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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 Bramowitz. 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. We

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Speaker 1: hear a lot about increasing tensions between some of the

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Speaker 1: biggest states with respect to air pollution controls and Washington,

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Speaker 1: d C, where President Trump has taken a more lax

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Speaker 1: stance with respect to pollution controls. I want to bring

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Speaker 1: in Mary Nichols, chair of the California Air Resources Board,

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Speaker 1: which is based in Los Angeles, but she joins us

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Speaker 1: here in our Bloomberg leven three studios UH and UH.

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Speaker 1: Mary was crucial in revealing the Volkswagen's diesel cheating scandal.

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Speaker 1: She has talked in Germany about this. She also has

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Speaker 1: taken really a hard line with respect to tightening our standards.

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Speaker 1: And I'm so glad that you're here. I'm wondering it's

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Speaker 1: California headed on a collision course with Washington, d C.

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Speaker 1: And sort of how ugly could this get well, I

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Speaker 1: hope not. We're trying not to be on a collision course.

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Speaker 1: We're trying to continue along a path that began really

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Speaker 1: many years ago, where California generally identifies a pollution problem

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Speaker 1: and helps to identify the technologies that could could solve

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Speaker 1: that problem and do it in a way that's also

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Speaker 1: good for the economy, and then usually within a period

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Speaker 1: of a few years, the federal government steps up and

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Speaker 1: adopts the same standards. That's what happened at the beginning

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Speaker 1: of the Obama administration when we locked in a national

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Speaker 1: program that combined fuel economy standards a end greenhouse gas

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Speaker 1: emission standards at the federal and the state level. So

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Speaker 1: we've been on a path working collaboratively with the federal

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Speaker 1: government UM for quite a few years now. When President

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Speaker 1: Obama came in, he immediately indicated that he wanted to

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Speaker 1: put a halt and re examine that program. And so

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Speaker 1: we're in the midst of that process right now. It's

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Speaker 1: not a foregone conclusion that the standards will change, and actually, UM,

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Speaker 1: the auto industry as a whole has indicated that they

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Speaker 1: don't want to throw out this whole program. What they're

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Speaker 1: hoping to do, in their terms, would be tweak the

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Speaker 1: standards and the enforcement provisions a little bit, but not

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Speaker 1: really halted. Now. I think part of the rationale there

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Speaker 1: is that they know that getting better fuel economy is

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Speaker 1: popular with the American public. It may not be the

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Speaker 1: most important thing that people look at when they are

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Speaker 1: making a purchase decay vision for a car or a

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Speaker 1: light truck, but people really like it that the vehicles

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Speaker 1: that are out there today are so much more efficient

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Speaker 1: than they used to be. But we're going to have

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Speaker 1: to see what this administration decides they want to do.

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Speaker 1: Mary explain to people perhaps the differences between emissions rules

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Speaker 1: and regulations in California and in other states, although there

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Speaker 1: are some states that have similar emissions and I'm wondering

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Speaker 1: if there is a push to offer a more consistent

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Speaker 1: national emissions program because each state has its own. You know,

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Speaker 1: you want to register a car, let's say, in California,

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Speaker 1: if it's older than I believe, was it sixty five

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Speaker 1: or seventy five, you don't have to go through an

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Speaker 1: emissions test. So you know, there's so many different differences

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Speaker 1: between states. What characterizes California, Well, actually there are only

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Speaker 1: two emissions standards federal and there's federal and California. Other

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Speaker 1: states can if they want to opt in to the

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Speaker 1: California program, and there are thirteen states that have done that.

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Speaker 1: So it's basically the northeastern states and the Pacific coast

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Speaker 1: states Oregon and Washington with California and then the rest

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Speaker 1: of the country having the federal standards. But the good

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Speaker 1: news at the moment is that although there are differences

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Speaker 1: in some of the features like inspection and maintenance requirements

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Speaker 1: and when you have to reregister and all that kind

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Speaker 1: of thing, when it comes to the cars that are

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Speaker 1: built by the auto manufacturers, UM, they really now build

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Speaker 1: them all to one standard. Because we and the federal

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Speaker 1: government agreed on the greenhouse gas emission standards UH and

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Speaker 1: have been pursuing a common pattern since we thought we

