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Speaker 2: Big day for a.
Speaker 3: Couple of consumer discretionary names. McDonald shares sinking right now,
Speaker 3: lower by just about five percent of severe coli outreak,
Speaker 3: likely tied to onions served on the quarter pounders sickened
Speaker 3: dozens of people in the US, mainly in Colorado and Nebraska,
Speaker 3: killed one according to the US CDC. Also, Starbucks shares
Speaker 3: bouncing around. They were down earlier in the session by
Speaker 3: as much as about three percent, but you know, only
Speaker 3: down about one tenth of one percent right now. This
Speaker 3: after sales plunged for the third quarter in a row.
Speaker 3: The company pulled it's guidance for twenty twenty five. It
Speaker 3: calls attention to the scope of the problems facing Brian Nickel,
Speaker 3: the new CEO over at Starbucks. We got Mike Hayln
Speaker 3: with us. He's the perfect person to talk about both
Speaker 3: of these things. He's senior restaurant analyst over at Bloomberg Intelligence.
Speaker 3: He joins us from Princeton, New Jersey. I do want
Speaker 3: to start with with McDonald's, Michael, and get an understanding
Speaker 3: from you about how widespread this could be and the effect.
Speaker 3: I mean, I gotta tell you, I know that this
Speaker 3: is probably every franchise e's worst nightmare to have someone
Speaker 3: get sick, even if it is three thousand miles away.
Speaker 4: Yeah, without a doubt, it's pretty much the worst thing
Speaker 4: that can happen to a restaurant or a franchise ee.
Speaker 5: Yeah, we'll see, you know.
Speaker 4: I would expect some more cases to be found, you know,
Speaker 4: in the coming days and weeks, but.
Speaker 5: We'll find out shortly.
Speaker 6: You know.
Speaker 4: To McDonald's credit, they've historically been as good as it
Speaker 4: gets operationally, and so hopefully they were able to mitigate
Speaker 4: this as fast as possible.
Speaker 7: And you think about and this is something that we
Speaker 7: talked about a couple hours ago on BTV, but you
Speaker 7: think about the blueprint here, I mean Chipotle for example,
Speaker 7: this obviously having their own issues with the ecoli that
Speaker 7: weighed on Chipotle for at least five quarters I believe.
Speaker 7: So how does McDonald's avoid a Chipotle type situation.
Speaker 4: Yeah, well, Chapote was a little bit unique because after
Speaker 4: the initial Ecola outbreak, they had several neuro virus outbreaks, right,
Speaker 4: and so Chippole also owned all their stores, so there
Speaker 4: was not only did they suffer a big top line
Speaker 4: to climb, but it also suffered significant margin contraction.
Speaker 5: Also, Chipotle was a.
Speaker 4: More difficult problem to solve because food is out in
Speaker 4: the open behind a sneeze glass, and so it's easier
Speaker 4: for pathogens to get in. So for all of those reasons,
Speaker 4: we don't expect the impact on McDonald's to be nearly
Speaker 4: as deep as Chipotle. You know, they're saying Chapotle seems
Speaker 4: our shelves are down twenty percent and twenty sixteen and
Speaker 4: the client to your point, for five straight quarters. But
Speaker 4: that being said, we still think, you know, consumers are
Speaker 4: going to be turned off.
Speaker 3: By this news.
Speaker 5: You know, it was a tragedy.
Speaker 4: It's it's it's terrible, and you know, I think it's
Speaker 4: gonna impact sales and traffic at least for a few quarters.
Speaker 6: Here.
Speaker 3: It's interesting you say that impacting sales and traffic. I
Speaker 3: got to give a shout out to Tom Kane. We
Speaker 3: walk in the studio to give him. There's a bag
Speaker 3: of McDonald's in the studio waiting for us, So I
Speaker 3: I you know, he got us some fries. He got
Speaker 3: us some flet of fish. It's still here. We have
Speaker 3: not eaten it. It does smell, but it doesn't. It's
Speaker 3: not holding him back from going to McDonald's here in
Speaker 3: New York the next day. Michael and I wonder, you know,
Speaker 3: if if something happens, something's in the news and it
Speaker 3: is geographically isolated, does it affect traffic in other parts
Speaker 3: of the country.
Speaker 4: Yeah, we we think we think it is. I mean, listen,
Speaker 4: Tom's one of a kind. He all so offered me
Speaker 4: McDonald's on surveillance next time I'm in the city.
Speaker 3: So thanks. I'll make good on that, I promise.
Speaker 2: Yeah.
Speaker 4: No, and I know so I'm looking forward to it.
Speaker 4: But yeah, no, I think it does. Man, there's there's
Speaker 4: this has been all over the news today. Everybody wants
Speaker 4: to talk about it, you know, and when consumers hear
Speaker 4: about it, especially the fact that somebody passed away, especially
Speaker 4: the fact that quarter pounder of cheese is a very
Speaker 4: popular menu item for McDonald's, I think all of these
Speaker 4: things add up to some consumer hesitancy in the coming
Speaker 4: weeks and months, and you know, I think it's going
Speaker 4: to be up to McDonald's to prove to their customers
Speaker 4: and their investor base that they're doing everything they possibly
Speaker 4: can to make sure that the food they're serving is safe.
Speaker 5: Right, is it is?
Speaker 4: You know, if it came from the onions, which is
Speaker 4: it seems like it's most likely. You know, maybe they
Speaker 4: can grill the onions, or stop putting fresh onions on
Speaker 4: the burgers, whatever it could be to kind of rectify
Speaker 4: their situation.
Speaker 3: I you know, Katie brings up Chipotle over the last decade.
Speaker 3: I think of Jack in the Box in the nineteen
Speaker 3: nineties and what the e coli outbreak, Probably because I'm older,
Speaker 3: but the outbreak at Jack in the Box and what
Speaker 3: that did, Michael, I mean, that changed the course of
Speaker 3: the history of that restaurant.
Speaker 5: Yeah, that was a much much deeper decline.
Speaker 4: I think there were several casualties in that case, and
Speaker 4: that really changed the way quicker quick service companies serve
Speaker 4: their hamburgers.
Speaker 3: Right.
Speaker 4: I think prior to the Jack in the Box insistance,
Speaker 4: you know, medium burger served medium was kind of common.
