Bloomberg Businessweek Weekend-February 12, 2021

tim where there were so many cryptocurrency headlines. This week we're going to talk about that and what's going on with bitcoin and all of those cryptocurrencies with former f d i C chair Sheila Bear. And we're also talking toys. Looking forward to hearing about how Mattel is creating more culturally relevant toys and also just what a good year was for the company. Yeah, big time. Also, so many of us can't wait to get on a plane again. I cannot wait for work for fun, We've got the

outlook for travel. I mean, I'm excited to go somewhere. I don't really want to sit on a plane again. No, I don't miss being in airports. I don't miss being on airplanes, but I miss going places airports, walking around. We're gonna hear from the CEO of Trovago all of that to come. We begin, though, with an interesting interview this week and Tim, it's around COVID. It's one company

that actually made some news this week. We're talking about Tonics Pharmaceuticals share surging this week and really this year. You might recall the stock was the target of day traders last month, touting the company on message boards for no apparent reason, as Bloomberg reported, Well, this week the stock shooting up on news that it's developing a COVID nineteen antibody skin test. Yeah, it really caught investors attention.

This was a really interesting interview. We both really liked it. Tonics, by the way, also working on a COVID vaccine, and that's where we started the interview. We're developing a vaccine primarily that stimulates T cell immunity. It's based on a live viral factor that's called Horsebox, and it's a one shot vaccine that we believe from historical parallels, could provide

decades of protection. We have monkey data supporting the vaccine, so we were very happy when we in ounced that we're developing a skin test that will measure T sell immunity to COVID, and we think that this is important because there are two arms of the immune system, antibodies and T cells. Antibodies are transient. They can be measured for maybe three or six months. The T cells last for years or decades, So we think it will be very important to figure out how many people have T

cell immunity instead of just the antibody test. How long do you think that will stick or I mean, how long do you think we will have to know this? I mean I'm thinking about this in the context of right us being on the other side of this pandemic at some point, But how many more years do you envision us actually needing to get tested for immunity. Well, unfortunately,

I think that COVID is here to stay. I think it's the majority opinion of people that have experts that COVID will become endemic after Okay, I just want to make sure I understand this here to stay. We've only eradicated one one thing, and that is smallpox in around the world. Smallpox, we were very fortunate was eradicated because it was extremely deadly thirty of infected people died. But part of the success of smallpox eradication was the vaccine

that was used. And the other part of the success with smallpox vaccination was that there were no animal reservoirs, And by animal reservoirs, I mean that no other non human animals got infected with it. With covid, we already know that's not the case. Manx, hamsters, tigers, a variety of different animals get so it's very unfortunately unlikely that this might be eradicated. So I think that the solution long term will be childhood immunization in the same way

that we immunize for MMR measos moms and rebella. We probably will go to a system of immunizing children, and that's why we think of vaccine like ours, a live replicating vaccine which can provide years and decades of protection, is the best solution for that post pandemic covid problem. UM. But it wouldn't be infants, because a lot of viral vaccine is for UM. You know, in the case of smallpox, it was administered to children about five years old or so,

but not not for infants. But yes, I think that that would be the plan. But clearly, first we have to get out of the pandemic. And for this, I think we're all extremely grateful to people who have quickly developed these vaccines, the MR and A vaccines and maybe now these at A valuous vaccines. Uh. They definitely have an incredibly important role and I can't wait to get mine. So you know, first we have to put out this fire and then we can go to more durable solutions.

So and forgive me, I just want to go back to because I know and just reading in before you are coming on, and I know you are working on the vaccine, But what about this skin test, because it does seem like investors are very enthusiastic. Are they wrong to be so enthusiastic about that and not focus on the vaccine instead? The skin tests is very important. I was mentioning the vaccine because it tells a little bit of this story about how we got to the skin test.

But the skin test is very important because we really don't know how many people have immunity and we can't measure it. So there are many cases, for example, where there's a husband or wife and one of the spouse who gets infected the other cares for them, but for example, the caregiver frequently doesn't get sick, doesn't develop antibodies, etcetera. We believe that a number of these cases actually T

cell immunity develops without antibodies. There it's now known by much more complicated laboratory techniques that T cell immunity is protective of developing serious disease. So we just think this skin test is important, and we think the excitement is justified because we would really get a better handle on how much T cell immunity is in the population. We're going to be in human trials with both of them,

we believe this year. But I think in terms of, you know, getting out beyond trials hopefully, Tim's got to say, it feels like a long time away, at least right now, and it is. They're also a reminder that we're gonna ultimately need multiple vaccines to get ahead of all of this. That was Tonics Pharmaceuticals co founder, CEO and chairman Dr Seth Ledderman. Coming up. Also in the news this week, Coco Bitcoin. We check in with a former banking regulator

who's not a fan. You're listening to Bloomberg Business Week this is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stillavan from Bloomberg Radio. Another big story this week bitcoin and cryptocurrencies. Bitcoin jumping to a record high after a MasterCard and Make of New York mill and moved to make it easier for customers to use cryptocurrencies. Felt like the global corporate community, Tim was all of a sudden weighing in on bitcoin

and cryptocurrencies. Yeah, did it really felt like Monday morning was a turning point. It's when we learned from a Tesla regulatory filing that the company would hold one point five billion dollars of the cryptocurrency on its balance sheet. Also in crypto news, Elon Musk saying that he quote bought some doge coin for lile x. That's his son, right it is? And I gotta say to the water