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Speaker 1: had locked this in until but now, because of the

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Speaker 1: Trump administration's desire to redo the so called mid term

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Speaker 1: review that was a part of that program, we're in

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Speaker 1: a holding pattern at the moment while they decide what

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Speaker 1: they want to do. Another front of this is that

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Speaker 1: California has been requiring a higher proportion of electric vehicle

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Speaker 1: UH cars sales does anyone want to buy them? Oh yes, Um,

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Speaker 1: so we now have three hundred and twenty thousand and

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Speaker 1: change electric cars on the roads in California. They're beginning

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Speaker 1: to pop up in places, and not just in San

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Speaker 1: Francisco or l A where they're very visible. Uh, And

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Speaker 1: because of that we are seeing a real increase. It

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Speaker 1: still is one of those technologies that many people think

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Speaker 1: is somehow pie in the sky. They're not really aware

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Speaker 1: of how many different models of electric vehicles are available.

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Speaker 1: But this summer we saw proliferation at county fairs of

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Speaker 1: ride and drive opportunities where hundreds of thousands of people

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Speaker 1: in total came out just to try out some of

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Speaker 1: the new electric vehicles. I wonder how much power it

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Speaker 1: gives California from a negotiating perspective that China and other

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Speaker 1: countries are so aggressively trying to promote electric vehicles, so

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Speaker 1: to be able to say, the automakers look from a

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Speaker 1: competitive advantage, you need you need to go for this. Well,

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Speaker 1: we like to think that our stance as having been

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Speaker 1: pioneers with promoting electric vehicles helped to get the companies

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Speaker 1: to the point where they made the decisions to build these.

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Speaker 1: Now very attractive models that are out there offered for sale.

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Speaker 1: But China is on its own course, and obviously a

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Speaker 1: mandate from China is going to have an enormous leveraging

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Speaker 1: effect because they're such a huge potential market out there,

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Speaker 1: and they're saying they're not going to allow any internal

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Speaker 1: combustion engines at all after twenty dirty so just a period,

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Speaker 1: don't even try that. That certainly gets the car company's

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Speaker 1: attention in a way that even California can't do. Mary,

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Speaker 1: do you and other members of the California Air Resources

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Speaker 1: Board and vision at time when we will have self

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Speaker 1: driving trucks and that truck drivers will be more like

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Speaker 1: airplane pilots with autopilot features rather than the way they

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Speaker 1: operate now. I actually think that trucks could be in

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Speaker 1: some ways the ideal place for some of the autonomous

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Speaker 1: driving features to be introduced early, because they have so

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Speaker 1: many safety features associated with them. Um, I myself least

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Speaker 1: a new car just two years ago. I hadn't bought

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Speaker 1: a new car in years. I won't bother to justify that,

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Speaker 1: but just say I'm cheap. But the fact is that

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Speaker 1: cars nowadays, you know, anything above the least expensive car

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Speaker 1: already comes with certain features that I had never heard

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Speaker 1: of before, like something that beeps at you when you

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Speaker 1: cross over the white line, and you know, a light

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Speaker 1: that flashes in their rear view mirror that tells you

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Speaker 1: when there's somebody coming too close to you. These are

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Speaker 1: things that are tremendous safety features, but if you put

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Speaker 1: them into a truck, it's going to make a huge

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Speaker 1: difference because the trucks do so much more damage. Thank

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Speaker 1: you very much. Mary Nichols, chair of the California Air

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Speaker 1: Resources Board, speaking to us here at our Bloomberg eleven

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Speaker 1: three oh Studios. This is Bloomberg. I want to turn

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Speaker 1: our attention now to the world of equal pay for

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Speaker 1: equal work. And Bob Morrits is the chairman of Price

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Speaker 1: Waterhouse Cooper's International and the Price Waterhouse Cooper's has just

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Speaker 1: put together the Heat for She Impact Sport and here

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Speaker 1: to tell us more about what it revealed. Bob more,

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Speaker 1: it's Bob. Thanks for being with us. Maybe you could

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Speaker 1: just give us some of the highlights for the results

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Speaker 1: of the annual report. Sure, I love to um first.

