial 0:40:03.560 --> 0:40:07.040 expressions are just so good. She handled it very gracefully, 0:40:07.040 --> 0:40:09.239 but you can tell, you know, she's hurting inside. And 0:40:10.000 --> 0:40:12.319 there was another question that was asking her, you know, 0:40:13.160 --> 0:40:14.759 you know you quit tennis. She used to be a 0:40:14.760 --> 0:40:17.040 tennis player before she came to the Space program, and 0:40:17.120 --> 0:40:20.279 it was you quit tennis because you didn't think you 0:40:20.320 --> 0:40:23.200 had the ability to go pro? Would you have quit 0:40:23.239 --> 0:40:25.719 the Space program if you hadn't been the first American 0:40:25.800 --> 0:40:29.480 woman picked? So, you know, just kind of terrible questions 0:40:29.560 --> 0:40:31.600 like that. You know, they asked if she'd be the 0:40:31.640 --> 0:40:36.280 first mom in space. One anchor asked if she wished 0:40:36.320 --> 0:40:40.400 she were a man? You know, just truly. You wonder 0:40:40.480 --> 0:40:43.719 how I keep saying during these interviews, you know, I 0:40:43.840 --> 0:40:47.560 apologize for our press ancestors because I feel like we've come. 0:40:47.440 --> 0:40:47.839 A long way. 0:40:48.239 --> 0:40:48.799 I'm with you. 0:40:49.680 --> 0:40:54.200 These six women had a pretty diverse professional background. Talk 0:40:54.239 --> 0:40:54.960 to us about that. 0:40:55.040 --> 0:40:58.080 Yeah, That's what I loved most about the cohort is 0:40:58.320 --> 0:41:01.879 they are so illustrated of how there's just no one 0:41:02.040 --> 0:41:05.320 true path to space. You know, we had two medical doctors, 0:41:05.719 --> 0:41:09.880 an astrophysicist and tennis player, an electric electrical engineer, an 0:41:09.880 --> 0:41:14.719 oceanographer and geologist, and a chemist. And not only were 0:41:14.800 --> 0:41:17.400 they diverse in the types of fields that they worked in, 0:41:17.800 --> 0:41:20.280 but also in terms of whether or not they always 0:41:20.320 --> 0:41:22.879 wanted to be astronauts. You know, some half of them 0:41:22.960 --> 0:41:25.719 had dreamed about it their whole lives or had secretly 0:41:25.760 --> 0:41:29.080 harbored this ambition, while the other half didn't even think 0:41:29.120 --> 0:41:32.120 about it until they saw that NASA was opening up 0:41:32.200 --> 0:41:35.600 the selection process. And I just think that's a really 0:41:35.640 --> 0:41:40.239 great illustration of you know, when you make things more 0:41:40.320 --> 0:41:44.399 diverse and accessible for people, those who would be great 0:41:44.400 --> 0:41:46.680 in those roles would realize that they could actually do 0:41:46.760 --> 0:41:48.240 it when they wouldn't have before. 0:41:48.920 --> 0:41:51.759 Okay, there's also this subtle thing that comes up in 0:41:51.760 --> 0:41:55.560 the book that astronauts seem to have a chemical attraction 0:41:55.680 --> 0:41:59.520 to one another. How many different relationships were there were? 0:41:59.680 --> 0:42:00.480 Yeah, there was. 0:42:00.680 --> 0:42:04.640 There were three of the women did marry other astronauts, 0:42:04.440 --> 0:42:07.759 and some one they married, you know, before they became astronauts, 0:42:07.760 --> 0:42:11.520 but secretly harvard that ambition. Others met through the program, 0:42:12.040 --> 0:42:15.600 And I think that's just it's indicative of the fact 0:42:15.600 --> 0:42:17.200 that they spent a lot of time together. You know, 0:42:17.239 --> 0:42:20.520 this was a very close, tight net group of astronauts, 0:42:20.520 --> 0:42:24.640 the tfng's you know, the men actually say this in 0:42:24.680 --> 0:42:26.560 the book. You know, what was described to me is 0:42:26.600 --> 0:42:30.320 the women weren't exactly you know, the bestest of friends, 0:42:30.360 --> 0:42:32.719 you know, which you might think they were being, you know, 0:42:33.400 --> 0:42:36.320 very similar in how you know, how they were picked 0:42:36.360 --> 0:42:38.440 and the things that were asked of them, but it 0:42:38.480 --> 0:42:40.399 was really the men that they spent most of their 0:42:40.440 --> 0:42:43.400 time with. For instance, they had to stay current in 0:42:43.800 --> 0:42:48.279 NASA's fleet of T thirty eight jets, and so since 0:42:48.320 --> 0:42:51.440 the women weren't able to fly the planes themselves, they 0:42:51.440 --> 0:42:52.759 had to be in the back seat, and so they 0:42:52.800 --> 0:42:56.000 spent a lot of time with male pilots, and so 0:42:56.040 --> 0:42:58.480 they would start to gravitate towards the pilots that they 0:42:58.880 --> 0:43:00.880 like the most. So I think it just goes to 0:43:00.880 --> 0:43:03.799 show that when you put a lot of you know, 0:43:04.000 --> 0:43:07.640 very accomplished, good looking people together and you make them 0:43:07.680 --> 0:43:10.760 spend a lot of time together, you know, romance is bloom. 0:43:11.239 --> 0:43:13.640 How are things at NASA today in terms of gender breakdown? 0:43:13.680 --> 0:43:16.800 Because if you look at the airline industry, it's still 0:43:16.960 --> 0:43:19.520 relatively rare to actually have a female captain. 0:43:19.840 --> 0:43:21.920 Yeah, I mean, there's still quite a long way to go. 0:43:22.120 --> 0:43:25.600 While each of the astronauts selections since the six were 0:43:25.640 --> 0:43:29.240 chosen have had women, you know, they all haven't been equal. 