Bloomberg Businessweek Weekend - August 19, 2022

the opening our wallets, that's for sure. And the latest FED minutes tell us that officials agreed last month on the need to eventually quote unquote at some point. Right, that's an important phrase. We're gonna obsess over that. Yeah, dial back the pace of interest rate hikes even as they continue to gauge how monetary policy tightening is working towards curbing inflation. Coming up, we're gonna look at how rising costs are affecting a key line item in corporate budgets,

I T spending. It's great read on the economy. Also ahead on the broadcast, two players in the alt energy space. One is profiled in this week's international cover story will explore how China's electric automaker b y D became the world's third most valuable automaker by going against Tesla's playbook. And what about turning your e V into a backup power source? What do you think to him? Yeah, I mean if I had an e V, if I had

a garage, if I had a house. Details details. Well, we're going to check in with the founder and CEO of Decibel. He'll be stopping by. Plus our domestic cover story on a mc CEO, Adam Aaron's quest to keep his company a meme forever. All of that to come. We begin with an up close look at the state

of the I T market. We got some insight into corporate spending on computing infrastructure from Cisco out with an earnings beat and an upbeat forecast on Wednesday, and then right after Cisco reported, we checked it with Crawford del Prette. He is president at International Data Corporation i d C. They are a global market and advisory analysis firm. They check in on technology, telecom and consumer tech markets, just

all that's going on there. Crawford joined us in studio with a look at the big picture for i T. What we see is that even though we're sort of getting closer and closer to a global recession, we're gonna likely see the scenario where in past cycles, i T drops below the rate of GDP, so people sort of

snap back and they just clamped down on spending. In general, we expect, like we saw in the last downturn, which was in that you know, let's just say we get GDP down to about maybe two percent this year, we expect i T we should be in the five to

six percent range. So what that kind of says is that unlike these past historical cycles were all the way back to the mid eighties, i always was slammed lower than GDP, we're going to see people lean into tech and invest in tech in order to modernize their business

and frankly get through these down cycles. And I think what you saw in someone to be more productive or just because they have to happen because there's a disruptor around every corner, because they have to keep their business models modern and um oh, by the way, you know, they're stomers are demanding it. Um so there's just no check is really your only way out. It reminds me of I think you know what we've heard from Goldman Sachs right right, Katie Kotch at Goldman Success that management.

When we're at milk In, It's like in a downturn, people will cut back on things perhaps that are discretionary, like marketing people, if they're not going to pull back on tech, Crawford, I mean, is that the difference between this potential downturn and downturns of past. I think where tech is and how tech is the central nervous system of a company is a big, big part of how this downturn could be different. You can't uncommit or decommit from software as a service right once you're in, it

becomes a core part of your business. So fine, the incremental pack you might buy on a SAS platform that can be up for debate, but you're not going to rip your instance of salesforce, your your instance of work day. You're not going to take those things out of the organization. So they become very, very sticky. And that's why we see stained demand and we're gonna see double digit demand for things like SASS. Software is a service or a

platform is a service. Now talk about personal computers, those are one of the first things you can say, you know what, workforce, go an extra year, go an extra eighteen months. We'll clamp down on that stuff. But the stuff that tends to be really sticky is that as a service. But if a company is faced with making a decision of hiring more, paying more, versus spending doing the I T spend, my gut from what you're saying

is that they're going to do the spend. They're gonna do the parts of the I T span that are critical to the business. And what's changed in the last decade is more and more and more services are critical to inventing those new services that your customers are going

to depend upon. Given the choice, you've got to spend on core I are we seeing, Crawford, any of this being pulled forward, And we talked about this being pulled forward during the pandemic, But are we see any of it pulled forward right now for reasons over concerns of inflation When companies are saying, Okay, I don't want to wait a year to do this because if we wait

a year, it's gonna cost ten percent more. We saw some of that in the software Older people basically said look, software prices are very, very high, and companies are passing those those expenses down to end customers, so people did tend to do a little forward buying. Probably the best example of forward buying we saw was during the pandemic work.

We believe we pulled, you know, maybe a quarter of a year a PC shipments forward when people went home and we saw, yeah, that was more hardware based, software based. It's a little bit harder to say some of the project based work in the services world, there's a little bit of that where we've seen some of the service of our you know, able to pass those costs onto customers and customers having to accept them. How how is inflight inflation impacted by I T spending? Is it a

pressure or is it a reliever? There was a lot of cynicism over the last few years about the productivity gains associated with tech um. I think what we learned during COVID was that they're absolute, massive productivity gains associated with tech So I would say that in a lot of ways, it isn't a relief valve for companies to be able to say I can serve my customers in

a new way. Now having said that, the costs. Inflation costs are absolutely being passed on to customers in the cycle, whether that's in supply chain constraints and availability of parts, or whether that's in pure labor costs in the professional services space, or the software costs have been passed on. And we've seen that right down the line. Okay, so we're on the verge, as you said, potentially of a

global recession. What are the data points that you're looking at so so so what we're spending a lot of time on is basically what's happening in China right now. China is you know, one of the second largest I T markets. We're clearly seeing a cool down there. Are we going to continue to see sustained spend? Is the government frankly more okay with reduced spend and it reduced spend going forward and reduced outlook for the overall economy.

