Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,
Speaker 1: we now quote bitcoin spot prices here at Bloomberg because
Speaker 1: it has gotten that hot. And here to talk about
Speaker 1: sort of the agony that this presents to the biggest
Speaker 1: Wall Street banks is Shinelli Basak. She's insurance company is
Speaker 1: a boutique investment banks reporter for Bloomberg News. She's also
Speaker 1: getting her m b A at n y U. And
Speaker 1: before we get into the details of what to expect
Speaker 1: right before bitcoin starts trading on the futures exchange this Sunday,
Speaker 1: for the first time time, you said that they're crypto
Speaker 1: clubs and everyone's a crypto trader in your MBA classes.
Speaker 1: And it's shocking how many people talk about it in
Speaker 1: an MBA program. It comes up almost every day. What
Speaker 1: are they talking about? They're talking about how they can
Speaker 1: trade it. All their friends are in the market in
Speaker 1: some fashion, whether they're in technology somehow or whether they're
Speaker 1: at a bank and thinking of leaving actually to kind
Speaker 1: of you know, get into the market in different ways
Speaker 1: to do what well. For example, one of the biggest
Speaker 1: investors we know in this space is Mike Novograds, right,
Speaker 1: I mean Mike Novagrads has people he's hired from Millennium,
Speaker 1: Goldman and Morgan Stanley, right. So you know, while the
Speaker 1: big banks have been very slow to get in, we've
Speaker 1: seen talent move to places where they can do more
Speaker 1: active in the market. Curious, how do they expect this
Speaker 1: to be cleared? If a lot of the banks are
Speaker 1: not willing to do that, how do you clear a trade?
Speaker 1: I am very curious to see what volumes look like
Speaker 1: on Sunday and Monday. I've been asking everybody what they're expecting.
Speaker 1: Because Golvin has said they'll be able to do it immediately.
Speaker 1: All the other banks pretty much have said they're not
Speaker 1: going to be ready on day one, or they're not
Speaker 1: going to do it at all. They're still waiting. What's
Speaker 1: the main obstacle is that the margins that people have
Speaker 1: to post. The margins are wicked high. How are they
Speaker 1: they used to be? But after so much volatility the
Speaker 1: last couple of weeks, CEBO actually raised the requirements. So
Speaker 1: that means that anybody looking to make a bitcoin trade
Speaker 1: has to post forty four percent of whatever the trade
Speaker 1: they're trying to put on the equivalent of that in
Speaker 1: some kind of hard asset cash correct aside. And and
Speaker 1: so what does that mean? If the price goes, you know,
Speaker 1: up rapidly, then the banks have to be worried about it. Right,
Speaker 1: the price yesterday alone surge. So if this is something
Speaker 1: that is going to be tradeable, what is going to
Speaker 1: be the deliverable cash? It's actually cash settled, a cash settled,
Speaker 1: So really everybody, all they just want to do is
Speaker 1: they're just trading this to make dollars. They're using this
Speaker 1: to make money. Well, that's the other question that's coming
Speaker 1: up here too, right, I mean, because it's cash, that'll
Speaker 1: the shows that the futures market is pretty much a
Speaker 1: speculators market, right, and so there's kind of inherent differences
Speaker 1: between how people trade bitcoin now and how they will
Speaker 1: be trading them moving forward. There was a story on
Speaker 1: the Bloomberg that cited a statistic that I thought was
Speaker 1: rather shocking that when thousand investors, which is a relatively
Speaker 1: small pool in the scheme of the millions of investors
Speaker 1: out there, only when thousand investors account for of the
Speaker 1: bitcoin holdings, what potential risks does that concentration offer up. Well,
Speaker 1: it's definitely a huge concentration risk, and I think it's
Speaker 1: also another reason people are kind of excited for the
Speaker 1: futures market. They're hoping that a lot of big institutional
Speaker 1: investors will start to get into the market because now
Speaker 1: we know the investors are not necessarily institutions. Pensions are
Speaker 1: not investing in bitcoin, they're really worried about custody issues.
