1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,160 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well, 7 00:00:33,280 --> 00:00:37,960 Speaker 1: we now quote bitcoin spot prices here at Bloomberg because 8 00:00:37,960 --> 00:00:40,080 Speaker 1: it has gotten that hot. And here to talk about 9 00:00:40,360 --> 00:00:43,040 Speaker 1: sort of the agony that this presents to the biggest 10 00:00:43,080 --> 00:00:46,199 Speaker 1: Wall Street banks is Shinelli Basak. She's insurance company is 11 00:00:46,240 --> 00:00:49,400 Speaker 1: a boutique investment banks reporter for Bloomberg News. She's also 12 00:00:49,800 --> 00:00:52,479 Speaker 1: getting her m b A at n y U. And 13 00:00:52,960 --> 00:00:55,120 Speaker 1: before we get into the details of what to expect 14 00:00:55,720 --> 00:00:59,280 Speaker 1: right before bitcoin starts trading on the futures exchange this Sunday, 15 00:00:59,320 --> 00:01:01,760 Speaker 1: for the first time time, you said that they're crypto 16 00:01:01,800 --> 00:01:04,720 Speaker 1: clubs and everyone's a crypto trader in your MBA classes. 17 00:01:04,800 --> 00:01:07,399 Speaker 1: And it's shocking how many people talk about it in 18 00:01:07,400 --> 00:01:09,920 Speaker 1: an MBA program. It comes up almost every day. What 19 00:01:09,959 --> 00:01:12,160 Speaker 1: are they talking about? They're talking about how they can 20 00:01:12,200 --> 00:01:14,240 Speaker 1: trade it. All their friends are in the market in 21 00:01:14,280 --> 00:01:18,640 Speaker 1: some fashion, whether they're in technology somehow or whether they're 22 00:01:18,680 --> 00:01:21,200 Speaker 1: at a bank and thinking of leaving actually to kind 23 00:01:21,200 --> 00:01:23,279 Speaker 1: of you know, get into the market in different ways 24 00:01:23,640 --> 00:01:26,920 Speaker 1: to do what well. For example, one of the biggest 25 00:01:27,040 --> 00:01:29,760 Speaker 1: investors we know in this space is Mike Novograds, right, 26 00:01:29,800 --> 00:01:32,400 Speaker 1: I mean Mike Novagrads has people he's hired from Millennium, 27 00:01:32,440 --> 00:01:35,480 Speaker 1: Goldman and Morgan Stanley, right. So you know, while the 28 00:01:35,480 --> 00:01:37,600 Speaker 1: big banks have been very slow to get in, we've 29 00:01:37,600 --> 00:01:40,160 Speaker 1: seen talent move to places where they can do more 30 00:01:40,200 --> 00:01:43,720 Speaker 1: active in the market. Curious, how do they expect this 31 00:01:43,840 --> 00:01:46,119 Speaker 1: to be cleared? If a lot of the banks are 32 00:01:46,120 --> 00:01:49,120 Speaker 1: not willing to do that, how do you clear a trade? 33 00:01:49,440 --> 00:01:52,160 Speaker 1: I am very curious to see what volumes look like 34 00:01:52,240 --> 00:01:55,400 Speaker 1: on Sunday and Monday. I've been asking everybody what they're expecting. 35 00:01:55,600 --> 00:01:58,880 Speaker 1: Because Golvin has said they'll be able to do it immediately. 36 00:01:59,360 --> 00:02:01,440 Speaker 1: All the other banks pretty much have said they're not 37 00:02:01,480 --> 00:02:03,080 Speaker 1: going to be ready on day one, or they're not 38 00:02:03,120 --> 00:02:05,160 Speaker 1: going to do it at all. They're still waiting. What's 39 00:02:05,200 --> 00:02:08,360 Speaker 1: the main obstacle is that the margins that people have 40 00:02:08,440 --> 00:02:11,600 Speaker 1: to post. The margins are wicked high. How are they 41 00:02:11,080 --> 00:02:15,600 Speaker 1: they used to be? But after so much volatility the 42 00:02:15,680 --> 00:02:18,880 Speaker 1: last couple of weeks, CEBO actually raised the requirements. So 43 00:02:18,960 --> 00:02:22,280 Speaker 1: that means that anybody looking to make a bitcoin trade 44 00:02:22,320 --> 00:02:25,720 Speaker 1: has to post forty four percent of whatever the trade 45 00:02:25,720 --> 00:02:28,400 Speaker 1: they're trying to put on the equivalent of that in 46 00:02:28,480 --> 00:02:31,959 Speaker 1: some kind of hard asset cash correct aside. And and 47 00:02:32,000 --> 00:02:33,960 Speaker 1: so what does that mean? If the price goes, you know, 48 00:02:34,400 --> 00:02:37,040 Speaker 1: up rapidly, then the banks have to be worried about it. Right, 49 00:02:37,120 --> 00:02:41,720 Speaker 1: the price yesterday alone surge. So if this is something 50 00:02:41,760 --> 00:02:45,040 Speaker 1: that is going to be tradeable, what is going to 51 00:02:45,080 --> 00:02:50,480 Speaker 1: be the deliverable cash? It's actually cash settled, a cash settled, 52 00:02:50,520 --> 00:02:52,280 Speaker 1: So really everybody, all they just want to do is 53 00:02:52,280 --> 00:02:55,200 Speaker 1: they're just trading this to make dollars. They're using this 54 00:02:55,280 --> 00:02:57,799 Speaker 1: to make money. Well, that's the other question that's coming 55 00:02:57,840 --> 00:03:00,000 Speaker 1: up here too, right, I mean, because it's cash, that'll 56 00:03:00,160 --> 00:03:02,000 Speaker 1: the shows that the futures market is pretty much a 57 00:03:02,040 --> 00:03:05,639 Speaker 1: speculators market, right, and so there's kind of inherent differences 58 00:03:05,680 --> 00:03:08,000 Speaker 1: between how people trade bitcoin now and how they will 59 00:03:08,040 --> 00:03:11,400 Speaker 1: be trading them moving forward. There was a story on 60 00:03:11,440 --> 00:03:14,079 Speaker 1: the Bloomberg that cited a statistic that I thought was 61 00:03:14,160 --> 00:03:18,320 Speaker 1: rather shocking that when thousand investors, which is a relatively 62 00:03:18,360 --> 00:03:20,600 Speaker 1: small pool in the scheme of the millions of investors 63 00:03:20,600 --> 00:03:23,920 Speaker 1: out there, only when thousand investors account for of the 64 00:03:24,080 --> 00:03:30,520 Speaker 1: bitcoin holdings, what potential risks does that concentration offer up. Well, 65 00:03:30,520 --> 00:03:32,880 Speaker 1: it's definitely a huge concentration risk, and I think it's 66 00:03:32,919 --> 00:03:34,880 Speaker 1: also another reason people are kind of excited for the 67 00:03:34,880 --> 00:03:37,600 Speaker 1: futures market. They're hoping that a lot of big institutional 68 00:03:37,600 --> 00:03:39,920 Speaker 1: investors will start to get into the market because now 69 00:03:39,960 --> 00:03:43,800 Speaker 1: we know the investors are not necessarily institutions. Pensions are 70 00:03:43,840 --> 00:03:47,560 Speaker 1: not investing in bitcoin, they're really worried about custody issues. 