Bloomberg Businessweek Weekend - August 26, 2022

edition of Bloomberg Business Week. Jackson Hole fed J Powell all top of mind for the news room this past week, and coming up, we're gonna actually zoom out a bit for a look at how inflation and the economic slowdown have impacted the business world this summer, and really all of us consumers. We'll also get a pulse check on the venture capital space and dig into the retail sector with the CEO of Petco. Plus our cover story details the causes and devastating effects of a contaminant found in

a Michigan baby formula plant earlier this year. It plays into the ongoing nationwide shortage, so troubling on many, many levels. All right, all of that and more to come. We begin, though, with the sun me of shut offs, surging electricity prices spurring the worst ever crisis in late utility payments. It

was a Bloomberg big take from this past week. You can also find it in the economic section of the new issue of Bloomberg Business Week magazine that is out now on newsstands, online at Bloomberg dot com, and of course, on the Bloomberg terminal. Will Wade, Mark Chettiac and Ben Holland wrote the piece. Will is Bloomberg News Power and Renewable Energy editor, and he joins us, Now, well, it's

good to have you with us. So this is something that some twenty million US households are dealing with right now. That's about one in six American homes that are unable to pay surging electricity bills. Why well, the basic issues at the price of electricity keeps going up. It's about fift higher than it was a year ago, and it's probably gonna keep going up because it's all types of natural gas, and natural gas prices have doubled from a year ago. You know, it's interesting what I think about.

And whenever I talk Will with our European colleagues, they're like, you know what, We've been dealing with this a while. Um, certainly because of the Russian War in Ukraine. Give us a little perspective as we kind of you know, even zoom out a little bit wider. You know, that's totally fair. It is too good to put it in a global context, because we're looking at this issue here in the United

States and it's serious. But we're thinking here about people who can't afford to pay their bill, and if you go to Europe and Asia, there's places where they're worried about not having enough electricity to go around, especially come winter. It also comes at a time when, interestingly, enough government aid that happened during the coronavirus pandemic dried up. So what's the connection between a lack of government help and then an inability for so many millions of Americans to

be unable to afford their bills. Well, during the pandemic, the government passed actually with state governments, many states had policies that said you can't shut off people's power, and that was because so many people were out of work. Most of those policies have ended, mostly towards the end

of last year and the beginning this year. But then in a lot of states, especially if North there's winter, shut off marchor rams every year they say you can't shut off hypoles power when it's really cold, because literally people can die. So we're coming out of both of those things right into the spring. And in spring is when everybody started saying, wait, what's this inflation? Saying why

is everything so much more expensive? So a few months down the road brings us to now, and that's when we're seeing people's bills have gotten high, people are behind on their bills, and utilities give people grace periods, and now they're like, well, the grace periods over, We're gonna have to start shutting people off. I guess say, well, with a story like this, what's great is you guys zoom out and then you zoom in and you talk

about one family and one individual. Adrian nice Um tell us a little bit about when you start to really get to the granular level, like what jumps out for you. Well, I spoke to her several times while I was doing the reporting. She's forty five years old. She's a house cleaner. She was with her teenage son in Minneapolis, and she's just been really struggling. You know, she's a house cleaner.

So in when the pandemic happened, one of the first things that happened as all our clients said, sorry, I don't want you to come over. She's been getting work coming back, you know, since in the past few months. But the meantime she had a utility bill that climbed up to like three thousands dollars. She was getting shot off notices from her local utility and she didn't have it write that even though a larger family lived in the same unit that she was in before, because electricity

electricity prices have gone up so much. Just for her and her son, who weren't using ostensibly that much power, their bill was even higher just because of the rise in prices. Yeah, exactly. Last year she was sharing apartment with a friend and the friend had two children, and then the friend and her kids moved out, so there were two people instead of five people in the units. But the power bill is basically the same even with much less consumption, and of course she had to pay

all of it herself. Natural gas really there's just not enough of to go around all around the world. The US is the biggest producer of gas in the world, but we export a lot, and if we chose to keep some here in the US, so prices would go down then there'd be more potential power shortages in Asia and Europe. You know, our friends over there really needed, especially since the war has completely upended the gas market.

It reminds us of kind of how fragile things are, Like I think about will for such a long time in the US because of fracking and just a lot of development in the energy space um carbon fuel specifically here in the United States. That we talked about having a glut, right, it was natural gas was so cheap, but right, but how quickly unfortunately with the war Russian War, you know, and kin, how things have changed pretty quickly. And this has really hurt a lot of global pocketbooks,

it really has. I mean I've been covering this for a long time, and just everything about the electricity market for years and years it was, well, gas is so cheap, we can't compete with this. Let's when we see nuclear power plants closing. But gas was like two or three bucks for years and years. Hit ten bucks a couple of days ago. I think it was mind something now, so it's just crazy. In Europe, especially Germany, you hear people saying, well, they want to stop using Russian gas,

but if they stop using Russian gas. Then they got to get it from somewhere, and the whole markets tied together. It's a big world, but it's all tied together. Well, it's a really big story. Was a big take this week. A really big thank you to you Will Wade, Bloomberg News Power and Renewable Energy editor, for joining us to talk about this important subject. US households owing about sixteen billion dollars in late energy bills. Team. That's double the

pre pandemic total, according to uh Well in the team's reporting. Yeah, and the question also is you know where's the relief in sight? Right right now? No, right, all right? Coming up this week's cover story, our Business Week investigative team reveals how a deadly bacteria found its way into a key link in America's baby formulas supply chain. You're listening to Blue Bomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes

Tim Stinovik from Bloomberg Radio. Well. One of the more troubling stories to make headlines so far this year, America's shortage of baby formula and supply chain snarls alone not the only culprit in this life threatening development affecting children across the US. Turns out, a deadly contaminant found its way into products at an aging Michigan factory owned by Abbott Laboratories. The details this week's cover story Bloomberg Business Week.

