Bloomberg Businessweek Weekend - April 24th, 2021 (Podcast)

edition of Bloomberg Business Week. It's week fifty eight. Working from home still for many We both were in the office this week, and I gotta say, Tim, New York City, our home base, it felt like it was opening up this week. It did. I think part of it has to do with just how many people are getting vaccinated, and then also the weather it does start to feel like spring, right, Yeah, exactly made a big, big difference, And investors are increasingly focusing on an economic recovery well,

keeping a watchful eye on the COVID global case count. Also, corporate earnings were in the midst of them, yep. And with that as our backdrop, this week, we are going to hear from one CEO about the recent quarter and outlook. Tobotlee CEEO Brian Nichols stopping by. Plus the best electric Vehicles you're gonna be surprised about one carmaker that didn't make the list. Hint it's Tesla. Given it away, all right. We're also going to take you inside the magazine a

look at the future of energy. Who has it right? The head of Exxon or, speaking of Tesla, Elon Musk. All of that to come. We begin there with this week's cover story, President bind him marking his one hundred day in office this coming week. Well, the president taking office a mid a health pandemic, a sagging economy, a reckoning with centuries of racial injustice, and the existential threat of climate change. He's made progress and taking action, and

yet still faces some tough roads ahead. For all the details, we spoke with Bloomberg News White House reporter Nancy Cook. I think most people would say that Biden has done a pretty good job. You know, he has a majority of Americans support him and pulling Democrats, even people who wish that Senator Elizabeth Warren or Bernie Sanders had won the nomination. They're really happy with him. Um, and he's

even pulling well with Republicans. Feel like, you know, he's done a pretty good job handling COVID and so what he walked into chiefly were you know, a pandemic and low vaccination rates and schools closed and the economy really in a slump. And the first hundred days has really

been about trying to solve those two crises. And they've gotten a lot of that by ramping up the vaccine distribution, by getting more people vaccinated, and then passing this sweeping one point nine trillion dollar COVID relief bill which gives money for things like testing and school reopening and so so much of the first one days have just been dealing with crisis and now becomes the hard part where he's really trying to do something to cinvent his legacy.

What is the playbook for the next one days? What does it need to be? What do people say it needs to be? Well, I think the playbook that they're trying to do is now that they have I mean, they still have to deal with the pandemic, and there's still a lot of fallouts from the economic downturn, so

no one in the White House is discounting that. But what they're trying to do now is sort of reshape the economy and propose some big ideas that Democrats have long wanted to do, and so that includes everything from infrastructure to more money for childcare and elder care. And that's the sweeping set of packages. President Biden is going to unveil this the third one that he's talking about um on Wednesday, and and those the most recent two packages,

the infrastructure and this upcoming families one. You know, that's more than three trillion dollars in spending that they are proposing. They want to offset it with tax increases, but again it's a huge amount of money, and their goal is to really not just bring the economy back to where it was, but also sort of try to make some tweaks to it and reshape it. So obviously it's really ambitious. And the Biden administration and Democrats, well Biden administration, you know,

is the Biden Biden's president. Democrats control the House and Senate, but barely uh and there are some modern modern Democrats who don't support these plans as they are right now, how does Biden sell this and and to what extent does it involve selling the plan to the American people in a way that President Obama didn't do when it

came to Obamacare. That's a great question. So the way that they sold the COVID Relief Bill, which is the way they're going to try to sell these two bills, was really to try to build public support outside of Washington. So what they have tried to do is to find unity or bipartisanship, not really as Democratic lawmakers and Republican lawmakers on Capitol Hill a green but more to try to promote policies and and put forward ideas that appeals

to the majority of Americans. And so with the infrastructure package, for instance, you know, sevent of Republican voters are in favor of rebuilding roads and bridges, more job training, increasing broad brand access, and those are the things that the Biden White House is going to keep focusing on. These plans that appeal to Democratic and Republican voters, not necessarily just lawmakers on Capitol Hill. That's really the political strategy. Is it a smart strategy? Does it work? Will it work?

It works With the COVID Relief bill, it worked very well. And I think that they feel like based on what they saw during the Obama administration and how much Obama was tied up with trying to go with after Republicans and wu Republicans who didn't really want to work with him. I think that the Biden administration learned some lessons and felt like they had to go another way and it was a gamble, but it works for the COVID relief bill, and I think they're going to try the same thing

with these next two packages. So enter two and that's when you know, the mid terms are and I'm wondering how the ambitious goals of the Biden administration has right now I have to get done before and how that

can change the landscape in Washington. Well, really, they feel like they, you know, the mid term elections, the party in power typically loses, and so I think the White House is very focused on the mid terms and they feel like, you know, they have a window of time to try to get these major things done and they're going to go for it. And I think so much of the argument heading into the mid terms for the

Biden administration is going to be an economic one. Are you better off financially than you were two years ago? You know, are you making more money? Um? Is the stock market in a good place where the kids schools reopening? Are there more people in the middle class? And so it's really it's interesting because it's a it's an area where Republicans have so dominated. Typically Republican politicians get higher

polling for their handling of the economy. But what we've seen in recent polling is Biden is getting very high marks for its handling the economy, and so so much of that political argument in two is going to be around that. That was Bloomberg News White House correspondent Nancy Cook. First, one hundred down. Now it's the next one. I can't tell if it's if it felt like a hundred days or if it went by really slowly or really fast. But time is just really weird right now, Carol, for

so many people. I totally agree. All right, coming up, how doctors are working on building public trust and acceptance of vaccines. This is really important. It is especially as we get to the second half of American adults getting the vaccine. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. Earlier this week,

President Biden had some good news regarding the pandemic. He announced that America reached his goal of two hundred million shots on day ninety two of his presidency, so ahead of schedule. I'm proud of the American people, the volunteers who showed up two staff vaccination sites in their neighborhoods, drove senior citizens who get their shots. FEMA, the military, the National Guards, state and local health departments, and providers

running sites safely and efficiently ahead of schedule. But Carol now comes the hard part that second half of Americans, more than of the U S population, has received at least one dose of the vaccine. And for more on the vaccine rollout in America, we turned to Dr Chris By, professor of Public Health and Human Rights at the Johns Hopkins Bloomberg School of Public It is supported by Michael R. Bloomberg,

founder of Bloomberg LP and Bloomberg Philanthropies. The good news here really is that we have two very safe and effective vaccines, the two Messenger RNA vaccines UM, the MODERNA and the Visor UH. Those, of course, are both two dose vaccines. They have not had some of the same problems that have emerged with the with the Jansen, the Johnson and Johnson vaccine where the astra Zeneca vaccine. This is the challenge that has been rare, but nevertheless, UM,

significant complication and blood clots. We don't see those with either the Visor or the Maderna. So our vaccine rollout is going really very well. UM. We're over you know now three million adults being immunized every day. UM, and we're expecting emergency used authorization for the Visor vaccine to go down to twelve to seventeen year olds as well.