Speaker 1: Endowments are not really although people are in talks with
Speaker 1: endowments of certainly they're not investing in this yet, so
Speaker 1: it's kind of limited. But it's also a lot of
Speaker 1: retail investors also, So really it's you know, it'sbody once
Speaker 1: told me the average age of a bitcoin investors twenty two.
Speaker 1: I don't know how true that is, but it's it's
Speaker 1: what I'm trying to do at the younger generation. So okay, right, well,
Speaker 1: let's hope not. The thing that occurs to me though,
Speaker 1: is if you have to put up so much margin,
Speaker 1: and if the trade moves against you during whatever time train,
Speaker 1: you know, before it expires, Uh, how are you going
Speaker 1: to manage the big price swing? So you're gonna then
Speaker 1: get a call from your broker whoever is executing the trade,
Speaker 1: saying you better put more money in the account by
Speaker 1: you know, four o'clock, or we're going to close out
Speaker 1: your account. Because it can go up and it can
Speaker 1: go down as much as we've seen what is the
Speaker 1: fifteen thousand one day, ten thousand another day, You're gonna
Speaker 1: have to be constantly monitoring your margin. Require That's absolutely true,
Speaker 1: and the people are already thinking about that right now.
Speaker 1: And um, you know, I wonder too. It means you
Speaker 1: also have less leverage on the investment, right So I'm
Speaker 1: wondering if it makes it somehow less attractive. So let's
Speaker 1: talk about the deliberations that are going on inside the
Speaker 1: biggest Wall Street banks right now. Goldman Sachs, as Pin
Speaker 1: was saying, has decided to start clearing bitcoin futures from
Speaker 1: day one. What's the debate internally here? The debate internally
Speaker 1: comes from a couple of ways. We talked about the
Speaker 1: volatility for a while that's definitely a huge concern reputational risk.
Speaker 1: I mean, we've seen every bank CEO come out in
Speaker 1: some fashion saying something the most promised in An example
Speaker 1: of this is Jamie Diamond who has called it a
Speaker 1: bubble and a fraud. UM. However, JP Morgan, that doesn't
Speaker 1: mean their clients are not asking about it, and they
Speaker 1: have to and they they are one of the people
Speaker 1: that have been weighing offering the futures contracts to their clients.
Speaker 1: So there's this inherent disconnect between what they have to
Speaker 1: address to clients and how maybe the banks feel about it.
Speaker 1: There's also no your customer, customer and undering leandering concerns
Speaker 1: with with these contracts as well. Is it useful to
Speaker 1: to think of bitcoin as a commodity or is a currency?
Speaker 1: That's the big debate, right what what? What is it? Um?
Speaker 1: You know there there are arguments for it to be both. UM.
Speaker 1: I think that generally, walking into the futures market, people
Speaker 1: are behaving as if it's a currency. I gotta say,
Speaker 1: one thing that I'm struck by is that the actual
Speaker 1: price that you can get on bitcoin is completely different
Speaker 1: from coin based to other other exchanges. So you have
Speaker 1: to wonder what the real value is and how are
Speaker 1: people not going to just simply get scammed? Right, We're
Speaker 1: definitely wondering kind of what the differentiation is among different
Speaker 1: exchanges and also not only just bitcoin, but now you
Speaker 1: have a lot of other options to invest in the
Speaker 1: cryptocurrency space and how those prices are connected to each other.
Speaker 1: One of the biggest mysteries in this world, for example,
Speaker 1: is tether. We had a fantastic story and if you
Speaker 1: haven't read it yet, I really suggest you guys look
Speaker 1: at it. By might not licening you know what is
Speaker 1: underpinning the value of tether. Well, we'll go and we'll
Speaker 1: explore that at another time. I want to thank you
Speaker 1: very much for being with us, just as shoes gold shoes. Uh.
