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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Wall Street Week. I'm David Weston bringing you

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Speaker 2: stories of capitalism. If you can think it, you can

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Speaker 2: code it. Generatve AI brings the brave new world of

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Speaker 2: vibe coding to a project near you. Plus, we're going

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Speaker 2: to need a lot more power to run all that

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Speaker 2: new vibe coding, and it turns out that we may

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Speaker 2: get some of it from the ground under your feet

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Speaker 2: and Las Vegas. It's not just for gambling anymore. But

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Speaker 2: we start with the FED, which held its monetary policy

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Speaker 2: meetings this week even as it waits for its new

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Speaker 2: chair to be confirmed by the Senate. Glenn Hubbard was

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Speaker 2: the head of President George W. Bush's National out of

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Speaker 2: Council and then went on to run the Columbia Business School,

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Speaker 2: where he is now on the faculty. So, Glenn, we

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Speaker 2: had the Federal Open Market Committee meeting and we heard

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Speaker 2: from Chair Pal they basically didn't do anything. Did they

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Speaker 2: have a choice?

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Speaker 3: No, But I think they did do a few things.

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Speaker 3: So they certainly didn't change the funds rate. I don't

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Speaker 3: think anybody expected that, or at least reasonably. The battle,

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Speaker 3: of course, the descents that happened. Were over the FED statement,

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Speaker 3: or at least what people perceive the FED statement to be.

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Speaker 3: Is there an easing bias? Is there a tightening bias?

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Speaker 3: I think it's fair to say, under the hood, members

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Speaker 3: of the FOMC are conflicted. Some view that the next

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Speaker 3: move is going to have to be flat for an

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Speaker 3: extended period, possibly even up. Others like Governor Myron have

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Speaker 3: a different sign. So that's really what happened.

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Speaker 2: One of the things I couldn't figure out is the

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Speaker 2: easing bias language that they descended from the three members.

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Speaker 2: I looked at the same of carefully. I didn't find

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Speaker 2: those words in there.

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Speaker 3: No, I don't think it's there in black and white.

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Speaker 3: I think probably this is a reading the room kind

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Speaker 3: of observation of people going on record that we really

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Speaker 3: are uncomfortable with a view that at the next FOMC

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Speaker 3: meeting or maybe even the meeting after that, that a

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Speaker 3: cut is forthcoming.

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Speaker 2: They did say in the statement that there was extreme

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Speaker 2: uncertainty coming out of the Middle East because of the

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Speaker 2: Iran war. Is that what is driving the concern about

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Speaker 2: rates or was there a pre existing issue with inflation?

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Speaker 3: I would have to give you the classic economist answer

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Speaker 3: yes and no. So yes, the uncertainty is a problem.

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Speaker 3: Oil prices are high, the US economy is less energy intensive,

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Speaker 3: but it will still raise at least headline inflation. Let's

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Speaker 3: remember inflation was stock well above the fed's target before

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Speaker 3: February twenty eighth, So Iran adds to the problems the

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Speaker 3: FED faces, but it's not really the core problem. I

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Speaker 3: think what's vexing the FED is why it was more

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Speaker 3: difficult to get inflation down before Iran. But yes, the

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Speaker 3: uncertainty matters.

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Speaker 2: What about inflation expectations because I've seen some indications now

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Speaker 2: they may be rising in the United States and even

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Speaker 2: in Europe.

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Speaker 3: So far, I think they're relatively anchored. That's a good

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Speaker 3: news for the FED, and that's far more important for

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Speaker 3: the FED than whatever the inflation number by whatever measure

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Speaker 3: they look at is today. But I think the risk

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Speaker 3: is if the war continues and prices remain elevated, and

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Speaker 3: of course we still have tariffs working their way through

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Speaker 3: the system. Even if the ultimate effect is to stabilize,

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Speaker 3: that's going to be an inflation problem and that could

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Speaker 3: unhinge expectations.

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Speaker 2: So what does this mean for the new chair coming

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Speaker 2: in Kevin.

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Speaker 4: Walsh good luck.

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Speaker 3: I mean Kevin Walsh is actually well suited for this moment.

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Speaker 3: He has outstanding small py political skills, consensus building skills.

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Speaker 3: He's very smart, he knows these issues. I think his

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Speaker 3: challenge is going to be looking at the men and

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Speaker 3: women around the table, whether it's the governors or the FMC,

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Speaker 3: and figuring out how to bring them together. That's going

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Speaker 3: to require two things. His skills, which as I said,

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Speaker 3: he has, but another's the theory of the case. I mean,

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Speaker 3: how do you talk about the economy. I think that'll

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Speaker 3: have to be job one for our new chair.

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Speaker 2: Some are interpreting that three person descent as putting a

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Speaker 2: marker down really almost against President Trump. With President Trump's

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Speaker 2: pressing for lower rates, don't go too far, too fast.

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Speaker 3: I'm not sure that that's true. I mean, it is

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Speaker 3: true President Trump would prefer lower rates. He certainly has

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Speaker 3: told us all that. I think it's more a matter

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Speaker 3: of a sincere difference of opinion and policy. And given

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Speaker 3: where we are right now, with the labor market softening

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Speaker 3: a little yet we have a robust economy, inflation is stuck.

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Speaker 3: You can see why people are wondering, is the glass

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Speaker 3: half full or half empty. When you have uncertainty, more

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Speaker 3: often than not, watching and waiting until you get more

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Speaker 3: information is the right answer, and I think it is here.

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Speaker 2: Is it a symmetric risk right now as you look

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Speaker 2: at it, or is there a real risk of stagflation

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Speaker 2: where you actually could hurt growth and still have inflation.

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Speaker 3: Well, there's certainly a risk of stagflation, but I would

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Speaker 3: be more worried about inflation at the moment. The underlying

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Speaker 3: economy is very good and the GDP numbers we got

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Speaker 3: for the first quarter are reassuring still about the pace

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Speaker 3: of AI investment and about final sales, even though the

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Speaker 3: headline print is a little below expectations.

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Speaker 2: Kevin worsh comes in saying that he thinks there is

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Speaker 2: a room for rate cuts because of AI.

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Speaker 5: How does that work?

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Speaker 3: Well, the story, if it's correct, is what I would

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Speaker 3: come more of a long run story. So AI in

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Speaker 3: the long run, certainly, as the potential to be disinflationary

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Speaker 3: reduces the costs, particularly in service producing sectors. Think about

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Speaker 3: the costs of producing what lawyers do, or accountants do,

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Speaker 3: or engineers or dare I say, economists, that could all

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Speaker 3: be disinflationary. The problem is that's not today, it's not tomorrow,

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Speaker 3: and it may not even be a year or two

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Speaker 3: from now. The immediate effect of AI is the aggregate

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Speaker 3: demand effect of building data centers. The investment numbers that

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Speaker 3: showed up so robust in GDP all a SQL that raises,

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Speaker 3: not lowers the real interest rate, and inflation is stuck.

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Speaker 3: So I think incoming chair Worsh's story makes sense as

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Speaker 3: a potential long run hypothesis. I don't think it could

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Speaker 3: be a theory of the case for cutting rates now.

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Speaker 3: To cut rates now, you'd have to have a view

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Speaker 3: that the economy's weakening is such that that tramps small

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Speaker 3: teeth the inflationary pressures.

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Speaker 2: There are other parts of the fed's job besides just rates.

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Speaker 2: What do we expect from Kevin Warsh's chair in the

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Speaker 2: other parts.

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Speaker 3: Well, I think he's signaled that he wants to take

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Speaker 3: a look at least in a couple of areas. One

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Speaker 3: is the size of the Fed's balance sheet, which of

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Speaker 3: course bloomed enormously since the global financial crisis. That's not

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Speaker 3: really as simple as saying do I want a big

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Speaker 3: balance sheet or a small balance sheet? Because the FED

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Speaker 3: has proven to be the market maker of last resort

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Speaker 3: in the treasury market multiple times, and the treasury market

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Speaker 3: is the market for the world's safe asset. Regulation perhaps

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Speaker 3: unwittingly made it hard for private market makers to do

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Speaker 3: the job they could be doing. So a FED balance

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Speaker 3: sheet is pretty important. But I do expect Kevin worsh

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Speaker 3: to spend a lot of time there the other's financial regulation,

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Speaker 3: especially since the Global financial crisis, the FED got more

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Speaker 3: territory in financial regulation, so there may be a look,

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Speaker 3: do we have the right rules? Do we have the

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Speaker 3: right capital regime? I would expect incoming Chairwash to take

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Speaker 3: a hard to take a hard look at that a

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Speaker 3: warning though, regulation, unlike monetary policy, is a political subject,

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Speaker 3: and so do expect Congress. Do expect the President to,

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Speaker 3: with good merits, have political views to balance.

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Speaker 2: For the question that's been raised by some other members

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Speaker 2: the FED right now is the relationship of the regional

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Speaker 2: Fed to the national Fed. Then, in fact, maybe there

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Speaker 2: should be more power or authority or responsibility taken into Washington.

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Speaker 2: Does that make sense?

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Speaker 3: I don't think so. I think the decentralized structure the

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Speaker 3: FED is a feature, not a bug. Remember the history

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Speaker 3: lesson for the FED is it was done to get

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Speaker 3: points of view throughout the nation, where a nation of

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Speaker 3: different business sectors and different geographies. That said, there is

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Speaker 3: a point that I think regional presidents may be communicating

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Speaker 3: too much. In any organization, the top of the organization

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Speaker 3: needs to set the tone internally and externally. So having

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Speaker 3: a lot of debate inside strikes me as a good thing.

