Bloomberg Businessweek Weekend - January 17th, 2020

in Japan. I gotta say that's one of my favorite stories. We really get into the details of how Carlos going his great escape from Tokyo, and we also get into because I feel like this story has gotten hidden, about the legal implications and the legal issues still facing Mr. Gone.

Plus you mentioned trade and impeachment and politics. We caught up with both black Stones, Steve Schwartzman, he was in the room when the trade deal was signed, and you caught up with New Jersey Governor Phil Murphy about the state of the state and the state of politics. We did, indeed, Plus Apollos greed it is this week's cover's story. It's a story that really hasn't been told, but our team they got the interview with Leon Black first to the

big story of the week. So, China has made substantial and enforceable commitments regarding the protection of American ideas, trade secrets, patents, and trademarks. China has also pledged firm action to confront pirated and counterfeit goods, which is a big problem for

many of the people in the room. And that was President Trump after the US and China signed that phase one of the trade deal, a lot of pump and circumstance down in Washington, a full room, the President name checking a lot of his friends there in the audience. Let's get more on the economics of the trade deal. Let's bring in Shawn Donna in DC with his story. And how now comes the hard part? After the handshake. We've seen the photo ops. This is the tough part.

Why is it so hard? Sean? President Trump is not the first president to make a deal with China. In fact, he referenced that when he was signing this, saying that he was righting the wrongs of the past, writing the issues that his predecessors had not addressed in terms of dealing with China. President Clinton, of course, brought China into the w t O. George W. Bush had his own

dealings with China. So did Barack Obama, who not only had a constant economic dialogue with China but also was looking for his own trade deals to try and deal with the threat of China. That was the Transpacific Partnership. The common thread through all of this has been that the consensus here in Washington certainly is that China just hasn't lived up to its promises in these past deals. And that's where the China moment is for Donald Trump. Right now, He's got his deal. Now will China live

up to it? And so what does enforcement look like, Sean, What does it look like on the ground and where does the rubber meet the road here? Right So, the thing that the administration says is very different about this deal, and the reason they think they can get China to live up to its commitments is this enforcement mechanism that's in there. Essentially, it sets the stage for if the U S has any complaints or any inkling that China

isn't living up to the deal. There's this kind of ninety day process of consultations at the end of which you can whack the Chinese with tariffs if you choose to. That's uh, that's good. That seems to be a mechanism

that could work. But it's also an unwinding of the kind of global system that was set up in the nineteen nineties, and that's essentially the World Trade Organization, which was set up to be a neutral arbiter in disputes like this, and the Trump administration is just going around that.

And that has big consequences for everyone else in the world because it means that that's going to reduce the credibility of the w t O and its ability to keep the peace and global trade at a time when the Trump administration is already undermining it by by failing to a point or blocking the appointment of of new judges. So there's big consequences for not just the US and China in terms of trying to get China to live up to this deal, but also for the rest of

the world and global trade. You know, I mean the whole idea of the w t OS to avoid trade wars. Donald Trump has gone down the path of trade wars. Uh, and now he's promising more trade wars to try and enforce deals essentially, if that's if that becomes the issue. And that's Sean Donn and senior trade reporter for Bloomberg Carroll. Let's turn now from trade to the twenty twenty presidential campaign. Here's Josh Green with the story on the Terminal and

online how Bernie Sanders is poised for an upset. You know, Josh, it does seem Bernie is out there to win this one. What's different about the team presidential race and his run to get the nomination versus today and Kenny Win. Bernie Sanders, who was all but forgotten about three months after he suffered a heart attack, is in first place in the race in Iowa. And yet I still think there's a sense in Washington and on Wall Street that there's no

way Bernie can possibly win. So what I do in the magazine this week is do a deep dive into Sanders and look at what is different about his race this time around. Uh, the main thing is he's running to win. Last time around, when he was running against Hillary Clinton, he was in the race. I think more to make a point, but the key takeaway here is that Bernie is playing to win, and he is actually in position to be able to do so, and Josh tell us about that Warren v. Sanders battle that is

shaping up. While I was out there in Iowa, Politico reported that Bernie's campaign had been giving it surrogate's talking points, telling them to tell voters to attack Elizabeth Warren as an elitist and somebody who couldn't unify the party and beat Donald Trump. Uh. That is a harsh attack from

someone supposed to be an ally. The story went public, and it looks like in retaliation, Warren's camp leaked that in a in a private meeting between the two of them, at the beginning of this cycle, Sanders had said to Warren, I don't think a woman can win this race. Now, none of this was ever spoken of. It only came to light a few days before this past weekend's debate, and it's set off a firestorm, as you might expect, with the political press out there putting pressure on Warren

to say, you know, is this true. Well, after about a day of being quiet, Warren put out a public statement. It was like pouring gasoline on a fire. Josh, thanks so much. That's Bloomberg's Josh Green. He's been following the comings and goings of the presidential hopeful, certainly the Democrats. And I think this one's an interesting he focused Remember last year, Josh focused on Elizabeth Warren, that great story.

