Bloomberg Businessweek Weekend - February 17th, 2023

that looks favorable to Moscow or Kiev. The longer the conflict lasts, the higher the economic cost, and worse, the higher the death toll will climb. For more, return to Bloomberg News Automation editor and opinion columnist Leonid Bursitsky and Bloomberg Business Week editor Joel Weber. Joel, I want to kick it off with you. How does the magazine team approach something like this, put this conflict into perspective twelve

months in? Well, we really have been looking at this mark for a second, and the newsroom as a whole is obviously very key on it that that one year mark obviously is the thing that we can kind of all look towards, and and we wanted it to be a way of not only looking back on what's happened,

but also what it means to come. And that's why we turned to leon And he'd done a cover story for us earlier in the year, and we are last year, and we wanted to return to him to sort of to to get a sense of his perspective on it. Um as somebody who who is from Russia originally and and left um and you know where we started where

with some numbers. The economic toll here has just been devastating, But as Leonid writes, it's not only just on the Ukrainian side, where obviously um Putin's invasion um has had a huge impact, but it's also really beginning to show up on the Russia side. So so leon had walked us through your thesis and how things might unfold. Yet the physical devastation is obviously on the Ukrainian side, all of it. There's pretty much no more relates of damage

physical damage to to Russia. He would, uh, some shells are reaching the Russian regions bordering on Ukraine. The actual destruction is all on Ukrainian territory because the war is being fought there. Um on the other hand, the sanctions against Russia are pretty devastating. The Russian economy was worth. The Russian GDP was about one point eight trillion dollars in two thousand twenty one, which made it much much bigger than the Ukrainian economy, which was about two hundred

billion I think. So the Ukrainian GDP dropped one third between thirty and one third uh for two. The Russian GDP only dropped about three percent, and also it was supposed to grow three percent, So the total is like six percent of the two thousand twenty one GDP. In in absolute numbers, Russia has actually lost more than Ukraine because the Russian economy was so much bigger to start with before the war. And that is before we start factoring in the loss of life, the immigration, the you know,

all of these factors that are also war related. Leon the loss of life in terms of people who have actually you know, died as a result of this war, but also people who are leaving the countries, whether it's Russia or Ukraine. You do think about the lasting impact of that that when we get fingers crossed on the other side of this, what it ultimately means. Well, here in Berlin, ware I live UM also as a Russian immigrande basically who who left Russia on the war actually

began into thousand and fourteen. UM, we see a lot of huge influx of people from both Ukraine and Usha. And a year's a year after the war began. Um, some of these families have settled in and you know, the kids are in school. Uh, people have found jobs, they've learned the beginnings of the language. A lot of the Ukrainian refugees too, are not going to go back.

The German Migration Office recently held a poll that showed about thirty percent of the Ukrainian refugees are not planning on going back to Ukraine after the war is over. The actual percentage is probably higher, even apart from you know, the actual war damage, the actual casualties, the loss of the brain drain, the loss of talent, the loss of active people, and I mean it is active people who

leave under such circumstances. In Ukraine, it's overwhelmingly women and and they've taken their kids with them, so that there's going to be extended fallout. The human losses for both economies will be substantial. So premature to even imagine what the world here might look like. Imagine a world where the battlefield we finally might have a version of the truth or something. What would it look like on both sides when this conflict eventually does. Yeah, yeah, we're definitely

looking at the well. The worst part of this is that it's almost impossible to imagine and and being to the military action at this point because there's really no common ground. There's no way that the sides can agree on anything until um, one of them is satisfied that it's one and you know, victory for both sides seems

your remote at this point. But even just imagining something has happened when the war has ended, the sanctions against Russia will not be lifted again, even even with Russia loses. They can only be lifted if the Putting regime falls uh and the successors are more pro Western and then willing to uh you know, to to to take pretty unimaginable steps um uh in terms of rejoining the Western world. So these the sanctions are going to be around for

many years. The devastation in Ukraine requires hundreds of billions of dollars of investment to just to rebuild what was destroyed. Um, it's not clear where that kind of money would come from. UM. From Russian reparations. Uh, it's not clear how much in terms of reparations Russia would actually be able to pay. UM. Whether it's possible to confiscate any of the frozen Russian

international reserves to fund the rebuilding of Ukraine. UM. It's not clear how interested Western governments will be in providing more money once the war is over, especially the enormous amounts that are required because the entire cities have been wiped off the face of the earth. And you know one thing I do wonder though, when you write about in the story, I mean Russia's role in the energy markets has given it a ton of money, right in

terms of supporting the war financially. Um. But again you've got the embargoes right, and the pushback against the world when it comes to Russian oil. Does that those somehow help them in the future or time will tell UM, Well, it's the embargoes are not really helping Ukraine in any way, because the Russian regime funds this war and then thinks of everything else and there's still enough. It's still selling enough oil to the likes of India, China. UM. You know,

Asian markets to fund the military action. UM. It's it's not like a complete global embargo on Russian oil and Russian energy resources would probably help, because then Russia would quickly, relatively quickly run out of money. But as Russia retains the ability to sell some energy resources h and also things like fertilizer and agricultural products that are not sanctioned at all, the money will go into the so called

special operation first and everything else second. Well, I have to say, the way you end the story, you say, add it all up. It's increasingly evident that neither side can emerge in economic winner. No matter what happens on the battlefield, both will suffer crippling consequences long after the last shells light. It's an incredible read, and as Joel mentioned, like you really you put the numbers on it, but you do wonder about the devastation and how no one

really wins um as a result of this war. Leona, thank you so much, really appreciate it. Many thanks to Bloomberg News automation editor and opinion calumnist Leonid Breschitsky for his work on this week's cover story. Joell Webber, of course, the editor of the magazine. He's going to stick with us for the next segment. Be sure to check out the magazine though, for additional coverage of the war in Ukraine, including the shrinking armstock piles of both countries and a

photo essay on displaced Ukrainians. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five m start on Bloomberg Radio, The Bloomberg Business and You too. You can also listen live to our flagship New York station, Just Say Alexa, Play Bloomberg E, Love and Dirty. So as technology seeps into every walk of life, an increasing proportion of Supreme Court decisions require at least a basic literacy and subjects that may not

come naturally to the aging members. Not my words, they are the words of Bloomberg's Gregg Store, who writes about it. The upcoming new issue of Bloomberg Business Week out on newstands later this week, already on the Bloomberg and at Bloomberg dot Com slash business Week. Greg as you know, Supreme Court reporter here at Bloomberg. He joins us from our nine and nine one studio in Washington, d C. Also with us. The editor of Bloomberg Business Week told Webber,

He's in our Bloomberg Interactive Brokers studio. I've often thought about this, and we talked about this with lawmakers, like do they understand kind of all the high tech stuff that they're legislating. Well, that's what Greg came to us with. UM and this is just one of those ones where he really picked up the phone. He was very excited. He was like, Joel Children, I got to talk to

you about this idea. UM. And and it turns out that, UM, this is not a totally new idea, but it's really relevant right now because of the case they're gonna here next year, which we will basically focus on section thirty and what that means for the future of the internet. UM, so rewind the clock a little bit for us, Greg, What what happens when Elena Kagan and Stephen Brier sit down and play Grand Theft Auto like they did about

a decade ago. We just soak in that moment for Yeah, I wish I could have been a fly on the wall for that that one. Yeah, this is a case about a decade ago. It was a California law that banned the sale of violent video games to minors, and so Justice Brier, who was then in his early seventies, and Justice Kagan decided, we don't know a whole lot about violent video games, so we're going to check them out.

And so, uh, they had it set up in Justice Briar's chambers and went down there and played Grand Theft Auto to try to learn a little bit about it. As it turns out, according to Justice Kagan, she was a lot more enthusiastic about it than he was. He thought it was really awful and disgusting, and she was like, next round, next round. Uh, you know, we have more we have more reporting to do on Kagan's video game obsession if it if it became that, you know, including

maybe what console she's gonna do. But to keep it back on the Supreme Court, Um, you know, we're obviously Briar is not going to be on the bench when they hear this case next week. But what what do they have to do in order to get ready for a big case like the one they're going to hear when maybe they don't have as much expertise as people in the industry might. Well, the short answer is that they do a lot of research with a lot of

help from people around the court. You know, all of them have for twenty something are generally twenty something law clerks who can help them out. They've also got a whole courthouse full of people. So there's a case back in the late nineteen nineties having to do with restrictions on posting adult oriented material in the way that children might see them. And so I was back before the

court was really connected to the Internet. And so they set up a computer in the library where justices and their clerks would go there and and UH, you know, put in searches to see if you know, pornography popped

up or something like that. Uh. In a more recent case, I actually talked to Justice Bryer had interviewed him last week, and he said, this is a copyright case involving Google and Oracle, and he said he just spent a lot of time trying to understand the Java programming language and how it worked, because that was central to the case whether Google infringed Oracles copyright, and UH spent a lot of time. He has a very lengthy explanation in his

opinion siding with Google. UH that for the most part, was pretty well received in terms of understanding the technology at issue in the case, I would love to be on the fly, a fly on the wall when they tried to teach lawmakers about TikTok and the importance of that moving forward. You got to open it and spent about five hours a day on it. But in all seriousness, you know, to be fair to Scout is this is

an issue that plagues a lot of lawmakers. We always hear these funny sound bites from members of Congress too, when they're you know, in a social media hearing or crypto hearing. For example, we remember dog Coin from the ft X hearing. The Internet runs on tubes most yes, exactly exactly. So how how does scout is compared to Congress when it comes to understanding the Internet. Yes, that's a good question, Madison. There there are certainly some examples

of the Supreme Court saying similar type of things. Maybe not quite as bad as you know, the Internet being a collection of tubes. But you know, over the years, the Supreme Court is asked some questions during arguments that suggests yea, they may not understand the technology. But I think there are a couple of important points. One the