Bloomberg Galaxy Crypto index touching a record as well. Everyone everyone talking about crypto this week, although Tim, I kind of say not everybody is a fan. Yeah. Bank of Canada said that cryptocurrency boom is speculative mania. And Carol, you caught up with Sheila Bear, former head of the fdi see, who was there during the two thousand eight Finefel crisis along with Bloomberg News Wall Street recorder Shanali boss Sheilabert doesn't see bitcoin replacing the dollar at least

anytime soon. First, let me say I'm expressing my individual views. I'm not speaking for any any companies have affiliated with and uh, you know, I think, Look, I don't I don't give a financial advice. I can tell you my personal uh bilosophy on this is that you know, stay away from it. It's it's volatile. Uh, it's a nose lead levels. Now we don't know how sustainable that is. Uh. You know, if if you're a very wealthy person with some some money to risk, fine, But now I don't

have a lot of confidence in it. I mean the problem bitcoin is it is so volatile, right, So it's original promises a as a method of payment. Really it's volatility gets in the way of its usefulness as a method of payment. I mean there's some if you're if you're buying a very expensive car, maybe you know, I guess that's the idea of test lab. But I'm skeptical. I've always been more interest to the technology that underpins

bitcoint as opposed to the bitcoin itself. I think blockchain distributed ledger technology has a whole host of use cases that can make our financial system much more inclusive, much

more efficient, um well less costly. Uh. And so that's that's where I think people should be focusing in terms of finding real value about that for a second, more specifically, I was very surprised to hear you say that about bitcoin, because I have heard you talk about how digital currency could have done more during this pandemic to get money to people who needed it. How far the way do you think our financial system is from that? Actually that

sort of thing actually happening, right, So I was speaking. So, there are lots of different cryptocurrencies. Bitcoin is the granddaddy of them all. Uh. It's a lot of hype around a lot of nostalgia, a lot of romance around it. But when I spoke of I was talking about stable coins. There are a cryptocurrency that is that is tied to the dollar. Disclosure. I'm on the board of a company that that offers a stable coin that that is like that.

It's a dollar for dollar collateralized. You give a dollar to the company, it goes into an f d I c ensured bank account or a short term treasury. You're issued a dollar of cryptocurrency representing that that maintains stable value because it's fully collateralized and tethered to the fiat currency of the US dollar. So if those and there are other companies that offer there, there's a possibility that fed through a central bank digital COURTNESY could digitize a

dollar as well. But that's what I was talking about, not using bitcoin, but using a crypto version of the dollar tethered to the dollar so maintain stable value. That's interesting because there's a ton of people out there who invest in bitcoin that don't believe in the dollar, that don't believe in the current financial system as we have it. What would you say to those people? Well, I would say I believes in the dollar a lot more than I believe in bigcoin and holding value. Uh you know,

look I I people would know me. Know. I've been a critic of the highly aggressive monetary policies we have. We have pursuits as a great financial crisis. Uh, it's not manifests itself an inflation. We've got an asset inflation. It's got some very other unpleasant side effects in terms of the build up of leverage, uh, inflated financial asset values. So I you know, I'm not in love with the with the monastery highlight commodated monetary policies we have pursued.

But even given that, Yeah, now I would, I would have a lot more confidence Santigolo than I would in big coin. Again, it's speculative, it is volatile. Uh, understand it, don't you know, buy it unless you can, you know, withstand significant losses because it goes up. But it goes down to what about other countries? Right? We know China's racing to do a digital currency. If the US doesn't catch up, what's at risk for US here? Well, that's

a good point. And again, the China's central bank currency is tied to the r m B. It's tied to their own fiat currency, so they're or not. They're not using bitcoin to do this, They're using a cryptographic version of their own. There are the R and B. So yeah, and I think most observers think that part of the well, there's some privacy issues around the China's use of cryptocurrency, because you can so the goodness and the badness. You can really you've got a you know, a very clean

trail of transactions. So there's privacy issues around that that may be good if for law enforcement purposes, it may be bad for privacy, but but also yeah, I think a lot of observers think China wants to become the

reserve currency, eventually the world's reserve currency. And if you have, if you have, if you have digitized your own fiat currency, going into these developing countries where they're already heavily involved, they have unstable currencies, it's very easy to get those countries to adopt the digital version of your own fiat currency. Something we wanted to ask you about Chila is we heard from FED Chief J. Powell. He said, workers, small,

all businesses, they still need continued support. You have been very vocal about wealth inequality and the need for many US families to build financial security. Um, what do we need to make sure with this latest COVID relief package? All right, Well, I think it's it's right to focus on household payments, and people of good will can say it was a fifty thousand, seventy five thousand, uh, but I think they need to be sizeable payments and that

needs you know they're using fiscal policy. Who can get the money directly into into household budgets where it can be saved, It could be used to pay down debt, or could be used to spent. Any of those are good uses of money. UM. You know, the wealth inequality since the Great Financial Crisis really has gotten much much worse.

Low bit of income of families UM have been saving more, but there's still their ability to build wealth has paid in comparison to the three top issial on the society which has benefited so highly from the monetary policy we're talking about earlier and inflating financial last note, so they need more financial security. So if the money saved, that's a good thing too. If it gives them more financial security,

they spend it. That helps the economy. So I think that should first and form must be the top priority. Continued supplemental unemployment benefits again, a direct household support is important. UM. I think the uh those are how I prioritize it. There's controversy around to help state local governments. We have definitely seen that to be the case. That was former head of the fdi C. She lived there along with

Bloomberg News Wall Street reporter Shinali Bassik. The full conversation can be found on our podcast feed at Bloomberg dot com. She'll addressed the responsibility that banks have to minority communities. Next hour, we'll hear more about that with the founder and CEO of Runway, which is looking to close the racial wealth gap for good, and Tim speaking of race and culture still ahead in roads towards inclusivity. We're going to check in with the Mattel's CEO on creating culturally

relevant toys. That and an update on the company's strong, really strong fourth Warner is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Steinovy from Bloomberg Radio. So, Tim, quarterly earning season in the US, Yeah, it's largely over. We still heard though, from some well known companies and big brands throughout the week. One in particular, Mattel they had a really, really strong fourth quarter. Yeah.

You know, we hear a lot about trends during the pandemic, but nothing more puts a smile on my face than the image of grandparents and parents buying their kids toys because they're they're stuck inside and they want their kids to be able to do stuff. That was kind of an interesting storyline at Yeah, exactly and the toymaker specifically Mattel surpassing Alice estimates during that fourth quarter, they had its best performance in years. Listen, e commerce was up,

dolls and more really leading the way at the company. Well, Carol, you caught up with Mattel chairman and CEO E Non Cries. That's right, and we kicked it off with talking about the company's performance. This was an exceptional quarter for Mattel without best performance and years, really driven by strong consumer demands and another mile stool year for the company. For the second quarter in a row, we achieved double digit sales growth, outpaced the industry, and gained share on a

global basis. You know, our results really exceeded expectation on on pretty much across the board, with the highest fourth quarter growth in fifteen years and a significant increase in profitability with fullier operating income that was twoing a half times higher than last year. But this is not just about the quarter or the year. It's about a multi year ten around that is tracking very well, which puts us in a strong position to continue to increase profitability

and accelerate growth in one and beyond. You know, talk to us about that because you know, reading through some of the research and uh, there are you know folks saying, well, listen, it's really because of the pandemic. Families our home, they've had a fine different ways to spend time with their families, games, you name it, and kids, you know, being at home

that parents are spending a lot more on toys. Talk to us a little bit about what you have been doing and your team have been doing at Mattel to really kind of juice some of the brands that have been you know, that have been in your portfolio for for a long time. You know, there's no question that COVID, the COVID lockdown drove strong demand for toys. Uh, and the year ended up seeing extraordinary growth for the industry.