But it's interesting to see how there's a lot of attention and for good reason, being paid to Bernie Sanders well in the clash between Bernie Sanders and Elizabeth Warren seems to be one of the most compelling storylines out there right now. You know, I feel like this Carlos Gohnes story, Carol, every time we think, wow, that's the most interesting thing I've heard, or what a twist or what a great details, it is not uh, And thanks to some stellar reporting from Matt Campbell, there's just a

constant stream of new information. He led a team that put together a really nice pieces then this week's magazine, on the Blueberg Terminal and on Blueberg dot Com. Today, Matt joins us on the phone from Bay Route. He's still on the ground on the Gun story until Webber, the editor Bloomberg Business Week, is here with us in our Bloomberg Interactor Broker Studios. So Matt, I gotta ask you, especially since you have the perspective of really being in

this story. What's the thing in this story about the escape itself that you really just zero in on as the as Carol Master would say, whoa moment. Well, I think there's there's quite a lot to say wow about in the story. I'm interested in in all the scenarios that were examined to get Carlos gone out of out

of Japan. There's some discussion about and was published notably term of sun discussion of actually buying a cargo ship and sneaking him onto it, so that was rejected as too complicated, and in the end they did get to this very dramatic private jet escape that we now know a little bit more about, which you know. This to me, Um and the wonder of this story, it's like we all these little dribs and drabs that have come out

over the last week and change. Actually ever since the story really broke at the beginning of the year, you know, we've all been captivated by part of what made this

be Um. I think this epic part three of this story that Matt's been kind of shepherding, is this inside the plan of of how to get how to get somebody out of the country, how to extract someone and you know, it's a very movie esque, but you know the reason it can be movie esque is because of like real reporting and and Matt, can you kind of walk us through how the story opens. Well, so the story opens with a security contract or an Asia, uh, someone who does this kind of saying s quoting v

I P s as protecting cargoes. He gets a call a few months ago from someone he knows who's looking to hire for a job in Japan, looking particularly to escort someone out of the country and looking for operatives with Asian East Asian faces particularly, and and the security contractor was sort of noncommittal, and no one really came to mind, and he never really thought of it again.

So of course he saw the news along with the rest of the world on New Year's Eve, and that's when you connect the dots and and uh what you know, one of the things that I've been kind of captivated by and this is like, obviously Carlos going had the means to actually, you know, fund something like this, but what what kind of what would it go down for? Like what what is the service actually cost someone? Well,

that's that's a very good question. One estimate that I've heard, uh, was fifteen million dollars, which when I first heard it sounded insanely high. But the person who was proplaying an estimate to be that then took me through the mass. And and one thing that you have to add at every point in that calculation is, for lack of a better term, a risk premium. This is flagrantly illegal. Everyone involved could be exposed to arrest obviously, uh. And people

need to be compensated for that kind of risk taking. Yeah. And when you say everyone, we've actually got some names. You've got a Michael Taylor and then you've got a buddy of Michael Taylor. I mean, we've got names on the individuals who are believed to have helped Carlos Gone get out of Japan. That's right, so far, just two names, Michael Taylor being the leader of the group. Very interesting

guy with a somewhat checkered history. Uh. Former Green Beret, very experienced Special Forces operator, ended up in the private security business, but actually ended up going to jail in the Mids over federal charges to do with allegedly bribing his way as to a contract in Afghanistan. So really, someone has operated in some gray areas and they pulled

off this amazing coup on behalf of Carlos Bone. So I mentioned earlier that this is sort of the part three in the Magazine of Carlos Gone trilogy that you've basically been steering from the moment. Uh. You know that Japanese officials basically arrested him on a tarmac year and change ago. Um, so, what what have you learned? And what is what is this escape? What you know? Put put it all in context? What what does it mean

for uh, for people to know? Well, I think the big scene here is that he has now turned the tables. Over the last year. He seemed pretty helpless, this real Titan business is very respected corporate figure, was suddenly just completely at the mercy of the Japanese justice system. And and none of all these none of the advantages he had, money, connections, access to media or whatever. It didn't see the count

for anything. And it was, you know, really a tale of a guy kind of alone, kind of abandoned and facing a pretty grim fate that's now completely changed. He has gotten out of the threat of being sent to a Japanese prison, though he's certainly not out of the woods yet. As as we discussed in the story what right, and and I want to end on that note that if we can, I mean, not out of the woods, because he's essentially, without overstating it, sort of a different

type of prisoner at this point. By by some accounts, he's not free to go in any sense. Right, Well, he is, Jason certainly free to live here in Lebanon, at least as far as we know there. There is a judicial proceeding that is going to run its course here, but it's very unlikely to be extracited. So he is, he's fine to be here for now. Uh. He certainly can travel anywhere, except perhaps to France, where he's also

a citizen. Uh. And the other thing is, you know, his reputation has not yet been rehabilitated, and I think if he entertained thoughts of a comeback, which which he very well might, there's a long way to go to that. And I'm just gonna say, as you so rightfully, including your story, it's another case of the winner take all in the game of twenty one century capitalism. If you've got money and means, you can get yourself out, Matt

just quickly. Indeed, Yeah, well it's it turns out that, you know, we were very surprised and you have that he couldn't beat the system, but he was able to exit the system, which is not something that's the most criminal. The other option, if you can't beat the system, just change the system altogether, exactly. You got to get in the box. That's Bloomberg reporter Matthew Campbell and Business Week

editor in chief Joe Webber. Jason, this story just gets more and more interesting, and I've got to take my hat off to our team here at Bloomberg who has done great investor gate of journalism and is really getting to the details the names of the individuals behind that great escape of Carlos Gone and how it all came down. It is now approximately three weeks since Carlos go in the ousted head of Nissan and Renault escape from Japan.

And while we're all obsessed Jason easily with the Hollywood like feel of this story, real story, there are still something we can't forget and that's the legal side of this story. A lot of questions still, absolutely and we've talked a lot about, as you say, the escape, the dramatic you know, sort of in the box literally like getting to Lebanon. But what happens from here from a legal perspective, that's what we really want to dig into. Now.

