WEBVTT - Former Apple Engineer Unveils Jobs' Creative Process 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P and L 0:00:20.840 --> 0:00:33.400 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Our 0:00:33.400 --> 0:00:37.320 next guest is the author of a new book entitled 0:00:37.440 --> 0:00:42.640 Creative Selection, inside Apple's design process during the golden age 0:00:42.840 --> 0:00:47.040 of Steve Jobs ken CoA Cienda. He joins us now 0:00:47.080 --> 0:00:49.600 in our eleven three oh studios, and he is also 0:00:49.640 --> 0:00:54.800 the former principal engineer of iPhone software at Apple. So 0:00:54.840 --> 0:00:57.639 if you have any problems with your iPhone, you know 0:00:57.720 --> 0:01:00.200 who to ask. Great to have you with us hand. 0:01:00.240 --> 0:01:02.280 Thanks for coming in. Thanks so much, it's great to 0:01:02.280 --> 0:01:06.600 be here. Tell us why you decided to write this book, Well, 0:01:07.120 --> 0:01:09.920 I thought, I think I worked at Apple during an 0:01:09.959 --> 0:01:13.360 interesting time in its history. I got the opportunity to 0:01:13.440 --> 0:01:17.080 work on some products like the iPhone, but I also 0:01:17.200 --> 0:01:19.800 started at the company back in two thousand one one. 0:01:19.800 --> 0:01:23.640 Apple was still an underdog and and the iPod hadn't 0:01:23.680 --> 0:01:26.160 even been released. Yet and and the Mac was still 0:01:26.200 --> 0:01:29.160 the company's main product, and and it was at a 0:01:29.160 --> 0:01:32.600 five percent market share in a computer industry dominated by 0:01:32.720 --> 0:01:35.600 Microsoft Windows. And so I was I was there. I 0:01:35.640 --> 0:01:39.280 was a witness to this effort of Steve Jobs to 0:01:39.280 --> 0:01:42.120 make the company relevant again, not only the market but 0:01:42.319 --> 0:01:45.880 in people's minds. And and that's with products like the 0:01:45.880 --> 0:01:48.760 iPhone and and and the iPod before it. Right, that 0:01:48.760 --> 0:01:51.200 that worked out pretty well. So Ken, here we are. 0:01:51.360 --> 0:01:54.760 Apple is now worth more than a trillion dollars in 0:01:54.920 --> 0:01:59.680 market cap. What point in your tenure at Apple did 0:01:59.680 --> 0:02:04.440 you realized, Huh, we're working on something that's really big. Well, 0:02:05.040 --> 0:02:09.800 when the iPhone came out, of course, it built upon 0:02:09.919 --> 0:02:13.600 the iPod before it, and so Apple had already re 0:02:13.840 --> 0:02:18.440 established itself as as as a company worth watching. But 0:02:18.560 --> 0:02:22.280 then with the iPhone, uh, and and and the release 0:02:22.320 --> 0:02:27.360 of apps, and and the excitement that people had, uh 0:02:27.440 --> 0:02:30.160 that they could carry around this computer in their pocket, 0:02:30.400 --> 0:02:33.000 and that he could download all of this software that 0:02:33.000 --> 0:02:36.440 that opened up all of these these these new software 0:02:36.480 --> 0:02:40.120 and hardware networking capabilities to them. Uh, it became clear 0:02:40.160 --> 0:02:44.200 to us that that this was something special. Just give 0:02:44.240 --> 0:02:48.079 people a little flavor of how you ended up at 0:02:48.160 --> 0:02:51.440 Apple because you did not well. You graduated with a 0:02:51.480 --> 0:02:55.280 degree from in history, and I understand that you're also 0:02:55.280 --> 0:02:59.320 at one point thinking of a career as a motorcycle repair. 0:02:59.520 --> 0:03:03.160 So I graduated from college. I had a history degree, 0:03:03.639 --> 0:03:07.120 uh and I wanted to do so. Yes, I I 0:03:07.400 --> 0:03:10.400 went to Yale uh and and but I wanted to 0:03:10.400 --> 0:03:15.000 do something different from from studying and so I I 0:03:15.480 --> 0:03:19.160 went to motorcycle mechanics school. I have to say, Uh, 0:03:19.200 --> 0:03:23.280 this wasn't the most popular decision with my father, but 0:03:24.160 --> 0:03:26.799 my family got behind me and supported me. And so yeah, 0:03:26.840 --> 0:03:29.480 I went out to to fix motorcycles. You know, throughout 0:03:29.600 --> 0:03:33.440 my throughout my life, throughout my career, I've I've tried 