Bloomberg Businessweek Weekend - April 8th, 2022

Figure that one out, Tim, Yeah, that was pretty surprising on Monday morning. And then we've got the perfect person to break down what that means to the world's richest man and of course the social media platform as well. Our conversation with Cathy Wood is coming up. Also ahead, the president of Mattel on the retail industry's new normal. We're still trying to figure out normal. I gotta say that. And also Oakview Groups CEO Tim Lwacky, he breaks down

the company's big bet on Vegas. We're talking three billion dollars, so for some serious money there, ye. Plus our editor's roundtable profiles a GOP Senate hopeful who's going full Maga in a hotly contested and highly priced Pennsylvania primary running against Dr Oz. That's our domestic cover story story. I couldn't put down all of that to come. We begin with the war in Ukraine, now more than six weeks old.

Russia is facing new international sanctions on the heels of apparent war crimes in town surrounding Kiev that were among the first targets of the invading Russian forces. In the meantime, companies with workers on the ground there are taking steps to hell. Andy Kurtzak is founder and CEO of Just Answer. It's a site that connects people with doctors, lawyers, vets, mechanics, and other experts seven and he's had more than two

employees caught inside the war zone. They're all live and uh and doing as well they could possibly be doing in the situation that we're in. So all of our preparations have paid off. We've been asking to keep them all safe and so far it's working. And you in your notes you said that six of them are currently fighting, and those who are fighting are still being paid a salary. Yeah, so what we what we promised to them even before the war started, when we thought that this might happen.

Was we'd pay them fifty percent of their salary in addition to the sellary they get for being in the military, and then we guarantee their jobs when they come back victory. Hey, and if we can take a step back, UM, and we're grateful that you've given us some time. What are you I mean, it's hard for any of us, UM, I think in terms of some of the atrocities that we're seeing in some of the news coverage of what's

going on in Ukraine right now. What are you hearing, UM from your team members who are on the ground in Ukraine, UM, hearing pretty much what you're seeing in the news, which is it's dreadful. It's terrible. I mean that that that seeing the bodies and the torture and the reality now that they've taken back some of their territories near Kiev is just awful, I mean, and they're horrified for those who the rest of the world is. For those that have stayed on the ground, um, and

decided not to leave Ukraine, why is that? Well, so a few reasons, I mean, So we have of the two eight now employees that we have in Ukraine, thirty nine of them have We've been able to get them out, but the rest either they can't get out because of there are men between eighteen and sixties against the law for that that leave the country. And then we've got people that that you know, maybe their spouse or their their family members are stuck there and so they don't

want to leave either. So some of the women are staying by the side of the men that are forced to stay in Ukraine. And then we've even got like what the woman that leads their office in Ukraine, her son just turned eighteen, so he can't leave even so she's not leaving her son behind. What's the message that that you want to send to other people in Silicon Valley, other Americans who are here in the United States, and

really just just watching this play out. I mean, I think a lot of people have this feeling that, well, Okay, the government's doing what it can do. There's only so much I can do. You know. The first thing is that this aspects all of us. This is not some small skirmish in Eastern Europe. This is about democracy and about freedom and East versus West. This is everything that we worried about during the Cold War. It's actually happening now. And you know, this aspects all of us, and so

we all need to do our part to help. You know, Andy, I do wonder too, and obviously you're doing everything and anything you can to help UM, your team that are there in Ukraine. How do you though our audience a business investing audience as well, obviously caring though about the

humanitarian aspect. But when you look at the market over in Europe, you know, will this ultimately lead to kind of a business rethink about exposure, whether it's in Ukraine, whether it's Russia, Like, how what's what's the what is it the longer lasting UM strategy that stays with us because of this? Yeah, so we've already seen lots of companies boycotting Russia and hopefully more will continue to do that.

And you know, as this this goes on, what my hope is that companies will not just think about boycotting Russia but also buying Ukrainian goods and services. I mean, this war is about Russian's aggression and bombs and tanks, but it's also about the economy and sanctions, and we can all do a part to help the Ukrainian side of this. And so that's what just answers trying to do and I hope any other companies will do it as well. Andy, you and your family are actually planning

to go to the border of Ukraine. This is a mission to deliver medical aid, body armor, laptops and more. Um, you're taking your kids? Why why is this important to you? Well, so, when my family and I got together a few weeks ago and we're deciding what we wanted to do for spring break. You know, normally we would go to Hawaii

when my mom lives and we love. We just couldn't dare to go somewhere fun for spring break when our friends and colleagues and the people of Ukraine are suffering so much, And so we got together the family, and we decided that we wanted to go and help. Is there a message in terms of the governments that are out there, who have already imposed a lot of certainly economic and business sanctions, as you mentioned, a lot of companies pulling out. Um, what more do you think should

be done at this point? I mean they should continue to escalate the sanctions. They should continue to send UM military UH equipment and any humanitarian supplies as well. So there's a lot more to be done. I mean, they've got a lot of people in Ukraine that are ready and willing to fight, but they need the supplies in order to maintain this this war and to and to beat back Russia and for democracy. They're fighting for our democracy just as much as their own. That was Andy Kurtzig,

He's founder and CEO of Just Answer. We wish he and his family well as they had the Eastern Europe to help his employees and take part in the broader humanitarian relief efforts in the region. Coming up next, our Editors Roundtable spotlights a former Ray Dalio disciple who's looking to make waves in the political world by taking a page from former President Donald Trump's playbook. 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. Our domestic cover story in the magazine was also a Bloomberg Big Take and among the most read articles on the Bloomberg terminal this past week. I gotta say to him, I started reading. It was the first thing I read that morning, and I just couldn't stop. Yeah, I had the same experience with it. I mean anything

that Josh writes, it's just fantastic. It's a profile of David McCormick, formerly president of the world's biggest hedge fund, Bridgewater Associates. He's now running for a Senate seat in Pennsylvania, and well, people who know him, they're not surprised by his political ambitions. Some of his rhetoric is raising eyebrows. Yeah, indeed, So why is the one time champion of diversity and inclusion now going full maga. Well to find out, we

