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Speaker 3: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 3: This past week, big macro issues certainly on the minds
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Speaker 4: This is Fedhair J.
Speaker 3: Powell, in the latest FOMC meeting and decision downplayed growth
Speaker 3: concerns in the impact of President Trump's trade war on prices,
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Speaker 1: This year, the war in Ukraine entered a new chapter
Speaker 1: after Donald Trump's calls with both Russian and Ukrainian president
Speaker 1: cidents led to a thirty day truce preventing strikes on
Speaker 1: each other's power infrastructure. So this hour we tackled nearly
Speaker 1: three year war with the two leading experts on Russia
Speaker 1: and whether these talks have any.
Speaker 3: Merit, Plus all things Elon from SpaceX to Tesla to
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Speaker 3: world's richest person. And in our next hour, a read
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Speaker 3: affordability crisis at US colleges and how some of the
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Speaker 1: All that to come. We begin, though, with the latest
Speaker 1: in the Russia Ukraine conflict. A voice that we've turned
Speaker 1: to often is doctor Angela Sten, a senior fellow at
Speaker 1: the Brookings Institution at a former National Intelligence officer for
Speaker 1: Russia and Eurasia at the National Intelligence Council who also
Speaker 1: served in the Office of Policy Planning at the US
Speaker 1: Department of State. She's the author of the twenty nineteen
Speaker 1: book Putin's World, Russia Against the West and with the Rest.
Speaker 5: And the way we got here is right. The President
Speaker 5: Trump said during the campaign that he was going to
Speaker 5: end this war in twenty four hours. It would never
Speaker 5: have started had he been president at the time. It
Speaker 5: took a little more than twenty four hours to get
Speaker 5: this particular phone call with Putin, although we know that
Speaker 5: he had previous ones after his election. And so he
Speaker 5: got the Ukrainians by putting pressure on them to agree
Speaker 5: to a thirty day total cease fire, and that's what
Speaker 5: he said he wants from the Russians. I've just been
Speaker 5: reading the Russian readout, the Kremlins readout of the talks.
Speaker 5: It's a little different from the one that we got
Speaker 5: from the US side, and it mentions that Trump asked
Speaker 5: Putin for a cease fire on hitting energy and infrastructure targets,
Speaker 5: and it said that, you know, Putin was favorably inclined
Speaker 5: to it, It didn't actually necessarily say that he agreed
Speaker 5: with it. And a lot of it had to do
Speaker 5: with the restoration of US Russian relations, and apparently they're
Speaker 5: going to organize hockey games between Russia and the United States.
Speaker 5: But the thing that's most notable in the Russian one,
Speaker 5: and I think your correspondent already alluded to it, is
Speaker 5: that Putin's saying that they have to get to the
Speaker 5: fundamental causes, the root causes of why this war broke out,
Speaker 5: and that's going to go right back to NATO to
Speaker 5: Ukraine wanting to be part of the West and to
Speaker 5: putin essentially saying that can happen. So I will be
Speaker 5: curious to see how this works out. I'd also like
Speaker 5: to know how they're going to enforce this very limited
Speaker 5: but still important ceasefire. Don't forget Russia has destroyed seventy
Speaker 5: percent of Ukraine's electricity production during this war. How are
Speaker 5: they going to monitor this and then what comes after it?
Speaker 1: But Angela doesn't seem like to you that it is
Speaker 1: indeed the beginning of the end of this war.
Speaker 5: Maybe I think what it's certainly the beginning of the
Speaker 5: US and Russia established, re establishing relations, and we've heard
Speaker 5: that from President Trump. Is it the beginning of the
Speaker 5: end of this war? I'm still I think the jury's
Speaker 5: out on that. I think we have to see how
Speaker 5: long Houghton drags out the negotiations before he agrees to
Speaker 5: a total cease fire. And again, he hasn't really shown
Speaker 5: that he's interested in ending this war anytime soon. He's
Speaker 5: much more interested in restoring these relations with the US
Speaker 5: and ending his isolation.
Speaker 4: That's interesting.
Speaker 3: The other thing, I wonder Angelain something that we've talked
Speaker 3: about with you before. I mean, are there ever really
Speaker 3: any guarantees that President Pulton won't try to invade Ukraine
Speaker 3: or another country again? And how does the outcome of
Speaker 3: this negotiate negotiation for an end to the war kind
Speaker 3: of determine the likelihood of that happening again.
Speaker 5: So, as President Zelenski, unfortunately for him, pointed out in
Speaker 5: the overval Office when he then got the president, the
Speaker 5: vice president very angry with him, Russia has violated every
Speaker 5: cease fire it's signed with Ukraine, certainly since the annexation
Speaker 5: of Primeiere in twenty fourteen. And Russia has also violated
Speaker 5: every treaty it's signed with Ukraine since its independence. So
Speaker 5: I think one has to be very skeptical. And this
Speaker 5: is of course why President Zelenski, again unfortunately for him,
Speaker 5: in the Oval Office, wanted to talk about security guarantees,
Speaker 5: because without very robust security guarantees, there's absolutely no reason
Speaker 5: to believe that Russia wouldn't try and invade Ukraine again.
Speaker 5: The best security guarantee we know would be Ukraine joining NATO.
Speaker 5: That's been taken off the cards now by the Trump administration,
Speaker 5: but it needs these guarantees. And the Europeans, the French,
Speaker 5: the British, and other European countries have said they're willing
Speaker 5: to provide security guarantees, boots on the ground to be
Speaker 5: a stabilizing force, stabilization force once the war ends, but
Speaker 5: they say they need American backup for this, and that's
Speaker 5: something which the Trump administration has not committed itself to.
Speaker 6: Angela.
Speaker 1: Let's say this is the beginning of the end of
Speaker 1: the war and it does end, what does Russia look
Speaker 1: like on the other side of this. Is it stronger
Speaker 1: or weaker than it was?
Speaker 7: Is it more?
Speaker 1: Is Putin more emboldened than he was pre invasion?
Speaker 5: Yeah, so what it looks like is, I mean, the
Speaker 5: economy is not in good shape and it's going to
Speaker 5: get worse the longer this war goes on for Putin.
Speaker 5: So if the war ends, that would and obviously if
Speaker 5: the sanctions are removed, which they would be if the
Speaker 5: war ends at some point, then that would be very
Speaker 5: beneficial for Putin. But yes, he comes out of this
Speaker 5: looking stronger. He invaded another country and provoked and presumably,
Speaker 5: I mean, we have to see if Ukraine has to
Speaker 5: make territorial concessions to Russia. He will then, you know,
Speaker 5: have taken twenty percent of Ukraine. And unless there are
Speaker 5: these very robust security guarantees, he could invade again. And
Speaker 5: now he'll be in you know, he'll be invited back
Speaker 5: to the United States. Maybe the Europeans won't want to
Speaker 5: deal with him for any time soon. But Russia's actually
Speaker 5: strengthened its international position in many ways while it's been
Speaker 5: fighting this war.
Speaker 3: But is there some credibility Angela in President Trump trying
Speaker 3: to create some kind of economic cooperation or more economic
Speaker 3: cooperation between the US and Russia to create a different
Speaker 3: future and relationship with Russia going forwoting and is there
Speaker 3: some good to that.
Speaker 5: Well, in the nineteen nineties, there were a lot of
Speaker 5: American firms that were very active in Russia, energy companies,
Speaker 5: large firms, small firms. They were making money and they
Speaker 5: were doing quite well. And yet the political relationship between
Speaker 5: the US and Russia was very difficult. There were a
Speaker 5: couple of high points after nine to eleven when the
Speaker 5: US and Russia with Putin, you know, worked together in
Speaker 5: terms of the beginning of the US campaign in Afghanistan. Also,
Speaker 5: I should point out that there were thousands of American
Speaker 5: business people in Ukraine when Russia invaded. That didn't stop
Speaker 5: Russia from invading. So of course there are arguments to
Speaker 5: build up economic ties with Russia. But I think history
Speaker 5: shows us and even the experience of the last thirty years.
Speaker 5: Putin always likes to separate economics from politics, and you
Speaker 5: can have a good or a strong economic relationship with
Speaker 5: Russia and it doesn't seem to have that much impact
Speaker 5: on what Russia does politically or militarily, particularly under Putin.
Speaker 1: You know, I asked what Russia would look like after this,
Speaker 1: but what about Ukraine? Because this is the country that
Speaker 1: three years ago we were talking to you and so
Speaker 1: many other people thought this war would be over just
Speaker 1: in a matter of hours, a matter of days, a
Speaker 1: matter of weeks. But look what Ukraine has been able
Speaker 1: to do to defend itself. What does Ukraine look like
Speaker 1: on the other side, You know, on.
Speaker 5: The good side, Ukraine now has the strongest and largest
Speaker 5: army in Europe. It's developed very sophisticated technical technological capabilities.
Speaker 5: It's been using electronic warfare. It's much more sophisticated than that.
Speaker 5: On the other hand, of course, its economy has suffered greatly,
Speaker 5: and you know, it's had cities and villages obliterated by
Speaker 5: the Russians, so it's going to need an enormous amount
Speaker 5: of economic assistance and investment if it is to recover.
Speaker 5: It's also lost a large number of soldiers. We don't
Speaker 5: quite know, but I think for both Ukraine and Russia
Speaker 5: it's in the hundreds of thousands. And it also has
Speaker 5: millions of Ukrainians are now living abroad because of the war.
Speaker 5: They need to come back and they need to help
Speaker 5: rebuild the country. So economically it's it's you know, in
Speaker 5: very poor shape, even though other aspects militarily it's better off,
Speaker 5: but it will still be in a very fragile state
Speaker 5: at the end of the war.
Speaker 3: Angela, you know, I was thinking about this a lot,
Speaker 3: like what is the relationship between President Putin and President Trump?
Speaker 3: And I know what we've talked with you about this before,
Speaker 3: And is Russia a great power? Is it a great economy?
Speaker 3: You already referenced that it wasn't. They're businesses, their alliances,
Speaker 3: their leadership.
Speaker 4: I mean, is.
Speaker 3: It an economic and political model to emulate?
Speaker 5: Well, it's not an economic model to emulate because it's
Speaker 5: essentially a hydrocarbon exporter. It doesn't have a very modern economy.
Speaker 5: You know, I always when I teach my students, I say,
Speaker 5: tell me how many products in your home are from
Speaker 5: China and how many from Russia. Well, you know the
Speaker 5: answers to that there many of them from China, then
Speaker 5: on from Russia. So it earns a lot of money
Speaker 5: by selling hydro carbons, but it doesn't have really a
Speaker 5: modern economy. It has a shrinking population. It has a
Speaker 5: major demographic problem, and it's had that ever since the
Speaker 5: fall of the Soviet Union and even before then. But
Speaker 5: militarily it is a superpower, and that's in history. Russia
Speaker 5: has always been a great power because of its military,
Speaker 5: not because of its economy. And so it is you know,
Speaker 5: I think the largest nuclear power, the US and Russia,
Speaker 5: the two nuclear superpowers. The Russians have more warheads than
Speaker 5: we do, and so in that sense, it's a great power.
Speaker 5: And because of the hydrocarbons, and of course its location.
Speaker 5: It's the largest country in the world sitting astride Europe
Speaker 5: and Asia, so it has many strong endowments. But it economically,
Speaker 5: it really does need to modernize.
Speaker 1: Hey, just thirty seconds left, doctor sten. It does raise
Speaker 1: the question, though, how the rest of the world keeps
Speaker 1: putin in check, given the strength of its military and
Speaker 1: given his ambitions, how does that happen?
Speaker 8: Well, we know that he.