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Speaker 3: Doing it out in the press or on television, I'm

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Speaker 3: less persuaded that's a good thing.

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Speaker 2: There's a good deal to talk about what a chair

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Speaker 2: wash will do in terms of, for example, forward guidance

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Speaker 2: and even number of news conferences that are held the

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Speaker 2: dot plots. How much of that is in the authority

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Speaker 2: of the chair? Does that need to be voted on

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Speaker 2: by the full fed Well, he.

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Speaker 3: Would need to get his colleague support, but I suspect

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Speaker 3: he could get it. I count myself as among those

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Speaker 3: who wonder what the utility of the dot plot is

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Speaker 3: and the excessive communication. There's a continuum, if you will.

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Speaker 3: Chair Greenspan was quite opaque. He famously said, you know,

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Speaker 3: if you thought you understood me, you must be mistaken.

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Speaker 3: To Chair Bernanki, who was extremely transparent, I think probably

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Speaker 3: an incoming Chairwash wants to be somewhere in between.

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Speaker 4: There.

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Speaker 2: One thing that incoming chair worsh will have that has

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Speaker 2: not been had for a very long time is a

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Speaker 2: former chair sitting in the room at least for some

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Speaker 2: period of time. What will that do to that dynamic?

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Speaker 5: Do you think?

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Speaker 3: I'm not sure it's actually going to do very much.

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Speaker 3: I think Chair Powell's current Chair Powell's points of view

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Speaker 3: are well known. He said them many times. I expect

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Speaker 3: he'll repeat those as a governor, and the time he

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Speaker 3: has left, I think he also is somebody who would

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Speaker 3: be deferential in the way he would be to a

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Speaker 3: new chairs. I don't think it's going to change things

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Speaker 3: very much. Whether he leaves is a personal decision, and

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Speaker 3: he'll have to make it.

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Speaker 6: The independence of the FED.

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Speaker 2: We also spoke with former US Treasury Secretary Hank Paulson

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Speaker 2: about the challenges facing the next FED chair. Paulson agreed

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Speaker 2: that Walsh has a hard road ahead, but that he

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Speaker 2: is up to the task.

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Speaker 6: Well, you have a chairman of the FED, you want

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Speaker 6: someone who understands markets, who is a good community gator,

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Speaker 6: has a good understanding of sound economic principles, and I

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Speaker 6: think Kevin Walsh meets those tests right, and he's been before,

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Speaker 6: he's done it. Now, I think his job becomes more

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Speaker 6: difficult because there's independence of the perception of independence. So

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Speaker 6: I think how this transition between Jay Paul, who's just

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Speaker 6: been a star performer and got great credibility and integrity.

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Speaker 6: I think how that transition is handled and how the

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Speaker 6: administration deals with it is either going to make Kevin's

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Speaker 6: job more difficult or you know, somewhat easier. But Kevin

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Speaker 6: won't have an easy job anyway. And I compliment the

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Speaker 6: Trump administration. I'm selecting him right.

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Speaker 2: Coming up, AI may be coming for a job near you,

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Speaker 2: especially if you're a computer programmer. This is a story

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Speaker 2: about a double edged sword. At this point, AI is

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Speaker 2: promised to do just about everything, but it turns out

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Speaker 2: that it's best at creating the very thing that it

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Speaker 2: is made of. Code. It was once considered a high

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Speaker 2: skill task, but coding is now accessible to just about

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Speaker 2: anyone with the help of generative AI. On the one hand,

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Speaker 2: this unlocks possibilities for creating a wide range of products

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Speaker 2: and businesses that otherwise might never have seen the light

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Speaker 2: of day. On the other hand, it's made the future

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Speaker 2: less certain for those who write code professionally. Our colleague

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Speaker 2: Ed Ludlow brings us the story of what happens when

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Speaker 2: we lean in and let AI do the work.

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Speaker 7: In Upper Tracts, West Virginia, Jamie Grove owns a boutique

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Speaker 7: warehouse helping clients ship out anything from dinosaur bones to

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Speaker 7: board games. Last year, he built software that automates shipping

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Speaker 7: out packages with help from AI.

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Speaker 2: Where's the order at that you're looking at?

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Speaker 6: There?

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Speaker 8: There's absolutely no way I could have done any of

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Speaker 8: this without AI. For the initial run to take some

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Speaker 8: spreadsheets that we had that we were working with to

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Speaker 8: get an actual workable sample ready to go took me

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Speaker 8: less than a day and we were live and we

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Speaker 8: were using it right here in the warehouse.

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Speaker 7: In Oakland, California. Cynthia Chen wished there was an app

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Speaker 7: that collects pictures of different breeds of dogs.

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Speaker 9: And then it was when I learned about vibe coding online.

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Speaker 9: Is when I thought maybe I should try it myself.

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Speaker 9: The first time, you see like this little pop up

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Speaker 9: and it says build succeeded, and then you can see

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Speaker 9: the app pop up and like it's actually real. That

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Speaker 9: was like the sort of magical moment where I was like,

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Speaker 9: oh my gosh, this is crazy. I can actually build

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Speaker 9: things myself.

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Speaker 7: The term vibe coding was coined by Andre Carpathy, a

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Speaker 7: founding member of open Ai, to describe a process of

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Speaker 7: computer programming akin to having a conversation with a robot.

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Speaker 7: Here's what it looks like in practice. Say I want

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Speaker 7: to create a website that visualizes and animates a data set.

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Speaker 7: I would use a generative AI tool like Claude or

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Speaker 7: codex or in this case, Gemini and tell it exactly

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Speaker 7: what I want using plain English. AI then writes the

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Speaker 7: code for me, and as coding has gotten easier, it's

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Speaker 7: led to the creation of more code than ever before.

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Speaker 7: Activity on GitHub, the platform used for storing and sharing code,

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Speaker 7: has seen a massive increase in activity, surging in early

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Speaker 7: twenty twenty five when AI coding pilots became popular. And

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Speaker 7: although vibe coding has helped small businesses and hobbyists create

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Speaker 7: their own software, it's the professionals who leading the way.

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Speaker 10: So what goes on in this building is we have

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Speaker 10: a mix of folks working on Google Cloud. At Google,

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Speaker 10: when we talk about autonomy and agentic engineering, we have

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Speaker 10: systems that allow you to kind of have almost a

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Speaker 10: virtual software engineer.

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Speaker 7: Hold on, if all these brilliant engineers are using AI

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Speaker 7: in this way, what is it that they're doing all

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Speaker 7: day long in beautiful buildings like this?

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Speaker 10: One excellent question.

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Speaker 7: Adilsmani is the director of Google Cloud AI. He oversees

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Speaker 7: teams of engineers currently building the next generation of AI

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Speaker 7: tools for businesses.

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Speaker 10: So, if you are vibe coding, you're pretty much just

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Speaker 10: giving into the vibes. You don't necessarily have a clear,

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Speaker 10: full idea of your vision. You're just working with the LLM.

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Speaker 10: You're trying to get somewhere with it. If you are engineering,

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Speaker 10: that's where you have to apply rigor to it. You

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Speaker 10: have to have this clear set of requirements you are testing,

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Speaker 10: and whether you are a startup or whether you're in

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Speaker 10: a big enterprise. Right now, the role of the software

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Speaker 10: engineer is going to be evolving to one where you

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Speaker 10: are increasingly a little bit more of a manager. You're

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Speaker 10: going to have effectively like a virtual team of agents

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Speaker 10: that you're responsible for and you have to own the outcomes.

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Speaker 10: Doesn't matter how many are responsible the output, You're responsible

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Speaker 10: for the output exactly. And so you need to decide

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Speaker 10: like how am I evaluating quality? How much time am

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Speaker 10: I going to spend evaluating quality? Because there are some

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Speaker 10: people who very much enjoy YOLO, like, okay, well the

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Speaker 10: agents ran overnight looks good kind of runs, I'm just

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Speaker 10: going to deploy it. But if you're building any kind

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Speaker 10: of serious software, you still need to have some idea

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Speaker 10: of like what is what is the quality bar? What

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Speaker 10: are my quality gates? How am I making sure this

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Speaker 10: is actually going to meet the needs of my users

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Speaker 10: in a consistent way.

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Speaker 7: For the engineers at Google's headquarters is here in Sunny Vale, California,

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Speaker 7: Osmani says, AI isn't just making their lives easier, it's

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Speaker 7: making them better at coding. The extension of that question,

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Speaker 7: which we pose largely by investors, is how do we

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Speaker 7: measure the productivity gains of that engineer or that team.

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Speaker 10: I remember in the earlier days of AI, you know,

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Speaker 10: org leaders would look at things like, oh, hey, well,

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Speaker 10: how many lines of code are being generator? Which is

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Speaker 10: not in any way a good proxy for productivity. But

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Speaker 10: these days, I think that people use a mix of

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Speaker 10: different kinds of metrics. You try to use qualitative and

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Speaker 10: quantitative generally speaking, there's a big productivity boost. In the

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Speaker 10: earlier days of AI, would have said, you know, that

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Speaker 10: boost is ten to fifteen percent. These days it's anywhere

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Speaker 10: from thirty to fifty percent, and I see that number

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Speaker 10: only continuing to go up.