So let's get to it with Bloomberg News senior investigative reporters Susan Burfield, who joins us in our interactive broker's studio here at Bloomberg Headquarters along with us Bloomberg Business Week at or Joe Webber. He's on the access line in Massachusetts. I gotta say, Joel Paul and I've been talking about this story, how disturbing it is. Yeah, well, the circumstances UM have been extremely disturbing for all the

parents in America who have infants UM. So you know, obviously formula is one of these things that you really probably take for granted. I know we did when we had a child, and then all of a sudden, UM, you face a shortage UM and you can't get a very essential ingredient for you know, raising a healthy child, young child. What was upsetting about this particular reporting was that you know that shortage which affected millions of Americans

actually had a different route than UM. So many other supply chain snarls that we've faced UM during the pandemic UH, and this one actually was because of bacteria called Chronobacter that surfaced UM not only in cans of formula, but ultimately in one of the main plants UM that America gets its formula from. So so Dusan had been working on this and we just kept telling her to go bigger and tell us and get to the bottom of what happened. And and she did. So, Susan, what get

to the bottom of it? What what happened? Months and months of reporting. Well, UM, you're right that you know. The formula shortage. UM was on a lot of people's minds and got a lot of attention in May and June of this year in particular. But UM, what we discovered is that UM. Back in February UM, there was a recall of products that were made in the particular plant UM as you mentioned, owned by Abbot, located in Sturgis, Michigan and responsible for about of the whole supply of

infant formula in the country. The reason for the recall was that there was a bacteria that can be really dangerous and even deadly for infants, and it was found in the plant and UM it was the reason that they had to recall almost seventy million cans of simulac

and other formulas. UM. What we also found is that there was almost a year's worth of warnings UM at the company and warnings at the f d A. UM probably should have picked up on and didn't UM that, you know, had they, maybe none of this would have happened. So so that's kind of where I wanted to go. I guess we've I don't know, all become somewhat used to corporations cutting corners maybe too, you know, boost profits

or whatever. But that's why we have agencies like the f d A to kind of keep an eye on them. From your reporting here and your story, I was kind of really shocked and disappointed that the FDA really missed it here what happened there because of covid um. The f d A missed one year's inspection. They inspect infant formula plants every year, so they missed one, and when they went in September, they saw some troubling signs, but they didn't UM elevated to a warning for abbot Um.

They didn't request that abbot Um recall any product or you know, do anything at all other than try to fix the problems on its own. Then a whistleblower from the plant UH sent a report to the f d A outlining problems at the plant, not mentioning Chronobacter this particular bacteria, but describing a place where UM procedures were sometimes shortcut, as you said, where rules were sometimes bent, and where people weren't always held to account when they

should have been. This report, had the f d A taken it seriously enough, UM could have also brought the inspectors back into the plants sooner than it did. That report the FDA said was lost in their mail room, lost in the mail room, lost in the mail room, so wherever. You know. The other element that that that really raises, though, is this this thing where companies can almost self police. But you know, abbott has ended up in a place that is actually a little different than

than a lot of other companies. UM talk to us about that development, Susan, because that they basically FDA stepped in and said, yeah, we have a over site now, yes, you know, as as the shortage really became a crisis for a lot of families, and as the f D a is confidence in Abbot that it could clean up its plant, um waned, Abbott entered into a consent decree with the Department of Justice, and it gives the f d a extraordinary oversight of the plant's operations and required

the plant to make changes to almost every way that it operates. Legal issues, What are the legal issues facing Abbot here, because there really weren't worse and just a huge inconvenience plus a lot worse. Yeah, so, you know, the chronobacter Um did get into some formula we think UM, and of course it's a little bit hard to prove exactly. You know that kids who were sick UM had formula that we know was recalled, but to find the contaminant, which is you know, small cells, is not always easy.

But there were two kids who died UM, there were two kids who were sickened UM. Those four cases the FDA investigated, we came across other cases and those families are suing Abbott. Altogether, they're facing about two dozen lawsuits. Of course, they're operating under a consent decree for the next five years with the Department of Justice, and the FDA itself is under investigation by the Office of the

Inspector General. That was Bloomberg News senior investigative reporters Susan Burfield, along with the editor of the magazine, Joel Weber on this week's cover. Store Also joining us Bloomberg's Paul Sweeney and the baby formula crisis exemplifies our next guests point. Our world is built around convenience and innovation, but we're

not always prepared for what nature has in store. Engineers have given us this illusion that we can basically use technology to construct all these systems, and for the short term, yes, they work fine. But in the long term, the stress is going to build up eventually, and and that's what we have to be conscious of. Professor Salima Lee breaks

down how natural laws define human life. 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 of six, one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nineteen and around the globe. The Bloomberg Business app and Bloomberg Radio Vodka.

This is Bloomberg Business Week, all right. So we've talked a lot about energy, alternative energy, and the environment this week. It's a topic taking on renewed importance with President Biden having recently signed legislation that include billions of dollars in climate change initiatives. With some thoughts on how natural and social system science can inform planetary crises, we turned to Salim Ali, Distinguished Professor of Energy in the Environment at

the University of Delaware. He's the author of a new book, Earthly Order, How Natural Laws Define Human Life. We started by asking about the meaning behind the title. It's basically looking at some of the fundamental constraints that the planet has on us. So you know, when we talk about markets, markets are ultimately dependent on some aspect of natural resource constraints. We're going back to the basic laws of nature essentially, and making sure that we align our economic and social

systems in congruence with those strains. I've talked about this before on air, so listeners will be familiar with it. But I grew up in California and I had a professor in college. I went to college in Maine, a professor in college, you said California is a place where nobody should ever have lived because of the lack of water and the wildfires. And I'm wondering, professor, if the market is failing in that sense, because you see California

home prices still just out of control. And I say to myself, wait a second, and this is somebody who has family in California. Why are people living in a place where there is no water? Yeah, I mean if you go back to that classic Hollywood from Chinatown, you know, it goes to that kind of the heart of that challenge in California in terms of water security. And one

could say the same of Phoenix, Arizona. I mean, so many places where we have designed human habitation without really considering the natural constraints there, and especially the number of people who lived there. I mean, perhaps you could have some level of population, but that's that's a good example of that. And engineers have given us the salute that we can basically uh use technology to construct all these systems.