Speaker 5: Has ambitions that go beyond Ukraine, and that's why the
Speaker 5: Europeans are very worried about it. And now you see
Speaker 5: France offering you a nuclear umbrella to the rest of Europe.
Speaker 5: You see some European countries, even Poland, talking about should
Speaker 5: they acquire nuclear weapons. So this is one of the
Speaker 5: impacts of this brutal war is at least country countries
Speaker 5: in Europe reminding themselves that they're still vulnerable to a
Speaker 5: potential Russian invasion, and some of them are talking about
Speaker 5: the possibility of a war with Russia within the next
Speaker 5: five years.
Speaker 3: Bottom line ten seconds. This is a good this is
Speaker 3: a good move. This is some progress on the call.
Speaker 5: Yes it is, I mean hopefully if they implement this
Speaker 5: for a cease file, of course it's a good move.
Speaker 3: All right. My guess is we're going to be coming
Speaker 3: back to you a lot more still on this and
Speaker 3: we so appreciate that we can. Angela, thank you so much,
Speaker 3: doctor Angela stant Senior, fellow at the Brookings Institution, a
Speaker 3: member of the Council on Foreign Relations, and her book
Speaker 3: author of Putin's World.
Speaker 4: Be sure to check it out.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: A new book out notes when the hammer and sickle
Speaker 3: came down in late nineteen ninety one, Russia's new market
Speaker 3: opened for business. From banking to brewery, sectors emerged out
Speaker 3: of nowhere, and for the next three decades this proto
Speaker 3: capitalism transformed Russian society. But as this book also notes
Speaker 3: in its own words, everything changed once Russia launched the
Speaker 3: full scale invasion of Ukraine in twenty twenty two.
Speaker 1: Someone with distinct knowledge in the dynamics between Russia and
Speaker 1: the companies that do business there is Charles Hecker. Charles
Speaker 1: is a journalist and risk management consultant. He's also the
Speaker 1: author of the new book Zero Sum, The Arc of
Speaker 1: International Business in Russia. Charles has spent forty years working
Speaker 1: in the Soviet Union and in RUSSA I think.
Speaker 9: Right now somewhere we're between sort of two steps forward,
Speaker 9: one step back, or maybe even one step forward two
Speaker 9: steps back, I mean from President Trump from President Zelenski.
Speaker 9: We can at least draw the conclusion that the two
Speaker 9: presidents are once again sort of speaking regularly, speaking normally,
Speaker 9: and without the anger and the hostility that we saw
Speaker 9: of a couple of weeks ago that really set this
Speaker 9: process back dramatically. So we have a bit of a
Speaker 9: victory there in that the two presidents are communicating. As
Speaker 9: far as the actual peace agreement or the cease fire
Speaker 9: between Russia and Ukraine, both sides are already accusing each
Speaker 9: other of violating that. So there were attacks allegedly from
Speaker 9: Russia on Ukrainian energy installations, and Russia says that Ukraine
Speaker 9: is doing the exact same thing back.
Speaker 3: So when Steve Woodkoff says he believes that I think
Speaker 3: he said to some extent, well, some of these attacks
Speaker 3: were already happening, or I don't know. I guess the
Speaker 3: devil and timing is always in the detail, or the
Speaker 3: devil's in the details. He believes that President Putin is
Speaker 3: acting in good faith. Your knowledge of President Putin and
Speaker 3: how he does things, do you think he is.
Speaker 8: Well.
Speaker 9: One of President Trump's predecessors in the White House when
Speaker 9: talking about Russia, always said trust, but verify, And you know,
Speaker 9: there hasn't been a whole lot of verification going on lately.
Speaker 9: And what we do know is that President Putin has
Speaker 9: in the past gone back on his word when it
Speaker 9: comes to holding off on attacking Ukraine. And so with
Speaker 9: the fact that the timing, as you suggest, is still
Speaker 9: incredibly vague on when this is all going to start
Speaker 9: and when the ceasefire will kick off, we still don't
Speaker 9: know first of all, what Putin's word is and when
Speaker 9: or if he'll start to obey it.
Speaker 1: So I just want to get your thoughts about where
Speaker 1: we are in your view, if this actually is the
Speaker 1: beginning of the end of the war. You mentioned that
Speaker 1: both sides are already not agreeing to what had been
Speaker 1: agreed upon, but you also said that it's good news
Speaker 1: that the US is speaking to both of these parties.
Speaker 1: Do you actually think this is the beginning the end
Speaker 1: of the war.
Speaker 8: It might be.
Speaker 9: I mean, I think if this is the beginning of
Speaker 9: the end of the war, it's going to take a
Speaker 9: lot longer than any of us anticipate. And a lot
Speaker 9: longer than any of the actors in these negotiations are
Speaker 9: telling us. I mean, we know, look that the strategic
Speaker 9: driver for Putin behind all of this is to keep fighting.
Speaker 9: So when he says that he's engaged in ceasefire negotiations,
Speaker 9: when he says this he's interested in a ceasefire, he's
Speaker 9: really not being entirely genuine with his counterparties, because really
Speaker 9: what Putin wants to do is to continue to press on.
Speaker 9: He thinks he's winning on the ground in Ukraine. His
Speaker 9: progress has been a little bit better than previously, and
Speaker 9: right now there's very little incentive for him to stop.
Speaker 1: So that's the perfect place to sort of transition to
Speaker 1: business in Russia over the last few decades, something that
Speaker 1: you've been writing about and that you know a lot about.
Speaker 1: If we were talking to you three years ago, we'd
Speaker 1: be talking to you about all the American businesses that
Speaker 1: have announced that they've stopped doing business in Russia as
Speaker 1: a result of Russia's invasion of you. I think a
Speaker 1: lot of people then would have thought this is going
Speaker 1: to have huge economic consequences and effects on the country
Speaker 1: and might cause Russia to think twice about what it's
Speaker 1: doing militarily that obviously didn't happen, right.
Speaker 8: Well, exactly right.
Speaker 9: I mean, if we were talking about this precisely three
Speaker 9: years ago, what we would be talking about is absolute
Speaker 9: sort of streams of Western executives stampeding towards Moscow's airports,
Speaker 9: among other places, trying to get out of the country.
Speaker 9: And this was exactly three years ago, a time when
Speaker 9: international offices, European and American offices were physically emptying out
Speaker 9: of expats and of Russian employees who were desperate to
Speaker 9: leave the country because the full scale engage invasion was
Speaker 9: kicking off. And so if we look at it now,
Speaker 9: you know, the US business community is looking at the
Speaker 9: negotiations between Trump and Putin and they sense that sanctions
Speaker 9: relief is in the air. And there are active conversations
Speaker 9: now in the companies that left Russia three years ago
Speaker 9: about going back. Not everyone will do it, but everyone
Speaker 9: is talking about it.
Speaker 3: Yet you know, you're right, or you note that in
Speaker 3: like one generation, we saw Russia open its doors and
Speaker 3: then close them again. So I mean what ultimately rules
Speaker 3: in Russia? Is it money, is it business? Is it politics?
Speaker 9: Well, you're right, I mean the last generation in Russia
Speaker 9: was one of the biggest experiments in global capitalism ever.
Speaker 9: You had this emerging market opening up during a time
Speaker 9: when companies were globalizing rapidly, and everyone rushed in to
Speaker 9: Russia following the collapse of the Soviet Union. You know,
Speaker 9: for companies to go back, it is partially all about money,
Speaker 9: but it's about that and a lot more. It's about
Speaker 9: a change to the risk reward equation. And in the
Speaker 9: nineteen nineties, just about anything that you'd did in Russia,
Speaker 9: almost any kind of Western business activity made money. It
Speaker 9: was really like, you know, plant any seed and.
Speaker 7: It would grow right.
Speaker 9: That is no longer the case. Companies that want to
Speaker 9: go back to Russia or are thinking about going back,
Speaker 9: are not going back to the Russia of the nineteen nineties,
Speaker 9: not going back to the real go go days of
Speaker 9: the two thousands. It's very different now.
Speaker 3: Well talk to us about this, and this is something
Speaker 3: Tim and I talked about with Angela Stent, who has
Speaker 3: understands Putin, understands Russia too, And I said, you know,
Speaker 3: what is today's Russia? What is Putin's Russia? Is it
Speaker 3: a great power? Is it a great economy? You know,
Speaker 3: what are their businesses, their alliances, like what do we
Speaker 3: need to know? And some of it I asked facetiously
Speaker 3: when I said, is it a great economy?
Speaker 4: But I mean, what is it today?
Speaker 9: Well, you know, there were a lot of people, not
Speaker 9: Angelus Stentt, who's one of my idols in the field
Speaker 9: of Soviet and Russian studies, from way back in the day.
Speaker 9: You know, there were people that said that Russia was
Speaker 9: a gas station with nukes, and you know, that is
Speaker 9: a vast underestimation of Russia's role in the global economy.
Speaker 9: And we understood that Russia and gas and oil and
Speaker 9: all of that came under sanctions, or oil came under sanctions,
Speaker 9: and when the Europeans tried to chase gas out of
Speaker 9: their pipelines, we understood what happened to prices. We also
Speaker 9: understood what happened on global grain markets after the start
Speaker 9: of the full scale invasion. So Russia is a lot
Speaker 9: more plugged into the global economy than we ever thought,
Speaker 9: and perhaps even more than we think, particularly an area
Speaker 9: of precious metals, rare earth metals, critical minerals. These are
Speaker 9: places where Russia has significant strategic deposits that are useful
Speaker 9: not just to Russia, but to everybody else around the world,
Speaker 9: So you know there is reason to go back in
Speaker 9: There are companies that are thinking about it. But but
Speaker 9: the war lasted a lot longer and is lasting a
Speaker 9: lot longer than anybody ever thought, and enormous changes have
Speaker 9: taken place on the ground politically and economically in Russia.
Speaker 9: And if you're thinking of going about going back, you
Speaker 9: have to be thinking, well, what kind of Russia is
Speaker 9: waiting for us?
Speaker 1: Well, what kind of what did Russia businesses, Charles do
Speaker 1: to replace American businesses and Western businesses that left. We
Speaker 1: all saw stories of McDonald's, for example, pulling out. That
Speaker 1: was such a prominent example because of what happened when
Speaker 1: the fall of the Soviet Union happened, and that first
Speaker 1: McDonald's opened up in Russia. But we saw this sort
Speaker 1: of Russian version of McDonald's come in. What has been
Speaker 1: what has happened on the ground since American and Western
Speaker 1: businesses have left.
Speaker 9: Yeah, a lot of different things have happened since since
Speaker 9: Western and American companies left, and that is that you're
Speaker 9: absolutely right to point out that a number of significant
Speaker 9: Western brands, including McDonald's, which everybody loves to look at
Speaker 9: when we're talking about Russia. But other companies like Starbucks,
Speaker 9: for example, had a massive presence in Russia and they're
Speaker 9: gone too. They've been taken over by local Russian owners.
Speaker 9: They were sold when those two companies decided that they
Speaker 9: wanted out. And so what those companies have been doing
Speaker 9: has been winning, growing and maintaining market share and trying
Speaker 9: to sort of run businesses. And right now it's very
Speaker 9: difficult to understand whether the current owners of McDonald's or
Speaker 9: Starbucks or any of the other companies that left, you know,
Speaker 9: how keen they are to sell those back to the
Speaker 9: people that they bought them for just a couple of
Speaker 9: years ago. The other thing that's happened on the market
Speaker 9: is that companies from non sanctioning countries have moved in,
Speaker 9: and that includes countries like Turkey and China. They've taken
Speaker 9: over market share, they've moved in, and it's going to
Speaker 9: be difficult for returning companies to dislodge them.
