Bloomberg Businessweek Weekend-January 16, 2021

We watched virus numbers ticking higher, the vaccine rollout continuing to frustrate, and for the first time in history, a U S President was impeached for a second time. With that in mind, we'll hear from the author of kill Switch, The Rise of the Modern Senate and the Crippling of American Democracy. Also, its primary motivation was his anger at government shutdowns to coronavirus, the US Capital writer that has No Regrets. This was among our most read stories this week.

For me, it was a must read. Yeah, it was a fascinating story. And in the meantime the business world, Carol it marches on I p O s off and running as Petkoe went public again. We've got the CEO, but Tim, We're gonna begin with the top story this week, big tex social media giants Facebook, Twitter, Google, Amazon banning President Trump, Parlor and others in an effort to prevent

for the riot organizing. We caught up with Bloomberg News technology reporter Sarah Fryer, author of No Filter, the inside story of Instagram, along with Bloomberg Business Week editor Joe Webber, who gotta say, kicked it off with a little levity in an already stressful I was looking forward to that didn't look anything like I don't think I'll be so lucky.

Um and and obviously UM with sort of the social media platforms UM basically basically you know, not only blocking Trump and and perhaps permanently banning him in the case of Twitter. But then I think the parlor conversation has become the one that's even more interesting because um, both the Apple App Store and and Google's play Store have taken restrictions there. But then I thought the big move, in the one that I was actually most eager to talk to Sara about, was sort of the the Amazon

move awus coming in and basically blocking it. Yeah, but it does show you know, like not only are the social media companies able to wield a stick, but like Amazon's got the biggest stick of all. So so Sarah kind of there's this is just a fast moving story. But I want to understand, like how you're thinking about

where this conversation goes from from here. Well, it dove tails right in with the tech power conversation that we're going to have a lot more of this year as these anti trust of battles with Washington rage on, and I expect that to continue during the Biden administration. And that tech power conversation is both about because the power to restrict as as much as it is about the power to allow UM. And so the companies are grappling with this, allowing Parlor to be on the App Store,

allowing Parlor to have UM posting by Amazon. That's the thing that employees are looking at, Critics are looking at and saying, well, why don't you just cut them off? You have the power to do that. You're a private company, And the companies are saying, you know what, Yeah, we

don't want to be dealing with this. This We don't want this headache and and it's really interesting to see that evolution because we've we've talked about it a lot, like you said, with the social media companies, UH, it's a lot of conservatives are concerned about too much cutting

off of people who have accounts. A lot of people on the democratic side are concerned about the hosting of illegal activity and UM people who are inciting violence, and in the balance is really what is is UH an issue here to look and Valley companies have a reputation for being really mission driven, and I think a lot of employees have had of a personal reckoning over the last few years. Is it ethical to work for Facebook?

Is it ethical to work for Google if they're working with the Defense Department on you know, UM, putting people in cases of the border. There have been a lot of new debates about what it means if you work for a company that has certain suppliers, certain vendors, certain contracts, and host certain voices. And so we have seen employees the almost the more forceful voice against their leaders and even the government because the government can't can't really be

clear about what they want. Everyone's scrutinizing tech power, but they don't necessarily have a clear direction of what would be a good resolution. Whereas employees, you know, they're mostly they're mostly liberal, they're well educated, and they're saying, hey, I don't want to work for a place that supports something like this. And we saw an open letter from Twitter employees to Jack Dorothy asking for a bigger ban on Trumps. They had previously only banned him for twelve hours,

and now that he's permanently banned. And we've seen we've seen Amazon employees right to their employer about parlor, saying, why are we hosting parlor? We should we should kick them off. And I think that that power should not be underestimated because of how hard it is to recruit

Untilicon Valley the best talent. Well, and what's to stop I don't know, Like, I don't know whether there's oranges to oranges, apples to apples, but another company from saying I don't like Well, I guess companies do that, right if they don't want to work with a supplier, or if they don't want to work with something, they have

that opportunity to do it. Sarah, I'm just trying to understand the differences or not differences from another company kind of banning something, you know, whether they don't sell to a certain customer. Um, they do that all the time, right, Well sometimes so okay, a few years ago, companies, we're happy to just work within the bounds of the law. There are sanctions against Iran, we won't sell two around that. That was like, you know, if it's illegal, we won't

do it. Um. And that was how Facebook and Twitter thought about content a lot in the early days. You know, remove as little as possible, all right, tim safe to say social media really rethinking some of its playbook. We saw that this week, right, no, no doubt about it. Yeah, that's right. I mean I was really surprised to see big moves from the biggest tech companies essentially de platform in the president. Really remarkable, all right. That was Bloomberg

News technology reporter Sarah Fiar. She joined us along with Bloomberg Business Week editor Joe Weber. Still the come as social media band, the president of the U S House voted to impeach him for historic second time. We'll hear from a top aide to former Democratic Majority Leader Harry Reid of Nevada and the author of kill Switch. The rise of the Modern Senate and the Crippling of American Democracy, timely book. You're listening to Bloomberg Business Week. This is Bloomberg.

This is Bloomberg Business Week with Carol and Bloomberg Quick Takes Tim Stinovy from Bloomberg Radio. This past week will go down in US history as the U S House of Representatives impeach President Trump for a second time, ten Republicans voting in favor. Tim. It was kind of a reminder of the division and dysfunction we're seeing definitely throughout the GOP. Yeah, I mean, only the future will tell

if this is a splintering. For seven years, Adam Gentlesen had an up close view of growing Senate dysfunction as a top aid to former Democratic Majority leader Harry Reid of Nevada, and writes about it in his new book, Kill Switch, The Rise of the Modern Senate and the Crippling of American Democracy. Switch It's a great title. Adam is public affairs director of Democracy Ford. It's a legal advocacy group against corruption in the executive branch and government.

