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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P M L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,

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Speaker 1: you know, Lisa, when I think of slam dunk, I

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Speaker 1: think really only a basketball, but I guess you can

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Speaker 1: apply it to a variety of different business techniques. And

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Speaker 1: here to help us understand sort of the convergence of

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Speaker 1: what you learn on the court and what you can

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Speaker 1: learn in the office is Byron Scott. Thank you very

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Speaker 1: much for being here. He is an NBC studio analyst,

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Speaker 1: but of course he is known as h. Yes, I

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Speaker 1: was gonna was gonna give the whole record, you know,

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Speaker 1: I was gonna tell everybody about his what three NBA champions,

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Speaker 1: uh NBA All Rookie first Team, also coach to the

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Speaker 1: l A. I mean, just you're thank you for being here.

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Speaker 1: Thank you guys for having me all right. And in

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Speaker 1: the in the other corner is Charles Norris. He is

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Speaker 1: the chairman of Fresh Pet and he is the former

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Speaker 1: chief executive of McKesson Water and deer Park Spring Water. Charles,

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Speaker 1: thanks for being here. Okay, so this is the obvious question,

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Speaker 1: what do you two gentlemen have in common? We were

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Speaker 1: just talking about that, even though we don't look alike,

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Speaker 1: we have a lot in common. We're separated by at

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Speaker 1: least a couple inches, a little page, a little bit

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Speaker 1: of hair, but uh, we have a lot in common.

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Speaker 1: And uh it was remarkable as we got to know

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Speaker 1: each other and spend time together how much we had

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Speaker 1: in common. And we learned it because Byron invited me

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Speaker 1: to work out with him at the Laker facility when

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Speaker 1: he was coaching, and he invited me to go into

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Speaker 1: coaches meetings, film sessions with players, watch practices. And I

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Speaker 1: in turn invited Byron to come to bank meetings and

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Speaker 1: board meetings and really get involved in the businesses I

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Speaker 1: was in. And we then started talking about the techniques

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Speaker 1: we used in leadership, and lo and behold we found

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Speaker 1: that they were very similar. Well and Byron, so you

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Speaker 1: coached the Sacramento Kings, New Jersey Nets, New Orleans Hornets.

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Speaker 1: I could go on and on what one skill do

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Speaker 1: you think sort of connects both the corporate world and

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Speaker 1: the bull Well, I think Lisa, from a leadership standpoint

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Speaker 1: in Charlie's taught me this, you know, in various ways,

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Speaker 1: and I was doing it and really didn't know I

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Speaker 1: was doing it. But you really got to get to

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Speaker 1: the heads and hearts of the people that you're that

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Speaker 1: you're that you're dealing with and basketball that is the

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Speaker 1: players you know in the business world. In the corporate world,

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Speaker 1: he's deal with his employees. So it just taught me that,

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Speaker 1: you know, you have to ask that second and that

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Speaker 1: third question because one thing that you want them to

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Speaker 1: know is that you're very interested in the things that

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Speaker 1: they want to bring to the table. And we both

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Speaker 1: believe that you have to be able to get delegate

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Speaker 1: authority you know two people. In my case it was

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Speaker 1: assistant coaches um to give them the right to go

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Speaker 1: out and do their job to the best of their

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Speaker 1: ability and if they failed, you know, then you kind

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Speaker 1: of jump in. But you want to have them have

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Speaker 1: that sense of knowing that you know everything they do

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Speaker 1: counts as well. And I think that's something that Charlie

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Speaker 1: and I both had in common coming from our backgrounds.

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Speaker 1: So you co authored a book that was just really

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Speaker 1: slam dunk success. Uh. Was published by Center Street on

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Speaker 1: April's yesterday. Correct, I just came out what was the

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Speaker 1: process of writing it? Like? I mean, Byron, you were

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Speaker 1: telling me about the death death like workouts that you

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Speaker 1: guys engaged on, and but what was the process of

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Speaker 1: writing the book? Like? It was great to be honest with.

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Speaker 1: I mean, once we decided that this is something that

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Speaker 1: we could really do, and a lot of that was

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Speaker 1: because of Charlie's wife, Peggy, who said who used to

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Speaker 1: be an editor herself, and said she really thought we

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Speaker 1: had something here. Uh. Then we started taking a little

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Speaker 1: bit more serious and we contacted her friend of Charlie's name,

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Speaker 1: Todd Smith, who took it to a totally different level.