Speaker 4: Now there's no pink in any of the burgers you're
Speaker 4: getting in QSR right now, and that's because of that.
Speaker 4: So there's been you know, advances in food safety, and
Speaker 4: you know, I'm sure this is gonna force McDonald's to
Speaker 4: kind of improve their food safety measures and you know,
Speaker 4: in the hopes that this never happens again. But this
Speaker 4: is just part of the business, and it's constantly the
Speaker 4: one of the biggest risks. You know, most of the
Speaker 4: CEOs I talked to, you know, if I asked them
Speaker 4: what keeps them up at night, it's usually food safety.
Speaker 4: Right It's something that you know, they do their best
Speaker 4: to control, but sometimes you know, it can still you know,
Speaker 4: thinks can still happen.
Speaker 7: So McDonald's of course facing a test here. Sure is
Speaker 7: currently down about four point eight percent. I also want
Speaker 7: to talk about Starbucks. Of course, Sure's they're pretty much
Speaker 7: flat right now. They had been down by more than
Speaker 7: three percent earlier. Of course, the news from yesterday pulling
Speaker 7: its forecast for Starbucks. Of course, this under Brian Nichol's
Speaker 7: leadership here, and I guess the fact that they pulled
Speaker 7: the forecast wasn't too surprising. Michael, you think about the
Speaker 7: problems that are facing this chain, and I would imagine
Speaker 7: that Nichols here just wants to have a clean slate.
Speaker 5: Yeah, one hundred percent. Yeah, nobody cares about this news.
Speaker 3: This is old news.
Speaker 5: Brian Nichols just started a month ago. And you know,
Speaker 5: any any good CEO is going to do this.
Speaker 4: They're gonna withdraw annual or long term guidance to give
Speaker 4: their their initiatives time to to kind of take take hold,
Speaker 4: right And so, you know, they're moving aggressively. You know,
Speaker 4: they've made some significant management changes. They have a new
Speaker 4: head of China, they have a new chief brand officer.
Speaker 4: You know, he Brian Nichols visiting stores and uh, you know,
Speaker 4: has seems to have a good idea about how they
Speaker 4: can improve the barista experience, how they can improve on
Speaker 4: the on the speed of service for the customers, and
Speaker 4: things of that nature. So yeah, they're listening. They're moving fast,
Speaker 4: and that's really what's most important in this story right now.
Speaker 3: What is the biggest challenge that Brian Nichol has to
Speaker 3: overcome at Starbucks to get more people through the doors
Speaker 3: and buying more coffee.
Speaker 4: Yeah, no, I think it's that operational piece is going
Speaker 4: to be the first thing, you know, they're they're gonna
Speaker 4: you know, listen, Happy baristas provide a good experience for
Speaker 4: the customer. Customer has a good experience, they're more likely
Speaker 4: to come back, So that's going to be.
Speaker 5: A huge part of it. Price is a concern.
Speaker 4: I'd expect some work to be done on the strategic
Speaker 4: pricing front, which Chipotle was fantastic at, and then from
Speaker 4: there it's going to be improving on the marketing. Starbucks
Speaker 4: historically has not spent a lot on marketing. They've only
Speaker 4: marketed to their loyalty members. The Starbucks are rewards members,
Speaker 4: and now Brian Nichol's gonna spend a little bit more.
Speaker 5: He's going to market to people everyone.
Speaker 4: Not just their rewards members, and that should lead to
Speaker 4: a bump in sales and traffic.
Speaker 3: Mike Kalin and Bloomberg Intelligence, good to see you. Thanks
Speaker 3: so much for joining us from Princeton this afternoon. Katie.
Speaker 3: You don't need to be persuaded to go.
Speaker 7: I know, it was like spending on marketing. They have
Speaker 7: me locked in. I spent five dollars and like seventy
Speaker 7: nine cents there every single morning.
Speaker 3: Okay, you're not part of the problem. You're part of
Speaker 3: the solution.
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Speaker 3: So we got our eye on shares of Boeing their
Speaker 3: lower by just about a percent off of the lows
Speaker 3: of the day. Shares were under pressure even though investors
Speaker 3: were already prepared for lackluster results after the company provided
Speaker 3: a preview earlier this month, we hear from Boeing five
Speaker 3: billion dollars in accounting charges. Revenue of seventeen point eight
Speaker 3: billion dollars fell short of analysts estimates, negative free cash
Speaker 3: flow of two billion dollars in the quarter, bringing the
Speaker 3: total it's burned through so far this year to ten
Speaker 3: point two billion dollars. For more, we bring in George Ferguson.
Speaker 3: He's Bloomberg Intelligence senior Aerospace, Defense and Airlines analysts. He
Speaker 3: joins us from Bloomberg Intelligence headquarters in Princeton, New Jersey. George,
Speaker 3: did we learn anything new in this report about the
Speaker 3: tough task that Kelly Ortberg has ahead of him? And
Speaker 3: turning around the planemaker. I think we did I think
Speaker 3: the most interesting or I don't know. I guess I
Speaker 3: think of it as interesting. But maybe concerning thing we
Speaker 3: heard from the during the report was that Boeing expects
Speaker 3: cash burn next year as well for the entire year.
Speaker 3: It sounded like they expect most of it in the
Speaker 3: first half, and they'd expect some of the cash generation
Speaker 3: to turn around by the second half, but still be
Speaker 3: negative on the year.
Speaker 2: I was a little bit surprised by that. I thought
Speaker 2: that the turnaround could be sooner. They might be sandbagging
Speaker 2: us a little bit.
Speaker 8: But I think cash is a really important part of
Speaker 8: this story right now, and that's concerning.
Speaker 2: Yeah.
Speaker 7: Absolutely, And I mean you think about this quarter, and
Speaker 7: you think about Kelly Orberg his first report as CEO.
Speaker 7: Is it fair to say this is just let's throw
Speaker 7: everything out there, let's put every bad number that we
Speaker 7: can out there right now, because I mean, it doesn't
Speaker 7: seem like there's really any bright spots here.
Speaker 2: Yeah. I think there was a little bit of that.
