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. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week.
Tim is off this week. So where to start? Yes, we could begin with how the week began and what felt like a mini market meltdown that led us to a six point four trillion dollar global equity wipeout in the span of three weeks, and a rush into shorter data treasuries in the US bond market that briefly drove yields on two year notes below those on ten year bonds for the first time in over two years, and it all led some to call for emergency rate cuts
by the FED. By week's end, feels like things calm down a bit, even though I got to say early in the week we saw crypto assets sell off as well, testing the industry axiom that bitcoin is the equivalent of digital gold and therefore belongs in an asset portfolio to hedge against stock market tirations like seldom before. That wasn't
quite the case. This week, as you know, we'll talk crypto though with the author of Cryptomania, plus the US presidential race it is often running full throttle now that Vice President Kamala Harris picked her running mate Minnesota Governor Tim Walls, who will together go up against the Republican ticket a former President Donald Trump and Ohio Senator JD. Vance. On that, how about going on a thought provoking journey into the heart of our democracy and the soul of
our country. That trip coming up, plus working from home, back of the office, hybrid work, how work continues to shift. We talk about that with the CEO of the Workspased Network Company IWG, who is, by the way, not seeing signs of recession. If we were, we might be talking more about layoffs. On that we get into their true cost. All of that to come, We begin with a trip along the back roads of the United States known as the Lincoln Highway, taken by Frank S. Barry and his wife.
Frank Berry is a Bloomberg opinion columnist and a member of the editorial board covering national affairs. Full disclosure. He was chief speechwriter to Mayor Michael Bloomberg during the twenty twenty presidential campaign and in New York City Hall Michael Bloomberg, of course, the founder of Bloomberg LP, home to Bloomberg Radio and Bloomberg Broadcast, and of course of Bloomberg Philanthropies.
Frank Berry's mission of wandering America to understand what binds our country together despite the great political divide is all in his new book, Back Roads and Better Angels, a Journey into the Heart of American Democracy. He spoke about his journey with Bloomberg's Matt Miller and me met in for my co host Tim Stenevik, who was off this week.
Back in twenty sixteen, when the country seemed to be coming a part of the seams. I was looking for a different way into the story that everybody was talking about, which is what's happening and why is the country so divided? And I wanted to go exploring what holds the country together. And I stumbled across us this thing called the Lincoln Highway, which, as it turns out, starts here in New York in Times Square and runs all the way across the country
to San Francisco. And it was the first road to connect the two coasts. It was dedicated in nineteen thirteen, and so I thought, what better way to explore what holds the country together than by channeling the spirit of Lincoln and driving this road. Now, it didn't happen because life got in the way, but the pandemic came along in twenty twenty, and my wife and I realized this was our opportunities now or never.
Was it snap judgment, no problem? Your wife said, yep, I'm in.
It took a little work, It wasn't quite that quick, but she was all in and it did happen really quickly. We had never driven an RV before, and so we had to move quickly, and.
Twenty five feet twenty seventeen Winnebago exactly.
We decided it was the biggest RV we wanted to drive and the smallest RV we wanted to live in. But it had everything we needed. A bed, a kitchen, a bathroom, and off we went.
So you made some interesting stops. I mean, obviously you had a job to do. You weren't just driving and sight seeing, That's right. You wanted to stop and talk too important people. How did you choose, you know, with whom you would speak and you know, how do you set up I feel like you had to have a tour manager in order to organize everything.
I wish I had had a tour manager. It was very much happening on the fly. I didn't have a lot of time to put it together. But I wanted to talk with people who would represent a cross section of the country, people from all different backgrounds and working all different types of jobs in different industries. And I wanted to talk with people who had interesting stories to tell that would represent what I was after, which was
this better sense of what holds us together. And so in some cases the people we spoke with, of course it was just spontaneous people we met along the way always you know, interested to hear those stories. But I also would reach out to people before we arrived in town and ask, you know, do you have to time to sit down. Sometimes it was a civic leader, sometimes as a business leader. Sometimes it was a farmer, sometimes
it was an activist. And the good thing about the pandemic, the extent there was a good thing is people had more time on their hands. Everyone's schedule was interrupted, and people were really generous with their time.
We found it just kind of once everybody got up and running and being on air and working from our homes. Everybody was accessible because everybody was home.
That's right.
I do want to ask you your first interview who that was, And I also want to even take one more step back. Why the Lincoln Highway.
Yeah, So the Lincoln Highway to me represented a it was a hopeful idea in nineteen thirteen, when there was no road across the country. It was a way to stitch the country together, a way to encourage more people to see more of the country. I think that's still something that we need more of today a time when we talk about flyover country. The Lincoln Highway was kind of the original idea of combating the notion of flyover country. And so we left on September eleventh from New York City, and.
We did.
We did because having lived in New York on September eleventh, it's impossible not to carry with you the spirit, I think, the spirit of unity that we all felt in the in the aftermath, and so that's what I wanted to take with us and to try to try to channel. And so my first interview on September eleventh was actually with the Mayor of Jersey City Steve Pullip, who was downtown as I was.
My home city, right very far.
We didn't get very far at all. Yeah, started square y'.
Stop here first, first stop. Yeah, and we stopped. There's a Lincoln statue in Jersey City, a great one.
Uh.
And so I had a great conversation with him about his nine to eleventh story. He was working downtown as I was on that day. He ended up joining the Marines, and he talked about you know, his and from there and what led him to end up running for office.
So what about when you actually get into fly over country, because you're still a long way from Jersey City, Okay, I meaneah.
Even got to the newer Camport.
Yeah, so like when you get to the real America, it's all real. Who were you talking to in the heartland.
Though, well as people from all different walks of life and so, you know, the heartland also includes Chicago. The Lincoln Highway runs through big cities and small towns. But in Ohio I spoke with a farmer, Chris Gibbs, who had a real interesting story. Friend of mine introduced me
to him. He was a lifelong Republican, very active in Republican Party politics, grew disillusioned with the party under Trump, decided to become an independent, and in doing that he found something happened he didn't expect, which is he lost most of his friends. And that was a really tough story to hear, but it was representative of how person and all politics has become, I think, and a lot of people have a version of that, where we've lost friendships over that. The good news of his story is
he didn't give up. He decided to become an independent, and as it turns out, the Democratic Party asked him to chair the local county Party committee and he's now doing that.
I'm just trying to get to the other side, because you know, we're here in New York. When we put together a two sided panel, neither one likes Trump.
Right, when you talked.
To a Republican, you're talking to one who doesn't support Trump. But yet half the country does support Trump. And I imagine you left this you know, bubble in order to get in touch with that other half to find out what these hillbilly elergy people were all about. So did you run into any.
Well, of course, yeah, of course we did. Lots of Trump supporters and saw Trump signs all along the route, lots of them. But my purpose was not to try to explain other people to readers. Right, This was not hillbilly elogy. I wasn't trying to do that. I was trying to let people speak about their own experiences in ways that would remind us of what holds us together. And So to give you one example of a Trump supporter, really strong Trump supporter, I spoke with two husband and
wife out in Arizona. When we made it to the end of the Lincoln Highway. We kept going two ranchers and they talked about how difficult life had been for them under the Obama administration because of a change in an EPA rule and the difficulty they were facing because of an EPA rule that would require them to fence their ranchers. It's open range, require them to fence their road, and it would have cost two million dollars one point
six million. I said, one point six million dollars to put a fence up, and he said, well, you know, I could do it for sixty thousand dollars, but because of federal regulations, it would cost me one point six million.
Did you find most people were willing to talk.
Absolutely.
In fact, almost no one said I don't want to talk, right, I don't have time. People were really forthcoming and welcoming.
Oh go ahead.
Well no, I'm just I'm curious about the and a edgo side of it, because I would love to do that.
Also, I've never driven an r V.
We'll talk about when you first got it, where you had to go to was it Tennessee?
Where'd you go to pick it out?
So we uh what we bought it used and a woman in Florida was kind enough to drive it halfway. So I met her in North Carolina, Carolina, picked it up, had no idea what I was doing, got in the driver's seat, feared that I had bit off more than I could chew, and kind of did. But at that point it's too late, and so we drove it back to New York and then off we went. But yeah, neither of was my wife nor I had driven an RV before. We had never lived in an RV on a.
Street in the city.
Well, we brought it up state for a few days and then and then we brought it back into the city. But no, I never actually, in fact, we walked the first mile of the Lincoln Highway from Times Square to the River, and then we got a ferry and picked up.
A smart move.
Yeah, took two months to get across across the country.
We did, I mean that way, yes, to get to San Francisco. We arrived on election day or on election day eve.
And what was that like?
Well, it was crazy because San Francisco was empty downtown. It was being boarded up as we pulled in, because there was a real fear of election day or election night violence if the results went the wrong quote wrong way. And so that was really disturbing to see in a trip that was exploring democracy to being a city where there was a fear of violence at the end of an election. That's something that I had never seen in my life.