Speaker 1: So it raises the question about initially why the companies
Speaker 1: left during the invasion. In your view, was it because
Speaker 1: it was seen as not ethical to do business and
Speaker 1: support a country that had this invasion? Was it because
Speaker 1: of American regulations or was it an actual business decision.
Speaker 9: There were a few different decisions. In some cases, sanctions
Speaker 9: made it illegal to do business in Russia, and there
Speaker 9: were companies that just had to get out because there
Speaker 9: was no way that they could transact in Russia at
Speaker 9: all without violating sanctions. Other companies looked at the reputational
Speaker 9: risk of doing business in Russia, and you had significant
Speaker 9: external pressure on these companies saying, why are you still
Speaker 9: in Russia. You're paying taxes to the Russian government. The
Speaker 9: Russian government is using that money to buy weapons to
Speaker 9: kill Ukrainians, So what are you doing there? Companies felt
Speaker 9: that reputational pressure and they left.
Speaker 8: And then there were companies that.
Speaker 9: For whom it was easier to leave because maybe Russia
Speaker 9: wasn't that big a market, maybe they weren't doing all
Speaker 9: that well there anyway, and why bother with all of
Speaker 9: the difficulty of doing business in this kind of environment,
Speaker 9: and so they also packed up and left.
Speaker 3: You know, I think we think that introduce capitalism, introduce
Speaker 3: Western businesses, whether it's China, whether it's Russia, that these countries,
Speaker 3: these places will become liberal democracies. And here we are
Speaker 3: again seeing that it really doesn't work. So is it
Speaker 3: not going to work? If we can continue to get
Speaker 3: what's what's wrong with our thinking or why is it
Speaker 3: not working.
Speaker 9: One of the lessons that we have to have learned
Speaker 9: on exiting Russia is that the assumption we made, just
Speaker 9: as you said, Carol, the assumption that we made on
Speaker 9: the way in that engaging with Russia economically and commercially
Speaker 9: and sending Big Max to Russia would transform the country
Speaker 9: somehow into a mirror image of the West, or into
Speaker 9: at least a sort of liberal democracy that we could
Speaker 9: get along with. And you know, I think we've learned
Speaker 9: over the years, whether we're talking about Russia or we're
Speaker 9: talking about China for example, or other countries, that you know,
Speaker 9: eating Big Max doesn't make you a democrat, you know,
Speaker 9: little d democrat. And so you know, if companies once
Speaker 9: again go back to Russia and think, look, you know,
Speaker 9: we're going to be on the ground and we're going
Speaker 9: to give this a chance, and we think that Russia
Speaker 9: may reform, that's a mistaken assumption. And you know, we
Speaker 9: realize that perhaps a little bit too slowly. I don't
Speaker 9: want to be too judgmental about our experience in Russia
Speaker 9: over the past generation, but it was a flawed assumption.
Speaker 3: So President Trump seems to want to create economic ties
Speaker 3: between the US and Russia. Some say, you know, the
Speaker 3: diplomacy or lack thereof, or whatever you want to call
Speaker 3: it that we've had between the US and Russia and
Speaker 3: President Putin so far has not created a better relationship.
Speaker 4: So maybe this.
Speaker 3: Could Is that even possible with your knowledge of President Putin,
Speaker 3: how he runs the country, his type of leadership, I mean,
Speaker 3: is there some good that could come out of this?
Speaker 9: I think President Putin is going to remain resolutely hostile
Speaker 9: to the West going through.
Speaker 4: The United States included.
Speaker 9: Yes, absolutely, capitol W boldface letters. He is going to
Speaker 9: remain hostile to the West and the United States, and
Speaker 9: he will see them as enemy nations, and he will
Speaker 9: take a very skeptical view towards companies that come from
Speaker 9: those countries.
Speaker 4: And so he.
Speaker 9: Certainly doesn't believe eve that allowing Western companies into Russia
Speaker 9: or American companies into Russia is an overwhelming good for
Speaker 9: the Russian economy or certainly for the Russian political system.
Speaker 9: And that's something that companies are going to have to
Speaker 9: manage and overcome and be extremely acutely aware of if
Speaker 9: or when they go back in to mine.
Speaker 4: You get a quick one last question.
Speaker 1: Y, Yeah, Charles, would you recommend that companies just don't
Speaker 1: go back to Russia.
Speaker 9: Companies are going to make up their minds about this
Speaker 9: based on how they view their risk reward decision. And look,
Speaker 9: there are companies out there in for example, the energy sector,
Speaker 9: in natural resources, in metals and minerals and mining that
Speaker 9: have really robust appetites for risk and cast iron stomachs
Speaker 9: for managing it. They will probably go back, and they're
Speaker 9: going to do it carefully. They've done this before. They're
Speaker 9: doing business in places like ire Rock right now. So
Speaker 9: they'll go back to Russia and we'll see how they listen.
Speaker 4: So love this.
Speaker 3: Hope you can get you back real soon because we
Speaker 3: know that this is going to be certainly an ongoing
Speaker 3: and kind of story.
Speaker 4: That will probably go on for a while. Charles, thank
Speaker 4: you so much. Collect with the book.
Speaker 9: It's a pleasure.
Speaker 6: Thank you.
Speaker 3: Pleasure is ours as well. Charles Hecker, journalist, risk management consultant.
Speaker 3: Book just out It is called Zero Sum The Arch
Speaker 3: of International Business in Russia.
Speaker 2: This is the Bloomberg Business Week podcast. Listen live each
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Speaker 4: And Splashdown Crew nine Back on Earth.
Speaker 3: Yes, indeed, everybody, Yes, those two NASA astronauts whose planned
Speaker 3: short trip to space became one that left them in
Speaker 3: orbit for nine months. Yes, you know, they are back
Speaker 3: on planet Earth. But Wilmore and Sonny Williams coming home
Speaker 3: to a the United States, though, that is a bit
Speaker 3: differently are different, I should say, It's got a new president,
Speaker 3: a new Republican controlled Congress, and a world that some
Speaker 3: would say is being turned upside down by new US policies. Now,
Speaker 3: those two NASA astronauts also returned to Earth in a
Speaker 3: SpaceX craft, which is, of course, you know, SpaceX a
Speaker 3: part of the Elon Musk Empire. So too is DOGE,
Speaker 3: the entity that is tasked with an ever widening mission
Speaker 3: to seemingly remake the US government, and that includes cuts
Speaker 3: and spending and in the federal workforce. So we thought
Speaker 3: it was time to do kind of a checkout all
Speaker 3: things Elon and Tesla and SpaceX and Doge and more
Speaker 3: to do that we have back with us Bloomberg Business
Speaker 3: Week columnist Max Chafkin. He is co host of the
Speaker 3: elon Ing podcast, author of The Contrarian Peter Thiel and
Speaker 3: Silicon Valley's Pursuit of Power. Max is here in our
Speaker 3: Bloomberg Interactive Broker studio. Of course Tim out there in
Speaker 3: our San Francisco bureau. Max, good to have you here.
Speaker 3: We were talking going on, well, you know, we find
Speaker 3: we were thinking about Elon today and like he's in
Speaker 3: this kind of funny spot. He finally brings these two
Speaker 3: astronauts that I know NASA doesn't want us to use
Speaker 3: the word stranded, but we're stranded up in space.
Speaker 4: They were safe, but SpaceX brings him home.
Speaker 3: At the same time, you've got a judge, a federal
Speaker 3: judge ruling that must likely exercise unconstitutional power in the
Speaker 3: Trump administration's efforts to shutter the US agency that manages
Speaker 3: for an AID. I mean, there's so much going on,
Speaker 3: the highs and lows that seem to be Elon. How
Speaker 3: do you because you continually have to kind of put
Speaker 3: it all together, makes sense.
Speaker 4: How do you put it all together?
Speaker 8: Well, I think, of course, this SpaceX mission is a
Speaker 8: demonstration of all that that company has achieved. They are
Speaker 8: the main way that America gets its astronauts to and
Speaker 8: from and cargo to and from the International Space Station.
Speaker 8: There was this there is this competing effort that the
Speaker 8: Boeing craft that is going slower and Elon Musk, as
Speaker 8: you said, stepping in now. I think the problem here
Speaker 8: is Musk think in his mind and when you look
Speaker 8: at like some of the things he said about what
Speaker 8: he wants out of the Trump administration, he just sort
Speaker 8: of expects Trump to essentially give a bunch more contracts
Speaker 8: to SpaceX. I think in these court rulings and in
Speaker 8: some of the pushback, we're seeing political pushback as well
Speaker 8: as pushback from consumers, like some of this these d
Speaker 8: you know, vandalistic acts on Tesla stores and so on.
Speaker 8: We're seeing that that may prove to be more difficult
Speaker 8: than I think maybe the Elon Musk uh, you know,
Speaker 8: super fans would have believed.
Speaker 1: What do you mean by that, Max, How is that
Speaker 1: more difficult?
Speaker 8: Well, I think there's political Well sort of we're a
Speaker 8: couple of things. One is we're starting to see sustained
Speaker 8: political opposition, not just to Donald Trump, right, whose poll
Speaker 8: numbers have have dipped a little bit in most polls
Speaker 8: since he took office, but also, but even more so,
Speaker 8: to Elon Musk. Elon Musk's has gone from being a
Speaker 8: very popular, uh public figure to being an unpopular public figure,
Speaker 8: even even more unpopular than Donald Trump were like a
Speaker 8: typical Republican politician. And so so that is going to
Speaker 8: be a challenge. That's a challenge because you know, Democrats
Speaker 8: and Republicans are consumers, and if people are generally mad
Speaker 8: at Elon Musk, they may not buy Tesla's. We're seeing
Speaker 8: that show up in some of the Tesla's sales data.
Speaker 8: I think it's also a challenge if we're talking about
Speaker 8: some sort of effort to hand SpaceX another contract. Now,
Speaker 8: of course NASA did use SpaceX to bring these astronauts back,
Speaker 8: but as he said, Carol, they didn't really have an option.
Speaker 8: And and what Elon Musk is going to be talking
Speaker 8: about and is talking about to some extent, are are
Speaker 8: contracts where there are other options. So this rural broadband program,
Speaker 8: where Musk and his supporters would very much like the
Speaker 8: emphasis to go away from fiber optic to satellite. That
Speaker 8: is going to have political opposition. We're seeing opposition in
Speaker 8: Italy where Georgia Maloney, who's of course a Musk ally
Speaker 8: there's been talk of giving SpaceX a starlink, the satellite
Speaker 8: division of SpaceX a big contract opposition there, and then
Speaker 8: I think you're even starting to see little hints of
Speaker 8: opposition to know what you might see as a more
Speaker 8: transactional thing in the US, where if Elon Musk were
Speaker 8: to get what he wants, he would get like a
Speaker 8: giant Mars contract. Now, I think that is going to
Speaker 8: be as I said, it's going to be difficult. They're
Speaker 8: going to be senators, congressmen who are who are in
Speaker 8: the States where these other legacy aerospace contractors are, who
Speaker 8: are not going to be happy about that.
Speaker 1: There's also business challenges too, Max, and I'm curious about
Speaker 1: your thoughts on this. We got news this week that
Speaker 1: Shalmi is actually raising its target for a number of
Speaker 1: vehicles that it plans to deliver this year. Byd comes
Speaker 1: out with this five minute charging essentially equivalent of going
Speaker 1: into a gas station filling up your gas tank. Tesla
Speaker 1: doesn't have that technology. In the US, you can't get
Speaker 1: these Chinese autos, but around the world you certainly can.
