Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Speaker 1: Week inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 2: This was supposed to be the year that US inflation
Speaker 2: wrote the last mile down to two percent, letting the
Speaker 2: federal reserves steadily reduce interest rates from a two decade high.
Speaker 2: Now those expectations have been dashed this past week.
Speaker 3: Fetcher J.
Speaker 2: Powell said, persistent inflation means borrowing costs will stay elevated
Speaker 2: for longer than previously thought. That's a shift in tone
Speaker 2: with ramifications for policy around the world.
Speaker 4: This is the International Monetary Fund held its Spring meetings
Speaker 4: this past week in DC and inter deep expectations for
Speaker 4: global economic growth this year, and yet remained cautious amid
Speaker 4: persistent inflation and of course, geopolitical risk.
Speaker 2: With that in mind, we got our own take on
Speaker 2: the economy through the lens of the trucking industry as
Speaker 2: well as from the US CEO at DHL Express.
Speaker 4: That's straight ahead, as is the bitcoin having on that
Speaker 4: two voices from the crypto world, the CEO of Core
Speaker 4: Scientific on the business of bitcoin mining, and the president
Speaker 4: of Ava Labs on blockchain that could really, really, finally,
Speaker 4: maybe figures have some really use cases DMV anyone, Oh.
Speaker 2: God, that would be sweet. Plus one of the most
Speaker 2: read stories on the Bloomberg this week, sextortion scams on
Speaker 2: social media. If you don't know what we're talking about,
Speaker 2: and you have teens at home, you should.
Speaker 4: All of that to come. We begin, though, with something
Speaker 4: that is a great indicator of economic health, transportation, and
Speaker 4: this week we caught up with two voices in the space.
Speaker 4: Our first one came on the heels of earnings from
Speaker 4: truck giant JB. Hunt, chairs of the company, sank dragging
Speaker 4: down transports as the trucker's disappointing results and tepid demand
Speaker 4: sent a warning signal across the sector.
Speaker 2: Our own warning and insight on the sector came from
Speaker 2: Melissa Foreman and president at Triumph Pay, a payment platform
Speaker 2: that connects brokers, shippers, and carriers. It's a division of
Speaker 2: TBK Bank and part of the publicly traded Triumph Financial,
Speaker 2: which has about a one point seven billion dollar market cap.
Speaker 5: It is a rough freight marketplace right now, and the
Speaker 5: recession is real, and it's just you know, when you
Speaker 5: look at Q one, it was one of the softest
Speaker 5: ones we've seen, you know, some of the normal seasonality.
Speaker 5: Feels like it had come back and then dropped away again. So,
Speaker 5: you know, it's really hard to predict and project what's happening.
Speaker 5: It just knowing that this recession has been lingering for
Speaker 5: as long as it has. I think we're in what
Speaker 5: month twenty four, twenty five of it.
Speaker 3: It's just rough on everybody.
Speaker 4: When you say recession, are you talking about a trucking
Speaker 4: recession or economy wide recession?
Speaker 3: Yeah, freight recession.
Speaker 4: Freight recession.
Speaker 2: Okay, what does that mean? Is there just too much
Speaker 2: competition out there? I mean that was some of the
Speaker 2: concerns going into the j be Hut numbers.
Speaker 3: Yeah.
Speaker 5: I think that what is happening right now is you
Speaker 5: just have a gluttony of capacity in the marketplace. And
Speaker 5: so with all that capacity, these carriers trying to hold
Speaker 5: on and survive till twenty five, I think is the
Speaker 5: mantra it you know, they're just there's too much capacity
Speaker 5: in order to make the rates competitive and profitable for
Speaker 5: them to operate. So that's depressing the average invoice price,
Speaker 5: which makes it rough on everybody in the industry.
Speaker 2: Is that just left over from the pandemic? Is that
Speaker 2: what this is about?
Speaker 6: Or what?
Speaker 3: It's really hard to tell.
Speaker 5: You know, certainly, at the peak of the pandemic, we had,
Speaker 5: you know, some of the best times in transportation, and
Speaker 5: then there was this this level in a reset of
Speaker 5: what is the new norm? And I just I don't
Speaker 5: think we'd figured out what that is yet.
Speaker 4: Okay, So I was just going to ask the same
Speaker 4: thing that Carol just asked, which is, you know, is
Speaker 4: it just that we bought everything we needed during the pandemic.
Speaker 4: We don't need any more couches? Yeah, but it's hard
Speaker 4: to see that two years out from rails or even
Speaker 4: to our thronder years or dogs or is it or
Speaker 4: or has our spending shifted to services?
Speaker 3: I think it's a little bit of both.
Speaker 5: You know, we all certainly spent a lot of a
Speaker 5: lot of money on products during the pandemic because services
Speaker 5: weren't an option, and there was also you know, some
Speaker 5: misbalances in inventories, and what I think we're hearing in
Speaker 5: the market more recently is some of the inventory restocking
Speaker 5: is starting to happen.
Speaker 3: So that is a good sign.
Speaker 5: But certainly services I think have taken a higher priority,
Speaker 5: just you know, as people have kind of gotten back
Speaker 5: out into the world. You were talking about business travel
Speaker 5: as an example earlier in your segment on how that's
Speaker 5: up right, So travel, I think across the board seems
Speaker 5: to be up. I know the planes are full when
Speaker 5: I'm on them, and so the services and experiences I
Speaker 5: think are still taking a higher precedent.
Speaker 2: Well, so what can you tell us about route differentials
Speaker 2: in the trucking industry, because I do wonder if there
Speaker 2: are certain routes where they are getting the rates and
Speaker 2: certain where they're not. What can you tell us about that.
Speaker 5: Yeah, I would say I'm not an expert on specific
Speaker 5: lanes or commodities, but I do know where carriers have
Speaker 5: the buying power and the density they're able to still
Speaker 5: negotiate the longer term contracts, and so you know, that's
Speaker 5: certainly a place to focus and where you can garner
Speaker 5: the rates that make sense for you to be profitable.
Speaker 4: So I want to talk a little bit cross border,
Speaker 4: because you guys have some news when it comes to
Speaker 4: what's going on in Mexico. And what's so interesting is is, Carol,
Speaker 4: we've talked about this quite a bit over the last
Speaker 4: few months. The idea interesting exactly. You know, I don't
Speaker 4: necessarily want to suspect I think we can't. To a
Speaker 4: certain extent, we can call it near shoring. To a
Speaker 4: certain extent, we can call it, you know, a return
Speaker 4: to what happened during the nineties in the United States
Speaker 4: before we saw a lot of manufacturing move to China
Speaker 4: and other parts of the when AFT one exactly, and
Speaker 4: I want so so Melissa, tell exactly what's going on
Speaker 4: when it comes to what's happening with cross border right now.
Speaker 5: Yeah, I think, as you mentioned, like, we're seeing a
Speaker 5: lot more manufacturing go back to Mexico. And as you said,
Speaker 5: it was there back in the times of NAFTA.
Speaker 3: I remember that.
Speaker 5: Very well and all of the business that was going
Speaker 5: across the border, and we're there again, and there's so
Speaker 5: much opportunity to be able to help support transportation specifically
Speaker 5: in that space. We have you know, carriers at our
Speaker 5: clients and brokers at our clients that are have set
Speaker 5: up shop on both sides of the border and just
Speaker 5: trying to take advantage and leverage the efficiencies that that
Speaker 5: that brings them and the you know, efficiency gains and
Speaker 5: costs and in time, yeah, go ahead, say to do that,
Speaker 5: though you have to also be able to make payments
Speaker 5: to those carriers in preferably the currency that they prefer.
Speaker 5: And it's it's really hard right now. There's there's not
Speaker 5: a lot of density and being able to do Mexican
Speaker 5: pays payments too small carriers in the space, and so
Speaker 5: we saw this as an opportunity to one support and
Speaker 5: kind of get ahead of where the growth is going
Speaker 5: for cross border operations, but also to meet our customers
Speaker 5: where they need us to, and that's to be able
Speaker 5: to pay.
Speaker 3: Their carriers in the currencies they prefer.
Speaker 5: With the dollar softening a little as compared to pesos,
Speaker 5: more and more cares have been asking our clients to
Speaker 5: be paid in Mexican peso and they didn't have the
Speaker 5: opportunity to do that before. So it was you know,
Speaker 5: causing some capacity issues for them and curry relationship issues.
Speaker 3: So we wanted to break that market.
Speaker 4: Carol, you might remember the big take that we did
Speaker 4: back in September, all about how Mexico has passed China
Speaker 4: to become the U the largest US trading partner. Happened
Speaker 4: back in twenty twenty three. Pretty well. Now, well, well, Teresa,
Speaker 4: is the question most of why, why is this something
Speaker 4: that you were only able to do just now? You know,
Speaker 4: if there has been so much going to Mexico, why
Speaker 4: were you able to do this years ago?
Speaker 3: Yeah, It's it's complex.
Speaker 5: We've been building out our payments network for the last
Speaker 5: several years and expanding into multiple currencies. You know, we
Speaker 5: started with you know, the US dollar, moved into Canadian
Speaker 5: dollars as our clients asked for that.
Speaker 3: Now we're getting asked for Mexican pesos.
Speaker 5: But the regulatory and compliance components of what goes into
Speaker 5: that is pretty complex. And so we started this effort,
Speaker 5: you know, at the beginning of last year, and it
Speaker 5: just takes time to get it done and to do
Speaker 5: it well. And so that's why we're we're launching when
Speaker 5: we are. It's just the effort that goes into it.
Speaker 5: We anticipate being able to move and releasing European and
Speaker 5: Asian payments towards the later part of this year as well.
Speaker 2: How much has this business picked up since you guys
Speaker 2: have started.
Speaker 5: You know, we are not executing payments yet, okay, So
Speaker 5: we expect to have the ability to support that for
Speaker 5: our customers by the end of Q two, so the
Speaker 5: end of this quarter, and then work with them and
Speaker 5: their integrations with their TMSs and accounting systems to turn
Speaker 5: it live. So we haven't, but when we're talking to
Speaker 5: our clients, what we're hearing from them is about on average,
Speaker 5: five percent of their business is now being done in
Speaker 5: Mexico and they're having to turn business away because they
Speaker 5: don't have a good payment option. And so our hope
Speaker 5: is that, in our expectation is that as we launch
Speaker 5: these new capabilities, it's going to give our customers the
Speaker 5: competitive advantage to be able to move into those markets.
Speaker 2: More deeply, are these truckers, these drivers making the same
Speaker 2: kind of money that other drivers are making.
Speaker 3: I don't have an answer to that.
Speaker 2: I'm just curious. I'm curious if you yeah, sorry, I'm not.
Speaker 2: We love picking your brain because you do know so
Speaker 2: much about this industry, So forgive me.
Speaker 5: I've thought about the average Well, what's.
Speaker 2: The platform goes up like you're probably going to have
Speaker 2: a lot more information, but it is fascinating because I
Speaker 2: am curious about the level of activity and the dynamics
Speaker 2: of that market in particular, so really interesting stuff. Promise
Speaker 2: you'll come back once the platforms up and running and
Speaker 2: we can kind of dig a little bit more into
Speaker 2: what you guys are seeing. Always appreciate it. Such a
Speaker 2: timely interview. We're telling our producer, this is the perfect
Speaker 2: interview to have after we were talking about Jbehund, just
Speaker 2: to get your perspective and what you see, all right.
Speaker 4: Also, I just want to say shout out to Melissa
Speaker 4: Foreman's tech team or whoever set up this shot. You know,
Speaker 4: Melissa herself. She's got a microphone on. It looks like
Speaker 4: she's in a studio. It's like perfectly lit. I mean,
Speaker 4: I you know, it's like we take like three or
Speaker 4: four people to the shot.
Speaker 2: Everybody who comes on our air. Yeah, please FTA wondering
Speaker 2: Melissa Foreman be Well TALKSI and President of Triumphey in Dallas.
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Speaker 4: Well, we love talking shipping and logistics. After all, understanding
Speaker 4: who's shipping where and how much they're shipping is key
Speaker 4: to understanding trade and the global economy. Next guest has
Speaker 4: a great read into that. Greg Hewitt is a CEO
Speaker 4: at DHL Express US. It's a segment of Deutsche Post
Speaker 4: DHL Group, one of the biggest private employers in the world.
Speaker 4: I've got more than a five hundred and fifty thousand employees,
Speaker 4: revenues more than eighty seven billion dollars just last year.
Speaker 4: Greg's here in the Bloomberg Interactive Broker's studio.
Speaker 2: So great to have you here. We do, Tim and
Speaker 2: I love talking to anybody and everybody who's involved in
Speaker 2: transportation because it does feel like you guys do have
Speaker 2: some great insight into what's going on in the economy. Welcome, Welcome,
Speaker 2: Nice to have you here.
Speaker 7: Thank you so much for the invite, My pleasure to
Speaker 7: be here.
Speaker 3: So tell us a.
Speaker 2: Little bit about the environment, what you're seeing and the
Speaker 2: level of activity and how it compares from the last
Speaker 2: six months from twelve months. I mean, I'm not quite
Speaker 2: sure with the pandemic still if we're still thinking about
Speaker 2: pre pandemic levels. But what do you see I.
Speaker 7: Think I've seen To start the year, we felt it
Speaker 7: was going to maybe be a little bit stronger, a
Speaker 7: little bit more growth. We're coming off of post pandemic,
Speaker 7: a bit of a downturn. What we saw was e
Speaker 7: commerce was kind of fueling any growth that traditional segments automotive,
Speaker 7: engineering and manufacturing, high tech. We're still a little bit lower,
Speaker 7: maybe having last year a little bit too much inventory,
Speaker 7: trying to cycle that out. We went into the year
Speaker 7: with optimism, thinking we closed last year stronger, maybe it
Speaker 7: was going to grow. Haven't quite seen that in first quarter,
Speaker 7: seeing it a little bit softer than we thought. But
Speaker 7: everybody's optimistic. A lot of people are talking about peak
Speaker 7: season this year, which in airin ocean will come in
Speaker 7: the summer. For me an Express, it'll come kind of
Speaker 7: us Thanksgiving to end of year. People are optimistic that
Speaker 7: volume will grow and things are recovering.
Speaker 4: Okay, you mentioned Aaron Ocean, so I wanted to start
Speaker 4: with ocean. Are you seeing any increase or is DHL
Speaker 4: seeing any increase in demand from the ships that are
Speaker 4: avoiding the Suez canal. How's that playing out for you?
Speaker 7: I think a little less than I thought, quite honestly.
Speaker 7: My segment. Usually when there are pinch points in any
Speaker 7: one of the sectors, like the ocean transport, maybe people
Speaker 7: move things over to a fixed network ours and express.
Speaker 7: I haven't really seen that lift yet. I think companies
Speaker 7: are still being patient. They still have time before the
Speaker 7: peak to allow things to work themselves through, or we'll
Speaker 7: probably see it would be more towards the summer, or
Speaker 7: for me, a fall season if there continues to be
Speaker 7: challenges with the supply chain, that's when things start to
Speaker 7: convert over to air and we'd see a lift in cargo.
Speaker 6: Great.
Speaker 2: What's the most challenging part of your business right now?
Speaker 2: I means certainly something we talk about as higher energy prices,
Speaker 2: right and we've pulled back a little bit off of
Speaker 2: kind of the activity over the weekend in the Middle East.
Speaker 2: But I am curious if that's starting to bite into
Speaker 2: some of your costs or raise that cost equation.
