Bloomberg Businessweek Weekend - February 3rd, 2023

And for also congratulations on the cover story. Thank you. Yeah, it was definitely a career milestone, and it does seem like people are fighting the Fed. We've been here before, but is this time different. A lot of people would tell you it is because they actually have the data on their side. I mean, we've gotten six consecutive months of headline CPI coming down. You're seeing other measures start to roll over as well. Employment costs have gone down.

So I mean the people lining up again to bet against the Fed, but that they will actually have to cut rates this year. They've got a lot of ammunition on their side. And the Fed, I don't know. We heard from Jerome Pale just this week. It doesn't seem like he's necessarily pushing back as forcefully as might have been expected at this point. All right, can we take

a step back. Joe Weber comes to you, the editor of the magazine, May Katie Big FED meeting first one, talk to us a little bit about the conversation you guys had and what you were thinking about, kind of going into what you guys wanted to put out there. I will just say Joel kept us on our toes. We didn't know until the afternoon the day before that it was going to be the cover, so that was

a fun surprise. But Liz McCormick and I work really closely together, you know, we've known each other for years, and where she sits on the bond side, where I sit on the cross asset side. It just made sense if you look across asset classes right now, there's so much optimism built into every market on the idea that

the FED is actually going to pause rates. So that was the genesis of this story, because I mean, the thing you hear over and over again it's so tired, don't fight the FED is exactly what's happening in every single market right now. So listen, I got together as it happened. Joel was looking for a big, sweepy take on this FED meeting, so it came together really quickly and really nicely. I have to say, it's pretty remarkable. The feeling of risk on all of a sudden here

in very different. I don't know if everybody was just tired of all the selling that went on in two But what's interesting is is it the market people keep tweeting to me, Hey, the market is forward looking? Is it the case that they are looking forward to the FED slowing down, stopping at some point, whether it's this year or early next year, and that maybe things are better in the second half. That's the rub that it

is a discounting mechanism. And I mean, there's been so many moments just in the past few years where the market is seemingly at odds, which with what's actually happening in the economy. So it's totally possible that you know, we priced in the recession last year. Wall Street now

is saying it's going to be short and shallow. They're looking ahead to a brighter future, or they're saying, you know, maybe there is going to be a downturn that causes the FED to cut But what's interesting about the complexion of this risk on rally is whether it ultimately backfires. If you think about things such as financial conditions, which

we know the FED watches. If you look at market based measures of financial conditions, which are very popular on Wall Street, they've been easing, and Pale and Company have you know, said repeatedly that financial conditions, the tightening of those sort of measures are how monetary policy actually touches the real economy. You know, influences the wealth effect that people feel, It influences how comfortable companies feel about issuing

dead and piling on leverage. If you do have financial conditions easing at the same time that the FED is trying to take the economy off the boil, those two are kind of working at cross purposes. I was pretty struck by this one comment from one Neil cash Car, the president of the Minneapolis FED. Here's what he said, quote, I've spent enough time around Wall Street to know that

they are culturally, in institutionally optimistic. This is a guy when we go up, he's a guy who spent um kind of pushing back against rallies, and it's interesting for him to be doing this because this is a guy who's traditionally known as being dubbish, and he's increasingly now seen as hawkish. How should we read into his comment, Well, you forgot the best part of the quote. So this

is from a New York Times profile. Uh. The author asked him about the fact that you do have the market pricing in rate cuts against what the central bank is saying, and he said, referring to the markets, they are going to lose the game of chicken. I can tell you that. So that's Neil cush Car saying I dare you to b yeah, basically saying like you are going to lose money here. So the fact that you did again have a president of the Minneapolis FED saying that, uh,

is pretty amazing. We'll see in the next few days. I mean, after we get a FED meeting, you hear from Jerome pal the markets move. In the next few days, you have a bunch of FED speakers come out and either confirm or walk back that message. So the next two days are gonna be critical. I think I agree with you, Like it's gonna be so interesting because many people set off of j. Powell at that first FED meeting that it was kind of like he gave everybody something.

The hawk's got something that does get something. So it was like, what bird, what bird is this? I don't know. Well, what's interesting too is you know we are off peak inflation right, the trend lines are in our favor, and I do wonder the job market holding up. I know that's frustrating for the Fed, but it also shows maybe we could get to that soft landing. I mean, markets could be right. It's like, how do you cross that with that whole idea of don't fight the Fed. That's

the thing, like, we could be right this time. We could also turn into a situation into a stop and start sort of fed. Maybe they do pause, but maybe the next move after the pause isn't a rate cut. Maybe they have to hike again if inflation doesn't come. But they talked about right, didn't Jay say he goes doesn't want to stop and then start again? Yeah, he definitely got some questions to that effect on Wednesday. I feel like he did a polite little tap dance around it.

But in terms of what actually pans out this time, I mean, the market does have a pretty fraud history in fighting the FED. I mean I remember when the September. Pause was a conversation for about two weeks at this meeting. At one point this past summer, there had been a cut priced in for February, which obviously didn't happen. So this happens. I mean even again, don't fight the Fed. It's one of the most tired sayings in finance, and yet we do this every single cycle. It's like Luciana

Charlie Brown. Yeah, they're going to pull the football. But the thing is is the football hasn't been pulled yet now and and and there has to be a certain point, Katie, when the football isn't pulled, when there is indeed evidence from the economy. Wait, so what's the football helping? The football is okay, so you know in peanuts, Yeah for sure. When Charlie Brown tries to kick the football and over and over again, he gets fooled. Yeah, Lucy pulls it.

And this is like the whole idea of the market's thinking, Okay, well we think you're done, so the markets are Lucy, no fed the FED chairs Lucy. Okay, I really I really want to work with you guys, mat or maybe or maybe like potential potential cutting of rates is the football. Okay, so maybe this was a bad idea now, but the idea of kind of what you write that the markets keep thinking one way and J Powell yeah, is kind

of Lucy, I'm pulling the football kids. We're gonna keep raising rates and so they keeping In this case, he's being open about it. That's that's the difference I think Carol is isn't he always open? Yeah? But but he's not like Lucy right, Like, he's not fooling anyone that. This is why I like Snoopy. Snoopy is very clear, the red baron is clear. Um. Having said this, I

guess time will tell. But it is interesting when you see traders pricing in one thing in the markets, you know, especially if you like the bond market, the fixing very smart market. And I mean a point to to make here which has been made to me, is that you know, market participants, investors very loud voices. They get to change their mine on the FED every single hour, every single day if they want to. Whereas we only hear from

the Fed in very scheduled regular appearances. We're not going to get an update on their dot plot at the Summary of Economic Projections until March so there's a long time between those sort of updates that we all care about and focus on so deeply. Whereas you know we can, i mean, public opinion consensus changes so quickly, the FED by design doesn't do that. You're in the simulcast with this, I feel like we'd go round and round the same conversation.

The one thing that does stick with me that is j Pal saying we're gonna get back to two. So that is really their benchmark, and they don't deviate from that debate from it, then they're going to have to keep raising race. That's the thing. That's where financial conditions come in because again, when you think about headline CPI at nine point one percent, it's a lot easier to get to six and a half percent than it is

to get to two percent. And that's where you know, that's where you maybe need to see some labor market pain. We haven't seen it yet, we haven't needed to. But to get it back to that benchmark, which they had a chance to deviate from, they explicitly said they're not. That is a lot more would to chop and they're willing to feel that labor pain. They seem to be right okay, So apart from the labor market, what could derail this? What could derail this in terms, let's say

linus otherwise you're out of here. I don't know who Line is is? Are you kidding? Is he the smelly one? He's the sweet one with the blanket and doesn't he Isn't he kind of stinky? He's Lucy's little brother, right? I don't know anything about sense. Oh my god, there's I thought there was like a stench cloud that or maybe he's dirty. I don't know, all right, For the FED, for the market, for Lucy and Charlie Brown, for the markets.

I guess which would derail this is inflation that's stickier than expected, or re accelerates, because right now, I mean, it feels like it's come down a lot quicker than maybe consensus has said it would. But you know, if you do have waged inflation that remains somewhat elevated, if you have other pockets of the economy re accelrat if you have commodity prices good. I mean, there's a lot

of potential risks here. For again, this incredible rally that we've built so far into this year, that really started in mid October. Yeah, like you think about if right way to stay higher and companies have to kind of eat those costs right to pay for workers. That's going to impact margins, which is something we talked about a lot here. We love you, Katie Gray felt, thank you

so much. You're listening to the Bloomberg Business Week podcast just Live week days from two to five pm Eastern on Bloomberg Radio, The Bloomberg Business a band you too. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg, Elove and Dirty So so dying to do this story. It was a most ready when to hit the Bloomberg this week. By the way,

it is still is for the week overall. It's in the new issue of Bloomberg Business Week, which, as you know, out on newsstands, on line of Bloomberg dot com, and on the Bloomberg. We just want to get right to it because the story is how to be eighteen years old again for only two million dollars a year. Here to reduce us to Brian Johnson and his mission, We've got Ashley Vancey's Bloomberg Business Week features writer, also the author of Elon Musk Tesla SpaceX and the Quest for

a Fantastic Future. So actually answer that question for us, who is Brian Johnson. I think a lot of people use a product that he was instrumental in bringing in market quite frequently. Who is this guy? Yeah, you know, he's a he's a software entrepreneur. UM loosely, that's how he started. Um. There's a company called Braintree, which which is not like a household name, but people use it all the time. And and it's also acquired Venmo, which

people probably do know. So it was helps you, you know, process mobile payments on on the internet and and process credit cards. And Brian ran that company in his in his thirties and sold it to pay Pal a few years ago for eight hundred million dollars. And that's kind of how he made his fortune, all right, And now he wants to be young again or so. Jill Weber, the editor of Blieberg this week also in studio with us. Okay,

so I can be eighteen again. If I have a team of thirty doctors and a two million dollar a year of budget, what do what do I get for that treatment? Actually a lot of work, you know, So it does sound exhausting. Actually it looks and it looks exhausting, you know, I mean Silicon Valley, and I guess other people have been kind of obsessed with longevity and and reversing aging for a long time. We we've all heard these stories. Brian's kind of taken it to the next level.