That may happen fairly soon. Can we get out of the pandemic though, If people under the age of twelve cannot be vaccinated, well, about of the American population is children under aged eighteen TI, so it is very important that we learn as quickly as we can uh, if these vaccines are as safe and effective in children as they are in adults. UM. That process is mostly being led right now by the companies themselves. The trials are underway. UM. We have the data, as I said, from the twelve

to seventeen year old. UH. The we really need to accelerate the research effort for the five to twelve year old and of course they're so important for them for you know, getting back to seeing their friends and getting back to school and and getting back to acted life, which so we really need for our kids, right getting back to you know, a so called normal life. The thing is, I mean, bottom line, vaccines are the way out of the pandemic done right, no question, no question.

So if we don't get to her immunity, what does our world look like? Well right now we have a couple of very specific challenges. People have described this as a race between the vaccine rollout and the emergence of these new variants, the mutants that you were mentioning, and that really is a challenge. Some of these new variants are more infectious than the viruses we first encountered, um, some of them have more resistance to the broadly neutralizing

anybody's that we've been using. And at least one for sure, the variant that was first identified in South Africa, does appear to be a challenge for at least the astros Ennica vaccine. The good news is that they both the Messenger RNA vaccines, Biserne Maderna, and as far as we can tell, that Inson and Johnson vaccines do appear to provide good, robust protection against the variants that are circulating now.

But what we're learning with this virus is that mutations keep happening UH, and we really have to get ahead of those mutations. The big challenge right now is that the vaccine rollout is sold in much of the rest of the world. That's because the rest of the world doesn't have the same access to the messenger RNA's they were relying on astras Enka and Johnson and Johnson UH. And we are seeing huge surges of infection in places like India and Brazil UH, much of South America in fact.

And if we can't do better with getting control of those epidemics and getting those populations immunized UH, the current generation of vaccines may be undermined by these new variants. That's a real threat and we're working very hard to prevent that scenario. Dr Bira, a listener are listening in on our conversation, has a question for you, and basically is asking, how can we, as parents and good conscience ask our kids to get shots when we have no

data to support the side effects on kids. Furthermore, this disease is not a real risk for anyone under thirty. Deaths under the age of eighteen represent point zero zero zero seven. Basically, they're saying that kids are going to be okay, So why are we going to maybe potentially put them at risk by giving them a shot. How can we do this in good conscience? Well, the first thing could say is, of course, that we wouldn't ask anybody to have their children be immunized until we have

the data. And so those trials are underway UH And as I said earlier, the twelve to seventeen year old data from the Fiser UH trial is going to the f d a M and being reviewed. So so I think the caller is absolutely right that we need to see those data, and parents are going to want to see that before they imman oz. I think it's a common misconception to compare COVID nineteen UH disease and deaths

in children with those and adults. The real question is comparing COVID nineteen disease and deaths and children with other vaccine preventable diseases and children. And when you do that, there close to three children who died already of COVID in the United States. UH. Looks actually like quite a severe UH number of cases and a vaccine preventable infection.

We hope so I think that's more compelling. UM. It's also the case that UM, while children have had much lower rates of illness and death from COVID, they've had a very high burden of non health issues. The social isolation is hard for kids, to developmental issues, the educational

issues that parents are so concerned about. And we think, particularly for the twelve to seventeen year olds, that vaccination is really going to help them be able to engage again in sports and after school activities and being with their friends. So those those all get weighted in. The non medical complications of COVID for kids have been severe. Talking about vaccines for kids, this is a big issue, and I think we need to really understand everything we

can from the medical community because parents have lots of questions. Yeah, look at something that my family thinks a lot about because my wife and I, you know, are going to be fully vaccinated in the next few days, but are toddler won't be, So what does that mean for what we can and can't do well? We always love checking in with the folks over at Hopkins. One note that JOHNS. Hopkins Bloomberg School of Public Health, supported by Michael R. Bloomberg,

founder of Bloomberg LP and Bloomberg Philanthropy. We'll still ahead on Bloomberg Business Week. We're going to hear from the CEO of Bowerie Farming. It's a vertical farming company that's backed by Google, blacked by Google and a few other

interesting investors. This is Bloomberg broadcasting from the financial capital of the world, Bloomberg Eleve in Rio in New York to Washington, d C, bog to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chadal one nine team and around the globe of Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. So a big focus on the climate. This past week President Biden hosting a virtual

Global Climate Summit with world leaders. Also of course Earth Day and in keeping with that, and we decided to catch up with Irving Fain, the founder and CEO of Bowery Farming, and you know Tim if you haven't heard of it, Barry build Smart Indoor Farms and counts g V formerly Google Ventures. Also Henry Kravis of KKR and leaders and food including David Barber, a blue hill, Tom Colleckio and Jose Undress as investors, and here's some of

our conversation with Irving Fain of battery farming. What we do with Bowery is build smart indoor farms that we locate very close to the cities and the communities that we serve. And so inside of the farms, we actually stack our crops from the floor are all the way up to the ceiling, and we grow under lights to mimic the spectrum of the sun. And it's totally controlled and contained environment, and so we can grow fresh, protected produce three hundred sixty five days of the year, independent

of weather and independent of seasonality. But what makes it even more interesting is we go completely pesticide free, completely agro chemical free food, so no herbicides, no fungicides, no one's exicides, no pesticides. And whereas when you do that in the field, your quality suffers and your yield suffers. In our case where over a hundred times pluts more productive than a square foot of farmland, and we use a very small fraction of the water compared to traditional agriculture.