And we think that that is absolutely a possibility. That was Crawford del Predd, President at I d C International Data Corporation. Up next, we turn our attention to the gender gap in the C suite, where men still far outnumber women. Our next guest has a plan to level the playing field. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Messer

and Bloomberg Quick Takes Tim Stinnoby from Bloomberg Radio. Well, our next guest is on a mission to centralize the role of women as economic, environmental and social change makers who are creating a high growth future. Patients. Merrimai Ball is founder and CEO of Women of the World Endowment. It's a global endowment focused on what's known as gender lens investing. She currently leads the fixed income business with

a current portfolio of more than three billion dollars. Her new book is called The Double X Edge, Unlocking higher returns and Lower Risk and of course to him that double X represents the two chromosomes, the two X chromosomes, noting the female gender. Now, Patients help build out the banking on a women platform at the International Finance Corporation, which is a member of the World Bank Group that

works to accelerate private sector growth in developing countries. She's also a member of Apollo Global Management's Impact Advisory Committee. Carol and Bloomberg Market Senior editor Mike Reagan recently caught up with Patients and They began by asking why she thinks the world undervalues one of its greatest resources women. So we know that nine eight percent of capital is

that is under management today is managed by men. Yet we also know that when you have gender diverse teams allocating capital or making any decision, you're twenty one percent more likely to actually get out performance in profitability. You'd likely to mitigate downside this better, you're likely to have your dollar doing more than one thing at any given time because women prioritize, yes, making financial returns that are really important, but also the opportunity to drive for other

types of changes. And so why do we not see change to get to a point where we're talking about current what has been happening in legislation currently, for instance, the Inflation Reduction Act, it's looking to solve inflationary problems that are leading to potential for recession in et cetera. But it's also looking to so climate climate issues, climate

related issues. And here we know that when women are in these decision making rooms, whether it's ceased with positions or on boards, we actually get better upcomes all around. Companies have better policies and standards to adea to we have better disclosures with better tracking, and we also have better performance. It is interesting that with the numbers telling us that it is you are going to make more money.

And mckinson did a study in which show that if we just if we had every every country in the study that they had of ninety countries just doing better to improve gender gender diversity in in decision making, the world could actually have a twenty five trillion dollar gained to global GDP, even their conservative studies pointed to twelve

trillion dollar games. But it's true though, I think, you know, if you want to affect change in the world through the capital markets, you have to go hand in hand with positive change and uh something on the P and L state, you know, good returns uh to back it up. And so the focus a lot of times patients obviously goes to E s G. We're investing through a sort

of environmental, social and governance lens. What's kind of alarming this year's we've seen a big backlash to that from a lot of politicians, you know, the quote unquote anti woke type of politicians. Do you think it's leaving a mark on the industry? Is is there any damage being done to the notion of e S g from all this backlash we've seen. Well, unfortunately, yes there is a backlash and it is resulting in some headwinds. But here's what I have to say. Nature, Mother nature is doing

what it needs to do. We have fires in California, you know, floods in Australia, fires in Europe, etcetera. Nature is telling us that we need to do something and e S investing has a place and it is a place that can be both financial and impact related. One of the things I wonder is the role of women, Like what do we lose by not doing so incorporating more women into our world in terms of growth, opportunity, political progress, climate change, I mean, some of the it's amazing.

These are the things we talked to on a daily basis with so many of our guests. So what are we losing by not bringing more women into the fold? You know, in the book that we just wrote, we looked at what it is that makes men and women different. They're not an equal unit of productivity and what are those things that are different? And it is one the long view. Women tend to prioritize the long view over

short term gains. They tend to have collaborative leadership styles and tend to be more risk aware when it comes to the challenges that we're facing. They also tend to be more approximate to those challenges. That's an opportunity set that we're losing when we don't have them in decision makes rooms, because that ability to see around the corners is just as needed as the ability to you know,

to six short term gains. What it leads to is really a loss in you know, art performance over time in terms of profitability, but also the ability to mitigate risk in a much more structured and thoughtful way. If if you had a few minutes to talk to my daughters, uh, based on your twenty plus years, I believe of experience in capital markets UM in a very competitive, male dominated field. I know my one daughter is thinking about majoring in

finance and maybe getting into the industry. What's the secret to success for a woman? So so, Mike, the first thing that I would actually say is a conversation with you, and then I would have a conversation with your daughters. Conversation with you would go like this, that you know, the way that you believe your daughters are rock stars at home, whether it's your wife, Um, and the fact that you're very comfortable with this decision is being made by them and you following. You know, we need to

have men taking that into the workplace. It is incredibly interesting how men are very comfortable with women taking over all kinds of things in one realm of their lives, but not as comfortable in another realm and in the workplace. That is that's part of the opportunity that the world loses. You know that your your daughter has all the traits that I just um elaborated on, why would you know

a business not want that in the room? And to your daughter, I would say that if she wants to come into financial markets, you know I've been in it for more more than twenty five years, and you know I'm now in my fifties. The world is so much better today. Where we need to be in capital markets is to create spaces where we're not just sticking boxes. So we have this many women come in and and we take that box, but really be very intentional about

what seats we're putting them in. The case we make in our book, the ex ext edge is that when you put them in acid allocation seats. When you put them in those decision making seats, you actually are going to have our performance and over time greater economic pie for ever for everybody. That's what you That's the magic that your daughter will bring to whatever company she ends up joining. That was patients marrymi Ball, founder and CEO of Women of the World Endowment, her new book, The

Double X Edge, Unlocking Higher Returns and Lower Risk. Well, I'm just gonna put out for you, tim women we can solve the problems that els at this point. I know I'm not arguing with it, okay, but you know, I don't know why I got so defensive. I don't know either or thanks to Mike Reagan for joining us on that conversation as well. Still ahead of Bloomberg Business Week, the company looking to shake up the global electric vehicle landscape.

Most people sort of think that the way Tesla has developed itself is the model for auto companies of the future, and by d sort of stands an example of it doesn't have to be that way. More on why a

Chinese TV giant is steering clear of Testla's tactics. 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 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.