Speaker 7: From my perspective, still, my biggest challenge is dealing with
Speaker 7: the inflationary pressures that go with rising wage rates here
Speaker 7: in the US and the need to compensate my team
Speaker 7: to who are skilled workers to keep the front lines happy.
Speaker 7: That's probably still my biggest versus anything globally that's putting
Speaker 7: pressure on.
Speaker 4: That's interesting to hear. Where is that pinch point? The
Speaker 4: biggest is that with people in warehouses, people actually doing
Speaker 4: the driving, doing the deliveries, and you're talking, you're not
Speaker 4: talking back office folks.
Speaker 7: Now, it would be more frontline of finding the skilled
Speaker 7: labor for couriers and termost journal handling stuff.
Speaker 4: I mean, who's your competition there is it is Amazon
Speaker 4: around the country that's just driving up wages.
Speaker 7: I don't know if I would say that it's anybody
Speaker 7: that's driving it up. I think in general you've heard
Speaker 7: coming through the pandemic, every wage is whether it was
Speaker 7: at a dunkin donuts to well a caurreer, everything goes up.
Speaker 4: We talk about California's minimum wage all the time, up
Speaker 4: to twenty dollars an hour at this time, and we
Speaker 4: have to.
Speaker 7: Respond to that and make sure that anywhere where we're
Speaker 7: employing people, not only are we at the minimum wage,
Speaker 7: but generally because it's skilled labor, we've got to be
Speaker 7: a bit above that.
Speaker 2: Well, one thing, you know, and this is something we
Speaker 2: talk about when we focus a lot on inflation generally
Speaker 2: here in the United States. And we're having a conversation
Speaker 2: earlier with one of our analysts who watches the rate environment,
Speaker 2: and it's kind of debate about whether or not this
Speaker 2: idea of the FED getting back to two percent inflation,
Speaker 2: whether it makes sense anymore, because there does seem like
Speaker 2: the work that there's just not enough workers that people need,
Speaker 2: and that maybe a higher wage is something not just
Speaker 2: short term or until the next wage cycle, but something
Speaker 2: longer built into kind of our economic model. Do you
Speaker 2: agree with that or what's your thinking about wages longer term?
Speaker 7: I think from my standpoint, what I'm not seeing is
Speaker 7: wages don't go down once they go up, they tend
Speaker 7: to hold and grow from that. What we've seen is
Speaker 7: lower levels of turnover. So we've got stability in the
Speaker 7: workforce that have gone with the higher wages. So I
Speaker 7: think that's a good thing. Now we've got to drive
Speaker 7: productivity in order to make sure that we've got this
Speaker 7: share holder return.
Speaker 4: So Carol, this was Carol's idea. She's like, we got
Speaker 4: to talk drones here, and I'm thinking to myself, Okay.
Speaker 2: Well, is make it more productive.
Speaker 4: I'm thinking to myself, Okay, well, if the folks on
Speaker 4: the front lines are the ones who are driving up wages,
Speaker 4: I'm wondering how dhl's experimenting with drones drone delivery, and
Speaker 4: if that is actually something that's realistic in terms of
Speaker 4: supplanting or replacing at any point certain men's who are
Speaker 4: doing the delivering.
Speaker 7: From my perspective, it hasn't. It's not going to supplant
Speaker 7: humans doing the delivering. In fact, we've used I don't
Speaker 7: see it. I think the reality is there there are
Speaker 7: challenges around having autonomous vehicles in the air and airspace.
Speaker 7: We have used it in some remote locations to deliver
Speaker 7: medicine and such. I think we're still going to need
Speaker 7: people delivering packages, but with the advantage of automation in
Speaker 7: terms of software that helps with rooting, helps make sure
Speaker 7: they can be efficient and effective. Those are the things
Speaker 7: that I see in the near term as more of
Speaker 7: an impact.
Speaker 2: I got to say, and forgive me, I'm going to
Speaker 2: talk about, you know, the competition, but ups one of
Speaker 2: the things after spending this is a few years back,
Speaker 2: but spending a day with a delivery man, I mean
Speaker 2: they that's exactly. It's all technology and this whole idea
Speaker 2: of a kidd in with these You know, with our team,
Speaker 2: you don't make left turn to make right turns because
Speaker 2: you don't want a truck or driver spending seconds minutes
Speaker 2: at an intersection. So things like this do add up.
Speaker 7: They absolutely do. And so our biggest investments in technology
Speaker 7: in the last few years would be around routing software
Speaker 7: and station optimization, and now with international optimization would be
Speaker 7: what's the optimal amount of courier, roots and personnel that
Speaker 7: you'd have in a station based on big data, the
Speaker 7: data that tells you what's coming in. How do you
Speaker 7: allocate that most effectively and put into that With global
Speaker 7: trade clearance, customs clearance, that's probably the next area we're
Speaker 7: investing evily in because we need to do that more efficiently,
Speaker 7: more effectively, more streamlined.
Speaker 2: Well, can I ask you what happens there?
Speaker 8: Is?
Speaker 2: It just takes long.
Speaker 7: If you had to do if you have to clear
Speaker 7: something formally, you've got an entry writer who has to
Speaker 7: go through the harmonized tax codes making sure all of
Speaker 7: the information is available for customs to clear it effectively
Speaker 7: and for the duties and taxes to be assigned. It
Speaker 7: can be a bit of a manual process. So doing
Speaker 7: things with automation that makes it more accurate, more efficient,
Speaker 7: more effective as part of our customs clearance experience.
Speaker 4: How's air capacity? Looking at the company right now? Do
Speaker 4: you have to much air capacity?
Speaker 7: I wouldn't say we have too much. I think we
Speaker 7: probably adjusted coming out of COVID, where we had a
Speaker 7: lot of charters and extra capacity that balanced out our
Speaker 7: fixed network. The jets that we've bought, we've now right
Speaker 7: sized those. We try to run eighty to ninety percent
Speaker 7: capacity utilization and then scale accordingly, and we're running a
Speaker 7: good levels.
Speaker 4: Well to what extent are you leaning more on third
Speaker 4: party capacity providers right now?
Speaker 7: I think if I would have said before the pandemic
Speaker 7: we were very balanced between our own network and leveraging
Speaker 7: commercial lift. Through the pandemic, we leaned much heavier on
Speaker 7: our own network. Now we're probably balancing it out. Before
Speaker 7: we add maybe another jet into our own fleet, we
Speaker 7: will look at commercial to balance it out.
Speaker 2: So when we started GREG, it sounded like there was
Speaker 2: hope that things get a little bit better this year.
Speaker 2: To any of your clients talking about slow down recession.
Speaker 7: Not really in fact, I would say, compared to this
Speaker 7: time last year, where there was a lot of uneasiness
Speaker 7: where inventory levels were high, there was a lot of
Speaker 7: uncertainty this year. When I talk to them, they are optimistic.
Speaker 7: What I haven't seen is the orders flow through and
Speaker 7: the moves go through yet. But people are feeling same.
Speaker 3: But show me the order we.
Speaker 7: Want to see them. But it gives me optimism that
Speaker 7: for peak season we'll see a return to more of
Speaker 7: the norm we're usually in third and fourth quarter. There's
Speaker 7: a rise in goods moving that we haven't seen in
Speaker 7: the last couple of years.
Speaker 4: To the same extent, why do vote, Why would a
Speaker 4: customer go with DHL instead of going with FedEx or UPS.
Speaker 7: Well, for me, our DNA and ARE what we were
Speaker 7: born out of in nineteen sixty nine is international and
Speaker 7: our specialty is around the movement of goods internationally. So
Speaker 7: if you're a small business or a business bringing goods
Speaker 7: in from around the world, nobody can clear it and
Speaker 7: deliver it like we do. If you're a business that
Speaker 7: looks to market your goods globally, nobody knows those countries
Speaker 7: and consumers better than us.
Speaker 2: Greg twenty seconds left here because you do see kind
Speaker 2: of the trade if you will, going between the US
Speaker 2: and globally. Any pushback that you see in terms of
Speaker 2: the globalization idea that we keep hearing in narratives quickly.
Speaker 7: Yeah, we definitely have heard concern a little more protectionist
Speaker 7: policy in a number of places.
Speaker 2: See it though in the day I.
Speaker 7: Haven't seen in the day to day. What I have
Speaker 7: seen is probably the US China relationship. Definitely China plus one,
Speaker 7: new markets in Asia and Mexico growing because of that.
Speaker 2: Yeah, we hear that a lot.
Speaker 4: We love talking shipping and logistics.
Speaker 2: Told you we really like it. Greg here at, chief
Speaker 2: executive officer US of DHL Express here in studio, Greg,
Speaker 2: thank you.
Speaker 6: This is Bloomberg.
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Speaker 2: Well, this is one of those stories that is unfortunately
Speaker 2: part of our new reality thanks to social media and
Speaker 2: an area that our Olivia Carvell continues to explore, inform
Speaker 2: and report on this story Today's Bloomberg Big Take. It
Speaker 2: is also the cover story the upcoming new issue of
Speaker 2: Bloomberg BusinessWeek. It is about scammers and scams which the
Speaker 2: FBI calls sextortion, and it has become one of the
Speaker 2: fastest growing crimes targeting children in the United States.
Speaker 4: For more on what exactly is happening, I do want
Speaker 4: to bring in Bloomberg BusinessWeek investigative reporter Olivia Carville. She's
Speaker 4: here in our Bloomberg Interactive Brokers studio. As Carol just mentioned,
Speaker 4: it's the cover of the new issue of Bloomberg Business Week.
Speaker 4: It's out this week. It's already online at Bloomberg dot
Speaker 4: com and always on the Bloomberg terminal. Olivia, the story again,
Speaker 4: the cover story, It centers around a term that I'd
Speaker 4: actually never heard of, sextortion. What is it?
Speaker 9: When I first started reporting this story, I'd never heard
Speaker 9: of sextortion before either. Essentially, it is a hybrid of
Speaker 9: sexual extortion. So we're mainly children, unfortunately, are targeted online
Speaker 9: and sixtorted or sexually extorted through naked photos, blackmail to
Speaker 9: send money or in some cases send more naked photos
Speaker 9: to scammers, perpetrators, predators online and the FBI has been
Speaker 9: tracking this crime for a long time, but in recent
Speaker 9: years it's changed completely. In the past two years, sextortion
Speaker 9: has really become more a financially motivated crime. What these
Speaker 9: predators want is money. It's not kind of more naked
Speaker 9: images of children.
Speaker 2: I have to say, I think there's somebody who might
Speaker 2: be listening to Like, of course, when you see this,
Speaker 2: you say no and you just put your phones down.
Speaker 2: I'm going to ask you to tell the tale of
Speaker 2: during DeMay, Sure, Jordan out of Towe. It's a really
Speaker 2: sad story and a tragic one.
Speaker 9: Yeah. Jordan de May was a pretty typical teenage boy.
Speaker 9: He lived in Marquette, a city in Upper Peninsula in Michigan.
Speaker 9: He was a football star, a basketball star, really good looking,
Speaker 9: really popular, had a girlfriend, lived with both his mum
Speaker 9: and his dad. Was one of the most popular kids
Speaker 9: in school. Teachers loved him, football coaches loved him, his
Speaker 9: girlfriend loved him. And then one night in March of
Speaker 9: twenty twenty two, he said goodbye to his girlfriend Casto goodnight,
Speaker 9: went home before his ten pm curfew as usual, and
Speaker 9: on his way home, he got a message from a
Speaker 9: teenage girl on Instagram called Danny Roberts, and that message
Speaker 9: just said, Hey, this is pretty normal for a popular
Speaker 9: kid who's like regularly featured in the local newspaper for
Speaker 9: his sporting successes to be contacted by random girls on
Speaker 9: social media.
Speaker 2: This happens a lot.
Speaker 9: Now. You know, she may have been a stranger, but
Speaker 9: on her Instagram profile he could see all of her photos,
Speaker 9: he could see all of her friends, and they actually
Speaker 9: shared mutual friends. And I think teenagers today have this
Speaker 9: safety net. They feel like social media is a safe
Speaker 9: place and that you know, looking at an Instagram profile,
Speaker 9: you know who you're talking to. But sadly that is
Speaker 9: not the case. And the story tells us why. So
Speaker 9: Jordan was contacted by this young woman. They started a conversation.
Speaker 9: They were talking about school life, pretty normal topics, and
Speaker 9: then she turned the conversation flirtatious. She started to flirt
Speaker 9: with him. She then sent him a naked photo and
Speaker 9: asked him to play a game. She wanted to play,
Speaker 9: sexy Picks, So that was her sending the nude photo first.
Speaker 9: That kind of threw him off, I guess, and put
Speaker 9: him in a position of feeling like this was someone
Speaker 9: he could trust that they were in this private conversation.
Speaker 9: He responded by sending his own nude photo, and as
Speaker 9: soon as he did that, the blackmail started. Six hours
Speaker 9: after they first started messaging. He took his own life.
Speaker 4: And he took his own life because of the concern
Speaker 4: over what would happen if these pictures got out. That
Speaker 4: was the blackmail. He indeed sent money, they wanted more money,
Speaker 4: and what happened.
Speaker 2: Yeah, I think.
Speaker 9: I think ultimately he took his own life because of
Speaker 9: the pressure these blackmailers placed upon him. Initially, the agreed
Speaker 9: upon amount was three hundred dollars. He paid that, he
Speaker 9: sent it to them, and then they came back asking
Speaker 9: for more. They wanted eight hundred dollars, and at one
Speaker 9: point in the message exchange, he sends them a screenshot
Speaker 9: of his bank account and it had fifty five dollars
Speaker 9: in it. He's a seventeen year old kid, and he says,
Speaker 9: I can't pay anymore, and they say, no deal, and
Speaker 9: they keep pushing and say, if you don't give us
Speaker 9: more money, we're going to send this to all your
Speaker 9: friends and family.
Speaker 4: And it turns out, as you're reporting, shows Jordan's story
Speaker 4: absolutely tragic. The repercussions of that still playing out. But
Speaker 4: he's not the only one.
Speaker 9: He is not the only one. The FBI have been
Speaker 9: aware of more than twelve thousand, six hundred victims of
Speaker 9: this crime across North America. We know more than two
Speaker 9: dozen teenage boys have taken their own lives after falling
Speaker 9: prey to the specific scam.
Speaker 2: The financial motivation, and then kind of the evilness, if
Speaker 2: you will, of these individuals. How are they getting caught?
Speaker 2: Because they are getting caught, correct.
Speaker 9: I mean, in the few cases where they have been caught,
Speaker 9: law enforcement have been able to track their identity through
Speaker 9: their IP addresses, so that's where they've been able to
Speaker 9: file preservation request records to Meta or other social media
Speaker 9: platforms to try and find out who is really behind
Speaker 9: that account. And these scammers have become very effective at
Speaker 9: these catfishing strategies by hacking into these Instagram accounts, taking
Speaker 9: control of them, weaponizing them in order to coerce that
Speaker 9: nude photo and then blackmail.
Speaker 2: It's just amazing, like going back a second, within six
Speaker 2: or seven hours, all of this happened, and it's playing
Speaker 2: out over and over again, which doesn't leave necessarily a
Speaker 2: lot of time for law enforcement unless somebody reaches out
Speaker 2: or a student feels comfortable enough to reach out to
Speaker 2: a parent. But you think about we all know teenage
Speaker 2: teenagers in general, teenage boys like they're not likely to
Speaker 2: reach out. Has any of them in the process stuck
Speaker 2: in it have reached out to an adult or law enforcement?