We're a young country, a young democracy, right, We've definitely seen our moments of strife. We've had a civil war. After talking to people, do you have more hope?
A lot?
Yeah? I came away really optimistic actually and full with hope, partly because that's what I heard from people. When you know, there was a lot of frustration. I'd hear from both Democrats and Republicans about how divided we were. But in the end, most people expressed hope.
That we would get through it.
They weren't always able to articulate exactly why, but there was this that we would get through it because that's what we do. And actually, there's a lot of history in the book, but that's probably the most historically accurate assessment that you could make, because we've been through so much as a country, even though relatively young, so much violence and division, civil war being the worst of it, but plenty of other episodes too. But we found ways
to get through it. And part of the story of the book is highlighting those ways, the kind of the values that have led us out of the dark times. And I think the more we can recognize that we've been through versions of what we're experiencing today, the more kind of hope and faith we will have that we can get through it.
Are there any prescriptions?
I mean, hopefully we don't have to get to a civil war before we can reset. Right, How should we deal with this division?
Well, there's a lot I think that we can learn from Lincoln, and that's why he's the perfect guide for the trip. And so one thing to keep in mind is, you know, Lincoln in the eighteen fifties, as the country was heading towards Civil War, said of white Southerners, they were just They are just as we would be if we were in their situation. Now, Lincoln abhorred slavery, thought of it as a moral abomination, but here he was speaking about Southerners and their support for slavery with no judgment.
And I think that is something that we can learn from because today there's so much judgment about the other side and so much kind of quickness to decide that the other side is not just wrong, but they're evil. And I think the more that we can recognize that we're shaped by our circumstances and that different points of view can still hold valid perspectives, to not assume that we are entirely correct, that others have valid viewpoints, the more that we can try to hold the whole thing together.
Frank, do you think it's just Donald Trump so that if he is no longer you know, a part of the GOP or guiding or leading the GOP, do things change. I mean, you saw people as you drove, and it was off the beaten path, right, sometimes it was dirt roads. And one of the things that we often talk about is the struggles that a lot of Americans feel that. Yep, we've got a stock market that sometimes is hitting records or we've seen it, and yet that's not main street.
And so I wonder if it's something deeper in the fabric right now.
Yeah, it's definitely deeper. It just doesn't all go away. The division doesn't all go away if Trump goes away. I definitely believe it or runs much deeper than that. And that's why we've got to be able to recognize what can get us through it, because it's not just defeating it's not defeating Donald Trump. It's not waiting for him to leave the political scene. The forces that are dividing the country right now, and you see it anytime
you pick up social media. You see it on your phone, but you hear it in conversations, and you sense it in people's anxiety.
All of that is.
Going to be with us, and it really requires leaders to tap into, as say in the book, the better Angels of our Nature. It's a Lincoln phrase, but it does require leadership that reminds us of the best of America and the best of our values, and to recognize when leaders are trying to exploit the worst in us and to tap into our fears and hatred.
Well, and I guess we have to be open as well.
You know, when I think about the problems on the left, you've got the sort of cancel culture and sort of this gas lighting censorship. I'm sure a lot of people on the right feel that they can't speak or be heard because they're not allowed to say how they feel.
Absolutely, I couldn't agree more and that's something I speak with people in the book about that that also is a threat to democracy, and sometimes democrats fall into the trap of thinking that threats only exist on the right, and that's wrong. They exist on the left too, and that censorship that you're talking about is a big part
of it. And I heard that from people in different parts of our journey, the fear of speaking their minds, and a lot of times that fear was on the left because of either you know, facing personal or professional repercussions for stating their opinion. That's a really unhealthy thing in a democratic society if people feel afraid to express an opinion.
Does academia make it worse? I used to think about one of our producers said, you know, that's what colleges, you say stupid things and then you learn and we don't do that anymore, or if you do, the penalties are incredible.
Yeah they're talking about professors or students.
About both, but you know what I'm saying, Like.
It was further capable of saying, Yeah, college should be a place where you make mistakes and learn and grow. But also any community should have a level of forgiveness and understanding that we're not going to see things differently. And the desire to shame and punish people for being on what someone uses the wrong side of an issue is really counterproductive to a civil, democratic society.
Your last person, we've only got about forty seconds. Did you think long and hard about who the last person you wanted to speak to?
Well, as it happens, the trip we went across the country and back, we ended up the Lincoln Memorial, And so I had an old friend hadn't spoken to him many years. Sergeant Mike Roccarty is a Capitol police officer. He was on duty on January sixth, and so I spoke to him about his day. He's a conservative Republican, and he relayed the events of that day and how harrowing and dangerous and how much worse it almost was.
And that was a really powerful thing to hear from him, and so that helps to conclude the story.
Frank Berry is a Bloomberg opinion columnist. His book Back Roads and Better Angels, a journey into the heart of American democracy. Coming up the demand for office space with the CEO of IWG and what it really costs when a company lays off workers. You're listening to Bloomberg BusinessWeek. This is Bloomberg.
You're listening to Theloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple car Play and then Bright Auto with a Bloomberg Business app, or watch us live on YouTube.
London based International Workplace Group or IWG, said it swung to a pre tax profit for the first half as revenue group and backed guidance for the year as it entered the second half with good momentum. The ADRs that trade in the US rallied on the news. We wanted to hear more, especially with so much talk this past week about a US labor market slow down. We spoke with the founder and CEO of the London based office provider Mark Dixon. Matt Miller joining me on this conversation
as well. He's in for Tim. Talk us little bit about the environment, what you're seeing in a day where we're trying to figure out the way forward after a global market selloff.
We operate in more than one hundred and twenty countries, about half of that businesses in the US. The economy has been difficult for a while, but we haven't seen the any markets globally deteriorating unless the places of extreme geopolitical pressure at the moment, so you know, demand is are more companies move into hybrid and as we said today, good momentum going into the second half. So we're normally an early indicator. We're not seeing anything yet.
I mean, you have correct me if I'm wrong.
Formerly, I think people know the Regis brand really well. You have office space in places where people actually still want to use it, right, I just remember the last time we talked, it's like.
You're not You're not You're.
Not loaded with you know, midtown Manhattan, Third Avenue offices.
It's more like closer to where people live. Isn't that the case?
Absolutely right? Well, look, we we have a huge operating platform, is used by eight million people. It's you know, now coming up for four thousand buildings a million rooms that we operate. You know, this is a sizeable operation exactly as you say. You know, we do supply offices by the way in all over Downtown, Midtown, Manhattan, Downtown, et cetera, et cetera. But we also supply customers all over New Jersey, all over Connecticut, all over New York State, and all
across the country. You know, we a US business is about twelve hundred locations and it's it's it's growing at about a thirty percent growth rate each year as more and more people move to hybrid work, in particular in the suburbs.
Wow, what kind of investment do you have to make there? Because it's not just like buying a building and you know, putting in carpeting. You've got to conform to the way we work. You know, I'm imagining a lot of wiring, a lot of Wi Fi. How capital intensive is the business?
Well, look, we're opening one thousand new buildings a year approximately, but we do not make the investments. We're you know, we're similar to Marriott or Hiat or Hilton, and we operate these things on behalf of landlord partners investor partners that actually own the buildings. So we are an operator, you know, we're not the funder, so you know. But in answer to your question, it costs about a million bucks for an average sized center one to two million.
You know, we can build them in about nine weeks and trade them pretty quickly anywhere in the country, such as the demand for hybrid working and look, most importantly, it gives owners who whether they're in the suburbs or in downtown locations, it gives them new income that they weren't touching before. New income which basically is coming from a productization of real estate, you know, turning it from what was difficult and CAPEX heavy into op X and cash like for customers.
Mark, what can you tell us though here we are, what four years out from the start of the global pandemic, and I'm thinking about just here in the US specifically, since you said about more than half of your businesses here in the United States, how has in terms of the working from home or the hybrid mix, how has it evolved? How has it changed?
It's sort of evolving fast as fast as real estate will let it. Remember, you've got to back drop, people already have commitments to real estate, so it takes time for them to heed those commitments. Number one, number two. Pretty much all corporations are either adopting or reviewing the
adoption of hybrid working to some degree. You know, just if you look at what we supply and of our eight million customers today, about a million we support working from home, and more of that percentage in the US as corporations basically use technology. Basically your office is now run by Microsoftice. It's not in sort of real estate
in Manhattan or anywhere in the country. You know, companies more and more moving to working on a platform that is, you know, providing space wherever people need it as opposed to bringing them into central offices wherever they may be and getting people together. So it's much cheaper, it's half the price. It's opics only, there's no capex, it's super flexible, it's a business tool. The companies are adopting because it makes sense, and of course it's very popular with workers.
You know, they don't really want to be forced to commute exactly now.
I was just thinking about that. We've had this horrible story about New Jersey Transit. It stranding passengers for three hours in the tunnel with no air conditioning, electricity, and that would just make you not want to go from Chatham, New Jersey into the city to work every day. So I'd much rather, you know, go to a regis or an IWG office space in short hills.