So he's got all these doctors, you know, he's his his theories. He's trying to add some metrics and measurements and proof to this whole field. And so what all these people do is literally test every every part of his body with as many research grade instruments as they can. So we're talking m ris, ultrasounds, blood tests, stool samples, everything.

And then you know, he does a series of therapies um stuff that begins just like eating well and exercising and goes up to two laser treatments on his skin and things like that to to try and correct issues and give him the body of a much younger person. There's eating well, you know, as we know it. But then there's also what Brian Johnson does, which is like

you know, you tried it, you tried it. Actually, what is this concoction that he puts in a blender Yeah, so every day, Brian, it's exactly one thousand, nine hundred seventies seven calories, and like he likes to say that each calorie has to has to fight for its life in his diet. And I went to his house, his his kind of mansion in Venice, California, and yeah, so I got to see what he has for his daily diet.

You know, some of it is okay, there's this thing that he calls nutty pudding, and it's it's basically berries and some yogurt type stuff and and that's good. But then you know, the heart of what he eats is this this kind of vegetable sludge which starts out at call a flower and accole and lentils and things that I actually like. But when you mush, yeah, it tastes it taste, I mean, it had almost had just like no taste. It tasted like dirt. And Brian swears it's delicious,

but I had trouble getting it all down. Okay, can you talk to us about meeting him at the front door. Yeah, well, so you know, I've been following Brian for years and so I know exactly what he looks like and and and all that and you know, I we were setting up for this dinner and he sent me a text message while I was waiting in my car for him to arrive, and he said, I might look a little different this time. I just had um some fat injected

into my face and I had an allergic reaction. And then when he finally did appear, I mean, his face was swollen about, you know, three times it's normal size, but he still had He's got this glowing, very beautiful, pale skin. And so you know, in the story, I say he looked like a giant porcelain doll, and he really did. And were you tempted to to join in that experiment? Not on that one? That one looked a

little outside of my my comfort zone, you know. But Brian, to his credit, man, I mean, he really he takes all this stuff. It's stride. He just kind of laughed about it. His son came in and he just kind of had a giggle, like he's seen all this stuff before. And so Brian just does it and moves on. Okay, So are there takeaways for us mere mortals who who don't actually want to rewind the clock this obsessively that?

But maybe you know, steal a couple of couple of things from his wisdom, like what what have you adopted from Brian Brian's routine that that I might want to consider not as much as I should, you would think, be like ave I wish? I wish I could say it was. I mean, if anyone's curious. So there's a couple of things I took away. If anyone's curious, they could go to if they search project blueprint, that's what

this is called. And Brian John said he's got everything listening on this website, that he eats, that he puts on his face, all of that, And so you could kind of pick and choose where you want to get into this thing. I would say the big picture might take away is that you know, there really are people who are trying to move this field to to a better place. I mean, the whole point of this is like we hear about fad diets, you hear about the TB twelve method, and like no one knows if any

of this stuff works. And so you know, he's publishing everything out the open, all his his data and and um, you know, and he's one of many people who are trying to advance this field and be open about what's going on. Not sure I'm ready to try the nutty pudding.

Having said that, though, seriously, folks um in terms of what's going on inside his body, though, some of his doctors are excited, right, yeah, I mean, you know, some of this sounds kind of little nuts at first, blush, but then you look at his at his metrics is pretty good, you know. I mean, first of all, the guy is like I mean, if you look at him, he has ripped like professional athlete and beyond ripped, and uh, you know, like his resting heart rate is like forty three.

He's got the lung capacity of an eighteen year old, He's got the gum inflammation of a seventeen year old, and so um, you know, out on me. Well see that's the point here. But yeah, no, I mean there's there's parts of him that are just clearly incredibly healthy, and according to this data, you know, he really has sort of reversed the age and the overall health of

a lot of his innards. I think a lot of people might want to live longer so they can spend more time doing things that they love, so they contend more time with their families, so they can, you know, have a longer life. But there's this conundrum and reading your story actually just in the last thirty seconds that we have is this is so exhausting, and this is so all encompassing that it seems like to me he doesn't have time to to do those other things. Well, yeah,

this is the one trick. I mean, like I said, I've known him for a while and we always debate this. I'm like, look, man, one of my favorite things on earth is to go have a really nice late dinner with a bunch of friends, a bit of wine, you know, And and he's just not that's not even an option for him. And um, you know, what he's doing is a full commitment. I think he would argue that he's at the forefront of this. He's a pioneer. The stuff is gonna get cheaper and easy to use over time.

Is he happy though, He's beyond happy. I mean, this is sort of like a religious calling for him, you know. Well, next up gene therapies, as you write about some more experimental procedures. So we look forward to seeing what's next, uh for Brian Johnson. And I'm sure I'll be written by Ashley Vance Ashley a Bloomberg Business Week along week till Webber. Check out the new issue of the magazine.

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 a band You too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg elve and Dirty. We are so excited about our next guest. In fact, sorry Charlie if I missed the cute because we were talking with him over the next week or so. Just big broad picture. We're gonna be hearing from some of the big media

companies when it comes to earnings. Of course, Netflix already reported a blockbuster report thanks to a massive subscriber beat. When it comes to the media names, it's about grabbing eyeballs, boosting and holding out a subscribers by giving them great contact content. And our next guest, Tim really gets his space in a big way. Yeah, he's been in it as it's evolved in a really big way, from traditional broadcast and linear to TV to the explosion and streaming

and mobile DVDs everything. Josh Stapan is the former president CEO of AMC Networks. You know him from such hits as Mad Men, Breaking Bad, The Walking Dead. It was spun off from table Vision Carol back in two thousand eleven, and he's got a new book out. I love it the title third Act. I think about my third act because I'm still in my first act. Reinventing your next chapter. Josh Saypan is in our Bloomberg Interactive Broker Studio. Thank you, Thank you so much for coming in. Well, thank you

for having me pleasure. We have so much to talk about. Do you still like the media world when you look back at it, do you think it's just kind of unbelievable and what it's, what it was, what it's become continues, it's wonderful. And uh, I can't get enough television. My wife and I sit down every night and no joke, actually, uh,

particularly new shows. There's this abundance of shows, and I think television, many would agree what goes on the screen at home has come to dominate so much of the conversation, and so we sit down frequently and say what do you want to watch? What are you watching? God? Well, it's a you know, honestly, it's Academy Awards season after saying that, So I'm trying to be current as a voter. Yeah, on everything that might be so so I've been racking them up all they're also sort of findable, but I

do have access to them. So, uh, you know, everything from Pinocchio, Tatar to Babylon to uh everything everywhere at once to the list goes on a spectacular list and then documentaries and then foreign films, and so there's not enough time. What about what about like quote unquote TV these days? Because TV these days is that it's such a loose it's like, well, no, I don't even mean linear. I mean I mean like you know, HBO weekly or a Netflix series drops all at once on Netflix, like

what are you binging? What are you streaming? That's sure, Well, I have particular affection for AMC because of time and time there and uh so the AMC bought the and Rice Library, and so Mayfair Witches and is new and Interview with the Vampire is wonderful, and uh as well as finishing up the end of Better Call Soul and Dark Winds, and the list goes really on no Better Call Soul spoilers place. So it's wonderful, But but we do, of course watch HBO, Netflix, Apple, etcetera, etcetera. Jus, how

do you feel about like it's funny? I watched Bad Sisters, which I adored. I don't know if you saw it, but I watched it week to week because it was one and it was kind of fun to look forward to when it came out. And I hadn't done that. I mean, so often I just something gets dumped and I just sit there for hours. Do you like that model? Do you think it's a smart model. Do you think it's better that we're kind of waiting for something every week? Well?

I would I would defer to today's experts who are deep in the belly of the beast and can understand the implications of all that. I will just say as a consumer, I don't mean this to be in any sense cute. I like it both ways, you know. Yeah, I'd like to binge shows and then I can talk about something that was on Hulu, which is my wife and I liked a show called Patient with Steve Carrell. Wonderful show effets on Hulu and we spent and it was anxiously awaited watching new episodes each week. So I

think it's wonderful both ways, depending upon the content. The business imperatives behind it are what they are, and people who are closer to it today can tell you more than I can. I do think about like the explosion and just the demand for content and what that has done for directors, producers, actors, right, I mean actors who would you think only on the big screen? Right, like to to have a series on one of the streaming services. It's a really cool thing and I think we all benefit.