What about lighting, lighting meaning meaning we use lighting or what well, what what are the problems that you know, I've done, you know, some some research and some work and reporting on some of these indoor door farming is that the lighting that's needed is a lot of electricity. And so when you're looking for sustainable ways, right, you've

got to get the complete picture. And I'm just curious what's involved in making sure because you say you take the seasonality out of it, and I'm looking at a lot of video are was earlier on your website and there's a lot of light obviously that's needed for plants. So tell me a little bit about that part of the equation. Got it make? It's a great question, Carrol, and I think it's something we think a lot about from a few different funds. Most importantly, in number one,

we power our farms with renewable energy. And so the farm that I'm actually in right now in Maryland uses low impact hydro power its power will continue to do that as we continue to build farms. So the power that we go source is from renewable sources. The second piece that I think is important to understand is we're as you look at what we're building, is what we're really doing at Bowery isn't just innovating farming, we're actually

reinventing the entire fresh food supply chain. And so we do that because we control the entire supply chain from seed all the way to store. So if you compare what we're doing at Bowery and Agriculture, you actually just can't just compare it to a farm. You have to compare it to the entire supply chain from the harvesting to the transportation of processing and packing and then storage across the supply chain and all the trucking miles that

are required to do that. And so we're eliminating thousands of food miles, a number of different steps where food is actually wasted. And because we're centralizing everything in one place, we can power it all, as they said, with renewable energy, whereas to try to put renewable resources against the entire existing agricultural supply chain today will be really difficult. So

are you a profitable company? So we we don't. We don't disclose our financial publicly because we are a private company, but we do think a lot about sustainability, not just from an environmental perspective, but also from an economic perspective as well, because to create the greatest impact. You need to create a sustainable, long term viable business, and that's a really important focus about okay, and are you creating

a long term viable business? Listen, you know we're Bloomberg, and I know you're not going to open up your books and show me everything. I assume you wouldn't be doing it, and you wouldn't have investors like Henry Kravis or you know, GV involved if they didn't see UM a profitable path at some point. So I'm just curious kind of where you guys fit in and and what's the math on this, what's the business metrics on this, and and where does it go? So you're you're absolutely

right that we are incredibly fortunate. You know, to date we raised a hundred and seventy five million from really incredible partners, Google Ventures, General Catalyst, TOMASI, folks like Henry and you mentioned a lot of great people who supported us to date. And as you said, you know, folks like that don't don't support a company that they don't see a path towards becoming a large company and a large business, which requires one to build a sustainable business.

But I think the other side of of what your question was that the interesting economic component of what we're doing is really in that reimagination of the supply chain that serving fame the founder and CEO of Barry Farming. I love all the stuff that's going on when it comes to farming, whether it's on rooftops, whether it's um hydroponic. I mean, we're really trying to figure out better and more productive ways to do it and really a lot more closer to actually to the people who need it. Yeah.

And oftentimes when you think of food, you don't necessarily think of venture capital and tech companies like you know, the venture arm of Google. But you marry those companies with people like Tom click e oh and people involved at Blue Hill, it Stone Barns. That's a big deal. Yeah, exactly, because they aren't listen thinking about this NonStop. You're listening to Bloomberg Business Week. Coming up next another company that's

interested in farming and food production. We're talking about Chippotle Burrito's. We got an update on the business with CEO of Brian Nicol. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio this past week. One of the best known names in the fast casual restaurant space. To be fair to him, they really kind of created the fast

casual space. We're talking about Chipotle Mexican Grill. The company reported a jump in profitability thanks to a rebound in sales and hire menu prices. Digital once again a big, big driver. Digital absolutely took off during the pandemic. Even thinking about my own experience, the first time that I downloaded Chipotle's app and used it to order ahead was in March of last year, at the height of the pandemic.

The company has been featured in the magazine before on the Bloomberg Fifty list in twenty nineteen for the company's turnaround, engineered by its CEO, Brian Nicol. Brian joined us once more to talk about the business and the company's outlook. Look, I think we've got our company and our people focused

on the right things. So I talked about this in the earnings call, which is you know, obviously we're a restaurant company, so we have to be hiring, training the best people, creating the right culture in the restaurants so that we provide a great ulminary experiences that we can at our restaurants, and so we started there and from there we wanted to make sure we had more accessibility and that's really where the digital focus has come in,

as well as our in dining room experience. And as you mentioned, we've made tremendous progress on the digital front.

We actually had record sales for the quarter. We did over eight hundred and seven million dollars just in digital sales, which you know was up in a big way, and uh, you know that's because we're giving more customers more access and with that digital ability, Uh, it's really convenient whether you want to order ahead and pick up, order ahead and grab it from your car, order ahead and have

it delivered. And then now with COVID cases on the decline, vaccines going up, and more places opening up dining rooms, we're seeing people come back into our dining rooms for that great experience as well. How would you characterize capacity right now compared with pre pandemic in the actual restaurants. You know, so in our dining rooms we probably have heard about sixty per cent of our dining room business.

We're optimistic that that's going to continue to climb as more and more places become more and more open and people get back to their normal routines, you know, taking kids to school, going to work, um, whatever your normal day looks like. The thing that's really great news about this is while our dining rooms have recovered, our digital business has not really seen any cannibalization to meaningful levels. So that's why you see the record sales and digital

even while our dining rooms are coming back. That's pretty remarkable. You expect that to continue even as the world continues to reopen. Brian no I do. I think people by nature want to be social, and one of the more social things to do is have lunch together, have dinner together. And then also I don't think this is changing. When people get back to their normal routines, they want access to great, clean food in a customized fashion, in a

convenient way. And you know Chipotle is that right where food with integrity. Uh, it's totally customizable and uh, you know, the speed is pretty amazing. So I think it's going to continue, and I believe people will continue to come back to the dining rooms and they're going to demand more access digitally. You've got to be able to do both what was more important the stimulus jacks that came out from the government or the handcrafted uh case idias.