I don't know where they are, But do you find a lot of that?
Do you find a lot of people who say, do you find a lot of a big growth in that customer who no longer wants to commet into the city but wants to go to an office near her house.
The key thing here, Matt is they no longer need to be going to that downtown location or wherever it may be in the country. The technology allows them to work from anywhere, so they can work from home. But a lot of people are much more productive working from an office with less distractions. But they want that office to be down the road, walkable, cyclable, short drive. Well they don't want to do is waste an hour two hours a day going backwards and forwards accompanied by their
laptop to use a laptop in another place. It just doesn't make sense in a tech enabled world.
Mark you know, you guys can do single spaces. You can do offices for small teams, for large teams, you can be headquarters right for different folks. I am curious, what's the bulk of your business? Is it short term durations, is it longer term? Is it large teams? What is it?
We do everything from hourly, daily in a monthly yearly. Long term contract for us would be two or three years. In terms of numbers of people, about forty percent of our business is individuals. These are individual professionals, individual entrepreneurs that all over the world, millions of them. It really works for them and they're they're very sticky in the sort of bedrock of our business. About forty percent are
very large companies who would would have larger implementations. I mean these are you know, up to one hundred two hundred thousand people from a company that would be dropping in and using. And then in the middle we've got SMEs, you know, smaller medium companies that you know use us because of the flexibility and so on. So it's a vast range. Remember eight million users, we've got a range of everyone, and look the number keeps growing. It's a
very attractive economic way to do things. Both for building owner partners and for our customers, and it's very popular with the workers themselves. Everyone's a winner in this. That's why it's got such momentum.
Just ten fifteen seconds forgive the squeeze Mark. But so nothing in it that says to you recession, people slowing down on hiring or anything that any clues there not.
That we're seeing.
Look, a lot of companies are looking to save money, but that's been going on for a while because of the cost. But no, we're not seeing anything in any of our markets.
That was Mark Dixon, founder and CEO of the Office Provider IWG, also known as International Workplace Group. Well. Another work related story that was among the most read on the Bloomberg this past week came from BusinessWeek and our workshift team about the true cost of layoffs, because when companies cut staff, they don't just have to pay severance, but face other expenses that haven't been fully calculated until now.
Matthew Boyle, Bloomberg News Senior Management and workplace reporter, filled in Matt Miller and me on the data collected and what it showed and why he did this story.
Ca I mean I started work on this story six months ago.
You did.
Yeah, when layoffs were come, I mean layoffs, when have they not been you know, coming hot and heavy, and just with Intel recently and.
Dell as well.
But you see all these pressure releases, You read the memos from the CEOs, you know, streamlining efficiency, blah blah blah. And then the SEC filing goes out and they say we are taking a charge of X million for Severn. So I'm like, okay, it's got to be more to it than that, right, what's the true cost of a layoff? Because I've been laid off and we've you know, either you've been laid off or you've done a layoff. I think all of our listeners are falling to one of
those two categories. And you see what happens to the survivors, the people who are still there. You know, they're like zombies at times. They're worried about another layoff coming. They now have to do the work of two or three people. So you know, your engagement goes down, your morale goes down. You're kind of looking at the door like maybe I should be down the street taking a job somewhere else.
Yeah, a lot of the other people because we know.
So we know that output declines. We know that quitting goes up, but how much does this actually cost? We just kind of see these as like intangibles, like, well, it happens, but you know, we had to do this. So I'm like, somebody must put some numbers behind this. So I dug around and finally found you know, I found an actuary at the Department of Labor. I found
academics who have studied this. I've found a guy who studied two hundred layoffs and figured out how much did the quitting rate increase after.
Let's step back and first look at just the direct costs, because you're talking about the whole ball of wax, right, But you lead your story with the Facebook firings. And I knew a couple of young people that Facebook brought over here from Europe to work and then almost all of a sudden, laid them off and sent them right back. They had great packages, and the whole thing was almost a billion dollars right to lay off eleven thousand employees.
That's like eighty eight thousand dollars a person. So that's just the severance, right.
Yeah.
So I looked at their filing and they said, well, you know, after we nine hundred and seventy five million or whatever it was in severance. But it's not material because they were big saving all this money. We know, we don't think give any of these people bonuses next year, and we're saving this or that, and I'm like, you know, there's got to be again more to it than that.
So but all we really know is how much they take in the charge for severance, which will cover you know, two week salary, health care, continuation, outplacement, you know, help with your resume. But again, the costs of a layoff goes so.
One of the biggest indirect costs, like you've got to bring in I guess Bain or mckensey to make you feel better about it first, right, so you got.
Another cost, another cost. Yeah, there you go. No, Matt Boyle will do it for you. So the biggest ones are reduced productivity. Output goes down. So I went to a called Active Track and like other firms, so they're one of the biggest ones. They track employee activity. Now we've all heard about you know, they're watching your hours or surveiling you and all these stories about employee surveillance. But employers do want to know, you know, what you
are doing on the company time. So this company was able to track pre and post layoff productivity at seven
anonymous firms. Obviously I don't know who they are, but we saw exactly what happened to productivity and who's usually about an hour a day less productive, So that's eighteen hours a month turns out to be, you know, for every what is it every ten thousand sorry, for a company with one hundred employees, that means more than fifty thousand dollars lost in productivity every month until it finally reverts to normal, usually after six months, but sometimes, you know,
not six months. So that's one of the big ones. Another one is increased quitting. People are worried about their own job and so people start, so you have an increase in what's called voluntary attrition quitting. Now, companies always have a level of attrition. Normally, it's usually about nineteen percent.
So usually you are replacing nineteen percent of your people just because they found something better in general, but when you do a layoff, your voluntary attrition can go up by fifty percent.
That's a lot.
That is a lot, yes.
Well, and I feel like on the other side of that, like if you need those workers that are leaving.
Now, those are the ones you want to keep exactly.
That to bring them in, to recruit them, then to retrain them, that's again another cost.
Yes, a, those are people you didn't want to lose in the first place. They're not the people you laid off. Then you have to train, recruit and train their replacements. So all that has a massive cost. And you're able and I was able to determine it. So you take and you know that, you take a normal turnover rate, you figure out how much it costs to replace the people you lose, the increased incremental quits as I was calling it, because it usually costs about one point two
five x to replace a lost worker. So if you take let's say sixty five thousand average salary in the US, you know that's over eighty thousand dollars to replace them. Multiply that by the incremental quits, and for at a ten thousand person company, you know you're talking about seventy five million dollars that you were not thinking you were going to spend to replace all these people.
I have to say, you sound like an accountant. I'm kind of loving this.
I'm a history major. So no, this was all new to me, but you know it's pop. I had people walking me through the mass saying, yeah, that sounds right, but like, you know, I wish I could do it for like a particular company, you know, getting inside their books. That wasn't going to happen. So I just had to sort of guesstimate and do backup here that does exactly. Hey, Meta, why don't you tell me what you you have?
Also, you know, obviously we all pay unemployment insurance tax at the company pace that and because when you fire, when Meta fires eleven thousand people, a lot of them are going to go on unemployment and start collecting money from the state. We all pay for that collectively. But it turns out the state wants a little bit more from a company that people the next year, right.
Yeah, I filed that under boring but important. Of course, your unemployment insurance rate is going to go off because you just put some people on unemployment. So guess what. So there, I've spent weeks finding out finding this guy who used to be an actuary for the Department of Labor, who was so tired of getting that question from people, how much is my UI in rate.
Going to go up.
He built his own calculator to figure it out because a varies state by state, and all these laws and the formulation for it goes all the way back to nineteen thirty five, and different states do it different ways. Long story short, you know, this guy actually put a calculator together. So I said, hey, what if you're a Texas company and you lay off ten percent of your work for us? He's like, oh, just plug it in. Boom,
there you go. Your unemployment insurance is going to go up by such and such a million dollars a year.
So that's another one.
Then there's the lawyers. Let's not forget the lawyers. You've got to hire lawyers to make sure you don't get laid off and if you sorry, if you don't get sued, and you will do get sued, and you probably might get sued, but it might be a big, massive, ugly class action lawsuit, or it could just be one person who's like, how dare you type of thing. But you have to analyze the demographics of the people you plant to lay off to make sure that no one group is disproportionately hurt.
That's Matt Boyle Bloomberg News Senior Management and workplace reporter. You're listening to Bloomberg Business Week. Coming up. There are lots and lots and lots of books written about the good, the bad, and the ugly of the crypto world. As we continue to digest the hype, hope, and the fall of cryptos, once Almighty King, that story is coming up next. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
The crypto acids sell off this past week tested big time the thinking that bitcoin is the equivalent of digital gold and therefore belongs in an acid portfolio to hedge against dock market gyrations. What safe haven you might even ask?
Well?