71 00:03:47,680 --> 00:03:50,520 Speaker 1: Endowments are not really although people are in talks with 72 00:03:50,600 --> 00:03:54,120 Speaker 1: endowments of certainly they're not investing in this yet, so 73 00:03:54,360 --> 00:03:56,160 Speaker 1: it's kind of limited. But it's also a lot of 74 00:03:56,200 --> 00:04:00,440 Speaker 1: retail investors also, So really it's you know, it'sbody once 75 00:04:00,480 --> 00:04:02,960 Speaker 1: told me the average age of a bitcoin investors twenty two. 76 00:04:03,200 --> 00:04:06,280 Speaker 1: I don't know how true that is, but it's it's 77 00:04:06,280 --> 00:04:11,360 Speaker 1: what I'm trying to do at the younger generation. So okay, right, well, 78 00:04:11,920 --> 00:04:14,839 Speaker 1: let's hope not. The thing that occurs to me though, 79 00:04:15,040 --> 00:04:17,400 Speaker 1: is if you have to put up so much margin, 80 00:04:17,960 --> 00:04:22,120 Speaker 1: and if the trade moves against you during whatever time train, 81 00:04:22,240 --> 00:04:25,960 Speaker 1: you know, before it expires, Uh, how are you going 82 00:04:26,000 --> 00:04:29,520 Speaker 1: to manage the big price swing? So you're gonna then 83 00:04:29,560 --> 00:04:33,280 Speaker 1: get a call from your broker whoever is executing the trade, 84 00:04:33,279 --> 00:04:35,039 Speaker 1: saying you better put more money in the account by 85 00:04:35,200 --> 00:04:37,000 Speaker 1: you know, four o'clock, or we're going to close out 86 00:04:37,000 --> 00:04:39,680 Speaker 1: your account. Because it can go up and it can 87 00:04:39,720 --> 00:04:42,760 Speaker 1: go down as much as we've seen what is the 88 00:04:42,880 --> 00:04:46,239 Speaker 1: fifteen thousand one day, ten thousand another day, You're gonna 89 00:04:46,240 --> 00:04:51,520 Speaker 1: have to be constantly monitoring your margin. Require That's absolutely true, 90 00:04:51,680 --> 00:04:54,040 Speaker 1: and the people are already thinking about that right now. 91 00:04:54,520 --> 00:04:57,039 Speaker 1: And um, you know, I wonder too. It means you 92 00:04:57,080 --> 00:04:59,640 Speaker 1: also have less leverage on the investment, right So I'm 93 00:04:59,640 --> 00:05:02,920 Speaker 1: wondering if it makes it somehow less attractive. So let's 94 00:05:02,920 --> 00:05:05,960 Speaker 1: talk about the deliberations that are going on inside the 95 00:05:05,960 --> 00:05:09,159 Speaker 1: biggest Wall Street banks right now. Goldman Sachs, as Pin 96 00:05:09,279 --> 00:05:13,320 Speaker 1: was saying, has decided to start clearing bitcoin futures from 97 00:05:13,400 --> 00:05:17,400 Speaker 1: day one. What's the debate internally here? The debate internally 98 00:05:17,560 --> 00:05:19,359 Speaker 1: comes from a couple of ways. We talked about the 99 00:05:19,400 --> 00:05:23,440 Speaker 1: volatility for a while that's definitely a huge concern reputational risk. 100 00:05:23,560 --> 00:05:26,440 Speaker 1: I mean, we've seen every bank CEO come out in 101 00:05:26,520 --> 00:05:29,839 Speaker 1: some fashion saying something the most promised in An example 102 00:05:29,880 --> 00:05:31,600 Speaker 1: of this is Jamie Diamond who has called it a 103 00:05:31,600 --> 00:05:35,200 Speaker 1: bubble and a fraud. UM. However, JP Morgan, that doesn't 104 00:05:35,200 --> 00:05:37,560 Speaker 1: mean their clients are not asking about it, and they 105 00:05:37,600 --> 00:05:39,240 Speaker 1: have to and they they are one of the people 106 00:05:39,279 --> 00:05:42,000 Speaker 1: that have been weighing offering the futures contracts to their clients. 107 00:05:42,240 --> 00:05:45,000 Speaker 1: So there's this inherent disconnect between what they have to 108 00:05:45,200 --> 00:05:48,200 Speaker 1: address to clients and how maybe the banks feel about it. 109 00:05:48,400 --> 00:05:52,039 Speaker 1: There's also no your customer, customer and undering leandering concerns 110 00:05:52,080 --> 00:05:55,080 Speaker 1: with with these contracts as well. Is it useful to 111 00:05:55,080 --> 00:05:58,960 Speaker 1: to think of bitcoin as a commodity or is a currency? 112 00:05:59,160 --> 00:06:03,159 Speaker 1: That's the big debate, right what what? What is it? Um? 113 00:06:03,200 --> 00:06:06,839 Speaker 1: You know there there are arguments for it to be both. UM. 114 00:06:06,880 --> 00:06:09,640 Speaker 1: I think that generally, walking into the futures market, people 115 00:06:09,640 --> 00:06:13,080 Speaker 1: are behaving as if it's a currency. I gotta say, 116 00:06:13,160 --> 00:06:15,120 Speaker 1: one thing that I'm struck by is that the actual 117 00:06:15,200 --> 00:06:18,359 Speaker 1: price that you can get on bitcoin is completely different 118 00:06:18,440 --> 00:06:22,000 Speaker 1: from coin based to other other exchanges. So you have 119 00:06:22,080 --> 00:06:25,160 Speaker 1: to wonder what the real value is and how are 120 00:06:25,200 --> 00:06:28,680 Speaker 1: people not going to just simply get scammed? Right, We're 121 00:06:28,720 --> 00:06:32,920 Speaker 1: definitely wondering kind of what the differentiation is among different 122 00:06:32,920 --> 00:06:35,919 Speaker 1: exchanges and also not only just bitcoin, but now you 123 00:06:35,960 --> 00:06:37,520 Speaker 1: have a lot of other options to invest in the 124 00:06:37,560 --> 00:06:41,400 Speaker 1: cryptocurrency space and how those prices are connected to each other. 