I'm just curious what had a bigger, bigger impact on the bottom line. Well, you know, it's definitely clear as both played a really good role. And uh so, you know, obviously the stimulus payments are a point in time versus the case D is going to be around for a long time, and so we're optimistic about where we get to with the addition of the case to be and the business and uh you know, I think putting our food into this really portable solution, which is you know,

the case DA, it's just fabulous. So I don't know if you have a chance to try it, but I highly encourage it. I love me some case idia and yours included. But it was a really ten of first quarter sales that just like blows my mind. Yeah, you know, it came out of the gates really strong, and the feedback from customers has been really excellent. You know, they love the experience. They love being able to get their glock or caso or people to guyo with our case adillas,

and the digital experience has been really phenomenal. It's a great start. A lot of new people came into our business.

I think it was the highest level of new users to Chipotle in the month of March, and a lot of that had to do with the fact that we brought the case d L. Hey, Brian, I know digital was so big for you this last quarter and over the last year, but you're also thinking a lot about restaurants and looking too close to double or more than double the footprint in the US and Canada UH in

the coming years. I'm wondering how you're thinking about the restaurant experience on the other side of this, because we do know that there's likely going to be some sort of hybrid work environment where people are going to be working from home. In Chipotle has been huge for people who are working in offices, right this is what they grab and go and they get for lunch. So how

are you thinking about locations differently? In so, how are you thinking about store design differently to imagine some sort of new normal on the other side of the pandemic. Because I'm also thinking there's some real estate deals out there right now because of the pandemic. Yeah, you don't look You're exactly right. We believe there is a lot of opportunity for us to build a lot more tiboldays, right,

we're just shy a three thousand today. You probably saw in our release we opened forty new restaurants in the first quarter. We've guided to doing about two restaurants this year. Uh and ultimately we want to get to you know, five six thousand plus restaurants. UM. So as we think about the design of these restaurants, though, we want to

make sure we've got great accessibility. So if that means you're coming in for a dining room experience, I think it's important to have a great seat with great music, get your food quickly, get exactly what you want, and get on with your heal. And I think that trend is not changing. Um. And then the digital we've added more access by providing this Chapoleon window where you can

order ahead and pick it up from your car. And you know, that's been a phenomenal breakthrough for us where we see our you know, our total business goes up as results of it, but our digital business increases and predominantly increases with the order ahead and pick up business, which is our most profitable transaction. So to answer your question, I think the good news is we're really well positioned

for the hybrid work model, the return to work model. Uh, you you can insert whatever normalcy is the new normal. We're ready to go because we've got access for all of those occasions. And uh, you know, I'm confident that food with integrity, customized at a great value is going to continue to win the day. And where does where does order and delivery come into this? Because I know

that's something that you talked about. In the cost of actually getting that burrito, that food to the consumer, that's expensive. How do you lower that cost? Yeah, so look, we would love to find ways to lower the cost of the delivery channel. That's why we're experimenting and investing in companies like neuro where it's an occupant less autonomous vehicle. Uh. Until then though, you know, obviously we want to get us affici and as we can in that channel. But

those costs obviously make delivery and more premium convenience. And so what we've seen is people understand that and uh we passed those costs on in order to get that premium convenience. You know, there's a price to pay for it. We would love to find ways to lower that cost so that you know, we don't have to charge that premium. Hey, one thing I want to go back to digital if I can, Brian, is you recently launched a digital only restaurant that's up in I think Highland Falls, New York.

How is that doing? And I'm curious if there's plans for for more. Yeah, it's doing really well. Thanks for asking, and yeah, we will be doing more. I would say in the US, it's more of a fill in strategy. Uh. You know, so I think of some of these markets where you've got a lot of Chipotle's already, we want to give people that additional access maybe we need. Frankly, you know you've got to chipole doing three four million dollars um. If we could put in another restaurant, do

it all digital. One will make the experience better at that lunch bole Uh, and then also gives people better digital experience. So I think there's opportunities there. And then there are trade areas like Highland Falls where it just makes sense to have a digital only restaurant, and so where those present opportunities will obviously do that, but the majority of what will continue to build is a you know,

a Chipotle that has all the access points. Right. The thing that's great about Chipole is we have a kitchen that is doing real culinary fresh ingredients. The guys are just cooking up unbelievable chicken steak. And then that kitchen services these two businesses. Right, You've got the digital wording business and you've got the pressumer that comes in moves down the line, and we've got the capacity off that

kitchen to service both of those experiences. So you know, we've got a lot of room to grow still in the digital business, and we've got a lot of groom to grow on that dining business. I love this situation we're in right now, Brian. I know you guys didn't come out with UM I think comp sales forecast. There

are still concerns about COVID and the impact. Tell me about the visibility you feel like that you do have or is it maybe at the end of the year do you feel like you'll start to feel more confident about visibility. Look, I think it's just uh us being aware of what's happening. Right. You see some regions where COVID continues to spike, and uh you're hearing a lot

of good things as it relates to the vaccine. UH. So as I think we just get further into the year, UH, you'll get rid of some of that UM I guess volatility associated with COVID UH. And then that gives you more confidence sharing you know a number. Obviously we plan accordingly UM for a certain response to our initiatives, but you know, when there's external factors like COVID going on, UH, I think the prudent thing to say is, hey, look, I think we've got the right plans in place to

navigate it. UM. But it really has sense to commit to a number that's about LACEDEO. Brian nicol And to be fair, like you mentioned before we got into the interview, he was on the Bloomberg fifty list back in twenty nineteen. I mean he really did come into a company. We know, all of the E. Coli outbreaks out at Chipotle really set it back for several years. They had a huge

turnover in terms of the management. I've spent a lot of time initially with Steve Els, who was one of the co founders of the company, h and all of that management, and they really do fast casual and change the restaurant space in a big way, but they had big problems and Brian Nickel came in and really turned that company around. It's been incredible what he's been able to do, and shareholders have certainly rewarded him and the

company for that. Well, it's gonna wrap up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Jim Stanov and I'm Carol mass are coming up in our next hour. We're gonna look at the future of energy kind of from a management perspective. I would say it's a great business school case study. Basically, we're comparing the CEO of x On and the CEO of Tesla. We're talking about Elon Musk, who will have it right when it comes to the future of energy.