0:43:29.480 --> 0:43:32.040 And in terms of the women who've gone to space, 0:43:32.160 --> 0:43:34.680 I think we're still below one six of the people 0:43:34.719 --> 0:43:37.279 who've gotten to space have actually been women, and the 0:43:37.320 --> 0:43:39.880 women of the statistics for women of color are just 0:43:39.920 --> 0:43:41.840 even more abysmal. We have such a long way to 0:43:41.880 --> 0:43:45.719 go to really reach that equality. So it's that, you know, 0:43:45.840 --> 0:43:49.920 I just think that when you put up societal barriers 0:43:49.960 --> 0:43:52.800 in place, it takes quite a long time to break 0:43:52.840 --> 0:43:55.680 them down. So, you know, think of the criteria that 0:43:56.040 --> 0:43:58.440 it takes to become an astronaut. We had to really 0:43:58.560 --> 0:44:01.560 like encourage women and people of color to go in 0:44:01.600 --> 0:44:04.759 stem fields because they were discouraged from going into those 0:44:04.760 --> 0:44:06.439 fields for so long, and it just takes a while 0:44:06.520 --> 0:44:10.080 to you know, break those barriers down. So and when 0:44:10.080 --> 0:44:12.160 it comes to space, things take a really long time. 0:44:12.160 --> 0:44:15.319 Developmental time takes, you know, it's we're talking on the 0:44:15.400 --> 0:44:18.120 order of years and decades. But to that point, it's 0:44:18.160 --> 0:44:21.200 probably safe to say that we could be doing more. 0:44:21.280 --> 0:44:24.680 You know, there's better ways to you know, encourage a 0:44:24.760 --> 0:44:27.040 more diverse set of people to get into the program. 0:44:27.160 --> 0:44:28.960 So it's just something to keep top of mind. 0:44:29.040 --> 0:44:31.600 Our thanks to Bloomberg News Space reporter Lauren Grush, her 0:44:31.600 --> 0:44:33.840 new book is just out. It's called The Six, The 0:44:33.960 --> 0:44:37.279 Untold Story of America's first women Astronauts. You can catch 0:44:37.280 --> 0:44:40.080 the full conversation on the business Week podcast feed. You're 0:44:40.120 --> 0:44:43.359 listening to Bloomberg business Week coming up. While billionaire James 0:44:43.440 --> 0:44:46.440 Dolan has compiled a massive sports and entertainment portfolio that 0:44:46.480 --> 0:44:49.000 includes two New York sports teams and a variety of 0:44:49.000 --> 0:44:52.840 arenas in theaters, his latest project could redefine his legacy. 0:44:53.000 --> 0:44:55.040 You know, some people call him Madison Square Garden, you know, 0:44:55.080 --> 0:44:57.520 the most famous venue in the world. Yet he has 0:44:57.560 --> 0:45:00.960 this idea he wants to disrupt I have entertainment. 0:45:01.120 --> 0:45:03.600 Our BusinessWeek team takes you inside the sphere in the 0:45:03.600 --> 0:45:06.239 heart of Sin City. This is Bloomberg. 0:45:06.560 --> 0:45:10.120 You're listening to the Bloomberg Business Week podcast. Catch us 0:45:10.160 --> 0:45:13.680 live weekday afternoons from three to six Eastern Listen. 0:45:13.400 --> 0:45:16.880 On Bloomberg dot com. The iHeartRadio app and the Bloomberg 0:45:16.920 --> 0:45:20.359 Business app, or watch us live on YouTube. 0:45:20.400 --> 0:45:22.960 For the last several years, people visiting Las Vegas might 0:45:23.000 --> 0:45:25.480 have been puzzled as they gazed westward from the Strip. 0:45:25.680 --> 0:45:28.080 Looming in the distance was a three hundred and sixty 0:45:28.080 --> 0:45:31.239 six foot tall sphere. The Dark orb bore a familial 0:45:31.280 --> 0:45:34.520 resemblance to the Death Star, but lacked any signage offering 0:45:34.520 --> 0:45:37.120 a clue to its purpose. Devin Leonard is out with 0:45:37.160 --> 0:45:39.640 a new feature that delves into the convoluted history and 0:45:39.640 --> 0:45:41.840 promise of what's known as the Sphere. It's in the 0:45:41.880 --> 0:45:45.280 latest issue of Bloomberg BusinessWeek magazine, available now on newsstands, 0:45:45.280 --> 0:45:47.680 online and on the terminal. Devin and Joe Weber are 0:45:47.760 --> 0:45:49.480 with me and Jess mett In to detail the one 0:45:49.520 --> 0:45:51.960 of a kind venue and the man behind the project, 0:45:52.239 --> 0:45:55.920 New York Nixon Rangers owner and CEO of MSG Entertainment, 0:45:56.280 --> 0:45:56.960 James Dolan. 0:45:57.360 --> 0:46:00.760 He's actually kind of fascinating in that he has other interests. 0:46:01.000 --> 0:46:04.160 Music's a big one, and he saw this opportunity to 0:46:04.280 --> 0:46:07.800 basically build something in Vegas that had never been built before, 0:46:08.480 --> 0:46:11.719 and he had a vision that I think originated more 0:46:11.800 --> 0:46:15.239 or less with him and he went and like did it, 0:46:15.320 --> 0:46:17.879 and now it's like gonna open and there has never 0:46:17.920 --> 0:46:20.880 been a music venue like this, So yeah, it's really 0:46:20.920 --> 0:46:23.680 easy to hate on James Dolan and the guy may 0:46:23.680 --> 0:46:27.440 have pulled off like what's basically the perhaps a world 0:46:27.560 --> 0:46:31.000 class music venue unlike any other. And it shaped like 0:46:31.400 --> 0:46:34.000 a sphere, and that's what it's called, right Devin, the sphere. 0:46:34.080 --> 0:46:36.279 Yeah, I mean, I mean, look, you know this, this 0:46:36.320 --> 0:46:37.840 is a guy he embarks on this thing. You know, 0:46:37.960 --> 0:46:40.440 he's he's past sixty, he's got, you know, all the 0:46:40.520 --> 0:46:42.400 money he needs. He's the son of a son of 0:46:42.400 --> 0:46:44.560 a billionaire, Charles doll And, a cable you know, cable 0:46:44.600 --> 0:46:47.239 TV pioneer. His family controls, you know, some of the 0:46:47.280 --> 0:46:49.359 world's most you know, famous venues. You know, some people 0:46:49.400 --> 0:46:51.680 call Madison Square Garden, you know, you know, the most 0:46:51.680 --> 0:46:54.080 famous venue in the world. Yet he has this idea 0:46:54.280 --> 0:46:58.279 he wants to disrupt live entertainment by building you know 0:46:58.320 --> 0:47:00.960 what's basically what is it? You know, it's around it's 0:47:01.000 --> 0:47:04.120 an orb like you know, sphere, and it's it's sort 0:47:04.120 --> 0:47:05.320 of three different things. 