125 00:06:41,800 --> 00:06:43,920 Speaker 1: One of the biggest mysteries in this world, for example, 126 00:06:44,000 --> 00:06:46,039 Speaker 1: is tether. We had a fantastic story and if you 127 00:06:46,040 --> 00:06:48,320 Speaker 1: haven't read it yet, I really suggest you guys look 128 00:06:48,360 --> 00:06:50,479 Speaker 1: at it. By might not licening you know what is 129 00:06:50,560 --> 00:06:54,520 Speaker 1: underpinning the value of tether. Well, we'll go and we'll 130 00:06:54,760 --> 00:06:56,719 Speaker 1: explore that at another time. I want to thank you 131 00:06:56,800 --> 00:07:00,159 Speaker 1: very much for being with us, just as shoes gold shoes. Uh. 132 00:07:00,279 --> 00:07:05,080 Speaker 1: The Commodity Futures Trading Commission says that bitcoin is a 133 00:07:05,160 --> 00:07:10,280 Speaker 1: commodity anyway, Thanks very much, Snali boss, much appreciated, and uh, 134 00:07:10,560 --> 00:07:12,840 Speaker 1: we'll be looking forward to more reports on what happens 135 00:07:12,880 --> 00:07:14,760 Speaker 1: to bitcoin. I have a feeling Sunday is going to 136 00:07:14,800 --> 00:07:35,880 Speaker 1: be an important day. Blame Japanese banks for the flat 137 00:07:36,000 --> 00:07:39,200 Speaker 1: treasury curve. That's according to City Group strategists. Here with 138 00:07:39,280 --> 00:07:41,480 Speaker 1: us is the CEO of the U S arm of 139 00:07:41,600 --> 00:07:45,000 Speaker 1: a Japanese bank, to comment on those Japanese flows and 140 00:07:45,040 --> 00:07:47,800 Speaker 1: what they're doing to US markets. Jerry Rosieri, president and 141 00:07:47,880 --> 00:07:50,920 Speaker 1: chief executive officer of Missoojo Securities, joins us here in 142 00:07:50,920 --> 00:07:53,560 Speaker 1: our eleven three studios. Jerry, thank you so much for 143 00:07:53,640 --> 00:07:56,360 Speaker 1: joining us. SO is this the case? Is it Japanese 144 00:07:56,400 --> 00:08:00,280 Speaker 1: banks that are flooding into longer term US treasure ease 145 00:08:00,360 --> 00:08:04,720 Speaker 1: that's keeping the yield curve flat? Well, that has been 146 00:08:04,720 --> 00:08:08,480 Speaker 1: the case over many years. UH. You know, foreign foreign 147 00:08:08,480 --> 00:08:13,120 Speaker 1: holdings by the Japanese have increased substantially over the last 148 00:08:13,200 --> 00:08:19,720 Speaker 1: five to seven years. Up over that time period. UM, 149 00:08:19,760 --> 00:08:23,880 Speaker 1: I think the bigger movement into US treasuries and and 150 00:08:24,040 --> 00:08:28,440 Speaker 1: similar risk risk free assets was in two thousand sixteen 151 00:08:29,160 --> 00:08:32,880 Speaker 1: two thousand seventeen. It's been less of a fixed income story. UH. 152 00:08:32,920 --> 00:08:38,000 Speaker 1: And in fact, we've seen evidence that the banks and UH, 153 00:08:38,080 --> 00:08:41,040 Speaker 1: particularly the regional banks in Japan will be pulling back 154 00:08:41,040 --> 00:08:46,000 Speaker 1: a little bit, much of that dictated by the regulator. 155 00:08:47,480 --> 00:08:49,880 Speaker 1: To be really clear, they've pulled back a little bit 156 00:08:50,040 --> 00:08:54,440 Speaker 1: on their investments in US treasuries, I would say, not 157 00:08:54,440 --> 00:08:58,280 Speaker 1: not pulling back in terms of UH selling assets, but 158 00:08:58,920 --> 00:09:01,880 Speaker 1: the pace of buying, I would say, has has lessened. 159 00:09:02,679 --> 00:09:06,040 Speaker 1: So this is not exactly the dynamic that well, I think, 160 00:09:06,080 --> 00:09:09,000 Speaker 1: I think. You know, whenever you see moves, particularly in 161 00:09:09,000 --> 00:09:12,840 Speaker 1: the U S treasury market, you'll curve flattening, you'll curve steeping. Uh. 162 00:09:13,280 --> 00:09:17,320 Speaker 1: It's it's always common to to blame uh, non US 163 00:09:17,360 --> 00:09:23,240 Speaker 1: investors oftentimes Asia. Uh, you know, and uh and uh. 164 00:09:23,400 --> 00:09:27,000 Speaker 1: Certainly the Japanese are large holders at last China of 165 00:09:27,200 --> 00:09:29,679 Speaker 1: US treasuries. I just want to ask a little bit 166 00:09:29,679 --> 00:09:32,240 Speaker 1: and maybe get an update. I know in twenty fifteen, 167 00:09:32,400 --> 00:09:35,520 Speaker 1: Missouho paid what about three billion dollars for the loan 168 00:09:35,640 --> 00:09:38,559 Speaker 1: book of Royal Bank of Scotland. Right about that was 169 00:09:38,600 --> 00:09:40,520 Speaker 1: a thirty six and a half billion dollar loan book 170 00:09:40,520 --> 00:09:43,439 Speaker 1: for North America. Can you give us an update on 171 00:09:43,480 --> 00:09:46,720 Speaker 1: that and whether if you were to be able to 172 00:09:46,760 --> 00:09:50,360 Speaker 1: buy that today, what would that be worth? Well, they 173 00:09:50,400 --> 00:09:55,320 Speaker 1: were basically a loan commitments, So the reason we pursued 174 00:09:55,400 --> 00:10:02,000 Speaker 1: that transaction was to elevate our client penetration here in 175 00:10:02,040 --> 00:10:07,560 Speaker 1: the America's So the book itself was interesting, but more importantly, 176 00:10:07,640 --> 00:10:11,040 Speaker 1: we are looking to establish long term lending relationships in 177 00:10:11,080 --> 00:10:13,880 Speaker 1: the US and that's what we've actually done. We've uh, 178 00:10:14,160 --> 00:10:17,200 Speaker 1: we've more than uh I think for top tier lending 179 00:10:17,240 --> 00:10:21,480 Speaker 1: relationships of increased ten times over the last two and 180 00:10:21,480 --> 00:10:24,280 Speaker 1: a half years. And you're hiring human beings, right, Yeah. 181 00:10:24,320 --> 00:10:26,600 Speaker 1: So with the the the asset purchase in and of 182 00:10:26,640 --> 00:10:30,079 Speaker 1: itself was interesting, but we actually wouldn't have pursued that 183 00:10:30,440 --> 00:10:33,080 Speaker 1: unless we were able to bring a number of people 184 00:10:33,160 --> 00:10:35,199 Speaker 1: over from the institution. So we took on about a 185 00:10:35,240 --> 00:10:39,880 Speaker 1: hundred and twenty people from RBS along with those assets. 186 00:10:40,440 --> 00:10:44,000 Speaker 1: Just with respect to MISSOO Securities, how much has it 187 00:10:44,080 --> 00:10:46,960 Speaker 1: expanded and how much do you plan to continue expanding 188 00:10:47,000 --> 00:10:49,080 Speaker 1: from a head count perspective? Sure? So so in the 189 00:10:49,200 --> 00:10:52,680 Speaker 1: US I joined the company two thousand, ten UM and 190 00:10:52,760 --> 00:10:56,160 Speaker 1: we securities, we were maybe a little over three hundred people. 