turned to our editors round Table. Bloomberg. Business Week National correspondent Josh Green wrote the piece He joins us along with the editor of Business Week, Jill Webber. Just a couple of months ago, David McCormick was the CEO of Bridgewater, which is the world's largest hedge fund, and that means he was basically under Ray Dalio. Many people probably more familiar with Ray Dalio than David McCormick. But in you know, January, when he announced that he was gonna be running for

the Senate seat in Pennsylvania. Uh, it basically has meant that there's this has become the hot race that everyone is starting to watch um the election. This is the primary, right, and we'll see who emerges victorious in May. Um. That's again just the primary, but already it is shaping up to be the most expensive primary in U. S. Senate history. Uh. And then it pits him against doctor Oz is the

other kind of front runner. So you have David McCormick hedge fund background, who's gone full MAGA versus Oz, who everyone knows from you know, his days as America's doctor from Oprah. Uh So, So, Josh, let's talk about McCormick because this transformation from hedge fund CEO to MAGA has taken a lot of people who worked with him in in finance and at Bridgewater very much by surprise. Yeah, you know, it's funny. It's a political reporter, you know.

I often see candidates and people sort of gradually switched positions and kind of change their profile. I've never seen anything like what David McCormick has done, going from CEO of the world's largest hedge fund. You know, a guy who fits in comfortably at Davos um and in the hedge fund world, transform himself, as I say in the piece, faster than Clark cannon a phone booth into a China bashing,

uh immigrant bashing, pro Trump uh maga acolyte. But McCormick has concluded, I think correctly that if you want to win office in a Republican primary, this is still Donald Trump's party and you need to demonstrate your allegiance to Donald Trump. So it come as a shock to a lot of his former colleagues from the hedge fund world, who know him as this urbane guy with a PhD

from Princeton. I have to say one of my favorite lines, I guess there's someone you talked to who worked with McCormick who asked, is Connecticut Dave McCormick the real one? Or is Pennsylvania Day McCormick the real one? Or is the real Dave McCormick a chameleon, will be whatever he needs to be to succeed. I mean, I feel like this is what politics have become, especially if you're playing with the Republican Party. Right, they're all kind of cow

towing still Josh to Donald Trump. Yeah they are. I mean McCormick is fascinating on so many levels. You know, as you said, he lived in uh, you know, Bridgewater is based in Westport, Connecticut, and for the last ten years, you know, he's been this this friendly, widely respected hedge fund manager. But then he moved to Pennsylvania in order to run for the Senate seat, and you know, has

created this entirely different persona. Uh. You know, to some level, when politicians run, there's a little bit of an artistice there. But his transformation has been so extreme that legitimately shocked a lot of people that I talked to who kind of thought they knew him, and now we're wondering, like, you know, who is the real guy here. But I think on another level, it's pretty transparent what's going on.

You know, there's a there's a school of thought amongst some Republican Mitch McConnell, the Senate Minority leader from Kentucky, especially, is trying to push the idea that the Republican Party is moving beyond Trump, that Trump's Trump's power has faded, his time has passed. And I think the Republican Senate primary and McCormick's example in particular, shows that that is simply not the case. That if that, if you want to win election, all of these guys, including doctor Oz,

who I spent some time with for the piece. Have concluded the way to get elected is to demonstrate your allegiance to Trump. Dr as another guy who spent years in Pennsylvania. Right, I'm being santastic. We just want to know where you caught up with him. Well, I mean that That's one of the weirder turns in this piece was, you know, Oz doesn't like to talk to national reporters, um, but I decided to go hang out with him get

a flavor of his campaign. Anyway, showed up early to a campaign event in Bluebell, Pennsylvania, and I wandered in the men's room h and low and behold, Dr Oz is the only guy in there. So uh, seeing the serendipitous opportunity, I introduced myself. I said, I was working on a profile on McCormick, and Oz right there in the men's room just started fulminating about McCormick and Bridgewater

and head fund guy, I should say. Dr Oz, who's surprisingly literate and all things fine and he had a degree from the Wharton School, was frustrated that that McCormick has managed to get away with this transformation to the degree that he has because polls show there haven't been a lot of them, but the most recent poll I saw a show that McCormick is actually leading this primary

race over oz Um. So it's an interesting contrast of of of styles and backgrounds, but they're all seeking to basically be the same person, and that is, you know, the candidate that Donald Trump decided to endorse, because I think that will be if it happened, that'll be the decisive factor in this in this primary rate. So you know where is Trump in this. He's he's been quiet so far. If he does come out in support of someone, what do you think happens, what unfolds from there? Well,

it's interesting. The Washington Post reported on Wednesday that McCormick is actually down in mar A Lago trying to win over Trump's endorsement. So so clearly, you know, McCormick is trying to close the deal, as as they would say in the hedge fund world. Whether whether or not he does, though,

it is kind of uncertain. Before McCormick and os got in the race, there was another leading Republican candidate who Trump did endorse, a guy named Sean Parnell, who wound up having to leave the race in November after allegations of spousal and child abuse. UM McCormick won his endorsement campaigned with him. That was taken by a sign uh from some people in Trump World. In Pennsylvania Republican politics.

You know, maybe Trump will lean in that direction, but it's Trump and you just never know until he decides. Often he decides things on a whim. But both candidates, as I say, if he's Oz is OZ has the support of Melania Trump, so he's not without his his advocates in Trump World. But until Donald Trump makes up his mind, I think it's wide open race. So much drama, and yet this is all for a primary, Josh. So

we're gonna We're gonna see who Republicans pick. What does it look like on the other side of the aisle On the Democratic side, there two candidates running, Connor Lamb or moderate Congressman John Setterment big early blue color lieutenant governor. Who is about is sharp a contrast and personality and style as you could possibly have um with the CEO of Bridgewater. That was Bloomberg Business Week National correspondent Josh Green, along with the editor Joel Webber, on this week's domestic

cover story. We're gonna have more from our editor's roundtable in just a bit. Coming up next though, on Bloomberg Business Week, why Kathy Wood thinks Elon Musk's newsteak and Twitter could portend to shake up in the c suite. We'll speak with the Arc invest founder, ce IO and CEO.

