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 Stenebek from Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. This past week we got a pulse check on the US labor force with the release of the November jobs report. Ahead on the program, we'll hear from the CEO of International Workplace Group better known as IWG, about why big markets like New York have little hope of ever getting most people back into the office five days a week.
We're also talking tech, and plenty of it, including how Israel's war with moss is affecting the country's most important business sector, ways co founder Ory Levine ways En, plus the next generation of artificial intelligence is already here. Find out what the newest tools can do from the CEO of publicly traded Big Bear AI and where the biggest threats in them could lie From the President of IDC
Crawford del Pratt. All of that to come. We begin with a frontier that is still largely out of reach for most space, the magazine devoting this week's business section to it, including a story on developing drugs in micro gravity. Here to explain the space race happening inside the pharmaceutical industry, our Bloomberg News healthcare reporter Bob Langres and BusinessWeek editor Joel Weber.
So, we're decided to do a little space package.
There's a lot happening up there, it turns out, and there are some expected things like what SpaceX is up to you and the race to catch them, but there's also I thought, some more interesting things of like applications that you probably never heard of. And it turns out that you know, you mentioned micro gravity there there are some novel use cases for what can be accomplished in space. So Bob walk us through it is what can we do in space that we can't do as well here on Earth.
Yeah, So it turns out, you know, a lot of the drugs that drug makers are making these days are proteins, things like monocle and antibiodies or cancer drugs, and these are that are that are infused and these are you know, complicated, finicky molecules, the notoriously difficult to produce on Earth in
their crystal form. So it turns out that without gravity, or without much gravity, you know, it becomes much it's much easier to form like a large, large and very uniform crystals, and that, as it turns out, and enhance formulations and even potentially some existing drugs. So drug maker merk it's working. It's worked on a new formulation of it's just blockbuster cancer drug k Tuda. Now that's the cancer drug that Jimmy Carter got. It's sort of melanoma
and all sorts of other ones. But right now it must be infused like you have to go to the doctor's office and infused over a couple hours. And the dry it would really like to put that in injectable forms. You could do just a self administered injection potentially even at home. But to do that, it needs to be able to concentrate that con true to much more to be concentrated now and if you did it with the
current formulation, to be get like molasses. So it turns out they did some in space and the International Space Station and they came up with a way to concentrate
it much more and keep it fast flowing. And the concept for was first device in space and the fact that they might go into clinical trials is something that was the first you know devised in space that's excited a lot of gotten a lot of interest in you know space spaceed drug development and other companies like Eli Lillie is up there with some experiments now, and you even now have startups that once the International Space Station
is decommissioned, you know, sometime after twenty thirty that are working on developing you know, automated kind of drug formulation laboratories in space. It's sense on experiment up and then it come back down and drug companies could work on it.
Okay, so when does this happen? Why don't we have this already?
Bob?
Well, you know, these are all kind of like, you know, I'd like to say, these are all kind of like early experiments. So say they're drug companies and setting up experiments by the way out into space for really for decades, and they're their first experiments were kind of like early stage aimed at like early stage drug crystallization works to crystallize GOT disease more promoting proteins so they could design better drugs. And in fact, a unit of a suka Holdings.
That's the Japanese company. They have a drug in final stage trials in Japan for muscular dystrophe. There was was base and some very early work, you know, done early in the early days of International Space Study space station
crystallizing a muscular dystrophy associated protein. But what's happening now is there actually Americans and others are showing you could actually devise you know, better formulations of existing blockbuster drugs, and that's really driven the attention to like maybe space is like you know, could really like help us get some new patents and make a lot of money. So that's really driven interest.
So whose job is it to figure out how to do this in space? Like, you know, Tim, Tim, if you're going to make you know, car breaks in space, I'm sure you can figure that out.
But Bob, you don't want to see how far I made it from the math in college.
But within the pharmat, like, whose job is it to figure out space manufacturing?
Yeah, So at the big you know, drug makers, there's relatively you know, small numbers of people like working on it, so it's still a niche field. I'd say, you know, if you go to a big drug maker, I would image. There's probably a lot more people work around AI either space, but you know, you know, space is like you know, garnering interest. Some of the people I talk to, their titles are like, you know, director of Formulations, development titles
like that. But these experiments are are hard. You know, you you send something up to the space station and you know you get it back down a few months later, and if you like screwed up in the design and the experiment, you know your next shot and the next experiment maybe you know six months later. So you gotta got you gotta do it. Be very careful with experimental design. You can't, like it's hard to call an astro and say, hey, I want to change everything midstream once is up there.
So there's even a whole set of like companies that help drug makers like have like self enclosed experiments that can send up that are like all ready to go. The astronart press is a couple button to turn it on and then press the couple buttons to turn it off. You know, you can't it's hard to adjust the audition mystery, and once you're up in space.
The button pressing job it doesn't sound that So Bob, I want to get to this idea of scaling and make sure I understand what's actually happening in space. I want to go back to the company that you used in the lead here, LAMB Division, who's working on the
world's first protein based artificial retina for patients with retinitis pigmentosa. So, if it's so hard to actually create these two hundred paper thin layers of light sensitive protein in on Earth, does that mean that they won't be able to scale it in an environment that's not zero gravity.
Yeah.
So they're one of the few companies that's right now is talking about actually, as I understand it, manufacturing and finished product, you know, in space. And if you think about their product, it's like literally it's a size of a whole punch, like a paper whole punch. That's like, you know, so you get I guess you get one or two of these if you're a patient. So they don't need that much finished product. You know, it's a
relatively small market. I mean, this is not like an infused drug where you're going to be giving you know, two hundred millimeters every two weeks for the rest of your life. That's more like merks k true to the they make it, Mark and K true to their cancer drug. They make it like by the ton on Earth and their experiments in space. So far, I've made like one dose at a time, so you can see that it's
not right now practical. Wouldn't be even if there are even though there are technical advantages, it would not be practical for them to make the finished product in space. But for something like this artificial retina, where the total quantities needed are very very small, and I imagine if we ever get this to market, it's going to be sold for a very high price. You know, you can imagine that's an actual like possibility to actually make that in space.
Would you take the one jose that's been made in space, knowing that there's massive quantities on Earth, it's practically the same thing. It's just been made in space. Like, why wouldn't Why wouldn't I do it?
Why not?
I don't know?
Is the true question that rises the whole regulatory question. No one's even got to, like, you know, if something actually were made in space, or even if like there's another idea they're talking about, it's making like a seed crystal in space, use the better conditions of space to make like little seed crystals that they could then be used sort of like a sour to start being brought down to Earth and able to grow bigger quantities on Earth.
But even there, like the FDA, how would the FDA regulate that, there's a whole I guess said of unknown like questions there.
Yeah, FDA is not having any problems with oversight. We did that story actually earlier today, having said that, how easy is is you duplicate the process of space drug or manufacturing drugs in space on Earth? Can we create that, recreate that?
Yeah?
So the way to think of it with some of these drug formulations are trying to make better, like easier
to use injectable drug formulations. And the way to think about that is that there's just like you know, there's a million conditions you can put in to get something to crystallize, the temperature, the pressure, you know, the concentrations, many men conditions you can try almost an infinite number, and just things form a little without the microgravity because crystals are these kind of slow forming, finicky things, and without the convection is one of the things that goes
away the fluid convections. So and that's reduced and that gets better, just gets better quality crystals in many cases. And so the way to think about it is they get an idea in space like in these better conditions, and then once they know what they're looking for, they then find you find a way to duplicate that back at the factory here on Earth. And that's what Merk did with this new formulation of k truda that may go into clinical trials.
Okay, So so Merk seems to be all over this. What about other drug manufacturers are you know, is there really a race like as often is the case in space space or is everybody.
Else space race?
So Mark has a competitor in cancer drugs, and that's Bristol Myers Squid and they make a rival to k tree called Abdivo, and they indeed are putting experiments up into space. Look you're looking at protein crystallation, you know, and you know they they do say it includes cancer, but they won't to say which drugs and are involved. But all I can say is they do make a
direct rival to k truda. So, you know, drug companies, you know, historically you know, once one company does something, you know the others want to try it out.
The wait, not like a dry diet drug or anything.
Yeah, well, so far I've not heard of any diet drugs, you know that maiden space. But you know, I'll keep reporting.
We should make journalism in space, just so are volunteering together. I mean, you know, Bob Bob was already going to go check it out. So most cost effectively, if incorporated card.
We'll cover that SpaceX trip.
Okay, Hey, listen, I hate to be a bummer on all of this, but isn't the International Space Station at risk of being decommissioned after twenty thirty? So, like does that put kind of a damper.
On all on this?
Well, there's companies, like you know, there's like private startups and core working on like what's after the space station. There's one small one, you know, startup that actually has like a little satellite that's like a little drug production lab. They hope it's going to be a little automated drug formulation production lab up there. Now for their first mission, they've had some problems getting the reentry capsule back down
because they need FAA Federal Aviation Administration permission. They haven't been able to get it yet. So it illustrates some of like you know the potential snags involved in space based production.
Yeah, okay, well we know where Big Pharma is, which is the final frontier. You know, I'm curious to see if if this is for real though. I mean, like, sure, you can make a couple of applications, but scale seems maybe not easy to get there. Tim's going to try break pads and report back.