191 00:10:56,840 --> 00:11:01,000 Speaker 1: Uh now we're hentering heading towards eight hundred UM. It's 192 00:11:01,000 --> 00:11:05,880 Speaker 1: been a h I say, a measured expansion. We've tried 193 00:11:05,960 --> 00:11:09,200 Speaker 1: to uh move at a pace that sort of suits 194 00:11:09,200 --> 00:11:13,440 Speaker 1: our organizations tolerants. Uh. And but having said that, uh, 195 00:11:13,720 --> 00:11:16,959 Speaker 1: it's been very targeted. So it's been capital markets, so 196 00:11:17,120 --> 00:11:19,840 Speaker 1: debt capital markets, it's been equity capital markets. We've expended 197 00:11:19,880 --> 00:11:21,840 Speaker 1: our high yield business over the last couple of years, 198 00:11:22,440 --> 00:11:24,959 Speaker 1: also on the sales and trading front as well, growing 199 00:11:24,960 --> 00:11:27,680 Speaker 1: out our equity platform as well as diversifying our fixed 200 00:11:27,679 --> 00:11:32,240 Speaker 1: income platform. Any thoughts are maybe comparisons between now and 201 00:11:32,280 --> 00:11:35,640 Speaker 1: the and the time of Lehman Brothers. Whether the banks 202 00:11:35,679 --> 00:11:38,360 Speaker 1: and the brokerage firms have they changed at least the 203 00:11:38,360 --> 00:11:41,439 Speaker 1: way that they perceived their balance sheets? I mean, does 204 00:11:41,440 --> 00:11:44,760 Speaker 1: that inform the day to day operations of of the organization? 205 00:11:44,960 --> 00:11:47,320 Speaker 1: I mean things are you know, I'm former Leman Brothers. 206 00:11:47,360 --> 00:11:49,240 Speaker 1: I was there for twenty three years, so I know 207 00:11:49,280 --> 00:11:52,440 Speaker 1: that situation well. But uh yeah, the environment is a 208 00:11:52,440 --> 00:11:55,400 Speaker 1: lot different. I mean there's less leverage, uh you know, 209 00:11:55,520 --> 00:12:01,120 Speaker 1: the regulatory environments different. Um but you know, I would 210 00:12:01,120 --> 00:12:03,640 Speaker 1: say that uh you know, the the industries have been 211 00:12:03,640 --> 00:12:07,920 Speaker 1: expanding since two thousand and eight. Uh so employments up 212 00:12:08,080 --> 00:12:11,880 Speaker 1: in business actually is pretty decent. Where is the biggest 213 00:12:11,960 --> 00:12:15,960 Speaker 1: opportunity for MISSOO host securities in US markets? Is it 214 00:12:16,320 --> 00:12:19,880 Speaker 1: highel bond trading? Is it underwriting investment grade bonds? So 215 00:12:19,920 --> 00:12:22,680 Speaker 1: we're we're already top ten in corporate investment grade debt 216 00:12:22,840 --> 00:12:25,280 Speaker 1: in the U S which is trading in terms of 217 00:12:25,320 --> 00:12:30,400 Speaker 1: origination UH. In terms of trading activities, we've been aggressively 218 00:12:30,400 --> 00:12:36,120 Speaker 1: expanding our equity platform UH and cash businesses. We're working 219 00:12:36,200 --> 00:12:39,640 Speaker 1: on both derivatives and ffects for fixed income UH and 220 00:12:39,800 --> 00:12:44,959 Speaker 1: equities UM. In the fixed income side, we've been expanding 221 00:12:45,000 --> 00:12:48,040 Speaker 1: our security securitized products area as well as in our 222 00:12:48,120 --> 00:12:50,880 Speaker 1: high yield trading area. And just real quick, are you 223 00:12:50,960 --> 00:12:54,679 Speaker 1: using balance sheet? Yes? We do? And is that increasing? 224 00:12:55,320 --> 00:13:00,560 Speaker 1: Our balance sheet has been relatively stable. UM, it's but 225 00:13:00,640 --> 00:13:03,000 Speaker 1: it's not a constraint on our business. I would say, 226 00:13:03,480 --> 00:13:05,440 Speaker 1: thanks very much for coming in and spending time with us. 227 00:13:05,520 --> 00:13:09,559 Speaker 1: Much appreciate it. Very interesting UH. Jerry Rozsieri is the 228 00:13:09,640 --> 00:13:34,240 Speaker 1: president and the chief executive of Missouho Security. Total addressable market? 229 00:13:34,600 --> 00:13:37,160 Speaker 1: What is it? And why does it matter? Well, we 230 00:13:37,200 --> 00:13:39,400 Speaker 1: have Bill Smede to help us answer this question. He 231 00:13:39,480 --> 00:13:42,600 Speaker 1: is the chief executive officer and chief investment officer for 232 00:13:42,720 --> 00:13:46,480 Speaker 1: smed Capital Management. They're based in Seattle, helping to manage 233 00:13:46,480 --> 00:13:49,800 Speaker 1: more than two point two billion dollars and you can 234 00:13:49,920 --> 00:13:54,400 Speaker 1: follow Bill on Twitter at Smede Cap, s m E 235 00:13:54,480 --> 00:13:59,359 Speaker 1: A d cap alright, smead cap. What is total addressable 236 00:13:59,440 --> 00:14:04,360 Speaker 1: market t A M. Well, it means how many possible 237 00:14:04,480 --> 00:14:09,440 Speaker 1: customers or how many possible widgets that you can sell 238 00:14:10,320 --> 00:14:14,319 Speaker 1: based on the population available and those that have access 239 00:14:14,360 --> 00:14:18,000 Speaker 1: to what you're doing. And it's become quite a popular 240 00:14:18,040 --> 00:14:21,760 Speaker 1: thing where you know, we're we're ten years into maybe 241 00:14:21,800 --> 00:14:24,800 Speaker 1: the best stretch that growth has ever had against value. 242 00:14:25,240 --> 00:14:29,680 Speaker 1: So when when when valuations aren't very enjoyable to talk about, 243 00:14:30,320 --> 00:14:32,880 Speaker 1: it's pretty easy for growth people to kind of slip 244 00:14:32,920 --> 00:14:38,119 Speaker 1: into talking about possibilities and potential and uh, total addressable 245 00:14:38,120 --> 00:14:41,120 Speaker 1: market is a way to to think about potential. Well, 246 00:14:41,160 --> 00:14:43,560 Speaker 1: I could guess, I could say potentially at one point 247 00:14:43,600 --> 00:14:45,360 Speaker 1: I was going to play for the NBA, but I 248 00:14:45,440 --> 00:14:48,480 Speaker 1: knew that wasn't gonna happen, So potential goes out the window. 249 00:14:48,800 --> 00:14:54,560 Speaker 1: Does this make any sense? Well, you know it doesn't 250 00:14:54,360 --> 00:14:57,920 Speaker 1: certain circumstances. I think you know. Warren Buffett says, what 251 00:14:57,920 --> 00:14:59,840 Speaker 1: the wise man does at the beginning of the fool 252 00:14:59,840 --> 00:15:01,880 Speaker 1: to us at the end. So so let me give 253 00:15:01,880 --> 00:15:05,680 Speaker 1: you an example. When he bought Coca Cola, he actually 254 00:15:05,720 --> 00:15:08,280 Speaker 1: paid a much higher price earnings ratio than he normally 255 00:15:08,360 --> 00:15:11,440 Speaker 1: used to pay. He paid eighteen times earnings. But he 256 00:15:11,480 --> 00:15:15,000 Speaker 1: could see that Coke was in the early stages of 257 00:15:15,120 --> 00:15:19,280 Speaker 1: beginning to sell soda pop all over the world rather 258 00:15:19,320 --> 00:15:22,240 Speaker 1: than just the you know, the most sophisticated parts of 259 00:15:22,240 --> 00:15:25,000 Speaker 1: the world. And so you know, by the time he 260 00:15:25,080 --> 00:15:28,200 Speaker 1: got done, we were on a one week mission trip 261 00:15:28,240 --> 00:15:30,760 Speaker 1: with our family and they were drinking phantom on a 262 00:15:30,800 --> 00:15:34,480 Speaker 1: relatively deserted island off the coast to Honduras. And that 263 00:15:34,520 --> 00:15:37,200 Speaker 1: was about ten years ago, right, So they went from 264 00:15:37,240 --> 00:15:41,480 Speaker 1: from mainly mainly dominating the highly populated parts of the 265 00:15:41,520 --> 00:15:44,200 Speaker 1: western world and they went all the way around the world. 