Speaker 1: This is Bloomberg Business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news As it happened. Bloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. Jackson Hole fed J Powell
Speaker 1: all top of mind for the news room this past week,
Speaker 1: and coming up, we're gonna actually zoom out a bit
Speaker 1: for a look at how inflation and the economic slowdown
Speaker 1: have impacted the business world this summer, and really all
Speaker 1: of us consumers. We'll also get a pulse check on
Speaker 1: the venture capital space and dig into the retail sector
Speaker 1: with the CEO of Petco. Plus our cover story details
Speaker 1: the causes and devastating effects of a contaminant found in
Speaker 1: a Michigan baby formula plant earlier this year. It plays
Speaker 1: into the ongoing nationwide shortage, so troubling on many, many levels.
Speaker 1: All right, all of that and more to come. We begin, though,
Speaker 1: with the sun me of shut offs, surging electricity prices
Speaker 1: spurring the worst ever crisis in late utility payments. It
Speaker 1: was a Bloomberg big take from this past week. You
Speaker 1: can also find it in the economic section of the
Speaker 1: new issue of Bloomberg Business Week magazine that is out
Speaker 1: now on newsstands, online at Bloomberg dot com, and of course,
Speaker 1: on the Bloomberg terminal. Will Wade, Mark Chettiac and Ben
Speaker 1: Holland wrote the piece. Will is Bloomberg News Power and
Speaker 1: Renewable Energy editor, and he joins us, Now, well, it's
Speaker 1: good to have you with us. So this is something
Speaker 1: that some twenty million US households are dealing with right now.
Speaker 1: That's about one in six American homes that are unable
Speaker 1: to pay surging electricity bills. Why well, the basic issues
Speaker 1: at the price of electricity keeps going up. It's about
Speaker 1: fift higher than it was a year ago, and it's
Speaker 1: probably gonna keep going up because it's all types of
Speaker 1: natural gas, and natural gas prices have doubled from a
Speaker 1: year ago. You know, it's interesting what I think about.
Speaker 1: And whenever I talk Will with our European colleagues, they're like,
Speaker 1: you know what, We've been dealing with this a while. Um,
Speaker 1: certainly because of the Russian War in Ukraine. Give us
Speaker 1: a little perspective as we kind of you know, even
Speaker 1: zoom out a little bit wider. You know, that's totally fair.
Speaker 1: It is too good to put it in a global context,
Speaker 1: because we're looking at this issue here in the United
Speaker 1: States and it's serious. But we're thinking here about people
Speaker 1: who can't afford to pay their bill, and if you
Speaker 1: go to Europe and Asia, there's places where they're worried
Speaker 1: about not having enough electricity to go around, especially come winter.
Speaker 1: It also comes at a time when, interestingly, enough government
Speaker 1: aid that happened during the coronavirus pandemic dried up. So
Speaker 1: what's the connection between a lack of government help and
Speaker 1: then an inability for so many millions of Americans to
Speaker 1: be unable to afford their bills. Well, during the pandemic,
Speaker 1: the government passed actually with state governments, many states had
Speaker 1: policies that said you can't shut off people's power, and
Speaker 1: that was because so many people were out of work.
Speaker 1: Most of those policies have ended, mostly towards the end
Speaker 1: of last year and the beginning this year. But then
Speaker 1: in a lot of states, especially if North there's winter,
Speaker 1: shut off marchor rams every year they say you can't
Speaker 1: shut off hypoles power when it's really cold, because literally
Speaker 1: people can die. So we're coming out of both of
Speaker 1: those things right into the spring. And in spring is
Speaker 1: when everybody started saying, wait, what's this inflation? Saying why
Speaker 1: is everything so much more expensive? So a few months
Speaker 1: down the road brings us to now, and that's when
Speaker 1: we're seeing people's bills have gotten high, people are behind
Speaker 1: on their bills, and utilities give people grace periods, and
Speaker 1: now they're like, well, the grace periods over, We're gonna
Speaker 1: have to start shutting people off. I guess say, well,
Speaker 1: with a story like this, what's great is you guys
Speaker 1: zoom out and then you zoom in and you talk
Speaker 1: about one family and one individual. Adrian nice Um tell
Speaker 1: us a little bit about when you start to really
Speaker 1: get to the granular level, like what jumps out for you. Well,
Speaker 1: I spoke to her several times while I was doing
Speaker 1: the reporting. She's forty five years old. She's a house cleaner.
Speaker 1: She was with her teenage son in Minneapolis, and she's
Speaker 1: just been really struggling. You know, she's a house cleaner.
Speaker 1: So in when the pandemic happened, one of the first
Speaker 1: things that happened as all our clients said, sorry, I
Speaker 1: don't want you to come over. She's been getting work
Speaker 1: coming back, you know, since in the past few months.
Speaker 1: But the meantime she had a utility bill that climbed
Speaker 1: up to like three thousands dollars. She was getting shot
Speaker 1: off notices from her local utility and she didn't have
Speaker 1: it write that even though a larger family lived in
Speaker 1: the same unit that she was in before, because electricity
Speaker 1: electricity prices have gone up so much. Just for her
Speaker 1: and her son, who weren't using ostensibly that much power,
Speaker 1: their bill was even higher just because of the rise
Speaker 1: in prices. Yeah, exactly. Last year she was sharing apartment
Speaker 1: with a friend and the friend had two children, and
Speaker 1: then the friend and her kids moved out, so there
Speaker 1: were two people instead of five people in the units.
Speaker 1: But the power bill is basically the same even with
Speaker 1: much less consumption, and of course she had to pay
Speaker 1: all of it herself. Natural gas really there's just not
Speaker 1: enough of to go around all around the world. The
Speaker 1: US is the biggest producer of gas in the world,
Speaker 1: but we export a lot, and if we chose to
Speaker 1: keep some here in the US, so prices would go
Speaker 1: down then there'd be more potential power shortages in Asia
Speaker 1: and Europe. You know, our friends over there really needed,
Speaker 1: especially since the war has completely upended the gas market.
Speaker 1: It reminds us of kind of how fragile things are,
Speaker 1: Like I think about will for such a long time
Speaker 1: in the US because of fracking and just a lot
Speaker 1: of development in the energy space um carbon fuel specifically
Speaker 1: here in the United States. That we talked about having
Speaker 1: a glut, right, it was natural gas was so cheap,
Speaker 1: but right, but how quickly unfortunately with the war Russian War,
Speaker 1: you know, and kin, how things have changed pretty quickly.
Speaker 1: And this has really hurt a lot of global pocketbooks,
Speaker 1: it really has. I mean I've been covering this for
Speaker 1: a long time, and just everything about the electricity market
Speaker 1: for years and years it was, well, gas is so cheap,
Speaker 1: we can't compete with this. Let's when we see nuclear
Speaker 1: power plants closing. But gas was like two or three
Speaker 1: bucks for years and years. Hit ten bucks a couple
Speaker 1: of days ago. I think it was mind something now,
Speaker 1: so it's just crazy. In Europe, especially Germany, you hear
Speaker 1: people saying, well, they want to stop using Russian gas,
Speaker 1: but if they stop using Russian gas. Then they got
Speaker 1: to get it from somewhere, and the whole markets tied together.
Speaker 1: It's a big world, but it's all tied together. Well,
Speaker 1: it's a really big story. Was a big take this week.
Speaker 1: A really big thank you to you Will Wade, Bloomberg
Speaker 1: News Power and Renewable Energy editor, for joining us to
Speaker 1: talk about this important subject. US households owing about sixteen
Speaker 1: billion dollars in late energy bills. Team. That's double the
Speaker 1: pre pandemic total, according to uh Well in the team's reporting. Yeah,
Speaker 1: and the question also is you know where's the relief
Speaker 1: in sight? Right right now? No, right, all right? Coming
Speaker 1: up this week's cover story, our Business Week investigative team
Speaker 1: reveals how a deadly bacteria found its way into a
Speaker 1: key link in America's baby formulas supply chain. You're listening
Speaker 1: to Blue Bomberg Business Week. This is Bloomberg. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stinovik from Bloomberg Radio. Well. One of the more
Speaker 1: troubling stories to make headlines so far this year, America's
Speaker 1: shortage of baby formula and supply chain snarls alone not
Speaker 1: the only culprit in this life threatening development affecting children
Speaker 1: across the US. Turns out, a deadly contaminant found its
Speaker 1: way into products at an aging Michigan factory owned by
Speaker 1: Abbott Laboratories. The details this week's cover story Bloomberg Business Week.