We began with the news of the last two weeks. There was a lot of it. We talked about the capital ride and the second impeachment of President Trump. I hate to say it, but I'm not surprised. I think this is the logical result of what the president has been soaking for the last four years. Um, And you know something I talked about in the book. I mean,

you know, the rise of these forces predates him. Um. He took over the GOP in terms of assuming its leadership, but a lot of the forces that propelled him to office existed before he even stepped into the political arena. So I think that it's horrible to see what we've been seeing over the last week, but it is sort of sadly the culmination of a lot of trends of extreme partisanship that have been building for decades now. So explain your title to kill switch. What do you mean? So?

When I worked in the Senate, one of the things you hear a lot is that the Senate that's supposed to act as a cooling saucer. Uh. This is dates back to an apocryphal story about George Washington explaining to Thomas Jefferson as they were drinking some tea, that the Senate was supposed to act like the saucer under Jefferson's tea. He would splash out of the saucer, cool on the splash off the cup, and cool on the saucer before I was ready to drink. Uh what that was true

at a time? Um The founders created the Senate to be a liberative and thoughtful. They also created it to not have a filibuster and to not have a supermajority threshold for passing legislation. They created it as a majority rule institution. It was designed to be thoughtful, but also to get things done and for debate to be thorough

but limited. What we see today in the modern center is a body that allows the party that's out of power to use the rules of they as they have come to evolve, to stop everything that comes before the chamber. This combines with the forces of partisanship that are dominating our politics today to turn the Senate from what was once a cooling saucer now into a kill switch that shuts down everything that the federal government tries to do.

And a big reason for that is in something that you really dig deeply into in your book is the filibuster. That's right, and so the book explains the historical evolution of the filibuster. Um. This is something that you know, if folks know anything about the Senate, they tend to know about the filibuster. And when they think of it, I tend to think of Jimmy Stewart in Mr Smith cost to Washington, right, holding the floor, talking at length, uh, sort of using it as an underdog against the forces

of corruption and entrenched power. Um. The thing is, this is not really what the filibuster has ever truly been in practice. UH. And even though it is directly associated with the Senate in the popular imagination, it was not part of the Senate and was not meant to be part of the Senate. Um. When the Framers created the Senate, they did not include the filibuster. And not only did they not include it, they argued against ever creating something

like it. They were writing the Constitution in the shadow of the Articles of Confederation, which had established a super majority threshold for most bills to pass Congress. The Framers saw that that was a disaster, and they argued very clearly in the Federalist Papers and other writings that establishing a supermajority threshold would have the direct effect of giving what they called a pertinacious minority, the ability to bring everything to a halt for the sole purpose of embarrassing

the majority. You know, they were realists. They understood this essential fact of politics that you give the party that's out of power of this ability to throw a monkey engine in the system, they're going to use it. It took basically two centuries for that power to evolve in the way that it has today. But that is what we've come to scene. That's what we've come to see happen in the Senate is the minority use that power and that monkey wrench, and exactly the way that the

Framers warned us they would. One thing I want to ask you, um, take us back to the first time you got to the Senate. What was it like? What was your first experience of it? The first start I got to the Senate, I was I was brought up to meet my boss, Senator Harry Reid. And it's an incredibly ornate building. I mean, unfortunately, a lot of scenes are on display this last week of the inside of the Capital for the wrong reasons, But when you're there

and able to appreciate it, it is incredibly dramatic. You've got painted walls, you've got arched ceilings, you've got giant chandeliers, you've got historic portraits everywhere. It's overwhelming. Uh. It feels a little bit like vers I uh in a little bit uh, a little fancy for a democracy, more than you might expect. Um. But it's an incredibly intimidating place. Uh. And then the leader's office is they they nicknamed at the taj Mahal for a good reason. It's got these

huge views of them all, dramatic feelings, huge fireplaces. It's it's a lot to take in is as a young staffer. Um. Yeah, And I think it's interesting when we read about, right, we grew up reading about history. We read about the capital, and it is something. It's got it. It must have just been something to actually be kind of part of it. Then Uh, and didn't live up to your expectations? Did it? Did it go beyond your expectations or did it start

to disappoint how quick? My big yeah, pretty quickly. My big takeaway was the big, massive gap between what you expect from such a grand institution and what it was able to produce. Uh. You know, I was there during a period of historic gridla one of the defining experiences for me. I talked about us in the book was after the murder of twenty first creators in Newtown, Connecticut. Uh. The absolute failure of the Senate to pass any kind

of policy solution, even in the middle of the road. Uh. Some might argue, not even not even strong enough policy like background checks. Um it. It is stunning. You know, this institution that has a reputation for being slow and has a reputation for working in a deliberative fashion. But I think that in many ways has been used as an excuse for it to simply do nothing. And I

think that's the problem that we're seeing today. We as we as a federal government are simply unable to operate in an intelligent way to meet the policy challenges that we face. And and part of what I argue in the book is that we need to find ways to restore the Senate, to keep what's good about it, to can let it continue to be a deliberative body, but actually make it be a place where good ideas don't just go to die. Good ideas go there to be

developed and perfected and then actually passed. No one has done more to increase good luck in dysfunction in Congress than it's tunnel. When he took over as leader, there was a historic rise in the use of the filibuster under his watch and at his direction. I should be clear about that. Um. It was explicitly a strategy of his.

Adam Gentlesen, author of kill Switch, The Rise of the Modern Senate and the Crippling of American Democracy, also a former deputy chief of staff to Senate Democratic Leader Harry Reid. Kind of hard to believe all the political news we've already had this week. You thought was full of action, right, Yeah, exactly. Get ready, everybody check out to a story about the book by Bloomberg Business Week National correspondent Josh Green, someone we love to talk to about all things politics. Find

that on the Bloomberg and Bloomberg dot Com. Still ahead, a story that was among the most read on the Bloomberg tim this week. Yeah, it was about the Capitol Hill rioter that isn't actually sorry about what he did. That's coming up on Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol and Bloomberg Quick Takes.