But how do you think about the evolution if you go back to your early days right when you I forget the name of the firm, but it became harder cable, like it's hard to think about what it was. Well, I grew up really in a desert of television, um paucity of anything that was worthwhile. Um uh, there were rare in your book would maybe beg to different to talk about, because actually he was a really notable exception.

Another person in the book named Bill Persky, who did who really featured strong women in his comedies and as it happens, to be a dear personal friends. So I'm very attached to both him and his extraordinary work, which began with Dick van Dyke and Katon lle So. But it was a different world and it really was, if not desert, it was desert with few oasis. And today it is land of abundance, and I think it's a wonderful land of abundance for creative expression. Do you think

forgive me, tim, but I just went to it. Do you think we're getting better in terms of diversity and and really serving different audiences? You know, I'd like to think yes. I really would like to think yes rather emphatically. Um. And you know, shows are coming to mind that are really portraying people who look like the world they don't look like a different world. And I think that's a virtuous, wonderful and really truly truly important thing. Because media is

so it actually gets inside people's skin. And so if they see an embrace of diverse people, I think it really helps and influences behavior rather profoundly. I'll tell you an anecdote. Another person who's in the book is ex Senator Governor Bob Kerrey, who went on to be university president and UM and then banker and is also i should say, a poet along the way, and was earlier a pharmacy in military person and I think there's a fourth and a fifth act in there, but that's okay,

exactly right. But he made a comment we were fortunate enough years ago to have been involved with the show in its early years called Queer Eye for This Great Guy. And Bob commented that that show when he was in Nebraska had perhaps more to do with defanging homophobia than some legislation, because it made humans seem familiar who were different. And I think one sees that, you know in in you know, in theater, you see it in books, you see it particularly in TV, which is in your home

every day. You said theater, you run a theater, as you own a theater as well. Game for it? Um, you really love media and content, don't you want to talk about what's not to like? Well? I think there is some stuff that has a lot of people concerned and the idea of short form stuff and watching on your phone. A study back in October by OMDA said that TikTok overtook Netflix to become the second most popular service in the US. YouTube was at the top when

it came for people under thirty five watching. Does that concern you at all? You know, I'm not sure I am an authority on what the impact of short form and TikTok, but from the perspective of art, from the perspective of you know, what we are consuming, you know, I guess truly if you don't mind, again, don't let me feign authority. I think, let's be honest, you know

a thing or two about media. You've been in this space, the social implications of it, the social implications a long term social implications of media, social not and even on art are hard to predict. For a couple of comments, if I may, One is that, um, I think it's rich and wonderful that younger people can create. I mean that. I don't mean that just to be great great media.

I think people, young people, kids are at home and they may be fashioning sort of expertise and careers in media by it was making YouTube videos and making TikTok videos. And I think it is an on ramp to being creative people because they're learning tools. No kidding, you've seen it, you see it in your family. I think it's a

sort of wonderful thing. And you know, I think then there's a whole subject about um implications of and social implications of and I think one might need a sociologist or anthropologist to talk about and figure out all that you've talked about. Some of the people in the book, tell us first of all, why you wanted to write this together. Sure, thank you for asking. So, about three or four years ago, as I contemplated the end of a conventional career, was that hard? Well? Yeah, because I

loved it so much. Great company, great play, great people, great shows, and very attached to it. And but there's an inevitable time to do something different, and um uh, So I just began to observe people, some of them like me, some different and what they did if they had the benefits of continued health and and a degree of means that gave them some flexibility. And I became a little interested in what do you do after you

do what you do if you have that opportunity. And so I began to observe sort of the good, the bad, the indifferent, and the spectacular. And so I thought it was a good subject maybe and I'll see if I can write a book about it. And so I presented it to a publisher and they said, okay, so how do you think about it? In the context of your own career though, of your own third act? Well, is this book your third act? This book a second act? That would be a little meta. Uh So, you know,

what are you doing? Well? I wrote the book, that's it, um So, I think it's a part of it. But I have some things that I'm starting to do that have been pretty appealing to me. Um. I've been working I mentioned to you Columbia University, and I've been volunteering actually at the Fortune Society with people who have been recently released from prison. What's your friend of mine is involved with and working on making some independent films, which is near and due to my heart. I was at

Sundance last week. Uh and so a bunch of different things. I think it's so important because I do think there are people who get through some really significant accomplishments, you know, and maybe think that's it, and then you realize wit you've got, You've got another runaway, You've got more things you can do. Some of the names in your book, Josh, are definitely household names. We would know who they are. Some of them aren't. Go through some of the names,

and I'm curious how you decided the list. Sure, well, you know. Um, I worked with a wonderful editor who has great judgment and I think helped craft the balance of the book. And she and I thought, uh that it would be good to have a mix of people who are well known and who one would recognize. Robert Redford, I mentioned Sundance, was a painter and actor. His first film direction job was he won an Academy Award for ordinary people and obviously an environmentalist and really then gave

freedom to independent film through the Institute. The festival's better known, So he's involved. Alan alda remarkable guy who had the privilege of meeting people my age know him as Hawkeye Mesh. But he went on to do eight years of a science show on public television and then set up the all the Institute for Communications and trained no fewer than five thousand doctors in how to communicate better patients. So the pretty darn remarkable u use of time and sort

of agency. Um, and the glorious Steinham really needs no summary. She sort of speaks for her self. I think, just sort of the modern feminist. How did the people who you profiled, who you write about come to mind for you? Did you tap into your own network? Did yeah, I did. I did a process. I did a bit, and then I had the help of the woman named Ellie Strauss

who did some research. She's a friend of my daughter actually, and she's a teacher, and so I was able to impose upon her and say, do you have some downtime, because she's a very bright young woman. And so she did some research and we found people who were not known at all. There are forty five of those, and they're they're just great to read about. I'll mention a couple of there's I was saying it when we were talking. Hope partly work. She's seventy two. She had a career

at Verizon. She had attended the Brooklyn Children's Museum as a kid, and then she founded as the chair of the Bronx Children's Museum that opened its concrete doors a couple of months ago. It was reported in the New York Times. Jamal Joseph grew up in New York. He was gotten into some trouble twice. He became a black panther.

He served some hard federal time and then got degrees in advanced degrees while in prison, taught at Columbia and then developed this thing called impact theater, which really advances kids and teachers in theater, and it's immensely helpful to them. There's more fanciful people. A guy named Art Chill who became a stand up comedian at in his late seventies. How wild is well? I love this also. I think a woman who became a flight attendant in our fifties,

somebody who became a firefighter. Yes, I loved those stories. You know, they're just they actually just elevate me, you know, to think, um, I'm gonna go be a firefighter. Well, it's so funny because we had a guest earlier in the week and I'm not being critical, but I was talking about that by the time you're forty five year middle age and nobody wants to hire you, and and

and then to see the third act. You know, just there are people who are so productive well into their eighties nineties, and they're doing There's a guy named Leonard Tao who is nineties five, four or five, who is doing it's indescribable what he is doing with his time and resource. What did the research of the book and writing the book, putting it together and learning about all these people teach you about the way that you want to spend this time. Yeah, well I think, um, if

there was, I guess a lesson and it was for me. Um, sort of don't lay on the couch. Uh, it's not agreeable anyway, and um, don't watch too much tea. We started talking about what working too much television. Maybe don't watch daytime television or don't binge during the day, get out of the house unless it's Bloomberg TV, unless it's what it is interesting in this time post pandemic, where

it's like, go live life. Yeah, you know, it's really honestly, the few little things I've done which sounds they're inconsequential in the scope of things, but they've been for me. I'm not so sure any they're helping anybody in the world. I hope a teeny bit. They're certainly making my eyes open to the world because my world has been pretty um I wouldn't say monolithic, but um, familiar for a very long period of time. We really enjoyed this, and

good luck with the book. And when you're on your third act or fourth act or whatever, come back in and come talk with us. Thanks so much for having you. We wish you well. Josh Sapan. He's former president and CEO of a MC Networks. Check out his book I put it out on Twitter. Um Josh. His new book is the third Act, reinventing your next Chapter. So delighted

to have him here in studio. Thanks again. You're listening to the Bloomberg Business Week podcast Cat Just 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 Love and Dirty. Uh. If you've spent any time in the dairy aisle of the supermarket, you have definitely seen cheese, yogurt, butter and more from Tillamook.