Speaker 1: The Commodity Futures Trading Commission says that bitcoin is a
Speaker 1: commodity anyway, Thanks very much, Snali boss, much appreciated, and uh,
Speaker 1: we'll be looking forward to more reports on what happens
Speaker 1: to bitcoin. I have a feeling Sunday is going to
Speaker 1: be an important day. Blame Japanese banks for the flat
Speaker 1: treasury curve. That's according to City Group strategists. Here with
Speaker 1: us is the CEO of the U S arm of
Speaker 1: a Japanese bank, to comment on those Japanese flows and
Speaker 1: what they're doing to US markets. Jerry Rosieri, president and
Speaker 1: chief executive officer of Missoojo Securities, joins us here in
Speaker 1: our eleven three studios. Jerry, thank you so much for
Speaker 1: joining us. SO is this the case? Is it Japanese
Speaker 1: banks that are flooding into longer term US treasure ease
Speaker 1: that's keeping the yield curve flat? Well, that has been
Speaker 1: the case over many years. UH. You know, foreign foreign
Speaker 1: holdings by the Japanese have increased substantially over the last
Speaker 1: five to seven years. Up over that time period. UM,
Speaker 1: I think the bigger movement into US treasuries and and
Speaker 1: similar risk risk free assets was in two thousand sixteen
Speaker 1: two thousand seventeen. It's been less of a fixed income story. UH.
Speaker 1: And in fact, we've seen evidence that the banks and UH,
Speaker 1: particularly the regional banks in Japan will be pulling back
Speaker 1: a little bit, much of that dictated by the regulator.
Speaker 1: To be really clear, they've pulled back a little bit
Speaker 1: on their investments in US treasuries, I would say, not
Speaker 1: not pulling back in terms of UH selling assets, but
Speaker 1: the pace of buying, I would say, has has lessened.
Speaker 1: So this is not exactly the dynamic that well, I think,
Speaker 1: I think. You know, whenever you see moves, particularly in
Speaker 1: the U S treasury market, you'll curve flattening, you'll curve steeping. Uh.
Speaker 1: It's it's always common to to blame uh, non US
Speaker 1: investors oftentimes Asia. Uh, you know, and uh and uh.
Speaker 1: Certainly the Japanese are large holders at last China of
Speaker 1: US treasuries. I just want to ask a little bit
Speaker 1: and maybe get an update. I know in twenty fifteen,
Speaker 1: Missouho paid what about three billion dollars for the loan
Speaker 1: book of Royal Bank of Scotland. Right about that was
Speaker 1: a thirty six and a half billion dollar loan book
Speaker 1: for North America. Can you give us an update on
Speaker 1: that and whether if you were to be able to
Speaker 1: buy that today, what would that be worth? Well, they
Speaker 1: were basically a loan commitments, So the reason we pursued
Speaker 1: that transaction was to elevate our client penetration here in
Speaker 1: the America's So the book itself was interesting, but more importantly,
Speaker 1: we are looking to establish long term lending relationships in
Speaker 1: the US and that's what we've actually done. We've uh,
Speaker 1: we've more than uh I think for top tier lending
Speaker 1: relationships of increased ten times over the last two and
Speaker 1: a half years. And you're hiring human beings, right, Yeah.
Speaker 1: So with the the the asset purchase in and of
Speaker 1: itself was interesting, but we actually wouldn't have pursued that
Speaker 1: unless we were able to bring a number of people
Speaker 1: over from the institution. So we took on about a
Speaker 1: hundred and twenty people from RBS along with those assets.
Speaker 1: Just with respect to MISSOO Securities, how much has it
Speaker 1: expanded and how much do you plan to continue expanding
Speaker 1: from a head count perspective? Sure? So so in the
Speaker 1: US I joined the company two thousand, ten UM and
Speaker 1: we securities, we were maybe a little over three hundred people.