Tim Stinovik from Bloomberg Radio. This story gotta say many of us were drawn to I was because I believe that in kind of figuring out what was wrong at the capital this year, what happened the riots and the breaching of the US capital, we need to understand those who did it, ask why, and we need to talk to them. And I think that's why this next story resonated with so many people. It was among the most popular on the Bloomberg this week. It's exactly what our

own William Turton did. He's a Bloomberg News cybersecurity reporter, and his story among the most read on the terminal right about the Capitol rioter telling his story from the inside that rider. By the way, he's got a name. Brendan Fellows is a twenty six year old from upstate New York who decided to go to the Trump rally when he saw a tweet from President Trump in December he said there's going to be a big rally on the sixth and DC. He said, to be there. It

will be wild. So when when Fellows saw that tweet, he decided to go to DC. And you know, something really revealing that he told me is that, you know, while he does believe the election was rigged, and he has been you know, consuming a lot of said about electand fraud. His primary motivation was his anger at government shutdowns due to due to coronavirus, which I thought was really kind of fascinating. Yeah, that part was really interesting, William.

And I wonder to what it says about the idea of you know, there's so much psychology here right, like why were these people who many of whom are now apologizing, What what sort of sparked them to to actually make this move to to do something? Um? And and what did he tell you about that? Well, something fascinating about Brandon iss that, um, he had never been to a Trump rally before, and when he came to this U rally, he didn't even know that there was a march. He

simply came to see see Trump speak. So he quite literally got swept up into the mob um when he joined this march. And by the time he had already reached the Capitol, the outside perimeter had been breached. So you know, he walked onto the Capital law and scaled a wall and eventually climbed through a window to get into the Senate, And once inside, he got into the office of Senator Murkley at Democrats Oregon Um where he put his feet up on the table and smoked to joint.

Why did he did he understand he was breaking the law by doing that? You know, it's it's hard to know. He claims that because he wasn't being arrested while inside and in fact, the police officer gave him directions to the statue hall inside the capitol, that you know, he

was under the assumption he wasn't doing anything wrong. Um, you know, of course the kind of it's difficult to believe, but but you know, I think it's revealing he he did not think that he was going to get in trouble for for doing this based on the reaction of the police officers. You know. You you talk about in the piece that he's had some friction with his family

over this and over his beliefs. Like yeah, and I think it's it's it's probably something that we're a lot of us can relate to with the way that disagreements politically are are happening right now. Um, I'm wondering, after talking to him, UM, take us through like what he's planning to do moving forward? I mean, how do how does one move past an inflection point like this, Well, you know, I'm not sure in speaking to him if

he's actually grappled with the fact that he's done something wrong. Um. You know, and and you know, one of the reasons we know that is because he's planning actually to return to d C for for more events on the twenties surrounding the inauguration. You know, some people will say that that we shouldn't listen to people and and that by talking to them is platforming them. But I think they're wrong. It's actually really important to understand the psychology and motivations

of these people. And there's a really good example of that. I mean, these folks said that they planned to storm the capital on the sixth, no one listened to them, no one took them seriously, and then they actually did it. Um. So you know, I think just in general, we need to we need to actually listen to what these people

are saying. I mean, you tell his story. He lives in a converted school bus, he stopped working last spring because if fears of COVID nineteen um, and you said, you know, he became a disillusioned when New York State denied him unemployment benefits. I mean, we have we talked about the opioid epidemic in the past, that people who

were just kind of lost in society. I mean, we really need to understand these stories in these individuals who feel like there is no voice for them, and this is where the President in many large ways, you know, did speak to them, right. But I think it's also important to understand that these people are becoming radicalized by the Internet. I mean, he told me that he gets the majority of his news from YouTube. He pointed out

Ben Shapiro and Stephen Crowder. He also said he's recently started watching news Max and One American News, which have both promoted false claims of a rigged election. So, you know, the culpability of platforms like YouTube and Facebook, um and Twitter are are a parent in this In this riot, it's no different than forgive me because I'm hearing radicalized

by the Internet. It's no different than we talked about terrorists. Right, we think about nine eleven and after nine eleven that individual who being radicalized by the internet, we saw that as a bad thing. Yes, I mean a lot of folks who ended up joining the Islamic State were radicalized by YouTube. Well, social platforms certainly playing a big role in the organization of the rallies that we've seen recently.

And I love that William really talked about YouTube there, because it's Facebook, it's Instagram, it's Twitter that I've gotten so much for the attention parlor too. But YouTube has a big role in this, right exactly. And I don't think we thought about that instantly, but you're right to point that out. That was William Turton, Bloomberg News Cybersecurity reporter. All Right, you're listening to Bloomberg Business Week. Even though it felt that way, this week was not just about

news out of the nation's capital. That's right. The I p O market also often running with a couple of new issues this week, including one that was a reminder that pets are big business. You talked to Petco CEO. We did. Indeed, that's coming up next. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bomberg Quick Takes Tim Stinovic from Bloomberg Radio. We're gonna go

switch gears. We got to talk about some of the market activity that we're already seeing this new year, including once again an active market to take companies public amazing. Just a couple of weeks in right tim I p O market often running, we caught up with Bloomberg News

deals reporter Crystal Seed here about the activity. We we really are selling the year UM with very, very sizeable and hype profile I p o s. Just this week we have seen at least six companies when public in New York and that includes Petco and that includes a firm posh Mark. A lot of them are consumer facing companies.

We have seen a bunch of technology companies when public laid in the quarter, but let it be consumer or a tech is going to be a year of another record year potentially for I p o s. We already have seen, you know, certain companies come out and say that they have either confidentially filed or engaging advisors on listenings. So not only that, we are potentially going to see more direct listing given they are now able to raise the companies I would raise UH proceeds from from these transactions.