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Speaker 1: But in the process of doing it, our writer John Work,

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Speaker 1: who was a great writer who did a great job

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Speaker 1: of really capturing I think the essence of what this

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Speaker 1: book is all about. Uh, And we both speak in

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Speaker 1: the first person, and he was really able to kind

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Speaker 1: of capture everything that we wanted to really apply to

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Speaker 1: to the to the leadership roles and the and the

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Speaker 1: other chapters that we have in the book that we

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Speaker 1: thought would be very interesting to a lot of our readers.

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Speaker 1: If I can add something to that. Byron and I

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Speaker 1: sat down and we listed about fifteen leadership qualities that

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Speaker 1: we had in common. And when John Worke uh interviewed us,

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Speaker 1: he interviewed us thinking specifically about each of those leadership

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Speaker 1: qualities as a separate chapter. Now, Charles, I want to

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Speaker 1: just put it to you that you know and it's

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Speaker 1: your success at McKesson water, Uh, also do your park

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Speaker 1: and also fresh Pet. How do you contrast that with

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Speaker 1: what perhaps goes on in the court, which is, if

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Speaker 1: you don't perform on the court or as a coach,

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Speaker 1: your time there is pretty limited. But there are many

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Speaker 1: cases in which we see companies run by chief executives

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Speaker 1: who get huge pay packets, Uh, and their measurement is, well,

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Speaker 1: let's just put it subjective because they might be tied

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Speaker 1: to stock performance and that doesn't necessarily I mean, just

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Speaker 1: because the stock goes up doesn't mean you're a great CEO.

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Speaker 1: How do you sort of have the same incentives for

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Speaker 1: figures on the court and figures in the boardroom. Well, Uh,

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Speaker 1: we both have to win. And how you define winning obviously, Uh,

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Speaker 1: in sport, it's who who gets as points. In business,

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Speaker 1: it who gains market share. And uh, it's a very

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Speaker 1: easy scorecard if if you're every year you have a budget,

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Speaker 1: and that budget is around sales profit, but it's also

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Speaker 1: around how you're growing versus your competition in the market.

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Speaker 1: And it's honestly surprisingly as competitive in business as it

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Speaker 1: is in sport. To that end, Byron, you talked about

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Speaker 1: how each chapter in the book is a different leadership quality.

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Speaker 1: Is there one leadership quality that stands out to you

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Speaker 1: is the most counterintuitive? Well, for me, again on a

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Speaker 1: basketball court, I've always been a guy is believe that

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Speaker 1: if you're going to lead her, if you're gonna be

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Speaker 1: a leader, you got to lead by example. You know.

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Speaker 1: So if if I'm going to lead by example, I

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Speaker 1: want to be at the gym early, you know, I

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Speaker 1: want to I want the players to come in and

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Speaker 1: see me on the trap me you'll see me in

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Speaker 1: the weight room and be able to also go on

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Speaker 1: the floor and be able to show them certain things

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Speaker 1: that I want to be done. Because it's it's kind

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Speaker 1: of hard as a coach when you say I want

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Speaker 1: you to do it this way, but you can't show

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Speaker 1: them how to do it. You know, you can tell them,

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Speaker 1: but you can't show them. So I still really believe

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Speaker 1: that's one of the most important things, especially in my field,

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Speaker 1: is being able to go out there and participate and

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Speaker 1: to show the guys exactly what you mean, uh. And

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Speaker 1: I think a lot of guys really enjoy that when

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Speaker 1: a coach can get out there and kind of play

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Speaker 1: around a little bit with them as well. Charlie, what

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Speaker 1: about in the corporate boardroom, Well, what I find counter

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Speaker 1: intuitive is celebrating risk and learning from failure. Uh. To

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Speaker 1: be successful in business and to be successful in life,

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Speaker 1: you've got to get outside your box. And I look

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Speaker 1: for people uh to surround me who are willing to

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Speaker 1: take risk. And if we don't encourage that, ultimately, people

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Speaker 1: are going to get nervous if they're um uh, they

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Speaker 1: take a risk, and then they're punished for having failed

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Speaker 1: in the risk they take. So the counterintuitive aspect of

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Speaker 1: that is to celebrate the fact that you're willing to

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Speaker 1: go out and take calculated risk. Thank you so much

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Speaker 1: both of you for joining us today. Truly a pleasure.