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Speaker 1: The Heat First SHE initiative is something that the u

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Speaker 1: N sponsors, which is a effort to get more men

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Speaker 1: uh in the business of supporting women, both at a

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Speaker 1: corporate level, at a country level, and at an educational level.

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Speaker 1: And we had ten Impact Champions from university, ten country

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Speaker 1: leaders as well as ten corporate leaders exemplifying what we're

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Speaker 1: looking for individual organizations and individuals themselves to do. So

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Speaker 1: what the report focuses on is what progress have women made.

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Speaker 1: It provides some insights and hopefully some inspiration for the

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Speaker 1: thirty organizations to ten by ten by ten in terms

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Speaker 1: of what they've done in their own organizations, countries or institutions,

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Speaker 1: and exemplifies the benefit that can come from it. So,

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Speaker 1: for example, we heard from the pres is it in

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Speaker 1: a Malawi who changed laws to allow for and eliminate

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Speaker 1: child marriages, um that put more women in the education

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Speaker 1: system that allow for them to have job opportunities. Thereafter,

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Speaker 1: we heard from university presidents in terms of what they

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Speaker 1: were doing to deal with sexual assault and discrimination. And

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Speaker 1: we heard from the corporates both in terms of what

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Speaker 1: they're doing to increase the number of women both in

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Speaker 1: leadership roles as well as to move forward with pay equity,

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Speaker 1: as well as what corporates are doing to help in

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Speaker 1: the education system to enable women to bigger opportunities, particularly

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Speaker 1: in the STEM research areas that are important to the

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Speaker 1: future of work in various countries around the world. Bob

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Speaker 1: in the US, what is the major obstacle to women

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Speaker 1: having more prominent roles and organizations? From our perspective, what

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Speaker 1: we see is it's a combination of the unconscious preferences

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Speaker 1: or biases that come out of organizations. UM. If you

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Speaker 1: think about roles, for example, UM, there's very few women

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Speaker 1: on boards today and those boards are responsible or picking

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Speaker 1: the new CEOs UM, So it's not surprising that there's

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Speaker 1: a biased um that might come from that. But nonetheless,

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Speaker 1: we've got to do more to get more women, um

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Speaker 1: at the top of the house in these board rooms.

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Speaker 1: So there's a different perspective. And when you have women

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Speaker 1: on the boards, our own study has found actually diversity

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Speaker 1: becomes an important factor in thinking about leadership succession as

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Speaker 1: the men are in the room that it's not the one,

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Speaker 1: two or three issue that's top of mind for them. UM.

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Speaker 1: The second thing I would say is that we've got

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Speaker 1: to make sure that organizations do a much better job

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Speaker 1: with their talent management, succession planning and making sure that

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Speaker 1: the women have the opportunities because the women are equally

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Speaker 1: qualified to do these roles. It's a cruel matter of

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Speaker 1: creating the opportunity for success being business unit leaders and

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Speaker 1: driving that. And this is where data becomes important. What

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Speaker 1: we have found is there's tremendous amount of data now

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Speaker 1: demonstrating where policies need to change, where perhaps leaders might

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Speaker 1: have those unconscious or conscious preferences or biases. And the

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Speaker 1: data can allow for organizations to pinpoint what changes you

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Speaker 1: need to make it kind an organization and where the

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Speaker 1: efforts should be pinpointed for hopefully turning the actions into

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Speaker 1: better results than better outcomes. You know, maybe I'm just

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Speaker 1: revealing my bias here, but in my experience, a lot

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Speaker 1: of it does come down to childcare and if the

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Speaker 1: woman is the primary caretaker, which usually that is the assumption,

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Speaker 1: she is going to prefer to have a lighter schedule

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Speaker 1: and a less prominent rule in order to take care

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Speaker 1: of her family. Sometimes it's not even a preference, it's

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Speaker 1: a it's a mandatory kind of reality of life. So,

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Speaker 1: I mean, what what what what What did you say

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Speaker 1: to that? Yeah, it's it's definitely one of a few

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Speaker 1: issues that actually have to be dealt with at the

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Speaker 1: corporate level UM. And here's what we see organization is doing. So,

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Speaker 1: for example, with us at PwC, we put in a

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Speaker 1: number of different policy changes. So give you another stat