Speaker 1: So let's get to it with Bloomberg News senior investigative
Speaker 1: reporters Susan Burfield, who joins us in our interactive broker's
Speaker 1: studio here at Bloomberg Headquarters along with us Bloomberg Business
Speaker 1: Week at or Joe Webber. He's on the access line
Speaker 1: in Massachusetts. I gotta say, Joel Paul and I've been
Speaker 1: talking about this story, how disturbing it is. Yeah, well,
Speaker 1: the circumstances UM have been extremely disturbing for all the
Speaker 1: parents in America who have infants UM. So you know,
Speaker 1: obviously formula is one of these things that you really
Speaker 1: probably take for granted. I know we did when we
Speaker 1: had a child, and then all of a sudden, UM,
Speaker 1: you face a shortage UM and you can't get a
Speaker 1: very essential ingredient for you know, raising a healthy child,
Speaker 1: young child. What was upsetting about this particular reporting was
Speaker 1: that you know that shortage which affected millions of Americans
Speaker 1: actually had a different route than UM. So many other
Speaker 1: supply chain snarls that we've faced UM during the pandemic UH,
Speaker 1: and this one actually was because of bacteria called Chronobacter
Speaker 1: that surfaced UM not only in cans of formula, but
Speaker 1: ultimately in one of the main plants UM that America
Speaker 1: gets its formula from. So so Dusan had been working
Speaker 1: on this and we just kept telling her to go
Speaker 1: bigger and tell us and get to the bottom of
Speaker 1: what happened. And and she did. So, Susan, what get
Speaker 1: to the bottom of it? What what happened? Months and
Speaker 1: months of reporting. Well, UM, you're right that you know.
Speaker 1: The formula shortage. UM was on a lot of people's
Speaker 1: minds and got a lot of attention in May and
Speaker 1: June of this year in particular. But UM, what we
Speaker 1: discovered is that UM. Back in February UM, there was
Speaker 1: a recall of products that were made in the particular
Speaker 1: plant UM as you mentioned, owned by Abbot, located in Sturgis,
Speaker 1: Michigan and responsible for about of the whole supply of
Speaker 1: infant formula in the country. The reason for the recall
Speaker 1: was that there was a bacteria that can be really
Speaker 1: dangerous and even deadly for infants, and it was found
Speaker 1: in the plant and UM it was the reason that
Speaker 1: they had to recall almost seventy million cans of simulac
Speaker 1: and other formulas. UM. What we also found is that
Speaker 1: there was almost a year's worth of warnings UM at
Speaker 1: the company and warnings at the f d A. UM
Speaker 1: probably should have picked up on and didn't UM that,
Speaker 1: you know, had they, maybe none of this would have happened.
Speaker 1: So so that's kind of where I wanted to go.
Speaker 1: I guess we've I don't know, all become somewhat used
Speaker 1: to corporations cutting corners maybe too, you know, boost profits
Speaker 1: or whatever. But that's why we have agencies like the
Speaker 1: f d A to kind of keep an eye on them.
Speaker 1: From your reporting here and your story, I was kind
Speaker 1: of really shocked and disappointed that the FDA really missed
Speaker 1: it here what happened there because of covid um. The
Speaker 1: f d A missed one year's inspection. They inspect infant
Speaker 1: formula plants every year, so they missed one, and when
Speaker 1: they went in September, they saw some troubling signs, but
Speaker 1: they didn't UM elevated to a warning for abbot Um.
Speaker 1: They didn't request that abbot Um recall any product or
Speaker 1: you know, do anything at all other than try to
Speaker 1: fix the problems on its own. Then a whistleblower from
Speaker 1: the plant UH sent a report to the f d
Speaker 1: A outlining problems at the plant, not mentioning Chronobacter this
Speaker 1: particular bacteria, but describing a place where UM procedures were
Speaker 1: sometimes shortcut, as you said, where rules were sometimes bent,
Speaker 1: and where people weren't always held to account when they
Speaker 1: should have been. This report, had the f d A
Speaker 1: taken it seriously enough, UM could have also brought the
Speaker 1: inspectors back into the plants sooner than it did. That
Speaker 1: report the FDA said was lost in their mail room,
Speaker 1: lost in the mail room, lost in the mail room,
Speaker 1: so wherever. You know. The other element that that that
Speaker 1: really raises, though, is this this thing where companies can
Speaker 1: almost self police. But you know, abbott has ended up
Speaker 1: in a place that is actually a little different than
Speaker 1: than a lot of other companies. UM talk to us
Speaker 1: about that development, Susan, because that they basically FDA stepped
Speaker 1: in and said, yeah, we have a over site now, yes,
Speaker 1: you know, as as the shortage really became a crisis
Speaker 1: for a lot of families, and as the f D
Speaker 1: a is confidence in Abbot that it could clean up
Speaker 1: its plant, um waned, Abbott entered into a consent decree
Speaker 1: with the Department of Justice, and it gives the f
Speaker 1: d a extraordinary oversight of the plant's operations and required
Speaker 1: the plant to make changes to almost every way that
Speaker 1: it operates. Legal issues, What are the legal issues facing
Speaker 1: Abbot here, because there really weren't worse and just a
Speaker 1: huge inconvenience plus a lot worse. Yeah, so, you know,
Speaker 1: the chronobacter Um did get into some formula we think UM,
Speaker 1: and of course it's a little bit hard to prove exactly.
Speaker 1: You know that kids who were sick UM had formula
Speaker 1: that we know was recalled, but to find the contaminant,
Speaker 1: which is you know, small cells, is not always easy.
Speaker 1: But there were two kids who died UM, there were
Speaker 1: two kids who were sickened UM. Those four cases the
Speaker 1: FDA investigated, we came across other cases and those families
Speaker 1: are suing Abbott. Altogether, they're facing about two dozen lawsuits.
Speaker 1: Of course, they're operating under a consent decree for the
Speaker 1: next five years with the Department of Justice, and the
Speaker 1: FDA itself is under investigation by the Office of the
Speaker 1: Inspector General. That was Bloomberg News senior investigative reporters Susan Burfield,
Speaker 1: along with the editor of the magazine, Joel Weber on
Speaker 1: this week's cover. Store Also joining us Bloomberg's Paul Sweeney
Speaker 1: and the baby formula crisis exemplifies our next guests point.
Speaker 1: Our world is built around convenience and innovation, but we're
Speaker 1: not always prepared for what nature has in store. Engineers
Speaker 1: have given us this illusion that we can basically use
Speaker 1: technology to construct all these systems, and for the short term, yes,
Speaker 1: they work fine. But in the long term, the stress
Speaker 1: is going to build up eventually, and and that's what
Speaker 1: we have to be conscious of. Professor Salima Lee breaks
Speaker 1: down how natural laws define human life. This is Bloomberg
Speaker 1: broadcasting from the financial capital of the world Bloomberg eleven
Speaker 1: Frio in New York to Washington, d C. Bloomberg to Boston,
Speaker 1: Bloomberg one of six, one does San Francisco, Bloomberg nine
Speaker 1: sixty to the country Sirius XM Chado one nineteen and
Speaker 1: around the globe. The Bloomberg Business app and Bloomberg Radio Vodka.
Speaker 1: This is Bloomberg Business Week, all right. So we've talked
Speaker 1: a lot about energy, alternative energy, and the environment this week.
Speaker 1: It's a topic taking on renewed importance with President Biden
Speaker 1: having recently signed legislation that include billions of dollars in
Speaker 1: climate change initiatives. With some thoughts on how natural and
Speaker 1: social system science can inform planetary crises, we turned to
Speaker 1: Salim Ali, Distinguished Professor of Energy in the Environment at
Speaker 1: the University of Delaware. He's the author of a new book,
Speaker 1: Earthly Order, How Natural Laws Define Human Life. We started
Speaker 1: by asking about the meaning behind the title. It's basically
Speaker 1: looking at some of the fundamental constraints that the planet
Speaker 1: has on us. So you know, when we talk about markets,
Speaker 1: markets are ultimately dependent on some aspect of natural resource constraints.
Speaker 1: We're going back to the basic laws of nature essentially,
Speaker 1: and making sure that we align our economic and social
Speaker 1: systems in congruence with those strains. I've talked about this
Speaker 1: before on air, so listeners will be familiar with it.
Speaker 1: But I grew up in California and I had a
Speaker 1: professor in college. I went to college in Maine, a
Speaker 1: professor in college, you said California is a place where
Speaker 1: nobody should ever have lived because of the lack of
Speaker 1: water and the wildfires. And I'm wondering, professor, if the
Speaker 1: market is failing in that sense, because you see California
Speaker 1: home prices still just out of control. And I say
Speaker 1: to myself, wait a second, and this is somebody who
Speaker 1: has family in California. Why are people living in a
Speaker 1: place where there is no water? Yeah, I mean if
Speaker 1: you go back to that classic Hollywood from Chinatown, you know,
Speaker 1: it goes to that kind of the heart of that
Speaker 1: challenge in California in terms of water security. And one
Speaker 1: could say the same of Phoenix, Arizona. I mean, so
Speaker 1: many places where we have designed human habitation without really
Speaker 1: considering the natural constraints there, and especially the number of
Speaker 1: people who lived there. I mean, perhaps you could have
Speaker 1: some level of population, but that's that's a good example
Speaker 1: of that. And engineers have given us the salute that
Speaker 1: we can basically uh use technology to construct all these systems.