0:47:05.400 --> 0:47:05.560 You know. 0:47:05.600 --> 0:47:07.560 At night, it's going to be a concert hall where 0:47:07.600 --> 0:47:09.200 this sort of state of the art sound system and 0:47:09.239 --> 0:47:12.360 also this huge LED screen that's as big as bigger 0:47:12.400 --> 0:47:15.840 than I should say, three football fields, and you know 0:47:15.880 --> 0:47:18.840 the high they're calling it the highest resolution LED screen 0:47:19.040 --> 0:47:20.600 in the world. In the daytime, it's going to be 0:47:20.840 --> 0:47:23.000 sort more of a tourist attraction, immersive entertainment. 0:47:23.200 --> 0:47:25.120 You've got to see pictures and videos of this thing 0:47:25.120 --> 0:47:27.560 to actually do it justice. I mean, you hearing about 0:47:27.560 --> 0:47:30.560 it is one thing totally, but this thing is actually 0:47:30.719 --> 0:47:31.680 really really cool. 0:47:32.000 --> 0:47:34.160 No, I mean that. That's something that really kind of 0:47:34.160 --> 0:47:36.560 blew my mind was that when I went out to 0:47:36.640 --> 0:47:39.399 Vegas to go take a tour, I actually I stayed 0:47:39.400 --> 0:47:40.800 in the west and you know, which is sort of 0:47:40.840 --> 0:47:42.759 overlooking it, and I asked them, you know, hey, can 0:47:42.800 --> 0:47:44.319 I can I I want to look out at the 0:47:44.360 --> 0:47:47.600 sphere because it was it was one hundred and fourteen degrees. 0:47:47.600 --> 0:47:48.200 I got to do it. 0:47:49.400 --> 0:47:51.359 I'm not going to go outside. But but no, but 0:47:51.440 --> 0:47:53.040 but I got in there and just looked at it 0:47:53.400 --> 0:47:55.480 out the window. I couldn't believe it. I mean that 0:47:55.600 --> 0:47:57.960 that's when you know, again, as I say in the story, 0:47:58.560 --> 0:48:00.319 a lot of people, you know, were doubting of people 0:48:00.320 --> 0:48:01.839 were saying, this is you know, this is never going 0:48:01.920 --> 0:48:03.600 to work. This is the death star. And then they 0:48:03.600 --> 0:48:05.799 turned it on and you know everybody had you know, 0:48:05.960 --> 0:48:07.120 people just kind of went nuts. 0:48:07.440 --> 0:48:10.279 So why is spear? What was the inspiration behind it? 0:48:11.360 --> 0:48:13.960 You know, that's a really good question. You know, in 0:48:13.960 --> 0:48:17.440 twenty sixteen, you know, his family just sold Cable Vision. 0:48:17.440 --> 0:48:20.760 They just they just sold it for eighteen billion dollars, 0:48:21.600 --> 0:48:23.319 you know. And I make a joke in the story 0:48:23.360 --> 0:48:24.839 the guy plays in the band. I mean he could 0:48:24.840 --> 0:48:26.640 have gone off and played and played in the band, 0:48:26.360 --> 0:48:30.280 and he's like he drew a picture, you know, on 0:48:30.280 --> 0:48:33.719 on a notepad and you know, and told this guy, 0:48:33.760 --> 0:48:37.520 but the chief technology officer of a Cable Vision, this 0:48:37.680 --> 0:48:39.319 is the venue of the future. Let's go out and 0:48:39.320 --> 0:48:41.919 disrupt the live entertainment is I don't actually know where, 0:48:42.000 --> 0:48:43.440 no where he got that idea. 0:48:43.520 --> 0:48:46.400 But it turns out that from an engineering standpoint, it 0:48:46.480 --> 0:48:51.000 is incredibly difficult, No, it's insane to playing music in. 0:48:51.680 --> 0:48:53.040 So how did they go about solving that? 0:48:53.320 --> 0:48:58.400 Well, it's an acoustical nightmare because everything just echoes inside 0:48:58.440 --> 0:49:03.160 of Speercally. They found a company in called Hollaplot in 0:49:03.239 --> 0:49:09.600 Germany that's that basically beams audio to using algorithms to 0:49:09.800 --> 0:49:11.880 different places, and you know, to where wherever you're sitting 0:49:11.920 --> 0:49:13.879 that the algorithm set up so they're basically measured. They're 0:49:13.880 --> 0:49:16.880 creating these beats, you know, sound and and and they're measured, 0:49:16.960 --> 0:49:19.520 so everybody sort of here's the same thing. But that way, 0:49:19.840 --> 0:49:21.919 since you're sending the audio right to the people you're 0:49:22.680 --> 0:49:26.640 everything isn't just bouncing all around and echoing. And that's 0:49:26.760 --> 0:49:30.120 just one of the sort of crazy, crazy and and 0:49:30.120 --> 0:49:33.799 and I think ultimately expensive things they did, and and 0:49:34.200 --> 0:49:37.000 helps explain why this thing went from one point two 0:49:37.120 --> 0:49:39.920 billion dollars you know price tag to uh two point 0:49:39.960 --> 0:49:41.080 three billion. 0:49:41.120 --> 0:49:41.480 That's the thing. 0:49:41.920 --> 0:49:42.560 Who's counting? 0:49:43.440 --> 0:49:47.000 So so wait, there's gonna be a big act that's 0:49:47.040 --> 0:49:49.640 gonna open this up. And because this is gonna happen, 0:49:49.719 --> 0:49:52.719 and I mean, it's already in Vegas, it's built. They're 0:49:52.719 --> 0:49:54.920 already doing weird stuff on the strip. 0:49:55.320 --> 0:49:59.319 Who's opening a little band from Ireland called a You 0:49:59.440 --> 0:50:00.480 two of them? 0:50:00.640 --> 0:50:02.239 Yeah, I think if you're gonna be there, yeah, if 0:50:02.280 --> 0:50:04.400 you're gonna make if you're gonna make a splash like 0:50:04.560 --> 0:50:07.680 launch with with with YouTube, how long are they going 0:50:07.719 --> 0:50:08.399 to be opening there? 0:50:08.440 --> 0:50:10.600 They're good, they're they're gonna be playing for twenty five 0:50:10.719 --> 0:50:13.520 twenty five nights, and tickets are how much, you know, 0:50:13.920 --> 0:50:16.000 I think they started around one hundred and fifty dollars. 