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. Uber,
Speaker 1: the scandal ridden driving a ride sharing service, is uh
Speaker 1: evidently reportedly the subject of two additional, formerly undisclosed investigations,
Speaker 1: and here to talk about why this company has been
Speaker 1: uniquely targeted by regulators and lawmakers. I want to bring
Speaker 1: in Max Chafkin, who writes for Bloomberg Business Week and
Speaker 1: joins us UH, to talk a little bit about this. So, Max,
Speaker 1: you know, what is it about Uber that has made
Speaker 1: it subject to so many investigations? Right? So, as you said,
Speaker 1: we we've learned. My colleague Eric Newcomer reported earlier this
Speaker 1: morning that first of all, there is an additional criminal
Speaker 1: probe that's looking into Uber's alleged theft of trade secrets
Speaker 1: from Google, and another one looking at price fixing. I
Speaker 1: think the answer to the question I asked of of
Speaker 1: sort of what was going on and and this is
Speaker 1: in the piece, but the company had kind of a
Speaker 1: culture of I guess you might say rule bending, uh
Speaker 1: and and and some might call it legal innovation. And
Speaker 1: I think that's that's a term that some people inside
Speaker 1: of you Uber had used might call it cheating, right, yeah,
Speaker 1: And that's and that's something I think we've seen before
Speaker 1: in the financial services industry, where these financial services innovations
Speaker 1: sometimes uh, you know, push into areas of you know,
Speaker 1: breaking ethical rules or even criminality. Well, Max, I wont
Speaker 1: if you get to tell us about the executive ranks
Speaker 1: of Uber. Who's there to actually fix the company and
Speaker 1: then justify its multibillion all the valuation so so uh
Speaker 1: recently Travis Kalenik Uh this this the former CEO, a
Speaker 1: guy who sort of most closely associated with the founding
Speaker 1: of Uber. Step down. There's a new CEO, the former
Speaker 1: Expedia CEO, Dera Coastra Shah. He hope hope on getting
Speaker 1: that one right, um, but on the pronunciation. But he's
Speaker 1: been basically doing a an apology tour and and sort
Speaker 1: of going around from to to offer, from office to
Speaker 1: office to office, trying to sort of turn the page
Speaker 1: and say, this is not going to be a company
Speaker 1: that sort of by default bends the rules. And we're
Speaker 1: learning that he is looking into some of these sort
Speaker 1: of you might call them counterintelligence programs. It appears that
Speaker 1: Uber had kind of almost its own personal, sort of
Speaker 1: private spy service that was run by the former General Council,
Speaker 1: the former Chief Security officer. Right. So, just to get
Speaker 1: a little bit more specific about what the allegations are,
Speaker 1: we talked about their program called Hell that that's what
Speaker 1: they named, that basically tracked other competing ridesharing services where
Speaker 1: they were to allow Uber drivers to go compete with
Speaker 1: them more directly. They also kind of cloaked themselves sometimes
Speaker 1: Uber drivers and would arrive instead of some of the
Speaker 1: other competing rides sharing services. These are among uh, some
Speaker 1: of the services that they provided that are being targeted
Speaker 1: by regulators. Yeah, I mean when you when you take
Speaker 1: a step back, you brought up Hell there. There was
Speaker 1: also a program, similar program in Australia that was designed
Speaker 1: to it seems like spy on maybe you might say
Speaker 1: UH an Asian uh a taxi service UM. Basically in
Speaker 1: all sorts of ways, it appears that that engineers inside
Speaker 1: of Uber kind of broke with norms as far as
Speaker 1: privacy and and uh sort of uh, you know, data
Speaker 1: securities concerns. So so for instance, they were routinely uh
Speaker 1: calling cabs from from Lift, a competitor, and and basically
Speaker 1: trying to hire those drivers. They were routinely scraping data
Speaker 1: from other services, and and this this thing called gray Ball,
Speaker 1: which is a subject of another investigation. They were sort
Speaker 1: of routinely trying to identify police and law enforcement officers
Speaker 1: and try to make it more difficult for those people
Speaker 1: to use the app, basically giving law enforcement um fake
Speaker 1: data allegedly. So it's a whole bunch of it's a
Speaker 1: whole swirl of things. You start to add it up,
Speaker 1: and and obviously it looks like a culture of uh
Speaker 1: that that's problematics at least, you know, Max said, it
Speaker 1: makes me maybe considered that you know, with a hefty valuation, Uh,
Speaker 1: may be considered that How is that it justified when
Speaker 1: you have competitors that may offer exactly the same kind
Speaker 1: of service without these legal problems? I mean, what competitive
Speaker 1: advantage do they have that they got a list of
Speaker 1: clients and everyone has the app, but everyone's got the
Speaker 1: other app. And they're the same clients. Yeah, And I
Speaker 1: mean this this gets to a pretty significant issue for Uber,
Speaker 1: which is, right now, they are trying to raise money,
Speaker 1: raise a big boatload of money from soft Bank, including
Speaker 1: some of this money is going to buy out existing
Speaker 1: shareholders in an auction, and we don't know exactly what
Speaker 1: the valuation is going to be. Is it going to
Speaker 1: be you know, closer to to Uber sort of on
Speaker 1: paper valuation around seventy billion, or is it going to
Speaker 1: be more like fifty build billion or something like that.