Plus we're talking Auto Trader and electric cars because Auto Trader has a list of the best evs of and Carol one big name failed to make the list. I gave it away at the beginning. You did give it away, and I just gave it away to kind of because I just talked about Tesla. Folks they're not on the list.

Will explain why this is Bloomberg. This is Bloomberg Business week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happened, Sloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hi,

I'm Carol Masser and I'm Tim Stovik. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including a look inside Auto Trader's list of the best electric cars. Plus Consuelo Vanderbilt Costan tells us all about Soho News. It's her new professional networking website for the global creating community. And if her name sounds familiar, it should. It's one of the iconic families of the United States.

We'll talk a little bit about that as well. First up this hour, this week's remarks in the magazine takes a look at the future of energy from a management perspective. This is a great business school case study, It really is. It looks at Tessa CEO Elon Musk and also his counterpart it X on Mobile Darren Woods. Safe to say that the name of X and CEO probably doesn't readily come to mind he keeps a low profile, unlike Mr

Elon Musk. We spoke with Bloomberg Business, we getitor Joe Webber and Bloomberg opinion columnist at Liam Denning, who watches the commodity space. The way I think about it is, you know, if you go back a few years, Exon was the most valuable company in the world. It could kind of do no wrong um and investors had this kind of rock solid belief in it. And here we are, you know, just a few short years later in early

um x On is. You know, it's been through some troubling times, it's run pretty much the same as it always has been, but it's lost that kind of belief from investors, where Tesla, you know, despite everything it does that you think would shake belief, just has this kind

of fanatical devotion on the part of investors. So I just always an interesting way of looking at these two companies opposite ends of the energy business, really interesting, and I thought, man, this would be great to like just sit down with a bunch of people like we are doing now and just talk about it like you do. Wonder because both liam are optimistic long term and how can that be possible? Can it be possible that they both have, at least in the somewhat longer term, you know,

optimistic futures or is that impossible. I think it's impossible. You know, there is one viewpoint that says, well, look, the energy transition will take time, and these both of these companies can certainly make money for some period. But I think when you look at their core belief systems, they're just very different. I mean, you know, Bloomberg any

f our own in house forecasters. You know, they're pretty bullish on electric vehicles, but even they see it as taking a little while, um, maybe into the middle of the thirties to see like serious market penetration. Elon must sees it happening much quicker than that. You look at Excel mogul Um, they're more in the it will take time, camp we can develop new businesses, that sort of thing. I just think the the the the sheer aggressiveness of

each view makes them incompatible. You know, one of one of these is going to work out to be true, but not both. It does seem like the money right now is on Tesla, though it's it's hard to imagine a world where fossil fuels in a company that really is focused on fossil fuels ends up being the one that survives, right, I think longer term for you know, fossil fuels are going to peak and decline absolutely. Um.

I think it's a question of degree. You know. Um, Exxon has suffered mainly because it made some really bad tactical errors. Um, you know, stretching all the way back to about a decade ago when it brought this very expensive gas business where it ended up writing off quite a lot of it at the end of last year, and there have been other mistakes I think where it

gets little unbelievable as if you look at Tesla. I mean, clearly there is a lot of money flowing into clean tech right now and there is a bright future for that business. But you know, you look at Tesla, It's made about billion dollars of profit over the last six quarters. It's valued at like seven billion dollars. Um. Has the

market got a bit ahead of itself on Tesla? I would say, yes, Well that kind of speaks to you know how Excen specifically has performed this year year today, h Liam And and that number actually really jumped out to me. UM, So talk about like why why an exon might be able to continue to performing in the shorter term, while while as in the long run, we can might still the market might be right to be bullish on Tesla. Yeah, I think in the short term

what Excen is doing, it's a couple of things. One is that it's just at the oil price has recovered a bit from the from the COVID pandemic, so that's kind of lifted all oil companies. I think the other thing is excellent has you know, it's ex someone was

kind of aloof for the longest time. I mean, I think I mentioned in the piece that Darren Woods made made headlines just for showing up on an earn uh and and they've actually had to listen, you know, they actually had activists show up and had to engage with them. And so they have They've adjusted their stance. They've they've reigned in spending, they've started acknowledging that there is actually an energy transition and there there potentially going to start businesses.

But look at that. So they're they're coming back, partly because the all price is coming back, but partly because they seem to have acknowledged their past mistakes with Tesla. There is there is there is a core story of the energy transition, and that's that's right, of course, um, but it's also a function of the fact that we are we are in a moment in markets where that kind of long term vision thing is meeting, you know, very low interest rates and you do get some fantastic value.

That's Bloomberg Opinion columnist Liam Denning and Bloomberg Business Week. Get out of Joel Webber and listen to him. Only time will tell which vision of the future of energy will be correct. Is it Exxon or is it Tesla? Well, shareholders are certainly voting right now, and Tesla is I think in the lead. Well coming up. Tesla was part of another conversation we had this week because of its absence from the list of the best evs of We're

going to explain right after this. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenoby from Bloomberg Radio. A lot going on in the world of electric vehicles, right We know that, especially as major automakers ramp up their offerings. Recently, we heard about Mercedes Ben's tim entering a new era with its flagship S class

sedan going electric. So we decided to get a roundup of the best electric vehicles according to one batch of metrics, this one from Auto Trader, which interestingly does not include a major player in the space, and I'm going to say it has something to do with those metrics. We caught up with Brian Moody, he's executive editor for Auto Trader. He filled us in on how they came up with

the list and it's findings. So one of the things that we included was the car had to have a plug and so we didn't include hybrids, but we did include plug in hybrids, so they're both electric only and plug in hybrid vehicles. We also put the price cap at seventy five dollars, and we wanted to only include cars that would be available within the next six months of the public so that it would need you know, it would be meaningful to someone who's going to buy

an electric car. Alright, So notably absent is Tesla. Is it that dollar mark that knocks it out or what? No, because Tesla actually has a couple of cars well under price range. Last year we do this list every year. Last year we had the Model three on our list, and it is a fun car to drive, but we also like the way it look. But one of the reasons we didn't included this year was because of increasing competition for one thing, and a lot of us didn't

care for that main central screen that controls everything. A more traditional screen uh with also gauges where you expect them to be, we thought was safer and more in line with what people would expect from a car. All right, so it was reviewed, but you just you guys just didn't really like it as much. Yeah, and it's a good car. I think if someone was looking for an inexpensive electric car that's fun and that's your main criteria, I would say you should be looking at cars like

the Hyundai Kona, the Ford, Mustang Maki. And that's in addition to too many others that you know we have. Let's of ten, you can include everything. Let's talk about them, and that's fair And what's interesting. When I was looking at your list, I'm like, Wow, there's a fair amount of e vs out there. So walk us through the list.