But the payoff is potentially huge here. I mean, if you can cure blindness with artificial retinas, Like even though Bob says it's a relatively small number of people, I mean, people would pay so much for that.
You need is you know, some micro gravity?
What's that?
That's why it's there for you.
I think the key word we use in the headline was that the drug companies are exploring this, you know, yeah right, not a donk deal. And you know, I think the way to think of it, they're doing experiments up there that are going to help help them, you know, devise new formulations and new versions of their drugs, but it doesn't necessarily I mean those they are actually those final drugs are actually going to be produced in space.
I think we call that the to be sure graph or the third word in the headline.
I'm just going to say thank you, Bob, because I've been just saying drugs.
In space It sounds really cool.
It does sound really cool. I'm very interesting in terms of maybe what we could see down the road. Bub landgread.
Thank you so much.
Everything you do is just we learned something and it's a fun read and interesting read. Healthcare reporter here at Bloomberg News on zoom in San Francisco. He is not on the International Space DAG.
As far as we know, despite the fact that there were some Internet connectivity issues. But yeah, never know, really really interesting stuff. I'll be the guy who presses the button stroll that sounds like it.
We can fight over it maybe, yeah, exactly what has Joe Weber, of course, the editor of Bloomberg Business We check this out in an upcoming new issue of Bloomberg Business Week. It's also online.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen.
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Well.
As the COVID pandemic fades into the past, many things have returned to normal, the world of work has not. Companies, employees, and governments still figuring out how to adapt to lasting changes to corporate life sparked by widespread lockdowns. I put millions onto a work from home schedule at stakes. At stake really worldwide aren't just norms for office life, but really the economic health of big cities as well, particularly
in the United States. We have a great voice to talk to us about what's going on in the workplace environment.
Yeah, let's checked in with him a little over a year ago. It feels like so much has happened, and since then, so much has been talked about. One company, one person who's at a front seat to all of this is the London listed office space provider IWG. We've got back with us Mark Dixon, founder, executive director, a CEO of IWG. That's International Workplace Group. He's with us
here in our Bloomberg Interactive Brokers studio. Talk to us a little bit about the footprint that you have and where else you've traveled.
US is our biggest market's about it's more than half of the business and we've been here for more than thirty years in the US, but the growth is now really quite dramatic in terms of how we're growing the platform, how we're growing the number of buildings we have across the country. So I've just come from the Midwest from
Minnesota where I've been doing site visits. But you know, we're growing the business about fifty percent growth rates in the US and it's got the place with the highest take up of hybrid working and so it's very exciting. So invested day tomorrow, but very useful to drop in and have a look at what we're doing in the market.
So mark return to office, work from home hybrid, what's winning hybrid?
So you have to imagine a new world driven by technology. So everyone, a lot of the narrative sort of thinks that things are going to go back to normal and everyone's going to come back to Manhattan. That's not going to happen. People want can and want to work at places near to where they live. They don't want to commute. So the elephant in the room is commuting. It's not people are working from offices, they just want to do
it locally. Hybrid is a combination of work from home, work from near to home, and come into someone like Manhattan or Chicago once a month, get together with colleagues, business reviews, collaborate.
So what does that mean for a market like New York City? For example?
For New York City, it'll need to reinvent itself. You can see it coming back here. It's probably a little over a year since I was last in New York City. Yeah, I mean it's more vacant. I didn't think it could get more vacant.
You think it's more vacant than a year ago.
Oh, yes, absolutely. I mean you can see it at the retail level, and then you can just got to look up in the building. So I mean, look, it's my I've been doing this for nearly thirty five years, so I can tell looking at buildings where they're occupied or not, there's a lot of vacancy, a lot of sublet and you know, it's places like New York very very difficult places and expensive places, time consuming places to
commute to for normal workers. So unless you live here, it's not convenient, and especially downtown, if you go downtown, you've got that double commute. So where you have that, it's you know that people don't want to do that.
It makes complete sense because I feel like for many of us who've come back to the pandemic. I like being actually back in the office. I'm so tired of commuting though. I'm tired of it like you just and when you have that break.
That we done, is you're going to keep doing it.
Yeah, I'm not giving up my card anymore, my commuting card. You work with the likes of or have Disney, Uber, Microsoft, black Rocks, Spotify, which got news that it's cutting fifteen hundred jobs earlier. We got that news. Disney earlier this year began the first round of seven thousand expected job cuts. Any of that working its way into less demand for what you are doing or help me understand.
Yeah, more demand.
You see.
What's happening is you've got globally pretty much a difficult economy, So corporations are looking at ways to be more efficient, to get more productivity, to cut cost, so more and more of a movement. You have to imagine us as providing a platform for work and support of workers. You know, at the moment in the US, as an example, we've got twelve hundred buildings every state. We're adding six hundred buildings next year, So you get this sort of work platform.
It costs half the price, it's near where your people want to be. And we've also do US airport's airside, we do railway stations, rest stops. So it's a work from anywhere. It's not just office buildings, and the future, a technology powered future, is about being productive wherever you are, and it's about getting the most overt workforce. And that's what companies are looking for today.
So what kind of indicator are you So if a you know what I mean, if a company is looking to cut costs and tap into more of you, is that just a smart company or is it a company feeling squeezed and they're looking to cut like you know what I'm trying to it is as soon as they need more space, Well.
How they save money is they have less space. It's a bit like Uber. You don't have a car in every city you travel to Chicago, you take an Uber and you take an Uber when you need it. You don't have one city there all the time. And what we're doing on our platform, we've got eight million people using it. They you know, you one day you're in Chicago, the next day you're working from close to home. We also support nearly about eight hundred thousand people that work
from home. We have a whole product range that supports homeworkers. So it's you know, it's about a technology powered workplace that's available anywhere. Our job is to create productive workplaces so that people can do the best work.
But it's not coworking.
We do co working offices, we do work from home. We do drop in small little things like a phone box that you can use in airports. Do your teams.
How did you watch the bankruptcy if we workplay out?
Well, it was long, wasn't it.
I mean it's but they weren't wrong in their concept.
Absolutely not wrong. They were wrong in their execution.
Yeah.
I mean I've been doing this business along. I started with one building in Brussels in nineteen eighty nine. We've now got just a little over four thousand, and that's been pretty much sell funded. We've had very little capital put into the business, so we've reinvested capital. They in the contrary, you know, they've used a huge amount of capital and so it's just a different discipline, right, idea, It's all about the execution. This is a detailed and
difficult operational business, not easy. A lot of people misjudge it.
How does the business model I'm a bit daft. How does the business model work in terms of you because you get investor money, or how does it works because you don't own because we were getting some perfect kitchen you don't own.
We have a platform so and that platform is a digital platform, a sales platform, and we have huge numbers of customers sitting on one side of the platform. If you own a property, you're an institution, you're a private owner. You want to put your property on our platform, you can do that and we'll operate it for you. That's
what we do. So we're working the biggest institutions in the world, insurance companies and someone who are putting property on the platform so that it's sold in a hybrid way. We're the middleman in all of that.
Get a piece of the business. So you don't care if that property isn't rented out completely for the month. We do well, you do because you'd make more money.
Off of it, and we want our partners to be successful, so we're very focused on that.
Do you have any are you in any long term leases?
We have some, We have almost no long to We have leases, but all of them are sure. We we option long and we keep them short. Otherwise pretty much a year we can get out of anything.
How has the interest rate environment impacted you?
If we are where our net debt is small, next year it would be about the same as our rebit do so about one time bit.
But any of your customers who have properties, have they have you have some of them gone under or because of the higher rate, some.
Of them, a few, very few have gone. But then you get special services. We provide cash flow in the building, and whoever takes the building, they like our cash flow.
So we're the areas of the world that you're concerned about in terms of economies, economic activity, the consumer.
I mean, I think there's a not a global squeeze, but it's pretty much. I think there's a universal squeeze, both on companies and on the consumer. It's pretty widespread. I mean, for me, and I've been business for nearly fifty years. You know how quickly interest rates came up.
Has caught everyone you know, unawares, if you like. On the one hand, and that's caught businesses that have debt and that have taken out that debt obviously at low interest rate comes back higher but also the consumer cost of living and squeezing them as well. So that's forcing companies to take action, whether as you said, whether that's cutting people or cutting costs. And that's quite a good environment for US.
Mark just got like twenty seconds left here. So based on what you're seeing, what you you are doing, you've talked about some some pretty impressive growth, especially with the US market recession. Next year, global recess from US recession very quickly, I would.
Say, difficult. Yeah, small recession.
Difficult year, small recession. That means a lot because you definitely have like a front receipta in terms of what many companies are doing. Come back, please sooner more than one year. Mark Dickson is founder, executive director and CEO of IWG International Workplace Group.
Here in studio, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Hey everybody to say that a lot has happened since we last checked in with our next guest would be an understatement.
Big time.
Or Levine last joined us earlier this year, before the October seventh Hamas attack on Israel area. As you know, Many is the co founder, of course, at the navigation app Ways, which Google bought for more than one point one billion dollars. He was also an investor in move It, which then tim Intel bought for a billion dollars.