Speaker 2: Have we heard of anything like that?
Speaker 9: Yeah, Carol, I think that this crime is so much
Speaker 9: bigger than we actually imagine it to be. Those twelve
Speaker 9: thousand cases are largely underreported. I don't know how many
Speaker 9: people have been affected, but the FBI says this is
Speaker 9: touching every neighborhood across the country. Some parents who have
Speaker 9: had their children die and have spoken publicly in the past,
Speaker 9: including a South Carolina state representative. He talked about his
Speaker 9: son's death and he's been contacted by hundreds of children
Speaker 9: in the moment of crisis, saying please help me, because
Speaker 9: what happened to your son is happening to me.
Speaker 4: There's a really poignant moment in your piece where he
Speaker 4: talks about leaving his cell phone on at night so
Speaker 4: he can answer those calls. And I believe Olivia. He
Speaker 4: said he's gotten hundreds of them.
Speaker 9: Yeah, he's received over two hundred phone calls.
Speaker 4: So I want to say Jordan's story continues because the companies,
Speaker 4: and we'll talk more about the tech companies a little
Speaker 4: bit later in our program, but the tech companies play
Speaker 4: a big part in your piece here. Talk to us
Speaker 4: about what happened. Meta Platforms, a parent company of Facebook
Speaker 4: and Instagram, actually has this portal where law ENFORCEMDIA agencies
Speaker 4: and agents can go and make records requests. What happened
Speaker 4: when a police officer, just hours after finding out about Jordan.
Speaker 10: Went to do that.
Speaker 9: So usually when you file a preservation request through the
Speaker 9: platforms through this law enforcement portal, you have to provide
Speaker 9: a court order signed by a judge. Essentially, it's like
Speaker 9: a digital search warrant. The detective in this case wanted
Speaker 9: to file that preservation request as an emergency order to say,
Speaker 9: let me sidestep the court order that's going to take
Speaker 9: a while to get access to. Just give me the
Speaker 9: data on this particular Instagram account, that's the Danny Roberts
Speaker 9: account that was messaging Jordan to May Because, as the
Speaker 9: detective put in his request, he thought other children's lives
Speaker 9: were at risk. He told me he was at the
Speaker 9: mercy of the platform. He couldn't do any more other
Speaker 9: than ask them for the data. Who is this person?
Speaker 9: What's their IP address? What's their email address? Meta responded
Speaker 9: and said his request did not rise to the level
Speaker 9: of an emergency and told him they wouldn't give him
Speaker 9: any information without a court order. So he went and
Speaker 9: got it, and it took a few more days. It
Speaker 9: took a lot longer, but he did get that data.
Speaker 9: And when he did read that message exchange between Jordan
Speaker 9: DeMay and Danny Roberts, he said he had to read
Speaker 9: it twice because it was so shocking and disturbing for him.
Speaker 9: I've done a lot of interviews with law enforcement around
Speaker 9: the harms of social media. This is the first story
Speaker 9: where multiple seasoned detectives and FBI agents have cried Olivia.
Speaker 4: I want to talk a little bit about the tech
Speaker 4: platforms here. Instagram is owned by Facebook parent Meta platforms.
Speaker 4: You mentioned Snap earlier. Snapchat owned by Snap Inc. Talk
Speaker 4: to us a little bit about the platforms this is
Speaker 4: happening on in the role that the tech companies play.
Speaker 9: So the platforms first became aware of sextortion as an
Speaker 9: issue in mid twenty twenty two and since then they
Speaker 9: have taken a lot of action to try and address
Speaker 9: this issue. Meta, for example, sends sextortion focused safety notices
Speaker 9: directly to young users of the platform. They also use
Speaker 9: AI to try and detect suspicious accounts. Say, for example,
Speaker 9: a predator hacks into the Instagram account of someone based
Speaker 9: in the US and they'reover in Lagos, Nigeria. The shift
Speaker 9: of that IP address could send out a red flag.
Speaker 9: That Meta would then be tracking this account to see
Speaker 9: if anything suspicious happens. And just last week, Meta announced
Speaker 9: they're going to be blurring automatically blurring nude photos sent
Speaker 9: through its platform. But even taking those steps, this crime
Speaker 9: is still occurring and will still occur.
Speaker 2: And I think.
Speaker 9: That that's because these bad actors are savvy. They know
Speaker 9: how to get around any kind of guardrails. The platform
Speaker 9: was put up because social media is so ubiquitous in
Speaker 9: children's lives. Now everyone is on it. They want to
Speaker 9: promote this beautiful life they all live. They want to
Speaker 9: show that they're friends with hundreds, if not thousands of
Speaker 9: other people. So they get a friend request from a
Speaker 9: stranger and they accept it.
Speaker 2: That's amazing, But I do think we've become desensitized, you know.
Speaker 2: Whoever thought and Okay, I'm taking off in a little
Speaker 2: bit of a direction, but you would get into a
Speaker 2: stranger's car pretty regularly. And I think about uber like,
Speaker 2: we've just kind of accepted this idea of strangers, but
Speaker 2: they feel kind of familiar and we're okay because the
Speaker 2: company says they're okay. Basically, tell us about the two
Speaker 2: bad actors in this story who are ultimately responsible.
Speaker 9: Well, it's kind of a network of bad actors over
Speaker 9: in Nigeria along the Ivory Coast and other countries in
Speaker 9: Africa where they are creating scripts of how to blackmail
Speaker 9: kids and sharing them on other platforms like TikTok and YouTube.
Speaker 9: This is an industry wide issue. It's not just one
Speaker 9: social media platform facing this problem. It's right across a
Speaker 9: number of them. So this group of Konmian they're called
Speaker 9: the Yahoo Boys, so they may sound familiar anyone who
Speaker 9: was swindled by the Yahoo dot com email scam. The
Speaker 9: Nigerian princes, they have now revolutionized or turned their attention
Speaker 9: towards teenage boys in the US. And they're doing that.
Speaker 9: They're exploiting the shame and embarrassment of these kids because
Speaker 9: it's getting them money, it's getting them results. In one
Speaker 9: case I read about, the Secret Service investigated and the
Speaker 9: individual managed to swindle two point five million in Bitcoin
Speaker 9: payments from US victims. And that's just in the last
Speaker 9: two years.
Speaker 4: Carol mentioned the two individuals in Nigeria who ultimately were
Speaker 4: extra dated to the United States. Talk to us about
Speaker 4: what their fate will be, what their fate is, and
Speaker 4: how the FBI was able to track them down.
Speaker 9: Yeah, and that's what makes this case so unique, is
Speaker 9: the first case where the FBI has managed to track
Speaker 9: the perpetrators to their home country of Nigeria and extradite
Speaker 9: them back to the US to face charges for the
Speaker 9: wrongful death of Jordan de May. These two individuals, Sam
Speaker 9: Samuel and Sampson Agoshi. They are brothers. They're from a
Speaker 9: small town twenty two and twenty and one of them
Speaker 9: was studying at a university, the other was training to
Speaker 9: be a shoe cobbler. They grew up attending church, playing
Speaker 9: soccer with their friends. They obviously got involved in the
Speaker 9: scam and the sextortion scam, and after Jordan de May's death,
Speaker 9: when law enforcement tracked their IP address back to Lagos.
Speaker 9: These two individuals were arrested, extradited here and just last
Speaker 9: week they pled guilty to conspiring to sexually exploit hundreds
Speaker 9: of teenagers across the US. It wasn't just Jordan de
Speaker 9: Maay that they were messaging. They messaged hundreds of young boys,
Speaker 9: including one the day Jordan died, they were sending him
Speaker 9: message in Wisconsin telling him that they were going to
Speaker 9: make him commit suicide.
Speaker 2: I do wonder about social media, like the organizations these
Speaker 2: networks that are actually laying out kind of the playbook,
Speaker 2: what oversight are they doing and kind of pulling that
Speaker 2: in and reading that in as well.
Speaker 3: Well.
Speaker 9: When they first became aware of the crime, they started
Speaker 9: tracking it and there was a report, a research report
Speaker 9: that was published in January of this year where a
Speaker 9: researcher was able to find these scripts across TikTok and YouTube,
Speaker 9: hundreds of them where the Yahoo boys were sharing how
Speaker 9: two's as in how to blackmail American teens, including how
Speaker 9: to sound like a teenage girl, how to turn a
Speaker 9: conversation flirtatious, how to get that nude picture, and then
Speaker 9: how to blackmail.
Speaker 2: So what's the responsibility of social media or that are
Speaker 2: they pulling them or are they scraping them off?
Speaker 9: Or what I mean, they're trying to like, they're doing
Speaker 9: all they can to take down those reports. Every post
Speaker 9: that was raised and that research report has been removed
Speaker 9: from social media. But I've been able to find more.
Speaker 9: You know, the scammers just changed the hashtags A Yeah,
Speaker 9: how do you keep this content off? It's a tidal
Speaker 9: wave and you've got a bucket?
Speaker 6: Yeah, Olivia.
Speaker 4: I mentioned it's one of the most read stories on
Speaker 4: the Bloomberg terminal. It's the cover of BusinessWeek, it's the
Speaker 4: big take. I imagine you've been hearing from people about
Speaker 4: the story. Can you share with us some responses.
Speaker 9: Yeah, I've heard from a lot of readers, people who
Speaker 9: work in schools. I heard from a lacrosse coach saying
Speaker 9: that he wanted to share this with all his players.
Speaker 9: I also heard from a CEO today who said that
Speaker 9: he read this story while going home last night on
Speaker 9: the train and that he couldn't stop reading it, and
Speaker 9: when he got home, he went straight to his son's bedroom.
Speaker 9: His son is fifteen. He set him down and said,
Speaker 9: I need you to read this story, and I need
Speaker 9: to talk to you about it. I want you to
Speaker 9: know that I was young once I also did dumb things,
Speaker 9: and if you do anything like this, come to me,
Speaker 9: come and speak to me. And it's those conversations that
Speaker 9: we were hoping this story.
Speaker 2: Would Yeah, I mean right exactly, because as we talked
Speaker 2: about earlier, maybe we were talking off camera and off air,
Speaker 2: just this whole idea. When you're a teenager, this does
Speaker 2: feel like it's the you know, if this was shown,
Speaker 2: it's kind of the end of your life as you
Speaker 2: know it, and you don't know how to get out
Speaker 2: of it. And so talking about it, parents talking about it,
Speaker 2: teachers talking about it, you hope you can get ahead
Speaker 2: of it a little bit.
Speaker 11: Yeah.
Speaker 4: One detail that you shared in your reporting was an
Speaker 4: image like a mockup of a newspaper having been sent
Speaker 4: back to somebody.
Speaker 3: Yeah.
Speaker 9: In one case, the scammers actually posted the nude photo
Speaker 9: beneath the headline that seed like the individual's name was
Speaker 9: caught sending nude photos on the Internet. They threatened that
Speaker 9: these victims are going to be arrested by police for
Speaker 9: sharing child pornography.
Speaker 2: Well, and the scary part too, is they just knew
Speaker 2: so much about their network. Those individuals those teenage boys
Speaker 2: write their networks and were able to really kind of
Speaker 2: tap into it and scare them. A terrifying story, but
Speaker 2: an really important story. Bloomberg Business Week investigative report Olivia Carvell.
Speaker 2: Another incredible story from her, an important one. As we said,
Speaker 2: it's in the upcoming new issue Bloomberg BusinessWeek. It is
Speaker 2: on the Bloomberg and of course at Bloomberg dot com.
Speaker 2: This is Bloomberg Business Week, Carol Master Tim Stenovic. This
Speaker 2: is Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm. Easter Listen
Speaker 1: on Applecarplay and then brought auto with a Bloomberg Business app,
Speaker 1: or watch us Live on YouTube.
Speaker 2: You may remember back in January, the SEC approved the
Speaker 2: launch of bitcoin spot ETFs to trade on the US market,
Speaker 2: causing the price in cryptocurrencies to surge, with the biggest
Speaker 2: one of them all, Bitcoin hitting an all time high
Speaker 2: of more than seventy three thousand dollars last month.
Speaker 4: That was a major milestone for bitcoin enthusiasts, and the
Speaker 4: next one, the ones every four year software update called
Speaker 4: the Having the.
Speaker 2: Having Well great news for bitcoin investors, perhaps not so
Speaker 2: great news for bitcoin minors, because having means the amount
Speaker 2: miners earned for validating transactions to create blocks and in
Speaker 2: the process create bitcoins will be cut in half.
Speaker 4: For more on how this will affect bitcoin miners, Carol
Speaker 4: and Bloomberg Global Finance correspond at Shanali Bassic checked in
Speaker 4: with Adam Sullivan, president and CEO of the small cap,
Speaker 4: publicly held crypto mining firm Core Scientific, which emerged from
Speaker 4: bankruptcy earlier this year thanks largely to that turnaround in
Speaker 4: bitcoin prices. We began by getting his thoughts on the.
Speaker 12: Having Every two weeks bitcoin resets how difficult it is
Speaker 12: to mine a bitcoin, and so the difficulty has been
Speaker 12: increasing steadily over the course of the past five six
Speaker 12: years actually for the entirety of bitcoin's existence, but it's
Speaker 12: been increasing more rapidly in twenty twenty four given the
Speaker 12: price runop.
Speaker 2: I want to go back to having, though, can I
Speaker 2: just want to understand and make sure our audience does so.
Speaker 2: It happens every four years, So it means the amount
Speaker 2: you and other miners have right at this point, basically
Speaker 2: your validating blocks are cut in half. So how does
Speaker 2: that Doesn't that impact the top line, the revenue line.
Speaker 12: Absolutely, it definitely does. But people on the network feature.
Speaker 2: Value of as bitcoin goes up, that's also a factor.
Speaker 2: That's a big factor.
Speaker 1: Yeah.
Speaker 12: But once we get to the having part of the
Speaker 12: network will's shut off because they become unprofitable to mine
Speaker 12: at those levels, and so we get an increasing share
Speaker 12: of the overall network post habit.
Speaker 13: When you say part of the network shuts off, do
Speaker 13: you mean that company's rivals of yours will face increased
Speaker 13: financial pressure.
Speaker 12: Absolutely. In twenty twenty two, we saw the down bitcoin price,
Speaker 12: you know, going too kind of a bear cycle. We
Speaker 12: saw energy prices go higher, and so what you saw
Speaker 12: was a number of challenge companies, sell facilities, sell minors,
Speaker 12: and you'll see that again if they haven't.
Speaker 13: Adam, I mean, you're kind of a great person to
Speaker 13: talk to given that corener scientific face bankruptcy ones, Why
Speaker 13: is this time.
Speaker 14: Different for you?
Speaker 3: Guys?
Speaker 13: How did you emerge from bankruptcy and make it into
Speaker 13: this cycle?
Speaker 12: Yeah, I mean it was so it was a thirteen
Speaker 12: month process, and when we came out, we came out
Speaker 12: of much stronger company, so we had a much more
Speaker 12: interesting capital structure. We lowered debt by almost forty percent,
Speaker 12: and they gave us optionality in the capital.
Speaker 2: Structure million dollars in debt that you guys trimmed.
Speaker 12: Yeah, we trimmed about four hundred million. Yeah, And so
Speaker 12: the rest of our capital structure has optionality in it,
Speaker 12: meaning there's mandatory converts in it, there's cash exercise warrants,
Speaker 12: and so if we perform well, it creates a situation
Speaker 12: where we'll be debt free.
