WEBVTT - Cheerleading Is a $2 Billion U.S. Industry, Untapped Worldwide, Varsity Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:31.680 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. So 0:00:31.760 --> 0:00:35.760 it turns out that pumping your fist and screaming yeah 0:00:36.080 --> 0:00:39.519 is big business, in fact, somewhere in the order of 0:00:39.640 --> 0:00:43.040 two billion dollars. Here to talk about the cheerleading business 0:00:43.440 --> 0:00:46.280 is Jeff Webb, founder and chairman of Varsity Spirit, which 0:00:46.320 --> 0:00:50.400 is based in Memphis, Tennessee. And Jeff, you know, I'm interested. 0:00:50.440 --> 0:00:54.040 When I think about cheerleading, I think about very much 0:00:54.080 --> 0:00:59.200 an all American type of vision with girls and pigtails 0:00:59.240 --> 0:01:02.600 and pumping their pom poms and wearing those pleated skirts 0:01:02.640 --> 0:01:05.399 and specific sneakers, which I'm sure all costs money, but 0:01:05.440 --> 0:01:10.800 your and I toward a bigger business overseas. So where 0:01:10.840 --> 0:01:13.880 is the cheerleading that's going on outside of the US. So, well, 0:01:13.920 --> 0:01:17.520 it's still in its infancy, but it is definitely a 0:01:17.560 --> 0:01:22.080 gaining momentum. We we actually have an international federation that 0:01:22.280 --> 0:01:25.319 is just recently recognized by the International Olympic Committee, which 0:01:25.400 --> 0:01:28.600 kind of gives you validation as an emerging sport or 0:01:29.000 --> 0:01:33.000 sport that's actually arrived. And we have a hundred and 0:01:33.000 --> 0:01:35.479 ten countries in that federation, so it gives you an 0:01:35.480 --> 0:01:38.440 idea of of where true how much activity there is 0:01:38.680 --> 0:01:42.360 on a broad basis. Now as far as it being deep, uh, 0:01:42.400 --> 0:01:44.640 there's no doubt that the you know, the U s 0:01:44.720 --> 0:01:47.280 has because of its traditions children, has been around the 0:01:47.360 --> 0:01:50.040 US for over a hundred years at school gyms and 0:01:50.080 --> 0:01:52.280 so on. So we have a we have a lot 0:01:52.360 --> 0:01:55.600 more people here involved in cheerleading, but it is beginning 0:01:55.640 --> 0:01:57.560 all over the world and a lot of that just 0:01:57.600 --> 0:01:59.400 has to do with the exposure we've gotten with our 0:01:59.760 --> 0:02:03.560 now sational championships and world championships and uh saw some 0:02:03.600 --> 0:02:06.640 of the educational programs we've been involved in overseas. But 0:02:06.680 --> 0:02:09.440 it's a it's an exciting time. Cheff. I understand that 0:02:09.480 --> 0:02:13.040 you were a yell leader at the University of Oklahoma. 0:02:13.200 --> 0:02:17.399 What is a yell leader? And did your families say, gee, 0:02:17.480 --> 0:02:19.440 you know, law school would have been a good idea, 0:02:19.960 --> 0:02:22.919 but you founded this company. Tell us how it all happened. Yeah, well, yeah, 0:02:23.000 --> 0:02:25.160 later it's the term that was used in in the 0:02:25.240 --> 0:02:29.920 day for the men who were involved in interiorleading. And 0:02:30.280 --> 0:02:33.200 as far as the company itself, yeah, I was gonna 0:02:33.240 --> 0:02:34.680 go to law school. As a matter of fact, that 0:02:34.760 --> 0:02:37.480 was that was the that was the plan after after 0:02:37.560 --> 0:02:41.440 college and um, I've been I've been working uh three 0:02:41.560 --> 0:02:43.480 or four jobs to get through school, and gentleman who 0:02:43.560 --> 0:02:46.240 had a company that did cheerleading camps and clinics, asked 0:02:46.280 --> 0:02:47.920 me to come work for him for a year to 0:02:47.919 --> 0:02:50.799 make money to go to law school. Did that kind 0:02:50.800 --> 0:02:52.959 of came up with different concepts, decided to leave there, 0:02:53.320 --> 0:02:55.959 start my company, and the rest is history, I guess. Well, 0:02:56.480 --> 0:02:59.000 I'm glad you mentioned the camps and the training because 0:02:59.040 --> 0:03:01.280 I wanted to just help people a little bit the 0:03:01.360 --> 0:03:03.960 scale of what is going on, how many people, how 0:03:03.960 --> 0:03:06.760 many camps, and maybe just enlightened everybody that is not 0:03:06.880 --> 0:03:10.480 part of this business. Well, the actually started with the camps, 0:03:10.480 --> 0:03:13.240 and of course now we also have a uniform business 0:03:13.280 --> 0:03:17.480 and also the competitions that we do um throughout the country. 