Well I spoke to him because of his new book, fall in Love with the Problem, Not the Solution, a handbook for entrepreneurs. It details his journey and also his unique philosophy on what it takes to be a successful innovator. He's a graduate from the Tel Aviv University and served in the Israeli Army Special Intelligence Unit. He started both Ways and move It companies in Israel, which of course is currently at war with Hamas in the Gaza strip Or he good to have you back here in the
Bloomberg Interactive Brokers studio. How are you doing?
It's complicated, right, because it's never going to be the same. It's never going to be the same. That was a devastating attack. That was you know, my kids are the age between twenty two and thirty three. They could have been at this party, and there were many days that that was my main thought of the day, that I'm
lucky that they weren't. That was devastating. And I think that at the end of the day, if you look into the future or you realize that they might be a solution, but without Hamas being there, well.
That's what we think about. We talk a lot about the way forward. I've talked to people I feel like on both sides, and when I say sides, I don't mean on Hamas's side, but I mean on the Palestinian point of view, the Israeli point of view, about how do we go forward? How do we stop that we don't find five years from now, ten years we're still talking about conflict in that region. How do you think about that?
So, look, at the end of the day, if you think about the Palestinians and Gaza Streep and you ask yourself whether or not Tramas was doing any good for them, not really, they were doing very good for themselves, but not for the people. And look, Israel left the Gaza Strip some seventeen eighteen years ago. There was an opportunity to build awesome ness there and Ramas to go over and basically this is a terrorist organization, right, they are only agenda that they have is to kill us, and
that doesn't work. We guess what we don't want to be to get killed. If Ramas is being removed from the region, then there are opportunities for something else completely different, right, because at the end of the day, most people prefer leaving over dying, right, And most of the people in the Gaza Strip it's the same for them. The challenge is that the leadership of the Haramas is the one that is basically enjoying the killing on one hand, and
the power in particular that they have. And I think that once they are being removed, there is an opportunity and I see major role of the US, major role of US Saudi Arabia helping to recreate something new in the Middle East.
We talk a little bit about that because that's a part of the equation that I'm having trouble seeing here the solution and what actually happens. And it sounds like you think Hamas can be removed from power. So let's say Hamas is successfully removed from power in the Gaza Strip, what would you like to see happened.
So again we have to realize that what I would like to see has I have zero influence on that, or maybe a little bit of influence, but that's about it. But I think that the opportunity here is that really recreating something new with the support of the American, with the support of the Saudist and basically establishing sort of normalizations in the relationship. Right now, if you look at the history of Israel, every time there was a major crisis,
two things happened. Number one, as well grew up stronger. Number two, we actually figure out a way, a different way.
Right.
That's true for the he Pour War back in the seventy three, and after that we had a peace with Egypt, right. And that's true for World War Two where the Holocaust happened, and after that there was a Jewish statement. And so at the end of the day, I think that the October seventh is such a major crisis that it will lead into something else, and you know, hopefully as soon as possible. Right, But when is that going to happen? We don't know.
I want to talk economy a little bit, because I don't think people understand that when people get called back to the military. They leave their jobs to go back to the Israeli military. So there's a whole element of the Israeli economy that's not working the way that it
should right now. Are you seeing the effects of that day to day that there is a shortage of workers, that there are a lot of people who I mean, I have friends on Facebook who've posted Israeli as you've said, you know, my husband is away fighting right now because he got called back. She's a tour operator who does restaurant tours for tourists. There's no tourists there right now, so she literally they literally have no income coming in right now as a result of this.
So so not exactly, because when you're doing your military reserve, you do get from the Social Security the same pay that you were government if you were working. But if you look at the impact of the war on the economy, then then I would say, for a second, obviously budget for security and is going to go up dramatic. Then
that's we all realize the war costs money. Some markets, some industries are completely suffering from that, right Like tourism right there is there there are no tourists going to Israel, right And and I don't blame them, right, they shouldn't. It's there is a war there and they don't feel safe.
And that's all high take industry is actually getting strong because what we are realizing is that the people that are still there, they are carrying the load for all the people that are going on the military or reserve and so forth. And what we have seen is that the productivity increased dramatically. And when people that will be coming back from the military reserve, then we are likely to see huge growth in the high tech in general.
The challenge right now for the high tech, the Israeli high tech, that it's harder to raise capital, right, so most of the investors will prefer to be on the fence and and you know, way to see that the war is overright, investing in a war zone people afraid, and they rightly.
So that's interesting to hear because you've also got a group of very vocal Americans who are happy to give to Israeli causes. And I would think that some of those would be supportive of a venture capital. Of course they will in the country. They to kind of help prop it up time.
They do, and they will.
But in general, if you look at the you know, non Jewish investors or non engaged investors, then they have more challenging time, not all of them, but a lot.
Or is there anything you've put on hold because that's home base for you? Correct Israel?
Or so I you know, I keep on building. Look, I have a very simple life. I have a mission, I have a destiny, I have a purpose and this is about value creation. And then I can create value through multiple ways, through you know, building startups that help people, through you know, coaching and mentoring a group of CEOs. That of my startups, through teaching and through you know, the ultimate way of teaching is the book itself. They're
falling love with the problem, not the solution. Book is by and large, this is sharing my know how with people and hopefully make them more successful.
What's the problem that you see right now that needs to be working?
There are a lot You're picked him exactly, take a pick. So the good news is that there are a lot of problems. The bad news is that there are a lot of problems. Right the end of the day, there are a lot of problems. One of the you know, major problems that we are addressing recently is actually in the US, the realization that most people will not have enough saving for retirement, and so Pontera is one of the companies that is helping that in the US help
people to eventually retire richer. And so this is this is a big problem at the end of the day when people get old and they don't have enough money. This is a big problem. So this is one of the things that I'm trying to do with my startups. And you know, dealing with parking. Parking is a major problem right now in generally you would say, wait a minute, in the US, it's less of a problem because most people live in a single family house and they have
a driveway and they have parking cars. But the rest of the world, most people live in a multifamily houses, multi story houses, and they don't have parking garage, and then looking for parking at the end of the day's a nightmare. And this is you know, my most recent startup that we started that a couple of years ago and h and it's stealing these well and hopefully it will grow to address that because parking is a major problem.
Yeah, we could use that in Brooklyn.
Okay, Well, it's something I wonder you know, when I think about so much. This year, we've talked about artificial intelligence and generative AI, and some are concerned that it's going to take jobs away from people. I see it
more as complimentary. But having said that, I do think about job creation in the future because economies, whether it's the Gaza Strip, if people have a way to make a living and build a much more productive life, or whether it's in Israel or whether it's in other developing markets, if you can create a better life for yourself, it's just a better, more peaceful place, right, even create an economy.
So are there I don't know. We are we moving increasingly towards the world though, where technology is replacing jobs at a faster pace than we can make them. Unless you're coder, you know, I think that I hear that for the last fifty years.
So even if you think of the revolution of agriculture, that we started to have tractors and combine and different machinery and everyone said, oh, this is going to take away the work of the farmers, and guess what, it didn't. Right, So every time that there is an innovation, we tell ourselves, oh, this is going to take away all the jobs, and then you look at the unemployment rate and it doesn't change, or maybe it's becoming better because what happened is that
that technology by and large increase productivity. And when it increased productivity, then we can create more. And when we create more, then more people actually have a better life.
So you're not worried about AI be the end of us all.
Not at all. What I think that we might find out that there are some areas that we will need to establish regulation. Right, So if I'm speaking with a person, then that's one thing, But if I don't know that I'm speaking to a machine might be a different thing. So maybe the machine will need to identify itself and tells me I'm a machine. And and this is something that I think that eventually we will need to have.
Do you think that AI is close as Elon Musk believes two becoming smarter than humans?
No, No, I think that we hear that for the last fifty years or computers are going to be smarter than people. Oh, we don't need people, We don't need the human brain. The human brain something video fifty years ago, right, But then you know, end of the day. I think that the creativity and the adaptability is something that only humans would have and at the end of the day, that part is not going to be taking away.
Now.
Whether or not you can scan way more information in a fraction of the sick and absolutely yes, Whether or not you can process some of the things way faster, yes, but not the same order of magnitude what the human mind can do.
We've talked about a lot, and obviously it's a very stressful world right now. Final thoughts that you want to leave our audience as we get ready for a new year. So I think that in just about thirty seconds.
Sorry.
Value creation, right, value creation when you create value and valuate the way you create for others, not for yourself. If we think about value creation, then we end up with a purpose to a life. And when we end up with a purpose to a life, we're going to be happier and live longer, and the war is going to be a better place.
Thank you so much than happy new year. Hope the new year is a calmer one, more peaceful one, and better one way it will be okay or OLIVI, thank you so much. We appreciate it. Co founder of Ways and so much more. As we talk about we've talked about his book fall in Love with the Problem, Not the Solution, A handbook for entrepreneurs. Happy New Year.
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We got Mark Million, Bloomberg News Technology Editor and also the editor of Bloomberg BusinessWeek, Joel Weber, both here in our Bloomberg Interactive Broker's studio. This is really cool a behind the scenes look at Anderilla, closely held venture capital backed company that's competing with the likes of Raytheon.