As equity sank on Monday and carry trades unraveled, Bitcoin behaved more like stocks than gold, at one point tumbling seventeen percent to below fifty thousand dollars before recouping some losses. Its correlation with the precious metal turn negative in July according to Bloomberg Data, and so yes, we continue to rethink the world of crypto and try to understand the
way forward. Writing about it in a new book out this past week, Andrew Chow, correspondent for Time Magazine, his book Cryptomania, Hype, Hope, and the Fall of Ftx's billion dollar Fintech Empire. There are lots of books out there about the world of crypto, about FTX, about the good, the bad, the ugly, and really still a lot about the promise of crypto. What did you want to write about and why?
Absolutely?
I think my book starts with the sort of utopian promises of crypto and the ideals forged out of the two thousand and eight financial crash, wanting to build a fair, decentralized global financial system that would work for everybody, and then seeing how that idea took hold in the minds of so many people over the pandemic and then took their wallets and then became a system that perhaps was even more predatory for the time being than what its
backers had hoped. So that's sort of what my book traces.
If they'd stuck to the original premise A bitcoin, it would have gloss their wallets, right because one of the key one of the key issues is that you own your own crypto. You don't let it sit on an FTX platform for example.
That's right.
Yeah, it's so funny to see these centralized platforms exchanges really take rise and kind of dominate the industry. Even now, it seems like at least over five percent of all crypto is sitting in coinbase accounts. Last year, finance had an even bigger share, and FTX as well. I mean back when it existed, the huge share of the market for people taking their money and trusting it with somebody else.
The whole idea of crypto is that it's trustless, that you know it's there because it's sitting on the blockchain. You can see.
You don't need somebody else, not that there is a yeah, don't share your private key.
Not your key is not your crypto. You know. The whole point is not trusting anybody and being able to access this decentralized money anytime you want. And how the industry has formed has just been around these centralized systems that work better because you know, they built out the technology and the ux to allow people to use.
Do you differentiate between bitcoin and the other? I mean, how many other coins are there two thousand, five thousand other coins out there? You do you make that differentiation or do you see it?
Quite a lot of my book is about Ethereum and the dream of metallic beauty and it's founder to create a system that is like a this layer of the Internet that rests upon blackchain. It's not just about money or digital gold. It's about the how blackchain potentially facilitate these fair systems in all sorts of ways, and how then Ethereum and its ecosystem mostly became a giant casino. So I think, you know, there are a lot of really interesting projects out there. I think a lot of
their narratives haven't really stood the test of time. Slonas went down and the come up Ethereum still and then there's a whole bunch that.
But do you agree with I mean, having studied this for so long and then written a book about it, you know, staking versus proof of.
Work, Yes, well, proof of work is obviously as takes a huge amount of energy, Yes, exactly, It's supposed to be incredibly energy intensive so that it's hard to hack into I was actually where your money, where your mouth is, you know, I was in Texas. There's a town that's being impacted because it's sitting next to a bitcoin mine, a proof of work mine, and the noise from the
mind is driving people crazy. So I think it's also important that we remember that there these are it's on a blockchain, but these are physical technologies, and they're in the world, and they're impacting people in different ways.
You know, you talk about narratives around the crypto world. How has it changed in a good way or a bad way?
In a good way is interesting framing there. I think at the beginning of where my book starts.
A smarter way like more educated if you will.
In twenty twenty, twenty twenty one, there was all this hope of crypto revolutionizing all these different parts of society. I don't know if you've heard of the concept of dows, where they were going to revolutionize how the corporation may make corporate voting fair, or you know, voting blockchain in city councils, keeping medical records on the blockchain. They are all these sort of applications that we're supposed to write
to happen. It seems like now, the narrative has really been dominated lately by just the idea of number go up, the idea that bitcoin is digital gold, and that it's going to appreciate and value the more that people believe in it. It's running on momentum and the ideology around it, and from where I'm sitting, a lot of the other sort of ideals of the blockchain being able to transform and form a bedrock for different parts of society have not materialized yet.
What happened to the decentralized what's now decentralized autonomous organization?
There was so much hope for them.
I remember talking to like my veterinarians assistant and he was all hyped up, and it's such a fascinating concept, but I haven't heard anything about it in two years.
Yes, exactly. A lot of them just sort of became investment clubs of healthy crypto people being able to pool their money and then put them into other investments that went up and then crashed alongside the market. And it turned out the voting systems within dows were just as flawed as you know, a board vote in which a lot of these doos had a sort of one token, one vote system. So the whales, the people who owned the most tokens, had had an inordinate amount of sway
in these organizations. So it's not like they were fair or a better voting system or a way to run anything from what I saw.
So the bottom line is your outlook for crypto is not optimistic.
It's funny because the belief system around crypto has grown so strong that you know, there's so many people who are there's so many outright critics, and then people like me who were just trying to point to the flaws or the divide between what the promises are and what's been delivered so far. That's basically because everybody's sort of like, well, you can't like stop pointing out the bad, But I'm
a reporter. What can I do but exactly chronicle what has happened in the world, And I want to show that there were all these lofty promises of creating financial systems, global financial systems that were better than the status quo, and I don't think they've materialized yet. That's not to say that it couldn't happen.
In the future. Sbf FTX rightfully, So you write a lot about him. Kind of the rapid rise and fall. It feels like it's an unbelievable story. It's one you really written for the big screen. But having said that, did we need to kind of go through it to kind of look at the crypto world in a different light? Do we need to see something like that?
I think that's a really interesting question and interesting stupid or interesting?
No?
I think I think most crypto people would argue like, no, we did not need to go through that. If he hadn't been around, then we would be well on our way to the moon. I think he revealed a lot about the way the crypto industry works and the way that the power vacuum, this decentral space can give rise to very powerful people who want to use the space
for their own ends. I think it's important to remember that Sam Bengminfree did not come into crypto as an idealist or believing anything about the way that bitcoin was going to revolutionize global finance. He simply saw an arbitrage opportunity that he had learned, you know, on Wall Street, and saw that it was orders of magnitude more successful in crypto than it had been at Jane Street Capital.
So he comes in and then he realizes that because of all the differences between the markets, he could make an absolute amazing amount of money, and then he is going to chase that to its logical end.
But he had no idea, it seems, how to run a business. He had no concern for any of the bureaucratic side of it, the back office.
The admin.
He did it all wrong, and it seems I feel sort of sorry for him because it seems like he sort of fell into this mistake and he was clearly making it on purpose. But he should have been better advised. He wasn't twenty six. He's thirty two actually, but to me still seems pretty young. Okay, but to spend twenty five years in prison.
But still, although I also felt how many people followed really smart financial types who kind of put him up on a pedestal, right, Like you think about everybody who chased him and wanted to talk to him, and you.
Know, yes, maybe a question.
All of us.
I think he was incredibly huboristic, so I think his arrogance is sort of key here. He believed that he knew better than a lot of people.
You're Silicon Valley, right, like ooh, somebody bright like on a different level brilliant exactly.
And when it comes to the sort of checks and balances you were talking about, he would always talk about like, oh, I want my company lean. I think you know, having like a board would slow me down. He really believed in himself and his ability to revolutionize like the way that a crypto business should run. He was the most he was the least risk of person you'll ever meet.
So he really he loved risk. He embraced it. He was taking all sorts of leverage and that was his whole game was to get as leveraged as possible and borrow as much money as possible to plow into risky trades that could then net him an enormous, enormous amount of money. And when you do that, you know, if you chase that forever, it's going to come back to buy you.
I've always thought, you know, the coins in crypto don't seem to have much more value beyond the speculative nature of you know, invest in investing or gambling, but the underlying technology seems to hold so much promise. Blockchain technology. You see banks experimenting with it, You hear about the value of a decentralized ledger, do you think there's any future for that technology.
My book really explores this sort of dichotomy which I cast and it's as like sort of the battle for crypto's soul, which is very simplistic, but a nice sort of framing device between these two of Metallic Beater and the founder of Ethereum on one hand, who wants to build these elegant blockchain systems and believes that they can supercharge so many different things, and then Sam on the
other hand, who's just basically playing with meme coins. It's important to remember that Sam created a whole sort of genre of meme coins that people jokingly called the Sam coins that he used to prop up his own business. So creating his own coin called FTT, withholding most of it, putting it on the market, buying it back, instructing its traders and never let it fall below a dollar and so that and then letting people borrow off of it, So creating this enormous house of cards through meme coins.
And we've seen how meme coins have been sort of one of the driving factors of this bull run of people, even like the Trump coins and stuff like that, and really getting away like the heart of crypto inside, you know, sort of meme coin mania and getting away from vitallics ideals that blockchains can be used for all sorts of useful things.
How weird is it that we have doge coin on the Bloomberg terminal type croyp go and you see our crypto homepage. Right, we're serious business for renal institutional investors and we have a joke dog coin on here and we track it every second. Right, No, you're right, so strange.