And for the short term, yes, they work fine, and but in the long term, the stress is going to build up eventually, and and that's what we have to be conscious of. And I do wonder about this order and the things that are so connected and maybe and how we teach it to our younger generation, like how do we need to be rethinking things? Because you know, I'm listening to you speak and I've been thinking about is it time for us to tell the world back off,

stop consuming so much because Earth can handle it? Like I've really been thinking about or such a consumption let society, but it's really being brought down as a result. You know, I am very much Um. You know, approaching this from a practical point of view, we we are going to need to consume in order to sustain livelihoods, but we need to move towards constructive consumption rather than having consumption, which is not considering some of those natural constraints. So

I'm all for green growth. I mean, there are many ways in which you can use the capitalist system in a very constructive way. Um. But what we have done is we have not really considered some of those fundamental constraints that physics puts on us. I mean, for example, many years ago, you know, in the nineteen sixties seventies, there was an economist who wrote a book. It was published by Harvard university press was called the Entropy Law

and Economics. His name was Nicholas georgesco Rosin, and what it tried to do was to link some of those physical constraints to economics. But unfortunately we have we lost our way at some point and we could have great growth, we could have markets functioning, but we just need to

do them within those constraints. So then do you think when we're seeing the constraints UH energy supplies as a result of the Russian warranty Ukraine, that we shouldn't necessarily release supplies produce more because ultimately it's a fixed commodity at some point it's going to run out by let innovation disruption happen. Part of it is that we are also very knee jerk in our approach to looking at

even environmental problems. And so it's not just I don't want to just put all the blame on the markets. I think environmentalists share the blame that they don't make science based decisions. So, for example, with the war in Ukraine, you know, three weeks ago Europe had to pass new

legislation to basically classify nuclear energy as clean energy. And that's because they completely had this panic attack after Fukushima, and they didn't consider that actually, from a natural science perspective, nuclear power, especially existing nuclear power plants which were already operating, made a lot of sense to provide baseload power. And now they have no baseload power, so they have to either be important gas from Russia or they have to

reclassify nuclear. So the environmentalists share this blame that if we do not have science based decision making, we have what I call in environmental awareness, but we don't have environmental literacy. I really want to make the connection between practicism and consumerism. That was Selima Lee, Distinguished Professor of Energy in the Environment at the University of Delaware. His book Earthly Order, How Natural Laws to Find Human Life.

It is out now you're listening to Bloomberg Business Week. Up next is the pet health and wellness markets starting to soften. After so many of us found new furry friends during the pandemic. I found one of those new furry friends. I'm just gonna put that out there. We're gonna sit down with the CEO pet guy. We're gonna talk outlook and the reasons for a tougher Corely earnings report. This is Bloomberg. You're listening to Bloomberg Business Week with

Carol Masser and Bloomberg Quick Takes. Tim Steinovich from Bloomberg Radio. Shares a pet coast sold off following earnings this week after the company cut its adjusted earnings for share and net revenue guidance for the full year. An analyst at Baird called the pet Health and Wellness Giants forecast reset quote much needed, so to find out more about the company's miss and where it goes from here mid persistent

inflation and a tight labor market. Bloomberg Surveillance co host Paul Sweeney and I spoke with pet Co chairman and CEO. Ron called great companies bro even in tough economies. So we had a four percent comp which is a good number. You know that we did not have the inventory issues that other companies are talking about. Most retailers are talking about inventory, excess inventory and having a discount. We didn't

have that situation. We continue to see a positive nick shift towards premium and super premium brands, so a lot of good news, but at the same time, there is some pressure from the inflation on discretionary items like toys, tennis, balls leashes and that pressures. That's our highest profit area, so that puts some pressure on the piano. So in your piano, on your pan l talked to us about I guess inflation in terms of your cost of good sold. Where do you guys see it in your piano? Yeah,

so freight would be a big one. Um, labor would be another one. Labor we pretty much have in our model. But I don't think anybody had the freight freight inflation that we saw in their model because the guests, you know, really popped in March April type time coming down? Is it helping you? It's starting to come down, But the freight gets tied to the inventory, so it doesn't show up in the p and l un till later in

Q three and into Q four. I actually have been in a store on Second Avenue bought a bunch of toys. I want to do shout out to Chedterly, who was really lovely because I have a dog, a puppy that shoes through things in thirty seconds. So I came up with an armful of toys and I said, help me, help me, what's gonna you know last? And she was really wonderful I have to say, though, I noticed a lot of empty shelves and I was curious in the dog toy area, is it supply chain problems? What was it?

Or is it just people? I don't know you it looked like you were sold out. You know, there's not a single vendor that said I think there's gonna be a million new pets in two thousand and twenty, another new million new pets in twenty one, and elevated pets this year. So all of of vendors have been scaling their manufacturing. The bad news is that the supply lagged the demand. The good news is that that supply and capacity is coming up now. I was in a brand

new plant in Dallas for honest. Kitchen Hills just announced major investments in their manufacturing. So that capacity, it really takes about two years to get new capacity up, and that capacity is coming up now. We're seeing improving supply week after week. Talk to us about the demand side of this business. The pet business, it seemed like they're in a pandemic. A lot of folks went out and it got themselves a pet acata dog something like that.