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Speaker 7: At MIT, Frank Nagel and a team of research has

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Speaker 7: surveyed over one hundred and eighty seven thousand software developers

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Speaker 7: who are using GitHub co pilot, a generative AI tool

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Speaker 7: for coding, and they found that workers are more productive

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Speaker 7: because what they spend time on has changed.

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Speaker 11: I think one of the big things that we often

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Speaker 11: think about with AI is that it's just going to

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Speaker 11: enhance productivity, right, It's going to make us faster doing

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Speaker 11: whatever it is we do. But that's just really just

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Speaker 11: scratching the surface. You have one hundred percent of your

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Speaker 11: time that you allocate to work. How did that break

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Speaker 11: down along these dimensions of what we called core work,

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Speaker 11: actual coding versus more project management type of work. And

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Speaker 11: what we found is that when coders started using these

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Speaker 11: types of tools, they massively shift the amount of their

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Speaker 11: time that they allocate to coding, and they take away

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Speaker 11: a whole lot of their allocated time towards from project management,

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Speaker 11: and so part of the reason we think that this

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Speaker 11: is happening is that if in the old days you

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Speaker 11: were writing piece of code A, and that piece of

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Speaker 11: code was dependent on some other piece of code B,

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Speaker 11: you had to wait for that other person, You had

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Speaker 11: to interact with them and make sure that everything worked together,

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Speaker 11: whereas now you can just write it all yourself.

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Speaker 7: This productivity boost is particularly true for those who are

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Speaker 7: writing and deploying brand new code, and especially those with

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Speaker 7: no knowledge of code whatsoever, including creatives like Chen.

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Speaker 9: This is press Pedals, the new app that I'm working on,

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Speaker 9: and here is a press Flower. So I'm going to

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Speaker 9: go to the cloud code that I have running, and

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Speaker 9: then I'm simply going to describe what I wanted to do.

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Speaker 9: I actually tried a whole bunch of tools in the beginning,

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Speaker 9: and this was about a year ago, which I think

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Speaker 9: is like feels kind of like the stone ages of

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Speaker 9: vibe coding. I was able to make the foundations of

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Speaker 9: the app in maybe a month, and as like a

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Speaker 9: totally non technical person, I was actually able to build

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Speaker 9: a full stack app, so there's like front end and

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Speaker 9: back end capabilities, and I was able to get it

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Speaker 9: out on the App Store, just entirely myself.

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Speaker 7: For business owners like Grove, his Vibe coded solution is

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Speaker 7: helping his warehouse save on costs.

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Speaker 8: We have three main coding solutions here that we've used

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Speaker 8: AI for. One is to create batching, which is the

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Speaker 8: important part in terms of taking work that are different

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Speaker 8: and getting them all together into groups that make it

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Speaker 8: easy to pick. And then the other solution that we

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Speaker 8: have is inventory tracking. So that's a standard warehouse feature,

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Speaker 8: but our clients are all so very different, and so

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Speaker 8: trying to force a client into a single inventory tracking

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Speaker 8: system is really difficult. So we actually we've used AI

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Speaker 8: to build an inventory tracking solution that allows them to

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Speaker 8: be themselves basically. So I have a pretty varied background.

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Speaker 8: I started out as a programmer a long long time ago.

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Speaker 8: But even someone who is a very fast coder could

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Speaker 8: not have built all these solutions impossible. If I were

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Speaker 8: to do it with a team of programmers, I could

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Speaker 8: have five programmers working on this full time and still

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Speaker 8: not deliver as many results. If I were to install

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Speaker 8: a software system that does everything that we're doing now,

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Speaker 8: let's just say without all the customizations and all the flexibility,

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Speaker 8: we might be talking about an annual license of anywhere

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Speaker 8: between six and ten thousand dollars a year, scaling all

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Speaker 8: the way up to maybe thirty to fifty thousand dollars

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Speaker 8: a year depending on how much volume we push through

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Speaker 8: our warehouse. This doesn't have the flexibility that we would want,

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Speaker 8: and it's expensive for a small boutique warehouse.

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Speaker 5: That's a big.

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Speaker 7: Expense now for about twenty dollars a month. Business owners

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Speaker 7: like Growth are building their own software solutions, and whilst

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Speaker 7: that's opened up new possibilities, there is a downside. Since

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Speaker 7: twenty twenty two, employment for software engineers right out of

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Speaker 7: college has fallen by nearly twenty percent. Nagel thinks companies

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Speaker 7: are making a big mistake.

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Speaker 11: I do think that one of the biggest risks of

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Speaker 11: the whole thing is that people are going to get

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Speaker 11: too focused on the short term and not think about

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Speaker 11: the long term enough. First of all, you don't hire

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Speaker 11: any new people who's going to run the company in

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Speaker 11: ten to fifteen years. But second of all, our research

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Speaker 11: and others has shown that these junior people are actually

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Speaker 11: the ones who are able to change their job and

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Speaker 11: get the most out of using these tools. And so

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Speaker 11: if we're not hiring them at the same rate we

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Speaker 11: were before, then we're not going to be able to

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Speaker 11: take advantage of that.

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Speaker 4: And Chan agrees.

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Speaker 9: I feel very strongly that this is not replacing engineers.

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Speaker 9: I think the more you use AI to build, the

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Speaker 9: more you understand the space and kind of even know

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Speaker 9: what you can and can't do. It's like, technically I

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Speaker 9: can make it, but an engineer probably could have made

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Speaker 9: this in a much shorter timeline and probably with much

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Speaker 9: more robust code.

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Speaker 11: From the business standpoint, I do think there's this opportunity

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Speaker 11: where companies that have been thinking about things like reverse mentoring,

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Speaker 11: where the younger folks can help the more experienced folks

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Speaker 11: learn how to better use these types of tools, while

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Speaker 11: the experienced folks are able to better help the younger

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Speaker 11: folks understand how the industry works.

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Speaker 7: If AI can write code, then what is the role

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Speaker 7: of the software engineer? Osmani says today, it's all about quality.

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Speaker 10: If I want to build a robust engineering artifact, something

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Speaker 10: that's going to last time, something I can ship to

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Speaker 10: hundreds of millions of users or billions of users, there

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Speaker 10: are a lot of things that it needs to factor in,

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Speaker 10: and so what people and buildings like this are doing

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Speaker 10: all day long, are trying to make sure that the

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Speaker 10: code is actually meeting that quality bar so that when

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Speaker 10: we do ship something to you that happens to be

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Speaker 10: using AI behind the scenes, you're actually getting what you want.

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Speaker 10: That's the important thing for the users at the end

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Speaker 10: of the day, they don't care if a human has

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Speaker 10: been aufering it or AI's been aufering it. Does it

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Speaker 10: help them get the job done in a reliable way.

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Speaker 7: Is vibe coding a term that's therefore used. Is it

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Speaker 7: banned with this Absolutely not.

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Speaker 10: I think that vibe coating has a lot of value.

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Speaker 10: Vibe coating is enabling people to go from idea to

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Speaker 10: execution faster than ever, and it has completely changed how

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Speaker 10: many teams approach prototyping. You know, so many times in

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Speaker 10: the past in Silicon Value and lots of places, if

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Speaker 10: you had an idea, you'd go through weeks or months

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Speaker 10: of just discussing or debating, hey can we afford to

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Speaker 10: build this? Now you can just build it. And I

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Speaker 10: think that it has a very concrete place in our

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Speaker 10: language now. It's just important that you understand that vibe

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Speaker 10: coding a thing does not necessarily mean that you have

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Speaker 10: a production ready artifact that's going to be battle hardened.

441
00:23:17,359 --> 00:23:20,960
Speaker 7: In Silicon Valley. The test of AIS progress is true autonomy.

442
00:23:21,320 --> 00:23:23,760
Speaker 7: To start a project in the evening and wake up

443
00:23:23,800 --> 00:23:27,080
Speaker 7: in the morning to code written autonomously by an AI

444
00:23:27,160 --> 00:23:31,280
Speaker 7: agent a dream for senior software developers and perhaps a

445
00:23:31,400 --> 00:23:34,880
Speaker 7: nightmare for entry level computer engineers who would have once

446
00:23:34,960 --> 00:23:39,480
Speaker 7: done that work themselves. But for us non coding mere mortals,

447
00:23:39,720 --> 00:23:42,119
Speaker 7: the moment could be ripe to do what mankind is

448
00:23:42,200 --> 00:23:45,439
Speaker 7: best at building and creating.

449
00:23:50,200 --> 00:23:53,280
Speaker 2: Up next journey to the center of the Earth, or

450
00:23:53,320 --> 00:23:56,720
Speaker 2: at least toward it. Geothermal may be an important part

451
00:23:56,720 --> 00:23:59,359
Speaker 2: of what gets us the energy we need to power

452
00:23:59,400 --> 00:24:18,119
Speaker 2: all that a This is a story about resourcefulness in

453
00:24:18,160 --> 00:24:20,639
Speaker 2: the quest of feed AI data centers. The US is

454
00:24:20,680 --> 00:24:23,960
Speaker 2: looking to get more power from just about everywhere it can,

455
00:24:24,520 --> 00:24:27,639
Speaker 2: from fossil fuels to wind and solar to nuclear. But

456
00:24:27,720 --> 00:24:30,040
Speaker 2: it turns out that an important part of the puzzle

457
00:24:30,080 --> 00:24:33,480
Speaker 2: lies beneath our feet. Our colleague Michael McKee takes us

458
00:24:33,480 --> 00:24:36,840
Speaker 2: into the promising and developing world of geothermal energy.