It gives it a huge level of credibility. Our thanks to Andrew Chow. He's correspondent for Time Magazine. He's the author of Cryptomania, Hype Hope and the Fall of Ftx's billion dollar Fintech Empire, his book out now. Well. That wraps up our first hour of the weekend edition of
Bloomberg Business Week from Bloomberg radio Head. In our next hour, Rivian's founder and CEO on the VW partnership following a quarterly update that led to a stock selloff, plus what it really is like to drive Rivian's second generation SUV, the R one S. Plus two former financial folks on season three of their HBO series Industry, which kicks off this weekend, and for all you math haters out there, we have the simple path to loving math. Yes it
can be done. This is Bloomberg Business Week. I'm Carol Masser. Stay with us. Today's top stories and global business headlines are coming up.
Right now, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Easter Listen on Apple, card Play and ed Bright Auto with a Bloomberg Business app, or watch us live on YouTube.
Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, Tim is off Bloomberg' Matt Miller joining me in our chats this week, including one about Rivian's founder and CEO on the VW partnership, and the good and the bad of the second generation Rivian suv. Also art imitating life in the HBO series Industry, the co creators are back on season three plus, cracking the Numerous Sea Code. For everyone who has ever thought they were bad at math, turns out you don't need to
be a prodigy. First up, one of the few pure play electric vehicle makers in the US, second only to Tesla when it comes to ev output, that is still struggling though to get production levels up. We're talking about Rivian and the stock sold off on the news following its latest quarterly update as it stuck to a full year vehicle production target unchanged from last year. Rivian CEO expects output to grow in twenty twenty five, even with
a plant shutdown looming. Here's Matt Miller joining me this week, sebbing in for Tim. Matt kicking it off with his take on Rivian's business.
If you're a new company, right and you make an exciting new product, investors want to see growth. They want to see your production double sales only rows three point three percent. That's a problem that OURBA scarac.
Hashowher outputs coming next year though they did.
Say yeah, they said that. But the plans for the future look good. They're supposed to build a new factory in Georgia. They got a five billion dollar injection from folk Schwagen. They are building a new factory in South Carolina. So at some point you expect production to pick up. I wonder, though, how how good the vehicle is.
All right, we're going to talk about that, but you actually caught up with the chairman and CEO Rivian and the founder a little bit earlier on Bloomberg TV. Here's what he had to say.
The Volkswagen partnership is something we're really excited about. But the focus of this is around our leveraging our network architecture, our topology of computers, the pology of electronic ConTroll and is the EC used in the vehicle, and then of course our software stack. It does open the door to other types of partnership and activities we could be doing with Volkswagen Group, but to date, the core focus and the singular focus is around our software and electronics technology.
So he's saying that because I asked him if Volkswagen was going to basically rebody a Rivian to make the Scout. You know, they bought the Scout brand and they're going to revive that awesome old truck, or if you know, maybe Volkswagen would be able to make given them more production with their South Carolina factory. So I wanted to know more about that partnership. So does Hannah Elliott, my partner in Hot Pursuit of their partner, Yes, my other partner in my podcast Hot Pursuit, and.
She has actually driven the Rivian. I have not.
She's driven too. She joins us now from Los Angeles. Hannah, you drove I think a couple of years ago, the pickup truck version of the Rivan, the R one T. Now they've made improvements to I guess what, the powertrain and the software, and they have given you a new R one S to test out.
What do you think about their products?
Yeah, this is the R one S, the second generation, and in a word, better, It's better, definitely. The technology is more seamless, we have a lot more luxury options, like a glass roof that you can make go dark if you want. We've got heated and ventilated front seats. We have actually better driving controls and ride handling, even though I still think that can be improved. So in short, it's better. I don't think it's a perfect product yet,
and it is really expensive. The R one S that I drove was about one hundred thousand dollars and that's actually not the top of the line. That was closer to the entry level side. So yeah, it's getting better. I would say it's getting better. A good foil for those who don't want to buy a Tesla.
Maybe interesting. I gotta say it looks like a kind of a land rover meets suburban with cartoon eyes on it as I love it as its lights in the front. That's what it looks like to me, Like you could put this right a little bit.
Well, it's got a signature look because with other models, right, and they all kind of have that signature completely.
Of course, we have the truck, the R one T truck, We've got the R one S which is the suv. We've got the R two promised and coming. So it's kind of you know, Rivian has decided that maybe they could be a foil for Tesla. That's you know what. The cyber truck is very polarizing in its looks, and the Model X has these goaling doors that really grab attention. So yeah, Rivian is kind of going maybe for a more quiet luxury like Patagonia wearing style, which I think
is smart. You know, they're cultivating their own buyers.
It makes sense.
Does it matter though, unless I mean unless they can produce more does it really matter? Like you know what I mean, it's really cool to see what they're doing, but don't they have to make more cars?
Yeah, they really need to make more cars. We already know that they're pausing production in some of their factories. Unfortunately, they're dealing with supply chain issues. You know, of the four models that you can pre order of the R one s right now online, only half of them or a fewer are even being delivered.
Only the dual motor.
We're waiting for a try motor and a quad motor, which they're saying we'll have over a thousand horse power. So I'm really excited to test those and drive those, but they're not here yet. Now. Rivian will take your money if you want to pre order them, but it's going to be like next year at the earliest before we see really a wider range.
So yeah, they need to like make more.
It makes sense that the I mean, if you want an electric vehicle to fit your whole family that's made in America, but you're not like a Maga man, then you may not want to get one from Elon Musk, right.
Yeah, and you know what that applies to a lot of people, especially in California. I just read a really interesting opinion piece about that. Go ahead.
Yeah, so, but I wonder why it doesn't handle that well. I mean, recently, I've driven the F one fifty Lightning that has a lot of power. It's very big and heavy. It handles well. The Kia EV nine. We both like that, Hannah. It's a big family suv that handles well and is heavy. The BMWXM, even if you don't like the styling or don't really understand what BMW is doing with it. It's very heavy, but it's got this active you know, anti
roll technology that keeps it flat around corners. Why can't the Rivian I mean, why don't they have the tech or the design to make it work around the corners.
It's really disappointing. I mean, of course, part of it is just physics. This is a seven thousand pound suv. It's almost eighty inches tall.
It's big.
It's like a rolling battery. That is what it That's what it is. So some of it is just physics. But to your point, others have been able to control the role in sort of this Frankenstein lumber that I really felt in the R one s and it's it's
too bad, you know, making cars as hard. If you have a company like Volkswagen that's been making vehicles for decades, they just naturally have better engineering than a company that's a startup that is coming from the tech background, so I think part of it is just experience, and Rivian is new at making cars, all right.
So bottom line, did you like it?
Though?
I mean, I know you look outside, you look inside. I mean, did you like the ride?
It doesn't drive great? No? No, A short answer, no, I give me, give me the VA give me I had. I was in an old Resto mod right after the Rivian and it just felt a lot more fun to drive.
A couple other out of these.
I thought the sunroof thing is cool, so they have, you know, a transparent sunroof. The touch of a button becomes opaque, which is I think interesting at least technology, but it doesn't have the kind of basic if you walk up to your car with your keyfob in your pocket, like every vehicle these days, unlocks for you, you know, and then locks when you walk away, what's the Rivian How does that operate?
So this seems like a really small thing, and it kind of is because it's just an issue with unlocking the car, but it's a big thing because we have to unlock and open the door handles every time we want to use the product. And the thing is you can either download an app to unlock the vehicle, or you have to carry around a key card and sort of this plastic pouch which you wave on the door handles and then they sort of pivot out from the side of the vehicle. There's a little bit of a delay.
You have to hit the car just right on the side of the cars. It's not intuitive, and the car does recognize the key, like you said, as you walk up to it. It just this technology is not solving problem.
That was Bloomberg News auto columnist Hannah Elliott and co host of the Bloomberg Hot Pursuit podcast that she does with Matt miller Man, of course joining us there as well. If taking a Rivian for a test drive this week and is perhaps not your jam, how about diving into a world that is near and dear to us. The HBO series Industry has been described as a gen Z
banking drama and made its debut in twenty twenty. It centers on a group of college graduates working at Pierpoint in Company, a fictional London investment bank.
I got an email about a girl on your desk dealing with.
Some embezzlement and a missing daddy.
The press on to public face for this scandal.
I wanted my friend, can you use me?
Does it appall you that I have somehow managed to make it.
On my own? Everyone's collateral.
We hold the line, where's your stomach?
I hope you all enjoy feeling your flesh sea in the hell you've created.
That's from the HBO series industry. The writers and co creators Mickey Down and Conrad Ka joined Bloomberg's Matt Miller and me in studio to talk about the series now and it's third year. Did you ever think it was going to make it to season three?
Of course not.
No, we never think so. It was right as if we're writing the last episode. But yeah, it's a privilege.
I mean, the odds, honestly in the media industry are against you getting two extensions, right, And that's a pretty amazing achievement, the.
Aldo against getting season one. Yeah, I mean, yeah, it's an amazing achievement. We're really happy.
Well, Conrad, tell us what it's meant for you.
Oh, it's tremendous. I mean, me and Mickey have known each other and we're now in our mid thirties. I know Mickey since he was eighteen, and to get this. You know, we're best friends. To get to do this on this scale has been a dream come true. And doing it with HBO, they really took a huge pun on us. We were very, very green and very inexperienced, and you can't really make TV anywhere else.