You know, the toy industry proved its resilience, is that it's a strategic category for retailers, and it highlighted the importance of play. But the demand driven by COVID, however, is difficult to quantify, as the industry was projected to grow even before the pandemic, and we've believed that much of our overall performance has been driven by the work of our organization and by the strength of our brands and quality of our products. We didn't just right the wave.

We outpaced the industry and gain share on a global basis in the third quarter, the fourth quarter and the full year. In the US, our growth rate in the fourth quarter was one point three times higher than the industry. In Europe we grew five times more than the industry, and in Latin America we continue to gain share in the quarter and for the full year. So you know, we re lived the categories where we are a global leader.

Vehicles and infant of the pre school will continue to perform well, and we expect to accelerate the growth and increase overall share. We'll talk to me about some of the brands. Listen, I have grown up with Mattel. I'm from a large family, you know. Inheriting my older sisters, Barbies was a big thing. And then I've got a seventeen year old where I've Bitty Baby Kit, Marie Grace. These were all throughout my home. Um, so tell me

a little bit about some of the brands. Talk to me about Barbie, Talk to me about Hot Whales, Talk to me about American Girl and then games what what what kind of growth have you seen? This was a very exciting quarter for all of our ends. Barbie continue to go from strength to strength, up eighteen p in the quarter and for the year, with retail sales up more than thirty Bobbie ended up being the overall number one toy property globally for the industry both in the

fourth quarter and full year. The Barbie Dreamhouse was the number one toy in the US in the fourth quarter and the full year. Had one of those in my house. I had one of those in my house a year, so you know exactly what I'm talking about. Yeah, yeah, So it's been really you know, an incredible monta year journey for Barbie, um carrying the flag for diversity and

plusivity and purposeful play. But you know what what is um, what is interesting is that you know, without taking anything away from the incredible success of Barbie, this is you know, very much a story about the matel playbook because the Barbie success is driven by the same methodology, same capabilities, uh, same approach um that we is that we applied across our entire product offering meaning about brand. So it's about brand, purpose, design,

lead innovation, cultural relevance, and execution of accident. You know, Tim, we're definitely seeing and hearing a lot more companies listening to consumers in the broader society about what's going on and staying relevant and trying to be much more culturally sensitive when it comes to their products. That was Mattel chairman and CEO E Non cries. You're listening to Bloomberg

Business Week. Up next to explanate the boarding process, We're going to ask that you please step out of the alb once you have found your assigned feet abcre on your right, d E N upper on the leaf. Well, so many of us can't wait to hear that sound again. And when will we be regularly hopping on planes? We'll check in with Tree Bago CEO Axel Heifer. This is Bloomberg. This is bloom Bird Business Week with Carol Measure and

Bloomberg Quick Takes. Tim Stillavan from Bloomberg Radio Traveling. Tim, Uh, what's the last time you got on a plane for a vacation. I know exactly when because I've been thinking about it a lot. I went skiing at the end of February early March last year, and that was the last time I went on a vacation. It's a long time, I know. I think I traveled around the Super Bowl. We had a remote for work. Uh and so it's been a really, really long time. And that doesn't count, Carol,

you were working. Even if it was the Super Bowl, that's not a vacation. No. It was a lot of fun. It was Florida, it was warm, it was a lot of fun. And we've got a story this week to um. You know, we're all wondering about when it kind of gets back to quote unquote normal. The Biden administration, they are considering whether to impose domestic travel restrictions, including on Florida.

I mean, they're worried about the coronavirus mutations threatening to reverse all the progress that we've made on the pandemic. The travel industry hit hard. We've talked with him many times throughout the health crisis, giving us a great frontline view of what's happening or not happening in the travel industry. Axel Heafer is CEO of the online travel platform tree Vago. I mean that the times are still pretty difficult um for travel obviously, but then for for all of us

with all the restrictions around the world. On the other hand, UM, I do think that there is is clear hope and there is a clear path to UM to return to a more normal life. And the second half of the year with some countries being very successful in vaccinating very quickly UM and more and more vaccination production capacity coming online. So it's it's a mixed um of of a very very difficult present and an improving outlook for the future. Before we look forward a little bit, tell me, I mean, so,

is everything pretty quiet still? Is it like it's been largely the last year or so? Are you seeing some activity a little bit on your platform? I mean the

travel is travel activity is very limited, UM. So we we've we've seen quite a lot of travel in the third water of last year where the infections came down pretty much everywhere in the northern hemisphere, and you could clearly see that there is a huge demand of UM of all of us getting a break and traveling, seeing friends and family and and just going to the beach or the mountains. But then with the autumn coming, infections have obviously come up and travel has collapsed pretty much,

UM in all of our main markets. So the demand is is very quiet, but you know we are we are focusing on on the recovery and improving our product offering. Well. It's interesting to watch and Expedia reporting, Disney reporting earnings. You know we're watching too in terms of uh, you know, indications of when they start to see their parks opening. How do you see this is a second half story, a third quarter, fourth quarters story, I mean, how do

you see it? Maybe you know playing out here, It's very difficult to predict that we are we are very confident that by the third quarter most of the main markets will have made a lot of progress UM and and in the vaccination program, so that there will be returned to to travel in summer. And the question when the summer will start will will obviously be answered slightly

differently market by market. If you look at countries like Israel, UM, I mean, they will be fully vaccinated much much earlier than than some countries in continentally Europe and UM, the UK and the US being somewhere in the middle. So as soon as there are sufficient progress and through the better weather the new infections wild dropped, there will be some return to travel. Well. And what's interesting too, and I think you and I actually have talked about it before.