Speaker 7: It seems like there are some.
Speaker 1: Real business realities that the Tesla empire is running into.
Speaker 8: Yes, I mean we would be talking about these challenges
Speaker 8: even if the politics were working perfectly for Elon Musk
Speaker 8: you talked about China. We've seen Chinese automakers make huge strides.
Speaker 8: And you're right, Tesla is protected to some extent because
Speaker 8: these Chinese companies are not in the US, But Tesla
Speaker 8: gets about forty percent of its sales from China, so
Speaker 8: this is like a direct threat to its business. Also,
Speaker 8: these companies are operating in other regions where Tesla, you know,
Speaker 8: collects a percentage of its sales, so even today this
Speaker 8: is a problem. And then the other thing you're seeing
Speaker 8: is a lot of these Chinese automakers are offering basically
Speaker 8: their own versions of what Tesla calls full self driving.
Speaker 8: This is an advanced driver assistance software suite, and they're
Speaker 8: effectively giving this software away. The Tesla bulls had been
Speaker 8: expecting that they would be able to charge huge sums
Speaker 8: of money for Tesla Full self driving. Right now coast
Speaker 8: about one hundred bucks a month now, and when Musk
Speaker 8: has talked about he said, it's going to get even
Speaker 8: more expensive because if you could, you know, take a
Speaker 8: nap in your car, that would be worth even more
Speaker 8: what we're now. I think there are reasons to be skeptical.
Speaker 8: I would, you know, if you're driving down the highway
Speaker 8: right now, wouldn't take any sleeping pills and trust the Tesla.
Speaker 8: But that said, even if that technology were to pan out,
Speaker 8: even if it were to do exactly what Elon Musk
Speaker 8: says it's going to do, there are potentially other companies
Speaker 8: doing the same thing for less money, and that's a challenge.
Speaker 3: I feel like the million, billion, trillion dollar question though, Max,
Speaker 3: is is there information that Elon Musk is getting working
Speaker 3: within the government that is going to give him this
Speaker 3: incredible advantage or access to data? I think about you know,
Speaker 3: the AI you know startup that he's involved in, and
Speaker 3: like all this stuff, is there stuff or do we
Speaker 3: not even know that he is getting access that even
Speaker 3: if he leaves tomorrow, that he has an advantage in
Speaker 3: some way, I mean.
Speaker 8: He has I think that in theory, yes, you know,
Speaker 8: AI systems rely on huge sums of data. If Elon
Speaker 8: Musk were able to like funnel a bunch of if
Speaker 8: data were to leak from the federal government into Grock,
Speaker 8: you know, Elon Musk's large language model that in theory
Speaker 8: helped Grock. But I think there are a number of reasons,
Speaker 8: not that I don't know that that's the most likely
Speaker 8: scenario or the most concerning scenario. There would be ethical issues,
Speaker 8: legal issues, uh, issues of personal privacy, and also I
Speaker 8: just think that the political advantages he has by being
Speaker 8: close to Trump probably vastly outweigh whatever. You know, you know,
Speaker 8: incremental data. There are a lot of data sets, a
Speaker 8: lot of financial data sets out there. I do think
Speaker 8: some of these agencies that are being you know, as
Speaker 8: you know the Trump administration and supporter see it reformed,
Speaker 8: as its critics would say, gutted, were agencies that were
Speaker 8: investigating Elon Musk. We're holding Elon Musk companies backs, you know,
Speaker 8: x Elon Musk's you know, the new name for Twitter
Speaker 8: has been trying to launch these payment services, effectively mobile
Speaker 8: banking through you know, the company that you use to
Speaker 8: send memes and and and the CFPB has been one
Speaker 8: of the there like CFPB, you know, is it has
Speaker 8: been you know, it's it's in the courts now, but
Speaker 8: the Trump administration is essentially attempting to shut it down. NITSA,
Speaker 8: the Highway regulators, they have been investigating Tesla. There are
Speaker 8: ways in which must could sort of clear a path
Speaker 8: in terms of from a regulatory perspective. But again, all
Speaker 8: these things are going to create political consequences downstream, political consequences,
Speaker 8: and that those it's going to be primarily Democrats, that's
Speaker 8: who we're seeing protesting in front of Tesla stores, but
Speaker 8: I would not be surprised if you also see some
Speaker 8: Republicans with concerns about this stuff as well.
Speaker 1: Well, it seems like now Max, the courts are really,
Speaker 1: as Carol mentioned, not rained in, but they've certainly said
Speaker 1: that some of what Elon Musk has done is not allowed,
Speaker 1: especially with regard to us AI D. You know, there
Speaker 1: are questions whether or not these employees can actually go
Speaker 1: back to work and if they're going to be reinstated
Speaker 1: full time. We don't know the answer to that yet,
Speaker 1: But do are the courts that raining him in?
Speaker 8: Yes, the courts are reigning in Doge and or at
Speaker 8: least maybe creating a situation where the what Musk is
Speaker 8: doing is not going to have a huge long term
Speaker 8: effect or even that it may end up costing more money,
Speaker 8: because of course, if you have to if you lay
Speaker 8: a bunch of people off, you spend a bunch of people,
Speaker 8: spend a bunch of money laying people off, and then
Speaker 8: you have to spend a bunch of money bringing them
Speaker 8: back online. That ends up costing more money. So there
Speaker 8: is a situation, there's a way in which some of
Speaker 8: the some of this stuff that's working its way through
Speaker 8: the courts ends up sort of blunting the impact of DOGE.
Speaker 8: I mean, it's important to remember Musk is not the
Speaker 8: only actor within the Trump administration who's or within the
Speaker 8: Republican Party who is trying to rein in parts of
Speaker 8: the federal government. And so so Trump is trying to
Speaker 8: do this as well. Congress will certainly, I think, at
Speaker 8: least attempt to put some of this into law. So
Speaker 8: there will be you know, the Musk will have some support.
Speaker 8: It's not just going to be Musk versus the courts.
Speaker 3: Should we assume that as long as Elon's deep pockets
Speaker 3: are around to support the Republicans and Trump's doings.
Speaker 4: That he's going to stick around.
Speaker 3: I think there's a lot of discussion about, you know,
Speaker 3: when does the president get tired of Elon?
Speaker 8: Right, Yes, that's the conventional wisdom is at some point
Speaker 8: Trump will get tired of seeing Elon Musk's you know face,
Speaker 8: you know, on TV or newspapers, hearing people talk about
Speaker 8: it when when they should be talking about all the
Speaker 8: great things he's done, get frustrated, and he'll get sort
Speaker 8: of iced out. I think that is not very likely,
Speaker 8: and it's for the exact reason you just said, Carol.
Speaker 8: Musk is a major donor to Republican campaigns. He will
Speaker 8: be a major force by his own account anyway, in
Speaker 8: the midterm elections. And really he is is a very
Speaker 8: important ally for President Trump because if Trump is trying
Speaker 8: to do something and there's opposition from Congress, he has
Speaker 8: this very very very very wealthy friend, Elon Musk, who
Speaker 8: can fund a primary challenge. The other thing is we
Speaker 8: saw this infomercial you know at the House where Trump
Speaker 8: you know, talked about all the wonderful things about Tesla
Speaker 8: and in fact bought a Tesla you know, on the
Speaker 8: south lawn of the White House, you know, potentially very
Speaker 8: helpful to Tesla. You know, that seemed to be the goal.
Speaker 8: Around the same time, New York Times reported that Musk
Speaker 8: had promised to put one hundred million dollars into Trump's
Speaker 8: own packs. So Musk is still donating money on top
Speaker 8: of the roughly three hundred million he put into the
Speaker 8: twenty twenty four cycle. He said he's going to put
Speaker 8: more into his own packs. He in fact is funding
Speaker 8: this Wisconsin State Supreme Court race. Right there are going
Speaker 8: to be more races, and he's giving Trump money. I mean,
Speaker 8: he is a very, very important la. I think the
Speaker 8: real question is does Musk get tired of this? Does
Speaker 8: Musk start to wonder do I really want to have
Speaker 8: a day to day role? And how much is that
Speaker 8: day to day role hurting my companies? Because you look
Speaker 8: at a stock price, investors are not super.
Speaker 3: Happy, all right, Always a lot going on and so
Speaker 3: appreciate it keeps us busy.
Speaker 4: I'm always confused.
Speaker 3: How many more headlines is it Trump versus Zylla? Like
Speaker 3: we get in any Max Chafkin, thank you so much.
Speaker 3: Calmness with Bloomberg Business be co host of the Elon Inc. Podcast,
Speaker 3: which you can find wherever you get your podcast. Also
Speaker 3: on the Bloomberg and at Bloomberg dot com and Max
Speaker 3: also the author of the contrarian Peter Teel and Silicon
Speaker 3: Valley's Pursuit of Power. Max.
Speaker 2: Thank you you're listening to the Bloomberg Business Week podcast.
Speaker 2: Catch us live weekday afternoons from two to five pm Eastern.
Speaker 2: Listen on Applecarplay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 3: Well, Carnival reported earnings, and the stock at one point
Speaker 3: sold off more than six percent on the news. This
Speaker 3: after our key quarterly earnings forecast trailed estimates, adding to
Speaker 3: worries that a travel slowdown has spread to even the
Speaker 3: most robust corner of the market. However, Carnival did boost
Speaker 3: full year profit expectations, beating Wall Streets view, suggesting any
Speaker 3: slow down may prove transitory. Do you want to point
Speaker 3: out too? The stock is down about fifteen percent so
Speaker 3: far here in twenty twenty five.
Speaker 4: Let's get some context and more detail around the company's
Speaker 4: quarterly update. Great to have back with us. Josh Weinstein.
Speaker 3: He's president, CEO, and Chief Climate Officer of Carnival Corporation,
Speaker 3: and he joins us from Carnival's headquarters in Miami.
Speaker 4: Josh great to be talking with you.
Speaker 8: How are you very well?
Speaker 6: Thank you?
Speaker 8: How are you doing doing okay?
Speaker 3: Trying to keep up with everything that's coming at us
Speaker 3: on a daily basis, And I kind of want to
Speaker 3: start there, because there is a lot coming at anyone
Speaker 3: who's running a big company like yours today, whether it's
Speaker 3: out of Washington, whether it's out of.
Speaker 4: How the consumer is feeling.
Speaker 3: How would you describe the crew's business and how it
Speaker 3: compares from your last quarterly update?
Speaker 4: What has changed at all?
Speaker 3: Because I know you have been very optimistic, and it
Speaker 3: seems like you're still optimistic about the business based on
Speaker 3: the releases.
Speaker 10: Yeah, yeah, absolutely. So the thing that's changed from December
Speaker 10: to today is, well, we just completed our first quarter
Speaker 10: and instead of yields being up four point seven percent,
Speaker 10: which is what we guided to, they were up seven
Speaker 10: point three percent. And so clearly things went very very
Speaker 10: well in the first order. Consumers love to cruise, and
Speaker 10: we've got eight brands that are purposely tied to particular demographics,
Speaker 10: particular national markets, and it serves us very very well.
Speaker 10: And so what we see is enough strength in that
Speaker 10: first quarter that we can raise our yields for the
Speaker 10: year for our full year guidance, and that's basically saying
Speaker 10: that we're content to keep four percent plus.
Speaker 6: Yields for the remaining three.
Speaker 10: Quarters of the year, despite the fact that there is
Speaker 10: you know, geopolitical and macroeconomic uncertainty which certainly wasn't on
Speaker 10: the radar when we came up with our guidance to
Speaker 10: begin with in December.