Well, and I know we've talked about this. I was thinking about this all of us. I mean I sit in our makeup room or in our newsroom, like I've got an idea for a show, its epen happened. I'm still here and I'm happy to be here. But I mean you guys actually had an idea and it worked out. How did that come to be?
Well, we me Mett Oxford, we went in too Charison Finance. I worked in investment banking, cornas on a trading floor. That's how the story, I mean, that's it was. It was based on our experiences originally, but we all have.
Had interesting, crazy experiences that's going to have.
But not like they do on the trading floor, right, I mean the trading floor is on another level. There's a story today about an i caat broker who had a client from City who could just continued to harass her, and she went to HR and said, this is a problem. The guy's making me feel uncomfortable. And her boss was like, I don't care. He brings us so many trades.
Suck it up. Basically, that's not unusual.
Is it.
No, it feels it feels very realistic. I mean, some people say to us a criticism the show, they think it's hyper sensationalized. But we experienced you know, I worked in a trading fo for three Is it a big American bank? This is pre me too. But it still felt like a very much a hierarchical place where women were having to behave in a certain way, in a way men certainly, you know, weren't expected to be honest.
Well, we'll go back to how it happened. I mean, because it's like I said, we all have great ideas, like how did you make it happen?
Well, we were working with a producer called Jane Tranter, who was a big cheese at the BBC before setting up her own studio, and we were doing something totally different for her, and then she asked. She basically discovered that we were two ex bankers, and she said, did
you ever want to write about this world? And we had written about it we'd written a really bad script about it, basically based on our own experiences, and it was incredibly boring and formless, but it was a script about finance, and the way that we opened up is obviously there's loads of depictions of finance we all know and love, but that always from the top down. There was about the people who have the most power in
the industry. So our way of going through it was the new lens was to go through the people who have the least amount of power, people going to the job for the first time, which was reflective of our experience.
And they're still but they're still partying like constally, right, I mean, is it the same aim you think post me too in this new era as it was back in the days of you know, Heaven and Hell parties and the Predator's Ball.
I think, I mean, look that these places have to evolve, They have to evolve with the times, they have to keep up with the times. HR departments are incredibly much stronger now than they were ten years ago. But I think, you know, I think human behavior, I mean this, Some people say this show is quite a cynical take on the world, but me and Mickey have a quite quite say, quite cynical take on the business. So I think it's a pretty realistic depiction of how things still still unfold.
How do you kind of keep the story going or how do you think about what drives it.
We have very good writers, I mean, we have insane the good writers room, like me and Mickey are sort of standing on the shoulders of really strong collaborators. So we go into the room for twelve weeks, we break the episodes of writers. We go in and right then you know it's a contemporary show. We loved it. We ironically, given we were both spot out by the business, we find finance fascinating now that we were writing about it rather than doing it, if that makes sense.
We've got great consultants as well, one of which is quite a well known person who doesn't want to be named. Yeah, and he absolutely loves you know, using ours shows that bash.
People used to work well billions right, you think about billions, right. They had some really incredible consultant student right to make sure that the hedge fun world, right, that investment world was depicted pretty accurately for all of us. It was like a guessing game of like who was it based on.
That wasn't a guessing game at all.
I know, I know, but you know that there were nuances that you maybe wanted to still figure out.
Do you get any commentary from the pros, Like if you're hanging out at a pub in the city, does someone say, oh, that show is actually very realistic or no, that's way off, that's not.
How by people in the pub all the time.
They often show their own narcissism as well, because they come up and say, oh, that character is quite clearly me so I don't know who you are, but yeah, no, no, people in the business say it's quite accurate. We get we get approached quite.
I still get a lot of LinkedIn messages saying you got me into finance by your show, which is quite.
We didn't actually write it as a recruitment sal but ironical.
Because I think is very interesting because you have a cynical take on the industry. It's very dramatic in a way that maybe people don't necessarily want to be involved with. And yet you're you're recruiting people to the industry. Do you find that more often than you're having people making people leave the industry?
I think it's you know, obviously re left it, But there's a sudden amount of seduction in the show, and it makes this show look it makes the industry look sexy. Someone said to me the other day, you've made banking sexy again, and I said, well, that's that's exactly why I set out to do.
So I'm very happy you also get into ethical investing, which I think is interesting. We talk a lot, you know, in the Bloomberg world about the rethink of ESG right going through a lot of changes. Why did you choose that topic. Is it just because it's kind of top of mine right now or has been for a while.
It felt like it was in Yeah, as we say, when we start breaking the season, we have the consultant and we just talk about big macro trends and themes. It felt like something that we wanted the show to be more intelligible in the third season. We didn't want it to be just loads of finance tagno bubble, so we said it around an I p O. We thought
that was more in the world. Yes, Jesus is one of those things which I think it's an acronym, but you still kind of you understand the real world impact of what it is, and also the show, The show functions that we kind of call it a bit of a high toned satire. It's always got its kind of tongue in its cheek a little bit, and it felt like the perfect thing, you know, if you think the show is cynical, it feels like the perfect thing for us to kind of try and interrogate and undercut a
little bit. It's a good avenue for humor, to be honest.
How do you like working with HBO and and what's it like? I think you said it's the only place that's really making TV right now.
Why do you say that, Well, I just think it's it's it's still the gold standard. It's still it's still, you know, the home of prestige television. I think that, you know, we have no experience working with anyonhere else really, so it's not easy for me to say.
You talk to people on other shows, you've been doing this for years. Yeah, you've got three seasons.
And I always say, and you know, I'm always a standard by the amount of people who say to us, you have no idea how much latitude they give you. They give us amazing notes, they're they're very collaborative, they.
Push, they give you.
They never center ourselves, they don't toast to censeer ourselves.
They always have to push ourselves into darker places, more interesting places, more human places. That very Mickey says, they're amazing collaboratives, very incisive.
Yeah, I mean, look, I mean I think a lot of TV is censored now, a lot of it's quite bland. I think a lot of it's quite down the line. I still think HBO is the place where you go if you want to make stuff that's provocative.
And it was definitely if you think you go back to Soprano as you go to Sex and the City, like it was a moment in time where I feel like, all of a sudden, TV really did push the limit right and they did set the standard for it, and it does feel like, I don't know, I don't know if it's gone backwards a little bit.
I liked episodes. Have you seen episodes.
It's a great show about people exactly, people from Britain.
They come to LA to make a show.
And when you say the HBO is giving you notes, I'm thinking about the way they did it and that it's a good.
Depiction of it. Actually it's a good show.
It's funny.
So what about the streaming model.
I mean, we saw these strikes that went on for so long last year, and it's so much harder for actors to get what they want out of it.
There's so much concern.
About you know, Ai, there's so much happening in media right now. What do you think about being in it at this time in your life or at this time in its life.
Well, it's challenging. It's like whenever big tech disrupts anything, it doesn't really think about it acts first and then doesn't really think about the long term consequences of what
it's doing. I mean, for the streaming model, I mean I can just talk about it practically in terms of we really like the fact that HBO put the show out week to week, like and that you can't binge it and those a very bingeable show, like you know, there are seasons of TV which you know, Disney put out and they had to have a cultural moment the last about two days, whereas HBO make it more of an event driven thing. You know, the show is going
to f a weeks. Hopefully it's going to be a bit of a conversation.
We really back to.
The old times of like destination.
Or you know.
On Sunday nights and people talk about the Monday morning is it's not rockest?
Yeah, it was like that with you know, Game of Thrones and Silicon Valley and Deep when they were all on Sure.
I feel like it's kind of weirdly disrespectful of people's work because people, you know, like the one hundred and fifty people worked on our show for a year of their lives. For it to like go in a weekend feels a little.
Bit like one rainy weekend and we start just bin, we've all done. Exactly where do you guys want to take the show or how do you think about it?
We want to keep doing it. I mean, as I joked earlier about the fact that you know, we never know whether we're going to come back on that we always right the last episode of each season to feel like it could be a finale.
But with the door slightly a.
Jar, that's a little tough though.
Yeah, I mean, well, that's that's going back to what you said about that, that's the business at the moment. You're not guaranteed the third fourth season. It's getting a third season. That feels totally wild to me. So I think we love to continue it. We directed the last two episodes, which was a new experience without ruining it.
You know the show good which time you guys directed?
First time we directed?
Yeah, And then the show ends in a very bold note which allows for new stories but also close the door another one. So I think there's more to be said.
It's interesting that you make it, that you're making it in a way, I don't want to say, more serious, but it's like the arc that Barry took, where it started out as a comedy and became a drama. You know what's what's ahead if you get a season four? I mean, do you do you continue that?
Are touris the.