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Speaker 1: which is when women leave from alternity to leave out

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Speaker 1: of side and of mind more than one year and

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Speaker 1: they come back into the system because they're out of

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Speaker 1: side of the mind, there's automatically a decrease in their

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Speaker 1: reading and assessment of their performance. Why is that. It's

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Speaker 1: probably because they were out of sight, out of mind

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Speaker 1: for a period of time, or there might be some

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Speaker 1: unconscious behavior for it. So we as a P two

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Speaker 1: BC organization change the way in which we do evaluations

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Speaker 1: for women that have left on alternatively UM and giving

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Speaker 1: them a two year period where we're saying, hey, listen,

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Speaker 1: if they come back into doing good work, their assessments

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Speaker 1: should not change. The second thing we've done is provide

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Speaker 1: more opportunity for flexibility. We've got more women that are

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Speaker 1: being promoted at a senior level that have flexible schedules

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Speaker 1: and we need to role model them and put them

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Speaker 1: in places more accepting. And third, we're actually putting in

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Speaker 1: more support care UM to make sure that there's an

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Speaker 1: opportunity for them to leverage tools UM and other methodologies

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Speaker 1: as well as other support groups to deal with the

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Speaker 1: child care issues. So there's a big opportunity, but it

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Speaker 1: causes the management teams to look at that data and

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Speaker 1: then take the appropriate actions necessary to address that data.

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Speaker 1: What you do with women is much different than what

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Speaker 1: you need to do to overcome some of the challenges

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Speaker 1: with minorities, for example, men or women. UM, So, I

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Speaker 1: think that's where people have got to be very tailored.

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Speaker 1: There's no one silver bullet or one size. SIT's all well, well, Bob,

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Speaker 1: I mean I understand all these initiatives, programs and you know,

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Speaker 1: management training efforts, but why don't you just pay people

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Speaker 1: more money? I mean, why do this? What's the incentive?

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Speaker 1: I mean it may sound great and it sounds fair,

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Speaker 1: but if you're a manager who isn't going to get

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Speaker 1: any financial bonus or any financial incentive to, let's say,

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Speaker 1: hire women or make women more prominent in the organization,

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Speaker 1: why wouldn't you just use the incentive of pay people

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Speaker 1: more for doing whatever it is you want them to do.

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Speaker 1: So we'll take your your point in sort of flip

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Speaker 1: it a little bit um. There's organizations now that are

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Speaker 1: much better, and we made a change about three years ago.

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Speaker 1: Was one of our commitments to He for She, which

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Speaker 1: was to put a diversity index in place. That caused

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Speaker 1: us to get very specific with our leadership teams around

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Speaker 1: expectations were now there's risk and reward to their compensation model.

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Speaker 1: To your point, right, how do they actually lead? By example,

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Speaker 1: let'son sent them. But now we can pinpoint with the

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Speaker 1: right data where people are not doing what's needed and

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Speaker 1: therefore there is a negative or a negative implication of

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Speaker 1: their compensation. So you do have the data to say

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Speaker 1: who's doing things quantitatively as well as get a sense qualitative.

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Speaker 1: With some feedback processes, you can adjust accordingly um compensation

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Speaker 1: for your leadership team if you're very specific on accountability

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Speaker 1: and you hold them accountable very specifically in terms of

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Speaker 1: your assessment on their performance as well as in the

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Speaker 1: compensation that they received. Bob Maritz, thank you so much

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Speaker 1: for joining us. He's chairman of Price Waterhouse Cooper's International Limited,

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Speaker 1: which is based in New York, and they just put

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Speaker 1: out this Heat for Sheet Impact Report, a lengthy look

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Speaker 1: at what the obstacles are to getting more women and

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Speaker 1: UH and a broader diversity of employees into positions of

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Speaker 1: power and earning more well. There has been an escalating

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Speaker 1: war of words and threats between North Korea and the

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Speaker 1: United States. The latest is in North Korea is threatening

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Speaker 1: to test a powerful nuclear weapon over the Pacific Ocean

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Speaker 1: in response to President Donald Trump's threats and increased sanctions

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Speaker 1: on the country. To give us a sense of what's

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Speaker 1: at stake here, how much more this exacerbates the tensions here.