Greg Farrell is here with this. He has unpacked this in a way that few have and is here to provide some historical perspective as you look at this, what are the key legal issues here? The case against gone is not like a lot of cases brought against CEOs in the United States, where it's a clear case of either inside or trading or accounting fraud in order to goose up or an so that you can get your bonus, the end ron stuff that we all remember from fifteen

twenty years ago. The case against Gone h is unusual in so far as it's a he's been accused of helping himself to more money than he deserved or somehow finagling away to get the board to approve or unbeknownst to the board and even bigger pay packages than he

was entitled to, which is uncommon. It's seen rarely here. Basically, to my mind, it brought back the case against former Tycho CEO Dennis Kozlowski and his CFO, brought not by the federal government but by the Manhattan District attorney Bob morgan Thou back in the oh four oh five era, and that was kind of a messy case. It was not clear they went after him on books and records issues, etcetera. But we did not have that clear resonance that an

accounting fraud securities fraud case has. Tycho shareholders were not really burned by this, Yes, Becauselowski helped himself to more money than you know, the board had a proved But unlike Endron, unlike Health South, unlike some of these other world calm, Tycho was a real profitable company and his shareholders were doing well. So this falls into that category. Going was accused of helping himself to more than he

deserved and basically parleying his position to enrich himself. Another thing that was missing from you know, morgan Thou's case against Tycho, but clearly present here is the plan and Carlos Going referred to this in his press conference last week, to basically fold Nissan into a wider global automotive group that would basically, you know, uh, remove the essential Japanese element from it or make it less of a Japanese champion brand that had been and you know, I think

He's actually got a point there that this is something that didn't go over well. But it was in the works. It was in the works. It was in the works. It's more than a coincidence. I think that this very aggressive regulatory legal action and prosecution of Going took place at a time when Nissan was, in fact, you know, drifting towards becoming an international brand, unless of a Japanese brand.

What's interesting, I want to go back to what you said of you know, perhaps Carlos Gone helping himself to more than he was allowed. Is that a simple legal

case to figure out? In other words, do you just go back to the employment contracts and here's what they say, you weren't allowed to have this house or so and so forth, or when it comes to this kind of thing, because I could certainly see with a board that's really happy with its CEO, and Carlos Gone was lauded as this incredible auto executive in the industry and really globally

as an executive. And I do wonder whether it's like, oh, yeah, we like him, Yeah you can have that, or you can do this, Like how do you go about legally proving it what's required? There are a lot of wiggle room. How You've made a very good point here, and that is he was a superstar CEO by the time this all unfolded a little more than a year ago. And as you pointed out in his press conference last week, UH, somewhere near twenty books have been written for case studies

in business schools about his phenomenon. We would ter you him saying, what a right, But this is at the far end of a twenty year reign. Certainly, when you have that much success over a period of time, Uh, there are certain realities that happen. We've seen it here in the US with very powerful uh you know UH CEOs who developed sort of a there's a hero worship.

And after a while, technically all you know, boards of directors are independent, but over particularly twenty year period where you know, new board members come on, etcetera, after a while, the board becomes, if not a wholly owned subsidiary, far less of an independent watchdog. But then what you know, shareholder activists would would like us to have, they do become that becomes a very comfortable relationship between the board and the CEO because everybody's doing well, why rock the boat?

And in that gray area is um whether or not you know, uh, Going is entitled to this h the board, you know, So there'll be different claims if this ever went to trial, that the board was not aware that he paying himself, that Going could say no, why I told them this, or they knew that, or we had a discussion at the end of the last board meeting where I said I'd be interested in this, but the money went through and somebody yes, exactly. And there were

lawyers for every board meeting, in board minutes, etcetera. So these are not like secret meetings that happen and people forget um. So you know, that is a very great area. And that's Greg Ferrell, one of the legal legals here at Bloomberg. And what I loved about his conversation was he put it in context, historical context. He's followed everything from Enron to Tycho, and those connections that he made

to the Dennist Kauselowski story I thought were fascinating. I also think it was funny that in starting to talk with him, he's like, wait, I had to remember that there were charges. What were the charges specifically against Carlos Go And so he gets into the particulars. So obviously

a store that continues to evolve, it isn't over. As you said, Even if you don't know Apoulo management, you probably know some of the company's targets, right Jason, We're talking about Horris Casinos, Claire's jewelry stores, Linen and things. This brings us to the cover story this week, it does, and it's really an unbe leavable story that's never been told. Leon Black, one of the key figures in the world of finance, in the world of philanthropy, and certainly in

the world of private equity. Caleb Melby and Heather Pearlberg wrote the story. Caleb here with us in New York City, Leon Black, Where to begin? Where did you begin? Indeed? Yeah, Heather and I it took us months to to put this together. Um, and we approached it in the summer

being like, here's this guy. He was in the news at the time because of his affiliations with Jeffrey Epstein, and like his name was in headlines everywhere, and it was suddenly of much broader interest to a much broader group of people, and we were like, do people know who he is? Like what his story is? The fact that he's been at like all the key junctures in

like American financial history for like half a century. Um, So we went and you know, we started talking to people all the way back to the nineteen seventies about Leon his story, how he came to be one of the most powerful and ruthless people in American finance. And we do want to take that step back. I mean, who is he today? I mean he is when it comes to private equity and investors, I mean big deal, but someone who's been very quiet. Yes, yeah, he is.

In private equity. There's there's some people who you can think of as kind of ambassadors for for that line of work, right probably Steve Schwartzman, chief chief among them. Leon Black has not shouldered that responsibility to tell the industry's story or anything like that. He's very adverse, uh to the press, and we learned about why when we talk to him. But yeah, Apollo Global Management now has three billion dollars under management. That's a figure that's grown

sixfold in the last decade. He wants to get up to six hundred in the decade after this one. And he's worth almost ten billion dollars now. He's chairman of the Museum of Modern Art, which in in I feel like New York society culture. If you want to be the head of a cultural institution in the world, that's a big one. That's a cover position. Yeah, I've kind

of been thinking about it. Is like the iron throne for Game of Thrones, for for like the royal houses of Manhattan for sure, um and and yeah, mostly he's done that. Yeah, much less in the public eye than his contemporaries, um and uh. Apollo also has a reputation across the street, across the realm of finance for for playing harder ball than some of his contemporaries as well. And so let's talk about some of those junctures going

back through history. For for Leon black And one of the most notable is his time at Drexel Burnham Lambert at the foot, at the side. However you want to characterize it of Michael Milkin, you know, a definitive time in American finance. As you say, remind us why Drexel is so important? Well, yeah, he he learned under Michael Milken and h He also served as banker to some of the most important corporate waters of the nineteen eighties.