266 00:15:44,200 --> 00:15:47,840 Speaker 1: So that market got addressed by Coca Cola. So it's 267 00:15:47,880 --> 00:15:49,720 Speaker 1: a good time to think about it at the beginning, 268 00:15:50,720 --> 00:15:53,160 Speaker 1: but but it's it's not good at all when you 269 00:15:53,240 --> 00:15:55,520 Speaker 1: get in the late stages of a lot of financial 270 00:15:55,560 --> 00:15:58,360 Speaker 1: euphoria like we are now to think about that because 271 00:15:58,400 --> 00:16:02,960 Speaker 1: it usually breeds trouble. Bill, What could be in your 272 00:16:03,000 --> 00:16:05,280 Speaker 1: mind the next Coca Cola, if not on that scale, 273 00:16:05,360 --> 00:16:08,160 Speaker 1: but has the potential to really take off. I think 274 00:16:08,160 --> 00:16:13,360 Speaker 1: you did home in on some pharmaceutical companies. Correct. Well, yeah, 275 00:16:13,760 --> 00:16:17,440 Speaker 1: the there's an enormous population, both in the States and 276 00:16:17,480 --> 00:16:21,720 Speaker 1: Europe of of baby boomers and osteo processes is a 277 00:16:22,280 --> 00:16:25,720 Speaker 1: is a malady that that has a tendency to hit 278 00:16:25,800 --> 00:16:29,280 Speaker 1: as you get older, and it's especially prevalent in women. 279 00:16:29,760 --> 00:16:34,120 Speaker 1: And so you know, m Gen makes the most successful 280 00:16:34,600 --> 00:16:38,720 Speaker 1: uh drug for treating osteo process Prola, and then as 281 00:16:38,760 --> 00:16:41,840 Speaker 1: a bit of good fortune, they found out in testing 282 00:16:41,840 --> 00:16:45,360 Speaker 1: thirty people that it also caused tumors that were close 283 00:16:45,440 --> 00:16:48,040 Speaker 1: to the bone to stop growing, and they sell that 284 00:16:48,160 --> 00:16:51,640 Speaker 1: as Xchieva. And so you know, even though that's a 285 00:16:51,640 --> 00:16:54,880 Speaker 1: blockbuster already prolia Is, it's just got a lot of 286 00:16:54,920 --> 00:16:58,320 Speaker 1: population in its way, and and that's something that the 287 00:16:58,360 --> 00:17:01,960 Speaker 1: company has to look forward to. Another case, in Mgen's case, 288 00:17:02,000 --> 00:17:06,159 Speaker 1: they're introducing Rapata, and the health insurance industry has been 289 00:17:06,200 --> 00:17:08,840 Speaker 1: slow to take it on given all the tweets and 290 00:17:08,960 --> 00:17:14,280 Speaker 1: grief associated with pharmaceutical prices. So uh it's been a 291 00:17:14,359 --> 00:17:18,159 Speaker 1: slow to be adopted. But if you combine that with staatens, 292 00:17:18,640 --> 00:17:22,800 Speaker 1: people with terrible high bad cholesterol dropped down to about 293 00:17:22,840 --> 00:17:25,800 Speaker 1: seventy bad cholesterol. In effect, we could have a nation 294 00:17:25,840 --> 00:17:29,600 Speaker 1: of marathon runners running around people that were formerly had 295 00:17:29,640 --> 00:17:33,160 Speaker 1: the blood of of someone with severe heart disease potential 296 00:17:33,440 --> 00:17:36,159 Speaker 1: and and and very likely at some point time to 297 00:17:36,160 --> 00:17:38,440 Speaker 1: get hit by heart attack or stroke to a bunch 298 00:17:38,440 --> 00:17:41,480 Speaker 1: of marathon runners around running around because of the way 299 00:17:41,480 --> 00:17:44,600 Speaker 1: that this attacks bad cholesterol in the bloodstream. Well, Bill, 300 00:17:44,680 --> 00:17:48,560 Speaker 1: eventually those marathon runners might have to head home. Can 301 00:17:48,600 --> 00:17:53,440 Speaker 1: you talk about the home building market and specifically Lenar Well, Yeah, 302 00:17:53,520 --> 00:17:57,680 Speaker 1: Leonard now owns more build uble lots than anybody because 303 00:17:57,880 --> 00:18:01,960 Speaker 1: they're they're merging with call Atlantic and UH as you 304 00:18:02,040 --> 00:18:04,320 Speaker 1: go forward, the three things that are gonna be tough 305 00:18:04,400 --> 00:18:06,920 Speaker 1: to deal with to build all the homes we're gonna need, 306 00:18:06,920 --> 00:18:11,280 Speaker 1: and the total addressable market is that some large percentage 307 00:18:11,359 --> 00:18:13,760 Speaker 1: I think Zillo is on the cutting edge of of 308 00:18:13,840 --> 00:18:17,000 Speaker 1: measuring this, some very large percentage of the millennials that 309 00:18:17,040 --> 00:18:20,399 Speaker 1: our ages twenty two tote are going to end up 310 00:18:20,400 --> 00:18:22,399 Speaker 1: buying a home, and many of those homes need to 311 00:18:22,440 --> 00:18:25,280 Speaker 1: be built because the people at the other end aren't 312 00:18:25,320 --> 00:18:27,600 Speaker 1: moving out of their homes as fast as people are 313 00:18:27,640 --> 00:18:31,080 Speaker 1: moving in. So so UH, having a lot of buildable 314 00:18:31,119 --> 00:18:33,959 Speaker 1: lots is one of the ingredients that would help you 315 00:18:34,080 --> 00:18:37,800 Speaker 1: meet that addressable market. And then of course the labor 316 00:18:37,920 --> 00:18:40,680 Speaker 1: is going to be a big challenge. Right. We think 317 00:18:40,720 --> 00:18:44,120 Speaker 1: that you might see a very generous green card set 318 00:18:44,200 --> 00:18:50,639 Speaker 1: up for people in carpentry, plumbing, electricians, etcetera. Uh, bricklayers, roofers, 319 00:18:50,880 --> 00:18:54,440 Speaker 1: you name it, and and uh and then the materials 320 00:18:54,480 --> 00:18:57,159 Speaker 1: and we could see some inflation in the materials as well. 321 00:18:57,280 --> 00:19:00,120 Speaker 1: But uh, that's right, those are in front of us 322 00:19:00,160 --> 00:19:04,560 Speaker 1: because even today, the home building that's being done today 323 00:19:04,680 --> 00:19:07,440 Speaker 1: is way better than five years ago. But it wouldn't 324 00:19:07,440 --> 00:19:10,399 Speaker 1: It would have been a bad number in nineteen sixty, 325 00:19:10,840 --> 00:19:14,920 Speaker 1: seventy eighty five or ninety five. Rights, it's we're as 326 00:19:14,920 --> 00:19:19,159 Speaker 1: still at recession low levels of home building compared to 327 00:19:19,240 --> 00:19:22,120 Speaker 1: past decades. Okay, but Bill, when does the stock get 328 00:19:22,200 --> 00:19:25,120 Speaker 1: too expensive? I mean you're looking at Lenar right now. 329 00:19:25,160 --> 00:19:29,119 Speaker 1: The stock is up within so far this year and 330 00:19:29,240 --> 00:19:35,679 Speaker 1: it sports a pe of over sixteen for a home builder, right, So, so, uh, 331 00:19:36,160 --> 00:19:40,119 Speaker 1: what you've got here is a historically cyclical business in 332 00:19:40,200 --> 00:19:44,560 Speaker 1: a secular surge, and we think we're we've finished the 333 00:19:44,640 --> 00:19:47,040 Speaker 1: third inning is where we think we are now what 334 00:19:47,160 --> 00:19:50,960 Speaker 1: that means PIM and for low turnover portfolio managers like 335 00:19:51,040 --> 00:19:53,640 Speaker 1: the US, this is one of the challenge of being 336 00:19:53,640 --> 00:19:57,640 Speaker 1: our investors is we want to sit through whatever correction 337 00:19:57,760 --> 00:20:00,080 Speaker 1: comes next to get to where this is going to 338 00:20:00,119 --> 00:20:03,639 Speaker 1: be in five or six years. So you're right. This industry, 339 00:20:03,840 --> 00:20:07,600 Speaker 1: the earnings are growing twenty percent a year on about 340 00:20:07,640 --> 00:20:12,760 Speaker 1: ten revenue growth. Right, So there's people out here in 341 00:20:12,800 --> 00:20:16,479 Speaker 1: Seattle excited about the company whose revenue is growing and 342 00:20:16,480 --> 00:20:19,040 Speaker 1: whose profits don't go at all. And this is an 343 00:20:19,080 --> 00:20:22,000 Speaker 1: industry whose revenue is growing ten percent and the profits 344 00:20:22,000 --> 00:20:25,080 Speaker 1: are growing twenty So you're absolutely right. They've had a 345 00:20:25,080 --> 00:20:27,680 Speaker 1: good run. They could have a correction at any time. Fact, 346 00:20:27,720 --> 00:20:29,560 Speaker 1: this market could have a correction at any time. But 347 00:20:30,000 --> 00:20:32,440 Speaker 1: for the long duration investor that wants to catch this 348 00:20:32,520 --> 00:20:35,800 Speaker 1: next five to ten years aging of the Moneial group, 349 00:20:36,000 --> 00:20:39,520 Speaker 1: it's a nice addressable market to consider. Build. Another way 350 00:20:39,560 --> 00:20:43,320 Speaker 1: to hedge against the downturn is holding more cash? Are 351 00:20:43,440 --> 00:20:47,400 Speaker 1: you doing that? No? We we We kind of made 352 00:20:47,440 --> 00:20:50,760 Speaker 1: a decision ten year our fund are our fund will 353 00:20:50,760 --> 00:20:53,879 Speaker 1: be ten years old, our strategy ten years old right 354 00:20:53,880 --> 00:20:56,840 Speaker 1: after the first of the year, and and we just 355 00:20:56,920 --> 00:20:59,880 Speaker 1: made a choice. At the beginning. We assume that most 356 00:21:00,000 --> 00:21:02,840 Speaker 1: of the people that would invest with us, we would 357 00:21:02,840 --> 00:21:05,840 Speaker 1: be a part of their total portfolio. Someone else is 358 00:21:05,880 --> 00:21:09,840 Speaker 1: likely doing the asset allocation, and so we don't really 359 00:21:09,920 --> 00:21:13,280 Speaker 1: feel like we have any special competency to time the market. 360 00:21:13,800 --> 00:21:17,480 Speaker 1: In fact, you know what we got started at the 361 00:21:17,480 --> 00:21:19,959 Speaker 1: beginning of Oh wait, the next fourteen months was the 362 00:21:20,000 --> 00:21:23,640 Speaker 1: worst market decline in eighty years, So I don't think 363 00:21:23,640 --> 00:21:26,439 Speaker 1: people should be coming to us for market timing. Bill Smide, 364 00:21:26,480 --> 00:21:28,720 Speaker 1: thank you so much for joining us. Bill Smeede, Chief 365 00:21:28,720 --> 00:21:32,520 Speaker 1: executive Officer and chief investment Officer. It's Smeed a capital 366 00:21:32,560 --> 00:21:56,879 Speaker 1: management overseeing two point two billion dollars in Seattle. What 367 00:21:56,920 --> 00:21:59,359 Speaker 1: would you like to do for a job? Perhaps a 368 00:21:59,520 --> 00:22:01,840 Speaker 1: game to hester you don't need any experience for that, 369 00:22:02,000 --> 00:22:04,960 Speaker 1: or a heavy equipment operator. We hope you have experience 370 00:22:05,040 --> 00:22:07,639 Speaker 1: for that. Here to help us understand the job market 371 00:22:07,720 --> 00:22:11,159 Speaker 1: right now is the chief executive of Zip Recruiter. Ian 372 00:22:11,320 --> 00:22:13,399 Speaker 1: Siegel is also the founder. Great to have you with us, 373 00:22:13,400 --> 00:22:16,359 Speaker 1: ce In, Thanks for spending time. You know, I was 374 00:22:16,400 --> 00:22:19,560 Speaker 1: looking at your side, looking at a trending job titles, 375 00:22:19,840 --> 00:22:23,960 Speaker 1: trending job types, and I'm seeing that one of them 376 00:22:24,160 --> 00:22:31,120 Speaker 1: is a boat captain. Where does this information come from? Well, 377 00:22:31,720 --> 00:22:37,160 Speaker 1: we a Zipp Recruiter, are probably the single largest starting 378 00:22:37,240 --> 00:22:41,440 Speaker 1: point for small and mid sized businesses that do job 379 00:22:41,480 --> 00:22:46,200 Speaker 1: posting in America, and so we end up getting all 380 00:22:46,240 --> 00:22:50,440 Speaker 1: the interesting jobs on our site. So if you, for example, 381 00:22:51,160 --> 00:22:54,080 Speaker 1: run a small ship business, or let's say you are 382 00:22:54,600 --> 00:22:59,160 Speaker 1: in a hurricane struck area and hurricanes have knocked out 383 00:22:59,200 --> 00:23:02,360 Speaker 1: your business that will last few months, then it seems 384 00:23:02,440 --> 00:23:05,000 Speaker 1: likely that you're going to go on a hiring binge 385 00:23:05,119 --> 00:23:09,399 Speaker 1: right now to restock the captains for your ships. So 386 