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Speaker 1: I want to bring in Scott Seeman uh. He is

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Speaker 1: the director for Asia at Eurasia Group, which is based

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Speaker 1: in Washington, d C. Scott, thank you so much for

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Speaker 1: joining us. So this seems alarming. I'm wondering at what

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Speaker 1: point does this escalation of words bleed over into escalation

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Speaker 1: and actual physical combat. So we still attach a pretty

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Speaker 1: low probability to the risk of an actual military conflict UM.

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Speaker 1: And that's talking about a wide range of scenarios, everything

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Speaker 1: from uh, someone starting intentionally an attack to an accident

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Speaker 1: or miscalculation kind of getting out of control and pushing

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Speaker 1: in a direction of a larger conflict UM. So we're

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Speaker 1: not you know, we're not overly concerned at this point

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Speaker 1: that this rhetoric that we're seeing is really escalating the

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Speaker 1: chances of something going awry. But certainly the threat to

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Speaker 1: send a missile someplace over the Pacific and detonate it UH,

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Speaker 1: that adds a new element that the US and other

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Speaker 1: countries are going to have to take into consideration. Scott.

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Speaker 1: In the past month, North Koreans have launched two missiles

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Speaker 1: over Japan. They tested a sixth and powerful nuclear device.

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Speaker 1: They described it as a hydrogen bomb, and that follows

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Speaker 1: two successful test launches of intercontinental ballistic missiles in July.

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Speaker 1: If they try to put both of those technologies together.

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Speaker 1: What could the United States or its allies in Asia

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Speaker 1: do if indeed they tried to launch and test a

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Speaker 1: hydrogen weapon in the atmosphere over the Pacific Ocean. So

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Speaker 1: the range of options everything from some sort of a

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Speaker 1: surgical strike UH to try to eliminate some of the

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Speaker 1: capabilities that preemptively. I don't think preemptively is you know,

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Speaker 1: unless there was intelligence that said that the North Koreans

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Speaker 1: were fueling up a rocket that was going to threaten

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Speaker 1: the United States or an ally with an actual UH

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Speaker 1: nuclear weapon. No, I don't think a preemptive strike is

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Speaker 1: probably in the cards, but we'll we'll have to be

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Speaker 1: watching to see what kind of preparations the satellites give

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Speaker 1: us an indication that the North Koreans are doing, and

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Speaker 1: certainly there will be a whole range of options that

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Speaker 1: military leaders here in the US and elsewhere we'll have

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Speaker 1: to sit down and start thinking about. Now. You know,

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Speaker 1: I have to wonder what the reaction is within North

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Speaker 1: Korea among the common folk, because these increased sanctions are

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Speaker 1: only going to exacerbate food shortages that have been brought

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Speaker 1: about by the worst drought since two thousand and one

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Speaker 1: in the country. Is there any chance of rising political

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Speaker 1: tensions within North Korea? I doubt it. I think we've

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Speaker 1: been hoping for that for decades and and it hasn't happened.

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Speaker 1: I think the normal people, the people who are outside

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Speaker 1: of Kongyang, who are not part of the government elite. Uh,

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Speaker 1: they're simply trying to get through uh, you know, every day. UM.

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Speaker 1: I don't think that the economy is in a state

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Speaker 1: right now that we're looking at starvation famine on the

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Speaker 1: scale that we saw under Kim Jong UN's father, for example.

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Speaker 1: The economy seems to be performing relatively well, so they've

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Speaker 1: got quite a bit of a cushion. Uh. So I

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Speaker 1: think the chances of some sort of a you know,

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Speaker 1: a political crisis or or an uprising, uh would you know,

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Speaker 1: it's extremely remote. And again we've been hoping for that

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Speaker 1: for decades and it just hasn't materialized, you know, Scott.