459
00:24:39,960 --> 00:24:42,840
Speaker 4: This is not a gold mine, but in an age

460
00:24:42,840 --> 00:24:46,320
Speaker 4: of power hungry data centers desperate for energy, it might

461
00:24:46,359 --> 00:24:49,120
Speaker 4: be even better. So what are we looking at here?

462
00:24:50,960 --> 00:24:54,840
Speaker 12: The OLM geothermal power plant in Steamboat where we have

463
00:24:54,960 --> 00:24:58,520
Speaker 12: to generate electricity.

464
00:24:59,160 --> 00:25:00,960
Speaker 4: How much electricity do you produce here?

465
00:25:01,520 --> 00:25:05,359
Speaker 12: In the entire Steamboat area, We've produced between eighty to

466
00:25:05,440 --> 00:25:06,600
Speaker 12: ninety megawoks.

467
00:25:07,000 --> 00:25:09,880
Speaker 4: That's enough to power more than fifty thousand homes a

468
00:25:09,880 --> 00:25:13,800
Speaker 4: small city. Or Matt Technologies is one of America's largest

469
00:25:13,840 --> 00:25:18,359
Speaker 4: geothermal companies, with plants throughout the Southwest, the hotbed of

470
00:25:18,400 --> 00:25:23,360
Speaker 4: the country's geothermal activity. Out the heat exchanger Doron Blaschar

471
00:25:23,600 --> 00:25:25,280
Speaker 4: is the company's chief executive.

472
00:25:25,520 --> 00:25:29,080
Speaker 12: We operate twenty four seven every day, regardless of the sun,

473
00:25:29,160 --> 00:25:32,960
Speaker 12: regardless of the wind, and that's the main benefit that

474
00:25:33,000 --> 00:25:36,879
Speaker 12: you get from geothermal steady twenty four seven electricity.

475
00:25:38,440 --> 00:25:42,399
Speaker 4: Led by the hyperscaling of AI installations, electricity demand in

476
00:25:42,440 --> 00:25:44,679
Speaker 4: the US is projected to grow by as much as

477
00:25:44,800 --> 00:25:48,639
Speaker 4: twenty percent over the next decade. And let's say that

478
00:25:48,760 --> 00:25:51,680
Speaker 4: means the country needs an all of the above approach

479
00:25:51,800 --> 00:25:55,280
Speaker 4: to power generation. And on the list of potential sources,

480
00:25:55,640 --> 00:25:59,240
Speaker 4: geothermal stands out for being a clean source of constant

481
00:25:59,359 --> 00:26:01,000
Speaker 4: or baseload power.

482
00:26:01,640 --> 00:26:05,680
Speaker 13: We need baseload power, and that's the sweet spot that

483
00:26:06,000 --> 00:26:08,720
Speaker 13: the geothermal brings us. You don't have to worry about

484
00:26:08,760 --> 00:26:11,800
Speaker 13: if the sun's not shining, if the wind's not blowing.

485
00:26:12,119 --> 00:26:16,640
Speaker 13: It allows that baseload that every grid needs to operate.

486
00:26:17,480 --> 00:26:20,240
Speaker 4: So far, geothermal is just a small piece of the

487
00:26:20,359 --> 00:26:23,840
Speaker 4: US power generation mix, producing less than one percent of

488
00:26:23,840 --> 00:26:28,920
Speaker 4: total utility scale electricity, but demand and technology are changing

489
00:26:28,920 --> 00:26:29,480
Speaker 4: the outlook.

490
00:26:29,960 --> 00:26:35,000
Speaker 14: Geothermal energy is the heat of the earth, and it's

491
00:26:35,040 --> 00:26:39,360
Speaker 14: been used for millennia. Hot spring systems we're used by

492
00:26:39,400 --> 00:26:42,399
Speaker 14: the cavemen to cook their food.

493
00:26:43,000 --> 00:26:45,840
Speaker 4: Until now, the industry has largely been confined to the

494
00:26:45,960 --> 00:26:49,199
Speaker 4: rare places where hot water and permeable rock come together

495
00:26:49,359 --> 00:26:54,280
Speaker 4: in underground reservoirs like this site outside of Reno, Nevada. Now,

496
00:26:54,560 --> 00:26:58,760
Speaker 4: enhance geothermal systems or egs have the potential to give

497
00:26:58,880 --> 00:27:02,600
Speaker 4: nature and assist Much of the work has been pioneered

498
00:27:02,600 --> 00:27:06,080
Speaker 4: at Utah Forge, a Department of Energy funded field lab.

499
00:27:06,680 --> 00:27:09,680
Speaker 4: Joseph Moore is its principal investigator emeritus.

500
00:27:10,359 --> 00:27:15,160
Speaker 14: The conventional geothermal systems, these are also called hydrothermal systems

501
00:27:15,240 --> 00:27:19,280
Speaker 14: or hot spring systems, have the natural fractures that allow

502
00:27:19,359 --> 00:27:23,880
Speaker 14: water to move through the rock, extract heat, and then

503
00:27:24,000 --> 00:27:29,359
Speaker 14: come to the surface enhance Geothermal systems are not associated

504
00:27:29,520 --> 00:27:35,200
Speaker 14: with hot springs. These are areas where fractures don't extend

505
00:27:35,240 --> 00:27:40,200
Speaker 14: to the surface and are not abundant enough to allow

506
00:27:40,400 --> 00:27:44,760
Speaker 14: water to circulate in the subsurface. We have to make

507
00:27:44,920 --> 00:27:48,439
Speaker 14: the fractures in order for the water to move through them,

508
00:27:48,880 --> 00:27:51,840
Speaker 14: and this can be done almost anywhere in the world

509
00:27:51,920 --> 00:27:55,800
Speaker 14: if we drill deep enough to reach the temperatures that

510
00:27:55,960 --> 00:28:00,320
Speaker 14: we need. Typically these temperatures are in the order of

511
00:28:00,359 --> 00:28:03,520
Speaker 14: four hundred degrees f and higher.

512
00:28:04,320 --> 00:28:07,080
Speaker 4: To do that, EGS companies are turning to the oil

513
00:28:07,160 --> 00:28:12,040
Speaker 4: and gas industry, which increase production by inventing the technique

514
00:28:12,160 --> 00:28:12,840
Speaker 4: of fracking.

515
00:28:13,480 --> 00:28:17,719
Speaker 15: The fracking actually creates that permeability that you need to

516
00:28:17,720 --> 00:28:20,040
Speaker 15: flow the water through the rock in order to harvest

517
00:28:20,040 --> 00:28:20,400
Speaker 15: the heat.

518
00:28:21,480 --> 00:28:25,359
Speaker 4: Cindy Taff is the CEO of Sage Geosystems, a next

519
00:28:25,400 --> 00:28:29,680
Speaker 4: gen geothermal and energy storage company. After spending thirty five

520
00:28:29,760 --> 00:28:32,399
Speaker 4: years at Shell, she is now using her knowledge of

521
00:28:32,480 --> 00:28:34,640
Speaker 4: oil drilling to partner with Ormat.

522
00:28:35,280 --> 00:28:39,360
Speaker 15: We're going to be drilling adjacent to their conventional geothermal

523
00:28:39,400 --> 00:28:43,480
Speaker 15: field and then putting our production, which will be hot water,

524
00:28:43,680 --> 00:28:46,800
Speaker 15: into an existing power plant. And the reason why we're

525
00:28:46,800 --> 00:28:50,320
Speaker 15: excited about that is that it expedites our ability to

526
00:28:50,480 --> 00:28:52,720
Speaker 15: have a commercial project by at least a year and

527
00:28:52,760 --> 00:28:55,680
Speaker 15: a half because we don't have to acquire land, we

528
00:28:55,720 --> 00:28:57,840
Speaker 15: don't have to build a power plant, we don't have

529
00:28:57,880 --> 00:28:58,160
Speaker 15: to have.

530
00:28:58,120 --> 00:28:59,120
Speaker 10: A grid interconnection.

531
00:28:59,560 --> 00:29:02,680
Speaker 15: We're going to be drilling the wells later this year,

532
00:29:02,760 --> 00:29:06,760
Speaker 15: if not early next year, depending on the permitting timeline,

533
00:29:06,800 --> 00:29:08,960
Speaker 15: and we're going to be flipping the switch in twenty

534
00:29:09,000 --> 00:29:12,480
Speaker 15: twenty seven. And so this partnership is really going to

535
00:29:12,560 --> 00:29:16,320
Speaker 15: open up the ability to scale commercially around the world

536
00:29:16,440 --> 00:29:18,280
Speaker 15: because of Ormat's footprint.

537
00:29:19,200 --> 00:29:22,520
Speaker 4: If Sage can provide the hot water, Ormat will use

538
00:29:22,520 --> 00:29:23,719
Speaker 4: it to generate power.

539
00:29:24,200 --> 00:29:27,840
Speaker 12: We sign with them a collaboration agreement basically allowing us

540
00:29:28,360 --> 00:29:31,720
Speaker 12: if that once they're successful, to use the technology and

541
00:29:31,720 --> 00:29:35,720
Speaker 12: build a pop plant and joining forces with Sage, having

542
00:29:35,800 --> 00:29:38,720
Speaker 12: them bring the experience and knowledge from the oil and

543
00:29:38,760 --> 00:29:42,240
Speaker 12: gas industry, combining with the geothermal that we bring. We

544
00:29:42,360 --> 00:29:44,480
Speaker 12: do believe that we get a winning path.