Speaker 1: And for the short term, yes, they work fine, and
Speaker 1: but in the long term, the stress is going to
Speaker 1: build up eventually, and and that's what we have to
Speaker 1: be conscious of. And I do wonder about this order
Speaker 1: and the things that are so connected and maybe and
Speaker 1: how we teach it to our younger generation, like how
Speaker 1: do we need to be rethinking things? Because you know,
Speaker 1: I'm listening to you speak and I've been thinking about
Speaker 1: is it time for us to tell the world back off,
Speaker 1: stop consuming so much because Earth can handle it? Like
Speaker 1: I've really been thinking about or such a consumption let society,
Speaker 1: but it's really being brought down as a result. You know,
Speaker 1: I am very much Um. You know, approaching this from
Speaker 1: a practical point of view, we we are going to
Speaker 1: need to consume in order to sustain livelihoods, but we
Speaker 1: need to move towards constructive consumption rather than having consumption,
Speaker 1: which is not considering some of those natural constraints. So
Speaker 1: I'm all for green growth. I mean, there are many
Speaker 1: ways in which you can use the capitalist system in
Speaker 1: a very constructive way. Um. But what we have done
Speaker 1: is we have not really considered some of those fundamental
Speaker 1: constraints that physics puts on us. I mean, for example,
Speaker 1: many years ago, you know, in the nineteen sixties seventies,
Speaker 1: there was an economist who wrote a book. It was
Speaker 1: published by Harvard university press was called the Entropy Law
Speaker 1: and Economics. His name was Nicholas georgesco Rosin, and what
Speaker 1: it tried to do was to link some of those
Speaker 1: physical constraints to economics. But unfortunately we have we lost
Speaker 1: our way at some point and we could have great growth,
Speaker 1: we could have markets functioning, but we just need to
Speaker 1: do them within those constraints. So then do you think
Speaker 1: when we're seeing the constraints UH energy supplies as a
Speaker 1: result of the Russian warranty Ukraine, that we shouldn't necessarily
Speaker 1: release supplies produce more because ultimately it's a fixed commodity
Speaker 1: at some point it's going to run out by let
Speaker 1: innovation disruption happen. Part of it is that we are
Speaker 1: also very knee jerk in our approach to looking at
Speaker 1: even environmental problems. And so it's not just I don't
Speaker 1: want to just put all the blame on the markets.
Speaker 1: I think environmentalists share the blame that they don't make
Speaker 1: science based decisions. So, for example, with the war in Ukraine,
Speaker 1: you know, three weeks ago Europe had to pass new
Speaker 1: legislation to basically classify nuclear energy as clean energy. And
Speaker 1: that's because they completely had this panic attack after Fukushima,
Speaker 1: and they didn't consider that actually, from a natural science perspective,
Speaker 1: nuclear power, especially existing nuclear power plants which were already operating,
Speaker 1: made a lot of sense to provide baseload power. And
Speaker 1: now they have no baseload power, so they have to
Speaker 1: either be important gas from Russia or they have to
Speaker 1: reclassify nuclear. So the environmentalists share this blame that if
Speaker 1: we do not have science based decision making, we have
Speaker 1: what I call in environmental awareness, but we don't have
Speaker 1: environmental literacy. I really want to make the connection between
Speaker 1: practicism and consumerism. That was Selima Lee, Distinguished Professor of
Speaker 1: Energy in the Environment at the University of Delaware. His
Speaker 1: book Earthly Order, How Natural Laws to Find Human Life.
Speaker 1: It is out now you're listening to Bloomberg Business Week.
Speaker 1: Up next is the pet health and wellness markets starting
Speaker 1: to soften. After so many of us found new furry
Speaker 1: friends during the pandemic. I found one of those new
Speaker 1: furry friends. I'm just gonna put that out there. We're
Speaker 1: gonna sit down with the CEO pet guy. We're gonna
Speaker 1: talk outlook and the reasons for a tougher Corely earnings report.
Speaker 1: This is Bloomberg. You're listening to Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes. Tim Steinovich from Bloomberg Radio.
Speaker 1: Shares a pet coast sold off following earnings this week
Speaker 1: after the company cut its adjusted earnings for share and
Speaker 1: net revenue guidance for the full year. An analyst at
Speaker 1: Baird called the pet Health and Wellness Giants forecast reset
Speaker 1: quote much needed, so to find out more about the
Speaker 1: company's miss and where it goes from here mid persistent
Speaker 1: inflation and a tight labor market. Bloomberg Surveillance co host
Speaker 1: Paul Sweeney and I spoke with pet Co chairman and CEO.
Speaker 1: Ron called great companies bro even in tough economies. So
Speaker 1: we had a four percent comp which is a good number.
Speaker 1: You know that we did not have the inventory issues
Speaker 1: that other companies are talking about. Most retailers are talking
Speaker 1: about inventory, excess inventory and having a discount. We didn't
Speaker 1: have that situation. We continue to see a positive nick
Speaker 1: shift towards premium and super premium brands, so a lot
Speaker 1: of good news, but at the same time, there is
Speaker 1: some pressure from the inflation on discretionary items like toys, tennis,
Speaker 1: balls leashes and that pressures. That's our highest profit area,
Speaker 1: so that puts some pressure on the piano. So in
Speaker 1: your piano, on your pan l talked to us about
Speaker 1: I guess inflation in terms of your cost of good sold.
Speaker 1: Where do you guys see it in your piano? Yeah,
Speaker 1: so freight would be a big one. Um, labor would
Speaker 1: be another one. Labor we pretty much have in our model.
Speaker 1: But I don't think anybody had the freight freight inflation
Speaker 1: that we saw in their model because the guests, you know,
Speaker 1: really popped in March April type time coming down? Is
Speaker 1: it helping you? It's starting to come down, But the
Speaker 1: freight gets tied to the inventory, so it doesn't show
Speaker 1: up in the p and l un till later in
Speaker 1: Q three and into Q four. I actually have been
Speaker 1: in a store on Second Avenue bought a bunch of toys.
Speaker 1: I want to do shout out to Chedterly, who was
Speaker 1: really lovely because I have a dog, a puppy that
Speaker 1: shoes through things in thirty seconds. So I came up
Speaker 1: with an armful of toys and I said, help me,
Speaker 1: help me, what's gonna you know last? And she was
Speaker 1: really wonderful I have to say, though, I noticed a
Speaker 1: lot of empty shelves and I was curious in the
Speaker 1: dog toy area, is it supply chain problems? What was it?
Speaker 1: Or is it just people? I don't know you it
Speaker 1: looked like you were sold out. You know, there's not
Speaker 1: a single vendor that said I think there's gonna be
Speaker 1: a million new pets in two thousand and twenty, another
Speaker 1: new million new pets in twenty one, and elevated pets
Speaker 1: this year. So all of of vendors have been scaling
Speaker 1: their manufacturing. The bad news is that the supply lagged
Speaker 1: the demand. The good news is that that supply and
Speaker 1: capacity is coming up now. I was in a brand
Speaker 1: new plant in Dallas for honest. Kitchen Hills just announced
Speaker 1: major investments in their manufacturing. So that capacity, it really
Speaker 1: takes about two years to get new capacity up, and
Speaker 1: that capacity is coming up now. We're seeing improving supply
Speaker 1: week after week. Talk to us about the demand side
Speaker 1: of this business. The pet business, it seemed like they're
Speaker 1: in a pandemic. A lot of folks went out and
Speaker 1: it got themselves a pet acata dog something like that.
Speaker 1: I'm not sure where those owners are today, where those
Speaker 1: pets are today. But how did that impact your business
Speaker 1: and how are you dealing with it today? Well, if
Speaker 1: you look at our business, we're up on a three
Speaker 1: year basis, our econ businesses up, services, business up, so
Speaker 1: we have scaled tremendously on the back of that. But
Speaker 1: make no mistake about it today two two the predictions
Speaker 1: are for it to still be elevated in terms of
Speaker 1: petted options versus two thousand and nineteen pre pandemic, and those, uh,
Speaker 1: those stories about there being more relinquishments are really just stories.