It's a dairy co ops started back in the early nineteen hundreds. Today is a one billion dollar brand that sells products everywhere from Albertson's to Target, to Walmart and so much more. And we got the CEO with us. Patrick Kreitzer, the CEO of Tillamook. He joins us now via zoom from Oregon. Okay, Patrick, we're gonna talk about a lot. We're gonna talk about the business. We're gonna talk about inflation. We're gonna talk about what you see in the economy, But first, what the heck do you

put in the ice cream? Because everyone I talked to, including you know myself, because I love the Tillamook ice cream husband, huge fan, Jason Kelly, our colleague, when he found out I was interviewing you, he said, you have to try the ice cream. And I'm like, I know, We've already talked about the ice cream. What's up with the ice cream? Well, there's lots of cream in it. We put a lot of dairy in the in every

one of those ice cream cartons. A lot of a lot of love goes into making that, and I'm glad you appreciate. So the secret is is the is the dairy like it's an extra serving of dairy or something, right? It is, Yeah, lots of extra cream. And when you make ice cream, uh, you know, you you determine how much cream to put in there, and almost also how much sort of how much to fluff it up. And we do a little less fluffing and a little more

cream and it tastes fantastic. What's weird, though, is and this is a business question, It's not like it's much more expensive than sort of competitors right there in terms of how you how you think about how it's presented, because it comes as like a big you get a lot for your money. It's like still a good value. How do you make that How do you calculate that move? Because the dairy part is the expensive part. It is,

you're right, the expensive part. And I'm glad you you recognize that we we position the brand as it has been for over a century, um as everyday premium, which means, yeah, you're gonna pay a little bit more for it, but there's a lot of value packed into that ice cream carton or into that package of cheese and uh. And so we're trying to make it accessible and off that you're gonna pick it up every week, enjoy it every week in your home. Um, but you'll appreciate the quality

that you paid a little bit more for. Hey, Patrick, you know you are in and out of I'm sure all of the stores that stuck your items. Um, there's a lot of competition out there, So how do you make sure that you do stand out? And I'd love for you to get into the relationship with your suppliers meeting the farmers and the individuals that you work with directly. Yeah, absolutely, and um, those two things are very connected for us because it all starts with that relationship with the farmers.

We are a hundred and fourteen year old farmer own cooperative UM. And in fact, cheese, which is our primary product, is made the same way it was a hundred and fourteen years ago, and our farmers, uh, you know, require demand that that we that we keep the recipes the same and and as we were just talking about, put put a bit extra value in in every product, and that's important to them, UM, and that's helped to stand out on the shelf as we've expanded across the country.

Up until two thousand fourteen, we were a much beloved Pacific Northwest brand, and then beginning in two thousand and fourteen, we began expanding around the West. And now we've been very pleased with the acceptance we received around the country as we've expanded into as you said at the top of the show, here every market in the country, and we're now in one quarter of US households. But we've got a lot more people to introduced, uh introduced to

the Tillamook brand. Well, I have to say just our own personal experience, and I did so my husband a quick message. I'm like, guess who we have on We have the CEO of Tillamook and he's like, love their ice cream. I have to say, the search for it sometimes in this market, UM is really tough. I was a target recently and there was like only two cartons. I mean, so are you continuing to grow? How do you like make sure that you can meet all the demand as you expand? And yeah, yeah, thank you, Yeah,

we are continuing to UM to expand. In fact, before two thousand eighteen, we were all the west of the Rockies, so all the places that folks are are beginning to discover us. You know, there might not be quite as much on the shelf there as we'd like to like to have, and and we're we're trying to rectify that.

We're bringing product out there as fast as we can. UM. But you know, one thing I'll suggests is when you're in the store and you don't think there's enough Tillamook product, go talk to the store manager and that will help a little bit. Hey, uh, do you guys only uh produce products at the headquarters in Telemaco Rent, Oregon. No, we've actually expanded a bit UM since our early days of all the production being in Tillamook. All of the dairy farmers UH that own the cooperative UH do live

and farm in Tilama County. UH. Many people that know our brand don't know that Tillamooks a town in a place actually the high school mascot is the Cheesemaker. So we're very much integrated into that community and and owned

by that community. UM. But as we've expanded around the country, we've partnered with other cooperatives and and and other manufacturing partners to make product to our very UH precise and high expectations and specifications in other places in the country, so we can make sure we're getting product into those stores where people are Listen. Is there any discernible difference between something made in one facility with with UH dairy

from one area versus another area? There isn't. UM. You know, we do make all of our cheddar cheese, which is our core product. We do make all of that in Oregon, UH, and then we moved around the country. We cut and rapid in a few different places, but it's fundamentally made all in Oregon and with our recipe, but where we do make other products, for example, cream, cheese or ice cream with partners where in those factories are very close partnerships.

In some cases our partners will put in equipment specific to the way we make product because of you know, we're not varying the way we make it, so you can't tell any difference if you've come visit us at our visitor center until MC Oregon, which a lot of people do. We we've had one point three million people visit us in a single year there in our factory on the coast. Become visit us there, the products gonna be exactly the same as you find in Wigmants Patrick,

what's the bulk of your business? Is that the ice cream or is it the cheese? As you say, your main product and where is the most growth most of our business is in the is cheese ice cream has been our fastest growing product. It's it's turned out to be, you know, as we've expanded into new regions in the US, has turned out to be sort of the easiest entry point for consumers to kind of find us that you know, hopefully that big wall of a full door of of

ice cream flavors with our bright colored packaging. UM kind of draws people into the brand. And then once they find us there, they like to move and discover our cheese and our cream cheese and our other products. You know, consumer product company is always looking for a good brand. You seem like you would be ripe for UM. The taking UM, staying a coop, cooperative, staying private, still the plan and just got about five seconds. Yeah, that is

the plan. Certainly we get those calls, but our farmers are very proud to own this brand and this company and what it's meant to our local community. Well to come back soon. This is a great story and certainly something that is very relevant to our worlds. I'm sure Tim will have some ice cream ice cream tonight, and I'm sure I will as I get the chocolate chip mint that's my husband's. That's what I like to um. Patrick, Thank you so much. Patrick kritz Are He's CEO of

Temo joining spa Zoom from Oregon. Really fun conversation. 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 a band. You two. You can also listen live to our flagship New York station. Just say Alexa, play Bloomberg. Elvendy. We're gonna stay in Miami and welcome in as well our Bloomberg TV audience and you too. You and Bloomberg Originals are streaming service

because we've got a special guest. Cathy Wood is back with us. She's the founder, chief investment Officer and CEO of our Investment Management, joining us from St. Petersburg, Florida. Kathy, great to have you back with us. Happy New Year, Happy New Year. I'm I'm really happy to be with you, and it is so far a happy new year. It's definitely a different tone. Well, you know, it's interesting we watched yesterday continuing today even though we're off our highs.

When it comes to stocks, Kathy, it seemed the more J. Powell talked, the more you know excitement you saw, and it moves to the upside when it came to both stocks and bonds. Does this market reaction make sense to you or do you see some irrational exuberance if you will know? If anything, I I saw an exaggerated UH reaction last year to fears that inflation and interest rates were embedded in the system UH like they were in the seventies, and we just didn't believe that at all.

In fact, we were seeing a lot of early lines of UH inflation coming down, actual deflation surfacing. So this does not surprise us. I think what has happened here there there are three people who have weighed in in in in the last week who really have changed their points of view. One is Larry Summers. Larry Summers was almost apoplectic last year, so this is the former Treasury sector almost eplectic about inflation. And I think he truly influenced the FED because he was so sure that we

were in a seventies style inflation. If you'll notice in the last week he said, okay, now, don't don't signal what you're going to do in the future. We're seeing some economic weakness year. And I think the other thing he was saying, not explicitly, was hey, some prices are coming down that I didn't expect to come down. You know, the oil prices roughly half of where it was last March. So that's that's the first person. The second person was

Treasury Secretary Janet Yellen. And remember, I think the market last year got really upset when she changed her mind on transitory and uh and and and I think that fed Chairman Powell as well, and uh and and turned him into an even more hawkish mode along with the rest of the Ford board members. She this week said that now that inflation is coming down, we're probably going to be looking at the bigger risk being kind of

mired in low inflation low growth. That was a big and it effectively says, wow, maybe it was transitory after all. It was just a little longer than we expected. Who knew supply chain problems would last two to three years? Who knew Russia would invade? And then the third the third thing that happened. This was really important. I think in the Q and A um Herman Powell himself said, I agree with Lyle Brainerd. We do not believe we're in the middle of a weight price spiral. And that's

another code phrase for the seventies style inflation. So I think that is what the markets responding to. Cathy, you've talked about the threat of deflation, So what's your view of that versus inflation right here? Well, a couple of things we see the deflation in the pipeline because commodity prices, which are at the top of the funnel, have been coming down on balance. Now we're we're seeing right now some interruptions in that as China moves away from its

zero COVID policy. But I think the fake out here is China has been building inventories, particularly of energy. It's been getting Rusha's energy for discount to what the rest of us are paying, So why wouldn't it build inventories? So I think I think UM that fear is probably going to be or has been a little overblown in terms of ramifications for inflation. UH. And I also don't China's China's taking off. But anyway, we have the funnel.