Earlier this week, President Joe Biden signed into law the Inflation Reduction Act, committing four hundred thirty seven billion dollars to a range of initiatives from combating climate change to learning the cost of prescription drugs. One major beneficiary the electric transportation industry are Bloomberg business Week International cover story this week examines China's ev giant b y D and why it's being very un Tesla as it makes waves

in the international market. Business Week Assistant Managing editor Jim Allis is here to break it down. Most people sort of think that the way Tesla has sort of developed itself is the is the model for um, you know, auto companies of the future, and by D sort of stands in as an example of it doesn't have to be that way. I mean, b by D is not just a startup and it's a very successful company. It's

the largest EV maker in China. It's also the third most valuable by market cap auto company in the world, after Tesla and Toyota, though a lot of people here probably don't know it much other than that it's a big investment by who else, Warren Buffett, who bought into this company back in the you know, early two thousands and put in with two eight million dollars. It's now a stake worth eight billion dollars. And um, this is

a company very that believes in vertical integration. They've come in and they've said, everybody's talking about chips shortages, and everybody's talking about battery deals. They make their own batteries. They're now the third largest maker of EV batteries in the world. They also make their own chips. They use them in their cars. They are probably going to be a battery supplier to Tesla. They're already a battery supplier

to Toyota. They also, um, you know now I've invested in lithium, minds, all the things you need for batteries. They are just very different. The other thing that's really different is that they are making cars for the sort of middle class person. I think that's huge, and that's that's a big market. But it's a very different approach with the Tesla came in and Tesla said they were doing Model three at what thirty k, right, and the average price for that it's now about forty six. So

what would it be y D set you back? Right now? You can't get one, and you can't get one in the you can't get one in the US. But it would probably be about a third less than comparable Tesla in China where they sell Hit to Hit. Their Otto three um was about half the price of the Tesla Model Why, which would be comparable? It should be sort

of e V car. It's a different marketplace though, because when you're saying I'm going to make cars for I don't wanna call it Middle America, it's Middle China and Middle Asia. You're not going to be able to charge as much, but you're also not going to be able to have the same sort of level of profitability. And right now, about two percent of every of revenues goes to profit at b y D, about ten percent of profit goes to um UM. You know, a revenue goes

to profit at Tesla. Ultimately we will be able to get these cars in the United States and and I do think about what that means for some of the competition and specifically, Yeah, I mean that that is the goal there. I mean one of the big things about the ideas it's been expanding global. It means in Australia now they're they've got deals now for Germany. They view

themselves as a global company. They just got then they're going to use this period now when everybody wants to have evs but everybody doesn't have the capacity to produce enough evs. They're using that as an opportunity to sort of build into the market. Also, Um they have UM, you know, they're they're doing something that China wants to do, which is to become more of a producer, global producer

of autos and um. Just this morning, um, the Chinese Premier Leko King went to be at b y d S headquarters and to say, you guys, hey at a boy you know, get out there and you know, sort of do this for us for the future. I mean, they view that as one of the big potential consumer products of the future. And China must have a much bigger piece of that and a company like b y D gives them a beachhet than that. And I just want to point out, I mean, the eight rs do

trade on the New York Stock Exchange. They're up for the year just shy of ten percent. But I do think about, you know, the access for investors ultimately, especially when you're President ge it feels like, you know, really honing in, homing in on certain industries and either restricting what they can do or whether they can be listed on the New York Stock you know, on US exchanges.

And I do wonder what the futures are, how investors ultimately will continue to be able to tap into this well, I mean, the the idea at least the Chinese would like, um, you know, the rest of the world to be able to help them fund this transition. But um, a lot of countries increasingly reviewing, you know, sort of the auto business as it's a potentially protected industry something because it's going to be one of the biggest consumer products forever.

I mean, it's it's trans transit is just that, and so's It'll be interesting to see just how dependent do we want to become on foreign automakers who aren't German or Japanese. I gotta say it does feel like the EV market there's gonna be a lot more competition to him, and things could be changing, not just here in the US with Ford, you know in GM, but also with the international companies a lot more players. All right. That

was Business Week Assistant Managing editor Jim Ellis. On this week's international cover story are Bruce Eronhorn and Dentedly put it all together out of Hong Kong. You're listening to Bloomberg Business Week. Coming up next, evs from a different angle. Find out how your electric vehicle can actually help power your house. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovich

from Bloomberg Radio. All right. In our last segment, we talked about China's rising power in the electric vehicle business and when we think about e vs, we generally think about an energy efficient way to power our rides, but what about our houses. Well, this past week we spoke with Mark andre fo J, He's founder and CEO at the Montreal, Canada based Decibel. The company produces what it calls a home energy station and what that does is it turns your EV into a backup power source for

the home. Mark Andre began by explaining why a regular power generator can be a big investment. The second largest asset purchase for any family is or car, and the car sets into driving most of the time. And right now California takes this Florida with hurricanes, we have lots of blackouts. So the concept is very simple, how to use the energy from the EV to power the home during a blackout. I already pay for that energy. I already pay for that EV, so I want to leverage it.

It's looked at simples some papers, but now we need to combine the technology from EV that is still in this infancy, and of course the world of regulation inside homes to make it universally compatibles. And this is really what we have achieved with our discabel technology and our Discabled platform. We create a universally compatible solutions that can take the energy from the evy to power your home during the blackout. Is this essentially you know people by

generators right just in case? Is this essentially kind of forward looking alternative energy generator? Is that basically how we should look at it? I think it's one of the use case. But Discabel is a for in one device. We do much more than this. The discabel is a home energy stations. It's also your solar energy. It's your blackout power using your EV, your station, your battery. It's also your home energy management system, all combined into a

single unit. So not only we can use we can charge your car fasters, we can use the energy from the evy to power your home during a blackout, but also we can charge your EV using your the solar energy that so far is still free and nontaxable. Help me imagine what this looks like here, because you said it's also for use for solar How do you? How

do you? How does that work? I mean, is the idea that you have a solar power You have solar panels at your home and those charge your your e V, and the e V is that power station in your home. Absolutely correct. You put solar panel on the roof of your home and it's going to generate absolutely enough energy to charge your EV and some leftover of the energy

for your home or vice versa. And the car here is used as a battery to start this excess energy are for examples to use this energy to reduce your energy invoice as the time of high costs like dinner time. To use your car as a battery, use solar to charge it, reducing your costs and protecting your ass So okay, so it's not just for emergencies now, it's the idea is to offset the higher costs that you have of

power to so it takes you off the grid. So it takes you off the grid a little bit, right, Well, it's it's a combinations. It's a combinations. Right. The grid right now require massive infrastructure investment. So we cannot go without the grid. We we need the grid in the in North America. Remember something, there's one billion dollars a day of fuel. Let's go to the gas station every single day to power passenger car. Now, imagine all those