Joel Yet and the company had been You're right into Oculus and developed Oculus, which now Meta Facebook acquired. Ever since then it has been more interested in doing military applications. And this roadrunner, which announced on Friday and after they had an exclusive look at it, attempts to solve a big problem for the US military.
Mark what is that problem?
The problem is drones, and so in particular in Iraq and Syria, they the militants there have been able to import these consumer drones like the kinds that you'd buy for the holidays for your kids. They take them apart, they attach bombs to them, and they are able to assemble so many so cheaply that it's become a huge threat to American forces.
I mean, these are the drones that are essentially being used by Ukrainian forces to bomb Russian forces at are really low cost.
And right back at Ukraine.
Yeah, they're like taping Russia. They're taping bombs to them.
Yes, that's the example of an ally using it as a cheap way to kind of protect themselves in war. But it's also a huge threat to American troops, and so they've been working on ways to not just be able to take out individual drones, but when forces create, you know, militants create like what's what they call these swarm assaults where there's like a bunch of them all coming at at once, you need new technology to take
it out. So this is one answer to that. It's it's, as you said, like almost a miniaturized fighter jet looking thing that just goes in and uh and throws a missile at these like swarms of drones, tries to take them all out, and then it can it can go back and it can land and they can load another missile onto it and send.
It back up.
So how much do we think this technology is actually going to cost? Because obviously the cost is the thing here.
You weaponize a drone, which I can do some holiday shopping and acquire many druns. I'm not going to touch the bomb part, but I can get the I can get the drones, h and I get I get what we're going for here. Because ultimately it's like, how can the US military bring the cost down with something that could be reusable? So so what what kind of budget do I need to acquire many of these road runners?
So traditionally U US military was using Patriot missiles just like kind of the default option. Those can run like four million dollars a missile. ANDERIL says that they can make these these things, these road runners for in the low six figures, so you know, one thousand, two hundred thousand per unit. So if they can pull it off, and to be clear, it's it's a star, it's an unproven company, it's startups, not raytheon. So there's there's doubts
about whether they can pull it off. But if they can, the US could save a lot of money.
All right, so so far, so good in terms of how effective it is in terms of trials and testing.
Yeah, it's very early.
It's a it's a brand new product. But they say the US has ordered a bunch of them and they expect them to be in the field next year.
So who else is attempting to come up with solutions in this space?
Because this is a huge problem, Like I mean, US forces around the world just basically, you know, you with not that much technology, it becomes a serious problem. And like you know, andder All can't be the only one looking for looking at this base to provide potential SLA and I.
Have to say reading this story, this is what to me, I said, Okay, this is modern warfare, this is war going forward, so you really need to have something to counter it.
Yeaheah.
So the major defense contractors offer options that the USCS, and again I mentioned the Patriot missile is kind of the default. It's like, you know, tried and tested and they know it works. But Andrels is taking this bet that they can kind of break into this market with a very different option.
Ashley makes this point a couple times in the story that even though this thing the Roadrunner has been unveiled, it hasn't yet been manufactured at scale. And if there's one thing that we've learned from Tesselas's troubles over the last six years or so, manufacturing one or ten of something isn't as difficult is manufacturing a large number doing this stuff at scale. What did the experts Ashley spoke to about scaling this say in terms of challenges here?
Yeah, you're right, it's hard.
And it's also not a traditional consumer electronic where you can use, you know, factories of China sule.
You can't buy one of these for the holidays for your Family'll try.
Still, and but yeah, I mean there's always the dark web, that's true. The philosophy inside this company has been to try to do everything themselves, and so they're building their own factory capabilities, their own factory lines to try to be able to build the whole thing, uh and do it in America, which is kind of what the US government would like to see.
What's really kind of cool, too, is they're not this is one thing, and hopefully if they get it up and running, this is one thing, but they plan to take this technology and spread it across other products.
Right.
Yeah, yeah, so ander Old already has a bunch of different products that they sell to to the US and allies. They do like you know, Century towers, sort of like a virtual border wall that the US, their Border Control has has purchased. But yeah, they've they've said that they've spent these years developing all this new technology and they think that it will They haven't gone to specifics, but they think it some of it will be useful to some of the other products that they're working on.
Okay, so something about this name strikes me as being a little cheeky road redder. What is that a reference to?
Yeah, so, so Raytheon has a product called Coyote, So it's a looney.
Tunes Raytheon being a competitor of.
Exactly right, So they're trying to stick it to their much bigger rival.
What is the Coyote other than you know, just trying to get the road Runner again and again and again and again and never quite being able to it in the real world?
What what is the coyote made by Ratheon.
Do It's a it's another sort of like autonomous defense system that the main innovation that anderil Is is talking up with This new product is that it's reusable.
It can land.
Like various companies including Androl, have built counter drone products that can go and blow up a single drone that's flying around. And so the main targets here are swarms of drones and being able to reuse them so that you're not having to buy a new one every single time you take out.
My understanding too, is it's just one person that's needed to kind of actually run it right or operate it rather than multiples.
That's part of the pitch.
Yeah, yeah, it remains me seen.
But yeah, they part.
You know, Androl builds this kind of like software system that they call Lattice where you can hook in all sorts of different defense products and they're saying, you know this will work with that that you can have them all kind of communicate wirelessly so you can see where all of your different roadrunners are.
It kind of sounds like the Ring camera system from Amazon, but for you know.
You're obsessed with your Ring camera system right now.
You just add you know, you add the border wall to it. I'll take a couple of drag and drop into your car. I'll take a couple you know, road runners through man well, the bigger thing an opportunity here is obviously the Vince budget gigantic and being able to crack it even with something that you know, may only cost him the six figures, but around the world at scale,
if you can manufacture it there, that's that's huge. But you know, the bigger challenge here does seem like the US military being geared for different wars than we've ever seen. And I think you know what, what we witnessed in Iraq earlier in the two thousands was that the US military was basically ill equipped to fight a certain type
of war. And you know when obviously Ashley has spent a lot of time in this space, but like there seems to be a new kind of war that the US may not be ready for and we're getting of it. What else is Androil maybe developing that could help down the line? Do we have any sense of what this could look like?
Yeah, the thing about defense contractors, they don't like to talk to they don't like to talk about their weapons until they're until they're ready. But but I mean, you've raised a really good point about the kind of like the new realities of war. One of the one of the interesting things and one of the things that Andrel was trying to address is this kind of like imbalance in the in the economics of the of battling drones.
Like I said earlier, it's so cheap to assemble like large quantities of drones and put bombs on them and create some very powerful weapons and high high quantities. As it stands now, it's very expensive to take them out. And so it would cost so much more to blow up these drones than it would cost to create like a kamikaze drone that can kind of can blow up and harm a lot of soldiers. And so that's something that Anderil is trying to address by by focusing on costs as one of the main things.
So I just want to make sure I understand the product here that actually got to see.
It's a.
Fighter jet type of drone that takes off autonomously, but then has a and has an explosive projectile that destroys a drone. The explosive projectile obviously not reusable, but the part that it's launched from is the part that's.
Reusable exactly well, so in the current model, it's not reasonable once it once it it sends off, it's it's missile the boy, I mean, the thing tends to blow up and you can't use it again. They say that they're close to developing basically a V two that that what you did there jet the jet can can be reused. So if you send the jet out in the current model, you send the jet out, it doesn't see anything that it that it needs to blow up. It can come
back and it can land. That's that's like an innovation. It's almost like a tiny SpaceX rocket.
That's I was thinking, right, it's the whole kind of Tesla idea.
Yeah, and it takes off in the lands and similar it takes off vertically and then it kind of turns and then flies like a like a jet. And so but but they say, you know, the next big invention here in the next model will be able to fight, like take out a drone and then come back and land and you can load it up with another missile.
It is, though, something we talk so much about disruption in so many different spaces, and right it's been these major defense contractors that have been so involved. But it's really kind of fascinating to see this company just kind of coming up potentially with something that would be very dramatic and would become, you know, certainly something that governments would do.
What truck record do they have in this space?
Because this they've been toying around in the military application space basically since they got out of the headset one, right.
Yeah, so they're relatively new. I mean when you compare them to the major defense you know, raytheon Boeing like that, you know, not they're not super tested, but they they started early. Really they're started putting out products early in the Trump administration, and they seize on that as like their first big opportunity was he was talking a lot about the wall, like why don't we sell him a virtual border wall?
And they bought it.
And so they've like worked on some other products to varying degrees of success, but they're really making a lot of noise about this one because they see a really big opportunity.
I keep thinking like if this engine is so powerful, like do they sell it to Bezos? You know who wants to deliver things? Like is there some kind of you know, commercial not just defensive commercial application.
Storied history of starting with military applications and then turning finding the commercial finding the commercial application years later but I think to their credit they have looked at this as like, what is the problem that the US military is facing in the field, and how can we perhaps protect American soldiers And that goes for allies as well.
I mean, like we will see where this application ends up, because clearly as Ukraine is currently shown and other battlefields around the world, like, we will see more and more and more drums, and currently those are being used abroad. But the technology is scary enough that it can be used to really inflect pain everywhere.
So yeah, first thing got to make sure it works right, Yes, little.
Good start tested in the desert.
Okay, not around that all right.