This is Bloomberg Broadcasting from the financial capital of the world, Bloomberg eleven oh in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh 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. Well, big story this week. It was all over Twitter, it

was everywhere. It was all about Elon Musk's investment in Twitter, taking a steak, so called passive steak, of more than nine percent in the platform. Well, our Innvest Management has large positions in both Tesla and Twitter. Cathy Wood is the founder, CEO, and ce IO of the company, and in our wide ranging conversation, we start with her take on Musk's big move, especially in light of his friend Jack Dorsey's recent departure. He's certainly making a statement, and

it's a statement about censorship. He he doesn't agree with censorship. UH. For as smooth functioning democracy as he has tweeted, I believe uh and so I think he's sending a strong signal to the new CEO. UH. And I I also know there's some controversy about why Jack left having to do with this new CEO. So a few messages there. Have you talked to Ellen at all about it? No? I have not, Okay, UM, and would you be buying either more Tesla or Twitter on the news? And let's

throw on Tesla also having this record first quarter? Um, is this a catalyst to buy more of these shares in your view? On Tesla? We post our trades at the end of every day, so many will know that we have. It is the largest position in our flagship portfolio and in most portfolios where we hold it. But we have been selling recently because of how well it has done relative to the rest of the stocks in our portfolio. So it has levitated relative and uh and

so it's been a good source of cash. We've taken profits and read employed them into other stocks that we thought were being unfairly penalized here. Uh, and I think one of the reasons for that is Tesla's in the indexes the broad based disease, and most of our other stocks are not. And uh, that's a big problem out there in terms of the way capital is being allocated these days in the public equity markets. Kathy, how much

would Tesla have to fall for you to start buying again? Well, you know, even now, we're going to put out another model on geth hub In. I'm going to say within a week. Our last one is from about a year ago, and uh, you'll see from that model that our price

expectation at that time was three thousand dollars. So there's still a lot of running room ahead for Tesla, But relative to the other names in our portfolio, even though that's a you know, a triple or nearly a triple, other names in our portfolio we believe will deliver much more than that over the next five years. Because they have been hit so hard, they're not in indexes, and so when there are risk off periods, traditional investors really diversify and sell our stocks as they move closer to

their benchmarks. The benchmarks against which they are measured. So it's a great buying opportunity for us. I will say, I can't believe how long that buying opportunity lasted, from February of a year ago to a few weeks ago. But we think the concentration of our portfolios towards our

highest conviction names will pay off. As for Twitter, I think there are some investors relieved that someone is willing to speak up and say, hey, you're going to ruin this platform if you continue to censor it, uh in somewhat uh random ways. Uh. So, so I think that's good. I will say, this could be setting up for another leadership change at Twitter. Uh, you never know, and so that will bring with it perhaps some uncertainly, uncertainty and dislocation,

so especially as it relates to advertisers. So so we shall see, so cathy uncertainty potentially at Twitter, a potential leadership change. Who are the names that you would like to see lead Twitter? Who could do a great job in your opinion? Oh, I am not going to speculate on that, you know, And to be honest, we haven't

thought about it that carefully. Uh, there are names flying around, but I wouldn't want to throw out anything there unless unless we felt very strongly uh so, we we will wait to see whose names are put forth, but whoever is put forth, and I'm not jumping to this conclusion automatically. I'm saying it's one of many possibilities. It will lead to be are Garwal changing the policy of the company to you know, really open source, uh the the censorship or or call people out on censorship, h or it

will be a management change. I don't know what's going to happen at all. We are just getting started with Kathy Wood here on Bloomberg Business Week. We should know that the day after we talked to her, Tim Twitter announced that Elon Musk would also be taking a seat on the company's board. So to her point, didn't feel very passive, and it doesn't. It's not playing out that way. Yeah,

some really pression comments from her. I mean this is literally hours after our interview that big move came from Twitter CEO. It was not a passive investment, as Kathy would correctly predicted. Carol. When we come back, we're going to get her take on the broader social media landscape, putting money to work in China and the big problem that she sees with passive index investing. Yeah, great paper that they put out in social media on that. You're

listening to Bloomberg Business Week. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Ston from Bloomberg Radio. Let's get right back to our interview with Kathy Wood. We already talked about Elon Musk's big bet on Twitter. She weighed in on that. So what about the other big players in the social media space? What does she think is she making any

bets there? Tim Well one part two of our conversation, the Arc invest founder, CEO and ce IO tells us why she's not yet ready to pour money into those companies. Carol and who's winning the fight for more eyeballs? I think what's happening the ground is shifting underneath social media. I don't think anyone understood until Facebook reported or gave guidance for the first quarter how provocatively disruptive uh TikTok

had become. I mean, I know I've seen my children and and and their generations spend a lot more time on TikTok and and wondered, you know, how how would this impact Facebook? But I also know that there's a huge advertising shift from linear TV to so shal So you have those two opposing forces. While it appears that TikTok is being much more disruptive than we thought, and not just Facebook, but Netflix has talked about it as well. This is competition for the consumer's time. Uh, And so

I think again, the ground is shifting. And if you think about it a Facebook, a Facebook, When you think about Instagram and Facebook itself, it's all about me, me, me, It's you know, I am central. If you think about TikTok, it's about how can I entertain you. It's a completely different d n A. So I'm not so sure that that Reels is going to make it the way that Stories did. Stories was about me, me, me, Facebook God, that TikTok is a completely different animal here. Hey, Kathy,

gotta ask you about Chinese stocks. You and I have certainly had conversations, and you've made investments in, you've gotten out, you've got you know, and I just want to know where you are in Chinese stocks right now because we've seen quite a bounce back in the last couple of days still down a lot. If I look at something like the Nasdack Golden Dragon, would you be committing new money?