Speaker 13: So what are some of the lessons learned from the
Speaker 13: first ball run we saw in crypto going into now
Speaker 13: the new ball run going into crypto into the having Yeah, it's.
Speaker 12: A bitcoin mining is very much a commodity company, right,
Speaker 12: So it's you have energy inputs on one side and
Speaker 12: you have bitcoin outputs on the other side, and you
Speaker 12: have to be able to hedge input costs and hedge
Speaker 12: output costs. And so you know, we were a case
Speaker 12: study in we had over six hundred million a bitcoin
Speaker 12: on balance sheet and when bitcoins started to trade down,
Speaker 12: it not only hurt our balance sheet, but our income
Speaker 12: statements started to get constrained as well, and so that
Speaker 12: was the real issue in twenty twenty two.
Speaker 2: So your balance sheet is very different so that you
Speaker 2: can't get into that situation again, like, go play it
Speaker 2: out for us a little bit more, because you are
Speaker 2: a great case study. I think if I'm an MBAs
Speaker 2: do and I want to study your company and understand
Speaker 2: what happened and then how you came out and how
Speaker 2: you're doing something different because I could certainly see similar
Speaker 2: scenarios and troubles. Playing three tends to repeat itself.
Speaker 12: It does, it does. But you know the interesting part
Speaker 12: is our counter parties, our debt holders, understand that. And
Speaker 12: so they built two things into the capital structure, time
Speaker 12: and optionality. So the time is they bought us essentially
Speaker 12: three to four years before there's any larger maturity walls
Speaker 12: on our jay I didn't have last time, which we
Speaker 12: had a lot of short term advertising down in a
Speaker 12: balance sheet before, okay, And they also built us in
Speaker 12: optionality where if we trade above certain levels, we were
Speaker 12: able to eliminate our debt. And so really those two
Speaker 12: things make us a completely different company from that perspective.
Speaker 13: Now, let's walk through some of the impacts of the
Speaker 13: having How much do you think it will impact revenue at.
Speaker 6: The end of the day.
Speaker 12: Yeah, it's a great, great question because if you look
Speaker 12: back the estmates in twenty twenty, no one was right,
Speaker 12: and so when you look at twenty twenty four and
Speaker 12: you look at the estimates, we have a feeling that
Speaker 12: anywhere between ten to fifteen percent of the night work
Speaker 12: will come offline. So that means our revenues will be
Speaker 12: cut by about forty percent. Now depending on bitcoin price,
Speaker 12: if that trades down, depending on the mix between machines
Speaker 12: at different power prices, more network as stash could come
Speaker 12: off line, and so we could have a better or
Speaker 12: worse scenario depending on those factors.
Speaker 3: That's a big number.
Speaker 2: Is that manageable even with the covenants or whatever that
Speaker 2: you said that you guys are doing it differently in
Speaker 2: terms of how you're managing your balance sheet. That's a
Speaker 2: big hit. How do you manage that?
Speaker 12: Yeah, you manage it through really three different areas, but
Speaker 12: one of the main ones is on the energy side.
Speaker 12: So you need to have flexibility and the ability to
Speaker 12: curtail more often on the grid because you get paid
Speaker 12: to curtail or in some cases in regulated markets, it
Speaker 12: actually brings down your power costs. And so for us,
Speaker 12: as we look at the revenue cut, it actually provides
Speaker 12: an opportunity for us to showcase what we've built. Internally,
Speaker 12: we have the most advanced software team, the most advanced
Speaker 12: technology team, and the best operations team in the industry.
Speaker 2: So you can automatically get those power benefits we can.
Speaker 3: Yeah, they're right there. Yeah, okay, So what about others here?
Speaker 13: I mean, I'm kind of curious about how you think
Speaker 13: the industry is changing.
Speaker 2: Are you going to say dogecoin? Are you going to
Speaker 2: go there?
Speaker 3: Well, how do you react?
Speaker 6: Right?
Speaker 13: How do you re I'm actually going to go to
Speaker 13: another buzz with AI and do you sit there as
Speaker 13: a bitcoin mining firm and say we're going to diversify
Speaker 13: into other areas as well where certain hardware.
Speaker 3: Could be applicable.
Speaker 13: We've heard people talking about things like that, do you
Speaker 13: buy some of your rivals at this point? How do
Speaker 13: you diversify or maybe double down on this industry?
Speaker 12: Yeah, So we actually signed a contractor was announced a
Speaker 12: few weeks ago with core Weave, you a very large
Speaker 12: HPC company that's really the first for a our company
Speaker 12: has traditional data center roots, and so we're looking at
Speaker 12: converting about three hundred megawatts of our seven hundred and
Speaker 12: twenty four megalats today into actually HPC compute facilities, and
Speaker 12: so absolutely we're taking a look at what it means
Speaker 12: in twenty twenty eight to be competitive and trying to
Speaker 12: work towards the infrastructure is a three year game, so
Speaker 12: it's working towards altering our infrastructure before the next you know,
Speaker 12: having in twenty twenty eight.
Speaker 2: I'm HPC high performance computing. Yes, okay, So to make
Speaker 2: sure I understand it, I didn't know that.
Speaker 3: Oh thank you Google, thank you.
Speaker 13: But you know, when you're thinking about twenty twenty eight
Speaker 13: and you think about this having cycle, even if having
Speaker 13: cycles of the past had caused a run up in
Speaker 13: bitcoin or at least preceded one, how can you be
Speaker 13: sure that that will be the case for the future.
Speaker 13: As somebody who's running a business, do, you almost have
Speaker 13: to protect yourself from maybe that not being the case
Speaker 13: every time.
Speaker 12: This business is about protecting your downside risk and preparing
Speaker 12: for downside volatility, because if you can have time and
Speaker 12: market in bitcoin mining, you can actually experiencing you can
Speaker 12: actually experience the bull runs, which if you can't experience
Speaker 12: the bull runs, then you know, bitcoin mining is is
Speaker 12: generally just you know, for most of the time, bitcoin
Speaker 12: is you know, about a thirty to forty percent margin business.
Speaker 12: But during bull runs, you know, the margin profile expands rapidly.
Speaker 2: So are you set up okay? So we're just below
Speaker 2: seventy thre thousand dollars on bitcoin? Are you okay with
Speaker 2: bitcoin at sixty five thousand?
Speaker 12: Absolutely?
Speaker 2: Sixty thousand, absolutely, fifty five thousand.
Speaker 12: Absolutely, we emerge at we emerge at less than half
Speaker 12: of it at seventy thousand.
Speaker 2: But there's some kind of significant haircut.
Speaker 12: You're fine, absolutely, So when you're.
Speaker 13: Rolling back to the capital markets, right, I think one
Speaker 13: thing that fast fascinates me is that a lot of
Speaker 13: these big bitcoin companies and sort just about a minute
Speaker 13: to answer here, but these big companies are levering up again.
Speaker 13: Does that come with a warning sign?
Speaker 12: It does a little bit absolutely. I mean this industry
Speaker 12: is you know, Bitcoin, especially the price has been driven
Speaker 12: by leverage in the past. You know, we're seeing a
Speaker 12: little bit different bitcoin price run up today, driven by ETFs,
Speaker 12: and I think that's actually a positive sign for our industry.
Speaker 13: Micro strategy, what you said, micro strategy just brought a
Speaker 13: ton of money to be buying bitcoin, So leverage looks
Speaker 13: a little different in the system these days.
Speaker 2: I guess and I hadn't past well. As you can see,
Speaker 2: we get pretty excited. I know, you get rid of
Speaker 2: we're talking about this topic. Adam, come back soon. Interesting
Speaker 2: especially it's a different year or new year for you guys,
Speaker 2: so it'd be interesting to maybe catch up with you
Speaker 2: real soon. Absolutely really appreciate it, Adam Sullivan, President and CEO.
Speaker 2: As we said, small cap publicly alt crypto mining firm
Speaker 2: Core Scientific. You can find it certainly ticker as CORZ.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm. Easter Listen
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Speaker 4: Last month reported on how billionaire Steve Cohen's point seventy
Speaker 4: two Ventures. It's part of a group of investors who
Speaker 4: are betting that blockchain tech can be used in the
Speaker 4: US to simplify vehicle registration. So point seven to two
Speaker 4: Ventures led a funding round for a company called champ
Speaker 4: Titles Carol. It's a startup that's working with several state
Speaker 4: governments to replace existing vehicle title registration and lean systems
Speaker 4: with a digital system featuring blockchain technology.
Speaker 2: Kh sign me up for someone whose to go get
Speaker 2: a new title or get it to replace a thank
Speaker 2: you do really copy of a title for our cart?
Speaker 3: Yeah?
Speaker 6: Yeah, I have to.
Speaker 4: I have to find my marriage certificate. Really yeah, I
Speaker 4: don't know how gonna do that.
Speaker 2: It's good luck, good luck blockchain. It could come in handy.
Speaker 4: It's the whole in your marriage certificates.
Speaker 2: I'll say that for advocates of the technology, car registration
Speaker 2: just one of many uses. But we think about this
Speaker 2: a lot. This is blockchain. I kind of understand. John
Speaker 2: wu is one of those advocates. He's president of Ava Labs.
Speaker 2: He's the developer of blockchain project Avalanche, and he argues
Speaker 2: that we'll soon see quick adoption of blockchain technology. He
Speaker 2: joins us from New York. John, good to have you
Speaker 2: on with us again. So how are we thinking about blockchain?
Speaker 2: What are you seeing in terms of really being put
Speaker 2: to use? Because I do feel like we have been
Speaker 2: talking about it for a long time. I'm going to
Speaker 2: say at least a decade already.
Speaker 15: Well, it probably is about a decade, but probably a
Speaker 15: little bit less because the programmability on using a smart
Speaker 15: contract on a blockchain really started with ethereum, so you know,
Speaker 15: bigcoin is not as programmable, is really more of a
Speaker 15: store value and Etheroerem has only been around for less
Speaker 15: than call.
Speaker 6: It ten years, so that's when it's really started happening.
Speaker 15: But utility is hard to understand because there's a lot
Speaker 15: of B to B stuff and even what you just
Speaker 15: mentioned with the DMVs having cars register on the blockchain,
Speaker 15: that's the use case that makes perfect sense. That's the
Speaker 15: blockchain aspect of it. And I think the states that
Speaker 15: is leading the way on that is State of California
Speaker 15: and their DMV. They are really I think they already
Speaker 15: said they want to put all the title of cars
Speaker 15: in California on a blockchain within a very near term
Speaker 15: in the future.
Speaker 4: Hey, so how is that different, John, explain to someone
Speaker 4: listening right now who is saying, wait a second, how
Speaker 4: is that different from just, you know, having a database
Speaker 4: in the cloud of every vehicle registration, Like, how is
Speaker 4: it different when it's on the blockchain.
Speaker 15: So this database is shared by everyone, it's immutable and
Speaker 15: everyone can see what's happening. So first of all, the
Speaker 15: for the reason to use it is it will save
Speaker 15: cost because you don't have to replicate databases for every
Speaker 15: point of access for every person needing their own version
Speaker 15: of the ledger. If you will, so it will save
Speaker 15: you the system money. If you will, it'll make the
Speaker 15: workflow far more automated and save access operating expenses in
Speaker 15: that way. But more importantly, I think in this case,
Speaker 15: the fact that it is immutable and transparent, it makes
Speaker 15: it easy for people to audit and check and the
Speaker 15: providence of who own what auto. What you are afraid
Speaker 15: of in this non trustless world of single servers is
Speaker 15: that whoever has control of that server can have to
Speaker 15: change information on that server by accident or by nefarious means.
Speaker 15: On a shared blockchain, you can't do that because everyone
Speaker 15: can see what's happening.
Speaker 2: Well, how would it work? So help us understand. So,
Speaker 2: like if I needed to get a copy or I
Speaker 2: wouldn't have to get a copy of my license is
Speaker 2: what you saying? Or my car title because it would
Speaker 2: just be on the blockchain. But how would I access
Speaker 2: this and who would be overseeing that blockchain?
Speaker 15: That's a good question. So that's the user's side, the
Speaker 15: user interface side. I mean, you can also replicate this
Speaker 15: with your house titles, the same concept right now, when
Speaker 15: you buy a house, you need to change ownership there
Speaker 15: you go to town hall, and at town hall they
Speaker 15: it's actually paper based. If I take most places and
Speaker 15: they literally show you paperwork of who owns and then
Speaker 15: they add your name to it. So the user interface
Speaker 15: in this case will still be controlled by I guess
Speaker 15: a municipality or a state, you know, a public entity
Speaker 15: so to speak, but the underlying information will be stored
Speaker 15: in a way that in theory, all municipalities can all
Speaker 15: get access to it and look at it, and even
Speaker 15: I can actually look at it. If I am savvy
Speaker 15: enough to create an interface to search into the blockchain.
Speaker 4: Okay, I would imagine there are some more exciting uses
Speaker 4: for blockchain than DMV. But Carol wants to keep talking
Speaker 4: about it. Go ahead, I just want more questions. So
Speaker 4: very exciting.
Speaker 6: If you save your time of going into all this stuff,
Speaker 6: I mean.
Speaker 3: Would it say what?
Speaker 2: Did it saved me time? Would it save me money?
Speaker 13: Though?
Speaker 2: If I still had to verify something, would I still
Speaker 2: have to go to the municipality's blockchain or talk to
Speaker 2: somebody and they would have to say, oh, yeah, like
Speaker 2: it's here, like it would I have that easy access or.
Speaker 15: No, Well, presumably it will definitely it will save the
Speaker 15: municipality money to put it this way, put it on
Speaker 15: the blockchain over time, And whether they want to provide
Speaker 15: access to everyone. I think in this case it's a
Speaker 15: hybrid solution where they still control some point of access,
Speaker 15: but if they conceptually wanted to open it up and
Speaker 15: expose the blockchain, everyone can concede it.
Speaker 2: So they could still charge me.
Speaker 4: Basically, Yeah, they got to get revenue from you. They
Speaker 4: got to pay, you know, for seeing employees the equation. Yeah,
Speaker 4: like like we talked about earlier the past, maybe the
Speaker 4: savings aren't being passed along to the customer.
Speaker 2: Maybe not.
Speaker 4: Okay, John, I want to talk a little bit about
Speaker 4: some other use cases here, because you argue that we
Speaker 4: could see lots of uses when it comes to gaming,
Speaker 4: consumer loyalty, and on chain finance. I want to start
Speaker 4: with on chain finance here. Explain to us where you can,
Speaker 4: because this is not just something that you're talking about here.
Speaker 4: I mean we got black Rocks Larry Fink talking about
Speaker 4: this as well tokenization, So so talk to me about
Speaker 4: what's exciting to you when it comes to finance and
Speaker 4: the blockchain.
Speaker 15: So the number one use case right now happening in
Speaker 15: the financial world is tokenizing of what I call real
Speaker 15: world assets, and that's either tokenizing money market funds, the
Speaker 15: US dollar, or actually a private equity fund. So I
Speaker 15: think the one area that people will absolutely agree that
Speaker 15: there's some product market fit, if not.
Speaker 6: Already has product market fit, is the stable coin.
Speaker 15: So even paypals trying to create stable coins, there there's
Speaker 15: a lot of happening in different industries, and that's in fact,
Speaker 15: I think Brevin Howard did this analysis where last year
Speaker 15: there were more stable coins settled on blockchain or as
Speaker 15: much as the visa network. So basically, when you can
Speaker 15: create that efficiency, you save money. And you know, even
Speaker 15: paypalt they're allowing US customers using their stable coin capability
Speaker 15: to send money overseas, and you know, when I spoke
Speaker 15: to them last, basically, if there's four parts of creating
Speaker 15: a stable coin and allowing people to transfer the money
Speaker 15: around the world, they haven't even completely integrated the entire workflow.