Speaker 1: Relinquishments are below pre pandemic. So the supply of pet
Speaker 1: um and the pet universe is only growing and we
Speaker 1: tend to do better in terms of capturing more than
Speaker 1: our fair share of new pets. So why don't you
Speaker 1: guys pull in your your guidance. It's really that pressure
Speaker 1: on disposable income UM and supplies. If you look at
Speaker 1: our our food our foods up double digits. UM, you
Speaker 1: look at our but yeah, you look at our services
Speaker 1: up double digits. It's really that segment of supplies toys, um, balls, leashes, collars,
Speaker 1: that kind of thing. The rest of the business is
Speaker 1: highly highly recession resistant and as I said, we continue
Speaker 1: to trade up, whether that's in food to premium kibble
Speaker 1: or fresh frozen or even are Ready fashion brand. UM
Speaker 1: that was up double digit, which is kind of a
Speaker 1: higher end supplies brand. You do you talk recession at all?
Speaker 1: Of course we do. We have to plan for every eventuality.
Speaker 1: You expect it a story the other day, prediction of recession,
Speaker 1: so we need to be planful for that. So we're
Speaker 1: doing two things. One is making sure that our cost
Speaker 1: structure is prepared to navigate through that, and the second
Speaker 1: thing is making there's hiring components, there's location components, there's
Speaker 1: UM travel components. You cut back in all the areas
Speaker 1: that aren't revenue generating direct revenue generating, to make sure
Speaker 1: that UM, if your revenue is impacted, your cost structure
Speaker 1: is not in line with not out of line with
Speaker 1: your your revenue profile. The second piece, though, is making
Speaker 1: sure you're more attractive to customers who are going through
Speaker 1: a recession. Right, So things like bundles right, bundle tennis balls,
Speaker 1: things like our vital Care program, which is a membership program.
Speaker 1: It gets discounts across our portfolio. People can save three
Speaker 1: with that program. Mega PACs, So you change your offering
Speaker 1: or just your offering for the consumer mindset as they
Speaker 1: navigate through a recession. Well, I share a condo building
Speaker 1: with Harry, who was a pit bull with a very
Speaker 1: bad attitude and anger management problems that he used to
Speaker 1: work on. But in any case, he gets his chewy
Speaker 1: delivery every week or two. Talk to us about your
Speaker 1: digital business, how you deal with some of those online competitors,
Speaker 1: and kind of how your business is varying. Well, first
Speaker 1: of all, we can help Harry with our trainers there
Speaker 1: is our excellence and get his attitude in the right place. Um.
Speaker 1: We also have repeat delivery UM, and our repeat delivery
Speaker 1: is businesses growing significantly ahead of the competitor that you mentioned. Um,
Speaker 1: that's part of our recurring revenue plays and recurring revenue
Speaker 1: is important in terms of line of sights revenue. So
Speaker 1: are recurring revenue. Customer growth was fift so it was
Speaker 1: very very strong. UM. We love those customers because it's
Speaker 1: a guaranteed customer and very sticky in URMs. Well, that's
Speaker 1: what I'm curious about, retention and times and so it
Speaker 1: sounds like once you've got abody within the pet Co network,
Speaker 1: they tend to stay or do they We've had very
Speaker 1: strong retention UM. The dynamic right now is we continue
Speaker 1: to bring in new customers. So one of the strengths
Speaker 1: in the quarter was we brought in three thousand new
Speaker 1: customers into our franchise. The competitor that you mentioned bled
Speaker 1: UH customers last quarter. Is that unusual that number we had.
Speaker 1: This is our fourteen consecutive quarter in a row adding customers.
Speaker 1: So we've continued to add customers, which speaks to the
Speaker 1: strength of our model and our marketing. Well, how often
Speaker 1: is it you bring somebody in for either a vet
Speaker 1: visit or some grooming and they're going to buy something.
Speaker 1: When we put a Vette hospital in one of our stores,
Speaker 1: we get a four to five point center store lift
Speaker 1: in merchandise. That's despite taking out square feet of merchandise
Speaker 1: UM footage, but we still get a four to five
Speaker 1: point left because of the traffic and also because the
Speaker 1: type of customer that that is going in to see
Speaker 1: a vet, they're the higher end customers. How many stores
Speaker 1: do you have today? Around four hundred and fifty and
Speaker 1: they're all us, Right, we have number one in Mexico
Speaker 1: online offline UH, and then we have an initiative with
Speaker 1: Canadian entire for some store and stores. Okay, so how
Speaker 1: do you how do you see your store count as
Speaker 1: a part of your growth story? Are we adding stores?
Speaker 1: Here is our geographic areas you need to get into
Speaker 1: or muscle up in. Yeah, so we've done the culling
Speaker 1: where there was less profitable. Now we're back into a
Speaker 1: growth mode. We'll add fifteen in the back half of
Speaker 1: this year, partially those small town rural stores that I
Speaker 1: talked about, which are very excited about. It's an eight
Speaker 1: billion dollar address the market for us UM and some
Speaker 1: high growth geographies. Are you guys competing increasingly with other
Speaker 1: private equity because it does I feel like, I know
Speaker 1: my VET, who used to be a standalone has been
Speaker 1: swooped up, and like these networks, there's been a lot
Speaker 1: of private equity actions in the VET space, which gives
Speaker 1: us our opportunity because there's very high multiples being paid
Speaker 1: for those vets. So after you pay that kind of money,
Speaker 1: then there's a lot of pressure to have upgrade efficients.
Speaker 1: Not much fun, I'm going to tell you. After no
Speaker 1: offense the pe guys, I know you. But that said, um,
Speaker 1: we have a different approach. We allow the vets to
Speaker 1: practice medicine as they see fit, which is important. One
Speaker 1: thing I want to ask you where's growth going forward?
Speaker 1: Because you do have some you know, international exposure, UM RUN,
Speaker 1: so where do you continue to grow? Yeah, we have
Speaker 1: a forty billion dollar addressable market that we're just leaning into.
Speaker 1: So if you look at the vet market, it's a
Speaker 1: thirty billion dollar market. We only have two hundred vets
Speaker 1: stores so far we have we said we're going to
Speaker 1: get up to seven eight hundred vets. So that's one area.
Speaker 1: The second thing is small town rule. I talked about
Speaker 1: an eight billion dollar market that is exploding from a
Speaker 1: population standpoint. Our first store is doing very very well.
Speaker 1: You'll see us lean into that. Third is our x
Speaker 1: r X is a scale addressable market again UM and
Speaker 1: it's a mess in general. There's there's like I think
Speaker 1: there's ways to make it easier right, exactly right and
Speaker 1: provide a holistic solution there. And then the last thing
Speaker 1: I would cite is insurance. UM insurance. If you go
Speaker 1: to Europe, um insurance is about ten percent penetrated for
Speaker 1: pet parents. Here it's two to three percent penetrated. So
Speaker 1: we have an offer. It's growing double digit, but we
Speaker 1: can go even faster, and we'll have some news shortly
Speaker 1: on that front. When you look at what seems to
Speaker 1: be conflicting signals around within our economy, whether it's labor
Speaker 1: data or labor data seems to be very strong, but
Speaker 1: you see continued weakness within the housing market in other areas.
Speaker 1: How how do you see it or how does it
Speaker 1: how does it kind of factor what you do in
Speaker 1: terms of your longer term strategy at the company. In
Speaker 1: terms of the here and now navigating through choppy waters,
Speaker 1: our plan is to navigate through what we what we
Speaker 1: uh we assume are going to be similar economic environment
Speaker 1: to today. Right, We're not economists say okay, well, let's
Speaker 1: assume gonna this is gonna be steady state for six
Speaker 1: twelve months. How would we navigate through that? And that's
Speaker 1: part of the revised Conservative guide that we put out
Speaker 1: today was let's make sure that in this environment we
Speaker 1: can deliver or over deliver from a long term strategy standpoint.
Speaker 1: Our long term strategy as a winner. Right, the category
Speaker 1: is going to grow seven percent. We continue to gain
Speaker 1: share in areas like super premium gain share and VET
Speaker 1: gain share and digital basically where all the profit pools are.
Speaker 1: That's pet Co chairman and CEO Ron Coglin, Bloomberg's pulseweened
Speaker 1: joining us there as well, and we had a long,
Speaker 1: in depth conversation. So go to our podcast feed to
Speaker 1: hear it in its entirety. And that reps up the
Speaker 1: first hour of the weekend edition of Bloomberg Business Week
Speaker 1: from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovic.
Speaker 1: Ahead in our next hour, we're focusing on venture capital.