0:03:17.520 --> 0:03:20.720 But the camps themselves are are different than other sports 0:03:20.800 --> 0:03:23.200 camps that are normally for individuals. These are for teams. 0:03:23.600 --> 0:03:27.040 Teams are already selected high school cheerleaders, college cheerleading teams. 0:03:27.360 --> 0:03:29.280 There four days and three nights, usually done on a 0:03:29.360 --> 0:03:33.360 college campus. We have about three hundred thousand students at 0:03:33.360 --> 0:03:37.120 our camps every summer. We're the largest especially camp operator 0:03:37.120 --> 0:03:39.640 of any kind in the world. Jeff, how much has 0:03:39.920 --> 0:03:44.120 cheerleading as a sport moved away from the sidelines of 0:03:44.240 --> 0:03:49.040 sports games and to its own discipline that is completely 0:03:49.040 --> 0:03:54.240 independent of a football game. Well, it's it's interesting there. 0:03:54.400 --> 0:03:57.880 They're now different what we call disciplines of cheer the 0:03:57.920 --> 0:04:01.080 traditional cheerleading that you see at the football games and 0:04:01.120 --> 0:04:04.600 basketball games. It's still it's the largest part of cheerleading 0:04:04.640 --> 0:04:07.160 and we don't want to do anything to take away 0:04:07.160 --> 0:04:10.080 from that. When when when I started the company, the 0:04:10.120 --> 0:04:13.040 idea was to take the traditional leadership role on the 0:04:13.080 --> 0:04:15.680 sidelines at pep rallies and you know, in the in 0:04:15.720 --> 0:04:18.680 the parking lots before the game, and add entertainment and 0:04:18.720 --> 0:04:22.520 athleticism and just kind of modernize it. And I don't 0:04:22.520 --> 0:04:26.120 think any of us realized the the how powerful that 0:04:26.120 --> 0:04:29.760 that combination would be. So for us, it's we look 0:04:29.800 --> 0:04:32.560 as all the all the the actual sport aspect is 0:04:32.600 --> 0:04:35.960 being additive to leadership. We think, you know, college cheerleading, 0:04:36.000 --> 0:04:39.160 high school cheerleading are very important and we don't want 0:04:39.160 --> 0:04:41.560 to do anything take away from the leadership. Having said that, 0:04:41.880 --> 0:04:45.320 there there's also an actual pure sport play that's exists 0:04:45.320 --> 0:04:47.720 here in the US and overseas. Yeah, what I think 0:04:47.720 --> 0:04:50.359 about cheerleading now, I mean I have two sons, and 0:04:50.400 --> 0:04:52.240 if one of them went into cheerleading, I think I'd 0:04:52.279 --> 0:04:55.680 be frightened because I see some of the flips that 0:04:55.720 --> 0:04:58.920 they'll do and come down. I mean, it's it's it's 0:04:59.000 --> 0:05:02.200 really a gymnastic type of endeavor, correct, whether there are 0:05:02.200 --> 0:05:05.400 a lot of acrobatics involved in the entertainment aspect of it. 0:05:05.839 --> 0:05:08.039 And one of the things that has allowed us to 0:05:08.400 --> 0:05:11.160 expand like we have is we've developed all the techniques 0:05:11.600 --> 0:05:14.679 and the progressions of skills to actually do those stunts 0:05:14.760 --> 0:05:17.359 is what they're called, in in a safer way as possible. 