Court has gotten younger. So you have more justices who are uh, you know, in their fifties rather than in their seventies and eighties, we maybe understand the technology a

little better. Uh, they have kids as well. And secondly, regardless of the age of the justices, for the most part, when I talk to people actual almost entirely when I talk to people, they said, despite some occasionally uh confused sounding questions, the court generally does a pretty good job by the end of the day when it puts out the really important thing, which are its opinions. And no doubt that does get some help from the law clerks

who maybe understand the technology better. Uh. But but for the most part, the court, based on the people I talked to them, my reporting gets better grades than than a lot of members of Congress do. Greg. So, what's at stake with the case that they're going to hear next weekend? And what exactly is it? What are they gonna hear? Yeah, so this is as you said, this is an argument they're going to have on a Tuesday of next week Tuesday, and a somewhat less important case

case on on Wednesday. The Tuesday case is all about the saying called section to thirty, which has been around since It basically shields social media companies other Internet companies from liability because of posts put up by their users by third parties. And that has basically served as a

very broad shield for Internet companies. And this is the case involving a lawsuit by the victim, the family of a terrorism victim saying Google, through its YouTube service UH basically recommended terrorists content, terrorists videos and provided support to ISIS. And the question is whether that lawsuit can can even get in the door. If the Supreme Court says yes, it can get in the door, we're carving out of

a bit of an exception to section to thirty. Computer companies, social media companies say, we are really worried that there will be no stopping that and and that that will force us to be a lot more restrictive about the content that our members are users can put up on the Internet because we're worried about being sued over it. Okay, So,

and what does industry have to say about this? And this won't be the only two thirty case that they hear, right well, so, so they have a two thirty case on Tuesday, As they said, there's a second case on when Day involving Twitter, and it's actually kind of a related question about whether the family of a terrorist victim can sue under this law that's it's called the Anti Terrorism Act. Uh. The industry is basically saying, this case has the potential to really transform the Internet, and not

in a good way. It will force us to be it could force us to be censors to a large degree. It could restrict speech on the Internet. And they are arguing that there's going to be a carve out in section two thirty. This is really something that Congress ought to be able to do because it can be a lot more precise rather than the kind of the blunt instrument of a Supreme Court opinion. Let's just hope they haven't been playing video game exactly. Oh my god, that image,

Um Gregg Store, thank you so much. He is, of course Supreme Court reporter Here at Bloomberg News from or Not and I want Studio in Washington, DC. Are thanks to Jill Weber, the editor of Bloomberg Business Week. This story, as we mentioned in the upcoming new issue of Business Week, out on newsstands already on the Bloomberg and at Bloomberg dot com. You're listening to the Bloomberg Business Week podcast.

Catch us live week days from two to five pm Easter on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station Just Say Alexa, Play Bloomberg, e Love and Verdi. Well. You might recall last week Ross Gerber, a vocal Tesla shareholder, Tesla car owner frequent guest, on our air, saying he will pursue a board seat on the electric vehicle maker's board well at the time, also saying that it's time

for Tesla to grow up. Gerber's firm holding about fourty shares as at the end of last year of Tesla. That's according to our data. Ross's co founder president CEO Gerber Kawasaki Wealth and Investment Management. He joins us lucky for us via zoom from Santa Monica, California. Hey, Ross, good to have you here. Your fund. By the way, your e t F is that more than fourteen percent. You're to date, Tesla's your biggest shareholder, at least according

to our data. Um to us about pursuing a board seat on Tesla, why do you want to do it? And what progress have you made towards that end? Well, I think mostly it's because I feel like it's time for Tesla's board to sort of take a more active role in some of the main issues that involve Tesla, which seemed to be I don't know, sort of ignored.

And a lot of founder led companies, you know, grow to be very, very successful, um, and then they reach a point like where Tesla has, where certain things just need to change. And and I don't think these are you know, bad things. I think it's a good thing, um for Tesla to focus on, you know, really three main things that you know, I'm most concerned about, which is, you know, public relations, marketing, and lobbying so that things like full self driving you know, are you know, appropriately

understood by the public UM and the risks and rewards UM. Secondly, i'd love to see Tesla focus on the customer, the consume. Humer is constantly having bad experiences with Tesla service and and and I just think somebody needs to really be focused on the customer over at Tesla. And then thirdly, a secession plan. Um. Ellen is clearly running Twitter here and that's his priority, which is fine, But if something

ever happened to Eilani. I mean, he is working, you know, like twenty hours a day, you know, you know, what's what's the plan for Tesla? So these things don't seem to be answered from Tesla, and and so now I'm pushing for board see because I think it's time for there to be some accountability to these issues. So Ross, you mentioned the PR situation when it comes to Tesla. To what extent are you concerned about Ellen's impact on

the company's PR? Well, I think that you know, for a long time, we got a lot of free advertising out of Ellen, and there was a perception of Ellen that was much more positive today now that Ellen runs Twitter and has taken many political positions, and I think it's his right to do that. But it's sly unfortunate how many customers and shareholders here at at least that I know, and which are a lot that really have now taken a negative you towards Ellen. And it's really

kind of sad to me. And the bottom line is it's time for Tesla to build its brand around Tesla and about you know, the values that Tesla really stands for and versus what Elon's values are, and and so I don't really have any issue with his per se values. But we're in the selling car business, and you know, I don't know if that's what he's thinking every day when he gets up in tweets. So I think Tesla can take an active role in shaping the public perception

of its wonderful products and services. Hey listen are reporting by our Red Ludlow and Caroline Hyde. Um noted how you have a good relationship with UM some of the biggest shareholders in Tesla, someone who I've talked to a lot, Kathy would have our investment and also barely Gifford. Have you have they said that they would support you in your pursuit of a seat. Well, I haven't talked to any of the institutions yet because I haven't. You know, I'm still officially got to send out my letter and

get this going with you will do that right now? Yeah, I will definitely be doing that, and and we're certainly And that's one of the reasons I'm running is just so that there is an option for people. I'm not like doing this for any like personal gain. Let me tell you, it's a very time consuming process and and most of my clients and and friends, you know, are sort of like, we want you focusing on our money,

not running Tesla or dealing with Tesla. And that said, you know, I just feel compelled that there needs to be a choice for investors, individual investors, so that they actually even know somebody on the board. You know, a lot of people are like, oh, we support Tesla's board currently. I'm like, do you even know who's on the board And they're like no, And would you like, would you like to see there's another person. Ellen's obviously on the board,

but Kimball Musk is also on the board. Would you like to do you think it is just a board of people who really like Elon? And there do I I do? And granted I really like Elon too, so it's you know, I'm not I'm not a negative person here. This is a friendly activist. I'm trying to help Tesla in a way that they're not good at. Okay, so there,

you know. I'm a marketing pr kind of guru. That's kind of my thing, and and I think I could help the company dramatically, and I've been doing it for a long time behind the scenes, and a lot of people don't realize that that behind the scenes, I've been you know, advising them for years and years and years about the way they handle many different elements of their marketing and PR. And that said, they've implemented a lot of these things over the years and it's been very successful.

But I think at this point, you know, Tesla is now a six billion dollar company and and things like. You know, there was an anti Tesla ad that was run during the Super Bowl and how this even happened is mind blowing to me. And then there was no counter to that, and if you look at the headlines,

they're just very misleading and it and it becomes very tiring. Well, Ross, I know you mentioned that you are a fan of Tesla, of course, but you would be referred to as a dissident shareholder if this one through and management did not support your efforts, which is interesting here. Um, I wonder have you spoken to Ellen No. Last time he spoke was on a Twitter spaces in December where I addressed many of the issues that I had and he addressed them back in a way that I was pretty happy with.

But you know, we still don't have a CEO of Twitter, and that was one of the things, you know, I was hoping for, you know, that he would, you know, refocus on Tesla and find the CEO of Twitter and and and maybe even work a little bit less on creating you know, political comments that creates so much dissonance among so many Tesla owners. Um. But you know, I don't expect him to change his opinion or what he wants to say on Twitter. But I do think his focus.

I mean, he's working three jobs. He's admitted to himself, he's exhausted, he's working seven. But in that Twitter space that you mentioned, Ross Musk did tell you that Twitter is about ten percent of the complexity of Tesla. Did you believe him when he told you that. I think that I think he meant that after he's and dealing with what he's dealing with. But I don't think he's right.