0:03:33.480 --> 0:03:38.800 to figure out ways that I could reinvent uh and 0:03:38.800 --> 0:03:42.800 and and integrate new new new efforts, new new directions, 0:03:43.480 --> 0:03:47.360 new ideas. So ken one thing that I'm struck by 0:03:47.400 --> 0:03:51.240 as Apple sort of starts a path forward, how much 0:03:51.320 --> 0:03:56.600 was Steve Jobs responsible for the dynamism of Apple? And 0:03:57.080 --> 0:04:00.240 you know, does his his death and you know, kind 0:04:00.240 --> 0:04:02.760 of the saturation of the Apple products at this point 0:04:03.200 --> 0:04:05.200 create a cap and how much further it can go 0:04:05.280 --> 0:04:12.320 and innovate? Well, you see Steve created the culture that 0:04:12.400 --> 0:04:16.040 we used at Apple to build products. And and to 0:04:16.120 --> 0:04:18.039 just talk a little bit about that a second, because 0:04:18.080 --> 0:04:21.000 I think it does inform so much about what what 0:04:21.000 --> 0:04:23.839 what Apple is and how it how it does its work. 0:04:24.240 --> 0:04:27.000 You know, he was a great editor and and and 0:04:27.080 --> 0:04:31.160 he set these assignments for people like me a programmer, 0:04:31.400 --> 0:04:33.760 and he would evaluate the work that came back, you know, 0:04:33.839 --> 0:04:38.479 always with a mind for how these products would fit 0:04:38.480 --> 0:04:42.159 into people's lives so that it wouldn't wouldn't be just 0:04:42.200 --> 0:04:45.320 a piece of technology, uh, that it would be something 0:04:45.360 --> 0:04:48.240 that people would find meaningful and useful for them, you know. 0:04:48.320 --> 0:04:54.279 And this this continues on his his his legacy is 0:04:54.279 --> 0:04:56.400 still very very strong in the company. Well when you 0:04:56.440 --> 0:05:00.760 say meaningful to them, I mean right now we're broadcasting 0:05:00.920 --> 0:05:04.520 as these set it hearings go on with Facebook and Twitter, 0:05:04.600 --> 0:05:06.800 and I just have to wonder, I mean, given the 0:05:06.839 --> 0:05:10.640 fact that people are raising questions about iPhone or smartphone 0:05:10.640 --> 0:05:14.440 addictions and that people are using social media that's being 0:05:14.480 --> 0:05:19.000 corrupted according to some people buy foreign actors and bots 0:05:19.000 --> 0:05:21.520 and the like. You know, does that does that vision 0:05:21.640 --> 0:05:23.719 change or is there something about that that has to 0:05:23.839 --> 0:05:27.400 change just by nature of where we are right now. Yeah, 0:05:27.440 --> 0:05:31.280 I think as a society, as a culture, we are 0:05:31.440 --> 0:05:35.640 learning what to do with these new devices and and 0:05:35.640 --> 0:05:39.120 and the pervasive part that they play in our lives. Yeah, 0:05:39.200 --> 0:05:43.279 where this is still new to us. This technology like 0:05:43.520 --> 0:05:47.599 the iPhone didn't exist a dozen years ago, and Twitter 0:05:47.720 --> 0:05:53.239 didn't either, and so we are still trying to figure 0:05:53.240 --> 0:05:57.560 out how to incorporate these new ideas and these new 0:05:57.600 --> 0:06:00.760 capabilities into our life. So it's you know, I'm an optimist. 0:06:00.800 --> 0:06:03.160 I think we're going to figure it out. Well, your 0:06:03.160 --> 0:06:05.160 book is very optimistic as well, and I gotta say 0:06:05.160 --> 0:06:08.200 it is a great read. It's called creative Selection. And 0:06:08.200 --> 0:06:10.240 I'm wondering if you could just quickly tell the story 0:06:10.400 --> 0:06:14.560 about a demo that you'd made with a gentleman name 0:06:14.880 --> 0:06:18.440 Phil Schiller, just had to do with the Corty keyboard 0:06:18.440 --> 0:06:22.040 that we're If you've got large thumbs, it's your fault. 