Show kind of like it just matured in the sense that, like me and Mickey and all the actors were very young when it first aired, and the show had a very ya feel. It was about drug sex, rock and roll, young rads. But you know they're now in a position where, both fictionally and in real life, that they've grown up. We've grown up. We just can't help but write about
sort of more mature, deeper, more adult themes. So I think that's where the residents you're talking about comes and I think we would just continue to do that as if if we get given the opportunity.
Is there ever, like an offshoot of it as you guys think, Do you think about it?
What other products are you spinning out?
The pairpoint universe eighteen spare points really cool?
Do you guys miss being in the world of finance? I mean you get to kind of live it by writing about it.
We get to live it writing about it. We get to meet really influential people within it. I am so much more fascinated now by it than I was when I was actually in it because I was doing you know, I was the junior banker than European Investment Bank doing Excel spreadsheets. I wasn't actually having to write about the thing.
But you loved it when you were there.
Oh, I didn't love it at all. We were shameless.
We were chewed up and spat out. I was unceremoniously thrown out the door of Mormon Stanley.
What's the city like post Brexit? I mean, I know.
Back in the day when I worked in London in the early two thousands, and it was like the heart of global finance. Right of course, New York is also incredibly significant but there was a concern that post Brexit that would fall apart and it would all go to the continent, which I don't think it has happened at all.
I don't think it has. I don't think it has.
I mean just I mean culturally, just walking around the city or walking around London, you feel the impact and atmosphere of finance still. I mean, every single person and their brother is wearing a vest and coming out of a part on the shoesday. So it feels like, I don't know, I don't know, it feels obviously, I don't know. It feels maybe it feels and less electric than it did.
I mean, just speaking to our friends high up and big invested thanks like just the way the way you're allowed to behave for slightly different that's probably had a different effect.
I'm wrong.
But all the bold brackets like Goldman and always good that their European hobby is still wondering.
It's not like they moved, but for a minute they thought about, hey, maybe we go to Frankfurt, and the and the employees kind of said no, I'm not going to Frankfort, no matter how much you paid.
But they've come back and the cap and bonuses is no longer there, and I feel like this new government is making inroads to having a relationship with the finance community Europe again, with Europe again. Yeah, so I think maybe we're just going to go back eight years.
What are you guys? So I'm fascinating about the current financial world.
Do you do you caught up in the stock slide the last few days?
I mean, were you watching the non farm payrolls number?
I thought it was very good viral marketing for US sell off from Japan.
We get we get paid in dollars, so we often look at Mickey Offering Monitoring Central BAGUS to see if we're going to lose a couple of thousand dollars on our paycheck. That's about as much of our finance.
Interest goes interesting, all right, fascinating stuff.
No, it is really, you know, I don't know, it's a look you're having fun. It sounds like you find out if there's I don't know, the third season just getting it away. So I feel terrible to talk about a fourth season. But we'll see, right what happens. I mean, it's really gone on a lot longer than I bet you guys thought.
Oh my God, Yeah, for sure, for sure.
I would just say it's a quick sales pitch. If if you were turned off by seasons one and two, I think season three you could almost watch Cold and it's a really universal and engaging story.
So why would he turned off by seasons one?
No, I'm just I'm just saying, you know, because some people thought it was, you know, like.
Is your audience? Is your audience more gen Z and millennials? Do you do? You don't know hownect with it.
I don't know how many gen Z people watch TV, to be honest, I mean, but it's definitely I would say it's it's Skew's younger. But we're you know, we're hoping to as I said before, like the shows will come more adults.
So hopefully if you over sit down with you and say, look, you're not getting the forty five to fifty five year old.
It's like, do you look at the demographication?
No, No, I think I think it's a it's a broad demographic.
I mean, yeah, you know my father in.
Law who's the next judge, who in his sixties loves the show, but he said he would love there for me a button, which just skipped all the sex scenes.
He likes the business and he likes the finance.
He doesn't want to to see any of these young people having sex, he says, But but I think, look, the show is mature, much more mature than it was explosive season.
What do you people get out of it? Just to kind of wrap up, Micky, let me ask you.
First, look, it's not on the dactive show. It's not preachy. I think it's really really entertaining. I think it has This is the most explosive seasons yet, and it's just a lot of fun.
It's I think, you know, it's it's.
Very very addictive, and I think people will enjoy it for that reason as well. And if it says something about the world, and that's a plus.
Can't read Le's thirty seconds.
For you, I think it will. It's one of the few TV shows in which I think will force you to put down your phone because I'm not second screening, because it's engaging, it's dialogue driven. Turn on the subtitles. There are loads of jokes in the background.
All Right, it's streaming already.
It comes out on Sunday, okay pm.
All right, Sunday, nine pm. That's Mickey Down and Conrad Kay, the writers and co creators of the HBO series Industry. You're listening to Bloomberg business Week coming up. It turns out you can have a math mind without being a prodigy. We get into the simple path to loving math. That's next. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
The math performance of US teenagers has sharply declined since twenty eighteen, with scores lower than twenty years ago and
with American students continuing to trail global competitors. According to the results of a key international exam released this past Tuesday, in the first comparable global results since the coronavirus pandemic, fifteen year olds in the United States scored below students in similar industrialized democracies like the United Kingdom, Australia and Germany, and well behind students in the highest performing countries such
as Singapore. South Korea and Estonia, and while the data seems to show a continuation in math under performance that predates the pandemic, our next guest says there is a way to change that. Shalini Sharma is the CEO and
co founder of the nonprofit educational software organization Zern. Her new book Mathmind, The Simple Path to Loving Math, she joined Bloomberg's Matt Miller and Me starting with her own admission that she's not a math prodigy, but thanks to a revelation in middle school, learned to love math.
I was not a math prodigy, and I had a accidental and lucky experience in sixth grade that changed the trajectory of my life. My math teacher, mister Snyder, he just decided to believe in me when I didn't believe in myself. What had happened is I was in a math class in sixth grade. It was Honors math. It's the first time I experienced that the boys were thriving and the girls were quiet in the back. There weren't actually very many girls in the class. There were more boys,
and I was just barely holding on. I remember there was a point where I took a test. Mister Snyder called me to his desk. My stomach dropped. I went over to his desk and I saw less red marking than usual, and he said to me, he said, you did better on this test, and if you try your best,
you could be just as good as the boys. And I know in twenty twenty four that we don't think that's a good thing to say to a little girl, but I will tell you that my heart exploded because it was the first time I considered that I didn't just have to survive, but that I could excel and I could be the best. And it started this powerful chain reaction. And I wasn't born one, but I made myself a math kid and I came to love math. And it's because of that moment.
I had also some really great teachers that I'll never forget. And I never thought I was that good at math. I was very dyslexic. I had a bad memory for you know, times tables in you know, first and second grade or whenever you do that. But I get to eighth grade and I get this algebra teacher at the Columbus Academy, Tim Hildreth, who just really made math seem more fun like an art or like music, or like it was creative as you write in your book, and he connected with me in a way that.
Was cool.
The problem I have is that I can always visualize the solution. I can feel how the problem should work out, and I can get a lot of the answers right. I'm not good at the formulaic showing your work, and I never have been, so I wonder if that's a common problem.
Yeah, I mean so much in there. So think about reading. You know, if, for example, let's say we were all going to take a reading test, but none of us knew how to read. We didn't know that each letter represented a sound, and that you could put the sounds together and make bigger sounds like. We didn't know that, but you showed us. You showed me a bunch of symbols, and you said, when these symbols are together, that means the word house. When these symbols are together, that means
the word radio. And so there was a two hundred word test. I crammed it, I memorized all the words. I even got an A on the test. But because of how every human brain works, every adult brain, every kid brain, I would start to forget that and so two weeks later, even though I got an A on the test, I would forget how to read. And so think about how terrifying and insane reading would feel if we taught it that way. And so what you're talking about happened to you in your eighth grade class is
that the symbols and the meaning came together. So what math really is is symbolic notation to describe the real world around you. That's actually all it is. And so when you see pictures and visuals, then you get to connect that symbolic notation with reality and then it sinks into the brain and it becomes durable. And that's just
the science of how our brains work. So if you're teaching, let's say a seventh grader about negative numbers, you can teach them all these rules of when you multiply on negative times a negative, it's positive, when you subtract and negative from a negative. You know, you can give them a table and they may cram it, but they're going
to feel really stressed. But if you instead you say, okay, think about negative numbers as you dive into the ocean, and you go deep into the ocean, and that's negative numbers. Get back up to sea level, that's zero, and then you climb a mountain. Those are positive numbers. Now let's lay that out in the number line. And so if we see the number negative five, that is the position of the number on the number line. Now start playing with the numbers. And that's what's often missing for kids,
is that making sense. And the kids who love math, perhaps maybe Carol, they're doing that in their heads. Either adults showed it to them, they figured it out themselves. They read the textbook. However, they figured that out, but they put the symbols and the pictures together. And one of the main things we can do to help kids love math is always offer them those pictures proactively.
You know.