Speaker 8: Right They pushed Triple seven certification and first deliveries back
Speaker 8: twenty twenty six, which is another year out. That was
Speaker 8: a large portion of the charge at commercial airplane. You know,
Speaker 8: I'm sure that there's to you know, judging some of
Speaker 8: these things, trying to figure out what's when they can
Speaker 8: they absolutely deliver it by and I think Triple seven
Speaker 8: might fall in that in that category. Uh, And so
Speaker 8: that you know, they push it out and take a
Speaker 8: charge and maybe if things go better than they expect,
Speaker 8: they'll have a certification prior to that and deliveries prior
Speaker 8: to that. So I do feel like there was a
Speaker 8: little bit of that going on inside this earnings report.
Speaker 3: He also sent a message to employees today. It said, quote,
Speaker 3: it will take time to return bowing to its former legacy,
Speaker 3: but with the right focus in culture, we can be
Speaker 3: an iconic company, an aerospace leader. Once again, the old adage,
Speaker 3: if it's not Boeing, I'm not going now it's printed
Speaker 3: on T shirts that that Boeing sells. Pilots were known
Speaker 3: to say that, George, do you believe that Boeing can
Speaker 3: get back to what it once was?
Speaker 8: I do, And I think, you know, because of the duopoly,
Speaker 8: they absolutely have a window. You know, they pointed out
Speaker 8: they have a half a trillion dollar backlog. You know,
Speaker 8: we knew this before the call. But because of the duopoly,
Speaker 8: Airbus has not been able to make much, uh, you know,
Speaker 8: much headway against them because the supply chains are so
Speaker 8: intertwined and they're having similar just not as bad a
Speaker 8: problem with their supply chain. Absolutely, if they turn around
Speaker 8: the quality deliver like they used to. Uh, there's plenty
Speaker 8: of core customers that are still in their camp, companies
Speaker 8: like you know, airlines like Ryanair, Southwest Alaska. These are
Speaker 8: these are high quality customers to have, so they absolutely
Speaker 8: have the opportunity to become that you know, that that
Speaker 8: great you know, look, I think Airbus is great as well,
Speaker 8: but that great aircraft commercial aircraft manufacturer.
Speaker 2: But this is the time, right, they got to get
Speaker 2: the union back. They have the vote tonight.
Speaker 8: They got to get a union back into the into
Speaker 8: the factories building airplanes, and they got to bring the
Speaker 8: union back somewhat happy. Right, you can't make them entirely happy.
Speaker 8: I think they've got a decent deal on the on
Speaker 8: the table for them. But when you bring them back,
Speaker 8: you've got to have them happy and motivated to build
Speaker 8: quality airplanes because that's the only way to make the
Speaker 8: company successful going forward.
Speaker 7: And George, you know, well, the reason why their customers
Speaker 7: are so loyal is because, I mean, it's Boeing and
Speaker 7: it's air Bus. It's interesting, though, you had Embraer's CEO
Speaker 7: on Bloomberg Television. I believe it was last week.
Speaker 3: He was on our show too last week.
Speaker 7: No kidding, Well, I only watched the TV first.
Speaker 3: You should watch the I will.
Speaker 7: I'll go back. What I know from the TV I
Speaker 7: go on was that he hinted at, you know, a
Speaker 7: seven thirty seven rival, that maybe they would think about
Speaker 7: a new jet to rival the seven thirty seven. That
Speaker 7: was in the TV interview. But anyway, George, the question
Speaker 7: I have to you, I mean, is this a duopoly
Speaker 7: that could be broken into? Or is it just is
Speaker 7: it Boeing, is it Airbus? And that for the foreseeable
Speaker 7: future is the only game in town.
Speaker 8: So I would say it is a duopoly will be
Speaker 8: broken into. I don't think it'll be Embryer. I think
Speaker 8: it'll be Comac. The C nine one nine, the Chinese manufacturer.
Speaker 8: They do have a narrow body flying in fleets in China.
Speaker 8: There's about eight of them in fleets right now, most
Speaker 8: of them with China Eastern. They don't get the same
Speaker 8: hours per day as of Boeing or Airbus. Narrowbody gets it.
Speaker 8: They're just they have to work on some of their sustainment.
Speaker 8: They're not building them as fast as Boeing and Airbus,
Speaker 8: but they've built them. They're in fleets, and they can
Speaker 8: count on a very robust domestic market. They can count
Speaker 8: on getting the Chinese airlines to buy that airplane. And
Speaker 8: so I think they're breaking in now and one day
Speaker 8: they will be a competitor. It won't be probably in
Speaker 8: the US and European markets anytime soon, but they they'll
Speaker 8: be a competitor in the developing world and they'll be
Speaker 8: absolutely a major part of fleets in China over time.
Speaker 3: Would that be because of the FAA and regulators here
Speaker 3: in the US and then the European counterpart to the
Speaker 3: fa as well, or do you see them not approving
Speaker 3: the see nine one nine.
Speaker 8: So it's already, you know, the European regulators are already
Speaker 8: looking at the airplane. And so what I see is
Speaker 8: I think the regulators are going to take a very
Speaker 8: close look at these airplanes and make sure they feel
Speaker 8: really comfortable about them before they let them into markets.
Speaker 8: And so you know, I think that means they've got,
Speaker 8: you know, a more protracted approval process. And then I
Speaker 8: think once you get past that approval process, I think
Speaker 8: the other second challenge inside the US and Europe will
Speaker 8: be acceptance of that of that Chinese airplane, right I think.
Speaker 2: Look, I think in time probably will happen.
Speaker 8: But my guess is you won't see it for over
Speaker 8: a decade in the US, maybe less in Europe, because
Speaker 8: I think.
Speaker 2: It's just going to take some time.
Speaker 7: It's going to take some time. Of course, we're talking
Speaker 7: about earnings chiefly. That's how we started the conversation. That's
Speaker 7: only one part of it. George. Of course, a lot
Speaker 7: of excitement coming this afternoon, this evening when it comes
Speaker 7: to Boeing of course, that highly anticipated labor vote. How
Speaker 7: are you expecting it to go? And how high are
Speaker 7: the stakes right now?