We had at a holiday time massive discounting UH. And even though we had massive discounting in the fourth quarter, inventory accumulation accelerated. That was the biggest surprise to me. Wait a minute, final sales where that punk uh. That inventories built even though retailers and others were trying to clear the shelves with these massive discounts. That was very

interesting to me. So I think underlying demand here is UM Basically the consumer railing against price increases because real average wages have gone down and the consumer is going to win this battle. Kathy, I want to go back to the way that characterize what we heard from the FED and J Powell yesterday, because he also said some other things like further rate hikes will be appropriate. It's premature to declare victory. We have a lot of work left to do, and if our outlook turns true, then

I don't see us cutting rates this year. What convinces you that his views have changed. Well, I think he is looking at the bond market and he's saying what he should say as as a FED chairman who has been very concerned about inflation. He can't turn on a dime. But just look at what the bond market saying. The long term bond yield peaked in October at four point three percent, and today we got down to I believe

three point three five. You know, if if you look at the tenure bond yield as a proxy for what effectively nominal GDP give or take a little uh nominal GDP growth will be over the next ten years, that doesn't need leave a lot of room for for much inflation. If we're going to have real growth over the next ten years. So I think the markets are speaking loudly. I think the inverted Yiel curve, we're still around seventy

basis points haven't been that. We haven't seen it this low since the early eighties when Vulcar was trying to strangle inflation out of the system, and he did so. Cathy, forgive me, I want to jump in for a second, because so are you expecting the FED to cut rates this year? I would not be surprised to see the Fed cut rates this year. Uh. And one of the other reasons that we're very focused on this message that the bigger risk is deflation, it's also a very big opportunity.

Um when when we look at deflation, there are there's good deflation and there's bad deflation. The bad deflation is caused by demand destruction. The good deflation creates demand. And that is what our research is centered on, which is illogically enabled innovation that rides down learning curves, which are expressed by cost declines, which turn into price declines. You'll notice that Tesla is cutting cutting prices and many many people jump to the conclusion that, oh, they're having so

much trouble now there's so much more competition. No Tesla can cut prices now that supply chain issues are passing us because it is riding down a cost curve. The battery cost curve declines. And I think it's battery costs are lower than anyone else's. It's drive train costs is more more correctly, UH said, are are lower than anyone's out there. And so he wants he wants to proliferate

electric vehicles to save us from environmental disaster. That is his mission, and he is going to drive down prices. When you drive down prices, units explode. It's no surprise to us even without price cuts. Last year that electric vehicle demand was up more than sixty percent while gas powered demand was down. I believe seven percent. The consumer pref shift has occurred. We are now in prime time

for electric vehicles. I want to go back to Tesla in a moment, but I want to go back to here our innovation E t F. We've done the story on Bloomberg. You guys had the best month on record for the fund, up twenty eight percent. All r E t F s, all the eight ones E t F s are up seven of them in double digits. Do you see that as vindication for your investment theses, um,

and do you think it can continue? Yes, we believe that Innovation was one of the biggest victims of the of a massive interest rate in increase we saw last year and less than a year, I think eighteenfold increase in interest rates. It was like a massive earthquake. And the other victim, of course was the other very long duration asset out their long term bonds. Uh. They were hit at least through October, if if my numbers are correct, The long bond market had not seen that um, that

bad a year since the seventeen hundreds. We're not We're not talking post World War two. We're talking about the That gives you a sense of the shock to the system, and the shock to our strategy was palpable. Boy, we felt it every time Chairman Pale spoke. We're speaking with

Cathy Wood, CEO of ARC Investment Management. Kathy Carroll just asked you about the performance in January and she mentioned that it's the best month ever for the ARC Innovation e t F. The thing is is that the jump in performance hasn't been met with in the way of flows with investors putting money back into ARC. Perhaps this is because it's been a tough couple of years for the e t F and for many of your E t f s. How do you win them back? Well, actually,

I don't think we lost many investors. I think the shock to most people is how well we held our assets in Our underperformance started in February of twenty one, when people were starting to get vaccinated, going back to work, and these fears of inflation started to surface. So since February of twenty one, we have seen a massive down round in our innovation strategies, and in twenty one we had very significant inflows, most of which we kept. I

think the net was seventeen billion that year. Last year again a horrific year. I think for the year our flagship was so a r k K was in flows one more than one point five billion dollars, and I think that shocked a lot of people. What we saw was averaging down. Uh. Many of our loyal shareholders did average down, and I think one of the reasons they did is we were out there every step of the way, giving away our research, reassuring our clients that actually innovation

solves problems. And we have so many problems now created by supply chain problems, the war created by the FED, and the demand destruction which is hurting margins, which technology will solve in terms of increasing productivity. And I think because we are so prolific in in our research, our analysts are amazing in terms of the kind of original research they're doing, so our clients and others are reading research from us that they're not seeing from anyone else

or anyone at all. And I wouldn't get even out And I want to get into that in a moment, because I do love it, Cathy, like you've got over a hundred fifty pages and your big ideas for for this year, and it's a lot of things that we talk about. What I do want to ask you though, after a sixty percent drop in our innovation the e t F last year, and I know it was a tough year for form many assets, do you find any of your investors kind of treating ARC a little bit,

you know, more cautiously. I think one thing that happened last year is we were able with a number of papers. We were uh we called it our ground war. We were trying to help investors and advisors understand that, UM, if you take a look at truly disruptive innovation, which is all we do UM, and you look at other growth portfolios, large cap growth, uh, you know growth generally, as well as the major benchmarks like the NASDACK, you

won't find much truly disruptive innovation in them. And so as we were getting hit so badly, what we also saw is investors taking tax losses and some of NASTAC and other strategies and moving into our strategy, which was hit so hard because they did believe that we were going to rebound faster. We were the hit hit the hardest.

Our research would suggest that that the two hundred trillion dollars that we expect by twenty thirty to be the market valuation pleased on disruptive innovation, that that had changed, that that hadn't changed. And so if you have a five year investment time horizon, yes, you move into our strategy and oh, by the way, we are the new NASTAC,

which is one of the ways we are trying to convey. Look, if you want to look at the future and truly disruptive innovation the way the Nasdaq, the NASDAC performed in the eighties and nineties. That's where we went avation. Okay, look through that now you will not find the kind of disruptive innovation. It certainly doesn't dominate those indexes. Maybe them. Well that's true. That's the perfect segue, Kathy to gets you to weigh in on what we look for from

the companies that are reporting this afternoon. Companies like Apple, Alphabet, Amazon, These are not companies that you necessarily are betting on. These are companies that you think can be disrupted. What do you watch for with them? What can they tell us about how the economy is? And you know what what arc should be looking at. Yes, well you know when I say we don't own those in our flagship strategy, we do own them in some of our more specialized strategies.

But these two are the companies have enjoyed incredible success. They have created big, big markets, and to move up tenfold a hundredfold from here is going to be difficult. We're not saying they're not going to be successful, but we are saying a few things. Take Amazon. Amazon is not a social network. We have moved into a world of social commerce, so we own Shopify. Shopify is supporting Instagram and TikTok and others that have that that are

taking really social commerce and scaling it. Um and Amazon will not become a social network. It is not one. It's a good online uh retailer um and I would put it in a more mature category of online retail. That's not what we do. If you look at Google or alphabet UM, everyone's talking about chat GPT, and we do believe that it is going to put search at risk. Search is of Google's revenues. Now. We also believe, however, that the Google is going to harness AI as well.

I mean it has it owns deep mind. It is one of the best AI companies in the world, but I think it has been so caught up in fears about legal liability associated with the dangers created by about Microsoft and Microsoft's big investment chat GPT. Do they have the potential to overtake Google when it comes to search because of the way they are harnessing AI. I I think that's the big threat. I think that's why Sundar went to code read at at at Google. I think

they're going to become very aggressive. So yes, yes, we absolutely are are focused on what open AI and Microsoft are going to do together. Kathy. You know one thing is and you know for our TV and our streaming service and YouTube, we've got you know, the share prices of Apple, Amazon, Meta and Alphabet up there. I mean you're looking at Meta up more than and it was higher at its best levels of the session. I do like how you think about innovation and things that are

gonna be impacting us in years to come. Is the metaverse? Uh, something that you guys think about that this is an important trend or tvd well. Yeah, in Japan we subadvise a fund for Nico Asset Management UM called the Metaverse. So yes, we are in the very early days of what will become very immersive digital experiences. In fact, we believe that more than half of our spending will end up online as opposed to UH through physical stores. UH. And and that's part of our big ideas this year.

Are Our team UH, led by Frank Downing and Nick Bruce, have done a terrific job Andrew as well, pulling together how this new world is going to work. So absolutely we do. I think what happened with Meta last night I listened to the call was fascinating. I think what's happening is uh, Meta has an answer to TikTok It's reels and Reels is taking off. They're also extremely focused on using artificial intelligence as they are activating this platform.