0:05:17.400 --> 0:05:19.400 I mean, there was some risk and there were some injuries, 0:05:19.400 --> 0:05:22.279 and one injury is too many, but we've been pretty 0:05:22.320 --> 0:05:24.720 successful in in mapping this out to where it can 0:05:24.760 --> 0:05:29.560 be done in controlled way. Uh your company have they 0:05:29.600 --> 0:05:32.960 have you attracted any interest from by from from buyers 0:05:33.040 --> 0:05:35.880 private equity firms. Well, we're actually we were owned by 0:05:35.920 --> 0:05:38.960 private equity primarily right now. We've been through different types 0:05:39.000 --> 0:05:44.400 of iterations. UM started in proprietor individual proprietorship. We went 0:05:44.440 --> 0:05:46.359 through venture capital. We are a public company for a 0:05:46.360 --> 0:05:49.680 while and have and now with private equity a Charles 0:05:49.680 --> 0:05:53.080 Bank based in Banks in Boston. And we also our 0:05:53.120 --> 0:05:55.760 companies has transformed itself and that we we have our 0:05:56.040 --> 0:06:00.280 traditional cheerleading and school spirit division or un which is 0:06:00.360 --> 0:06:03.839 Varsity Spirit, but we also have a varsity brands has 0:06:03.839 --> 0:06:07.000 a sporting goods sports uniform division called bs IN Sports. 0:06:07.560 --> 0:06:10.960 And also we have a graduation company called her Jones 0:06:11.000 --> 0:06:14.080 which is class rings and so on, and um, you 0:06:14.080 --> 0:06:17.479 know the company itself. The CEO of the companies Adam Blumenfeld, 0:06:17.800 --> 0:06:20.080 who came up through the bs N ranks, and uh 0:06:20.400 --> 0:06:22.320 he and I and our entire management team along with 0:06:22.400 --> 0:06:24.800 Charles Bank work to take the company as far as 0:06:24.839 --> 0:06:26.479 we can take it. I want to thank you for 0:06:26.560 --> 0:06:29.520 coming in and maybe off off Michael give us that 0:06:29.600 --> 0:06:33.719 Oklahoma University of Oklahoma, yell call well done, Bloomer Sooner, 0:06:34.279 --> 0:06:36.920 well done, very good. Jeff Webb is the founder and 0:06:37.080 --> 0:06:51.480 chairman of Varsity Spirit. They are based in Memphis. So 0:06:51.560 --> 0:06:56.080 does the world really need another travel website? Well, apparently 0:06:56.120 --> 0:06:58.040 it does, and here to tell us more about it 0:06:58.120 --> 0:07:01.080 is Bob guccion Jr. He is the founder of wonder 0:07:01.200 --> 0:07:05.200 Lust travel dot com. He's also the founder of Spin magazine, 0:07:05.240 --> 0:07:08.880 Gear and Discover Media. Nice to have you with us, 0:07:08.880 --> 0:07:12.560 Thanks for coming into the studio. Than how do you 0:07:12.600 --> 0:07:16.840 move on from Spin which was music, right, a Gear 0:07:17.120 --> 0:07:21.200 which is gadgets and I believe men's lifestyle and lifestyle, 0:07:21.320 --> 0:07:24.160 and then Discovery Media, which is kind of science. Right, 0:07:24.360 --> 0:07:27.000 it was a science magazine. So how does that morph 0:07:27.200 --> 0:07:32.360 into this next iteration of Bob guccion Jr. Well, actually 0:07:32.400 --> 0:07:34.360 it does. You know know that it had to by 0:07:34.400 --> 0:07:38.880 the way, um as a media editor and businessman, you know, 0:07:38.880 --> 0:07:40.960 I could have just simply said this is a great category. 0:07:41.000 --> 0:07:43.280 But it has because it's really got the same kind 0:07:43.320 --> 0:07:49.040 of uh vain of overwhelming curiosity. You know, when I 0:07:49.080 --> 0:07:52.880 went into the music magazine business always said it isn't 0:07:52.880 --> 0:07:55.520 really a music magazine. It's a magazine for young people 0:07:55.840 --> 0:07:59.320 crossing the threshold between adolescents and young adulthood. It was 0:07:59.360 --> 0:08:01.240 much more than music magazine. It is much more holistic. 0:08:01.480 --> 0:08:03.640 And the same with Wonderless. It's not just a magazine 0:08:03.640 --> 0:08:06.640 about nice places to go. It's about the experience of 0:08:06.680 --> 0:08:11.120 traveling UM, the experiences you can expect, the experiences you 0:08:11.120 --> 0:08:17.000 have had, UM, the sort of awkwardness of of of 0:08:17.000 --> 0:08:20.440 Often travel is very awkward. That's part of the liberating 0:08:20.640 --> 0:08:22.560 beauty of it, you know. I say. The one thing 0:08:22.560 --> 0:08:25.040 about what we travel is always going to happen is 0:08:25.080 --> 0:08:27.240 we are always going to surrender our sense of control. 