Speaker 1: Uh now we're hentering heading towards eight hundred UM. It's
Speaker 1: been a h I say, a measured expansion. We've tried
Speaker 1: to uh move at a pace that sort of suits
Speaker 1: our organizations tolerants. Uh. And but having said that, uh,
Speaker 1: it's been very targeted. So it's been capital markets, so
Speaker 1: debt capital markets, it's been equity capital markets. We've expended
Speaker 1: our high yield business over the last couple of years,
Speaker 1: also on the sales and trading front as well, growing
Speaker 1: out our equity platform as well as diversifying our fixed
Speaker 1: income platform. Any thoughts are maybe comparisons between now and
Speaker 1: the and the time of Lehman Brothers. Whether the banks
Speaker 1: and the brokerage firms have they changed at least the
Speaker 1: way that they perceived their balance sheets? I mean, does
Speaker 1: that inform the day to day operations of of the organization?
Speaker 1: I mean things are you know, I'm former Leman Brothers.
Speaker 1: I was there for twenty three years, so I know
Speaker 1: that situation well. But uh yeah, the environment is a
Speaker 1: lot different. I mean there's less leverage, uh you know,
Speaker 1: the regulatory environments different. Um but you know, I would
Speaker 1: say that uh you know, the the industries have been
Speaker 1: expanding since two thousand and eight. Uh so employments up
Speaker 1: in business actually is pretty decent. Where is the biggest
Speaker 1: opportunity for MISSOO host securities in US markets? Is it
Speaker 1: highel bond trading? Is it underwriting investment grade bonds? So
Speaker 1: we're we're already top ten in corporate investment grade debt
Speaker 1: in the U S which is trading in terms of
Speaker 1: origination UH. In terms of trading activities, we've been aggressively
Speaker 1: expanding our equity platform UH and cash businesses. We're working
Speaker 1: on both derivatives and ffects for fixed income UH and
Speaker 1: equities UM. In the fixed income side, we've been expanding
Speaker 1: our security securitized products area as well as in our
Speaker 1: high yield trading area. And just real quick, are you
Speaker 1: using balance sheet? Yes? We do? And is that increasing?
Speaker 1: Our balance sheet has been relatively stable. UM, it's but
Speaker 1: it's not a constraint on our business. I would say,
Speaker 1: thanks very much for coming in and spending time with us.
Speaker 1: Much appreciate it. Very interesting UH. Jerry Rozsieri is the
Speaker 1: president and the chief executive of Missouho Security. Total addressable market?
Speaker 1: What is it? And why does it matter? Well, we
Speaker 1: have Bill Smede to help us answer this question. He
Speaker 1: is the chief executive officer and chief investment officer for
Speaker 1: smed Capital Management. They're based in Seattle, helping to manage
Speaker 1: more than two point two billion dollars and you can
Speaker 1: follow Bill on Twitter at Smede Cap, s m E
Speaker 1: A d cap alright, smead cap. What is total addressable
Speaker 1: market t A M. Well, it means how many possible
Speaker 1: customers or how many possible widgets that you can sell
Speaker 1: based on the population available and those that have access
Speaker 1: to what you're doing. And it's become quite a popular
Speaker 1: thing where you know, we're we're ten years into maybe
Speaker 1: the best stretch that growth has ever had against value.
Speaker 1: So when when when valuations aren't very enjoyable to talk about,
Speaker 1: it's pretty easy for growth people to kind of slip
Speaker 1: into talking about possibilities and potential and uh, total addressable
Speaker 1: market is a way to to think about potential. Well,
Speaker 1: I could guess, I could say potentially at one point
Speaker 1: I was going to play for the NBA, but I
Speaker 1: knew that wasn't gonna happen, So potential goes out the window.