Speaker 15: But yet what they've integrated, called half of it has
Speaker 15: already makes it a more profitable transaction. You know, another
Speaker 15: great example would be sticking with PayPal. PayPal owns the
Speaker 15: PayPal wallet and Vemo. You know they bought in Vemo
Speaker 15: and brain Tree. It's a different, you know, construct different
Speaker 15: tech stack. And if you have a wallet at a
Speaker 15: PayPal in Vemo and you have a PayPal wallet, if
Speaker 15: you want to move your own money one hundred dollars
Speaker 15: from PayPal to Venmo, you see one hundred dollars.
Speaker 6: So it's seamless to you.
Speaker 15: But in the back end, really what happens is it's
Speaker 15: subsidized by PayPal. Only ninety nine point call it nine
Speaker 15: gets moved and they put the extra ten cents in
Speaker 15: there for you because they have to go outside the system,
Speaker 15: integrate different tech stacks, move things around, go to a
Speaker 15: third party, and it just costs money to and the
Speaker 15: friction there costs money.
Speaker 2: Yeah, I would assume that whole industry, right, we know
Speaker 2: they're looking and watching because you just think about how
Speaker 2: much I've got a daughter overseas and just the movement
Speaker 2: of moneys in the.
Speaker 4: Mechanicy so hard to do.
Speaker 2: Bank here and opening a bank there because it makes
Speaker 2: more sense, Like it's just crazy. And she's become real
Speaker 2: savvy about who's charging fees and stuff, and we try
Speaker 2: to figure it out.
Speaker 4: You just got to do it in Switzerland, Carroll.
Speaker 2: You we're on Bloomberg right now.
Speaker 15: Well, I mean, if you remember, like five, six, seven
Speaker 15: years ago, people who did remittance was using bitcoin because
Speaker 15: it was it was save them fifteen percent instead of
Speaker 15: going to Western Union or one of these places.
Speaker 12: Right.
Speaker 15: The only problem we'll bick on with just two moltles.
Speaker 15: So now the stable coin construct is a better one
Speaker 15: for moving money back and forth overseas well, John.
Speaker 2: Wo, I'm looking for I can't wait till I don't
Speaker 2: have to go to DMV anymore. Sorry, DMV. There's got
Speaker 2: to be a better way, and I understand how maybe
Speaker 2: blockchain can make it simpler and make more sense. John Wu,
Speaker 2: thank you so much of a great weekend.
Speaker 4: John Wu also big on Twitter. I don't know if
Speaker 4: you saw he tweeted it. You know when he tweets
Speaker 4: put mentions you on Twitter, you can get a lot
Speaker 4: of us.
Speaker 2: John, Can you mention this a lot more?
Speaker 3: We would really.
Speaker 4: Appreciate it, absolutely, John, Good to see you.
Speaker 2: You well.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 2: In our second hour of the weekend edition of Bloomberg
Speaker 2: Business Week. Well, this Monday is Earth Day, and so
Speaker 2: in honor of our beloved mother Earth, we are exploring
Speaker 2: some of the stories, challenges, and impact of climate change
Speaker 2: in the next sixty.
Speaker 4: Minutes, including a stark reminder of where we are told
Speaker 4: through one reporter who's been on the front lines of
Speaker 4: climate change at small Town America, Jonathan Wigliotti on his
Speaker 4: new book Before It's Gone.
Speaker 2: Plus the US power grid old, outdated and stressed, and
Speaker 2: yet getting a big financial boost from the US government
Speaker 2: to help turn it around. A view from the US
Speaker 2: Department of Energy.
Speaker 4: And Regenerative Agriculture. A new documentary, Common Ground, takes a
Speaker 4: deep dive into the agricultural history of the US and
Speaker 4: why we should turn the clock back on how we
Speaker 4: grow food.
Speaker 2: First up this hour, though, let's talk about the US
Speaker 2: power grid. How to describe it old?
Speaker 4: I think that's fair to say problematic for a lot
Speaker 4: of people and a lot of states.
Speaker 2: Yes, yeah, really difficult, right, and in need, tim, I
Speaker 2: would say, of a massive, massive overhaul.
Speaker 4: Check, check and check.
Speaker 3: Well.
Speaker 4: Last fall, the Department of Energy announced up to three
Speaker 4: point five billion dollars in funding to upgrade the US grid.
Speaker 4: This topic was among the many at this week's Bloomberg
Speaker 4: Enny f Annual Energy and Climate Summit in New York City.
Speaker 4: Maria Robinson participated in a panel at the event. She's
Speaker 4: the Director of Grid Deployment at the US Department of Energy,
Speaker 4: and she joined us for a reality check.
Speaker 14: So we're facing a lot of different problems here on
Speaker 14: the grid today, right. You are talking about we have
Speaker 14: new demand. It's great that we're bringing manufacturing back to
Speaker 14: the United States, but that's a strain on the electric grid.
Speaker 14: The electric grid is aging. It's not just older than me,
Speaker 14: it's older than my grandparents. So then we're looking at
Speaker 14: ways that we need to upgrade our existing infrastructure while
Speaker 14: continuing to build new ones. I think of it. We
Speaker 14: released a report just yesterday on advanced and innovative grid
Speaker 14: deployment mechanisms of being able to take advantage of some
Speaker 14: of the existing infrastructure and figuring out ways at relatively
Speaker 14: low cost to upgrade what we currently have.
Speaker 2: The joke that I make is so we cannot do upgrades.
Speaker 2: It's not like a massive rebuild, right, we have to
Speaker 2: do both.
Speaker 14: We are definitely going to have to continue to build
Speaker 14: in order to meet all the demands. But we can
Speaker 14: take advantage of those existing rights of way, right, we
Speaker 14: don't have to deal with as much permitting, which we
Speaker 14: all know is a really difficult topic to deal with.
Speaker 14: But you know, oftentimes folks are taking our existing lines
Speaker 14: and replacing the metal part that's inside of it. It's
Speaker 14: called a conductor, and oftentimes they're just replacing that like
Speaker 14: for like, instead of upgrading it to a newer technology
Speaker 14: that can move more electrons every single day. And so
Speaker 14: it's so funny.
Speaker 2: There's a story in the Bloomberg. It's probably connection with this,
Speaker 2: but it's a central transmission line is getting a twenty
Speaker 2: first century upgrade, and it's about a startup that's created
Speaker 2: a wire that's lighter and can carry up to three
Speaker 2: times more electricity. I mean, we talk about this with
Speaker 2: battery usage, right for evs, about just about making things,
Speaker 2: even chips, right, accelerators, making them more productive, making them
Speaker 2: more energy efficient, Like this is what it's about out exactly.
Speaker 14: And so all these great technologies are already out there.
Speaker 14: They're really proven in the field. We just need the
Speaker 14: market to pick them up.
Speaker 4: Is it more of a state issue right now? I mean,
Speaker 4: I think if states that have struggled with their grids,
Speaker 4: Texas and California certainly come to mind. Is it a
Speaker 4: federal issue or is it a utility issue?
Speaker 14: It's all three all the apl The fun part about
Speaker 14: the electric grid is that it doesn't follow political lines.
Speaker 11: Right.
Speaker 14: We have an eastern interconnect a western interconnect, and they
Speaker 14: don't follow necessarily. They're like time zones, right, they just
Speaker 14: sometimes split a state down the middle. So we have
Speaker 14: to figure out how we mix some federal policy with
Speaker 14: individual state policy. Some states are really looking to decarbonize,
Speaker 14: and the way they want to build their grid might
Speaker 14: be different than their neighbor who has different goals. Ultimately,
Speaker 14: and so we're trying to mix and match all those
Speaker 14: different priorities in order to make sure that we have
Speaker 14: a strong grid that can withstand anything.
Speaker 2: There's nothing like a federal incentive or a tax break
Speaker 2: or something to get us to do something, whether you're
Speaker 2: a company where you're an individual. So what are the
Speaker 2: incentives that you guys or that utilities need to actually
Speaker 2: adopt better technologies and some of the technologies that you
Speaker 2: guys are talking about.
Speaker 14: So there are certainly some ways from the regulatory structure
Speaker 14: that utility commissioners at the state level or at the
Speaker 14: federal level could incentivize the use of some of these
Speaker 14: different technology today.
Speaker 2: Do we need to really make it happen?
Speaker 14: I think we need to make a bit of a
Speaker 14: push here, just because we have so much to deal
Speaker 14: with over the next three to five years, and that's
Speaker 14: when we can deploy some of these technologies while we're
Speaker 14: still building out major transmission lines that you know, take
Speaker 14: ten to twelve years.
Speaker 4: Is this a national security issue?
Speaker 14: It certainly is a national security issue, and this is
Speaker 14: something that we continue to face every day. Our grade
Speaker 14: is one of our greatest assets that we have in
Speaker 14: our country and making sure that we can withstand cybersecurity attacks,
Speaker 14: physical attacks, and just frankly weather. One of the biggest
Speaker 14: issues is wildfires and making sure that we can prevent
Speaker 14: those from happening moving forward.
Speaker 2: Yeah, we were talking about this another story that's on
Speaker 2: the Bloomberg today that's about that. You know, how investors
Speaker 2: have looked at at the debt at utilities is kind
Speaker 2: of a sure thing in the past right in terms
Speaker 2: of investing, but because of what's happening with climate change,
Speaker 2: that is not necessarily the case. That there's a lot
Speaker 2: more questions that are out there in terms of the
Speaker 2: unpredictability and the costs that are mount to get some
Speaker 2: of the nation's utilities.
Speaker 14: And I think part of this is intent trying to
Speaker 14: incentivize utilities, and they're really coming around to realize this.
Speaker 14: You're not going to if a pole gets knocked down
Speaker 14: from one hundred and fifty mile an hour WINS, you're
Speaker 14: not going to replace it with another pole like was
Speaker 14: there before that could get knocked down. You want something
Speaker 14: that can with stand two hundred and fifty mile an
Speaker 14: hour WINS. And so we have to make sure that
Speaker 14: the regulatory structure is there in place to allow them
Speaker 14: to think in a forward leaning way.
Speaker 2: What can I just ask you, so, what is that
Speaker 2: regulatory structure?
Speaker 14: So there are these very fun organizations called utility commissions
Speaker 14: public utility commissions. They're the people who decide how much
Speaker 14: you pay on your electricity bill and on your gas bill,
Speaker 14: and those are the folks that hold utilities accountable and
Speaker 14: also figure out how those costs are being allocated to
Speaker 14: regular folks like us and to major industry as well.
Speaker 4: How much are we talking here? If you could waive
Speaker 4: a magic wand and get enough funding to completely upgrade
Speaker 4: the grid in the US, how much would it be?
Speaker 14: So we are really lucky under the bipartisan Infrastructure Law,
Speaker 14: the Inflation Reduction Act rate my office has about twenty
Speaker 14: two billion dollars to upgrade the grid. We talked about
Speaker 14: three and a half a bit going out last year.
Speaker 14: To be honest, that's a drop in the bucket. Every year,
Speaker 14: utility spend about twenty three billion dollars just to maintain
Speaker 14: their existing assets in order to continue to upgrade. What
Speaker 14: we do find though, is that some of those costs
Speaker 14: could just be shifted. Instead of paying to replace l
Speaker 14: like for like, we could be paying a slightly lower
Speaker 14: cost even to do some of those upgrades. And that's
Speaker 14: where we have to continue to push the market as.
Speaker 4: Much as west so is twenty plus billion dollars enough.
Speaker 14: Twenty plus billion I think per year. But you know,
Speaker 14: we're blessed with having Inflation Reduction Act money and by
Speaker 14: Parson infrastructure law, of course, that expires after a period.
Speaker 2: Is there a chance that we're all going to end
Speaker 2: up paying as users consumers that to in other words,
Speaker 2: to help pay for this, that we are going to
Speaker 2: pay higher utility costs.
Speaker 14: I think if folks are smart, and we do good planning,
Speaker 14: and we think years out and make sure that we're
Speaker 14: being preventive about it, that we're not going to bear
Speaker 14: the costs. I think about how much a cost for
Speaker 14: recovery after a major storm at the lights go out,
Speaker 14: how many billions of dollars of revenue.
Speaker 2: Is and here we are, So what hope do you
Speaker 2: have that it kind of changes?
Speaker 3: I do have a lot of hope.
Speaker 14: I think that folks are really come This issue is
Speaker 14: coming to a head for the first time, at least
Speaker 14: in my career. Folks are really realizing that our grid
Speaker 14: needs a lot of investment. Everyone focuses on the generation side.
Speaker 14: They're excited about new plants and new gas and new
Speaker 14: solar and new wind.
Speaker 4: I hate to end on this, but what's like one
Speaker 4: scenario that keeps you up at night?
Speaker 14: Oh, there are a lot of scenarios that keep me
Speaker 14: up at night. Hurricane season keeps me up at night,
Speaker 14: hurricane seams and then absolutely keeps me U up at night.
Speaker 14: And so we just want to make sure that we
Speaker 14: can invest in our grid as much as possible to
Speaker 14: make sure that instead of the light's going out for
Speaker 14: five hours, they only go out for five minutes.
Speaker 2: Well, Maria Robinson, thank you so much. Reality check there,
Speaker 2: director of the Grid Deployment Office at the US Department
Speaker 2: of Energy.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch US
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Speaker 2: Well, empowering and updating the US power grid is definitely
Speaker 2: one big concern. So too is recycling. The Environmental Protection
Speaker 2: Agency estimates that the US has a combined recycling rate
Speaker 2: of only thirty two percent from materials including glass, plastic, cardboard,
Speaker 2: and paper. That figure reflects collections from industrial, commercial, and
Speaker 2: residential trash.
Speaker 4: On top of that, Carrol microplastic and pifos showing up
Speaker 4: seemingly everywhere now, and we knew that we wanted a
Speaker 4: reality check and what's working and what's not working? Tony
Speaker 4: Parata focuses on the sustainability and regenerative economy at PA
Speaker 4: Consulting and began with how we can do better when
Speaker 4: it comes to recycling.
Speaker 8: First, technology better mechanical recycling practices leveraged by AI and robotics. Second,
Speaker 8: new recycling methods are coming on the scene, things like
Speaker 8: chemical recycling that go beyond just mechanical recycling. And finally,
Speaker 8: what we're most excited about is a move away from
Speaker 8: plastics altogether into alternative materials. As low as those recycling
Speaker 8: grades are, it does represent opportunity both for enhanced collection,
Speaker 8: but also a new world and a new horizon of
Speaker 8: new materials.
Speaker 2: Well, Tony, you know, it's interesting too. And I always
Speaker 2: feel like when there's money to be made, people kind
Speaker 2: of can go and do the right thing. Or you know,
Speaker 2: tax policy can also make us do the right thing.
Speaker 2: What is it, though, that moves the needle the most,
Speaker 2: you know, in terms of sustainability initiatives, at least in
Speaker 2: your world, What you've seen that really kind of moves people,
Speaker 2: company industries to do the right thing.
Speaker 8: In the world of materials like plastics and aluminum and glass,
Speaker 8: what we've seen, especially here in the US, is a
Speaker 8: bottle return deposit system does a lot to move recycling
Speaker 8: rates upward. So here in the US and in my
Speaker 8: hometown of Connecticut, now we just raise the redunption rate
Speaker 8: from five cents to ten cents. It's been unchanged for
Speaker 8: the better part of three decades, so that was a
Speaker 8: major move. Bills and initiatives like that do an immense
Speaker 8: amount to be able to increase the collection of those materials.