00:23:09,560 --> 00:23:12,080 Speaker 1: I is it fair to say that zip recruiter is 387 00:23:12,200 --> 00:23:18,800 Speaker 1: sort of a byproduct or caters to the gig economy. Well, certainly, 388 00:23:18,800 --> 00:23:21,040 Speaker 1: the gig economy makes up a lot of the jobs 389 00:23:21,080 --> 00:23:22,960 Speaker 1: that you will find on our site, and that's because 390 00:23:23,000 --> 00:23:28,000 Speaker 1: the gig economy increasingly represents a large percentage of opportunities 391 00:23:28,040 --> 00:23:31,240 Speaker 1: for people to work in America. So, whether it's Uber 392 00:23:31,560 --> 00:23:34,639 Speaker 1: or list or delivery Hero or a multitude of on 393 00:23:34,720 --> 00:23:39,120 Speaker 1: demand services, the gig economy has become a material option 394 00:23:39,359 --> 00:23:41,840 Speaker 1: for a lot of job diggers, not just for full 395 00:23:41,840 --> 00:23:46,480 Speaker 1: time work, but also as a second job to bolster 396 00:23:46,640 --> 00:23:50,359 Speaker 1: their income. So in one thing that a lot of 397 00:23:50,400 --> 00:23:53,639 Speaker 1: economists sort of decry is that there isn't a tremendous 398 00:23:53,640 --> 00:23:57,320 Speaker 1: amount of visibility into the gig economy. And I'm wondering, 399 00:23:57,440 --> 00:23:59,920 Speaker 1: from your perspective, you probably have one of the best 400 00:24:00,080 --> 00:24:03,239 Speaker 1: views into it. Frankly, and I'm wondering what kinds of 401 00:24:03,320 --> 00:24:06,800 Speaker 1: wage increases are you are you seeing and and has 402 00:24:06,880 --> 00:24:11,119 Speaker 1: that been a positive trend that you've been noticing? Well, 403 00:24:11,160 --> 00:24:14,359 Speaker 1: I mean, if you if you look at the health 404 00:24:14,480 --> 00:24:17,520 Speaker 1: of the global job market and want to see global, 405 00:24:17,520 --> 00:24:19,880 Speaker 1: I mean in the United States. Uh, you know, you're 406 00:24:19,920 --> 00:24:23,360 Speaker 1: at four point one percent unemployment, which is a seventeen 407 00:24:23,440 --> 00:24:26,359 Speaker 1: year low. You've had ninety two months of the economy 408 00:24:26,400 --> 00:24:29,240 Speaker 1: adding jobs in a row, and so you're really looking 409 00:24:29,280 --> 00:24:32,120 Speaker 1: at what some would call peak employment. And when you're 410 00:24:32,119 --> 00:24:35,080 Speaker 1: in that kind of environment, what happens is there is 411 00:24:35,119 --> 00:24:38,040 Speaker 1: a dearth of talent searching for work, and so employers 412 00:24:38,080 --> 00:24:40,760 Speaker 1: are forced to do things like raise wages to induce 413 00:24:40,800 --> 00:24:43,600 Speaker 1: people to leave jobs they currently have and come to 414 00:24:43,720 --> 00:24:48,800 Speaker 1: the those employers opportunities. So the gig economy um isn't 415 00:24:48,840 --> 00:24:52,560 Speaker 1: really benefiting from that wage increase. The gig economy is 416 00:24:52,560 --> 00:24:55,199 Speaker 1: more like a foundation upon which if you want to 417 00:24:55,200 --> 00:24:57,800 Speaker 1: work today, there is an opportunity out there for you 418 00:24:57,880 --> 00:25:00,160 Speaker 1: to go get. But if you are looking for are 419 00:25:00,560 --> 00:25:04,000 Speaker 1: more full time work and a more traditional role. Right 420 00:25:04,000 --> 00:25:06,680 Speaker 1: now is a great time, probably one of the greatest 421 00:25:06,720 --> 00:25:09,920 Speaker 1: times in our lifetime to be a job seeker. So 422 00:25:09,960 --> 00:25:12,000 Speaker 1: are you saying that there's sort of a divergence here 423 00:25:12,160 --> 00:25:16,760 Speaker 1: with sort of the standard jobs being much more sort 424 00:25:16,760 --> 00:25:20,240 Speaker 1: of competitive and higher paying and paying even higher wages, 425 00:25:20,440 --> 00:25:22,680 Speaker 1: whereas in the gig economy you're not seeing those pay 426 00:25:22,760 --> 00:25:28,280 Speaker 1: raises exactly. And and part of why you're seeing people 427 00:25:29,200 --> 00:25:32,320 Speaker 1: uh be more patient in their job search is because 428 00:25:33,640 --> 00:25:36,320 Speaker 1: the employees who are working in a gig economy are 429 00:25:36,400 --> 00:25:38,600 Speaker 1: using it as a secondary source of income or is 430 00:25:38,640 --> 00:25:41,720 Speaker 1: a bridging income between opportunities as they look for work 431 00:25:41,800 --> 00:25:44,600 Speaker 1: that they would consider more meaningful. Well, Ian, when I 432 00:25:44,680 --> 00:25:46,639 Speaker 1: asked you about being a boat captain, I thought you 433 00:25:46,680 --> 00:25:48,879 Speaker 1: were going to say that you've got an algorithm or 434 00:25:48,920 --> 00:25:52,879 Speaker 1: a way to aggregate all of the information that comes 435 00:25:52,920 --> 00:25:58,600 Speaker 1: to your site and to your specific company. I'm wondering, then, 436 00:25:59,560 --> 00:26:03,680 Speaker 1: how do you automate the process of matching the right 437 00:26:03,760 --> 00:26:07,040 Speaker 1: person with the right job or is that left up 438 00:26:07,080 --> 00:26:12,160 Speaker 1: to the company that's looking for the worker. Oh no, no, no, no, 439 00:26:12,400 --> 00:26:16,200 Speaker 1: we are not just at the bleeding edge. We're sorry. 440 00:26:16,200 --> 00:26:18,280 Speaker 1: We're not the cutting edge of technology. We're at the 441 00:26:18,320 --> 00:26:22,280 Speaker 1: bleeding edge right now. There is technology that has evolved 442 00:26:22,359 --> 00:26:25,600 Speaker 1: over the last two years, often referred to as machine 443 00:26:25,680 --> 00:26:29,159 Speaker 1: learning or sometimes called deep learning. It's an approach to 444 00:26:29,160 --> 00:26:33,199 Speaker 1: building algorithms that do things that humans will never be 445 00:26:33,280 --> 00:26:37,640 Speaker 1: able to match. You give us an example behind absolutely 446 00:26:38,160 --> 00:26:42,680 Speaker 1: so uh when you use one of these algorithms instead 447 00:26:42,720 --> 00:26:46,080 Speaker 1: of doing a traditional match the way you would rationally 448 00:26:46,080 --> 00:26:48,840 Speaker 1: do it, which is I, for example, have been a 449 00:26:48,880 --> 00:26:52,680 Speaker 1: product manager in my career. Old school algorithms would say 450 00:26:52,680 --> 00:26:54,439 Speaker 1: I'm going to find all the jobs that have product 451 00:26:54,480 --> 00:26:57,200 Speaker 1: manager in the job title, and I will just show 452 00:26:57,200 --> 00:27:01,480 Speaker 1: you those jobs. Today, the technolog is so good, it says, 453 00:27:01,560 --> 00:27:03,679 Speaker 1: I'm going to look at everyone who's ever searched for 454 00:27:03,720 --> 00:27:06,359 Speaker 1: product manager in there in the history of this company, 455 00:27:06,359 --> 00:27:08,640 Speaker 1: and then see all the other job titles that they've 456 00:27:08,680 --> 00:27:11,160 Speaker 1: ever looked for, and as a result of that, they're 457 00:27:11,160 --> 00:27:14,520 Speaker 1: able to cluster opportunities that might be interesting to you 458 00:27:14,920 --> 00:27:17,600 Speaker 1: that a traditional search engine would not be able to surface. 