Speaker 1: We hear from the CEO of Incredible Health on her
Speaker 1: firm's latest funding round that includes an NBA star, and
Speaker 1: then a VC veteran tells us what's peaking her interest
Speaker 1: and pulling at her firm's purse strays blass Amazon's latest
Speaker 1: billion dollars streaming vet stick around. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week inside from the reporters and editors
Speaker 1: who bring you America's most trusted business magazine plus global business,
Speaker 1: finance and tech news as it happened. Bloomberg Business Week
Speaker 1: with Carol Messier and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio Plenty Ahead in our second hour of the
Speaker 1: weekend edition of Bloomberg Business Week, including a VC update
Speaker 1: on a newly minted unicorn in the healthcare space, and
Speaker 1: then one venture campus that's working to digitize the physical world,
Speaker 1: Plus a crop of startups are touting the medical benefits
Speaker 1: of psychedelic drugs. Will explain why solid science could be
Speaker 1: taking a backseat to unbridled capitalist ambitions as these companies
Speaker 1: race to market. Tim we're talking mushrooms. Yeah, we're talking
Speaker 1: mushrooms again. They're all over the place. First up this hour,
Speaker 1: one company that's managed to defy tough conditions. Last week,
Speaker 1: johns Hopkins joined Andres and Horowitz, Kaiser Permanente, NBA star
Speaker 1: Andre Iguadala and others in an eighty million dollar Series
Speaker 1: BE funding round for Incredible Health, pushing that company into
Speaker 1: unicorn status. The platform connects hospitals with nurses and other
Speaker 1: healthcare workers. Carol An Bloomberg New Senior Markets reporter Katie
Speaker 1: Greifeld spoke with co founder and CEO Dr Emman Abuside
Speaker 1: about the new cash infusion. So it means that we're
Speaker 1: now the highest, the highest value that enabled career marketplace
Speaker 1: for healthcare workers in the US today. Our valuation of
Speaker 1: about one point six five billions, and for the first
Speaker 1: time we've had our customers health systems including Kaiser, Permanente
Speaker 1: and John Hawkins invest in our round two, which really
Speaker 1: positions us as the leaders in in in healthcare hirings.
Speaker 1: So maybe an obvious question, but this latest round eighty
Speaker 1: million dollars, what will you be using the money on.
Speaker 1: So we're using the money in three key areas verses
Speaker 1: in R and B, you know, so investing in the
Speaker 1: hiring workflow and automating it with machine learning technology. And
Speaker 1: that includes automating the screening, automating the matching, just so
Speaker 1: it's increasingly more personalized and more automated for both the
Speaker 1: healthcare workers and the employers. We're also going to be
Speaker 1: investing in career resources for nurses UM and so they're
Speaker 1: using us over the course of their entire careers. UH.
Speaker 1: That includes still growth, scheduling services, UM, educational scholarships, cross training,
Speaker 1: all of which is completely free of charge for for nurses,
Speaker 1: and so we are the place where they manage their careers.
Speaker 1: And then frankly, just you know expansion, you know, expansion
Speaker 1: beyond nurses UH and beyond hospitals UH, because right now
Speaker 1: we're for serving those two markets primarily and have have
Speaker 1: ambitious to support the rest of the healthcare workers and
Speaker 1: healthcare employers to explore the platform with our audience to
Speaker 1: remind them exactly what you are doing, who is on it,
Speaker 1: how many people, and really the growth that you are
Speaker 1: seeing month to month. Sure hospitals and other health care
Speaker 1: employers they use incredible help cut them matching technology to
Speaker 1: hire high quality permanent nurses in less than fourteen days
Speaker 1: instead of the industry average of eighty two days. We
Speaker 1: saved each hospital facility that we've worked with at least
Speaker 1: two million dollars and travelers costs over time, costs in
Speaker 1: HR costs, and the nurse of using our platform enjoy
Speaker 1: uh an average of salary piece of about fifteen and
Speaker 1: reductions in commute time. UM. I guess it's over the
Speaker 1: last year in Dow top line revenue over five. We've
Speaker 1: now expanded to over six hundred hospitals across states. We
Speaker 1: work in very large health systems including hp A, Healthcare,
Speaker 1: UH and Kaiser from an Entente, and we also work
Speaker 1: with academic medical centers like Stanford, Peter Sina and John Hawkins.
Speaker 1: And we have over ten thousand nurses joining our platform
Speaker 1: every single week, and that industry average of eighty two days,
Speaker 1: which you've shortened to fourteen days. How does eighty two
Speaker 1: days that average now compared to what we've seen in
Speaker 1: the past. I guess what I'm asking is did the
Speaker 1: pandemic make exacerbate that? Has that average grown longer? The
Speaker 1: pandemic has definitely exacerbated that number, So that average has
Speaker 1: gotten longer because we are continuing to face the various
Speaker 1: severe labor shortage in nursing and as well as other
Speaker 1: healthcare professions. And then the other key number that pandemic
Speaker 1: has and pactages turnover. Um. You know, the average turnover
Speaker 1: for nurses in the US was about seventeen before the pandemic.
Speaker 1: It's now on average twenty one and a half of them. Well,
Speaker 1: tell us a little b about I was talking to
Speaker 1: somebody within the nursing community and just said, COVID, monkey, pocks,
Speaker 1: you name it. Women, individuals, men, people who are in
Speaker 1: the nursing um field have just kind of had it.
Speaker 1: Have we lost or how many have we lost from
Speaker 1: this field? So we are we weren't increasingly losing nurses
Speaker 1: from this field. So our third annual data report from
Speaker 1: earlier this year showed that one third of nurses are
Speaker 1: considering leaving the profession permanently by the end of two
Speaker 1: and so this is a workforce that has been negatively
Speaker 1: impacted in some cases, you know, decimated by the pandemic.
Speaker 1: They are being overworked. Uh, and and and experiencing extreme
Speaker 1: fatigue and stress and burnout at the moment. And how
Speaker 1: do you how do you address retention then if you know,
Speaker 1: burnout is such a big issue. So a couple of
Speaker 1: key ways. First, Um, you know, are the employers using
Speaker 1: our platform enjoy a sixteen percent increase in written in
Speaker 1: their baseline retention rate because the nurse was able to
Speaker 1: consider multiple opportunities before selecting that specific employer. Um. But
Speaker 1: you know, we also in our in our surveys and
Speaker 1: our data shows that the top reasons why nurses are
Speaker 1: changing jobs by far, the number one is career advancement. Uh.
Speaker 1: They're looking for more career advancement, they wanted rotor skills,
Speaker 1: move into leadership, cross train m become more specialized. And
Speaker 1: so the hospitals and helplesses that are investing in career
Speaker 1: advancement for nurses are enjoying better retention rates. A big
Speaker 1: thanks to Dr mon Abu's aid CEO and co founder
Speaker 1: at Incredible Health, Katie Greifeld taking part there as well.
Speaker 1: By the way, she did mention to us that the
Speaker 1: company's ultimate goal is to go public. We're certainly hoping
Speaker 1: to hear more from them down the line. Feels like
Speaker 1: she continues to take big steps towards that. That's for sure.
Speaker 1: All right, still ahead, We'll check in on the broader
Speaker 1: health of venture capital in two and we're investors are
Speaker 1: looking to place their bets. Eclipse Ventures partner Aidan Madigan
Speaker 1: Curtis joins us on the other side. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stenovik from Bloomberg Radio. Last month, Bloomberg
Speaker 1: reported that global funding for startups spell in the second
Speaker 1: quarter from the first. The total number dwindled to eight
Speaker 1: point five billion dollars. So where the people with deep
Speaker 1: pockets and an appetite for risks supposed to find opportunity?
Speaker 1: Our next guest has some ideas. She certainly does. Aidan
Speaker 1: Madigan Curtis as a partner at Eclipse Ventures. It's a
Speaker 1: venture capital firm focusing on essential industries divving big into
Speaker 1: the digital age. Aiden was part of the team at
Speaker 1: Apple that scaled up the first ever Apple Watch. She
Speaker 1: joined me in Bloomberg News senior markets reporter Katie Greifeld.
Speaker 1: We started though with an update on the overall VC
Speaker 1: environment for what it's worth, you know, Uh well, we
Speaker 1: did see funding kind of NVC drop as a whole
Speaker 1: quarter of our quarter. Last quarter was also the sixth
Speaker 1: largest quarter of VC funding into startups. Uh ever, and
Speaker 1: I think you know, we're you know, we're talking about
Speaker 1: a hundred five billion dollars um into into sort of
Speaker 1: great new companies. And I think that even in some
Speaker 1: of the toughest times, we see some really exceptional companies
Speaker 1: getting built. For example, Um, you know, LinkedIn was started
Speaker 1: to know too, as was it Lastian and pro Core
Speaker 1: or Airbnb and o a full on No. Eight. I think,
Speaker 1: you know, sometimes the very best comp needs actually get
Speaker 1: built when times are toughest. And aisan, I'm a looking
Speaker 1: over the notes that you you sent us, and you
Speaker 1: write that physical industries are right for VC investment. What
Speaker 1: exactly is a physical industry? Sure thing? Um? Yeah, it's
Speaker 1: actually really fascinating. You look at the you know, talking
Speaker 1: about kind of industry stats. The six hundred and twenty
Speaker 1: five billion in in VC investment that went out last year,
Speaker 1: you know, well over of that is invested in UM,
Speaker 1: you know, areas like in fintech or enterprise stas or
Speaker 1: e commerce or biotech. When we're talking about physical industries,
Speaker 1: we are talking about the basic foundations of our society.