545
00:29:44,400 --> 00:29:48,520
Speaker 4: Now as the technology begins to prove itself, other private

546
00:29:48,560 --> 00:29:52,000
Speaker 4: capital is moving in behind it, with next generation geothermal

547
00:29:52,080 --> 00:29:54,920
Speaker 4: attracting more than one and a half billion dollars since

548
00:29:54,960 --> 00:29:56,480
Speaker 4: twenty twenty one, a.

549
00:29:56,440 --> 00:29:59,960
Speaker 13: Company called called Fervo now has has their drill site

550
00:30:00,080 --> 00:30:03,960
Speaker 13: located very closely to the forge site. They're drafting off

551
00:30:04,000 --> 00:30:07,360
Speaker 13: of that new technology. It's gotten better and faster and

552
00:30:07,440 --> 00:30:11,760
Speaker 13: cheaper already, and so that's how these things are working together.

553
00:30:11,920 --> 00:30:12,120
Speaker 6: Now.

554
00:30:12,360 --> 00:30:15,880
Speaker 13: Fervo has a four hundred megawatt plant that they're building

555
00:30:15,960 --> 00:30:19,840
Speaker 13: right now, which is incredible. The investments are there, and

556
00:30:19,880 --> 00:30:24,960
Speaker 13: so it's going to take less subsidies because these companies

557
00:30:25,000 --> 00:30:27,120
Speaker 13: don't need the subsidies. They just need the power, and

558
00:30:27,120 --> 00:30:28,200
Speaker 13: they need it really quickly.

559
00:30:28,840 --> 00:30:32,000
Speaker 4: In Utah, Governor Spencer Cox wants to make his state

560
00:30:32,080 --> 00:30:35,640
Speaker 4: an energy and business hub, with geothermal an important part

561
00:30:35,680 --> 00:30:36,240
Speaker 4: of that plan.

562
00:30:36,680 --> 00:30:39,800
Speaker 13: We understand the demand for energy right now. It's why

563
00:30:39,840 --> 00:30:42,640
Speaker 13: we in Utah I launched something called Operation giggle Wade

564
00:30:42,640 --> 00:30:44,840
Speaker 13: about two years ago. We know we have to double

565
00:30:44,920 --> 00:30:48,520
Speaker 13: Utah's energy production over the next few years in order

566
00:30:48,560 --> 00:30:50,480
Speaker 13: to compete with the rest of the world and to

567
00:30:50,520 --> 00:30:54,720
Speaker 13: make sure that our citizens have the technological advancements that

568
00:30:54,760 --> 00:30:57,320
Speaker 13: are happening out there and that they have low cost.

569
00:30:57,920 --> 00:31:00,520
Speaker 4: It helps Utah and Nevada that much of the land

570
00:31:00,520 --> 00:31:04,480
Speaker 4: where EGS geothermal can be developed belongs to the US government,

571
00:31:04,920 --> 00:31:07,360
Speaker 4: and the Bureau of Land Management is making more of

572
00:31:07,360 --> 00:31:11,920
Speaker 4: that land available. Demand is running ahead of supply. Average

573
00:31:12,000 --> 00:31:15,960
Speaker 4: leasing prices paid surged almost three hundred percent last year.

574
00:31:16,520 --> 00:31:18,200
Speaker 13: That's one of the things that we're finding out. Look,

575
00:31:18,200 --> 00:31:20,560
Speaker 13: there are a lot of states who give giant subsidies

576
00:31:20,560 --> 00:31:23,000
Speaker 13: a way to attract businesses. We're not like that in

577
00:31:23,000 --> 00:31:25,040
Speaker 13: the state of Utah. We do have some subsidies, like

578
00:31:25,360 --> 00:31:28,560
Speaker 13: every state, but we understand that what people really need

579
00:31:28,680 --> 00:31:32,440
Speaker 13: is speed, and they need assurances that we're not going

580
00:31:32,480 --> 00:31:34,520
Speaker 13: to pull the rug out from under them, that we're

581
00:31:34,520 --> 00:31:38,920
Speaker 13: not changing our regulatory scheme every few months, that it's

582
00:31:38,960 --> 00:31:41,720
Speaker 13: a place where it's easy to do business and deploy capital.

583
00:31:42,960 --> 00:31:46,640
Speaker 4: Geothermal is also politically palatable. At the same time that

584
00:31:46,800 --> 00:31:50,240
Speaker 4: Washington is opening up more land for geothermal development and

585
00:31:50,600 --> 00:31:54,600
Speaker 4: continuing tax credits supporting it, it's pulling back support for

586
00:31:54,760 --> 00:31:55,640
Speaker 4: wind and solar.

587
00:31:56,080 --> 00:31:59,040
Speaker 13: It's one of those rare forms of energy where there's

588
00:31:59,080 --> 00:32:01,000
Speaker 13: no opposition at all.

589
00:32:01,280 --> 00:32:02,040
Speaker 7: The far right is.

590
00:32:02,040 --> 00:32:05,840
Speaker 13: Opposed to is opposed to wind and and some solar.

591
00:32:06,360 --> 00:32:11,360
Speaker 13: The left is opposed to to coal and some nuclear. Finally,

592
00:32:11,400 --> 00:32:14,560
Speaker 13: we have this this energy source that everybody believes in

593
00:32:14,720 --> 00:32:17,160
Speaker 13: that everybody loves. We just didn't have a way to

594
00:32:17,200 --> 00:32:20,400
Speaker 13: produce it at scale in enough places. And and because

595
00:32:20,440 --> 00:32:24,560
Speaker 13: of human ingenuity, because of this abundance mindset that we're

596
00:32:24,600 --> 00:32:28,120
Speaker 13: starting to get as America again, we're getting baseload power

597
00:32:28,440 --> 00:32:32,160
Speaker 13: at scale that prices are coming down because the technology

598
00:32:32,200 --> 00:32:34,720
Speaker 13: is getting easier and cheaper and faster.

599
00:32:35,240 --> 00:32:38,200
Speaker 4: Still, as with any source of power, there are risks

600
00:32:38,280 --> 00:32:42,480
Speaker 4: that come with geothermal energy. Most important concerns over access

601
00:32:42,520 --> 00:32:46,240
Speaker 4: to water and its use td COW and sustainability and

602
00:32:46,240 --> 00:32:49,720
Speaker 4: disruptive technology. Analyst Jeff Osborne covers.

603
00:32:49,440 --> 00:32:52,480
Speaker 16: Or mat geothermal historically is you know, out in the

604
00:32:52,520 --> 00:32:56,240
Speaker 16: middle of the desert, typically in vast expanses of land

605
00:32:56,320 --> 00:33:00,960
Speaker 16: and not the most accessible for water. A big risk

606
00:33:01,000 --> 00:33:03,960
Speaker 16: for investors to monitor is where's the water going to

607
00:33:04,000 --> 00:33:06,680
Speaker 16: come from? And if we need an additional water source,

608
00:33:07,640 --> 00:33:11,280
Speaker 16: is that available as a backup plan, and what's the

609
00:33:11,320 --> 00:33:15,480
Speaker 16: cost of that, and what's the political ramifications as it

610
00:33:15,560 --> 00:33:20,160
Speaker 16: relates to future permitting approvals and so as we move

611
00:33:20,200 --> 00:33:25,040
Speaker 16: into new geographies that maybe are less familiar with geothermal thinking,

612
00:33:25,080 --> 00:33:27,800
Speaker 16: like a state like Texas that the water availability in

613
00:33:27,840 --> 00:33:30,120
Speaker 16: West Texas where some of these data centers are coming

614
00:33:30,160 --> 00:33:32,640
Speaker 16: in is certainly going to be an issue, and so

615
00:33:34,000 --> 00:33:37,040
Speaker 16: that's where learning comes in from some of these initial

616
00:33:37,080 --> 00:33:39,920
Speaker 16: projects that are being done by the likes of Fervo

617
00:33:40,040 --> 00:33:42,240
Speaker 16: and what ore Metal have with the SAGE and swimmers

618
00:33:42,280 --> 00:33:44,000
Speaker 16: A partnerships, they'll be able to take some of that

619
00:33:44,080 --> 00:33:48,160
Speaker 16: data and then hopefully convince a investors, but be both

620
00:33:48,240 --> 00:33:51,800
Speaker 16: local and state level politicians that this is something that

621
00:33:51,800 --> 00:33:56,440
Speaker 16: should be approved to move forward with, typically things around

622
00:33:57,040 --> 00:33:59,720
Speaker 16: water and grid in our connection or two of the

623
00:34:00,120 --> 00:34:02,360
Speaker 16: the key punch list items that investors are going to

624
00:34:02,360 --> 00:34:03,080
Speaker 16: want to understand.

625
00:34:03,280 --> 00:34:06,360
Speaker 4: When does it start producing a profit for investors.

626
00:34:07,080 --> 00:34:10,960
Speaker 15: Once it starts, we can start scaling, which actually is

627
00:34:11,640 --> 00:34:16,680
Speaker 15: very soon after this first commercial pilot. I would say

628
00:34:16,719 --> 00:34:18,560
Speaker 15: we can scale in the next two or three years

629
00:34:18,600 --> 00:34:21,640
Speaker 15: to four hundred and five hundred megawatts. That's when the

630
00:34:21,719 --> 00:34:26,160
Speaker 15: returns will really come for investors because as you scale,

631
00:34:26,200 --> 00:34:28,600
Speaker 15: of course, you can drive cost down because of the

632
00:34:28,680 --> 00:34:32,000
Speaker 15: efficiencies of during scaling. We have a term sheet with

633
00:34:32,120 --> 00:34:35,400
Speaker 15: Meta for one hundred and fifty megawatts for one of

634
00:34:35,440 --> 00:34:38,280
Speaker 15: their data centers. They're already in need for more power

635
00:34:38,360 --> 00:34:42,360
Speaker 15: at that data center because some of the solar production

636
00:34:42,440 --> 00:34:45,680
Speaker 15: has dropped out and so we've got an agreement with them.