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Speaker 1: Despite some people's lamenting the increasing war of words between

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Speaker 1: Kim Jong un and President Trump, some others say that

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Speaker 1: actually this is just highlighting a problem that has been

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Speaker 1: going on for a long time, that the situation is

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Speaker 1: coming to a head, not because of the words, but

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Speaker 1: because of what's been behind it and what's been sort

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Speaker 1: of left for future presidents to deal with. Do you

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Speaker 1: agree with that or do you think that that there

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Speaker 1: has been some kind of material escalation since the beginning

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Speaker 1: of the year. So I hate to go into assessing

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Speaker 1: whether previous governments in the US or elsewhere could have

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Speaker 1: done more, should have done more. Um, I think you

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Speaker 1: can always say that probably more effort in time could

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Speaker 1: have been put into ensuring that we don't get to

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Speaker 1: the point that we're at right now. But that's where

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Speaker 1: we are, and certainly the pace of development around these

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Speaker 1: weapons that we've been seeing has greatly accelerated. People are

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Speaker 1: talking about this being a breakout, meaning that they have

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Speaker 1: really moved quickly towards eventually getting the technology that they

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Speaker 1: require for a viable I CBM. So, uh, this is

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Speaker 1: moving all in the wrong direction. Um. The flip side

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Speaker 1: of that, of course, is that one part of the

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Speaker 1: strategy to deal with North Korea is to ensure that

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Speaker 1: this becomes a bigger crisis for China, hoping that that

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Speaker 1: will motivate Beijing to do more as well. Well, we

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Speaker 1: know that the Chinese have just forbidden their banks to

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Speaker 1: do business transact business with companies in the North Korea.

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Speaker 1: That was announced earlier today. But just quickly, Scott, what

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Speaker 1: do you think about the the sort of fear that

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Speaker 1: people are not expressing. I'm looking at the Korean stock index.

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Speaker 1: It is of more than seven in team percent year

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Speaker 1: to date, and it doesn't seem as if investors care.

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Speaker 1: Give you about seconds, Yeah, no, we we've seen the

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Speaker 1: markets really kind of shrug off a lot of this.

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Speaker 1: Part of it is probably because this is so this

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Speaker 1: is such a common occurrence, But I think the market

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Speaker 1: is probably needing to spend a little more time looking

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Speaker 1: at this issue. Well, I guess that's a diplomatic way

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Speaker 1: saying no one's afraid, but it might not be bad

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Speaker 1: to look over your shoulder at least a little bit.

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Speaker 1: Thanks very much, Scott Seaman, he is the director of

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Speaker 1: Asia for the Eurasia Group, giving us his thoughts on

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Speaker 1: the turmoil that exists on the Korean peninsula. As I said,

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Speaker 1: the South Korean stock index, the costpy up more than

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Speaker 1: seven and a half percent so far. It is a

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Speaker 1: bad day for grub hub today. It is a very

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Speaker 1: bad day because Amazon is looking at their business model

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Speaker 1: and saying we can do that too. To tell us

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Speaker 1: more is Craig Giamana. He's consumer reporter for Bloomberg News,

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Speaker 1: and he joins us now Amazon dot Com is about

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Speaker 1: to get into the or deeper into the food delivery business.

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Speaker 1: What's going on here, like give us a label? End? Yeah,

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Speaker 1: So they have, um, they've had Amazon restaurants for a while.

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Speaker 1: I think they started that in Seattle. You know, it's

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Speaker 1: it's still pretty small, and I don't think it's quite

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Speaker 1: crossed over into you know, mainstream peel and they haven't

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Speaker 1: really attracted many national chains. Is the big thing. So

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Speaker 1: the news today is that they're partnering with a company

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Speaker 1: called Olo, which provides digital order and pay solutions for

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Speaker 1: about two restaurant brands that have forty tho locations, and

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Speaker 1: they're going to basically make it easy for all of

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Speaker 1: their customers to work with Amazon. So, yes, this is

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Speaker 1: Amazon making a big push into the restaurant delivery space,

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Speaker 1: which has gotten more and more popular it seems like

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Speaker 1: every year. Hey Craig, does this mean that Amazon gets

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Speaker 1: an exclusive with those customers, No, it doesn't. What it

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Speaker 1: means basically is that if you are an OLO customer,

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Speaker 1: you can easily tap into Amazon restaurants. So the feeling

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Speaker 1: is that places like shake Shack, Chipotle's catering business that

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Speaker 1: sort of they'll flip the switch and turn this on.

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Speaker 1: But also what it does this is a little bit

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Speaker 1: in the weeds, but you know, there's Grubhub, there's Seamless.