Speaker 1: Industries like manufacturing, transportation, the delivery of actual healthcare, or
Speaker 1: even supply chains, things that make up over global GDP
Speaker 1: and UH. In terms of how we think about it
Speaker 1: and why they're so right for investment, I think UM,
Speaker 1: you know, in many ways, COVID brought to the light
Speaker 1: just how rigid so many of our supply chains are,
Speaker 1: and the geopolitical climate of the last year or so
Speaker 1: has also really shown a light on how globalization well
Speaker 1: you know, transformative in so many ways and really depletionary
Speaker 1: in a good way for the last you know, thirty
Speaker 1: years worth of consumer power has also made us very
Speaker 1: interconnected and has UM you know, made us very interdependent.
Speaker 1: So we're really focused on digital transformation of some of
Speaker 1: those industries that underlie our basic infrastructure. So what does
Speaker 1: that mean for something like you know, either supply chains
Speaker 1: or manufacturing specifically. I mean, I love what you're talking
Speaker 1: and it really resonates with me because I do feel
Speaker 1: like there are certain parts of our world that have
Speaker 1: been slow to innovate and be disrupted. But I agree
Speaker 1: with you, crisis often leads we saw it during the
Speaker 1: pandemic to disruption and innovation and thinking about things in
Speaker 1: a different way. So how does this all lead and
Speaker 1: guide your investments? Talk companies for us if you would, So,
Speaker 1: if you think about where the vast majority of the
Speaker 1: world's manufacturing based is, It's no longer in the US.
Speaker 1: You know, manufacturing used to be of US GDP. It's
Speaker 1: now twelve percent of US GDP. And that's a change,
Speaker 1: a shift that's happened in the last twenty five years
Speaker 1: or so. UM some of our portfolio companies are really
Speaker 1: focused on not just the concept of restoring but the
Speaker 1: notion of how do we actually bring real innovation to
Speaker 1: grow productivity in industries like manufacturing. For example, bul Conforms
Speaker 1: it's a three D metal additive technology using a very
Speaker 1: advanced laser structure that can actually make incredibly complex designs.
Speaker 1: For example, UM metal medical implants where small tiny pieces
Speaker 1: to go into consumer electronics, and it can do it
Speaker 1: at a hundred times the pace and the speed and
Speaker 1: throughput as traditional metal manufacturing. So that's a good example
Speaker 1: out of the team out of m I T that
Speaker 1: we invested in several years ago. UM Greg Greg How
Speaker 1: is a partner at Eclipse and this is the word
Speaker 1: member there, and we've been watching their growth with great anticipation.
Speaker 1: There is a New York Times UM article on them
Speaker 1: just just a month or two ago talking about the
Speaker 1: crazy advances that they're making in this space. Another good
Speaker 1: example of the company called Bright Machines. It's UM. It's
Speaker 1: actually a technology that we collaborated on with Flextronics and
Speaker 1: took and turned into its own standalone company where essentially,
Speaker 1: with just very simple software instructions, we can take a
Speaker 1: very modular approach UH to using robotics in software creating
Speaker 1: full end end manufacturing lines that can do really quick changeovers.
Speaker 1: And we can actually produce using that type of technology
Speaker 1: really fast and easy and outputs and assemblies with great flexibility.
Speaker 1: So that's a good example across manufacturing. UM. We're also
Speaker 1: really heavily invested in modernizing things like transportation and bringing
Speaker 1: also a climate focus to some of those innovations. For example,
Speaker 1: a company called Arc Boats, it's a fully electric speed boat. Um.
Speaker 1: We've also got an investment in a company called Axle Higher,
Speaker 1: which is a really rapid last mile logistics funny. So
Speaker 1: you can sort of see across the chain whether it's
Speaker 1: a sort of end end full stack approaches like Arc
Speaker 1: which is an actual boat, an electric boat, with the
Speaker 1: acqual Higher which is the software stack as well as
Speaker 1: the full the full end delivery. How we're trying to
Speaker 1: innovate across these different industries. Well, let's situate this in
Speaker 1: the macro economic environment that we're currently in, which is
Speaker 1: one with a lot of fears about recession. And when
Speaker 1: you're thinking about sort of these innovative businesses that you're
Speaker 1: looking to, how concerned are you that a recession, sure,
Speaker 1: should it descend on the economy, would sort of uh
Speaker 1: stop some of that innovation in its tracks. Yeah. I
Speaker 1: actually think innovation is really one of our only key
Speaker 1: ways out of pretty um you know, pretty dark looking
Speaker 1: economic time. If you think about the power of um,
Speaker 1: what it sounds funny, but hydrocarbons, did you know from
Speaker 1: the nineteen fifties and the nineteen seventeen. They actually allowed
Speaker 1: us to relatively cheaply really fuel crazy economic growth and
Speaker 1: crazy economic development. Globalization in the last thirty years has
Speaker 1: allowed us to reduce labor costs and actually produced um
Speaker 1: much more for far less. These are the These are
Speaker 1: the key elements that create growth. It's essentially being able to,
Speaker 1: through productivity and lower cost inputs, produce more output. That's
Speaker 1: Aidan Madigan Curtis. She's a partner at Eclipse Adventures. Bloomberg's
Speaker 1: Katie Graydfeld with us there as well. Up next on
Speaker 1: Bloomberg Business Week. We are still talking startups, that very
Speaker 1: specific type of startup. Why many new market players want
Speaker 1: to get in on psychedelics. I think one of the
Speaker 1: things that we forget when we talk about magic, mushrooms,
Speaker 1: m D m A, all of the psychedelics they're really
Speaker 1: having a moment right now, is that there's still so
Speaker 1: much we don't know. You know, coming to market smoothly
Speaker 1: will rely on part on figuring out from these basic
Speaker 1: science questions inside the race to grow, monetize, and even
Speaker 1: patent the greatest shrooms. You do not want to miss this.
Speaker 1: This is Bloomberg broadcasting from the Financial Capital of the World,
Speaker 1: Bloomberg eleven Frio in New York to Washington, d C.
Speaker 1: Bloomberg to Boston, Bloomberg one oh six one to San Francisco,
Speaker 1: Bloomberg nine sixty to the country Sirius XM Chado one
Speaker 1: nine team and around the globe the Bloomberg Business app
Speaker 1: and Bloomberg Radio dot Com. This is Bloomberg business Week
Speaker 1: recent takeover of the Pursuit section of Bloomberg business Week.
Speaker 1: It included a set of stories about the growing economy
Speaker 1: for various types of mushrooms. Among them are the kind
Speaker 1: you will not find in the produce section of your
Speaker 1: local supermarket, at least him not yet. This week, our
Speaker 1: features team examines the growing business of so called magic mushrooms.
Speaker 1: It's among the various types of psychedelic drugs that could
Speaker 1: have legitimate medical benefits, and a series of young companies
Speaker 1: are banking on it, Yeah, a lot of them. The
Speaker 1: problem is some of the firms racing to market might
Speaker 1: be getting ahead of themselves. Drake Bennett and Kristin V.
Speaker 1: Brown co wrote the story for Business Week. Kristen is
Speaker 1: a healthcare reporter at Bloomberg News. She and business Week
Speaker 1: editor Joe Weber joined me and Katie Greifelda Bloomberg with
Speaker 1: a primer on the challenges facing these fungi fanatics. There's
Speaker 1: still so much we don't know. You know, these drugs
Speaker 1: were originally being explored back in the fifties and sixties
Speaker 1: as things that could really have a positive impact on
Speaker 1: mental health. But then in the late sixties early seventies,
Speaker 1: we cracked down on them. Experimentation basically came to a
Speaker 1: grinding halt, and we've had all these decades where we
Speaker 1: just weren't exploring how these drugs work. And so even
Speaker 1: though we've had these fantastic clinical trial results that show
Speaker 1: really breathtaking numbers of people who have been helped buy
Speaker 1: these drugs for disorders like PTSD and depression, we still
Speaker 1: don't to understand a very basic level how the drugs work.
Speaker 1: And I think coming to market smoothly will rely in
Speaker 1: part on figuring out some of these basic science questions.