I think Twitter is a beast. It's super difficult to manage, and we're coming into an election cycle very soon, and and boy it's a hard thing to be Twitter during an election, clearly, And so I just think this is a very big task that he's taken on. And and you know, once again, I I hope he said he would get a CEO for Twitter and and I think

that's one of the things I'm pushing for. The sooner the better he can have more help and leadership at Twitter, the more he can refocus on what's important to me, which is getting the cybertruck out and scaling production. And we've got battery production scaling so in Mega pac So it's a very important time for Tesla. And and and I just think he's a human being. And at some point you can't work seven days a week, twenty hours a day. UM. A couple of quick questions, because we've

only got a couple of minutes left. Um. Tesla shares are up about sixty year to date, they're still down more than from that high back in early in November. Ross. First of all, have you been buying at all this year and adding to your position? Yeah? Within my fund, we've added to our position, so we were able to buy Tesla shares cheaper to add to our position. Um when it went down. UM. So you know last year, this year, last year, this year, and and at the

end of last year and early this year. UM. So you know, I can only really comment about my public fund because what happens in my firm, you know, varies by client and risk and all these other factors, um but within my fund we've added to Tesla, it is a ten percent waiting currently, a litt less than ten percent waiting currently, which is the highest waiting that we have for a position. So Tesla's are number one stock.

I love the company. I think it has a wonderful future, but I would like to see some changes in the way that they're running the business. Final quick question for you. A lot of retail investors, as you know, have a of their funds in Tesla. Where do you see the biggest upside for them? Well, right now, I think the biggest upside for Tesla is number one on successfully scaling their production in Berlin and Austin of the model why, number two getting the cybertruck out this year at some point.

And number three it's clearly you know, mega pac production. You know, energy storage is going to be a phenomenal business for Tesla over time, and and now they're ramping this business, so trucks and mega packs. It was really the next level for Tesla, and and so you know, we're on the verge of a very good growth stage for Tesla over the next several years. But I'd love to see them really focused on their image in the public.

Ross too quick questions Twitter. If he wasn't pursuing Twitter, do you think you and I would be having this question very quickly? No, if he wasn't involved with Twitter, I don't think we'd be having this conversation at all. And you still want Ellen running this company? Yeah? Absolutely? I mean what I really wanted him refocus back on Tesla. Listen, so appreciate your time, great conversation, Ross, and looking forward

to seeing what comes next. Um Ross Gerber, President, chief executive officer at Gerber Kawasaki Wealth and Investment Management, UH investor in Tesla. It is his top holding. We heard him say teen percent waiting in that fund of his and also an owner of the cars. Joining us via zoom from Santa Monica, California. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, The Bloomberg Business and

you too. You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg e Love and Dirty Well on our radar. This week, thirteen f filings which institutional investment managers are required to file quarterly, and it really does give investors some clues on how some of the most watched investors have been investing their money. We are usually obsessed with them and watch them because

they can move share prices. Our next guest uses machine learnings to create index replication ets to track all the investments such as hedge funds, VC, venture capital and also private equity. Bob Elliott is the CIO at Unlimited and is former senior investment executive at Bridgewater Associates. His bio reminds us that he built and led Ray Daluous personal investment research team for Newly a decade and he's here in our Bloomberg Interactive Broker studio. Hey, welcome, Nice to

have you here with Gina and myself. How are you? Thanks so much for having me. Great to be here. What was it like to be with Ray fifteen years? It was great. It was, you know, really a formative time in my career, particularly starting around the financial crisis and navigating that challenging time, and then of course you know the decade and a half cents and so it was really about about the best place and about the best time to to learn how the macro economy works

and how how financial markets work. So it's really it was a great time. So talk to us about what you've taken from your lessons at Bridgewater and brought to your new organization. I mean, it sounds fantastic because it sounds like the confluence of hedge funds and AI and machine learning, and these are all things that people are very, very captivated by. So how are you utilizing a machine

or learning in your process? Now? Well, if you think about it, most investors, whether they're explicit about it or not, use a set of decision rules to make to inform their investment decisions, right, And of course some people are more explicit about it, using an explicit systematic approach. Some

people call themselves discretionary, but they're using heuristics. And what we can do is we can draw on our understanding of the types of decisions that those investors are making, the types of assets that they're making across different hedge fund strategies. So like equity long short managers are a little different than global macro folks than fixed income are.

And with that understanding, we can actually look at the returns of those managers and infer what they're doing and close to real time, and and that's what we're really doing.

That's what our technology is all about, is understand seeing what they're doing, seeing the outcomes of their strategies, knowing what they could plausibly be betting on long and short, and then we can take that understanding and package it into an et F structure and make it accessible to everyone in a in a very tax efficient form of back testing. Did you do to really figure out that this works? Because because once you get the filings right, all of these investment folks could have been out of

the positions in different positions. So I'm trying to understand how this strategy can be used going forward. We don't actually look at the filings. We look at the returns, which is really important because but it's still after the fact, isn't it. It is after the fact that we actually have pretty timely returned some some returns information that's daily, some of it is a few days after the end of the month, and so we have a pretty good real time sense of what types of positions these folks

have on. And the interesting thing is at sort of the industry wide level or hedge fund style level, they don't move that fast. Uh, you know, the shifts say from being very into growth stocks and tech stocks to being more positioned in value stocks really transitioned from say the summer of until early two. That's a pretty normal, normal shift in thinking and positioning amongst hedge fund managers.

That's sort of twelve to eighteen month time frame. And so when we're when we're doing what we're doing, we're a few weeks behind the actual positions. But you know, relative to relative to capturing understanding of what these most sophisticated asset managers are doing, it's it's it's a pretty good job of capturing what they're doing. And then when you're actually capturing what they're you're doing. Are you investing alongside them effectively or are you ever going against them?

For instance, if they're going more long small caps, are you always going more along small caps or are you taking that as a contrary signal and going short small caps in your strategy. What we're doing with our first product is we're replicating the returns of the aggregate hedge fund industry. So we're going along with what we see those managers doing and trying to match it as closely

as we can. And that's because you know, the truth is, hedge fund managers are pretty darn good at invest of them, surely inaggregate, particularly when you when you consider the strategy. So if you add back the fees, which is really one of the things that we can do because we don't have to charge two in twine, we use technology to replicate what they're doing rather than charge two in twenty and so grossive fees. You know, if you add

back the fees, hedgemen managers are great. It's just the challenges. You can't invest in them typically without that high fee structure, and so what we're trying to do is infer what they're doing and offer it a much lower fee structure than a typical LP position. How does this work for VC and PE, because they're not all the same worlds. Absolutely absolutely, those those positions and those exposures are different.

Although the same idea that there's a set of core decision rules that those investors are making to identify what type of investments they wanted they want to put in, they want to invest in is it's it's the same basic concept, except they're what we're doing is we're looking at their private market investments and finding look alike type companies in the public markets that we can use that look a lot like the type of investments that they're doing,

particularly later stage investments that they're doing. We can take that understanding, find lookalikes in the public markets and use that and package that as an e t F to make it widely accessible. And the tradeoff is it's imperfect, but you also don't have your money locked up for you know, ten or twelve years, and you don't have

to pay two and twenty fees. So how do you Speaking of fees, I think immediately of transactions costs, I would think that this is a pretty lumpy sort of transactions cost strategy where you have the thirteen F filings, all of your transactions occur. How do you manage those transactions costs and also manage the impact that you may have on the market by having such a lumpy trading period. Yeah, because we're looking at the returns, we actually get information

incremental information kind of all the time. Every week or two we're getting new incremental information, and so that allows us to evolve the portfolio through time in instead of in a concentrated way, in an incremental way, and that, and that helps reduce the transactions costs that that we see. We also typically are trading in you know, some of the biggest liquid markets, the sixty biggest liquid markets in the world, and so those markets fortunately have much lower

transactions costs. Then if you know, we were trading very specific positions, so no fees or low fees, low fees. We we charge a basis point management fee, which you know, when you think about that in the context of say two and twenty type products, right, you know, a typical hedge fund strategy charge what four dred basis points on average per year looks like a good deal, and you know, I probably don't have to sell you all on the

E t F structure. But it also comes with the incredible tax efficiency of an et F, whereas most of these hedge fund structures are fund to fund structures are typically LP positions and their tax at ordinary income, which is much less efficient than an E t F. Bob, how do you think, though, you know, we're coming out of this environment where money was so cheap for such a long time, and we're also coming out of a pandemic where again we had just so much money flooding

the market. How might that though, we're all trying to figure out what everything is on the other side and whether we are in somewhat of a new normal, right, so, how do you think about how that might potentially impact performance? For sure, the dynamic for fifteen years of unbridled monetary stimulation was if you bought pretty much pretty much everything went up, and the more risky the thing that you bought,

the more it went up. Typically, And and that air is over and the fetes make it very clear that that era is over. And so now we're in an era of tighter monetary policy and a lot more macroeconomic uncertainty.

And that's a period of time where alpha typically shines, right because you have the most sophisticated asset managers who can who spend billions of dollars on you know, the smartest minds to figure out what's likely to transpire, and that's where they really shine is in those difficult moments, those uncertain moments, where they can position their portfolios agilely in a way that helps them navigate the difficult environment.

If you look back last year, you know, hedge funds, the hedge fund industry in general, inaggregate was roughly flat at a time when stock index investing was down fifteen. That's the that's the type of significant outperformance that you can see in these in these very challenging times from the sophisticated asset managers. So you gave us the opening to talk about positioning, So I'm just going to dive right in. What are you seeing with respect to positioning.

You talked a little bit about the value growth transition or the growth value transition over the last year. What are the big themes in terms of positioning this year. I think the biggest thing, which connects to that aggregate uncertainty is we're actually seeing managers playing about as conservatively as we have seen in the last twenty five years other than the acute crisis periods of oh eight and twenty.