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Speaker 1: All of those businesses basically provide these restaurants with a

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Speaker 1: tablet that they have to take to the back of

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Speaker 1: the house. What all I was saying is sign up

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Speaker 1: with us and we'll integrate all that directly into your

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Speaker 1: POS system, your sales system. So it's supposed to make

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Speaker 1: it much easier for these restaurants to handle these orders

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Speaker 1: in connecting it to your point of sales system. Can

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Speaker 1: you envision a time when this is also integrated into

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Speaker 1: the back end, so it's not just the point of sale,

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Speaker 1: but eventually integrated into the inventory control system, your supply chain.

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Speaker 1: Because I was noting, for example, that Amazon, you know,

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Speaker 1: is looking to get into a lot of other businesses,

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Speaker 1: and you know, being in the restaurants supply or the

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Speaker 1: food supply business now that you have whole food might

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Speaker 1: be something that they're thinking about. I mean, I don't

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Speaker 1: think there's any question that they're thinking about that. That's

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Speaker 1: what they do, right, There's a supply chain company. And

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Speaker 1: the other thing that they do is incredible prowess with

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Speaker 1: customer data. So that's why every time there's an Amazon

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Speaker 1: press release, we see the stocks of Kroger go down,

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Speaker 1: Campbell General Mills. Today we saw grub Hub go down.

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Speaker 1: So this is Amazon going hard after the one point

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Speaker 1: five trillion dollar market for food. Half of that is grocery,

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Speaker 1: half of that is restaurant. Roughly speaking, we know they're

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Speaker 1: going after grocery hard with Whole foods now here, they

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Speaker 1: come for the restaurants I'm trying to figure out. I mean,

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Speaker 1: it's this just from a system's perspective that Amazon is

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Speaker 1: trying to streamline things for for restaurants or are they

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Speaker 1: also providing the delivery service force they they provide the delivery, so,

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Speaker 1: I mean, delivery has become more and more important for

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Speaker 1: these restaurants, and McDonald's resisted it for years. There was

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Speaker 1: concerns that the fries wouldn't hold up, that the food

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00:25:39,720 --> 00:25:41,600
Speaker 1: would arrive, it would take twenty minutes, it would be

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00:25:41,640 --> 00:25:44,120
Speaker 1: too long. McDonald's now is signed up with Uber Eats,

436
00:25:44,119 --> 00:25:45,800
Speaker 1: which has become more and more popular. You can get

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00:25:45,880 --> 00:25:49,280
Speaker 1: McDonald's delivered and I think thirty stores. This is Amazon

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00:25:50,080 --> 00:25:52,960
Speaker 1: basically getting access to OL those customers, which is a

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00:25:52,960 --> 00:25:55,360
Speaker 1: lot of restaurants, and then you'll basically put that order

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00:25:55,400 --> 00:25:57,399
Speaker 1: through the OLO system and then Amazon will deliver it.

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00:25:57,480 --> 00:26:00,320
Speaker 1: So you know, Amazon wants frequency, they want they want

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00:26:00,320 --> 00:26:03,800
Speaker 1: to be wherever customers are and wherever people buy things often,

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00:26:03,840 --> 00:26:06,360
Speaker 1: so they want you go into that website. You want

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00:26:06,359 --> 00:26:08,240
Speaker 1: to order Chili's, or you want to order shakeshack or

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00:26:08,280 --> 00:26:10,040
Speaker 1: something like that, do it on Amazon, and while you're there,

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00:26:10,359 --> 00:26:12,600
Speaker 1: you know, buy a DVD player, buy some clothes, buy

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00:26:12,600 --> 00:26:14,680
Speaker 1: some whole foods products, whatever it is. Well, but I'm

448
00:26:14,680 --> 00:26:19,000
Speaker 1: trying to understand what competitive advantage Amazon would have with

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00:26:19,280 --> 00:26:21,879
Speaker 1: the actual delivery. I mean, I understand from this from

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00:26:21,920 --> 00:26:24,880
Speaker 1: the computer systems, but but a lot of these restaurants

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00:26:24,920 --> 00:26:28,959
Speaker 1: have forces and Grubhub and Seamless have entire you know,

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00:26:29,320 --> 00:26:32,080
Speaker 1: work staffs devoted to this. That's right, that's right, and

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Speaker 1: so it's very expensive to hire delivery drivers. You're absolutely right.