And What's App is also uh a very important platform that they have not monetized and now they're activating it. UH so really really fascinating. And you know, just to give you a sense, Delta is working through What's App right now to inform passengers when something goes wrong UH and improving customer service dramatically. So you know this this could become a very big business use case. So yes, lots of big markets that Facebook. The other thing that

Mark did was used the word efficiency. He must have used times and and and and in that in that vein, he was using artificial intelligence as well. Because as we in big ideas UH and you can find big ideas on our dash invest dot com um in Big Ideas, we show the productivity increases that are possible because of artificial intelligence. It's these companies who could be some of

the biggest beneficiaries if they harness AI correctly. I think a lot of people are looking for the killer app like they look like these viral apps that the Internet delivered. The killer app for artificial intelligence is productivity games, and any company does not harness it is probably not going to be one of the big winners out there. And just one other thing on AI. I think a lot of a lot of the hype is in companies that

have AI in their names. We talk, you know, the real winners here are going to be those companies that have proprietary data and have lots of it, have the best domain expertise, best AI expertise, the best pools of high quality data. Two basically create new businesses in your big ideas paper you again speaking of of big ideas. And I love when we talk about this because everybody on Twitter has a comment. But you stick to your million dollar bitcoin forecast despite what we saw I think

about six drop in it last year. Um people are saying to me, really, does she really stick to this? Why the confident in that despite everything? Well, the confidence actually was strengthened last year. Now, last year was was a terrible year for everything crypto, But if you think about what happened, it was the centralized opaque players who went bankrupt. F t x Celsius, three hours Capital, Um and and what did we see from bitcoin? Bitcoin is

completely decentralized and transparent. It started because of oh eight oh nine, the lack of transparency in the traditional financial services ecosystem. And I remember when we did our research and Art Laugher I mentioned him. I mentioned him the first was on your show. Um, he took us through what bitcoin meant to him and it was wow, Art, the this is a rules based monetary it's a rules based digital monetary system, and it's global and and there's

no human intervention. Uh, it's very disciplined. It's mathematically metered to top out at twenty one million units. Well in the last year, the response to the last three years, the responses to COVID that the fiscal and monetary responses that you know in many countries are causing hyper inflation and you know fiscal crises. We're seeing protests and riots all over the place. Um, well, where do these people go for an insurance policy against an implosion in their

purchasing power and wealth. It is in something like bitcoin. Bitcoin is an insurance policy, and it is an insurance policy for the for for everyone, against confiscation of wealth. Uh. So you're nice tempering any of your thoughts even with what happened last year, and and if anything, you're kind of doubling down on your conviction because of what happened

last year. Is that fair? Yeah? We did. We tempered a few assumptions we thought, led by Tesla and block formally Square and micro Strategy, that more corporations would put coin on their balance sheets. That is that we've dialed that one down considerably. And the same thing with nation states uh, El Salvador as they're sticking to their guns on this one, UH and UH and actually are doubling down.

I believe in terms of bond issuance backed by bitcoin um, but other countries will probably not move as quickly as they might have if El Salvador had had, you know, a grand swish right off the bat. We do think it will happen, it's just we've pushed it out a bit.

So I think our base case going now is UH, in five years, I think roughly six and seventy thousand, something like that, and then in by t as as we see more use cases and more of these insurance policies taken out against they still and policy regimes are not healthy, we think it could pass a million dollars, Kathy, we don't have a ton of time, and I want to make sure to get to a few more of

your big ideas in your research. For three we've talked about AI, We've talked about cryptom we've talked a little bit about batteries in Tesla. UH. In the last thirty seconds or just the last couple of minutes that we have with you, let's talk about a few more specifically robotics. What what's appealing to and what's exciting to you. What

do you see as investment opportunities for robotics. Well, I think everyone thinks robots have been around forever, and they kind of have, but they've been locked in cages inside auto companies. And so what we have now is really the dawn of the age of robotics. It's really going to happen because of battery technology and artificial intelligence, and

we're talking about industrial robots. Amazon is adding one thousand robots per day UH, and by the year we think they will have that Amazon will have more robots than people. Even though they will continue to increase their employment UH, roles, robots will increase faster. Why is this happening? Well, as always with technology. The technology is ready and even more important, the costs are low enough now and the technology really

AI battery technology critically important. Uh. And the costs if we use rights law for every cumulative doubling in the number of industrial robots produced, costs will decline by FI. I think it's even more than that. Given the massive labor shortages that have been exposed, and we still have around the world, some of its demographics, some of its COVID related um, the aftershocks, we think the time is right for robotics now. So uh. And you know, Tesla

is a robotics company autonomous vehicles, which is where we're going. Uh. Those are butts, those are robots. So we think we're going to see a lot of robots rolling around, flying in the air, drones and so forth, so, you know, and collapsing the cost of that. I don't know if that's so great for me. I don't know, Carol, I'll take it. I'll take a robots if you've got some new money to commit. What's the name you buy? Is

it Tesla? Right now? Well, Tesla is the number one position in two of our air KK and air k Q, and we even have it in air k W because it is probably the best case of a convergence between and among the most uh massive innovation opportunities of our lifetimes. Robotics. Autonomous vehicles are robots, energy storage, they will be electric and artificial intelligence. They'll be powered by AI. So that's one S curve feeding ANOTHERS curve feeding another. Skert going

to leave it there. I feel like we go around the world with you, Kathy, and so appreciated. Kathy would. She's the CEO, she's the founder, She's the ce IO of ARC Investment. Check out her big idea fifty three pages. You can find it outline at ark Infested. Kathy, thank you so much. You're listening to the Bloomberg Business Week podcast just live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business app band you too.

You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg, e Love and Verdi. Well as you know, or if you didn't, here's your reminder, so mark your calendars. The Grammys are back this upcoming weekend. Harry Styles, by the way, just added to the lineup. It came out the football games. That's pretty cool. I really like Harry Styles. Um so that is an addition the award show, of course put on an overseen by the Recording Academy. Yeah, we've got the current CEO of

the Academy right now with us. He's a record producer, a songwriter and more. Born into a musical family. It's been a while since we've spoken, but very pleased to have back with us. Carol Harvey Mason, CEO of the Recording Academy with us via zoom from Los Angeles. Harvey, so good to have you back with us. Last time I think we talked to us the summer of one. A lot has happened. Tell us about your world since then. Well, thank you, Carol and Tim. Good to be here. I

appreciate it. It has been a whirlwind for sure. It's been a crazy two or three years, as it has for everyone. So I guess it's nothing unique for us. But we're really excited to be back in l a Crypto dot Com arena February five. Got an amazing show coming together around music and can celebrate the year in excellence. So when you talk about the year and excellence, I always think about, you know, who's going to be there.

How you can watch it? Let's start there, because we are kind of obsessed with how you can watch things so differently. Um, you can stream it on Grammy dot com. You can go to the recording account, me's YouTube channel. How is it that most people still watch this show? I know I sometimes watch it live. Sometimes I you know, are checking out clips the next day. How is it that a lot of people are consuming it? First of all, I think it's a combination of all the things you mentioned.

Some people are watching on CBS, some people are going on the streaming services, some people are watching online. I think it's a multi screen experience now. But we're seeing more and more people gravitating towards music content and specifically the Grammys. Whether that's as you said in bite sized chunks were watching the three hours show. We still have work to do to figure out how can we meet

viewers and consumers where they are. But I'm excited about the appetite and the desire for people to want to watch great music, great art, great performances. That's what excites me about Grammys and about Sunday. Well, how do you make this work from a rights perspective? Harvey. If if CBS has the broadcast rights to it, how can how are you guys allowed to just put it on live dot Grammy dot com or on the recording academies YouTube channel.

Is take us through the deal there, We're great negotiators. I mean, this is I mean this is kind of you don't see this because because companies, you know, a company like CBS wants to recoup its investment and sell ads against the content. Well, CBS has been an amazing partner, and we only do things that we think will benefit or raise awareness of the telecast and the property and intellectual property that is the Grammys that are the Grammy. So CBS has been in favor of a lot of

these things. They've been supportive and they are our partners. But we also have to make sure we're thinking forward. We're seeing around corners, what's going to be next? How are people are gonna watch this show? It's in our best interest to figure that out as well as CBS is well. Speaking of partnering, which you talked about as CBS being a great partner, you've got some great partners and they read like a who's who of the corporate world. IBM, Google, Pixel, MasterCard,

Gray Goose, Amazon, United Airlines, Hilton Series exam Um. You know, one of the things I do wonder about your platform, and I feel like all the award shows, it's been a place for artists to come out and be political and talk about things, maybe rightfully so that are in our world. How does that I don't know. How does that impact who you end up partnering with, or does it impact talk to us a little bit about that when there's so many important things going on right now

that need to have attention brought to them. That's what I was gonna say. I think our partners probably appreciate it. I know they don't want to get in the weeds of who's going to say what and what their beliefs are. But we're not using music, and we're not using the power of the Academy and the platform with the Grammys for good or for change or for awareness, then we're missing an opportunity. I think our partners understand that comes

with the creative community. We are a unique group of people. We care deeply. We're very passionate about a lot of things, including music, but also politics or race, relations with the economy of the environment. So These are all things that you're liable to see on a Grammy telecast. My hope is that whether you believe in exactly everything everyone's saying or not, you understand and you support and you believe in the idea of using your platform for good and

for change. Can could you expand to on our marketing guys. I will tell you that when our newsroom new you were coming on, they're like, you know, a lot of award show um can generate a lot of revenue through these partnerships you've got, as we mentioned, uh, several well known household names, Greg Goose Vodka, the official spirit of the Grammy Awards. You know, talk to us a little bit more about that and the other marketing deals that

you've got. We've got an amazing partnerships team. They've worked really hard to partner and I guess join forces with world class organizations. And we do a lot of work to make sure that we're attracting and joining with the right types of partners And it's not just about a one day a year partnership. We like to think of these partnerships and arrangements as annual or multi annual year deals. We're doing so much throughout the year. It's not just

about the show. It's about the work through Music Cares and giving back to music people. It's about our advocacy and DC, our education, our preservation through the museum. These are all things that our partners are involved in with us. Our Black Music Collective and our HBC. You tour are our sponsorships and our opportunities for incoming people into our industry. These are things that our sponsors are really really excited about and us providing more as I said, good and

positive outcomes for our community, for the culture, for the world. Well. As people consume the content differently, these kinds of sponsorship has become increasingly important because perhaps they're not necessarily tuning in during the breaks and instead what they're doing is they're watching clips or they're watching in in you know, live, and then they'll put something else on during the breaks,

as many people do. Uh. So, give us an idea harvey of of of the other types of partners that you have that the way you integrate brands into the content, and if you can, please just give us some numbers. I mean we're Bloomberg, So I mean, how much are these brands paying for this type of association. It really varies, and I would hate to put everyone's business out on the street, but I will say that it depends on

the level of activation. Some of it is hospitality. Sometimes people want to come to our events and be in the room with other great people and creators. Others want to be featured across all the work that we're doing, and as you touched on, we're finding new ways to

do it. We're a web three, metaverse other things, and our partners are coming with us, so I think they're seeing this as an opportunity to partner and collaborate with an organization the Academy that is seeing into the future and finding new ways to attract, attract eyeballs and attention.