He was banking for Henry Cravis. He was banking for Carl Icon, who would become something of a men tour. They'd go on vacations together, play poker together. Um. And Uh. Of course Drexel is one of the most famous like low points you can probably say in Wall Street financial history with the trial of Michael Milken, it's bankruptcy and

everything else. Um. But also with the time heals all wounds Michael Milken, Leon Black, a lot of these guys there now you know, they're that's all in the past, and and they've risen to become kind of like lord and master of of Wall Street. And the Drexel part of the story I think is really important because it's success and essentially creating the junk bond obviously, and the junk bond market is critical for what comes next and what comes comes next for Leon Black. But also, and

you alluded to this, the dissolution of Drexel. The bankruptcy makes Apollo possible absolutely so when Leon uh first strikes out on his own right around, it's all with like Drexel survivors essentially and uh. And at the same time, there's this credit crunch Uh in the economy and all of the companies that had been bought or we're sitting on piles of high yield debt, we're now in trouble. And a lot of them, a lot of that debt

was issued by Drexel, sometimes by Leon himself. He knows which are the good companies, which are the bad companies, And now all of a sudden, they're all struggling and the game is no longer mergers acquisitions l b O S is about buying that distressed debt and using it to maneuver to take over these companies. And he's had a front row seat as that that was being issued.

And now he forms what's actually called line advisors at first, but then later becomes Apollo uh To to go in, working with backing from Credit Leon, a French bank, to really start to rifle through these distressed companies. And he Apollo's really big value at is that they're going for the ones that are so distressed that his competitors, your

Cravis is your icons are not touched them. And he's going in there and he and his team are willing to, you know, go through the restructuring battles, go through the bankruptcy battles to try to make a profit off these companies. And I do wonder too, write he's been at the right place at the right time and kind of understanding the marketplace. Um, but I also do wonder Caleb that you know, he has kind of done a service in terms of going after some of those companies that maybe

some of the other private equity firms weren't interested in. Sure, yeah, yeah, he would. He would argue that, um, they are the truest value investors in private equity, right that that the way they think about value is you find a distress situation that you are uniquely capable of heading into and turning around, and that's going to lower your downside risk because you're buying it for so cheap and hopefully also

boosting your chances of return later on. And one of the things that Apollo has notably done and with you know, full permission from their investors, is they have had the ability to invest all around a company in many ways, not just buying at what he not just doing sort of a plane vanilla leverage file, but they're buying credit.

Often they find themselves at different times on different sides of a deal, right, absolutely, And that's true for Apollo itself, and it's true for Leon as a person too, so so so, yeah, he was He worked with companies and executives while he was issuing the debt at Drexxel, then then at Apollo, buying into those companies, as you say, multiple different ways through equity, through debt um and then he continues to run into the same people all throughout

the next few decades. Um he's sometimes competing, as he would later do with Icon for control of a company or partnering with them. So, okay, I think what's interesting about this story. There's so much because you do go into family history and and so on. What I also think is just novel is that you actually sat down, You guys sat down and talked with Lion Block Black. This is someone who doesn't give interviews. Tell us little

bit about the experience and what you got from him. Yeah. So, uh, Heather and I got to go sit down with Leon at his office at nine West fifty seventh Street. Uh. Something that struck me. It's kind of kind of a joke in financial journalism, knockout views of Central Park is a phrase that gets dropped into a lot of stories. This was the most stunning view of Central Park I have ever seen, like the whole park splayed out like

a bocce ball court right in front of you. Truly, the most amazing um views I've seen in a Wall Street office reporting here. But he um uh. He was incredibly clever, uh, funny, very obviously intelligent um, and was very interested in trying to communicate to us that he he felt his company was misunderstood. That's the first line of your story, yes, which is exactly what you said.

That the most feared man in the most aggressive realm of finance, he wants to know why he's been misunderstood, right, Um. And there's a few things that play there. One we we we deal with this idea of risk and who bears risk in any private equity deal, and who bears risk in in Leon Black deal specifically. And he makes a very good point that well, Claire's or Linen's and things or whatever may be a distressed asset that appears risky.

Of course, the way Apollo goes about it does not mean Apollo itself or Apollo's investors are bearing a lot of risk. Right. You put a little equity in, you get a lot of debts shift shift shift that that risk to to your creditors and then of course to the target company uh itself. Um, and and we we came with a lot of questions. Uh. But that was the thing that really really animated him, and and I really seemed to both excite and aggravate him in a

way that I found surprised. The notion of risk and the misunderstanding. Yeah, yeah, the misunderstanding of of him and his company and and and and yeah, as we said, a part of those because he is not proactively told his story in a way that a lot of his

contemporaries do. And and when I was talking to other people around the company, they'll say, okay, Caesar's because casinos something like at there's only one Apollo and there's like, you know, two dozen creditors who all hate how all Apollo is going about their line of work there, right, So so they feel like there's there's a definitional like numeric sort of imbalance and how how their story gets told.