Speaker 8: Well, I think the stakes are really high because I
Speaker 8: think I think the sooner you bring the employees back
Speaker 8: into the into the factories, the sooner you can crank up,
Speaker 8: you know, the supply chain, the flow of the factories
Speaker 8: and start getting airplanes built. The longer you let that lapse,
Speaker 8: the harder it is to start that engine again. And
Speaker 8: so I think you've been out. They've been out a
Speaker 8: little bit over a month now. It's not terrible, but
Speaker 8: if you keep going here, I think you run some
Speaker 8: risk of problems, more problems in the supply chain. What
Speaker 8: do I think about the you know, the deal on
Speaker 8: the table. It's very close. I think Boeing will get
Speaker 8: an approval. I think that there might be some machinists
Speaker 8: that thought maybe they deserve forty set instead of thirty five.
Speaker 8: They didn't give the pension, but they sweetened up four
Speaker 8: to one k. I think with a bonus and some
Speaker 8: better matching. It seems very close. And again, the machinists
Speaker 8: have been out for a month. I think they've got
Speaker 8: a good, good probability of getting the deal done tonight.
Speaker 8: I guess we'll see how much machinists have saved up
Speaker 8: prior to the striking.
Speaker 3: Yeah, George, if they do get it done tonight, how
Speaker 3: quickly can those workers be back?
Speaker 8: I mean, on the call we heard you know it
Speaker 8: will take you know, more than a month or so
Speaker 8: to get things really rolling again. But I think you'll
Speaker 8: get people back in fact, okay quickly. I don't know
Speaker 8: why you can't add them back by the end of
Speaker 8: the week.
Speaker 3: So let's say Boeming is able to overcome this hurdle
Speaker 3: that is seems to be the closest one in its path.
Speaker 3: What's next, What's the next thing it has to jump
Speaker 3: through in order to get back to firing on all cylinders.
Speaker 8: Well, again, I think you got to restart the supply chain.
Speaker 8: And you know, Kelly Orperg indicated today not going to
Speaker 8: rush through that process. It's more port and they do
Speaker 8: it right, then do it fast.
Speaker 2: I agree.
Speaker 8: I think they'll have to make sure they have the
Speaker 8: quality controls in place. He talked about some training as well,
Speaker 8: So I think it's really sort of getting that factory
Speaker 8: started in a stabilized way so they could feel really
Speaker 8: good about the quality. Then they're going to have to
Speaker 8: turn their sights to bringing Spirit into the bowling fold
Speaker 8: next year, although they're already well deep into that. I
Speaker 8: think managing some of the definitely managing the quality that's
Speaker 8: coming out of Spirit, and those two things will be
Speaker 8: key to getting seven thirty seven rolling, and then getting
Speaker 8: rid of those old airplanes that they've already built, destined
Speaker 8: for China or India. They just got to get them
Speaker 8: tidied up because they built them a bunch of years
Speaker 8: ago configured for the customer that's ultimately to take them
Speaker 8: and get them out the door. That'll kill a lot
Speaker 8: of the lag they've had in some of their financials
Speaker 8: as they're trying to manage airplanes already built but sitting
Speaker 8: on ramps.
Speaker 2: I think those are key to the commercial business getting
Speaker 2: it moving.
Speaker 3: George ferguson Bloomberg Intelligence, senior Aerospace, Defense and Airlines analysts,
Speaker 3: joining us from Bihead Orders in Princeton, New Jersey.
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Speaker 3: slash Bloomberg Podcasts. Well, we love talking transit here on
Speaker 3: Bloomberg Business Week, we often talk about planes, trains, automobiles.
Speaker 7: Yeah, you know, we got a great movie, great most
Speaker 7: Steve Martin, fantastic.
Speaker 3: John Candy, can't forget about him.
Speaker 7: Classic.
Speaker 3: One thing we don't talk a lot about, though, is buses,
Speaker 3: especially inner city bus, taking a bus from one city
Speaker 3: in the US to another city. A lot of people
Speaker 3: in the US rely on this type of transport. Last year,
Speaker 3: people in the US are can estimated fifty million trips
Speaker 3: on intercity buses. This according to widely cited data from
Speaker 3: Joseph Schweiderman over at DePaul University. This is the bread
Speaker 3: and butter of our next guest. Kai Boyson is CEO
Speaker 3: of Flicks North America. It operates Flicks Bus and Greyhound
Speaker 3: in the US, as well as Greyhound in Mexico. Kai
Speaker 3: joins us here in the Bloomberg Business Week studio. Just
Speaker 3: give our audience an update on the where the revenue
Speaker 3: comes from. Like, is Greyhound bigger than Flicks Bus here
Speaker 3: in the US. Just give us an idea of the
Speaker 3: breakdown there. Okay.
Speaker 9: Flick North America is the mothership company here in the US,
Speaker 9: and it operates two largest bus companies, one is flix
Speaker 9: Bus and the other one is Greyhound. Approximately two thirds
Speaker 9: is Greyhound and one third is flix Bus. And what
Speaker 9: we do is we continue to grow that business for
Speaker 9: both prints as Flicks North America, and the growth is
Speaker 9: mostly coming on the flicks bus site.
Speaker 3: Would you consider it's given that the growth is mostly
Speaker 3: coming on the flicks bus side, would you consider a
Speaker 3: rebrand of Greyhound to flex bus.
Speaker 9: This is a possibility, but this is not our agenda
Speaker 9: right now. Right now, we leverage those two brands and
Speaker 9: they have great value in both brands. So we are
Speaker 9: enjoying the Greyhound brand in a way that it's an
Speaker 9: iconic brand in the US. It's so well known and
Speaker 9: on the Flick side is such a strong brand. It
Speaker 9: attracts none users to the industry and both different purposes
Speaker 9: and working conflmentially so well.
Speaker 7: And you used to have bolt Bus as well, right
Speaker 7: you think about Greyhound. Everyone knows Greyhound. Both bus also
Speaker 7: had a following because you know it was cheaper, it
Speaker 7: was easy. But you shut that down right to focus
Speaker 7: more on Greyhound, correct.
Speaker 9: I mean it was a successful and kind of initiative
Speaker 9: done in the past. But when Flix board Greyhound, the
Speaker 9: decision was two brands are good and enough, so we
Speaker 9: decided to shut down both bus.