0:06:22.520 --> 0:06:27.000 Using and creating the keyboard for the iPhone. Is a 0:06:27.040 --> 0:06:31.640 fascinating story about collaboration at Apple. Right. Well, you see, 0:06:31.880 --> 0:06:35.320 the way that we did work was always based on 0:06:35.440 --> 0:06:40.200 demos and and and we used this creative selection process 0:06:40.240 --> 0:06:45.640 to Starwinnian process of evolving the projects and and and 0:06:45.680 --> 0:06:49.280 the products from these early stage stages where lots of 0:06:49.320 --> 0:06:52.920 times the software wasn't very good. And so this this 0:06:53.000 --> 0:06:56.160 demo that you're you're mentioning was was an instance where 0:06:56.240 --> 0:06:59.560 this early prototype, well, it didn't really work very well 0:06:59.600 --> 0:07:04.839 for Phil and like Apple, he said so. And so 0:07:05.200 --> 0:07:07.400 you know, for me as a as a product developer 0:07:07.400 --> 0:07:09.320 and designer, you had to have a pretty thick skin. 0:07:10.000 --> 0:07:13.840 But you had to react to what these people were 0:07:13.840 --> 0:07:16.360 saying when they tried to software, because that's the experience 0:07:16.400 --> 0:07:18.840 that people have. They walk into an Apple store and 0:07:18.880 --> 0:07:20.600 they pick up a device, and they need to decide 0:07:20.720 --> 0:07:22.960 if they want to buy it or not. And and 0:07:23.000 --> 0:07:25.560 so it was job the job for someone like me 0:07:25.640 --> 0:07:28.800 to make sure that the product worked, that that the 0:07:28.840 --> 0:07:32.360 experience would be good when people tried the product. Yeah, 0:07:32.360 --> 0:07:34.400 and not to get too offended when people say, uh, 0:07:34.600 --> 0:07:38.120 it doesn't work for me. I'm sure it was. Yeah. Yeah. 0:07:38.120 --> 0:07:40.360 It was then my my role to step in and 0:07:40.400 --> 0:07:43.160 figure out what what's making people have that reaction and 0:07:43.160 --> 0:07:45.920 to bridge that gap so that the experiences is a 0:07:45.920 --> 0:07:49.000 good one rather than uh. Ken Cakscenda, thank you so 0:07:49.080 --> 0:07:51.520 much for being with us. Ken Kshnda is author and 0:07:51.560 --> 0:07:55.600 former principal engineer of iPhone software at Apple. His new 0:07:55.640 --> 0:07:59.080 book is Creative Selection, Inside Apple's design process during the 0:07:59.120 --> 0:08:17.280 Golden Age. Steve Jobs chairs of Twitter. They are lower 0:08:17.360 --> 0:08:19.320 right now by four and a half percent. As comes 0:08:19.480 --> 0:08:23.280 as the chief executive, Jack Dorsey testifies for the Senate 0:08:23.320 --> 0:08:26.520 Intelligence Committee. Here to tell us more about these hearings 0:08:26.600 --> 0:08:30.720 and the companies is Mark Douglas, the chief executive of Steelhouse. 0:08:31.040 --> 0:08:33.360 All Right, Mark Douglass, what do you take away from 0:08:33.400 --> 0:08:36.439 the hearings? Is this just a political theater or are 0:08:36.440 --> 0:08:41.240 there going to be substantive changes at these social media companies? Um? Hi, 0:08:41.360 --> 0:08:44.959 good morning, So Um, I would put a little bit 0:08:44.960 --> 0:08:48.680 between those two. I mean, I don't think there's going 0:08:48.720 --> 0:08:52.600 to be much that comes from these hearings from a 0:08:52.640 --> 0:08:57.400 congressional Senate perspective in terms of legislation that's essentially not 0:08:57.640 --> 0:09:00.600 already enacted by these companies. And there's the they already 0:09:00.679 --> 0:09:03.880 have controls and plays, they have taken actions and things 0:09:03.920 --> 0:09:06.079 like that. But I think the hearings are pretty informative. 0:09:06.120 --> 0:09:08.840 I think for anyone that chooses to watch them, like 0:09:08.960 --> 0:09:11.319 with the Zuckerberg testimony, you learn a lot. You learn 0:09:11.320 --> 0:09:13.880 a lot about how these companies operate, Marco, Who do 0:09:13.920 --> 0:09:17.800 you think has performed better today, Jack Dorsey or Cheryl Samberg? Um. 0:09:17.880 --> 0:09:22.040 Cheryl Samberg. Jack sings to me personally, UM, fairly nervous. 