Do you have faith in Chinese authorities actually making Chinese comping much more transparent for U S investors, especially when it comes to financially sensitive information. Well, I think that the government is showing that at the margin, it's going to make moves, but they're going to be marginal moves. In this case, I think there are three years to um to comply with our audit requirements. Uh. So they're they're they're talking that they're they're they're they're they're talking,

and so we'll see what happens. Uh. You know, common prosperity to us means that profit margins are high profit margins are not a good thing, and so we have steered away from anything with a high profit margin. Uh. And we have focused on those companies and we've we've in our flagship strategy, we're out completely. We've shifted towards something like SE Limited in Singapore, but in a more specialized strategies. We're looking for very low margin companies that

are consistent with common prosperity. Uh, you know, really distributing goods and services into lower tier cities, for example, or providing transportation, so expung uh neo, we have bought their very low margin. It's all about next gen transportation in a world where you know, human driven cars are are still relative to the eligible drivers, still very low percentage. So uh, We're we're interested there JD logistics in the

logistics area using drones, but lots of innovation. They're doing a lot again pushing into the lower tier cities, So we're we're a bit gun shy. We don't think that the Chinese government is thinking very much about treating capital well, but we know there are huge opportunities consistent with common prosperity, and so we will have an allocation. But until things change dramatically meaning more of a friendly to capital, we'll

probably keep that exposure pretty low. Hey, Kathy, one thing, I mean, you and your team are very good about research, right, and you open it up to the world and you want to have these conversations. I am curious when we look at the world specifically what's going on in Ukraine and Russia. China's relationships specifically with it seems like wanting to continue some kind of relationship with Russia. Um, how is that problematic do you think for investors going forward

and ultimately Chinese companies? And is there kind of a rethink on what our global markets ultimately will be like longer term? You are a longer term think individual. Yes, yes, Well, one thing I do know about China is uh, it's a survivor and it really does want to be um, it really wants to be in the lead in terms of innovation. So we, given our sole focus on disruptive innovation,

are not going to dismiss China. But these geopolitical strains are not going to be good again, it's capital unfriendly. We do know that innovation solves problems, and starting with COVID, uh, we we we we had a lot of problems. Now with the Ukraine Russia, the Russian invasion of Ukraine, we have a lot more problems, uh. And so we think

innovation generally is going to help solve those problems. And so we're happy that the market is now turning its sites back to innovation being a good thing and non index stocks being uh an area of great opportunity. So, Kathy, you know one thing I want to get to and this is something you guys have been writing about over at ARC and that is passive versus active. When it comes to indexing, there has been, as you know, so much money going into passive indexing UH, and investments not

a good thing ultimately. Do you think investors in that world are going to ultimately be burned? One of the reasons I founded our invest is I believed that, taken to an extreme, which is where I think it is now, that index based investing was going to lead to the most massive misallocation of capital in history. And I think that's happening. And you saw what happened to our pure play, innovation based strategy over the past year. When fears about

inflation and interest rates picked up. There was risk off UH, and this movement back to broad based benchmarks and other benchmarks and away from our strategies. And so we saw a stock like in vite Go from sixty dollars to seven or eight dollars in the span of a year. UM. This this doesn't make any sense, UH. We have in our portfolio and we have used this risk off period

to concentrate towards our highest conviction names. We've gone in the flagship portfolio from fifty eight names I believe down to thirty five, which is essentially saying, Okay, we're not so sure that these these twenty two or twenty three stocks are going to be UH the as a pure play of disruptive innovation as we are that these other thirty five are. And of course Tesla is UH the

leader of the gang there. So UM, yes, we've we've been UM, we've been surprised that it UH the risk off lasted that long, that the shift into passive and indexed lasted that long, but it set us up for some great opportunities here. Um, as we have so many problems to to solve, and innovation is the right way

to solve those projects. Cathy, what would you say to somebody who's listening right now who says, study after study that they read shows that the on average, the active manager does not outperform the benchmarks, especially after fees year in and year out. Yes, well, we certainly have our Our time horizon is a five year investment time horizon, and I would agree with you. I think the vast

majority of active managers have underperformed. We have significantly outperformed over that five year period at a compound annual rate. UH and I think one of the reasons there is under performance is this benchmark hugging behavior. So they they they are very close to their benchmarks and then they and and that to me is is as close to passive investing as you can get, and then they charge a fee for it. We are not in those indexed stocks. We are really focused on the future, not on the past.

Indexes are where they are because of what has happened historically. Uh and the those at the highest end of the index is the largest positions are there because of past performance. If we are right, we are facing the most uh, the most disrupted innovation in the history of the world. Five innovation platforms genomic sequencing, adaptive robotics, energy storage, artificial intelligence, gens, blockchain technology. They involve fourteen technologies and there are all

kinds of convergences between and among them. So they're setting up for explosive growth opportunities, but they're not being well followed well research. That's one of the reasons we do publish our research. We want to um We want to educate investors, but not just investors, we want to educate parents and grandparents. Here how here's how the world is changing.

Make sure to guide your children or your grandchildren towards the right side of change so they don't end up working for these companies who are going to be completely disrupted. So I think many people you know a case in point, and I don't think Facebook is going to necessarily be a bad stock going forward, but the fact that a disruptor like Facebook could be disrupted so quickly is an important case in point. That was Cathy would have our invest always great to catch up with her. You can

access the entire interview. Find that on our podcast feed at Bloomberg dot com or wherever you get your podcasts. That wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanabek. Ahead in our next hour, oak View Group is rolling the dice on Las Vegas in a big way, to the tune of three billion dollars. CEO Tim light Wacky tells us what he sees on since Cities Horizon, hoping an NBA team will be part

of that too. Write years in the making, right it takes a while. Plus, our Business Week team spotlights a fintech startup that seven hundred thousand people think is ready to revolutionize banking in Black America. It's an incredible read. 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 Stinovik on Bloomberg Radio. Hi, I'm Carol Messer and I'm Tim Stanovic. Blady ahead in our second hour of the weekend edition of Bloomberg Business Week, including a few groups CEO Tim Lwecky on his firm's Vegas venture, plus Mattel President and CEO Richard Dixon on supply chain

sustainability and the toy making giants fight against inflation. Are you also ready for a Barbie movie? Um? Yeah, I think Whether I am ready or not, it's coming. Come on, just go with it. Just I mean, there's some big names in this movie. There is. It's incredible, al right. First up this hour though a story featured in this week's issue of Bloomberg Business Week, all about the most hyped startup in Black America, you might call it, and

it is called Greenwood. Bloomberg News retail reporter Jordan Holman co wrote the piece with Brett Pulley. Jordan is actually up here in our New York City studios from Atlanta, taking part in this week's editor's round Table along with Bloomberg Business Week editor Joel Weber. And this is all about, you know, the future with with the future of banking could look like, right, and to be an app on a phone is sort of what a lot of banks

aspired to do. What's unique about Greenwood is that post George Floyd, they the founders behind this recognized that there are just a huge group of Black Americans, Latin X Americans who lack access to black owned, minority owned banking.