Speaker 3: And yet investors seem to be at least initially disappointed
Speaker 3: over your second quarter even a forecast. Your forecast was
Speaker 3: one point three to two billion in the second quarter
Speaker 3: and as it expected one point three to five billion,
Speaker 3: should they be disappointed?
Speaker 10: You know what, I guess I'll answer by saying our
Speaker 10: December guidance was basically saying we're going to be about
Speaker 10: was it a buck seventy give or take for the
Speaker 10: year on EPs we just came out with guidance.
Speaker 6: Said buck eighty three.
Speaker 10: We all performed on revenue yields on board. On board
Speaker 10: trends are really really healthy with our with our consumers.
Speaker 10: So I would argue that we should be higher than
Speaker 10: where we were in December since our results are better
Speaker 10: than where we were in December, But that's really up
Speaker 10: to up to the Street. Our job is to deliver
Speaker 10: and hopefully over deliver, which is what we did in
Speaker 10: the first quarter.
Speaker 1: So Josh, let's talk a little bit more about that
Speaker 1: consumer because in the press release you noted that Carnival's
Speaker 1: not completely immune from heightened macroeconomic and geopolitical volatility, and
Speaker 1: you're still taking up earnings expectations for the year. You
Speaker 1: remain on track to have another stellar year across the
Speaker 1: entire brand of cruises. Why are we hearing then from
Speaker 1: airlines that consumers are pulling back? Why are we not
Speaker 1: seeing that in your business?
Speaker 10: Well, I think there's a couple of things to differentiate.
Speaker 10: First of all, airlines aren't just for or holidays. Airlines
Speaker 10: are business travel. It is holidays, it's conferences, it's government travel.
Speaker 10: We are really holidays, we are vacations. So we're in
Speaker 10: a different bucket than where than where airlines are. You know,
Speaker 10: we came in to twenty twenty five the best book
Speaker 10: position we've ever been in at higher prices. We came
Speaker 10: out at the end of the first quarter still being
Speaker 10: in line with record occupancy percentage and price is still
Speaker 10: nicely higher. We're eighty percent book for the year, and
Speaker 10: so we have relatively limited inventory to sell when it
Speaker 10: comes to twenty twenty five. At the same time, our
Speaker 10: guests and our brands aren't just focused on in year.
Speaker 10: You know, we just came out of the first quart
Speaker 10: of the wave period, which is considered the traditional big
Speaker 10: push for selling, and we set a record for the
Speaker 10: most volume we've ever done during.
Speaker 6: Wave for future years out.
Speaker 10: So people aren't just thinking about the short term, they're
Speaker 10: thinking about the long term, which is exactly what we're
Speaker 10: doing as a company.
Speaker 1: But are you noticed any change in the tone of
Speaker 1: the bookings, the pace of the bookings, or perhaps even
Speaker 1: people canceling because of their own uncertainty. I understand there's
Speaker 1: this difference between discretionary spend and business spend, but after all,
Speaker 1: discretionary is discretionary, and that's often the first thing to
Speaker 1: go if people are feeling uncertain.
Speaker 10: Yeah, you know, we haven't seen any noticeable change in
Speaker 10: trends on cancelations, certainly, as we mentioned on the call,
Speaker 10: you know, there were ups and downs over the first quarter.
Speaker 10: There's ups and downs all the time, but we got
Speaker 10: through our period exactly at pretty much the highest point
Speaker 10: that you can get at at least for us in
Speaker 10: our history, and we feel good about the position that
Speaker 10: puts us in. Like I said, onboard spending, you know,
Speaker 10: it's up about ten percent year over year in the
Speaker 10: first quarter. That's an acceleration of year over year performance
Speaker 10: versus where we were in the fourth quarter, and at
Speaker 10: least into the first couple of weeks of March. With
Speaker 10: cruises that have ended, we really haven't seen a slowdown
Speaker 10: in that consumer behavior that onboard spending. And so you know,
Speaker 10: at the end of the day, people in good time
Speaker 10: and bad times, they take holiday, they.
Speaker 6: Take a break. They need a break.
Speaker 10: You could argue in bad times they need that break
Speaker 10: even more than they do in the good times.
Speaker 6: And that's what cruising is. It's a break.
Speaker 10: It's a way to relax, to get away from things,
Speaker 10: enjoy time with friends and family.
Speaker 6: That's what people pay for now.
Speaker 10: And when you line up cruise versus other vacation alternatives,
Speaker 10: frustrating as it is for me as a CEO of
Speaker 10: a cruise company, we're a great value. And the fact
Speaker 10: is if people are getting concerned, if there's uncertainty, if
Speaker 10: there's noise in the background, people are searching for more
Speaker 10: value for their money. And that's exactly what we do,
Speaker 10: so it plays very well into our strength.
Speaker 3: So just for the record, I could go on a
Speaker 3: cruise for about a month right now because I need
Speaker 3: a break.
Speaker 6: But we'd love to have you. We'd love to have you.
Speaker 3: Having said that, what about in terms of pricing, are
Speaker 3: you guys able to maintain pricing? Nothing changing in that
Speaker 3: regard either for the first quarter or even for the
Speaker 3: outlook for the second quarter.
Speaker 10: Yeah, you know, so, like I said, the first quarter,
Speaker 10: you know, our yields year over year, we're up over
Speaker 10: seven percent and over a two year period, we're talking
Speaker 10: about twenty four percent higher yields.
Speaker 6: Yeah, for the first quarter.
Speaker 10: When we look at the rest of the year Ques
Speaker 10: two through four, we're projecting a little bit over four
Speaker 10: percent yield improvement year over year for that nine month
Speaker 10: period remainder of the year. So you know, look, it's
Speaker 10: hard going right, It's not like anything is easy, and
Speaker 10: we got to work hard.
Speaker 6: Our brands work hard to make that become a reality.
Speaker 10: And they do it through good revenue management techniques, through
Speaker 10: the great advertising that they're doing, and then ultimately delivering
Speaker 10: onboard experiences that people want to pay for. And then
Speaker 10: they get off of our ships and they tell their
Speaker 10: friends and family how amazing it is, and we get more.
Speaker 3: Hey, one of the things we wanted to ask you
Speaker 3: is something that in late February, the US Commerce Secretary
Speaker 3: of Howard Lutnik, he made some comments about how US
Speaker 3: based cruise companies Josh should be paying taxes even on
Speaker 3: ships that are registered abroad. We saw your stock, along
Speaker 3: with everybody in the major crew space sell off on
Speaker 3: his words. Even though analysts indicated the worry may be overblown.
Speaker 4: They said, we've heard this before over the years. Is
Speaker 4: it overblown? Are you talking with a Trump administration about this?
Speaker 3: And if there was a US registration change, what would
Speaker 3: that mean for you guys.
Speaker 10: So clearly we're operating in the confines of US laws
Speaker 10: as well we should shipping. International shipping is based on
Speaker 10: very specific tax regimes that are set up in the
Speaker 10: US and all over the world, and effectively it's based
Speaker 10: on reciprocity. So we feel like we're in a good place.
Speaker 10: We're doing what we should be doing. Having said that,
Speaker 10: anything out of the administration, including Secretary Lutnik, we certainly
Speaker 10: take seriously and we're working hard to understand what the
Speaker 10: concerns are and how we can address them if any
Speaker 10: there's really nothing, there's nothing to report on from my
Speaker 10: perspective as far as you know what that.
Speaker 6: Means or where things could be going.
Speaker 10: But we'll stay on our guard and do whatever we
Speaker 10: need to do to make sure we're staying on the
Speaker 10: right side of of policy.
Speaker 1: Josh, why don't you register in the US? Is it
Speaker 1: regulatory reasons? Is it tax reasons? Is it labor reasons?
Speaker 1: Is it all of the above? Why don't you register
Speaker 1: in the US.
Speaker 6: Yeah, it's just not that simple.
Speaker 10: You don't just take a ship and all of a
Speaker 10: sudden ship you can't just switch to US registry.
Speaker 6: It's it's just not that simple.
Speaker 10: And and really it's a it's a it's a people
Speaker 10: to go to school for classes for this right about
Speaker 10: international shipping and what what it means, how it works.
Speaker 11: Uh.
Speaker 6: And it's been in place for much longer than I've
Speaker 6: been alive.
Speaker 8: Uh.
Speaker 10: And and so you know, we could we can do
Speaker 10: a separate session on that, but but suffice it to say,
Speaker 10: it's a regime that is that is well founded and
Speaker 10: and it's where we are right now.
Speaker 3: All right, So it's not something that we should think about.
Speaker 3: I mean, it can be done, though.
Speaker 6: Right, what what is the it.
Speaker 4: In terms of registering in the United States?
Speaker 10: It's honestly not that simple based on how you law works.
Speaker 6: It's just not that simple.
Speaker 4: Okay.
Speaker 3: Would that be a conversation though, then to have with
Speaker 3: the Trump administration Josh and say, listen, guys, if it
Speaker 3: was simpler, I mean, they're all about making things simpler,
Speaker 3: right efficient?
Speaker 4: Is there a conversation to be had?
Speaker 6: Oh, We're happy to talk to the administration truly.
Speaker 4: Okay, Okay, Hey, listen.
Speaker 3: One of the things we wanted to talk to you
Speaker 3: about in a big way, and I've seen it firsthand,
Speaker 3: is the island destinations that you guys have and it
Speaker 3: seems to be a continued, you know, move for you
Speaker 3: guys and expansion. You open Celebration Key this July. This
Speaker 3: is in Grand Bahama Island. How do these island destinations?
Speaker 3: We've talked to you about it, but it continues to
Speaker 3: be something we find really interesting. How does it fit
Speaker 3: into the North American crew strategy and how important it
Speaker 3: is I always think about to the top line of
Speaker 3: the profitability picture.
Speaker 10: Yeah, So for us, what we're doing with Celebration Key,
Speaker 10: which opens in July, it's a bit of a first
Speaker 10: for us. Even though we have a wonderful footprint around
Speaker 10: the Caribbean, we've really, we've we've built and created these
Speaker 10: destinations really as a service to our brands and something
Speaker 10: that's supportive of and really supplemental to what brands are
Speaker 10: doing and leading with with a cruise experience that makes
Speaker 10: them so loved. What we're doing with Celebration Key, which
Speaker 10: doesn't even exist yet and yet it's captivated the audience
Speaker 10: and captivated the imagination of Carnival cruisers and others, is
Speaker 10: we want to also lead with destination as a driver
Speaker 10: of consideration, of a driver for people saying I need
Speaker 10: to go on Carnival Cruise Line because I'll get to
Speaker 10: go to Celebration Key or because I'll get to go
Speaker 10: to relax Away Half Moon Key, because it's the only
Speaker 10: way to get there.
Speaker 6: And so we believe that.
Speaker 10: There's a tremendous amount of untapped value there in revenue generation,
Speaker 10: as well as the fact that these destinations are built
Speaker 10: close to the United States, hence we consume less fuel
Speaker 10: in order to get there, which saves money is obviously
Speaker 10: good for the planet.
Speaker 3: Hey listen, twenty seconds left here what is your most
Speaker 3: popular destination?
Speaker 4: Where do most people want to go and what it?
Speaker 10: Wow, we carry thirteen million people last year. They want
Speaker 10: they want to go to a lot of places. I'd say,
Speaker 10: if you're going to ask me, what's my top that
Speaker 10: I've ever been to, I got to say, you got
Speaker 10: to go on a cruise to Alaska, and you gotta
Speaker 10: go with Princess Hall in America or Carnival because they
Speaker 10: do it in an amazing way and QNR for those
Speaker 10: who are looking for the for the luxury end.
Speaker 6: But if you want to see the.