0:50:16.080 --> 0:50:18.879 Yeah, but I mean I'm going, well, I. 0:50:18.800 --> 0:50:20.359 Mean they're almost all sold out, so I think if 0:50:20.360 --> 0:50:21.680 you want to go, Joel, you're gonna have to look 0:50:21.719 --> 0:50:24.399 at them stuff up and those prices are right. Yeah. 0:50:24.800 --> 0:50:26.200 I mean it's a good point though, Joel, that you 0:50:26.239 --> 0:50:28.239 bring up. If it's good enough for Bono, all right, 0:50:28.280 --> 0:50:30.000 then you know it's good enough for other musicians. 0:50:30.040 --> 0:50:30.160 Right. 0:50:30.560 --> 0:50:33.120 I also just think this is this is the future, 0:50:33.360 --> 0:50:36.200 right like live event We know that live events are 0:50:36.200 --> 0:50:38.440 where artists make their money. If you can make an 0:50:38.560 --> 0:50:42.200 artist a venue unlike any other what happens, you can 0:50:42.239 --> 0:50:43.040 get anybody you want. 0:50:43.200 --> 0:50:45.560 Well, they don't have to travel, so so I mean, 0:50:45.880 --> 0:50:49.480 these these bands have like these caravans of trucks that 0:50:50.640 --> 0:50:52.799 you know they carry there. They're they're they're you know, 0:50:52.800 --> 0:50:54.879 all the equipment around all that, they take their led 0:50:55.040 --> 0:50:57.319 lighting around, they take their sounds just to surround all 0:50:57.320 --> 0:51:00.560 these concert halls and and and in this is from 0:51:00.560 --> 0:51:02.440 what I'm told with you too and other bands, they 0:51:02.480 --> 0:51:06.680 actually have two sets. You know two caravans that you 0:51:06.960 --> 0:51:09.520 know that you know that that move in between in 0:51:09.560 --> 0:51:12.160 between venues, So when they're so the one to the 0:51:12.160 --> 0:51:13.919 next one, you know, they're setting up the next venue 0:51:13.960 --> 0:51:15.920 walk while they're breaking down the first. Anyway, I mean, 0:51:16.040 --> 0:51:18.840 it's it sounds, it's enormously expensive and it's a huge headache. 0:51:18.840 --> 0:51:21.040 And I guess if they can spend you know, a 0:51:21.040 --> 0:51:23.000 couple of months in Vegas, you know, some people are 0:51:23.000 --> 0:51:24.640 definitely gonna want to do that. And some of the bands, 0:51:24.680 --> 0:51:26.279 by the way that they're talking about a cold Play 0:51:27.000 --> 0:51:30.160 and Fish, Harry Styles is. 0:51:35.280 --> 0:51:39.200 All the relationship with Fish they're doing. 0:51:39.440 --> 0:51:40.600 Yeah you packed that house? 0:51:40.840 --> 0:51:43.240 Yeah, okay. 0:51:43.280 --> 0:51:48.560 So there's also a possibility that Vegas won't be the only. 0:51:48.320 --> 0:51:51.520 Place that has a sphere, not if Jim Dog can help. 0:51:51.520 --> 0:51:54.320 But yeah, no, they're they're, they're they're they're trying to 0:51:54.320 --> 0:51:57.359 get permission to build one in London and there's they're 0:51:57.400 --> 0:52:02.880 scouting other locations. But after spending two point three billion dollars, 0:52:03.200 --> 0:52:05.200 they want to change their plans to get partners because 0:52:05.280 --> 0:52:07.239 he's not going to want to do that again. Well 0:52:07.239 --> 0:52:08.840 he's already said he says he's not going to do 0:52:08.840 --> 0:52:09.200 that again. 0:52:10.120 --> 0:52:13.080 Okay, So Joel, you mentioned that, you know, with live 0:52:13.160 --> 0:52:15.520 music in this day and age, the world of Beyonce, 0:52:15.960 --> 0:52:19.760 the world of Taylor Swift, people will pay for certain 0:52:19.800 --> 0:52:22.400 acts and certain experiences more. 0:52:22.200 --> 0:52:23.280 Than one hundred and fifty dollars. 0:52:23.400 --> 0:52:26.319 Oh for sure. Yeah, he didn't see me going to 0:52:26.320 --> 0:52:30.480 beyoncere Taylor Swift as concerts, even though I wanted to, Devin, 0:52:31.080 --> 0:52:32.920 it was hard to see this coming, like the post 0:52:32.920 --> 0:52:35.960 pandemic surge and especially the high prices that people would pay. 0:52:36.160 --> 0:52:38.040 Talk about the construction of this and the way that 0:52:38.080 --> 0:52:40.040 the pandemic derailed it, because this thing was in the 0:52:40.080 --> 0:52:42.719 works before the summer of twenty twenty three. 0:52:43.160 --> 0:52:45.400 No, because that's I mean, that's the whole thing. They 0:52:45.560 --> 0:52:50.959 basically they least eighteen acres of land from from Las 0:52:51.040 --> 0:52:55.239 Vegas sands and they started to build this thing, and 0:52:56.400 --> 0:52:59.359 then in twenty twenty the pandemic hits and it just 0:52:59.719 --> 0:53:03.840 dry up the cost of you know, steel, computer chips, 0:53:04.160 --> 0:53:05.719 you know, basically, you know, just saying the story just 0:53:05.719 --> 0:53:08.280 about anything you need, you know, for a multi billion 0:53:08.320 --> 0:53:09.080 dollar development. 0:53:09.200 --> 0:53:10.319 LEDs were more yeah. 0:53:10.360 --> 0:53:11.680 Yeah, yeah, those. 0:53:11.600 --> 0:53:14.640 Yeah, no, yes, especially for the inside and the outside 0:53:14.640 --> 0:53:18.880 of the excessphere but so so so that effect and 0:53:18.880 --> 0:53:21.800 also halted construction. They were initially going to open in 0:53:22.400 --> 0:53:25.600 twenty twenty one, so that set them back three years. 0:53:25.640 --> 0:53:28.880 But but but it was also just all this advanced technology, 0:53:28.880 --> 0:53:30.799 all these things they're experimenting with. They had to create 0:53:30.800 --> 0:53:33.000 an entirely new camera just to be able to capture 0:53:33.000 --> 0:53:36.440 images large enough to fit, you know, that screen. They 0:53:36.440 --> 0:53:38.920 were stitching images together for multiple cameras. 