Speaker 4: Is it just I mean, is it kind of a
Speaker 4: waste of time for us to be talking about the
Speaker 4: consumer end of this? Isn't doesn't so much of this
Speaker 4: happen on the industrial side of this stuff?
Speaker 8: I would agree if you take the mentality of I
Speaker 8: have a problem to solve, Yeah, I'm going to convince
Speaker 8: three billion individuals to quote unquote do the right thing.
Speaker 8: Or would I prefer to convince a thousand companies to
Speaker 8: change the way in which they go to the market.
Speaker 4: Well, what are the regulations around companies? Because it seems
Speaker 4: like that really is what moves the needle with this stuff.
Speaker 8: Regulation is definitely the tip of the sphere. There's been
Speaker 8: a lot of talk around extended producer responsibility and the
Speaker 8: cost that firms will incur as a result of manufacturing
Speaker 8: and producing these items, but again major opportunity for the
Speaker 8: companies that get it right. At the end of the day,
Speaker 8: sustainability is in essence talking about using resources properly and
Speaker 8: that allocation of those resources it means better business.
Speaker 2: Hey, Tony, how has the recent news from the SEC
Speaker 2: and Chair Gary Gensler had an impact? I'm thinking about
Speaker 2: the SEC now forcing companies to disclose their greenhouse gas
Speaker 2: emissions for the first time, but we should point out
Speaker 2: watered down a key requirement after there was some heavy
Speaker 2: lobbying from industry groups. But this alone, how might it
Speaker 2: change kind of the story and the impact and move
Speaker 2: us to a much more sustainable world.
Speaker 8: Well, I think the story that we've seen unfold for
Speaker 8: the past ten years is there is a real embracing
Speaker 8: of this concept, in particular by the capital markets. So
Speaker 8: the lack of a climate action plan inside the company
Speaker 8: is the lack of a business continuity plan makes you
Speaker 8: less investible. So by embracing the notion of sustainability, greenhouse
Speaker 8: gas emission and being transparent in that data collection in
Speaker 8: your activity in essence as a leader of an organization,
Speaker 8: you're helping make your firm a more investible asset class
Speaker 8: and your future proofing your own business.
Speaker 4: Hey, I want to talk a little bit about other
Speaker 4: issues that we've talked about on our program when it
Speaker 4: comes to sustainability, and a lot of that has to
Speaker 4: do with sort of the effects that we're living with
Speaker 4: each and every day because of decisions that have been
Speaker 4: made and production over the last fifty to one hundred years.
Speaker 4: We talk about single use plastics and the idea that
Speaker 4: we're starting to see microplastics show up in places that
Speaker 4: we do not want them. And we talk about pfast,
Speaker 4: these so called forever chemicals tainting water streams and the
Speaker 4: water that we're drinking just from the tap in certain areas.
Speaker 4: How do you think about all this stuff, Tony, in
Speaker 4: ways to kind of, like, I don't know, keep yourself safe.
Speaker 8: So it's clear to a large number of us that
Speaker 8: the amount of plastic that we're producing at scale is
Speaker 8: just untenable. On top of that, to your well made point,
Speaker 8: the medical community is stepping in and every week discovering
Speaker 8: more and more places that plastics in particular show up.
Speaker 8: What is heartening and promising is a whole raft of
Speaker 8: new technologies coming onto the landscape. So things like seaweeds, inalogenates,
Speaker 8: and plant based fibers are being used to replace plastics.
Speaker 8: In particular, You've got companies like not Pla. They won
Speaker 8: an Earthshot Prize late last year. PA actually helped them
Speaker 8: with their initial technology. We're seeing a whole revolution in
Speaker 8: the world of plant based fibers. There's a technology called
Speaker 8: pull pack where they're using fibers to replace plastics of
Speaker 8: all kinds. So, as disheartening as one may see, some
Speaker 8: of the data look like there are immense opportunities to
Speaker 8: be had and new technologies coming onto the marketplace every day.
Speaker 2: Right How quickly though? Can it change the needle? Like
Speaker 2: I totally get into it. Bloomberg very involved in the
Speaker 2: earth Shot Prize as you know, you know, but I
Speaker 2: still am surrounded by a lot of plastic And if
Speaker 2: I go to buy anything, there's certain aisles in supermarkets
Speaker 2: and various stores that all it is is plastic containers.
Speaker 2: So how do we You know, I talked about Gensler
Speaker 2: Chair sec Chair Gensler. I mean a lot of lobbying,
Speaker 2: and these are whether it's the petroleum industry, the plastics industries.
Speaker 2: I mean spend a lot in terms of lobbying. Their
Speaker 2: survivability is at stake. Some would say, so how do
Speaker 2: you ultimately move that needle?
Speaker 8: I would offer one example that just dropped last week.
Speaker 8: Crick the coffee company. They disrupted the world of coffee
Speaker 8: years ago with a single serve pot and we all
Speaker 8: get to choose the flavor and the style and the
Speaker 8: amount we want in our homes. They just launched last
Speaker 8: week in the US and new products called the k Round.
Speaker 8: It's basically a plastic free coffee capsule that you can
Speaker 8: use in your home without the need for using plastics
Speaker 8: or aluminum. It's that type of innovation that will not
Speaker 8: only solve the material in the waste side of it,
Speaker 8: but I expect that to be a huge commercial and
Speaker 8: consumer success.
Speaker 4: Wait, these are the ones. You don't have to send
Speaker 4: these back to recycle, right.
Speaker 8: No, it's literally a pressed coffee pod that's coded in
Speaker 8: a non plastic coating. You drop that pressed coffee pod
Speaker 8: into curious new machine and you get the same amazing
Speaker 8: experience that we all come to know and expect, just
Speaker 8: without all the extra packaging.
Speaker 2: Hallelujah.
Speaker 4: But you know there's some stuff that you just feel
Speaker 4: like can't be made in a sustainable way like legos,
Speaker 4: the things I step on every.
Speaker 2: Day, Tony, do you have a solution thirty seconds left
Speaker 2: for do you have a solution for something like legos?
Speaker 6: For lego?
Speaker 8: Not yet that we should have those folks call PA
Speaker 8: and we can help them. The medical industry is moving
Speaker 8: more sustainably. That's another key area that's been problematic for
Speaker 8: safety reasons and regulatory Yeah, and again technology is here
Speaker 8: to save us. There's a lot of amazing discoveries on
Speaker 8: the horizon.
Speaker 4: So when I really hurt myself on the lego, I
Speaker 4: will be given a medical solution.
Speaker 3: That will make sugar sugar.
Speaker 4: Yes, exactly, that's what you say when you step on
Speaker 4: a lego.
Speaker 2: Those things really really really hurt, Tony, Thank you so much,
Speaker 2: really appreciate it. Certainly a space that we care about,
Speaker 2: and UH is great to get some time with you.
Speaker 2: Tony Parata. He is sustainability and regenerative economy expert at
Speaker 2: PA Consulting Jettings from Westbork, Connecticut. Those things hurt.
Speaker 4: They've been, to be fair, they have been trying to
Speaker 4: make them more sustainable. They can't figure out any way
Speaker 4: to make my understanding as they can't figure out a
Speaker 4: way to make them with a material that's not plastic
Speaker 4: that has the same precision.
Speaker 2: Now I get it right so that it's still a
Speaker 2: toy that kind of works. All right, Where to come, folks,
Speaker 2: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 1: Bloomberg eleven thirty.
Speaker 4: Well, Carol. As I've prepared for our next guests, I
Speaker 4: went back and I reread a few columns from Bloomberg
Speaker 4: opinions Mark Gongloff, who covers climate change, and I came
Speaker 4: across some really startling stuff. Here's when he wrote. Recently,
Speaker 4: you'll probably remember this one. Climate fuel disasters killed at
Speaker 4: least twelve thousand people last year. That's according to one count.
Speaker 4: A change in climate has already killed at least four
Speaker 4: million people globally in the past twenty years. That's according
Speaker 4: to a study released in January by a biologist at
Speaker 4: Georgetown University Medical Center, and last year the US alone
Speaker 4: suffered at twenty eight natural disasters costing a billion dollars
Speaker 4: or more, a record that's according to the Noah National
Speaker 4: Centers for Environmental Information.
Speaker 2: Right, we just talked with our TV colleagues right about
Speaker 2: people leaving Florida because it's getting too hot, and you've
Speaker 2: got homes that campionsured because of climate change. Jonathan Vigliotti
Speaker 2: has seen the devastation of many of these disasters firsthand.
Speaker 2: He's a national correspondent for CBS News. His new book,
Speaker 2: out tomorrow, gives it's a first hand account of the
Speaker 2: stories of people who've been affected by climate change, and
Speaker 2: the stories spanned the country from the Pacific Northwest to Louisiana,
Speaker 2: North Carolina, New York, California, Hawaiian more. As we know, increasingly,
Speaker 2: no one in the globe, or no one certainly across
Speaker 2: the United States, but no one across the globe is
Speaker 2: immune to climate change.
Speaker 6: Yeah.
Speaker 4: The book is called Before It's Gone, Stories from the
Speaker 4: front lines of Climate change and small town America. Jonathan
Speaker 4: joins us from Los Angeles. Jonathan, good to have you
Speaker 4: with us this afternoon. First of all, congratulations on the book.
Speaker 4: I want to go back to the genesis of this
Speaker 4: book because you've covered a lot in your career. You
Speaker 4: were based in Europe at one point, you've been based
Speaker 4: here in the US for a few years. At what
Speaker 4: point where you on assignment and you realized, Okay, this
Speaker 4: is the story I need to tell, this is the
Speaker 4: book I need to write.
Speaker 10: Well, great question, and first, thank you both for having
Speaker 10: me on. It's a pleasure to be here. For me,
Speaker 10: it has been an evolution because when I first started
Speaker 10: covering these stories environmental disasters, I failed to make the
Speaker 10: link between climate change, the role it was playing and
Speaker 10: radicalizing our weather, and the role that radicalized weather was
Speaker 10: having on our main streets across the country. For me,
Speaker 10: one of the wake up calls was literally began with
Speaker 10: a wake up call midnight. I was sent to a
Speaker 10: fire in Healdsburg, California, so northern California Wine Country, and
Speaker 10: my team and I responded to a fire that was
Speaker 10: up in the mountain side. We were with first responders.
Speaker 10: We were looking at this fire burning about a mile
Speaker 10: a mile and a half away. At the time, it
Speaker 10: didn't seem like it was much of a threat, but
Speaker 10: the wind picked up and that fire quickly grew and
Speaker 10: spread to where we were, and we were with fire
Speaker 10: crews stationed on this mountaintop, and I had never seen
Speaker 10: such fear and panic in their eyes, which then became
Speaker 10: vocalized as one of the chiefs up on the hill said, go,
Speaker 10: go go. The panic set it all, and we quickly
Speaker 10: realized we were in danger, and so we followed this
Speaker 10: crew as they tried to escape that mountain, and we
Speaker 10: lost sight of their headlights because the fire had grown
Speaker 10: in such intensity and so quick quickly that all the
Speaker 10: flames were blacked out by the smoke, and we accidentally
Speaker 10: went off onto a dirt road and nearly got trapped.
Speaker 10: We ran into what became a dead end. We weren't
Speaker 10: sure my team and I what we should do, if
Speaker 10: we should stay or turn around. We ultimately decided to
Speaker 10: turn around, and thank god we did because, as you
Speaker 10: clearly know my being here, we survived. But when we
Speaker 10: went back to look the next day, a tree had
Speaker 10: fallen down and it blocked off that road. When we
Speaker 10: later after escaping, made our way down the hillside and
Speaker 10: joined the firefighters we were with, they said they had
Speaker 10: never experienced anything like that before. These are men and
Speaker 10: women that had been trained for years, decades in some
Speaker 10: cases to battle fires, and they were being caught off
Speaker 10: guard by mother nature in a way they had never
Speaker 10: seen before and in a panic that I never expected
Speaker 10: from first responders. So I think in that moment I
Speaker 10: wrote a Facebook post and that kind of triggered the
Speaker 10: beginnings of this book.
Speaker 2: Jonathan, and I feel like I almost guess the answer
Speaker 2: to this, but this idea of never seen that before,
Speaker 2: once in a lifetime, storm, once in a lifetime, you know,
Speaker 2: heat wave, if you will. It used to be once
Speaker 2: in a lifetime. We heard those things, but now we
Speaker 2: hear them rather frequently. Talk to us about kind of
Speaker 2: how that started. You started to see that as unfortunately
Speaker 2: a trend here.
Speaker 10: Yeah, time and time again, a historic wildfire, a historic hurricane,
Speaker 10: a historic tornado. After a while, you almost get tired
Speaker 10: of saying historic because it just keeps repeating itself, and
Speaker 10: the next storm out pace is the one before it
Speaker 10: that was also historic. As a journalist, as a storyteller,
Speaker 10: I feel like we have this unique power to help
Speaker 10: connect the dots to the world around us, how it
Speaker 10: all works. And I've been given this unique access to
Speaker 10: the frontlines of these storms and ways. I think it's
Speaker 10: safe to say, most people have not, and I have
Speaker 10: been able to see climate change and the science behind
Speaker 10: it in action and these very real time events that
Speaker 10: are happening right now, not ten twenty years down the road,
Speaker 10: and when we say right now, in historic ways time
Speaker 10: and time again. And I hoped in writing this book,
Speaker 10: I could take viewers and readers along for their journey
Speaker 10: to those frontlines so that they too could connect those
Speaker 10: dots to better understand something as oftentimes abstract as climate change,
Speaker 10: how it really is taking effect in very real ways
Speaker 10: in communities across the country. It is an abstract conversation.
Speaker 10: It is hard for a lot of people to understand
Speaker 10: climate change in the science behind it, including myself. And
Speaker 10: I mentioned to you that I failed to initially talk
Speaker 10: about climate change and link those dots. I think the
Speaker 10: more we talk about this, the more we link those
Speaker 10: dots and make those connections, the more people will understand
Speaker 10: the climate threat, what that threat means to their communities,
Speaker 10: and perhaps what they could do. And that's my hope
Speaker 10: action that can be taken right now to make these
Speaker 10: communities more resilient.
Speaker 2: And Jonathan, we want to go into some of those
Speaker 2: stories because I agree with you that the more we
Speaker 2: tell these stories, hopefully it kind of clicks and sinks in.
Speaker 2: But having said that, we all been kind of talking
Speaker 2: about it for a while with kind of an understanding, like, hey,
Speaker 2: guys years ago saying, we see things are going in
Speaker 2: the wrong direction, and I feel like I almost feel
Speaker 2: like it's with guns in this country. It's like every
Speaker 2: time that there's some kind of mass shooting, we say, okay,
Speaker 2: never again, and yet here we are and we continue
Speaker 2: to report on it. Why do you, as you obviously
Speaker 2: report on it a lot, have lots of stories in
Speaker 2: this book, and you see the devastation, and yet it
Speaker 2: does seem like we continue to put this no pun
Speaker 2: intended on kind of a back burner, if you will.
Speaker 10: I think about Dan Gilbert. He's a psychologist at Harvard.