Speaker 1: And and and the fact is that I think I
Speaker 1: think investors might might be asking questions about sort of
Speaker 1: how brittle is Uber's business, how how how secure? Why
Speaker 1: not invest in lift or why not invest in any
Speaker 1: of the other rides sharing services? Because the thing is,
Speaker 1: it's supposed to be asset light, right, So you don't
Speaker 1: put all your capital into the automobiles. You let the
Speaker 1: drivers assume a lot of the risk. And you want
Speaker 1: a valuation of a tech company, Well, there are a
Speaker 1: lot of other people that can figure that out, now, right.
Speaker 1: I mean if you the thing is, if you believe
Speaker 1: in the business, and you believe that that these companies
Speaker 1: create value, you still acknowledge the Uber is much bigger
Speaker 1: than any of these other companies. It has a bigger network,
Speaker 1: it's it's a better known brand. Although Lift is competitive
Speaker 1: in certain cities, Uber is kind of the biggest, UH
Speaker 1: of these apps in most of the most of the
Speaker 1: cities where rides sharing companies play. At what point, though, Max,
Speaker 1: does this start to snowball where you have regulators targeting
Speaker 1: the business both because of some potential infractions as well
Speaker 1: as mounting opposition from taxi services that have been long standing. Well,
Speaker 1: it is starting to snowball. I mean what we saw
Speaker 1: in London where where regulators in London who had kind
Speaker 1: of given Uber the okay, sort of we're reading this
Speaker 1: news that was happening in the US about this program
Speaker 1: gray Ball, which I mentioned earlier, and said hey, wait
Speaker 1: a minute, we're not okay with this, and they basically
Speaker 1: announced that they were taking Uber's license away. And now
Speaker 1: they've sort of reopened negotiations. They're trying to negotiate a
Speaker 1: new deal with Uber. Uh. There's there there rumblings that
Speaker 1: the same thing could happen in Brazil. And I think
Speaker 1: it's important to remember and and Uber was very good
Speaker 1: at sort of playing local politics, like going from city
Speaker 1: to city figuring out how to get their service legal
Speaker 1: or basically pushing and forcing regulators hands to make it legal.
Speaker 1: But each of these cities have very specific local issues,
Speaker 1: and it's not like it's a done deal to any
Speaker 1: any mayor anywhere around the world. If if, if he
Speaker 1: or she decides it's popular to go after Uber can
Speaker 1: do that, and there's not much Uber can do, and
Speaker 1: it's it could potentially, especially if criminal inquiries lawsuits continue,
Speaker 1: amount this won't go away. It's not like Uber is
Speaker 1: legal everywhere and it's gonna be legal everywhere forever. Just quickly,
Speaker 1: because I know this is slightly off topic, but you
Speaker 1: also have been writing a lot about Facebook and legal issues.
Speaker 1: Have you noticed that the technology industry now faces the
Speaker 1: legal same legal issues that maybe the non tech world
Speaker 1: had faced, you know, decades earlier. Yeah. Absolutely, And I
Speaker 1: think there is an interesting sort of Facebook connection here.
Speaker 1: The the Uber chief security officer, Joe Sullivan, was at Facebook,
Speaker 1: and you wonder how common are these kind of internal
Speaker 1: spy agencies. I mean, Uber had a lot of consumer data,
Speaker 1: but it is not the only company in Silicon Valley
Speaker 1: with of data that's ultra competitive that has been pushing
Speaker 1: in all sorts of ways, and I think we have
Speaker 1: to look at this and ask, you know, how common
Speaker 1: were these practices, you know, industry wide, And I don't
Speaker 1: think we know the answer yet. All right, well, we're
Speaker 1: gonna look to you for the answer. I think you
Speaker 1: got almost you know, at least a couple next stories
Speaker 1: out of that one. Thanks very much for joining us.