637
00:34:45,719 --> 00:34:48,719
Speaker 15: We're also working with the Department of War and they're

638
00:34:48,800 --> 00:34:54,759
Speaker 15: very interested in behind the fence power that's easily defendable,

639
00:34:54,840 --> 00:34:57,720
Speaker 15: and because a lot of our equipment is below ground

640
00:34:58,080 --> 00:35:01,560
Speaker 15: and it doesn't have a big surface footprint, it will

641
00:35:01,600 --> 00:35:06,040
Speaker 15: help to solve the supply demand mismatch that you currently

642
00:35:06,080 --> 00:35:10,480
Speaker 15: see in the power markets. Being base load, there's a

643
00:35:10,560 --> 00:35:14,799
Speaker 15: huge demand. Geothermal is just a huge untapped resource.

644
00:35:16,040 --> 00:35:19,080
Speaker 4: Next generation systems could be a game changer in the

645
00:35:19,120 --> 00:35:23,200
Speaker 4: renewable energy industry, especially if everybody is on board.

646
00:35:23,719 --> 00:35:27,319
Speaker 13: Good news is that Democrats support this now. So this

647
00:35:27,600 --> 00:35:30,280
Speaker 13: used to be just a partisan issue. Was just Republicans

648
00:35:30,320 --> 00:35:33,520
Speaker 13: who cared about this. Now as a bipartisan issue, Members

649
00:35:33,520 --> 00:35:36,560
Speaker 13: of Congress from both parties are pushing towards this. This

650
00:35:36,760 --> 00:35:39,239
Speaker 13: is a technology that is bringing us all back to

651
00:35:39,280 --> 00:35:43,560
Speaker 13: the table, bringing us all together, bringing investment at every level.

652
00:35:43,760 --> 00:35:46,360
Speaker 13: And I think the future is bright for our country.

653
00:35:48,239 --> 00:35:51,520
Speaker 2: Coming up playing the odds, whether it's in a casino

654
00:35:51,880 --> 00:35:55,000
Speaker 2: or in what's next to the casino. Las Vegas is

655
00:35:55,040 --> 00:35:57,000
Speaker 2: reinventing itself yet again.

656
00:35:57,480 --> 00:36:01,400
Speaker 1: Vegas as a whole is extremely elastic. Vegas isn't going anywhere.

657
00:36:12,480 --> 00:36:15,440
Speaker 2: This is a story about taking a chance, having a

658
00:36:15,480 --> 00:36:19,120
Speaker 2: shot at wealth and success, something at the heart of

659
00:36:19,160 --> 00:36:22,520
Speaker 2: what many considered the American dream, and something built into

660
00:36:22,520 --> 00:36:26,319
Speaker 2: the very foundation of Las Vegas, Sin City, which for

661
00:36:26,400 --> 00:36:36,440
Speaker 2: over a century has drawn visitors from all walks of life.

662
00:36:38,480 --> 00:36:39,760
Speaker 5: What brings me to Vegas?

663
00:36:39,760 --> 00:36:42,359
Speaker 2: Well, my husband and I we're married here. We're here

664
00:36:42,400 --> 00:36:43,520
Speaker 2: on a girl's parkature.

665
00:36:43,719 --> 00:36:44,640
Speaker 16: We came here to party.

666
00:36:44,960 --> 00:36:45,520
Speaker 6: We partied.

667
00:36:45,680 --> 00:36:51,200
Speaker 13: You see, we've got pirates coming from all around the world.

668
00:36:51,400 --> 00:36:54,240
Speaker 2: Beneath the bright lights and the constant buzz of the strip,

669
00:36:54,640 --> 00:36:58,200
Speaker 2: the city itself is taking a chance at reinvention as

670
00:36:58,239 --> 00:37:01,400
Speaker 2: signs of slow down in its core businesusiness start to surface.

671
00:37:02,320 --> 00:37:04,920
Speaker 2: To understand the Las Vegas of today, you have to

672
00:37:04,920 --> 00:37:08,040
Speaker 2: go back to where it all began, and few have

673
00:37:08,120 --> 00:37:11,640
Speaker 2: followed that story, like screenwriter and journalist Nick Pelegi.

674
00:37:11,920 --> 00:37:16,880
Speaker 17: After the Second World War, with the air conditioning allowing

675
00:37:16,920 --> 00:37:21,560
Speaker 17: these places to remain open twelve months a year and

676
00:37:22,080 --> 00:37:26,640
Speaker 17: aviation advancing it changed the whole economy of going to

677
00:37:26,680 --> 00:37:30,320
Speaker 17: Las Vegas and allowed people to begin to invest money.

678
00:37:30,520 --> 00:37:32,640
Speaker 17: It was the only place in America where you could

679
00:37:32,719 --> 00:37:37,360
Speaker 17: gamble legally. Every illegal book maker all around the country,

680
00:37:37,560 --> 00:37:41,680
Speaker 17: all of whom were fully operational and had all the

681
00:37:41,719 --> 00:37:46,600
Speaker 17: political and police connections they needed to operate in the open. Really,

682
00:37:48,040 --> 00:37:50,640
Speaker 17: they all went to Las Vegas, where they were legit.

683
00:37:51,560 --> 00:37:52,800
Speaker 17: It was an amazing moment.

684
00:37:55,280 --> 00:37:58,080
Speaker 2: It was the start of the infamous mob era, a

685
00:37:58,160 --> 00:38:01,840
Speaker 2: world Pologie would later chronicle in the Academy Award nominated

686
00:38:01,880 --> 00:38:03,000
Speaker 2: film Casino.

687
00:38:03,200 --> 00:38:04,120
Speaker 5: Who could resist?

688
00:38:04,440 --> 00:38:07,200
Speaker 18: Anywhere else in the country, I was a bookie, a gambler,

689
00:38:07,200 --> 00:38:10,120
Speaker 18: always looking over my shoulder, hassled by cops day and night.

690
00:38:10,640 --> 00:38:14,200
Speaker 18: But here I'm mister Rothstein. I'm not only legitimate, but

691
00:38:14,360 --> 00:38:17,840
Speaker 18: running at casino. And that's like selling people dreams for cash.

692
00:38:17,920 --> 00:38:19,560
Speaker 2: All of us have heard about the time of the

693
00:38:19,640 --> 00:38:21,919
Speaker 2: mob in Las Vegas. How much of that as myth

694
00:38:21,960 --> 00:38:23,240
Speaker 2: and how much of there's reality?

695
00:38:23,360 --> 00:38:27,520
Speaker 17: Well, it's mostly reality. And when it came time to

696
00:38:27,680 --> 00:38:33,040
Speaker 17: open casinos maybe or expand casinos in Las Vegas because

697
00:38:33,040 --> 00:38:36,080
Speaker 17: of air conditioning and the new aviation, where were you

698
00:38:36,120 --> 00:38:39,200
Speaker 17: going to get that cash? Who was going to invest

699
00:38:39,680 --> 00:38:43,719
Speaker 17: Banks were not investing in casinos because casinos were immoral.

700
00:38:44,960 --> 00:38:47,080
Speaker 17: So you couldn't go to a real bank. You couldn't

701
00:38:47,080 --> 00:38:49,440
Speaker 17: go to Jamie Diamond and say I need two hundred

702
00:38:49,440 --> 00:38:53,360
Speaker 17: million dollars. So the only cash you really had came

703
00:38:53,640 --> 00:38:57,239
Speaker 17: in cash from the men who had originally made their

704
00:38:57,320 --> 00:39:02,160
Speaker 17: wealth in prohibition, and they would doing legitimately what they

705
00:39:02,160 --> 00:39:06,360
Speaker 17: had been doing basically illegitimately. It's really a sort of

706
00:39:06,800 --> 00:39:10,719
Speaker 17: slice of the free enterprise system at work, and it

707
00:39:10,920 --> 00:39:13,680
Speaker 17: just kept getting bigger and bigger, until it got so

708
00:39:13,840 --> 00:39:16,680
Speaker 17: damn big the government said they're making too much money.

709
00:39:16,920 --> 00:39:20,960
Speaker 17: At the government legalized illegal gambling and has taken it

710
00:39:21,000 --> 00:39:24,920
Speaker 17: over and of course not dealing with it as well

711
00:39:24,960 --> 00:39:26,279
Speaker 17: as they mob guys did.

712
00:39:28,360 --> 00:39:32,240
Speaker 2: From mob money to corporate capital, Las Vegas kept evolving.

713
00:39:32,520 --> 00:39:35,120
Speaker 2: But now in the age of online gambling, when a

714
00:39:35,120 --> 00:39:39,320
Speaker 2: casino fits in your pocket, what's next? Fed President Mary

715
00:39:39,400 --> 00:39:42,240
Speaker 2: Daily oversees the Federal Reserve's Western Region.