And I think that speaks to the fact that there is a lot of uncertainty, macro uncertainty about exactly where we're going. Is it, you know, higher for longer or has the FED tightened enough to tip us into recession? And in those moments, um you don't have to you don't have to hold your max positions in order to uh, in order to continue to earn, to continue to deliver those returns. And so that's what we're seeing is a conservativism.

And then under the under the hood, what we're seeing is a bunch of positioning in line with that, tilted towards value stocks, tilted towards higher top part of the credit stack, Positions like that that are defensive in nature in this environment. All right, we're gonna have to leave it there. I'm good to know. I know you're just getting these funds off the ground, or get you got one fund off the ground, right, one fund HF N D t F. Looking looking forward to here a little

bit more as you guys build out. Bob Elliott, Chief Investment Officer and Unlimited Here in our studio, you're listening to the Bloomberg Business Week podcast. Catch Just Live week days from two to five pm Easter on Bloomberg Radio, The Bloomberg Business a band you Doo. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg Love and Dirty. We talked about the

Bluebird Big take, one of the most read about. How many years what three years into the pandemic and you still have business leaders and city officials um around the world still trying just about everything to get people and employees back into offices and revive local economies. Um, we have a great next guest who can give us an idea of what's going on in the labor market and some of the trends that he is seeing. So back with us, as LinkedIn. Chief operating Officer Dan Shapiro. He

joins this via zoom from Mountain View, California. Dan, it is so great to have you back with us, UH, and here with myself and Gina. We did talk about a year ago. Tell me about your world since then. Um, how does the working world compare to where we were then versus today? Sure? Great to be back, and it's a topic on the minds of many people and many

executives all over the world. But one of the things that is most notable about the moment when right now is that there are very different perspectives being held by senior leaders versus individual workers around company. UH. As much as eight percent of senior leaders believe that people do their best work when they come into the office on a regular basis, and at the same time of individual

workers believe that they can work from anywhere. So there's this massive disconnect in perception of how the best work gets done at the senior leadership levels versus the front line. And I think that that's playing out in basically every industry and every market around the world. Now, the question is, as we move into a more uncertain economic moments where uh, senior leaders have what you might argue is more leverage in these discussions, are they going to really ask people

or require people to come back in the office. And you're seeing many organizations go that route. J and I were just talking about this off air, this whole idea of a tight labor market. Uh, you know, employees have certainly been in the driver's seat, but you do wonder write you know, if things change, you know what we see a bunch of workers ledting back to the office. Yeah. Absolutely,

And that that's my question for you. And are you actually seeing then job postings shift to reflect that sort of senior leader belief or are they still generally posting jobs with a hybrid kind of tilt to them. How have you seen the job postings on LinkedIn really shift over the course of the last year to reflect these beliefs. Yeah, you're seeing the pendulum swing back in. Any Ways, I think for the first to just look at remote roles.

So right now on the LinkedIn platform, the applications to remote roles is well in access a sorry in excess of the number of job postings remote roles. And I think it might have been about a year ago that we saw remote roles on LinkedIn peak at about and that numbers come down to fourteen percent or lower, depending upon what market you're looking at. So you're seeing a

retrenching towards wanting people to be around office locations. And then within hybrid you're seeing different organizations adopt different expectations of what flexibility means. Is it about three days in the office, is it about five days in the office? Um? But it's very clear is that senior leaders are taking this moment to reset the social contract with their employees if they can. And but you're still seeing workers prefer to work at organizations where remote is available in some

cases or where there's a lot of flexibility. And as we go into what appears like a slowdown in the economy, UM, you know you're seeing more people uh hold onto the jobs they have, be less open to move between jobs,

and senior leaders are taking that opportunity to reset expectations. Hey, Dan, do you think leaders are making a mistake by not being maybe more flexible even if we start to see the labor market not as tight as we've seen, Like, is it smarter to kind of make it flexible that you know, if you think about it right, your pool of workers are available, workers that you can hire can be much greater if you're willing to kind of go anywhere. Yeah, I think I think flexible. I think the question is

what does flexibility meaning your organization? Um, there's no question that people do work well when they are periodically getting together. You know, sometimes doing certain kinds of work is useful to being in the same location, but it's definitely essential to building strong relationships. Um. But the question is what does flexibility meaning in your organization? The truth is that despite all the headlines of macroeconomic slowdown on a global basis,

the labor market is still quite tight. It's tighter than it was pre COVID, And so while you might see headlines around UH technology companies going through layoffs are slowing down hiring, by and large, you still see continued hiring across most industries, and in fact, one of the most interesting dynamics is that many companies in industries outside of tech have huge technology teams within their organization and they're taking this moment to pick up talent that might have

been previously unavailable to them because they weren't competitive for these roles. It's almost like we're about to watch this massive tech talent diaspora across industries. And so if you want to be competitive for that kind of talent, even though it might feel like, um, you're you're moving away from a fully job secret focused market, Um, you're going to want to have some flexibility built in your mono

because that's what that town is looking for. So, speaking of what talent is looking for, I want to go back to something you said earlier and kind of get another stat from you, and that was you mentioned that the remote role applications are incredible. Right A company posts a remote role and they get a lot of job applications. Are you then seeing the inverse as well? A company that posts a not remote role or a fully in

office role, are their applications then perilously low? Still? Are we still in that environment where the job market is so tight that nobody even bothers to apply for the roles that are in office. I think that people are still applying to in office roles, but then they're going in and having deep conversations with those employers about what

does it mean to be in office? Like do you mean do you mean me coming here five days a week from nine to five or whatever those hour are, or is it something where I can weave it into the way I've built my life since the pandemic um? You know that being said, the basic math of the situation is that when you make a role remote, you open yourself up to job seekers across a wide range

of locations. It massively expands the talent pool um, which has been an incredible vehicle for companies to hire folks that previously they never would have been able to engage with. So I think it really comes down to organizations figuring out what their talent needs are and then understanding what

the work style makes most sense for their organization. But it's it's probably gonna have some degree of flexibility built into it, Dan, what are you guys doing at LinkedIn Um From a talent perspective, we we've adopted a phrase of we trust our employees to work where they work best. When it makes sense for them and their teams, and so oftentimes will encourage folks to come together for certain

kinds of work. We definitely foster gatherings, but we also know that sometimes people's work style works really well for them to do their work from home, either all the time or some days a week. What do you think is behind this notion that senior leaders have Eight of senior leaders think that people are more effective in the office. I'm just curious what is what's the data or the reasoning behind that belief system. Were they particularly unsatisfied with

how workers behaved? You know? In one? Is there something else there? Well? I think that from what I've seen a lot of it is instinct. Um. A lot of it is that when you lose visibility of what people doing, you wonder what their contributions are. I think it's a

very human reaction. UM. I also think though, that business is a team sport, and some work is essential for people to get together, to feed off of each other, to create that organic energy and UM that is often best done when people are in the same physical location. I don't know about about your jobs, and my job is about interacting with bowl across a wide range of our organization, and so getting people together to do that work in some way sometimes the best way to get

things done. Yeah. I think there's some truth to what leadership is feeling. But the question is how to balance that with the reality that sometimes the best way to get something done is to sit down by yourself and knock it out. Yeah. Absolutely, if you consider the interruptions you have sometimes, whether it's the emails, whether it's just people walking over uh, you know, sometimes I think just

being kind of home and just focusing. We've been talking with LinkedIn Chief operating Officer Dan Shapiro, still with us

via zoom from Mountain View, California. So, Dan, Gina and I have been having a conversation because we've been talking a lot about pandemic work, coming back, the adjustment, and we're just talking about that there is to some extent almost an assumption of those fourteen fifteen sixteen, how are days that we're doing during the pandemic and we had nothing else to do, happy to work long days, um, that there's an assumption that we're going to continue and

then as a result, like we don't all have any kind of quiet time to innovate, think, you know, and almost want to carve out time in our calendar. But it's hard for organizations to understand the importance of that, what you're thinking about that, and how leaders can maybe encourage that, or do you encourage that in leadership. I think that if you look at top performers, some of the best practices that they deploy in their own work

one is they set good boundaries. They know that being successful at work means you're also a successful human being in your life outside of work. And some of those boundary setting norms have really frayed over the last few years, and so I think there's a there's a big focus at lots of organizations and definitely within my own team, around what do you healthy boundaries look like in an environment where the physical location of home and work are a little bit more fluid. I think that's a very

active discussion. I think the second thing is that there's no question that highest performers take time to think and process us an ID eight. Sometimes they do that by themselves, sometimes they do that with others, and I think many people are trying to figure out how to carve that out for themselves, whether it be blocks of time or or gatherings with colleagues. But I think you've hit on a key thing, which is some of some of the best practices that the most talented people deploy in a

regular basis. Uh, we've sort of lost our habits about by virtue of the way the pandemic forced us to work. But do you think organizations respect that? So, like if you in your calendar or most workers marked out and said, this is my think time, this is my quiet time, do you think you know a manager or somebody might say, Okay, that's good, but right now I need to have a meeting with you. So maybe you can do quiet time tomorrow.