Speaker 1: Does this make any sense? Well, you know it doesn't
Speaker 1: certain circumstances. I think you know. Warren Buffett says, what
Speaker 1: the wise man does at the beginning of the fool
Speaker 1: to us at the end. So so let me give
Speaker 1: you an example. When he bought Coca Cola, he actually
Speaker 1: paid a much higher price earnings ratio than he normally
Speaker 1: used to pay. He paid eighteen times earnings. But he
Speaker 1: could see that Coke was in the early stages of
Speaker 1: beginning to sell soda pop all over the world rather
Speaker 1: than just the you know, the most sophisticated parts of
Speaker 1: the world. And so you know, by the time he
Speaker 1: got done, we were on a one week mission trip
Speaker 1: with our family and they were drinking phantom on a
Speaker 1: relatively deserted island off the coast to Honduras. And that
Speaker 1: was about ten years ago, right, So they went from
Speaker 1: from mainly mainly dominating the highly populated parts of the
Speaker 1: western world and they went all the way around the world.
Speaker 1: So that market got addressed by Coca Cola. So it's
Speaker 1: a good time to think about it at the beginning,
Speaker 1: but but it's it's not good at all when you
Speaker 1: get in the late stages of a lot of financial
Speaker 1: euphoria like we are now to think about that because
Speaker 1: it usually breeds trouble. Bill, What could be in your
Speaker 1: mind the next Coca Cola, if not on that scale,
Speaker 1: but has the potential to really take off. I think
Speaker 1: you did home in on some pharmaceutical companies. Correct. Well, yeah,
Speaker 1: the there's an enormous population, both in the States and
Speaker 1: Europe of of baby boomers and osteo processes is a
Speaker 1: is a malady that that has a tendency to hit
Speaker 1: as you get older, and it's especially prevalent in women.
Speaker 1: And so you know, m Gen makes the most successful
Speaker 1: uh drug for treating osteo process Prola, and then as
Speaker 1: a bit of good fortune, they found out in testing
Speaker 1: thirty people that it also caused tumors that were close
Speaker 1: to the bone to stop growing, and they sell that
Speaker 1: as Xchieva. And so you know, even though that's a
Speaker 1: blockbuster already prolia Is, it's just got a lot of
Speaker 1: population in its way, and and that's something that the
Speaker 1: company has to look forward to. Another case, in Mgen's case,
Speaker 1: they're introducing Rapata, and the health insurance industry has been
Speaker 1: slow to take it on given all the tweets and
Speaker 1: grief associated with pharmaceutical prices. So uh it's been a
Speaker 1: slow to be adopted. But if you combine that with staatens,
Speaker 1: people with terrible high bad cholesterol dropped down to about
Speaker 1: seventy bad cholesterol. In effect, we could have a nation
Speaker 1: of marathon runners running around people that were formerly had
Speaker 1: the blood of of someone with severe heart disease potential
Speaker 1: and and and very likely at some point time to
Speaker 1: get hit by heart attack or stroke to a bunch
Speaker 1: of marathon runners around running around because of the way
Speaker 1: that this attacks bad cholesterol in the bloodstream. Well, Bill,
Speaker 1: eventually those marathon runners might have to head home. Can
Speaker 1: you talk about the home building market and specifically Lenar Well, Yeah,
Speaker 1: Leonard now owns more build uble lots than anybody because
Speaker 1: they're they're merging with call Atlantic and UH as you
Speaker 1: go forward, the three things that are gonna be tough
Speaker 1: to deal with to build all the homes we're gonna need,
Speaker 1: and the total addressable market is that some large percentage
Speaker 1: I think Zillo is on the cutting edge of of
Speaker 1: measuring this, some very large percentage of the millennials that
Speaker 1: our ages twenty two tote are going to end up
Speaker 1: buying a home, and many of those homes need to
Speaker 1: be built because the people at the other end aren't
Speaker 1: moving out of their homes as fast as people are
Speaker 1: moving in. So so UH, having a lot of buildable
Speaker 1: lots is one of the ingredients that would help you
Speaker 1: meet that addressable market. And then of course the labor
Speaker 1: is going to be a big challenge. Right. We think
Speaker 1: that you might see a very generous green card set
Speaker 1: up for people in carpentry, plumbing, electricians, etcetera. Uh, bricklayers, roofers,
Speaker 1: you name it, and and uh and then the materials
Speaker 1: and we could see some inflation in the materials as well.