Speaker 7: I am curious about just the bus industry in general,
Speaker 7: because you know, we think about BoltBus. I also wrote
Speaker 7: Megabus a lot in college, and I believe that their
Speaker 7: parent company filed for bankruptcy in June, So it seems
Speaker 7: like a tough industry to be And just give us
Speaker 7: a feel of the competitive landscape and what differentiates you.
Speaker 9: Okay, Flix is here to transform the long distance post
Speaker 9: truggle in the United States, and what is really critical
Speaker 9: is to make long distance pos trugle top of mind
Speaker 9: for anyone constring long distance truggle. And it all starts
Speaker 9: with customers effectively, and we need to make sure that
Speaker 9: we deliver a pleasant experience for any Flicks journey and
Speaker 9: then they come back to us, they recommend to their
Speaker 9: friends and family, and then we grow the business. That's
Speaker 9: what we are focusing right now. And as we do that,
Speaker 9: what we see as Flicks North America is ridership is
Speaker 9: going up so a year after year and making good progress.
Speaker 9: But as we do that, what is really important to underline,
Speaker 9: we're improving the customer experience every day, every week. It's
Speaker 9: important for us.
Speaker 3: Can you talk about that, because my understanding is that
Speaker 3: over the last few decades we've seen a decline in
Speaker 3: the number of these greyhound bus depots, so there are
Speaker 3: fewer areas where people can get on and off a
Speaker 3: bus and in effect making it less convenient for people.
Speaker 3: How do you use technology? What are you doing to
Speaker 3: combat that?
Speaker 9: Okay, infrastructure and boss terms are integral part actually of
Speaker 9: our offering. You're right, and we need to think about
Speaker 9: holistically in the United States when it comes to infrastructure.
Speaker 9: Nuts is it kind of as an integrated transportation network,
Speaker 9: not in silos. Airlines, railways, intercity bus, local transit, subways.
Speaker 9: We should think about as one, and intercity bus is
Speaker 9: an integral part of it. And to make it work,
Speaker 9: we need to bring all these different modes of transports
Speaker 9: into intermodels so that one can actually connect from one
Speaker 9: to another swiftly, and more importantly, they have the freedom
Speaker 9: to choose which one they want to go with depending
Speaker 9: on their expectations and the budget.
Speaker 3: Of course, sounds great. The problem is we live in
Speaker 3: America and this was a place not necessarily built for
Speaker 3: mass transit.
Speaker 9: In some occasions, you're right, But if you look at
Speaker 9: Los Angeles Union Station. This is a wonderful example of
Speaker 9: an intermodel working perfectly well for all mods of transport.
Speaker 9: If you go to New York now, if you go
Speaker 9: to Boston South Station, we've got great examples. What we
Speaker 9: need to do more repeat those examples and do better
Speaker 9: actually in other cities and states of the United States.
Speaker 7: And we only have about thirty seconds left with you,
Speaker 7: but talk to us quickly about EVS and whether or
Speaker 7: not that's integrated into your fleet.
Speaker 9: Sustainability is a core value of Flix. What we're doing
Speaker 9: on the EV side is we're looking at the technology,
Speaker 9: we're looking at the infrastructure. When it is a success
Speaker 9: for the customer, we'll actually deploy it. Right now, we're
Speaker 9: doing pilots and tests, working with all stakeholders, talking about
Speaker 9: what is the best technology and what is the best
Speaker 9: infrastructure to make it commercially viable. When it is ready,
Speaker 9: we'll embrace it fully.
Speaker 3: Hi boysen CEO Flix North America operates Flix Bus and
Speaker 3: Greyhound here in the US, as well as Greyhound in Mexico.
Speaker 3: Thanks so much for joining us on Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: Well, our next guest is the COO and head of
Speaker 3: business of the publicly traded enterprise work management platform Asana.
Speaker 3: We've got one hundred and fifty thousand customers in two
Speaker 3: hundred countries and territories. Companies include AT and T Mobile,
Speaker 3: excuse me, Amazon, Roche and more. Maybe ATNT that's one
Speaker 3: of my gainers today, by the way. Nice, yeah, pretty good, right, yeah,
Speaker 3: it's on my mind. We got with us Ann Romandi,
Speaker 3: who is head of a business and COO over at Asana.
Speaker 3: She joins us from New York and lots of news
Speaker 3: on your company this week. You got this new tool
Speaker 3: that helps people integrate AI without using code, an update
Speaker 3: to your survey about how people are working in this
Speaker 3: day and age. But first, Asana's got a footprint all
Speaker 3: over the world, and you've got a view into what's
Speaker 3: happening in terms of what people are spending money on.
Speaker 3: How is business around the world right now? What are
Speaker 3: you hearing from customers.
Speaker 10: Yeah, thanks for having me on around the world.
Speaker 6: What we're hearing from customers, it's probably themes that you're
Speaker 6: also hearing. They are focused on how both growth in
Speaker 6: this environment, how do they manage growth in a really measured,
Speaker 6: thoughtful way.
Speaker 10: Cost management is really critical, and.
Speaker 6: Our customers continue to be really concerned about employee engagement
Speaker 6: and productivity. And I think there's a new theme that
Speaker 6: we're seeing emerging, which is customers want to be much
Speaker 6: more intentional and thoughtful about their technology investment. In fact,
Speaker 6: a lot of our largest customers are feeling like, oh,
Speaker 6: there's some technology bloat, and so how do they make
Speaker 6: better more intentional just so their employees can be more
Speaker 6: productive and can collaborate more seamlessly together.
Speaker 7: I'm curious about the competitive landscape here because you know,
Speaker 7: I know that you have several rivals. For example, some
Speaker 7: of your rivals have entered into deals to sell themselves
Speaker 7: for example. Talk to us a little bit about that
Speaker 7: landscape and how you're trying to differentiate.
Speaker 10: Yeah, we see a lot of signs that are actually
Speaker 10: quite positive.
Speaker 6: There's a lot of demand overall for collaborative work management.
Speaker 6: I think the problem continues to persist of how do
Speaker 6: you make sure teams and functions are really well aligned.