So all know it's going to be a big year for a CN for capital markets and UM it's it's the best, it's one of the best starts in the year that we've seen. UM so yeah, pet Petco and the adoption really helped them in terms of growth. And it's not just a short term um a short term um boosting revenue or in business that they're going to see. People who adopt during the pandemic are going to have the pet for the next decade or so, and that really helped them. And it's the same trend that they

see in suburbs and in cities. UM So in terms of expansion, UM millennial is getting pets and COVID definitely have been a driver. Peco a name that's going public for a second time and with a great ticker. We're talking about Petco Health and Wellness, which follows the pop prints of Chewi, which went public last year and Bark expected this year via Spack. Let's not forget that Chewi was a cover story at Bloomberg Business Week. I mean,

it's all about everybody's pets. I do want to say though, that the owner of the animal supply chain store Petco man they raised eight D sixty four million in that I p o Yeah a lot, right, and it returned the retailer to the public market fifteen years after it was taken private. The company which is changing its name to Petco Health and Wellness Company. In conjunction with the listing,

sold forty eight million shares for eighteen dollars each. Now after the I p O, Petco will continue to be controlled by its current owners that include CBC Capital Partners and Canada Pension Plan Investment Board. They acquired Petco four four point six billion from TPG and Leonard Green in two sixteen, a decade after those two firms took Petco private. It's one of those Harvard businistical scale studies. I gotta say, yeah,

absolutely is. It also speaks to the cycle of this stuff right, public private, private, public, right, which we see a lot and in the process, everybody's making a lot of money. Along the way, we caught up with Petco CEO, Ron Coglin and oh that ticker by the way, let's get back to that. It's w O O F. Let me start with what hasn't changed. What hasn't changed is the mission of the company to really improve the lives of pets pet parents has always been in the hearts

of the folks who work at PETC. But what's changed is we've really retooled the business um. Instead of being a big bag of dog foot in a cart type company. Were really become a complete partner for the health and wellness of a pet parent. We're really the only ones that can do that because we're the only ones who have a veterinary hospitals, training grooming that the online and the mass players don't have. We have the highest end food.

We're only retailers said, we're getting rid of artificial ingredients, getting rid of shot callers. And then we have strong e commerce and our stores which are now called pet care centers that more and more are working together. So here's an amazing fact for you eight. We're e commerce orders are getting fulfilled through our pet care centers, which just gives us faster to the customer and lower cost versus competition. Right, so you don't have to have these huge,

massive distribution centers. Yeah, we call it that's right. We call these micro distribution centers, and it really gives us a competitive advantage. We talked about it as forward deployed inventory. Ron. I gotta say I love dogs. Got my dog Scout. She's quite the spoiled little critter um. But what's interesting is that I've talked with the CEO of Chewy follow this sector because it has really exploded. We have definitely

seen it take off. Where's the most growth? Is it the health care side of it and the pet care centers? Is that it? Is it merchandise? What is it? Yeah, So you're seeing explosive growth and services. So that's where we're putting a lot of effort. We're building out the fastest vet network build out in history, really focused on the affordable vet care. Don't get the care they need because of affordability, So we're rolling out seventy um that

hospitals a year. So that's a big growth area. And the other growth area is around digital and that's where you know, we were growing before covid and we're growing last quarter and our digital offerings, so you're seeing that competitive competitive advantage come through. Listen, we know the pandemic. I'm sure you've asked me, asked this question a million times, so forgive me. The pandemic led to people adopting a

lot of pets. I know, as I walked my dog over the last year, the streets were kind of littered with you could see the various you know, pet retailers, E tailers, boxes. Everybody was buying things for their pets, argue at all concerned that as we all eventually get

back to work that maybe that focus on our pets changes. Yeah. So, so, first, we have three points three million new pets in America today based upon what happened in COVID and people needing a little more joy in their lives, and those adoptions and those need to be said, they need to be groomed, they need to be trained, and then they need to be vaccinated. So that provides a lift to the entire

category in terms of change of behavior. The good news is more and more companies and plays are talking about working from home, so that should be good. And more and more employers are becoming dog friendly. So we don't anticipate. And his history says there's not a lot of you know, returns if you will with live pets. Um so, and if if you know, we're we actively try to make sure that pets are put in homes or Petco Foundation saves four hundred thousand thousand lives a year from euthanasia,

and we're dedicated trying to eliminate euthan asia. So um, we're going to be a catalyst for making sure that nothing bad happens on the back side of responsible pet ownership. That's the thing that I think, you know, everybody needs to know about because, um, that is going to help you in your cause. There. Hey, brick and mortar, how important is that? Like I do, do you guys think

about that? You need to have to some extent, some saturation almost like a Starbucks where people if they're moving around, they need something for the pets that they see pet cos everywhere. How important is that to the business story for you guys? You know, we're comfortable with our footprint, but what I will tell you is our brick and mortar pet care centers are absolutely sources of competitive advantage. You think about it, right, they are the salons for pets,

they're the hospital for pets, or even the schools for pets. Um. So our services make you know, we get much more utilization than your traditional retailer. But secondly, now their micro distribution centers and they are providing competitive advantage for e commerce. So you know, people think of us in the past as a traditional retailer, but that's not where we are. We're services center and we're an eCOM fulfillment center. So they are providing strategic advantage for us. Just got about

fifty seconds left here. Investors paid up big here a lot of enthusiasm. Um ron, let me ask you. You guys had a net loss of twenty five million on sales of about three point six billion for the thirty nine week period ending October filings. When what's the problem? What's the path of profitability? And when does it happen? Yeah? So, first,

it's already happened. We grew net income the last two quarters. Uh. And the great thing is that all the proceeds are going to use to be used to pay down debt, which means our debt payments are going to get cut in half. So um, we were profitable in the last two quarters. And you know this will put us in even a better position. Okay, what kind of dog or cut do you have? Or what do you got? Yummy was at the ringing the bell today. He's a yellow

lab twelve years old, the love of our family. And so he's actually sitting by my by my feet right now, patiently saying when are we going home? Dad? Because we've been here doing the uh, the New York City quarantine. So we've been here for a while. I gotta say yummy, my scout and the rest of us can't wait to get out of warrantine. Put go CEO Ron Coglin, that company going public just this past week. That wraps up the first hour of the weekend edition of Bloomberg Business

Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovik. Still to come in our next hour more on social media clamping down on thousands of accounts. We'll talk to a social media toxicity tracker, the CEO of Writer plus the keeper of more than a thousand patents partnering up with household names. We've got the co head of the Family Office, Nottingham's Spurk on the intersection of innovation and investment. And this week's cover story, it is a good one.