Speaker 10: He was kind of a north star a ted talk
Speaker 10: that I watched him give on YouTube years ago, and
Speaker 10: he was actually talking about the key to happiness, But
Speaker 10: in this conversation was also speaking about this part of
Speaker 10: our brain known as the prefrontal cortex. And it's this function,
Speaker 10: this feature that we have on like any other animal
Speaker 10: in the Kingdom, that gives us this ability to imagine
Speaker 10: things before they happen, and it's largely based off of storytelling,
Speaker 10: stories told to us by friends, family, by the media.
Speaker 10: And it's this adaptation essentially that provides us with tools
Speaker 10: to not do foolish things. And it actually really does
Speaker 10: work as long as the information is clear and that
Speaker 10: imagination is triggered. I've thought about those anti smoking campaigns.
Speaker 10: I'm not sure if you've seen any of those on television,
Speaker 10: the one that features someone in some state of suffering
Speaker 10: telling others not to pick up a pack of cigarettes.
Speaker 10: In New York City, the Department of Health there found
Speaker 10: for every dollar it's spent on its program, it saved
Speaker 10: thirty two dollars in medical costs. So the information was clear,
Speaker 10: people understood it. They knew to either stop smoking or
Speaker 10: to not pick up smoking to begin with. But when
Speaker 10: it comes to climate science, it can be overwhelming, including
Speaker 10: the solutions which can be daunting, and that perhaps explains
Speaker 10: why in the past four decades, according to one organization
Speaker 10: that tracks real estate, six times more people moved into
Speaker 10: riskier coastal communities than they did into safer inland ones
Speaker 10: that were nearby. These aren't people that are looking to
Speaker 10: intentionally put themselves in harms way. Many of them have
Speaker 10: thirty year mortgages, so they expect that they're going to
Speaker 10: be safe for the duration of their mortgage at least.
Speaker 10: I think the failure to digest this climate science comes
Speaker 10: from a failure, and I'll take my own responsibility in
Speaker 10: this a failure. As I turn off this bone that
Speaker 10: was supposed to be I apologies work from home. It
Speaker 10: speaks to a failure on my part, and I'll just
Speaker 10: take my own responsibility to connect those dots while in
Speaker 10: the field, especially early on. I think the more that
Speaker 10: we show the real life images and connect it to
Speaker 10: the science without fear of what viewers will say in response,
Speaker 10: I think the more people will start to see, will
Speaker 10: listen and when informed, take action. But that comes with repetition,
Speaker 10: and it's critical that we continue this kind of reporting.
Speaker 4: You know, I'm a Californian. I think you live in California.
Speaker 4: This is not necessarily a place where like I would
Speaker 4: love to live back in California, but I think about
Speaker 4: my family back in California, and I mean, do you
Speaker 4: think about where you live and right now and potential
Speaker 4: climate implications.
Speaker 10: I do every single day. I bought my home just
Speaker 10: before COVID, and I had a difficult time getting the
Speaker 10: right kind of insurance, affordable insurance. I live in an
Speaker 10: area that is at low risk of wildfire, so I
Speaker 10: didn't expect that to be an issue, but insurance was
Speaker 10: very costly until I found the right insure, and it
Speaker 10: took a lot of research and investigating on my own,
Speaker 10: which a lot of people don't have the time to
Speaker 10: even do that, and so I was fortunate to find it.
Speaker 10: But of course I think about it every day in
Speaker 10: terms of the threat and the looming threat when there
Speaker 10: are fires in the area. Of course I'm aware, but
Speaker 10: I'm in Hollywood, so I'm surrounded by concrete, so I
Speaker 10: am better off than most.
Speaker 4: Well, it's something we talk about a lot through the
Speaker 4: angle of insurance companies. Jonathan Carol and I were talking
Speaker 4: just about, you know, kind of your experience covering natural
Speaker 4: disasters for such a long period of time, jetting to
Speaker 4: different parts of the country and talking to people who
Speaker 4: have experienced such devastating loss from Hawaii to the South
Speaker 4: coast of the United States to the Pacific Northwest in
Speaker 4: your home state of California too. And I'm wondering if
Speaker 4: you could just share with us a couple stories that
Speaker 4: stand out to you from your reporting that you included
Speaker 4: in the book, particularly interested in your experience in Hawaii,
Speaker 4: a chapter that you added just before the book went
Speaker 4: to publish.
Speaker 10: Yeah, thank you for that question. And Lahina in many
Speaker 10: ways offers all of us lessons to learn from as
Speaker 10: long as we listen. So we were launched to Lahina
Speaker 10: less than twelve hours after the ton was destroyed. We
Speaker 10: were one of the first network teams inside Lahina. We
Speaker 10: couldn't drive in. We were met by a roadblock that
Speaker 10: we ultimately ended up bypassing by taking a chartered boat
Speaker 10: an hour and a half to the centered shoreline. And
Speaker 10: what we discovered in my book I described as an
Speaker 10: environmental holocaust. Home after home, business after business was destroyed,
Speaker 10: and we met survivors who had wrote out the storm
Speaker 10: who were serving the damage. They looked like ghosts. Many
Speaker 10: had no evacuation order issued. There were no evacuation orders
Speaker 10: issued in most parts of the island, and those that
Speaker 10: did survive saw the flames outside of their windows and
Speaker 10: took action to escape on their own. Many did not
Speaker 10: survive because they were trapped in their cars. More than
Speaker 10: one hundred people were killed and the days and weeks
Speaker 10: that followed. What is haunting to me is how this
Speaker 10: was described as an explosion. We heard local leaders describe
Speaker 10: time and time again this fire as like a bomb
Speaker 10: going off, implying that there was no time to take action.
Speaker 10: But we would later learn that there was actually a
Speaker 10: nearly decade long fuse that could have been put out
Speaker 10: at any point, because in twenty fourteen, scientists on the
Speaker 10: island came out with a report that said the warming
Speaker 10: atmosphere was leading to an increased fire threat, and they
Speaker 10: even recommended things that could be taken mitigation efforts to
Speaker 10: reduce the threat by removing dry invasive grasses, restoring wetlands,
Speaker 10: conserving water, using fire resistant materials when building homes or
Speaker 10: restoring them. These are materials that qualified for tax credits
Speaker 10: and would reduce insurance costs. And ultimately that report was
Speaker 10: filed away by local leaders and action wasn't taken in time.
Speaker 10: But in the miles on path of destruction that my
Speaker 10: team and I walked, as we walked along historic Front Street,
Speaker 10: there was one home that did survive. It was unscathed. Today,
Speaker 10: it's known by locals in Lahaina as the house with
Speaker 10: the red roof, and those homeowners took those remedies that
Speaker 10: were offered by scientists. They were initially concerned because of termites.
Speaker 10: They removed dry invasive grasses around their house, trees and
Speaker 10: brushes that were too close to the home. They used
Speaker 10: a metal red roof on top of their house, and
Speaker 10: they used river rocks as a moat around their house,
Speaker 10: and ultimately it prevented the fire from reaching their home.
Speaker 10: This was one homeowner that took action on their own.
Speaker 10: They listened, they took action, and they survived and across
Speaker 10: the country. And the reason I say this is a
Speaker 10: lesson to be learned by storms of other names. There
Speaker 10: are other houses with the red roofs that have survived.
Speaker 10: And this is what I call habitat change, what is
Speaker 10: known by scientists as habitat change. By restoring our habitats,
Speaker 10: we can build more resilient communities so when extreme weather
Speaker 10: does hit, we can survive. We need more homes with
Speaker 10: the red roof. And to me, that story of that
Speaker 10: house really symbolizes the hope that we should all have
Speaker 10: and how we should feel empowered as individuals and as
Speaker 10: individual communities to come together and to take action before
Speaker 10: it's too.
Speaker 2: Late, there's incredible fires. Obviously as a result of climate change.
Speaker 2: There's also increasing water and rising water levels. If you will,
Speaker 2: your story where you went up to Greenland and took
Speaker 2: a look at the Arctic ice melt, to me, there's
Speaker 2: another thing that reminds me that there is kind of
Speaker 2: no way of going back. When I see stories or
Speaker 2: hear stories about that, or see pictures about that. Talk
Speaker 2: to us a little bit about that, and I am
Speaker 2: curious if there was a story for you that was
Speaker 2: like a huh, you know, we're getting maybe closer to
Speaker 2: a point of no return here when it comes to
Speaker 2: the climate impact.
Speaker 10: And that could be one of them. Because our glaciers
Speaker 10: are like a candle burning on both ends. You have
Speaker 10: our warming atmosphere, which is heating up these glaciers from above.
Speaker 10: Then you have the warming water, which is heating these
Speaker 10: glaciers up from below. And so you have this rapid
Speaker 10: ice mell and this influx of water into our oceans
Speaker 10: leading to sea level rise and responsible for in the
Speaker 10: past four decades of forty percent chance of hurricanes growing
Speaker 10: into massive and major hurricanes capable of causing billions of
Speaker 10: dollars in destruction. As you mentioned, last year alone, twenty
Speaker 10: eight storms that caused more than a billion dollars in damage.
Speaker 10: When I was there on those front lines with the scientists,
Speaker 10: I think the aha moment was some of the frustration
Speaker 10: they expressed and the great lengths they go to to
Speaker 10: collect their data to hopefully help awaken those that aren't
Speaker 10: there on those front line to the crisis that is emerging,
Speaker 10: and ultimately so many worried, and so many of those
Speaker 10: scientists worried that it would fall on deaf ears. It
Speaker 10: was one of the main themes in my book, this
Speaker 10: idea that before every disaster, there is a scientist that
Speaker 10: has been ignored and being there on those frontlines seeing
Speaker 10: that work being carried out, and also understanding uniquely just
Speaker 10: from their perspective, that ultimately comes down to communicating that work. Clearly,
Speaker 10: that really changed the way that I came to understand
Speaker 10: perhaps people's difficulty in absorbing the information being presented to
Speaker 10: them and the looming threat that awaits if we don't
Speaker 10: take action.
Speaker 4: Well, let's talk about perhaps some policy prescriptions here. And
Speaker 4: as a reporter, you go to these places and you
Speaker 4: report the facts, you tell people's stories, you bring things
Speaker 4: to light. If there's a message that you want policy
Speaker 4: makers to understand from your reporting, from your work, from
Speaker 4: your book. What is it and what recommendations perhaps you
Speaker 4: have for them.
Speaker 10: You know, the Infrastructure Deal, the Inflation Reduction Act both
Speaker 10: infuse billions and millions of dollars to address these multiple
Speaker 10: crises from climate change, which is the release of greenhouse
Speaker 10: gases into the atmosphere, and we can reduce that through
Speaker 10: green alternatives to habitat change the way we build and
Speaker 10: where we build, and how we build more resilient. I
Speaker 10: think my message would be to empower local municipalities to
Speaker 10: take action to help get the information into residence hands,
Speaker 10: to cut the bureaucratic red tape so that that funding
Speaker 10: is easily available and it's easy for people like myself,
Speaker 10: people like you, everyday residence to understand how to access
Speaker 10: it so that they can be funded in their efforts
Speaker 10: to restore their communities if they've lost them already, or
Speaker 10: to make them more resilient for those that are still
Speaker 10: standing well.
Speaker 2: And I love how you divide your book into the
Speaker 2: four elements firewater, earth, and air, and you just realize
Speaker 2: through your reporting the stories that were slowly increasingly rapidly
Speaker 2: chipping away at all of those elements, and that's what's
Speaker 2: necessary for existence. So you know, we're hitting it kind
Speaker 2: of at all of those levels. It's upsetting to say,
Speaker 2: to say the least, Jonathan, thank you so much. Really
Speaker 2: appreciate it, and good luck with the book.
Speaker 10: Thank you so much, Carolynsim. I really appreciate the conversation.
Speaker 2: The book is before it's gone. Stories from the front
Speaker 2: lines of climate change in small town America. We've been
Speaker 2: talking with Jonathan Vigliotti, of course national correspondent over at
Speaker 2: CBS News.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Easter Listen
Speaker 1: on Apple car Play and ed Brote Auto with a
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Speaker 3: What I'm about to tell you is a matter of
Speaker 3: life and death.
Speaker 2: If the soil dies, we die.
Speaker 3: But there's a way to save our precious soils.
Speaker 2: It's called regenerate.
Speaker 10: Regeneration is not just restoring the land to the state
Speaker 10: that we found it out, but actually making it better.
Speaker 2: All right, what you've been hearing and watching for those
Speaker 2: who are watching on our streaming service and YouTube, that
Speaker 2: is from the documentary Common Ground, which looks into how
Speaker 2: food production and agriculture can be done better with less
Speaker 2: environmental impact by looking at our past and to our
Speaker 2: past and looking to regenerative agriculture.
Speaker 4: For more on the film, and it's deep dive into
Speaker 4: the agricultural history of the US. We welcome the filmmakers
Speaker 4: behind it, the husband and wife team of Josh and
Speaker 4: Rebecca Tickle. Thanks so much for joining us. I just
Speaker 4: want to start with how you guys got into this. Rebecca,
Speaker 4: I want to start with you talk to us a
Speaker 4: little bit about why you wanted to dive into regenerative
Speaker 4: agriculture and really the agricultural history of the US.
Speaker 16: We've made twenty films on the environment, almost all of
Speaker 16: them are documentaries, and we started off focusing on reducing
Speaker 16: our emissions, and then we realized at a certain point
Speaker 16: that even if we reduced all of our missions and
Speaker 16: stopped emitting today, that it wasn't going to take that
Speaker 16: legacy load of carbon that we've admitted into the atmosphere
Speaker 16: and do.
Speaker 2: Anything with it.
Speaker 16: And the only way we can actually do anything with
Speaker 16: it is through biosequestration using plants, and so regenerative agriculture
Speaker 16: it's a way of building soil that not only benefits
Speaker 16: the environment, draws down that legacy ton of carbon that
Speaker 16: we've put up into the atmosphere, but it also helps
Speaker 16: farmers to make a profit.
Speaker 11: And so as soon as.
Speaker 16: We learned this, and as parents, we knew that we
Speaker 16: had to take this message and tell it as well
Speaker 16: as we can and broadcast it as loudly as we
Speaker 16: could to as many people as we can, because right
Speaker 16: now everyone is facing this climate anxiety. We're facing climate anxiety,
Speaker 16: and we don't have to. We can take that same
Speaker 16: energy and put it towards the solution of regenerating our
Speaker 16: soil and stabilizing the climate. So as soon as we
Speaker 16: discovered that, and we learned that, we knew that we
Speaker 16: were going to take our skills as filmmakers and use
Speaker 16: it to tell that story.
Speaker 2: Josh and Rebecca take a step back. You know, over
Speaker 2: the years, and a few years ago, I should say,
Speaker 2: remember working with the folks of a Chipotle who've also
Speaker 2: done had done some films and really looked into you know,
Speaker 2: regenerative farming and how we could farm better. You guys
Speaker 2: have been doing this for a long time, and you've
Speaker 2: done so many films on the environment. First of all,
Speaker 2: talk to us about kind of that trajectory and what
Speaker 2: you've seen and whether we're making any progress on doing
Speaker 2: things better and reducing the impact on our agricultural economy,
Speaker 2: on what we eat, and really just kind of helping
Speaker 2: out the climate. Are we doing anything better?
Speaker 11: Well, we have done this for twenty years, and I
Speaker 11: think awareness is higher now than it's ever been. When
Speaker 11: we released Kiss the Ground, the film that the prior
Speaker 11: film to Common Ground, it was during COVID lockdown and
Speaker 11: that film went absolutely viral. We're so interested in the
Speaker 11: connections between soil and health, and I think that remains today.