0:09:22.080 --> 0:09:26.520 I think he has never smiled. Demeanor UM, which is 0:09:26.880 --> 0:09:30.360 kind of um personally to me doesn't read that well. 0:09:30.400 --> 0:09:34.280 I think Cheryl, you know her, her experience as an 0:09:34.280 --> 0:09:38.320 executive and kind of comfort just being in front of 0:09:38.320 --> 0:09:41.560 a microphone and in a setting, UM seeing she just 0:09:41.679 --> 0:09:44.560 kind of comes across much better. Marca, what if you 0:09:44.559 --> 0:09:47.560 could comment on the world of advertising as it relates 0:09:47.559 --> 0:09:52.080 to social media and whether publishers, those people who purchase 0:09:52.280 --> 0:09:56.720 advertising online are they really getting what the social media 0:09:56.800 --> 0:10:00.520 companies tell them they're getting or they getting many of 0:10:00.559 --> 0:10:04.840 the fake and illegitimate accounts that have also been the 0:10:04.880 --> 0:10:10.200 subject of political investigation. Yeah, I mean that's an interesting question. 0:10:10.280 --> 0:10:15.559 So the Facebook in particular is widely considered the best 0:10:15.600 --> 0:10:20.400 performing advertising platform period um and so, and the way 0:10:20.440 --> 0:10:24.200 that measured is two ways, um. Two people click on 0:10:24.280 --> 0:10:27.319 the ads and respond to them, and do they purchase 0:10:27.679 --> 0:10:30.640 goods and services after they see the ads and the 0:10:30.720 --> 0:10:36.720 goods and services You can't the clicks potentially, UM can 0:10:36.760 --> 0:10:40.840 be a little you know, maybe a fake box or 0:10:40.880 --> 0:10:42.880 something like that can do that. There's not really an 0:10:42.920 --> 0:10:46.319 incentive to do it, but people um companies run these 0:10:46.360 --> 0:10:48.920 ads and they get the purchases that they're looking for, 0:10:48.960 --> 0:10:51.280 they get the consumer response that they're looking for. So 0:10:51.320 --> 0:10:54.480 I think, in particular on the social media companies, that's 0:10:54.480 --> 0:10:57.960 considered really safe place to advertise and very very high 0:10:57.960 --> 0:11:01.800 performing place for advertising the place of money. So, given 0:11:01.800 --> 0:11:04.839 your background and your intimate knowledge of how the advertising 0:11:04.840 --> 0:11:08.800 works and data collection UH plays out, what is the 0:11:08.920 --> 0:11:12.880 question that you would ask both Cheryl Sandberg and Jack 0:11:12.960 --> 0:11:17.080 Dorsey and what would you be hoping to hear? Well, 0:11:17.120 --> 0:11:19.679 I think what most consumers want to hear. So in 0:11:19.800 --> 0:11:21.800 terms of the question, let's say that question was coming 0:11:21.840 --> 0:11:26.160 from a consumer perspective, is my data being solved? I 0:11:26.200 --> 0:11:29.839 think when I talk to people, they generally understand these 0:11:29.880 --> 0:11:34.000 platforms are free and in return for them being free, 0:11:34.559 --> 0:11:37.160 that they're going to receive ads, and those ads are 0:11:37.360 --> 0:11:40.280 going to be targeted at their interests, words they use 0:11:40.320 --> 0:11:43.120 in their profiles, things like that, what they you know, 0:11:43.160 --> 0:11:45.480 where I think most people draw the line is are 0:11:45.559 --> 0:11:48.079 you selling that data in any way? Are you giving 0:11:48.080 --> 0:11:50.000 it away? Are you trading it in any way? And 0:11:50.000 --> 0:11:54.360 I think that's um ultimately the real question here. UM. 0:11:54.400 --> 0:11:56.040 I know a lot of centers want to talk about 0:11:56.080 --> 0:12:00.520 political ads. I think that's another not consumed a question, 0:12:00.559 --> 0:12:03.599 but a question that Americans have is is you know 0:12:03.679 --> 0:12:06.959 when when their political ad placed, are they legitimate? Are 0:12:07.000 --> 0:12:10.360 they real? Um? Those are the two key things. I think, 0:12:10.400 --> 0:12:13.400 the consumer data, what's happening with my data? And and 0:12:13.520 --> 0:12:16.319 can I trust that the ads I see, particularly in 0:12:16.320 --> 0:12:20.240 a political arena, are are legitimate? Thank you so much 0:12:20.280 --> 0:12:22.560 for being with us. Mark Douglas, chief executive Officer of 0:12:22.640 --> 0:12:27.320 Steelhouse talking about what we've been hearing among the Senate 0:12:27.320 --> 0:12:31.000 Intelligence Committee, where we have both Cheryl Sandberg as well 0:12:31.080 --> 0:12:35.440 as Jack Dorsey of Facebook and Twitter respectively, testifying in 0:12:35.520 --> 0:12:38.520 front of Congress. Really interesting that this hearing was supposed 0:12:38.559 --> 0:12:43.040 to be about interference