Speaker 10: Great State, the only way to do it is with
Speaker 10: a great brand that can take you on both c
Speaker 10: and with our land experiences. Because we've got hotels and
Speaker 10: motor coaches and Glasstone railcars and you name it, we
Speaker 10: got it up in Alaska.
Speaker 3: I just want to go somewherehere I get a cocktail
Speaker 3: with like a little umbrella in it.
Speaker 10: I just I'm that we also serve cocktails with to
Speaker 10: go to Alaska.
Speaker 4: Josh, thank you so much. I always appreciate the time
Speaker 4: you give us.
Speaker 6: Be well.
Speaker 3: Be well, Josh Weinstein, President, CEO and Chief Climate Office
Speaker 3: of Carnival Corporation, joining us from Carnival's headquarters in Miami.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoon from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 3: Harvard University this past week announced that students whose families
Speaker 3: earned two hundred thousand dollars or less annually will be
Speaker 3: able to attend the college tuition free, while at the
Speaker 3: same time, some of America's most prestigious colleges are issuing
Speaker 3: bonds at a record pace.
Speaker 1: As public opinion on higher education continues to sour and
Speaker 1: the Trump administration threatens huge spending cuts, American universities are
Speaker 1: facing some serious challenges.
Speaker 3: Bloomberg BusinessWeek editor Bradstone sat down with some university presidents
Speaker 3: to hear how they are navigating a potential funding crisis
Speaker 3: while also selling the value of a degree. He talked
Speaker 3: with Tim and Bloomberg's Emily Graffeo.
Speaker 8: We actually interviewed five.
Speaker 11: We brought together five university presidents at the end of February,
Speaker 11: and that was one week before the federal government, before
Speaker 11: the Trump administration threatened to withdraw four hundred million dollars
Speaker 11: in funding from Columbia University.
Speaker 8: So yes, in some ways the timing was.
Speaker 11: Great because there was these these clouds were on the horizon.
Speaker 11: In other ways, this publishing this package on higher education
Speaker 11: is like trying to jump onto a moving horse, and
Speaker 11: things are moving very quickly.
Speaker 1: Yeah, I mean, the news is happening very quick. Decision
Speaker 1: makers you spoke to at these top universities, they were
Speaker 1: public and private schools, they were large schools and small schools.
Speaker 1: They were liberal arts schools and state schools. It really
Speaker 1: runs the gamut.
Speaker 7: Who were these people?
Speaker 8: And they're the brave few.
Speaker 11: We put out the core far in line, and look,
Speaker 11: I mean, this is a tough time for university presidents,
Speaker 11: maybe the hardest job in America right now, not only
Speaker 11: the pre Trump factors of rising tuition costs, dropping mail enrollment,
Speaker 11: the ambiguity around test scores, protests in twenty three and
Speaker 11: twenty four, and then the kind of post Trump factors,
Speaker 11: the specter of an endowment tax NIH cutting funding, and
Speaker 11: now the threats around the EI and anti Semitism. But
Speaker 11: really it's the administration viewing universities as a source of
Speaker 11: elitism and something of the enemy. So yes, we got
Speaker 11: the presidents of New York University, Marist University, Grinnell College,
Speaker 11: the University of Colorado A Boulder, and the University of
Speaker 11: Rhode Island all together in a room in New York
Speaker 11: City to hash out these issues.
Speaker 12: Rad I found it interesting that this word crisis came
Speaker 12: up multiple times in your article. I mean, how much
Speaker 12: of the job of being a college president is now
Speaker 12: a job of crisis management?
Speaker 8: I don't think historically it was one.
Speaker 11: I mean I think this was, you know, this used
Speaker 11: to be the statesman role. I don't know if we
Speaker 11: could say it was ever particularly easy. But the thing
Speaker 11: that has really happened, I think, probably starting with October seventh,
Speaker 11: twenty twenty three, and the attack on Israel from Hamas,
Speaker 11: there have been a set of constituencies at universities that
Speaker 11: are all whose interests are all diametrically kind of opposed.
Speaker 11: You have students, particularly at some of these elite universities,
Speaker 11: particularly of my alma mater, Columbia, inheriting the mantle of
Speaker 11: student activism and protest, and then you have alumni that
Speaker 11: are very much against us on campus activism, that feel
Speaker 11: like the college community.
Speaker 8: Experience has been co opted.
Speaker 11: You've got the federal government now with its agenda saying
Speaker 11: that the campus has moved too far left. These are
Speaker 11: places of liberal thought and anti conservative thought. You know,
Speaker 11: take those arguments or leave them. But if you're a
Speaker 11: university president right now, you're kind of buffeted by all
Speaker 11: these different wins. And I think it was on display
Speaker 11: when the presidents of Harvard and Yale and eventually Columbia
Speaker 11: were asked to testify in twenty twenty four and basically
Speaker 11: ended up all losing their jobs because there's really not
Speaker 11: an easy way out of all this conflict.
Speaker 1: Yeah, it's been pretty remarkable to watch, and I guess
Speaker 1: when you explain it that way, it makes sense to
Speaker 1: why university presidents were a little reticent to get in
Speaker 1: a room and speak with the editor of Bloomberg BusinessWeek.
Speaker 1: It goes beyond though protests, Brad, because there are questions
Speaker 1: you raise and hear about shifting demographics, things that have
Speaker 1: been playing out over the long term, but also recently
Speaker 1: of funding losses for these schools and the importance of
Speaker 1: these universities providing employees and leaders for the next generation
Speaker 1: of American businesses. And there seems to be this tension
Speaker 1: right now that's playing out with maybe a lack of
Speaker 1: understanding of the importance of that federal funding going into
Speaker 1: training those people who make the next innovations.
Speaker 11: And that's where I think the roundtable really really was
Speaker 11: an excellent exercise. I mean, they came together and they
Speaker 11: really made the argument that universities matter, that these are
Speaker 11: drivers of scientific and medical research, that this is a
Speaker 11: magnet bringing the best and brightest from around the world
Speaker 11: to the United States in the case for knowledge for research,
Speaker 11: and saying this strengthens the United.
Speaker 8: States and why would you ever kneecap it? And you
Speaker 8: know so yes.
Speaker 11: There was also the private industry argument, Justin Schwartz, the
Speaker 11: chancellor of University of Colorado a Boulder, saying that business
Speaker 11: needs a human capital supply chain and that is the
Speaker 11: role of universities. And then if you undermine that, talent
Speaker 11: gets cut and you handicap the US in its direct
Speaker 11: competition with China and other countries. They also made the
Speaker 11: point that, you know, the US is already kind of
Speaker 11: lagging a little bit. We used to lead in patents
Speaker 11: in the number of research papers published, We're not number
Speaker 11: one anymore. So they're making the argument this should be
Speaker 11: a time of reinvestment and not curtailing for political reasons.
Speaker 11: The financial foundation of these universities.
Speaker 12: You asked a very short and pointed question, is college
Speaker 12: too expensive? What did the presidents have to say to
Speaker 12: that question.
Speaker 11: I think they all agreed, you know, that there are
Speaker 11: investments that they have had to make to keep up
Speaker 11: with rising expenses and the quality of life for students.
Speaker 11: They also make the point, maybe somewhat cheapishly, that this
Speaker 11: is still a great ROI that college is one of
Speaker 11: the best investments a young person can make. But they
Speaker 11: talked about alternative things are trying to do, like no
Speaker 11: loan financing for students and making sure their students aren't
Speaker 11: graduating with a load of debt that weighs them down
Speaker 11: in their careers. But I think it's sort of an
Speaker 11: unsolved problem, and it's you know, interesting to me that
Speaker 11: these are the best minds in the country and the
Speaker 11: challenge of rising tuition is one that has yet to
Speaker 11: be solved.
Speaker 1: Linda Mills, when asked about the increasing number of people
Speaker 1: questioning the value of college, she referred to the college
Speaker 1: as a whole in universities as a whole, as an
Speaker 1: industry and I'm wondering how you view that word is
Speaker 1: higher education and industry.
Speaker 11: So, yes, Linna Mills is the president NYU, it is
Speaker 11: an industry, right. I mean, these are massive, massive institutions
Speaker 11: with incredible endowments and investment arms, and particularly in New
Speaker 11: York City, great real estate holdings, and they are corporations
Speaker 11: under themselves. They operate with a very unusual set of circumstances.
Speaker 11: They're generally nonprofit institutions, and as we've been really finding out,
Speaker 11: they get an enormous amount of their income from the
Speaker 11: federal government, and I think in some cases it's almost
Speaker 11: like one one third. And so they're also they serve
Speaker 11: a high profile public purpose, and they're quite politically vulnerable
Speaker 11: in this in this environment, and so I think what
Speaker 11: we're seeing now is a lot of these universities really
Speaker 11: try to get on the right side of the Trump administration,
Speaker 11: as many companies are doing. Perhaps that's the best evidence
Speaker 11: that it is in industry. Just like many companies are
Speaker 11: scrubbing their websites and they're all their public communication of
Speaker 11: the phrase DEI, you know a lot of universities are
Speaker 11: doing that as well.
Speaker 12: Brad, what were the presidents hopeful about they are obviously
Speaker 12: working with, you know, the future generations of America. What
Speaker 12: jumped out to you in their responses, Yeah.
Speaker 11: We did, We did ask that. But look, I'm not
Speaker 11: going to pull any punches here. I think that you know,
Speaker 11: this is a tough time for them. You know, there
Speaker 11: were things that we talked to them about, like declining
Speaker 11: mail enrollment that they you know, it's sixty forty on
Speaker 11: some college campuses, that they just don't have an answer
Speaker 11: to right now. They say, you know, these problems are
Speaker 11: starting in early education, that men lack role models right now,
Speaker 11: you know, the political situation is becoming increasingly difficult for them.
Speaker 11: You know, we did ask them what they were hopeful
Speaker 11: about the fact that you know, they still have you know,
Speaker 11: dynamic campuses and tens of thousands of students engaged in
Speaker 11: you know, cancer research and finding the next drug and
Speaker 11: understanding you know, maternal health and all those topics that
Speaker 11: so important that that keeps him going. But you know,
Speaker 11: by and large, their attention has had to be diverted
Speaker 11: to some of these much more difficult issues.
Speaker 1: Bradstone he's the editor of Bloomberg a BusinessWeek. Check out
Speaker 1: everything in at Bloomberg Business Week at Bloomberg dot com,
Speaker 1: slash BusinessWeek, and of course, on the Bloomberg terminal. You're
Speaker 1: listening to and watching Bloomberg BusinessWeek.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Applecarplay and the
Speaker 2: Android Auto with the Bloomberg Business app. You can also
Speaker 2: listen live on Amazon Alexa from our flagship New York station,
Speaker 2: Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: As we just heard, university presidents are finding college degrees
Speaker 3: a bit of a tough sell through. On top of
Speaker 3: that skyrocketing tuition costs and artificial intelligence in the classroom,
Speaker 3: and college will likely not be the same in the
Speaker 3: years to come.
Speaker 1: Kathleen Alaski has thoughts on the future of college. She's
Speaker 1: founder of the nonprofit Education Design Lab. She's also the
Speaker 1: author of the book Who Needs College Anymore? Imagining a
Speaker 1: future where degrees won't matter.