Like what what you're thinking about that? Like realistically? Yeah, Um, I think what I see in practice is that, uh, people set aside time and then some portion of it gets taken back. And I think that's what's worked in my career and what many other people do. Like maybe you know, I set aside ninety minutes a day to try to do things I know I need to get done, and I sort of expect that, you know, thirty minutes out of that is going to sort of go to

something that's urgent or required. Um, And I think that that's that's sort of finding the balance between what you wish were optimal and what the pragmatic realities of a day to day work experience are. But the best managers I know encourage their teams to set healthy boundaries and to honor them, um. And then also to make sure that person has time to to do the thing they

need to be excellent. I think this feeds into the topic that you've You've suggested we dig into, Dan, and that is the importance of reactive leadership versus a depth of leadership. Can you talk us through that? Yeah, Well, when when things are uncertain, when the world feels chaotic, and it is absolutely the case the last several years have felt both of those things, and I think this

time is no different. Um. That the key from a leadership perspective is to take in all of the information that's thrown your way, but to not feel the need to react to every given headline, and whether the headlines are about changes in inflation, or how companies are hiring or laying off folks, or the war in Ukraine, um, all of these things, UH reflect a very uncertain and

changing world. And what the best leaders do in these moments is they don't feel the need to respond or react any given moment, but they process that information then they're very decisive about the moves that they're going to make to set their team up for success. And I think what employees value is leadership that is able to sift through all of the noise that's going on in the world and to give clear guidance and over communicate with folks around what the strategy is going to be

going forward. Um and I see that in the best teams around the world and the customers that I work with, and I see that in the best teams at Lincoln. So how do you think a great leader at a solid company can become adaptive in an environment where the things are so chaotic and it does feel like things and things have just become enormously more chaotic over the

last few years than they were in the past. What are the techniques to developing an adaptive leadership style that you've researched, especially when you have annoying news people like ourselves saying here's the latest headline and we're obsessed with it and inflation. Well, I think there's three steps. You know. The first step is uh, you need to take in

as much information as you can. There is so much great intelligence in the world that's available to leaders right now about what's going on, and the key is to make sure that you're not closing yourself off from all of that amazing insight and intelligence. But then the key step is to not feel the need or to feel compelled to respond every time some piece of information comes your way. And so the second step is the synthesis.

Every day, how do you take this information that's coming your way and using it to form a worldview of what you think your company or your team meets to doing right now given what's changing um And often times there will be a big lag between receiving lots of new information and ultimately deciding what your organization is going

to do differently. And then finally it's communication. Once you've synthesized this information and boiled it down to a few things, not many things, but a few things that you're going to react to and act upon, how do you make sure your team understands the thinking behind those moves so

they can put the strategy into practice. So often times when there's new information coming our way in and in a certain world, we feel compelled to do something about it, But sometimes the right move is to sit back, to let things settle, and then to be bold in your choices. All right, So I've got to finish up. Just got a minute left here when we have all these headlines speaking of Sorry, I'm going to be reactive for a

moment or see if I get your reaction. But we're talking so much about AI and chat bots and chat GPT. How do you think about that and the impact on how we work going forward? Just got about seconds. I think it's incredibly exciting. I think, like many new platform technologies, they have the potentially be incredibly powerful, and also we

need to be responsible with them. But it is likely that any role at any company UM, that AI will be a core part of how each individual worker becomes more productive UM And whether that's about creating content, whether that's about innovation, whether that's about coding or analysis, all of us will have AI working alongside of us to help them us be better and more productive in our roles. So it's not about all of us being replaced necessarily

just quickly. Well, I think if you look at all of the major innovation technology over the years, they have lent themselves to empowering people to do more and better things. And I think AI will be well great to check in with you, and thank you so much for all of that time, Dan, Thank you, Thank you. Dan Shapiro, his chief operating officer over at LinkedIn. Joining us from Mountain View, California. You're listening to the Bloomberg Business Week Podcast.

Catch us live week days from two to five pm Easter on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg e Love and Dirty. Teach did children well the fathers did slowly go by and be all right, teach your children? Well right, yes, we hope. I know my child who's not really a child anymore. The music that they pick is just so on point. So thank you to the team who does that. Yes

and why Yeah Crosby Stills love it. Um. When it comes to teaching kids, sometimes they need an assist. And I have to say my daughter over the years has definitely tapped into Khan Academy. Yeah exactly. I mean it got me through business school. I'm really excited to have with a saal Con founder and CEO of KHN Academy.

He joins us on zoom for you from Mountain View, California. Uh, Saul, I gotta tell you, I promised myself when I finally did get to interview you this many years after business school, I would thank you for the videos that you did about discounted cash flows and interest rates and all the things that I worked on in my personal finance and accounting classes, because it was your voice that helped guide me through business school. Uh. And it's interesting because this

Carol wasn't available when I was an undergraduate. We weren't even talking about YouTube back then. Very please to go back with a sal Cohn founder and CEO of KHN Academy joining us from Mountain View. Saul, how are you. I'm doing well. Thanks for having me, you know, take us back to two thousand eight, because it's funny and thinking about this interview that we're doing right now. You know, we think about online education in the way that it really gained so much attention in the early part of

during lockdowns and when kids were sent home. You've been working on con academy for a dozen years by the time the pandemic hit. Take us back there and where we are now in some ways earlier. It all started back actually in two thousand four, when I was tutoring some cousins remotely, when I was in Boston, they were in New Orleans. I started writing software for them. Friends

suggest that I make videos for them on YouTube. It took on a life of our own, and it was in two thousand eight that I actually set up this this family project as a not for profit mission free world class education for anyone anywhere and called it KHN Academy. And if we compare that time to where we are now, I think now people actually take it for granted that, of course, on demand video is going to be really useful for for learning. Of Course, students should be able

to have self paced practice. Um. Of course, it's not the best use of class time for a teacher to just lecture at students and students to sit passively and listen. Because students have access to on demand video, perhaps it might be a good idea to allow students to learn at their own time and pace. But if you go back to two thousand and eight, none of that was mainstream.

People thought things like YouTube and maybe the Internet generally for the most part, was as a toy or or maybe a distraction, but now we realize that it's it's central to the education. I think the other really good thing that happened is obviously when when we set out as a not for profit in the name of trying to level the playing field, it's it's predicated on the idea that everyone eventually will have access to the Internet. In two thousand and eight, we weren't anywhere close to that.

Were still aren't at perfection, but in school environments we've gone a long way in the US globally that there's still a lot more work to be done, and I think we the pandemic. One of the silver linings is it it helped accelerate a lot of internet and tech adoption, not just in schools, but at home as well. How do you think it's you know, the impact it's had on how kids learn um or helped compliment supplement you know, classroom time. Yeah, well, I think you know, everything is

is a double edged sword. We all know about all of the things on the Internet that maybe aren't the most productive things for kids, but in terms of when they are productive on it, whether you're talking about kids in elementary school, or middle school, all the way to med students. It's now become pretty mainstream that students are going to vote with their feet. If there's someone who's just going to lecture at them, and the students have

an option, they won't show up anymore. If you if you visit most med schools, the actual electoral halls are pretty empty. The med students, who are very diligent students are usually gonna watch the lecture later on at double speed. UM. So, I think there's an expectation of some people say, oh, kids these days have less of an attention span. I don't think they have less of an attention span necessarily. It's more that they have more options and they have

higher expectations. When we were kids, we're like, Okay, we gotta sit in the classroom and just pretend to pay attention and look at the clock, and so we're gonna play that game game. But but now now you don't have to do that. They have they have other things. I think they know that if they don't understand something

in class. Back when we were kids, you'd have to either somehow struggle with a textbook, or if you're lucky enough to have have a family, member help you or or had enough resources to get a tutor, And now we're talking about very few people. Now people know, Yeah, I can go to kN Academy, I can ask the questions, I can find other I can do practice problems. I can make sure that I understand what I'm doing. I

can go to YouTube and find other resources. So I think kids are actually able to advocate for themselves a lot better because they don't. They're not willing to just put up with only one modality. Hey, given all the work that you've done over the past gosh, I mean it's close to twenty years at this point. So I'm I'm wondering, you know, how, how how it changes the way you think about education with regard to your own kids. Yeah, you know, even back in two thousand, kind Academy really

got on on folks radar. In two thousand nine, two thousand ten, two thousand eleven, I gave a Ted talk where you know, let's let's reimagine education, make things more personalized. We shouldn't have kids moving forward lockstaff if you don't, if you only got a seventy percent on the test, you should always have that opportunity incentive to make that

an eight percent, make that a nine percent. And I wrote a book, One World school House, about how how education could change, how you can even create a school of the future. And then in my oldest I now have three kids, my oldest was just entering kindergarten age and I said, hey, I don't want to be a hypocrite. Um, I don't want to preach all of these things about mastery, learning, personalization and then not have my own kids do that.