with US elections. We've heard very good. 0:12:44.559 --> 0:12:50.439 In fact, I haven't heard anything specifically about the presidential 0:12:50.520 --> 0:12:54.160 election or any specifics regarding what the companies have done 0:12:54.200 --> 0:12:56.960 to ensure that that doesn't happen with the upcoming the 0:12:57.040 --> 0:12:59.120 term elections. Indeed, and there does seem to be a 0:12:59.160 --> 0:13:02.560 lot of focus. Potential regulations are oversight of these companies, 0:13:02.559 --> 0:13:05.520 and perhaps that's what's leading the tech shares to decline 0:13:05.640 --> 0:13:25.559 more than other arrival industries. The market for initial public 0:13:25.760 --> 0:13:28.600 offerings in the United States that have been announced more 0:13:28.640 --> 0:13:32.319 than twenty seven billion dollars worth of initial public offerings 0:13:32.320 --> 0:13:35.559 so far this year a hundred companies. Here to help 0:13:35.640 --> 0:13:39.360 us understand the market is Manuel Enrique's founder and chief 0:13:39.360 --> 0:13:43.560 executive officer of Hercules Capital. They are based in Palo 0:13:43.600 --> 0:13:46.079 Alto and Manuel joins us now and well, thank you 0:13:46.160 --> 0:13:48.040 very much for being with us. Tell people a little 0:13:48.080 --> 0:13:51.240 bit about Hercules Capital and the kind of money that 0:13:51.360 --> 0:13:54.520 you invest and at what stage because you're kind of 0:13:54.559 --> 0:13:57.320 at the very beginning for a lot of companies, maybe 0:13:57.360 --> 0:14:02.280 between one and forty million dollars of investment capital. Correct. Well, 0:14:02.280 --> 0:14:05.040 we kind of helped bridge the gap for companies looking 0:14:05.080 --> 0:14:08.480 to expand and grow without having UH to ENCURRG greater 0:14:08.559 --> 0:14:12.800 solution and you get either grow by using venture capital 0:14:12.800 --> 0:14:15.400 equity dollars or you can grow by having more conservative 0:14:15.440 --> 0:14:18.360 bank capital. We fit in that middle void where we 0:14:18.400 --> 0:14:21.960 actually help these companies continue to advance or innovations and 0:14:22.000 --> 0:14:25.800 their disruptive technologies by preserving more capital ownership to the 0:14:25.800 --> 0:14:30.160 original investors, original seat investors, and the founders by using 0:14:30.200 --> 0:14:34.160 a vehicle call venture debt, which is what we do. MM. Interesting. 0:14:34.320 --> 0:14:36.240 This is especially interesting to me because it comes at 0:14:36.240 --> 0:14:40.320 a time where there's increasing focus on how the number 0:14:40.360 --> 0:14:43.240 of I p O s has declined significantly in the 0:14:43.280 --> 0:14:46.480 United States. SEC Chair Jay Clayton has me that's one 0:14:46.480 --> 0:14:50.360 of his priorities to basically prompt more companies to go 0:14:50.480 --> 0:14:53.280 public in the US. What's your take on the I 0:14:53.440 --> 0:14:55.880 p O market? And you know, do you sort of 0:14:55.920 --> 0:14:58.600 agree with people who say that people like you who 0:14:58.680 --> 0:15:03.680 offer this bridge finance saying reduced the need to go public. Well, 0:15:03.720 --> 0:15:06.680 there's certainly there's there's a lot of factors that question. 0:15:06.720 --> 0:15:08.360 I mean, number one, you can go back as far 0:15:08.400 --> 0:15:12.280 as decimalization, uh causing an impact on that, Sarbans Oxley 0:15:12.360 --> 0:15:16.720 another issue causing that, and then the public shareholders demanding 0:15:17.200 --> 0:15:21.520 that business models be more developed and start showing less 0:15:21.520 --> 0:15:24.240 of a cash burned before they go public, and all 0:15:24.280 --> 0:15:27.200 of that has actually changed, and in fact, fiscal two 0:15:27.240 --> 0:15:29.200 thousand and eighteen we're probably seeing one of the most 0:15:29.280 --> 0:15:33.040 robust IBO market activities we haven't seen in probably over 0:15:33.080 --> 0:15:37.320 a decade and UH So far the first two quarters 0:15:37.360 --> 0:15:39.600 of the year have been very very strong, with very 0:15:39.640 --> 0:15:42.160 strong performance for companies like for example, to start with, 0:15:42.200 --> 0:15:45.080 like Roku alone, UH is up since its i p 0:15:45.240 --> 0:15:48.360 almost almost three and a half times and its valuation. 