You know, this whole idea of health passport or some kind of COVID, you know, vaccine certificates to allow you to go you know, a cross border. Are we gonna do we need that in order for this to work and for the travel industry to really open up. It's a good question, and I think it's a It's the question is to me more political question, how this would

be im amentment. I mean, if you if you would only allow UM for vaccinated people to travel, I think that that is UM could create quite some some issues because there is a certain certain sequence of handing vaccinations out UM, so so there is a clear preference to

a certain age groups in particular. Whereas if you use the vaccination passport to make it easier to travel so to UM, to lift the requirements of a quarantine or of UM of multiple tests UM, I think that that is a different matter, and it would for sure help to make it easier. But the key thing that is holding travel back is more the predictability. So will I be able to go somewhere, what kind of experience will

I have? And will I be able to return without an unexpected position of a new quarantine restrictions or travel restrictions. Do you anticipate to And I think we've talked about this too, that the type of travel that maybe we continue to see, at least for at least the first half of the year and maybe even into the second half of the year is much more country within a country, you know, and it's a lot more of local travel. Do we continue to see that kind of thing versus

cross border? Yeah, I would expect the same pattern that we've seen in twenty twenty. So first friends and family UM, and predominantly domestic or neighboring internationals, so for the US, Mexico, and then UM continently. For example, for Germany was a lot of Netherlands and Austria UM, and then UM with more progress also some international travel, and international travel obviously requires a lot more improvement, as you need an improved situation in the country of origin and the country of

destination to then UM installed travel corridors. But domestic will will be the first for Shure to recover. You sound exhausted. I don't know, I mean I I it has been it has been pretty much exactly a year. Actually we reported we reported this week and I looked it up.

So the the first earnings that we report a que for twenty nineteen, actually February eleventh, we we had this one sentence on the share all the latter that said, there is the new virus spreading in Asia, and we don't think that we can make give any guidance because there is some uncertainty. Um. And of course it turned out very, very different than what we anticipated. But I think now that we are in one, we we are closer to the end of the pandemic than than to

the beginning. And and that's the way to think about it. Yeah, so today I have an optimism, be an optimist and and focus on on the recovery rather than looking at the difficult times that we are still in right now. Right because I know all the times that we've talked to you over the past year, I mean, this whole idea we talked about. You know that we don't have a playbook. We're kind of finding our way through it. And I do feel like vaccines are certainly a game changer.

Dr Anthony Fauci, at least here for the US, as US vaccine supply should increase enough by April to allow anyone who wants a shot to begin getting one. That to me like, we're getting, you know, goal posts like this, signpost like this to give us some idea of a visibility going forward. You I'm assuming you're talking to a lot of people in the travel industry, you know, you talk about the second half? Is everybody kind of talking

about the second half at this point? I think there there's there's a wide consensus that in the second half we should see a significant improvement. UM, whether we see it a bit earlier, they're obviously the very very different assumptions and and the different perspective on the on the second quarter is predominantly driven by the uncertainty around the new virus variants. So how quickly will they spread? What exactly will that mean for um, the increase in infections?

And on the other hand, how quickly, UM will the vaccination programs be rolled out? And how quickly will the mortality rate drop? And depending on on your view on those two questions, you're you're more positive or more skeptical, UM for a bit earlier recovery and earlier start of the summer. So how do you continue to run a company in this environment? I know you've got to worry about employees. UM, tell me where you are with that.

And and I'm also how do you do kind of long term strategic planning in this type of environment or do you kind of just have to put it on hold until you get through this, I mean on the on the business side, UM, it is actually not that difficult because the every every data point that we look at, every survey that you look at, shows that there is

an increasing desire to travel. I mean the longer the lockdowns and the restrictions last, the more we all want to travel and you know, see friends and family and and really get out of there and and break out of the routine. So there is very strong demand and we are not worried at all that there will be

no no rebound ones. Things are more under control. The bigger challenge, UM is is I think I mean, not specific to travel, is it's a chance that we are all facing that this has been going on now depending on where you live for for a year and and

we all exhausted. I mean, it's just it's difficult to live in a in a world where, um, you basically spend most of your time at home, where the schools are closed in a lot of countries and a lot of regions where you need to be a parent and employee and the teacher at the same time in parallel basically.

And that's why I think what what will make it make much easier and give us a lot of relief will be the reopening of schools wherever they are closed, and then also the reopening of some activities that that allow you to allow us to break out of the routine. And then the step after that is travel UM. And I think once we see the first steps that that that that allow us to to have a bit more normal life, the pressure that we all feel will will

be UM will ease a lot. And and that is also the key challenge in running a travel business, but running any business, I would say, I mean, do you anticipate that in the second half you could see your business up two D three hundred as people who as you said, I'm with them, I'm tired of it. You know, I've been basically living in a bubble for the most part, and um, you know, can't kind of wait to be able to just kind of break out a little bit.

Do you anticipate that we could see some kind of off the charts kind of increases when it comes to travel. There there there would be definitely be a rebound. I mean how much exactly is almost impossible to predict, to be honest, because you will still have certain parts of the population that we'll see friends and family but will

be reluctant to really travel, will not fully safe. That was one of our go to voices on the travel industry, Travago CEO Axel Heifer, and that reps up the first hour of the weekend edition to Bloomberg Business Week from Bloomberg Radio. I'm Carol Messer and I'm Tim Stantin. Back more ahead in our next hour, including our cover story Apple is the two point three trillion dollar fortress that Tim Cook built, plus people getting direct recurring cash payments

and income. Is it more than a pipe dream? And at another question for all of you, do you want to be famous? How about fake famous? That's the name of a new documentary. We're going to talk about that and go into the world of influencers and grab a glass of a nice cabernet or coat drone. We're catching up with the founder of Vivino on raising money. There was a lot of money too, and more people raising glasses during the pandemic. You had me at grab a glass.