0:53:38.760 --> 0:53:41.560 Camera and they had to patent this thing because it's 0:53:41.600 --> 0:53:44.479 like the quality in size of this image is so big. 0:53:44.560 --> 0:53:46.239 And then like, I think this is like there's like 0:53:46.360 --> 0:53:48.960 some feats of engineering that they passed. 0:53:48.800 --> 0:53:51.040 A lot of stuff. I came. I think there's I 0:53:51.080 --> 0:53:53.400 think the numbers on like sixty patents overall, and not 0:53:53.520 --> 0:53:55.759 just that the camera is just you know, like eight 0:53:55.880 --> 0:53:56.240 or something. 0:53:56.280 --> 0:53:59.400 So our thanks to senior Global business writer for the magazine, 0:53:59.440 --> 0:54:02.000 Devin Leonard and once again the editor of Bloomberg BusinessWeek, 0:54:02.239 --> 0:54:04.880 Joel Weber. Still to come. On Bloomberg Business Week, we 0:54:04.920 --> 0:54:07.520 turn our attention to the retail sector and the resurrection 0:54:07.600 --> 0:54:10.520 of j C. Penny. CEO Mark Rosen stops by to 0:54:10.600 --> 0:54:14.799 explain the strategy and why it's paying off. This is Bloomberg. 0:54:15.760 --> 0:54:19.319 You're listening to the Bloomberg Business Week podcast. Catch us 0:54:19.360 --> 0:54:23.480 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:54:23.560 --> 0:54:26.840 the Bloomberg Business app, and YouTube. You can also listen 0:54:26.960 --> 0:54:30.080 live on Amazon Alexa from our flagship New York station, 0:54:30.480 --> 0:54:33.200 Just Say Alexa play Bloomberg eleven. 0:54:32.960 --> 0:54:37.520 Thirty Tim Stenek along with Bloomberg News Deputy team leader 0:54:37.560 --> 0:54:40.120 for US Equities Jess Menton, Who's in for Carrol Master 0:54:40.239 --> 0:54:42.400 this week? Our next guest is a veteran of Walmart 0:54:42.480 --> 0:54:45.719 and Levi Strauss, who's facing perhaps his toughest challenge yet 0:54:45.880 --> 0:54:48.640 reviving the storied brand of j C. Penny, which dates 0:54:48.640 --> 0:54:51.080 back more than one hundred and twenty years. The department 0:54:51.120 --> 0:54:53.360 store chain filed for bankruptcy shortly after the start of 0:54:53.400 --> 0:54:57.080 the pandemic in twenty twenty. Then in November of twenty 0:54:57.120 --> 0:55:00.000 twenty one, a new leader took the helm. Just last month, 0:55:00.080 --> 0:55:02.759 the company announced a one billion dollar reinvestment plan that 0:55:02.840 --> 0:55:06.319 focuses on digital and in store experiences. This past week, 0:55:06.360 --> 0:55:08.799 we caught up with Mark Rosen, the CEO of the 0:55:08.920 --> 0:55:11.960 now privately held Jcpenny. He joined us from the company's 0:55:11.960 --> 0:55:13.600 headquarters in Plano, Texas. 0:55:13.880 --> 0:55:15.759 We are a private company, but what I can share 0:55:15.880 --> 0:55:20.160 is we now have sales that are over eight billion dollars. 0:55:20.280 --> 0:55:23.000 We have just over six hundred and fifty stores across 0:55:23.040 --> 0:55:27.279 the country, and we also operate jcp dot com, So 0:55:27.320 --> 0:55:32.319 we're serving customers everywhere right now, and the business is 0:55:33.040 --> 0:55:36.440 really You mentioned that we emerge from bankruptcy, and we 0:55:36.520 --> 0:55:39.800 emerged with a very very clean balance sheet, in a strong, 0:55:39.920 --> 0:55:44.440 strong financial position with less than half a billion dollars, 0:55:45.280 --> 0:55:48.640 with less than five hundred million dollars of debt on 0:55:48.680 --> 0:55:52.240 the balance sheet, so really financially positioned to drive forward 0:55:52.280 --> 0:55:55.560 and really reinvigorate this brand and re establish our relationship 0:55:55.560 --> 0:55:57.920 and our relevance with our consumers, which is really the 0:55:57.960 --> 0:55:59.239 core of America. 0:55:59.280 --> 0:56:02.280 You might have heard just a little earlier talking about 0:56:02.440 --> 0:56:05.000 over the weekend visiting a mall, seeing a jcpenny that 0:56:05.480 --> 0:56:08.120 was no longer operating, and even having the conversation with 0:56:08.200 --> 0:56:11.360 his family about whether or not the store still exists. 0:56:11.680 --> 0:56:13.839 How do you change that narrative and let people know 0:56:13.880 --> 0:56:17.480 that yes, jcpenny is here and we've got six hundred 0:56:17.480 --> 0:56:18.640 and fifty stores across the country. 0:56:18.680 --> 0:56:19.239 How do you do it? 0:56:20.440 --> 0:56:22.440 Well, that's actually part of so you mentioned that we 0:56:22.600 --> 0:56:26.359 just announced an over a billion dollar investment back into 0:56:26.400 --> 0:56:31.040 the business, and that that investment is focused on remodeling 0:56:31.080 --> 0:56:35.920 our stores and reinvesting in the store platform, putting new technology, 0:56:35.960 --> 0:56:41.040 a new point of sale, in in revitalizing our online 0:56:41.080 --> 0:56:45.120 shopping experience and really improving THEJCP dot com shopping experience, 0:56:45.560 --> 0:56:48.120 and then also our supply chain. But I would say 0:56:48.160 --> 0:56:50.600 we're a retailer, and so it all really starts out 0:56:50.640 --> 0:56:53.200 with product. And over the last couple of years, what 0:56:53.200 --> 0:56:58.200 we've done is reintroduce over twenty five of our brands, 0:56:58.239 --> 0:57:01.600 Brands like Stafford that ever customer knows and loves, and 0:57:01.680 --> 0:57:04.439 a lot of customers grew up with brands like Liz 0:57:04.480 --> 0:57:08.600 Clayborn and brands like Cooks in our homes, in our 0:57:08.640 --> 0:57:11.839 home area, and so we've reintroduced that product. And now 0:57:11.920 --> 0:57:14.240 what we're investing in also along with that a billion 0:57:14.280 --> 0:57:18.640 dollars is what we're calling a brand reinvigoration that is 0:57:18.640 --> 0:57:21.760 centered