0:15:48.880 --> 0:15:51.640 Docu Signed, one of our own portfolio companies, has been 0:15:51.640 --> 0:15:55.160 a blockbuster, doing phenomenally well, probably a hundred hundred plus 0:15:55.200 --> 0:15:59.560 percent since going public, and there's multiple examples of that 0:15:59.600 --> 0:16:01.960 throughout those recent i p o s. But what makes 0:16:01.960 --> 0:16:04.120 this I p O market very interesting and very unique. 0:16:04.480 --> 0:16:08.400 It is not just subject to the technology tape performing well. 0:16:08.440 --> 0:16:11.560 It's also seeing very good strong performance on biotech. So 0:16:11.600 --> 0:16:15.440 it's a wide industry uplift that's going on. As investors 0:16:15.480 --> 0:16:18.320 continue to clamor for growth, they're seeing that growth coming 0:16:18.320 --> 0:16:21.920 from biotech and technology companies. Just to give the detail 0:16:21.920 --> 0:16:24.760 about docu Sign, that company went public in March of 0:16:24.840 --> 0:16:28.080 the year, a seven hundred and twenty three million dollar 0:16:28.200 --> 0:16:31.760 i p O. That share is so far performing a 0:16:31.880 --> 0:16:35.600 hundred and twenty three What can you tell us about 0:16:35.600 --> 0:16:40.880 investing in the biotechnology industry or medical device business because 0:16:40.880 --> 0:16:43.960 those are both areas that you're interested in. Yes, we 0:16:44.040 --> 0:16:47.560 have um about the one point five billion of assets 0:16:47.560 --> 0:16:50.200 we have invested, literally half of it is invested in 0:16:50.240 --> 0:16:53.960 about technology companies from wide array of companies from anywhere 0:16:53.960 --> 0:16:58.600 from biotech to medical devices to therapeutic diagnostics UM and 0:16:58.640 --> 0:17:01.040 we're seeing a very great strong performance in that area 0:17:01.080 --> 0:17:03.600 as well. And we're very happy with what we're seeing 0:17:04.160 --> 0:17:07.400 with the results in the biotech companies, despite the fact 0:17:07.440 --> 0:17:09.640 that you've been seen this kind of storm cloud forming 0:17:10.280 --> 0:17:13.520 on drug prices that has been looming either from the 0:17:13.520 --> 0:17:16.480 Clinton administration or sorry when Hillary Clinton was looking at 0:17:16.560 --> 0:17:19.600 drug price regulation and now the Trump administration is looking 0:17:19.640 --> 0:17:22.919 at drug price regulations. Although we've seen a lot of 0:17:22.920 --> 0:17:26.840 that headwind causing some impact in biotechs, we're seeing so 0:17:26.880 --> 0:17:29.880 far the industry seems to be brushing that off rightfully, 0:17:29.880 --> 0:17:33.200 so because they're making such a great medical advancement that's 0:17:33.200 --> 0:17:35.960 going on there. So I'm just wondering, from your perspective, 0:17:36.000 --> 0:17:39.240 one's the best time to invest in a company before 0:17:39.280 --> 0:17:42.800 they go public at this point or after they go public. Well, 0:17:42.800 --> 0:17:45.080 that's a great question, because what Hercules offers to the 0:17:45.119 --> 0:17:48.640 shareholders who in our stock is the ability to actually 0:17:48.680 --> 0:17:51.440 own some of these high promising pre I p O 0:17:52.040 --> 0:17:55.800 PREEM and a companies that are now beyond just a concept. 0:17:56.160 --> 0:17:58.440 So we definitely we generally don't invest in a Series 0:17:58.480 --> 0:18:01.159 A or Series B we search of development company. We 0:18:01.160 --> 0:18:04.480 tend to invest after the company has shown demonstrative progress 0:18:04.480 --> 0:18:06.840 in its development. So we try to take as much 0:18:06.960 --> 0:18:09.520 risk out of the investment as we possibly can and 0:18:09.560 --> 0:18:13.560 therefore allow our shareholders to participate an additional upside. So 0:18:13.600 --> 0:18:15.879 an interesting way of looking at Hercules is and Hercules 0:18:16.000 --> 0:18:20.159 almost be seen as kind of et F of the 0:18:20.240 --> 0:18:23.720 venture capital industry. We have a wide