I'm not sure where those owners are today, where those pets are today. But how did that impact your business and how are you dealing with it today? Well, if you look at our business, we're up on a three year basis, our econ businesses up, services, business up, so

we have scaled tremendously on the back of that. But make no mistake about it today two two the predictions are for it to still be elevated in terms of petted options versus two thousand and nineteen pre pandemic, and those, uh, those stories about there being more relinquishments are really just stories. Relinquishments are below pre pandemic. So the supply of pet um and the pet universe is only growing and we tend to do better in terms of capturing more than

our fair share of new pets. So why don't you guys pull in your your guidance. It's really that pressure on disposable income UM and supplies. If you look at our our food our foods up double digits. UM, you look at our but yeah, you look at our services up double digits. It's really that segment of supplies toys, um, balls, leashes, collars,

that kind of thing. The rest of the business is highly highly recession resistant and as I said, we continue to trade up, whether that's in food to premium kibble or fresh frozen or even are Ready fashion brand. UM that was up double digit, which is kind of a higher end supplies brand. You do you talk recession at all? Of course we do. We have to plan for every eventuality. You expect it a story the other day, prediction of recession, so we need to be planful for that. So we're

doing two things. One is making sure that our cost structure is prepared to navigate through that, and the second thing is making there's hiring components, there's location components, there's UM travel components. You cut back in all the areas that aren't revenue generating direct revenue generating, to make sure that UM, if your revenue is impacted, your cost structure is not in line with not out of line with

your your revenue profile. The second piece, though, is making sure you're more attractive to customers who are going through a recession. Right, So things like bundles right, bundle tennis balls, things like our vital Care program, which is a membership program. It gets discounts across our portfolio. People can save three with that program. Mega PACs, So you change your offering or just your offering for the consumer mindset as they

navigate through a recession. Well, I share a condo building with Harry, who was a pit bull with a very bad attitude and anger management problems that he used to work on. But in any case, he gets his chewy delivery every week or two. Talk to us about your digital business, how you deal with some of those online competitors, and kind of how your business is varying. Well, first of all, we can help Harry with our trainers there

is our excellence and get his attitude in the right place. Um. We also have repeat delivery UM, and our repeat delivery is businesses growing significantly ahead of the competitor that you mentioned. Um, that's part of our recurring revenue plays and recurring revenue is important in terms of line of sights revenue. So are recurring revenue. Customer growth was fift so it was very very strong. UM. We love those customers because it's

a guaranteed customer and very sticky in URMs. Well, that's what I'm curious about, retention and times and so it sounds like once you've got abody within the pet Co network, they tend to stay or do they We've had very strong retention UM. The dynamic right now is we continue to bring in new customers. So one of the strengths in the quarter was we brought in three thousand new customers into our franchise. The competitor that you mentioned bled

UH customers last quarter. Is that unusual that number we had. This is our fourteen consecutive quarter in a row adding customers. So we've continued to add customers, which speaks to the strength of our model and our marketing. Well, how often is it you bring somebody in for either a vet visit or some grooming and they're going to buy something. When we put a Vette hospital in one of our stores, we get a four to five point center store lift

in merchandise. That's despite taking out square feet of merchandise UM footage, but we still get a four to five point left because of the traffic and also because the type of customer that that is going in to see a vet, they're the higher end customers. How many stores do you have today? Around four hundred and fifty and they're all us, Right, we have number one in Mexico online offline UH, and then we have an initiative with

Canadian entire for some store and stores. Okay, so how do you how do you see your store count as a part of your growth story? Are we adding stores? Here is our geographic areas you need to get into or muscle up in. Yeah, so we've done the culling where there was less profitable. Now we're back into a growth mode. We'll add fifteen in the back half of this year, partially those small town rural stores that I

talked about, which are very excited about. It's an eight billion dollar address the market for us UM and some high growth geographies. Are you guys competing increasingly with other private equity because it does I feel like, I know my VET, who used to be a standalone has been swooped up, and like these networks, there's been a lot of private equity actions in the VET space, which gives us our opportunity because there's very high multiples being paid

for those vets. So after you pay that kind of money, then there's a lot of pressure to have upgrade efficients. Not much fun, I'm going to tell you. After no offense the pe guys, I know you. But that said, um, we have a different approach. We allow the vets to practice medicine as they see fit, which is important. One thing I want to ask you where's growth going forward? Because you do have some you know, international exposure, UM RUN,

so where do you continue to grow? Yeah, we have a forty billion dollar addressable market that we're just leaning into. So if you look at the vet market, it's a thirty billion dollar market. We only have two hundred vets stores so far we have we said we're going to get up to seven eight hundred vets. So that's one area. The second thing is small town rule. I talked about an eight billion dollar market that is exploding from a population standpoint. Our first store is doing very very well.

You'll see us lean into that. Third is our x r X is a scale addressable market again UM and it's a mess in general. There's there's like I think there's ways to make it easier right, exactly right and provide a holistic solution there. And then the last thing I would cite is insurance. UM insurance. If you go to Europe, um insurance is about ten percent penetrated for pet parents. Here it's two to three percent penetrated. So

we have an offer. It's growing double digit, but we can go even faster, and we'll have some news shortly on that front. When you look at what seems to be conflicting signals around within our economy, whether it's labor data or labor data seems to be very strong, but you see continued weakness within the housing market in other areas. How how do you see it or how does it how does it kind of factor what you do in

terms of your longer term strategy at the company. In terms of the here and now navigating through choppy waters, our plan is to navigate through what we what we uh we assume are going to be similar economic environment to today. Right, We're not economists say okay, well, let's assume gonna this is gonna be steady state for six

twelve months. How would we navigate through that? And that's part of the revised Conservative guide that we put out today was let's make sure that in this environment we can deliver or over deliver from a long term strategy standpoint. Our long term strategy as a winner. Right, the category is going to grow seven percent. We continue to gain share in areas like super premium gain share and VET gain share and digital basically where all the profit pools are.

That's pet Co chairman and CEO Ron Coglin, Bloomberg's pulseweened joining us there as well, and we had a long, in depth conversation. So go to our podcast feed to hear it in its entirety. And that reps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovic. Ahead in our next hour, we're focusing on venture capital.