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Speaker 1: Byron Scott is NBA studio analyst for ESPN and longtime

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Speaker 1: NBA champion and coach of a number of the top

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Speaker 1: NBA teams, as well as Charlie Norris, who is the

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Speaker 1: chairman of Fresh Pet also the former head of McKesson

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Speaker 1: Water and deer Park Spring Water. Their book is currently

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Speaker 1: on the bookstand Slam Dunk Success. Loneliness is a killer.

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Speaker 1: As Pim was saying, a lot of older people are

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Speaker 1: increasingly living alone and this is an increasing problem for many.

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Speaker 1: Doors Schooler might have the answer Door School or as

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Speaker 1: chief executive Officer of Intuition Robotics, which is an Israeli

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Speaker 1: start up focused on creating electronic companions for people who

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Speaker 1: perhaps live alone. Door thank you so much for joining us. Uh.

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Speaker 1: First of all, just let's start with what is ellie

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Speaker 1: q Hi Lisa, thanks for having me on. Yeah. Eli

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Speaker 1: Que is an active aging companion. She's a social robot

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Speaker 1: that actually um lives in the home of the older adult,

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Speaker 1: usually in the living room, and it helps them be

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Speaker 1: more connected and engage. It helps them to simplify the

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Speaker 1: way to communicate with their family by bridging the digital

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Speaker 1: to five, and it helps them meet their own goal

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Speaker 1: towards an active aging lifestyle by helping them implotting them

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Speaker 1: to go for a walk or take their medication on time,

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Speaker 1: learn new things every day and so on. Okay, and

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Speaker 1: and the door. Just in the interest of full disclosure,

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Speaker 1: I just want to say that you've raised what a

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Speaker 1: total of six million dollars from investors that include the

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Speaker 1: Rumba maker, I Robot, as well as Terra Venture partners,

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Speaker 1: uh man, Ive Mobility, and Bloomberg Beta. Just in terms

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Speaker 1: of fair disclosure there uh and also on the crowdfunding

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Speaker 1: platform our crowd. What are you using the money for?

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Speaker 1: What's the next step? Yeah, the next step is really

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Speaker 1: funding research and development and also manufacturing UM and user

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Speaker 1: trials as we plan to bring this product to market

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Speaker 1: UM hopefully within the next twelve months. Because I was

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Speaker 1: watching your video that you have online in which you

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Speaker 1: have an example of this device and it's paired with

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Speaker 1: some kind of tablet. I guess that's where the software runs.

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Speaker 1: Maybe you could describe, how did you It almost looks

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Speaker 1: like a I don't know, I don't know how to

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Speaker 1: describe it, Almost like a multi stacked flower vase. That's

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Speaker 1: one way of putting it. Yeah, there are two components

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Speaker 1: to the solution. One part is a screen or removable

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Speaker 1: tablet that we provide to our users. UM. And the

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Speaker 1: main part is l Q, which is the the social robot.

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Speaker 1: And she does look kind of like, UM, I don't know,

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Speaker 1: a new uh physical presence in the home. She's very

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Speaker 1: beautifully designed by eve Bihar. But it's it sits on

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Speaker 1: a table. I mean, this is not something This is

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Speaker 1: not a life size thing. This is something that's that

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Speaker 1: sits on a table. Correct, she sits on the table.

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Speaker 1: But she does have automatronic capability, so she we use

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Speaker 1: body language essentially, which we are humans are kind of

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Speaker 1: programmed to understand. So she will look to the side,

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Speaker 1: you look up, she'd lean forward to make a point. UM.

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Speaker 1: When we connect with families and lets they send a

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Speaker 1: picture over a we make it super simple for them

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Speaker 1: to do that and for the older adults do it,

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Speaker 1: but they also elak. You will turn look at the picture,

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Speaker 1: have a comment about it after understanding what's in it,

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Speaker 1: and then try to solicit the older adult to respond

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Speaker 1: and be part of the conversation on Facebook messenger. Is

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Speaker 1: this um? Have you done psychological studies to see whether

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Speaker 1: a robotic presence is equal or nearly equal to really

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Speaker 1: having another person there A right, it's definitely not the same.