0:08:27.360 --> 0:08:29.520 It was always a lousory anyway, but we think we 0:08:29.560 --> 0:08:33.400 have a sense of control, and you surrender it um, 0:08:33.480 --> 0:08:36.360 and that is what allows you to take in to 0:08:36.440 --> 0:08:39.120 absorb everything. You're not trying to pick and choose. You're 0:08:39.120 --> 0:08:42.000 actually just absorbing everything because you're like an infant dependent 0:08:42.080 --> 0:08:44.439 on the largess of the people around you. So, Bob, 0:08:44.880 --> 0:08:48.480 the website wonder lust travel dot com launched today and 0:08:48.480 --> 0:08:50.760 I'm looking at it right now, and there's a story 0:08:50.800 --> 0:08:53.800 how to pack from Mars, which makes it really raises 0:08:53.800 --> 0:08:59.120 a question for me. Who's your audience Mostly Martians? You know, 0:08:59.120 --> 0:09:01.959 all the Martians out there, this is for you. Yeah, 0:09:02.000 --> 0:09:06.200 It's the first site exclusively for people from Mars. Um, 0:09:06.240 --> 0:09:10.480 you know this point that the audience question is. I 0:09:10.520 --> 0:09:14.120 think we're looking at, you know, everybody who's smart and 0:09:14.160 --> 0:09:17.760 curious and likes to travel. And I would imagine it's 0:09:17.800 --> 0:09:20.360 going to fall more money as money yes, exactly as 0:09:20.360 --> 0:09:23.440 I say, it's gonna fall more into the gen X 0:09:23.480 --> 0:09:26.440 generation as matured, the baby booners who I am part 0:09:26.480 --> 0:09:29.079 of a hopefully matured and the rest have I don't 0:09:29.080 --> 0:09:32.960 know if I have, um and you know, slightly older millennial, 0:09:33.240 --> 0:09:36.600 the older of the millennial world. But really, anybody's curious, 0:09:36.640 --> 0:09:37.840 as you said, has a bit of money so they 0:09:37.840 --> 0:09:40.760 can get on a plane. But um, I think curiosity 0:09:40.800 --> 0:09:42.319 is the main thing that the had a pack for 0:09:42.400 --> 0:09:43.960 Mars thing was a bit of a sort of joke. 0:09:44.280 --> 0:09:47.320 Started out as a joke, it became a very serious article. Um, 0:09:47.360 --> 0:09:52.160 because you know, our competitors, dearly beloved, the competitors who 0:09:52.240 --> 0:09:54.240 I won't name, I don't want to anybody, but they 0:09:54.360 --> 0:09:56.719 run articles as you may have seen, called how to 0:09:56.760 --> 0:10:00.360 pack Well once is fine, but a hundred times, almost 0:10:00.360 --> 0:10:03.319 two hundred times. These two publications we were actually in 0:10:03.360 --> 0:10:05.760 the list all of them as links. And I just 0:10:05.760 --> 0:10:09.040 just said, looked ugly, but it was it about two 0:10:09.120 --> 0:10:11.600 hundred between videos and articles that they have done about 0:10:11.600 --> 0:10:13.480 how to pack, and I thought, how you know, how 0:10:13.559 --> 0:10:15.840 much is there to say? So I said, but however, 0:10:16.040 --> 0:10:18.439 even they have not done how to pack for Mars. 0:10:18.679 --> 0:10:20.840 And having had a science magazine, I was at NASA 0:10:21.080 --> 0:10:22.720 on a couple of occasions, and I know that they 0:10:22.760 --> 0:10:27.080 have an entire chunk of the entire organization dedicated to 0:10:27.120 --> 0:10:28.959 this one question. How do you pack from ours? It's 0:10:29.040 --> 0:10:32.000 not a small issue, you know, it's a six month flight, 0:10:32.040 --> 0:10:36.360 it's thirty three plus million miles and only one tenth 0:10:36.480 --> 0:10:38.960 of one percent of the entire weight of the spacecraft 0:10:39.559 --> 0:10:42.719 is not fuel or rocket, so the rest of it, 0:10:42.960 --> 0:10:47.680 everything else has to go in all your people scientific equipment. 0:10:48.000 --> 0:10:50.280 So actually they're very strict about what you can take, 0:10:50.640 --> 0:10:52.600 and they have number the heavy down to fifteen pairs 0:10:52.640 --> 0:10:55.160 of clothing, not not sixteen fifteen And they want you 0:10:55.240 --> 0:10:57.360 to bring a book. There was a suggestion, I said, 0:10:57.600 --> 0:11:00.040 to cheap, bring two books, you know, but to a 0:11:00.040 --> 0:11:01.559 fun thingur next one is how to pack for prison, 0:11:02.120 --> 0:11:03.880 because by the way, you can there are things you 0:11:03.880 --> 0:11:06.240 can bring to prison. And after that we can do 0:11:06.240 --> 0:11:07.920 how to pack for the Apocalypse, which by the way, 0:11:07.960 --> 0:11:10.400 should be self defining as the last of the articles. 