Elon Musk loves China and China loves him back. For now, time will tell of that one and try January. Yep, it's a thing, I'm doing it. I know you are the CEO and co founder of Athletic Brewing gets real and breaks news with us. You brought him to our attention. Tip. Yeah, I've been drinking this stuff, not just in January, but it actually tastes pretty good and non alcoholic beer. It

has a bad rap, but it's pretty hot right now, Carol. Yeah, it helps with those morning schedules, right, It certainly does. I need all the help I can get, all right, So grab a non alcoholic beer, a coffee, or whatever your beverages of choice. More to come on Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio.

Hi'm Carol Masser and I'm Tim Stanovka Bloomberg Quick Take plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including John Nottingham on how his family office is taking disruptive innovation and partnering with companies to create new businesses and investment returns. Let's Tim, We've got this week's cover story. China has really given Tesla just an amazing amount of autonomy that most Western companies don't enjoy. The love affair between China and Elon Musk.

So far, so good, so far. Andrew g Anuary, it is a thing. The CEO of Athletic Brewing on that and breaking some news with us as well on his investors and his plans moving forward. Let's kick things off this hour with may have Be, former vice president of Mubadala, one of the world's largest sovereign wealth funds. As we mentioned earlier, one of our big stories this week social media and big text shutting down and blocking the accounts of President Trump and others. May's co founder and CEO

of Writer, which tracks toxicity on social media. A really timely conversation as President Trump's words and actions are behind this week's historic second impeachment. The conversation started off with more on what Writer does. We are an a I writing assistant, so we help correct language and in addition to stylistic and grammar type corrections, um, we will also

correct on what we call healthy communication. And that's a lot of you know, uh, stripping out paths of aggressive language and toxic language, mainly for a a workplace use case. So if our company has got a website right and is doing things that that's what you're that's what you're going through. You're making sure that their message comes across

in a you know, non toxic way. Yes, in addition to emails they may find their customers or chats in between, colleague, but we basically kind of pointed this very powerful technology at the Twitter stream to some interesting results. Yeah. And one thing that's really fascinating about this is you've been analyzing tweets since the election this fall, including the tweets from President Trump, from President Obama, and from President elect

Joe Biden. And I was surprised to see UM that Obama's tweets, even though they have been relatively muted, they've come out strongly against the events on Capitol Hill. You said that his tweets were classified as toxic between compared to us a daily average of less than ten percent. I was surprised to see that because I don't I

don't I wouldn't think of the President Obamas tweets as toxic. Explain, Yeah, absolutely, I mean what we tried to build was a data set where UM, inflammatory language on both sides of a debate is flagged, and you know, aggressive posturing, aggressive language is what gets UH flagged. And uh, you know, President Obama was absolutely very forceful in his condemnation and that's what we picked up on UM. And uh, you know, even even if you compare it to the ways in

which uh biben condemned um. There was you know, different different words chosen. UM. Now, of course that makes sense politically right. One is a former president, one is an incoming president UM for whom UM Uniting both sides of the country is something that he's wanted to do, but and both are in stark contrast to the language that you know. Trump is a regular But I want to ask you about that. But what makes something toxic? Is it using caps? Is it using exclamation points? What you

know makes something to toxic? Absolutely all of the above, Carol. So our models taken to account punctuations, addiction, since paths, UM, and then the actual words so UM, you know, stolen if it is in all caps, riggs regardless of how you write it, fite regardless of how you write it, UM. And then things that are you know, verifiably um, untrue, UM you know are also part of UM. Like it's flagged as as toxic. So what do you find when you tracted our you know, tracked what President Trump has

put out there? So there were there were some interesting findings. The first overall, on January six, all of Twitter was quite toxic UM. So thirty two percent of all of Twitter um was contained inflammatory of all tweets contains inflammatory um language. It was really interesting is Trump's contribution to that. I remember he had eighty eight million followers, and and beyond just kind of his immediate reach, things were ample.

Things that Trump tweeted were amplified by virtue of just the degree to which he gets liked in and retweeted UM, and so by by virtual those eight million followers. What we found was language amplified by him, which includes you know, steal, the steal, the word fight, the word rigged, um, we're actually president. And almost half of all toxic tweets on the six across the entire Twitter stream UM, which is

which is really astounding. I mean, you know, there are a lot of ways that people are looking at his band from Twitter and and uh you knows being called his d platform ization across all of tech um, and the reckoning for a Silicon valley, and the First Amendment is is really just beginning, all right, that increasing level of toxicity. I think, tim, this is gonna be a problem that's gonna stick around for a while. And I

think big big tech social media gonna figure it out. Yeah, and and terribly do think that after talking to May it's it's clear that this type of language is seeping into places that aren't just online. Right. I was kind of surprised by some of the numbers, she said, even among people that we thought would not have toxic tweets. But it's considered it once you do some analysis. Yeah, it's all about that natural language processing. I know exactly

n LP. Is that what they call it? Uh an LP? Yeah, I had to do it in my head there all right. That was writer, co founder and CEO may have been. You can hear that full conversation on our podcast feed. You're listening to Bloomberg Business Week coming up. There's a big boom in home product We catch up with Nottingham Sparks, co president on business innovation and product design. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg

Quick Takes Tim Stinovich from Bloomberg Radio. We definitely said it a lot on air over the past twelve months, how disruption in times of stress and strain definitely lead to innovation. Yeah, I like the silver lining to what's happening now here And one of our guests knows all about that. He his family office hold over patents of which have been commercialized, including the Crestspin toothbrush and Swiffer

sweeper vac. Come on, that's like a mainstain in everybody's homes or anything, especially during the pandemic when we're in our homes more than ever before. So we got up with John Nottingham. He's co president of the family office that specializes in innovation. It's called Nottingham Spurke. John also serves on the boards of the Cleveland Clinic Board of Trustees, Case Western Reserve University Technology Commercialization Board, and a lot more.