This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stenovic from Bloomberg Radio. Hi on Carol Masser, and I'm Tim STENOVK of Bloomberg Quick Take Clay Ahead in our second hour of the weekend edition of Bloomberg Business Week, including city programs to provide unconditional cash payments to residents. Why we need them. Plus you two can become on Instagram influencer. It's all in a new HBO documentary, Fake Famous. We've got the filmmaker,

even meet him, even you, anyone can do it. I love this story and it's five o'clock somewhere. A lot of that going on during the pandemic. We're going to check in with the founder of wine app startup first though. This week's cover story. It was a good one and it's all about Apple, A deep dive into Tim Cook's company and Carol. One thing that I was really surprised and interested in is is just how quickly Apple went from one trillion dollars to two trillion dollars. It only

took twenty four months. It's amazing. Yeah, but it took like, you know, the entire history of Apple to reach one trillion dollars. It's pretty remarkable, right, And I gotta say this was among our most read on the Bloomberg this week and reporting for Bloomberg Business Week, another deep dive by Bloomberg News technology reporter Austin car check it out.

We lead off the story with a big quote by Warren Buffett, who said, you know, Tim may not be able to design a product like Steve, but he's some He's a real phenomenal manager and someone who understands the world to a degree that very few CEOs over that he's met over the past sixty years can match. And

we wanted to explore what that means. You know, how was it that he was still able to build Apple into a two point three trillion dollar company without being a product visionary, which is what as he noted, Apple was known for with jobs at the helm And how Cook did that was through Apple supply chain, through his operational management, through his handling of China, especially during the trade war, as well as his diplomacy efforts during the

Trump administration. So this story is sort of a deep dive into the other half of Apple, the side that you really don't see that often doesn't get as much attention because it's it's a little bit complicated and wonky, and and it's just hard to explain. And we wanted to bring that that side of Apple to live. But that that's Tim Cook, right, He's complicated, he's wonky. He's supply chain guys. He's not Steve Jobs right, He's not the product guy. He's the behind the scenes, like get

it done guy, right. Absolutely, it was. It was funny some of the people that we we talked to very early in his days at Apple, um they actually described him, which is so anti Steep Jobs. They describe One person we talked to described him as quote exceptionally boring, which is such a funny way to describe someone exceptionally boring. Um, But that's because he's he's a numbers guy, He's a

spreadsheet guru. He's someone who can just find the minutia in the tiniest of of of part costs, of component issues and and sort of managed to build up an outsourced supply chain that Apple depends on for all its products. And I think that the major thing is Apple gets so much credit because Steve Jobs and their former design head Johnny I've can design a product like the iPhone or iMac or iPod, But equally as important is that Tim Cook was able to manufacture millions of those products.

So it's not just that a person can design a single product, is that Tim Cook can can turn out tens of millions, hundreds of millions of these devices. And that's how Apple was successful. If they couldn't do that, if they couldn't get their supply chain to be economic, there's no way Apple would have been successful. Uh, you know over the last ten years or even during the Jobs era. I want to also say, and you write about this in such great detail, Tim Cook also kind

of a master politician. Yeah. One of the things that I feel like has not gotten enough attention is just how he handled that relationship in Washington. If you think about the last four years, Apple was uniquely vulnerable. I mean Trump came into office, um, you know, with with threats of a trade war with tariffs and threats that that could have really disrupted Apple's supply chain. There was a lot of calls and personal attacks on CEOs for

outsourcing jobs. Um and and the reliance on China and the tech industry, and you would think that that Tim Cook would have really not been in a good position, uh to sort of navigate those those rough waters. But instead the company thrived during the Trump era. And when we talked to to to Washington insiders, you know what they really said was he was in Washington more than any tech CEO, perhaps as much as any CEO in the world, just sort of always offering to help where

they could sort of find overlap in common ground. And when we talked to Gary Khane, who was the former Chief Economic by Or, he was just saying that what really struck him was not just how much he was at the White House, but also that he wasn't just all about asking about tax issues or tariff issues or trying to focus the attention on what can benefit Apple, but he was more so offering, how can I help you guys with your agenda when it comes to just

other political issues. And I think that really positioned him well to sort of escape more attacks from Trump personally as the CEO, but also put him in a good position to exploit potential tariff exemption. It allowed him to receive tax exemptions on products ranging from the Mac pro to the iPhone and Apple Watch, and these tariffs could

have been huge, hugely disruptive. There was analysts that would have estimated that had some tariffs go into two and let's go into place, it could have added a hundred and fifty dollars or more to each sale of an iPhone iPhone, which would have been tremendously disruptive. So the fact that Tim Cooke was able to avoid that, in part by these sort of constant outreach to to President Trump and Jared and Ivanka UM, you know, really helped the Apple uh sort of cause over the last four years.

It's kind of to Austin like an odd couple. I think safe to say that most would say Donald Trump and Tim Cook. But yet there are pictures of them touring a factory, and I have to say, that's one of my favorite parts of your story about this factory. I think it was was it in Austin, UM and

the optics that Tim Cook made sure happened? Yeah, I mean that that was another thing that that someone that had worked in the Trump administration told us that that that Tim Cook was also very skilled at at trading optics. He recognized that this was a president that really wanted mainstream business validation. He wanted to be seen with the big CEOs out there, uh, to sort of, you know, as a testament to his art of the deal bona fide.

And and this the Texas Factory, which is something that they had gone to tour together Tim Cook and Donald Trump in November, and it was supposed to sort of exemplify the restoring efforts, the bringing jobs back from shen Z. That was Bloomberg News technology reporter Austin Carr. Check out that story and more in the current issue of Bloomberg Business Week, on newsstands, online at Bloomberg dot com, and on the Bloomberg You're listening to Bloomberg business Week coming up.

Runway has been trying to think of innovative ways to make sure that businesses that we care about stay active, continue to employ folks and make wonderful product We're gonna hear from the leader of a black and brown woman led firm about helping to build wealth for people of color. This is Bloomberg. This is Bloomberg Business Week with Carol

Messer and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio. So, Tim, one of the things the pandemic really brought to light is about the disparities that we are seeing in our society and our economy, specifically wealth gaps that we are seeing between black and white people. Reminded of it every day with the unequal recovery and the unequal impact that this pandemic has had. We did catch up with the head of one company though, that's working to change that.