around really helping our customers make it count. And 0:57:21.800 --> 0:57:23.840 when we look at our customer, I set our customers 0:57:23.880 --> 0:57:26.560 the core of America. It's the school teachers that teach 0:57:26.600 --> 0:57:29.160 our children it's the construction workers that build our homes 0:57:29.200 --> 0:57:32.280 in the buildings we work in. It's medical workers who 0:57:32.320 --> 0:57:35.040 take care of our families. And that customer is looking 0:57:35.120 --> 0:57:38.120 for a sense of belonging there, looking for a place 0:57:38.160 --> 0:57:41.960 where they can find accessible fashion that they can still 0:57:42.000 --> 0:57:44.880 get at a great value, because that customer is making 0:57:44.920 --> 0:57:46.640 trade of us every day in their life. And so 0:57:47.160 --> 0:57:51.080 what we're introducing also is a campaign to reinvigorate the brand, 0:57:51.200 --> 0:57:54.200 centering around how we help our customers make every moment 0:57:54.240 --> 0:57:56.040 in their lives, whether it's a big moment like their 0:57:56.120 --> 0:57:59.040 daughter's wedding, or whether it's a smaller moment like getting 0:57:59.040 --> 0:58:00.920 their kids ready for school in the morning. But how 0:58:00.960 --> 0:58:04.000 do they use the products that we have at jcpenny 0:58:04.000 --> 0:58:06.200 to make that count but be able to make account 0:58:06.280 --> 0:58:08.520 but still have money left to put breakfast on the 0:58:08.560 --> 0:58:09.360 table for the kids. 0:58:09.560 --> 0:58:12.520 Hey, Mark, whenever you're talking about middle income shoppers, and 0:58:12.600 --> 0:58:16.440 especially with this inflation dynamic, how do you sort of 0:58:16.560 --> 0:58:19.800 view that as far as how to get shoppers back 0:58:19.840 --> 0:58:22.640 in when they are trying to figure out where to 0:58:23.120 --> 0:58:24.600 sort of shift their spending. 0:58:24.680 --> 0:58:28.320 At this point, right inflation is an issue for our customer. 0:58:28.360 --> 0:58:30.440 We look right now, we see that our customer is 0:58:30.440 --> 0:58:34.400 spending over seven hundred dollars a month more just for 0:58:34.880 --> 0:58:39.320 rent or mortgage, for groceries, for gas, and that means 0:58:39.400 --> 0:58:41.640 that every dollar is even more important to them, and 0:58:41.680 --> 0:58:44.400 it's more important that they make every dollar count. And 0:58:44.400 --> 0:58:46.440 that's really what we're here for is to help them 0:58:46.480 --> 0:58:48.040 do that. And I think the unique thing that we 0:58:48.080 --> 0:58:51.920 can bring to the table is we can bring great 0:58:52.000 --> 0:58:55.960 fashion and great product at a really accessible price to 0:58:56.000 --> 0:58:58.600 our customers. And that's what they're that's what they need, 0:58:58.680 --> 0:59:00.680 that's what they're looking for right now in their lives. 0:59:01.000 --> 0:59:04.120 When you talk about technology upgrades to some of these stores, 0:59:04.320 --> 0:59:06.520 kind of build on that. What more specifically are. 0:59:06.440 --> 0:59:07.160 You doing. 0:59:08.520 --> 0:59:11.720 Within the stores. It's a lot of it's mobile and 0:59:11.720 --> 0:59:15.040 it's point of sale or checkout technology. So we'll be 0:59:15.720 --> 0:59:18.360 within the stores centralizing the checkout, but we'll also be 0:59:18.400 --> 0:59:20.240 putting in the hand of hands of all of our 0:59:20.240 --> 0:59:23.160 associates in the stores mobile devices that will help them 0:59:23.200 --> 0:59:26.400 manage inventory better. It'll help them ship and fulfill online orders, 0:59:26.400 --> 0:59:28.760 it'll help them check inventory and order online. For a 0:59:28.800 --> 0:59:32.200 customer or I've talked about centralized checkout, what it really 0:59:32.240 --> 0:59:34.240 will do is move check out anywhere so that they 0:59:34.240 --> 0:59:37.040 can mobile check out a customer anywhere in the store. 0:59:37.000 --> 0:59:40.040 Sales of over eight billion dollars. Where do more sales 0:59:40.080 --> 0:59:42.000 happen right now at the six hundred fifty stores across 0:59:42.000 --> 0:59:43.640 the country or jcpenny dot com. 0:59:43.920 --> 0:59:46.880 So it's about a seventy thirty split with stores the 0:59:46.920 --> 0:59:49.840 seventy percent and with the online business about thirty. 0:59:49.640 --> 0:59:50.880 And where are you more bullish? 0:59:51.280 --> 0:59:55.720 So both are actually growing, and we're focused on growing both. 0:59:55.760 --> 0:59:58.960 But I do believe that right now we've done a 0:59:58.960 --> 1:00:03.400 significant amount of of reimagining our online experience and investing 1:00:03.440 --> 1:00:06.080 in JCP dot com, and we think there's significant growth there. 1:00:06.160 --> 1:00:07.920 So do you think that it is it growing at 1:00:07.920 --> 1:00:11.320 a faster rate in like yell eclips store sales with 1:00:11.440 --> 1:00:12.880 JCP dot com in a number. 1:00:12.680 --> 1:00:16.640 Of years, the JCP dot com business is growing faster 1:00:17.320 --> 1:00:20.840 than the store business. I don't believe that it's ever 1:00:20.920 --> 1:00:23.080 going to eat clips. I think you could reach, like, 1:00:23.240 --> 1:00:25.280 you know, a forty sixty point or something like that. 1:00:25.320 --> 1:00:27.080 But the reality is what we're seeing is that customers 1:00:27.120 --> 1:00:28.800 still want to shop in stores. They still want to 1:00:28.840 --> 1:00:30.600 come in, they want to have that try and experience, 1:00:30.640 --> 1:00:32.840 they want to get help from an associate to put 1:00:32.880 --> 1:00:36.880 together an outfit, and in important areas like we reintroduce beauty, 1:00:37.160 --> 1:00:39.120 a customer is looking to come in and get help 1:00:39.160 --> 1:00:39.960 and try product. 