Speaker 1: But uh, that's right, those are in front of us
Speaker 1: because even today, the home building that's being done today
Speaker 1: is way better than five years ago. But it wouldn't
Speaker 1: It would have been a bad number in nineteen sixty,
Speaker 1: seventy eighty five or ninety five. Rights, it's we're as
Speaker 1: still at recession low levels of home building compared to
Speaker 1: past decades. Okay, but Bill, when does the stock get
Speaker 1: too expensive? I mean you're looking at Lenar right now.
Speaker 1: The stock is up within so far this year and
Speaker 1: it sports a pe of over sixteen for a home builder, right, So, so, uh,
Speaker 1: what you've got here is a historically cyclical business in
Speaker 1: a secular surge, and we think we're we've finished the
Speaker 1: third inning is where we think we are now what
Speaker 1: that means PIM and for low turnover portfolio managers like
Speaker 1: the US, this is one of the challenge of being
Speaker 1: our investors is we want to sit through whatever correction
Speaker 1: comes next to get to where this is going to
Speaker 1: be in five or six years. So you're right. This industry,
Speaker 1: the earnings are growing twenty percent a year on about
Speaker 1: ten revenue growth. Right, So there's people out here in
Speaker 1: Seattle excited about the company whose revenue is growing and
Speaker 1: whose profits don't go at all. And this is an
Speaker 1: industry whose revenue is growing ten percent and the profits
Speaker 1: are growing twenty So you're absolutely right. They've had a
Speaker 1: good run. They could have a correction at any time. Fact,
Speaker 1: this market could have a correction at any time. But
Speaker 1: for the long duration investor that wants to catch this
Speaker 1: next five to ten years aging of the Moneial group,
Speaker 1: it's a nice addressable market to consider. Build. Another way
Speaker 1: to hedge against the downturn is holding more cash? Are
Speaker 1: you doing that? No? We we We kind of made
Speaker 1: a decision ten year our fund are our fund will
Speaker 1: be ten years old, our strategy ten years old right
Speaker 1: after the first of the year, and and we just
Speaker 1: made a choice. At the beginning. We assume that most
Speaker 1: of the people that would invest with us, we would
Speaker 1: be a part of their total portfolio. Someone else is
Speaker 1: likely doing the asset allocation, and so we don't really
Speaker 1: feel like we have any special competency to time the market.
Speaker 1: In fact, you know what we got started at the
Speaker 1: beginning of Oh wait, the next fourteen months was the
Speaker 1: worst market decline in eighty years, So I don't think
Speaker 1: people should be coming to us for market timing. Bill Smide,
Speaker 1: thank you so much for joining us. Bill Smeede, Chief
Speaker 1: executive Officer and chief investment Officer. It's Smeed a capital
Speaker 1: management overseeing two point two billion dollars in Seattle. What
Speaker 1: would you like to do for a job? Perhaps a
Speaker 1: game to hester you don't need any experience for that,
Speaker 1: or a heavy equipment operator. We hope you have experience
Speaker 1: for that. Here to help us understand the job market
Speaker 1: right now is the chief executive of Zip Recruiter. Ian
Speaker 1: Siegel is also the founder. Great to have you with us,
Speaker 1: ce In, Thanks for spending time. You know, I was
Speaker 1: looking at your side, looking at a trending job titles,
Speaker 1: trending job types, and I'm seeing that one of them
Speaker 1: is a boat captain. Where does this information come from? Well,
Speaker 1: we a Zipp Recruiter, are probably the single largest starting
Speaker 1: point for small and mid sized businesses that do job
Speaker 1: posting in America, and so we end up getting all