That's right. Jessica Norway is who we spoke with. She's the founder and CEO of Runway. The firm describes itself as a financial innovation company and they're committed to dismantling systemic barriers and reimagining financial policies and practices, and it helps to build black community wealth through early stage funding

and more. Check it out. We started off thinking about Runway and the disparity of black businesses, which unfortunately right now due to covid and UM and just the historical imbalance of African Americans ability to access capital, the racial wealth gaps. That gap prior to covid UM was somewhere around about ten thousand dollars in combined wealth on average across the country for black people in about a hundred and forty two thousands for white folks around the country

combined wealth. UM. And since COVID, everybody a white blacks. UM, everybody has taken a hit, and so that number has been completely decimated. Uh, and Runway has been trying to think of innovative ways to make sure that these businesses that we care about, UM, stay active, continue to employ folks and make wonderful products as we know them to do. Well. It's interesting you guys, and we did a great Bloomberg story about some of the work that you're doing, specifically

about these guaranteed income pilot projects. Tell us little bit about this where you're actually giving residents money no strings attached, um, you know, to help out specifically small businesses. Uh, tell us little bit about that. All right, So this this started right as at the time when everything was closing

down around us. This is probably April, and UM, the funding Uh, the fun team at Runway came together to talk about our portfolio of companies and they range um from uh wonderful you know, food makers and artisans and all kinds of tech companies and so forth. What could we do to make sure where that that group of folks UM made it through, and we really believe in the community of our entrepreneurs and we believe that our

survival is really dependent on there. So we thought about it and we came up with thinking that what we needed is cash UM and that they needed a guaranteed income payment, something that they knew every month that was gonna come in that could help them to make some of the adjustments and some decisions that we all had

the face around childcare and flowing of business. We have one company that was a florist that did a lot of events in the summer, and so how do those companies start to pivot UM, go online more UM, and just deal with the things that happened day to day in their life. So we decided that a cash payment every month for a few months would help give some of that breathing space to make those decisions. And one of the things that was so important for us is for us to say that it didn't matter what they

did with that money. They didn't have to report to us, they didn't have to make an application to get it or anything. It was a conversation with them about what we could do that would help them in this moment in time, and when we look at the success of it, our businesses are still active and going and hiring people, and the amount of money that we were able to

to move to them was really nominal. When we look at the ripple effect of what it means for those businesses to be up and running right now at this time, well like, if you think about it, right, if you're able to keep these businesses going, the impact on the family specifically the business owner, but then again anybody they employ, and then ultimately is that business gets bigger, it becomes,

you know, casts a wider net. What's interesting is you've done a lot of research on this UM and have looked into and it's something that we actually talked this week with the former head of the f d i C. Sila Bear, about banks they, you know, in terms of lending to minority community ease or minority business owners, especially the big banks, they're not so good. That's right, that's right.

One of the really incredible things that came out during this time CARE was a report from um I think it came out in August or maybe the beginning of September from um UM the Federal Reserve of New York that talked about this very issue and said specifically that it was because of systemic racism inside of the financial institution that made it so that these businesses that we're talking about were under capitalized from the very beginning and therefore could not sustain this level of a blow of

closure and so forth. So we we also looked at the data UM from the p p p UH program that the banks were administering, and again we saw numbers where African American entrepreneurs UM did not get the same access to those UH funds as other businesses did, and

so we have a historic blind spot UM. A side of the financial industry, particularly with banking and Runway has been really active since the very beginning to work with depository institutions like banks and credit unions UM, even some uh c df I loan funds and so forth, but to talk with them about those in these underlying biases that are coded inside of their underwriting process, how we can change those things right and and incentivizing those changes so we're able to bring a lot of folks who

are investing alongside of us, who are really ready to put their money into banks that are going to be the kind of actors that are going to actually help these businesses well. Listen, and I feel like so much of the work you're doing too, it's and and we're getting much more clarity and being much more deliberate and specific. It's not just gaps and income, it's really gaps in wealth.

And and I know in the Bloomberg story that we wrote because of the racial wealth gap, the media net worth of white families is in estimated a hundred and seventy one thousand dollars compared to seventeen thousand, a hundred fifty media net worth of black families. I mean that, Jessica is huge. It's huge, It's huge, And I think what why Runway is so um important in this time?

As you describe, we're a financial innovation firm, and what we mean is we don't think that there's a one size solution I think that's going to actually change it. I think that there's been multiple failures along the way that have gotten that level of wealth to where it is, from places around income inequality, to housing um to business you know, their education spending. There's a lot of places

where we can really look at this. But what is what it's important at this point is for us to be deeply innovative that the things that we used to do for disaster or for business supports will not solve a historical problem. We have to be much more creative about it. And I think that's why a Runway firm um is really growing at this particular time. That was Jessica no World, founder and CEO of Runway. Still to come on Bloomberg Business Week. We've been looking forward to

this one. Do you want to be Famous? Yes, yes, absolutely Batch the HBO documentary Fake Famous. The filmmaker and creator of Instagram influencers, Nick Bilton joining us. That's next. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick takes Tim Stenovy from Bloomberg Radio. So, Tim, do you want to be famous? That's a good question. Well, it's a question also asked by a new HBO Max documentary. It really provides a great window into the world of influencers.

It's called Fake Famous, and it's been described as a yearlong social experiment to turn three individuals into Instagram influencers. Well, there are no shortage of people who want to become famous behind the camera in front of the camera and the person creating the influencers is veteran technology journalist Nick built In. He's written for Vanity Fair, the New York Times. He's also the author of Hatching Twitter, a true story

of money, power, friendship, and betrayal. Nick wrote, produced, and directed the film. He joined us from l A. I've been a technology report for almost twenty years now, and um, I was a Vanity Fair about five years ago, and Graydon Carter was my editor in chief, and you know, we were kicking around a few documentary ideas over the years, and a couple of years back, he said, oh, we should do a documentary on influencers, uh. And I said, oh, well, the whole industry is a bit of a joke. And

he said, what do you mean. I said, well, I could make an influencer in ten minutes. And he said, well, that's our documentary. And um and that was essentially how this all began. And I had been at the New York Times. Uh, I had written about box. You know, these these uh fake accounts that exist on social media that can be created by writing code and so on. And I had written about the rise of them and

how advanced they were getting over the years. I had then written about them when I was a Vandy fair talking about the election, how Donald Trump and Hillary Clinton both had millions and millions of fake accounts following them, and of course influencers employed these same tactics, and that was essentially what we wanted to show in the film.