We hear from the CEO of Incredible Health on her firm's latest funding round that includes an NBA star, and then a VC veteran tells us what's peaking her interest and pulling at her firm's purse strays blass Amazon's latest billion dollars streaming vet stick around. 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. Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio Plenty Ahead in our second hour of the weekend edition of Bloomberg Business Week, including a VC update on a newly minted unicorn in the healthcare space, and then one venture campus that's working to digitize the physical world, Plus a crop of startups are touting the medical benefits

of psychedelic drugs. Will explain why solid science could be taking a backseat to unbridled capitalist ambitions as these companies race to market. Tim we're talking mushrooms. Yeah, we're talking mushrooms again. They're all over the place. First up this hour,

one company that's managed to defy tough conditions. Last week, johns Hopkins joined Andres and Horowitz, Kaiser Permanente, NBA star Andre Iguadala and others in an eighty million dollar Series BE funding round for Incredible Health, pushing that company into unicorn status. The platform connects hospitals with nurses and other healthcare workers. Carol An Bloomberg New Senior Markets reporter Katie Greifeld spoke with co founder and CEO Dr Emman Abuside

about the new cash infusion. So it means that we're now the highest, the highest value that enabled career marketplace for healthcare workers in the US today. Our valuation of about one point six five billions, and for the first time we've had our customers health systems including Kaiser, Permanente and John Hawkins invest in our round two, which really positions us as the leaders in in in healthcare hirings.

So maybe an obvious question, but this latest round eighty million dollars, what will you be using the money on. So we're using the money in three key areas verses in R and B, you know, so investing in the hiring workflow and automating it with machine learning technology. And that includes automating the screening, automating the matching, just so it's increasingly more personalized and more automated for both the

healthcare workers and the employers. We're also going to be investing in career resources for nurses UM and so they're using us over the course of their entire careers. UH. That includes still growth, scheduling services, UM, educational scholarships, cross training, all of which is completely free of charge for for nurses, and so we are the place where they manage their careers.

And then frankly, just you know expansion, you know, expansion beyond nurses UH and beyond hospitals UH, because right now we're for serving those two markets primarily and have have ambitious to support the rest of the healthcare workers and healthcare employers to explore the platform with our audience to remind them exactly what you are doing, who is on it, how many people, and really the growth that you are

seeing month to month. Sure hospitals and other health care employers they use incredible help cut them matching technology to hire high quality permanent nurses in less than fourteen days instead of the industry average of eighty two days. We saved each hospital facility that we've worked with at least two million dollars and travelers costs over time, costs in HR costs, and the nurse of using our platform enjoy uh an average of salary piece of about fifteen and

reductions in commute time. UM. I guess it's over the last year in Dow top line revenue over five. We've now expanded to over six hundred hospitals across states. We work in very large health systems including hp A, Healthcare, UH and Kaiser from an Entente, and we also work with academic medical centers like Stanford, Peter Sina and John Hawkins. And we have over ten thousand nurses joining our platform every single week, and that industry average of eighty two days,

which you've shortened to fourteen days. How does eighty two days that average now compared to what we've seen in the past. I guess what I'm asking is did the pandemic make exacerbate that? Has that average grown longer? The pandemic has definitely exacerbated that number, So that average has gotten longer because we are continuing to face the various severe labor shortage in nursing and as well as other healthcare professions. And then the other key number that pandemic

has and pactages turnover. Um. You know, the average turnover for nurses in the US was about seventeen before the pandemic. It's now on average twenty one and a half of them. Well, tell us a little b about I was talking to somebody within the nursing community and just said, COVID, monkey, pocks, you name it. Women, individuals, men, people who are in the nursing um field have just kind of had it. Have we lost or how many have we lost from

this field? So we are we weren't increasingly losing nurses from this field. So our third annual data report from earlier this year showed that one third of nurses are considering leaving the profession permanently by the end of two and so this is a workforce that has been negatively impacted in some cases, you know, decimated by the pandemic. They are being overworked. Uh, and and and experiencing extreme

fatigue and stress and burnout at the moment. And how do you how do you address retention then if you know, burnout is such a big issue. So a couple of key ways. First, Um, you know, are the employers using our platform enjoy a sixteen percent increase in written in their baseline retention rate because the nurse was able to

consider multiple opportunities before selecting that specific employer. Um. But you know, we also in our in our surveys and our data shows that the top reasons why nurses are changing jobs by far, the number one is career advancement. Uh. They're looking for more career advancement, they wanted rotor skills, move into leadership, cross train m become more specialized. And so the hospitals and helplesses that are investing in career

advancement for nurses are enjoying better retention rates. A big thanks to Dr mon Abu's aid CEO and co founder at Incredible Health, Katie Greifeld taking part there as well. By the way, she did mention to us that the company's ultimate goal is to go public. We're certainly hoping to hear more from them down the line. Feels like she continues to take big steps towards that. That's for sure.

All right, still ahead, We'll check in on the broader health of venture capital in two and we're investors are looking to place their bets. Eclipse Ventures partner Aidan Madigan Curtis joins us on the other side. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovik from Bloomberg Radio. Last month, Bloomberg reported that global funding for startups spell in the second quarter from the first. The total number dwindled to eight

point five billion dollars. So where the people with deep pockets and an appetite for risks supposed to find opportunity? Our next guest has some ideas. She certainly does. Aidan Madigan Curtis as a partner at Eclipse Ventures. It's a venture capital firm focusing on essential industries divving big into the digital age. Aiden was part of the team at Apple that scaled up the first ever Apple Watch. She joined me in Bloomberg News senior markets reporter Katie Greifeld.