And not only that, but I actually did and continue to believe that that is the most powerful way to learn. So we started a school, con Lab School, uh where now all of my kids go. It's out here in northern California. And what we're seeing is when you have a school that's really students centered, where you know we have. The one edict we have is there's no lectures at the school. Everything has to be active. Students can learn their own time and pace. But once again, they're not

in isolation. They get support from their peers, they get support from the faculty. When human beings are in the room together, they either have socratic dialogue, or they're doing projects, or they're collaborating, or they're tutoring each other. We have a motto, everyone's a student, everyone's a teacher, and we're seeing we we've had our first few graduating classes in the last couple of years, and I don't want to jinx it, but the kids are doing frankly better than

you would expect from a traditional environment. We just looked at our lower school, which is, you know, grades K through six, K through five, and our kids are seeing about two grade levels of math a year. We just launched a con World School with Arizona State University, which is an online high school, and they they're using similar

modalities but in an online framework. And they just saw on the first semester five times the expected growth in math, and I think it was three times expected growth in reading. And but once again, it's just because the kids are able to learn at their own, their own pace, and because they're not learning to be passive and they're learning to have more agency over their learning. They're more entrepreneurial, they have more of a growth mindset, they're willing to

take risks. We think they're feeling a lot less of the stress and anxiety that we know is a bit of an epidemic right now. Amost young people so there's not a huge history with con Lab School because you only started it a few years ago. But where are you in terms of college placement and how you've been able to, uh see how these kids have done longitudinally. Yeah, and as I said, the school has been around for

about eight years. We had this current garagings graduating class is going to be our our third But you know, this is a school that did not have traditional letter grades. We measure, but at any point students can improve their grade. But out of you know, I remember our first graduating class of nine students they went to and I'm very sensitive because so many folks index on where kids go to school and all of that, but our students ended

up at some of the top places in the world. Um, you know, I don't want to get to brand conscious about where they went, but they went to let me just say, very very good, very good places. And they're even more importantly, we we stay in touch with these students and they're really thriving in these environments because frankly, the college environment is all about self based learning. The college doesn't pretend that way, but really that's what it's

all about. No, you're absolutely right, you get what you put into it. Essentially when you go to college. Hey, so sal we're looking at your school, um collapse school. Can you scale that? You want to scale it? Even for there it's in Mountain View, right, but can you go further with it or do you want to? Yeah, the whole idea and I always tell the team there that is not just to start another school in Silicon Valley for my kids and other folks in this area.

Obviously you have to serve the kids in the community well, but it's really to show that there's another way of doing things and then essentially sharing with the world how to do that so it can it can scale. So one of the first ways of scaling is by starting con World School with Arizona, a s U that's actually free to any student in Arizona because it has a

state charter there. And then it's we we hope reasonable cost outside and we're working on more states, so you really can get a free world class education if you're if you're in the states that that supports something like this. So that's one skilling mechanism, and we are seeing folks form essentially hybrid pods where they're getting the benefits of

in person sports, etcetera. But then they're able to use the World School, uh for their Socratic dialogue and their seminars and you know, being able to meet their advisors and things like that. We also are starting more con lab schools. It's likely we might start one in the Midwest. Um. And so I think we are at the moment. I won't ever say we have nailed it. It's a lab school. We're constantly iterating, but I think we're starting to scale it.

And that could take multiple forms. It could take an online school, it could it could be a share the curriculum with other folks. What what, however, we can get it out there, Salgion, The numbers work. It's it's really tough to be self sufficient as a school. It's a it's a private school, so there's you know, tuition. Um. But I mean I went to a school that my friend's mom started for second grade and the school was only around for about ten years. They just couldn't keep

it going. It was tough. Um. Are the numbers working. The numbers are working. And what I've always given the charger to the school that we should be able to be in terms of cost per student per year, cost competitive with UM some public school districts, and they're huge variation. If you look at at the high end, a New York City public school spends about forty dollars per student

per year. A lot of you know, came Bridge, Boston, Massachusetts, they are mid twenties, even approaching thirty thousand dollars per year. But then you have other places, including high cost of living places like California, where depending on the district, you're really looking at more of like ten to fifteen thousand dollars per year. Right now, if if you were to hold all things equal, we actually have to pay a lot in real estate expense because we're renting out a

couple of campuses. But if our real estate expense we're similar to what a traditional public school was spending, where we we have our cost per student down to about twenty dollars per year UM. And and so if you include the real estate that it's it's approaching a higher number. It's you know, it's probably closer ton or twenty eight thousand. But UM, to answer your question, we we intentionally are keeping it much more accessible than the surrounding market would support.

These numbers don't sound like small numbers. To anyone anywhere, but especially but if you live in the Bay Area, if you live in New York, you'll know that a lot of the top independent schools will easily charge you fifty or six thousand dollars a year um. And you know, we're we're we're pretty focused on showing this model can scale and as an as is accessible and also has evidence that isn't just another independent school. It's the kids are growing faster and happier, you know, in doing this?

What's been the easy part? What's been the difficult parts of doing everything? Including school or Kon academy or the whole everything from the get go. Like I think about when you started, and I know, I remember, you know, we talked about Bill Gates being you know, a supporter of it. You have some really high profile people, and I'm sure that helped um, you know, doing the Ted talk. But I'm just wondering, as you've done this, what's been

the easy part, what's the difficult part? Well, the easy part is this is something that I've always been drawn to, even when you know my past, my past careers in tech and just been an analyst at a hedge fund, which I both careers I enjoyed, but I always was drawn. That's why I started tutoring my cousins. That's why I started writing software for them that was focused on learning, and that's why I started making deals because I enjoyed

making these these education videos. So that was always the easy part, and whenever I want to recharge, even today, that's the kind of stuff that I try to really work on. Let me make some videos today. The hard part, I would say, the early days. The hard part is convincing people to take you seriously. Especially you know now it's a somewhat mainstream thing to be a YouTube influencer or whatever else. Back in two thousand and six, two thousand seven, two thousand and eight, it was very um

let's call it. No one really took you seriously. And then once we started to get off the ground and people took note. I think when we said no, we just don't want to be a YouTube channel, we don't want to be another for profit education company. We actually want to create an institution for the world that actually has a chance of being the safety net education system for the world that can reach billions of people. I think back then some people might not take that so seriously.

For a guy operating out of a walk in closet. Um, I think you fast forward and yes, you know folks like Bill Gates and the Doers, and you know there's so many people, um that you know I grew up reading about who who have now become some of our supporters. But whenever I say those names are mind folks that we still need their help, so please foction to kind of academy. But UM, I think now what's gotten easier

is when when I take on a project. Let's say we started school we're starting this online high school, or we started another not for profit called Schoolhouse dot World which gives free tutoring. They way it's able to do is to leverage volunteership. These types of things would have been very hard when I was just a guy in a closet back in two thousand eight or two thousand nine, But now people are willing to take it seriously, They're

willing to partner. Uh. You know, the fact that even volunteers show up to Schoolhouse dot World and to tutor other people is because there's some trust and belief in what we're trying to pull off. But even today, I think I think it's a lot of what I do is trying to get people to believe I I really I realized that that's like the believe both in our own organization, Like hey, hey, hey, folks, we're literally trying to move the dial for the world. And I know

you can get cynical about that, but it's doable. Um, how do you use AI in education? Well, there there's you know, there's a lot of what we already know is going on, and then there's a lot of potential. Even before these large language models like chat, GPT and all of that, we've always thought, hey, AI could be used to this is it's being used in for profit companies to recommend the right add to you. In an education setting, maybe it can be used to recommend the

right content to you. And we've used variations of that in the past at Kon Academy. I think what's exciting about these large language models is the potential for them to start to act like a socratic tutor, for them to intro to introduce modalities that might not have existed before. I know people are really worried about this doing essays for students, but maybe we can embrace that and say, well, maybe it can help the student do something more ambitious.

Maybe it can help give feedback that. Traditionally, when you write an essay, at best, it might take you a week or two to get the feedback, and then if even if you make it better, you may right not get a chance to to get feedback on that. Now you could get instant feedback. Uh. I did a little experiment with my daughter or where we used a large language model to co write a story, but then she had a chance to talk to one of the characters.

That's something that just seems like science fiction, but it's now doable. Or we're at the cusp of of making these things doable. So if you imagine, I think we're in the next year, we're going to see layers on top of tools like con academy where you might have a tutor and AI tutor. Now, once again, I don't think this replaces the human but it just gives more leverage to the human teacher, to the human parent, uh

to be able to be able to do more. It's like moving beyond when you know math right, it used to be what's what's the answer? Did you get the answer right? And then it moved to wait, what was your thinking? And show us the work. And okay, you know that was more important than really kind of the final to some extent or as important to getting the answer right. What do you think about the A C T S and S A T S. A lot of it went away during the pandemic? Good move, Like do

we have to move away from that stuff? Well? Those tests is perfect. But I always tell people if you don't like standardized tests, what part you not like the standardized or the test? And you need to have some way of of of understanding, and especially now that you have chat GPT that can write your college essays, this is actually the fairest mechanism by which to be able to see who's college ready brilliant we have not. That is just an interesting way of thinking about this. And

I don't like my test part. To answer your sal thank you so much, good luck. Such an incredible organization that you've created. Um and as we said, what almost twenty years in, it's pretty remarkable. Sal con He is founder and chief executive officer of con Academy, joining us via zoom from Mountain View, California. Just google them you can find out all the incredible work that they are. Yeah,

it's incredible for a long time. More than fifty languages used in more than a hundred and ninety countries, a hundred and forty five million registered users. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, The Bloomberg Business and and you too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg Love and Dirty Carol Masser along with Katie Griffel.