That's Caleb Melby. He and Heather pearl Berg did this cover story, Jason, and what's wonderful about it is, uh they spent a long time on it. There's so many details about the man, his background, his family, uh, and really how he got to where he is today. And what's fascinating too is and we talked about it with Caleb, is that they actually sat down with Leon Black and

this is not something that Mr Black does often. The insights that they got into him, into the firm, into the implications of the business, both there to follow and into the broader private equity world totally fascinating. We should mention you can get all of our conversation with Caleb Melby takes you even deeper into the story. It's our Business Week Extra podcast this week, so download that wherever you get your podcast. I got a chance to catch

up with Steve Schwartzman. He is, of course the co founder of the chairman and the CEO of the Blackstone Group, a confidante of President Trump and of President she He played a little bit of a shuttled diplomacy role throughout these long trade negotiations. He was in the White House for the signing. Here's what he had to say, This got to be a deal basically, uh, because it's been going on for three years, uh since we really started this. Uh, it was two days before Davos three years ago. UH.

And uh. So so we've had a lot of near missus UH, a little bit of success, and now a lot of success. UH. And I think it takes a while for each country UH to figure out what it really wants to get out of a trade agreement, what it wants to get out of the compliance um uh the opening of its markets. UH. And for China, you have to remember that the US in China, other than the World Trade Organization deal in two thousand and one, fundamentally hasn't had a trade agreement since the nineteen forties.

So what's been achieved is very very significant. The two countries want to work together. That's that's a huge change. UH. That tariffs are starting to be reversed their U. There are major purchases of things of not just agriculture, but other things. Intellectual property has been reversed. Separately, the conversations in December regarding fentanyl, which is killing over fifty thousand Americans a year in China is really made huge strides

to cut off the supply of fentanyl. And and so what we're seeing is our countries that are competitive but also have this huge relations and ship trade wise together these two countries. Hard to believe, uh, the way you depending upon how you calculated between thirty five of the world's economy just in two countries. So the idea of decoupling uh and everybody going their own way on virtually everything is impractical and it's also not good for the

world economy. So so what the two countries have done now is figure out where they can start the dialogue, how they can implement it, uh. And it's a very positive feeling. This wasn't a grudging type of deal that's been entered into. Alright. So Steve, obviously you've been playing a bit of a role of a statesman going back and forth between these two leaders that you know very well. At the end of the day, you're a businessman, you're an investor. What does this do for you as a businessman?

As an investor sitting at Blackstone? Does it amp will find? Does it accelerate investments that you may be making around the world and specifically in China. Well, what it does is it provides a baseline of of a better world economy, and I think you're seeing in the markets over the last sort of whatever you want to measure, UH, you know, the last year, certainly the last few months as this

agreement has come together. It's not the only reason for strong markets, but it's it's the business community globally UH telling you that things are better now in terms of prospects than they were before this agreement was entered into. And so when you think about Phase two, and we'll see when that gets started, what's the most important thing for you to see as an investor in a business person? Well, I think UH, phase two will cover a number of

other things, which which which are important. UH. You know, things that that you know have not been resolved. There are some issues you know regarding UH cyber and non tariff trade UH restrictions and and and also tariffs themselves have not been fully negotiated out UH in terms of where you go when these things UM all unlined, assuming you have a successful Phase two, and there are other

issues as well, UH. And so what's important as a business person UH is to know that there's positive momentum. There are countries who realize that even though they may be rivals in certain areas, that in the commercial area, as much cooperation on as fair a basis as you can do is better than than countries just sort of breaking apart, which is which is deleterious? Uh, world trade and for business. And that's my conversation with Steve Schwartzman

there on the White House lawn. Interesting of course, he is a friend and confidante of the President. He's obviously very pro this deal. He worked on it. But interesting to see what the implications are for his day job, you know, running the world's biggest alternative investment manager. I gotta say it was just interesting to see who was all in that room in the White House as that trade deal with signed A very telling story. It is

the second most popular dating app in the US. It's supposed to offer women a better option, but does it. We're talking about Bumble. It's the subject of a feature in the magazine this week. Clear set Of wrote it and it is quite a tale. She's here with us in New York City. Alright, where to begin? I guess let's begin with what is Bumble. Bumble is a dating app, is also a networking app. They have like a platonic

version and a professional networking version. But essentially, you know, you swipe right or left if you like people, and if you do, you go on a date, you can message them. Um. But it's defining feature that it was founded with is that only women can message men first. So if you swipe right on a man and he swipes on you, the woman, it's on her to message him. Supposedly,

this is empowering, This allows women to guide the conversation. Um. But the issue is there's not really any evidence that it actually is empowering or that it's doing what it claims, which is supposed to be flipping the script, you know, giving women more power and relationships. Right, And I feel like she's really on a mission to kind of get rid of harassment of women on a dating website and you know, maybe a big more broadly like on social media. Right,

there's a mission. And the she we are talking about, Whitney wolf Heard, she came from Tinder, I mean, which is an important sort of historical note, right. Yeah, So Bumble has like an amazing origin story, which is um, it's founded by this woman named Whitney wolf Heard, who when she was twenty three, she along with some other people, co founded Tinder. She was first vice president of marketing. She's sort of engineered tenders like initial explosive app especially

in college campuses. UM. She's sued Tender for sexual harassment in UM. There was an undisclosed settlement, no admission of wrongdoing. UM. But you know, she received a lot of harassment online during all of this, you know, people calling her names, death threats, etcetera. So when she found a bumble, she really wanted to combat harassment online and just make a place on the Internet that's safer for women. And is

she I mean, that's the really the big question. I feel like you're trying to get to and you look at the culture of the company because there's been concerns about that and whether or not she's making a difference on social media. Yeah, and this story, I will say it took me a long time to report because initially, when when someone tells you, you know, we're making the internet safer for women, we have all of these policies in place, you think, Okay, there's the data that sounds great.