Speaker 1: I mean, I cover marijuana socks all the time, for example,
Speaker 1: and they have just been beaten and beaten up in
Speaker 1: the market, mostly due to regulatory concerns. I would imagine
Speaker 1: in psychedelics. Uh, it's even more dramatic. Yeah, I mean,
Speaker 1: there are some concerns. Studies funchaing that these drugs are
Speaker 1: in large part very safe, but in specific instances, for example,
Speaker 1: people with histories of suicidal ideation, or maybe people had
Speaker 1: psychotic illnesses like because of for any other running their family,
Speaker 1: there could be a high risk component. Plus, you know,
Speaker 1: there's just all of the decades of cultural baggage that
Speaker 1: go with these drugs, So there is definitely wanting to
Speaker 1: keep safety in mind. Plus that this has already come
Speaker 1: out a little bit as we move forward in clinical trials.
Speaker 1: There you know, when when you have a therapist in
Speaker 1: a room with some of these who's like out of
Speaker 1: their mind tripping there, there's also a lot of potential
Speaker 1: for abuse, which is true in any healthcare scenario, right.
Speaker 1: So I do think that there is one segment of
Speaker 1: this industry, of this leg of science that is wanting
Speaker 1: to you know, go slow and study and make sure
Speaker 1: that as we roll these drugs out to people, that
Speaker 1: we're not only trying to roll them out quickly so
Speaker 1: that we're getting them to people soon who are in
Speaker 1: desperate need of drugs, can you know, treat on of
Speaker 1: these vistors, but we're also doing it safely so that
Speaker 1: we don't wind up in a situation where something terrible happens,
Speaker 1: and when there's you know, BackFlash to deal with what's
Speaker 1: it looks like from an investment standpoint right now? Yeah,
Speaker 1: that's actually really interesting. You know, I just checked my
Speaker 1: note notebook. Care one estimate puts that this industry could
Speaker 1: be at about six point nine billion dollars in a
Speaker 1: few years, so huge, huge, huge market potential. But one
Speaker 1: of the things that's interesting about psychedelics that you know
Speaker 1: it's different from your average pharmaceutical companies playbook is that
Speaker 1: you're dealing with things that have been existence for long time,
Speaker 1: so you have to figure out where the I P
Speaker 1: is and people are taking different approaches compass pathways. Their
Speaker 1: strategy has been to try and create a novel pilocybin molecule, right,
Speaker 1: so they're tweaking the sort of crystalline structure in the lab.
Speaker 1: They're synthesizing it and tweaking the structure and saying it's
Speaker 1: something new. But then you have people pushing back and saying, well,
Speaker 1: it's not actually something new, you're just riffing on something old.
Speaker 1: So the debate gets a very complicated there, and then
Speaker 1: there's other companies that are saying, we're not even gonna deal.
Speaker 1: What's trying to prove that our you know, version of
Speaker 1: this thing that has been existence forever is new. We're
Speaker 1: gonna instead find I P in other places. You know
Speaker 1: this one company, Numinis. Their strategy is we're gonna come
Speaker 1: up with a way to grow the mushrooms super efficiently,
Speaker 1: and we're going to patent that. What does the Bloomberg
Speaker 1: audience investors who are interested in this need to know.
Speaker 1: In terms of some of these startups, I feel like
Speaker 1: you just laid out some of it. This is only
Speaker 1: going to be a really hot base. The question is
Speaker 1: what form will the drugs take when they come to market.
Speaker 1: Is it going to be, you know, a totally new
Speaker 1: drug that we make by taking some elements of psychedelics
Speaker 1: and turning them something new into the laboratory, or is
Speaker 1: it going to be just finding the right platform to
Speaker 1: roll out like you know, like mushrooms in their original form.
Speaker 1: I think that's the big question is not will these
Speaker 1: things help people, but how our thanks to Bloomberg News
Speaker 1: healthcare reporter Kristin V. Brown and Business Week editor Joe
Speaker 1: Weber for that report and our thanks once again to
Speaker 1: Bloomberg News Senior Markets reporter Katie Greifeld. You're listening to
Speaker 1: Bloomberg Business Week. Coming up, you'll need to read this
Speaker 1: week's Pursuit section of the magazine so you will know
Speaker 1: what to watch on TV in the weeks and the
Speaker 1: coming months. Tip there's a lot coming our way. Yeah,
Speaker 1: there certainly is. Um Fans of Game of Thrones or
Speaker 1: in for something right, Yeah, it's it's rolling out the
Speaker 1: Bloomberg screen time squad on the latest salvos from the
Speaker 1: streaming wars, including a ten figure bet from Amazon on
Speaker 1: the one show to rule them all. Maybe we'll find
Speaker 1: our newest obsession. This is Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovich from Bloomberg Radio. We're wrapping up our broadcast as
Speaker 1: we often do, with a dive into the Pursuit section
Speaker 1: of Bloomberg Business Week. Don't tell anybody, Timpert, it's always
Speaker 1: my favorite. All right, Well, and now everyone knows because
Speaker 1: you just said it. They bring us the best of food, travel,
Speaker 1: and luxury of all kinds. This week. They're taking us
Speaker 1: to the front lines of these streaming wars and latest
Speaker 1: to big budget projects from some of our favorite entertainment heavyweights.
Speaker 1: That's right, We're talking about everything from Hulse my Tyson
Speaker 1: drama to Amazon's Lord of the Rings prequel. The section
Speaker 1: opener asked the question, are we entering the blockbuster era
Speaker 1: of streaming or finally finally hitting the summit of pete TV?
Speaker 1: To break it down, we've got Bloomberg News Media, Entertainment
Speaker 1: and Telecom editor Felix Jill along with Pursuits Deputy editor
Speaker 1: Jim Gaddy joining us. Now, Okay, Jim, I want to
Speaker 1: start with you because a lot of the programs that
Speaker 1: we're gonna be talking about, namely Amazon's huge Lord of
Speaker 1: the Rings prequel and about huge I mean expensive as well,
Speaker 1: these were put into motion before you know, Netflix kind
Speaker 1: of fell apart a few months ago. Yeah, you know,
Speaker 1: this has been one of Jeff Bezos kind of pet projects,
Speaker 1: himself a Tolkien super fan. Uh, Felix did some deep
Speaker 1: diving into this process. Felix, what did you what really
Speaker 1: surprised you about this whole saga? You know, you see
Speaker 1: these huge projects, including uh, this Lord of the Rings
Speaker 1: prequel from Amazon landing at this interesting time and streaming. Uh.
Speaker 1: Netflix has The Sandman, which is also a big budget
Speaker 1: sci fi show that just landed. HBO has a House
Speaker 1: of Dragon, which is the Game of Thrones prequel at
Speaker 1: Disney Plus has She Hulk. All these hugely expensive uh
Speaker 1: streaming shows landing. Um act this very precarious moments in uh,
Speaker 1: you know, the streaming era where all these studios are
Speaker 1: under a lot of pressure to cut back. You know,
Speaker 1: you're seeing layoffs at you know, HBO Max and that
Speaker 1: at Netflix, and so it's this interesting contrast, like which
Speaker 1: way is this the whole thing going? Like, are we
Speaker 1: going into these huge you know, we're going to do
Speaker 1: more and more big blockbuster series or is this kind
Speaker 1: of like the Grand Finale and everybody's gonna be like, yeah,
Speaker 1: maybe we'll just um, you know, not make billion dollar
Speaker 1: TV shows. All right. I'm so confused because I thought
Speaker 1: this was the era of get off your couch, the
Speaker 1: pandemic is over and go live life everybody. But that's okay,
Speaker 1: that's okay, We're all going to be pulled back to streaming.
Speaker 1: UM Felix one thing I thought, um, just to kind
Speaker 1: of get going in terms of what Amazon is doing
Speaker 1: um with the Rings of Power. Jeff Bezos really into this. Yes,
Speaker 1: he is a big Tolkien super fan himself, and he
Speaker 1: was very involved in the beginning, pushing Amazon to pay
Speaker 1: two hundred and fifty million dollars just for the rights
Speaker 1: um to make five seasons of the show, plots a
Speaker 1: potential spinoff down the road. Um. But that was, you know,
Speaker 1: five years ago, and this thing has been the works
Speaker 1: now for five years. Uh. It's been a shot mainly
Speaker 1: in New Zealand. At some point the New Zealand government
Speaker 1: revealed that the first season alone was going to cost
Speaker 1: you know, approximately four hundred and sixty five million dollars
Speaker 1: in productions uh fees. So it's it's this huge bet
Speaker 1: by Amazon. They really haven't you know. It's it's fascinating
Speaker 1: to watch the evolution of their original streaming strategy because
Speaker 1: when you think back, you know, a decade ago when
Speaker 1: they launched Amazon Prime Video. At that point, they were
Speaker 1: all about, Oh, we're going to disrupt the way Hollywood
Speaker 1: does production, and we're going to open it up to everybody,
Speaker 1: and we're gonna set up this portal on the website
Speaker 1: where anybody can upload a screenplay, and you know, democratize
Speaker 1: the whole process. And you know that that is where
Speaker 1: they started. And then ten years later you've gotten to
Speaker 1: the point where they're making the most expensive TV show ever. Um.