Note to self, Mark Mirillian, thank you so much. Really appreciate you coming in and spend some time with us, Bloomberg News Technology editor and of course the editor of Bloomberg BusinessWeek, Tel Weber.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
Twenty ahead in our second hour of the wee Get of Bloomberg BusinessWeek, including a conversation with private equity heavyweight Mark Patrickoff on his investment in the sports education company IMG Academy. Plus, we'll explore the personal tech and enterprise level IT trends to watch for in twenty twenty four
with Crawford del prehtt of IDC. As you might expect, artificial intelligence is high on Crawford's list, and first up this hour, we have an executive with a front row seat to some of the cutting edge developments in this space. Mandy Long is the CEO and a board member at Big Bear AI. It's a publicly traded software maker that provides AI and machine learning technology to support its customers
and defense, manufacturing, healthcare, and life sciences. Mandy spoke with Carol in Bloomberg News equities reporter Bailey Lipschultz last week.
Billy, it was interesting to talk to David Weston who talked about talking with Larry Summers about a year ago and Larry was saying, oh my god, AIAI generated AI. And then it was January of this year when Microsoft made that ten billion dollar investment. Then all of a sudden we were all in it.
Exactly a year ago. Yesterday I believe was the birth of Chad GPS. It just celebrated its first birthday. I don't know if you use it. I'd like to a little bit play around with it more. Have it explained complex topics?
Yeah, I'd say.
Write some code.
Tell it to me like, oh, I wish I could do that.
But it's interesting and I feel like we've all become enamored big time with it. We talked about the Microsoft investment. It does feel like everything that was connected with AI was often running. It became the buzzword on corporate earnings calls. Yet Nvidia, it's your top performing name in the S and P five hundred, two hundred and twenty percent. They make the chips that are needed in the massive amounts
of calculations. Just today we had syrup Tech. It's a startup that makes AI tools to help fashion retailers plan and manage their inventory. They raised about seventeen and a half million in a funding round. So it's just all in on AI.
There's a lot going on, and it's everywhere.
I was talking to a banker this morning and she was saying that when we think about AI. You can't just think about it as generator AVEAI or the chip makers the foundations. This is something that every company has to have an answer to and investors are asking that question because because the way she put it, either.
Going to be a winner or you're going to be roadkill.
Right, that's a really interesting and people are building out their infrastructure to support it. So our next guest definitely all in on AI. Delighted to have with us. Mandy Long, CEO and board member at Big Bear AI joining us on Zoom in Chicago. Mandy, it is I feel like the topic there's two topics this year. It's weight loss, drugs and AI, no doubt about it. Tell us about what this year has been like for you guys.
Absolutely, and thank you for having me.
Yeah, it has been a huge year for AI, and in no small part because of the rollout of chat GPT, which did celebrate its birthday yesterday.
I think what it's meant for us, right and Big Bar AI. You know, we've been well, we've only been a publicly traded company for a couple of years.
We've been at this for a while and we apply artificial intelligence to national security missions.
Right and enterprises.
I think something that has been a big catalyst for us, and I heard the comments earlier around the fact that but it really isn't just about generative AI artificial intelligence in general, right in the application of it, particularly the operational application of it, right the use in production helping people is what has been a big game changer for our business, and as we look towards the future, it's what makes us incredibly excited about where we're headed.
You are a small market cap two hundred and eighty two million. You've had quite a run this year, Like a lot of names in the space, up one hundred and sixty seven percent. About fifteen percent of the float is shorted, so investors are watching it very carefully considering the run up. Dig a little deeper and tell us exactly what you guys are doing and who your customers are, because from what I understand, it's a lot of the US government, if not all.
Yeah, so our entire business is not all federal government.
We work about twenty federal agencies, about one hundred and sixty commercial customers in the private sector, and how our business breaks down is really into three verticals. We do work in supply chainel logistics, we do work in cybersecurity, and we do work in autonomous systems, and when you think about those three markets, there's actually a high degree of complementary nature because we're securing supply chains the same way that we're introducing autonomous technology, and AI plays a
role in all three of those. The big difference maker for us is that we combine very deep subject matter expertise or the vast majority of our employees who are supporting our customers come directly from those customer environments, regardless of whether it's in the public or private sector, and we pair that with a really open architecture approach associated
with solving customer problems. And when it comes to the competitive landscape, where there's still a lot of players who live in proprietary, closed system pay me support forever, we take a pretty different tactic because for us, it's outcomes.
Well, Manda, you mentioned competition. How do you view the evolution of big bar AI within what still is a very much nascent part of the market.
AI is absolutely still in the early days because the difference maker and is going to be you know whether or not you can do it in production at scale and you can work in an environment that is imperfect for us, right, I think because of our roots in national security and in working in highly complex and imperfect environments, we have a bit of a leg up there, right, that causes us to stand out relative to the competition.
A lot of how we also apply the technology, right. I mentioned open architecture before.
That's a really big tenant of how we operate as a business, and I think it plays a big role as you start to think about the implications of applying AI in production, right, as you start to get into those questions of how do you know how do you monitor in.
An ongoing basis? As these technologies mature.
Andandy, you know what's interesting is the conversation and narrative has evolved over the year and everybody getting so excited about AI. You know, I laughed, but it truly was. On the earnings call, we would just search for AI because every CEO is dropping it in to their press releases or somehow bringing it up for a while. While having said that, help me understand practically, whether it's supply chains or cybersecurity or autonomous systems. Give me a for
instance of what you guys do using advanced AI. Generative AI to help a company absolutely.
So a couple of really specific things that we do. One is we have a very mature portfolio and computer vision right. So it's an area that I think for the technology industry has been somewhat out of reach for a long time because you needed the compute.
We have a solution called arcis Right.
We're partnered with L three Harris in supporting their autonomous surface vessel fleet, so we do the computer vision at the edge on those vessels to help with vessel identification, weapons, etc.
Right.
Associated with deployments and missions where you're working in really disconnected and difficult to process environments, we provide CV there. Over on the supply chain side, a really good example of our capabilities are associated with what we do from predictive analytics. We have a solution that we call Dominate that's very focused on geopolitical and macroeconomic forecasting.
Right.
That's applied in an environment today, right, incredibly relevant as you look at the global landscape and your suppliers who are working through very difficult capital deployment decisions associated with still having to deliver en product to a customer and an environment where you can no longer rely on the same turnaround times associated with the assembly process.
What's interesting is I hear you talk and I'm thinking, were you laughing at everybody in January when they're like, oh my god?
AI?
I mean, we know AI has been around for decades, but in terms of this more advanced level, it sounds like, I mean, how long have you guys been working on that? Although it doesn't like the processing power, right, has been a newer thing to kind of take it to another level. So I'm just curious connect the dots for me on that if you would.
Yeah, And the answer is no, by the way, in terms of whether I was laughing and everyone right, I think this year has been a As a technologist, it's a it's a liberating year because I've talked about previously, you know, this idea that.
I think AI is the new literacy.
Right.
You know, previously literacy for a long time was held at a high priest and priestess level.
It was inaccessible to the masses.
And what change, right is the idea of literacy empowers and liberates people. I think what's happened this year is the exact same thing is happening with AI. Right, We've democratized the ability to interact with these advanced models in a way that it didn't exist right a little over
twelve months ago. And you know, whether you're talking about empowering creativity, right, An example of you know how even I use gender tove AI and tools like that is I, you know, I play with my kids and I asked them, you know, who's the main character and what's our bedtime story going to be? And we you know, you work with technology to change the way that people can think about being creative.
And I think that for me is you know, it's why I love what I do, right. And I think that what we're going to.
See on a go forward basis is that because the level of understanding of what is just what is possible associated with kind of technology is now becoming more mainstream, we're going to see the applications of it become widely adopted because it shouldn't be limited to those who can speak the technical language, right, It's humanity that's going to decide where this goes.
When you look at Big Barry, I is the growth prospect within the private or public sector? Like, what is more attractive and where do you see that growth for the company?
The answer is both right, And I would say that because what has changed, particularly over the past two years, as we've seen massive disruption in the global supply chain and we've seen a geopolitical climate right that looks like we could be.
In a.
New face of a conflict in the coming years. Means that both sides of my business are very busy because one needs the other, right in order to look into the future and be successful.
We're talking with Mandy Long, CEO and board member at Big Bear AI, still with us on Zoom in Chicago. Mandy, you were talking about the importance of both the public and private worlds in terms of your business going forward. Talk to us a little bit more about that, and I know you also made a recent acquisition. Tell us about that and how that kind of feeds into your business and fits into the business growth.
Absolutely, and I think the best way to break down the importance of the relationship between the public and private sector side of what we do is that there's an incredible amount of collaboration that happens between both sides today and I think Big Bear in particular sits.
At an intersection point between the two of those.