0:11:11.840 --> 0:11:13.280 What do you let us know when you're going to 0:11:13.360 --> 0:11:17.520 publish that up, that one that's the ultimate trip, you know, Yeah, 0:11:17.559 --> 0:11:19.640 you know, I want you to just offer some examples, 0:11:19.720 --> 0:11:22.480 because that way it maybe crystallizes what you're doing here. 0:11:22.520 --> 0:11:26.680 And I noticed, for example, you've got something papermaking in Korea. 0:11:26.840 --> 0:11:30.440 You also have a recommendation for restaurants in Italy that 0:11:30.480 --> 0:11:32.680 are a little bit different than perhaps the run of 0:11:32.720 --> 0:11:35.800 the mill reviews. Just to give us some examples. Yeah, well, 0:11:36.240 --> 0:11:38.320 the one you're referring to, Hanji, it was a video 0:11:38.360 --> 0:11:41.679 made by a very young and very very talented Korean filmmaker. 0:11:42.280 --> 0:11:46.439 We discovered in Oxford, Mississippi, where I taught for a year, 0:11:46.559 --> 0:11:48.680 so I have a lot of friends and relationships there now. 0:11:49.080 --> 0:11:53.439 So uh. He did this beautiful piece about how to 0:11:53.480 --> 0:11:56.360 make paper, the ancient art of papermaking, which I thought 0:11:56.440 --> 0:11:58.920 was wonderfully ironic given that we're in the digital age, 0:11:58.920 --> 0:12:00.920 and and the piece is about how this is really 0:12:00.960 --> 0:12:02.920 kind of a spring art but just a beautiful piece 0:12:02.920 --> 0:12:05.720 of filmmaking, and it's cultural and you're there, you know, 0:12:05.800 --> 0:12:08.880 every one of my pieces let's say my hours. Everyone 0:12:08.880 --> 0:12:12.360 who wandered us to pieces has to bring you there, 0:12:12.960 --> 0:12:14.920 and that's not just by saying this is a great 0:12:14.920 --> 0:12:17.400 hotel room. We do that too with the Rome Hotel Guide. 0:12:17.480 --> 0:12:18.760 If you want to know where to stay in Rome, 0:12:18.880 --> 0:12:21.560 check our guide out, because we went through all hotels 0:12:21.559 --> 0:12:23.440 and decided these are the best ones and most interesting 0:12:23.760 --> 0:12:25.760 from a mixture of personal experience and research. You know, 0:12:25.960 --> 0:12:29.319 my own experience was very good in that respect. Um 0:12:29.400 --> 0:12:31.920 So another contemple, the one about the restaurants. I think 0:12:31.920 --> 0:12:33.840 you're probably talking about ten places to eat before you 0:12:33.880 --> 0:12:36.960 die and then you can die, and you know that's 0:12:36.960 --> 0:12:39.400 I'm glad you brought it up, because obviously there are 0:12:39.640 --> 0:12:42.760 ten million places you could eat that are gonna be 0:12:42.800 --> 0:12:45.520 interesting on this planet. But I just wanted to pick 0:12:45.600 --> 0:12:48.760 ten places, not all of them restaurants. One of them 0:12:48.800 --> 0:12:53.240 is a Vietnamese barge that my main food writer guy 0:12:53.280 --> 0:12:58.240 called Chris John's as a superb travel writer. He uhs 0:12:58.240 --> 0:13:00.000 best meal ever had in his life, best meal anywhere 0:13:00.040 --> 0:13:02.320 about it? For us? We put that in. I put 0:13:02.320 --> 0:13:08.040 in the Mondo X place before in a drug rehab 0:13:08.679 --> 0:13:12.520 and it's a drug rehab center in Italy. It also 0:13:12.559 --> 0:13:15.720 happens to have amazing food. Yeah, well, world class restaurant, 0:13:15.720 --> 0:13:19.880 world class restaurant and autombiotics. Bob, you know you have 0:13:20.320 --> 0:13:25.080 a very long history in magazines. Your father founded Penthouse, 0:13:25.400 --> 0:13:28.640 which also is into experiences of different natures. Um. But 0:13:28.840 --> 0:13:32.319 I have to wonder, and you talked about how the 0:13:32.360 --> 0:13:35.800 irony of papermaking in a digital era, in a digital 0:13:35.920 --> 0:13:39.880 era where the barrier to entry in magazines is so low, 0:13:40.760 --> 0:13:43.319 what gives you confidence that this will be successful? Oh? 0:13:43.400 --> 0:13:50.080 I think a large doses of stupidity. But alcohol helps well. 0:13:50.080 --> 0:13:54.160 But people have, people have, you know, obviously an immense 0:13:54.240 --> 0:13:58.160 appetite for stupidity. I'm just wondering with my stupid No 0:13:58.240 --> 0:14:00.360 not there is no God, no, no glare we cleared 0:14:00.360 --> 0:14:02.600 that up? No? No, I mean I think I was joking. 