cars charging at home in the near futures. In a decade or a decade or so, we're gonna need major investment in energy generation at the home levels. This is where this about home energy stations makes so much sense. We can differ infrastructure costs for the utilities, luring the rates, therefore leveraging your assets in the derived ways, enerating more clean energy and being more resilient energy Marte, isn't this

where out the battery? The answer is very likely. I can say that to you when you drive your cars on on on the highways right now. You're using your battery right now to move your cars to power your home. It's impressive, but we only use a fraction of that energy power to power your home. It's funny, but it's take less energy to power your home then pushing your t V on the highway. Therefore, the usage of the battery is way less than driving your car on the highway,

and still it's to your own benefits. Is to power your home during a blackout is to reduce your energy invoice, and therefore it makes sense. Where are you, what's the growth of the business, what's your plans for coming into the US market. Well, I'm happy to announce that about a month ago, we just got our certification on our platform, one of the most stringent certification for our platform to allow us now to communicate with utilities in real times.

Following the certification of this platform later this fall, also we're gonna start to roll out device and we're gonna start with California, following by Texas, Florida in New York. When when does that happen? So this fall. Later this falls, we're gonna announce a different pilot project and collaboration with different partners in California. So the first unit is going to be delivery and owns in California this fall. Texas may follow in Quan with Florida and Texas in Quan.

Three Do utilities hate you though, because aren't you basically making it so? And forgive me? I go extreme occasionally, you know, aren't you making it so? Individuals can kind of be independent? Right, there's solar panels on your roof, it's recharging everything, and then they're tapping into that power. You can be surprised that I still have friends in the in the utility business. The fact is no, uh.

We may say a love eight relationship, but most of the utilities really appreciate what this a belt can offer. Lets me explain when the utilities want to interact with homes today, nobody takes the call. There's no engineers, there's no CFO at home, right, So if the utilities want to have the support of homes today to maintaining the energy cost, a device need to exist inside your homes. This is exactly what the discipl home energy station is.

So if the price of electricity go very high on the market and they want to support and want to give you back money, for example, to use a little bit of energy from your e V, the disciplit and energy station is going to basically automatically react to that call, and if you agree to it can push back energy, reducing the stress on the infrastructures, reducing the energy cost. This is really where the complimentaryity when the grid happen. But wait, what am I missing? Because I'm just thinking

you're then taking essentially money away from utility. No, right, because you're not, because you because it gives an individual or a homeowner the ability to pop off the grid. Right. Well, the price of electricity vary during the day, of course, when you have a lot of for example, renewable generations solar generation. At noon, the cost of energy on the all sales market is quite low. However, at dinner time

we all cook dinners, we have the path. We have a high demand for electricity, putting the grid at stress. Utilities want to try to level up or flat this curve. This is exactly where the home energy station come at play for them, right, we use it and re resell it at dinner time. Okay, let's talk Tesla here, because this is a company that has a power wall, it's a battery for your home. Got solar small part of the business, to be sure, compared to the vehicles that

it sells. But what's going to stop Tesla from building exactly what you're doing at decibel and including that as part of a supercharger. Because I look at this on your website and it looks like it's a supercharger. But couldn't Tesla incorporate the technology you have and therefore leap frog you bypass you. Well, we we share a common passion with Tesla is to serve their homeowners with more

cost effective, renewable and relable energy. The difference is Tesla, of course, is virtically integrated through technolog the Tesla technology, where Discabel is a universal for in one devices. We support all e vs, we support all solar installers, and we support multiple brand of storage. So it's kind of an open eco system versus a closed ecosystem maybe, but agree.

The second point is also we have seventeen families of patents that we basically passionately developed over the last seven years. That also provided we can build this Discabel at the price point of the market. Compare today, what's the cost the cost for right now the discabel are sixteen If you look at our website at discabel dot energy. We this is an upscale unit is designed for solar storage evy and minds mounted US three thousands per feet and up.

And this unit, if you fully install, is an average twenty less expensive than the competitions. So the discabelue and it's start at five thousand dollars and after that the cost is vary according to the number of solar poun's gonna put on your house, the installation costs and if you decide or not to put permanent storage into your home.

So a typical installation can go as high as thirty thousand dollars, can be as low as seven thousand dollars, according to your need, according what is good for your family. What is important to remember here return and of an investment for your system is usually between three to five years, and this system is designed to last ten to fifteen years, so it's going to generate more money than you're gonna

pay for it. Are there any tax incentives in place now in different states in the US or as part of the Inflation Reduction Act, and that will help offset some of these costs. Absolutely in the Biden Inflation Reddiction Act of three d and sixty nine billions or something,

there's a large aspect. Uh, it's can go as of as twenty eight thousand dollars cash back per house in Dusk program if you consider everything that was Mark Andre Fourge, founder and CEO of Decibel, And that wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovick.

Ahead in our next hour, we talked to the chief executive from one of America's biggest privately held pizza chains, Marcus Pizza, and we'll dig into a plant based meat substitute that's making its way onto menus at a Michelin starred restaurant. Plus our domestic cover story, Have the head of a MC created an army of meme loving fans and why it's getting harder to hold onto them. 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. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including We're talking pizza with the CEO of Marco's Pizza and how the chain is now peddling one billion dollars worth of pizza pies a year. And you might recall how our Bloomberg Pursuits team detailed the many qualities of mushrooms in a recent edition of the magazine. I love that issue. It's a great issue. I was recommending it to a

friend last night. The CEO of one of the featured company's, Nature's Fine, stops by to explain how a fungus born out of a Yellowstone hot spring is finding a new home in supermarkets and on high priced restaurant menus. Yeah not yet, I had to hold back. I know, I know. Plus elite personal trainers reveal what it's really like to