He's a busy man. This past year though, to him tough, but as we heard from John, it also opened up doors for innovation. You look at the current events and you look at you look at the world at face value, and you say, look, how does that affect me? How does that affect my my partners, clients and and UH co workers, and and you look at you look past the noise, and you look for for opportunity, and you know there is opportunity and disruption. So that's what we're

focused on. Well, tell me in terms of the disruption you're seeing and where that has led you in terms of innovation and opportunities. Well, you know, we have the core of our firm here is a product innovation firm. So we are vertically integrated to have you know, insights and design and engineers and prototypers all at one location in Cleveland, Ohio. And when we see an opportunity, we grab it. So give me. I'll give you an example. As soon as as soon as the pandemic hit, we said, okay, uh,

where's the where's the demand for product? We saw a hand sanitizer. Well, great, hand sanitizer is great, but but one of the one of the problems is you have to touch it to dispense the product, so you know who has touched it before that. So what we did is we fast tracked a product into the marketplace that's hand sanitizer, but you don't have to touch it. It just dispenses it right in your hand. That's pretty amazing

how we were able to quickly do that. Well, we because we're vertically integrated, we have all the we have all the engineers and designers and people, and we can just fast track it. We we grab a factory, we we get we get a launch partner and we just launched it. So if you go into Lows right now as an example, we we we launched it Lows. They bought everything that we could we could uh produce and uh you know the stack to the ceiling at Lows and then we're going to roll it out to other

retailers as soon as we can. We can catch up with the band. But we've sold million we've made. This didn't exist in March, and we're making millions of product right today. Yeah, it's pretty fascinating because you know, we focus so much. You know, we've been talking a lot about t vs and a ton of his vehicles. Like it's innovation often leads you to very very high tech stuff, but sometimes it's just some very simple solutions like what you guys are working on. Oh, it could be low tech.

For instance, we work with a number of portfolio companies that have product and you know they have they have margin issues. Well, we could go in and pick a look at that product, tear it apart and put it back together and uh delivered twice the margin they had before. Keep the price, but the margins multiplied. And so those are the kind of we have to react, we have to pivot we have to be nimble and we just have to react to the market as we see it today dot not not as we saw it yesterday. Your

customer today is different today. They're they're thinking different, they have different pain points, and if we can react to that before anybody else, we win. You know what has changed about the consumer in the last year that you think really stays with us longer term? Oh my goodness, I mean yeah, we're I mean, first of all, that we're everybody's at home, all right. Guess what? There is

a boom in home products. I can tell you specific Uh, there's a big booming home products, believing John Nottingham, President of Nottingham Spurk. It is a family office. It specializes in innovation. John still with us on the phone from Cleveland, Ohio. It is really fascinating to read about kind of what you're doing. John, and I think, you know, we think about investing in so many different ways. You know, obviously directly through the market you can go into a venture

fund and angel fund. But you guys really are there, you know, in the thick of it creating the innovation. How does it all work? How long does it take for you to create something that ultimately a P and G or you know, another big company you know, sees it and says, okay, we want to run with it. There's a product here for us. Um how does it work? Well,

you know, it all starts with a customer. You know, you look at you look at the customer and like we said, today's customers is thinking totally different than than than that customer was a year ago or six months ago. And you've got to sort of tap in. So we bring customers into our innovation hub, into our center. We have a focus group. We watch them through a two way mirror today and we say, what what is their pain points? What are they thinking about? What? What do

they want? And then and then we have our engineers and designers watching them, what seeing the twiggle in their eyes, seeing their their body language. And then we run downstairs and we build it. We we you know, we design it, we build it, we put it together, we fast track it through a factory, and we get it in that customer's hands as quickly as possible. You've got to strike while that iron is hot and be the first one out there. I have to say, there's a listener who's

hearing our conversation, said kind to ask him about Polar Delight. Um, I mean this is another thing that you guys were involved incorrect. Oh, yeah, so we've invented we've invented a new way to consume premium ice cream. Okay, it's not out there yet. We're working on it. We're fast tracking it, and it is going to change the way people think about ice cream the same way that carrig and espresso change changed the way people think about coffee. Just think

about it is something we'll have in our homes potentially. Uh, you know, probably it's gonna it's gonna it's gonna go out for two convenience stores first. But it's a technology. It's a platform technology, and platform technologies you can just grow and grow and grow. It's fascinating. Another listeners saying, Okay,

so are you guys manufacturing in the United States? Like, how do you kind of get your hands around some of the discussions we've had this year, whether it's supply chains, whether it's a thinking about kind of developing industries here, and you guys are obviously working on a global scale, but uh, the need for sustainability, the impact on climate, Like how does that affect some of your innovation that

you're doing. And obviously it sounds like, you know, you're looking at the consumer who now wants things like directly, maybe we want to cut out you know, e commerce just got kind of a kick in the pants over the last twelve months specifically, So how do you kind of work all of that in as well? Oh see if that see, that's what excites us. I mean, it's all about opportunity, right and so, uh so what we

do is, you know, we have this partnership with Ernston Young. Look, I think it makes sense that they see themselves as sort of Albert Einstein like in in what they're doing. That's Nottingham Spirit co President of the Family Office, John Nottingham. Very cool the work that they're doing coming up someone who knows also a lot about innovation and apparently tim how to get things done in China. Well, that's because the world's largest market for electric vehicles loves elon Musk

at least for now. TikTok. I'm just going to say that story coming up next, that's our cover story. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick takes Tim Stinovich from Bloomberg Radio. So Tim, this week's cover story. It's a smart one. It was

a team effort. It's about the love affair between Elon Musk and China, and so far, so good, and yet we got more from one of the editors of this story, Bloomberg business Week Features editor Max Chafkin, who joined us along with Bloomberg business Week editor Joel Weber. Like many stories at Bloomberg, Carroll, you mentioned this, there were a

lot of people involved to make it happen. The story is a real repeating, a real reporting, UM feat and the story is ultimately about how Tesla, UM and China find themselves in this little love affair. And UM hints why our cover line is China's favorite capitalist and that refers to Elon Musk and China has really given Tesla just an amazing amount of autonomy that most Western companies don't enjoy UM when they do business in China. And it's been rewarded UM by being able to have this autonomy.