I think we also drag with us a very unique subset of fans, consumers, listeners, people that are not only the most prolific creators in the world, but also people who are crazy, intense, passionate lovers of art and culture. And that's a very attractive group of people for advertisers and partners to reach. Hey, just got a couple of minutes left here, Harvey, And we didn't say in our introduction to you that you brought into a musical family.

You've been a record producer, songwriter. You understand this business. You've written for some some heavyweights and been involved with some heavyweights in the industry. What do you make of kind of the business of the music industry which increasingly you have people like Taylor Swift and others really taking control of their brand and their music. You've got a lot of artists selling their brands, whether it's to private equity and other investors. Um good or bad in your view,

that's a whole show. Care all. We should do another talk. We would love to. I know it's not easy. It's important to address because it's an evolution of where we come from and where we're headed. It's never there's never been a time like this. There's a hundred thousand songs a day being uploaded to the streaming services, so that's

going to create different opportunities. We still believe that the labels are valuable and important as partners to creators in some instances, but I think independent artists are also going to be able to reach their fans directly and put music up. You make it on a Friday, it's available Friday night for somebody to listen to and evaluate and love and share. So I think there's a lot of innovation and iteration that's happening around our industry. As you said,

people selling their catalogs. I'm not sure where that's going to go because the prices are at a place where I'm not sure everyone's figured out how to monetize it to accommodate the high trading value of some of these catalogs. But I do think what the Academy is doing is really important because we're fighting for new legislation to protect songwriters and creators and intellectual property and copyrights. So legislation changes can increase the value of a lot of these catalogs.

All right, five seconds. Who you're looking forward to at the Grammys. I'm looking forward to all the diversity, all the different genres, all the different people all coming together one room, February five. I love in the show is a mixture of everything, because it really is fun to watch Harvey come back soon please, Chief Executive Officer of

the Recording Academy. Of course, as you know, they oversee the Grammys, and the's founder and c of Harvey Mason Media via zoom from l A. This is Bloomberg you're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business Band. You too. You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg e Loove and Dirty Full Transparency. Tim and

I both have Aora rings. Tim has his on. I don't. I forgot to. Didn't take it off to do some chores. You are supposed to take it off to take you know, when you're doing dishes. I was doing something and following the rules. It was kind of a rough night white and I wasn't diving this time around, all right. As you may know, it is a privately held company that

we follow a lot. The current issue Bloomberg business Week magazine, the Pursuit section, it's one of the sleeptrackers profiled as part of a deep dive into the business of sleep, which we know Tim is big business, but we know this ring does a lot more than that. It does. Let's stark numbers here though. Um just last week last year, the market for sleep tracking devices society at fourteen point five billion. It's projected to reach sixty two billion by

the year. It's a lot of stuff, all right. So let's get to our guest, Tom Hale. He was named CEO of Order Ring last April. He was former chief operating officer at Home Away. They were acquired by Expedia. He's an alum to of Adobe Macromedia. He is in our Bloomberg Interactive Broker studio. Welcome, Welcome, Nice to have you here. Thank you so much. It's great to be here. So what's it been like? Wow, it's been incredible joy to learn. I mean you think about sort of this

particular product being the intersection of health, physiology, physics, fashion. Right. I never saw myself as a purveyor of jewel, right now I am. And in technology you think about what's going on in technology where you've got a I processing huge amounts of data and the intersection between health and technology is super interesting. So I've been climbing a huge learning curve. But that's been incredibly thrilling. What have you

learned the most? Is it that the size of the market, or the size of the interest or what you know? I think it really is that there's a change underway which is about how people are approaching health. I think COVID kind of took the covers off. Everyone felt a little bit secure about their health. And then COVID came along and reminded everybody that health is fragile and you need to monitor it and manage it. And everyone started

thinking about it very differently. And so that change, that's a societal maybe even a global change, and in some sense, health wearable steers right into it. Okay, So or a monitor's health through the finger. It's a ring that you wear on your finger at tracks sleep tracks activity throughout the day. There a handful of sensors on it. Um. I'm wondering about the technology that goes into the ring, the hardware, but also what happens on the app and

sort of which one is. I don't know where you're investing. Well, you have to invest in both, of course. I mean. Being the only smart ring on the market, we've actually got a lot of huge technical challenges that we have to manage, right. We have to make sure that the quality of the signal that we get is the highest and most accurate that is possible. Frankly, we are medical grade, you know, in terms of the accuracy of the of

the device itself. Partially that has to do with just the location of where you are measuring on the human bodies. You said, doctors measure your pulse and your heartbeat and SPO two from the finger. They don't measure on the outside of your risk. So we are just structurally advantaged in terms of accuracy. Now that being said, where a science driven organization, so we take that super super seriously. We validate everything, not just across like some small population,

but across men, women, different ethnicities, different skin tones. A lot of the technology that are is used for these kinds of wearable sensors is light based. We shine lights into your body and based on the signal that comes back, the refraction, the absorption, we're making conclusions about your heart rate, your respiration, your heart rate variability, these metrics that come

back to you. Guess what if you don't have the same tone in terms of skin color, the melanin in your skin absorbs that light differently, and so you have to be really thoughtful about how you measure so accuracy, the form factor. These are structural advantages and structural things that we focus on around at or that's the hardware. So how do you technologically account for a white person versus a black person versus how do you do it well?

You have to make sure one we're lucky because we measure on the inside of the palm, right, and the inside of the palm generally actually is a lot narrower range. Even people who have like sunburns or hair or tattoos or darker skin on the outside, they tend not to have sunburns or tattoos or hair on their palms. Maybe some people do, but most don't, So that's actually a

structural advantage. But we do things like we monitor when the light signal goes in what comes back, and we start to learn a little bit about like do we have to increase the amplitude to get a good signal? Do we have to decrease the amplitude Because we're getting to like we're we're very intelligent about that. In fact, we did a one of our big features last year was workout heart Right. You guys might have, I don't know, experienced it. So it's basically different things that you can

use it for. It's super accurate in terms of like measuring your heart rate during a workout. It's as accurate as a chest strap, which is you know, kind of the gold standard for measuring a hurry. All right, So when we were testing it right before we shipped it, people are like, you know what, we're we want to make sure that we validated this across a wide range of skin tones. And so we actually did a lot of work to test on a wide range of skin

tones and we felt pretty good about it. We've made some tweaks in terms of the power of the signal, the light signal that we send into the body, but that kind of scientific validation is the key. And that's the hardware side. The software side, though, gets a lot of updates. The app gets a lot of updates. And the reason I ask is is because oftentimes with hardware, you see a brand new version each year. If that, if that this year, you didn't see a new version

of of a ring with different sensors. You saw a different version in the you know, in a superficial sense. And I use the term superficial not in a project pejorative way, but you know, the idea that the sensors inside didn't change. Correct me if I'm wrong, but that's correct. The sensor platform is the same. By the way, we have two versions of the ring, right, Yeah, the heritage and the horizon. That's what you're talking about exactly. Um, do you which sensors would you add right now if

you could? Or is it is it kind of like where it needs to be and the work needs to be done on the app side the analysis side, Well, we're always looking at new technologies as as they're emerging and new capabilities as they're emerging. You know a lot of people have have have sort of hypothesized that there are lots of things that you can do with new

sensor technology. Um, really, I think the reality is that a lot of the ambitions here, like we can test your blood glucose, you know, non invasively, are possible, but definitely further away than most people are willing to admit. Elizabeth Holmes could do No, she's she's all over. I think that's her next process. I know that's I don't know, but but but you you you know, the thing is that you want to make sure those things are validated acurate.