1:00:40.480 --> 1:00:43.800 When you look at this portfolio, whether it's fashion, apparel, home, 1:00:43.880 --> 1:00:47.560 beauty as well as jewelry, where are you seeing spending 1:00:48.000 --> 1:00:50.800 the strongest and where do you see people pulling back 1:00:50.840 --> 1:00:51.320 the most. 1:00:53.000 --> 1:00:55.560 It's interesting because if we look across the business, we're 1:00:55.640 --> 1:00:58.120 really pleased with the growth that we've seen in our 1:00:58.120 --> 1:01:01.320 home business and in our men and women's apparel business, 1:01:01.400 --> 1:01:04.760 and we believe we've gained share in all of those 1:01:04.800 --> 1:01:08.280 areas because customers are spending there. Our jewelry business is 1:01:08.320 --> 1:01:11.040 another one that continues to be really strong right now. 1:01:11.240 --> 1:01:15.480 I think rather than seeing people reduce spending in particular areas, 1:01:15.840 --> 1:01:18.240 we're actually seeing that within an area, they're being a 1:01:18.280 --> 1:01:21.840 little bit more selective about what they're choosing, and we 1:01:21.880 --> 1:01:24.760 are seeing some more growth come from some of our 1:01:24.800 --> 1:01:28.600 private label brands. For example, in home, we're seeing products 1:01:28.640 --> 1:01:31.160 like Cooks, which is a private label opening price point, 1:01:32.120 --> 1:01:35.959 small small appliance think like blenders and toasters and things 1:01:36.000 --> 1:01:39.000 like that, and cookwear. We're seeing customers choose that product 1:01:39.040 --> 1:01:42.200 in some cases because they realize it's great value and 1:01:42.240 --> 1:01:44.520 they can save money by going for that product. 1:01:44.680 --> 1:01:46.680 So are you going to stay a private company forever? 1:01:46.800 --> 1:01:48.080 Is there an IPO on the horizon. 1:01:48.600 --> 1:01:52.280 So right now we're really actually focused on just driving sustainable, 1:01:52.280 --> 1:01:55.840 profitable customer growth within the business and we're very fortunate 1:01:55.880 --> 1:01:58.040 that we have an ownership group that is aligned with 1:01:58.120 --> 1:02:01.040 doing that and focused on the long term. And right 1:02:01.080 --> 1:02:05.800 now the focus is building that relationship with customers, driving 1:02:05.840 --> 1:02:08.600 customers back to the brand, and then we'll see where 1:02:08.600 --> 1:02:09.240 it goes from there. 1:02:09.640 --> 1:02:11.640 That was Mark Rosen, CEO of j C. 1:02:11.800 --> 1:02:12.120 Penny. 1:02:12.360 --> 1:02:15.280 You're listening to Bloomberg business Week coming up, we stick 1:02:15.320 --> 1:02:18.200 with the retail theme and examine how AI is increasingly 1:02:18.240 --> 1:02:20.400 becoming part of the shopping experience. 1:02:20.760 --> 1:02:23.320 That's what lily Ai does. We are using AI to 1:02:23.400 --> 1:02:28.000 bridge the gap between retailers speak and consumers speak in retail, 1:02:28.600 --> 1:02:32.880 and this is the perfect type of problem that AI 1:02:33.000 --> 1:02:36.000 can come in and help solve. To understand the language 1:02:36.000 --> 1:02:39.959 of the consumer, use AI to extract those attributes out 1:02:39.960 --> 1:02:43.920 of the images of the product catalog and then help 1:02:44.160 --> 1:02:45.360 the consumer experiences. 1:02:45.640 --> 1:02:48.560 The CEO of lily Ai breaks down her company's unique 1:02:48.600 --> 1:02:51.880 data driven tools designed to help streamline product discovery in 1:02:51.920 --> 1:02:54.520 the world of e commerce. This is Bloomberg. 1:02:54.840 --> 1:02:58.400 You're listening to the Bloomberg Business Week Podcast. Catch us 1:02:58.400 --> 1:03:01.760 live weekday afternoons from three to six Eastern Listen on 1:03:01.840 --> 1:03:05.880 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, 1:03:06.160 --> 1:03:07.840 or watch us live on YouTube. 1:03:08.720 --> 1:03:12.360 Tim Stanibek with Bloomberg'sjess Mattin. Who's in for Carol and Jess. 1:03:12.360 --> 1:03:15.480 We've got yet another use for everybody's favorite type of tech. 1:03:15.640 --> 1:03:19.960 So the hype in artificial intelligence, as we know is everywhere. 1:03:20.000 --> 1:03:22.520 But what about when it comes to the intersection of 1:03:22.640 --> 1:03:27.360 AI and retailers. Well, there is a company that is 1:03:27.400 --> 1:03:29.920 powered by AI that is aiming to bridge that gap 1:03:30.000 --> 1:03:32.840 and makes selling easier for companies, especially when you're talking 1:03:32.840 --> 1:03:37.520 about Bloomingdale's, Macy's, the gap back to school purchases obviously 1:03:37.600 --> 1:03:40.400 starting up right now and then also ahead of the 1:03:40.480 --> 1:03:43.600 holiday shopping season. Joining us now is Perva Gupta, co 1:03:43.680 --> 1:03:47.640 founder and chief executive officer at Lilyai, joining us on 1:03:47.720 --> 1:03:51.400 Zoom from Palo Alto, California. Thank you so much for 1:03:51.520 --> 1:03:55.200 joining us. Talk to us about what your company is 1:03:55.400 --> 1:03:57.760 and what you do. Just to set the scene here. 1:03:57.640 --> 1:04:01.240 My company is called lily Ai. We are working with 1:04:01.280 --> 1:04:03.360 some of the largest brands and retailers. But let me 1:04:03.360 --> 1:04:07.200 ask you a question. I'm sure you shop online all 1:04:07.240 --> 1:04:09.560 the time and I've gone through an experience when you're 1:04:09.560 --> 1:04:12.200 looking for something as simple as a navy blue sweatshirt 1:04:12.360 --> 1:04:15.680 and you are getting no results, or you're getting even 1:04:15.680 --> 1:04:20.360 worse red lipsticks and slippers. It's not that they