Speaker 11: I think the gap for most people and where especially parents, moms,
Speaker 11: folks who shop at the grocery store, where the gap
Speaker 11: is is people are questioning what decisions will make the
Speaker 11: biggest impact for their health and what decisions were going
Speaker 11: to make the biggest impact for the climate. The awareness
Speaker 11: is there, but what decisions to make? That's the question,
Speaker 11: and that's where Common Ground comes in. It really says, hey, look,
Speaker 11: here are your options. We don't tell people what to
Speaker 11: do in the film, but we give people a strong
Speaker 11: understanding so that they can make choices that work for
Speaker 11: them and their family and that's why we're excited about
Speaker 11: the Earth Day release of Common Ground that's coming out
Speaker 11: this Earth Day in theaters.
Speaker 4: Hey, Rebecca, I wanted to ask just about and Josh
Speaker 4: as well, about the some of the casts that you
Speaker 4: feature a huge group of people, but some real household
Speaker 4: names here. I mean we're talking about stars like Woody Harrelson,
Speaker 4: Jason Momoa, Rosario Dawson. Rebecca, talk a little bit about
Speaker 4: how you get them involved. Was it given your history?
Speaker 4: Is it pretty easy?
Speaker 16: Well, Josh here, I you know, I first heard of
Speaker 16: Josh because he had driven the Veggie van across the
Speaker 16: country promoting biodiesel back in the nineties and wrote a
Speaker 16: book that taught people how to make it. So of
Speaker 16: course Woody was driving across the country and his Hemp
Speaker 16: biodiesel van and every time it would break down, they
Speaker 16: would call on Josh to help them figure out how
Speaker 16: to problem solve. So he was definitely on board and
Speaker 16: has been on board with our work from the beginning
Speaker 16: and we could not be more grateful to him. And
Speaker 16: along the way, we've met Laura Dern through our film
Speaker 16: on the BP oil spill, and you know, we just
Speaker 16: come to know these other incredible passionate activists who are
Speaker 16: also concerned about the environment, who also happened to be
Speaker 16: mega celebrities like Jason Momoa and Rosario Dawson, and they
Speaker 16: are also deeply committed to stabilizing the climate and as parents,
Speaker 16: when they learned what we were sharing with them, it
Speaker 16: was a no brainer that they wanted to be involved
Speaker 16: and use their voice and their reach to be able
Speaker 16: to promote this message because as far as we're concerned
Speaker 16: and as far as they're concerned, this is the most
Speaker 16: important issue that we're facing. It's also the biggest opportunity.
Speaker 16: We're talking about a trillion dollar industry that that is
Speaker 16: barreling towards us. And this is the moment for people
Speaker 16: to find their role and to take a leadership ship
Speaker 16: position when it comes to regenerating the climate, because we
Speaker 16: have this small window right now where we can course
Speaker 16: correct and common ground shows people how we can do that.
Speaker 16: And what better way to celebrate Earth Day to go
Speaker 16: and find where your role in regenerating the climate and
Speaker 16: stabilizing the climate is.
Speaker 2: Guys, one thing I wanted to ask is that you know,
Speaker 2: as you said, you know agriculture is a massive industry.
Speaker 2: Commercial farming is massive, and you have to go up
Speaker 2: again some really big you know, food companies and so on,
Speaker 2: and sometimes it's hard to turn the needle. I do
Speaker 2: believe you can take make changes one step at a
Speaker 2: time or one acre at a time. But talked us
Speaker 2: about that battle, whether it's through lobbying, whether it's through
Speaker 2: just the massive amount of money that the commercial food
Speaker 2: industry has and can really impact or prevent change. What
Speaker 2: can you tell us in the insight on that that
Speaker 2: you guys are seeing in these twenty years of reporting
Speaker 2: it in this film in particular.
Speaker 11: Well, you guys are a business network, and you obviously
Speaker 11: are talking to business minded people. Ultimately, the food industry
Speaker 11: in the United States is driven by consumers. It's not
Speaker 11: driven by policy so much as it's driven by everyday
Speaker 11: people like you and me, who, if we're lucky, we
Speaker 11: get to make three votes a day with our forks
Speaker 11: and knives. And that's where the real power of this
Speaker 11: movement is. You see, when we release Kiss the Ground,
Speaker 11: there were no acres in the US to speak of
Speaker 11: in regenerative agriculture. Fast forward only four years after we
Speaker 11: release that movie, thirty four million acres in transition to
Speaker 11: regardative agriculture today. That's tremendous. That's six times more than
Speaker 11: organic agriculture did in fifty years. Happen in four years.
Speaker 11: So we're seeing consumer demand push big big companies like
Speaker 11: Whole Foods, Trader Joe's, and then of course the suppliers themselves,
Speaker 11: and even back into the supply chain as deep as
Speaker 11: the agricultural chemicals that supply fertilizers and chemicals and seeds.
Speaker 11: That's how deep the consumer push for reginative agriculture is going.
Speaker 11: We know as Common Ground is releasing in the theaters,
Speaker 11: that's the name of the film. We want everybody to
Speaker 11: see it. It's incredible. You should go watch Common Ground
Speaker 11: as it's releasing in theaters now that consumer demand is spiking,
Speaker 11: what happens when it goes on digital this fall. We're
Speaker 11: talking about one hundred to two hundred million consumers watching
Speaker 11: a movie that shows them how to make choice is
Speaker 11: around regin of agriculture. Forget about it. This is you know,
Speaker 11: this is a movement that is happening, and I think
Speaker 11: food companies should seriously look at getting on board.
Speaker 15: Well, Josh.
Speaker 4: Oftentimes, when we talk about the idea of having the
Speaker 4: opportunity to buy, to choose where you get your food,
Speaker 4: to buy food that is organic, buy food that is
Speaker 4: grown in a way that you want to support. It
Speaker 4: involves people spending more money. And I'm just wondering about
Speaker 4: you know, what you would say to folks who might say,
Speaker 4: you know, wait a second, it's nice to actually have
Speaker 4: the opportunity to do that, but there's so many people
Speaker 4: out there who can't really afford to make those decisions,
Speaker 4: and they're shopping purely based on price.
Speaker 11: Yeah, that's a great question. We get that question all
Speaker 11: the time as well. You know, we've been doing these
Speaker 11: films for a long time. So Common Ground is the
Speaker 11: second film, Kiss the Grounds the first one. We actually
Speaker 11: produced a free food guide on the common Ground Film
Speaker 11: website common groundfilm dot org for everybody to download, and
Speaker 11: that guide really takes you through the steps of eating
Speaker 11: a more regar diet. The way we look at it
Speaker 11: is this is not a one hundred percent change for anyone,
Speaker 11: even us. You're always modifying your diet right and families
Speaker 11: needs change. But we want to make the best choices
Speaker 11: at the time. So what tools do we have. Certainly,
Speaker 11: the age old adage of shopping around the outside of
Speaker 11: the supermarket. That's a good one. But another one is
Speaker 11: in California, we have a program where food stamps are
Speaker 11: given twice the value. You have the Snap program or
Speaker 11: your Snap card, you get twice the value in most
Speaker 11: places when you shop at a farmer's market. And I've
Speaker 11: never been to a farmer's market where a farmer isn't
Speaker 11: willing to negotiate and throw in some more apples, potatoes,
Speaker 11: you know, corn, whatever it is. So there are a
Speaker 11: lot of ways to attack the idea of how do
Speaker 11: we gradually increase the health of our families. We don't
Speaker 11: have to do it all in a day, right, and
Speaker 11: it doesn't have to be more expensive. In fact, it
Speaker 11: could be cheaper.
Speaker 2: So, Rebecca, I want to bring you back in and
Speaker 2: you know, this film is all about regenerative farming, and
Speaker 2: you know we kind of throw terms around and you
Speaker 2: touched on it at the beginning of our conversation. But
Speaker 2: break it down and how it works, how it can
Speaker 2: work on a grand scale, and why it is so
Speaker 2: much better for the environment. And I'm curious about yield too, and.
Speaker 16: That is yeah, I come from a legacy farming family,
Speaker 16: and we've certainly in my family, used our fair share
Speaker 16: of chemicals and done our fair share of tillage.
Speaker 6: Basically, the principles.
Speaker 16: Of regeneration and a regenerative agriculture is building soil, growing
Speaker 16: food in a way that's in symbiosis with nature. And
Speaker 16: the practices that are involved in regenerative agriculture are pretty simple.
Speaker 16: It's farming and eating in context. So we live in California,
Speaker 16: we can grow things that are more Mediterranean, but you
Speaker 16: wouldn't grow those same things in Chicago or in Vermont.
Speaker 16: So it's about getting creative and figuring out what's growing
Speaker 16: locally and regionally that can improve the health of my
Speaker 16: soil and my environment and my body. And then other
Speaker 16: practices like no tillage or minimal disturbance to the soil.
Speaker 16: So there's some tillage that has to happen for things
Speaker 16: like carrots, but overall you want to protect the life
Speaker 16: that's in the soil by not disturbing it and cutting
Speaker 16: it up, reducing obviously fertilizers, chemicals like pesticides, herbicides, fungicides,
Speaker 16: you know, really just helping the life in the soil
Speaker 16: to flourish. Because when you're encouraging life in the soil.
Speaker 16: You're encouraging life in our bodies because we're really a
Speaker 16: reflection of that soil. And then keeping the ground covered
Speaker 16: at all times. Farmers and the regenerative movement like to say,
Speaker 16: mama likes to be covered, Keep mama covered. So if
Speaker 16: you can see bare ground, you're exposing that ground to
Speaker 16: a potential you know, being evaporated up into the air
Speaker 16: like dust storms. And so really what you want to
Speaker 16: do is secure that soil with cover crops. It's a
Speaker 16: great way to bring nutrients back into dead dirt, begin
Speaker 16: the process of bringing it back to life and when
Speaker 16: you implement Oh and then the last big one is
Speaker 16: animal integration, so making sure that it's not just a monocrop,
Speaker 16: but making sure that that farm or that field, that
Speaker 16: ecosystem is filled with biodiversity. Because biodiversity not just in
Speaker 16: the food that's being grown, but also in the life
Speaker 16: that you see in that farm. You should see the
Speaker 16: whole trophic cascade. Really when you're growing food that is
Speaker 16: reflected in the food. And so one of the things
Speaker 16: that we talk about in Common Ground is let your
Speaker 16: food be your medicine. Let your medicine be your food,
Speaker 16: and if we take care of the soil and we
Speaker 16: implement these practices into our farming, we take care of
Speaker 16: the earth. The earth will take care of that.
Speaker 2: Okay, maybe this is super naive of me, but I
Speaker 2: feel like Tim and I sentimes asks a lot of like, Okay, well,
Speaker 2: if it's so good and makes such sense, why isn't
Speaker 2: this happening? What is the biggest obstacle?
Speaker 8: We know?
Speaker 2: The government I think in the latest infrastructure bill has
Speaker 2: the Inflation Reduction Act. Excuse me, I think made twenty
Speaker 2: billion available to the USDA Natural Resources Conservation Service to
Speaker 2: address popular conservation programs. There's stuff going into farming. So
Speaker 2: if it makes such sense, why isn't it happening?
Speaker 11: Well, the good news is it is happening. As we said,
Speaker 11: you know, we've faster. Why is it happening faster? Well,
Speaker 11: I think we're on an exponential curve with this. This
Speaker 11: is you know, you got to understand, Kiss the Ground
Speaker 11: only came out in twenty twenty and that was during
Speaker 11: a massive, you know, global lockdown, So we've really only
Speaker 11: had maybe twenty four months to activate around this set
Speaker 11: of concepts, which, look, this is all ancient knowledge. We
Speaker 11: didn't come up with regeneral agriculture. But the fusion of
Speaker 11: modern technology and precision agriculture with ancient traditional knowledge is
Speaker 11: showing that we can produce way more food for way
Speaker 11: more people and sequester carbon. I think we're going to
Speaker 11: see within the next twenty four to thirty six months
Speaker 11: an absolute exponential uptake in this and that's all the
Speaker 11: way from the government sector. The Farm Bill is being
Speaker 11: modified to include soil health. We're seeing this on a
Speaker 11: state and local level, we're seeing this on a national level.
Speaker 11: We're seeing this on an international level. So that's part
Speaker 11: of why we're excited is we've made environmental documentary for
Speaker 11: twenty years. Your first question, are we moving the needle?
Speaker 11: If you would have asked us maybe ten years ago,
Speaker 11: we would have said, I don't know. But today we
Speaker 11: can safely say regaron of agriculture is on track to
Speaker 11: outpace organic and all of the other natural foods trends,
Speaker 11: and it's going to do so within two to three years.
Speaker 11: That's amazing.
Speaker 2: Well, we see something on packaging that tells us this
Speaker 2: or no.
Speaker 11: Yes. As a matter of fact, we have an initiative
Speaker 11: it's called one hundred million acres one hundred million acres.
Speaker 11: Dot org is the website, and you can see all
Speaker 11: of the logos of all of the certifiers that are
Speaker 11: already in play. Old Foods and Trader Joe's have approved
Speaker 11: three of them. Internal estimates, they believe it will outpace
Speaker 11: the organic logo well and truly within thirty six months.
Speaker 11: So yes, you will see logos in the store. They
Speaker 11: will be certified, and then you will be able to
Speaker 11: look up that certifier. There'll be transparency as to how
Speaker 11: those acres were certified. So a very good system is
Speaker 11: in place, and it's coming to a grocery store near you.
Speaker 4: Well not everyone speaking of grocery stores is lucky enough
Speaker 4: to live near Rainbow Bridge Natural Foods in Ohai and
Speaker 4: get to experience the legendary grilled tofu that I survived
Speaker 4: on in high school when I lived there. Guys, but
Speaker 4: I do wonder about what people can do if where
Speaker 4: they live do not have these sorts of items for sale.
Speaker 4: I mean, are we in an environment where people can
Speaker 4: actually go and talk to the folks who work in
Speaker 4: grocery stores, big chains, grocery stores where people get their
Speaker 4: food and actually affect real change.
Speaker 11: Absolutely, Look, I think grocery management is very open to conversations,
Speaker 11: at least in my experience, no matter where you let
Speaker 11: me live, if you live in Bismarck, it doesn't matter.
Speaker 11: They want to service you as the consumer, and you,
Speaker 11: as the consumer is ultimately the one with the power.
Speaker 11: We don't say, hey, ask for them to replace a product.
Speaker 11: We say, look at the company and see if they
Speaker 11: have an option. Some of these companies now have regenerative options.
Speaker 11: So King Arthur Flower, the largest manufacturer of wheat in
Speaker 11: the United States, arguably the world, now has a regenerative option.
Speaker 11: All they have to do is carry that skew next
Speaker 11: to the regular flower right. Give consumers a choice. Very simple.
Speaker 2: We so appreciate talking with you guys. Thank you so much.
Speaker 2: Josh and Rebecca Tickle. Of course their documentary Common Ground,
Speaker 2: and it's going to have an on our birth day.
Speaker 2: The film will have an exclusive one day only screen
Speaker 2: event at AMC Theaters coming this Monday, April twenty second.
Speaker 4: Oh is the type of place where you can just
Speaker 4: walk around and grab oranges off a tree, ray and
Speaker 4: eat you mercados everywhere. It's pretty amazing.
Speaker 2: What I love is every day I learn a little
Speaker 2: bit more about Jim Stead.
Speaker 3: Of it all right.
Speaker 2: Great to check in with them. Thanks so much, everybody.
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