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Speaker 1: So as far as the economics of sending a driver

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Speaker 1: to pick up in order at a restaurant and then

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00:26:39,040 --> 00:26:41,360
Speaker 1: bringing out to somebody's house, the economics of that are

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00:26:41,400 --> 00:26:44,040
Speaker 1: not great. I think what Amazon sees here again is

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00:26:44,600 --> 00:26:47,040
Speaker 1: this is a growing piece of business and they want

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00:26:47,040 --> 00:26:48,800
Speaker 1: to be in there. So, as we know, they're willing

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00:26:48,840 --> 00:26:50,920
Speaker 1: to take losses on businesses if they think that that's

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00:26:50,920 --> 00:26:53,320
Speaker 1: the thing to do. So I think your question is

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00:26:53,400 --> 00:26:56,320
Speaker 1: right that the economics aren't great, but the frequency and

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00:26:56,359 --> 00:26:58,239
Speaker 1: sort of the loyalty and the ability to kind of

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00:26:58,280 --> 00:27:00,800
Speaker 1: just be the place that people go to buy things,

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00:27:00,840 --> 00:27:02,760
Speaker 1: I think is what they're looking at. Well, just to

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00:27:02,840 --> 00:27:06,680
Speaker 1: follow up on that, does it become a potential location

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00:27:06,720 --> 00:27:09,760
Speaker 1: for Amazon? Every restaurant that is part of this olo

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00:27:10,600 --> 00:27:15,160
Speaker 1: project or family, then they can become a pickup location

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00:27:15,240 --> 00:27:17,480
Speaker 1: for other Amazon products, right, So we I mean we've

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00:27:17,480 --> 00:27:19,480
Speaker 1: seen the Amazon lockers pop up in the Whole Foods.

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00:27:19,480 --> 00:27:21,800
Speaker 1: I mean that happened like the day after the deal closed.

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00:27:21,800 --> 00:27:24,199
Speaker 1: So you know, they haven't said that. I mean, but

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00:27:24,359 --> 00:27:26,640
Speaker 1: I don't think that that's a stretch to think that

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00:27:26,640 --> 00:27:28,560
Speaker 1: that's could be where this is going. Again, this this

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00:27:28,600 --> 00:27:31,920
Speaker 1: isn't an exclusive arrangement, so it's not like these old

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00:27:31,920 --> 00:27:34,560
Speaker 1: customers are going to only deal with Amazon. But again,

477
00:27:34,560 --> 00:27:36,080
Speaker 1: that's where all this is headed. I mean, if if

478
00:27:36,080 --> 00:27:37,960
Speaker 1: you're gonna be if you're gonna go to drive to

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00:27:38,000 --> 00:27:39,960
Speaker 1: the Chilis to pick up your burger and your meal,

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00:27:40,240 --> 00:27:42,840
Speaker 1: sure there's an Amazon locker there and you grab your package.

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00:27:42,840 --> 00:27:44,760
Speaker 1: I mean that that's not a stretch, No, but it

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00:27:44,800 --> 00:27:47,359
Speaker 1: does really kind of highlight how the changing nature of

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00:27:47,359 --> 00:27:50,040
Speaker 1: the whole supply chain, particularly you're gonna be able to

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00:27:50,040 --> 00:27:52,040
Speaker 1: save money on gasoline if they're going to do all

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Speaker 1: the delivery for you. Thanks very much for coming in.

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Speaker 1: Thank you appreciate it. The Craig Giammona. He is our

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00:27:57,000 --> 00:28:01,760
Speaker 1: consumer reporter for Bloomberg. Thanks for listening. To the Bloomberg

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00:28:01,840 --> 00:28:04,480
Speaker 1: P and L podcast. You can subscribe and listen to

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00:28:04,520 --> 00:28:09,040
Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.

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00:28:09,440 --> 00:28:13,040
Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm

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00:28:13,040 --> 00:28:16,359
Speaker 1: on Twitter at Lisa Abramo wits one. Before the podcast,

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00:28:16,400 --> 00:28:19,000
Speaker 1: you can always catch us worldwide on Bloomberg Radio