be a Jim Junkie. First up this hour, though this week's US cover story, It's all about how AMC Entertainment CEO Adam Aaron has cultivated an army of followers who sent the stock soaring in a retail trading frenzy last year. Unique tactics in looting MIMI membership schemes, free for all learnings, calls, the comical stock ticker ape That's Ape, and the bizarre acquisition of a seventy acre goldmine have grown at the company's profile. The next challenge turning the increased exposure into

profits with more. We're joined by BusinessWeek Media Entertainment and Telecom editor Felix Gillette and the editor of Bloomberg business Week, Joel Weber. In the time that um, we were sort of initially talking about this idea for the story. We're in the middle of the pandemic, people who were like, hey, movie,

movie theaters, that's not going to work out. And then lo and behold, AMC became this meme stock and Adam Aaron was the CEO of the company, and it sort of was like, you couldn't have imagined a more theatrical ceo to be in charge of a publicly traded company happened to be the world's biggest theater chain. And he kind of met the moment in this amazing way where a c became a meme stock and he was very flamboyant, very amazing on social media. It really kind of made

him endearing to all these retail traders. In the middle of all that, we realized that who is this guy? We did we had no idea, We had no idea what his backstory is. And he ends this amazing backstory because he came up through like loyalty programs. So so Felix um Analyza did this amazing job reporting this story. Felix, you know you guys, you guys dug into his back story so much like why was he the right person

for this company at this moment? Well, I think to an incredible degree, his entire career was really building up to this. Meme stocks come and go. So you have to like keep these four million retail investors somehow engaged, and you have to keep them, you know, involved, you have to keep them on your side, you have to keep them loyal basically, right. And the thing about Adam's fascinated that he spent his entire career engineering these loyalty reward programs. And if you go back to the nine.

His first jobs at PanAm, he did World Pass, the airlines first loyalty rewards program. Back then, the whole thing was like, Okay, if we want to talk to our customers, we're either going to have to die. A really expensive ad on one of the three broadcast TV networks or in the national magazine is going to cost a lot. And suddenly there was this new way. Computers are getting more expensive, less expensive, more powerful. We can keep track of our customers. We can talk to them directly. Adams

did their first program. Then he went to Western Airlines to the loyalty program for them, then Hyatt Hotel, you know, Norwegian Cruise Line, the seventies six ers. Everywhere he's gone, he's kept working on these programs. Suddenly you get to the present day and using social media, you know, he can talk directly to his customers. The fact that's amazing to me is that he managed to somehow extend this

whole tradition to investors. Like if you you know, invest in US, you have AMC stock, you buy stock, you hold on the stock, We're going to give your rewards. You know, We're going to give you a free cub a popcorn, which sounds insane, right, it just sounds completely made up, But actually that's kind of what he's done, and to remarkable degreed through some combination of his own charisma on Twitter and his own ability to kind of give this sense of exclusivity to this large group of

retail investors. That's a part of something special he's managed so far to hold onto them. Let's talk about gold mining. Yeah, because we all kind of heard it when they announced it and they said, you know, AMC's you know, just acquiring of this gold mine in the body. Everyone was like, what, Like, what are you talking about? Literally is no, it's a metaphor, right, there's a crypto mining operation. Like, no, it's actually a golden silver mine out there in the Black Rock desert.

So for months we were like just we're dying to know, like how did this whole thing go down? And one of the fun parts of the article, of the fun parts of reporting that was kind of doing the TikTok of like these guys, you know, showing how this deal came together. Um, Jason Mudrick Mudrick Capital really brought it to amc um you know, Adam talking about why he

wanted in on it. Then jumping on an airplane, you know, flying you know, picking everybody up, going out to this tiny little airport and win a Muka Nevada and then you know, driving up to this gold mine at dawn. I mean, the whole thing is just incredible the way

it went down and hilarious on many different levels. And then just like the thought of like what it's like they get the kind of like pile into this trailer at this gold mine in the middle of nowhere, it's only places WiFi for like hundreds of miles, and then have to like jump on the phone and sell this to all the AMC board members like this is why, you know it makes sense for a you know, the world's largest movie theater chain in two thousand twenty two

to be invested in the gold mine. Felix ud Goman, you really made me scratch my head. I remember when that crossed the Bloomberg reading your story. What made me scrap to my head is Nicole Kidman, the first Lady

of AMC. Like like every aspect of the story, you just kind of like what well, I mean, there are theater chains out there's done an incredible job of branding themselves, and you know, I think this is kind of like the AMC version of that, which is like, we have an opportunity before the movies come on to do something

that makes it feel like special somehow. That was business Week Media and Entertainment editor Felix Gillette, along with Business Week editor Joe Weber on this week's domestic cover story. You're listening to Bloomberg business Week coming up. The CEO of Nature's Fine on his mission with mushrooms. We have to deliver and taste, then we have to deliver on nutrition, and then we have to deliver for the planet. This is Bloomberg. This is Bloomberg business Week with Carol Messer

and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio Well featured recently as part of a takeover the Bloomberg business Week Pursuit section, a set of stories about the growing economy underground economy for various types of mushrooms. As part of that coverage, Bloomberg business Week Food editor Cake Crater introduced us to Nature's Fine, which is producing a meat alternative that has origins from a microscopic fungus in a