don't 1:04:20.360 --> 1:04:23.880 have navy blue sweatshirts, but the reason why that's happening 1:04:24.120 --> 1:04:27.440 is because the way that the products are described at 1:04:27.480 --> 1:04:31.720 retailers are in the language of midnight French terry at 1:04:31.800 --> 1:04:34.960 leisure like. That's why you're not finding it because it's 1:04:35.000 --> 1:04:38.040 not called navy blue sweatshirt. It's not labeled in the 1:04:38.160 --> 1:04:42.160 language that us as consumers use, and so that's what 1:04:42.200 --> 1:04:44.920 lily ai does. We are using AI to bridge the 1:04:44.960 --> 1:04:49.880 gap between retailers speak and consumers speak in retail and 1:04:50.200 --> 1:04:53.480 this is the perfect type of problem that AI can 1:04:53.520 --> 1:04:56.360 come in and help solve. To understand the language of 1:04:56.360 --> 1:04:59.680 the consumer, use AI to extract those attributes out of 1:04:59.760 --> 1:05:03.040 the images of the product catalog and then help the 1:05:03.080 --> 1:05:04.760 consumer experiences. 1:05:04.280 --> 1:05:06.320 Okay, so you got to explain to me, like I'm 1:05:06.320 --> 1:05:08.880 a five year old, how AI is being used here 1:05:08.880 --> 1:05:11.640 and how it's training itself. It's retraining itself. Take us 1:05:11.640 --> 1:05:12.320 through the basics. 1:05:12.520 --> 1:05:16.600 AI is being used for years now. It literally started 1:05:16.600 --> 1:05:21.280 in nineteen fifties, and fundamentally AI is when machines are 1:05:21.360 --> 1:05:25.960 mimicking human intelligence, right and recently, generative AI is all 1:05:26.000 --> 1:05:29.880 the hype everybody's heart of chat GPD. That's one type 1:05:29.880 --> 1:05:31.840 of AI. There are so many other types of AI 1:05:32.440 --> 1:05:36.000 like computer vision, natural language processing, all of those types 1:05:36.040 --> 1:05:38.120 of things. And so now coming back to your question 1:05:38.240 --> 1:05:43.400 around how we use AI, we have basically built we 1:05:43.520 --> 1:05:46.720 use a type of AI called discriminative AI where we 1:05:46.840 --> 1:05:50.640 have created a lot of clean training data where merchants 1:05:50.640 --> 1:05:53.760 on our team over the last few years have manually 1:05:53.920 --> 1:05:56.800 labeled all of the products and added a lot of 1:05:56.840 --> 1:06:00.160 the language of the consumer on every single product. 1:06:00.280 --> 1:06:03.080 How long does it take to do that kind of process? 1:06:03.200 --> 1:06:07.000 Seems very painful. It's a very very difficult process where 1:06:07.080 --> 1:06:10.760 you almost have to create the definitions in fashion in 1:06:10.800 --> 1:06:15.200 a very very clean mathematical way, where our merchants know 1:06:15.400 --> 1:06:18.960 the difference between boho and boho chic for example. Right, 1:06:19.280 --> 1:06:22.160 it needs to be really really clean data for AI 1:06:22.280 --> 1:06:25.800 to understand all of the different types of language that 1:06:25.920 --> 1:06:29.640 our consumers use or just over our consumers use. And 1:06:30.040 --> 1:06:32.960 so it's it's not an easy thing. It's a very 1:06:33.040 --> 1:06:35.600 very difficult labors process that we've gone through to be 1:06:35.640 --> 1:06:39.080 able to create all this clean training data which we 1:06:39.200 --> 1:06:43.000 then fed to our AI engines which now which are 1:06:43.040 --> 1:06:46.520 now doing a really good job of predicting all of 1:06:46.560 --> 1:06:50.840 these attributes on these products, which is basically the images. 1:06:50.920 --> 1:06:53.960 So in short, we have built the technology that can 1:06:54.040 --> 1:06:58.800 extract attributes in the language that consumers understand out of images. 1:06:59.240 --> 1:07:01.200 That was perfect good to a co founder and CEO 1:07:01.480 --> 1:07:04.280 at LILYAI. And that wraps up the weekend edition of 1:07:04.320 --> 1:07:06.960 Bloomberg Business Week from Bloomberg Radio. Thanks so much for 1:07:07.040 --> 1:07:09.520 joining us. Be sure to tune into Bloomberg Business Week 1:07:09.560 --> 1:07:11.720 Monday through Friday starting at three pm Wall Street Time 1:07:11.760 --> 1:07:14.960 on Bloomberg Radio and on Sirius XM channel one nineteen. 1:07:15.200 --> 1:07:17.360 You can also watch your daily broadcast on YouTube just 1:07:17.360 --> 1:07:21.000 search Bloomberg Global News and we're simulcast on Bloomberg Originals 1:07:21.160 --> 1:07:24.400 available at Bloomberg dot com Slash Originals and streaming platforms 1:07:24.440 --> 1:07:28.600 like Roku, Amazon, fireTV, Samsung TV Plus and more. Find 1:07:28.640 --> 1:07:31.800 our Bloomberg BusinessWeek podcast at Bloomberg dot com, Apple, or 1:07:31.840 --> 1:07:34.400 wherever you get your podcasts. The latest edition of the 1:07:34.480 --> 1:07:37.400 magazine is available on newsstands now, at Bloomberg dot com 1:07:37.400 --> 1:07:40.040 and always on the Bloomberg Terminal. Have a good and 1:07:40.080 --> 1:07:43.560 safe weekend everyone. For Jess Matton and Simone Foxman. I'm 1:07:43.560 --> 1:07:46.880 Tim Stenovic. Stay with us. Today's top stories and global 1:07:46.880 --> 1:07:48.960 business headlines are coming up right now. 1:07:49.240 --> 1:07:52.439 This is the Bloomberg Business Week Podcast. I'll a little 1:07:52.520 --> 1:07:56.040 on Apple, Spotify, and anywhere else you get your podcast. 1:07:56.520 --> 1:08:00.160 Listen live weekday afternoons from three to six Eastern on 1:08:00.200 --> 1:08:03.520 Bloomberg dot com, the iHeartRadio app, tune In, and the 1:08:03.560 --> 1:08:06.560 Bloomberg Business App. You can also watch us live every 1:08:06.560 --> 1:08:09.960 weekday on YouTube and always on the Bloomberg Terminal.