Some of the standouts based on your analysis. Well, one standout that's really telling is the new Chevy Bolt EUV and what that is is it's more of a crossover SUV type version of the Chevy Bolt we already know, So that tells you right there, Chevrolet knows something about making money and about making cars of people want crossover SUVs is where this is going. We also like the Twitter rap for Prime again same type of thing, the Volvo x C forty recharge and all electric small Volvo Suv.

And then the Ford Mustang Maki, which is a Mustang in name, but it has more of a uh sits high up off the ground and has more of a crossover suv type of feel. Can you see You see a theme here? People like SUVs? Yeah? Well listen, right, I mean that's the one thing I guess when it comes to the e V market, right, do I mean? Do makers manufacturers need they need to be thinking about really kind of the cars people want to be driving if they're you know, hoping to kind of juice those

e V purchase numbers. Right, that's exactly right now. There are plenty that aren't SUV based. For example, the Nissan Leaf is an affordable one that we like, um, but when it comes to cars like say the Hyundai I. Those aren't SUVs, that's just a regular car. But there's also a good number of plug in hybrids. We to put a couple of those on the list too, because we feel like it bridges the gap between fully electric and some concerns people might have and fully gas that

has its own set of concerns. And one of the best of those is the Lincoln Aviator. It is the plug in hybrid that goes for electric only, then gas and electric combined to get great gas mileage. Well, you know, what is it that people want right now? What's the consumer demand? Do they want the hybrids? Do they want

completely electric vehicles? What are still their concerns. I do feel like the infrastructure still lagging when it comes to supportive the electrical vehicle market, right I don't think that the confidence is there. So what people want our trucks and SUVs, and when you can give them an electric version of that, and this is the important part, convince them that they will never be without a way to refuel or recharge. That's when it's going to, you know,

really make a difference. There's a lot of trucks coming, but they're just not here right now, Well, do you feel like with the President's infrastructure plan, and certainly there's allocation for things like this in building out the infrastructure for electric vehicles, we were going to need to have some kind of program like that in order for evs to really take off in this country. Probably, yes, um.

But here's the one thing that concerns me is that if it was you know, the way the market works, the way the economy works is that it's it's market driven, it's demand driven. Competition makes great things. Why don't we see gas stations ramping up their electric charging stations to make stacks of money. I don't know the answer, but the fact that it's not happening makes me think that there's something that we are we aren't really aware of

at this point. The cars are good and they can be charged up at home, but that's not enough for some people. Well, who against stations in the US? Are they franchises or they're owned by the big integrated oil companies who are kind of working their book there now, right and many are Many are franchises, so they would they're probably making more money on selling coffee and twinkies

and they are selling gas. Yeah, it's interesting. Hey, when you look ahead to this year, I do feel like, all of a sudden, there is a lot of momentum. Whether it's Volkswagen, whether it's Mercedes, whether it's you know, pick your well known auto manufacturer. It does feel like, all of a sudden, everybody's all in on E VS. Yes. And I'll tell you something that you just mentioned that I find very encouraging. The Volkswagen I D for that you just mentioned is a very compiling car, no matter

how it's powered. So it is an all electric car. That's the only way it comes. But it's good looking, it's fun to drive. The interior is great. The part that it's electric. I don't know that younger drivers are going to care that much as they get older. They just want something cool. That new Volkswagon is just cool,

no matter what that was, of course. Brian Moody, executive editor for Auto Trader, So, Carol, I think one thing that's so fascinating about electric vehicles here in the United States is the fact that there are so many different players, but Tesla just dominates when it comes to mind share, when it comes to marketing, even though there's no actual formal marketing for Tesla. It's just the CEO, Elon Musk, is such a vocal proponent and he is out there

talking about it, and he's got so many followers and fans. Well, he's a dynamic individual and he definitely has been a game changer. I think most people would agree. Go back a couple of years when it felt like the traditional automakers were taking their time when it came to e vs or hybrids, and all of a sudden, Lan Musk comes up and it kind of blows up the way we do things, and all of a sudden, everybody else

wakes up as a result. Yeah. I think back to when Tesla for introduced its first cars, right, they did it at the really high end category was super super expensive, and the strategy has been to bring that price down and bring that entry point down, so it does get to that point where Cathy Wood says it is going to be significantly cheaper than buying an internal combustion vehicle. And I have to just say, like, you go out to the West Coast, you've always seen a fair amount

of Tesla's that makes sense. It's where their first production plan and it's an environment that easily can do it. But I see a lot more here now on the East Coast. You know, It's something I talked to Dani Hole about, the Tesla reporter for Bloomberg News. She lives in California, and you know, whenever I go to California, see tesla's everywhere. But here in New York you're seeing more and more. But it's still something I notice. It's still something I notice when I see a Tesla, right,

and there still needs to be more infrastructure. Everybody says that we'll still to come up on Bloomberg Business Week, where you hear from a member of New York City's founding families about protecting art and culture in a post

pandemic world. You're listening to Bloomberg Business Week, and this is Bloomberg broadcasting from the financial capital of the world, Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team, and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week.