Yellowstone National Park hot spring. You can't make this up, No, it's pretty incredible. The company has raised roughly half a billion dollars with backing from the likes of Bill Gates and Michael Bloomberg, who is of course the founder of Bloomberg LP, parent of Bloomberg business Week and Bloomberg Radio. Carol and I caught up with Nature's Fine co founder and CEO Thomas Jonas to ask him how it all

came to be. So we started the company really from a research project from NASA on extreme forms of life, and the goal of the initial research was to try to figure out if NASA was going to set approve to a moon of Settern, what would be the environment in which it would make sense to look for life. And that's really what took us on the path to explore ring the life forms that adapted into the acidic volcanic springs of Yellowstone, where we discovered this very unique

phonal organism. And it's very interesting because first of all, it's an extreme of file, which is more specifically, it's an acidophile. It's survived in extraordinary acidic environment. Actually, the place where we found it has a pH level of acid D equivalent to your car battery. In order to survive in this environment. This organist had to learn to do something which is very meaningful for us today. It

had to learn to do more with less. It had to figure out how to survive with a limited amount of resources that you can find in this sort of extreme environment in these volcanic springs, and it managed to do that in a in an extraordinary efficient way. And it creates this fabulous protein. So the quality of the protein is really iron there. Um it's better than pretty

much any sort of non animal protein. It has all the essential amino said, it's really a parody with soy that would be the only plant based that would be a source of complete amino acid. So what kind of protein alternative does it present consumers? Ultimately learning to do more with less, it's really the call of our generation. You know, no, there's no way around it. We're going to have to reinvent the way provide energy, the way

we provide transportation, and the way we provide food. Um. I think what we saw in the past few weeks with the war and in the past few months with the war in Ukraine was really how easily it was for this food system to get off balance. It's we're really subject to this sort of fructuation in a way that's much more important that I think most people had

perceived before. So the way we can bring a solution here through our protein called five is by growing it using a fraction of the resources, and we're talking less water, less land, and in it in percent less greenhouse gas than you can. Once we've grown that protein and we're doing that in Chicago in a warehouse, we can then

turn it into a wide range of product. And the first product that we launched, and we were actually the first one to ever do that, we launched with both a meat alternative and a dairea alternative, and that really reflects the fact that fires a platform. It's not just another burger alternative. It's really a new protein platform that can do all of these things. Give us an idea of taste here and sort of how malleable it is.

It took us a lot of work to develop a protein platform that is actually neutral in taste, and it sounds like something pretty trivial, but it's actually very important. A lot of people are trying to work on alternative protein have to mask some flavor that you probably don't really want to feel when you're eating something that are not very good. So it was important for us to give up something that is very mutual as the basis, and that neutral basis is enables us to go through

a very wide range of flavors. So we are able to do things that range from a strawberry yogurt to a cream cheese, to a chicken neckgets to a breakfast patty, and all of these are products that we have developed and we can really hit the flavor in a way that we think is it's very good. And it's not just us. Actually we are on the money of the Bernarda, the French restaurant in New York are prepare the best chef in America. And and food is about taste first

and foremost. And really the way we think about this is we have to deliver and taste, then we have to deliver on nutrition, and then we have to deliver for the planet. Talk to me about nutrition and that matters to me because there's a lot of sodium in in so many of those products that are out there. So to me, that isn't a solution because we have to be healthier as we do this. Talk to me about you talked about taste, I am also curious about texture. I'm a texture not when it comes to my food.

UM texture nutrition tell us about that. The texture that we have is actually really interesting and we get that from the fact that it's a filamentous microgenis, so it has naturally filaments that kind of mimics muscle filaments. It's not exactly the same thing, but it it creates a texture. So it's not like tofu at all in that regard. It is neutral in flavor and it absorbs flavor just like tofu. But in terms of texture, it has a bite.

We are able to do what we call play the texture piano and go from a range of texture literally from yogurt to to cream cheese to to chicken legget or breakfast paddy. So the nutritional aspect is also something that's obviously very important for consumers UM. And what's interesting is when you when you design these products, you can really design them in a way that as much much better for the consumer as well. You can evolve much

faster than the cow can evolve, so to speak. So what does that mean as far as our products are concerned. If you take our breakfast paddy for instance, we UM did some work around consumers expectation, and we found out that people love the taste of breakfast patty, people love the protein of breakfast patty, but people hate the fat of breakfast patty because there's actually more fat in a

regular breakfast patty than there is protein. So we designed it in a way that we matched the protein of the leading animal breakfast patty competitor, but we have less fat, so that means no cholesterol. So on sodium we are at about five milligram, which would be below the animal and kind of slightly below most of the competitor out there. In addition to that, I think what's important to to realize is because we control the environment, we're able to

grow our microorganism without homewards, without pesticide, without insecticide. You can have a much cleaner food. That's Nature's Fine. Co founder and CEO Thomas Jonas Carol, I gotta tell you, I'm you're going to try this stuff out. Maybe I'll swing by Whole Foods and grab some of the products. I am too, and I'm really impressed, first of all

about the amount of funding. I am also impressed about how they seem to be able to produce more food without um costing so much to the environment, So looking forward to hearing more as they grow this thing out, No pun intended. Gotta get a little dad joke there for me is a fun guy to be with. Ye there we go, and I was just waiting for alright, So his company has been an innovator in the world

of fun guy. Our next guest probably prefers a more old fashioned mushroom, perhaps paired with mozzarella, tomato, sauce, maybe pepperoni, maybe even my favorite egg plant. They are looking for value. They are trying to feed their families on fewer dollars, and pizza is a great place for them to do that. We check in on the health of the American consumer with the CEO of Marcos Pizza. Stick around. We're about to get cheesy. Another dad another dad joke. I can't

be responsible for that one, though, yes you are. This is Bloomberg broadcasting from the financial capital of the world. Bloomberg. He Love in Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one six one does 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.

Founded in nine and headquartered in Toledo, Ohio. Marcus Pizza now has over one thousand stores across the thirty four states, with locations in Puerto Rico and the Bahamas as well, and the company recently reported crossing the one billion dollar mark in annual sales, an important metric for them. With more on the business and what's next with high input costs and wage pressures continuing, Bloomberg News senior markets reporter Katie Greifeldt and I spoke with Tony Lobardi. He's the

president and co CEO of Marcus Pizza. Well, really, Mark, the Marcos brand is doing incredibly well during some very difficult time the last two and a half years. As you know, it's has been challenging, but we continue to grow. Um. We continue to see the same store sales growth, unit growth, average unit volume growth year after year, and we're pretty excited about it. Why do you think you're growing? Is it price en is it your demographic? What is it? Well,

I think it's all of that. We We've had an opportunity just recently to become the fifth largest pizza chain. Um congratulations to our franchisees. We've seen about a thirty six percent sales growth in the last two and a half years. Um uh. And really it started with our national advertising. We we became a national brand on TV this year as an example, or on TV for thirty

two weeks. Uh. We really focused on our digital footprint by rolling out a new app and working on our web page, and and we were able to take our digital our digital orders from twenty five percent just three years ago to now sixty today. Um uh. And of course we've got a great product and we're really the brand that very few people knew about. But as as we continue to tell our story and we're out there with a great value proposition getting people to try our pizza,

we seem to be winning the fight. And let's talk about delivery a little bit more. I've seen the notes that you passed over that you've made big bets on the future with a third party delivery platforms. Talk to me a little bit about that decision to go that route. We actually were earlier adopters of the third party. We felt pretty strongly that that was a creative to our business.