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Speaker 1: I mean, look, we would all like to be closer

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Speaker 1: to our parents, and we'd all like to visit them

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Speaker 1: all the time, but the fact of life is that

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Speaker 1: we live further and further away from them, and even

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Speaker 1: if we live close, we can't be with them all

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Speaker 1: the time. So we're not trying to replace a meaningful

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Speaker 1: interaction between humans UM with some kind of a robot.

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Speaker 1: What we are trying to do is bring to better

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Speaker 1: technology that will help bring people closer together, overcome the

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Speaker 1: digital divide, help older and all UM consume music and

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Speaker 1: ted talks and other interesting things on the on that

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Speaker 1: are available to them, and also be somewhat of a

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Speaker 1: nudge or an assistance or coach if you will, UM

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Speaker 1: to help convince them to go for walks and to

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Speaker 1: take their medications and time and so on. So it's

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Speaker 1: not replacements, for sure, but it is better than being alone.

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Speaker 1: And let's remember that of older adults live at home,

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Speaker 1: about sixty of themselves professed that they're lonely and socially isolated,

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Speaker 1: about fifty percent the TVs their main companion, and about

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Speaker 1: for percent talk to one person or less week. So

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Speaker 1: so it is what it is, and we're trying to

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Speaker 1: do what we can UM to make the situation better

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Speaker 1: and help people listful or live. Have you started selling

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Speaker 1: l a Q We have not started, telling an she's

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Speaker 1: now starting trials in the San Francisco Bay area. UM,

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Speaker 1: and you're right said they're good demonstrations and we're starting

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Speaker 1: a pilot program, but we still need to learn how

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Speaker 1: people react to the product if if it's you know,

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Speaker 1: the usabilities the way we hope it will be, and

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Speaker 1: we have to do those things before we start selling

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Speaker 1: the product. So are you are a serial entrepreneur? Correct? Correct?

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Speaker 1: Maybe just give people a little bit of your background

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Speaker 1: and why did you choose this as your next project? Sure? Yes,

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Speaker 1: I did my first startup straight after leaving military intelligence

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Speaker 1: in the Israeli Army at aged three, and this is

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Speaker 1: now my fifth venture venture. The last one was actually

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Speaker 1: inside a large company UM which is Office Alucan now

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Speaker 1: part of Nokia, and my co founders and I decided

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Speaker 1: if we really want to do something with high social

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Speaker 1: impact this time around and touch people's lives, and you

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Speaker 1: know that they are now the rec result proven by

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Speaker 1: the Center of Disease Control of loneliness and social isolation

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Speaker 1: where um it actually creates accelerated dimensiona depression and even mortality.

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Speaker 1: But the good news is that there are other studies

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Speaker 1: that show that when older guls practice active aging, when

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Speaker 1: they're actually more active and engaged, they push out they

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Speaker 1: mentioned for seven percent of the time, they heal faster

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Speaker 1: from illness and disease twenty of the time, and they're

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Speaker 1: just happier. So we really are trying to to harness

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Speaker 1: the latest technology in artificial intelligence and machine learning and

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Speaker 1: voice platforms and robotics to try and bring as many

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Speaker 1: older adults with that check in category as possible. I

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Speaker 1: want to thank you very much for joining us and

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Speaker 1: sharing your thoughts and telling us about this invention. Door

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Speaker 1: Schooler is the chief executive officer of Intuition Robotics. They're

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Speaker 1: based in Israel. You can follow him on Twitter at

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Speaker 1: door d O R school or s k U L

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Speaker 1: e E R. We want to take a moment to

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Speaker 1: let you know about something new from Bloomberg. Starting right now,

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Speaker 1: slash lens. Well more people are struggling to pay their

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Speaker 1: credit card bills. That is what we learned yesterday after

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Speaker 1: Capital One Financial and Discover Financial Services reported earnings, showing

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Speaker 1: that there were a larger number of credit card charge

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Speaker 1: offs in their card units, capital One in particular seeing