And they realized that maybe this, this route through Neil Banking, even though I don't think maybe the founders necessarily knew any of this at the time, could basically open up financial market, the financial market um and allow them to tap into a huge group of people who have never really been catered to in this way. So Greenwood was basically formed, and then everyone's been waiting for it ever since.

Seven hundred thousand people have been on this waiting list and just recently, slowly we're starting to see some of them get access. So Jordan's who who are the people behind this vision and and how have they mass mastered hype? Right, that's such a great description. So the founders are Paul Judge, he comes from the tech world, um. And then you have Ryan Glover who's also UM entertainment and they both live in Atlanta. So like you said, they are not

from the finance world at all. But what they really do know is culture and they know how to make content. And so for all of the seven hundred thousand people who signed up not knowing what this app was yet having this name Greenwood, which obviously has these historical residencies, um, when you think about the massacre and touls Uh, they just know how to market this really well. And they brought in civil rights icon Andrew Young, you have Killer Mike,

who is for the younger group. Um. So they've done just such a good job of building the hype. What's happening now is rolling out the product. What does that look like? Is it actually going to solve this racial wealth gap that is so entranced in the country. And then also will it provide. Um, will it like live up to what middle class black and Latino Americans want, which is this a banking service, super accessible that understands their needs, um, and that really speaks to them. I

mean my question is will really be a bank? Right? And this has been the problem, like your story, just so getting into the fear that many Black Americans have had when trying to access the established bank community, which is increasingly or is has largely been run by white individuals that have kind of pushed them out. What I love about this piece is we do dive into the history about basically the horror of being a black person

banking in America. And it starts all the way back at the end of the Civil War and was that civil rights movement, But it's so much longer than that. And there was Freedman's Bank, which, uh, the Congress enacted and said, oh, for the first time African Americans are earning wages, They're coming out of slavery, and so African Americans got really excited about the prospect of one earning money, saving it and hopefully building that generational wealth. But it

was so mismanaged. This bank was run by white people. Um, you know, there's speculation all of these things, and so when a bubble happened, most of the depositors lost their money. And then you see and throughout the years it did

not get better. There's redlining, there's all of this. So what Greenwood has the opportunity to be is a black owned bank or neo bank that is bringing in all of these important icons and saying, hey, we are for you, and we are rolling out content around financial literally see, and we're gonna make it fun. We're not you're not thinking about like going into a bank and maybe not being understood. But Jordan, what you do also is right

about this tension that exists. Even though Greenwood has these ambitions, it's still working within a system that is dominated by banks, by what you describe as essentially white controlled banks, because it has to use another bank in order to provide its banking services. You write that the fintech is setting out to build a black powered banking system being funded by white controlled banks, and its services provided by another white controlled bank. Explain what's going on there, but also

how Greenwood is trying to make it different. For sure, So as a neil bank, you are not a bank. You need to be ensured by fdi C Bank. And so when the founders went out, like at the very beginning, as they were trying to build this up there like it would be great to be backed by a black owned bank. But the reality in this country right now is that there's only about twenty black owned banks left in America just don't exist. Yeah, and they do not have the scale of the largest banks that we all

probably bank with. And so when they were building the system, they realized they did have to work with the white owned bank because that is our financial system right now. So even though you know, they were trying to be revolutionary, Uh, one of the founders told us, the revolution is complicated. And so even they do have the Founders do have majority's share of it, but a lot of it, you know,

white owned banks are involved. They are the investors. Um Greenwood is backed by Wells Fargo, JP, Morgan, Truest, all of those. And that's just the complicated reality of banking as a black American. That was Bloomberg News retail reporter Jordan Holman along with business Week editor Joe Weber. Check out the entire editor's roundtable. You can do that at business Week Dot com and also be sure to read our international cover story on social media's role in the

French press eidential election. You're listening to Bloomberg Business Week. Coming up next Mattel's president on rising production costs and the company's next big growth play. And I wonder if that includes Barbie hitting the big screen. You made sure to get a question in there about Yeah, this is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. We'll check out

shares of toymaker Mattel. They have seen a double digit percentage rebound since falling to a six month low back in October. We often check in with the company's CEO, E Non Cries, and this week President and CEO Richard Dixon was here in the studio to map out Mattel's growth plans and supply chain strategy, including a recent move

to double the number of its employees in Mexico. Part of the strong performance of our supply chain this year is attributable to our scale, our expertise, and are flexible model. We've spent the last several years through a capital light program consolidating our footprint geographically, We've re oriented much of our manufacturing footprint to be more flexible, and as you mentioned, recently expanded our facilities in Mexico, um and for a

variety of reasons cost reduction, consolidation. Obviously, close to shore helps with shipping and speed to market um and in general, I think the supply chain for Mattel has been a competitive advantage. You know, while the world is dealing with incredible challenges both in supply chain issues inflation issues, I think the performance that we've had in our supply chain has really proven that it's a competitive advantage from Mattel. You guys were doing this prepad and Netmaic, weren't you.

We've been working on this for several years. It's part

of a capital light model, that's correct. How much of though the tensions the geopolitical this is one of the big macro rethinks that we're having right now about we're seeing it certainly the energy market, I mean energy oil obviously very important to plastics as we know, But how are you rethinking about kind of where you're getting things because you're like, you know what, geo politically we can't say globalization is going to cure all that helps us.