0:14:02.600 --> 0:14:06.160 But in one respect, you do have to be dumb 0:14:06.240 --> 0:14:09.600 enough to believe that it will work. And I've done 0:14:09.600 --> 0:14:11.480 that my entire career. You know, I started it's been magazine. 0:14:11.600 --> 0:14:13.960 Literally did not know how to start a magazine. Um. 0:14:14.040 --> 0:14:15.679 In fact, we got all of the pages together and 0:14:15.760 --> 0:14:17.240 we all look at each others at what we do now, 0:14:17.240 --> 0:14:19.280 and everybody I thought you knew. I I thought you knew, 0:14:19.520 --> 0:14:20.880 So I called a friend of mine up come and 0:14:20.880 --> 0:14:23.640 tell me what we did next, and she christens us 0:14:23.680 --> 0:14:26.040 the Land of the Lost Boys. Because literally none of 0:14:26.080 --> 0:14:28.760 us knew then we got the magazine. Now I think, 0:14:28.800 --> 0:14:31.800 I think it's a beautiful, healthy dosage of innocence and 0:14:31.880 --> 0:14:35.000 naivet naive he made inscence is very helpful in these 0:14:35.000 --> 0:14:37.360 times because it keeps you focused on like you might 0:14:37.400 --> 0:14:39.360 as well do the right thing, the thing you had 0:14:39.400 --> 0:14:42.520 in mind, because you don't know how to do it otherwise. 0:14:42.840 --> 0:14:44.200 And the only thing I know how to do is 0:14:44.200 --> 0:14:47.120 tell a good story occasionally, well hopefully a lot more 0:14:47.120 --> 0:14:50.880 and occasionally, and all stories have to be a human beings, 0:14:50.880 --> 0:14:53.800 so that that's a that's a thing. Bob Guccioni Jr. 0:14:53.840 --> 0:14:56.560 Thank you so much for joining us. Bob gucci Founder 0:14:56.600 --> 0:14:59.960 of wonder Lust wonder Lust travel dot com, which is 0:15:00.000 --> 0:15:14.360 based in New York and launched today. Well, we've heard 0:15:14.360 --> 0:15:20.560 a lot about consolidation and partnerships within the airline industry, 0:15:21.200 --> 0:15:24.240 and Avianca Holdings is not immune to that. We're gonna 0:15:24.240 --> 0:15:26.840 be speaking now with someone who knows all about the 0:15:26.920 --> 0:15:30.400 latest partnership agreements, and that is Ernan Rincon, who is 0:15:30.440 --> 0:15:34.040 the chief executive officer of Avianca Holdings, which is based 0:15:34.080 --> 0:15:37.320 in Bogota, Colombia. Her Nan, thank you so much for 0:15:37.400 --> 0:15:41.520 joining us, and I know that Avianca has talked about 0:15:41.600 --> 0:15:46.360 some kind of partnership with content with United Correct where 0:15:46.360 --> 0:15:49.240 what stage is that in right now? Well, thank you 0:15:49.280 --> 0:15:52.640 for having me really pleasure to be here. Last year 0:15:53.400 --> 0:15:57.720 we began to search for a commercial strategic partner that 0:15:57.760 --> 0:16:01.040 would allow Avianca, who serves Let's in America very well, 0:16:01.080 --> 0:16:03.720 to connect well with the United States and North America, 0:16:04.200 --> 0:16:07.800 and after a long process, we chose United as our 0:16:07.880 --> 0:16:11.760 best choice. Many reasons for that. First of all, United 0:16:11.880 --> 0:16:15.960 an Avianca already are part of the State Alliance and 0:16:16.040 --> 0:16:19.000 that provided a very good foundation for us to work together. 0:16:19.520 --> 0:16:22.080 And then we found out that we have similar approaches 0:16:22.680 --> 0:16:25.720 and very complimentary routes. And we're trying to do right 0:16:25.720 --> 0:16:29.040 now is come to an agreement so that our passengers 0:16:29.080 --> 0:16:33.520 from Colombia, South America, Brazil into the United States or 0:16:33.600 --> 0:16:35.960 from the United States into Latin America would have a 0:16:35.960 --> 0:16:39.440 seamless experience either with United within the United States and 0:16:39.440 --> 0:16:43.160 then connect with a Bianca in Latin America or vice versa. 