The only reason Katie agreed to do the show is because of the segment. You can be honest, I heard this was happening. I had to be here, all right. It's been another nutty week. Katie was traveling lots of news, as you know, markets, a little bit of some gyrations here. We know we needed to wrap up with a segment on wine, and so with us right now is Josh Green, editor in chief for Wine in Spirits Magazine, here in our Bloomberg Interactive Broker studio. And yes we're gonna sample

someone in a moment. But Josh, first of all, how are you great to be here? I'm doing very well. It's a spring day outside that's what. It's beautiful. It feels really good, it feels really actually going running after this, but still I'm here for the one. You can always have a little sip. That's true. Well, extra springing your step. UM, big trends in wines last year. Talk to us a little bit about this past year and how this year

is shaping up when it comes to the wine industry. Well, everyone was very nervous about the pandemic from the industry's point of view, because everyone closed their tasting rooms. But UM deep direct to consumer did super super well. And UM, so there's this phenomenon everyone calls it premium. Yeah, a lot of people bought more wine, and so UM premium wines. Premiumatization is increasing at a pretty stiff clip. So UM

it means that people are buying up. And what's unfortunate, because the industry relies on it, is that things under fifteen dollars are sales are are diminishing, but things above

fifteen are actually on the increase. So UM. The Silicon Valley Bank does their annual report every year and UM it created a lot of buzz in the industry this year because there was there was a number of UM there were a number of trends that were scary for the industry, including this issue of baby boomers continuing to drink a lot of wine and millennials continuing not to drink a lot of wine. All right, millennial, what's wrong? So that? Are you a millennial or you? Actually? I

know I am a millennial. I will say the pandemic. You bought more wine. I drank a lot more wine because I was with my parents for six months, so I got really into white wine. For example. It used to be just read only, but my mom loves the white wine. Tell me about these millennials who are not made well, they are often choosing to drink spirits. Um. So the baby boom generation came to wine really in the early nineties when sixty Minutes produced this segment on

how red wine was good for your health. Now that yeah, now that's been questioned, and um, since it's been questioned. It also is it a time when younger people who are nesting m getting married and that's when they usually start drinking wine are not turning to wine as much. So they'll go out to a restaurant and the loader cocktails and cocktails are booming and spirits are booming. So for that generation, they're choosing either not to drink alcohol

or to drink alcohol other than wine. That is so interesting. Actually that does mirror my own life because my husband, for example, he loves to cook, he also loves to make cocktails. So I don't know. But for me, the pie is just getting bigger. It's not necessarily taking all of the above. So it's not really dire. I mean there is there. There is a continuing um there. People are continuing to drink wine. It's just that the growth is in the above fifteen so nine revenue was up

nine that in that segment of the industry. It's interesting because I do feel like we you know, we do a lot of wine segments. To be quite honest, on Bloomberg Business Weekend, I do feel like we often have people who you know, come on and say, like, there's a range of money you can spend on wines, but there's a lot of great wines out there under twenty dollars or under You don't the whole concept in this idea of you don't have to spend a ton of ton of money to get a great bottle of wine.

Well that's absolutely true. And in fact, the boomers, who are older in their sixties are buying more wine by volume but at a lower price, and the younger people are actually buying higher priced wines to their sort of wine curious. They're experimenting, they're looking at things that they don't know about and trying them, and so they're willing to spend more on on a wine for an occasion, but they're not drinking as much every day. Okay, that's

really interesting. Do you do it? I mean, well, it does feel when it comes to different price points, like buying something fifteen dollars, I just probably don't do it. I probably buy up and for it is more occasion based. It feels like it's not just like, oh it's too sale drink wine, Like then I might actually make a gin and tonic at home, But I don't think I speak for an entire generation. So I mean, I am

curious though when I think about my peers. I know that mock tails have seemingly become a really big trend, and you were talking about how there's this gravitation towards cocktails, But what are you seeing when it comes to non alcoholic drinks? We see a lot of growth in that area, and we as a magazine don't pay a whole lot of attention to that, um, But there is a lot of activity because you are because we're wine in spirits

and we don't really cover non alcoholic stuff. But there's a lot of activity even among wineries to produce lower alcohol wines and no alcohol wines and um. And there's also you know, in terms of dry January, curious, sober, sober, curious people there there's those are terms I here all the time now and you never heard them. Curious. Yeah,

it's a whole trend on TikTok. Well, it's interesting Timstanovic, who's my normal co host, you're my abnormally kidding, but he drinks non alcoholic beer, um, and he's a millennial. Like to make fun of him, but I feel like that's not okay, I can't. In fact, there's some really good on alcoholic beers out there, and now some really good some really good products made from wine that are not alcoholic that I have friends who are making some that are delicious. All right, So what's innovation in the

wine industry today? I would say that the innovation is really in farming, um, because you have this huge challenge. One of the one of the huge challenges to the industry is climate change, and so people have to develop farming tools and farming techniques that will sustain them through these really aggressive extremes of weather. And so people are you know, in certain areas where there's a lot of hail, people are finding ways of netting that is not driving

them out of business. So netting the vines to protect the grapes um where there is where there have been fire fire forest fires, it's been really devastating. I'm just I was I'm headed down to Chile next month to the south where I love the wines from the far South, where these very ancient vineyards, year old vineyards, and they've been wiped out up by forest fires in the last week. So people need to find tools to deal with protecting their vines and to deal with protecting them from heat. Um,

you have a lot of people. I guess the biggest trend farming wise is that even in places like Burgundy, you're seeing a classification that was based on where the snow first melted in the spring, and now the classification is based on where the coolest areas are, so you don't get sunburned on your grapes, So you don't you

want a northern exposure suddenly rather than southern exposure. It's so funny because I think Business Week has done some reporting to that, just saying because of climate change, Okay, so maybe you can't really grow here, but in this area where it maybe used to be too warm, it's a little cooler where it was too cool, like warmer. So things are kind of shifting around the world a

little bit. And then in those in those areas where you had moisture in the soil and that wasn't good for the vines, suddenly against drought it's saving the vines. So all these all these places that were once secondary are now becoming primary. And it doesn't necessarily mean that the great vineyards are bad now, but the great vineyards are challenged in a way they've never been challenged before. So you can't rely on the fact that the vineyard

is great. You have to know that the producer is really actively farming their vines to protect them from the grapes from the sun, to protect the vines from drought. You know that it's a big deal. Now affects the advantage, and so we only have like a minute left, but I am curious. Then we're gonna open up some bottles exactly. I really want to get to that. But you know, innovation when comes it comes to farming. But when we talk about, you know, the decrease consumption among millennials when

it comes to wine. Are our wine makers trying to innovate around that? Are they trying to reach out to those millennials. I think that there will be. I believe that there will be a necessary shift in the way that wines are priced. UM, because when I was growing up, I'm an old guy now, but when I was growing up, I could buy Roumier for went dollars a bottle at the store. Now that same bottle that I bought for

eight hundred dollars. The people that I'm serious designation UM and the people that are coming into the industry now, they don't get to taste those wines and they don't get the kind of excitement around the one. I mean, we're showing you two really beautiful wines, but they're out of the budget of most people. So UM, the industries, I think the people who are going to be most successful in the next few years are the people who are going to be innovating on creating exciting wines. Not

commercial winds, but exciting wines. It's wines that will excite people at a price point that they can afford. Now that makes so much sense. Um, So we're gonna open up. First of all, Um, Josh, you brought some wine for us to sample, and some champagne actually for us to sample. So we're gonna open up. Tell us about this bottle that we're gonna that. Stephen actually who's in studio with us, is going to open up for us. So Steven's opening.

Steven's opening the addition to for three of Rotor collection too for three And what this is is a completely new kind of wine from Rotor. So the two we're doing this big event on next week and the two champagne producers pouring at the event are both pretty significant houses. They put vineyards first, that's Bowl and j and Ludi Roder. And what Ludi Roder did was they their Brute Premier wine, which was their um, their basic non vintage brute wine.

They transitioned um a year ago over to this collection wine. So, um, what this is that one's for you? It is first of all, can I just say, I don't know if you can see this all right, generous, it's well, it's generous, and it's it's gorgeous, like the color the bubbles. So this is the two eighteen vintage. It's about eighteen vintage. And then Jean Jean papists Lacaillon, who's the winemaker and

the viticulturist there. He started what he calls a perpetual reserve in two thousand twelve, so he started taking wines and putting them away. So he's got two eighteen vintage from his growers and they're consulting with all their growers. Everything else that they make is from their own vineyards, but this wine is from growers, including some of their own vineyards, but from growers. And then they have this perpetual reserve what they add to each year, so there's

a consistency. So there's a consistency that they blended into this. And then they have some wine from oak aged reserves and they blended all together and they make this wine. And it's completely a different style of wine from what grew. Premier used to be cheers say wine, but it's a champagne to champagne, but champagne is a wine. I was a little confused about that. Is it if I call it champagne? Not at all because from it's from Champagne, but it's a wine from Champagne. They also make still

wines in Champagne. You know what, go ahead, no finish. That makes still ones in champagne, and that makes sparking moneagine. You know what's really fun is I feel like champagne. At least for me. Growing up, it was holidays and celebrations. But you go now to a bar, went to a work event, and that was the drink that they were initially kind of having everybody drink and it's it's just you go out and people are like, well, let me have a glass of champagne. A lot of people, a

lot of wine directors at restaurants. We're interviewing a bunch of them right now for a project we work on for our next issue. And I was just interesting interviewing Natalie McDade at Craft yesterday talking about what's going on to Craft, and she said one of the things she's seeing is that people are drinking champagne as a wine for dinner for the first time in her career, that

they're not just waiting to have a celebration. They're having it at dinner, which is something that I love to hear, that she loves to see and that many people in the industry have been waiting to happen. Yeah, I see it all the time. I've done it. Yeah. Well, maybe this is just antec data, but to the point that it used to be, it still is a celebration drink. I feel like I have noticed people order prosecco when

they're just like casually out for dinner. Maybe champagne feels a little bit too much, too serious, or you know, too much of a celebration. Prosecco seems to have taken on this role is like this is more every day. Ye. There there's very commercial prosecco and was also really absolutely delicious, very special prosecco, very carefully grown prosecco. So there's some really great wines in that category, and that's come up

a lot, and I think that it's become extreme. It's really blown away a lot of the other categories of sparkling wine other than champagne. Champagne is continuing to boom, and prosecco was really booming. But we what we did was Um. Stephen. Stephen brought brought some food that's gonna be paired with this UM, with this wine at the event. We'll tell us about this. So this is pizza Bianca, which is UM. Robin Wright is the sammier at the wine director at Chisiama Chiamo in UM Manhattan West UM.