Speaker 1: the interesting jobs on our site. So if you, for example,
Speaker 1: run a small ship business, or let's say you are
Speaker 1: in a hurricane struck area and hurricanes have knocked out
Speaker 1: your business that will last few months, then it seems
Speaker 1: likely that you're going to go on a hiring binge
Speaker 1: right now to restock the captains for your ships. So
Speaker 1: I is it fair to say that zip recruiter is
Speaker 1: sort of a byproduct or caters to the gig economy. Well, certainly,
Speaker 1: the gig economy makes up a lot of the jobs
Speaker 1: that you will find on our site, and that's because
Speaker 1: the gig economy increasingly represents a large percentage of opportunities
Speaker 1: for people to work in America. So, whether it's Uber
Speaker 1: or list or delivery Hero or a multitude of on
Speaker 1: demand services, the gig economy has become a material option
Speaker 1: for a lot of job diggers, not just for full
Speaker 1: time work, but also as a second job to bolster
Speaker 1: their income. So in one thing that a lot of
Speaker 1: economists sort of decry is that there isn't a tremendous
Speaker 1: amount of visibility into the gig economy. And I'm wondering,
Speaker 1: from your perspective, you probably have one of the best
Speaker 1: views into it. Frankly, and I'm wondering what kinds of
Speaker 1: wage increases are you are you seeing and and has
Speaker 1: that been a positive trend that you've been noticing? Well,
Speaker 1: I mean, if you if you look at the health
Speaker 1: of the global job market and want to see global,
Speaker 1: I mean in the United States. Uh, you know, you're
Speaker 1: at four point one percent unemployment, which is a seventeen
Speaker 1: year low. You've had ninety two months of the economy
Speaker 1: adding jobs in a row, and so you're really looking
Speaker 1: at what some would call peak employment. And when you're
Speaker 1: in that kind of environment, what happens is there is
Speaker 1: a dearth of talent searching for work, and so employers
Speaker 1: are forced to do things like raise wages to induce
Speaker 1: people to leave jobs they currently have and come to
Speaker 1: the those employers opportunities. So the gig economy um isn't
Speaker 1: really benefiting from that wage increase. The gig economy is
Speaker 1: more like a foundation upon which if you want to
Speaker 1: work today, there is an opportunity out there for you
Speaker 1: to go get. But if you are looking for are
Speaker 1: more full time work and a more traditional role. Right
Speaker 1: now is a great time, probably one of the greatest
Speaker 1: times in our lifetime to be a job seeker. So
Speaker 1: are you saying that there's sort of a divergence here
Speaker 1: with sort of the standard jobs being much more sort
Speaker 1: of competitive and higher paying and paying even higher wages,
Speaker 1: whereas in the gig economy you're not seeing those pay
Speaker 1: raises exactly. And and part of why you're seeing people
Speaker 1: uh be more patient in their job search is because
Speaker 1: the employees who are working in a gig economy are
Speaker 1: using it as a secondary source of income or is
Speaker 1: a bridging income between opportunities as they look for work
Speaker 1: that they would consider more meaningful. Well, Ian, when I
Speaker 1: asked you about being a boat captain, I thought you
Speaker 1: were going to say that you've got an algorithm or
Speaker 1: a way to aggregate all of the information that comes
Speaker 1: to your site and to your specific company. I'm wondering, then,
Speaker 1: how do you automate the process of matching the right
Speaker 1: person with the right job or is that left up
Speaker 1: to the company that's looking for the worker. Oh no, no, no, no,
Speaker 1: we are not just at the bleeding edge. We're sorry.