We started though with an update on the overall VC environment for what it's worth, you know, Uh well, we did see funding kind of NVC drop as a whole quarter of our quarter. Last quarter was also the sixth largest quarter of VC funding into startups. Uh ever, and I think you know, we're you know, we're talking about a hundred five billion dollars um into into sort of great new companies. And I think that even in some of the toughest times, we see some really exceptional companies

getting built. For example, Um, you know, LinkedIn was started to know too, as was it Lastian and pro Core or Airbnb and o a full on No. Eight. I think, you know, sometimes the very best comp needs actually get built when times are toughest. And aisan, I'm a looking over the notes that you you sent us, and you write that physical industries are right for VC investment. What exactly is a physical industry? Sure thing? Um? Yeah, it's actually really fascinating. You look at the you know, talking

about kind of industry stats. The six hundred and twenty five billion in in VC investment that went out last year, you know, well over of that is invested in UM, you know, areas like in fintech or enterprise stas or e commerce or biotech. When we're talking about physical industries, we are talking about the basic foundations of our society. Industries like manufacturing, transportation, the delivery of actual healthcare, or even supply chains, things that make up over global GDP

and UH. In terms of how we think about it and why they're so right for investment, I think UM, you know, in many ways, COVID brought to the light just how rigid so many of our supply chains are, and the geopolitical climate of the last year or so has also really shown a light on how globalization well you know, transformative in so many ways and really depletionary in a good way for the last you know, thirty years worth of consumer power has also made us very

interconnected and has UM you know, made us very interdependent. So we're really focused on digital transformation of some of those industries that underlie our basic infrastructure. So what does that mean for something like you know, either supply chains or manufacturing specifically. I mean, I love what you're talking and it really resonates with me because I do feel like there are certain parts of our world that have

been slow to innovate and be disrupted. But I agree with you, crisis often leads we saw it during the pandemic to disruption and innovation and thinking about things in a different way. So how does this all lead and guide your investments? Talk companies for us if you would, So, if you think about where the vast majority of the world's manufacturing based is, It's no longer in the US. You know, manufacturing used to be of US GDP. It's

now twelve percent of US GDP. And that's a change, a shift that's happened in the last twenty five years or so. UM some of our portfolio companies are really focused on not just the concept of restoring but the notion of how do we actually bring real innovation to grow productivity in industries like manufacturing. For example, bul Conforms it's a three D metal additive technology using a very advanced laser structure that can actually make incredibly complex designs.

For example, UM metal medical implants where small tiny pieces to go into consumer electronics, and it can do it at a hundred times the pace and the speed and throughput as traditional metal manufacturing. So that's a good example out of the team out of m I T that we invested in several years ago. UM Greg Greg How is a partner at Eclipse and this is the word member there, and we've been watching their growth with great anticipation.

There is a New York Times UM article on them just just a month or two ago talking about the crazy advances that they're making in this space. Another good

example of the company called Bright Machines. It's UM. It's actually a technology that we collaborated on with Flextronics and took and turned into its own standalone company where essentially, with just very simple software instructions, we can take a very modular approach UH to using robotics in software creating full end end manufacturing lines that can do really quick changeovers.

And we can actually produce using that type of technology really fast and easy and outputs and assemblies with great flexibility. So that's a good example across manufacturing. UM. We're also really heavily invested in modernizing things like transportation and bringing also a climate focus to some of those innovations. For example, a company called Arc Boats, it's a fully electric speed boat. Um. We've also got an investment in a company called Axle Higher,

which is a really rapid last mile logistics funny. So you can sort of see across the chain whether it's a sort of end end full stack approaches like Arc which is an actual boat, an electric boat, with the acqual Higher which is the software stack as well as the full the full end delivery. How we're trying to innovate across these different industries. Well, let's situate this in the macro economic environment that we're currently in, which is

one with a lot of fears about recession. And when you're thinking about sort of these innovative businesses that you're looking to, how concerned are you that a recession, sure, should it descend on the economy, would sort of uh stop some of that innovation in its tracks. Yeah. I actually think innovation is really one of our only key ways out of pretty um you know, pretty dark looking economic time. If you think about the power of um, what it sounds funny, but hydrocarbons, did you know from

the nineteen fifties and the nineteen seventeen. They actually allowed us to relatively cheaply really fuel crazy economic growth and crazy economic development. Globalization in the last thirty years has allowed us to reduce labor costs and actually produced um much more for far less. These are the These are the key elements that create growth. It's essentially being able to, through productivity and lower cost inputs, produce more output. That's

Aidan Madigan Curtis. She's a partner at Eclipse Adventures. Bloomberg's Katie Graydfeld with us there as well. Up next on Bloomberg Business Week. We are still talking startups, that very specific type of startup. Why many new market players want to get in on psychedelics. I think one of the things that we forget when we talk about magic, mushrooms, m D m A, all of the psychedelics they're really having a moment right now, is that there's still so

much we don't know. You know, coming to market smoothly will rely on part on figuring out from these basic science questions inside the race to grow, monetize, and even patent the greatest shrooms. You do not want to miss this.

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 recent takeover of the Pursuit section of Bloomberg business Week. It included a set of stories about the growing economy

for various types of mushrooms. Among them are the kind you will not find in the produce section of your local supermarket, at least him not yet. This week, our features team examines the growing business of so called magic mushrooms. It's among the various types of psychedelic drugs that could have legitimate medical benefits, and a series of young companies are banking on it, Yeah, a lot of them. The problem is some of the firms racing to market might

be getting ahead of themselves. Drake Bennett and Kristin V. Brown co wrote the story for Business Week. Kristen is a healthcare reporter at Bloomberg News. She and business Week editor Joe Weber joined me and Katie Greifelda Bloomberg with a primer on the challenges facing these fungi fanatics. There's still so much we don't know. You know, these drugs were originally being explored back in the fifties and sixties as things that could really have a positive impact on

mental health. But then in the late sixties early seventies, we cracked down on them. Experimentation basically came to a grinding halt, and we've had all these decades where we just weren't exploring how these drugs work. And so even though we've had these fantastic clinical trial results that show really breathtaking numbers of people who have been helped buy these drugs for disorders like PTSD and depression, we still don't to understand a very basic level how the drugs work.