You know, they've banned hate speech. UM. Women have to message men first, so it's harder for men to in theory anyway harass women. UM, at least out of the blue. Then the more that I looked into it and I would ask for proof, I couldn't actually get them to provide me with any explanation for how this worked. Eventually, at one point UM they did tell me their abuse rate, which is the number of people who are kicked off the app for violating these hate speech and harassment rules,

is seven to eight percent. But it's been the same throughout the entire time. So they've instituted these policies and not much is really changing, And there's no real benchmark for that, right because we don't know what that rate is that other dating sites right exactly. And you know, I talked to UM a couple of dating sites off the record, and they said, well, we don't know how you can compare us because we all have different terms of service agreements and different user bases and that sort

of thing, which it was there. But the reason why I started asking these questions is because former employees were telling me Bill Bumble doesn't actually check to see if anything that it does makes much of a difference. And once I heard that from many people, I started to sort of rethink, Okay, so what does it mean. You know, one of the things that Bumble does is it bans shirtless selfies. So their explanation for why they baned shirtless selfies.

Is that of the accounts that are reported for bad behavior have these shirtless selfies in them? So they banned them, but you could just upload a different picture. There's no real I mean, how does that mean women are safer just because you can't take your shirt off into photo anymore. So they don't have any explanation for how this actually

benefits anyone. I want to go back to the culture of the company because it in part rests and part of the narrative rests on where the company sits sort of Organizationally, it's part of a larger company now and in fact, Whitney Wolf heard has essentially ascended to to an even higher position. Tell us about the company and the parent company. Yeah, so if you've heard anything about Bumble, you you might know its origins story. But actually from the very beginning has been Um, part of a larger

company originally called Bad. In June there's a structure change and now it's called Magic lab Um. But but Do is a London based dating app that runs primarily I think in Europe and Latin America. Bumble was started sort of after the fact and has always been built by Bad engineers in London and then marketed and designed by Herd and wolf Heard and her team of women in Austin. So it's this weird mix of you know, it's a scrappy startup, but it's also not And but DO was

run by a Russian billionaire, right, so many fun facets. Yeah, and BED has its own culture problems. There was a great Forbes article a few months ago about um allegations of sexual harassment over there and just the lack of women's ability to advance the workplace at the DO. And yet here's Bumble this like, you know, beacon of equality, Claire, when you set out to do this story, I mean part of it sounds like you wanted to know a little bit more about this person and the and the

identity behind Bumble. I mean, tell us about your mission kind of what you what you hope to get out of it? What do you think you ultimately got out

of it it? Yeah, I mean so I came to this story because I had read all of the great press about Bumble, and I thought, while they are doing so many great things, and let's take a look at this company, because if we can figure out what Bumble is doing, we can figure out, you know, what other companies should be doing or how they should be changing their mission. But the more that I looked into it, the more

I realized these problems are really complex. I talked to this woman who is um an expert on trying to eradicate hate speech, and she talked about working with Facebook, and there were specific terms that Facebook wanted to make sure that people couldn't say derogatory, but also some of those same terms people throw around at each other in

a sort of endearing kind of way. And so if you decide to scrub that entirely from Facebook, you are capturing of the posts that use it in sort of a nice way, right, nice but whatever, um so, non non threatening, jokey kind of way, friend to friend. And so what she was saying is that, you know, to do this is much harder than just banning something. And when I heard that, I thought, Okay, well, mostly what

Bumble does is banned things. They don't have any explanation for how that actually works her high how that's beneficial. So I'm not sure that they're really solving anything. That's clear. Setteth who did the story on Bumble, and you can find that story online and also on the Bloomberg terminal. Interesting this woman young, she was a co founder of

Tinder and here she is behind bumble. But it's interesting about a company that sets out with a specific mission UH and cleverly digs into does it, you know, live up to that mission and does it create what it promised well? And this is a story that's ultimately about the culture of the company, sort of the culture of the world we're living in right now as well even lawmaking to some extent, and how corporate influence can play a role there. So New Jersey Governor Phil Murphy, he's

heading into his third year. UH. He did give his State of the State. I caught up with him. Talked about a variety of things that are going out of the state, but we kicked things off with talking about that US China trade deal. Here's what the governor had to say. Trade impacts US, UM significantly. We have one of the biggest ports in the United States. UH. And so for that reason alone, never mind our other goods

and services that are made in New Jersey. UM. I believe, UH, at its core, there are legitimate issues with China period UM. And and that's that's not to me in question. What has been in question is how we've gone about that UM and I have not supported the approach to this. I would have signed on the dotted line UH A lot of what was to go shade of assuming labor and consumers were protected. I would assigned what the Obama

had administration had worked on. But having said all that, lowering the trade temperature, as you suggest, taking another distraction off the table, I think is a good thing. I'm not qualified to tell you that this is a good trade deal. Again, I look at any deal through the eyes of consumers and labor, but putting aside the specifics, anything that can lower the temperature I think is good. Governor, talk to us about your kind of what I see is like two objectives with his Jobs Jobs New Jersey

Plan UH an initiative. It is about helping employers access talent. It's also about helping residents that are in New Jersey develop the skills. I hear this across the country that everyone is working on these initiatives. What specifically are you going to do to help New Jersey residents have the skills that they need for the jobs that are in demand. Yeah, you've got it exactly right. First, of all. So the notion here is this is what employers need for the

the econom to me of tomorrow. These are the employees that we're producing with the skills they've got. How can we as seamlessly as possible shrink the gap and make it line up as as best we can? You're write, lots of places are doing this, but no place starts where we start. Number one public education system in America, highest concentration of scientists and engineers per square mile in the entire world, a diversity unlike any other American state.

We just got ranked to be the smartest state in the nation. Uh. We start in a very good place, but again, getting that match to work. I can't tell you how many ceo s board chairs I've sat with you say listen, we love it. My first question is where am I going to get the workforce for tomorrow?