So earlier this year, Bloomberg reported on how two thirds of New York City's arts and culture jobs were gone because of the global pandemic. Cultural organizations around the world have been heard hard. We know this because of the shutdown. Well, someone whose family has been involved in the arts and really is one of the countries iconic dynasties and one of New York City's founding families, Can Swallow Vanderbilt Coston, philanthropist, entrepreneur,

co founder of soho mus. It's a professional networking website for the global creating community. And we started with a question. We ask a lot of guests, how has this past year been? You know, I think, as with everyone, that it's been incredibly challenging. Um. You know, I'm so grateful that both family and friends that everyone's healthy now, but

you know, it's it's been just awful to watch, you know. UM. And I think just you know, I say that on one breath, obviously with it, you know, the totality rate of what's happened. Um, But on a positive note, I also look at I think there's been a lot of incredible growth and changes, and I hope that we can

kind of keep to the lessons that we've learned. I mean, you know, keeping being simple and small right right, fingers crossed right, that we actually, you know, have learned something from this unfortunate time and and come out better on the on the other side. Exactly. One thing I want to ask you do work with an organization. You're co founder of pahomus talk to us about this world because you have a front row seat when it comes to folks in the art world who evolved in you know,

the arts and culture. So tell us about kind of some of these stories. And I mean, I can only imagine that it's been a rough one this past year. So who used to kind of define as the LinkedIn for creative it's a membership based site and when we help and work with all different forms of the creative universe, so from musicians, dancers, writers, actors across the gamuts. Knowing that creatives really working projects. So if I'm putting together a music video feature film, UM, we really helped to

procure job opportunities. Uh. We've just actually opened up a younger generation here called Pahomies World for kids for team and upwards UM and bringing in a home mentorship and master class programs to really help them, and so you know, it's our Our world is kind of a three sixty universe. UM, And right in the beginning of the pandemic, UM really started to see that a lot of our Broadway stars, artists that are normally on tour, we're suffering so much.

So we created this series called saves Um, which is just extraordinary where you know, artists like Tiffany remember her, so you sold her million albums and and her doing acoustics performances, which she's never done before, and so she was really able to showcase a whole another side to her.

You know what's interesting is you did have performers who were stuck home and all of a sudden, right they would normally be on tour, and I'm sure they can't wait to get back out on tour, but it was kind of interesting to see another way for them to

reach their fans by being able to perform virtually. And I do wonder do you think some of that stays with us on the other side of the pandemic, not replacing you know, in person performances, if you will, but it's just another way to kind of reach out and maybe give access to people who maybe can't afford a

ticket to something. It's just another venue, Carol. I absolutely believe that it's going to be something that it will be used and and kind of I think that where artists are actually found you know, comfort and even you know, whether it's testing new songs and doing things in a you know, a very very different medium than they normally have done. Um. I think this will absolutely be something

that will surpass the pandemic. Conswello, we talked about how some of what artists had to do during the pandemic, whether it's virtual performances, that it stays with us uh and maybe perhaps that creates another revenue stream, especially if even for you know, start starting out artists or younger artists or smaller artists. And I do think it could be a very productive outcome on the other side of

the pandemic. Do you agree? I absolutely agree, And I think just as you said, you know, for this younger talent, it's giving them an opportunity to test out new materials, to increase you know, kind of their fan base, and and to learn how it actually feels in a way that you know, be raw and vulnerable, which is you know, the wonderful thing about being an artist and um, and so yes, I really do. I think that it's as I said, I think this is gonna be something then

absolutely post pandemic. You know when we look at YouTube and I mean, my goodness, Justin Bieble was discovered that way, right, So I think that, right, Yeah, I do. I think that a lot of great things will be coming from that. I do. This is something I thought a lot about, Carol over the last year, is is what art looks like on the other side of this, and what creators and artists did over the last year. It's been exhausting

for a lot of people. But I just hope that we see a rising creativity, we see some just fantastic creators, we some fantastic artwork on the other side of this, and in a few years we can look back on this as a time when people got to reflect and create. Yeah. I hope so too. And I do think that once things reopen, we're gonna be back at museums, We're gonna be back seeing plays, We're going to be back doing all of it, going to concerts. That was Conswelo Vanderbilt,

Custin philanthropist and entrepreneur, co founder of Shows. You're listening to Bloomberg Business Week. Coming up, we check in on the status of the cannabis into tree with the CEO of Truly. I'm just gonna say it's smoking. You've been waiting to do that. I have Sorry, this is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. This week,

Tim the unofficial official marijuana holiday. We're talking about four twenty. It did, though, give us an opportunity to check in on the cannabis business well. At the start of the year, Bloomberg reported that the cannabis industry is finally going to hit the gas pedal in and for more in the state of the business, we caught up with Kim River, CEO of the cannabis company Truly. It's a seed to Sail vertically integrated cannabis company. We asked her what the

last year has been like. The year has been, uh, you know, incredibly busy. But you know, we've been very busy really since since the beginning of last year. Um, you know, we saw incredible increased demand throughout the COVID period and are now as we come out of COVID kind of have a little bit of a rebalance in terms of how our customers are doing business with us. But demand remains very very strong across all of the states that we that we do this. What does that

rebalance mean? You say demand is strong? Is it not as strong as it was? And just talked to us attle bit about the rebound, So yeah, no, it is. So what I mean by that is when we entered uh so to give you a couple of quick stats UM for our business, and we have UM, you know, at that point in time, I think we had about I think around fifty or so stores UM open and so during that during that time before COVID, we had about seventy percent of our business was walk in, so

just folks coming into our retail stores. About was you know, call ahead or online pickup, and then about ten percent was delivery. At the height of COVID, obviously that that behavior changed dramatically, and so about UM sixty percent was online or pre orders UM for pick up, about twenty percent was delivery, and then a small about ten percent

was walk in business. And so we're seeing that shift back a bit, although interestingly, and I don't think this is unique for cannabis, but for for a lot of retailers. You know, interestingly, the pick up the online ordering at channel has remained very strong. So that's still at a round between fifty and fifty five percent, So that certainly was very sticky UM with deliveries going back down to that ten percent number that we saw pre COVID, but

demand overall remains incredibly strong. So if we just used Florida as an example, when we exited twenty there were about two thousand, five hundred patients every week Florida Medical Program entering the program in Florida. Now in the last ten week average is at about fifty five hundred patients entering the program. So yeah, so it's it's been UM and you know, incredibly strong for as well UM in terms of new market entrance UM into across really all

again all of the states. In Pennsylvania also a market where U there were active been UM that the patient's profile there in demand also is very very strong. In twenty one, Kim, I want to get your thoughts on HR. It's called the Safe Banking Act. The US House Representatives passed it and this would give state authorized marijuana business is easier access to banking services. This has been tough for for US business owners because you guys have been dealing in cash, right, Yes, so we we deal in

either cash or um. We have partnered with a company called Canpaig, which, if you think about it, like a preloaded card. So if I'm a Starbucks addict, so a preloaded Starbucks card is is the easiest example. Um. And we're just starting to see some work arounds on the debit card side. But your point, Yes, it is primarily a cash based business. So this is a big deal because I mean, look the Democrats. Democrats have tried to pass this before, but they haven't controlled the House and

the Senate previously. So if this goes through, that's really good news for you guys. Yeah, and it's it's good news part. So I'm and I will just tell you that certainly, um, in terms of being able to have you know, alternative payment methods is a big deal and it's certainly a big deal for our consumers. And from a safety and security standpoint, we do have armored car service and we you know, deposit directly into the Federal Reserve.