How much of that is also at play in this that might make you do even more aggressive moves in

terms of protecting that supply chain. It's a really important part of our strategic roadmap, and I think as you've seen over the last several years, by example, you know, through consolidation as well as geographically expanding our footprint, UM offsetting if you will, any reliability on any particular market whatsoever, and in fact UM opening up various different plants in different countries for the same brand gives us the flexibility, the nimbleness that we need UM to accommodate and to

always keep the business moving despite political issues that may be arising in local markets. It's proven incredibly effective, particularly our performance in one We're in a quiet period currently, but you can see the performance in large part due to our our ability to effectively get product to consumers and retailers on time. So if there's a problem somewhere, it's very easy to say, Okay, plant number A, you've

got problems plant number ERE, We're just gonna amp it up. Yeah. Well, I wouldn't say it's that easy, but certainly it's not easy, but you're not a CEO. We have incredible expertise that have been with a company of a very long time and added new talent as well, but strategically made a concerted effort over the last several years. So you know, we didn't have to react in real time because we

were already moving strategically. But did you say when that happened, You're like, man, we're waiting ahead of the game because we would have had to do some shift. We we certainly felt confident in our strategy and in the plans that we had and executing bar none within the industry besting class. And I think that continues to be a strength of Mattel and we're building upon strength. Yeah, Richard,

what about when it comes to rising commodities costs? This is something that affects every company, whether you know, not just companies that you know, our airlines or oil companies. But the price of of uh W t I is up more than thirty five percent just this year. Tell uses a lot of plastic you have to ship stuff.

Uh how does that hit margins? Well? Look, uh, you know, cost factors have been you know a real issue in our business and in every business for that matter, and we've had a couple of years of significant inflation and we do this year is different. This year is to hate to tell you there's a lot of plastic and toys there are working on that too. We've got a

lot of sustainability efforts in place, UM. But it looked through a combination of pricing UH and cost savings, we expect to exceed inflation over time UM and through higher prices or better manufacturing or lower There's not a silver bullet, right so I mean there there are pricing adjustments and strategies that will take place across our portfolio, and there's also cost savings as well that we've been also sharing

and enjoying as part of our structural simplification plans. The two combined, if you will, many gate inflation to some degree and contribute to the margin expansion that we have UH shared over time. UM. Granted, we've we've spent a lot of time talking about the impact of inflation and supply chain, but as you can see from our results and from the guidance that we've given particularly in a quiet period right now, but from our two thousands to me on the side, again, as we take as we

take strategic price increases and look for cost savings. The most important part of our consumer proposition is to make sure our consumers really do love and get the value and innovation that our toys provide. But you're confident that the consumer can handle price increases, that the consumer is willing to pay, that you have that pricing power at

Mattel to raise those prices. I believe that our brands resonate with consumers around the world, and I think it's going to be um the innovation and the brand reputation and the quality that ultimately consumers judge uh and and jury in the in the toy industry. Where is the big growth Because we talk about you guys, I've talked with the folks at w W E. I mean you

have these partnerships, these alliances. You have older collectibles n f T s I assume play into the older collector of Mattel brands content creation, Barbie movie, Like, when is that happening? Where's the real growth going forward? And answer it all in two minutes? Well, I think you have to stay, take a step back and look at our our strategic roadmap, which has really been to be an I P driven high performing toy companies, very Disney esque. Well,

it's it's it's very Mattel. You know. We we have a portfolio of incredibly strong i P many of which as you mentioned, and there are a lot of brands within our portfolio that have you know, stood the test of time and could be revitalized. Masters of the Universe is a great example of that. A huge property in the eighties, ran dormant for decades and we brought it back. No, I didn't play with might might have missed my generation. I don't know. I don't know that. But anyway, it's

back and it's it's arguably better than ever. Um. But I think that the growth strategy of tel is really to continue to expand our i P into verticals, digital gaming content and f t s as you mentioned. But is it the adult collector that's the real like, where's the growth come from? It's both, It's it's literally across the board. If you look at our performance, every category that we're in and we're in seven categories, all grew. We grew market share across the world. Our biggest most

important franchise brands are all in growth mode. Barbie, Fisher, Price, Hot Wheels, American Girl, Thomas, the Tank Engine, our games portfolio, you know, single largest card game in the world. You know, we've done a lot of work. Were vital in our brands with the Mattel playbook that we take a lot of pride and innovation, cultural relevance and executional excellence have been the forefront of making our business successful. That's Mattel

President and CEO Richard Dixon. By the way, Carol, I know you are pretty excited about that live action Barbie movie that's right now in production. You couldn't figure out where the set is, so I guess you're just go to TMZ to get the pics. I was hoping for a few clues. Is it, Ryan Gosling, Margot Robbie. Come on, it's gonna be a lot of fun. I gotta keep that stuff under wraps them so people like you don't show up on setting. All right, Still to come on

Bloomberg Business Week. The cultural and demographic shift taking place as wealthy consumers you know where they're going. Well, we're not going to tell, but they are definitely leaving New York City. Okay, find out which southern market is reaping the benefits of the Big Apple Exodus. I think you can guess if you're a regular listener of this program.

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 nineteen and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. Another story that was among our most read when it hit the Bloomberg Terminal takes us to Palm Beach, Florida and

it's sizzling retail scene. It is the lead story in this week's Pursuit section Bloomberg News. Wealthy reporter Amanda Gordon co wrote the piece, and she explains that the coastal town is making the resort lifestyle feel more full time, thanks in part to a high end mall known as

the Royal Point Siena Plaza. All these New York brands have opened there since the pandemic started, and what we find is that there's a sort of sense of community that you know, the mall culture has always helped foster you know, in the suburbs when they were first being developed. That's kind of the history of malls. And in this instance, there's this big boom post maybe post COVID or at least at the moment, and and this mall has become

a hub for the sort of dynamism that's in the community. Well, I also think about the community in general, right, You know this firsthand because you've been going back and forth there. I mean, how many people all of a sudden have moved down there. And I feel like there's been kind of a juice in terms in terms of energy that's down there, right, a mix of kind of old money new money. Right, There's been a lot of movement and it's playing at it feels like in the retail sector