It's funny. One of our producers cci, She's like, I want to read this book, and she even said in the newsroom, I think I had a question here, but like, can you help adults enjoy math and have kind of a math mind? Having said that, you know, I grew up there's a lot of memorization and a lot of like doing problems and a lot of that, and I feel like the focus wasn't so much on how you got there, just get there and get the right answer. I mean, can an adult learn to love math and be better at math?
Yeah, definitely, And I think I think we as adults all kind of have to, you know, for two reasons. One is, if we're parents or aunties and uncles of kids, if we love math, we will help them love math, and so so it's just it's kind of our duty to help kids. But the second is in the world that is, you know, kind of manifesting in front of us, the need for numeracy. Just it's just off the charts, and you know, there's a lot of attention paid to literacy.
But it just really pains me that there's this prevailing misconception that some kids are destined to be left behind and they can't do math, or some adults can't do math. And more and more we see that that means they can't participate, and that means even participate in like understanding your show. You know, you have such an interesting show, but you're using a lot of mathematical terms, and so
we want people to be able to participate. But yes, I think there are four steps to building a math mind, and I think they pertain to anybody.
It's like the race when you're at the you know, at the end of a dinner and you're like, okay, we're going to give them. You know, we're we're out to dinner with a bunch of friends, like fifteen twenty percent okay, Like everybody's like figuring it out, and it's like, who could do it so like fast.
I don't know.
When we were kids, it was fifteen to twenty percent. Now they want like twenty five thirty.
It's a little different.
You say that there are.
Roadblocks for adults and for kids. What are the sort of hurdles that we need to overcome? What are the common issues?
Yeah?
I mean so the first is just believe. You open the show at the top by talking about the United States versus other countries. You know, shared some love for Estonia, and what's happening in those countries is and it might seem so simple, but it's a big deal. Which is in those countries people start with the belief that kids
can do math. So you know, the simple parallel I give is, imagine if we put all our kids in this country in kindergarten through eighth grade, and at the end they came out and we gave them a test, and we thought the test was really high quality. And at the end of the test, the majority were illiterate. The majority couldn't read. We'd be scandalized. And what if even worse than that, a bunch of adults said, that's okay,
they're not reading kids. You know, we get very mad at the adults, but that's the exact same thing we're doing in math.
For talking with Shanny Sharma, she's CEO, co founder of zur and it's a nonprofit educational software organization. Her new book, which is what we're talking about, is entitled Mathmind, The Simple Path to Loving Math.
And oh, by the way, can I just say one thing?
You can say whatever?
Talking at the top about how the US obviously, you know, US kids in general aren't doing great at math compared to the kids in Singapore. Yeah, and then you mentioned Estonia. Yeah, and I made a joke about how small. I want to point out that I do love Estonia. I went there for an ECB conference to talent. I stayed at the Hotel Telegraph, which was beautiful, is very nice. Would go back just to hang out. So I just want everyone from Estonia to know I do love you.
Because we get hate mail, or math gets hate.
Mail and school that they're great at math.
I want to go to chapter twelve. You say math matters for everyone, but we act as if it matters only for a select few. Our education system is built around both overt and quiet classifying of students what you
have referred to as sorting. We track classes. I grew up where it was like kids were in honors math, kids were in regular math casts, kids were in math that needed help, and it was like you were you were definitely I know, like I don't even want to say it, and it really put you in a certain way.
And I hope my daughter's not listening. But she was in a point where she thought she wasn't good in math and got a tutor and she actually is really great in math and loves it, and so it's just but she got it in her head that she wasn't great. I really hope she's not listening. She's not, she will hate me forever what we do in the US. What's wrong with what we do in the US and how
we teach math? Because there was something I saw on video where you talk about math war, something the US does but other countries don't.
Yeah, so like your kid and millions like them or at the top of my mind when I was writing math mind. And we have a system, and it's it's a strange one where we actually spend billions of dollars educating millions of kids by sorting find the math kids, not just teach all kids math, which is what is
happening in other countries. And kids aren't dumb, right, So you can say whatever you want put like, you know, nice things on posters, like you know, making mistakes is okay or whatever, but they know what's actually going on. And what's going on is that the way we teach in mathematics is it's a test to see if you have that rare genetic material to be able to do math, and every day you can fail the test. So, by the way, even kids who are in the honors class,
they're not feeling really good either. Everyone is feeling uncomfortable. Everyone is feeling like there's this scarce, rare genetic in more material, but it's completely not born out in science. Babies as young as two weeks old understand quantities. Pigeons can count, so con dolphins, and so we just have to relax because we can all do math. And what I'd say, is that doesn't mean that kids who have a deep passion for mathematics shouldn't be able to accelerate ahead.
If you have a deep passion for writing or journalism, you should be able to accelerate ahead. But that doesn't mean because you accelerate ahead that I shouldn't get to have really fun and challenging writing opportunities. And so we don't have to put those things in opposition, and we don't in other fields of knowledge, but we just do it in math. I would just say it's crazy and we could.
Just all stop.
I want to know what the system is that you developed, or that Zern developed. I read that you guys have a system that one in four elementary school kids use, and I don't know like half middle schoolers use, which made me curious, like what is it?
What is it like a program?
Do you have materials for teachers? Is it like you know, tricks?
What is it?
Yeah, so it's a million middle school kids, but the think about those so way I'd like to think about Zeren. There's a really famous mathematician who describes our problem in middle school math in America, and he says, kids walk out of class every day, like ten to twenty minutes behind in terms of confusion. Now we make that a big catastrophe, but that's all. They're just ten to twenty
minutes behind. And if we could support them in their homework or with just ten to twenty minutes of additional input, then they would get it. It would click, you know, you get that aha moment in your brain. And so think of zern as that digital compliment. It's the ten to twenty minutes every day for teachers or for families, and unzerned dot org it's free for teachers or families, and so we provide that ten to twenty minutes. I think some of the secret sauce of zern Is is
the pictures, gifts, visualizations. You know, when we're teaching. So for example, when we're teaching a fraction bigger than one hole, so eight forts, like what does that even mean? On screen, the teacher will cut two oranges into forts and you can see, well, it's two oranges and they're cut into
four pieces, so that there's eight pieces. And so it moves it from really abstract like no one really knows what a forts means in third grade, to being extremely concrete everybody understands two oranges cut into four pieces, and so that's how we're trying to support kids.
Shelnye, I wonder AI artificial intelligence. Do you think that's going to be a good or bad thing for the world of math?
Ya?
Do we need math? We have iPhones and.
We've talked with Sacon about a lot of this in terms of what he's doing.
And I'm just gonna ask con Academy like a competitor or I mean, you're not for profit, So what do you think about that?
Yeah?
I mean so I would say there's only two sites I let my I have thirteen year old twin boys, only two sites. I let my kids on con Academy and Zern. And I know Sal's kids have played with Zern, and I think it's really outstanding. And he does some things with visualizations and videos. And you know, we're both nonprofits just trying to put the best education we can up online for free for everyone. You know, I think
that with regard to AI, I don't know. I have no ability, no expertise, and no ability to predict where the world will go. But I'll say this, which is it makes it seem like math is more important. And the reason for that is, like today, in today's world, the single biggest predictor of getting through high school, into college, graduating college, and then having a massive effect in the sum of millions of dollars on lifetime earnings is algebra completion.
Just that algebra completion in your K twelve experience. And so if that's what's happening today in the world of jobs today, think about what happens in the future as numerous y and math skills become more and more expected and more and more part of every job. We already see stem jobs mixing together. We used to think stem jobs were you became an electrical engineer, you became a computer science not the case. Lots of folks who are majoring in history are actually out there doing STEM jobs.
This was really fun and I feel like any of us, well, I think you certainly much of adult you resonated with, and any of us who have kids. It definitely resident.
Wait, we had twenty seconds left. Who did it better? Teaching math at the university level? Brown or Harvard.
Brown?
Ooh, well done, well done.
That's Shalini Sharma, CEO and co founder of the nonprofit educational software organization Zern her new book Mathmind, The Simple Path to Loving Math, Cracking the Numeracy Code for everyone who has ever thought they were bad at math. And that wraps up the weekend edition of Bloomberg Business Week
from Bloomberg Radio. Thanks so much for joining us. Be sure to tune into Bloomberg Business Week Monday through Friday starting at two pm Wall Street Time on Bloomberg TV, Bloomberg Radio, and on Series XM Channel one twenty one. You can also listen to us on Apple car Play and Android Auto. It's free in the Apple App Store or on Google Play. You can also watch our daily
broadcast on YouTube. Just search Bloomberg Global News, where some willcast on Bloomberg Originals available at Bloomberg dot com, Slash Originals, and streaming platforms including Roku, Amazon, fireTV, Simsung TV Plus and more. Find our Bloomberg BusinessWeek podcast at Bloomberg dot com, Apple, or wherever you get your podcasts. And the latest edition of Bloomberg BusinessWeek Magazine is available on newstands now, at Bloomberg dot com and always on the Bloomberg Terminal. I'm
Carol Masser. Have a good and safe weekend. Everyone, stay with us. Today's top stories and global business headlines are coming up right now.