716
00:39:42,680 --> 00:39:45,120
Speaker 19: The economy of Las Vegas is the kind of economy

717
00:39:45,239 --> 00:39:47,640
Speaker 19: that if the US needs is it usually gets a

718
00:39:47,680 --> 00:39:51,160
Speaker 19: cold or maybe the flu. And so we're seeing some

719
00:39:51,239 --> 00:39:52,640
Speaker 19: of the things that are playing out in the US

720
00:39:52,719 --> 00:39:55,080
Speaker 19: economy play out here in Vegas. I think that the

721
00:39:55,160 --> 00:39:57,880
Speaker 19: Vegas residents are a little worried about that, but you know,

722
00:39:57,960 --> 00:40:00,680
Speaker 19: Vegas reinvents itself regularly, so there not depressed.

723
00:40:03,200 --> 00:40:06,560
Speaker 2: At the center of Las Vegas's latest reinvention is entertainment,

724
00:40:07,000 --> 00:40:09,280
Speaker 2: and one of the biggest players is the Tau Group,

725
00:40:09,560 --> 00:40:14,080
Speaker 2: a hospitality and entertainment company known for operating restaurants and nightclubs.

726
00:40:14,600 --> 00:40:17,799
Speaker 2: Jason Strauss is the group's co founder. You didn't start

727
00:40:17,840 --> 00:40:18,640
Speaker 2: in Las Vegas.

728
00:40:18,880 --> 00:40:20,440
Speaker 5: No, we started in New York City.

729
00:40:20,640 --> 00:40:23,960
Speaker 1: Our first two venues was taw Restaurant in Midtown and

730
00:40:24,080 --> 00:40:26,919
Speaker 1: Marque Nightclub, which I'm proud to say, twenty one years

731
00:40:27,000 --> 00:40:30,120
Speaker 1: later is the longest running nightclub in New York City history.

732
00:40:30,239 --> 00:40:31,520
Speaker 5: And we have one here in Las Vegas.

733
00:40:31,560 --> 00:40:33,680
Speaker 2: Why did you pick Las Vegas because we mostly think

734
00:40:33,680 --> 00:40:35,280
Speaker 2: about Las Vegas for gambling.

735
00:40:35,760 --> 00:40:39,200
Speaker 1: Well, back then, we saw a small inklean of nightlife

736
00:40:39,239 --> 00:40:40,800
Speaker 1: and the need for stylized dining.

737
00:40:40,840 --> 00:40:41,640
Speaker 5: It was just starting.

738
00:40:41,719 --> 00:40:44,040
Speaker 1: There was a lot of celebrity chefs back then, and

739
00:40:44,160 --> 00:40:46,400
Speaker 1: nightlife was maybe one or two nightclubs on the strip.

740
00:40:46,400 --> 00:40:48,640
Speaker 1: But we saw a real need for it, and frankly

741
00:40:48,680 --> 00:40:50,560
Speaker 1: we were right. We hit it right on the nose.

742
00:40:50,640 --> 00:40:54,000
Speaker 1: The timing was amazing. This is going back twenty one years.

743
00:40:54,160 --> 00:40:57,400
Speaker 1: We opened with the first restaurant in nightclub combination. Together,

744
00:40:57,480 --> 00:40:59,920
Speaker 1: we were the first really to like merge and marry

745
00:41:00,080 --> 00:41:03,000
Speaker 1: those two concepts, and within the first year we're the

746
00:41:03,040 --> 00:41:04,760
Speaker 1: highest grossing restaurant in the United States.

747
00:41:04,840 --> 00:41:06,200
Speaker 5: So we had a lot of success with that.

748
00:41:06,360 --> 00:41:08,640
Speaker 2: Tell us about the evolution, I mean, how fast did

749
00:41:08,680 --> 00:41:10,319
Speaker 2: it happen? How big has it got?

750
00:41:11,160 --> 00:41:13,520
Speaker 5: Oh Man, in twenty years, It's been an evolution.

751
00:41:13,719 --> 00:41:15,880
Speaker 1: When I was out here maybe two or three nightclubs,

752
00:41:15,920 --> 00:41:18,440
Speaker 1: we now have sixteen to seventeen venues on the strip,

753
00:41:18,640 --> 00:41:21,080
Speaker 1: depending on how you classify a lounge or a day

754
00:41:21,080 --> 00:41:24,200
Speaker 1: club or nightclub. Now there's this is the nightclub capital

755
00:41:24,239 --> 00:41:26,920
Speaker 1: of the world and the stylized dining capital of the world.

756
00:41:27,040 --> 00:41:29,600
Speaker 2: Is it continuing to grow? What's been the pattern of

757
00:41:29,680 --> 00:41:32,439
Speaker 2: growth just measured by how many people you have coming?

758
00:41:32,800 --> 00:41:34,319
Speaker 5: Well, yeah, it has continued to grow.

759
00:41:34,560 --> 00:41:37,800
Speaker 1: We're dealing with a particular segment we say premium segment

760
00:41:37,840 --> 00:41:40,840
Speaker 1: that's really looking for experiential I mean this nightclub that

761
00:41:40,840 --> 00:41:43,240
Speaker 1: we're in right now, Omnia is the highest grossing nightclub

762
00:41:43,280 --> 00:41:46,440
Speaker 1: in the country. And we have hit our best number

763
00:41:46,640 --> 00:41:49,040
Speaker 1: every year for the last three years here and here

764
00:41:49,200 --> 00:41:51,480
Speaker 1: at Omnia. So this is a really good indication of

765
00:41:51,520 --> 00:41:52,839
Speaker 1: where things are and where it's going.

766
00:41:52,920 --> 00:41:56,160
Speaker 2: When you say best number, is that both in total

767
00:41:56,280 --> 00:41:58,280
Speaker 2: revenue and in revenue.

768
00:41:57,880 --> 00:42:01,600
Speaker 5: Per customer gross net sales gros gross net sets.

769
00:42:01,480 --> 00:42:04,760
Speaker 2: And you measure also how much you revenue get per customer.

770
00:42:05,040 --> 00:42:07,439
Speaker 1: Oh yeah, there's a price point. There's a price per head,

771
00:42:07,480 --> 00:42:10,239
Speaker 1: but that differs on day of the week. You know,

772
00:42:10,280 --> 00:42:12,880
Speaker 1: there's a different customer in Vegas every weekend based on

773
00:42:13,000 --> 00:42:16,839
Speaker 1: convention scheduling, So it depends on the time of year,

774
00:42:17,160 --> 00:42:20,000
Speaker 1: who the talent is, sort of other factors that come

775
00:42:20,040 --> 00:42:22,440
Speaker 1: into town, if there's a UFC fight in town, So

776
00:42:22,520 --> 00:42:26,600
Speaker 1: all those things factor into different sort of per head numbers.

777
00:42:26,719 --> 00:42:29,360
Speaker 2: A lot of the people who follow Bloomberg are concerned

778
00:42:29,400 --> 00:42:30,760
Speaker 2: about business cycles.

779
00:42:30,880 --> 00:42:31,960
Speaker 5: They go up and they go down.

780
00:42:32,880 --> 00:42:36,040
Speaker 2: Are you vulnerable to business cycles or are you outside.

781
00:42:35,680 --> 00:42:36,520
Speaker 5: Of business cycles?

782
00:42:36,680 --> 00:42:39,760
Speaker 1: You know, I think we live in a particular demo

783
00:42:40,080 --> 00:42:44,600
Speaker 1: of premium where people have disposable income for experiential so

784
00:42:44,640 --> 00:42:47,480
Speaker 1: I think we're insulated a bit. But listen, Vegas as

785
00:42:47,480 --> 00:42:50,680
Speaker 1: a whole is extremely elastic. Vegas isn't going anywhere.

786
00:42:52,800 --> 00:42:55,640
Speaker 2: Look at this and now taw is doubling down.

787
00:42:55,920 --> 00:42:57,640
Speaker 6: I get it. Yeah, that's been pretty nice.

788
00:42:57,520 --> 00:43:00,319
Speaker 2: Making its biggest bet yet with its newest vend sure

789
00:43:00,640 --> 00:43:04,000
Speaker 2: Omnia day Club set to open later this month.

790
00:43:03,840 --> 00:43:08,080
Speaker 1: Forty six thousand square feet of cabanas, day beds, pools,

791
00:43:08,120 --> 00:43:12,400
Speaker 1: and up on that platform, up there is our Omnia

792
00:43:12,600 --> 00:43:13,520
Speaker 1: sky Deck.

793
00:43:13,719 --> 00:43:16,560
Speaker 2: Day clubs have become one of the biggest entertainment formats

794
00:43:16,560 --> 00:43:20,279
Speaker 2: in Las Vegas, daytime party venues that combine elements of

795
00:43:20,320 --> 00:43:23,480
Speaker 2: the city's famous night life scene with its pool culture

796
00:43:23,640 --> 00:43:28,960
Speaker 2: featuring DJs, cabanas, and high energy crowds. But even as

797
00:43:29,040 --> 00:43:32,760
Speaker 2: Las Vegas leans further into entertainment, the signs of softening

798
00:43:32,800 --> 00:43:36,680
Speaker 2: demand are hard to ignore. Visitor numbers are down seven

799
00:43:36,719 --> 00:43:40,640
Speaker 2: percent in twenty twenty five, the sharpest annual decline outside

800
00:43:40,760 --> 00:43:44,240
Speaker 2: the pandemic. There are reports of some softness and stupen

801
00:43:44,280 --> 00:43:45,080
Speaker 2: see and things like that.

802
00:43:45,640 --> 00:43:46,279
Speaker 17: How true are that?