459 00:27:17,880 --> 00:27:20,399 Speaker 1: And that's really the tip of the iceberg, because with 460 00:27:20,440 --> 00:27:23,400 Speaker 1: these algorithms we can start to use signal data from 461 00:27:23,400 --> 00:27:26,280 Speaker 1: the job seekers themselves, so we know, for example, if 462 00:27:26,320 --> 00:27:28,959 Speaker 1: ten job seekers go look at a specific job and 463 00:27:29,000 --> 00:27:32,240 Speaker 1: none of them apply, there is something unappealing about that job, 464 00:27:32,280 --> 00:27:34,520 Speaker 1: and the algorithm is smart enough to stop showing it. 465 00:27:36,040 --> 00:27:41,159 Speaker 1: Ian How does zip recruiter make money? So zip Recruiter 466 00:27:41,280 --> 00:27:44,520 Speaker 1: was built with a very simple premise is that a 467 00:27:44,560 --> 00:27:46,960 Speaker 1: lot of small businesses don't have the time to figure 468 00:27:46,960 --> 00:27:49,399 Speaker 1: out which job board they should be posting too. So 469 00:27:49,760 --> 00:27:52,440 Speaker 1: zip recruiter enables you, if you are a hiring manager, 470 00:27:52,920 --> 00:27:55,720 Speaker 1: supposed to over a hundred job sites with a single click, 471 00:27:56,200 --> 00:27:58,280 Speaker 1: and then all the candidates from all those different sites 472 00:27:58,400 --> 00:28:02,800 Speaker 1: come into one easy to review list. And in as 473 00:28:02,800 --> 00:28:08,520 Speaker 1: far as wages go, can you track individual wage offers 474 00:28:08,680 --> 00:28:13,440 Speaker 1: or salary requirements on the site? Yeah, so we get 475 00:28:13,520 --> 00:28:17,600 Speaker 1: you know, high hundreds of thousands of jobs directly posted 476 00:28:17,680 --> 00:28:21,400 Speaker 1: through zip recruiter every month, and one of the pieces 477 00:28:21,400 --> 00:28:24,360 Speaker 1: of information we capture about every one of those opportunities 478 00:28:24,440 --> 00:28:27,480 Speaker 1: is what salary is being offered. We use a BLS 479 00:28:27,480 --> 00:28:31,080 Speaker 1: based definition of low skilled, mid skilled, and high skilled 480 00:28:31,400 --> 00:28:34,359 Speaker 1: so we can watch trends that occur in the hiring market. 481 00:28:34,480 --> 00:28:38,600 Speaker 1: And just to make it simple, across all levels, all 482 00:28:38,720 --> 00:28:42,120 Speaker 1: skill levels, in the past year, there has been wage increase, 483 00:28:42,840 --> 00:28:45,720 Speaker 1: So it is, as I said, a great time to 484 00:28:45,760 --> 00:28:48,440 Speaker 1: be a job seeker. So I just not to harp 485 00:28:48,440 --> 00:28:50,560 Speaker 1: on this, but who pays you. Which is it? Is 486 00:28:50,600 --> 00:28:53,640 Speaker 1: it the job seeker or is it the potential employer? 487 00:28:55,560 --> 00:28:58,200 Speaker 1: It's the employers who pay us in order to do 488 00:28:58,240 --> 00:29:01,160 Speaker 1: that job distribution and collect Canada, it's we never charged 489 00:29:01,240 --> 00:29:04,840 Speaker 1: job seekers for anything. Okay, what what is next for 490 00:29:05,440 --> 00:29:08,200 Speaker 1: ZIP recruiter? Is there a way to tell whether it's 491 00:29:08,240 --> 00:29:11,800 Speaker 1: been a successful match and then you use that same 492 00:29:11,840 --> 00:29:16,040 Speaker 1: algorithm or an unsuccessful match brings some kind of remedy 493 00:29:16,240 --> 00:29:20,880 Speaker 1: or correction. I mean it's been Honestly, it's the most 494 00:29:20,920 --> 00:29:24,760 Speaker 1: exciting time it's ever been to be working in the 495 00:29:24,880 --> 00:29:29,240 Speaker 1: job category. The technology that has evolved, uh is so 496 00:29:29,280 --> 00:29:33,840 Speaker 1: advanced it's starting to feel like magic. So historically, from 497 00:29:33,840 --> 00:29:35,840 Speaker 1: the time you posted a job to the time you 498 00:29:35,880 --> 00:29:38,080 Speaker 1: sell that job, it would take you between forty five 499 00:29:38,120 --> 00:29:42,400 Speaker 1: and sixty days. And now literally almost instantly after you 500 00:29:42,480 --> 00:29:45,160 Speaker 1: post a job, we're able to go cherry pick the 501 00:29:45,320 --> 00:29:48,120 Speaker 1: very best candidates that are in market and notified and 502 00:29:48,280 --> 00:29:51,720 Speaker 1: instantly of just that job going live, which is inducing 503 00:29:52,160 --> 00:29:56,560 Speaker 1: unbelievable high quality candidates literally within an hour of a 504 00:29:56,680 --> 00:30:00,800 Speaker 1: job being posted. The entire recruiting process moving towards an 505 00:30:00,840 --> 00:30:03,680 Speaker 1: almost real time experience, and it's going to be a 506 00:30:03,720 --> 00:30:06,400 Speaker 1: real disruption to the way people hire. Ian Segel, thank 507 00:30:06,400 --> 00:30:08,400 Speaker 1: you so much for joining us. Ian Siegel, co founder 508 00:30:08,400 --> 00:30:16,200 Speaker 1: and chief executive officer of Zip Recruiter. Thanks for listening 509 00:30:16,240 --> 00:30:19,120 Speaker 1: to the Bloomberg P and L podcast. You can subscribe 510 00:30:19,120 --> 00:30:22,720 Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever 511 00:30:22,760 --> 00:30:26,280 Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter 512 00:30:26,560 --> 00:30:30,320 Speaker 1: at pim Fox. I'm on Twitter at Lisa abramowits one 513 00:30:30,520 --> 00:30:33,200 Speaker 1: before the podcast. You can always catch us worldwide on 514 00:30:33,280 --> 00:30:34,120 Speaker 1: Bloomberg Radio.