Speaker 1: Max Chafkin is a columnist for a Bloomberg Business Week.
Speaker 1: A writer for a Bloomberg giving us some details about
Speaker 1: what's going on with Uber and those additional criminal investigations. Well,
Speaker 1: there is a one hundred and eight year old company
Speaker 1: that a lot of people in America have never heard of.
Speaker 1: It is now called Mo Mochi ice Cream, and the
Speaker 1: chief executive officer joins us now, Craig Burger. Thank you
Speaker 1: so much for joining us. You became CEO about two
Speaker 1: months ago and had previously been uh, the CFO of
Speaker 1: the company. What excited you about the opportunity of leading
Speaker 1: this particular company. Yeah, I think the fact that we're
Speaker 1: innovation in the snacking category is everything I needed to
Speaker 1: hear and see. So the company has done a phenomenal
Speaker 1: job taking a very old item like mochi ice cream,
Speaker 1: and have really targeted the millennial consumer to bring it
Speaker 1: to the masses. So we're really changing the snacking world
Speaker 1: one mochi ball at a time. All right, So can
Speaker 1: you tell us what exactly is a moochi? Many people
Speaker 1: may know it as a Japanese dessert. You're calling it
Speaker 1: a snack the form fact. I'm sorry I have to
Speaker 1: use this on my son tonight. I'm changing the world
Speaker 1: one mochi ball at a time. You know, when they
Speaker 1: start giving me flack about anything gone so well, they're
Speaker 1: going to give you a cooler of it later on,
Speaker 1: of course. And I want to just tell people how
Speaker 1: it's made and and a little bit of the history
Speaker 1: of the company, because if you're from Los Angeles at all,
Speaker 1: you're very familiar with the heritage of this company. Yeah,
Speaker 1: let me start. So, the company is a hundred and
Speaker 1: eight years old, uh. And it was a confectionery to
Speaker 1: start so, dealing in primarily Japanese bakery items. And the
Speaker 1: founders invented basically mochi ice cream, which is a premium
Speaker 1: ice cream surrounded by sweet rice stough uh. And that
Speaker 1: brand was under the Mikawaya name and it had primarily
Speaker 1: traditional Japanese flavors, So people who tried the product loved it,
Speaker 1: but the awareness was very small. So then in two
Speaker 1: thousand sixteen, Century Park Capital private equity out of Los
Speaker 1: Angeles purchased the company, and they had this vision of
Speaker 1: taking a very ethnic snack and really taking it to
Speaker 1: the masses by creating a brand new brand, the Mimo
Speaker 1: Mochi ice Cream brand, and coming out with more traditional
Speaker 1: flavors that we know, like strawberry chocolate, cookies and cream,
Speaker 1: and really targeting the millennial consumer something that had never
Speaker 1: happened before. You mean, rather than red bean paste or
Speaker 1: green tea mochi. Uh, they want to get more American.
Speaker 1: I'm wondering, where is the market for mochi ice cream.
Speaker 1: Is it simply in the big cities or is there
Speaker 1: greater acceptance of more quote unquote ethnic foods in other
Speaker 1: places outside of the city's okay, great question. Let me
Speaker 1: start out with the market itself. So Mochi ice cream
Speaker 1: falls under the frozen novelty category, which is about a
Speaker 1: three billion dollar category, and that category has been flatted
Speaker 1: down slightly over the last couple of years. Mochi ice
Speaker 1: cream is part of that category. Mochi ice cream is
Speaker 1: the category within there that it has the most growth
Speaker 1: over the last year or two, primarily driven by Mymo
Speaker 1: Mochi ice Cream. It's definitely a coastal brand. We started
Speaker 1: out in l A and really in the last seven
Speaker 1: months have blown up My Mo Mochi ice Cream nationwide.
Speaker 1: But in l A, San Francisco, Seattle, and now New York,
Speaker 1: we're really blowing it up. Craig, what's the biggest challenge
Speaker 1: for you to expand awareness of this brand? I mean,
Speaker 1: what have you been most surprised at with respect to
Speaker 1: the difficulty. Well, it's pretty interesting because most people you
Speaker 1: talk to have never heard of Mochi ice cream. So
Speaker 1: the first thing you try and do is have them
Speaker 1: try it. So you know, We've hired a marketing team,
Speaker 1: We've got a strategy in place to really increase the
Speaker 1: trial and awareness of the product, and part of that
Speaker 1: is being done through what we call the Mochi Bar concept.