Speaker 1: So it's been kind of a fascinating journey. And yeah,
Speaker 1: Jeff Bezos has been right in there basically you know
Speaker 1: about you know, five, six, seven years ago, he started
Speaker 1: telling everybody his Hollywood executives, He's like, go out and
Speaker 1: get me my Game of Thrones. So at that point,
Speaker 1: Game of Thrones is kind of ruling over home entertainment
Speaker 1: and he really wanted that. He wanted Amazon to have
Speaker 1: something huge that was a global event, um, that would
Speaker 1: cross culture, that could help Amazon Prime make inroads into
Speaker 1: all these different countries around the world. And so it is.
Speaker 1: It's it's the biggest bet that Amazon has made in
Speaker 1: the home entertainment space, and we'll see how it goes.
Speaker 1: I'm wondering if the stakes are different for Amazon, because
Speaker 1: at the end of the day, you know, Amazon is
Speaker 1: a is a company that makes you know, its profits
Speaker 1: from selling server space through AWS and you know, getting
Speaker 1: us to buy more toilet paper and your peloton now too.
Speaker 1: But you already have one, Carol, so I guess you
Speaker 1: don't need to buy another one for you or something
Speaker 1: on it. Are the stakes different for for Amazon than
Speaker 1: they are for a pure play entertainment company like Disney
Speaker 1: or Netflix or you know, They're definitely different. I mean,
Speaker 1: they're not just about getting viewing time. They're about pulling
Speaker 1: people into the whole Amazon ecosystem, and this is a
Speaker 1: huge lure for them. But at the same time, I
Speaker 1: think it is an interesting test that come to the
Speaker 1: Amazon Flywheel synergy thing, where you know, in theory, they
Speaker 1: have all of these software and hardware assets that they
Speaker 1: should be able to use to make this Lord of
Speaker 1: the Rings prequel into this huge global events. I mean,
Speaker 1: they have Twitch the popular live streaming side, they have
Speaker 1: IMDb dot Com, they have all these fire TV devices everywhere. Um,
Speaker 1: they should be able to kind of use all of
Speaker 1: those assets to really push people to watch the series
Speaker 1: and to promote it and to market it. They haven't
Speaker 1: done an amazing job in the past of marketing their
Speaker 1: original series, so I think it's also a fascinating test
Speaker 1: to back can they get all these different assets working
Speaker 1: on the same page and if they can't, and they
Speaker 1: can't do it for something with this kind of intellectual
Speaker 1: pedigree that's kind of built in fan base, is kind
Speaker 1: of pre recognition among fans. Then I don't see how
Speaker 1: they could ever do it. All Right, So we've got
Speaker 1: House of the Dragon that's coming from Amazon. We've got
Speaker 1: The Sandman coming from Netflix. We've got Shee Hulk Attorney
Speaker 1: at Law, Disney plus series. There's lots of stuff coming
Speaker 1: at us. I want to get to some of the
Speaker 1: other stuff in pursuits because you guys cover so much.
Speaker 1: There's stuff on Mike Tyson. There's also George Miller with
Speaker 1: a new film. Give us some other things that are
Speaker 1: coming our way. Yeah, you know, it's funny talking about
Speaker 1: this Lord of the Rings series, Rings of Power. Um,
Speaker 1: nobody knows if it's going to be any good. Oh
Speaker 1: come on, go on. I mean there's no Peter Jackson involved. Um,
Speaker 1: you know if it's if it's really good, then it
Speaker 1: will pay back everything. But nobody really knows. What we
Speaker 1: do know is that the new Mike Tyson docu drama
Speaker 1: is not very good. We we watched it. Um. We
Speaker 1: had a guy one of our regular contributors who was
Speaker 1: a boxing trainer and has followed Mike Tyson's career I
Speaker 1: went and looked at this new series is from the
Speaker 1: people who did uh Titania, which got a lot of
Speaker 1: really a positive feedback and critical reception. I guess two
Speaker 1: things he took issue with in this series. One, Mike
Speaker 1: Tyson was not involved, which doesn't make a ton of
Speaker 1: sense considering how good of a storyteller he is about
Speaker 1: his his own story. He's done one man show, Undisputed Truth.
Speaker 1: He's got Spike Lee directed this HBO special about it. Um,
Speaker 1: he's over and over again. He's got a podcast. But
Speaker 1: he's he's very, very compelling storyteller himself, and they didn't
Speaker 1: go to him. He's pretty upset about it. If you
Speaker 1: go and read his tweets, I won't quote them on
Speaker 1: the radio, but um, you know, I would think you
Speaker 1: would not want to make Mike Tyson angry, like he
Speaker 1: bit somebody's ear off or anything. Yeah, we're gotten a
Speaker 1: fight on an airplane recently. Yeah. Yeah. The second thing
Speaker 1: that he sorry, the second thing that he found he
Speaker 1: took his shoe with, is that the most interesting character
Speaker 1: in this show is not Mike Tyson. It does Ray Washington,
Speaker 1: who he went to jail over. That is a story
Speaker 1: that no one is really told and so anyway, he
Speaker 1: that's kind of how he ended his review is like,
Speaker 1: you know, it's it's weird you meet the most interesting
Speaker 1: character in this show, like five episodes in the George
Speaker 1: Miller movie which comes out this weekend, three Thousand Years
Speaker 1: of Longing. It stars Idris Elba and Tilda Swinton. George
Speaker 1: Miller is a really interesting character. How many directors do
Speaker 1: you know can make Babe and had Feet and Matt
Speaker 1: Max Fury Road not many? You know, it's got his
Speaker 1: kind of trademark, you know, magic, He's he's just got
Speaker 1: this really interesting kind of point of view. And it's
Speaker 1: not totally perfect. Our reviewer did not if you felt
Speaker 1: like a kind of stack at the end. But you know,
Speaker 1: anything George Miller makes is worth going to see, even
Speaker 1: if it's not necessarily you know, ten out of ten.
Speaker 1: I wanted to talk about some of the other documentaries
Speaker 1: that you feature, because you have one about Lacrosse from
Speaker 1: kind of a character that Carol and I are very
Speaker 1: familiar with who's come on our program before. Yeah, and
Speaker 1: then also um lynd Sanity, which brings me back like
Speaker 1: a decade ago. Yeah, I um it brings me back
Speaker 1: to tim, Um. You know it's it's one of the
Speaker 1: only times in the last ten years where the knicks
Speaker 1: of matter during the season and not you know, entering
Speaker 1: off season when they're trying to guess which superstar is
Speaker 1: going to come. Felix, what are you gonna watch? I'm
Speaker 1: excited about the House of the Drag again. You'll be
Speaker 1: watching the Game of Thrones prequels, and I will be
Speaker 1: watching The Rings of Power pecking that out. That'll keep
Speaker 1: you busy. What about you, Jim, I'm gonna go see
Speaker 1: Bad Bunny this weekend? No comment, No comment. Um. Also
Speaker 1: in this section there's a great Q and A with
Speaker 1: Ken Burns about Mary about the United States role with
Speaker 1: the Holocaust that really I had no idea and it
Speaker 1: really stopped me, um, So we highly recommend you check out.
Speaker 1: And also what's going on when people get out bands
Speaker 1: on the road? Uh, interesting take on what's going on there.
Speaker 1: That's Bloomberg News Media, Entertainment and Telecom editor Felix Gillette
Speaker 1: also pursuits deputy editor Jim Gaddy and a big shout
Speaker 1: out to Katie Graydfield and Paul Sweeney for helping us
Speaker 1: out so much this past week, and that reps up
Speaker 1: the weekend addition to Bloomberg Business Week from Bloomberg Radio.
Speaker 1: Thanks so much for joining us. I'm Carol Masser and
Speaker 1: I'm Tim Stanovic. Be sure to tune into Bloomberg Business
Speaker 1: Week Monday through Friday. It starts at two pm Wall
Speaker 1: Street Time on Bloomberg Radio. You can also watch our
Speaker 1: daily broadcast on YouTube. Just searched Bloomberg Global News, and
Speaker 1: also check out our Bomberg Business Week podcast. You can
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Speaker 1: now at Bloomberg dot com, Slash business Week, and always
Speaker 1: on the Bloomberg terminal. You can also see me on
Speaker 1: Bloomberg Quick Take, available on Bloomberg dot com, slash Qt,
Speaker 1: and streaming platforms like Roku, Apple TV, Samsung TV, and more.
Speaker 1: Have a great weekend, everyone, a lot of things to
Speaker 1: watch over the next coming weeks. This is Bloomberg