Speaker 13: The problem even for eighteen year olds right now, is
Speaker 13: that they really see still a kind of college or
Speaker 13: bust narrative going on in the country. We have we
Speaker 13: say college is too expensive, it's maybe not worth it,
Speaker 13: and so we have a lot of people, you know,
Speaker 13: enrollment is down in the degree form and it's to
Speaker 13: drop pretty quite a lot since twenty ten. It's starting
Speaker 13: to it's starting to shift up a little bit. But
Speaker 13: what's interesting is the way that enrollment is improving right
Speaker 13: now is because of short term certificates and other forms
Speaker 13: of enrollment that colleges are starting to offer. You know,
Speaker 13: they're competing with like the boot camps and apprenticeships that
Speaker 13: are that are having trouble getting to scale, and colleges
Speaker 13: themselves are starting to offer alternatives. And so wrote I
Speaker 13: wrote the book really to raise the argument that we
Speaker 13: need a better fund and remove the stigmas from alternatives
Speaker 13: to college, because only thirty eight percent of Americans have
Speaker 13: a four year degree, and yet we tell all of
Speaker 13: our kids, you know, that they have to either go
Speaker 13: into debt or figure out how to get that four
Speaker 13: year degree. That's starting to change. It hasn't changed yet,
Speaker 13: So I still, you know, I think you have to
Speaker 13: give a lot of caveats when you're giving advice today.
Speaker 14: So can you speak a bit more to those alternatives
Speaker 14: in terms of we think about a traditional four year
Speaker 14: university or maybe a two year community college. Can you
Speaker 14: just dive a bit deeper into what those alternatives could
Speaker 14: look like and what that could mean like for could
Speaker 14: mean for the future.
Speaker 13: Absolutely, and I describe in the book that probably the
Speaker 13: two most successful alternatives right now, I mean, if you're
Speaker 13: looking to go for a professional pathway career, would be
Speaker 13: apprenticeships and industry certifications. And the problem with these two
Speaker 13: wonderful alternatives to a four year degree is that they
Speaker 13: are not evenly available, Like you can find them in
Speaker 13: some cities and states and some professions, but not not widely.
Speaker 13: But they are being looked to as the models that
Speaker 13: we need to create, that we need to create more of,
Speaker 13: and either colleges can develop and offer them or you know,
Speaker 13: independent organizations. A lot of entrepreneurs have been you know,
Speaker 13: looking in these spaces too. But we have to we
Speaker 13: have to get off this idea that that that the
Speaker 13: government should only fund the degree programs for people who
Speaker 13: are going, you know, at least half time into a
Speaker 13: degree program. That's how the funding follows.
Speaker 7: You.
Speaker 1: Now, how disruptive do you think AI is going to be?
Speaker 13: That's a great question. There's already reports coming out that
Speaker 13: AI is starting to impinge on and shrink the number
Speaker 13: of entry level white collar jobs right because expertise that
Speaker 13: you can you know, use chat, GBT or other other
Speaker 13: options to to try to get answers to questions that
Speaker 13: may not be within your realm of expertise, those that
Speaker 13: it tends to why about an entry level white collar job?
Speaker 13: You know that doesn't that doesn't require a physical interaction,
Speaker 13: And so we're already seeing some of that new reports
Speaker 13: are coming out. But on the flip side, for a
Speaker 13: college student or a learner or a job app again
Speaker 13: there's also they're also able to use AI to to
Speaker 13: find out about more jobs, to help them write their
Speaker 13: resume to potentially uh learn learn the bits of expertise
Speaker 13: that they need to even you know, sound good in
Speaker 13: their job interview. So you know, it's a there's a
Speaker 13: there's a positive and negative side to AI from the
Speaker 13: standpoint of of of the future of work. But you know,
Speaker 13: probably the nature of jobs and the speed at which
Speaker 13: they'll change will continue to accelerate.
Speaker 14: I really want to just keep an eye on There's
Speaker 14: been this conversation about AI picking up plagiarism. What is
Speaker 14: your standpoint as a teacher as to how to actually
Speaker 14: figure out if students are plagiarizing using AI? But there's
Speaker 14: also been some situations where AI fossely to texts plagiarism
Speaker 14: from students.
Speaker 8: Falsely to text.
Speaker 13: I have heard a little bit, a little bit about
Speaker 13: that there are apps that that you know, usually most
Speaker 13: colleges and schools are you are you know where you
Speaker 13: can you know, run you run the kids papers through these, uh,
Speaker 13: these applications. Yes, I mean I think that's happening maybe
Speaker 13: a little bit.
Speaker 4: But I mean you can.
Speaker 13: Usually tell without the without the apps, uh, whether whether
Speaker 13: the students came up with the argument right not necessarily
Speaker 13: supporting facts. I mean I don't I don't hear my
Speaker 13: colleagues having much trouble in that regard. But but yeah,
Speaker 13: I mean you can you can go back to the
Speaker 13: student and use prompts prompts to figure that out.
Speaker 14: We have a lot of students who are sitting here,
Speaker 14: you know, everyone's looking at chat GPT. But it's also
Speaker 14: a really good tool for teachers and people in the
Speaker 14: education field to utilize AI to better uh you know, educate.
Speaker 14: What has been your take on AI and just what
Speaker 14: the implications can be from uh teaching perspective.
Speaker 13: Yeah, I teach at the college level at George Mason
Speaker 13: University here in Virginia, and I, you know, I've tried
Speaker 13: to It's interesting, we haven't been given a lot of
Speaker 13: you know, policies about how we're supposed to, uh, you know,
Speaker 13: whether whether we're supposed to allow students to use it
Speaker 13: to write their papers, for example, And so a lot
Speaker 13: of us are just kind of you know, we're just
Speaker 13: kind of forging into our own territory.
Speaker 6: And deciding how to use it.
Speaker 13: And I've I have been treating it as my friend
Speaker 13: right to say, to have students use it to basically
Speaker 13: like pressure test the ideas that we might come up
Speaker 13: with the in the classroom. I teach design thinking, and
Speaker 13: so I have the students use it to pressure test
Speaker 13: the ideas that we do live in the classroom. And
Speaker 13: then they're supposed to, you know, go and and see, well,
Speaker 13: you know what, what is what does the rest of
Speaker 13: the landscape say about this? About this point that that's
Speaker 13: one example, But it does mean that we can't really
Speaker 13: assign papers in the way that we used to. You know,
Speaker 13: we have to figure out how to projectize things that
Speaker 13: are that that create unique responses from the students or
Speaker 13: require unique responses from the students. And that's been that's
Speaker 13: been really difficult, but kind of exhilarating.
Speaker 6: Really Yeah.
Speaker 1: I mean I just I might be old or a
Speaker 1: lud Eite or I don't know.
Speaker 6: I don't know.
Speaker 1: I just I worry about what this does to critical thinking.
Speaker 1: I mean I remember when I was in college and
Speaker 1: I would be working on a paper and I would
Speaker 1: have some sort of breakthrough with the thesis, and it
Speaker 1: would have required me to sort of go through all
Speaker 1: the notes and really come to a conclusion and distill
Speaker 1: an argument, and I don't And I learned so much
Speaker 1: by doing that, and it required me exercising a part
Speaker 1: of my brain that I don't know would need to
Speaker 1: be exercised if I had chat GPT, right.
Speaker 13: I mean, it's the same. I mean, I'm old enough
Speaker 13: to remember when the calculator came out and we were
Speaker 13: worried about, you know that doing the math problem and
Speaker 13: if you're not doing yourself, like do you learn? Do
Speaker 13: you learn enough? And I think the you know, the
Speaker 13: argument now is okay the calculator, Like, yes, we don't
Speaker 13: have to know long division anymore, but you still, you know,
Speaker 13: so you have to use math in different you know,
Speaker 13: you have to learn it in different ways or learn
Speaker 13: the applied version of it. So what I try and
Speaker 13: do in my classroom is force those aha moments that
Speaker 13: you had writing your paper. I forced them in a
Speaker 13: live setting, in a you know where we're where, we're
Speaker 13: creatively problem solving together, and that that does help. I mean,
Speaker 13: it doesn't work for a history paper, but it works
Speaker 13: if you take the history lesson and try to apply
Speaker 13: it to a real world situation that you have your
Speaker 13: students work on together. Because they want, you know this today,
Speaker 13: they want they want school or college to be an
Speaker 13: engaging experience, not a you know, not if it's something
Speaker 13: they can read and learn or even write a paper about.
Speaker 13: They they want to be able to get that at
Speaker 13: the you know, drop of a hat. So learning has
Speaker 13: to become a whole lot more of an engagement practice
Speaker 13: experience for students to even care or stay engaged. That's
Speaker 13: what I'm seeing my classroom and many of my colleagues too.
Speaker 1: Kathleen, we got to get you back, We got to
Speaker 1: go everywhere with you at the end of our program,
Speaker 1: and we do really appreciate it. Kathleen Alaski, she's the
Speaker 1: founder of the Education Design Lab.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Apple car Play
Speaker 2: and the Android Auto with the Bloomberg Business App. You
Speaker 2: can also listen live on Amazon Alexa from our flagship
Speaker 2: New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 9: Well.
Speaker 3: Our next guest is a self talkt cook who you
Speaker 3: may know from Instagram Shred Happens, where he has more
Speaker 3: than four million followers. It's there that he's documented his
Speaker 3: journey from being out of shape and unhealthy to losing
Speaker 3: over one hundred pounds, which he attributes to cooking and
Speaker 3: eating healthy foods. Now he's got a food company and
Speaker 3: a cookbook. Arashtashemi is a creator and the co founder
Speaker 3: of Kazan Food Company, which makes look hard about high
Speaker 3: protein rice and pasta Pasta pasta. It's like I'm from
Speaker 3: New Jersey or something, which I am.
Speaker 4: Pasta.
Speaker 3: Is also the author of the new cookbooks she read Happened,
Speaker 3: So Easy, So Goodie.
Speaker 4: Joins us here in the Bloomberg Interactive Brokers Studio, A
Speaker 4: beautiful book.
Speaker 3: Did I say your food company correctly?
Speaker 7: Kaisen?
Speaker 4: Yeah, Kaisen? I had a feeling not how are you.
Speaker 7: I'm doing great. How are you?
Speaker 4: I'm good good.
Speaker 3: Everybody always has a journey, I feel like to get
Speaker 3: to something.
Speaker 4: This is your first cookbook, your first book. Tell us
Speaker 4: a little bit about the journey and how you did
Speaker 4: get to this.
Speaker 15: Yeah, well, I mean the story starts from a young age.
Speaker 15: My parents immigranted to this country. And you know, I
Speaker 15: was always focused on success, in chasing a better life
Speaker 15: and making them proud. And so the majority of my
Speaker 15: life I was really professionally driven, and I was doing really,
Speaker 15: really great in the corporate world. But in like twenty seventeen,
Speaker 15: I just kind of looked at my wife Madeline. I'd
Speaker 15: always struggled with my weight, and at one point I
Speaker 15: was over three hundred and thirty pounds. I was pre diabetic,
Speaker 15: I had high cholesterol triglystrides.
Speaker 3: And so you're the stay in radio. You're in like,
Speaker 3: you don't look like somebody who was three hundred pounds.
Speaker 7: Oh, thank you, but anyway.
Speaker 8: Go ahead, go ahead.
Speaker 15: Yeah, And so I knew I needed to do something
Speaker 15: to kind of change things up, otherwise this was going
Speaker 15: to get too late. And so I looked at my
Speaker 15: wife Madeline at the time, and we decided that, you know,
Speaker 15: it was going to leave my corporate career. It wasn't
Speaker 15: an easy transition, but we made certain sacrifices. We adjusted
Speaker 15: our lifestyle, and I set out to kind of change
Speaker 15: the direction of my life and refocus my relationship with food.