Speaker 1: And we're really we're the first ice cream company to
Speaker 1: break away from the ice cream freezer in the retailers
Speaker 1: and go into the perimeter of the food stores with
Speaker 1: a self serve Mochi bar, and that's a paid sampling
Speaker 1: event because consumers are paying anywhere from a dollar fifty
Speaker 1: two dollars for Amachi ball and trying it on the spot.
Speaker 1: And it's usually the normal reaction. The first time they
Speaker 1: bite into it, it's wow, that's kind of weird, and
Speaker 1: then the second bite is, oh my god, I love
Speaker 1: this stuff. So it's uh, it's a great thing to see,
Speaker 1: you know, it's something that is really uh, taking the
Speaker 1: stores by surprise and building overnight. Was it a conscious
Speaker 1: effort to turn it into a snack as opposed to
Speaker 1: a dessert and therefore the smaller form factor. Yes, so
Speaker 1: we see it as a snack. You know, millennials snack
Speaker 1: at least four times a day. Uh, this is a
Speaker 1: perfect product. And ten calories per hundred and ten calories.
Speaker 1: It's handheld, it's portable, it's grabbing go. It fits their lifestyle.
Speaker 1: You know, we have fifteen or so flavors. What does
Speaker 1: it cost? Uh? You know, it comes by the ball.
Speaker 1: If you buy an e Moachi bar would be anywhere
Speaker 1: from all fifty to two dollars a ball in a
Speaker 1: six pack. The retail is about five or dollar a ball.
Speaker 1: I love how targeted millennials are. They like snacks, not
Speaker 1: desserts because deserts are too fattening, and they like it
Speaker 1: small and they like it quick. Who right there, you go, Well,
Speaker 1: you've definitely defined the market, and I think you're gonna
Speaker 1: start eating some of these moments. I must say that
Speaker 1: we gotta leave it there. Thanks very much, Craig Burger.
Speaker 1: He is the chief executive of Momochi ice Cream. NAFTA
Speaker 1: North American Free Trade Agreement five hundred and twenty five
Speaker 1: billion dollars. That's a total amount of trade between the
Speaker 1: United States and Mexico. Mexico is the number three trading
Speaker 1: partner of the US, right after Canada, also a signatory
Speaker 1: to NAFTA. Here to tell us about the renegotiation of NAFTA.
Speaker 1: There's our own White House correspondent. We've got Jennifer Jacobs
Speaker 1: joining us from Washington, d C. Jennifer, maybe just outline
Speaker 1: exactly what is scheduled to happen today, who's going to
Speaker 1: be there and what do they really aim to accomplish. Uh. First,
Speaker 1: it's Jennifer Epstein of on our White House team. Just
Speaker 1: wanted to make sure that's clear to that people aren't confused.
Speaker 1: Uh if they know our voices. Um so Uh. Prime
Speaker 1: Minister Trudeau is coming to the White House a little
Speaker 1: bit later today to meet with President Trump. It's their
Speaker 1: fourth meeting since President Trump took office at the beginning
Speaker 1: of the year. Um. And and this is the same
Speaker 1: time that there are a whole bunch of uh you
Speaker 1: know that that that we're in this fourth round of
Speaker 1: trade negotiation talks. Uh, and that's happening here in d
Speaker 1: C as well. Uh. You know, we're just anticipating in
Speaker 1: the US to continue to take a pretty hard line
Speaker 1: on some things that they that that they're kind of
Speaker 1: that the U. S officials kind of expect Mexico and
Speaker 1: Canada to be relucked into, including substantially raising the requirement
Speaker 1: of the requirements for rules of origin for vehicles. Um,
Speaker 1: you know what share has to be uh of the
Speaker 1: of the vehicle has to be built built in the
Speaker 1: United States. Jennifer and the rest of NAFTA. Jennifer, I'm
Speaker 1: struck by President Trump versus Congress, versus his diplomats. Is
Speaker 1: President Trump carrying the weight of a unified group of
Speaker 1: politicians and policymakers as he renegotiates NAFTA or is he
Speaker 1: increasingly isolated in some of his demands? You know, I
Speaker 1: think this is a situation where in order that it's
Speaker 1: increasingly isolated, I think it's been isolated all along. That
Speaker 1: that while there are certainly a big populist tervor uh
Speaker 1: to pull out of NAFTA, or that NAFTA the bad
Speaker 1: deal and it must be renegotiated, that there are so
Speaker 1: many Uh, there's so many US lawmakers who are who
Speaker 1: really would not do not actually support going all the
Speaker 1: way and getting out of NAFTA. You know, for this president,
Speaker 1: seems like threats are not just threats, but are It
Speaker 1: depends on what it is, of course, you know, if
Speaker 1: we're talking about nukes, who knows. But uh, you know,
Speaker 1: threats on something like this are threats that he seems
Speaker 1: poised to follow through on, just the way he has
Speaker 1: initiated the process of pulling out of the Paris Climate Agreement. Uh,
Speaker 1: just as you know we are anticipating some kind of
Speaker 1: reversal from the um Iran deal. Uh. These are things
Speaker 1: where this president is willing to negotiate, was willing to
Speaker 1: threaten uh in hopes of negotiating. Well, but what ends
Speaker 1: up happening is that he just ends up pulling out
Speaker 1: all altogether and just given up on these things, Jennifer Epstein. Uh.