And just at this on the other side of the coin with recent graduates saying, listen, I feel really good about my education, but I want to make sure the skills have got will get me the job that I want, and so our job is to make that match as best we can. I'm understanding. Of course, you guys are gradually raising the minimum wage. Small businesses are selling us that that is killing them. How do you respond to that? And we know small business is always the backbone of

really our nation's economy. Yeah. By the way, our administration, for the first time, Carol has a small business unit in our Economic Development Authority. That's never happened before. I think six of the employment in our state is technically by small businesses as it relates to minimum wage. One. One way we're doing this is we're doing it gradually. Uh. It's a five year glide path to fifteen dollars an hour. Uh.

And that's explicitly because of the small business community. Secondly, depending on how small you are, there are carve outs in the glide path is even longer. UM. I can't justify having a two income household earning below the poverty line in New Jersey. Uh, it's just it's unacceptable. So we had no choice but to go from eight dollars and something that we're now at eleven dollars. Uh. In in several years from now, we'll get to fifteen dollars.

It's the right thing to do. I think we're doing it in a responsible way, particularly with our small businesses. And I hope we can have one of those one plus one equal three outcomes. At the other end of the spectrum, the millionaires tax. Gotta ask you about it. You keep pushing for this millionaires tax. It was in your state of the state. Um, you know, your fellow Democrats in New Jersey seemed to say it's a dead issue. Why do you keep pushing? What chance is there for

success here? Yeah, I'd say I just challenge a little bit the basis of the question, my fellow Democrats. A millionaires tax actually in New Jersey polls in the seventies, including a wild majority of Democrats and a majority of Republicans believe it or not. Why do we want to do it? Because it's the right thing to do, and we're not begrudging folks who have done well. There are twenty two thousand and something folks in this state out of nine million who are in this category. Bless them

for their success. We take our hat off to them. We want more of them. That's not the point. It's not us versus them. We want them to pay a little bit it more. And the reason we want this is two reasons. Number One, will take the proceeds and will put it directly into the middle class, UH direct middle class property tax relief and K through twelve education funding. I inherited a state where the middle class had been ravaged. We're on a two year run now where we are

making historic investments. This will allow us to accelerate that. And in particular, property tax is the big tax burden in the state above all else. And that's Phil Murphy, governor of the state of New Jersey, coming off of his State of the State address, talking about your home state, Carol Master right, my great home state of New Jersey. So we did talk about a lot of stuff trade because it was in the news. Wanted to see what the impact was on the state, but also about his

mission for the millionaires tax and so much more. So fund is to check in with he. He's an interesting politician to be se the Opener pursuits. This week, it's about building around greenhouse. I know, Jason Kelly, you've been thinking about that. I've been thinking so much about it. But what we debated our houses, greenhouse conservatory, green house conservatory, What to do? What to do? James Tarmy is here with us in New York City. Didn't see this one

coming and yet it's a fascinating tale. So this is how people are spending their money. It turns out that very wealthy people in the last ten years or so have started spending hundreds of thousand dollars of dollars, if not millions of dollars, on their own private greenhouses in an effort to control where their produce comes from. Is this to grow their own kale? What is it? Well? Possibly, yes, kale, tomatoes, lettuce, peppers, all the stuff that you would just buy at a

normal supermarket. People are very aggressively trying to grow on their own. So you end up getting tomatoes that if you actually advertise the cost of what the actual greenhouse costs and so forth costs like forty dollars of tomato or whatever. So yes, it's and and let's be honest, by grow their own, it's usually hire someone to grow

their own, or try to hire something. We're getting a little bit ahead of ourselves, of course, But the entire shoot that many people have run up against is that the person who they call their gardener is who's the person who trims hedges and you know, transplants things. There's not in fact trained in horticulture, and train maybe in landscaping,

but not horticulture exactly exactly. And so people are discovering that they build this massive infrastructure and think that they can hire people to actually do what the infrastructure is for, namely, grow plans, and end up being in a situation where they literally cannot find anyone to actually enact their their plans. All right, so let's take a few steps back and let's talk about, um, what you found out. I mean, it really is kind of going back to what the UK. Right,

there's lots of greenhouses. Yes, one person, it's one person says that greenhouses in the New York UK are what garages are to the US, and essentially everyone has them. But a bit of a bit of a blow. But um, you know, anyone can have a greenhouse technically if it's a kind of little glass shack, but really those are oftentimes called cold frame houses, um, where it's just sort of try to protect the plants from the frost. And

these can be quite cheap. Once you start getting into an actual greenhouse that's meant to nurture and grow in winter plants all year round, you end up having to control temperature fluctuations during the day and night. You have mechanical systems. You have a very very complex series of different machines and various calculations that you have to take into account when you're constructing this ostensibly kind of you

calic little idyllic structure. All right, So going back to where we started a little bit, there's a greenhouse and then there's a conservatory. Conservatory seems much more relaxing. It is relaxing, but it's also not great for actually growing plants. It's great for keeping plants, right, you know, as as many people know, keeping plants in a glassy place during the summer and winter means that the plants, if you

water them, rive. However, it actually is not the best place to grow plants, first of all, because you need a lot of soil um and you need to water them aggressively. But also plants need very different temperatures oftentimes than um what you know your fern in your living room needs. And so if you're actually taking this seriously and trying to grow lettuce or whatever, um, you can't

really have it attached to your house. You need to standalone space, and you need a lot more serious of an investment, I think, and maybe plants need a climate control that's not exactly comfortable for human beings. Right, So now when it comes to cost, then it starts to get incredibly expensive, especially if you wanted to look nice.