Speaker 6: So we really see it as like the more innovation
Speaker 6: there is in the space, the better overall, because there's
Speaker 6: greater awareness and greater demand. And then for us, our
Speaker 6: focus really has been how do we help our customers
Speaker 6: bring AI directly into the most important workflows and have
Speaker 6: AI actually joined a team? You know, a lot of
Speaker 6: the AI solutions right now are very individual productivity based
Speaker 6: versus making a whole team function better, and that was
Speaker 6: a lot of the focus of our announcements and our
Speaker 6: work innovation event this week in New York.
Speaker 3: So talk to us a little about I want to
Speaker 3: follow on Katie's question about competition. I mean, a good
Speaker 3: indication of competition is you Google Asana and you get
Speaker 3: sponsored results like before you get the organic results from
Speaker 3: you know, Monday, dot Com, Project Tools, dot Ao. I know,
Speaker 3: there's Trello, I know there's clickup and the like. Who
Speaker 3: do you, Jira, who do you see as your biggest competitor?
Speaker 6: You know, we actually see our biggest competitor as sort
Speaker 6: of status quo and companies not choosing to have a
Speaker 6: single platform or actually introduce ways for teams to collaborate.
Speaker 6: There's still much more collaboration happening in spreadsheets, in documents.
Speaker 10: In meetings.
Speaker 6: Our report that came out said that over the last
Speaker 6: two years, employees have actually said that there's more wasted
Speaker 6: time in meetings than ever before. So while there are
Speaker 6: many different offerings and we see a lot of them
Speaker 6: being adopted bottoms up, we do continue to see sort
Speaker 6: of the biggest competitors like not doing something to give
Speaker 6: employees a tool that they can really collaborate together cross
Speaker 6: functionally sticky.
Speaker 3: How sticky is asana? Like if somebody signs up for
Speaker 3: what's churned, how hard is it to keep them on there?
Speaker 10: That's a great question.
Speaker 6: I think what we see is when used against the
Speaker 6: most important, most critical business use cases, we are very sticky.
Speaker 6: And that is why we're applying AI to those workflows
Speaker 6: and making it easy for non coders to adopt and
Speaker 6: really create that. So that's really what we've been focusing on,
Speaker 6: and also tying it to the highest level of a
Speaker 6: company's goals and priorities, and so we see when we
Speaker 6: work the best, it's when goals are tied to portfolios,
Speaker 6: tied to projects, and then type into the tasks, and
Speaker 6: so teams and individuals can really see how directly their
Speaker 6: work impacts the company's most important goals. And then for executives,
Speaker 6: as things change and they're responding to the environment and
Speaker 6: they want to be more agile and they change priorities,
Speaker 6: they can see that cascade quickly.
Speaker 10: Through the organization. So that's when we see that we're
Speaker 10: the most sticky and we're adding the most value.
Speaker 7: And of course this is Bloomberg news. So we have
Speaker 7: to talk about the stock price a little bit. And
Speaker 7: I'm curious, what do you think that investors are missing
Speaker 7: about the message because shares recently hit a record low.
Speaker 7: I mean, you're to date, your shares are down thirty
Speaker 7: eight percent. What isn't the market hearing that you would
Speaker 7: want to get across.
Speaker 5: I think what we are.
Speaker 10: Focused on is both the near term and then ultimately
Speaker 10: the long term growth.
Speaker 6: I think that some of the things that we've been
Speaker 6: focused on really are operational efficiency. I think in talking
Speaker 6: to our investors that matters a lot, and then good
Speaker 6: healthy growth. So I think for us, the priorities really
Speaker 6: are we do living for customers, if we can deliver
Speaker 6: really well consistently for customers. Then I think we'll see
Speaker 6: that in our result.
Speaker 3: I want to get to your state of Work report,
Speaker 3: the update that you guys have done, the work innovation report,
Speaker 3: But I also want to talk a little bit about
Speaker 3: the AI tools that you announced this week, the idea
Speaker 3: of no code AI integrating AI work into your workflows
Speaker 3: without actually writing code. Can you explain what that is
Speaker 3: and how people would be able to use quote unquote
Speaker 3: AI in their workflows.
Speaker 10: Absolutely.
Speaker 6: So, what we see that we're building with our AI
Speaker 6: studio that we just announced is AI as a teammate
Speaker 6: joining a team. So to break that down more specifically workflows,
Speaker 6: we think of having four really important parts an intake process.
Speaker 10: So think of work requests going back and.
Speaker 6: Forth between teams and then really actioning that work, kind
Speaker 6: of prioritizing, making decisions on that, executing on that work,
Speaker 6: and then reporting on that work. And so when AI
Speaker 6: can join that team, it can do a number of
Speaker 6: things in that intake process. If a company has standards
Speaker 6: for it requests, for example, those standards, AI can actually
Speaker 6: use those standards to evaluate a request, fill in any
Speaker 6: missing information, maybe go back to the person that submitted
Speaker 6: it and ask a few more questions and then actually
Speaker 6: even prioritize that request in a queue. One of our
Speaker 6: largest customers, morning Star, is using that exactly for it requests.
Speaker 10: And then actually the work.
Speaker 6: There's a lot of work that AI can actually do
Speaker 6: and complete, and so if it's part of a workflow
Speaker 6: and a team, it can go ahead and do the
Speaker 6: things that oftentimes employees think of as busy work.
Speaker 10: And then that reporting part at the.
Speaker 6: End, Hey, did you accomplish your goal or your task
Speaker 6: or your project, and then really reporting on that. AI
Speaker 6: does a really good job summarizing and reporting and also
Speaker 6: making recommendations on improvements. And so we want to design
Speaker 6: it in a way where the people closest to the
Speaker 6: business and to the workflows can actually build AI into
Speaker 6: the processes without needing technical skills. And so we worked
Speaker 6: with twenty of our largest customers to really design AI
Speaker 6: studio and implement it into some of their most important
Speaker 6: workflows and saw really great results. And so that was
Speaker 6: the announcement this week to introduce it to a much
Speaker 6: broader customer base.
Speaker 7: Can we talk about the productivity theater That phrase is
Speaker 7: in your report as well? I love this. Twenty two
Speaker 7: percent say that they sometimes prioritize looking busy over actually
Speaker 7: completing work, and sixty five percent of workers admit that
Speaker 7: they perform productivity theater at work.
Speaker 3: That's why are you laughing?