as well. Yes, so there are in fact, while this mall has taken sort of become a hub for New York brands, uh, there are there's activity all over town where um, you know, vacancies are being filled and new

shops are coming in. And one of the drivers of this is actually something we've probably talked about before, which is the New York restaurants and the fact is that although people are craving the new and special, especially if you have decided to uproot yourself from where you've been living and you're in a new community, you also crave the familiar, right and you also crave that sort of

kinetic energy of running into people that you know. And and someone told me while I was reporting the story, it's not even what, it's who. It's the fact that when you go to this place and there's a lot of outdoor space, beautiful landscaping, and it's not kind of like fancy and and sort of in a form or daunting way. It's it's very informal, which is kind of

like Palm Beach, but you run into people. It's like, as you write, a country club in some ways, and it serves as, uh, sort of a country club of sorts, especially at a time when well, people do things there that you're not allowed to do at country clubs, like actually have what business dinners? You're not allowed to do that. I didn't know that, uh. And also the waiting list of these country clubs are so long that these newcomers

aren't going to be able to get in anytime soon. Yes, there is sort of a democratic nature to uh, to common spaces. It's not a public space, you know, it's not a town space like the park across the way. Um. But at the same time, you know, it's a it's a well groomed space that is welcoming. And Samantha David, who you know, had the idea to come in and revive this. This place actually great timing because it all got into place. Sant Ambrose came in before you know,

in two thousand sixteen, so ahead of the pandemic. Basically, well if you think about it, right, Yeah, everything was set up, all the foundation was laid for this to happen. And one of the interesting things is that now they're now that they have sort of the basics down um and they have these galleries in from New York, so

there's this different kind of cultural life going on. And Jeff Coon's was down there for his opening and by the way, his work sold for eight millions, So this is a mall where you know, a piece of art can be bought for eight million. Uh. But in any case, the restaurant that's going to be developed out of a now vacant building two hundred seats on the waterfront, it's actually going to be the only restaurant that's public um on the island because the other dining areas are in

the clubs. So it's just adding an amenity, and it means that, you know, the Palm Beach might become more open in a way, right you do you feel like when you're when you've I've been down there just for work and stuff, and it's it does feel like it's the price of the clubs and it's just very exclusive and there isn't a lot of at least this is a few years ago, pre pandemic um, and this does feel like a very very different take. What is it doing?

It just sounds like that it's revitalizing all kinds of retail space in the area. Yes, I mean there there are lots of other areas where you can shop. It's not that Palm Beach needs more retail, but I do think that we'll see it all being upgraded. I'm wondering about the sense of permanence that you got from the people you interviewed, the people you spoke to. Are these people moving from New York City to Palm Beach? Is

this permanent? Well? One of the things that we note in the story is that people are getting younger, who are who are moving and they have kids. And you know, the enrollment since the pandemic started at the private school on the island is up thirty. So what I have learned from my interviews is that the people here, the people who have moved, love the fact that they can run over to the school and five minutes someone said, I don't have to go to Randall's Island to see

a soccer game. You know, So there is the sense that there's less friction. That's Bloomberg News Wealth Team reporter Amanda Gordon read more on the Royal Point Sienna Plaza in the Pursuit section of the magazine. You're listening to Bloomberg Business Week, Still ahead, Why Oakview Group is betting big on Las Vegas. CEO Tim Lae Wacky joins us. Next, this is Bloomberg. You're listening to Bloomberg Business Week with

Carol Messer and Bloomberg Quick takes Tim Stinovich from Bloomberg Radio. Alright, so till we know the Oakview Group. Man, they have built state of the art arenas. They've done it in Seattle, New York, Austin, and now they're going after since city here with more on the company's plans is CEO and co founder of the development company, Tim lae Wacky. We previously caught up with him and New York Islanders owner John Ladecki back in November. That was for the grand

opening the UBS Arena here in New York. Yeah, and before we talked about Oak's bet on Vegas, Tim gave us an update on his Long Island Arena just under five months into operation, and everything is an education obviously, the biggest issue We've had to work with this transportation and how we get people there, how you drive there, how you get out of the parking lot. Um, you gotta deal with crosstown and so there's no way to reinvent that. I've I've learned at the end of the day,

crosstown traffic is crosstown traffic. And so what we had to deal with on the turnpikes and on getting people to and from the building, we have to inherit the system. Now, all of that's gonna change in May when we open up both sides of the Long Island Railroad station that service UBS. So that's gonna help us and be able to get us getting customers both ways. On the Long Island railroad line, so that that that we're looking forward to that. But in the arena itself, the v I

P hospitality has been unbelievable. We've sold out of all of this. I think we have one suite left, which is fantastic. Our club seats sold fairly well. We we only have a couple of dozen club seats left. Sponsorships gone well. But we were talking about how hard it is to open up four arenas in six months, but how almost impossible it is to think about opening up four arenas in six months in the middle of COVID.

And so our our company are folks that do this the development side, all of the architectural firms, all of our general contractors. When you sit there and look at the ubs and realize we opened that up in the middle of COVID, and we open up Climate Pledge and then and Market and Savannah and now the Moody Center opens up in two weeks in Austin UM. It's really it shows human will power. We can we can get through all of this, we can make this work. We

can be optimistic and entrepreneurial. And we've been rewarded because business is really fantastic at all three of the arenas, and in Austin we have twelve concerts in the first month that are all completely sold out. It's incredible. All right, Tim, let's go all in on Vegas. Tell us what you want to do? Their three billion dollars in calling it

an entertainment campus. What is this all about? The concept is, if you look at live entertainment in Vegas, it is doubled, tripled, and quadrupled with the number of shows and the number of artists that want to play there. And ironically, although there's five arenas in the market place, only one of them is fairly new, and that is the where the

Golden Nights play at the Mobile Arena. So the concept is there that we build a point of destination where the hotel, the casino, the arena, and a new theater are all interconnected and intertwined, designed together so that when you stay in the hotel, you could go right into the arena, right into the theater. We try to think about a point of destination. It becomes a district for live entertainment, similar to what l A Live was in