So you know, a lot of these companies have a kind of base model that are around three graft feet that starts starts at approximately fifty dollars um and that cost will double when it comes to the mechanicals done is being implemented everything. So at the base amount for a lot of these people, they're spending at least a hundred thousand dollars, if not a lot more. And going back to what we were initially discussing, they spend all

this money. And then one person told me that these greenhouses end up being very very expensive storage sheds after a little while because they really can find anyone to staff it, right, that's really said. The point is though, also that there are these companies that are doing it, and it sounds like they are more in demand, right,

that people do want them. These companies have seen their sales at the high end treble and in some cases, you know, one company went from around fifteen greenhouses annually priced above two to more than fifty on an annual basis in ten years. That is, I think objectively, an explosion in demand. Sounds like the real business opportunity is

in staff and greenhouses at this point. So good luck, good luck following that dream exactly, house tomatoes exactly dreaming about Yeah, you know, I mean this has been fun, but you know, maybe I need to go staff some greenhouse at Tiget need exactly, James Tarry always great, Thank you, thank you so much for having me so in pursuits this week. It's not a supercar, it's not a race car, it's not an exotic concept car. It is a station wagon, or, as I have learned to call it, a Carol Carve

station wagon. Yeah, Hannah Elliott is here. She's telling us about this sleek new Audie that's making station wagons sexy, although apparently to some people they always were, always were, So tell us about the car that you wrote. So this is very exciting in the world of station wagons. This is the Audi R S six a Vaunt and it has not been sold in the United States until this year, and it's basically a supercar in station wagon form. So if you love station wagons, this is a very

exciting thing. We're finally getting something fast, powerful, cool, even I want to hear about the car. But what is it about? Is it that there are a ton more wagons over in Europe? Yeah, you know ursus here. Europeans have this thing where they respect and honor the tradition

of the station wagon. Let's not forget this is the shooting They call it a shooting break in Europe, and that that comes from the tradition of going out on the hunt and you take a shooting break and you open the back of your car and it's a nice picnic. You know, you've got that long roof line. So of course that the Europeans get it. We're slowly catching on and the automakers have finally decided to give us what

we want. And so how much of this is about just space in the sense that like Europeans, they have traditionally like a little less space both in their homes. It's a smaller part of the country. Right here in the United States, were like bigger is better, whether it's a minivan, whether it's an escalator or a suburban or whatever. We've gone big and not been as economical. I guess with the way we design cars. Is that Does that make sense totally? Um? I think the key word here's functionality.

You get something that is the height of a car and the width of a car, so it's smaller than a sub, but it has the functionality of an suv. So it's maybe the thinking person's sub. It's practical, you can put you know, the back door. It probably has slightly less space than an suv, but it's as functional, I would say. So we're talking functionality, all right, functional, But you sounded like this car from driving it, that you liked it. Tell us where you drove it and

what the experience was. Okay, So I took this out in the hills in Malibu, and you you may not think this because there's there's, of course the highway in Malibu, but if you take a hard right and you go up in the hills, there are some really aggressive turns up there. So I took this a vaunt up there and it performed. I had just gotten out of the Audi R eight and got into this. Now that rates their sports car. It kept right up. It has almost six hundred horse power, which is kind of insane, all

wheel drive, all these crazy drive modes. It was a blast and it sounds incredible. Well, talk to us a little bit about the growl of the car. You actually have a line in the story. Yeah, this is made well, oh the R rated line. Yes, it does. It sounds like a sports car. And this engine note was made specially for the American market because Audie knows Americans again might be a little hesitant about the station wagon thing, so they made a unique engine note specifically for the

American market. It does sound really aggressive. And so where does this fit? Sort of in the price range? Mean, Audi obviously is is higher end, but Mercedes, i think, also has a pretty popular Audie I'm sorry. Mercedes does make great station wagons. Um that it makes even a MG station wagons which are cereals mid six or you know, in the six figures. Um. Audie tells me that this is going to be roughly a hundred and twenty thousand. They haven't come out with official pricing yet, so it's

very expensive. Audi does make other less expensive wagons that are around fifty thousand, so it's a big jump. Um. But if you think, okay, portion makes a Panamera sports to reasona, which is kind of like a wagon to Again, these are all the six figures. Now these are primo cars. So alright, so you liked how it drove, tell us about the interiors, the exteriors in terms of it. So, my favorite thing about the technology on this car is

in the back. It has a motion sensor that if you swipe your foot underneath the back, it opens the back hatch, which I think is so cool that my whole family made fun of me. When your hands are full of its completely it's a great thing. Um to your point about the interiors, it comes with two special interiors of the R S Spec interiors. You've got this honeycomb pattern on the seats. It's basically trim like a sports car with perforated leather um. The whole interior is

gorgeous tradition. And so what does this tell us about where the market may go from here? It's very interesting. I don't know. The answer is, I don't know. I feel like it's a bit of a trial thing. We've seen SUVs continue to dominate. There's no sign of that changing or slowing down. But this isn't interesting option, and it is telling that they are bringing it to market now. It's telling that it's not a hybrid it's it's a

full on V eight car, so we'll see. And fuel efficiency, do you get any more efficiency here than you would for a big gas guzzling SUV. Yes, you know, I will say this is not the most efficient station wagon in the world, but yeah, I mean if you drive this on long um stretches, you can maybe get twenty miles per gallon, so so yes, a little better. Yeah. Are you anticipating other folks? Is there anybody else to like bring in a wagon? I don't know, I don't

I don't know, I don't think. So, you know, again, this is a really niche audience. We'll see. We'll see. It's kind of new and exciting and hasn't really been done like this before, so we'll see. I'm excited to find out Christmas there could be a bow on this car. I love my wagon. I gotta tell you, right, Hannah Elliott, thanks a lot, Thank you guys, and that wraps up Bomberg Business Week's weekend podcast. Thank you so much for joining us. I'm Jason Kelly and I'm Carol Masser. Proud

of my station wagon. Be sure to tune into Bloomberg Business Week Radio Live Monday through Friday. All starts at two pm Wall Street Time, And if you can't catch us live, get our daily podcast wherever you download your podcast. You can also watch the show live on YouTube. Just search for Bloomberg Global News and get this week's edition of the magazine. It's on newsstands now. We'll be back next week at the same time. This is Bloomberg