Speaker 7: It sounds a lot like what I do. It's just okay, delightful,
Speaker 7: just a meeting for the sake of meeting, and you know,
Speaker 7: sending around updates that maybe you don't need to be
Speaker 7: sent out. Talk a little bit about that.
Speaker 6: Yeah, we think the underlying trends and why workers feel
Speaker 6: that way and why that kind of continues to be
Speaker 6: an issue is again that at an executive or leadership level,
Speaker 6: it can be hard sometimes to figure out what exactly
Speaker 6: is going on, who's doing what is it going to
Speaker 6: be done by when? And so that creates a lot
Speaker 6: of this productivity theater right asking for status reports, asking
Speaker 6: for meetings where people are just doing readouts and employees
Speaker 6: are exhausted by that. But a lot of that is
Speaker 6: because there isn't a good single source of truth where
Speaker 6: you can really rely on it and be asking different questions,
Speaker 6: not status updates, but actually constructive questions on hey, do
Speaker 6: we have resources against our most important things? What happens
Speaker 6: if we shift those resources? How do we help unblock
Speaker 6: teams where you're actually looking at the same information, the
Speaker 6: same data about the work. And so when companies don't
Speaker 6: have that or teams don't have that, a lot of
Speaker 6: that busy work in productivity theater is the result, you
Speaker 6: know what, grab meeting to see what's happening, you know,
Speaker 6: versus actually looking at what's happening.
Speaker 3: What about this idea of disconnection because in your report,
Speaker 3: it's a fewer than half of workers say they understand
Speaker 3: how their work contributes to the company's goals forty seven
Speaker 3: percent nearly two and five thirty eight percent say they
Speaker 3: don't feel responsible for delivering high quality work. Is this
Speaker 3: just quiet quitting?
Speaker 6: I think what it is is not really being able
Speaker 6: to tie what they do day to day or week
Speaker 6: to week to what a company or leadership might say
Speaker 6: is the most important priorities. You know, too often priorities
Speaker 6: or objectives are shared out infrequently, or maybe they're on
Speaker 6: a poster somewhere in an office and then they're sort
Speaker 6: of forgotten. Versus when teams are doing their work, they
Speaker 6: can directly tie that to a company's priorities and actually
Speaker 6: see how much it matters or doesn't matter to influencing
Speaker 6: that and then make better decisions and have greater autonomy
Speaker 6: to make changes and know that that ties directly to
Speaker 6: an important company initiative. And that's oftentimes because goals or
Speaker 6: goal setting is done separately. It's not sort of a living,
Speaker 6: breathing thing that employees can be. So that's where what
Speaker 6: we're saying, you know that disconnect that causes that discimpt.
Speaker 3: And got to leave it there in Rimandi, head of
Speaker 3: a business and coo over at asauna joining us from
Speaker 3: New York.
Speaker 10: Bromack.
Speaker 1: A journal No how about you let me drive?
Speaker 10: Oh no, no, no, no, alright, please, I'll do gravel.
Speaker 1: I want to drive.
Speaker 3: It's a good question.
Speaker 1: This is the drive to the cloth well you don
Speaker 1: on Bloomberg Radio.
Speaker 3: All right, it is that time, Tim Statfeck and Katie
Speaker 3: Graefeld in for Carol Masser on this Wednesday afternoon. Less
Speaker 3: than eighteen minutes to go to the close. And if
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Speaker 3: slash subscribe. Now it is time for us to drive
Speaker 3: to the clothes. We're joined right now by Aya Yoshioka,
Speaker 3: portfolio consulting director at Wealth Enhancement. She's here from Los Angeles.
Speaker 3: We have like la weather.
Speaker 10: I I've brought it with me.
Speaker 3: What do you think? Well, I mean, revend, we're basically
Speaker 3: having a drought here in New York. I am kind
Speaker 3: of wild.
Speaker 11: I hate to tell you, but I leave Thursday and
Speaker 11: I saw that the weather actually turns.
Speaker 3: It's terrible news, you know, Katie and I we we're
Speaker 3: talking this week about the markets today. And you have
Speaker 3: an S and P five hundred this year. That's up
Speaker 3: over twenty percent, up over twenty percent last year by
Speaker 3: many measures. It's expensive. And the question that I have
Speaker 3: over and over again is if you're getting new money
Speaker 3: right now, how are you deploying it at a market
Speaker 3: that's historically expensive.
Speaker 11: You deploy it very carefully, you know, dollar cost averaging
Speaker 11: is always a great thing. But you know, we get
Speaker 11: a lot of clients who ask all the time. You know,
Speaker 11: markets are at all time highs. I'm a little nervous
Speaker 11: about the upcoming election. Should I just go to cash
Speaker 11: and wait for the all clear, and I said, you know,
Speaker 11: I don't know when the last time I ever got
Speaker 11: an all clear in the market. There's always something to
Speaker 11: worry about, and it's really difficult to time both the
Speaker 11: exit and the re entry into markets.
Speaker 3: Some people say impossible.
Speaker 11: We think so it's not easy to do.
Speaker 7: And the one of the it's only one seat. It
Speaker 7: feels like we've been talking about this for a month now,
Speaker 7: but that Goldman Sacks call it from David Coston coming
Speaker 7: out and saying that their team expects only three percent
Speaker 7: annualized returns over the next decade, pretty amazing, suck.
Speaker 3: That is such a departure, I know from what we've
Speaker 3: seen in the near past and also in the that
Speaker 3: is like a fundamental change. I know, you've got me
Speaker 3: really fun.
Speaker 7: I know, well, we had David Coston on Open Interest
Speaker 7: earlier today and we made the point in that that
Speaker 7: hasn't happened in the past unless we're talking about it
Speaker 7: in events such as you know, the financial crisis or
Speaker 7: literally the Great Depression. But I am curious. I mean,
Speaker 7: when you pull out your crystal ball and you take
Speaker 7: a look over the next ten years, I mean, what's
Speaker 7: the direction of travel? Are we talking about three percent
Speaker 7: unitalized returns or is it maybe a little bit better?