Right in the private sector side, right, we support with a lot of the technology we have in not only in the autonomous system side of our business, but also supply chains a lot of capabilities that then get delivered right into the federal government through those providers. In addition to that, we work that we do and for example healthcare, I spent fifteen years in healthcare, I was early days
in machine learning and vision AI. There we do a lot of work with hospitals and health systems supporting patient flow optimization. Right, So if you have a patient that presents inn the ED, how do you make sure that you get them to the right place at the right time. Those patterns right in the ability to apply advanced technology to that means that both sides of our business right are growing right and relevant because we're solving problems that
cross the chasm of both sides. And when we look forward to where we're headed, the anticipated acquisition that we announced recently with Pangam bolsters our vision AI portfolio. Because you heard me talk you know a lot about arcists right in the work that we do in horizontal imagery right in satellite Pangam has a remarkable portfolio that does advanced biometrics right facial you know iris based work and it provides a really comprehensive solution that we can bring to our customers.
And Manie kind of balancing though the utilization of technology AI streamlining things, helping work in healthcare and better treat people. But on the flip side, buying a facial recognition company, how does that play into some of the security issues and getting customers and consumers kind of on board with that. Just given as you mentioned, biometrics is something that's very hotly debated.
It very much is right, and I think it was an important strategic decision right and it was not made lightly right.
At Big Bear, we play.
A very big role and we use our voice very openly as it relates to talking about the safety and
security of AI technology. We're very active right in the responsible innovation category, the input associated with how to do regulation at scale, and so when we think about the use of biometrics, I think one of the things that's really important to keep in mind, right is that in many ways as a society, we've we've crossed over a lot of the chasm associated with putting information out there because of.
The widespread use right and multi year at scale use of social media.
Now from a kind of where we sit on that spectrum and the role that we play, right, most of the capabilities that when we think about our vision portfolio today, where we're very focused on, is not in making autonomous decisions, right, it's in helping to distill and provide decision support for the ultimate.
Costomer believe, So you'd be working side by side with a human might come up all in terms of one of your systems saying hey, here's what we've come up with, but you need to look at it and kind of make some kind of decisions maybe off of it. Correct, because I think what we're human in the loop, because I think we get we get worried. You know, our David Weston we talked with, who had talked with Henry Kissinger, very concerned about AI in war time or in war specifically.
And I think about the role that you know, you guys are going to be. You know they you already do work with the government. I mean, what are some of the oversights that we need to have though in place to make sure that there isn't some kind of runaway technology. And I'm not trying to be silly and sci fi, but these things could happen.
It's not an unfair question.
Yeah, and I think it's you saw in the executive order that came out, you know, the top item is safety and security of AI technology, and that is not for no reason. One of the things that I think we have to keep in mind as a society as well, is that we have already passed through the gates of a human being able to individually manage and provide oversight of this kind of technology at scale. We're already an
augmented species, right. You know, you have I'm sure a phone right on you at all times, or a computer at home. Leveraging technology to help keep those guardrails in place is going to be what's important here because the traditional processes in paperwork is not going to get us.
There many One of the things that played out with Opening Eye going too fast too soon. I think back to you know, Facebook, with Cambridge Atalytica, there is this the government was not kind of in the know and regulating these things, and technology companies were able to run rampant. How do you balance that because obviously that seemed to be playing out at Opening IY with Sam Altman.
So the rate and pace of innovation today has no historical precedent, So I think even looking at those examples, right, it's different. Now, look at what has happened with chat GPT in terms of adoption over the last year, Right,
there's nothing like it. So as you think about regulation and oversight, you know, I go back to the same core issue, which is that I don't think we're going to get there without tech regulating tech, and that tech needs to be open architecture, right, and it needs to include the open source, and it needs to evolve the way that these models are going to evolve or you know, we could get in trouble, But.
Aren't you worried a little bit about open source getting into the wrong hands?
There is a philosophical discussion to have around the role of open source versus closed source and the relationship between the two of them. There is power in the open source and the community level of effort associated with the oversight of that provides a scale that does not happen when you have a closed source system with a tight R and D budget.
I'm a promoter of the open source.
I think that we're finally getting to the place where it's going to become a really relevant part of how we operate as a society because of this pace of innovation, but it doesn't come without the need to have guardrails.
Well, listen, this was a really cool conversation and I hope you'll come back because guessing in twenty twenty four will still be talking about generative AI AI and all that it can do, because, as you said, we're really kind of early on in this whole process. Thank you so much. Have a great week in great holiday season. Mandy Long, CEO and board member at Big Bear AI Jennings on Zoom in Chicago. We covered a lot, but I have like a million more questions.
I know, I wish we had two more blocks to kind of really dig into other things.
We'll come back to have her back. Are folks, you are listening and watching Bloomberg BusinessWeek right here on Bloomberg Radio.
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So care well, pretty much through earning season, and like last quarter one, theme has been clear. It was clear today hefn with Mango DB's results. Right, Companies of all stripes are embracing AI, and for good reason. Take Wall Street for example, Banks using generative AI tools could boost their earnings by as much as three hundred and forty billion dollars annually through increased productivity. It's a nine to
fifteen percent increase in operating profits. That's according we should knowe to a McKinsey Global Institute report that was published today. We know they kind of want you to use AI because then you'll hire.
Them consolutely say yeah, you can look back to day. All right, We've got a great guest to give us an idea though, of where companies are going to be spending money when it comes to it in the new year. Crawfordal pret back with, President of the global market intelligence firm IDC International Data Corporation, also known as he joins us here in our Bloomberg Interactive Broker studio at Bloomberg Headquarters.
Hello.
Hello, almost happy new year.
So great to see you guys, So great to have you here.
How are you thinking about twenty twenty four?
So when we think about twenty twenty four, it's a year of transition for tech twenty twenty three was a year that people were extremely concerned about inflation.
They were extremely concerned about.
About the impact of inflation on tech. And at the end of the day, we'll see tech spending around about five percent, which continues the trend that tech is just so core to what companies do for next year. This five percent for twenty twenty three.
When you say tech spending, what is the umbrella that that covers.
So think about information technology spending, so everything from devices like personal compute devices, all the way through application software, all the ways of the partner software, all of it.
And services, what about.
Cybersecurity services, securities in there, any any any it and professionals. And this is across is across the world, It's across it's across all regions.
I would think it'd be higher five percent a lot.
Yeah, So five percent we've seen we saw it ramp up to double that during COVID when we saw things accelerate. But you know, we've seen it bounce in that five to eight percent range for It's been pretty range bound for for quite some time. If you take out sort of the two thousand and eight downturn, if you take out the craziness that happened during COVID.
What kind of growth were we seeing prior to the pandemic the year before.
So prior to the pandemic, like I said, you know, we saw that in those years it was about seven percent. Yeah, so it was kind of in that range.
Okay, why why isn't it higher? Why hasn't it grown As we've become more reliant on.
Tech every company, the tech you think about is hot, the new hot thing it's and that stuff is growing, right, So application software ten percent and we've seen you think you think about the cloud thirty percent growth now cooling to.
So companies are spending less on let's say, a PC for every person because they've come down in price. These are commodities, and they're spending more on the cybersecurity stuff that keeps there.
So it's actually worse than that.
If you look at something like twenty twenty three, it spending growth in PCs got shalacked. It was down fifteen fourteen percent, it was down dramatically. Now PCs are actually a thing that moved the needle because every man, woman and child needs a PC who needs to be connected to the internet, and they spend somewhere between eight to twelve hundred dollars on a PC. So as PCs start to come back, which we think that they will next year,
they actually move the needle on it demand. It's not uncommon to see them move the needle a couple percentage points.
Why are they coming back next year?
They're coming back next year because there's because we saw this huge increase during the pandemic, and they start to get old, and they start to age and they break
and people need to start replacing them as well. They'll be a Windows eleven upgrade cycle next year, and we'll start to see new PCs that actually bring wait for it, AI out to the edge, so you see a coprocessor which we'll be able to run the AI workloads, and we think that will start to fuel by the middle of next year another upgrade cycle.
I am curious because you guys consult you talk with clients. What's the constructive conversation to be having around AI right now? What are you hearing from those clients.
I think what customers are starting to get into now are what is we're sort of beyond kind of the big mind art of the possible, and we're now getting into how can I actually apply AI to my business and what are the barriers associated with AI. So a lot of the axioms that have always applied to tech apply here, which is, you know, things like garbage in,
garbage out. You've got to get your data organized. You've got to understand how to structure your data in order to make sense and in order to be able to synthesize your data in order to make better decisions with
your data. And so we're spending a lot of time talking with customers around the choices they make around their data, how they invest in their data, and how they can really think about structuring it for a world where they're going to be making decisions that they're potentially synthesizing and getting output from AI.
You know, Carol knows this. I've been completely obsessed with the sort of two different schools of thought when it comes to development of artificial general intelligence AGI, especially in the wake of everything that happened at Open AI, Sam Wellman, you came on and spoke yes during that crisis, I don't know if I could call it a crisis. Actually, during the drama, let's call it drama. The thing, Yeah, are you you spend you know, you're in this day
in and day out. Is there any sort of reality to the idea that artificial general intelligence is something we as a human species should be concerned about?
Oh?
Absolutely there is. It's going to take a while for us to get to that point. And I think that seeing companies start to come together and have a discussion around the responsibility and not necessarily doing it after the horses have left the proverbial barn is very very important. I think we're starting to be able to elevate that
but that that discussion. But I definitely believe that the ability to do harm and the ability to spin people up with misinformation, those are things you can just start to see on the horizon where we really have to think about what is the provenance of that decision or of that data. And I think we're going to see a lot of that. I think we're going to see governments start to require Okay, you've you've been told something, but what was the source of that? Where did that information come from?