Speaker 1: We're not the cutting edge of technology. We're at the
Speaker 1: bleeding edge right now. There is technology that has evolved
Speaker 1: over the last two years, often referred to as machine
Speaker 1: learning or sometimes called deep learning. It's an approach to
Speaker 1: building algorithms that do things that humans will never be
Speaker 1: able to match. You give us an example behind absolutely
Speaker 1: so uh when you use one of these algorithms instead
Speaker 1: of doing a traditional match the way you would rationally
Speaker 1: do it, which is I, for example, have been a
Speaker 1: product manager in my career. Old school algorithms would say
Speaker 1: I'm going to find all the jobs that have product
Speaker 1: manager in the job title, and I will just show
Speaker 1: you those jobs. Today, the technolog is so good, it says,
Speaker 1: I'm going to look at everyone who's ever searched for
Speaker 1: product manager in there in the history of this company,
Speaker 1: and then see all the other job titles that they've
Speaker 1: ever looked for, and as a result of that, they're
Speaker 1: able to cluster opportunities that might be interesting to you
Speaker 1: that a traditional search engine would not be able to surface.
Speaker 1: And that's really the tip of the iceberg, because with
Speaker 1: these algorithms we can start to use signal data from
Speaker 1: the job seekers themselves, so we know, for example, if
Speaker 1: ten job seekers go look at a specific job and
Speaker 1: none of them apply, there is something unappealing about that job,
Speaker 1: and the algorithm is smart enough to stop showing it.
Speaker 1: Ian How does zip recruiter make money? So zip Recruiter
Speaker 1: was built with a very simple premise is that a
Speaker 1: lot of small businesses don't have the time to figure
Speaker 1: out which job board they should be posting too. So
Speaker 1: zip recruiter enables you, if you are a hiring manager,
Speaker 1: supposed to over a hundred job sites with a single click,
Speaker 1: and then all the candidates from all those different sites
Speaker 1: come into one easy to review list. And in as
Speaker 1: far as wages go, can you track individual wage offers
Speaker 1: or salary requirements on the site? Yeah, so we get
Speaker 1: you know, high hundreds of thousands of jobs directly posted
Speaker 1: through zip recruiter every month, and one of the pieces
Speaker 1: of information we capture about every one of those opportunities
Speaker 1: is what salary is being offered. We use a BLS
Speaker 1: based definition of low skilled, mid skilled, and high skilled
Speaker 1: so we can watch trends that occur in the hiring market.
Speaker 1: And just to make it simple, across all levels, all
Speaker 1: skill levels, in the past year, there has been wage increase,
Speaker 1: So it is, as I said, a great time to
Speaker 1: be a job seeker. So I just not to harp
Speaker 1: on this, but who pays you. Which is it? Is
Speaker 1: it the job seeker or is it the potential employer?
Speaker 1: It's the employers who pay us in order to do
Speaker 1: that job distribution and collect Canada, it's we never charged
Speaker 1: job seekers for anything. Okay, what what is next for
Speaker 1: ZIP recruiter? Is there a way to tell whether it's
Speaker 1: been a successful match and then you use that same
Speaker 1: algorithm or an unsuccessful match brings some kind of remedy
Speaker 1: or correction. I mean it's been Honestly, it's the most
Speaker 1: exciting time it's ever been to be working in the
Speaker 1: job category. The technology that has evolved, uh is so
Speaker 1: advanced it's starting to feel like magic. So historically, from
Speaker 1: the time you posted a job to the time you
Speaker 1: sell that job, it would take you between forty five
Speaker 1: and sixty days. And now literally almost instantly after you
Speaker 1: post a job, we're able to go cherry pick the
Speaker 1: very best candidates that are in market and notified and
Speaker 1: instantly of just that job going live, which is inducing
Speaker 1: unbelievable high quality candidates literally within an hour of a
Speaker 1: job being posted. The entire recruiting process moving towards an
Speaker 1: almost real time experience, and it's going to be a
Speaker 1: real disruption to the way people hire. Ian Segel, thank
Speaker 1: you so much for joining us. Ian Siegel, co founder
Speaker 1: and chief executive officer of Zip Recruiter. Thanks for listening
Speaker 1: to the Bloomberg P and L podcast. You can subscribe
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
Speaker 1: at pim Fox. I'm on Twitter at Lisa abramowits one
Speaker 1: before the podcast. You can always catch us worldwide on
Speaker 1: Bloomberg Radio.