The technology that goes into our ring today, some of it's very very recent, very very new. Some of it has been established, there's lots of science around it. So the reality is, I don't know that we need to see huge updates in it. I think what's what's really important about the ring from it maybe different from your your wrist, is that it's also comfortable and non battery consumptive. I don't know if this has been your experience. Every five days or so, I give it a charge and

you don't have to think about it. You just don't have to think about it. It's just they're sort of silently in the background keeping track your metrics. The data is being processed, the algorithms are running, the recommendations and insights are coming through. And that's the software, right. The software is your health condition is different from your health condition. Let's understand that and give you the appropriate message. That's personalization,

that's machine learning. That's that's very different. I think the pace of software innovation incredibly rapid. Right we're releasing two three features a month, because that's the pace of soft hardware. You kind of wanted to be stable, because you don't want to change it all the time. I agree, Um, who is your typical consumer? Well, what would you guess? What would you guess? Um, I'm thinking like a guy in his thirties. Guy in his thirties. Kendall Roy from Succession.

Well yeah, or yeah, that was that was also yeah the Billions where we can I just ask you before we get into this series, what does that stuff do for you? First of all, it's great recognition, but what does it do the needle it? Well, you know, funnily enough, when when it used to be airtime, it would actually you can see it, but but it's not airtimes now it's all streaming on demand, right, But I think it

just puts us in people's consideration. They now understand there is a smart ring category and you can wear it and if if you're like the cast member of Billions, like maybe maybe you want to be a little careful. That I was going to say is sometimes, you know, sometimes it's worn by somebody who's not necessarily a fan favorite. Right, You're not really sympathetic to Kendall Roy. That does that? Does that? Bob? Are you h? No? Look? I mean what do they say? No? Bad, no bad? Pr um?

You know? When what is it when the Mr Big does he die on a Paltzon I can't remember spoiler? Maybe that's maybe that's a bad example. Let's not go there. It was not great Plotzon hasn't been doing that. Yeah, let's hope you you know, when when the next one doesn't die. And my point is all that stuff is positive and all all the you know halo around influencers, media personality CEO so Davos was crazy. It was lousy with or rings. You know, it's crazy. So that's really

powerful for us. But the reality is I think most people, you know, how they learn about it. They learn about it from our friend. Well we talk about I feel like there's bonding, like when you see somebody's on it's like, yeah, it's just really great term you can use, but I won't say it on air, but I can't say it. Yeah, we'll have to talk about later. I'm not okay, Alright, we're gonna come back with Tom Hale. Still got a ton of questions to ask him. I want to get

back to is it Tim, is he the typical demo? Well, actually, you know what's interesting is the typical demo is is a perfect bell curve around the age thirty five and equal male to female. Yah, we're gonna talk more about this, and we wanna talk about growth in the business and where it's all going. Tom Hale chief executive Officer or in our Bloomberg Interactive Broker Studio. Our conversation will continue

in just a moment. Tom Hale still with US, Chief Executive Officer of or A still in our Interactive Brokers studio. So we're talking about your demo. So just let's go back there. So your your typical buyer, I hate to say that your average buyer of an horror ring is who. Yeah, it's um it's actually a perfect bell curve on on either side of age thirty five. And so you see, you know, folks are aging in place who want to manage their health, people who have chronic illnesses who are

trying to make sure they don't get sick. You have thirty year old athletes who are training for their marathon or their ten k. You have twenty year olds who are women who are just coming to maturity and want to manage their contraception using you know, non hormonal contraception. You've got young kids, fifteen year olds who are training for the first time and thinking about recovery and how to do it. So it's a pretty broad span. Health, of course, is a money killed beast. People are having

different health situations as they move through their life. Is that what's really driving people to ultimately get it. It's about sleep and health. So some people people who are you know, I mean honestly, I think as you get older, sleep becomes this thing. And if you're a woman or a man in a certain age, like sleep becomes really important. Fads are out of the nest. So sleep is really

a big driver. And the thing is as like sleep as this habit that everybody does, but no one's particularly good at, right And when you lose sleep, wow, you feel it right acting to acquire looking at Carol right there? Sleep is sleep is this? I was just reading that. They say there's something that goes on with your brain as you get older that affects your ability to kind of stay asleep throughout. Lots of things change, right, pressures of life, stress, you know, all sorts of things asleep.

So okay, talk about the scores here because that's mainly what I look at on the app when I wake up in the morning to see how I slept. What do you aim for? What should people be sleeping? Like? I think this is the things that everybody's health situation is a little bit different. Really, what you're looking at is your baseline again, medicine has been practiced for years on the averages, and the truth is that we're all different. In fact, not only are we different, but we're also

constantly changing. So the metrics that go into those three scores, and the three scores for for clarity are sleep, activity, and readiness. And sleep is really like how well did you sleep? And it really understands a lot. How quickly did you fall asleep, how much disturbances did you have, how many how many times did you move around? How many times did you wake up? Did you fall asleep quickly?

Did you fall asleep within your normal bedtime? All these things are factors when we come up with one score, and that score is like somewhere between zero and a hundred. Very few people get a hundred. Some people do. Most people, if you look at the bell curve, probably distributed between seventy and eighty five. So if you're in that, you're pretty good, right and I go for a I go for seventy five? Are up? Yeah? Um? But it's not easy good. And duration, by the way, is a really

important factor, right, but it's not the only factor. When it comes to the data dump. If you will, there is a point where you know it gets to be a lot. How do you make sure that you're giving people smart information, enough information, like what's the balance socretible? Well, I think we think about it as most people just want to check how they deviated from their baseline. And that's actually one of the things that the software does.

It learns you kind of learns your patterns and then say, well, this is a deviation from that pattern, so maybe something's going on, and that the software kind of says, maybe you should take a rest. You're gonna look at so good today. Did you have a drink last night? You know, it's like and and that that kind of like supportive approach is really difference, really unique in the in the wearable space because we're not saying get your ten thousand steps whether you like it or not, or whether you

feel up to it or not. It's like we actually our activity score adjusts, you know, we we actually the activity goal we set a just based on your readiness or honestly, Okay, let's talk numbers here. Yeah, let's talk about the business. Yeah, I want to hear about the business. So you know, you can buy one of these rings Bucks Bucks, that's a one time revenue hit for you. Guys. But then there's the membership six bucks a month. Do you need to have the membership in order to get

to use the ring? Um? No is the answer. Um. But I think one of the things that we think a lot about is that your health really is priceless. And actually the algorithms and the processing and the R and D that we do that looks at your data, it becomes more valuable over time. Right. It's not just

did you get your steps in today? And by the way, once you figured out what ten thousand steps looks like, do you really need to be told you got The other thing that I'm curious about is, um, how many people like churn people who buy them and keep them because wearables are just known for people throwing them in a drawer. So I can't give you all the fatigue,

but the device fatague. And I think that's where the software comes in because we think about not only is your data changing, right, because let's put it for example, a lot of people get sick and the ring tells them, hey, listen, you look like you might want to go into rest mode, and the app reconfigures itself around you being sick. The activity score goes away, the advice changes. The tone changes. It goes from being like go for it to be

like take a break. And that customization, that experience is different because your health condition has changed, all right, So that idea that your health condition is changing all the time and the way the app can figures that's value over time. It did this to me when I got COVID. It realized that I had COVID, right, you know, it was like crazy sleep and stuff, televated body temperature and it's you know, asked if I wanted to switch into rest mode. You didn't answer my question about how many

people keep their ring on? Yeah, So two facts that I could share. So one is the average wear time. So if you look at the mean wear time over twenty four hour period, the average mean about twenty two hours and thirty minutes. Okay, that's the mean. When you look at the median, it's actually twenty three hours and thirty minutes. So what does that mean. It means half above half a leg exactly. So that means most people

are wearing it more than twenty three hours. But I guess when somebody puts the ring on, do they keep it on for twelve months? Do they keep it on for the second stat. The second stat is after twenty sorry, after fifty two weeks, we have eight eight percent of

the people still engaged with the app. Now that is shocking because, as you said, in the wearable world, the typical thing is you get the wearable, you try it on, you get some value, and you throw it in the drawer because you figured it out, or you have to charge it. All right, So how much is the business growing? Your private but give us some metrics. Are you growing? I think, oh, we're in hyper growth. That would that would be the phrase that year. Every year I'm making

a face. You can't see it on Well, maybe you can. But we're growing incredibly quickly, and you are profit in a down market. We are investing, you're investing. Will you go public? Um? I think we're building the business and we want to build a big business. And um, Honestly, having been in public companies, I'm not in any rush to go public. I want to make sure we're set up right. You need to raise any more money? Um, No,

we're probably set maybe even to a public event. We might we might see one more round, even to a public event. Yeah, so it could be a consideration. But you never you did not hear it here actually did and going it alone. Have no plans. Let me put it this way to be explicit. We have no plans to go public. I mean could an Apple like has Apple come out to you? This was also recently a think maybe by a colleague of yours. And I said, when when when Tim calls, like I'm gonna pick up

the phone, but he hasn't called yet. All right, this was a lot of fun. Come back soon, okay, Tom Tom Hale, Chief executive Officer of Or of course. Uh Here in our interactive broker studio, you're listening in watching Bloomberg Business Week Carol Master, Tim Stanovic, and this is Bloomberg. This is the Bloomberg Business Week podcast, available on Apple, Spotify,

and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern on Bloomberg dot Com, the I Heart Radio app, Tune In, and the Bloomberg Business Happen. You can also watch us live on Bloomberg Quick Take every weekday on YouTube and always on the Bloomberg terminal