And Nick, you say that influence our culture is is a bit of a joke, but hey, there's there's real money behind this, and and there's real money behind it still even though it seems like a lot of people and companies are in on the joke. Well, I think it's interesting because there is real money behind it. Um.

But it's at the same time it's not. It's it is so inauthentic in the way that the money, you know, changes hands, in the way that influences essentially purport to be kind of these these new bearers of ideas and

culture and consumerism and so on. It's, you know, when we really kind of show this in the film, I mean, one of the things that we talk about is is how influencers the entire concept of it, uh is it is it is very similar to advertising, but even more extreme, and that the whole goal is to make you feel worse about yourself, so that you want to experience what an influencer experiences in their wonderful life of their free vacations and their fancy Lamborghinis and this, that and the other,

and and really they're getting all this stuff for free, but they're not necessarily being honest about whether they actually like it or not. This is like kind of social media at its core though. Right, it's not just influencers who we are posting the highlight reel. Right, this is like how how normal people use Instagram. Right. They show off the best parts of their lives. It's like the holiday letter, you know, the trips to Africa and the

kids are all getting straight a's on steroids. Well, it's it's completely true. I think that you know, Instagram, I personal would believe is the worst at this. They're the guiltiest of it because Instagram was founded on this idea of of being deceptive to the viewer. And the whole point of filters that were there was a highlight of Instagram, which can make your really bad photo look really good

by just pressing a single button. And and the founders of Instagram they wanted it to feel like like a Vogue magazine or a vanity fair. They wanted people to post the beautiful shot images and make it appear as if, you know, that was the life that you were living. And I think that the end result of that was that you now have a system in place where I think it's just the most inauthentic platform on the Internet.

Every every platform has the problems. You have Twitter, where it's you know, everyone's just angry at everyone else, and you know, they all have their things, but Instagram, I think is the absolute most deceptive of them. All kids want to do this, They want to be influencers, they want to be famous, which is something you ask a group of of twenties some things, right when you kind of line up a couple of people to to work with.

So the one of the other aspects of the beginning of this film that we did a lot of research into and I had read about before, was um when you look at the studies that have been done. There's all these longitudinal studies who have been done, Ustlas done them, other other universities to where over the years they ask kids every single year, what do you want to be when you grow up? And back in the sixties and seventies, kids used to be wanted to be a teacher or

a lawyer, doctor. Back in the eighties, they started to kind of get a little bit interested in fame, but it was famed for something that they had done, like they wanted to be a basketball player or an actor or something. Fast forward to today and kids just want to be famous, and they want to be famous influencers because they think that is the fast track to get there. You know what, Carol, I think what's so surprising to me is just how many kids want to be influencers

when they grew up. Like, I'm actually disturbed by it. I was just gonna say, when you started talking about it, that's what I found most disturbing. I think about the documentary is the idea of kids. It's not about being doctor, lawyer, teacher. It's about being an influencer at a really early age. Who knows, maybe that will change in a few years. Yeah, well that was better. In technology journalist Nick Bilton coming up. Grab a nice glass of red or white or whatever

you like. We're going to catch up with the founder of online wine marketplace and at the Vino, who has seen usage take off during the pandemic What I loved about this interview, Carol, is you were able to drink wine while you did the interview, you know, for research purposes. Right. I did not, but I might be drinking as I listened to us over the weekend. You're listening to Bloomberg

Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stellovy from Bloomberg Radio. So some recent news. Wine started Vivino. They recently raised a hundred and fifty five million dollars. Tim. They're looking to expanded in new countries, are adding staff.

They really want to build out their recommendation engine after more than doubling wine sales during the pandemic, doubling do well, can we talk about this hundred and fifty five million dollars. I mean, that is a big funding round. You got up with the Vivino CEO and founder, Heinie Zacharison. Full disclosure, I love great red wine and I do use the Vivino app. We began now by talking about how his

world has been. We didn't know what was going to happen, right, so we had to We have people in Hong Kong too, they have seen something. But once it hit the US, we're talking mid marchers, So we actually started by sort of popping the brake a little bit and say, Okay, what's this gonna be, what's this gonna look like, what's gonna happen to our sales? But we pretty quickly saw that it was gonna move us sillswise in the right direction.

So so things when we had twenty of the March, things just jumped, you know, revenue just went way way up there in the beginning. We also had a little bit problems with you know, customers support and supply and so on, So that took us a month or two to really get back up to speed, but like a crazy time for us. And and you know it was

it was rough, but but numbers were good. Yeah, but so pretty quickly March that all of a sudden, um, you know, and has it been pretty consistent in terms of growth or have you seen a steady increase from month to month? It was it really jumped up for for two or three months and went like totally crazy, right, And we may be in the beginning thought, okay, what is this is just like a short term thing? People

want to make sure they have winers. So, but then stabilized at a certain level, and and it's been really really good ever since that, you know, just more buyers converting and and just higher numbers all over. And even when Europe sort of opened up over the summer, we didn't see numbers really go down again, So we just

landed at a new level. Well, that's what I want to ask you, and I'm sure listen, honey, that a lot of people are asking you, and we all wonder that, Okay, there are these trends, whether you're a peloton, whether you're you know, what have you? You know, do what we've seen over the last year because of the pandemic and we were forced to predominantly be in our homes, work from our homes, living our homes. Do do those trains

trends stay with us? What indications do you have that the growth that you've seen that you hold on to it and it continues to stay with you as the world starts to reopen. Yeah, it's a good question, right. I think first we can say for certain, like wine is probably not a fan, right, it's probably gonna stay with it, not in my world. So so they're probably

gonna keep buying wine. But what our theory and what we we we've seen so far, especially when you're opened again, is that you know, it's really really hard to get people to change habits. But if you have something that is more convenient and easier and so um, you know, they don't go back. Like like we buy most of our supermarket stuff online now miss me personally, and I would never go back, Like, once I've seen it work, I'm just not going back. And the same goes for

something like Amazon. Right, there's a reason why we do it because once we start doing it's it's incredibly convenient and and the same goes for for buying wine online. Well, and I'm curious about your demographic who your Do you have a typical user and if so, describe who they are and what kind of buying do you typically see from them. So so, we we have fifty million users around the world, so it's really really difficult for us

to to say what a typical user is. UM. Previously, i would say pre pandemic, it was people that were a little bit more into wine, not like not the high end user, more the the higher end of the casual drinkers. But now I think it's changed, Like we we see everybody doing it now. We also see price points moving down. That doesn't mean people dry, people buy wine that's less expensive. It just means that we're taking more from the offline part and people are starting to

buy less expensive wines online now too. Full disclosure. I love the you Know app. I use it. I think what's really cool about it, um honey, to be quite honest, is I can be anywhere and if I have someone, I can quick take a picture, I quick get some views, I can buy it. Like it's just wonderful and it's so easy. I do wonder too, like how stick is it? Once you've got somebody who's on the platform, do they automatically become a buyer shopper? Do they continue to increase it? Like?