So much journalism a little bit, no, no, I mean a lot of it. Like I used to think about when I started, you know this, you had to know what the source of the material was right, and whether it was a perspective or point of view, so subjective versus objective or data points who supplied it. So it's kind of interesting to hear you say that, but I do wonder what's it going to take Crawford. Are we going to be kind of chasing just like we were in social media? Like social media?
Right?
Where's the yes?
Sadly, I think companies are going to try to get ahead of this. I think governments are going to try to get ahead of it, but we are going to be chasing it for a long time. I mean, what happens when someone can apply AI to a social engineering piece of ransomware that works really really well, and I'd like to have thirty by tomorrow morning. What happens when when someone can say, oh, you know what, if I alter the code of that genome, I can create a new kind of a virus, and I'd like ten thousand
by tomorrow. These are the really horrible things that people could do with generative AI. To really think about setting loose a new generation of malware in a way we're not really thinking about chasing.
But each example that you bring up has a person behind it making a decision to actually do that. Yeah, what about that science fiction scenario where literally the robots become more powerful than us because they can think, because they can reason.
So when you start to get to broad agi, if you will, that is a risk where when you're dealing with massive amounts of information and the machine starts deciding what's right and what's wrong, then you're into that zone and you're into that zone of wait, wait a minute, what do you mean my credentials don't work because now I've been decided that I'm a person who shouldn't be included in this place, in the airport, on the plane, in some safe place. Make up your science fiction scenario.
But when you start dealing with huge volumes information and instante instantaneously making those kinds of decisions, things get a little bit dodgy, isn't.
It kind of sort of the problem with self driving cars? Right, dog on the right, woman with a stroller on the left. Actually, how does it determine and someone it's going to hit something? Right? How does it make that decision right?
And so someone has to write that code and get to a point where that decision can be made. But eventually there's a set of parameters and rules associated with decisions like that, and the machine has to decide.
Are you worried because of warfare? I'm sorry military warfare, of.
Course, Yeah, I mean absolutely. I mean these are the kinds of things that that bad actors can capitalize on, and bad actors sometimes get aggregated and it becomes a bad nation.
Think of the Jones story that we did.
I know, and you know, I go back to the Elon Musk conversation that he had at the Deal Book summit of the New York Times last week. He said that, you know, the government doesn't allow you to build a nuclear weapon in your backyard. There are grand rolls and rules and regulations. He thinks this is more dangerous than a nuclear weapon.
Yeah, And I think he's jumping ahead a number of steps. But I think if you walk back from that putting the bullets in one hand and the gun in the other, and being able to say, Okay, I'm going to give you the tools to load those together and eventually start shooting, he's not completely wrong in terms of where you can draw.
The line to.
And so I agree that we have to be really mindful as governments to think about not letting these circumstances happen, and unfortunately, Carol, I'll take the conversation back to something that you asked, which is are we going to be playing catch up? And I think the answer is, more often than not, we are going to be playing catch up because the number of situations and the number of instances is just so vast and we just don't know how why that spectrum can get.
Do you think the good will outweigh the concern?
Okay? I believe we are going to go through a very very difficult period where work and jobs get redefined, and there are a lot of roles and a lot of jobs that are going to be threatened by AI. Think about the legal profession, think about pair ofalegals, think about accountants, think about those kinds of areas. We will then invent new jobs that can stand on the shoulders of AI, and people will be reskilled and we will that will be a great time.
Who created Way as our co founder, he was kind of saying as very similar.
Absolutely, if there's going to be a period of pain associated with AI, that will I think lead to a period of tremendous growth.
But there's also responsibility that comes along with any technology. Happy New Year, bewhile proffer del Pratt IDC.
Thank you, thank you.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg.
So excited about our next guest. So much going on, as you know, at the intersection of sports, money and education, which is why this next story we're going to kind of start here is on our radar. It's courtesy of Bloomberg'sjillian ten. She reported last week on Patrick Coff Company, which works with athletes and entrepreneurs to invest in private equity. The company, along with more than fifty of its current and former athlete clients, including Philadelphia Eagles center Jason Kelsey.
And I've heard that name, okay, Jason Swift.
Oh wait wait? Can I say that cool? That's the cool one.
You are hearing the voice of Mark Patrick Coff, founder and CEO of Patrick Cough Company. Joenning us here in her Bloomberg Interactive Broker Studio. Just you know, you're here for the next sixty minutes. No, I'm just next time. You're going to be here for the next are you.
Well, we love an opt in choice, not you have to go do this choice.
Well, we love having you. First of all, tell us about this deal. I am G academy. I wasn't that familiar. Did kind of a deep but tell me what you guys are doing.
But you loved tennis though years ago I loved gymnastics was a little bit less. But with relevant IMG they haveppened gymnastics.
But I remember when I was in high school, I had friends who, if they were really good tennis players, all they wanted to do was go to Nick Boltary in Tampa.
And that is IMG Academy, by the way. So that evolved. Ultimately IMG acquired voluntary changed the name, and it's always been the pre eminent place for in some cases privilege. But as it's changed for under privilege.
I mean, I guess he didn't I guess he didn't pay a time to.
Yeah, exactly. So, so on one hand, you kind of knew the brand.
I did a lot of investment banking work for IMG when they were an independent agency. When Endeavor bought them. I stayed in close touch with IMG Mumbatala invested.
At the time.
I was involved in that transaction and one of the heads of the head of corp David and devver Got named Brent Richard, who was an old friend of mine. We've been on the opposite side of a couple of different banking deals. Ended up as part of his role and endeavor taking over this acquisition they had done with IMG and focusing on the academy and seeing a really big vision for for private education, democratizing I think access to the best coaching.
Well, yeah, I just wanted to jump in just because when you talk Politaria, I did. It's funny we did the US Open this year, got super into tennis again. Read Agasy's book. He talks about his experience at Politary. One thing that he made hate, Oh yeah, more hate than love for sure. Actually it's totally worth and Politary
for years was his coach. But one thing that he talked about was academics and and that's that's you know, in my experience too with growing up in California and seeing other tennis academies, the tennis was great, academics were lacking. Talk to me a little bit.
About Yeah, I will I'm sorry to interrupt you. I will do a little plug here, but it'll make sense for a second. I've been the chairman of the board of a charity in New York called New Heights Youth and it's a basketball related charity. But we use academics as a benefit for getting good coaching.
So we've sort of said, look, if you can.
Be part of a team, if you can consistently commit to what's required beyond a team, you can do the same thing in the classroom.
So if you want our coaching, we're going to give you.
We're going to force you into after school programs, SAT prep, college, you know, admissions process, you know help. So IMG has done that at a much greater scale in the for profit ways. So, yes, academics is a story here today. Athletics is what has always been what people talked about, but it's the combination of the two that is really
what's interesting here. So using sports as a hook to bring in kids either underprivileged or privileged, put them into the right types of programs to professionalize in their minds, how they take advantage of this physical skill they have off the court, off the field, and to have better, bigger, more fulfilling lives because of it. And there's proof points
across the globe. So when IMG sold you know itself, Endeavor sold IMG Academy at EQT, the and NOORDA and GLA, the opportunity was here to globalize a really interesting methodology that has changed people's lives for many, many years.
And Andre is a good example.
He probably wouldn't be the Andre Weovius Williams in the long list of people who have created discipline their lives, learned how to exercise one muscle. If they can do that successfully, realize they can exercise their intellectual muscles too. And IMG is a really phenomenal, i think academic process to do that.
And the asception isn't that everybody's going to become this big professional play.
It's very few make it to the kind of like.
A great finishing boarding school, right of course.
I mean it's one way of looking at I mean at New Heights IMG two. If five percent of these kids go and play some level professional sports. Remember professional sports, you know, take basketball isn't just the NBA.
There's leagues in Italy and.
France and Greece and Israel and many other places Brazil, great players coming from all over the world. Now, So that's the other opportunity here with I Academy and why they chose EQT and why we could be helpful is there's a real opportunity to globalize this.
You know, speaking of globalization, there's so many places I want to go with you, PGA and live they're supposed to. I think there's a deadline at the end of this year for this merger.
I think we talked about it this spring as if it was a done deal already.
It's coming or it's expected to. What do you think happens next?
You know, I don't know. I mean it's very hard to say. I think it's this is a good thing absolutely.
Look, I think anytime people have an opportunity to be paid fairly for their talent.
Is a good thing.
So if it's one league, clearly you know that caps to some extent what someone can make. I think competition ultimately is a good thing. I think the way it's been managed has been quite poor.
I'm really pretty certain that the JP Morgan's of the world who happened on you know here just in full disclosure of twenty percent of my business.
Yeah, but who are the bigges sponsors of the US Open, for example, I'm sure they were, And by the way, the Masters and other things like that, I'm sure they'd allowed voice when this fell upon us in the spring. So, you know, I think it's a good thing if it helps, you know, you know, democratize golf, so more people play golf,
more people see golf, more people attend golf tournaments. I mean it's been for the privileged few who get to go to see the Masters or go, you know, watch any of these tournaments.