0:16:43.520 --> 0:16:45.840 We make great progress in that negotiation. We meet on 0:16:45.880 --> 0:16:48.800 a weekly basis. We have made great progress and we 0:16:48.840 --> 0:16:53.080 believe we're aspiring to close the agreement in this year. Now, 0:16:53.200 --> 0:16:55.480 you also have something coming up this year and that 0:16:55.680 --> 0:16:58.160 is a court day. I believe it's on the nineteenth 0:16:58.160 --> 0:17:00.960 of September, and I'm wondering if you could just explain 0:17:01.320 --> 0:17:04.399 how this all happened, that you're ending up in a 0:17:04.400 --> 0:17:07.440 court case and in a lawsuit which I believe it's 0:17:07.440 --> 0:17:10.359 your second largest shareholder. That is correct. King's Land is 0:17:10.400 --> 0:17:13.360 the company that file is sued against A Yanka. They 0:17:13.400 --> 0:17:17.760 finally suited against a Bianca United UH Synergy, which is 0:17:17.800 --> 0:17:20.119 the parent company of A Yanka and the from of 0:17:20.200 --> 0:17:25.000 his brothers. We believe that the slaw suit has absolutely 0:17:25.040 --> 0:17:27.679 no merit. As a matter of fact, the judge in 0:17:27.760 --> 0:17:32.439 the state of New York UH ruled in our favor 0:17:32.560 --> 0:17:36.560 the first two instances, and now we have, as you 0:17:36.600 --> 0:17:40.560 clearly said on September nineteen hearing. The hearing is because 0:17:40.600 --> 0:17:44.280 we file for dismissal of the case because there is 0:17:44.280 --> 0:17:47.080 no merit. We're looking forward to having that conversation with 0:17:47.119 --> 0:17:49.919 the judge and we are optimistic that he will judge 0:17:50.400 --> 0:17:53.480 he will rule against in our favor. So you're somewhat 0:17:53.520 --> 0:17:57.840 new to the airline industry. You joined AVIANCA a little 0:17:57.840 --> 0:18:02.080 bit more than a year ago. You're obviously Microsoft Latin America, 0:18:02.160 --> 0:18:06.480 the chief executive officer of that. How is your opinion 0:18:07.640 --> 0:18:11.960 been changed about the airline industry since joining a banca 0:18:12.119 --> 0:18:16.639 and what were you most surprised to learn regarding the 0:18:16.720 --> 0:18:19.359 challenges of this industry. That's a great question, and I 0:18:19.400 --> 0:18:21.920 can give you an answer for hours, but let's let 0:18:21.920 --> 0:18:26.600 me say the following. The number one qualification that I 0:18:26.680 --> 0:18:30.320 had to be considered for CEO of AVIANCA is that 0:18:30.359 --> 0:18:34.600 I have six point five million miles with other airlines, 0:18:34.920 --> 0:18:36.639 So you've You've had a lot of experience in the 0:18:36.680 --> 0:18:40.359 passenger seat, all right there exactly. I have been left 0:18:40.400 --> 0:18:43.560 in airport for three days. I have been given royal 0:18:43.560 --> 0:18:46.720 treatment by other airlines, so I know all the experiences 0:18:46.760 --> 0:18:50.639 that that a passenger can have. But what I'm bringing 0:18:50.720 --> 0:18:54.360 to a YANKA is two things. Number One, the digital 0:18:54.400 --> 0:18:59.360 and information technology background. For many years, fourteen years from Microsoft, 0:18:59.800 --> 0:19:04.560 I help companies embraced technology, change their business model and 0:19:04.600 --> 0:19:07.720 embrace digital. And that's what we're gonna do with Avianca. 0:19:08.240 --> 0:19:13.520 We are transforming Avianca into a digital company that flies aircraft, 0:19:13.880 --> 0:19:16.359 and at the same time, we're building one of the 0:19:16.400 --> 0:19:21.160 top two one of the top two airlines Latin American 0:19:21.280 --> 0:19:25.120 Why serving the whole continent. I love that everybody wants 0:19:25.119 --> 0:19:27.920 to be a tech company. Even airlines are saying We're 0:19:27.920 --> 0:19:30.560 going to be a tech company that also flies planes. 