Those were different customers. When somebody was deciding whether or not they were gonna have lunch or dinner and they went to a door Dash or an uber each, they weren't thinking about Marcos UH, and so we thought that it would it would help us, and it has. In fact, we've grown that part of our business by six percent between one UH and it's up thirty six percent this year, so we'll do over eighty million dollars and thirty part third party aggregated sales and UH. It's been a big win.

It's introduced our brand to a whole set of customers that didn't know who we were. One of the big things that we talked about with anybody who runs a company. UH, and certainly in your space inflation. We did see inflation prints that were much more positive, coming in less than expected, but they're still high. What are the inflation pressures that you're seeing when it comes to aber costs and the food costs, Well, we're seeing what the rest of the

industry is seeing. When we rolled through Q two, we had about increase in overall food costs in in in Q two and P seven at peaked at pcent, and you're right, we didn't see it go higher here in the recent uh P eight, but is still too high. It's about five basis points pressure on the bottom line

for us. And while we've been taking some pricing to try to mitigate the inflation, we've really been focused on trying to just take modest increase increases to ensure that we continue to grow our market share and that that that's been difficult, trying to balance the two of staying profitable for our franchisees, but at the same time trying to be there for our customers in our communities as a real value for them during some times. Well, let's

talk about the franchisees. Like Carol said, you know, you have many stores across the US thirty three states, so you really see a lot of the country there. And I'm curious, what is sort of the common denominator when you think about the biggest problem right now. Well, you know, it's funny, um uh it is. Every year is challenging, but two is proven to be a more difficult year

than one. If you remember we started with COVID that was challenging, just getting stores open being essential, trying to keep your team safe, and and and and and keep keep the business moving. In one, we had great, great resignation period. We're trying to find help through the summer months and through the through the fall and winter was extremely challenging just again to keep normal operating hours. And so we've rolled that into two. And then here we

go with wage increases and and and inflation. And I would tell you that the two biggest challenges for our franchise DAST today, One is retaining and finding good help to help them continue to grow their businesses and then again managing their p and l um uh to a point where we can continue our growth. We've got about two hundred and forty years so news stores and development as we speak, we got about another hundred and fifty of those right behind it. And so we'll be a

store brand and no time. So really we need people. We often talk about recession no recession based on what you're seeing and what consumers are doing. What would you say, um in terms of consumer spending, what the economy looks like here in the US, Well, I would tell you that they are looking for value. I will tell you that they are trying to feed their families on on fewer dollars and pizza is a great place for them to do that. That's Tony Lobardi, President and co CEO

of Marcos Pizza. You're listening to Bloomberg Business Week. Coming up, the sweaty, salacious secrets of elite personal fitness trainers. Don't go anywhere. This is an incredible story. Yeah, you're not gonna want to miss it. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio ton Now for a weekly dive into the Pursuit section of the magazine, and

our undercover reporting expert is at it again. We're talking about none other than Bloomberg Pursuits contributing writer Brandon press Or. He's previously embedded himself with some of the world's most prestigious lifestyle brands everywhere from New York's Plaza Hotel to the Las Vegas Strip all to the cipher what goes on behind the scenes when it comes to their services, and this week, Brandon reveals what it takes to be

an in demand personal trainer. To do that, he gathered intel from an all star team at the world famous Techno Jim and once again the elite experience proves to be a little bit of a strange one, including what a little mini pig was involved. All right, we'll get that things were harmed in the making of this story. Okay, we'll get to it. Brandon joins us along with Bloomberg Pursuits editor Chris Rouser. So, Chris, where do we start

on this one? Well, Brandon has done so many of these at this point, going behind the scenes at Disney and on super yachts, and I always like, we're not gonna be able to think of another thing to do.

And he came up with the idea for celebrity or you know, fitness trainers for the rich and famous, and I said, oh god, this is perfect because I know the times that I've had a trainer, how I have like treated that person as a therapist, placed all my hopes and dreams with that person, maybe been a little in love with that person. And totally we've all been there. Uh, And so Brandon was Brandon got hooked up with Technogym, which is a great company and it really is a

backbone of the fitness industry. In a way that a lot of people don't realize, and it was off to the races. All right, Brandon, come on in here, because you've got, you know, a host of things that you've learned from the celebrity personal trainers. I want to start out with, though, who these people are and how Technogym recruits them because it's an elite group. Yeah, so um so Techer Jim uh, you know, has all of this

incredible hardware. They were first out of the gate was software in the nineties, and now they're pivoting to have a media arm of their company, which essentially means they're creating a lot of video content social media content. So they did a worldwide search for the best trainers around the world, and they whittled it down to these six all star talent trainers, and basically what they were looking

for was actually sort of a lack of hubrit. I think, you know, a lot trainers are on social media and they have muscles, and you know, they're taking selfies, and they were looking for people, you know, who are physically fit but humble. Well you said specifically in the story about um I guess they did an audition and then they had to watch themselves back and those who actually cringed at seeing themselves, Um, those are the ones that they liked. Yeah, that was one of my favorite anecdotes

from all of my interviews. So chatting with the head of content, I loved that little idea, and he said, there were so many people that they thought they were going to hire, and then when they watched them watching the tapes, they had the big smile on their face and to turn off. So okay, so we know that some of these people love themselves, let's talk about how their clients love them. Some of the best parts of this story are are the relationship between the clients and