And I hope something good comes of it.
I mean, I think TQL is interesting, which is the new Indoor League right, see if that that got Scott delayed, you know, it's it's an interesting way to take a sport that's been for very few people who could afford it. So if LIVE and PG come together, you have to see what that means.
TBD.
Yeah, Hey, listen, we've only got a couple of minutes, so you've got to already promise to come back really soon. But two minutes. The world's pretty stressful, to say the least. And who'd have thought, like just kind of this year, the stuff that we were talking about seeing living athletes, what's their role in all of this? And we're getting ready for a really important presidential election in the United States,
what's their role or should be their role? Where you know it can backfire in an instant.
Used to be.
I think in the locker rooms of the old days, you didn't talk about money, you didn't talk about sex, and you didn't talk about politics. I think in the last cycle of professional sports, where these kids are seeing the world in a very different way, they're learning more by accident or intentionally at a much younger age.
They are forming opinions, they're realizing the power of their brains.
Back to IMG Academy and I speak to athletes most cases seven days a week.
They'll bring up, what do you think is going to happen next November? I don't like this candidate, I do like that candidate.
And they're starting to understand that if they decide to amplify a point of view that's well informed, that could be influential. I mean not to make it about diversity, but you think about Obama and Oprah and the impact she had the Number one I'm going to use this example because it's kind of off point for the US but the number one cricket player in India has two
hundred and fifty million Instagram followers. I don't have offhand how many Instagram followers Joe Burrow has or Kyrie Irving or but you saw what Kyrie Irving did last fall. They can make a difference. And if athlete A doesn't want to see Donald Trump become president, he or she has a voice, and I think you're going to see a willingness that you did not see in the past other than from a very select few to use.
That voice to.
I think a positive event. And any opinion is a good opinion. I would say that about athletes and you know, just have an opinion. I don't care whether you go left or right or do this deal, don't do this deal. I just want you to have an opinion. So we say that a lot of them about politics. How an opinion, it matters. It's going to affect your lives.
As I said, promise to come back soon because we'll do more. We will obviously. Mark patrick Hoff, president and CEO of Patrickcoff Company, joining us here in studio.
You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from three to six Eastern Listen.
On Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
She's the founder and CEO of a consulting firm that's worked with the likes of Northorpe, Grumman, Lockheed Martin, the SEC, the US Army, US Marine Corps, Booz, Allen Hamilton, and more, including Harvard and Howard Universities. The company's name, KUSSY is an acronym for knowledge, Understanding, strategy and Implementation, and in the company's own words, is quote committed to transforming, inspiring and cultivating leaders around the world.
So let's get to it. Her new book is The Power of Conscious Connection for Habits to transform.
How you live and lead.
We have with us Talia Fox. She's the chief executive officer of the consultancy Cousy Global and a fellow at Harvard University. Talia, nice to have you here with us. You know, we're talking about Charlie Munger, quite a leader and someone who also kind of seemed to live to the fullest and was very honest and transparent about his views. Tell us a little bit about how you are thinking about how people can transform how they live and lead.
Yeah, you know, it's amazing.
With his death, he almost reached one hundred years old. And what you were describing about all of the giving that he did with his time here. That is what conscious connection is about. It's about being conscious of what's happening in the world and the needs and being connected to the power that you have to change it. And that power can look different from many different people.
So let's think about I want to think about your own journey as a leader, because you started this consultancy quite a few years ago and you work with companies to help cultivate leaders. And it's not just companies that you work with, but you also offer these online learning modules.
Can you talk a little bit about your own journey as a leader, because when I speak to people who do this type of work, I always want to get an understanding of Okay, well, how do they develop themselves into somebody who can actually teach these skills.
Yeah.
So my background is in psychology, so I really studied. I started off in nonprofit studying the impact that leadership has on real lives, and I started doing keynotes speaking events for nonprofit organizations. But I was very connected to the fact that leadership decisions impact. I was able to look into children's eyes and see the impact of leadership decisions. I've had quite an interesting journey of being a single mom, of having to really find my way and study what
matters and what makes a difference in achievement. And so I've read literally hundreds of books, and I have been on a hunt for my entire twenty year career, twenty plus years finding out what are those core ideas, what are those core things that really make a difference in how we live and lead. And that is really what this book is about. I'm sharing those stories, the stories of achievement and the hack that I call it to a great leadership and a great life.
So let's get to the four habits. So talk to us, walk us through them, if you will.
So it's very interesting because the four habits make up the acronym love. But that absolutely was a beautiful coincidence.
So the four.
Habits are listening, observe, value, and engage, And each of these habits is connected to a leadership skill that we want to master. So listening is connected to emotional intelligence that's very critical for our success. And so I outline in the book how to do that. Observation is connected to systems thinking. This opportunity to be to see patterns
and to understand how interdependent we are. Values is connected to cultural competence, our capacity to value people, to value connection to value differences, to really be able to see all the big issues happening in the world and understand how adapt how to adapt our world views to those and then lastly engage the real critical key value, particularly in the world we are in today, is to be able to communicate in such a way that connects instead
of divides, and so that habit makes up the acronym love, which I don't know my Department of Defense folks on how I feel about that acronym. I was actually cringing at how fluffy it was. But when I saw it right there, I said, oh, it makes up love. I wasn't going to shy away from it, and so we're sticking to it. So we'll see if leaders can handle the experience of that being so conscious connected in their strategy.
It's so funny because you know, you do work with clients like the Department of Defense, the US Army, of the US Marine Corps. What's the reaction to the folks when you share with them this methodology.
Well, our our firm kusai kusi knowledge as you've shared understanding strategy implementation that is real. That has been the strategic approach that we use when we go and do culture transformation projects. So this book I wrote not only for my clients but also for it's for the people, and so it's really about on an individual level and on a leadership level, what are those habits that we need to master on a regular basis, on a daily basis to impact change.
Talia. You know, we talk with leaders all the time, you know, And I'm curious about when you're working with the defense contractors do a lot of government work, it looks like consultants university. I mean, what is it that people often come to you and say, Okay, here's we've got this situation, here's what's wrong, or here's what's wrong with our leadership?
Like help us? Or do they not even know?
What's interesting is that, you know, I really wish that people would be more pulled by purpose as opposed to push by stress. But typically when people do come to Kusai, there's something happening in the news, there's a you know, racial issues, social issues, political issues, and you're seeing a huge divide or even bleeding out executives. You're seeing problem, serious problems. We actually call it a culture shot. They need to be triaged if you will, to get the
culture back on board. You've got a lot of conflict. People aren't talking to each other. That's when people say, okay, who do you go to? You go to Kusai for those kinds of challenges, and we really come in with sort of skills and systems to support in a full scale culture transformation.
So what are the issues right now that the companies that are coming to you right now are telling you that they're facing.
So right now we're dealing, of course with a lot of diversity, equity and inclusion issues, particularly around conversations about politics, conversations that are really highly tense, and so there is this opportunity. I mean, in the government, they have an act in a law that you're not supposed to talk
about these things. But people know their social media and so one of the things that we're doing is how do you have these difficult conversations, how do you see authentic without having to get into the weeds of what's actually happening in the world. So how do you build those relationships in a way that feels professional but that also feels authentic.
Well, I'm curious. I'm glad you went there because it's fascinating. We have conversations, and I feel like they certainly picked up momentum when it comes to diversity inclusion coming off of the pandemic, coming off of George Floyd. It's amazing how here we are, how many years out from that, how many years before that that we were having those conversations, and yet we still have a problem.
I don't know.
You talk with leaders, you work with companies. What is the fix so that we don't have to have the conversation anymore? Because it just is.
I don't think that it's a fix. I think it's actually almost like hygiene, cultural hygiene. I love that you have new people coming into an organization. This is something where where people we have feelings, we have triggers, we have experiences, we have life, and so we really need to treat it as a constant opportunity to create space, to be able to build this environment where people are committed to innovation, committed to growth, committed to being their
best selves. But in order to do that, the soil has to be We have some very specific communication strategies and ways that this culture operates, and we need to make sure that everyone is on the same page. I kind of like to use the very plain language of in this house, this is how we behave in this house. This is how we talk to each other, and that's
that's the corporate speak. This is what we do here together, and this is how we have these kinds of conversations and connect and deal with each other.
Corporate hygiene. Is that what you said?
Yes, I like that.
I like that right.
It's just it just is like you do it because you're yeah, you have to. You should be gotta brush your teeth.
You gotta brush your teeth act and using that analogy, the more you keep brushing your teeth, you have less cavities, less paces. You know, I don't want to be going on a wonderful trip somewhere and you have to go get a root canal. But that's what organizations are dealing with right now. I will tell you if I was leading in any large organization, I would not lead a team that has not been trained on how to manage
and communicate. I think in this day and age, it's almost like not having a way upsider people not being able to use a computer.
It's a great way, but it's a great way of thinking about It's a different mindset and I think that's really important in terms of changing ultimately the outcome. Tell you Fox, thank you so much, Chief executive Officer, the consultancy Kusai Global, A fellow at Harvard and CURSS. Our book is the Power of Conscious Connections for habits to transform how you live and lead. This is the.
Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you can get your podcasts. Listen live weekday afternoons from three to six Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Jermale