And I think coming to market smoothly will rely in part on figuring out some of these basic science questions. I mean, I cover marijuana socks all the time, for example, and they have just been beaten and beaten up in the market, mostly due to regulatory concerns. I would imagine in psychedelics. Uh, it's even more dramatic. Yeah, I mean,

there are some concerns. Studies funchaing that these drugs are in large part very safe, but in specific instances, for example, people with histories of suicidal ideation, or maybe people had psychotic illnesses like because of for any other running their family, there could be a high risk component. Plus, you know, there's just all of the decades of cultural baggage that go with these drugs, So there is definitely wanting to

keep safety in mind. Plus that this has already come out a little bit as we move forward in clinical trials. There you know, when when you have a therapist in a room with some of these who's like out of their mind tripping there, there's also a lot of potential for abuse, which is true in any healthcare scenario, right.

So I do think that there is one segment of this industry, of this leg of science that is wanting to you know, go slow and study and make sure that as we roll these drugs out to people, that we're not only trying to roll them out quickly so that we're getting them to people soon who are in desperate need of drugs, can you know, treat on of these vistors, but we're also doing it safely so that we don't wind up in a situation where something terrible happens,

and when there's you know, BackFlash to deal with what's it looks like from an investment standpoint right now? Yeah, that's actually really interesting. You know, I just checked my note notebook. Care one estimate puts that this industry could be at about six point nine billion dollars in a

few years, so huge, huge, huge market potential. But one of the things that's interesting about psychedelics that you know it's different from your average pharmaceutical companies playbook is that you're dealing with things that have been existence for long time, so you have to figure out where the I P

is and people are taking different approaches compass pathways. Their strategy has been to try and create a novel pilocybin molecule, right, so they're tweaking the sort of crystalline structure in the lab. They're synthesizing it and tweaking the structure and saying it's something new. But then you have people pushing back and saying, well, it's not actually something new, you're just riffing on something old.

So the debate gets a very complicated there, and then there's other companies that are saying, we're not even gonna deal. What's trying to prove that our you know, version of this thing that has been existence forever is new. We're gonna instead find I P in other places. You know this one company, Numinis. Their strategy is we're gonna come up with a way to grow the mushrooms super efficiently,

and we're going to patent that. What does the Bloomberg audience investors who are interested in this need to know. In terms of some of these startups, I feel like you just laid out some of it. This is only going to be a really hot base. The question is what form will the drugs take when they come to market.

Is it going to be, you know, a totally new drug that we make by taking some elements of psychedelics and turning them something new into the laboratory, or is it going to be just finding the right platform to roll out like you know, like mushrooms in their original form. I think that's the big question is not will these things help people, but how our thanks to Bloomberg News healthcare reporter Kristin V. Brown and Business Week editor Joe Weber for that report and our thanks once again to

Bloomberg News Senior Markets reporter Katie Greifeld. You're listening to Bloomberg Business Week. Coming up, you'll need to read this week's Pursuit section of the magazine so you will know what to watch on TV in the weeks and the coming months. Tip there's a lot coming our way. Yeah,

there certainly is. Um Fans of Game of Thrones or in for something right, Yeah, it's it's rolling out the Bloomberg screen time squad on the latest salvos from the streaming wars, including a ten figure bet from Amazon on the one show to rule them all. Maybe we'll find our newest obsession. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim

Stinovich from Bloomberg Radio. We're wrapping up our broadcast as we often do, with a dive into the Pursuit section of Bloomberg Business Week. Don't tell anybody, Timpert, it's always my favorite. All right, Well, and now everyone knows because you just said it. They bring us the best of food, travel, and luxury of all kinds. This week. They're taking us to the front lines of these streaming wars and latest to big budget projects from some of our favorite entertainment heavyweights.

That's right, We're talking about everything from Hulse my Tyson drama to Amazon's Lord of the Rings prequel. The section opener asked the question, are we entering the blockbuster era of streaming or finally finally hitting the summit of pete TV? To break it down, we've got Bloomberg News Media, Entertainment and Telecom editor Felix Jill along with Pursuits Deputy editor

Jim Gaddy joining us. Now, Okay, Jim, I want to start with you because a lot of the programs that we're gonna be talking about, namely Amazon's huge Lord of the Rings prequel and about huge I mean expensive as well, these were put into motion before you know, Netflix kind of fell apart a few months ago. Yeah, you know, this has been one of Jeff Bezos kind of pet projects, himself a Tolkien super fan. Uh, Felix did some deep diving into this process. Felix, what did you what really

surprised you about this whole saga? You know, you see these huge projects, including uh, this Lord of the Rings prequel from Amazon landing at this interesting time and streaming. Uh. Netflix has The Sandman, which is also a big budget sci fi show that just landed. HBO has a House of Dragon, which is the Game of Thrones prequel at Disney Plus has She Hulk. All these hugely expensive uh

streaming shows landing. Um act this very precarious moments in uh, you know, the streaming era where all these studios are under a lot of pressure to cut back. You know, you're seeing layoffs at you know, HBO Max and that at Netflix, and so it's this interesting contrast, like which

way is this the whole thing going? Like, are we going into these huge you know, we're going to do more and more big blockbuster series or is this kind of like the Grand Finale and everybody's gonna be like, yeah, maybe we'll just um, you know, not make billion dollar TV shows. All right. I'm so confused because I thought this was the era of get off your couch, the pandemic is over and go live life everybody. But that's okay, that's okay, We're all going to be pulled back to streaming.

UM Felix one thing I thought, um, just to kind of get going in terms of what Amazon is doing um with the Rings of Power. Jeff Bezos really into this. Yes, he is a big Tolkien super fan himself, and he was very involved in the beginning, pushing Amazon to pay two hundred and fifty million dollars just for the rights um to make five seasons of the show, plots a potential spinoff down the road. Um. But that was, you know, five years ago, and this thing has been the works

now for five years. Uh. It's been a shot mainly in New Zealand. At some point the New Zealand government revealed that the first season alone was going to cost you know, approximately four hundred and sixty five million dollars in productions uh fees. So it's it's this huge bet by Amazon. They really haven't you know. It's it's fascinating to watch the evolution of their original streaming strategy because when you think back, you know, a decade ago when

they launched Amazon Prime Video. At that point, they were all about, Oh, we're going to disrupt the way Hollywood does production, and we're going to open it up to everybody, and we're gonna set up this portal on the website where anybody can upload a screenplay, and you know, democratize the whole process. And you know that that is where they started. And then ten years later you've gotten to the point where they're making the most expensive TV show ever. Um.