It's a Union Square Hospitality Group restaurant. And yeah, and so she said that her favorite thing with this dish is champagne and sparkling wine. So we have them right next to a prosecco Domi prosecco and right next to Um rotor or State Rotor, Rotor, Louis rot Or, Champagne and UM. So we thought we'd bring it over. We were bringing the rotor. We thought we'd bring some some You heard that we weren't gonna let Katie eat until

she had She's not going to eat on air. Well, I'm going to eat a second, but I want to get to the second one because we've got about almost three minutes left here. So tell us about you brought us another UM a wine here red, yes, a red wine. So this is like this is Les marchiole so Tincia Merrily. UM has this estate in Bulgary, which is on the coast of Italy and the coast of Tuscany. And she and her her husband who passed away I think in

the early two thousand's. Um, he and she developed this estate and really found that Cabernet franc performed so well in this part of Tuscany. So this is Cabernet franc. It is a very I mean to me, this is one of the great wines of Italy. Um, it's a very beautiful want to make everybody know that we really do have the one here. This is true. It's a very elegant wine, a very delicate red wine with a lot of richness underneath. So she's a very beautiful, delicate

woman with a lot of strength underneath. My ADOR's she's amazing and um and she's you know, after her husband, after her husband passed, she really took it on herself to make this her project completely and the wine has only ever gotten better and better and better. And she she's one of the great producers in Italy. Now, I just love what's going on. We've had What were you going to say? No, I just I want to get into like the scoring. Like you mentioned that it scores

well in Tuscany. What what actually comprises how a wine scores. What's the sort of criteria there? It really depends on who's scoring it. Um. For us, a lot of it has to do with our immediate reaction to the wine and what we what our expectations are for the wine. Really gentle, Yes, it's gentle and beautiful. Yeah, but it's

full you were talking. I just I just wann't taste it before going well, and only got like forty seconds left here tell us about this event, uh six pm at Metropolitan Pavilion, which is on eighteen Street west of

sixth Avenue. This is our top one hund wines of the year, which we scored the wineries of the year, So these are the wineries that got the highest scores and the most highest scores, and so they're going to be wineries like Um Biggest Sicilia will be there, which is probably the greatest estate in Spain, Um Corson and Diamond Creek will be there from Napa Valley. This is incredible. They're amazing wines here, like wines you won't be able to taste virtually anywhere else in your life. And it's

a very reasonable ticket to get in. So we're actually the tickets are going really fast right now. We're very excited about that because since the pandemic is is sort of on the wane, people are out and about and really excited about going out. I agree with you, everybody wants to go do things. Um, Josh, we have to run. What a sport. What a great way to wrap up our week. Josh Green, editor in chief of Wine and Spirits magazine, check out on Wednesday, fabru fifteen, six to

eight pm, Top one Tasting. This is Bloomberg. You're listening to the Bloomberg Business Week Podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station, Just say Alexa, play Bloomberg, E Love and Didi. All right, do you

want to get to our next guest? Because first of all, just to set the stage a little bit, Maddie, a recent incredible deep dive by our Bloomberg Equality and Wealth team. It looked into what it called the slowest moving financial crisis of our time, and that was how public finances are buckling as retirement promises made to previous generations collide

with the realities of an aging population. Basically, we're getting older, will live in longer in a lot of ways, like how do you kind of maintain your retirement um, and maybe also you know, live in a nice way going forward. Yeah, it's scary and it's a reminder of the importance of saving early and often it's uns like our parents are in very all right, So let's get with us because we have a great guest who's got some thoughts on that,

Johnny Us from Charlotte, North Carolina via zoom. Attorney, entrepreneur and author Scarlett Cochrane just get a new book out. It's called It's Not About the Money. A Proven Path to building wealth and living the rich life that you deserve. Uh, and great to have you here with us, Scarlett. You know, I've got to said I got to say that, I've I've read that this book is described as it's a book about money, but it's not really about the money.

So explain that, because it's not about the money, because it's about the life that's possible when you create financial when you make financial decisions that align with that life. So, like you just mentioned, wanting to know that you have enough money set aside to not just retire, but also to maintain the quality of life that you want to have in retirement. That's what it's about. It's it's so important. And I feel like, I know you're on TikTok, Scarlett.

I am a little bit of a TikTok addict, and I feel like there's a lot of wealth advice on TikTok that's not always the best. Um, a lot of like just affirm that you're going to be wealthy someday. How does your book differ from that kind of I don't want to say woo woo advice, but just a little bit more ethereal tell me about how how your

advice is a little bit more actionable. So, first of all, let's not knock the woo, because it's important that we have that vision for what we want our lives to look like, especially people like me who come from really humble beginnings and want to really create that American dream. And we have to be able to dream and feel

a little woo to do that. However, just the dreaming, that's the beginning, but then you have to actually take action, and to take action that requires knowledge and empowering yourself

to understand how finances actually work. And for example, in the book, I teach a very concrete concept called the minimum investing rate, So that's knowing how much money you need to be investing, not just saving, but investing every single a month in order to retire when you want to and have the kind of lifestyle that you want

to have in retirement. So it's not just dreaming about the ideal retirement, but getting really practical and tangible with the how well you know, I've got to say Scarlet, and I've got family members like have done these financial vision boards right and just kind of checked them off whether it's college education, whether it's a beach house or a new car or whatever, you know, and kind of

helping to keep them focused. But it does seem like sometimes it's tough to invest and then also kind of live. So what is how do you get your head around that? What's your advice on that? My advice is to start where you are, so meet yourself where you are and do what you can, but you also have that long term goal in mind and you can work towards that over time. So for me, when I graduated from law school,

I went into public interests. I was a banking and finance attorney, was speaking sixty dollars a year, but I made the decision the commitment that I needed to start investing. So I started investing fifty dollars a paycheck, and ten years later that fifty dollars turned into over five hundred thousand dollars in my nesting. And that's the power of compounding, but also slowly increasing the amount that I was investing

over time. And you also talk a lot about the importance of knowing your numbers, Scarlett, which I thought was really critical. Uh, can you talk about why that is so important and what that looks like in practice. Well, we all have a tendency to do what I call mental money math, where we think that our finances look a certain way and we think that we spend a

certain way, but we don't actually know. And when you know your numbers, you know how much you're bringing in, how much you're paying in taxes for insurance, how much you're actually investing, then you can make sure that you're really on track to hit all of your savings and investing and life goals. Like you mentioned, we are in

this slow silent savings crisis. And the reason is because people don't know what the number is that they're trying to hit, and so they don't realize that they're falling off track until it's frankly a bit late. Actually, Scarlett Matte and I were just talking kind of off air before we got going, and the whole idea of if you start jotting down what you're spending, that's when you're kind of blown away because it's so easy, especially living in a city, right, Maddie, like New York City, Like

money just kind of flies off out of your pocket. Yeah, there's the joke that you can't leave your house in New York City without spending a hundred dollars, right exactly, it just gets eaten up. All right, Scarlett just got about a minute or so left here. So what's one or two pieces of advice if somebody wants to get started on this, Well, first of all, grab the book.

It's a comprehensive system taking you from how you think about money to dreaming big to really tactical tactical advice to how to manage your finance on a day to day basis. But number two, I would just allow yourself, give yourself a little grace, right beating yourself up and feeling shame. That doesn't make us want to do anything.

That doesn't motivate us at all. So I want you to forgive yourself for the financial decisions that you've made in the past and just trust that you have your best interests at heart, and then you're going to make better financial decisions moving forward. All right, Yeah, and you're gonna make mistakes at times, but that doesn't mean you don't kind of lose don't lose focus. Basically, Um, Scarlett, thank you so much. She is an attorney and entrepreneur.

Also author Scarlett Cochrane joining us there from North Carolina her new book that is out. It's Not About the Money, a proven path to building wealth and living the rich life that you deserve. This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live each weekday is starting at two pm Eastern pont Bloomberg dot Com, p I Heart Radio app, tune In,

and the Bloomberg Business App. You can also watch us live on Bloomberg Quicktake every weekday on YouTube and always on the Bloomberg terminal