And Tesla's behaved basically by by having its own Tesla Chinese operation basically become all autonomous within UM, within Tesla itself. UM but you know what what this really comes down to is, you know what's in it for China here and we'll bring Max in on that note. You know, one of the things that China has been able to accomplish here is to almost use Tesla as uh, you know, like almost like a whipping agent that it can kind of kick the rest of its ev aspirations into ligne

with Max. What what is the in game, um, both for for Elon and for China, do you think so? On the China side, Uh, there are there are a few things. So so one, as you said, Chinese government is very committed to electric vehicles. So so that means that you know, there are a zillion sort of incentive for purchases of electric cars as well as sort of disincentive taxes and that sort of thing on those who want to purchase um, you know, conventional vehicles, gas power vehicles.

So so China's got this I yeah, you know, this is just part of it. The sort of grand plan is is to create this gigantic um electric car industry. And you know, from the sort of Chinese economic policy maker point of view, having Tesla in this country especially and especially having a test of factory in the country, and that's that's one of the ways in which they really helped Tesla. You know, is a boon too to China because um, you know, it's it's not just the factory,

it's the supply chain. So on one hand, like Tesla brings added competition, maybe that gives a sort of kick to the other Chinese electric car makers, but it also creates this supply chain where you have the people who supply batteries and people who supply breaks you know, uh, software whatever, like all of that gets set into this this factory in China, and that helps the local economy. Um. You know. On the Tesla side, it's kind of the same thing, which is that this is a big uh,

this is a growth market. It's it's arguably, um, you know, the most important electric vehicle market. It's it's where right now at least you know, Tesla's growth is going to come from. And uh, what sort of makes this interesting is that, you know, Elon Musk has been able to really underappreciated. Part of about Elon Musk is that he's he's very good at politics. Um, you know, at a time when you know, there's been this trade war, when when lots of other companies have have struggled with China.

He's been able to kind of figure out a way to work it so that he's able to to open this factory, make Beijing happy, uh, and and sort of do do a lot of business. That The risk, of course, is that really at any time, you know that the scales could change and China could create additional restrictions or do all sorts of stuff that would make Tesla's life not so great. Could do other companies? Can other companies learn from what Elon Musk has has done in China?

How Elon Musk has been able to succeed in a place where so many American companies haven't been able to because they have to be so jealous Max, because it's been so hard for everybody else and it's taken a long time to kind of get any kind of foothold there. Yeah, I mean, I think that you know, Tesla had certain things going for it that that Ellen was able to

take advantage of it. I don't know that this is I'm not sure there's a sort of like a how to lesson here, to be honest, because um, Joel kind of hinted at this, but having Elon Musk open a factory in China has not just economic value to UH, to Beijing, it has kind of propaganda value, you know, at a time when you know, when sort of American

companies are dealing with you know, lots of hostility. When when when there's this trade war going on with Trump, um Elon Musk is able to sort of figure that out right. He was able to ask for more than pretty much anyone could ask for, and he he got something that no other car company had gotten, you know to date, which is trying to change the rules on sort of foreign ownership. UH and and Tesla use that to allow to to have a hundred percent ownership of

it of its joint sensure. So I don't think this is a case of of of must doing something that you know, other companies that could could emulate. It's it's more a case of must having things that China wanted. That's our cover story, And as we heard several reporters on the story, including Hayes Fan, a member of Bloomberg News is Beijing bureau who contributed to this article before being detained by Chinese authorities in December. You're listening to

Bloomberg Business Week. A new year often means new resolutions, like giving up alcohol. We'll hear from the CEO of Athletic Brewing on celebrating dry January. You gotta say, Tim, he got real with Us Brooks. Some news in fact, that story coming up next. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. So, Tim, we're gonna end our second weekend show together on a lighter note. Did

you know I'm guessing you did dry January. It's a thing. Yeah. I mean I've heard about it over the last years, and it's getting more and more popular. It makes sense happening after the holidays when we tend to, how do you say, indulge a little bit, just a little bit, especially this year, this pandemic year. I feel like one of the big stories has just been about, you know, everybody kind of tapping into their favorite beverage. Yeah, I

did it more alcoholic. Yes, at the beginning of the pandemic, there was a lot of wine consumed in our household. We've cut that quite a bit, though, And I gotta say we got to catch up with Athletic Brewing co founder and CEO Bill Schuefeld. This was somebody you brought to our attention, and he saw opportunity in the non alcoholic beer market and the timing is particularly right for

his company. Check it out. Going into the new year such a great time for people to kind of hit pause gold and thinking about what they want to achieve in the year ahead. That could be professionally, it could be with their diet, it could be workouts, it could be sleep, mindfulness, relationships, anything. And there's one pretty consistent variable.

If you pull alcohol and some unhealthy eating out of that, it makes it really easy to focus on what your goals are and like really kick start the year in a productive way. And it's a trend that's been increasingly popular, like exponentially so over the past few years. UM over US adults participated in dry January last year, and anecdotally it feels much higher this year. Bill. I know the company's in in sort of growth mode right now. Um do you see a big uptick in sales in January?

Typically we do, um YEA. So the average uptick month over month from January to December the past two years has been about UM. I will say this year, our website traffic is up about month month over months even Wow. So what does that mean in real numbers? Um? Yeah, So in terms of so it's estimated that over fifty million, over fifty million Americans specifically participate in dry January. But in the broader population three percent of US adults have

point one drinks or less per week. So there's a big misconception about the like the pool of adults who don't drink on any given week, UM, where non alcoholic beverages has always been thought about these really small penalty box markets like people in recovery, people who are currently not drinking for very specific medical reason, where really it's actually the majority of adults and the majority of the days of the week where not drinking may make sense.