So it's been kind of a fascinating journey. And yeah, Jeff Bezos has been right in there basically you know about you know, five, six, seven years ago, he started telling everybody his Hollywood executives, He's like, go out and get me my Game of Thrones. So at that point, Game of Thrones is kind of ruling over home entertainment and he really wanted that. He wanted Amazon to have something huge that was a global event, um, that would cross culture, that could help Amazon Prime make inroads into

all these different countries around the world. And so it is. It's it's the biggest bet that Amazon has made in the home entertainment space, and we'll see how it goes. I'm wondering if the stakes are different for Amazon, because at the end of the day, you know, Amazon is a is a company that makes you know, its profits from selling server space through AWS and you know, getting us to buy more toilet paper and your peloton now too.

But you already have one, Carol, so I guess you don't need to buy another one for you or something on it. Are the stakes different for for Amazon than they are for a pure play entertainment company like Disney or Netflix or you know, They're definitely different. I mean, they're not just about getting viewing time. They're about pulling people into the whole Amazon ecosystem, and this is a

huge lure for them. But at the same time, I think it is an interesting test that come to the Amazon Flywheel synergy thing, where you know, in theory, they have all of these software and hardware assets that they should be able to use to make this Lord of the Rings prequel into this huge global events. I mean, they have Twitch the popular live streaming side, they have

IMDb dot Com, they have all these fire TV devices everywhere. Um, they should be able to kind of use all of those assets to really push people to watch the series

and to promote it and to market it. They haven't done an amazing job in the past of marketing their original series, so I think it's also a fascinating test to back can they get all these different assets working on the same page and if they can't, and they can't do it for something with this kind of intellectual pedigree that's kind of built in fan base, is kind of pre recognition among fans. Then I don't see how they could ever do it. All Right, So we've got

House of the Dragon that's coming from Amazon. We've got The Sandman coming from Netflix. We've got Shee Hulk Attorney at Law, Disney plus series. There's lots of stuff coming at us. I want to get to some of the other stuff in pursuits because you guys cover so much. There's stuff on Mike Tyson. There's also George Miller with a new film. Give us some other things that are coming our way. Yeah, you know, it's funny talking about this Lord of the Rings series, Rings of Power. Um,

nobody knows if it's going to be any good. Oh come on, go on. I mean there's no Peter Jackson involved. Um, you know if it's if it's really good, then it will pay back everything. But nobody really knows. What we do know is that the new Mike Tyson docu drama is not very good. We we watched it. Um. We had a guy one of our regular contributors who was a boxing trainer and has followed Mike Tyson's career I went and looked at this new series is from the people who did uh Titania, which got a lot of

really a positive feedback and critical reception. I guess two things he took issue with in this series. One, Mike Tyson was not involved, which doesn't make a ton of sense considering how good of a storyteller he is about his his own story. He's done one man show, Undisputed Truth. He's got Spike Lee directed this HBO special about it. Um, he's over and over again. He's got a podcast. But he's he's very, very compelling storyteller himself, and they didn't

go to him. He's pretty upset about it. If you go and read his tweets, I won't quote them on the radio, but um, you know, I would think you would not want to make Mike Tyson angry, like he bit somebody's ear off or anything. Yeah, we're gotten a fight on an airplane recently. Yeah. Yeah. The second thing that he sorry, the second thing that he found he took his shoe with, is that the most interesting character in this show is not Mike Tyson. It does Ray Washington,

who he went to jail over. That is a story that no one is really told and so anyway, he that's kind of how he ended his review is like, you know, it's it's weird you meet the most interesting character in this show, like five episodes in the George Miller movie which comes out this weekend, three Thousand Years of Longing. It stars Idris Elba and Tilda Swinton. George Miller is a really interesting character. How many directors do you know can make Babe and had Feet and Matt

Max Fury Road not many? You know, it's got his kind of trademark, you know, magic, He's he's just got this really interesting kind of point of view. And it's not totally perfect. Our reviewer did not if you felt like a kind of stack at the end. But you know, anything George Miller makes is worth going to see, even if it's not necessarily you know, ten out of ten.

I wanted to talk about some of the other documentaries that you feature, because you have one about Lacrosse from kind of a character that Carol and I are very familiar with who's come on our program before. Yeah, and then also um lynd Sanity, which brings me back like a decade ago. Yeah, I um it brings me back

to tim, Um. You know it's it's one of the only times in the last ten years where the knicks of matter during the season and not you know, entering off season when they're trying to guess which superstar is going to come. Felix, what are you gonna watch? I'm excited about the House of the Drag again. You'll be watching the Game of Thrones prequels, and I will be watching The Rings of Power pecking that out. That'll keep you busy. What about you, Jim, I'm gonna go see

Bad Bunny this weekend? No comment, No comment. Um. Also in this section there's a great Q and A with Ken Burns about Mary about the United States role with the Holocaust that really I had no idea and it really stopped me, um, So we highly recommend you check out. And also what's going on when people get out bands on the road? Uh, interesting take on what's going on there.

That's Bloomberg News Media, Entertainment and Telecom editor Felix Gillette also pursuits deputy editor Jim Gaddy and a big shout out to Katie Graydfield and Paul Sweeney for helping us out so much this past week, and that reps up the weekend addition to Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and I'm Tim Stanovic. 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 searched Bloomberg Global News, and also check out our Bomberg Business Week podcast. You can find that at Bloomberg dot com, Apple, or wherever you get your podcasts. Bloomberg Business Week is available on newstands now at Bloomberg dot com, Slash business Week, and always

on the Bloomberg terminal. You can also see me on Bloomberg Quick Take, available on Bloomberg dot com, slash Qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend, everyone, a lot of things to watch over the next coming weeks. This is Bloomberg