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Speaker 1: a twenty nine percent increase in the provisions for losses

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Speaker 1: in the credit card unit. To make some sense of

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Speaker 1: this and to figure out what the broader implications are,

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Speaker 1: I want to bring in Ryan O'Connell, senior analysts focusing

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Speaker 1: on financials for Bloomberg Intelligence. Thank you so much for

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Speaker 1: joining us, Ryan, So what was your biggest takeaway from

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Speaker 1: these results, which were really quite disappointing. Well, good morning list,

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Speaker 1: Good morning Pim. This is really a pretty ugly earnings report,

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Speaker 1: and I think at least with regard to Capital One,

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Speaker 1: we've kind of hit a bit of an inflection point

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Speaker 1: several reasons. First of all, it just the magnitude of

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Speaker 1: the jump in provisions. If you look at their US

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Speaker 1: credit card business, which their biggest business, their provisions actually

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Speaker 1: went up about sev seven. Oh that's over here, just

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Speaker 1: to give some sort of perspective of the dollar amount,

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Speaker 1: about one point seven billion dollars. So that means the

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Speaker 1: amount of money that they're sitting aside to cover potential

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Speaker 1: losses in their card unit has now gone to one

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Speaker 1: point seven billion dollars. Right, And that's so that's your year.

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Speaker 1: You're absolutely right about the that's it's the quarter, so

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Speaker 1: you're a bear. And the other thing is their charge

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Speaker 1: off ring went from about four percent to five percent.

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Speaker 1: And what they also said is folks, you should expect

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Speaker 1: five percent for the rest of the year. So this

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Speaker 1: isn't just a one quarter of blip. This is a change.

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Speaker 1: Is did they give any details as to what is

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Speaker 1: behind this? Right? So what I thought was also very

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Speaker 1: interesting about this is that cap one is basically changing

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Speaker 1: its tune up until now. The reason for you know,

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Speaker 1: more bad loans, more chargeots is a lot of loan growth,

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Speaker 1: which is true, and the loans are getting older this time.

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Speaker 1: What they said is we've changed our view and the

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Speaker 1: way consumers are behaving. What does that mean cons change

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Speaker 1: their view? I mean it's just because, uh, you know,

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Speaker 1: because I mean, if someone doesn't repay a loan, it

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Speaker 1: can be because there's something wrong with the way the

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Speaker 1: loan was put together in the first place, or the

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Speaker 1: person should not have been allowed other company was not

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Speaker 1: should have been allowed to actually take out the loan.

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Speaker 1: They given credit cards to people that they shouldn't be

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Speaker 1: giving them too. Well, that's a great question, I guess.

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Speaker 1: Let's let's let's refer to it this way. They are

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Speaker 1: referring to higher levels of consumer debt. And again we

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Speaker 1: have to bear in mind that they're really talking about

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Speaker 1: their subprime customers, right, because that's about a third of

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Speaker 1: their business. As to whether or not they made bad loans,

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Speaker 1: let's just look at the results. Well, I think though,

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Speaker 1: it's important to note if they're saying now, if they're

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Speaker 1: changing their tune and they're now saying that there's a

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Speaker 1: change in consumer behavior, this is pretty fuzzy. Does this

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Speaker 1: mean they really don't have a handle on why there

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Speaker 1: has been such an unexpectedly big increase in charge offs. Well,

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Speaker 1: what I would say is that they sounded a lot

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Speaker 1: more cautious on this call than they have in the

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Speaker 1: last several calls, and I think they just see higher

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Speaker 1: levels and debtedness. Uh. In hindsight, perhaps they got a

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Speaker 1: little bit aggressive on the loan growth, but they've been

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Speaker 1: tamping that down. So is Capital One alone in an

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Speaker 1: isolated case in this pretty substantial increase in net charge offs?

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Speaker 1: I mean, yes, Discover also saw a larger amount of

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Speaker 1: charge offs and expected, but still way below Capital One.

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Speaker 1: Or does this sort of point to some kind of

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Speaker 1: broader weakness in the consumer. Well, uh, we'll have to

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Speaker 1: see a Synchronique, which also has a large subprime credit

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Speaker 1: card business. They were going to report their earnings on Friday,

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Speaker 1: and we'll just have to see how that goes out.