Los Angeles. Now we create that in Las Vegas. We're the first resort that you're going to pass when you come into the fifteen and you're driving in from Southern California, where five minutes from the airport. So instead of going right into the strip and the congestion, you go left into our our district, and our property is right next to where the Bright Line terminal would be that would connect a speed train between Southern California and Las Vegas. So it's kind of a vision for where we think

the future of Vegas is. And we've seen hotels and properties built around the exhibition business and the convention center business. This is being built around the live entertainment business. Tim where are you in development right now? When is it gonna open? We we it's gonna take a while, so we're probably a year away from pushing dirt. We've brought on both Populous and Gensler to help us design the

arena and to help us design the district. We're bringing in some pretty smart people on getting us through the entitlement. But we're in a perfect part of the town as it relates to traffic. We're probably the least congested piece of property because we're at the fifteen and the two fifteen, So a lot of access on and off both of those freeways to our particular piece of property. But I think we're probably pushing dirt next year, and then this is going to take about three years to build, so

we're looking at by the time we open. It's so interesting to talk to developers with a time horizon like this because so often we're talking next six or twelve months in financial markets and trying to get an understanding of the gauge of consumer tims. So so help us understand the calculus that goes into making a long term bet like this, that you know that you're comfortable investing billions of dollars and saying, hey, this thing is going to work out. What tells you that's that's that that's

the case. So by the way, you're right, you're in minutes and hours right, if you look at the world you live in, just it turned to look at what just happened with jet Blue. So what we have to do is kind of it requires a little bit of nostrodamus and an entrepreneurial spirit. You've got to see three or four years down the road where all this is going. Well, if you segment the thinking here and say, first of all Vegas gonna get any less popular, I don't think.

So you look at what what Resorts World built, their phenomenal new development there, and there's new developments with the Found Blue and others coming online. So I think the demand for people that want to go to Vegas is going to be fantastic. Is live entertainment going to continue to grow there? Fact is there's more residencies and more artists. When when we started with Selene Dion at Caesar's, there were a half dozen artists that did residencies and live

entertainment in Las Vegas. Now there's over thirty different residencies of artists that ultimately are doing extended stays in Las Vegas. If you look at sports now, you suddenly see what happened with the Raiders in the new stadium. You look at how well the Golden Knights have done. It's pretty amazing. Because what you've got to think about with Vegas is it's not the two to three million people that live there, it's the fifty million people that come in from all

over the world in order to spend time there. And obviously we want to be in a position where we prepare and build an arena that if the NBA decides to look at Las Vegas, we would meet all of the standards and we would create an economic upside within that arena that would help make the NBA a economic feasible proposition to somebody in Las Vegas. Yeah, Sports, you definitely are thinking about this and all of this. How

big is it? An if if of an NBA team, What are the conversations to him that you're having around that so far? Well, we we It's very clear to us that there's only a couple of people that are going to make this decision on the NBA in Vegas. One is the commissioner, Adam Silver, and the other is the ownership group and the thirty owners. They have to decide if they want to expand that's not our decision. Nor do we know something that no one else knows.

So we don't have any expectation, any guarantee, or any promises made to us from the NBA. And by the way, this arena and this district that we're building, it will work just fine with of entertainment and other sporting events. And so we can live off of music, we could live off of UFC, we could live off of boxing, We could live off of other events that we could ultimately activate into the arena, and without the NBA, we don't have the calendar issues, so our dates are much

more populous for those kind of events. That said, if the NBA gets to a point where they look at expansion, we certainly have Climate Pledge Arena in Seattle that is a perfect arena now for basketball. We've designed all of our naming rank deal, sponsorship deal, suite deals, premium deals so that we have the upside of the revenue for the NBA. We have an ownership group and partners with David Bonderman and the local partners in Seattle that are

ready to step into the NBA. So now you combine that with Vegas, and yes, we do have conversations going on with books that are interested in the NBA in Vegas. To have two world class arenas that are two standards met for the NBA, that both have the economic wherewithal to drive the kind of revenue necessary. Now it's just awaiting their decision if they When we started Climate Pledge Arena and we started the construction of that that arena in Seattle, we didn't have the guarantee of the NHL

but we knew they would come. Well, I think we feel that same way in Vegas. Where are you when it comes to naming rights. We're at the UBS Arena in Long Island. Um, you mentioned the Climate Pledge arena. What are you thinking for this project in Vegas? Yeah, so obviously we're gonna get Moody Center open next which which is a couple of weeks from now. By the way, one of our first events is George Straight and Willie Nelson, So that's two nights of those two that's gonna be fun.

I think we then will turn our attention towards not only the planning and the design of Las Vegas, but the economics of Las Vegas. Our group, our Global Partnership Group, has sold more naming rights for arenas than anybody naming rights. If I had to guess, I'm looking at what Crypto just paid removed a bowls and that was thirty million plus. It's probably in that ballpark. If you're a gambling man, would'll it be a crypto company? Well? I am a

gambling man. That's why I'm betting's rebillion on Vegas tonight. I'm not going to make that commitment, but at the end of the day. I think we've already heard from about a half dozen companies that are interested because they understand that fifty million people coming into Vegas from all over the world and the platform this arena could have. That's Tim Lae Wacky. He's CEO and co founder of oak View Group. And that wraps up the weekend edition

of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and I'm Tim Stanabeck. Be sure to tune into Bloomberg Business Week Monday through Friday. It starts at two pm Wall Street Time on Bloomberg Radio. You can also watch our daily broadcast on YouTube. Just search Bloomberg Global News and check out our Bloomberg Business Week podcast. You can find it at Bloomberg dot com, Apple,

or wherever you get your podcast. Bloomberg Business Week is available on newstands now, at Bloomberg dot com, at business week dot com, and always on the Bloomberg terminal. You can also see me on Bloomberg Quicktake. It's available at Bloomberg dot com, slash qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend. You're just everywhere, aren't you. Yeah, they can't get rid of me. We don't want to have a good weekend. This is Bloomberg.