How does it? How does it play out? It varies quite a bit. It is obviously an app, so you do lose a lot of people in the beginning, but once people start going right after people have used it for you one year, it just doesn't change. Like once their own board have used it for one year, that feels like it's a lifetime. We've been around for ten years now, so we have pretty good data on that, so so the people that really appealed to they just

keep going. So so that's amazing. Obviously we built new features all the time and so on to make it better and better. Is the US your best market, your fastest growing? Or where is it? US? Is by far our biggest market commercially around Our sales are in the US, so by far the biggest, not the fastest growing, I mean relative to to the market, it's by far the biggest. But but some other markets have started late. Uh, this might be a bit strange, but actually France started relatively late.

It's going really really. It took them a while to accept us, like we're not French show, so they wouldn't accept us. But now they love us, so so we're happy with them now. Well, so what are you gonna do with the money hundred million that you guys have raised? How do you need to spend it? And I am always curious for an app like yours? What's your most expensive you know, when you go through the balancy, is it the people, is it marketing? What's the most expensive item?

Line item? Yeah, we're very privileged in the way that we spend very little money on marketing historically, right, because we have twenty thou people that installed up every single day organically, so that's a privilege when it comes to that. That might change in the future just we have a little bit more cash now. But but for us, it's all about, you know, helping people drink better wine. So number one on our list is really upgrading product and

engineering just to make the product even better. And a lot of that is about using machine learning and AI to really learn every single user. You know, we know all these wines. We have twelve million wines on there and then we have these fifty million research and one thing is giving them ratings. But we want to give them personal ratings, just like Netflix does. So we're launching

something called match for you. So once once you scand of wine, you're not just gonna see the ratings, also going to say, you know it's eight nine and certainly Chibil like this wine, so that we're very excited about it. That's really interesting, that's really clever. Where are the areas in the world that you're not yet in terms of geography that you want to be, that you need to be. Yeah, I think Asia has been a slower region for us usually starts with the real wine lovers that start using it,

and then it's slow. Then it's spreads after that, but there's no doubt about like North America and even South America and Europe our strongest places. Asia is lagging a little bit after but we're starting to grow there now. So yeah, no interesting, Um, And I'm also curious. So I think I was just looking at some of the numbers and at least some of our reporting. This recent funding round million values you you guys, between six and eight hundred million. Does that feel about right? That's a

good question. We have some bloom Brig analysts estimate that, and I'm not kind of coming in further. Okay, fair enough, fair enough, Maybe over a glass of wine we can talk about it sometimes take a lot of wine. Okay, that's fair a lot of good wine. Um, you're not profitable yet, right, and probably not this year nor next. Why if it's doing so well and you guys are adding you know, I'm just curious. Actually we were profitable,

so we so we did bring even. As soon as this hit, we broke even, and I honestly I think that's also why we managed to really raise a lot of money people says, wow, this business really really works. The uneconomics are Charlotte growth is there. Let's put some real money on this and see if you can grow it even faster. Show. So we've really shown that the business model and the union numics are strong and that profitability continues this year, next year. There's your pretty confident

of that. We're not yeah, no, we're not planning to do that because now we really want to invest. Right. So so we've managed to show that, you know, it all works, but now we're going to invest a lot more fuel the growth. Got it? Got it? And so what's the endgame for you? Guys? Do you plan to I know, and I know you probably get asked these questions a million times, but I have to ask you, um, what is the endgame? Go it alone, continue to grow

the business. You've just gotten another capital raised. There's a lot of money out there. There's also a pretty healthy I p O market, you know, and it's been yeah, exactly, So how do you want to do it? I think it's a good question. I think my answer has always been and and and you know, we're closer to something now obviously, but really build a sustainable business also a

business that could stand alone. Right when you think about the wine market being like almost like four hundred billion dollars, if we get a slice of that, this could be a really big sustainable business. So you know, I think, you know, someone might be interesting acquiring us, but I think I p O is something I really like at some point too well. And it sounds like, you know, honey, from what you told me is now that you've got this money, but you said you did break even. You've

shown kind of the world that we can do this. Um, so you've got some more money that you mentioned you want to put into upgrading your product engineering and so on. Is that what you need ideally to kind of move the platform in the business to the next level because you've got a lot of users. Yeah, yeah, yeah. But I think it's also about like the thing about we are a global business. Right, we are actually in seventeen markets.

The marketplace open in seventeen markets, right, We're only two hundred people, so we really want to go a little bit deeper into each market. That was veno CEO and founder Heine's acharizing, and that reps up the weekend edition to Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining sum Carol Masser and I'm Tim Stanovk. Be sure to tune into our Bloomberg Business Week daily show Monday through Friday, starting at two pm Wall Street Time

on Bloomberg Radio. You can also watch our daily broadcast on YouTube. Just search Bloomberg Global News and check out to our Bloomberg Business Week podcast. Find that at Bloomberg dot com, Apple or wherever you get your podcast, and that's where you're going to find our extra podcast this week. Here more of our conversation with veteran technology journalist Nick built In on his HBO Max documentary Fake Famous. Find out how to fake being on an airplane. It's easier

than you think. All you need is a toilet seat and a big screen. That's all we're gonna, you know, giveaway here. You can also see more of me on Bloomberg Quick Take, available on Bloomberg dot com, slash qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Bloomberg Business Week It's available on newsstands right now at Bloomberg dot com and on the Bloomberg Terminal. Have a good and safe weekend everyone. This is Bloomberg,