0:19:30.720 --> 0:19:32.800 But I'm wondering, you know, what is the biggest challenge 0:19:32.840 --> 0:19:34.679 to the business model going forward? I know that some 0:19:34.720 --> 0:19:39.840 analysts have some pretty uh ambitious growth targets for Avianca. 0:19:39.920 --> 0:19:43.640 What's the biggest challenge? The biggest challenge is to take 0:19:43.720 --> 0:19:48.160 at ninety seven year old company. Avianca is the oldest 0:19:48.400 --> 0:19:51.920 erline continuously flying in the world, not in an America, 0:19:51.920 --> 0:19:54.960 in the world, taking that rich culture that was not 0:19:55.080 --> 0:19:58.000 digital and transforming into a digital company. What do we 0:19:58.040 --> 0:20:00.520 mean by that? The number one thing that we need 0:20:00.560 --> 0:20:05.080 to do is that every interaction between our passengers and 0:20:06.160 --> 0:20:09.760 Avianca be fully digital at the moment that are we 0:20:09.840 --> 0:20:14.200 identify eighteen points in which a passenger interacts with a Bianca. 0:20:14.720 --> 0:20:17.639 One of those seven eighteen is when they're actually in 0:20:17.680 --> 0:20:21.119 the aircraft. The other seventeen or elsewhere, when you make 0:20:21.160 --> 0:20:23.840 a reservation, when you make a change, when you get 0:20:23.840 --> 0:20:26.120 and check in, when you go to the counter, all 0:20:26.160 --> 0:20:29.200 of that and we're beginning to transform that and we're 0:20:29.359 --> 0:20:32.359 applying digital technology to each one of those eighteen points. 0:20:32.440 --> 0:20:36.320 Let me give you an example. Millennials live in Facebook. 0:20:36.840 --> 0:20:39.560 That's where their life is, and we realize that for 0:20:39.640 --> 0:20:42.760 them to make a reservation, they would have to get 0:20:42.800 --> 0:20:46.560 out of Facebook, go to a bianca and make a reservation. 0:20:46.640 --> 0:20:50.840 We developed a digital assistant that is part of Facebook Messenger, 0:20:51.240 --> 0:20:54.200 and within Facebook, you can make a reservation to fly 0:20:54.280 --> 0:20:56.600 with a bianca. That's what we mean by digital I 0:20:56.680 --> 0:20:58.359 just want to ask you one quick question. This is 0:20:58.359 --> 0:21:00.639 about money. Are you going to be raised any money 0:21:00.680 --> 0:21:02.600 this year? You're going to be doing a dead offering. 0:21:02.680 --> 0:21:07.200 How are you going to proceed? We are planning a 0:21:07.240 --> 0:21:11.520 capital increase of two million dollars. That capital increase has 0:21:11.600 --> 0:21:14.200 been given the green light by the board of directors 0:21:14.200 --> 0:21:15.879 and we're now in the process of doing all the 0:21:16.000 --> 0:21:19.600 legal and financial to raise capital by the hundred million dollars. Well, John, 0:21:19.720 --> 0:21:21.520 thank you very much for being with us. Her Nan 0:21:21.680 --> 0:21:25.639 Rincon he is the chief executive of Avianca holdings. They 0:21:25.640 --> 0:21:28.159 are also expanding in North America. Do you know that 0:21:28.160 --> 0:21:30.120 they have a new route that goes from Boston home 0:21:30.119 --> 0:21:34.000 to Bloomberg one O six one to Bogata. Thank you 0:21:34.080 --> 0:21:48.840 very much. We hear a lot about active versus passive, 0:21:48.840 --> 0:21:53.560 in particular about how money is absolutely pouring into exchange 0:21:53.560 --> 0:21:58.200 traded funds that seek to just passively mimic broad indexes 0:21:58.280 --> 0:22:00.840 and away from active fund But when it comes to 0:22:00.920 --> 0:22:03.879 debt markets, the trend is starting to reverse, and this 0:22:04.000 --> 0:22:06.960 I find really fascinating. Eric Balconis, who does incredible research 0:22:07.000 --> 0:22:09.640 on this, joins us now. Eric Baltnis is senior et 0:22:09.760 --> 0:22:13.080 F analyst for Bloomberg Intelligence and is a font of 0:22:13.240 --> 0:22:17.480 incredible knowledge when it comes to all things fund related. Eric, 0:22:17.520 --> 0:22:19.520 can you give us a sense of just how much 0:22:19.760 --> 0:22:25.239 this trend of money toward passive out of active, how 0:22:25.320 --> 0:22:29.920