And then at the beginning of the year almost more south where like those markets triple basically UM in terms of the category growth for non alcoholic beer, non alcoholic gear as a whole, including all the big macro brands that have been up forever UM it for so Athletic Bring launched in two thousand eighteen. UM non alcoholic beer group six percent in two thousand in two thousand nine, and in it grew over across the country. UM. We're but like as our company grows, wrapping a bigger and

bigger impact on those numbers. UM. The craft segments specifically grew three and nine percent last year, and craft non alcoholic beer an athletic kind of share of that market. Tim, you're a non alcoholic I am, and it's interesting. I'm not exclusively a non alcoholic beer drinker. But that's the reason why I wanted to get Bill on our show is because the way that my own habits have changed during the pandemic and also with with starting this new job,

which requires me to get up so much earlier. So what I've decided to do is actually not drink alcohol during the week. A friend of mine made the recommendation to me, who hosts radio very early in the morning, and he said, that is the key to a good night's sleep. UM, and I actually drink. I do drink athletic athletic brewing beer. UM. But it's also interesting because I've noticed that the marketing is not traditional beer marketing, right. This is a company that that seems to embrace the

idea of UM. It's sort of like you know, Bill, I think of out Agonia like the company Patagonia. When I see your marketing, it's very focused on like the outdoors and skiing and mountain biking. Um, what the environment tied to the environment. What is the message that you're going for, because, as you mentioned, it does seem like non alcoholic beer has has gotten a really bad rap because in the past, bad taste has been associated with it. Yeah, it's so funny, and it's like what the company was

born out of. It's exactly the occasion set that you're talking about. I was a huge foodie, craft beer guy. I loved alforts of social family, every like all sorts of normal occasions. But I also had this very serious stage job at a large hedge fund. I loved waking up at five o'clock, working out, being on point all day. I was starting to run ultra marathons on the weekend and really in that alcohol had a smaller and smaller place, But I still wanted a great beer I could have

during the week and wake up at five o'clock. And I quickly realized in cutting back on alcohol, I was sleeping right through the night for the first time in years. I was on point all day, my workouts were great and it was like the best life pack I'd ever uncovered. And so like my very normal modern adult lifestyle led

us in this direction to discover non alcoholic beer. And then when I got there, I found out non alcoholic beer, if you take out the alcohol, which is a diuretic and super dehydrating, non alcoholic beer is actually full of electrolytes, it's anti inflammatory, it's super low in calories. Our flagship Goldenhil's fifty calories and removed um, so you can kind of have your cake and eat it too and get a great night sleep, not of all the calories in

the weekend and stuff um. In terms of the brand ethos um, we really wanted to make non alcoholic beer positive and aspirational for the first time, and we're all about. The thing that made me go from like even considering quitting a very stable financial job was the positive impact we could have. And that's all positive impact on our stomers, health, activity, fitness,

and ultimately then their communities in the environment. And yeah, we've donate two percent of all sales the trail and park cleanups, and it's like in terms of being all

about being healthy active, outdoors and inclusive. Um, we only get one chance at this environment, and we are making a huge den as a company having it hard coded in our ethos from the start, and we'd really like to see more companies do that, honestly, Like two of sales isn't the biggest number in the world, but it makes a huge den But if you get enough people doing it, that two percent becomes something significant and impactful. Hey,

But one thing I want to ask you. When I said, like, give me some more of the numbers, you said website traffic up month over month. So are you guys profitable? And I'm trying to just get an idea because the non alcoholic beverage market, um, whether it's beers in spirits and things like that or just water and juice is I mean, it's massive. We have so many choices now a day. So I'm just trying to get an idea

of the financials for you. I'm thinking about our audience who are like certainly into this and they're looking for alternatives and disruptions, certainly in the beverage market. So give me an idea. Are you profitable? What kind of sales are you seeing, um, and where are you selling yeah, Um, so we are nationwise on our website. Um, we're pretty much the only true e commerce care platform there is because non alcoholic beer, we can ship direct the customer

nationwide off our website, which is a huge advantage. And that's been soaring during covid UM and with everyone shopping from home in we grew over despite having pretty much of our marketing ideas taken off the table. Um. And yeah, we finished in the mid double digit millions in revenue UM and we're planning to do over three times that

near ahead. UM. Yeah, so we're super excited that we're basically able to exceed our goals for the year, even even with the environment we're currently and and in terms of profitability, we weren't profitable last year, but a big part of that is we purchased a big facility in southern California where we could connect our production and really go national. Well let's talk about this production. UM, what are the what is the product lineup that you have

right now? And how are you thinking about expansion? Yeah, so we have two flag three flagships that have won awards all over the US and internationally, UM, World Beer Awards, International Beer challenge. Our flagship Run Wild ip A just won the gold in the US Beer Championship. They're all very approachable. UM are so our upside don golden nails, fifty calories crafted to remove gluten. It's incredibly like drinking slightly hotty Pilsing are basically UM a great crisp beer

for any occasion. Our run Wild i p A is a super approachable West Coast ip A, seventy calories crafted UM made with all organic grains. UM and that's probably our top selling beer. And then UM, probably our hardest to get beer is our Freeway Hazy i p A, which is now year round as well. UM that's available for subscription on our website. Capacity always was our biggest problem, especially in two that nineteen UM and through read that limited releases where they sell out online in thirty seconds

and people would be extremely frustrated by that. Yeah, it's good. It's kind of a good problem to have. I think it's good, but it's super frustrating. Well, it's certainly something those big name investors want to hear, especially if and when the company moves forward with an I p O. I was surprised Carell to hear that I p O is the direction that he wants to go. You don't see a lot of independent beverage companies going public. There are examples, but oftentimes they're scooped up by the by

the big guys. It's so hard because the network that's out there that's already established from the big play or is like they just dominate the world, and so it is tougher for the smaller guys. That's Athletic Brewing co founder and CEO Bill shoe Felt. You can hear that full conversation in our Bloomberg Business Week Extra podcast, and that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm

Carol Masser and I'm Tim Stanovk. Be sure to tune into the daily show Monday through Friday starting at two pm Wall Street Time, and be sure to check out our Bloomberg Business Week podcast feed wherever you get your podcast. You'll find other conversations from the week, including one with the Panasonic Corporation of North America Chairman and CEO Michael Moskowitz, who talked about some of the trends the biggest tech moments of the year, and don't forget. Bloomberg Business Week

is also on YouTube. Just search Bloomberg Global News and you can also see me on Bloomberg Quick Take available on Bloomberg dot com, slash Qt and streaming platforms like Roku, Apple TV, Samsung TV, and more. And you catch tim at nine and twelve noon Wall Street Time Bloomberg Business Week. We're available on newstands, on the Bloomberg and at bloomberg dot com. Stay safe everyone, This is Bloomberg