the trainers. So I think one of the things that was a big takeaway for me is that physical fitness is a non drug high. So there is this level of addiction you have. You know when the endorphins are going and you feel really good, and so a lot of people kind of transpose that obsession onto their trainers, like their trainers their dealer, and so there is this

level of of obsession that occurs. In one of the couples that one of these CORENT trainers teaches, they got divorced and they actually had to put it in their custody papers that they had to share d the of their trainer like other opposite days of the week. It's absolutely insane. Okay, speaking of divorce, there are some other anecdotes that you share and here about couples that are still together that perhaps maybe shouldn't be based on what

they're doing and what they're telling their personal trainers. Yeah, one of the big takeaways for me as well was that trainers are basically therapists, and a lot of the trainers are getting paid, you know, two or three or four or five hundred dollars an hour to train these people, and they only spend about half of the class engaged

in physical physical fitness. The other half is hearing about their client's problem um and usually that involved training a husband for an hour who's talking about hiring prostitutes when they're on their international business trips, and then the next hour there with their wife, the stories they could tell. I do think about the pandemic has really made I think a lot more people lean into wellness because we could just do so much virtually, and I think we

were all shocked at how much we could do. But it's also I think led to people maybe amping up their gyms at home. You got some insight into some of the kind of personal private gyms that people have. Yeah, one of the interesting things was that Technogym actually partners with all of these very famous design for ms all

over the world. UM. And all these wellness spaces are increasing in size UM and you know, wellness bass and hotels even are sort of taking over places that would have like the rooftop bar, now it's the rooftop gym. And these personal training areas in people's homes are now five hundred thousand dollars one million dollars. People are investing UM in buying whole New York City apartments and turning them into Jim's my pelotons in my hallway, minds in

my kitchen. That's because we live in New York City in New Jersey and we don't have room for well I guess some of these people do too, but they have, you know, entire apartments connected to one another. In the bedrooms are you know, no longer bedrooms there, Jem's Chris. I loved that that also that you learned that New York has the most intense relationship with fitness. I was kind of proud of that. I was proud of it too, but it was It's like it's people trying to be

very healthy and maybe a not healthy way. One of the things, um, that I learned, was right before the pandemic, there was a fit tech bubble, so all these vcs were investing in all of these ridiculous ideas. Opening Bouci took us all over the city that is gone now. The pandemic totally put an end to that. But now what we're seeing is all of this rise and really intense sort of personal driven fitness. UM. So people are

just going at it as hard as they were before. UM, but they're bringing in the personal trainers into their house, they're training outside, they're finding all these different ways to punish themselves. Wait, does that mean that no longer can we go into I don't know, workout place and be misted with rosewater or strapped into something like a bungee cord and crawl around in the dark like spiders? Is that we can't get that anymore? Brandon sadly, that's this

is a real, right, These are all real. I think there was this era of quirky fitness that New York City had and you know, so many of the trainers told me it was like Sinatra, you make it here and you can make it anywhere. So every booty fitness concept came to New York City, you know, trying to have a go at it. You know, trainers yelling at you on video cameras, in altitude chambers, hiking on Everest,

you know, different things like that. Okay, Brandon, what about when it comes to celebrities and athletes, because these to ask about DSM But okay, maybe I mean I don't want to talk about you want to talk about the feet? Alright, you go there. No, I mean it's a little triggering for me, Chris, you want to talk about the feed Well, as we said, the people get a real intense relationship with these trainers. A lot of the technogym trainers are doing virtual classes, so they so they get d m

s and stuff, right, Brandon, from people asking for more contents. Indeed, indeed, and because working out is so physical, when people reach out over d MS on Instagram, um they want something physical, so that a lot of times turns to um B d s M requests to have a trainer watch as they give themselves a wedgie or have a trainer come over and put a dog caller on the client and

shock them when they bark. There's a list somewhere at Bloomberg which is like Chris Rouser of Pursuits is responsible for bringing these stories onto Okay, okay, I got speaking of feet. Let's talk about a pair of socks that has never been washed, Brandon and how that fits into what these celebrity fitness trainers are doing. Oh yeah, So when you're training pro athletes, you're trying to eke out

you know that one percent extra from them. You know they're already a tot performers, so you know with the regular person, it's with a pro athlete, it's one and often that looks at like optimize using their entire calendar. They need to be sleeping a lot, they need to be doing this a lot, and optimization turns into superstition because if you're an NBA player and you're having an incredible game, you're like, okay, what we're what was the setup?

What did I do perfectly that gave me this amazing game? And for one of these pro athletes, it was a certain pair of socks and he wears those socks every day. Four years inside out. He's never washed them and you can smell them across the court. Come on, we all have our little quirks. Hey really quickly, the squealing teacup pig promise. Um. One of one of the trainers that technogym has a private client in London, and when he goes over to train that client, there is a separate

trainer that is training the client's pet pig. Yeah, we gotta take care of our pets. I'm just gonna say, oh my god, Um, Brandon, another great read. There's also some cool stuff uh in Pursuits about the importance of breathing and a really unbelievable supercar ev Supercars two million bucks. Come on, ready takes the importance of breath work. By the way, we don't need to argue for the importance of breathing, folks. Breathe, breathe, breathe. All right, we gotta run, Brandon.

Thank you so much, really appreciate it. Bloomberg Pursuits editor Chris Rouser, of course, along with Brandon Pressor. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Tim Stanivik and I'm Carol Master. Be sure to tune into Bloomberg Business Week Monday through Friday, starting at two pm Wall Street Time right here 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. Find that at Bloomberg dot com, Apple, or wherever you get your podcasts. Bloomberg Business Week is available on newsstands now at Bloomberg dot com and on the Bloomberg Terminal, and also check out Bloomberg Quick Take. It's available at Bloomberg dot com, slash Qt, and streaming platforms like Roku,

Apple TV, Samsung TV, and more. Have a great weekend, everyone, Breathe a little bit, have a workout, yeah exactly, and wash your socks. This is Bloombergh.