Speaker 1: How were you able to do it a rash, as
Speaker 1: Carol mentioned, everybody has different stories, but you did it
Speaker 1: through cooking yourself, through eating differently. We talk a lot
Speaker 1: about GLP ones on the program and the business opportunity
Speaker 1: there in the way people are using them, But how
Speaker 1: specifically were you able to do this?
Speaker 6: Yeah?
Speaker 15: Look, I think similar to many Americans, I was eating
Speaker 15: the wrong foods and the wrong quantities, and over time
Speaker 15: that just kind of, you know, I couldn't outrun that.
Speaker 15: I always had a gym membership, I had personal trainers,
Speaker 15: but you know, you can very quickly, you know, eat
Speaker 15: the five hundred calories that you're going to burn with
Speaker 15: an hour at the gym, and so for me, I
Speaker 15: really needed to shape focus on making foods that I
Speaker 15: was actually excited about eating. You know, I tried every
Speaker 15: single diet out there, from Weight Watchers, Jenny Craig, the
Speaker 15: Zone Atkins, you name it.
Speaker 7: I've tried them all, and you know, I.
Speaker 15: Think they're They're great for people, depending on whatever their
Speaker 15: circumstances are. For me, they felt a little bit more restrictive.
Speaker 15: I wasn't really excited about what.
Speaker 4: I don't want to count points.
Speaker 8: Hey, that could be useful.
Speaker 7: I'm not judging.
Speaker 4: I'm not judging.
Speaker 15: But and I did for a while, and actually it
Speaker 15: has worked for some people, right absolutely. And fun fact,
Speaker 15: I was on Weight Watchers for a number of years
Speaker 15: and I always remember, you know that there was a
Speaker 15: four pm weekly weigh ins and so starting Tuesday, I
Speaker 15: was always trying to figure out how do I game
Speaker 15: the system so I can actually you know, show a
Speaker 15: loss for the week. And so but look, I think
Speaker 15: for me it was really you know, all those diets.
Speaker 15: While they didn't work in many respects, they did work
Speaker 15: in the sense that they helped me understand what I needed.
Speaker 15: And for me was I love food and I wanted
Speaker 15: it to be an adventure. I wanted to be mentally
Speaker 15: stimulated as I was eating. I really enjoyed the process
Speaker 15: of food, and so you know, I had to figure
Speaker 15: out how to do that for myself.
Speaker 7: Well, yeah, I think.
Speaker 3: What's interesting too, is your book is so much like
Speaker 3: Mediterranean food. Yeah, And was that because that's what kind
Speaker 3: of got you to a healthier place, a better way,
Speaker 3: just a better kind of relationship and existence with food.
Speaker 5: Yeah.
Speaker 15: I think the big thing for me was, you know,
Speaker 15: I'm Persian and so we use a lot of spices
Speaker 15: in our in our home cooking and our and our culture,
Speaker 15: and so those played a huge part in adding flavor
Speaker 15: to the different types of meals that I was making
Speaker 15: for myself. You know, we use a lot of fresh
Speaker 15: herbs that had just a burst of flavor and every bite,
Speaker 15: you know, whether that's fresh mint, deal parsleygon and so
Speaker 15: you know, I started kind of experimenting with those things.
Speaker 15: And the great thing is they also don't have a
Speaker 15: lot of calories, and so you know, I was adding
Speaker 15: a ton of those to my meals. I was using
Speaker 15: a lot of citrus, and I was able to get
Speaker 15: a lot of flavor out of those very simple changes,
Speaker 15: and that got me excited about eating. It was more
Speaker 15: calorically friendly, and you know kind of started from there.
Speaker 1: Did you have to be really precise about measuring out ingredients,
Speaker 1: counting calories and really or could you be more could
Speaker 1: you be less formal?
Speaker 7: About it. Could you be more relaxed about it?
Speaker 15: I am much more relaxed now, But at the beginning, yeah,
Speaker 15: I absolutely had to take inventory of what I was eating.
Speaker 15: And one of the first things that I did was
Speaker 15: actually I started just documenting what I was eating, just
Speaker 15: on a sheet of paper at the time, because I
Speaker 15: didn't really realize how many times throughout the day I
Speaker 15: was actually reaching for something. And for me, those little nibbles,
Speaker 15: those little bites, licks, the snacking really caught up to me,
Speaker 15: and that was really an opportunity in of itself for me.
Speaker 15: I was cutting out about five hundred calories a day
Speaker 15: just by kind of monitoring that or if I knew
Speaker 15: that I had to actually, you know, write something down,
Speaker 15: it gave me a second to kind of just pause
Speaker 15: and question, do I really want to be.
Speaker 7: Eating this right now? Is this the right choice?
Speaker 15: And that helped me be much more mindful because before
Speaker 15: that I was just eating without really any sort of
Speaker 15: you know, concern for the ramifications or the consequences.
Speaker 1: How does physical activity play a part in your journey?
Speaker 7: For me, it's played a role.
Speaker 15: I'd say the bigger thing for me has been changing
Speaker 15: the dynamic with food and eating foods that keep me satiated,
Speaker 15: keep me full, deliver a ton of protein with the
Speaker 15: right levels of fiber to kind of keep me going
Speaker 15: throughout the day. One of the biggest, bigger things that
Speaker 15: I set out to do at the beginning of my
Speaker 15: journey was, you know, I didn't really know how to
Speaker 15: swim or run really a mile. But you know, I said, hey,
Speaker 15: I'm going to do a half iron Man and train
Speaker 15: for a triathlon, and so you know, that was an
Speaker 15: interesting process, and so I actually ran in two half marathons.
Speaker 15: I completed one I ran and two half marathons, completed
Speaker 15: two half triathlons or half ironman's, and then did a
Speaker 15: full marathon as well. But for me, the bigger opportunity
Speaker 15: was really around food because you know, as they say,
Speaker 15: you know, you really can't outrun a bad diet.
Speaker 7: And that's where I really struggled previously.
Speaker 3: How did you think about I mean, I think there
Speaker 3: are a ton of cookbooks out there, as you know,
Speaker 3: but how do you like the balance of creating something
Speaker 3: that's really tasty and appetizing and kind of attractive looking,
Speaker 3: and then but not making it so complicated that people
Speaker 3: like forget this you know, let me just order in.
Speaker 4: So, like, how did you think about it when you
Speaker 4: put this book together?
Speaker 15: Yeah, I think for me the biggest thing again was I,
Speaker 15: you know, through all the diets that I had done,
Speaker 15: you know, they were either boring and so I knew
Speaker 15: I didn't want to do the typical you know, brown rice,
Speaker 15: boiled chicken and broccoli, because I always that led to
Speaker 15: me kind of falling off because I was always chasing excitement. Yeah,
Speaker 15: and so for me, the biggest thing was finding ways
Speaker 15: to incorporate flavor in simple ways to doing you know,
Speaker 15: to what I'm eating in order to be able to
Speaker 15: kind of be excited about it, be mentally stimulated and
Speaker 15: look forward to eating. And so you know, I achieved
Speaker 15: that through the spices, through the herbs. I also have
Speaker 15: a full chapter of sauces, because that's really what helps
Speaker 15: elevate really any dish. And so as long as you've
Speaker 15: got different flavors and textures going on in colors in
Speaker 15: your meal, because we also eat with our eyes and
Speaker 15: so for me, the biggest thing was taking time to
Speaker 15: really plate things instead of just standing up putting something
Speaker 15: together and eating at the kitchen counter. For me, actually
Speaker 15: taking the time to plate it up in a beautiful
Speaker 15: way really made a difference.
Speaker 6: Rush.
Speaker 3: I just have to tell you if Tim was here
Speaker 3: in studio, this is when he usually breaks out of sandwich, right,
Speaker 3: or it would have been what it would have been,
Speaker 3: probably the break beforehand.
Speaker 1: Tim, Yeah, I got don't worry, I got my banana
Speaker 1: and my carrots.
Speaker 7: All right.
Speaker 4: It's usually though a full on sandwich.
Speaker 1: But anyway, I would Hey, I do want to ask you.
Speaker 1: I'm getting an urgent email from a colleague, Emily Grafeo.
Speaker 1: She anchored with me yesterday when Carol was out. I'm
Speaker 1: so jealous. I misshred happens by one day. OMG. I
Speaker 1: like his content a lot. I've made his recipes. Oh
Speaker 1: that's amazing. Raises it raises the question though about this.
Speaker 1: It's not a side hustle for you anymore. This is
Speaker 1: this is what you're doing now. Yeah, it was a
Speaker 1: more send you an accounting So you said you scaled
Speaker 1: back on your lifestyle back in twenty seventeen as a
Speaker 1: result of your health. You made some adjustments to your lifestyle.
Speaker 1: Have you been able to offset and more the salary
Speaker 1: you earned in the corporate world by doing what you're
Speaker 1: doing now.
Speaker 15: Yeah, I have, and I think, look in the corporate world,
Speaker 15: obviously it's a salary. You don't have overhead, you don't
Speaker 15: have expenses, you're not investing for the future. So you know,
Speaker 15: it took me a while. When I initially set out,
Speaker 15: I was begging companies to send me, you know, a
Speaker 15: free jar of peanut butter and if any of them wooded.
Speaker 15: And you know, it took me almost two three years
Speaker 15: to monetize on the content that it was making. You know,
Speaker 15: and I was in corporate finance before, at a pretty
Speaker 15: large company GE at the time, and so you know,
Speaker 15: when I left, it was aizable gap in our income.
Speaker 15: We put our house on the market, I started renting
Speaker 15: my car out on Touro and app. I started selling
Speaker 15: and flipping things on eBay. So I was trying to
Speaker 15: figure out how to make it work for me. At
Speaker 15: the beginning, it wasn't really about making money. It was
Speaker 15: really about changing my life.
Speaker 7: And a few.
Speaker 15: Years in I was able to completely offset the income
Speaker 15: that I was making. But with my corporate job. Now
Speaker 15: I did create a high protein, low car pasta and
Speaker 15: rice company, Kaisen, and so to develop that, you know,
Speaker 15: that required a lot of capital and so at some
Speaker 15: point I did have to go back to the corporate
Speaker 15: world to kind of fund the R and D of that.
Speaker 15: But yeah, it was tough. But now we've I've been
Speaker 15: able to completely offset it.
Speaker 8: Just got about thirty seconds.
Speaker 3: So what's your focus to build that, Kaisen or what's
Speaker 3: your next step?
Speaker 6: Yeah?
Speaker 15: I think, you know, continue to share content. You know,
Speaker 15: nothing makes me prouder than seeing families around the world
Speaker 15: enjoying my meals and make my recipes. And with Kaisen,
Speaker 15: we're able to deliver people high protein, low car pasta.
Speaker 7: So we're going to continue on that trend.
Speaker 15: And hopefully allow people to eat a healthier version of
Speaker 15: their favorite meal without the calories, without the carbs, with
Speaker 15: much more protein.
Speaker 4: I'm starving. If you're cooking for Timm and me, what
Speaker 4: would you cook tonight?
Speaker 7: Chris chicken and rice bull? No question?
Speaker 4: All right, deal, deal, deal, We get dessert too.
Speaker 15: I'll see you whipped Greek whet, whipped Greek yogurt and berries.
Speaker 7: Its delicious.
Speaker 4: Oh my god, I'm starving. Good luck, stay in touch,
Speaker 4: love to hear how things are going.
Speaker 3: Versa shemy creator and co founder of Cousin Food Company,
Speaker 3: and of course his new book, Shred Happens, So Easy,
Speaker 3: So Good, one hundred plus protein pac Mediterranean favorites.
Speaker 4: With a low carved twist.
Speaker 6: Good luckies.
Speaker 4: All right, you're listening and watching Bloomberg BusinessWeek.
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