803
00:43:46,320 --> 00:43:48,399
Speaker 2: Because you monitor these things, what do you look at?

804
00:43:48,520 --> 00:43:51,400
Speaker 19: It's definitely weaker than it was last year, and that

805
00:43:51,640 --> 00:43:54,720
Speaker 19: they have many factors that are affecting it. There's international

806
00:43:54,760 --> 00:43:56,439
Speaker 19: tourism has just dropped.

807
00:43:56,120 --> 00:43:57,160
Speaker 5: To the United States.

808
00:43:57,560 --> 00:44:00,760
Speaker 19: Then you have you know, the household who are making

809
00:44:00,920 --> 00:44:04,280
Speaker 19: fifty percentile or less in household income. They're just making

810
00:44:04,320 --> 00:44:06,800
Speaker 19: trade offs, you know, they have to gas prices are higher,

811
00:44:06,840 --> 00:44:08,839
Speaker 19: other goods and services are higher, and they get here

812
00:44:08,880 --> 00:44:11,560
Speaker 19: and they're like, Okay, I'm going to pay for this experience,

813
00:44:11,680 --> 00:44:13,799
Speaker 19: this show, but maybe I'm not going to spend as

814
00:44:13,880 --> 00:44:16,360
Speaker 19: much at restaurants. Maybe I'll bring food into my hotel

815
00:44:16,440 --> 00:44:19,920
Speaker 19: room and so other aspects of this are hurting a

816
00:44:19,960 --> 00:44:22,800
Speaker 19: little bit, But again, Las Vegas is used to this.

817
00:44:25,400 --> 00:44:28,839
Speaker 2: In a city built on volume and discretionary spending, even

818
00:44:28,960 --> 00:44:33,160
Speaker 2: small pullbacks can have an outsized impact. Since the pandemic,

819
00:44:33,239 --> 00:44:36,840
Speaker 2: Las Vegas unemployment has remained roughly a percentage point above

820
00:44:36,960 --> 00:44:40,319
Speaker 2: the national average. As you look from your approch at

821
00:44:40,320 --> 00:44:43,920
Speaker 2: the Federal Reserve at the economy of Las Vegas, what

822
00:44:43,920 --> 00:44:46,279
Speaker 2: are the major component parts? What do you really pay

823
00:44:46,320 --> 00:44:48,759
Speaker 2: attention to. There's gaming obviously, and you say not so

824
00:44:48,880 --> 00:44:49,960
Speaker 2: much gaming, some other things.

825
00:44:50,080 --> 00:44:52,319
Speaker 19: Yeah, So I look at travel and leisure, So what

826
00:44:52,360 --> 00:44:54,520
Speaker 19: are they doing in travel and entertainment? How are these

827
00:44:54,560 --> 00:44:57,960
Speaker 19: different pockets doing. Then I also look at technology, and

828
00:44:58,000 --> 00:45:01,000
Speaker 19: not so much the coding and things, but the infrastructure.

829
00:45:01,160 --> 00:45:04,040
Speaker 19: You know, are they attracting investments in things like data

830
00:45:04,120 --> 00:45:07,399
Speaker 19: centers or they have a technical interest here they want

831
00:45:07,400 --> 00:45:10,160
Speaker 19: to build technology out because it's just a great place

832
00:45:10,239 --> 00:45:13,239
Speaker 19: to put technical things, So they're working on that. Then

833
00:45:13,280 --> 00:45:16,480
Speaker 19: there's all the support parts of the economy that are

834
00:45:16,560 --> 00:45:20,400
Speaker 19: here to help the gaming and entertainment industry thrive. So

835
00:45:20,680 --> 00:45:22,719
Speaker 19: even if you're not directly working in travel and at

836
00:45:22,760 --> 00:45:26,000
Speaker 19: leisure on the strip, you're actually supporting the broader economy

837
00:45:26,000 --> 00:45:29,319
Speaker 19: by doing distribution and supplies, and so their economy is

838
00:45:29,360 --> 00:45:31,480
Speaker 19: really built on that. But if you ask what's the

839
00:45:31,520 --> 00:45:34,160
Speaker 19: one thing they would get worried about, it's are the

840
00:45:34,200 --> 00:45:37,080
Speaker 19: flights coming in? Are the guests coming because that drives

841
00:45:37,120 --> 00:45:39,719
Speaker 19: a lot of their economy. The technology is something they're

842
00:45:39,760 --> 00:45:42,600
Speaker 19: looking to build too, but it's not something that's driving

843
00:45:42,600 --> 00:45:43,280
Speaker 19: their economy.

844
00:45:43,480 --> 00:45:46,080
Speaker 2: We see a lot of development always in Las Vegas.

845
00:45:46,080 --> 00:45:47,520
Speaker 2: You said it's always reinvaying itself.

846
00:45:47,680 --> 00:45:49,560
Speaker 5: It is always reinventing, buildings getting.

847
00:45:49,280 --> 00:45:51,400
Speaker 2: Torn down and big buildings built and being built up.

848
00:45:51,920 --> 00:45:54,000
Speaker 2: One of the things we've heard is that Las Vegas

849
00:45:54,080 --> 00:45:58,640
Speaker 2: has been sort of advanced in minimizing the regulatory constraints,

850
00:45:58,680 --> 00:46:01,239
Speaker 2: the permitting of things. We've talked to people who say

851
00:46:01,280 --> 00:46:03,839
Speaker 2: they're building things here much faster than in some other

852
00:46:03,840 --> 00:46:06,760
Speaker 2: parts of your district like Los Angeles, San Francisco. Absolutely,

853
00:46:06,760 --> 00:46:07,480
Speaker 2: how true is that?

854
00:46:07,719 --> 00:46:08,320
Speaker 5: It is true?

855
00:46:08,440 --> 00:46:10,200
Speaker 19: So one of the things that we know is that

856
00:46:10,520 --> 00:46:13,560
Speaker 19: there's federal laws about zoning and other things, but most

857
00:46:13,600 --> 00:46:16,200
Speaker 19: of the zoning and where you can build, and how

858
00:46:16,200 --> 00:46:17,920
Speaker 19: you can build, and what kind of like fixtures you

859
00:46:18,000 --> 00:46:20,720
Speaker 19: have to have, that all comes from localities or states

860
00:46:21,280 --> 00:46:24,640
Speaker 19: and Vegas because they need to reinvent themselves and bring

861
00:46:24,640 --> 00:46:27,240
Speaker 19: this these new buildings along. That's part of their attraction.

862
00:46:27,560 --> 00:46:29,560
Speaker 19: They have to be faster, they have to be better,

863
00:46:29,640 --> 00:46:30,960
Speaker 19: they have to be less expensive.

864
00:46:33,800 --> 00:46:38,400
Speaker 2: That combination of speed, quality, and affordability sets Las Vegas apart,

865
00:46:38,960 --> 00:46:41,800
Speaker 2: and Jason Strauss says it's why projects at the size

866
00:46:41,800 --> 00:46:44,560
Speaker 2: and scale of Tow's New day Club can happen here.

867
00:46:44,760 --> 00:46:46,520
Speaker 1: I don't think I need to tell you anything more.

868
00:46:46,600 --> 00:46:49,120
Speaker 1: You can just look at where we are and how

869
00:46:49,120 --> 00:46:51,400
Speaker 1: we are just dead center of the middle of the strip,

870
00:46:51,800 --> 00:46:55,520
Speaker 1: all the famous lights and sound that make Less Vegas famous,

871
00:46:55,800 --> 00:46:57,680
Speaker 1: or right in the middle end here on the Omnious

872
00:46:57,719 --> 00:46:58,160
Speaker 1: Guy Deck.

873
00:46:58,520 --> 00:46:59,840
Speaker 5: You're completely immersed in it.

874
00:47:00,120 --> 00:47:02,319
Speaker 1: You can have food and drink, you can enjoy it

875
00:47:02,360 --> 00:47:04,279
Speaker 1: any day of the week, open seven days a week,

876
00:47:04,320 --> 00:47:05,799
Speaker 1: and this we think is going to be a really

877
00:47:05,840 --> 00:47:06,719
Speaker 1: special experience.

878
00:47:07,000 --> 00:47:09,880
Speaker 2: It's experiences like these that have long drawn people to

879
00:47:09,960 --> 00:47:14,560
Speaker 2: Las Vegas, a city built on reinvention, risk, and the

880
00:47:14,600 --> 00:47:17,320
Speaker 2: willingness to take a chance on what comes next.

881
00:47:17,680 --> 00:47:22,799
Speaker 17: I think it's the most American thing we've got, isn't it.

882
00:47:22,880 --> 00:47:25,800
Speaker 17: I Mean it's kind of frontier, it has the cowboy

883
00:47:25,880 --> 00:47:30,560
Speaker 17: world to it. It's everybody's got a shot. It's sort

884
00:47:30,600 --> 00:47:37,520
Speaker 17: of like it's America in miniature because so many different

885
00:47:37,719 --> 00:47:41,000
Speaker 17: people go there, right from all over the country. So

886
00:47:41,040 --> 00:47:45,719
Speaker 17: it's like in America for America.

887
00:47:47,239 --> 00:47:49,040
Speaker 2: That does it for us. Here at Wall Street Week,

888
00:47:49,280 --> 00:47:52,320
Speaker 2: I'm David Weston. See you next week for more stories

889
00:47:52,360 --> 00:47:59,719
Speaker 2: of capitalism

890
00:48:01,520 --> 00:48:02,400
Speaker 8: Many years