distribution of different 0:18:23.800 --> 0:18:28.119 venture capital firms, different uh technology and life sciences companies 0:18:28.119 --> 0:18:30.720 that we invest in, the different geographies of the United States, 0:18:30.840 --> 0:18:33.880 and different stages of developments, all aggregated in this one 0:18:33.880 --> 0:18:37.000 portfolio called Hercules. So you can participate in that by 0:18:37.000 --> 0:18:40.359 getting a nice dividend yield generally about nine nine percent 0:18:40.359 --> 0:18:43.679 dividend yield, while also seeing capital appreciation when these companies 0:18:43.720 --> 0:18:47.480 go public any evidence of docuside. For example, Manuel Henriquez, 0:18:47.480 --> 0:18:49.400 thank you so much for being with us. Manuel Henriquez, 0:18:49.400 --> 0:18:52.680 as founder and chief executive officer of Hercules at Capital 0:18:52.840 --> 0:19:10.200 in Palo Alto, California. I want to shift our attention 0:19:10.200 --> 0:19:14.200 though now to retail to shopping and the places where 0:19:14.200 --> 0:19:17.399 you do that shopping. And joining us now is Tom McGee, President, 0:19:17.480 --> 0:19:20.400 Chief executive Officer of the International Council of Shopping Centers. 0:19:20.600 --> 0:19:22.479 He joins us here in our eleven three oh studios 0:19:22.480 --> 0:19:25.200 in New York. Tom, thank you so much for being 0:19:25.240 --> 0:19:27.879 back with us. Really good to have you, especially in 0:19:27.960 --> 0:19:32.320 light of the retail earnings that we've gotten, which were inconsistent, 0:19:32.359 --> 0:19:35.120 I should say, where you have some of the longtime laggards, 0:19:35.119 --> 0:19:39.440 with J C. Penny, Sears, uh L brands really suffering 0:19:39.640 --> 0:19:42.520 as a result of weaker earnings, while the Amazons of 0:19:42.560 --> 0:19:45.720 the world and the Walmart and other big box stores too. Well, 0:19:46.000 --> 0:19:49.240 I'm just wondering, from your perspective, would it be better 0:19:49.400 --> 0:19:51.560 for j C. Penny and Sears to go out of 0:19:51.640 --> 0:19:55.240 business and to let other healthier retailers go in those 0:19:55.359 --> 0:19:57.800 key spots in some of the malls in order to 0:19:57.840 --> 0:19:59.879 generate more traffic, or do you think they should hang 0:20:00.000 --> 0:20:02.639 and for longer. Well, I think that First of all, 0:20:02.680 --> 0:20:05.480 I think it's a fiercely competitive industry and it always 0:20:05.520 --> 0:20:08.119 has been. Uh And if you look at uh the 0:20:08.280 --> 0:20:10.639 retail names today and compared to twenty years ago, and 0:20:10.640 --> 0:20:13.000 thirty years ago, you see a lot of change and 0:20:13.040 --> 0:20:17.120 fluctuation that happens. I think consumers should make that, you know, decision, 0:20:17.600 --> 0:20:19.959 not me, and I understand that, but I'm just wondering 0:20:20.000 --> 0:20:22.720 from a health perspective, do you think it's it's better 0:20:22.800 --> 0:20:24.440 for stores to sort of live their life and then 0:20:24.520 --> 0:20:27.080 be turned over if they're not being super successful, or 0:20:27.400 --> 0:20:29.640 is it better for familiar names to kind of hang 0:20:29.640 --> 0:20:33.040 on again. I think I think the consumers should decide that. 0:20:33.040 --> 0:20:36.119 I think from a from a shopping center developers perspective 0:20:36.119 --> 0:20:38.320 and an owner and manager, they're always looking for the 0:20:38.400 --> 0:20:40.280 mix and curation of folks that are going to drive 0:20:40.320 --> 0:20:43.959 foot traffic. And generally what drives foot traffic is those 0:20:44.000 --> 0:20:46.040 brands that are doing well in the marketplace, that are 0:20:46.280 --> 0:20:49.520 offering products or services. And I think that's an important 0:20:49.560 --> 0:20:53.080 element in you know, retail real estate today, really consumer 0:20:53.119 --> 0:20:56.120 real estate is that you're moving from really a product 0:20:56.160 --> 0:20:58.840 centric city and almost an apparel centricity that may have 0:20:59.040 --> 0:21:02.400 defined retail over the course of the last twenty five 0:21:02.480 --> 0:21:05.439 years or so, to one that does include that, but 0:21:05.520 --> 0:21:09.880 it's a composition of a lot more, a lot more services, hospitality. 