So we've eliminated as many of those risks as possible to date, and we are able to bank what state chartered banks were just not able to bank with federally chartered banks for obvious reasons. So that would change that landscape. I would say. More importantly though, potentially, is the fact that we also don't have access to normalized banking or

lending tools. So when you look at UM rates that cannabis businesses are forced to take it with really subprime you know lenders or more at more predatory rate system of my peers, for example, have been forced to take out to take to take that on at interest rates because again there's no access to normal tools. We can't get mortgages, we can't have business lines of credit UM.

So that coupled with you know, the federal provisions under two a D which their taxation UM laws, we also can't take normalized deductions, so we don't have things like normal business deductions, whether that be depreciation or you know again UM just you know, expenses that you would normally be able to doctor as a business. And so those two things together make UM you know, make profitability very very difficult as a legal UM under state law cannabis operator.

And so banking would certainly help on that first piece, and to again give us again of course being able to take other forms of payment, but also being able to work with um larger institutions and have access to normalized lending. And and if to a d E is lifted and that tax laws changed, what would that do to your profitability picture? Yeah, so last year it would have saved us about sixty three point five million dollars,

so so making much more profitable. Yeah, it's much more profitable than m than than we I mean we we do run a profitable business, Garelian. But yes, it would it would be um, it would be a great, great help, Kim. Let's talk more about the industry at large. One thing that I was surprised to learn. Even in areas where marijuana is legal from addicinal or for recreational purposes, the

illicit market continues to thrive. Um. Just one in three cannabis consumers in the US buys from established brick and mortar stores. That's according to survey published this month by New Frontier Data. The most popular source for means the users friends one other get their weed from dealers. How do you change that? Yeah? And I think that First of all, there has to be access, right, and it

has to be easy and convenient for customers. And so even when we talk about you know, in in Florida, for example, we have delivery, which is oftentimes you know, next day or even the same day. However, the process to get delivery is very onerous for customers. So you have to be UM present, you have to assign for it. There's this again, this whole transaction that takes place, and it is UM, it's like waiting for it in some cases can be like waiting for the cable man, right,

which no one wants to do that. So I think in some cases we need to make sure that cannabis is as convenient as the black market. UM. In many sophisticated black market areas, UM, it's you know, doorstep, it's quick, UM, it's convenient and UM. You know. So I do think that UM access and wider access is really important. And what does that look like though? Does that look like

does that look like delivery? I mean, does it look like I'm just trying to think of what looks I think, yeah, I think it's a full omni chanal experience, right, I mean I think that certainly it does look like it does look like to live like Amazon for some and yeah, I mean Amazon, right, like like Amazon. I mean when we think about now, I don't think that you know, tomorrow we're going to have drones leaving cannabis on doorsteps. Well Amazon doesn't have it yet either, even though they've

been talking about it for years. Yeah, but I do think that, right, I do think that when you think about even how far you know, alcohol delivery has come over the years and or you know, convenience um to to alcohol. Again, we have to make sure that this isn't getting in the hands of children, and it is a regulated product. There's certainly are going to be certain

barriers um and it will remain a regulated industry. However, I do think that if the goal is to compete head to head with the black market, there needs to be one access into education and three, right, we have to be price competitive and product competitive with the black market as well. And so um which you know, again taking another queue from alcohol and how how we came

out of prohibition UM with alcohol. A lot of that had to do with the fact that, um, we were able to educate customers on the safety right and how you know, how it was safer to to actually consume products from a regulated distributor as opposed to someone making

bathtub gin. So I think similarly, right, and we saw that a little bit with a base gait crisis that happened UM last year with out in California and West Coast UM west on the West coast, you know, additives being added to black market products that were very very harmful UM forustomers when inhaled. And so I think that as again more wid widespread regulation happens across the country, hopefully at the federal level, you know, consumers will um

will certainly you know, be drawn to m safer products. Hey, Kim one Quesson, I want to ask you, and just looking at your background, I mean you spent several years and in private practice as a lawyer where you were specializing the mergers and acquisitions, and I look at the cannabis industry and I'm just thinking it might be right for some more consolidation. What are your expectations there? Is

that maybe in the game plan for you guys? You know, absolutely I believe that the cannabis um is certainly like any growth industries and you know, as as they evolve right there will be uh consolidation and meaningful consolidation across across the industry. Certainly also as we see UM the federal landscape shifting UM. So you know, we already have been active in in the M and A arena. We plans that continue continue to be active in that space.

So certainly for us, and then I would assume for for many others, and I think that you absolutely will see consolidation happen over the next i'll call it twenty four months. That's Kim Rivers, the CEO of True Leaf, Carol, I gotta tell you, it feels like in the last couple of years, but especially this year, cannabis has gone from something that was really fringed to something that is

seriously mainstream. Yeah. I think the November elections were a big deal when you saw more states endorsing it for either recreational or medical use. And I think that's a big deal. But as Kim mentioned to us, Kim Rivers, of course, the CEO of Truely, you know, one of the big things is federally getting some rules about the industry that would make banking much easier and you know, state to state business interactions a lot simpler. Yeah, serious

economic implications for states as well if that happens. If you missed any of the conversation and the full conversation, you can find that on our podcast Speed and That wraps up the weekend edition to Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and I'm Tim Stanovac. Be sure to tune into our Bloomberg Business Week daily show. It's Monday through Friday. It starts at two pm Wall Street Time on bloom

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