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Speaker 1: I'm not judging that to your point, Lisa discovers, Yeah,

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Speaker 1: their charge also went up a bit, but it wasn't

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Speaker 1: a big deal. And Discover still says that things are

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Speaker 1: going pretty much as I expected. Now, again, the big

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Speaker 1: difference is Capital One's got about a third of their

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Speaker 1: customers and credit cards and subprime and Discover doesn't. Was

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Speaker 1: the subprime market a strategic you know position for the bank?

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Speaker 1: I mean they say, we want to go after these

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Speaker 1: people because this is where we can make the most money,

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Speaker 1: even if we do have to do charge offs later on.

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Speaker 1: I mean, this can't be something that just happened, right,

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Speaker 1: I mean, you don't. It's not like a multi week event.

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Speaker 1: This is something that's taken a happen. Capital One has

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Speaker 1: been in the subprime credit card business and in the

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Speaker 1: subprime auto business for a long time now. To be

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Speaker 1: fair to Capital One, they are still expecting seven to

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Speaker 1: eleven percent earning his growth this year, but frankly a

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Speaker 1: lot of us from cost cuts, and also they're doing

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Speaker 1: better in their commercial bank because the energy loan crisis

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Speaker 1: is sort of passing. So um, first, I've got two questions. First,

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Speaker 1: did we see weakness also among some prime credit card

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Speaker 1: customers or is the pain entirely isolated to the subprime customer? Well,

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Speaker 1: I think basically we're really talking about the subprime customer here, Lisa,

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Speaker 1: because again, if we use Discover or JP Morgan Bank

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Speaker 1: of America, they've all had some increases in charge offs,

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Speaker 1: but nothing like a hundred basis points okay, and then

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Speaker 1: the next point is what about auto loans. Did we

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Speaker 1: see the increase in charge offs there too? Actually no

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Speaker 1: uh net charge us for the outer loans were flat.

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Speaker 1: Your here. You know. One of the things we've also

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Speaker 1: trying to track is the correlation between this and what

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Speaker 1: happens in the larger economy. Obviously, any prospect of the

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Speaker 1: bank say anything about wages or about people being able

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Speaker 1: to make more money. Well, again, the tone of the

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Speaker 1: commentary was very different. So discover they still see a

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Speaker 1: growing economy again they're dealing with and they're still making

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Speaker 1: money as you just as you just describe. So maybe

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Speaker 1: they're saying, all right, you know, we're willing to take

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Speaker 1: this hit. I mean, even though the stock is down

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Speaker 1: I think about four percent percent right for three point

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Speaker 1: eight percent right now, it's more down more than three

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Speaker 1: three dollars a share, they're willing to take that hit

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Speaker 1: because they believe that this will you know, they're you

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Speaker 1: gonna be able to take this hit and not have

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Speaker 1: an effect the bottom line. Uh well, it's certainly infect

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Speaker 1: to the bottom line in this quarter. I think their

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Speaker 1: expectation is they've been in this businesses for a long time,

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Speaker 1: they're gonna ride through different cycles, and again they are

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Speaker 1: they are tightening up. Just be clear, they were tightening

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Speaker 1: up a loan growth now so they're responding. They are

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Speaker 1: responding because I mean down five percent, so it's five

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Speaker 1: and a half sense so far this year it's stock

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Speaker 1: and just paying at one point nine percent dividend. And

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Speaker 1: just to put this into perspective, the total amount of

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Speaker 1: credit card debt in the US has exceeded a trillion

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Speaker 1: dollars for the first time since the financial crisis, So

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Speaker 1: there's a lot of money at stakecare clearly. Well. One

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Speaker 1: other thing is that this is the highest level of

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Speaker 1: net charge justin about six years for a cup one. Alright,

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Speaker 1: Ryan O'Connell, thank you so much for joining us. Ryan

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Speaker 1: O'Connell is senior analysts focusing on financials for Bloomberg Intelligence,

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Speaker 1: and he joins us in our Bloomberg eleven three oh studio.

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Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

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Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

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Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa

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Speaker 1: abramoids one before the podcast. You can always catch us

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Speaker 1: worldwide on Bloomberg Radio