Speaker 11: Well, my crystal ball tends to be a little cloudy
Speaker 11: at times. But you know, I think that a lot
Speaker 11: of it is going to depend on the productivity growth
Speaker 11: that we get out of AI, Right. That's been the
Speaker 11: promise that I think everybody's been talking about. And if
Speaker 11: we do get real productivity growth similar to what we
Speaker 11: got back into in the nineties, you're going to get
Speaker 11: you know, expansion and margins still and I think you
Speaker 11: can get above that three percent long term growth and
Speaker 11: then you never know what could happen in terms of
Speaker 11: what could bring the market down in the short term, right,
Speaker 11: just like the pandemic did and we had a thirty
Speaker 11: percent discount in one month. And so I think there's
Speaker 11: still a room for a little bit more than just
Speaker 11: three percent growth over the next decade.
Speaker 3: What I don't know, it's like, you think about this
Speaker 3: from the perspective of how stocks are doing right now,
Speaker 3: and you know, I got to wonder in terms of geographies,
Speaker 3: the US has just absolutely ruled over the past decade,
Speaker 3: and every year we have people come on and say,
Speaker 3: you know, now it's time for international now it's time
Speaker 3: for international, and the US just keeps out performing, out performing.
Speaker 3: How long does that go on for?
Speaker 11: It's so tough to say, and it goes against what
Speaker 11: you're supposed to.
Speaker 3: Do with stocks broadly diversified portfolio geographically.
Speaker 11: Right, yes, and by low sell high right, that's what
Speaker 11: you've been told, And it seems like the better strategy
Speaker 11: has been by high sell higher. And you know, it
Speaker 11: doesn't seem to be the case with small caps and
Speaker 11: international as well, that they've just struggled. And valuation is
Speaker 11: a very poor timing tool. But I think what it
Speaker 11: does is the diversification in other areas of the market
Speaker 11: allows you to have an insurance policy in case leadership changes,
Speaker 11: and I think that's where we sit right now. Have
Speaker 11: some exposure so that you have that insurance policy.
Speaker 7: I'm curious what you make of the bond market at
Speaker 7: this juncture, and of course the ripple effect into the
Speaker 7: stock market. We were talking about the volatility that we've
Speaker 7: seen at the long end of the treasury curve with
Speaker 7: Abigail Doolittle a little while earlier. It's just this has
Speaker 7: been the dynamic for several years at this point. But
Speaker 7: it is interesting and notable to me that it feels
Speaker 7: like the epicenter of volatility is the treasury market. Of
Speaker 7: all asia classes, it's the bond market that's the most volatile.
Speaker 10: I agree.
Speaker 11: I think you know, I've been doing this for almost
Speaker 11: thirty years, and it's really interesting that we're not talking
Speaker 11: about the vics and we're talking more about the move
Speaker 11: index instead. And you know, I think it's because we
Speaker 11: were you know, we've had a decade in which interest
Speaker 11: rates really didn't move so much and they were anchored
Speaker 11: to zero. And now that we actually have real yields
Speaker 11: and interest rates at a nominal rate that is actually tradable,
Speaker 11: I think that's why you're seeing some of that volatility,
Speaker 11: and I think it can continue a little bit.
Speaker 3: Okay, I want to go back to the election, because
Speaker 3: time and time again, day and day out, we have
Speaker 3: people come on during driving the clothes and say, investers
Speaker 3: are waiting to see what happens. What are they waiting for?
Speaker 10: Waiting for clarity?
Speaker 11: They want to know who's going to win.
Speaker 3: And I think I can tell you it's going to
Speaker 3: be one of two people, like I can tell.
Speaker 11: You that absolutely. But I think you know, everybody remembers
Speaker 11: the twenty sixteen experience in which the markets were down
Speaker 11: what four and a half percent in the after hour because.
Speaker 3: They were surprised about a Trump win. Absolutely, I think
Speaker 3: nobody would be surprised. I don't think anyone would be
Speaker 3: surprised about anything, given the polls are fifty to fifty. Yes,
Speaker 3: there's a big Trump trade that's happened in some areas
Speaker 3: of the market.
Speaker 5: Yeah, but I mean so then you.
Speaker 3: See DJT sell off if you lose this right exactly,
Speaker 3: you know, I don't see an impact.
Speaker 11: I think people are also afraid that they're not going
Speaker 11: to know the winner right away because it's so close
Speaker 11: that but.
Speaker 3: We know that we know we're not going to get there.
Speaker 3: They are all know because we're in this new world.
Speaker 11: Yeah, absolutely, And I think that's but they're just scarred
Speaker 11: from the experience and it's a little bit more emotional
Speaker 11: for them, and so that just allows them to kind
Speaker 11: of freeze about everything when it comes to their portfolio.
Speaker 3: Feel like everybody's a little stronger now.
Speaker 2: Ye.
Speaker 7: I mean it is interesting. We talk about the Trump trade,
Speaker 7: we talk about the Harris trade, but if you look
Speaker 7: at the vent diagram, right in the middle is the
Speaker 7: fact that the deficit is going higher no matter what happens,
Speaker 7: which you.
Speaker 3: Could you sound like dad. Yeah, he loves to talk
Speaker 3: about this.
Speaker 7: We text all the time just about this. Okay, anyway,
Speaker 7: I guess that's not a question, but it is interesting.
Speaker 12: There are similarities, No, absolutely, And I think that it
Speaker 12: goes back to what we were talking about earlier about
Speaker 12: bond yields, right, and I think you know, an expanding
Speaker 12: deficit is never really good for bond yields, and so
Speaker 12: I think bonds are reflecting that.
Speaker 3: All right. You know you love to talking about the deficit.
Speaker 3: I don't think I agree with you. I don't think
Speaker 3: enough people are talking about this.
Speaker 7: Oh my god, Matt Miller never stops talking.
Speaker 3: He's right to be talking about this because regardless of you,
Speaker 3: but regardless of who comes in, if their plans go
Speaker 3: according to plan, then they're going to spend more money. Yes,
Speaker 3: so yeah, then you know, we'll see what happened.
Speaker 7: We have something to.
Speaker 3: Rely on, we do. Ayah, good to see you, Thanks
Speaker 3: for joining us. Come back next time you're in town.
Speaker 3: Ia Yoshioka, portfolio consulting director at Wealth Enhancement. Here in
Speaker 3: the Bloomberg Interactive Broker's Studio.
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