0:21:09.880 --> 0:21:13.560 You see quite frankly, when you see what's really happening 0:21:13.600 --> 0:21:17.880 in in retail in general is and I've always believed, 0:21:17.920 --> 0:21:19.840 and I've said this on this show, this whole retail 0:21:19.880 --> 0:21:23.200 apocalypse is just you know, kind of overblown what really 0:21:23.280 --> 0:21:25.920 is happening as a retail renaissance, and that there is 0:21:25.960 --> 0:21:30.000 a lot of redevelopment happening where you're mixing, um relative 0:21:30.080 --> 0:21:34.080 to what consumer demand is, mixing hospitality and living and 0:21:34.160 --> 0:21:37.040 retail all in one environment because people like to live, work, 0:21:37.080 --> 0:21:39.080 and play in one place, and I think you're seeing 0:21:39.080 --> 0:21:41.680 those things happen in retail generally here in the United States. 0:21:41.760 --> 0:21:44.399 And you know, we just recently issued kind of a 0:21:44.400 --> 0:21:47.919 global perspectives report because we are an international organization, and 0:21:47.960 --> 0:21:50.480 I think you see those same trends at different stages 0:21:51.040 --> 0:21:54.320 taking place across the world as well. All Right, I'm 0:21:54.359 --> 0:21:57.080 gonna give you a list of brands, and you can 0:21:57.119 --> 0:21:58.879 raise your hand if you've heard of them, because I 0:21:59.080 --> 0:22:02.560 confess that I've only recently, you know, tried to keep 0:22:02.640 --> 0:22:07.560 up to date. Thread Up, ever Lane, All Birds Away, 0:22:07.720 --> 0:22:11.920 Koto Packs, the Ministry of Supply, Indocino and m jem 0:22:12.000 --> 0:22:15.000 I Yes, and Casper Sleep. What do they all have 0:22:15.080 --> 0:22:20.360 in common. These are digitally native brands that have all 0:22:20.400 --> 0:22:26.840 opened actual physical stores. From the perspective of the International 0:22:26.920 --> 0:22:31.960 Council of Shopping Centers, to those kinds of brands demand 0:22:32.200 --> 0:22:41.320 something different than what a traditional store based operation wants. 0:22:41.320 --> 0:22:43.520 Are they savvy er in some ways? Do they want 0:22:43.640 --> 0:22:46.760 something different? What do they what do they want? First 0:22:46.800 --> 0:22:48.240 of all, I think it's the I think it's the 0:22:48.320 --> 0:22:51.679 natural evolution that we should expect that to be a 0:22:51.720 --> 0:22:54.640 continuing trend. I think the last ten years of really 0:22:54.680 --> 0:22:58.000 retailers are really invested in their online channel, and you know, 0:22:58.040 --> 0:23:01.560 not surprisingly so because that was new and emerging. I 0:23:01.560 --> 0:23:04.920 think what retailers Bobos is one example, right because Walmart 0:23:04.960 --> 0:23:07.280 bought them, Sure and now and now what you're seeing 0:23:07.280 --> 0:23:09.520 though is retailers and I really do believe this is 0:23:09.560 --> 0:23:11.760 the trend of the next ten years. Retailers are going 0:23:11.840 --> 0:23:14.280 to invest in their physical channel and that synergy that's 0:23:14.280 --> 0:23:17.120 going to take place because consumers really don't care. They 0:23:17.160 --> 0:23:19.800 just want, you know, best price, best service, regardless they're 0:23:19.800 --> 0:23:22.960 somewhat channel agnostic. I do think what you'll see though, 0:23:23.280 --> 0:23:27.439 is the stores of the future will increasingly focus upon experience. 0:23:27.480 --> 0:23:29.480 I think some of the brands that you're talking about, 0:23:29.560 --> 0:23:32.000 you know, Casper, the Sleep you know, it's a sleep center, 0:23:32.000 --> 0:23:35.120 and you know they're gonna focus upon experience as opposed 0:23:35.160 --> 0:23:39.240 to just a collection of products, and so infer inferred 0:23:39.240 --> 0:23:43.240 in that is, yes, the experiential aspect of seeing merchandise 0:23:43.240 --> 0:23:46.000 in a different way, but also just a greater level 0:23:46.000 --> 0:23:48.560 of customer service than you've had in the past. You know, 0:23:48.800 --> 0:23:52.200