Speaker 1: And I also I apologize because of course I know you,
Speaker 1: and I just want to mention also that people can
Speaker 1: follow you on Twitter or your twit Twitter handle is
Speaker 1: at gen x j E N E P s. And
Speaker 1: as someone who is certainly covering historic presidency uh and
Speaker 1: has a background in history with your degree from a Princeton,
Speaker 1: can you just sort of step back for a moment
Speaker 1: and tell us what do you what kind of reactions
Speaker 1: or what conversations do you have with other people, uh,
Speaker 1: and their reaction to this effort to renegotiate NAFTA, What
Speaker 1: did they tell you? How did they react? Well? Thanks, Pim,
Speaker 1: and don't don't worry about it. It's fine. It happens
Speaker 1: all the time in both ways with us. We get
Speaker 1: each other's emails all the time. UM. So I think
Speaker 1: that that in the context of this, this is pretty unusual.
Speaker 1: You know, this is the president who seems to be,
Speaker 1: you know, at once attempting to fulfill some of its
Speaker 1: campaign problemises, which is something that presidents trying to do
Speaker 1: and oftentimes you know, get stopped up on either because
Speaker 1: once they get into office they realize, you know, just
Speaker 1: how untendable something is, or they just can't get the
Speaker 1: support from Congress something like this. The President seems to
Speaker 1: be ignoring all of that and just trying to move
Speaker 1: ahead in his own way without uh and necessarily getting
Speaker 1: anybody else on board. Uh. And that just this kind
Speaker 1: of uh, you know, indicative of his style and his
Speaker 1: desire to be a bull in the china shop. You know,
Speaker 1: I'm struck by the fact that the US Chamber of
Speaker 1: Commerce Chief executive Officer Thomas Donohue was speaking in Mexico
Speaker 1: City yesterday and said that he would fight quote like
Speaker 1: hell to defend NAFTA if Trump tries to pull out.
Speaker 1: I'm wondering what could be the fallout if President Trump
Speaker 1: decides to single handedly pull out. Well, you know, it
Speaker 1: would obviously, uh, you know, turn the ire of a
Speaker 1: whole lot of members of Chamber of Commerce, of the
Speaker 1: Chamber of Commerce, which is you know, the hugest uh
Speaker 1: business lobby in the country. That all that that you
Speaker 1: would send only have a president who's still despite having
Speaker 1: dissolved his various councils uh seems to you know, rely
Speaker 1: on that kind of support and the and the support
Speaker 1: of the establishment mainline Republicans dwindling as they may be.
Speaker 1: That if if they can't even rely on him to
Speaker 1: kind of support their business interests, uh, you know, why
Speaker 1: should they be supporting him at all? For Epstein, thank
Speaker 1: you so much for joining us. Jennifer Epstein covers the
Speaker 1: White House for us here at Bloomberg News and NAFTA.
Speaker 1: Talks are going on today in Washington between President Trump
Speaker 1: and the head of Canada. Thanks for listening to the
Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox.
Speaker 1: I'm on Twitter at Lisa abramowits one before the podcast.
Speaker 1: You can always catch us worldwide on Bloomberg Radio.